Two weeks ago, my husband passed away after a valiant 3 week battle to recover from cardiac arrest.  I am 34 years old, and I am now a single mom of three beautiful children.  Today I am the sole provider, working for a start-up by the name of Ascend.

The vision of Ascend is to help women achieve financial greatness.  You know this.  For years now, we have been loud mouth advocates of financial literacy and financial empowerment into the MK community.  You’ve heard us proclaim, “A Man is Not a Financial Plan!”  You’ve attended our classes where we’ve called you to bold action to be involved in the finances of your family and to take personal responsibility for creating a living wage (running a profit centered business), and you’ve walked by our booth at Seminar every year as we’ve boldly asked, “Are you profitable?  Do you want to be?”

Maybe you are among the 20,000+ who read our newsletter every month and think you always have tomorrow to get your financial house in order… let me tell you, I am living proof that you only have today, and that financial planning isn’t hokey or a man’s job.

Although LeAnne and I are best friends, we sat down as financial-planner-and-client the week before my husband passed. I had one question, “Are the kids and I really going to be ok, financially?”  This was a surreal experience for both of us, but a healthy and important one. The reassuring part was that my husband and I did plan, and we did use Ascend Live religiously; thru the years, I remained involved and aware of what was happening in our finances, our investments, our medical benefits, our life insurance, our car loans, and our credit reports. Much like you, my life, the pull of the job, and my children gave me plenty of reason to abdicate personal responsibility in the nitty-gritty details of our financial life. But I work at Ascend, and we insist that our staff practices what we preach, even when life gets crazy.  Let me tell you, the financial disciplines we all hear LeAnne teaching are the disciplines that made a difference in moments that matter.  I’m pleased to share that worrying about money was the last thing on my mind as I co-labored with my husband in ICU for three weeks. 

Our financial planning didn’t leave me and the kids rolling in the dough, but we will be fine. We will be able to stay in our house and maintain a very similar lifestyle; to say the least, this is an enormous blessing!

Nobody ever thinks that bad stuff will happen to them— none of us considers, “What if the car accident I get in doesn’t kill me, but makes it impossible for me to work for the rest of my life?”   Few think the thought, “What if mom has Alzheimer’s, and in order to care for her we will be forced to use retirement accounts and home equity to pay for her care?”   In addition to my own situation, these are two real stories of “life” happening to some of our MK clients that LeAnne is working with as a financial planner.

With financial markets and stocks tumbling, pervasive fear given recent economics, with what life potentially has to offer or take away from us—no matter what the future brings, we have two choices:  1. We can plan objectively, and actively look for potential threats, and decimate them. 2.  We can let life happen to us and pick up the pieces later.

To not have a plan for what will happen to our livelihood if the car accident we get in doesn’t kill us
To not have a have a will in written and put enforce by a legal professional
To not confirm with a professional that the amount and type of life insurance we carry is sufficient
To assume the next generation will be able to afford to care for us in our old age
To blindly save in a 401k, or not save at all,  and assume that we will have more than enough to retire on
To assume that the benefits we have at work will be there forever
To buy the max of employer’s disability and/or life insurance and think it’s enough
To pretend that we are immune, that we will be the exception, or that we’ll just figure it out when life happens…

Is simply irresponsible.

My situation hits close to home for all of us on the Ascend Team.  With all my heart I wish I could speak to each of you individually, and counter every excuse we allow ourselves (and each other) about why we’ve waited or didn’t implement financial planning and financial systems into our lives and businesses. The reality is we can’t fix things after the fact. We can’t predict what will happen to us, but we can plan.

I am asking you to please sit down with someone—a well qualified financial planner that you trust (like LeAnne) who will help ask you the right-hard questions instead of allowing the wrong-easy answers to prevail in the unknown details.  Take some time soon to discuss and formulate what exactly you (or your family) would do if your life doesn’t go as planned.

Know that I care about you immensely and wish for you nothing but prosperity and many years of joy with your family.  It is this joy that I hope to help you preserve by writing this letter.

My love to you all,

Karin Ray

$700b Bailout, Sub-prime, Fannie Mae, AIG, Bank Mergers & your MK business

Business women need to understand the economic crisis and how it affects them.

Even if you haven’t been watching the news, you’ve heard about what’s going on out there on Wall Street. No doubt you heard that Monday afternoon, the Dow (an invisible grouping of 30 companies who each have $7+ billion in annual revenues-Microsoft, Verizon, SBC Global, etc.) dropped the most it has ever dropped. You’ve also heard that the $700 billion bailout package went before Congress and was not passed. If you’re breathing on planet earth, you know something about the sub-prime mortgage mess in the USA.

Like you, I go to the gym in the morning and see the headlines splashed across the TV screens-I observe the people around me running a little slower, and elipticisizng (is that a word?) with less vigor as we watch the unfolding of an historic financial disaster. When a hurricane happens, everyone understands that a big, nasty storm blows through one of our cities, that lives are in danger, and real estate is going to be damaged. We understand that kind of disaster. I’m not so sure that we understand this kind of disaster.

Everybody has been calling, texting, and emailing me for my take on what’s going on out there. (Now y’all made me blush!) Most of us really don’t understand this kind of disaster, what it means for us and what on earth it has to do with the Mary Kay business you’re building. So I’m going to unpack it in English for you! You already know that our passion here at Ascend is to take all things financial, and turn them into something that makes sense to your worldview, the way you do business, and the way you leverage your greatest asset (your ability to generate income). We are big believers in capitalism and we believe in the Mary Kay business.

I’m not an economist, but I think that as businesswomen, we need to be empowered by knowledge so we can act appropriately. With that said, let’s dive in!

The 3 Minute Summary of how we got here:

Right before Seminar 07, there was an undercurrent of disaster brewing in the financial markets. The financial markets are where money is sold-literally.

How can they sell money?

It starts with the Federal Reserve (central bank for USA) saying to big banks, “Hey, I’m going to lend you money, but you’ll have to pay it back at prime of 2%.” So then those banks take the loan, and re-loan it with additional interest points (a point is 1%). They loan money to businesses as investment capital, to home owners, issue credit cards, give car loans, etc. Banks started to get a bit greedy; especially between 2004-2006 when the housing market was booming. The Democrat Party spearheaded a movement to have 70% home ownership among us. With interest rates at an all time low, this seemed doable and banks were going to profit HUGE. The pervasive attitude was that real estate always appreciates. They started to offer mortgages to people who had bad credit, no credit, and sketchy income sources. Insult to injury, they gave bigger loans to people than they could afford (which artificially overpriced the value of homes). After all, if real estate “always appreciates” there was little risk. Banks were blinded by greed.

With zillions of dollars worth of IOU’s (mostly mortgages) on the books, financial institutions started to leverage–a sexy way to say speculation–they started to buy these things called Credit Default Swaps. They are demonic “investments” that supposedly offered insurance against a company or a pool of mortgages from defaulting. It was a get-rich-quick scheme that everyone in the financial markets jumped into with both feet. AIG was the primary issuer of these pixie-dust securities (think of securities as stocks). They got in over their head, and were going to have their credit score reduced because they couldn’t pay when mortgages started going belly up. (so much for “insurance”) Whether you’re AIG or LeAnne Ozaine-Smith, if your credit score is pillaged, you’ll pay prohibitive interest rates to borrow money.

Enter the Government Sponsored Enterprises (GSE) of Freddie Mac and Fannie Mae (the US Postal Service is another example of a GSE). These organizations sold securities based on pools of mortgages; that’s why their called mortgage-backed securities. When folks started to default on their loans, the value of these stocks went to hell in a hand basket. The government was obligated to fix the problem because they basically own Freddie Mac and Fannie Mae. No way around it.

LeAnne’s Brief Soapbox:

As a culture, it is easy to abdicate responsibility to the banks, the Fed, CEOs of businesses, predatory lenders, and Wall Street. We salivated at the American Dream, and bought more house than we could afford as if it was our inalienable right to live in a big, glorious home. Or if we didn’t buy a big home, much like banks, we leveraged our families to the hilt with Home Equity Lines of credit, used plastic, and continued to borrow as if the supply would never catch up with demand. We have no basis of financial responsibility and then wonder how we end up in hot water?

Seems pretty obvious to me.

The Skinny on the “Bail Out”

It was the Government’s way of issuing a line of credit to the Treasury so that it could lend money to the financial markets in exchange for “warrants” in those companies. Think of warrants as more than IOU. They are a legal stake in that company. The government was trying to help companies dump their positions in spoiled mortgage-backed securities. Also, it should be noted that Wall Street firms would not have directly received the funds (thus the whole hype about executives banking off of it was hog wash). The bill would have helped temporarily ward off a Firm’s creditors.

I think this quote is extremely profound in an election year:
“Of the 38 incumbent members of Congress from both parties who are considered vulnerable in the coming election, 30 voted against the bill.” (Without Bailout Plan, What will the Cost Be, Time Magazine, September 30th, 2008)

What in the heck does this have to do with my Mary Kay Business?

Everything. Since 2003 my team and I have been loud-mouth advocates in the Mary Kay Community of financial responsibility in business. We’ve exhorted you to manage your business with financial integrity so you can have financial peace in moments of history like this. Better, we’ve made it a no-brainer to manage your business finances with Ascend Live.

Never before has it been more important to take all that Mary Kay Ash envisioned for you and make it reality.

Practical Tips for your MK Business

Here are some practical tips to help you embrace capitalism, your God-given potential, and to bolster up your confidence in the face of this week’s market news:

1. Limit how much news you watch. Getting emotionally wrapped up in the things the talking heads on TV are saying is not going to positively move you to action. That doesn’t mean you turn a blind eye, it means that you watch, and purposefully move into action, not slip into inaction.

2. Stop pretending that its 2005. Credit isn’t cheap, and big shocker, you have to pay it back! The MK Visa has an average 17% interest rate on it. Even though her name is on that piece of plastic in your wallet, YOU pay it back (and PS, it ain’t the best credit card out there). If you borrow money, you’re going to pay it back with interest, period. The “loose” money lending that happened between 2004-2006 is gone. This means that credit card companies are going to make it harder to borrow, they’re going to try to recover their losses, and they aren’t at all interested in providing you a break on your interest rates. Don’t lie to yourself and justify purchases just because the interest is deductible; make sure it’s a solid business decision, especially if you’re using credit to make the purchase.

3. Sell the product you have on your shelf. Your inventory is valuable, but it has a shelf life. Your inventory is an “investment,” but it isn’t making you money just sitting there unsold. Unsold inventory is an asset, but a depreciating one. (All of us can point to a few limited edition items on our shelf that diminish in value every day they go unsold; and remember, unsold current catalog products have a 2 year shelf life, max!)

4. Spend on purpose. Get rid of the thinking that just because it’s a “write off” that it’s a good business decision. Now, more than ever, it’s time to become fiscally conservative. When you start running your business from cash, for a profit (just like Mary Kay Ash taught) you will recession-proof your business. Every single thing you spend money on needs to be re-evaluated for return. If it directly or indirectly ain’t increasing your profits, don’t buy it (that includes Section 2 purchases).

5. Think and act like a businesswoman. The excuse you’ve given yourself that you’ll float by financially by just checking your bank-balance online just doesn’t cut it in this, or any economic climate (not to mention it isn’t legal). If you’ve been sitting on the fence, or trying to find the inspiration to start using your Ascend Live portfolio, stop waiting. Ascend does your books. It is the watch-dog over your profits, and helps you run your business from a place of financial integrity.

6. Don’t stop investing. Do you want to buy when things are on sale or when they’re full price? Stay the course on saving and investing. If economic climates like these aren’t further proof that you need an emergency reserve for your family, I don’t know what is. On Tuesday, October 28th at 12 pm PST (1pMST/2pCST/3pEST), I will be teaching a webinar called How to Recession Proof your Business. This will give you some great pointers on how to use your Mary Kay business to inject a healthy sum of money into your family’s emergency reserves (or start one). Click here to get registered for this free webinar.

Ignore the marketplace. Focus on the fundamentals. Book, coach, sell, manage your money, recruit from integrity.

All my love,

LeAnne Ozaine-Smith
& the Ascend Live Team

“Tell your time where to go so you stop wondering where it went”

As summer is winding down, and many of us are finding new routines again with fall work and school schedules, it is common to experience some strain. The transition itself can be disconcerting, let alone navigating your way through all the decisions you have to make every day about how to spend your time.

Time and money management can be a lot a like. Time can disappear as quickly as your money if you’re not careful. If you are feeling like you just don’t know where all your time is going, then it is time to find out!

It’s just like figuring out a budget. The first step, usually, is to take a serious look at your spending habits – discover where your money is really going. Next, you make a list of all the “givens” and the “options. ” Givens are the type of things you cannot live without each month (the payments that have to get made). Options are those with which you have much more choice (those things you can live without). From there, you set goals and then use these goals as guidelines for how your money will be spent.

Taking charge of your time is much the same way…

First, you need to take a thorough look at how you are spending your time – where is it really going?! Make a list of all the “givens” and all the “options”. Working with a 7 day week calendar, plug in all the “givens” and see how much room is left for the “options”. Gradually and selectively plug in the “options. Be realistic. It is wise to leave some open, “free” time because we all know life happens.

Now, let’s be honest. Stress and strain can motivate us to get a budget started or set up a weekly calendar and then that same stress and strain can also give us the excuse to ignore it. If you are finding yourself frustrated about your financial situation or at a loss for how you will “get it all done” then ask yourself, “Am I taking time each week to manage my money or plan out my time?” If the answer is no, then no wonder you are frustrated. You can not expect anything to change, if you do not designate some of your most precious resource to achieve the goals you’ve established. Management takes time.

Think about your business. If you spend all of your time working your business so you can EARN money, but never stop to manage it or even pay yourself, then you are more likely to spend frivolously and retain less of what you earn. Managing your time can be the same way, unless you intentionally plan your time, it’s easy to waste it away.

The best gift you can give yourself is regular time to manage your life and work. Yes, you need time in your weekly schedule to manage your business, your money, and life in general. We often see the light bulb go on when we recommend designating some time as “Money Monday” or “Financial Friday” – setting aside time to make the change you want to see in your life a reality only makes sense.

Remember, we all have the same 24 hours each day so we must be wise about how we spend it.