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Changes in Attitude

The economy is in bad shape, the stock market is bouncing around like a ping pong ball, gold is trading at an all-time high and nobody has a clue as to what next year’s tax rates will look like (other than to say they are not going down -for anyone). In the midst of all this turmoil, none other than Warren Buffett (no relation to Jimmy), has published his “top five” tips to building and maintaining wealth.

You may think a guy as financially sophisticated as Mr. Buffett (currently worth in excess of $45 billion) might espouse complex diversification plans or discuss financial techniques we have never have heard of. Nope. His advice is utterly practical, down-to-earth and easy to follow. Let’s take a look:

1. Live Below Your Means – You can choose to make a lot of money or a just a little. But the second you spend all that money is when you get yourself into trouble. Saving is the key to establishing and preserving your wealth. As many people learned during the booming real estate market, just because you think you can afford something doesn't mean you should buy it. Keeping an eye on your bottom line will pay dividends over the long term.

2. Bounce Back From Defeat - With nearly 15 million workers currently unemployed in the U.S., it's easy to get discouraged. Don't! An essential component to building wealth is to learn to overcome obstacles and failure along the way. History is rife with rags-to-riches stories. The theme that resonates is to keep getting up and working toward your goal.

3. Self-Promote - Regardless of their chosen profession or vocation, successful people tend to have a strong sense of self-worth and they put that strength to good use. Let those you work with and for know what you do and how well you do it. When they need someone with your skills you are positioned to take advantage of the opportunity.

4. Have Street Smarts - Bernie Madoff lived the high life for decades, scamming unsuspecting clients with a money-making formula that proved too good to be true. Only afterward did we learn that with even a little due diligence, most clients could have easily uncovered the fraud.

But it's not only the swindlers and the con men you have to watch out for. Many times, friends and family are all too happy to take advantage of you and your money. Whether it's a handout, a loan or an investment idea, your friends and family are usually the ones asking for money. If you decline to give, lend, or invest the money, your friends and family become angry with you for not helping them. No matter what you do there are hard feelings all the way around.

Mr. Buffett’s advice “it's wisest to just say no." "If you don't want to give them (family or friends) money ... saying no is probably a good idea." The best way to say no is to have someone else do it for you. You really need to set up a wall between your finances and your friends and family.

5. Buy Cheap - The rich can afford to splurge, but that doesn't mean they do. John Paulson, a billionaire hedge fund manager, bought his Hamptons dream house “at a bargain basement price," The story has it that Paulson eyed the home while it was in foreclosure. Finally, on a rain-soaked day, he purchased the home on the Southampton town hall steps. He was the only bidder.

All good advice, but how does this apply to the use of structured settlements? It can’t guarantee that people will elect to live below their means but it absolutely WILL help them handle their new wealth more successfully. The steady stream of payments over a longer term has a leveling effect, giving them the time to adjust to the new spending patterns that accompany higher means.

A dependable income streams helps people bounce back from defeat. If the claimant is your normal (patriotic) “American Consumer”, they will spend their up-front cash surprisingly fast. However, if they also have a structured settlement, when they sober up from that initial spending spree, they can salve that remorse by learning from their mistakes. Most make much better choices with the remaining future payments.

Finally, one of the greatest (and most under-appreciated) benefits of a structured settlement is the insulation it creates between a person’s settlement proceeds and all the friends and family members who start leaning in. Having the ability to honestly tell them “I’m sorry I can’t help you. I did not get a single big payout; my attorney set it up so I would receive a (guaranteed) (tax-free) monthly income stream instead. I don’t have buckets of cash lying around; this has to serve as my retirement.” It helps not to have cash in your pocket when other people are trying to stick you with the tab…

Have a case with a smart claimant who could benefit from a simple Billionaire’s good advice? Show them a settlement plan that can go a long way to helping them build and maintain their wealth. Call Frank C. Kilcoyne CSSC at 800 544 5533. I am here to help.

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1Gorenstein, Peter and Torabi, Farnoosh, “Top 5 Tips to Build Wealth and Success, 2010 Financially Fit,
[http://financiallyfit.yahoo.com/finance/article-110926-6907-5-top-5-tips-to-build-wealth-and-success?ywaad=ad0035&amp%3Bnc] Tuesday, October 5