How To Prepare For Emergencies

January 17, 2022

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Denise and Chris Arand

Denise and Chris Arand

Executive Vice Presidents/Financial Strategists

2173 Salk Ave
#250
Carlsbad, CA 92008

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January 10, 2022

Why Poverty Can Be Outrageously Expensive

Why Poverty Can Be Outrageously Expensive

Picture the most expensive lifestyle you can imagine. What do you see?

Palm trees and beach views? Italian shoes and Swiss watches? Flying yourself into space just because you can?

How about having to live in government housing, or working a minimum wage job, or not even being able to find a job?

It’s counterintuitive, but poverty can be outrageously expensive.

There are two main reasons…

  1. Poverty makes essential spending relatively pricey
  2. Poverty has hidden—and costly—side effects

Let’s break these down…

Poverty makes essential spending relatively pricey. Consider an example. Let’s say you’re single and earn $10,000 per year, $2,000 beneath the federal poverty line.¹

Let’s also say that you and some buddies snag a mediocre apartment in the city. Great location, right? But at $500 each per month, it’s $6,000 each per year. That’s over half your income on housing alone.

Your car? Between insurance, gas, and repairs, you’re looking at costs that could be north of $5,000.

That leaves you in the hole for $1,000. Then add groceries, your cell phone, and emergencies. Normal living expenses have not only consumed 100% of your budget, but they’ve left you in the red for other essentials.

For the wealthy, those items aren’t even a consideration. The essentials take up just a fraction of their income. What’s relatively cheap for them becomes crushingly expensive for you.

But the cost of poverty can get steeper…

Poverty has hidden—and costly—side effects. Suppose that, to save money, you downgrade your housing. You find a true hovel in a bad part of town that charges $150 each per month, or $1,800 each annually.

And it doesn’t take long for reality to set in.

You might find yourself in a so-called food desert since there aren’t proper grocery stores around you that sell healthy, affordable food. The quality of your diet plummets, but still increases in cost.

There’s consistent crime in your neighborhood. Possessions get stolen. Cars get broken into. Friends get hurt. You’re under constant stress.

To deal with the stress, you pick up some foolish habits that further hurt your finances and health.

You turn to payday lenders to make ends meet. It’s a critical mistake—they charge you aggressive interest rates that become a black hole of debt.

Finally, the consequences of a low-quality diet, stress, and unhealthy coping mechanisms emerge. You face one expensive health crisis after another. You have to quit your job as your condition worsens.

This isn’t to excuse bad or foolish or unhealthy behavior. Rather, it shows how situations make people vulnerable to otherwise avoidable pitfalls.

Relative expenses and hidden expenses creating a vicious cycle help explain why it’s so hard to escape poverty. It also helps explain why poverty tends to be intergenerational. Poverty actually consumes the resources needed to build wealth.

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¹ “Poverty Guidelines,” Office of the Assistant Secretary for Planning and Evalutation, Jan 13, 2021, https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines

² “Average monthly apartment rent in the United States from January 2017 to February 2021, by apartment size,” Statistia, Mar 25, 2021, https://www.statista.com/statistics/1063502/average-monthly-apartment-rent-usa/

³ “Average Car Insurance Costs in 2021,” Kayda Norman, Nerdwallet, Aug 20, 2021, https://www.nerdwallet.com/article/insurance/how-much-is-car-insurance

January 6, 2021

Bridging the Retirement Gap

Bridging the Retirement Gap

If you’re already eyeing the perfect recliner for your retirement, hold that thought. And you might want to start rifling through the ol’ couch cushions for a little extra change…

Here’s a doozy: women age 65 and older are 80% more likely to be impoverished than men of the same age.¹

That number represents a staggering degree of human tragedy. But there’s a sad logic to it when you consider that women save 43% less for retirement than their male counterparts.¹

But that’s not all. According to the 2016 Financial Finesse Gender Gap in Financial Wellness Report, to retire at age 65 (without a career break):

  • Men need $1,559,480.
  • Women need $1,717,779.

Women have to come up with $158,299 more! This increase is due to the unique set of circumstances women face while preparing for retirement:

  • Women live longer
  • Women pay more for healthcare

To summarize, women all too often aren’t in a position to save as much as men, even though they need more to sustain their retirements. The tragic result is that many spend their retirements in poverty instead of living out their dreams.

But that doesn’t have to be your story. The savings gap may seem huge, but it can be bridged. And it all starts with a solid insurance strategy. Just think of it as pulling the footrest lever on your dream retirement recliner!

Your unique situation and goals all factor into how you want to kick back when you retire. I’m here to help. When you have a moment, give me a call or shoot me an email.

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¹ “3 Alarming Stats About Women’s Retirement Savings” Kailey Hagen, The Motley Fool, Jul 24, 2019, https://www.fool.com/retirement/2019/07/24/3-alarming-stats-about-womens-retirement-savings.aspx#:~:text=Fidelity’s%20latest%20retirement%20healthcare%20survey,65%2Dyear%2Dold%20man.

February 19, 2020

A Brief History of Stock Exchanges

A Brief History of Stock Exchanges

Stock markets didn’t exist four hundred years ago.

Wealth was highly concentrated in the hands of monarchs, lords, and elite merchants, and trade was risky at best. Raising money for an expedition (or war) meant either asking for a loan, collecting taxes, or both.

A Whole New World <br> But something changed for Europeans in the 1400s. The Ottoman Turks captured Constantinople (now Istanbul) and effectively cut off trade routes that had always brought in goods and big profits from China. Things that were previously thought impossible suddenly sounded like worthwhile possibilities. One thing led to another and before long a fellow named Christopher Columbus had introduced Europeans to a massive continent rich in resources. Major powers like Spain, Portugal, France, and England started to seriously invest in getting as much out of this “New World” as they could!

Disease, Famine, and Risk Reduction <br> “What does any of this have to do with trading stocks?” you might ask. Well, imagine that you’re living in 16th century Europe and you decide you’ve had it with all this groveling and servitude and poverty and want to make some cash. The New World is your best option to make it big; land is easy to come by and there are plenty of new resources like tobacco to grow and sell. There’s just one problem: it’s insanely risky. Between disease, famine, and bad weather, there’s a good chance you’ll either die or lose everything in the attempt. So what can you do?

Traders realized that they could reduce how much they risked on an expedition if they got multiple people to chip in. Everybody would get a portion of the profits if everything went well, and if not, any losses would get spread out. It didn’t take long for people to figure out that selling small portions or “shares” of trading voyages was a great way to raise cash that didn’t require levying taxes or stumbling on massive gold deposits.

The First Coporation <br> At first, shares were only good for a single voyage. But the Dutch East India Company changed all of that in 1602. The Dutch government decided they wanted to dominate trade with Asia, and they looked to the public for funding. Shares were priced so that most merchants could buy in, and the promise of government backing and continuing profits convinced hundreds to purchase the stock. It worked. The Dutch East India company became one of the first truly transnational corporations in history and essentially became its own state, flooding the Dutch people with valuable resources and prosperity.

Everyone took note of the Dutch model and decided to imitate it. Publicly traded companies started to pop up across Europe, with stock exchanges becoming a place where anyone with the means could buy and sell shares of different corporations. It was a huge step away from the older model of raising capital and created a new kind of institution, one that continues to dominate the world of business to this day.

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July 24, 2019

Is This the One Thing Separating You from Bill Gates?

Is This the One Thing Separating You from Bill Gates?

Well, a few billion things probably separate you and me from Bill Gates, but he has a habit that may have contributed to his success in a big way: Bill Gates is a voracious reader.

He reads about 50 books per year.* His reason why: “[R]eading is still the main way that I both learn new things and test my understanding.”

On his blog gatesnotes, Gates recommended Hillbilly Elegy by J.D. Vance, the personal story of a man who worked his way out of poverty in Appalachian Ohio and Kentucky into Yale Law School – and casts a light on the cultural divide in our nation. Gates said,

Melinda and I have been working for several years to learn more about how Americans move up from the lowest rungs of the economic ladder (what experts call mobility from poverty). Even though Hillbilly Elegy doesn’t use a lot of data, I came away with new insights into the multifaceted cultural and family dynamics that contribute to poverty.

We all have stories about our unique financial situations and dreams of where we want to go. And none of us want money – or lack thereof – to hold us back.

What things, ideas, or deeply-ingrained habits might be keeping you in the financial situation you’re in? And what can you do to get past them? I have plenty of ideas and strategies that have the potential to make big changes for you.

Contact me today, and together we can review your current financials and work on a strategy to get you where you want to go – including some reading material that can help you in your journey to financial independence.

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