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InFocus is designed to help you focus on the truly important things in life.

Current Issue: October 2012
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We hope you find this month's articles empowering and that you enjoy using them!

health | relationship | work | community | finance

HEALTH:

Wellness after 30: Getting the Most Out of Later Life | by Diane Randall

How do you define your Wellness? How does it show up in your life currently? About 15 years ago, I ask myself these questions many times. When I was in my early thirties, I watched my body, my health, my emotions and my sense of "self" slip away. I did not know what it felt like to wake up with a purpose and the will to move forward. I wanted to get a handle on my life and find a better way of living, one that would enhance the quality of my life as I aged.

After researching, soul searching, educating and defining what was important to me, I've come to believe that incorporating wellness habits into your life on a daily basis is the key. I recognize that wellness is unique to each person; it encompasses every aspect of your life and requires work, determination and commitment to bring about change. The change needed to bring balance and harmony to your life. This means wellness is a choice. What an enlightening discovery, I thought. Once I realized that it was a choice, I found a way to tap into my "self" strength and saw a time of change as an opportunity to be a better me.

Wellness is a Choice It requires that you do something everyday to honor your body, mind and spirit. Achieving wellness means taking control and directing your life where you want it to go. It means you are in command of all aspects of your life: physical, career, relationships, finances, spiritual, environment and emotional well-being. As you know, this is easier said than done. I've been a wellness coach for several years and find the denial of self-improvement and the lack of effort to achieve wellness, especially for those over the age of 30, dangerous.

The dictionary definition of wellness is: "The state of optimal well-being, not simply the absence of illness, but an improved quality of life resulting from enhanced physical, mental, and spiritual health."

Many people are not willing to do the work to achieve wellness and go into denial about how well they really are. After a while they find comfort within their denial and use it as a coping strategy to avoid bigger problems. They will continue avoiding small problems until a major crisis develops, and sometimes even then it doesn't trigger any action. The areas of life someone thinks about in the privacy of his or her heart (or alone in the dark) are exactly the areas that need to be honored--the mind, body and spirit.

Some reasons why adults don't incorporate wellness activities into their daily lives include lack of time, effort, desire and commitment.

I was talking to a client of mine the other day and he told me a co-worker had challenged him to run in a race. My client has been a heavy smoker for years and has not been physically active. I asked him how he planned on running the entire distance. He then told me about what a great runner he was in high school - more than twenty years ago. I explained to him that he had become very comfortable with denial about his health and wellness, and that I needed him to accept the truth about his overall well-being. We then set some goals to get him through a race at a later time, which included kicking the smoking habit as a first step.

It's not only the physical being that affects wellness; stress is a growing contributor and excuse preventing people from taking control of their own destiny. Investigating where your time is going and then adjusting your priorities to free up time to incorporate activities important to your health and wellness reduces stress. You must reevaluate your daily priorities and approach them in order of importance for your efforts to be successful. One suggestion might be instead of working 12 hours per day, work 10 and spend the two extra hours honoring your well-being.

According to time-use researchers and exercise experts, we're making excuses about our time. "People certainly do have time. There are about 40 hours a week of free time in this country," says John Robinson, a professor of sociology at the University of Maryland and co-author of Time for Life: The Surprising Way Americans Use Their Time. People are watching TV an average of 15 to 20 hours a week, so they have "room to carve out more time to be active."

The Main Thing You Should Do Is Put Yourself At The Top Of Your Priority List
Wellness is important, especially after age 30, because getting older brings with it an abundance of new metabolic, physical, physiological, emotional and mental challenges. And while change can be unsettling, this time of change can also be viewed as an opportunity to get the most out of life. Later life can be a time of rest, fun, relaxation, maybe even retirement, and most of all a time to enjoy life. It should be a time to embark on new adventures whether it's travel, a hobby or a fun job. Here are some suggestions to start creating a life that honors your wellness:

Be Honest About How Well Your Really Are
Realistically look at the areas of your life: physical, career, relationships, finances, spiritual, environment and emotional well-being. Identify the area(s) that need improvement. Set goals to achieve desired results one step at a time. Buy a journal to track your activity.

Assess Your Readiness For Change and Willingness To Embrace
It Identify and write down the benefits of wellness to your life and your willingness to make the necessary changes. Remember: every move, forward or back, is part of the normal process of change.

Identify and Eliminate Barriers and Challenges That Could Impede Your Success
There are always barriers to overcome as we move toward our goals. Select one barrier to work on at time. For every negative message you encounter, turn it into a positive one. For example, "I don't have enough time" can turn into "everything that needs to be done will get done." Learning to replace the negative messages with positive ones is a matter of establishing new habits. It takes time and practice.

Set Clearly Defined and Measurable Wellness Goals
Create fun and interesting ways to fulfill your goals. For example, to be more physically active at work, you may want to take a two-minute walk every hour around your work environment. Break your goals down into small, incremental steps.

Create Meaningful Wellness Priorities
Take a closer look at how you spend your time on an average day. Record your daily activity. Find opportunities for wellness activities you might not have known existed and incorporate them into your daily life.

Challenge Your Wellness Changes and Strive To Achieve Even More
Make simple changes first and then take a look at the things that are harder and that will require the most change to achieve your desired results. Tackle them one at a time.

Design and Refine Your Goals So You'll Get The Most Out Of Them Everyday
If you don't get the results you want in a reasonable amount of time, go back to the "drawing board." Re-design and refine your goals to fit what works for you. You may even want to get some
professional help.

Make Lasting Changes To Your Lifestyle
Identify and celebrate your accomplishments. Reward yourself! Review your favorite activities. Try new activities to renew your motivation.

The pace of today's world is so fast that we expect quick solutions to everything. If results are not immediate we're quick to quit. However, the long-term results that extend our lives are well worth the time, work and effort that we put into taking care of ourselves. Wellness is a way of life. Get yours back!

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Diane Randall, CHHC, AADP. Speaker, Wellness Educator & Holistic Health Coach. She founded Life Accelerated to help
adults over thirty regain their energy, increase vitality and enjoy unparalleled levels of peak performance through her
customized approach to wellness and well-being. For more information about her wellness coaching services, including
individual and group programs, helpful articles and upcoming live events, you can visit her website at
www.LifeAccelerated.com or call her at (312) 428-9346

HEALTH:

Spirituality and Healing | by Nicki Riddell

Opening Spirituality plays an important role that is often overlooked in one's healing process. Your “Spirituality” is an aspect of who you are. "Healing" is ridding the body of disease, either mental or physical, to bring about wellness, the results of which can be readily seen. A prominent integrative practitioner, Andrew Weil, M.D., states, “You are body, mind, and spirit. Health necessarily involves all of these components and any program intended to improve health must address all of them.” Dr. Weil further states, “Many people consider spirit to be in the province of religion, but I insist on making a clear distinction between spirituality and religion. Spirituality has to do with the nonphysical aspects of your being - the part of you that existed before and will exist after the disintegration of your body.”

Sense of Awareness
Spirituality has many facets, including awareness of the world that surrounds you; a sense of wonder, love, and gratitude; a practice of loving-kindness towards yourself and others; listening to your intuition and trusting your heart. Spiritual health is evidenced by people demonstrating the ability to be authentic, face their fears, let go of the past, and develop insight, forgiveness, peace, compassion, and love.

Enhance Your Spiritual Health
A sampling of what enhances spiritual health includes meditation, yoga, music and art therapy, breathwork, laughter, and martial arts. Regardless of your personal definition of spirituality, you can explore these and other options in a vast realm of modalities and processes that exist for the purpose of developing your spirituality and adapting it to your everyday life; and thus to having a healthy body, mind, and spirit.

Do you pay attention to your thoughts and what you are "saying" to yourself? What you truly believe at the core of your being has great power over what you are creating in your life.

What Are Your Internal Messages?
One well-known, practical process to enhance healing is to focus on these internal messages. Many people use affirmations (positive statements) to do this. Repeated often, affirmations can influence your core belief system, which may then bring about change in your physical, emotional, and mental states. It is very important to use affirmations that are positive statements in the present tense. For example, a very basic statement that affirms the value of self is: "(Your Name), I love you and accept you exactly the way you are." Another example of an "affirmation" statement would be: "I am whole." When repeating this affirmation, really picture yourself as whole. This shuts out concentration on any illness or health problems you may be facing, and the resulting disconnection of the body/mind/spirit. Regular practice of this affirmation leads to the core belief that you are truly whole, in spite of any physical evidence that might suggest otherwise.

Compose Effective Personal Affirmations
You can easily compose your own personal affirmations to address whatever needs healing in your life, be it physical, mental, emotional, or spiritual. Affirmations can be said as part of a meditation session, silently, like a mantra, or aloud while walking or driving. The more times they are repeated, the more effective they become. Another way to keep them foremost in your thoughts is to write them down on cards and place the cards in places where you will be sure to see them. It's alright to change the wording to suit a situation and/or to say several different affirmations.

Unify Your Body/Mind/Spirit
Author Barbara Hoberman Levine wisely reminds us that the aim of almost all spiritual work is to “...unify your Body/Mind/Spirit and reconnect your seemingly separate parts. By doing this you expand your ability to choose freely and to ensure yourself of clearer Body/Mind/Spirit communication. You will know yourself better. You will begin to recognize and accept your emotions, uncover harmful beliefs and seedthoughts, and begin to change them through the power of creative thinking. Joyfully accept it! An attitude of gratitude is the primary ingredient for a happy, healthy, peaceful fulfilled life.”

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Nicki Riddell is the founder/director of Alternative Answers, a referral service for integrative health practitioners in Rochester, NY. She also is a charter member of the Integrative Health Committee of the Monroe County Medical Society in Rochester. You can contact Nicki Riddell at (585) 461-5189 or moochiejojo@aol.com.

RELATIONSHIP:

Create A Harmonious Relationship | by Robert Najemy

Harmonious relationships are the result of inner work, love and deep respect for ourselves and the other.

Below are some simple basic guidelines for that process:

Take Responsibility
Take full responsibility for our reality. We are the sole creators of our thoughts and feelings. No one can create our happiness, security or self-worth.

Free Others from Responsibility
Free the other from any responsibility for our reality. We need to consciously forgive the other and free all others for any responsibility for the reality, which we have created.

Learn from Each Other
Perceive the other as our teacher and learn through both his and her positive and negative attributes. We learn to emulate the positive and understand, accept and deal with the negative.

Understand
Understand what lessons we need to learn through the other’s behaviors, which annoy us.

Effectively Communicate
Learn to communicate more effectively with each other with I-messages where we express our needs clearly and assertively without accusing, criticizing, complaining or threatening.

Accept
Understand and accept the other’s: Needs (such as: affection, love, approval, freedom, respect, unity), Beliefs (such as: I am in danger, I am not worthy, my freedom is in danger), and Reactions

Keep it in
Do not speak to third persons about our loved one, but only directly to him or her. (Except of course to a counselor)

Participation
Participate in groups for the purpose of self-knowledge and creating interpersonal harmony.

Seek Help
See a professional counselor alone or together.

Share Interests
Participate in each other’s activities.

Express Your Feelings
Express love and admiration such as: Gratitude for help and service. Acknowledgment of what the other does. Recognition of the other’s abilities, qualities and virtues. Love and appreciation.

Dedicate Time
Meet regularly for communication on all levels. This is best done on a weekly basis.

Visualize Love
Daily visualize the other in light and send love. Bring to mind five of the other’s positive qualities or abilities. Visualize a harmonious loving relationship. We cannot create what we cannot first imagine.

Twenty one positive beliefs about relationships
1. Relationships are opportunities for evolution into love and freedom from the ego.
2. They are a means towards our life purpose.
3. Our self-worth and security are within us and do not depend on being in a relationship.
4. We are free as long as I love.
5. Relationships are opportunities to merge our will with the other thus creating a greater reality.
6. It is natural that we support, inspire and affirm each other.
7. We can be ourselves when we are free from fear.
8. Mutual love and respect are the basis of all conscious love relationships.
9. We all deserve lasting love and respect.
10. We are safe and secure even when we are alone.
11. We need not prove that we are right – love (rather than being “right”) attracts love.
12. We allow each other the freedom to be ourselves.
13. We are worthy of love and respect exactly as we are.
14. The more we know each other, the more we want to be together.
15. We love each other even when we cannot fulfill each other’s needs.
16. We each create our own reality.
17. Together we create the reality of our relationship.18. We are equal.
19. Close relationships are beautiful.
20. We are never hurt by the other, but only by our own fears, attachments, needs and expectations.
21. We sacrifice our needs out of love for each other – not out of fear or duty.

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Robert Elias Najemy is the author of over 30 books, 600 articles and 600 lecture CDs and DVDs on Human Harmony.
Download FREE 100's of articles, find wonderful ebooks, guidance, mp3 audio lectures and teleclasses at
www.armonikizoi.com

His books Dealing with Testing Times, The Psychology of Happiness, Free to be Happy with Energy Psychology and six
others are available at Amazon and www.armonikizoi.com/store

He is also a life coach with 35 years of experience, has trained over 300 Life coaches and now does so over the Internet.
Info at: www.armonikizoi.com/2011/become-an-extremely-effective-and-valuable-holistic-harmony-life-coach

RELATIONSHIP:

The Key to Charisma | by Brian Tracy

There is a close association between personal charisma and success in life. Probably 85 percent of your success and happiness will come from your relationships and interactions with others. The more positively others respond to you, the easier it will be for you to get the things you want.

In essence, when we discuss charisma, we are talking about the law of attraction. This law has been stated in many different ways down through the centuries, but it basically says that you inevitably attract into your life the people and circumstances that harmonize with your dominant thoughts.

You Are A Living Magnet
In a sense, you are a living magnet, and you are constantly radiating thought waves, like a radio station radiates sound waves, that are picked up by other people. Your thoughts, intensified by your emotions, as radio waves are intensified by electric impulses, go out from you and are picked up by anyone who is tuned in to a similar wavelength. You then attract into your life people, ideas, opportunities, resources, circumstances and anything else that is consistent with your dominant frame of mind.

The law of attraction also explains how you can build up your levels of charisma so that you can have a greater and more positive impact on the people whose cooperation, support and affection you desire.

Perception is Everything
The critical thing to remember about charisma is that it is largely based on perception. It is based on what people think about you. It is not so much reality as it is what people perceive you to be. For example, one person can create charisma in another person by speaking in glowing terms about that person to a third party. If you believe that you are about to meet an outstanding and
important person, that person will tend to have charisma for you.

Mother Teresa of Calcutta
One of the most charismatic people in the world was Mother Teresa of Calcutta. In a physical sense, she was a quiet, elderly, frail woman in poor health, and she wore a modest nun's habit. She might have been ignored by a person passing her on the street, were it not for the tremendous charisma she developed and for the fact that her appearance was so well-known to so many people as a result.

How Would You Feel?
If someone told you that he was going to introduce you to a brilliant, self-made millionaire who was very quiet and unassuming about his success, you would almost naturally imbue that person with charisma, and in his presence, you would not act the same as you would if you had been told nothing at all. Charisma begins largely in the mind of the beholder.

Lasting charisma depends more upon the person you really are than upon just the things you do.

Continually look for ways to improve other's perceptions of you so that you can be more influential with them. Be a living magnet.

Action Exercises
Here are two things you can do immediately to put these ideas into action.

First, be clear about the messages you are sending and the perceptions you are creating in others. Are these perceptions consistent with the impressions you want to make?

Second, see yourself and imagine yourself every day as an important powerful and charming person. Treat others as you would if you were already strong, famous and influential.

Fake it until you make it!

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Brian Tracy is Chairman and CEO of Brian Tracy International, a company specializing in the training and development of individuals and organizations. He has studied, researched, written and spoken for 30 years in the fields of economics, history, business, philosophy and psychology. He is the top selling author of over 45 books that have been translated into dozens of languages. To learn more about visit www.briantracy.com

WORK:

Practice Creative Procrastination | by Brian Tracy

Creative procrastination is one of the most effective of all personal performance techniques. It can change your life. The fact is that you can't do everything that you have to do. You have to procrastinate on something. Therefore, procrastinate on small tasks. Everyone procrastinates. The difference between high performers and low performers is largely determined by what they choose to procrastinate on.

Priorities versus Posteriorities
To set proper priorities, you must set posteriorities as well. A priority is something that you do more of and sooner, while a postieriority is something that you do less of and later, if at all. One of the most powerful of all words in time management is the word no! Say it politely. Say it clearly so that there are no misunderstandings. Say it regularly as a normal part of your time management vocabulary. For you to do something new, you must complete or stop doing something old.

Procrastinate on Purpose
Most people engage in unconscious procrastination. They procrastinate without thinking about it. As a result, they procrastinate on the big, valuable, important tasks that can have significant long-term consequences in their lives and careers. You must avoid this common tendency at all costs. Your job is to deliberately procrastinate on tasks that are of low value so that you have more time for tasks that can make a big difference in your life and work.

Set Posteriorities on Time-Consuming Activities
Continually review your life and work to find time- consuming tasks and activities that you can abandon. Cut down on television watching and instead spend the time with your family, read, exercise, or do something else that enhances the quality of your life. Look at your work activities and identify the tasks that you could delegate or eliminate to free up more time for the work that really counts.

Begin Today
Begin today to practice creative procrastination practices that will free up more time for the more important things in life. Set posteriorities wherever and whenever you can. This decision alone can enable you to get your time and your life under control.

Action Exercise
Examine each of your personal and work activities and evaluate it based on your current situation. Select at least one activity to abandon immediately or at least deliberately put off until your more important goals have been achieved.

COMMUNITY:

The Economics of Compassion | by Dr. Eugene Stuerle

In a world of 24-hour news cycles, nonstop political campaigns, and persistent public policy failures, it’s easy to lose perspective. But a new day—or a new year—offers new hope, so let’s pause to ask who and what makes this world a better place.

Economists see great value in people trading their services and goods. When two parties make free exchanges, both believe they will gain from the action. So, when such exchanges are blocked by monopolists, dictators, or bad laws, collective welfare is reduced.

But isn’t it a bit of a stretch to argue that the good life is obtained exclusively or even mainly by market trade or proper government regulation and taxation of such markets? It’s not so much that self-seeking people sometimes don’t play the game fairly and might cheat, lie, steal, create Ponzi schemes, sell inferior products, collude, or market falsely. It’s that they don’t fully realize their potential for doing good.

Here, almost all religions are united in promoting one virtue that makes us more fully alive and the world a better place: compassion. The golden rule expounded by everyone from Confucius to Buddha to Jesus to Hillel bids us to treat others as we would be treated.

I would add a corollary to that rule of old, one that attempts to prove in economic terms that self-seeking is not enough:

We have the power to help others far more than ourselves.

The golden rule needs to be seen as more than a matter of belief. The moral compulsion to follow it is driven by our species’ fundamental, even biological, drive to survive and regenerate and, uniquely, to build and improve. If one could quantify this moral imperative, it’s that if you do good for me and I do good for you, we will multiply the combined good achievable when we try to do good only for ourselves.

The evidence is obvious, once you reflect on it. What’s the most important event of my life or yours? Isn’t it that we were born? What influence did each of us have on that event? Absolutely none. Fundamentally, we don’t deserve life because of our own actions; it is a pure gift. Yet, we can and do participate in the birth of other people, ideas and memories, events and institutions—all of which have lives of their own. Isn’t our power to participate in the miracle of birthing greater for others than for ourselves?

Or take the other end of the life cycle. How much domain do we have over death? Perhaps we can delay or speed up our own day of destiny, but that’s about the extent of our control over our situation. Even then, each of us has but one life. But when it comes to others, we have much more power, and much more than our ancestors did. Recent wars, terrors, and acts of violence make it clear that almost any of us can easily kill many people and destroy many lives. But the flip side of recognizing this power to do evil is also worthy of note. We have an equal, perhaps greater, power to do immense good. We touch on thousands of people over the course of our lives. And many of us lucky enough to live in this time and place have the wherewithal needed to save or improve the lives of many people.

Think now about the countless problems that we let get to us day after day. For most of us, hardly a day goes by when we do not want someone else to extend to us some love, job, promotion, access, favor, or simple recognition—or, in the case of government, to enact the policies that we favor. But waiting for others to do something for us can be debilitating, occupying time better spent elsewhere. And when we become too absorbed in what we want from others, we can’t see the consequences of our actions and inactions or really hear others and respond to their needs.

While we can’t easily change what others are inclined to do for us, we can change our own behavior toward them. Anyone who has ever raised children quickly learns how little control we have over them, compared to ourselves.

At this time of year, therefore, my thoughts and thanks go out more than ever to all of you who partake in the birthing and rebirthing of a better world.

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Dr. Eugene Steuerle is Richard B. Fisher chair and Institute Fellow at the Urban Institute, and a columnist under the title The Government We Deserve. Dr. Steuerle is the author, co-author or co-editor of fifteen books and close to one thousand articles, briefs, and Congressional testimonies. He serves on advisory panels or boards for the Congressional Budget Office, the Government Accountability Office, the Joint Committee on Taxation, the Committee for a Responsible Federal Budget, the Independent Sector, the Aspen Institute Initiative on Financial Security, the National Committee on Vital and Health Statistics, and the Partnership for America’s Economic Success. To learn more about Dr. Steuerle, visit Urban Institute

PERSONAL FINANCE:

If Rates Are Heading Up, Should You Refinance Now? | by Financial Planning Association

As the economy recovers, homeowners are faced with the good news/bad news prospect of a better real estate market with the likelihood of higher mortgage interest rates. For many, that leaves three choices – sell, refinance or sit tight with the mortgage they have now.

Despite the average 30-year mortgage rate that stood at 4.8 percent in late December, the decision to refinance isn’t always a great idea. In fact, it should be considered as part of an overall financial plan that is as individual as you are.

It makes sense to confer with financial and tax experts before you make such a move because there are more questions to consider beyond “How do I get that low rate!” Among them:

What are your current financial goals?
If you’re planning to stay in your home for the next 20 years, your outlook is far different than someone who wants to retire and move in the next five. Many people focus on paying off their mortgage instead of planning for retirement or education savings for their children. It’s important to get advice on this question that fits your overall lifestyle and financial needs. The important question is when you’ll get to breakeven on the cost of the refinance – generally 3 to 6 percent of the total loan amount. If your breakeven is at 12 months and you plan to stay in the home five years or longer, it will probably be worth doing.

What is your current debt load?
If you’re swimming in debt, don’t expect to get the lowest, most attractive rate available on the market. While the credit crunch is loosening, many mortgage lenders are being quite picky about whom they’ll offer their most affordable loans to and many are still turning away borrowers in significant trouble. It’s best to try and cut your level of credit card and other consumer debt before applying for any loan.

When was the last time you checked your credit reports and credit score?
You have the right to get all three of your credit reports – from Experian, TransUnion and Equifax – once a year for free. You can do so by ordering them at http://www.annualcreditreport.com. Yet don’t order all three at the same time. By staggering receipt of each of your credit reports at different points in the year, you’ll get a continuous picture of how your credit picture looks. Also, you’ll have the opportunity to focus on possible errors in a single report, which will give the other two credit agencies time to update their files.

Consider Biweekly payments on your current loan…
Your current lender might have sent you an offer for a biweekly mortgage loan program that will save you considerable money over the life of that loan. Discard their offer – many lenders make big fees off these programs – and see if you can do it yourself. Some lenders won’t allow it, but see if you can break up your payments in a way that will equally divide the principal and interest payments so you’re whole by the end of the month. Otherwise, they might apply the first half-payment to principal and still insist on the full monthly payment by the due date.

…Or consider adding a 13th payment for the year:
Either by adding the equivalent of 1/12th of what you typically pay per month to principal or simply double-paying your mortgage one month a year when you’re flush, you’ll pay your loan off faster.

Fixed or variable?
Given the recent uncertainty in the mortgage market and the current loan environment, it makes sense to try and go for a fixed rate since rates remain at historic lows. Higher rates mean higher payments if rates go higher.

Second mortgages can be problematic:
As many lenders have gotten stricter about doing business, they may not be as willing to take secondfiddle status behind an older second mortgage, which happens in a refinancing process if not addressed. If the borrower can’t roll the two loans into a single loan during the refinancing process, it may delay or kill the deal based on what the two lenders are willing to do.

Are you on top of your tax issues?
Remember that lenders are looking as broadly as they can these days for signs of financial trouble. If you have any late payments of current property taxes or any other potential disputes with state or federal tax authorities, those issues can complicate matters. Make sure you’re current.

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This column is produced by the Financial Planning Association, the membership organization for the financial planning community, and is provided by William D. Pitney, MBA, CFP®, AIF®, RFC®, a local member of FPA.

PERSONAL FINANCE:

Should You Be a Borrower or Lender? The Return of the Personal Loan | by Financial Planning Association

As lending requirements stay relatively tight for most consumers, the chance of borrowing outside the banking system from family or friends can be attractive. After all, it’s rare to see a parent or sibling demand a credit check or other lengthy documentation.

On the other hand, it could be one of the most dangerous financial transactions you ever make simply because money can drive a wedge between relatives in even the closest of families.

There are good and bad aspects to private loans. The good news first:

Terms can be significantly friendlier than a borrower would qualify for in the open market. For example, the rate charged on the loan can be higher than the lender would receive in a deposit account but lower than the borrower would pay a commercial lender.
They can require little or no collateral.
It’s a way to keep money in the family.
It’s a way for a borrower to be able to buy a home, a car or other critical assets even if they have a poor credit rating.
There’s no loss of tax benefits to the borrower or lender if an agreement in the case of a mortgage loan is structured and reported properly

Now the bad news:

Unclear agreements can lead to missed payments or default
If the borrower dies suddenly, the lender’s investment may be lost if the agreement isn’t structured correctly. A properly executed promissory note is still an obligation of the estate, and may continue to be paid to an heir or other person or entity based on the terms as agreed.
Jealous relatives could say they weren’t treated fairly.
Disagreements between borrower and lender could kill an important relationship.

The best arrangements are formal – written in proper legal language, notarized and recorded in the county where the property resides. A financial advisor such as a CERTIFIED FINANCIAL PLANNER™ professional can talk to both parties about what such loans – particularly large loans for real estate or tuition – can mean for their respective finances. It also makes sense for both parties to visit their respective tax professionals to make sure they know the correct ways to document the loan transaction over time for tax purposes.

A detailed document prepared with the help of an attorney or a certified public accountant can also lay out specific scenarios if either the borrower or the lender has to break or alter their agreement. Such trained experts can talk you through the benefits and pitfalls of a private loan arrangement as it affects your particular situation (either as lender or borrower) and specific laws and requirements in your state you have to follow if both borrower and lender are going to derive tax advantages from the agreement. You should be aware that the IRS governs these interest rates and provides an annually updated table that you can get at http://www.irs.gov/app/picklist/list/federalRates.html - these rates are Applicable Federal Tax Rates (AFR). You can also forgive a portion of the loan each year up the annual gift exclusion which is $13,000 this year.

Generally, any private loan transaction should include a promissory note that establishes how the debt will be repaid. That’s true for business loans or loans for most types of property. In the case of a business loan, it makes sense for the potential borrower to get specific advice on how lenders in their business will be treated not only in terms of repayment, but default. These agreements are particularly important for tax purposes as well.

In the case of a loan made for real estate, a mortgage or “deed of trust” statement (depending on the state you live in) or an agreement specific to the type of loan that binds the property as collateral for the promissory note will be necessary. It basically says that if you don’t fulfill all the terms in the agreement the lender has the right to foreclose or repossess the property.

Even if a friend or relative makes an offer of help, it’s proper for the borrower to take the initiative to structure the arrangement in a way that’s responsible and beneficial to both. If a relative is drawing income from the loan, special provisions should be made for prepayment and other contingencies.

The most important thing to remember and plan for? When two people who are close to each other enter into such an arrangement, the most valuable thing really isn’t the money. It’s the relationship.

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This column is produced by the Financial Planning Association, the membership organization for the financial planning

PERSONAL FINANCE:

A One-Year Checklist to Retirement | by Financial Planning Association

One of the biggest lessons of the recent economy is that many people who thought they were financially ready for retirement…weren’t.

The amount of money, investments and government support you’ll need to retire comfortably is as individual as you are. Some people plan to work in retirement. Others have health issues or other financial responsibilities – kids’ college bills, financial support for a senior relative -- to juggle with the everyday living expenses they’ll face in retirement.

Figure Out Where The Money Is
The days of single-employer careers have been over for decades. And nearly 30 years into the world of widespread IRAs, 401(k) and other self-directed retirement plans, many potential retirees can’t reliably state where all their retirement resources are. Start pulling together all available paperwork tracking personal, government and employer-based retirement assets get them into order. It’s OK if you don’t know immediately whether you have enough to retire – experts can help you with that. What’s important right now is to identify everything you have so you can properly evaluate alternatives.

Identify Debt
If you have significant home or consumer debt, that’s a tough burden to take into retirement because most retirees find their income will be somewhat or significantly lower. That also goes for big car payments, tuition debt, medical debt or elder support. Debt is the first major reality check on retirement for most people.

Adopt a Downsizing Budget
Too many people wait until retirement to learn how to live like retirees. If you have a budget, review it for unnecessary spending that could mean anything from cutting back on lattes to selling a bigger, more expensive car and going with public transit or a used vehicle. If you’ve never made a budget, now’s the time. Budgeting for retirement doesn’t mean cutting out every treat and luxury – it simply means extinguishing debt, setting priorities and determining which current expenses can be cut or eliminated. As the real estate market recovers, you may want to plan to sell your current home in favor of a smaller one that can be bought for cash or minimally financed, or possibly you might decide to rent. You might want to try “going smaller” with vacations, cars, clothes and other needs or wants that can move to a lower price point. Do this while you’re working, bank the money you save and you’ll have excellent training wheels for retirement.

Evaluate Your Support From The Government
A good rule of thumb is, “If you need Social Security or Medicare to retire, it’s best to keep working.” While both of these programs remain enormous help to many retirees, there’s always a chance of significant change in these programs, not to mention the continued discussion of moving the official retirement age well past 65. Definitely evaluate your government benefits, but do so in the context of what you’ve accumulated privately so you can maximize your government benefits when you need them.

Consider Healthcare and Long-Term Care NOW
If you’re lucky, your health is in great shape. But family history and events out of the blue may change that. If you retire before age 65, you won’t qualify for Medicare unless you are officially disabled. That means that you’ll have the responsibility to maintain private insurance that adequately meets your needs without huge financial risks that can come from uninsured care or procedures. Even as healthcare reform adds certain protections for under-65 policyholders, it’s more important now than ever to give attention to health matters and whether your current insurance strategy is adequate. As for long-term care, many Americans still forget that the bulk of home-based and nursing home care must be paid out of pocket. While long-term care insurance exists, age and health needs can potentially make it very expensive, so this is another important financial planning issue.

Find Out If Your Dream Retirement Really Works
It’s important to test your retirement dream. While many people dream of moving to a particular place, it’s important to vet that choice for financial and lifestyle repercussions. A particular location might have cheap housing and great healthcare options, but what about cultural attributes and tax issues? There are literally dozens of factors that should enter into your post-retirement lifestyle decision, and to jog your thought process, Nolo provides a checklist that might help.

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January 2011 — This column is produced by the Financial Planning Association, the membership organization for the financial planning community, and is provided by William Pitney, a local member of FPA

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October 2012