Bruce’s Wealth Blog

It has been a while since I have blogged.  I am sorry about that.  It is very easy to get so caught up in everyday life that time goes whirring by. 

We have really been closing deals lately.  Just today we closed one short sale and got an approval on another.  When I think about my rise to success, one of the things that come to mind is the whole fascination with scripts.  While you often end up saying the same things over and over to different people and creating something like a script in your head as a result, the truth of the matter is that the script that you create is yours.  It has your style, your personality, and other qualities that make it your trademark.  In that sense I like scripts.  But when it comes to using a written script, especially one written by someone else, I truly dislike them. 

As someone who has to listen to them when people call sometimes, I find I dislike them even more.  If you don’t want me to listen to you, call me and read from a script.  You can tell callers are reading from a script.  I have finally gotten to the point where I simply ask if they can jump to the end of their script because I am getting impatient.

But words are important.  And using the right words can make or break a deal.  So if you are new at something, how can you make sure you are using the right words or not?  Well as it turns out, it is a matter of perspective.  Are you genuinely providing a valuable service to serve someone else or are you providing a valuable service to serve yourself?  If you are truly serving someone else, then your words need to reflect that.  Let me give you an example:

It seems that just about every retailer on the planet has some rewards program.  The purpose of the rewards program has nothing to do with rewarding you, but is designed to track your spending habits so they can use that information to maximize profits.  To make the rewards programs more convenient, they started giving you a little barcode you could carry on your key chain to ensure you have it with you when you go to check out.  It was supposed to be a matter of convenience.  The more convenient you make it the more likely someone is to use it.  Well, as it turns out, if you are like my wife you have a separate keychain just for those little bar codes because you have so many of them.  Now what was convenient is no longer. 

Personally, I really dislike these programs and pretty much refuse to participate in them.  Most of the time I get to the check out and am asked if I have a rewards card, or a gold card, or a V.I.P. card, or whatever they decide to name it to make it sound special.  When I tell them no, they ask if I would like to join.  When they ask me that question, I always say no.  I know for a fact that they will give me some form to fill out that will take more time out of my day to apply for some "privilege" that I will never use in the future.  So my answer is always no.  But pay attention to the words they normally use:  "Would you like to join?"  That implies work or effort on my part to do something I don’t want to do. 

Yesterday, I went to see a movie with my daughter and her friend.  When I got to the ticket booth, the girl asked, "Would you mind if I signed you up for a rewards card?  It will take less than a minute and it won’t cost you a dime."  Before I realized it, I had said yes and less than thirty seconds later she had written down my name off my credit card, and the last 5 digits of the rewards card, and I had the tickets and rewards card in my hand.

So why would someone like me who hates these programs say yes this time?  Well, let’s take a look at her words.  "Would you mind…"  She is asking for permission.  "I signed you up…"  She is doing the work or putting forth the effort.  "less than a minute…" I won’t waste your time.  "It won’t cost you a dime." You won’t feel any financial pain.  She was using words that work.  She was saying she would serve me so I won’t be inconvenienced.  No wonder she had pages and pages of rewards cards she signed up that day.

What do your words say?  Are you using words that work?

Bruce..

I know so many people who demand great service from their suppliers of goods and services.  Yet, often when the shoe is on the other foot many of these demanding people are not willing to give a little extra to people demanding it from them.  Why is it that as so-called business people we understand that the way to develop loyalty and grow business we need to go that extra mile, and often choose not do it?

I don’t know the answer to that question.  But I was thinking about it this week as I was working a short sale that needed to close.  The problem was that the seller had two judgments that needed to be satisfied.  During negotiations we  included payment in full for those judgments but we did not get the payoff letters yet.  Once negotiations were complete, it was time to get the payoff letters.  Unfortunately while the first judgment holder was very quick in getting the payoff letters to us, the second judgment holder was much more difficult to deal with.

The judgment holder told us that it would take at least seven days to get the third party authorization into the system to be able to talk to us.  After working the system, I was able to find out that the judgment holder would not discuss the payoff directly, that they needed to refer the file back to an attorney through a national attorney referral network, and that would take an additional 10 to 14 days.  So, the normal timeline would be at least 21 days from initial call to a point where we might get a payoff letter.  The problem with this timeline was that it went beyond the settlement deadline given by the first mortgagee.  And that the first mortgagee already told us they would not extend the settlement since the foreclosure sale date was so close.  So to summarize, if we didn’t close on the short sale in time, it would go to the foreclosure sale and the judgment holder with all the red tape would lose the collateral they had to collect the judgment.  When I explained this to the judgment holder the response was, well then there is nothing we can do.  Talk about not going the extra mile, the judgment holder was a perfect example of it. 

So if the judgment holder wasn’t going to go the extra mile willingly, that meant I would have to do it and give them a better incentive to go that extra mile.  My approach required multiple personalities.  A nice guy approach through the front door, and a factual and demanding approach through the back door to create coercive pressure on the people responsible for getting the job done.

While I was being a nice but squeaky wheel on the front end, dealing directly with the people responsible for getting the job done, I was also climbing the corporate latter on the back end that took me from the local branch in NV to their corporate headquarters in CA, to the corporate headquarters of their parent company in NY, to the world headquarters of the parent company’s parent company in London, UK.  The purpose in talking with the people in the CEO’s office in London was to create a high level of priority and pressure as they send me back down through the chain.  The reason this works is because a corporation relies on being able to solve problems at the lowest possible management level.  If that doesn’t happen there is a failure in the system or a failure with personnel.  Regardless, the CEO of a worldwide finance corporation doesn’t want to hear from someone complaining about one of his subsidiaries doesn’t seem to want to be paid a $2k judgment they are owed. 

The strategy worked.  The representative of the CEO put me on hold and gave me the phone number and name of someone in NY who he had just spoken to about the situation.  The person in NY did the same thing until I was back at the local level.  Only now, I was back at the local level with someone who knew that the CEO in London said to get it resolved and quickly.  The next day I was notified that the attorney had it.  I had already been working the attorney referral network, so they too were looking for it.  In fact, from my understanding it had been assigned to the attorney within minutes of receiving the request from the judgment holder.  I also had been working with the attorney who it was going to be assigned to, so when they received it, they already had everything in place.  We received the payoff letter the very next day.

A large company who had no desire to go the extra mile was now bending over backwards to accommodate the needs of this situation.  Obviously we were going the extra mile for our client, and the client knew what was going on every step of the way because we were using the Short Sale Manager system we created for our Inner Circle members and they could see firsthand how much effort we were exerting to serve them without us having to tell them directly (very powerful).  And a process that was going to take at least 21 days was accomplished in 5 days.  We also derived a tremendous benefit by going the extra mile by strengthening our relationship with our client, we were able to build more relationships in the UK, and I personally found out that the CEO of this company is also an Anglican minister who wrote a book on faith and finance.  I got a new found respect for the leadership of this company.  The relationships and information are much more valuable than anyone could ever imagine.

So I ask you.  How much are you willing to go that extra mile?  Are you willing to make that overseas call?  Are you willing to put in a little extra time?  Are you willing to truly put your client first?  I challenge you to do these things.  Your business will be stronger if you do.

Bruce..

I was shocked last night to hear a comment about our economy and what is really going on.  You see, the federal government has their own special way of doing accounting.  While we often joke about how “creative” the federal government can be, we have a sense that something just is not right but we cannot put our finger on it.  The truth is that instead of using accrual accounting, which is the method required by the government to be used by businesses when reporting income to the IRS, our government uses cash accounting when reporting back to us.

 

Let me give you an example of the difference:  Let’s say you obtain an unsecured personal loan for $100,000.00.  And you have 5 years to pay it back with 5% interest.  Your monthly mortgage payment would be $1,887.12.  In a cash system, you were billed $22,645.48, and you paid $22,645.48.  If your income was $22,645.48, then you would show a balanced budget because your income was $22,645.48 and your expenses were $22,645.48.  If your income was $30,000.00 then you would actually show a $7,354.52 surplus.

 

However, if you conform to GAAP (Generally Accepted Accounting Principles), then you would use the accrual method required by our corporations.  In this case, you would show $30,000.00 in income, a new liability of $100,000.00 – $18,055.53 in principle reduction leaving a balance for that liability of $81,944.47, and interest expense of $4,589.96.  The cash at the end of the year is $7,354.52.  Balancing the cash against the liability, we end up with a negative net worth of $74,589.96.

 

We have the same year and the same transactions but two different methods of accounting in play.  One method shows more than a $7,000.00 surplus.  The other method shows we are in the hole for nearly $75,000.00.  Which sounds better to you?  If you were a politician, what would you rather tell your constituents?

 

This is what is going on today.  It is not about republican or democrat.  All of our politicians are spending us into bankruptcy and wondering why we are having problems with our economy.  Without this last “economic stimulus” bill, the government would have to disclose a national debt of $65,500,000,000,000.00.  This is more than 4 times our gross domestic product, and for the first time in history exceeds the gross domestic product for the entire world.  In short, as a nation we are bankrupt.  If we were to pay this debt off today, each household would have to pay$589,228.76.  If we were to pay it over time (which is the way we like to do things) it would cost more.  Based on the 30 year bond rate of 3.5%, if we were to drag this out over 40 years, we would be paying a total of $121,795,718,063,508.00 of which $56,295,718,063,508.10 is nothing but interest.  This equates to about $1,095,657.10 per household or $2,282.62 per household per month.  That seems to be a little much to put on the backs of the taxpayers, so lets drag this out over 75 years.  Again, at an interest rate of 3.5% the total would be $185,420,751,313,928.00 of which $119,920,751,313,928.00 is nothing but interest.  This works out to about $1,668,018.92 per household or $1,853.35 per household per month.   Basically, what we are talking about is another house payment per month for every household in the United States for the next 75 years or 900 months.  If our politicians were doing this in a publicly traded corporation, they would be prosecuted and thrown in jail.

 

To fix this, our government can print more money.  If we do this, and we likely are going to do this, it will have an even worse effect on our economy.  Printing more money will devalue the dollar against every other currency in the world.  Our imports will cost more, and we will get less for our exports.  In other words, as we interact with other countries, we will increase our expenses while decreasing our income.  Ultimately this will put more pressure on our economy creating at best stagflation or at worst a depression the likes of which we have never seen.  If you have never heard of stagflation, it is where we have uncontrolled inflation coupled with a stagnant economy.

 

In the short term, we have HR-1 (2009).  The American Reinvestment and Recovery Act, otherwise known as the Economic Stimulus bill.  This is a bill we have been told will cost American Taxpayers $816,000,000,000.  Once all is said and done it is expected to cost more than three times that amount.  In addition, the law makers had no time to read the bill.  They simply voted on it based on what their leaders told them was in the bill.  Looking at the bill we find $600,000,000.00 will be spent buying new cars for government workers; $10,000,000.00 for bike and walking trails; $200,000,000.00 for plug in car stations; $400,000,000.00 to NASA to collect climate change data; $800,000,000.00 to clean up superfund sites; $600,000,000.00 in grants for desil emission reduction; $650,000,000.00 for alternative energy technologies, energy efficiency enhancements, and deferred maintenance at federal facilities; $1,000,000,000.00 to the unions for their community oriented policing services cops hiring program; $246,000,000.00 to Hollywood; and $4,190,000,000.00 to ACORN, the group under investigation for illegal voter registration.  These are just some of the expenditures in the  bill.  Clearly, this is not an economic stimulus package.  It is a pork package.  It is simply a spending bill that has been rushed through.

 

So what does this mean to you?  Spending got us into this trouble.  More spending will not get us out.  As an investor it is critical that you minimize your debt and maximize your assets and income.  Real estate is still a great investment, but you don’t want to owe money on it.  You want to own it free and clear.  As the dollar is devalued, your cash will also be devalued.  But, assets such as real estate and gold will increase in value.  I hope I am wrong, but it looks like we are in for long harsh economic times.  Non-monetary assets are your best bet.  I will be discussing this in more detail at the next Inner Circle conference call.  Make sure you don’t miss it.  If you are not yet an Inner Circle member, visit http://member.drpreforeclosure.com and click on Inner Circle to join.

 

Bruce..

I was called today from someone to inform me that a friend of mine, Jim Booth, had died.  Jim had gone through quite a bit in his 61 years here.  He attended life’s seminars more than once.  While I had met Jim several times prior, I started really getting to know him when he attended my first class on being a foreclosure consultant in Maryland.  It was long before my Inner Circle days, so it cost him $795 to take the class.  He didn’t have it, so he borrowed it from someone else.  To the knowledge he got from the class, he added his determination, and his effort.  In his first year, he went from not having $795 to earning over $135,000.00. 

Jim had a strong sense of right and wrong.  More than once I would get an irate call from him asking what he should do about a rogue investor who was breaking the law and harming a homeowner.  The reason Jim did so well that year is because he didn’t make it about the money.  It was about two things.  The first was turning his life around.  Not only did this mean changing his financial position, but it also meant building relationships and doing something he felt good about.  The second came from another job he had where he was involved in taking houses away from people in foreclosure.  He told me on more than one occasion how awful that experience was.  So, the second thing that this was about was in his own way righting the wrongs he felt were committed when people lost their houses to foreclosure.  His reasons for doing so well were much more than money.  It was about the dash.

When you look at a tombstone, you see the name of the person buried there, when he was born, a dash, and then when he died.  You see, the name is not what is important.  The date of birth is not important.  And, neither is the date of death.  The only important part of the tombstone is the dash.  What did the person do between the day he was born and the day he died?  You can’t take your mc mansion with you when you die.  You can’t take a fat bank account with you when you die.  None of the "things" you treasured so much will go with you.  None of the physical earthly reasons why you started your business on your journey to great riches will go with you when you die.  The reason is because none of that stuff is yours.  It  has only been placed in your care for a very short time.  What does go with you when you die is the love you created during the dash.

There is nothing wrong with having great earthly wealth.  But, what you do with it is important.  Great earthly wealth has been placed in your care for a reason.  So do you want the big house or do you want to cure cancer?  Do you want to buy the eighty-thousand dollar car or do you want to feed a village for a year?  Do you want to charge people thousands of dollars and simply teach them how to attract money or do you want to charge a small fee and teach people how to have true meaning in their lives while they become wealthy?  Do you want to make money the core consideration in your dealings with others, or do you want to build loyalty and trust by offering loyalty to them?  You will be surprised how much wealthier you become when you take your focus off the money and put your focus on the dash.

What do you want your dash to look like?  You had better make a decision fast and make it happen now.  Our time is short and we have no promise of tomorrow.

There is a cool video about the dash.  You can view it here.

Jim – Rest in peace my friend.  You will be missed.

Bruce..

I have been getting a lot of emails lately about why I am no longer teaching the high priced courses I used to teach.  They have also been asking if I really expect them to believe that my Inner Circle – Bronze members paying $19.97 per month are actually getting the same high quality content I was giving my $5,000.00 boot camp students.

 

I am going to answer both of those questions right now.  I am going to use this space to open a part of myself to you that I don’t normally open in a business setting.  I will not volunteer this in a strictly business setting again, but will discuss it when asked.

 

The short answer to the second question is, “Yes.”  I am giving the same high quality content to my Inner Circle members.  In fact, they are probably getting better content because it is not static.  The truth is that boot camps are static events.  You go to one, get the material, and they send you on your way with limited follow up if you are lucky.  Most home study courses are the same way.  You pay your money and you are on your own.  Instead using that model, I am constantly adding content and making changes.  In addition, my Inner Circle members are getting more courses.  I am in the process of creating a short sale course, note buying course, and courses that teach various exit strategies.  So, the Inner Circle members are not getting the same value for their money.  Instead, they are getting much greater value.  Not to mention that they would have to be Inner Circle members for more than 20 years to have spent the same amount as my original students who paid $5,000.00 for one boot camp.

 

The answer to the first question is not as easy to explain.  While I believe one’s faith should guide their business practices, I don’t believe they should use it as a calling card.  For that reason, I don’t volunteer it in most business settings.  In fact, the only time in a business setting I do volunteer it is when I am speaking live and invite people to stay later if they want to hear about my relationship with God.  There is too much evil done in the name of religion and faith.  I believe in the principle of the fruit on the tree providing the evidence of what kind of tree it is.  In short, you should be able to tell I am a person of faith based on my deeds.  I should not have to tell you.

 

That said I began my journey with Christ on December 17, 2006.  So far, it has been an incredible journey that has turned my world view upside down.  If you are interested in the details of my journey, you can read my other blog at www.brucesministry.com.  In the late summer / early fall of 2007 I began to look at what I am doing to teach others about real estate investing.  Some students would take the information and run with it while other students would let their peers talk them out of it.  Unfortunately there is no test to see who will work to make it happen and who will not. More and more, I started having trouble with the idea that people would pay me that kind of money and then not be intentional about using the information.  I would discuss it with other national speakers and they would all tell me that it is not my responsibility to make others use the information I teach them.  And they are right, but the Holy Spirit seemed to be taking me in a different direction.  In fact, if you went to the summit, you may have noticed that I did not have the excitement and zeal for promoting my $20K private coaching program that I did providing you with information and doing my talk about God at the end.  Quite honestly, my heart really was not into it. 

 

It was through much prayer, thought, and discussion that I was lead to the business model I am using right now.  I have always thought that it was important for my students to benefit more from the information they get from me than I do from the tuition they pay me.  Now, trusting in Him, I am really putting my money where my mouth is.  He has changed my heart in dramatic ways.  I look at what is being taught to those who are still paying $5,000.00 for courses and I shake my head.  Some of it is good, some of it is mediocre, and some of it will land you in jail.

 

I should have seen it sooner.  My best marketing has always come from networking.  It has always been about building relationships.  Now, I have come full circle.  My eye is on the ball.  It is still about relationships – my relationship with Him, my relationship with my students, and the relationships between my students.  The Inner Circle program is the beginning of a movement where we build relationships – a community where we help each other to get to a place where we can enjoy an abundance of wealth of all kinds so we can do good things for our families, for others, and if we are people of faith, for Him.  On a side note, if you are not a person of faith I will not push anything on you.  It is just what guides me.

 

So those are the answers.  I am not teaching the high priced courses based primarily on where my faith has led me.  And, yes, what I am teaching is at least as high quality as when I was teaching the high priced courses, but I would argue the quality of teaching and the value has increased dramatically.

 

Happy Investing!  This is an exciting time for all of us.

 

Bruce..

The congress just passed a $700,000,000,000,000.00 Wall Street bailout bill.  President Bush signed it immediately after the vote.  Everyone is talking about how the federal government had to step in to bail out a Wall Street that ran amok.  They say it is the result of unrestrained greed on the part of Wall Street and the lenders they funded.  They say we need more government involvement on Wall Street.  Is it true?  Is government the answer or is it part of the problem?

 

In this present crisis, government is not the solution to our problem; government is the problem.   Ronald W. Reagan, January 20, 1981

 

The problem we are facing today actually started during the Carter Administration.  At the beginning of his presidency, President Jimmy Carter signed into law the Federal Community Reinvestment Act of 1977 on October 12, 1977.  This law was designed to encourage lenders to change their lending criteria to meet the needs of the local community, and more specifically the needs of minorities who have a disproportionately low level of home ownership.  In the years that followed lenders faced increasingly more pressure by the federal government to relax lending criteria.  Ultimately this lead to the S&L crisis. 

 

In the 1980s President Reagan signed partial de-regulation of the S&Ls into law.  The hope was that allowing them to invest in riskier loans would offset the losses they were facing as a result of federal government price controls.  In addition, federal regulators allowed the S&Ls to use creative accounting techniques that did not conform to Generally Accepted Accounting Principles (GAAP).  One of these techniques was something called goodwill.  If the S&L had $10 Billion in assets but had liabilities of $12 Billion, the $2 Billion dollar deficit was pushed down as goodwill and then counted as capital to hide S&L’s insolvency.

 

The end result of these actions pushed the inevitable S&L meltdown back to the end of the eighties  instead of them melting down in the beginning of the eighties.  As a result of the S&L meltdown, the Resolution Trust Corporation (RTC) was created in 1989.  Between 1989 and 1995 the RTC liquidated $394 Billion in assets.  The RTC created partnerships with private companies to liquidate these assets.  The investors who ultimately bought them made fortunes almost overnight.

 

The dust from the S&L had not even settled when the Federal Reserve Board wrote a scathing report about lending in Boston, MA.  In {Closing The Gap:} the Federal Reserve Bank of Boston, with regard to underwriting criteria said, “Even the most determined lending institution will have difficulty cultivating business from minority customers if its underwriting standards contain arbitrary or unreasonable measures of creditworthiness.”  The truth is that the underwriting standards were not at all arbitrary.  Underwriting standards come from statistical examinations of thousands of performing and non performing loans.  It is a risk analysis calculation that does not even look at whether the applicant is a minority or not.  The S&L crisis hadn’t taught them anything.

 

Then, in response to increasing pressure from the Clinton Administration, Fannie Mae finally agreed to relax credit requirements in 1999.  Again, this was an attempt to increase home ownership among minorities.  The changes worked.  In the early 2000s we saw more minority homeowners than ever before.  I have personally seen $600,000 homes in Northern Virginia sold to minorities who worked in low paying jobs such as landscaping and fast food.

 

Warning:  Sarcasm Zone

Wait a minute.  Landscaping and fast food jobs usually pay around $20,000 to $35,000.00 per year.  That works out to about $1,600.00 to $3,000.00 per month gross.  That doesn’t count withholding and other payroll deductions.  The last time I looked a $600,000.00 mortgage at 6% for 30 years is more than $3,500.00 per month.  If we amortize over 40 years it is still $3,300.00 per month.  I wonder why that would be a problem for people grossing less than $3,000.00 per year?  I wonder why the default rate is so high?

End of Sarcasm Zone

 

While greed did play a role on Wall Street, it is the federal government who pushed and pushed and pushed the lenders to relax their lending criteria.  So now $700,000,000,000.00 of taxpayer money has been set aside for another bailout.  Nearly two times the amount of the S&L meltdown.  Reagan was right.  Government is the problem.  Government interference will be costly for taxpayers.  But, government interference will also make investors who are smart enough to take advantage of the situation very wealthy.  Those who have specialized knowledge in foreclosures and the foreclosure process will be the big winners in the next 18 to 24 months.

 

Those of you who are reading this right now are finally in the right place at the right time.

 

Bruce..

 

P. S.  If you are looking to acquire the skills you need to take advantage of this situation make sure you join “Dr. Preforeclosure’s” Inner Circle at http://member.drpreforeclosure.com