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Financial Lessons You Can Take Away From Detroit's Bankruptcy

Are you dealing with overly optimistic assumptions when it comes to your investments? Detroit's pension fund managers had assumed a rate of return on their annual investments of 8 per cent. I do not know about you but I have not seen 8 per cent on any of my investments for a long time.
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An article by Jill Schlesinger, Business Analyst at CBS News got me thinking about what all of us could learn from this tragic collapse. She covers three particular points in her article; pensions, overly optimistic assumptions and municipal bonds. So what does that have to do with you? Let us look at each of these for a moment from a personal perspective.

Do you think the employees of Nortel or Enron thought there would be any issues with their company pension plans? I am sure they all thought they would be alright because weren't they working for big, financially stable organizations?

Are you dealing with overly optimistic assumptions when it comes to your investments? Detroit's pension fund managers had assumed a rate of return on their annual investments of 8 per cent. I do not know about you but I have not seen 8 per cent on any of my investments for a long time.

Municipalities across the board are struggling with declining interest rates and rising costs. Do you know what types of investments are held within your financial portfolio? Could you possibly have some of your money invested in municipal bonds?

After 25-plus years in the financial services industry, I have seen and heard stories of both financial success and failure. However, the one common thread I have seen is that the people who are successful know what is going on with their money and those who fail usually do not have a clue what is going on. Most people do not plan to fail they simply fail to plan. It is incumbent upon us to become financially well informed about our money and to take responsibility for it.

So, when was the last time you reviewed your financial situation to make sure you do not end up having to declare personal bankruptcy?

To learn more tips and strategies to take control of your financial future please visit Jane Blaufus to order my book, WITH THE [STROKE] OF A PEN®, Claim your life. Please join in the 'Courageous Conversations' by following me on Twitter and on Facebook.

The Ruins Of Detroit
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The Caesars Windsor Casino stands in contrast to an abandoned warehouse in Detroit. (Photo by Bonnie Jo Mount/The Washington Post via Getty Images) (credit:Getty Images)
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A tree stump sits among the ruins of the Packard Automotive Plant, a 35 acre site where luxury cars were manufactured until the 1950s on May 2, 2013 in Detroit. (Photo by Ann Hermes/The Christian Science Monitor via Getty Images) (credit:Getty Images)
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Graffiti covers an abandoned building February 24, 2013 in Detroit, Michigan. (Photo by J.D. Pooley/Getty Images) (credit:Getty Images)
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In a photo shot on Tuesday, Feb. 14, 2012, a dog looks out from behind a wall in an abandoned home in Detroit. (AP Photo/Carlos Osorio) (credit:AP)
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Abandoned houses are painted orange as part of Object Orange: Detroit, Disneyland, Demolition, are located off of the Davison Freeway service drive in Highland Park, Michigan on Thursday, May 18, 2006. (Photo by Jeff Kowalsky/Bloomberg via Getty Images) (credit:Getty Images)
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Residents that live in Detroit's east end came out of their homes to watch the third abandoned building fire of the day at the corner of Frederick and Chene. (Photo by Lucas Oleniuk/Toronto Star via Getty Images) (credit:Getty Images)
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In a July 31, 2012 photo, a boat is dumped in a field in east Detroit. Abandoned lots, alleys and neglected parks in Detroit used to be a favorite destination for discarded tires and trash. But over the past few months they have become dumping grounds for the dead. At least seven bodies have been found in some of the most desolated haunts in a half-empty city. (AP Photo/Carlos Osorio) (credit:AP)
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A City of Detroit fire station that was recently closed is seen February 24, 2013 in Detroit, Michigan. (Photo by J.D. Pooley/Getty Images) (credit:Getty Images)
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Part of the Brewster-Douglass housing project site is shown in Detroit, Friday, March 18, 2011. (AP Photo/Paul Sancya) (credit:AP)
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The abandoned Detroit Public Schools book depository (credit:Flickr:country_boy_shane)
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Detail of unused books left to rot at the abandoned Detroit Public Schools book depository. (credit:Flickr:country_boy_shane)
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The view from the inside of the abandoned Fisher Body Plant in Detroit. (credit:Flickr:memories_by_mike)
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Graffiti covers a crumbling building February 24, 2013 in Detroit, Michigan. (Photo by J.D. Pooley/Getty Images) (credit:Getty Images)
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The General Motors (GM) world headquarters is seen February 24, 2013 in Detroit, Michigan. (Photo by J.D. Pooley/Getty Images) (credit:Getty Images)
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Detroit firefighters arrived on the scene of an abandoned dwelling fire at 2645/51 Frederick Street in Detroit's east end. (Photo by Lucas Oleniuk/Toronto Star via Getty Images) (credit:Getty Images)
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A sign advertising building rates is seen on an abandoned building on February 24, 2013 in Detroit, Michigan. (Photo by J.D. Pooley/Getty Images) (credit:Getty Images)
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An abandoned boat filled with trash sits on Conant Street in Detroit, Michigan, on Sunday, April 9, 2006. Detroit eliminated bulk trash pick up three months ago due to budget cuts. (Photo by Jeff Kowalsky/Bloomberg via Getty Images) (credit:Getty Images)
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A man walks past an abandoned house that is painted orange as part of Object Orange: Detroit, Disneyland, Demolition, located off of the Davison Freeway service drive in Highland Park, Michigan on Thursday, May 18, 2006. (Photo by Jeff Kowalsky/Bloomberg via Getty Images) (credit:Getty Images)
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Barbed wire blocks the entrance of the abandoned Michigan Central Station on May 2, 2013 in Detroit, Michigan. The station was opened in 1913, closed in 1988, and has fallen into disrepair since. (Photo by Ann Hermes/The Christian Science Monitor via Getty Images) (credit:Getty Images)
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Steam rises from a manhole at dawn among abandoned buildings and factories along East Warren Avenue on May 2, 2013 in Detroit, Michigan. (Photo by Ann Hermes/The Christian Science Monitor via Getty Images) (credit:Getty Images)
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A man walks past the abandoned East Grand Boulevard Methodist Chruch on May 2, 2013 in Detroit, Michigan. (Photo by Ann Hermes/The Christian Science Monitor via Getty Images) (credit:Getty Images)
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Two abandoned apartment buildings burn on Waverly Street in the declining Detroit enclave of Highland Park. Last year the Detroit Fire Department received 27,000 calls. (Photo by Lucas Oleniuk/Toronto Star via Getty Images) (credit:Getty Images)
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Michigan Central Stationis Detroit's most famous ruin, with the train station last open in 1988. Designed by the same architects as New York's Grand Central Station. (credit:Getty Images)
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An interior shot of the massive Michigan Central Station. (credit:Flickr:country_boy_shane)
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A worker measures the former Detroit Fire Department Ladder No. 10 firehouse on Mt. Elliott in Detroit, Wednesday, May 8, 2013. Detroit plans to sell seven unused firehouses and a renovated but long-vacant police facility that once housed horses as part of an effort to raise money and encourage redevelopment. (AP Photo/Paul Sancya) (credit:AP)
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A July 31, 2012 photo shows a memorial to two killed teens whose decomposing bodies were found July 27 in a field in east Detroit. Abandoned lots, alleys and neglected parks in Detroit used to be a favorite destination for discarded tires and trash. But over the past few months they have become dumping grounds for the dead. At least seven bodies have been found in some of the most desolated haunts in a half-empty city. (AP Photo/Carlos Osorio) (credit:AP)
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This Oct. 24, 2012 file photo shows a graffiti-marked abandoned home north of downtown Detroit, in background. (AP Photo/Carlos Osorio, File) (credit:AP)
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Graffiti covers an abandoned building at the former Belle Isle Safari Zoo February 24, 2013 in Detroit, Michigan. (Photo by J.D. Pooley/Getty Images) (credit:Getty Images)
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In this Dec. 11, 2008 file photo, pedestrians walk by the abandoned Packard plant in Detroit. (AP Photo/Carlos Osorio, File) (credit:AP)
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Members of the Detroit Fire Department exit after putting out a fire in an abandoned house in Detroit on Thursday, Feb. 21, 2013. Photographer: Jeff Kowalsky/Bloomberg via Getty Images (credit:Getty Images)
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Shuttered Packard motor car company plant in Detroit. (credit:Getty Images)
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In this Oct. 24, 2012, photo, a broken streetlight lies on a sidewalk east of downtown Detroit. (AP Photo/Carlos Osorio) (credit:AP)
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The abandoned Harbor Light Center, in Detroit, Michigan on July 21, 2012. (Photo By Raymond Boyd/Michael Ochs Archives/Getty Images) (credit:Getty Images)
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The abandoned Hotel Eddystone, in Detroit, Michigan on July 21, 2012. (Photo By Raymond Boyd/Michael Ochs Archives/Getty Images) (credit:Getty Images)
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An abandoned home is seen on February 24, 2013 in Detroit, Michigan. (Photo by J.D. Pooley/Getty Images) (credit:Getty Images)
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The abandoned First Unitarian Church, in Detroit, Michigan on July 21, 2012. (Photo By Raymond Boyd/Michael Ochs Archives/Getty Images) (credit:Getty Images)
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The abandoned Detroit Public Schools book depository. (credit:Flickr:country_boy_shane)
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The back of an abandoned building facing, in Detroit, Michigan on July 21, 2012. (Photo By Raymond Boyd/Michael Ochs Archives/Getty Images) (credit:Getty Images)
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Abandoned Detroit Central Depot shot from street. (credit:Getty Images)
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This Oct. 24, 2012, photo shows a broken streetlight base on a sidewalk east of downtown Detroit. When the World Series was broadcast that week, television viewers saw vibrant crowds and skyline shots of the city. Yet beyond the hot dogs and home runs, Detroit is struggling to cross home plate. (AP Photo/Carlos Osorio) (credit:AP)
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The General Motors world headquarters building is shown near an abandoned building March 30, 2009 in Detroit. (Photo by Bill Pugliano/Getty Images) (credit:Getty Images)
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Exterior of abandoned house in Detroit, a familiar sight in many neighborhoods. (credit:Getty Images)
Detroit Abandoned Buildings(43 of52)
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The back of the abandoned Michigan Central Station on May 1, 2013 in Detroit. (Photo by Ann Hermes/The Christian Science Monitor via Getty Images) (credit:Getty Images)
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An abandoned home in Detroit. (credit:Getty Images)
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An abandoned building in Detroit. (credit:Getty Images)
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In a July 31, 2012 photo, a trashed strewn street is seen in east Detroit. Abandoned lots, alleys and neglected parks in Detroit used to be a favorite destination for discarded tires and trash. But over the past few months they have become dumping grounds for the dead. At least seven bodies have been found in some of the most desolated haunts in a half-empty city. (AP Photo/Carlos Osorio) (credit:AP)
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Graffiti decorates the ruins of the Packard Automotive Plant, a 35 acre site where luxury cars were manufactured until the 1950s on May 2, 2013 in Detroit, Michigan. Sitting on the East side of Detroit, the former automotive plant is now a site for scavengers, urban explorers and graffiti artists. (Photo by Ann Hermes/The Christian Science Monitor via Getty Images) (credit:Getty Images)
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The abandoned Fisher Body Plant. (credit:Flickr:nitram242)
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The Fisher Body Plant in Detroit, which is abandoned. (credit:Flickr:memories_by_mike)
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Part of the Brewster-Douglass housing project site is shown in Detroit, Friday, March 18, 2011. (AP Photo/Paul Sancya) (credit:AP)
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Aerial photograph of the Michigan Central Station's Beaux-Arts facade in Detroit, Michigan. (credit:Getty Images)
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A firefighter stands by as his co-workers attempt to extinguish a blaze at the abandoned duplex at 2645/51 Frederick Street in Detroit's east end.The fire was the first of three on the same day. (Photo by Lucas Oleniuk/Toronto Star via Getty Images) (credit:Getty Images)

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