Ed Rempel Org

What is The Cash Flow Dam?

What Is The Cash Dam and How Does It Work?

 The Cash Dam (sometimes referred to as a “cash flow dam”) is a simple but powerful concept, and it’s an especially attractive option for those who are familiar with the Smith Manoeuvre or other tax minimization strategies. Cash Dam can help you with tax optimization if you have a mortgage and own either a small business or a rental property.

What is cash damming?

 The Cash Dam allows the owner of a small business or rental property to more quickly pay down their non-deductible mortgage on their home. It’s a variation on the Smith Manoeuvre, but without additional investing. The Cash Dam is essentially an expedient way to change bad debt into good debt.

For someone who’s using the Cash Dam, what it involves is using a line of credit to pay for business expenses. Then, while using the increased business cash flow, you pay down a non-deductible mortgage or loan. This, in turn, produces an increasing tax-deductible business loan, while paying down a non-deductible mortgage or loan. Be advised that the Cash Dam as described above will only work for those who own a non-incorporated personal or partnership-based small business or a rental property.

Example:

 If you own a small non-incorporated business that has $2,000 in expenses each month and you also have a readvanceable mortgage, then the $2,000 per month expense would be paid by the home equity line of credit (HELOC). You then use the additional $2,000 you have in your business expense account to make a payment on your non-deductible mortgage. Interest paid on money that’s borrowed for business expenses is tax-deductible; by using the Cash Dam, you’ll be left with a tax-deductible business loan and a non-deductible mortgage that’s been quickly paid down.

One of the keys to the Cash Dam, however, is capitalizing the interest on the business line of credit. That way, you avoid using any of your own cash flow and you keep the business line of credit tax-deductible.

How does the Cash Dam differ from the Smith Manoeuvre?

The Cash Dam relies on using a tax-deductible business loan to allow you to pay down a non-deductible debt, while the Smith Manoeuvre allows you to buy investments. Investing from your credit line is why the Smith Manoeuvre has much higher risk and return than the Cash Dam.

Potential applications

 Say that you’re a rental investor, instead of using your own cash flow to pay for rental-related expenses, you can use the Cash Dam and a line of credit. In this instance, using the Cash Dam would help you pay for your personal mortgage and help you satisfy your tax obligations as well.

And if you are a small business owner, the Cash Dam can be extremely advantageous. The strategy gives you a way to quickly pay down your non-deductible mortgage and convert that debt into a tax-deductible business loan.

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WHY PEOPLE BUY?

Most sales people have no idea why their customers buy. They assume that customers buy for their reasons, when in fact the opposite is true. In fact, customers buy for their own reasons.

Here are some key ideas to remember about why customers buy.

1. EMOTIONS FIRST. The root of any buying decision is an emotional response based on perceived value or filling a need. Therefore, the actual decision to buy is almost always emotional.

Estate to the Heart by Edward Olkovich EstateTherapy dot com - Copyright 2014

2. HOT BUTTONS. Hot buttons are unique to each person and are perceived differently by each customer based on what makes them feel good or meets their emotional needs. The master sales person finds those real benefits and emotional needs and pushes the hot buttons that result in a sale.

3. BUYING SIGNALS. During the sales process a client communicates specific buying signals, Wood-Young notes. “Everything the customer does, or does not do, is a buying signal. Successful salespeople learn how to read and intuit these signals and use them to build a profile of customer buying behavior.”

4. THE BUYING TEAM. Successful sales people work well with multiple buyers and decision-makers by identifying roles, concerns and issues. What does each person bring to the sales transaction? What is their role in the buying process? What are their hot buttons?

Engage customers in areas that bring to the surface the mechanics of their buying process. Ask your customers, why do you buy? The answers will show that the customer or prospect is often thinking the following:

– Can I trust the salesperson?
– I don’t have time for this.
– I don’t want to hurt the salesperson’s feelings.
– What are his or her motives and intentions?
– Is it safe to open up?
– Everything is OK the way it is now, so why change?
– There may be a problem, but what the salesperson is offering isn’t the solution. I want to find my own solution.
– How can I postpone this buying decision?
– The salesperson’s solution is too risky.
– The benefits don’t outweigh the risks
– There is no solution to this problem.
– I’m not convinced I need to buy.

5. ASK FOR THE SALE. Finally, the sales master asks for the sale. Most salespeople never ask for the sale because they don’t think the customer wants to buy when in fact the customer is wondering, ‘How do I buy?’ Remember, people buy based on benefits defined by them, not by their salesperson.

By: Mark Borkowski is president of Mercantile Mergers & Acquisitions Corporation. He can be contacted at mark@mercantilema.com or www.mercantilemergersacquisitions.com. Mercantile is a mid market M&A brokerage firm.

IT’S ALL ABOUT FREEDOM.

No one is handed freedom on a silver platter. According to noted author and professor, Dr. W.W. Dyer. “You must make your own freedom. If someone hands it to you, it is not freedom at all, but the alms of a benefactor who will invariably ask a price of you in return.”

Freedom means that you are unobstructed in ruling your own life as you choose. Anything less is a form of slavery. If you cannot be unrestrained in making choices, in living as you dictate, in doing as you please with your environment (provided your freedom does not interfere with anyone else’s freedom), you are under command by forces stronger than you.

To be free does not mean denying your responsibilities to your loved ones and your fellow man. Indeed, it includes the freedom to make choices to be responsible. But nowhere is it dictated that you must be what others want you to be when their wishes conflict with what you want for yourself. Have a sense of freedom that does not mean that you shirk your responsibilities to your friends, family or community.

Most of the people who will try to tell you that you cannot, who will label your desire for freedom “selfish”, will turn out to have measures of authority over your life, and will certainly be protesting your threat to the holds you have allowed them to have on you. If they can help you feel selfish, they have contributed to your feeling of guilt, and immobilized you.

You must become the master of your own destiny. If you are not, you are not free. You do not need to be powerful or exert influence over others to be free, nor is it necessary to intimidate others, nor [to try to] bully people into submission in order to prove who is master.

The freest people in the world are those who have senses of inner peace about themselves. They refuse to be swayed by the whims of others, and are quietly effective at running their own lives. These are responsible people, but they are not enslaved by other people’s interpretations of what responsibility should be. This level of responsibility is to god, self, family and the community.

I will not pretend that the new forces of Unions have not restricted the freedom enjoyed by myself or by all of us. The adversarial association between employer and employee has resulted in an infinite amount of lost people working hours, and an unhappy work environment that results in disgruntled employees.

There is a better way.

There is a dire need to encourage individuals to spend, invest and work, instead of penalizing them when they do. Unions want to restrict commerce. Attempts to negotiate with the unions only result in more downsizing and corporate bankruptcies. We are all learning that a service economy must be driven by a productive manufacturing economy.

Real wealth, which comes from people’s ability to commercialize and develop new and exportable technologies, creates jobs and allows government to foster those socially necessary programs that provide new jobs and security for employees. The re-arranging, manipulation, and accumulation of capital does not provide us with new taxable income or the real creating of wealth.

For those individuals that do not want to provide equal value for equal pay should have their fellow employees drive them out. For those that want to work harder and produce more an additional yearly profit sharing program should be implemented. Those in the unit that did not want to work should not drag down those that do. Lets face it, superstars make more money and so they should. 

Unions threaten the freedom of Canadians in this highly competitive and global market place. Their role has been vastly diminished. They are dinosaurs that add little or no value to organizations or their people.

Any force, group or individual that threatens your freedom needs to be informed of their breach, even if it means putting your very livelihood or life on the line. People that want to build, grow and produce should not be taxed to death when they do so. They should standup and be counted.  We need producers of all kinds. The laggards can sit on the sidelines.

One of the great American states has the following words blazoned on their License Plates, “Live Free or Die”.  Freedom is worth fighting for, even if it takes a lifetime and great sacrifice.  God help those people that threaten my freedom.

By: Mark Borkowski is president of Toronto based Mercantile Mergers & Acquisitions Corporation. He can be contacted at www.mercantilemergersacquisitions.com

 

Death Bed Advice….

These were some words of wisdom told to me by a client that had to sell his company from his death bed. He and his family dictated these pieces of advice in one long visit. Not sure where they got them, but I wrote them down while he was dying.

I wanted to share them with you.

1. Life isn’t fair, but it’s still good.
2. When in doubt, just take the next small step.
3. Life is too short to waste time hating anyone.
4. Don’t take yourself so seriously. No one else does.
5. Pay off your credit cards every month.
6. You don’t have to win every argument. Agree to disagree.
7. Cry with someone. It’s more healing than crying alone.
8. Save for retirement starting with your first paycheck.
9. When it comes to chocolate, resistance is futile.
10. Make peace with your past so it won’t screw up the present.
11. It’s OK to let your children see you cry.
12. Don’t compare your life to others. You have no idea what their journey
is all about.
13. If a relationship has to be a secret, you shouldn’t be in it.
14. Life is too short for long pity parties. Get busy living, or get busy
dying.
15. You can get through anything if you stay put in today.
16. A writer writes. If you want to be a writer, write.
17. It is never too late to have a happy childhood. But the second one is up
to you and no one else.
18. When it comes to going after what you love in life, don’t take no for
an answer.
19. Burn the candles, use the nice sheets, and wear the fancy lingerie. Do not save it for a special occasion. Today is special.
20. Over prepare, and then go with the flow.
21. Be eccentric now. Don’t wait for old age to wear purple.
22. The most important sex organ is the brain.
23. No one is in charge of your happiness except you.
24. Frame every so-called disaster with these words: “In five years, will
this matter?”
25. Always choose life.
26. Forgive everyone everything.
27. What other people think of you is none of your business.
28. Time heals almost everything. Give time.
29. However good or bad a situation is it will change.
30. Your job won’t take care of you when you are sick. Your friends will. Stay in touch.
31. Believe in miracles.
32. Whatever doesn’t kill you really does make you stronger.
33. Growing old beats the alternative — dying young.

Mark Borkowski is president of Mercantile Mergers & Acquisitions Corporation. Mercantile is a mid market M&A brokerage firm. Mark can be contacted at mark@mercantilema.com or www.mercantilemergersacquisitions.com

So-called “Financial Experts” are anything but!

Five dozen financial “experts” tracked by CXO Advisory Group LLC of Manassas, Va., over the past two years were right only about 48% of the time incalling the broad direction of the U.S. stock market.

Mad Money’s Jim Cramer saw the future with 47%  accuracy, while bond king Bill Gross’s public forecasts were on the money only 46% of the time. If the gurus tracked by CXO were taking a fortune-telling class, they would flunk out of soothsaying school. But their unimpressive showing demonstrates an important truth: The stock market stumps even the best minds. 

Even the patterns that do emerge usually sucker us all. Consider emerging markets. Stock markets in developing countries handily outperformed those in the developed world from 1988 to 2009. So does that mean you should jump into emerging markets now? Slight alterations of starting and ending points can radically alter your conclusions.

As mentioned above, emerging markets outperformed developed markets from 1988 to 2009 – but they lagged behind from 1985 to 2006. It’s small wonder that most people don’t spend much time mulling these baffling patterns. Unfortunately, they do something even more dangerous: They simply jump on board whatever is hot or sell whatever is cold. 

During the 1990s, anyone who mentioned dividend paying stocks was laughed at, derided as a relic and left in the dust by the fast growth investors who were loading up on the hot dot.com stocks. This trend lasted for ten years and many called even people like Warren Buffett an old fuddy-duddy.

Today, with dividend-paying stocks all the rage, many investors are doing the opposite. They’re abandoning growth stocks and stocking their portfolios full of utilities, consumer staples companies and other “can’t miss” propositions. They may be right, but we strongly suspect that dividend-paying stocks will, at some point, lag the market for years, simply because they’ve been bid up so high. When that happens, many recent converts to the style will abandon it. That’s a pity, but it’s a predictable – and costly – reality of human behaviour.

The Chicago-based research firm Dalbar found that the average investor has underperformed the market, each and every year, since it began compiling data in 1990. The S&P 500 index returned an average 9.14 per cent over thepast 20 years, while the average investor earned only 3.83 per cent.

We all wish we knew what would be the biggest winners of tomorrow. We don’t and neither does anyone else. So we suggest to always invest in a diversified portfolio and rebalance annually and forget about trying to outsmart an unpredictable market. If you’re diversified enough, you will own both developed-world and emerging market stocks and more. You won’t have to guess the decade’s next great strategy. Best of all, you can spend your time playing with your kids or grandkids instead of asking questions about the direction of the markets.

But… forecasting has become like a sport (we want winners and losers). We tracked down one forecast that got 2012 mostly right (a winner). But…we caution you to place your future bets carefully…

— Adrian Reynolds is a 20 year vetran of the financial services industry; currently with DeThomas Financial Corp

Bullying at work – the total cost – financial and societal Part 2 of 2

Outside the financial costs, the personal costs are also of major concern to health-care professionals. Treatments for depression, stress, heart conditions, ulcers, other forms of gastric and intestinal stress, PTSD, internal trauma, alcohol abuse and drug abuse. The physical, emotional and mental abuse of families and friends. Other mental illnesses including paranoia and schizophrenia are common as is bi-polar disorder. In extreme cases, severe and unrestricted violence against themselves – including suicide and against others including events such as robberies, assault and in some cases and situations, even murder. These are all potential consequences to society that result from bullying. Is it really worth it? Bullying tears families and communities apart and it is preventable. Are you part of the problem or part of the cure?

“If you turn and face the other way when someone is being bullied, you might as well be the bully too.” ~Unknown

Inside family units, bullying is a well known, if very well hidden issue. Yes, we hear about parents abusing and bullying children but we don’t hear as often about siblings bullying or abusing each other – and it is not always the older child bullying younger one – I know of several cases where the reverse is true. There is no “typical” situation, which makes it tough to help the victims and educate the perpetrators or provide punishment as appropriate. Please remember, not all abuse is physical – the hidden damage of emotional and mental abuse is very often hard to identify and treat. Victims of emotional and mental abuse sometimes even appear to live outwardly “normal” lives, but on the inside are ready to explode with sometimes terrifying consequences to themselves and others – most often directly impacting those closest to them.

“By being a bully, you show everyone what an inferior coward you are.” ~Unknown

Psychologists, psychiatrists, family medical care providers and counsellors all deal with the effects on a daily basis. Unfortunately, law enforcement and other first responders see the consequences when no intervention or support has been provided. Healthcare practitioners and paramedical professionals have long known that bullies act out of feelings of inadequacy, jealousy and fear but the driving forces behind those issues are very challenging to define. They tend to use the bluster, self-aggrandisement and brash behaviours to cover their feelings – they are actually crying for help but too often that cry goes unheard until the damage has been done to one or more other people in their lives.

I have included several quotes in this article that can provide a starting point for readers to consider this issue. I suggest that to one extent or another, everyone’s lives have, are or will be affected by some form of bullying and/or related abuse. Can we do anything less than exert our best efforts to eradicate it from our lives?

“Respect – simple respect. I expect nothing more and I will accept nothing less.” From the Emmy Winning Series MASH – Margaret Houlihan talking to Hawkeye Pierce.

In closing, please think about the words of the famous song by Aretha Franklin:
“R – E – S – P – E – C – T”

These are but a very few links to sites that offer information on workplace bullying, abuse and violence. I urge you to use these and other resources to help yourself and others.

http://www.bullyingcanada.ca/index.php

http://bullyinworkplace.com/

http://www.bullyonline.org/

http://www.workplaceviolence.ca/