Reflection: The Art of Future Triumph

How long has it been since you looked through one of those old photo books that your mom keeps on the shelf at home? If your like me it’s been a while! But just imagine flipping through the pages, looking back at your childhood. There are probably a few pictures of your first day at school and that trip you took to six flags on family vacation. Ah nostalgia… wait a minute, this is a personal finance blog. What does picture books and warm fuzzy feelings have to do with financial success? Everything.

Do you remember how good it felt the last time you paid off an auto loan? How about the last time you paid for all your Christmas gifts with cash you had been saving all year? It feels awesome! There is almost no better feeling than when you make some really great financial decisions. The problem comes when people forget that great feeling and quickly try to go out and rack up new debt. Rather than taking some time to bask in the glory of debt free living they immediately go out and  finance a new car!

I think the key to continual success comes from trying to constantly stay in that realm of debt free nostalgia. You have to reflect on the great decisions you have made in order to continue to make them in the future. Maybe it should be as literal as taking a picture with your paid off car, or snapping a print screen of your zero credit card balance at the end of the month – that way you can go back in a few months to find inspiration!

I am a huge fan of Dave Ramsey, his book “Total Money Makeover” single handedly inspires me to continue to blaze the trail to financial success. I literally try to re-read his book a least once a year and I reference his concepts every single day. The day I read Dave’s book marked a significant point in my life when understanding just clicked for me. I already had the head knowledge, but it took the personal stories and his no nonsense approach for me to find the application.

I use “Total Money Makeover’ as a reflection tool for my own life. I take that time to see where I have come from and where I am now. It’s just like an exercise routine, if you don’t know what you looked like before you started then it is going to be really hard to see results as you go so you can stay motivated all the way until the end.

Savings Success 101: Avoiding Bank Fees

There has been a lot in the news lately about the exuberant  fees that many of the large financial institutions are charging. Overdraft fees, statement fees, stop payment fees etc. etc.

Here is a little lesson in commercial bank management: Traditionally banks made money on the “spread.” That is, the difference between what they pay in interest on deposits and what they earn on interest from loans. Pretty straight forward right? Well not so much, investors began to demand higher and higher returns on their investment, so banks had to find another large revenue stream. Enter the ridiculous fee.

It probably started innocent enough, first a fee here to deter account abuse, then a fee there to cover costs associated with a specific product. But then they realized that there was some money to be made, after all consumers never look at their bank statement, right?  Boom – the account maintenance fee is born.

You know how the fee story progresses, after all you are the one paying these fees. But let me share the most ridiculous of all ridiculous with you. In a recent USA Today article Sandra Block writes about the latest bank fee. A $29 to $99 fee will be charged to some credit card holders who have never carried a balance and have never paid a late fee. WHAT!!!

Yes, you read that correctly. It will now cost you, in real dollars, to be a responsible borrower. 

Listen, I have never been one of those advisors who wants clients to swear off credit cards. I have been of the notion that there is a time and place for credit cards, given a certain level of responsibility. But there comes a point where enough is enough…

Here comes my shameless plug for Gallup FCU and other credit unions all across the country. The credit union mission is “Not for profit, not for charity.” A responsibly run credit union should be abiding by this mission in all they do, including fees. Gallup FCU publicly posts all of our fees on our web site. Our goal is to have as few fees as possible while maintaining an appropriate level of accountability with the member. I am not saying that we don’t have any fees, we do. But the fees we carry are typically fees that are designed to deter members from abusing their account or for new products that are cost prohibitive without subsidy from a fee. We want to be as open about or fees as possible, if you ever wonder why we charge a fee for specific things or how we price those fees, please do not hesitate to ask.

The bottom line is that fees eat away at the progress you are making on your savings pilgrimage. You have to be aware what you are paying for in each of your accounts. This doesn’t only apply to your bank account, you have to evaluate all of the places you have money. What does you credit card charge, how about your 401(k), those mutual funds you own, the life insurance policy you have or the advisor you use? If you aren’t sure, go find out! 

“The Blame Shifter”

One of my favorite financial bloggers, Carl Richards at Behaviorgap.com, recently wrote an article called “The Assumer”. His whole premise is that the financial planning community needs to change their process for financial planning because they assume too much, I agree. Financial planning is a process, it is not a one and done document – hence the family CFO approach to financial planning that I am so fond of.

While I was thinking about “The Assumer” this week , I started to think of a different disease I like to call “The Blame Shifter.”

A Blame Shifter is someone who always attributes  financial  success  to their personal great decisions and financial failures are someone else’s fault. I am sure you are picturing someone who fits the description.

They have large credit card balances because their spouse spends out of control – No, it’s because they don’t have a budget.

They paid their bills late because their employer doesn’t pay enough – No, it’s because they live outside of their means.

They made a bad financial investment because their banker/advisor told them to do it – No, it’s because they didn’t surround themselves with the right resources.

They “just found out” that they have past due bills – No, they just decided to wake up and get involved.

and my favorite, most common Blame Shifting excuse:

I am just unlucky, that’s why I don’t have any retirement savings – No, they don’t have any discipline, they didn’t create artificial discipline and they didn’t bother to ask for help.

Are you still reading? Did I get your blood pumping – me too!

Here’s the deal, we are all Blame Shifters at one time or another during our pilgrimage. The place where you will determine success or failure is at these moments. Let’s face it, each and every one of us can think of a financial setback; that’s because sometimes it rains and sometimes it pours!  It is pretty darn easy to blame those setbacks on other people or the circumstances but that doesn’t help you learn. The only way to climb the tall mountains is to arm yourself with knowledge and understanding. When you make a mistake try to understand where you went wrong and how to avoid it next time. Sometimes you might need help, ask for it!

Your strengths and your finances

Ronny and I have been spending some time over the last year thinking about the Clifton Strengths Finder assessment and its applicability to personal financial success. We had the opportunity to take part in a 3 day Strengths Performance Coaching seminar here at Gallup and we were really immersed in the psychology of strengths and how they interact together. Typically, strengths coaching centers around helping an individual understand their talents and how they can leverage those talents to be successful with goal setting and in team interactions. But what if we took it a few steps further, what if the coaching went from personal goal setting to financial goal setting to full blown financial coaching?

Let’s face it guys, the traditional format of banking is broken. A bank is the only business on earth where the customer is truly intimidated by the service provider – well maybe the auto mechanic is another. What would happen if the loan officer at the bank was a coach? What if rather than trying to hide the requirements for approval with smoke and mirrors like the Wizard of Oz, loan officers coached members on the underwriting process and helped them make good decisions with their borrowing?

Those of you who have had the opportunity to take part in the Strengths Finder assessment know about the power of understanding your talents. Here at Gallup we get to think about talent every day and really get to put our knowledge of strengths and team interaction to work – that’s part of what makes this such a great place to work! What I have been meditating on for the last several months is what would a financial institution based on strengths and a coaching spirit look like? How could it impact the way people feel about personal finance? How engaged would those members be?

How much more successful would your savings pilgrimage be if you really understood your talents and realized the power of your strengths with your finances?

Living life through the lens of your strengths and talents will change your perspective – ask one of the 3 million people that are armed with the knowledge. For most people, thinking about their bank account is a struggle, saving is a tall mountain and planning for the future is as uncertain as the lottery. Finding out what your talents are and then working with a coach to kick butt on the things you struggle with will change your life. Take that thought and put it in the realm of your finances… I am already getting excited.

We are going to run with this idea, we believe that relationships matter and that by helping you succeed we are helping our business succeed. There is a certain intangible piece to this business, people still value community and integrity. People want more than a secure spot to park a few dollars and you know what, they deserve more! Think about your talents this week – I would love some feedback on how you think you could apply your strengths to your savings pilgrimage.