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The Best Financial Advise I Received and How I Use it Practically

By: Steve Johnson

8/27/2008 - 48 Comments

As part of a group writing project with The Finance Blog Network that I am a part of, I’m going to attempt to answer this loaded statement.

The reason this is a loaded statement is because it’s very difficult to determine which financial advice that I have received is the best.  Most importantly is how I use it practically.  In fact, the most valuable article to write is one that gives practical advice which provides the reader with actions they can take to improve their situation.

After careful consideration, I have decided that the best financial advice that I have received was from Peter Drucker, author of 'The Effective Executive'.  In his book on page 111, Peter says

"A good many studies of research scientists have shown that achievement (at least below the genius level of an Einstein) depends less on ability in doing research than on the courage to go after opportunity. .. It is more productive to convert an opportunity into results than to solve a problem- which only restores that equilibrium of yesterday.”

Time and time again, this advice has given me the courage to go after many business opportunities, even though I knew I was not the most skilled or had the right connections or had a complete business plan.  Opportunities are few and far between, but when you do find one, you have to be prepared to go after it.  The best ways to be prepared for an opportunity is to the stay informed and keep your finances in order.

This is why I wrote the following articles

Stay Informed, Read Constantly, where I say;

“Throughout history, reading has remained one of the top characteristics of success. ... Your financial education could perhaps be the best investment of your life. Whether it’s paying for your own education, your children’s education or investing your time in self education by reading blogs, books and financial magazines. Reading constantly has helped me discover some of my best methods and business strategies.”

10 Ways to Save Money During the Recession, where I say;

“Stay alert as to what is going on… The information you gain could save you a lot of money and lead you to new opportunities. .. Being prepared for opportunities is perhaps the best strategy you can have. The people who are out of debt and stay informed, could stumble upon a once in a lifetime opportunity.”

Dream Big, Operate in Reality, where I say;

“Dreaming big creates momentum for the future, as customers, competitors and owners and employees need to hear your business is planning to grow.  Dreaming big is about your plan to create new products and services that appeal to a whole new group of customers.  Dreaming big is communicating your vision for the future of your business to the market and then working hard to deliver what you envisioned. “

10 Habits of the Prosperous, where I say;

“1. Knowledge – The prosperous are constant readers, consuming financial information on a daily routine. .. The reason is because business trends move very quickly, and staying informed provides them the edge to envision the future.”

Information and knowledge are the keys to wealth. The way a poor person can become a wealthy person is by coupling knowledge with an opportunity. Sure the rich have more opportunities, but many opportunities are found by luck - and a poor person can be just as lucky as a rich person. Even if it takes longer to find a good opportunity, a poor person will need knowledge in order to have the vision for the opportunity. This is why education will always be the key.

How I Use it Practically

It’s about converting opportunities into results. For example, I bought my house in 2000 with an 8.5% 30-year fixed interest rate. Over the next several years, as I watched interest rates drop, I refinanced three times, resulting in my current fixed interest rate of 5.25%. The money I am saving over the lifetime of my mortgage loan is astounding. I will save something like $30,000. This was an opportunity that I learned about and then executed on.  A more recent example is, How I got an Additional $180 with my Stimulus Check.

I use this advice everyday in my business, as I am constantly reading and staying informed while constantly on the lookout for new opportunities.  When I find an opportunity, I am ready to execute with courage to go after it.  Keep in mind, courage does not guarantee success and sometimes I fail.  But, without courage to go after opportunities, I would never have been able to gain from the opportunities that result in a favorable outcome. 

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Crossing the Chasm

This book is primary about moving from high tech products from early market success to mainstream market leadership. But, this book explains many of the concepts of moving a business from the starting gate into the marketplace. If you are trying to start a new business, this book will be very useful. This book talks about, attacking a niche market, creating competition, start locally – then globally, building relationships and many others aspects of getting started.

The Effective Executive: The Definitive Guide to Getting the Right Things Done

This book explains how to be effective, regardless of your personality or circumstances. Peter explains how effectiveness can be learned. “Working on the right things is what makes knowledge work effective.” If you’re starting or working at a new business, this book will give you great advice about hiring the right people and understanding the most important things to do.

Living Rich by Spending Smart

Mr. Karp provides quick, easy to read, practical tips for smart spending choices. This isn't a book about saving for investing; it’s about making purchase decisions wisely and with purpose. What's more important than taking control of spending habits? Practical advice, easy to adopt changes for sound money management. Easy read with great tips, this book pays for itself in ONE day!

Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant

Blue Oceans are markets of non-consumers with no other competing products – unlike Red Oceans that are bloody full of competitors. This is a must read book for anyone considering starting a new business. This book provides a practical framework and analysis for the systematic pursuit and capture of new markets.