‘The solution to the Global Credit Crisis and how it relates to your own financial situation’ by Jamie McIntyre

The solution to the Global Credit Crisis is similar to the financial strategy I’ve implemented on my farms over the past 5 years, and the concept of which is the key to your financial success in 2012.

Could the solution to solving the debt crisis in Europe and elsewhere really be this simple?

Steve Jobs often quoted Leonardo Da Vinci,

“Simplicity is the greatest sophistication”.

Meaning often as humans we seek complex answers and over analyse when success in many circumstances is achieved through simple means.

So back to the financial strategy I have used on my farms for the last 5 years, which has finally achieved a worthwhile financial result, despite a high debt loading with the initial investment.

You see Europe is faced with a massive debt loading, with many countries in debt of close to 100% of their GDP or more.

Now of course everyone is aware they need to repay the debt and that this excess debt loading is a ticking time bomb.

And the best solution of course would have been to avoid such an excessive debt loading in the first place however it’s too late for that now.

In life often the proposed solutions can escalate the issue.

And right now the solution being implemented in Europe is going to do exactly that.

The near bankrupt countries such as Greece, Ireland, Spain, Italy and Portugal are now being forced to slash costs to be entitled to bailouts.

However some of these cutbacks are severe and will have an obvious outcome.

It will cause these economies to contract further and reduce the likelihood of the nations’ ability to meet their debt repayments in the future. When the only way these countries will ever be able to repay their debt levels is to grow their economies so the debt levels become affordable.

Just like 5 years ago when I acquired a lot of farms I, like most farmers or investors, used bank lending to acquire them. This meant they had a high debt load, high interest repayments and the interest as a percentage of farm income was extremely high.

Just like the interest repayments for European countries right now are extremely high compared to their GDP income.

So I could have been stressed regarding the debt levels and try to cut back expenditure to pay back the debt as quickly as possible. A fear based strategy.

Or I could invest heavily into growth.

I knew that I may not start paying off debt for at least 5 years versus using a low risk strategy of reducing expenditure. However by using a strategy of massive growth and development I could grow the farm incomes so that in 5 years the debt repayments to income ratio would drop so much that even though I still have the same debt levels, the debt is no longer an issue.

And now, 5 years on, the debt can be repaid passively so much faster without any stress or external cash flow needed.

My point is;

Debt isn’t such a bad thing if:

1. It can be repaid passively

I.e. if you have to work to repay debt then it’s an issue as that debt causes one to be stuck to a treadmill.

2. Debt isn’t such an issue if the passive income can safely meet debt repayments.

So what has this got to do with solving the European Debt Crisis and your financial success?

Simple.

The Governments must be focused largely on a growth plan to grow and stimulate their economies.

And I don’t mean a wastage plan disguised as a stimulus plan much like that of the Australian government stimulus package a few years back, wasting $16billion on projects such as sheds for schools. Rather than infrastructure such as finishing the freeway from Melbourne to Brisbane or expanding ports to decrease revenue losses from lack of infrastructure spending in the past.

But let’s not digress.

Sure, cutting wastage of expenditure can and must be done for many of these European countries.

I.e. the bloated pensions in Greece where you can retire at 50 to a 90% pension for life and where most people are government employed, which incurs huge costs.

Unproductive laziness and living off borrowed money contributed hugely to the problem.

So yes those that played their part in this extreme spending need to suffer some pain to be taught some basic financial lessons, so I have little empathy for them.

Life has predictable consequences whether we are aware of them or not.

However if all the Governments and Central Banks do is focus on cutting back and no stimulation then they can cut back all they like but the countries will go broke.

So can you simultaneously stimulate an economy whilst making cuts?

Can you grow your income whilst reducing your overheads?

Absolutely.

Cut wastage. And invest into areas that will grow future income.

This is what every entrepreneur has to do all the time, and any successful individual.

Eliminate wastage on the least productive expenses. And invest in more productive areas to grow income.

Thus financial success requires two skill sets;

One to be fear based to cut costs in preparation for worst case scenarios.

And another to be abundant based, to be willing to invest to grow income.

The two seem contradictory and often are. But both must exist for long-term wealth to occur and be sustained.

Be good at making money but also good at wasting it and you will have financial problems. Many actors and celebrities fit into this category.

I was helping out a friend in recent months. She makes a large income of 7 figures.

Yes 7 figures yet no idea about expense side management and is broke a lot of the time as a result.

Other people are so focused on the expense side and saving money they won’t spend or invest. And thus never grow their income or expand their financial earning capacity.

For me what made me wealthy was a combination of both.

17 years ago I had to cut expenses like crazy. I did.

My millionaire mentor told me “Jamie if you can’t be happy and grateful when you’re broke then what makes you think you will be when you’re rich?”

He told me I need to learn to be able to live off a small amount of money to minimise ones attachment to material things in order to accelerate your ability for money to flow to you.

As he said it’s ones attachment to money that repels money flowing to us.

However he also said I need to grow as a person to grow my income as my level of net worth or income will rarely exceed my level of personal development.

So at the same time I borrowed money to fly overseas and invest into my personal and financial education so in the future I could expand my income.

If I was simply focused on cutting expenses then I would have improved my financial position slightly.

However if I was never focused on investing into my future then I would have never become wealthy.

So it’s a dual focus that’s required, not only for countries to solve their debt problems but also companies and individuals.

Companies must eliminate their wastage and invest into expanding their incomes.

And you as an individual you must look at your expenses and eliminate wastage however put money aside or borrow to invest into your education and growing your income.

Countries can rapidly expand by having better education and training.

Having purpose driven and action oriented citizens focused on adding value and the greater good.

My millionaire mentor said the best thing about becoming wealthy is that little competition exists. Almost everyone if honest with themselves wants to be rich. However so few will invest into themselves and their future.

Thus ample opportunity for those that have drive and initiative.

People often ask how I achieved such rapid financial success in my 20s.

Was it luck? Or more than that?

I wonder if it had anything to do with the amount of money I borrowed and saved to continually invest in my real life education. Seminars, books, videos, audio cassettes etc.

When many of my friends at the time only invested in an academic education or a trade.

Valuable, but relatively insignificant to the real life education I invested into despite costing considerably less than a university degree.

Today I call that real life education, a 21st Century Education. An education for life.

Those that have it increase their chance of excelling in the 21st Century.

Those that don’t I would bet any day of the week will underperform to their true potential

Knowledge applied is power.

Ignorance is not bliss.

Do you have a 21^st Century Education?

Are you investing into growing yourself and your incomes this year?

How committed are you? And what are you willing to sacrifice to get an education for life if need be?

Jamie McIntyre.

Jamie McIntyre is a corporate authorised representative (ASIC No: 321315 ) of CLEARING AND SETTLEMENT SERVICES LTD (AFSL 238796)