Getting a Degree of Financial Security

June 14, 2021

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Andre & Mara Simoneau

Andre & Mara Simoneau

Financial Consultants

Lynx Creek Cir

Frederick, CO 80516

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June 14, 2021

Getting a Degree of Financial Security

Getting a Degree of Financial Security

The financial advantage gap between having a college degree and just having a high school diploma is widening!

As of 2019, the average college graduate earned 75% more than the average high school graduate.¹ When you crunch the numbers, it’s actually a more robust investment than stocks or bonds.

This income difference is making saving for retirement difficult for millennials without a college degree. According to the Young Invincibles’ 2017 ‘Financial Health of Young America’ study, millennial college grads – even with roadblocks like student debt – have saved nearly $21,000 for retirement.² That’s quite a lot more as compared to the amount saved by those with a high school diploma only: under $8,000.

However, a college grad may encounter a different type of retirement savings roadblock than a reduced income – student loan debt. But the numbers show that even with student loan debt, the advantages of having a college degree and a solid financial strategy outweigh the retirement saving power of not having a college degree.

Here’s an issue plaguing both groups: more than two-thirds of all millennial workers surveyed do not have a specific retirement plan in place at all.³

Regardless of your level of education or your level of income, you can save for your retirement – and take steps toward your financial independence. Or maybe even finance a college education for yourself or a loved one down the road.

The first step to making the most of what you do have is meeting with a financial advisor who can help put you on the path to a solid financial strategy. Contact me today. Let’s get your money working for you.

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¹ “College grads earn $30,000 a year more than people with just a high school degree,” Anna Bahney, CNN, Jun 6, 2019, https://www.cnn.com/2019/06/06/success/college-worth-it/index.html

² “Financial Health of Young America: Measuring Generational Declines between Baby Boomers & Millennials,” Tom Allison, Young Invincibles, Jan 2017, http://younginvincibles.org/wp-content/uploads/2017/04/FHYA-Final2017-1-1.pdf

³ “Retirement Plan Access and Participation Across Generations,” Pew, Feb 15, 2017, http://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2017/02/retirement-plan-access-and-participation-across-generations

June 7, 2021

How to Make the Most of Your Life Insurance Policy

How to Make the Most of Your Life Insurance Policy

Your life insurance policy is one of the most important things you’ll buy in your lifetime.

Knowing how to make the most of it will help you sleep better at night and more easily plan for the future. We’re going to cover the aspects of life insurance with a focus on making those numbers work for YOU!

Choose a policy with enough coverage. As a rule of thumb, a life insurance policy should provide a death benefit that’s at least 10X your annual income. Why? Because the benefit can serve as an income replacement for your family if you pass away. A payout above 10X your annual income can provide your family with a generous financial buffer to recover and make a plan for their future. Buying enough coverage helps ensure your policy fulfills its function—to financially protect your family when you pass away.

Choose the right type of insurance. There’s no one-size-fits-all life insurance policy. They each have different strengths and shine in different circumstances.

Term life insurance, for instance, is typically better for families who need protection on a thin budget. That’s because term is often an affordable option for securing a large death benefit.

Permanent life insurance might be better if you’re looking for an investment that grows over time. It’s also a good choice if you need lifelong protection for your spouse and children, but don’t want to be burdened by higher premiums as they age. That makes it particularly attractive to families with permanent dependents or who are interested in wealth-building vehicles.

Choose a policy that fits your budget. Life insurance shouldn’t consume your income. Rather, it should protect your income in case of disaster. Get as much life insurance as your family needs, but don’t add all the bells and whistles if you can’t afford it!

You want a life insurance policy that protects your family, aligns with your goals, and doesn’t break your budget. If you’re not sure what that looks like, meet with a licensed and qualified financial professional. They can help you hammer out goals and find policies that help you meet those goals!

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This article is for informational purposes only and is not intended to promote any certain products, plans, or policies that may be available to you. Any examples used in this article are hypothetical. Before enacting a savings or retirement strategy, or purchasing a life insurance policy, seek the advice of a licensed and qualified financial professional, accountant, and/or tax expert to discuss your options.

May 19, 2021

The Advantages of Survivorship Insurance

The Advantages of Survivorship Insurance

A survivorship policy pays out only after two people pass away.

Why does that matter? For many families, it doesn’t. They need more traditional forms of life insurance that protect income for their spouses and children.

But there are specific situations where survivorship insurance might be critical for your legacy. Read on for the advantages of survivorship insurance!

First, survivorship insurance can be an invaluable tool for estate planning. If one spouse dies, they can pass their assets to their spouse without facing federal estate taxes.¹ Not so for wealth left to future generations! For some couples with substantial assets to pass on to children, survivorship can leave a sizable death benefit that can offset the cost of estate taxes.²

If this strategy appeals to you, reach out to an attorney and a financial professional. You’ll need their help to get your estate in order and navigate your state’s tax system.

Second, survivorship insurance can cover ailing or elderly couples. As a rule of thumb, survivorship insurance is a good option for those who don’t qualify for term or permanent life insurance due to health or age. That’s because the rates are based on two life expectancies, potentially lowering rates and increasing your likelihood of qualifying.³ This is especially useful if the couple has children who are still dependents or will need special care.

In conclusion, survivorship insurance can be a powerful tool for specific people in specific situations. That’s why it’s best to collaborate with legal and financial professionals to make a decision that will be right for you and your family.

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¹ “An act of mutuality: Survivorship insurance,” Shelly Gigante, MassMutual, Mar 30, 2021, https://blog.massmutual.com/post/survivorship-insurance

² “An act of mutuality: Survivorship insurance,” Shelly Gigante, MassMutual, Mar 30, 2021, https://blog.massmutual.com/post/survivorship-insurance

³ “An act of mutuality: Survivorship insurance,” Shelly Gigante, MassMutual, Mar 30, 2021, https://blog.massmutual.com/post/survivorship-insurance

May 10, 2021

How Inflation Impacts Your Savings

How Inflation Impacts Your Savings

It’s time to wake up and smell the coffee!

The reality is that your retirement savings might be losing value every day. It’s because of something called inflation, and it may result in your finding yourself retiring with less than you anticipated. In this blog post, we’ll discuss how inflation affects your savings and what you can do about it.

First, what is inflation? Inflation is a measurement of how much prices are rising over time. And it’s not just that the price of gas is skyrocketing or some other commodity—inflation affects everything.

That may not necessarily be a problem for you, so long as your wages are increasing with the rate of inflation. Commodities might get more expensive, but your rising paycheck means you can still afford what you need. But if income isn’t keeping up with inflation, an upper-class income today may only afford you a middle-class income tomorrow!

But there’s another danger that inflation poses.

Let’s say you have $1 million dollars in the bank that you’ve put away for retirement. Good for you! You’ve probably already dreamed of how you’ll use that cash once you retire. A new home, a new car, worldwide travel, you name it!

But here’s the rub. Over time, the cost of those items (most likely) will steadily increase. So will the basic cost of living. By the time you retire, your $1 million has far less purchasing power than it did when you first started saving. You haven’t lost money, exactly. Your money has just lost value.

So how can you combat the slow decay caused by inflation?

Start by moving your money away from low, or no, growth places. Your Grandma may not like to hear this, but hiding money in your mattress is an easy way to torpedo its value over the long haul!

Find investments that actually grow over time and help beat inflation. Over the last 100 years or so, the average inflation rate has been 3.1%. That’s the bare minimum rate at which your investment should grow, if you’re using it for long-term wealth creation.

A licensed and qualified financial professional can help you with both of these steps. The sooner you start the process of protecting your wealth from inflation, the more you insulate yourself from the danger of waking up with less money than you’d thought!

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April 26, 2021

Pay Yourself First!

Pay Yourself First!

Pay yourself first!

Why? Because it can help you take control of your finances and reach your goals. But what does it mean to “pay yourself first?” It means the very first thing you should do with your paycheck is put money towards saving, then use what’s left for bills, and then finally for personal spending. Let’s break down how—and why—you should pay yourself first in 3 steps!

Step 1: Figure out your goals. What are you saving up for? Knowing what goal you’re trying to reach can help guide how much money should go towards it—saving for retirement would look different than saving for a downpayment on a house. Having a goal can also give you the motivation and inspiration you need to start saving in earnest. Write down your goal or goals, and start planning accordingly.

Step 2: Make a budget that prioritizes saving. When you’re creating your budget, the first category you should create is saving. Then, figure out how much rent, bills, food, and transportation will cost. Whatever you have left can go towards discretionary spending.

Your focus should be to treat saving like a mandatory bill. It’s a simple mental trick that can help you prioritize your financial goals and help make it much easier to say no when you’re tempted to overspend. You actually might literally not have the cash on hand because you’re saving it!

Step 3: Automate your saving. Once you’ve got your savings goal in place, automate the process. Whether it’s through an app or automatic deposits from your checking into a savings account, automating saving helps make building wealth so much easier. You can start building wealth without even thinking about it! Just be sure to automate your deposits to initiate right after your paycheck comes in. It removes the temptation to cheat yourself and overspend.

Remember, this doesn’t have to be all or nothing. Just because you can’t save a massive amount each month doesn’t mean you shouldn’t try! It’s about saving as much as you can. And paying yourself first with your paycheck is an easy way to start!

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April 19, 2021

How Do Checking Accounts Work?

How Do Checking Accounts Work?

You probably use your checking account every day, but do you really know how it works?

This article will explore exactly what a checking account is and how it works!

A checking account is a simple way to store your money. You can make deposits and withdrawals whenever you need to. They’re easy to access with checks, the ATM, your debit card, and online payments.

The checking account advantage? It’s liquid. You have instant access to those funds at all times without penalty if needed. That makes it ideal for daily expenses like buying groceries, paying for a babysitter, or making an emergency car repair. That’s why they’re so common—there are a total of 600 million checking accounts in the United States!¹

The disadvantage? Low (or no) interest rates! Because many checking accounts come with various fees and minimums to maintain them (usually elevated monthly account balances), the average interest rate is only about 0.04% APY on these types of accounts,² which may not be worth it in some cases if you’re saving up money without investing funds elsewhere as well.

Another downside? Overdraft fees. You might be liable for an overdraft penalty if the money in your checking account doesn’t match what you’ve spent! This could lead to some hefty fees. Thankfully many banks have overdraft protection policies which will prevent these charges, but not all do so check before signing up for a new checking account.

You should probably have a checking account if you don’t already, simply for the ease of living life. They’re not the most exciting thing in the world, but they can be hugely helpful for daily transactions. Just be sure you’re not relying on one to build wealth!

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¹ “Checking Accounts Shrink by Nearly 100 Million Accounts Since 2011,” Tina Orem, Credit Union Times, May 8, 2018, https://www.cutimes.com/2018/05/08/checking-accounts-shrink-by-nearly-100-million-acc/

² “Average Checking Account Interest Rates 2021,” Chris Moon, ValuePenguin, https://www.valuepenguin.com/banking/average-checking-account-interest-rates

April 14, 2021

The Time Value of Money and College

The Time Value of Money and College

College is one of the most expensive things that you can spend your money on, but it might not always be a good investment.

College graduates make much more than high school graduates over their lifetimes.¹ Some people think this means going to college is worth the cost because they’ll be able to pay off the loans with their higher salaries after graduation. But as you’ll see in this article, there’s another critical factor you should consider before going off to school.

Which career path will empower you to start saving sooner? The longer your money can accrue compound interest, the more it can grow. Working an extra four years instead of attending school could result in retiring with more. Let’s consider two hypotheticals that illustrate this point…

Let’s say you land a job straight out of high school at age 18 earning $35,000 total annual salary. You’re able to save 15% of your income in an account where the interest is compounded monthly at 9%. Assuming you work until 67, or 49 years, and consistently save the same amount each month over that time period at the same interest rate, you would retire with almost $4 million!

What if instead you attend college and graduate after 4 years? You land a job that pays $60,000 annually and are able to save 15% of your income. If you also retire at 67 after 45 years of work, saving 15% every month, you’ll retire with $4.7 million. That’s almost $700,000 more than the non-graduate!

But what if student loans prevent you from saving for 5 years after graduation? You’d retire with $3 million. In this hypothetical scenario, losing 9 years of saving results in a college graduate actually retiring with less than someone who diligently works and saves right out of high school.

The takeaway isn’t that you shouldn’t attend college. It’s that you should carefully weigh the costs of higher education. Is there a career path you could take right out of high school that would have you saving right away? Will your degree land you deep in debt and behind the 8-ball for building wealth? Or do the benefits of the degree substantially outweigh the costs? Don’t attend a college just because it’s what your peers are doing. Consider your passions, weigh the benefits, and calculate the costs before you make your decision!

This article is for informational purposes only and is not intended to promote any certain products, plans, or strategies for saving and/or investing that may be available to you. Market performance is based on many factors and cannot be predicted. Any examples used in this article are hypothetical. Before investing, enacting a savings or retirement strategy, or taking on any loans or debt, seek the advice of a licensed and qualified financial professional, accountant, and/or tax expert to discuss your options.

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“The College Payoff,” Georgetown University, https://cew.georgetown.edu/cew-reports/the-college-payoff/

April 5, 2021

Why Gold Is More Than Just a Shiny Metal

Why Gold Is More Than Just a Shiny Metal

Gold has been a symbol of wealth and status since the dawn of time.

In ancient times, kings would have gold coins minted with their faces on them so that they could be exchanged for goods. Today, gold is commonly viewed as an investment. But… why? This post will explore how gold may help you achieve financial security for your family during today’s difficult economic times.

Gold is a valuable resource because it is rare—but not too rare! There’s a fine line between rare and too rare when it comes to currency. Some materials don’t have high value because they’re too common. That may seem obvious. But other materials are too rare—it would be almost impossible to widely circulate coins made out of platinum or rubies because they’re too difficult to find.

Gold strikes that perfect balance. It’s common enough to create a steady money supply, but rare enough to hold value.

Gold has value because it doesn’t corrode. Other metals like iron and copper eventually will corrode. That attribute won’t do for a currency—the treasury of a state would slowly decay into nothing!

Gold is excellent for storing value because it lasts. Gold jewelry, bars, and coins are far more likely to be in good shape in 100 years from now than other metals.

Gold has value because… well, because it’s always had value! Let’s face it—gold has been worth so much to so many people for a long time. They’ve used it to create beautiful jewelry, altars, decorations, and anything else that communicates luxury. It’s been the basic means of exchange for countless societies, civilizations, and empires throughout history. It’s the default, the original, the classic. And because it’s been considered valuable for most of human history, it’s a fair bet that it will continue to be valuable into the future.

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March 17, 2021

What You Need to Know About NFTs

What You Need to Know About NFTs

Are you sitting down? Because some memes are officially worth money. Lots of money.

And it’s not just memes. Digital art has exploded in value recently, leading some to scratch their heads and others to jump on the bandwagon.

Here’s how Non-Fungible Tokens, or NFTs, work, and why you should care!

At their core, NFTs are simple pieces of digital art. They range from illustrated portraits of punks to “CryptoKitties” to the influencer equivalent of Pokémon cards—vlogger Logan Paul made $5 million in a weekend by selling one-of-a-kind trading cards featuring animated versions of himself.¹

Think of an NFT as a combination of a bitcoin and a trading card. They exist digitally and are sold online, but their value is totally dependent on being originals!

Each one has a unique blockchain ID, making them impossible to duplicate or forge. You can know beyond the shadow of a doubt that the digital artwork you’re buying is the real thing.

That makes every NFT a rare one-of-a-kind. And limited supply cranks up demand.

Where did NFTs come from? They started in niche internet subcultures. But they’ve made their way closer to the mainstream. Some people have even started viewing them as investment items. It’s easy to see why—a CryptoPunk drawing recently sold for $69 million.² There’s always a (very very small) chance that the simple NFT you buy today could be a rare collector’s item in 5 years. But it could also plummet in value the day after you buy.

Realize that the NFT market is uncharted territory. Predicting which NFT will be valuable is nearly impossible. There’s nothing wrong with dabbling in digital art here and there. But it’s best to stick with more stable and time-tested strategies if you’re aiming to grow long-term wealth!

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¹ “What Is An NFT—And Should You Buy One?,” Abram Brown, Forbes, Feb 26, 2021, https://www.forbes.com/sites/abrambrown/2021/02/26/what-is-an-nft-and-should-you-buy-one/?sh=7335a47824b2

² “Beeple NFT becomes most expensive ever sold at auction after fetching over $60 million,” Robert Frank, CNBC, Mar 11, 2021, https://www.cnbc.com/2021/03/11/most-expensive-nft-ever-sold-auctions-for-over-60-million.html

March 1, 2021

How to Find Your Net Worth

How to Find Your Net Worth

Usually when we think of net worth we imagine all the holdings of a wealthy tycoon who owns several multi-million dollar businesses.

Net worth is just a balance sheet of a person’s assets and liabilities, not unlike the balance sheets used in business. You also have a net worth, and it’s important to know what it is.

Calculating your net worth is simple. First, you’ll want to tally up all your assets. These would include:

  • Personal property and cars
  • Real estate equity
  • Investments
  • Vested retirement plans
  • Cash or savings
  • Any amounts owed to you
  • Cash value of life insurance policies

Next, you’ll calculate your liabilities (what you owe someone else). These would include:

  • Loans
  • Mortgage balance
  • Credit card balances
  • Unpaid obligations

Your total liabilities subtracted from your total assets equals your net worth.

The number could be positive, or it could be negative. Students, for example, often have a negative net worth because they may have student loans but haven’t had a chance to build any personal assets.

It’s important to realize that net worth isn’t always equal to liquid assets. Your net worth includes non-liquid assets, like the equity in your home.

Measuring your net worth regularly can be a strong motivation when saving for the future—it can mark progress toward a well-reasoned financial goal.

When you’re ready to put together a personalized strategy based on your net worth and (more importantly) your future goals, reach out! We can use your current net worth as a starting point, while keeping focused on the real target: your long-term financial picture.

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February 24, 2021

2 Strategies to Build Credit When You’re Young

2 Strategies to Build Credit When You’re Young

The sooner you establish your credit score, the better positioned you’ll be for financial success.

Why? Because your credit score touches every aspect of your financial life—a high score can help you obtain a lower interest rate on mortgages and car loans, insurance payments, and even your rent!¹ That can help free up more cash for building wealth.

So, where do you start?

Apply for a credit card… and then use it responsibly! Credit cards are excellent tools for building your credit history. If you attend a university, you might be able to score a student credit card. However, just remember that credit cards are not free money. The less you use your credit card, the higher your credit score. Choose a few recurring expenses, and limit your credit card usage to those. Then make sure you pay off the balance every month, on time.

Use automatic payments on all your debts. Missing payments on your debt obligations can torpedo your credit score. It’s absolutely critical to pay on time for your credit card bill, student loan payments, and anything else you owe.

Consider automating all of your debt payments. It’s a simple, one-time move that can steadily reduce your balances and help boost your credit score.

As you build your credit history, you’ll be able to apply for credit in larger amounts, and you may even start receiving pre-approved offers. But beware. Having credit available is useful for certain emergencies and for demonstrating responsible use of credit—but you don’t need to apply for every offer you receive!

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February 17, 2021

Spend Less or Earn More?

Spend Less or Earn More?

What’s the most effective way to meet your financial goals—increasing your income or cutting your spending?

The answer? It depends on your situation. While both strategies can be useful, they’re not interchangeable. Read on to discover the advantages and limitations of each approach… and which one may be right for you.

Spending less: An immediate solution with a fixed floor. There’s no doubt that cutting expenses is the fastest way to move closer to your financial goals. Canceling a streaming service, clipping digital coupons on your phone, and carpooling are simple lifestyle adjustments that take only seconds or minutes to accomplish.

But stricter budgeting can only go so far. Moving back in with your parents, walking to work, and never having fun again may still not be enough. There’s only so much you can cut before you seriously decrease your quality of life!

Earning more: High effort, massive potential. On the surface, increasing your income can seem like a daunting task. Developing your skills, working an extra job and starting a side hustle or business can be labor and time intensive. Furthermore, some of those investments may not pay off immediately—a business or side gig may not generate significant income for weeks, months, or even years!

But those investments also have massive payoff potential. Once you’ve mastered a skill, your earning power is only limited by the market demand for your abilities and your time. And as you grow more and more competent, your potential to earn only increases.

The takeaway? Spending less is a quick and simple move towards your financial goals. But, over the long-term, earning more has far more potential to create the wealth you desire. If you need to quickly increase your cash flow, create a budget and reduce your excess spending. But when your financial situation stabilizes, take inventory of your skills. You might be surprised by how many money earning talents you have, if you take the time to cultivate them!

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February 8, 2021

3 Steps to Reduce Debt with Limited Income

3 Steps to Reduce Debt with Limited Income

Is your income holding you back from paying down debt?

It may feel like necessities such as housing, groceries, and transportation are consuming your cash flow. So how can you pay down debt if you feel like you’re struggling to put food on the table?

Reducing debt with a limited income is certainly a challenge. But if you know the right strategies, it’s an obstacle that you can work to overcome. Read on for tips that can help you pay down debt, regardless of how much you earn.

Budget debt payments first. The next time you sit down to budget, start by allocating money for reducing your debt. It should be your number one priority. Then, budget for essential living expenses like housing, utilities, and groceries. If you need more cash flow, cut down on non-essential spending like dining out and purchasing new clothes.

Start a side gig. If cutting expenses alone doesn’t free up enough cash, explore ways to make more money. That doesn’t always mean starting a second job—after all, this is the golden age of side gigs! Here are just a few hustle ideas for your consideration…

■ Resell books, clothes, and shoes you might pick up from the thrift store on eBay ■ Rideshare or deliver groceries and food ■ House sit, baby sit, or pet sit for friends and neighbors

Ultimately, your ability to earn income is only limited by your creativity in solving problems. What other opportunities are there for you to help others and earn extra income?

Make more than minimum payments. Your debt will linger if you make only minimum payments. That’s because minimum payments are nearly erased by interest. You make a payment, but the interest may put you almost right back where you started.

Instead, choose one debt to eliminate at a time. You should start with the one with the smallest total balance or the highest interest rate. Keep making the minimum payments on your other debts, and target that one debt with the rest of your available financial resources. Once it’s gone, choose the next smallest balance. Rinse and repeat until your debts are gone.

The biggest takeaway is that if you’re working with a limited income, paying off debt has to become your number one financial goal. Devote as much of your budget towards it as possible and increase your earnings if you have to. But it’s well worth the effort—once your debt is gone, you’ll have significantly more income for building real wealth!

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January 11, 2021

Simple Ways to Streamline Your Budget

Simple Ways to Streamline Your Budget

Is your budgeting system slowing your financial progress?

It’s not hard to tell if it is. Consistently ignoring your budget and failing to see results like increased cash flow and reduced debt could be indicators that something’s wrong.

Fortunately, it’s not hard to streamline your budgeting process. Here are two simple steps you can take to make your budget more manageable and more effective.

Prioritize your short-term budgeting goals
Splitting your cash flow between non-discretionary spending, savings, your emergency fund, and debt reduction may make you feel like you’ve got all the bases covered, but spreading yourself too thin might actually be diminishing the power of your money. It creates a house of cards that’s waiting to collapse!

Instead of trying to knock out everything at the same time, your budget should reflect your current financial situation. Prioritize where you put your money for the goal you’re trying to achieve. Start by putting all your excess cash flow towards an emergency fund. Then, target your debt. And finally, start directing your income towards building wealth. You’ll more effectively clear the obstacles that block the way towards financial independence.

Automate everything
What if there were a way to automatically make wise financial decisions without even thinking about it? That’s the power of automation.

Once you’ve determined your short-term budgeting goal, set up automatic deposits that move you closer towards achieving it. If you’re building an emergency fund, set up an automatic transfer from your checking account to a high-interest savings account every payday. You can do the same with essential bills and utilities as well.

Once you prioritize and automate your budget, there’s a great chance that you’ll see real progress towards your goals. And once you see progress you’ll feel empowered, maybe even excited, to keep pushing towards building wealth and creating financial independence.

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December 30, 2020

The Millennials Are Coming, the Millennials Are Coming!

The Millennials Are Coming, the Millennials Are Coming!

Didn’t do so well in history at school? No worries.

Here’s an historical fact that’s easy to remember. Millennials are the largest generation in the US. Ever. Even larger than the Baby Boomers. Those born between the years 1980 to 2000 number over 92M.¹ That dwarfs Generation X at 61M.

When you’re talking about nearly a third of the population of the United States, it would seem that anything related to this group is going to have an effect on the rest of the population and the future.

Here are a few examples:

  • Millennials prefer to get married a bit later than their parents. (Will they also delay having children?)
  • Millennials prefer car sharing vs. car ownership. (What does this mean for the auto industry? For the environment?)
  • Millennials have an affinity for technology and information. (What “traditional ways of doing things” might fall by the wayside?)
  • Millennials are big on health and wellness. (Will this generation live longer than previous ones?)

It’s interesting to speculate and predict what may occur in the future, but what effects are happening now? Well, for one, if you’re a Millennial, you may have noticed that companies have been shifting aggressively to meet your needs.² Simply put, if a company doesn’t have a website or an app that a Millennial can dig into, it’s probably not a company you’ll be investing any time or money in. This may be a driving force behind the technological advancements companies have made in the last decade – Millennials need, want, and use technology. All. The. Time. This means that whatever matters to you as a Millennial, companies may have no choice but to listen, take note, and innovate.

If you’re either in business for yourself or work for a company that’s planning to stay viable for the next 20-30 years, it might be a good idea to pay attention to the habits and interests of this massive group (if you’re not already). The Baby Boomers are already well into retirement, and the next wave of retirees will be Generation X, which will leave the Millennials as the majority of the workforce. There will come a time when this group will control most of the wealth in the US. This means that if you’re not offering what they need or want now, then there’s a chance that one day your product or service may not be needed or wanted by anyone. Perhaps it’s time to consider how your business can adapt and evolve.

Ultimately, this shift toward Millennials and what they’re looking for is an exciting time to gauge where our society will be moving in the next few decades, and what it’s going to mean for the financial industry.

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¹ “Millennials: Coming of Age,” Goldman Sachs, http://www.goldmansachs.com/our-thinking/pages/millennials/

² “May We Have Your Attention: Marketing To Millennials,” Kelly Ehlers, Forbes, Jun 27, 2017, https://www.forbes.com/sites/yec/2017/06/27/may-we-have-your-attention-marketing-to-millennials/?sh=2f3cb7cb1d2f

November 11, 2020

How Much Should You Pay For a Car?

How Much Should You Pay For a Car?

Cars will drain your wealth.

In 2019, Americans were spending about $773.40 per month on their vehicles, or $9,281 annually.¹ That’s like owning a tiny house whose value nosedives the instant you buy it!

That’s not even counting the opportunity cost of throwing that money at a car. How much could that cash grow if it were invested or saved?

That’s why you should follow this simple rule for guarding your wealth from a car.

It’s called the 20/4/10 rule, and it’s composed of three parts. Let’s explore them one by one.

Start with at least a 20% downpayment.

Committing a hefty downpayment to a car curbs how much you’ll lose in interest later down the road. It’s always best to cover as much as you can up front with cash.

Finance the car for no more than 4 years.

How long would you want to dump money into an “investment” that doesn’t grow in value? Not long! Keep your financing period short and sweet and then get back to saving for your future.

Dedicate no more than 10% of your income to car expenses.

Your cash flow is a powerful wealth building tool if it keeps, well, flowing. Don’t let a car divert it somewhere else that it won’t grow and won’t build wealth.

Remember, this is not a bulletproof strategy.

You might be facing substantial mortgage or credit card debt obligations that make it difficult to afford the car you want. It’s always a good idea to meet with a licensed financial professional before you commit to buying a new vehicle.

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July 15, 2020

The Stock Market Crash of 1929

The Stock Market Crash of 1929

What comes to mind when you think of The Great Depression?

Maybe images of long unemployment lines and dusty farmers.

But it all started with a massive stock market crash. Here’s a quick history of the Stock Market Crash of 1929.

The Roaring Twenties
The decade leading up to the Great Depression is referred to as the Roaring Twenties. The First World War had just ended and Europe was in shambles. But the United States was poised to become an economic powerhouse. The U.S. economy was exploding in the years before the war and, unlike Europe, had escaped the conflict relatively unscathed. It didn’t take long for the U.S. economy and culture to kick into overdrive.

During the 1920s was the birth of consumer and mass culture. Women now had access to white collar jobs. That meant more money for the family and more freedom to live and dress how they wanted. Affordable cars, courtesy of Henry Ford, meant families could travel and vacation in places that were never before possible. Radios and phonographs meant that popular music (a.k.a., jazz) could reach a wider audience and make big money for artists.

The Big Bubble
But people weren’t content to just spend their money on Model-Ts and the latest Louis Armstrong record. They were buying stocks. And when they ran out of money to invest, they borrowed more. Banks were eager to lend out money to a new generation of investors with stable incomes. One of those things that seemed like a good idea at the time.

By the end of the decade, the American economy was booming. But underneath the surface was a tangle of high debt and wild speculation that the economy would keep on expanding. In reality, the only direction things could go was down.

The Stock Market Crash of 1929
The stock market set a record high in August 1929. Then it began to moderately decline in September. But by the middle of October, a modest slump became a total free fall. Spooked by the cooling market, investors started selling their shares in the millions. The technology of the time was overwhelmed trying to calculate how much was being sold. The massive bubble that had expanded during the roaring twenties was collapsing.

But the catastrophe didn’t end in the stock market. The public panicked. Droves of people started withdrawing money from banks as quickly as they could. But those banks had used that capital to invest in the market. Huge amounts of wealth were wiped out.

Aftermath
This upheaval caused the U.S. economy to take a nosedive. By 1932, stocks were worth only 20% of their 1929 peak.(1) Half of America’s banks were belly up, and nearly 30% of the population was unemployed.(2) Economies around the world were deeply shaken by the collapse of the U.S. market, making the Great Depression a global phenomenon. It would take the massive economic mobilization of World War II to resurrect the U.S. economy.

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June 10, 2020

The Food Waste Epidemic... And What You Can Do About It

The Food Waste Epidemic... And What You Can Do About It

Food waste is a big problem.

Don’t believe me? Just check out these food waste facts:

- The average family throws away around $1,500 of food every year.(1)

- One recent study found that we toss around a third of all consumable food, with wealthy nations being the biggest culprits.(2)

- Cutting back our food waste just 15% would free up enough food to feed 25 million Americans.(3)

Those are incredible numbers. And they touch everything from the poor in other parts of the world to your own wallet! But what can you do? How can you not only combat a global problem but also look out for your own financial needs? Here are a few practical ways to reduce food waste and save some money while you’re at it!

Shop with a plan
The first step to not wasting food is only buying food you plan on eating. That means deciding ahead of time what you want to eat, making a list, and only buying those items at the store. Sure, it’s thrilling to walk down the produce aisle just waiting for an exotic veggie to catch your eye or buying extra meat just in case you want pork chops instead of chicken thighs. But you’ll quickly find that shopping without a strategy can lead to overbuying. This raises the potential that food won’t get prepared and will get thrown out. Always start with a list and shop from there.

Online shopping may help you stay on track with your list—and save you a ton of time! It’s fairly simple these days to log in to your favorite grocery store app, check items off, then click Delivery or Pick-up. (Keep in mind the store may charge a small fee for these services, but if it means not throwing out yet another unopened box of spinach, it might be worth it!)

Store wisely
Even the best planner will overbuy at some point. Maybe there’s a great sale on your kids’ favorite snack crackers, or you want to pick up a couple extra bottles of wine since they’re BOGO. You might stock up on Monday and then remember you have dinner plans with the in-laws on Friday. Don’t panic! Keeping your food from going bad is actually pretty simple. For many perishable items, just take a deep breath, open your freezer, and put your food inside. Close the freezer door. Your food should be safe from going bad until your schedule clears up. Just remember to dethaw your food before you try cooking it!

If you find you’re stocking up often on dry goods, you might want to invest in some quality containers (plastic, glass or metal) to help keep your food fresher, longer.

Reuse (safely)
But what happens if you prepare a ton of food for a meal only to discover that your stomach is smaller than you anticipated? Open up the trash can and dump all of that delicious, edible food?

Never!

The classic leftovers loophole is to put your food in proper containers and leave them in the fridge until you can get back to them in the next day or two. You can also freeze leftovers if you need. But why stop there? Those leftovers are just begging to be transformed into something fresh and delicious! Why not stir fry them with some rice or cook them into a casserole? Get creative and make something new and amazing!

Reducing food waste takes a little work and planning. But with the right attitude, it can be a fun way of contributing to your community, helping the planet, and avoiding a hunger strike by your bank account!

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June 3, 2020

Do you know your net worth?

Do you know your net worth?

Usually when we think of net worth we imagine all the holdings of a wealthy tycoon who owns several multi-million dollar businesses.

Or a young heiress on the New York social scene, or a successful blockbuster movie actor.

However, you have a net worth too. Essentially, your net worth is a personal balance sheet of your assets and liabilities, not unlike the balance sheets used in business.

Calculating your net worth
First, you’ll want to tally up all your assets. These would include:

  • Personal property and cars
  • Real estate equity
  • Investments
  • Vested retirement plans
  • Cash or savings
  • Amounts owed to you
  • Cash value of life insurance policies

Next, you’ll calculate your liabilities (amounts you owe someone). These would include:

  • Loans
  • Mortgage balance
  • Credit card balances
  • Unpaid obligations

Your total liabilities subtracted from your total assets establishes your net worth.

The number could be positive, or it could be negative. Students, for example, often have a negative net worth because they may have student loans but haven’t had much of a chance to build personal assets yet.

It’s also important to realize that net worth isn’t always equal to liquid assets. Your net worth includes non-liquid assets, like the equity in your home.

What should your net worth be?
The notion that you should be at a certain net worth by a certain age is mostly arbitrary; wealth is relative. Having a hundred thousand dollars stashed away might sound like a lot, but if you live in an affluent area or have a large family to provide for, it may not last long if your job disappears suddenly. In other situations, the same hundred thousand dollars might be a fabulous starting point to a growing net worth.

Net worth can be a way of “keeping score”, but it’s important to remember the game is one in which you are the only player and you’re playing to best yourself. What someone else has or doesn’t have isn’t relevant to your needs and your future goals for your family.

Looking ahead
Measuring your net worth can be a strong motivation when saving for the future. Do you want to be a certain net worth by a certain age? Not if the number is pulled out of thin air. If your net worth marks progress toward a well-reasoned goal, however, it’s extremely relevant.

When you’re ready to put together a personalized plan based on your net worth and (more importantly) your future goals, reach out anytime. We can use net worth as a starting point and a measurement tool, while keeping squarely focused on the real target: your long-term financial strategy.

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May 20, 2020

New Money

New Money

Last time we looked at old money.

We saw that it’s built on a very specific set of values and exists in very specific places. But what about so-called new money?

The new money story
New money is characterized by a story. It begins at nothing, or next to nothing, and builds a fortune through hard work, grit, and determination. These rags-to-riches tales have been around for a while, but they’ve gripped the American imagination, especially since the last half of the 19th century. Andrew Carnegie and Steve Jobs are the classic examples of new money narratives, both men coming from immigrant families and amassing huge fortunes for themselves to change the world.

New money values
Building a fortune from scratch relies on a different mindset than managing a pre-existing legacy. Risk taking and innovation are often encouraged and even flaunted by the new money class. It’s a forward-thinking, even progressive, attitude that’s always looking for the next way to make another dollar.

The openness of new money
Progressivism and hustle are the hallmarks of new money. That’s resulted in new money existing in a unique world. New money tends to be found in the hotspots of entertainment or technology. That means movie studios attracting actors look for a break or technical schools swarming with students trying to build a digital future. The new money ethos has also resulted in very specific spending patterns that are more public. Highly visible charities, brash social media presences, and expensive toys and gadgets are all part of the package. But so is an interest in looking like an everyman. Fashion choices tend to be simple, most classically t-shirts or turtlenecks. It’s a far cry from the aloof elegance of old money!

Blurry borders between old and new
The lines between old and new money get complicated in how life plays out. Plenty of tech fortunes have been squandered over the last 30 years, while others have quietly decided to manage their wealth in obscurity. Plus, there’s no shortage of American aristocracy looking to flex on social media!

The biggest key is that old money and new money are built on values and mindsets. You can manage wealth earned from a mobile game like an oil tycoon from a long lost era and secure a legacy for your kids. Or you can forsake your family’s business of 200 years and forge your own path with hard work and grit. It’s up to you how you manage your specific circumstance!

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