Beyond Paycheck to Paycheck

at September 28, 2007 in Top 40 Introductory Strategies. 3 Comments

Financial planning is not difficult.

You: Yes it is.

No, it isn’t.

You: C’mon!

Seriously. Want proof?

You: Sure.

I once scored more points during a high school intramural basketball game than I received on a calculus test later that same week.

You: That only proves you’re a very good basketball player.

Some of my very best friends would be happy to tell you otherwise. I scored a 16 on the calc test.

You: Wow.

That’s sort of like what I said at the time. But I’ve lived long enough to understand that my poor showing in calculus is now an advantage.

You: That’s some good spin.

Glad you noticed. I can assure everyone that you don’t need to know calculus, advanced math, or even like math at all to successfully manage your personal finances.

You: I guess that does make sense given your calculus experience.

Exactly. Now let’s talk about you. I know you can make it through Beyond Paycheck to Paycheck. Perhaps you already have. Was there anything in there you couldn’t learn?

You: No, not really. But there were certain parts that were more complicated.

Fair enough. Maybe you did need to read some sections more than once. Perhaps I didn’t explain those parts well enough, or maybe you were tired from a long day of work. But I’m not talking about the kind of confusion easily fixed with a re-read. Rather, where are the complicated formulas?

You: Subtraction was about as hard as it got.

The challenging graphs?

You: None, thank goodness.

There aren’t any, because financial planning isn’t difficult. It is not calculus.

You: It is not organic chemistry either.

Nope. Now admittedly there is plenty to understand, but use this blog and your copy of Beyond Paycheck to Paycheck as your ongoing reference guide. Also, use tools widely available on the Internet–at the web site of your 401(k) plan custodian, for example. Periodically visit totalcandor.com. Stay confident. You can do this.

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The financial community and Total Candor

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at September 27, 2007 in Media. 5 Comments

When we started Total Candor in 2005, we were optimistic the financial community would look favorably upon our mission to “empower personal financial decision-making through unbiased education.” Ultimately, we were hopeful that financial services firms would see us as a potential partner and not a threat. After all, we’re not trying to obtain end customers as traditional clients and thus we have always been completely non-competitive. But, as they say, you never know until you’re “out there.”

Fortunately, we’ve had an exceptional level of support which continues to grow. In just the last few weeks, we’ve visited and spread the word at every ING DIRECT café in the country. In addition, this article recently ran in the Financial Planning Association of Massachusetts ’s The Planner magazine.

Yes, in fact much of the financial community gets the true importance of an unbiased money education. And this spirit of partnership will continue to help everyone—the financial services community, Total Candor, and, most importantly, you.

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Strategy # 34: You are who you are and you do what you do

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at September 25, 2007 in Top 40 Introductory Strategies. 0 Comments

Perhaps you dreamed of being a radio station shock-jock but wound up hawking contact lenses to eye doctors. Of your childhood friends, Ryan is now a high-powered executive and Jason works for the fire department. Karen became a teacher and Michelle remains a perpetual student.

That’s great. Job titles alone do not determine financial destiny. Many paths lead to financial success. Although the typical fire fighter’s salary is not extraordinary, there are wealthy firemen. Similarly, well-paid executives with maxed out credit cards are not to be envied.

A “lower than someone else’s” salary is no excuse for failing to make good financial decisions. Don’t feel sorry for yourself just because you make less money than your boss.

You: But if I only made a few thousand dollars more, it would be so much easier to—

Nonsense. Right now, someone is looking at you, wishing for your salary. The fact that you can’t save is mind-numbing.

You: You’re not really talking about me. I make only $XX,000 per year.

This is not for a different reader–I am still talking to you. Think about a recent immigrant who makes the minimum wage (maybe), yet still manages to send money home every month. Yes, even at $XX,000, your salary would present many additional opportunities for the immigrant’s family.

On the other hand, a high income does not grant anyone the right to spend recklessly and ignore basic financial planning principles. Regardless of salary, folks who spend more than their income are making poor long-term financial choices. Even the well-paid are unexpectedly laid off. Those without a savings cushion find themselves in bigger trouble faster, as their spending habits are much tougher to ratchet down.

Ultimately, your income is important, but your habits are much more so. If you’re happy with your chosen profession, congratulations. You already beat one set of odds, so enjoy. When you retire, your savings determine your lifestyle. The status of your former jobs won’t even buy you a package of Metamucil.

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See me live this week: Los Angeles, CA

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at September 24, 2007 in Events. 0 Comments

If you’d like an opportunity to see me live and receive a free copy of my book Beyond Paycheck to Paycheck, you’ll have the chance to do so this week if you live in or near Los Angeles. Although the original seminar date of September 25 filled up quickly, we have added an additional date: September 26. As of this writing, you can still grab a seat (for free!), by registering at the ING DIRECT web site.

Tell a friend –or better yet bring one–this is one great opportunity to receive that unbiased financial planning education you’ve always wanted.

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A Fed rate cut is not a debt reduction strategy

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at September 20, 2007 in Debt management and Media. 0 Comments

I was interviewed for Tuesday’s CreditCards.com lead article Fed rate cuts and your credit card. As a result of the Fed’s decision to lower interest rates by one-half of a percent, many people will see a slight reduction in the rates they pay on certain debts - most notably, variable interest rate credit cards. But even for those who owe a lot on their credit cards, this is no big deal. Sure, while every bit helps and the rate cut will help borrowers, let’s be honest folks: for the guy who was paying 22.79% APR on his credit cart who now suddenly find that he’s paying only 22.29%, this is a big yawn.

If you have high interest rate credit card debt, your focus has to be on paying it off. Step one is to call your credit card company and try to negotiate a lower interest rate. Remember, while that credit card debt is ugly to you, in the eyes of the credit card company, you’re a rock star. They love you! They’re making lots of money on your account. You don’t like them; they like you. Sounds like an opportunity, doesn’t it? Use it to your advantage to get a lower rate. After your rate decreases, more of your hard-earned money can be put toward paying down the debt, not simply paying interest.

Lowering your rate significantly through a phone call can be a big step in the right direction for you and a great way to begin living Beyond Paycheck to Paycheck. A Fed rate cut? Hardly life changing for the typical borrower.

"financial education"

See me live this week: New York, Philadelphia, and Wilmington, DE

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at September 17, 2007 in Events. 0 Comments

If you’d like an opportunity to see me live and receive a free copy of my book Beyond Paycheck to Paycheck, you’ll have the chance to do so this week if you live in or near New York, Philadelphia or Wilmington, Delaware. Although the original tour dates filled up quickly, we have added additional dates. As of this writing, you can still grab a seat (for free!), by registering at the ING DIRECT web site.

Tell a friend –or better yet bring one–this is one great opportunity to receive that unbiased financial planning education you’ve always wanted.

"financial education"

Strategy # 33: Understand the implications of every financial decision you make

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at September 13, 2007 in Gary and Top 40 Introductory Strategies. 0 Comments

You: I just bought this whole life insurance policy yesterday. Was that a good idea?

It might have been, but I don’t know.

You: How come?

Well, I’d have a lot of questions to ask you before I could comment on what’s appropriate for your situation.

You: What kind of questions?

As in your income, assets, marital status, previous marital status, children, age of children, mortgage, other debts, degree of participation in your 401(k) plan, if it has a match, and so on and so on.

You: Well the guy who sold me the policy didn’t need to know all that!

No, not to sell a policy to you he doesn’t.

You: So did I get burned then?

I still don’t know because I still don’t know enough about you. But the fact that you’re nervous and asking me about a decision you made yesterday tells me that you may have good reason to be fearful.

You: So what should I do?

First, never make a financial decision you don’t understand. If you don’t feel comfortable with your understanding of something, have the person explain it to you again. If it still doesn’t feel right, sleep on it. It’s okay to be skeptical.

You: Really?

Absolutely. A good financial advisor never rushes you into a decision, especially if he wants you as long-term client.

Gary: C’mon, people, hurry up here. I got 15 others to see after you and I know they’re buyers. Are you in?

If you’re feeling sales pressure to make a decision quickly, it’s a decent indicator you might want to take a step back and talk it over with someone else. Taking care of your money, even in the presence of financial experts, is one way to be sure to live Beyond Paycheck to Paycheck.

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Strategy # 32: Trust yourself

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at September 11, 2007 in Estate Planning and Top 40 Introductory Strategies. 0 Comments

You: Trusts aren’t for me–they’re for rich people, right?

Many people assume trusts are only for the extremely wealthy. And while there is certainly a place for trusts among the affluent, a revocable living trust makes sense for many people living a typical middle-class lifestyle.

You: How so?

A trust provides for a cleaner passing of your estate—large or small—to your designated beneficiaries.

You: I’m sorry. I speak English.

Sorry. In other words, a trust helps get your money and the things you own to the people you want to get them–and makes less of a mess in the process.

You: But why would I need a trust if I already have a will?

Unlike a will, trust assets avoid the costs and delays related to probate.

You: So it’s one or the other?

Nope. It’s often both.

You: Why would I still need a will if I have a trust?

Although you can pass assets through a trust, you cannot pass children. If you have young children, you need a will to make it clear who should take care of your children (become their guardians) should pass away. Furthermore, a will is used for things that you choose (or forget to choose) to put into your trust.

You: So I need both.

Maybe. Nearly everyone needs a will. Whether you need a trust will depend on several factors including your level of wealth and the complexity of your family situation (married, committed partner, step-children, etc.). That’s why estate planning is one area that often makes sense to talk through with an expert - usually an estate planning attorney.

You: So what now?

Although most people associate trusts with the extremely wealthy, the moral of today’s financial planning education is to be receptive to the idea that a trust may make a bunch of sense for you.

"financial education"

Strategy # 31: If there’s no will, there’s no way . . .

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at September 10, 2007 in Estate Planning and Top 40 Introductory Strategies. 3 Comments

. . . that your heirs are going to be happy that you did not have one.

You: But I’m in my late twenties and no one is going to confuse me with a Rockefeller. What’s the rush?

Even if you aren’t likely to die with a large sum of money, a will can be critical.

You: Why?

If you have kids, for example, only a will can determine who will be their guardians in the event you pass on. A will, especially when you have either a family or significant assets (let alone both), is essential.

You: What if I die without a will?

If you die without a will (technically called intestate), then the state government determines everything from who takes care of your children to who gets your money (and things). The odds of the government’s decisions gelling precisely with your wishes aren’t too great.

You: Well I don’t agree with most of the decisions the government is making while I’m alive, so I guess that makes sense.

Fair enough. Don’t miss your chance to leave your family in good shape. Get a will.

We’ll talk about trusts and other estate planning documents, like powers of attorneys and health care documents, in the near future. For now, especially if you have kids and/or significant assets, get a will.

"financial education"

Smart Money and I discuss financial services firms and Gen Y

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at September 7, 2007 in Media. 0 Comments

Last week I was featured in Smart Money’s “The Pro Shop.” As you’ll see in the article, the reporter and I had an interesting discussion about what financial services firms are doing, can be doing, and are likely to begin doing as the importance of Gen Y continues to grow.

Let me know what you think. How are the financial services firms treating you?