Back to Back Issues Page
September 2014 Newsletter: Financial Asset Management, and Keys to Small Business Success
September 29, 2014
Hello to all my frugal friends:

Something exciting happened over the last month...I was interviewed by about how one might use frugality to support creation of wealth that can be turned into seed money for an enterprise. As you might guess, I had plenty to say about that. Anyway, I've asked the publisher to allow subscribers like you to have access to the one hour interview at no of now, it's part of a paid subscription service that the site offers. More on that as it becomes available. I'm keeping my fingers crossed. If you're interested in a peak, here's an introduction to the interview

Another great event occurred when word came back from my customer in Australia that they accepted, as a final product, a technical study and report I had prepared a while back. I was waiting for a thumbs up on this. Now that I have it, there isn't anything "on my back" except what I place there around the homestead. It feels good to get that far away project completed because I'm not a fan of air travel...I'm much more comfortable with my feet on the ground here in Wyoming. I did enjoy my time down under. Photo above shows me relaxing at an historic lighthouse on the rugged southern coast of Australia during one of my visits.

I'm following the same pattern as usual, two articles you won't find on the site; one on personal finances, and one on being better prepared from an economic and financial perspective.

The first article this month is about financial asset management, at least a perspective from my viewpoint. As you can imagine, there are many other ways of looking at personal finances and management of financial assets.

The second article is from the series I'm writing about economic and financial preparedness. I've talked about making money by starting your own service business. Now, I want to offer you insights with respect to the keys to success.


Financial Asset Management – A Different Perspective

by Clair A. Schwan

When it comes to my abilities in the arena of financial asset management, I don’t consider myself to be more than a couple of notches above the crayon level. Although I’ve been free of debt for quite some time now, it’s not because I’m a financial wizard, it’s mostly because of my natural inclination to aim high and be financially conservative. If you listen to my sweetheart Ellen, she might also suggest that I have some sort of a crystal ball.

Whatever the case may be, I’d like to offer a different perspective on wealth preservation in light of what I see as our ever-changing economic climate. I think you’ll find much of this discussion to be applicable, regardless of where you might be in terms of debt.

Take notes if you wish. Just choose your favorite color, and try to stay within the lines.

The Financial Climate

I don’t closely monitor the economy, our financial system or general marketplace, but even the casual observer can’t help but see clear signs that we’re headed into stormy times. We’re raising the debt ceiling so often that having one doesn’t seem to matter anymore. Inflation and the high cost of oil is causing us to expend more dollars on nearly everything. Precious metals like gold have recently been at or near record high prices. Many segments of the marketplace that took a beating years ago still haven’t recovered. Unemployment and under-employment are so prevalent, severe and persistent that we’ve changed the way we’re reporting it, so it doesn’t look so dismal.

There are people in the know who are predicting financial collapse of our economy, and they’re pointing to economic disarray in the European Union as a sign of what’s to come for America.

Weathering the Storm

With a gloomy outlook on the horizon, what might one do to be better prepared or otherwise come out of this storm cell in decent shape? It’s a serious question to ponder. What should we be doing with our income, and if we have savings, what should we be doing with that? As poet Robert Frost suggested, the path we choose can make all the difference.

Investing in precious metals is popular because they have intrinsic value, and they tend to hold value. The most successful financial systems in the world have been anchored to or composed of gold and silver. It’s tough to argue against thousands of years of evidence, nevertheless, when a gold coin the size of a silver dollar costs $1,700 in today’s marketplace, it’s easy to see why this wouldn’t naturally be a first choice for the average person, so let’s look elsewhere.

What might our financial asset management approach look like if we’re not going to protect our wealth by investing in bars of gold and silver, and we don’t want to risk our money in the stock market? Here’s my perspective on what we might do in a different vein to preserve our financial assets rather than allow them to evaporate through inflation.

Land – generally I’m a big fan of land. Will Rogers referred to the value of land by simply saying, “They ain’t making any more of it.” Land has traditionally been a safe investment, and it’s one that can work for you if you have a mind to grow and raise your own food. It can also pay for itself and create a stream of income if you elect to grow something to sell like trees, bushes for landscaping, or rare wood. And, if you live on your land, that’s all the better.

Housing – with the housing market depressed in many areas, now might be a good time to take a look at what’s available. I’m in favor of paying off the mortgage, and that’s much easier to do if you select a modest home in a buyer’s market. This might be the time to downsize so the proceeds from the sale of your home can get you closer to being free of a mortgage. Your savings in housing payments could be invested elsewhere or used to pay off other debt.

Education – the marketplace is always changing, and if you’re able to change with it, you can enhance your earning potential. Just about anything associated with information technology is in high demand now and pays well. Some high paying skilled trades are also in great demand. Learning a technical skill requires a relatively low investment in time and money, and therefore may be a good alternative to a traditional college degree. Investment in education is generally a good one because it’s something that stays with us, and we can put it to good use throughout our life.

Tools and equipment – having appropriate tools can help you offset expenses and provide yourself with a source of income. As an example, perhaps you invest in a portable welder, one that’s engine driven and mounted on a trailer. It might be just the thing for you to use around the house and in a sideline business, and you could rent it out. Either way, it pays for itself and becomes an asset that creates a revenue stream for you.

A business of your own – there are any number of businesses, especially service businesses, that require limited investment in terms of vehicles, equipment, materials, supplies and so forth. Some can be a source of high income. Since you’re in charge, I’d suggest that your capital investment would be in good hands – probably the best possible.

Start Thinking

Your particular approach to financial asset management is something you need to invent on your own. You can get advice from any number of people, but in the end, the decision is yours. The suggestions above are simply examples of what I consider to be viable alternatives to help shield your wealth from the effects of inflation and some marketplace fluctuations. I’m certain there are many others that are worth considering.

Let me suggest six criteria that might help you identify suitable means of preserving your wealth:

  • Widely recognized as valuable
  • Having value that lasts and appreciates
  • Generally in demand in a wide range of economic climates
  • Capable of producing income and/or offsetting expenses
  • Something that can be converted into money with relative ease
  • An investment for the long haul

Pick one or more, mix and match. The choice is yours.

I certainly would hold a portion of my savings in cash, just to be able to conduct daily business, but it’s clear to me that cash isn’t going to appreciate much, nor will it hold its value. It’s fiat currency, it has value simply because we say it does, and you can imagine what happens when we stop believing what we’ve been told for so many years.

Consider this, a gas station recently offered gas at 10 cents per gallon if you made the purchase in pre-1965 dimes, quarters and half dollars which are 90% silver. Clearly, this is one business owner who sees more value in something other than our paper money. He’s not the only one with this perspective, but he might be one of the few who prominently displayed their preference for something other than federal reserve notes.

And, as I recall, it was a homemade sign displayed at his gas station, probably drawn with crayons.

Economic and Financial Preparedness – Start Your Own Enterprise With Limited Investment: Keys to Success

by Clair A. Schwan

As we head down this path of economic and financial preparedness, let’s continue with the idea that you might want to start up a service-related enterprise of your own. It’s usually the easiest and least expensive way of getting into business. I previously suggested a number of businesses that fit the profile of a service, and now I’d like to tell you about the keys to success. It’s always helpful to get a few pointers from someone who has gone down this path before.

Before we get into the meat of this, let’s refresh our minds regarding my original suggestion from the article about creating wealth. This should help us stay focused:

Start your own enterprise – perhaps the best alternative for better control of your destiny and much higher levels of income. Many can do this right now based on what they already have on-hand and their current base of knowledge and experience.

Okay then, let’s get busy with the discussion of how we might be better prepared for success.

Keys to Success

I could lay out exactly how to go about getting yourself into business, but that’s an article series of its own. For our purposes of economic and financial preparedness, I just want to highlight some of the keys to success as I see them. These are important considerations, regardless of what career path you might be interested in as a small business owner.

Stay with your strengths – don’t go venturing off into uncharted territory where the learning curve is steep. Stay with what you know, what you’re good at, and where you have a track record and lots of contacts. That way, you won’t be reinventing yourself or your business, and you can make good use of your network.

Find your niche – if you’re going to be a competitor with your former employer, make sure that you have a good niche to fit into, one that your former employer just can’t fill. That’s another reason it’s important to become a specialist.

Create your own future before leaving the mothership – if you’re thinking of leaving Big Clumsy Corporate employment, make sure you’ve greased the skids for your departure before you do. Perhaps that means cultivating your own customers, associates, employees, etc. You don’t want to take a big leap without carefully looking and planning for success.

Create a business development plan – perhaps the most difficult challenge you’ll face is gaining market share. You’ll need a solid plan as to how you’re going to rope in customers to keep a steady revenue stream headed your way. If you can figure this out, the rest is relatively simple. A key to getting market share is finding your niche, good preparation before leaving the mothership, and teaming with others who can help maintain a stream of work that pays.

Start small – it isn’t always possible to start small or start part-time, but if you can, it can often be the wisest thing to do because it minimizes your risks. If you start your business as a sideline operation, you can determine when you have so much work that you have to either hire someone or break loose and attend to the business yourself on a full-time basis. Just be sure you don’t operate the business in such a manner that you loose customers who are interested in your services, but are discouraged because of your unavailability or unresponsiveness.

Team with others – if you can team with others to provide a service, then all the better. Perhaps you’re a home inspector who is teamed with multiple real estate agents. The agents provide you with a stream of customers who need homes inspected, and you offer them a trustworthy and reliable source for their customers who request such services, and perhaps you share a small portion of your fee with the agents.

Offer complementary or related services – there isn’t any reason why you can’t offer services as an auctioneer and a real estate agent. When someone wishes to downsize and relocate, you auction off their possessions and sell their house too. It’s one-stop shopping for your customers.

Recognize and make use of the advantages you have – as a onezee, when the customer is discussing things with you, they’re talking with the decision-maker. There are no levels of management in your organization of one. You are it, and that’s all there is to it. This allows you to run circles around your slow, clumsy, stodgy and cumbersome competition. Make good use of this advantage.

If our focus is on making money, we need to at least know some of the keys to doing it well. In the absence of such guidance, we’ll be wasting time, money and effort. Such wastefulness can be discouraging and cause us to retreat to our previous world of being an employee, and we all know that isn’t usually the best route to take for advancing our interests in creating and accumulating wealth. Life as an employee also means we’re at the mercy of the economy instead of being a player in it.

Next Up

Let’s talk next about the pitfalls to avoid when starting an enterprise of our own. It’s helpful to know what some of the keys to success are, but equally helpful to know a bit about the mines strewn about our playing field.

Next Month

In next month's newsletter I'll provide an article about staying out of debt by ignoring your wants and focusing on your needs. I'll also provide another article in the economic and financial preparedness series. This time I'll be talking about the pitfalls we'll want to avoid as a small business operator.
Thanks for being here with me at Frugal Living Freedom. I hope you enjoyed the articles and can put them to good use in your own life to better your financial position and enhance your own financial peace of mind.

All the best to you and yours,


Back to Back Issues Page