The Unofficial Start of Spring: April Fool’s Day

This was Ronny’s office this morning courtesy of yours truly. Happy April Fool’s day!

For me, April Fool’s day is the unofficial start of spring. Temperatures are in the 70’s and the days are longer, only a few more weeks before summer! It’s about time for some spring cleaning but not just around the house, it’s time for spring cleaning of your personal finances too.

Ron Lieber recently published and article in the “Your Money” section of the New York Times online. His article includes a great checklist of things you should be doing to “tune up” your personal finances this spring.

The checklist includes topics such as Investments and Retirement, Loans, Credit, Planning, Insurance and Consumer issues. This is such a powerful tool that covers areas of life that you might overlook otherwise. Take an hour this weekend to work through the list, it will give you some really nice pointers for change and hopefully energize you to get back on the path to financial freedom.

Call me this week if you want to set up a time to talk about your financial checklist.

The 5 Policies You Shouldn’t be Caught Without

I have always been one of those advisors who is a reserved skeptic when it comes to insurance.

I am currently taking a few classes working towards the Certified Financial Planner designation and one of them is a risk management course. I went into the course excited to learn more so I could really make a great debate against insurance products… isn’t it funny how those are the famous last words in so many arguments?

I should prefaces this article by saying that I do not sell insurance, nor do I anticipate selling insurance any time soon. So I am really not trying to convince any of you that you should call me up to buy some. I do have a couple friends who would be  more than happy to help you out though!

When it comes to insurance I think the over arching motto to remember when thinking about a policy is: never buy something you do not understand. With that being said, here is my list of insurance policies that you should never be without.

Renters/Homeowners Insurance – You cannot stay in good graces with your mortgage company if you don’t have a homeowners policy but many renters think that they can get away without it. Don’t be silly, a renters policy costs about $20 a month and is well worth it. If your building burns down, if you are burglarized or if someone is hurt in your space you will wish you had this.

Automobile Insurance – I think every state requires that you carry insurance on your vehicle to register it. Most people don’t understand how much coverage they have or need. Review your policy to make sure you have enough coverage, the last thing you want is to be in a terrible accident and not have enough insurance.

Health Insurance – If you are young and healthy, good for you. But you still need some form of health insurance, even if it is just  a catastrophe policy. The leading cause of bankruptcy in this country is due to medical bills. Don’t be a statistic, get some health insurance – oh by the way, you will be required to have it in 4 years any way thanks to the new health care legislation.

Disability Insurance – The odds are that you will not die prematurely, but the odds are fairly high that you will either be temporarily or permanently disabled. In terms of the impact on your finances disability is far worse than death. Loss of earning power and increased medical expenses will cripple your assets. This leaves your family with the responsibility to pick up the slack. You need this policy, check with your employer benefits program, often they have an affordable policy available.

Life Insurance – There are a bunch of different types of life insurance policies out there. Most people are fine and dandy with a term life policy. Remember what you are insuring against here, premature death. You want to have a policy that covers your present debt obligations such as your mortgage and covers your future earning potential. Whole life policies are where insurance agents get a bad wrap, most people do not need these types of policies but they are pretty profitable for the agent. Remember, only buy what you understand!

The definition of insurance is: “a financial arrangement that redistributes the costs of unexpected losses.” It’s not an investment guys! If you meet with an insurance agent and they try to sell you a policy under the pretense that you are buying an investment – run away as fast as you can.

How Much Do I Need to Retire?

A friend of mine forwarded me a sobering article this week called “$1 Million Doesn’t Cut It for Retirement” by Joe Mont. I would urge you to go out and read it this weekend but the basis of the article is this: Conventional thought for the last decade or  so was that you need $1 million to retire comfortably, the new perspective is that you will need double that amount.

Does that notion melt your mind?! DOUBLE!

I think  a lot of times we don’t fully grasp how much 1 million is. So to put it in perspective, if you had $1,000,000 today in a savings account earning 2% you could spend $1000 every day for the next two and a half  years or you could spend $10,000 a month for more than 14 years before you ran out of money. That’s a lot of money!

But according to the article “…Seniors are the only generation that may come close to needing only $1 million. Forty-four percent of advisers said $500,000 to $1.5 million is sufficient for average families in that age bracket.”

So how much do you need? Well there is this little factor called inflation that you have to take into account. Inflation is the depreciation of your purchasing power over time. For example, if a pen costs $1 today and next year that same pen costs $1.03 then there was 3% inflation over the year. The average inflation rate over the last 100 years has been about 3%.

So how much do you need? Well the answer is… it depends. Because of inflation the younger you are the more you will need. Joe Mont’s article suggests that Generation Y (ages 18 to 26) needs to save at least $2 million to $3 million and  Generation X (ages 27 to 42) should save at least $2 million.

What can you do to reach the goal and have enough for retirement? Well, no matter how much time you have whether it is 2 years or 20 years it is never too late to start saving. As little as $100 per month will help you reach your goal. If you saved just $100 per month for the next 20 years and earned an average of 8% on your investment your balance would end up at a little less than $100,000. There is a start!

Normal

I started working as a teller at a local bank during the last few years of college. I remember when I first started doing transactions for customers and seeing the  balances in their checking account. It was eye popping for me to see the range in account sizes. This was where I first realized that I didn’t want to be “normal” any more, I didn’t want to drain my checking account to $0.15 every two weeks. “Normal” is in quotes because it is all too normal for this to happen.

We recently had an operations manager contact us looking for ways to help improve the financial education and in turn the financial positions of his team members. He was looking for a way to quickly infiltrate his large team with impactful information and strategies that will help them change their habits. He doesn’t want his staff to be normal any more!

When you go to do missions work they say that if the people are hungry they can only hear the growl of their stomach and not the message you are bringing, so you need to feed them. The manager that contacted us knows that if his team members are struggling with their finances, all they can think about is the next paycheck. These employees are bound by their needs and are not free to focus on the work at hand.

So how do we show the world that you do not have to live paycheck to paycheck? How do we communicate that their quality of life is being depleted by draining their checking account?

“Not until the pain of the same is greater than the pain of change will you embrace change.” Dave Ramsey

For me the pain of the same was living life as a broke college student, always worried that if my truck broke down I would be in serious trouble. I knew that I didn’t want to add my wife to this precarious situation and I wanted more for the future of our new family.  But the only real change happened when I realized that I could no longer be “normal”. Normal is just not good enough, normal is being one missed paycheck away from disaster. Normal is having credit card debt, leased cars and a McMansion in the suburbs.

As with most things worth doing, the steps to break the cycle are clear but difficult:

1. Put together an emergency fund.

2. Pay off your credit cards, car loans, student loans and any other type of consumer debt.

3. Build up your emergency fund to 3 – 6 months worth of expenses.

4. Save 15% for retirement.

If you do these 4 things then you wont be normal any more.

Patience is More Than a Virtue

Growing up my dad would always break out into song when my sister or I would start to whine. “Have patience, have patience, don’t be in such a hurry….” you might have heard the same song at some point in your life. He would always follow the song with a statement like “patience is a virtue”.

I’m here to tell you that when it comes to wealth, patience is more than just a virtue - it is solid gold.

In my post last week Curiosity Made the Rich Man, I wrote about some people that I have worked with and what made them successful in terms of the accumulation of financial assets. I narrowed down the traits that these clients had in common and I was able to identify two core values: Curiosity and Patience.

As important as curiosity is when it comes to money, patience is either equally important or maybe even more important.

The major finance reason to maintain high levels of patience is because of the cyclical nature of markets. We all know that the business environment has its periods of both boom and bust. But the real question is why does it matter to have patience? Carl Richards from www.thinkingcarl.com describes the need for patience due to the “Behavior Gap”. Check out what Carl has to say about investing:

“During the last few years, you may have noticed that your returns fell short of the returns you kept reading and hearing about in the media. If so, you’re not alone. A fund’s reported return is only part of the picture. The other half, well, it’s not always pretty, and you rarely, if ever, hear it mentioned. Driven by investor behavior, the investor rate of return doesn’t always match a portfolio’s gains or losses.

Let me explain.
Your potential to earn the fund’s published return rate is based on two criteria:
1. You bought AND held the fund for the entire time.
2. You didn’t add or withdraw any money.

Sounds easy, right? The reality? Few people actually invest this way. Instead, investors chase past performance, buying funds too late (after they’ve already peaked) or selling funds too early (before they turn around).”

I love this explanation. Because investors are driven by human emotion they tend to make decisions at precisely the wrong time - hence Carl’s phrase the “Behavior Gap.” Without massive amounts of patience and self control the average person just cannot wait out losses and take advantage of gains.

Have you ever met someone who wanted something so badly that they end up becoming reckless and end up flailing around like a two year old at the grocery store who wants a toy? It’s not very productive is it?

For most of my life I was a long distance endurance swimmer. Endurance sports are different than other sports most people are familiar with, it’s all about technique, efficiency and - yep you guessed it patience.

When you watch a really talented endurance athlete it looks like they are barely trying for most of the race. Think of Sven Kramer from this year’s winter Olympics. This Dutch long track speed skating phenomenon is so efficient that it looks as though he is barely trying while he sets world records.

I can speak from experience that in reality it is all about self control, establishing sustainable pace and finishing strong.

It’s funny how easily sports analogies translate to personal finance, but it is absolutely accurate. Guys, I am here to tell you that the most financially successful people I have worked with did not get there by day trading, winning the lottery or inheritance. These folks made a decision early on to be financially independent, then they set the course and followed the path no matter what was going on around them. Oh and it helped that they were a little curious about the tools that were helping them get there.

Curiosity Made the Rich Man

I often speak at different team meetings all across the city and have even been known to get outside of our state on occasion. Everyone knows that when you start to put together a presentation one of the most important things to do is think about your audience. You really want to tailor your topic to the people who you are engaging. Time after time, I have found the common denominator that almost everyone has when it comes to money.

Most people want to here about wealth and how to build it.

So a couple years ago I started thinking about the people I have worked with and what made them successful. I found that I should really break out success in two ways:

1.) Satisfaction – I have written a few times about this topic in blogs such as Find Satisfaction in Your Means and News Flash: Your Hero Might Let You Down. The main point being that money will only magnify your situation. If you are happy and satisfied in your life with modest means then adding significant wealth will only expand your satisfaction level.

2.) Accumulation of significant financial assets – Wealth is more than just money but for the purpose of this study, looking at financial assets helps to narrow it down.

So I made a list of the people that I have spent time with that embody both of my success criteria. Believe it or not the list is rather short - only about a dozen names or so.

And then I started to think about what else they had in common.

Outside of the obvious factors such as good annual income, effective savings habits, a little luck etc. I really came down to 2 commonalities that these individuals shared.

Curiosity & Patience

Let’s start by looking at curiosity. When talking about investing Warren Buffet once said “We try to stick with businesses we believe we understand.” I’m sure most of you have heard that quote, but how many of us truly take it to heart when thinking about our own personal investing? Mutual funds, ETF’s, index funds, stocks, bonds and everything in between – there is a lot to get lost in. The few that made my list have a natural curiosity that makes them very dangerous. These folks are constantly asking for more information. They invest in their own companies because they believe in their own abilities and they understand the business their in. They make investments in their education because they believe they can generate more return with more knowledge. They buy ownership in other companies because they understand how they make money and can project future value. And maybe most importantly, when they do not understand something they are not afraid to ask for explanation.

I recently heard a very tenured asset manager from a major local investment firm, speak to a group of financial professionals. One of his quotes especially struck me. He said, “You can either humble yourself now and take the time to ask questions or you can be humbled later when you fail.” That’s pretty blunt but extremely powerful if you are willing to listen.

More on Patience later….

CPA or Software

People look at me funny when I say that this is my favorite time of year. I love tax time. It’s true, I am a nerd - I think my love for it has to do with the planning piece. That‘s neither here nor there. During this time of year, many people ask me which I think is better, tax software bought off the shelf or a professional CPA.

I have to disclose my bias here, I am an accountant by training and most of my college buddies are practicing in firms across the city. However, I do see value on the other side of the fence as well. Let me break it down for you.

Software

I must say, the idea to create tax software was one of the better uses of technology over the past 20 years. What did we do before the question and answer personal income tax format!? At the formation of our tax code, the income tax system and the 1040 specifically, was intended to be simple enough for an 8th grader to complete. Whether or not the government succeeded at that level is… debatable. Truth be told, the software out there is a fine solution for those of you who have a relatively straight forward tax situation. Even if you had a scenario such as the first time home buyer credit take place last year, the software is robust enough to easily guide you through the maze. Most software now even offer a storage function that saves your past returns in electronic format for up to 3 years for no extra cost. (**side note: please also print out a copy of your return and save it for at least 10 years**) This is nice and can provide a valuable reference point when doing your taxes year to year assuming that you completed your return correctly in the past.

Which leads me to my critic of the tax software world. Ultimately the software is only as good as the user answering the questions. Let’s face it, most people do not have a clear understanding of the forms they are completing and would have no idea if a specific schedule were missing. At the end of the day this is the biggest and most looming issue out there, so much so that any other issues I might have had are irrelevant.

Certified Public Accountant (CPA)

I am only going to talk about CPA’s here, there are companies out there that offer tax preparation by folks who are not CPA’s, I would just as soon buy the tax software and attempt it myself. A CPA is a professional who has completed rigorous collegiate education, has passed an even more rigorous series of exams and has logged significant work experience. Needless to say, using a CPA will probably cost you a few more bucks than purchasing tax software but you get what you pay for.

The biggest plus that comes from working with a CPA, in my opinion, is not only the fact that you have a seasoned professional completing your forms; but it is that they actually sign the return as the preparer. If your return is audited by the IRS, the CPA that signed your form can act as support when generating responses and can help answer your questions about what is being requested.

For many people the cost of working with a CPA might not make sense until their financial situation becomes increasingly complicated. Every person’s financial scenario is completely different, choosing between tax software or a public accountant is not only a dollars and cents choice but also a personal preference. Do what feels comfortable.

Similar Name but Completely Different

Many times people confuse Gallup Federal Credit Union with Gallup Inc. and I would like to set the record straight.

Let me first say that Gallup Inc. is our sponsor corporation and we absolutely love and appreciate them for all the support and encouragement they provide to us. Yes, our office does reside in their building and yes we have access to all of the resources that a normal Gallup employee does. It is truly a relationship that we will never even begin to take for granted, they are very good to us.

It is important, however, to clearly define what type of influence Gallup has over the credit union and our member information. Gallup Federal Credit Union is a federally insured credit union that is regulated by the NCUA (our version of the FDIC) and is held to the same privacy laws that  all financial institutions abide by. Our member records are held with the highest privacy standards and our books are separate and independent from all sources. In a word, the access that Gallup Inc. has to private member information is none. 

People have also, on occasion, expressed concern to us regarding whether or not the credit union is influenced by Gallup Inc. when making loan decisions. Let me tell you, our loans are meticulously inspected by our own internal audit committee and by independent auditors as well as our federal governing body, the NCUA. We are required to document all reasons for both approval and denial. If there were ever any indication of discrimination based on any factor, including relationship with an outside entity, the penalties and fines for such a violation would be devastating.

The real bottom line is that although we do share a similar name and location these two entities, Gallup Inc. and Gallup FCU, are independent of each other. Because of heavy regulation there cannot be and there is no information  sharing regarding private member data. Gallup Inc. does not have access to your loan files, deposit account balances, transaction history or even the fact that you are a member. All of this information is extremely private.

One of our most important assets is our reputation as a financial institution. In fact, if we were to ever tarnish that reputation by sharing inappropriate member information, our business could be compromised beyond repair. We realize that the appearance of independence may be blurry at times because most of you see us every day but we want you to know that your information is protected.

If you ever have a concern or question regarding your privacy please do not hesitate to come talk with us about it. The last thing we would ever want is for you to hesitate to use our services because of a fear that your information might be used inappropriately.

End: The Holidays; Enter: The Credit Card Bills

-January 14th… Just a few more weeks and the credit card statements will start rolling in from the holidays - Ouch. How much did you spend this year? How much were you planning on spending this year?

I’m not going to lie, this was an especially expensive holiday season for us and to be completely honest I don’t think we were prepared nearly enough for it.

True Story:

Every Holiday season we really hit the Holiday hustle hard, we log approximately 3000 miles on our car during the course of about 4 weeks. Our family really does not have a huge gift list since we do not have children yet, so it  seems like the Christmas saving we have set aside will be enough – wrong. I should know better, I talk about this every day, but for some reason I neglected to budget in our Christmas savings for travel expense.

So there we are, cruising down I-29, singing our lungs out to the music; when every drivers worst road-trip nightmare happens. Thump! thump thump thump thump…. Flat tire. Not just one, but both rear tires, to the rim. Now mind you, we are in the middle of no where, it’s – 14 degrees outside, almost dark and I only have about 1/8th of a tank of gas left. If there was ever a memory making family moment, this was it.

To make a long story short, after a series of fortunate events we made it home. The not so fortunate event was the purchase of 4 new tires = $600.

We were not prepared. This expense was just not in our holiday spending plan. Should I have known that there was going to be some travel related expenses? Absolutely. Could I have set some money aside for this type of cost? Sure. Did I? No.

Yes ladies and gentlemen, Christmas happens the same time every year. 

Believe it or not there is a solution. At Gallup FCU we call it a “Holiday Savings Account” and I have already changed my automatic savings contribution to include travel expenses next year. You can do it too! A Holiday account is simply a savings account earmarked for Christmas – you can open one at any financial institution.

If you want more information about our Holiday account give me a call! This is a great way to keep your sanity next year when the Holiday hustle hits.

News Flash: Your Hero Might Let You Down

I find a lot of times when I write I am not only speaking to you the reader but also to myself – usually it is mostly to myself. A few months ago I wrote an article about finding satisfaction in your current situation. Boy, that message really resonates during the holiday season on so many levels.

I have been thinking a lot about finding satisfaction within your means both through the lens of personal finance but also as an individual. Being waist deep in the holiday hustle, I think it is important to think about your current satisfaction within your family’s situation. Are you happy with your resources? Are you happy with your giving over the last year? What would you change next year?

Like most finance professionals, one of my professional hero's is Warren Buffet. He lives here in Omaha, not far from the University of Nebraska. He is one of those guys that, when you grow up here, does not seem like he is that big of a deal. For the record, he is a big deal.

So just like I do with any hero, I watch his interviews on TV, I follow his company and their holdings and of course I read his biographies. In particular I read “The Snowball: Warren Buffet and the Business of Life”. The book was a volume in itself, outlining each of his major business deals as well as his personal family information. Like any human, Buffet has some particular quirks that make him unique as an individual. You know, weird food preferences like cheese sandwiches and interesting past times like model trains. But one quirk jumped out that really made me think. The book discusses Warren Buffet and his attitude toward giving away money. According to this biography, giving away cash makes Buffet physically ill – yes, to give even $1 makes Buffet’s stomach turn.

Now, I don’t generally like it when people speak poorly about my hero’s, it kind of makes me feel like someone is kicking my dog.

But I have to say it… he seems like a Scrooge.

Don’t get me wrong, I understand that Buffet has become the second richest person on earth by being cast iron, but becoming physically ill when you give money away? Come On!

So here is where the satisfaction piece comes into play. Don’t you say to yourself “If I had that much money I would give it to such ’n such” – I know I do. Well, Warren has that much money and he still doesn’t want to give it to “such ‘n such”.

There comes a point in life and in money where you have to say, “ok, it is time to starting living like I am satisfied”. I would argue that for every single one of you, including me, that day is today.

True Story:

I recently had an interaction with one of the most gracious people I have ever met. I started the conversation by complimenting him on some new construction he had recently finished. Rather than simply accepting the compliment and moving on, this man turned the conversation around and complimented me for mentioning it! I could not believe it, he was actually complimenting me for complimenting him – and now I felt really good about my compliment!

I walked away from that conversation saying, DANG! I want to be just like that guy! At some point in his life he made a choice to be so satisfied with his situation that the satisfaction oozes from his body.

I’m going to make the prediction right now: You will never have enough __________________ (enter whatever it is you would like more of) until you find satisfaction with your current situation. This holiday season I am going to choose to be satisfied, I challenge you to try it too.

There Is Something To Be Said For Peace Of Mind

When people start to take the journey of paying off debt they try to get all scientific about it. They say “Well I have a college degree, so I should synthesize these numbers and put together a debt payoff strategy that most completely displays my intelligence.” Then they go and spend all afternoon putting together an Excel spread sheet that best accomplishes the display. More often than not, that is where the excitement ends.

Keep it simple, there is something extremely psychological about debt.

Don’t let your mind keep you from winning! Pay off the smallest balances first – this way you can have a win right out of the gate. That win gives you an instant blast of peace of mind. You are going to beat debt! Next, pay off the second smallest balance with the payments you were making on the recently paid off loan, and so on until all the debt is gone.

The “Debt Snowball” approach works, plain and simple. There is no high finance involved – don’t even worry about the interest rates! Once you get the ball rolling you will find success like you would not believe. I always envision a Looney Toon's espisode where Wile E. Coyote is rolling down a hill to catch the Road Runner but is rolling so fast that he starts to pick up all kinds of dirt and debris. Do the same thing to your debt - START ROLLING!

Listen, if you still want a spread sheet, you can do that too. But make your first snowball payment before you open Excel.

The Fundamental Benefits of a Credit Union

A reader pointed out to me last week that I have never really spelled out what the big deal about credit unions is. I think I can break it down to three major points: Ownership, Mission and Service. I would like to say before diving into this topic that although all credit unions are charged with these same values, not all manage them with the same level of importance. When thinking about joining a credit union or when you evaluate your current credit union, understand that management has a significant impact on these values. You should get to know the manager of your local credit union, if they are aloof and inaccessible you may consider a different credit union. But I digress – on to the meat and potatoes!

Ownership

Ownership of a credit union is the first fundamental difference between credit unions and banks. A bank is owned by shareholders. Ownership of many banks is literally traded on a major exchange such as NYSE or NASDAQ. Some banks are family owned, this means that one family or a group of families own controlling interest of the bank and it is not publicly traded. Here’s the problem with this; I own stock and mutual funds, just like most of you, and I expect one thing from those investments - return. Rightfully so, I own it! I would have never invested in something that I wanted to break even. Why would an investor in a bank expect anything different? The problem is that the way a bank generates increasingly larger income each quarter (to avoid disappointing it’s owners), is by increasing fees or investing their own capital in higher risk investments – can you say mortgage backed securities?

Credit Unions are owned by the members. That is why we call them members and not customers! Every potential member has to meet the eligibility requirements to join, here at Gallup FCU that requirement is that our members must me Gallup employees or family members. There are many credit unions where the only qualification is that you live in a certain county or city. Either way you slice it, our members (customers) own the credit union. That means that there is no conflict of interest! Our owners expect return, so whatever we make in profit we fold back into the credit union in the form of new products, lower interest rates on loans and higher interest rates on deposits. We do not send out our profits to outside investors or other institutions. Big difference!

Click here for more resources on personal finance and savings tips!

Mission

“Not for profit, not for charity but for service.” All credit unions are charged with this mission. At a well run credit union these words are the core values behind every product and every employees actions. Credit unions are formed on the fundamental idea that banking should be based on community, in fact, that is how a credit union is run. A group of people pool their money together to be able to make loans to one another and benefit from the income generated from those loans.

I like to think of it in terms of the classic movie “It’s a Wonderful Life'”. George Bailey runs a Savings and Loan – which is different from a credit union but not too far of a stretch for this example. Do you remember the scene when there is a run on the savings and loan? I sure do, very distinctly – George yells above the noise (paraphrasing) “Now wait a minute! Your money is not here in the bank it’s in your house, it’s in Frank’s house and Ethel’s house…”

This is important because as times have changed, credit unions have not really gone away from that business model. Literally my deposit at the credit union could be used to fund an auto loan for my friend in accounting who is also a member. Now that is not to say that I don’t have access to my funds whenever I need them, the credit union is required to have enough money (called capitalization) on reserve to be able to handle all of your withdraws.

There is a certain level of ownership I feel being a member. At Gallup we call that engagement, I understand that my role as a member is important to the success of the credit union. I like the fact that when I put money in my savings account I am helping the credit union make a loan to another member. I also like the fact that when I need a loan, the interest I pay goes to all my fellow members in the form of interest paid on their savings accounts.

This is getting long but my favorite difference is coming up. Please keep reading!

Service

I have said it before, what a difference it would make if there was less selling and more teaching in the banking world? A credit union is about the closest place that you will find teaching when it comes to consumer banking. Speaking from my personal experience, I do not take much satisfaction in pumping out 10 auto loans a day. Clearly the fact that I spend several hours a week writing this blog demonstrates how strongly we feel about education. But service is more than education, it is the culmination of all the parts I have been writing about today. As a member you are an owner and a credit union will treat you as such. As a member you are part of a community where your deposit and your loan matter. I don’t know about you, but I like to matter. I like to feel like my bank is working for me and that my deposit is significant, that is where credit unions succeed above the rest. Come experience the credit union difference.

“Bailouts are for Boats”

If I have a good grasp on my readers, I think I can say with some certainty that majority of you fall into two categories: 1. You use a local credit union as your primary financial institution. Or 2. You use a “Mega Bank” for your banking needs.

I know, very insightful.

Community financial service providers are really trying to leverage the current insanity of the financial system to grow their businesses. What a better time to start advertising campaigns then when your competition is making a fool out of themselves, right? North Coast Credit Union in Bellingham, Washington is advertising using the slogan “Bailouts are for Boats” – very catchy.

You have heard me say it before, I believe all people have the same underlying desire. To have personal service from a professional who is more of a teacher and less of a sales person.

This desire didn’t come from a new found knowledge of phrases like credit default swap, collateralized debt obligation or subprime mortgage. The underlying urge to return to community  was there well before the economy took a tumble, the tumble was just the catalyst to start changing.

A lot of people are drawn to the “Mega Bank” because of a perception that it is just more convenient. “They have 50,000 ATM’s across the country, they have online banking on my phone, they let me print a picture of my pet iguana on my debit card and if that wasn’t enough, last time I was in their branch they offered me some rolling luggage for filling out a credit card application.”

True Story:

I have not had a need to physically go to a branch or an ATM in probably 3 years until last month. All I need is my debit card and online banking! Last month, my wife and I went to our annual Labor Day  family reunion in Minneapolis, Kansas. Yes you heard me right, not Minnesota, Kansas – population 1000.  In Minneapolis cash is still king and checks are still accepted, we haven’t carried checks since 1995.

We needed cash to pay for everything but like I said earlier, I haven’t been to an ATM in 3 years, so I never have cash. I desperately needed $50 to get through the weekend!

So you are probably saying to yourself, well Andrew, if I had been there I would have just whipped out my Wells Fargo debit card and gone to the local ATM (which is probably 1 of the 50,000 they own). Here’s the catch, there are no ATM’s in Minneapolis and the bank is not open on the weekends – a lot of good that 50,000 ATM network would have done! I was just out of luck, it didn’t matter if I banked with Gallup Federal Credit Union or Wells Fargo, neither could help me.

“It’s easier to get a divorce than to change your checking account” Texas banker Edward Speed said in an interview with The New York Times.

I get it, change is hard! But I like to think that in this case, change is worth it.

I really want to stimulate some discussion here (literally, please post your thoughts in the comments section below). Given all that has taken place over the last 2 years, what makes you believe in a local credit union? If you still bank with a “Mega Bank” why haven’t you switched? What would make it easier to switch?

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.

The Debt Consolidation Loan

Debt is like quicksand, once you fall in things start sinking pretty quick. The more you struggle, the more you thrash around, the quicker you fall. People start grasping for anything they can to pull themselves out, sometimes even bringing family members down with them. Inevitably they hear about the solution that will “clear up all their problems” – A debt consolidation loan.

“Oh yeah” they say, “If I can just make one monthly payment, I can get back on solid ground in no time.”

Here’s the deal guys, it’s just like your mom used to tell you: If it sounds too good to be true, it is. There are a few problems with the typical debt consolidation loan and one MAJOR problem with all of these types of loans.

1. The “Debt Consolidation” companies that typically offer these types of loan programs as their only source of business are usually scum bags. These type of companies prey on desperate people, they hide hidden fees in their loan program and do next to nothing to help solve the problem. I new a guy who owned a local debt consolidation firm, let me put it to you this way, he owned more sports cars and mansions than some celebrities. Do you think he was making a few bucks off of people who were turning to him for help? Absolutely!

2. When you are in debt you are often making decisions under extreme pressure. Many of the sales people at these debt consolidation firms are so pushy that they put additional pressure on you to make a hasty decision. More often than not these decisions produce outcomes that are detrimental to your future as a savings pilgrim.

3. Debt does a funny thing to logic. All you can seem to understand when you are in debt is that the noose is slowly tightening and you are just trying to survive. Add in a few debt collectors calling your house at all hours and normal logic goes out the door. Many times people have options out side of a debt consolidation loan that they can’t seem to see clearly. Selling some assets, picking up more hours at work, a second job or looking for help from family are all options that often people don’t see.

The major problem with a debt consolidation loan:

The major problem here is not the debt, it is the psychology of spending that pushed the consumer into this problem in the first place. By moving the debt to a consolidation loan all you have done is freed up the credit cards to potentially re-spend on! Many, many times people will double up their debt load in a matter of months by moving their old debt to a consolidation loan and then they go rack up new debt again on the available credit card. Talk about Quicksand!

If you want to get out of debt, there is only really one solution - a lifestyle change.

It is not the easy answer that most people are looking for. There is nothing easy about it, in fact it is down right hard. There are steps you can take to tackle credit card debt and be successful, that’s another post.

A CFO For Your Family

A Chief Financial Officer is the quarterback for the finances of a corporation, they oversee all aspects of the cash flow and reporting for the company. A great CFO pulls together a team of experts that each bring valuable assets to the group and then directs them to perform like the Boston Symphony. All the while this executive casts vision for the future and tweaks the financial approach for maximum performance.

I talk about it all the time, make savings automatic. If you make your savings automatic, you will be successful on your pilgrimage to financial freedom. So you do it, you are systematically investing and building wealth in the process. But as your wealth grows, things become more and more complex. It actually happens quicker than you might think. All of a sudden you are dealing with a CPA, a lawyer, an insurance agent and various other advisors and things are very complicated.

For most people thinking about juggling the advisors and monitoring investments simply takes time away from being able to enjoy life and have a few hobbies. After all, being able to enjoy life is the reason you started your savings pilgrimage in the first place. Right? A family CFO is the link that pulls all these complicated pieces together to make the symphony perform.

Carl Richards of BehaviorGap.com writes about a family CFO:

Note that a Family CFO doesn’t face the same conflict of interest as most financial planners or brokers. This person isn’t focused on making a short-term sell, which may be driven in part by commissions on products and services you don’t really need. The best Family CFOs are paid a predetermined rate and receive compensation from only one source—you. There are no strings attached, no lurking fees. You control your financial relationship.

For your family CFO to truly be able to put together the best team, cast vision for your financial future and tweak your plan, you must have a relationship. It might be a little awkward at first but in the long run a solid relationship with your CFO will give you the ability to relax and let them take the reigns.

We started Guide Rock Capital Management because of a desire to continue to serve families with more than just banking products. We found that people came to us looking for recommendations and direction for their financial future. Often times we sent people to other advisors to help them with the needs we could not serve. How could we know what kind of service and the quality of the advise that our friends were getting? We focus our new business on providing the best service we know how and by building relationships. We put the same philosophy that we use in the credit union to work at Guide Rock, “relationships matter”. You do not have to be a credit union member to start a relationship with Guide Rock. In fact, if you would like to learn more about Guide Rock and our family CFO approach to financial planning please contact me. We would love to have the opportunity to sit down with you and start a relationship.Contact us at: 402-938-6800

Chasing Return = Certain Failure

There are few things more frustrating than when your fund or stock pick is under performing or lagging the average industry return. This frustration often leads to the largest set back a pilgrim could have on their savings journey - chasing returns.A return chaser buys one hot fund and then once it turns cold jumps to the next hot fund – the catch is, that by the time they identify a hot category and make the decision to switch the new fund may have already begun to turn cold. All the while the old fund may now be poised to take off.

There are no clear signs when to switch or where to switch and when information becomes evident to aid you in your decision it is probably already too late. Meir Statman said it beautifully in a recent Wall Street Journal piece, here is an excerpt from the article:

Goldman Sachs is faster than you.

There is an old story about two hikers who encounter a tiger. One says: There is no point in running because the tiger is faster than either of us. The other says: It is not about whether the tiger is faster than either of us. It is about whether I'm faster than you. And with that he runs away. The speed of the Goldman Sachses of the world has been boosted most recently by computerized high-frequency trading. Can you really outrun them?

It is normal for us, the individual investors, to frame the market race as a race against the market. We hope to win by buying and selling investments at the right time. That doesn't seem so hard. But we are much too slow in our race with the Goldman Sachses.

So what does this mean in practical terms? The most obvious lesson is that individual investors should never enter a race against faster runners by trading frequently on every little bit of news (or rumors).

Instead, simply buy and hold a diversified portfolio. Banal? Yes. Obvious? Yes. Typically followed? Sadly, no. Too often cognitive errors and emotions get in our way

From: The Mistakes We Make – and Why We Make Them by Meir Statman

If you really want to delay your summit of the mountain we call financial freedom, all you have to do is start chasing return. I recommend a well diversified portfolio of varied funds so that no matter what the market is doing, at least a portion of your money is doing well.

It isn’t very sexy and it doesn’t have the excitement of a hot tip, but there is no better way to improve your odds for financial freedom.

Listen, everyone says they are a long-term investor until things start to get tough – then they want out. Do not let your emotions or fears drive you to make bad decisions. If you are questioning the diversification of your current portfolio please give me a call. I would be happy to review your current allocation structure and tweak it to the right mix for you.

Change the Way You Contribute

Step One: Open a retirement account to start your savings pilgrimage.

Step Two: Fund your retirement account systematically every month with an automatic contribution.

You’ve heard me say this over and over again, make contributions automatic every month. But why? Why is it so smart to contribute systematically? 

The long and short of it is Dollar Cost Averaging. I don’t want to scare any of you off with high finance lingo but trust me, dollar cost averaging is neither complicated nor high finance so bear with me.

Let’s say that your rich uncle died and gave you $100,000 - nice! The very next day you take the whole lump sum of money and dump it into the stock market and the day after that, the market falls 40%. Your $100k is now only worth $60k, so you freak out and pull all of your money out of the market because you don't want to suffer any more losses.

Then lets say, one week later the market is up 60% and you missed the up-swing because you were out of the game.

How would you feel? Horrible, You missed your chance!

Guys, this is exactly what could have happened to you last spring if you did not take advantage of dollar cost averaging with your contributions.

Here’s how it works: 

Let’s say you get the same $100,000 from your dead rich uncle. Only this time you divide it into 20 pieces of $5,000 each and invest each piece on the first Monday of the week for the next 20 weeks. If the stock market declines as soon as you invest the first $5k you can take comfort in the other $95k you still have in cash. When the market increases you will be poised to take advantage of the swing because you are systematically investing, no matter what the market is doing.

The other benefit to systematically contributing  to the market is lowering your average costs of shares purchased. For example, your first week you might buy shares of a specific investment at $5 per share, then next week you might buy at $4 per share and the week after you may buy at $4.50 per share. So the average cost of the shares is $4.50. Now you are really taking advantage of fluctuations in  market because you are buying at lower cost than you would have had you put all your money in on the first day.

Buy Low, Sell High

Everyone knows that the ultimate goal of investing is to buy low and sell high but because of emotion and human nature many people do just the opposite. Use dollar cost averaging to help you avoid falling into the trap. Make it automatic and you can create the discipline that you need.

Who would have guessed that after the miserable winter of 2008 to 2009 in the stock market, March was the month to have your money in! I certainly would not have made that prediction, but I took advantage of it because while the market was falling I was buying every month at lower and lower prices. It’s not rocket science but there is an element of discipline that is required. The good news is that you can create the discipline for yourself.

Your Children Want You to Save for Yourself

You want to give your children a hand up in life, absolutely. You want to provide them with all the opportunities and luxuries that you never had, sure. What if you do all these things but never save for your own retirement? Will that help your children in the long term? Probably not.

Sometimes parents get so caught up in “providing” for their children that they never take the time or resources to ensure that they are providing for themselves in the future. I want this article to ask the question: if you stretch yourself financially to give to your children without saving for your own future are you really helping them?

This is a difficult topic, no one wants to hear that they should hold back on college savings to contribute more for their own retirement. There is a basic human element that floods our emotions with a desire to provide for children. I am sure there are many underlying reasons why giving everything to your children is detrimental to their development of character and work ethic but I am not a psychologist, so let’s leave those arguments out of it.

Let’s just focus on the dollars and cents of it.

I have to argue that your kids have a longer time horizon to save and more opportunities for low cost student loan debt than you do. Saving for college in a 529 plan or through some other savings method is a great goal to have – but you have to remember when you start saving for a college goal you are embarking on a savings pilgrimage for someone else!

Why would you start a new pilgrimage if you have not yet made it even half way up the mountain of financial freedom? Let me put it to you this way, if you focus all your efforts on saving for your children’s future then your future will involve living with your children. Maybe your family culture is different than where I come from but when I close my eyes and dream about retirement it does not involve asking my kids for a few bucks to pay my greens fees for the day.

Friends, if you do not save for your retirement thinking that you are doing your kids a favor, your wrong. The only thing you are doing is ensuring that you will be a financial burden to them in the future.

Your kids will have the opportunity for scholarships, low cost student loans and part time jobs to get through college. And guess what, speaking from experience, they will value the education that they earned and paid for far more than if it were free. The other good news is that your children are quite a bit younger than you are. They have a good twenty years to create their own financial freedom.

If you can afford to put some money away for your children’s education it might be a good idea. I would strongly encourage you to talk with a professional to determine if you can truly afford it.

How about this idea, instead of giving your kids a free education and housemates in their 50’s. Why not give them the opportunity to earn their education and a big fat inheritance when you no longer need it.

Why Worry About Return?

Usually the answer I get when I ask the question above is, “so I can grow my retirement account”. Although this is a good answer, it’s not the real reason why it is so important is to make sure that you are achieving adequate return. The true answer is one word:

Inflation

There truly is no better time than now to talk about inflation and the impact it can have on your goals. With all the “stimulus” and government spending we can only assume that in the future our economy will experience significant inflation. 

So what is Inflation? Well the simple answer is this: The standard assumed average annual inflation rate is 3%, so if I were to go out and buy a box of pencils for $1.00 today, in one year that same box of pencils will cost $1.03. As you can see, the purchasing power of my dollar has been reduced! I can no longer go out and buy a box of pencils for just a buck.

Inflation is caused by many things but the looming cause for our future inflation is monetary policy. When the government passes out “stimulus” essentially they are adding additional dollars to the market which eventually dilutes the value of the dollars already out there.

Let’s use an example, say you are washing your white clothes at home. Every once in a while you will probably use bleach to help restore the whiteness to your clothes, but to keep from burning holes through the fabric you add water to the bleach to dilute it, the more water you add to the bleach the less potent the bleach is.

If bleach is like buying power then adding water is  like adding dollars to the market.

The more dollars you add the less buying power there is! Eventually retailers will have to raise their prices to compensate for the fact that each dollar is now worth less, or the bleach is not as strong as it use to be. And that my friends is inflation.

So why do you have to worry about return… because if you only generate a return that is equal to inflation, your money will only be able to buy you the same amount of stuff that it did last year! If you want to be successful on your savings pilgrimage you have to earn a return that beats inflation.

Let me insert a little disclaimer here, chasing return is a very dangerous thing. This topic is an entire blog post in of itself, but suffice to say that I am a proponent of buy and hold strategy unless you are a professional investor. I’ll write more on this topic at a later date.  As a savings pilgrim I want to always be conscious of the return I am earning on my path to financial freedom. I want to be sure that the investments I am using are falling in line with my risk tolerance and my mountain top goals. The only way to tell if the investments are working the way I want them to is through careful measurement and giving adequate time to let them work. Occasionally, I might have to adjust my path to success.

Inflation is a bear and no one knows when it will kick in from the great recession, but it will. Be aware and prepare yourself for the need to generate increased returns.

Two Things You Have To Do

Several months ago, back when the Dow Jones Industrial Average was at a decade low 6500, a friend of mine who is not a professional stock analyst or broker predicted the bottom of this recession in front of a group of 25 or so clients (bold move!). Turns out he might have been right, although I think it is still too soon to confirm or deny his prediction. But if you had dumped $10,000 into the Dow Jones Index that same day it would now be worth roughly $14250 or about a 42% increase in just 4 months. That’s something you can’t ignore.

Sure, I have been burned just as much as the rest of you in my retirement accounts over the last year and a half, so I understand the sick feeling that comes over you when you have to open your quarterly earnings/loss statement every 3 months.

I also completely understand bulking up the old emergency fund and paying down your unsecured debt – do it! But if you are young (younger than 45 or so) you have got to be taking advantage of the giant rebound in the market that we will inevitably experience over the next several months.  You cannot afford not to!

Friends, the current economic situation we are in is once in a lifetime.

Fortunes are made, missed and lost in environments just like this. If you are disciplined, use the right products and understand your personal risk tolerance, the choices and investments you make could be game changers for your financial future. Your savings pilgrimage will be a lot easier with the initial boost of a 50% return right out of the gate. Talk about a motivation energizer!

There are 2 things you must be doing no matter what your situation is.

First things first, if your company offers a 401(k) with any sort of match, you have to do whatever it takes to get the full match. Scrape every penny together and tighten your belt to take advantage of the guaranteed return. You will not find a guarantee like this anywhere in the market!

Second, the Roth IRA is the greatest gift the government has ever given to savers! There are some income limitations to take advantage of this program. A single individual with an adjusted gross income (AGI) of more than $95,000 is prohibited to contribute funds into a Roth IRA account. For a couple, the AGI is $150,000, and these limitations change on a annual basis.

If you qualify for a Roth IRA you have to have one! No Excuses!

When you reach retirement the distributions from a Roth IRA are tax free because you contribute with after tax dollars. I don’t know about you, but I am pretty sure than in 30 years taxes are going to be higher than they are today. If you do not understand why this is an amazing deal PLEASE CALL ME RIGHT NOW!

The reason I am so adamant and enthusiastic about these two things is because of this…

In a recent survey, 40%…. 40% of respondents said that their best chance to gain $500,000 in their lifetime is via a sweepstakes or lottery win.

WHAT!!

Apparently 40% of people have never heard the good news about the power of compound interest. I have got a lot of work to do.

Please do not be one of these people. $500,000 is easily attainable if you simply do two things, get the match in your 401(k) and contribute systematically to a Roth IRA.