The Financial Crossroads Blog

Before You Hit The Deer...in 90 Seconds or Less

2010-10-26T08:15:00.001-04:00

People tend to know the commercials for their car insurance company better than they know their coverage, so here’s a fly-by primer of how to understand your auto insurance with an extra special surprise at the end that’s bound to make you laugh.

Ben Franklin Was Wrong!

2010-10-19T08:12:00.002-04:00

Ben Frankin was, without question, a man of wisdom. He was right about many things, but one area in which I must respectfully disagree with the sage is his insistence that the only certainties in this life are death and taxes. Of course, taxes and death are hard to avoid, but there are also other things in life that we will most definitely not evade. In this last of an 18 blog series on the subject matter contained in the book I co-authored with best-selling author, Jim Stoval, we address another one of those certainties and the steps that one must take to adapt and thrive in the face of it.

From The Financial Crossroads, Chapter 18, “Your Story, Your Plan”:

We have made reference in other parts of the book to the oft quoted phrase about death and taxes. I enjoy history, so I had to trace its origin. It appears that Daniel Defoe, in 1726, was the first to make this now famous claim, albeit more eloquently: “Things as certain as death and taxes, can be more firmly believed.” Much closer to the modern day phrase, however, was Ben Franklin’s redux in a letter to Jean-Baptiste Leroy in 1789, in which he said, “In this world nothing can be said to be certain, except death and taxes.” Regardless of the veracity of this line of thought, I find it all quite depressing. But I do think that we could turn this into a phrase in which we’d all agree: One guarantee in this world is change.

Do you embrace, reject, resist or retreat from change? The fact that you purchased this book tells me you probably don’t reject it. That you read this far tells me you probably don’t resist it. The question now, however, is whether you will embrace it or retreat from it. The easier path is to retreat, because as Arnold Bennett tells us, “even a change for the better, is always accompanied by drawbacks and discomforts.” Regarding the intersection of money and life, there are two different types of change: fundamental change and practical change. In a perfect world, fundamental change happens first and practical change follows almost effortlessly. But fundamental change does not always come easily. Often times, practical change precedes fundamental change as we allow a discipline to shape our view fundamentally.

A fundamental change is seeing the world as a risk manager; practical change is altering your insurance policies. Fundamental change is shifting from a retirement plan to a fulfillment plan; practical change is taking degree or certificate college courses that could lead to a job change. Fundamental change is seeing your estate plan as a legacy plan; practical change is updating your will.

Practical change is cutting up the credit cards, your path to more; fundamental change is genuine contentment with enough. Practical change is beginning a giving program; fundamental change is having less of an attachment to material things. Practical change is writing your Personal Money Story; fundamental change is realizing its significance. Practical change is dealing with the dollars and cents in life; fundamental change is life itself.

The Financial Planning Timeline...in 90 Seconds or Less (sort of!)

2010-10-12T14:25:00.001-04:00

Unfortunately, the "financial planning process" has the unintended consequence of rushing you (and the financial planner) through the most important steps of the process in an effort to get the planner paid the quickest. See how in "The Financial Planning Timeline in 90 Seconds."

Selling Snow Cones To Eskimos

2010-10-06T21:29:00.002-04:00

The financial services business is… interesting. It’s not entirely devoid of good intentions and well-meaning people, but there is no question whose interest is the top priority—and it ain’t yours! To paint you a picture, I’ve included an excerpt from The Financial Crossroads; the story of how I first entered (then temporarily left) “the business.”

From Chapter Seventeen: Everyone Is Biased:

“Everyone is biased.” Those were the words of a mentor of mine shortly after I entered the business of financial advising. I had already been working in the financial industry for several years, but this was the second time that my idealistic view of the objective, trusted financial advisor received a healthy dose of reality. The first time was about three years earlier. I had just finished celebrating my rite of passage into the stock brokerage world——successful completion of the “Series 7” examination that allows one to sell stocks, bonds, mutual funds, options, and various other securities to the public——when I left my entry-level back office job at a reputable brokerage firm to join a successful team of stock brokers at another firm as a “junior broker.”

I showed up the first day, bright and early, in my token blue pin-striped suit, starched white shirt, and bold power tie. I sauntered into the team leader’s office to await my very first “Morning Call.” I listened intently and began feverishly taking notes as a man’s voice rang through a small box detailing the economic events and non-events that were expected to influence the stock and bond markets that day, as well as the state of the current “inventory” that the company held.

As the call wrapped up with a dose of encouragement——akin to a team chant before a football game——I took a deep breath, a final swig of coffee, and moved forward onto the edge of my chair, eagerly awaiting the golden wisdom from my suspender-bound leader as I set out to save the populous from their deviant financial ways. He stood up, glanced out over the magnificent view of the Baltimore harbor visible from his corner office, and invited me to walk across the hall to get comfortable in my new confines.

He grabbed a three-ring binder, six inches thick, and opened it to the first page. Then he told me to write down the only note he had taken during the morning call: “BGE 6.5% Preferred.” My mission was to call the first number attached to the first name (of many) on the first page (of many) and begin a conversation to help bring whoever answered the phone to the conclusion that they could simply not go another day without putting some of their hard earned money to work for them in this bargain basement deal with an unbeatable yield on this new issue of the bedrock Baltimore utility company’s preferred stock.

I was told to start by putting a smile on my face, because my joy would better translate through the other end of the phone. I should talk and talk and talk until the voice either transitioned into a static dial tone or submitted to my plea to “talk to the resident expert” in house (my team leader), at which point I should put them on hold and alert the big shark that we had a fish on the line (I’m not stretching the metaphors here; that’s really how they talked).

This was my dream?? Several weeks later, driving home from a client lunch with my leader, I got up the nerve to ask him a question, the answer to which I was dying to know: “What drives you? A genuine interest to guide a client to the path of financial success or a pure love of the sale?”

I appreciated his honesty as he let out a “hrmph” and retorted, “The sale——of course! If this business dried up, I’d sell snow cones to Eskimos!”

He was the resident trainer for the company’s new breed of financial advisors that would guide (or pester) the residents of the Baltimore metropolitan area. I talked to him a few days later and told him that I felt we had a “philosophical disconnect” in the way we viewed the business. He agreed, saying, “Yeah, some people just aren’t cut out for the phone,” and we parted on good terms.

The celebrated entrance into the business I had dreamt about since the eighth grade ended in disappointment after only two months.

The Most Important Financial Planning Recommendation

2010-09-28T13:15:00.002-04:00

When I say, “Financial Planning,” it’s altogether likely that the first thing that comes to your mind is either INVESTMENTS or INSURANCE. And while each of those disciplines are fundamental and foundational to every good financial plan, it is easy for me to say that the most important recommendation that I see in most financial plans does not fall under either of those categories, but instead, in the realm of estate planning.

And, of course, the first thing that comes to mind when I mention stuff like wills, powers of attorney and advance directives is, “Oh, yeah, I know I need to do that.” You’re in good company if you haven’t; over 80% of people don’t have these documents, and most of those who do, have insufficient or outdated documents. Why is it, then, that I could suggest that the MOST IMPORTANT recommendations in your financial plan fall under the heading of estate planning?

First, if you have minor children and haven’t yet created wills (or you have children who’ve blessed you with grandchildren), you should stop whatever you’re doing and purpose yourself to contacting an estate planning attorney to get these documents drafted immediately. Ordinarily, I try to avoid using such dramatic words as best, most and immediately, but I’m not exaggerating here! The reason this is so important if you have minor children is because you stipulate in your will who the GUARDIAN would be for your children in the case that you and your spouse are both… gone. Sure, the probability of that happening is very low, but if you don’t determine who should raise your children in your absence through a will, your state of residence will decide for you!

Second, whether you just became a legal adult or have recently gained access into the centenarian club, the time is likely to come when you’ll need someone else to help you with a financial or health decision because you’re unable (through a disability) or unavailable (you’re settling on a house and are out-of-town for business). You can clear up exactly how these things would be handled with a well written power of attorney document and advance directives. The former allows someone else to act on your behalf in financial matters; the latter, in decisions surrounding healthcare or end-of-life decisions (like the tragic Terri Schiavo case).

Third, of the very few things you can count on as certainty in this life is that your stay here on Earth will eventually come to an end. So even if you’ve made definitive plans to join the prophet Elijah, who reportedly left the planet on a chariot of fire sometime around 800 B.C., you’ll likely be leaving someone (and something) behind when you go. Deliberating over what you intend to leave behind—both monetarily and otherwise—may be seen as not only an opportunity, but an obligation for a life-well-lived.

So why do you think people have a tendency NOT to check-off this big to-do item of having solid estate planning documents created? People have a tendency to avoid conversations about their own demise, as though they might attract it sooner. Instead, I encourage you to see this as an incredible opportunity! Whether your 20 or 120, I encourage you not just to leave an estate, but a legacy.

For more information on HOW to put together a proper estate plan, you’ll find a more detailed explanation in Chapter Sixteen of THE FINANCIAL CROSSROADS.

For more information on WHY, enjoy my CROSSROADS co-author, Jim Stovall’s, best-selling novel, THE ULTIMATE GIFT.

Being The B.E.S.T.

2010-09-21T11:33:00.002-04:00

My greatest reward in writing The Financial Crossroads has been the opportunity to work with and learn from my co-author, Jim Stovall. With no disrespect intended to Jim’s colleagues on the speaking circuit, Jim is one of the only “motivational speakers” who has caught my ear. That is especially because he’s not one who has made a career out of mere celebrity and motivating slogans. Jim’s never stopped doing the things that made him one of the nation’s great success stories. He continues to write books of varying genres at a pace unknown in the publishing realm and he runs the Narrative Television Network. In short, Jim’s not cashing in on some former success; he’s living out his success story and sharing it with us along the way. So it is with great pleasure that I feature a guest blog post from Jim for this week:

Being the B.E.S.T. 

by Jim Stovall

In our society, we revere those who are the best at what they do. Chants of “We’re #1” are heard frequently. You will never hear, “We’re #2,” or “We’re not great, but we’re better than we were last year.” If we want to be the BEST at whatever we do, we’ve got to break it down into its individual components.

“B” is for Balance. It is the element that keeps our lives stable. We’ve all heard about superstar athletes, multi-millionaires, and movie stars who wreck their health or family relationships in their quest for greatness. No matter how much we achieve in one area of our life, if we lose the overall perspective that we are many-faceted beings, we can never be successful.

If we want to have balance in our lives, we are going to have to be proactive. Most of us plan our workday. We have things we are going to try to do, things we really need to do, and the ever-present list of “things we better do today, or there will be no tomorrow!” But how many of us really plan—with the same degree of diligence—our family time, recreation time, exercise, etc?

Several years ago, my wife Crystal and I began a tradition. We take the week between Christmas and New Year and focus on the things we have done in the previous twelve months and those we hope to do in the twelve months to come. We plan our leisure time and focus on where we are in each area of our lives. While I have certainly not reached the levels I want to in every area of my life, this practice has brought a degree of balance to me that I had never known before. Most of us spend all of our time, effort, and energy on professional and business pursuits, and the other areas of our lives get whatever is left over or—in too many cases—they get shoved completely aside.

Balance means investing in yourself in every area of your life.

“E” is for Enthusiasm. This is the first thing we receive when we enter this world as the doctor slaps us on the backside, and the last thing we give up before they close the coffin lid. I have had the privilege of interviewing superstars from the worlds of entertainment, sports, and politics. The one thing that each of these individuals has in common is a tremendous passion or enthusiasm for what they do. If you don’t feel that kind of daily passion, as you pursue your life goals, you need to either get a new career or a new attitude about the career you currently have.

I remember interviewing Katharine Hepburn. When I asked her what she would have done with her life had she not pursued show business, she replied, “If they did not pay me to be an actress, I would have to find another way to support my acting habit. I have an innate need to do what I do.”

 This type of enthusiasm will bring you an Academy Award or whatever is the highest honor in your field.

“S” is for Single-mindedness. This is the ability to focus on one thing at a time. This does not mean we are one-dimensional in our lives. It simply means, when we are working, we work; when we are playing, we play; and any other task we choose to undertake receives our total attention and focus.

We spend far too much time living in the past, worrying about things that cannot be changed or living in the future, planning for eventualities that may never come. If we will live in the moment, we will find that mistakes of the past and frets of the future simply fade away.

 If something is worth investing your time in right now, it deserves all of your attention.

“T” is for Tenacity. This is the one element that will always result in eventual success. As a blind person myself, I could hit a baseball thrown by the best pitcher in the major league if you would let me keep trying until I succeed. The immortal message from Winston Churchill echoes down through the years, “Never, never, never, never, never give in.”

The whole world belongs to the man or woman who realizes that the game is not over until you quit; and when it comes to your dreams and goals, remember that it is always too soon to quit.

Jim Stovall

37.4

2010-09-15T14:45:00.002-04:00

The number 37.4 probably means very little to you. But to those who live with Cystic Fibrosis and their friends and family, the number is very significant because the life expectancy of someone with CF is 37.4 years. What impact would it have on your plans for the future if your life expectancy was rapidly approaching… or if you’d already passed it? How, for example, would you plan for retirement and allocate today’s material resources? In the course of writing The Financial Crossroads, I had the privilege of asking my good friend who lives with CF—and also happens to be a financial planner—these very questions.

From Chapter Fifteen: Retirement (Fulfillment) Planning:

A good friend and associate of mine has a unique posture towards retirement planning in the short, mid, and long term. Marcus Harris is a Certified Financial Planner™ practitioner and a board member of the Cystic Fibrosis Foundation. At the age of 35, he is a husband, father, financial planner and one who suffers from Cystic Fibrosis, a life-threatening genetic disease that at this time has no cure. I asked Marcus how the knowledge of this disease has altered his view of retirement.

He told me that his personal financial planning philosophy took a serious turn about a decade ago. Up to that point, Marcus assumed that his life would be dramatically shortened——“in 2008, the median predicted age of survival rose to 37.4 years, up from 32 in 2000,” according to the Cystic Fibrosis Foundation website——and, therefore, he had little need for saving for the long and even the mid term. He was a spender. But in his mid-twenties, Marcus made a conscious decision that he wasn’t going to live life in the shadow of this disease; that he was going to continue to enjoy life, but he was going to approach it as though the cure was imminent. And it may be. This realization opened the door to Marcus entering into serious relationships, and in 2003, he got married. Now, he and his wife have five-year-old twins, and Marcus is a saver.

I think that his is a situation that offers us all a profound lesson in financial planning. Especially because of Marcus’s condition, he is very motivated to plan for his family’s future so that it is secure even if Marcus is unable to enjoy it with them. At the same time, Marcus is reminded daily, with a host of medications that follow him, that he has a disease that could have already taken his life. You might not know Marcus personally, but you know someone, or you may have experienced something similar personally that screams out that we are all living on borrowed time.

"This Isn't Russia."

2010-09-08T07:27:00.006-04:00

In the midst of a mentoring session with Danny Noonan on the golf course, Ty Webb, Chevy Chase’s character in Caddyshack, instructs Danny, “You don’t have to go to college. This isn’t Russia. Is this Russia? This isn’t Russia.” Jim Stovall and I thought you may need a bit more instruction than this on the matter, so we dedicated a chapter to education planning and saving for education in The Financial Crossroads. We’d like to share some of our contrarian thoughts with you for this week’s Crossroads Conversation…

From Chapter Fourteen: If Cost Were No Object:

Amy Skogstrom, Managing Editor at Automobile Magazine said, “When someone asks me what car I’d buy if cost were no object, I pretty much always say the 911.” Ms. Skogstrom is referring to the Porsche 911, the iconic sports car to best all sports cars. The magazine was reviewing Porsche’s newest creation, the 2009 911 Carrera 4S. I can remember as a boy, too young to even drive, having one of those hypothetical daydreams as I thumbed through a magazine of sports cars, picturing a wealthy philanthropist walking up to me and saying, “Hey kid, I’ll buy you any car in that magazine——the cost is no object.” In that recurring daydream, I too have always answered, “The 911.” There’s just something about it. But alas, when it comes to automobiles, cost is an issue, so I’ll not be parting with the $109,000 that would be required to buy the 2009 Carrera 4S, “as tested.”

There are very few things in life for which we could actually say money is no object. The health and welfare of my family is the first that comes to my mind. But even then, I confess that I certainly have allowed money into my decision-making process. I have, for instance, chosen a pediatrician who is in my health insurance network. Is there a better pediatrician that may offer a concierge medical service independent of insurance hassles? Possibly, but I haven’t explored those options because I know the cost is quite high. For most decisions in life, money may not be the primary driving force in our decision, but we delude ourselves if we claim that it is a forgotten non-factor.

This is no more evident than in the realm of education. Does education have a price? As parents, do we owe our children a particular educational path? Is a college education an entitlement or a privilege? Before we jump headlong into this debate, let me clarify a few things. Learning has inherent value that is incalculable. Education is one of the primary ways that we learn. I don’t, even for a second, want you to receive a message suggesting that education is overrated. I teach on the college level and believe that it is one of the more important things that I do in life, but I don’t believe that any and all education is priceless.

Ho Do I Choose The Right Financial Planner?

2010-08-30T16:38:00.003-04:00

I had the opportunity recently to work with some great folks at the Journal of Medical Practice Management. They had been exposed to The Financial Crossroads and asked if I would write an article to be published in their offering to doctors and medical practice managers. The topic? How to choose the right financial planner. Which, incidentally, became the title of the article.

As I reviewed the article prior to publication, I realized that although the article was initially geared towards those in the medical realm, the education is indeed quite universal. Furthermore, there has never been a time at which so many people have been asking the questions in my lifetime: “How do I know how to choose the right financial advisor? Who can I trust? How can I verify?”

So I was very pleased when I found out that the Journal of Medical Practice Management had licensed an online outfit to reproduce some of its articles, allowing me to share it with you and anyone you know who might be asking the question, “How do I choose the right financial planner?”

To read the entire article, click HERE!

Wag The Dog

2010-08-23T15:04:00.008-04:00

Let’s face it: the topic of taxes is just… plain… boring! Boring, but IMPORTANT. Here’s the most important rule to remember about taxes in your personal financial planning in the least boring way I could muster.

From The Financial Crossroads Chapter Thirteen, Wag the Dog:

There is an alien in our house. Even though we willingly invited this being into our midst when it was very young, it’s become abundantly clear that it does not fully understand the cultural norms of the human realm. For example, when left to its own devices, it will pillage our human food stores even though it subsists on its own specialized alien food. It seeks to re-create the style and substance of our outdoor landscaping by relocating the dirt and mulch of our purposefully designed flower beds onto our sidewalks, and creating anew trenches and holes in parts of our yard that were previously flat and covered with grass. And despite our munificent creation of an alien habitat inside of our home, it seeks to live in, and often bring destruction to, our human habitat, furniture, and creature comforts. It’s...a dog.

Tim’s dog can’t catch a Frisbee with her mouth, but tries with her paws!

She is, as much as it pains me to say it, our dog, and unless she hears Jack London’s Call of the Wild, she will be for quite some time because she’s still only a puppy. She was a shelter puppy—an adorable, lovable mix between a German Shorthaired Pointer and a Labrador Retriever (at best guess). An especially strong case can be made for the pointer, because as she grew, she became so tall and lanky that her youthful coordination simply couldn’t keep up with her growth. The result was an hysterical few months of physical comedy.

After a February winter storm, she looked like Bambi scrambling to find her footing on the ice-covered snow. If she made it up a flight of stairs, she’d have to be carried down to avoid tumbling over her stilt-like legs. And her tail grew to a point where it seemed to double her overall length. That tail is a weapon capable of clearing off an entire coffee table. And she’s so annoyingly happy that her tail is always in motion. I have, on more than one occasion, seen her lose control of her overjoyed tail, collapsing her entire awkward frame into a heap on the floor.

“Don’t let the tax tail wag the dog.” In college, I heard that quote for the first time from the professor that made the greatest impact on me in those years, Dr. Daniel Singer. He was—and is—that professor that unnerves students because he’s not predictable. One semester, he’d teach a class with three tests and two quizzes in between; the next semester, your entire grade was based on only one presentation. But it was his unpredictability, his passion, and his depth of conviction that drew me to him, and I aimed to take as many of his classes as possible. It is now my privilege to teach alongside Dr. Singer as an adjunct faculty member at the university from which I graduated.

Dr. Singer would not claim to have been the first ever to say, “Don’t let the tax tail wag the dog,” but to me, in my junior year of college, it was groundbreaking, and it still is. Too many people, too often, make poor economic decisions because their judgment is clouded by tax concerns. In most financial decisions, the tax consequences are a secondary or tertiary—at best—consideration. Drew Tignanelli, a Certified Public Accountant and Certified Financial Planner™ practitioner with 30 years of experience balancing tax planning within the framework of good financial planning put it to me this way: “First, forget about taxes!”

How could he make such a claim? It’s not because he sees taxes or tax planning as irrelevant or unimportant. He simply recognizes that in the realm of personal financial planning, you should make decisions first based on the wisdom of the investment, insurance, retirement, or estate planning strategy, and then take a look at the taxes.

Annuities are Not Bought...They're Sold!

2010-08-17T10:14:00.002-04:00

For those working as financial planners, that we will eventually be humbled by the recognition of a faulty thought process is not just likely, but a foregone conclusion. One of the financial products that I was trained on intensely was annuities—fixed annuities, variable annuities, equity indexed annuities and immediate annuities. And it wasn’t until I was in the industry over seven years that my continued research began to reveal that the benefits of annuities to consumers were exaggerated and the drawbacks, downplayed. As that truth began to settle in, I had to acknowledge that I was wrong. That was humbling, but I wouldn’t trade my initially faulty thought process for anything, because learning “the hard way” has helped me grow through experience and it makes me a better planner today. Here’s my confession, which kicks off Chapter Twelve in The Financial Crossroads:

From Chapter Twelve, The “A” Word:

In the realm of personal finance, no word has been dragged through the mud more times than The “A” Word——Annuities. Yet, annuities still survive and even thrive. How they do is not a mystery.

There is not an outcry on the part of consumers demanding annuity products. The reason for the continued vibrancy of annuity products and sales is that they pay a big honkin’ commission to the selling broker or agent. (There, I’ve said it.) And, as most of the financial sales tactics exposed in this book, I’m especially qualified to make such a statement, because I have sold them myself. I wasn’t a bad person in those days, conniving to separate prospects from their hard-earned money for my own selfish benefit. Conversely, every time in years past when I sold an investment product to a client for a commission, I did so thinking it was best for the client. My recommendations met all the legal requirements of suitability that are required of a broker, but I declare to you now that in hindsight there is no question that my judgment was partly influenced by the amount of money that I could make (or not make) in the sale.

And how could it not be? Let’s say you, as a salesperson, had three different products to sell with the following characteristics: one would pay you 1% for every year that the investment continued to be held by the client, one would pay you 5.75% up front followed by .25% each additional year, and another would pay you 12%——all up front. Which one would you be likely to pick, all things being considered equal? Hmmmm. Let’s add to the scenario the assumption that you were selling in the midst of an economic downturn which had resulted in a significant loss of revenue for you and your family. Is it possible that in that circumstance you may be inclined to favor the product that pays 12% up front over the one that pays 5.75% up front? And forget about the one that pays 1%, because in tough times, that simply isn’t going to butter the bread. These aren’t imaginary numbers that I’m using. One percent is a slightly below average amount that a financial advisor may charge for discretionary management of your investment assets; 5.75% is the average commission paid to a broker who sells a mutual fund (A share); and annuity products pay up to——and in some cases over——12%!

The sale of annuities is justified entirely too often because of the massive commissions that go to the broker or agent selling the product. Powerful organizations have made it their lives’ work to decry this very notion and have built elaborate systems designed to convince themselves, their brokers and agents, and the consuming public to believe in the justness of their actions. I was a part of one such group and was encouraged——along with a room full of other financial folks who had been invited to San Diego for an all-expense paid trip to hear what this organization had to say——to join the ranks of the “Safe Money Specialists.” Other people were selling products. We were selling peace of mind and getting paid 10 times as much!

I repeat: people who sell annuities aren’t bad people. But, they are sales people. You expect timeshare salespeople to have an economic bias to sell you a timeshare. You expect a phone solicitor who interrupts your dinner to keep you on the phone to convince you to buy something before you hang up the phone. You don’t, however, expect someone who refers to themselves as a financial planner or advisor or professional to have the primary aim to sell you something. Unfortunately, many of them do. Your broker or agent may have drank the company Kool-Aid and genuinely believe that he or she is doing the best thing for you, so treat them with respect when you tell them you’ll be moving your business. As I learned growing up in the Baptist church, we should, “Hate the sin, not the sinner.” We will be discussing in much greater detail the ways that financial services employees and financial advisors are compensated and what you should look for in Chapter Seventeen.

Sleaze, Scams and Sales

2010-08-09T15:33:00.006-04:00

I—known to my wife as one with a deficiency when searching for something around the house with little aid other than my own two eyes—often kid that my “other” career option was to be a CIA agent. And while I may not possess the innate skills of perception required for a career in espionage, I do occasionally get to act as an investigator on behalf of clients, family and friends. Most recently, I tried to help a friend discern whether a piece of mail she received was intended for her benefit or merely “to sell her something,” or worse.

She received an apparent “2010 Medicare Update,” and as one nearing retirement, why wouldn’t she want an update on how Medicare reforms might impact her? But as I pored over the mailing, I couldn’t determine its originating source. The return address was “National Processing Center,” a name used by the U.S. Census Bureau for their primary information collection center. But as I scanned the entire mailing, I finally found the tell-tale signs of deception disclaiming that this was, “IMPORTANT NON-GOVERNMENTAL” documentation in the guise of official business.

What can we do?? Expect deception. Some of the biggest crooks out there are legal “legitimate” enterprises. So not only do we have to watch out for outright fraud and theft on Craigslist and Ebay, we also have to look for the conflict of interest in every mailing we get from our bank, brokerage firm and insurance company and every pitch we get from their representatives.

While we want to be careful, we don’t want to go through life as a hardened skeptic, so here are a few tips for examining solicitations from the financial industry designed to determine the economic bias—the financial conflict of interest—of the party attempting to sell you something:

Determine the source of the solicitation. Many companies will cloak a solicitation in a mailing that appears to be something else. You’ll notice that insurance companies don’t sell insurance; they sell “peace-of-mind,” and they’ll often hide what they actually do. THIS particular company is, however, extremely elusive. Its return address goes to “National Processing Center”… and I did some hunting to find out that there is an entity called the “National Processing Center Senior Services” in Durant, OK. Hysterically, the Better Business Bureau gives them an A- even though they list their type of business as “Funeral Related Services”! Complete deception!
Answer the question “What’s in it for them?” Once you’ve realized that the mailing ISN’T in fact from, in this case, the Federal Government, you can question why THIS company wants to educate you with their “Medicare Update.” In thiscase, the answer is simple—someone who is interested in a Medicare Update is likely in their target demographic for the products THEY sell.
If it sounds too good to be true… One of the mainstays in the financial product sales are invitations to “Free” lunch and dinner seminars. If a so-called advisor is buying you and a room full of your peers a steak dinner at Morton’s and picking up the tab, you’d better be ready for a sales pitch that’s coming sooner or later.
If you believe that solicitation of any kind is downright fraudulent, report it to the Federal Trade Commission. You can access their complaint department by clicking HERE.

Any company that has to deceive you in order to get your business is simply not a reputable enough organization for you to deal with!

All Things Considered...Equal???

2010-08-03T09:16:00.004-04:00

“The conventional wisdom is often wrong.” Those were the words of Steven Levitt and Stephen Dubner in their blockbuster hit, Freakonomics, which, by the way, if you haven’t read it is well worth the time and money. This could be no truer than in the financial services realm and, specifically, the sales of investment products and services. Indeed, the entire premise that an investment’s asset class—its label as large cap stock, small cap stock, international stock, short- or long-term bond—as the PRIMARY determinant of its risk, must be questioned.

Here’s how Jim Stovall and I put it in The Financial Crossroads in the chapter entitled, “Portfolio Management: All Things Considered Equal”:

Have you ever heard anyone say, “All things being considered equal…” and then follow it up with a statement? They may just be an economist. It’s like saying, “If everything happens the way I expect it to, I’ll be home on time for dinner.” It’s really an out. In economics, enormous models are created with assumptions too numerous to count, and the aforementioned phrase gives the economist an out when circumstances beyond his or her control change. This phrase is especially important in the management of investment portfolios.

All things being considered equal, stocks are more risky than bonds. Growth companies, more risky than value companies. Small companies, more risky than large companies. International countries and companies, more risky than the United States and companies domiciled here. In investing circles, each of these categories is called an asset class. If all things were equal, the above presumptions would hold true. But, especially in the world of investments, all things are never equal! They’re in a constant state of flux, and as Mark Twain told us, “History doesn’t repeat itself, but it does rhyme.”

Departing momentarily from theory into reality, consider the notion that instead of risk being determined by asset class, risk is determined by the price of that asset. The risk of a particular asset is not correlated with its label, but instead, its price tag.

**************************

You see, we’re not suggesting that the asset class is irrelevant, but it frightens us that the financial industry seems to have built its foundation for investing on the widely accepted “science” that an investment’s risk is determined by its label instead of its price tag. This concept is theoretically known as Modern Portfolio Theory or the Efficient Market Hypothesis, but has become broadly known and presented to consumers as Asset Allocation. You’d probably know it better from the pretty pie chart that most often is pulled out to describe it. (All you need to do is “rebalance” between the asset classes when the pie chart gets out of whack and VOILA—a lifetime of investing made simple!)

So if you were one who had wondered if your pie chart wasn’t cutting it, or if you were relying too heavily on market logic that seemed all too illogical, we’d suggest that your common sense might actually trump the behemoth financial institution!

Life Insurance (Part 2): HOW?

2010-07-26T16:17:00.002-04:00

Just this past Thursday, we dove into the topic of life insurance with the not-so-existential question—WHY? What is the case for life insurance at all? If you didn’t take (a little over) 90 seconds to watch that one, you can do so by clicking HERE to see my list of life insurance “NEEDS” (those things that would be required to keep anyone you leave behind on track financially) and “WANTS” (those things that could better be described as “bells & whistles” in life insurance planning).

Today, we provide you with a primer on HOW you can begin to calculate an appropriate amount of life insurance for you as well as the type of insurance that would best suit your needs. We hope you both learn from and enjoy “Life Insurance—HOW? (in 90 seconds).”

IT’S EASIER TO LOSE MONEY THAN IT IS TO MAKE IT!

2010-07-19T13:30:00.003-04:00

Over the weekend, I was watching a television program on which a financial advisor made his claim that, “The market has always come back and I think it always will.” Sadly, this has been the sales pitch of stock brokers for generations and only some of those generations have walked away with a positive rate of return. For this post, I’d like to share with you the open to the fifteenth chapter of The Financial Crossroads titled “Risk Management Investing." We call into question the now institutionalized thought in the financial industry of “Buy and Hold,” Asset Allocation and Modern Portfolio Theory to remind all of us of the mathematical truth that IT’S EASIER TO LOSE MONEY THAN IT IS TO MAKE IT!

From “Risk Management Investing”:

"I am more concerned about the return

of my money than the return on my money."

(Mark Twain)

Mark Twain was the first to wittily claim that he was more concerned with capital preservation (the return of my money) than growth (the return on my money), but it is interesting to note that Twain passed away in 1910, prior to the Great Depression. Oklahoma’s favorite son, Will Rogers (who died in 1935), also later made this a notable quote. I have another that I’d like you to chew on. “It is easier to lose money than it is to make it!”

That’s not a catchy slogan or tagline. It’s a mathematical fact. If you have $100 and you lose 10% of it, it will take an 11% rate of return to become whole. If you lose 20%, you’ll need to make 25% to get your money back. What if you lose 50%? What rate of return would you need to make your money back? The answer is an astonishing 100%! I’m not being “tricksy” as Tolkein’s character, Gollum, called the Hobbits in the Lord of the Rings trilogy. See for yourself:

$100 x 90% = $90; $90 x (100% + 11%) = $100
$100 x 80% = $80; $80 x (100% + 25%) = $100
$100 x 50% = $50; $50 x (100% + 100%) = $100

Once you’re down 50% and facing that big 100% hill, it will take you around seven years, if you’re able to make an annualized rate of 10% per year, to get back where you started. If you’re making closer to 7% each year, you’ll be waiting a full decade to break even. If you earn 4% on your money, it will take you 18 years to recover from a 50% fall.

But you say, “I always learned that you need to buy and hold. The market will go up and down, and we can’t time it, so we shouldn’t try! It’s not timing the market. It’s time in the market!” It is true that market timing is a very dangerous business——betting, if you will. However, if and when you’re able to see the bearish train coming down the tracks, would it not make sense to get out of its way? The price of staying in can be disastrous. From the day the market peaked on September 7, 1929, it would have taken until 1954 to break even if you bought, and held. That is a pretty long time to wait, especially if you were planning to retire in 1932.

And today? For the last decade, the market is down over 20%. You will find that the current logic that runs the financial services realm at the institutional level was developed in one of the best stretches the market’s ever seen. From 1982 until March of 2000, the market ran upwards with little impedance. Objectively speaking, Buy-and-Hold and strict Asset Allocation concepts, born in that 18-year stretch, worked very well. But what about the stretch from 1964 up until 1982? Believe it or not, that span represented yet another 18-year stretch where the buy-and-holder would’ve made nothing——zip, zilch, nada. And we in the United States have it good! Japan’s staring at their 20th year of an atrocious run that leaves the Nikkei still 70% south of its peak at 40,000. So, eight years into a rough losing streak for the U.S. market——and following a colossal financial demise brought on largely by ignorance and greed on the part of the U.S. government, corporations, and citizens——would you rather be buying-and-holding the Dow or the Nikkei?

It’s not my intent to scare you, so let’s go back, and I can try to give you some answers and some hope. The world’s best investors are not buy-and-holders, asset allocators, or Modern Portfolio theorists. They’re risk managers. These are folks like Sir John Templeton, Jean-Marie Eveillard, Jim Rogers and yes, Warren Buffett. They spend more time worrying about how not to lose money than they do trying to make it. I’m not talking about leaving all your money in T-Bills and CDs. I’m talking about resetting your brain to focus first on managing risk in your investments, then, on your return.

Money and Health

2010-07-12T20:23:00.002-04:00

Check out this life changing quote from Charles Caleb Colton: “The poorest man would not part with health for money, but the richest would gladly part with all their money for health.” Especially important to note is that Colton eventually killed himself rather than undergo a dreaded operation. So he wasn’t necessarily philosophizing from a position of comfort, but communicating a realization through which he was living. Do you ever choose money over health? I know I have.

Indeed the management of our own health is both more difficult—and more important—than the management of our money. And to the degree that it is possible and within our control, we are well served to do everything we can to preserve our health. Nonetheless, there are so many things in life and health over which we simply don’t and can’t exercise control. While hopefully you’ve picked up from Jim Stovall’s and my communication that we don’t recommend that you immediately hand over your premium dollars to an insurance company to transfer every risk over which you lack control, there most certainly are occasions that call for the wise use of insurance products to keep devastating health impairments from also sending us into financial ruin.

My friend and co-author of The Financial Crossroads, Jim Stovall, shares a few examples of those instances in his “Timeless Truth” from Crossroads’ ninth chapter entitled “Money and Health”:

*********************************

Timeless Truth

With rampant credit card overspending, the sub-prime housing crisis, and ridiculous long term automobile leases, most people assume poor spending habits cause personal bankruptcy. In reality, the number one cause of bankruptcy in our society today is medical bills.

For most people, it is not a matter of if but when you will need major medical coverage. And if you’re one of the lucky ones who never uses your health insurance, HOORAY! I would be very pleased to pay the fire insurance premium on my house and never use it.

If you are earning part or all of the income for a young family dependent upon your ability to work, you need to realize that you’re more likely to become disabled than to die. Most people understand life insurance is important, but they don’t realize that disability insurance is critical.

Finally, there is a flaw in the way people look at long term care between them and their spouse. There is a serious danger I like to call the second spouse syndrome. People who fall victim to the second spouse syndrome assume they will be able to take care of each other in old age. In most cases, one spouse does not have the ability to take care of the other and, obviously, at some point one of you is going to pass away, leaving the other one alone.

The second danger in second spouse syndrome assumes that one nest egg will be adequate to take care of both spouses. Too often, a spouse dies at the end of a long debilitating illness. It is not unusual for that spouse to deplete a sizable nest egg in the last several months of life, leaving the second spouse destitute when it comes to their long term care needs.

None of us want to think about the issues represented by health, disability, and long term care insurance; however, if you don’t face it as a statistical exercise now, you will face it as a daily reality later.

You will work very hard to earn, save, invest, and manage your resources. Make sure that one of life’s inevitable bumps in the road doesn’t derail you and your family financially.

- Jim Stovall

*********************************

Goatees and Bow Ties and Other Wall Street No-No's

2010-07-06T09:15:00.001-04:00

I’m sure you know that Wall Street and the financial services industry is filled with plenty of its own JARGON, but did you know that it also has its own DRESS CODE? In this brand new video blog, I tell the story of how I was introduced to FINANCIAL FASHION and finish with some advice that should help you choose the right financial planner for YOU (all in about 3 minutes)!

"15 Minutes Could..." Cost You a Fortune!

2010-06-28T15:27:00.003-04:00

Do you know what the 100/300 actually means in your auto insurance policy? I find that one of the least addressed areas in financial planning is home and auto insurance. Is it because we’re more enamored with auto insurance commercials than the coverage pitched? Or is it because most of us are legally bound to carry this insurance and thereby have a tendency to commoditize it and take whatever’s cheapest? I think so. Indeed, that’s how I treated it for many years. But mistakes are made that cause anything from a costly inconvenience to monumental problems—even financial devastation—for too many every year. For this post, I’d like to share the opening of Chapter 8: “15 Minutes Could Cost You a Fortune,” from The Financial Crossroads designed to grab your attention regarding home and auto insurance and steer you onto the right path.

From Chapter 8: 15 Minutes Could Cost You a Fortune:

You’re involved in a car accident. It’s your fault. The person driving the car you hit is injured. He visits with an attorney who runs late night commercials in between People’s Court re-runs. They decide to sue you. They win and are awarded $950,000. Who pays that bill? The insurance company? Hopefully. You? Possibly. If insurance, which one of those different types of coverage tells you how much they’ll pay? “Gee, I hope that when I saved 15% in 15 minutes I didn’t reduce that particular coverage.”

You’ve seen that commercial that claims to save you 15% on your auto insurance cost if you’re willing to spend 15 minutes. I’ve talked to several people who liked that idea, spent their 15 minutes, and, indeed, saved 15% or more on the premiums that they paid for their car insurance. What is not promised by the unnamed insurance company, which incidentally is also represented by an over-sized lizard and a couple of prehistoric humans, is whether new converts could be guaranteed to maintain or improve upon their auto insurance pricing and still have good coverage. In other words, they may be spending less...for less.

It is not my intent to demonize the above-referenced company. You may very well have your auto insurance with them and be properly insured for a reasonable rate. But it is inside the insurance realm that economic bias is so ever present that we must be very careful to understand what coverage we own for the stated price. Too many have spent 15 to save 15, or followed through on some other tempting sales pitch, only to find that their auto coverage would leave them financially exposed in the case that it was needed. Another “forward thinking” company has recently invited television viewers to choose the price that they would like to pay for their car insurance and allow the company to build a customized policy around the spending restrictions. I’m going to make another suggestion specific to your home, auto, and liability insurance: determine the coverage that you need, and then shop around for apples-to-apples quotes to see who will offer you the best price.

Financial Planning For Fathers

2010-06-21T21:16:00.007-04:00

I’ve learned more about life in the last 6 years than in the previous 28 combined. It was 6 years ago when I became a father, and I now have two incredible boys—Kieran and Connor—who’ve likely taught me more than I them. Parenting is a glorious challenge that tests every area of our lives—our marriage, family, and friendships, as well as our productivity, creativity and often times our mental stability! Financially, being a father is… expensive. And for those dads who have a tendency to evaluate financial expenditures as a “return on investment,” the return on investment in our children presents a confounding dilemma. After all, the expense is cold hard cash and the return is nebulous and may not be realized for decades.

In the end, we dads must relinquish our desire for tangible benefits of parenting and pour our life (and often times, our money) into these little ones, unconditionally. It is through this sacrifice that we begin to realize that the real benefits of parenting have nothing to do with dollars and cents, but instead intangible blessings and unexplainable joy. And who wouldn’t trade that—dollars for lasting joy? Fathering, then, turns out to be an incredible investment after all!

Practically, here are four financial planning areas that every dad needs to address:

Will – Most of us dads think that we’re generally indestructible, but the truth is that the one thing we can be sure of in life is that we will eventually… die. That inevitability requires us to have a will. And especially for fathers of young children, the most important financial planning recommendation in your world is to acquire or update a will—most importantly, to stipulate who your children’s legal guardian will be in the case of your untimely demise.

Life Insurance – The one thing that many dislike almost as much as the thought of their own death is the notion of talking to a life insurance agent. But the truth remains that if we would be leaving behind a spouse and children who are at least partly reliant on our very existence for our portion of the household, we need some life insurance. The vast majority of us will ably fulfill our life insurance needs with TERM life insurance.

Education Planning – As dads, we’re not legally or ethically bound to pay for our children’s college education, but if that is something that we’ve pledged to do, we should save for it so that it doesn’t wipe us out once our kids start graduating from high school. Consider saving 50% of your expected college expenses in a 529 college investment savings plan.

Work/Life Balance – Dads tend to put a lot of weight into our role to “provide and protect” in our households, but if we’re to be honest, we’d acknowledge that we occasionally abdicate ourselves from other roles and duties in the household. Simply put, our kids grow up fast, and if we make them feel like our work is the most important thing in the world, they’ll quite naturally conclude that they aren’t. Adults understand the difference between the quality of time and the quantity—but for kids, it’s often just about the quantity!

I had an opportunity to share these same thoughts with viewers of WBAL-TV (NBC) in Baltimore yesterday - Father's Day. If you want to view the video simply click HERE or click the image!

Spending and Saving

2010-06-15T15:43:00.003-04:00

My The Financial Crossroads co-author, Jim Stovall, has certainly found enough success as a creator of books and movies to work only on “BIG” projects of his choosing, but Jim really loves communicating in his down-to-earth personal style on a regular basis through his syndicated column, Winner’s Wisdom. This week, Jim chose to address the topic of saving and spending, and I wanted to share it with you. Enjoy!

-Tim Maurer

************************************************

Spending and Saving

by Jim Stovall

Whether you make millions of dollars a year or earn minimum wage, there are only three things you can do with your money: You can spend it, save it, or give it away.

Your spending may range from absolute necessities to outrageous luxuries. Your savings may be prudent investments or coins in your piggy bank. And your giving may be coins you drop in a donation jar or launching your own foundation. But there are still only three things you can do with every dollar.

Financially successful people make sure that each dollar is divided between spending, saving, and giving. Traditionally, Americans have been a very giving and generous group of people. This generosity fluctuates some but remains strong, even during difficult economic times. If you’re not giving away part of every dollar you earn, you’re missing a great opportunity and one of the true joys in life. While, as a society, our giving can always improve, we seem to be doing fairly well overall.

The problem arises when we make the decision between spending and saving. Savings rates in America are dangerously low and, in some sectors of the population, the savings rate statistically actually drops below zero. You may wonder, as I did, how it is possible to save less than zero.

When I researched the statistics, I found that many people today are spending significantly more than they earn, and the disparity is showing up in their credit card balance, line of credit, or other debt instrument. This is a dangerous practice as without long-term retirement investments, your golden years may seem more like aluminum foil than gold. Without some emergency savings, you are like that pilot flying his plane 50 feet off the ground. While it might work for a little while, sooner or later, you will crash and burn if you don’t leave some margin of error in the form of a cash reserve.

When we look at global savings rates, we find that Europeans save 20%, Japanese save 25%, and the Chinese save over 50% of their income. This is fascinating when we consider that economic growth is thought to be fueled by spending, but China has one of the fastest-growing economies while their people are saving half of their income.

Global statistics are interesting for study or theoretical discussions but really don’t matter to you and me. The economic conditions on Wall Street or The White House should not concern us nearly as much as the financial picture on our street at our house. There are many ways to calculate the best way to spend, save, and give our money.

In my newest book, The Financial Crossroads, my coauthor Tim Maurer and I explore a number of ways you and your family can win with money. We offer many calculators and other tools you can use to get the information you need so you will know what to do; however, it’s important to realize that financial information abounds. As in most things, with money we don’t fail because we don’t know what to do. We fail because we don’t do what we know.

As you go through your day today, commit to get the information you need to make quality financial decisions and then act.

Today’s the day!

Jim Stovall is the president of Narrative Television Network, as well as a published author of many books including The Ultimate Gift. He is also a columnist and motivational speaker. He may be reached at 5840 South Memorial Drive, Suite 312, Tulsa, OK 74145-9082, or by e-mail at Jim@JimStovall.com.

Good Debt vs. Bad Debt in 90 Seconds or Less

2010-06-08T15:32:00.006-04:00

I’m impelled to go “back in time” to a topic that we discussed in April. Then, we discussed More vs. Enough—the lack of contentment that often leads to over-consumption. But with interest rates again hovering at record lows, I’ve been addressing good questions from people wondering if today’s historically low interest rates are a “game changer”? Should you now consider doing a cash-out refinance and investing the proceeds? Should you buy the car with a low or “no” interest loan?

Good Debt vs. Bad Debt. Is that the question? I challenge that entire premise in the next installment of the 90 Second Finance video blog series, and I encourage you to spend a couple minutes to check it out and post your comments, questions and criticism.

Career Advice...From the "Most Interesting Man in the World"

2010-06-01T07:28:00.007-04:00

After a couple weeks of discussion around the undeniably heavy topic of life insurance, I thought it was important to lighten things up a bit. I love finding tidbits about our financial lives in generally non-financial books, music, movies… and even television commercials.

Have you seen the commercials for the Mexican beer, Dos Equis, in which a nameless, well dressed, bearded man only described as “The Most Interesting Man in the World” shares supposed wisdom that is quite intentionally humorous—even hysterical at times? Here are some of the lines used to describe this gentleman:

“Police often question him, just because they find him interesting."
“He speaks fluent French, in Russian.”
“He once had an awkward moment, just to see how it feels.”
And one of my personal favorites: “He lives vicariously through himself.”

He’s even taken a moment out of his busy schedule to give us some career advice in which he posits, “Find out what it is in life that you don’t do well… and then don’t do that thing.” Now this is supposed to be funny—and when he says it, it is—but as I thought further, I realized that so few people seem to have taken his advice. Especially the way that many people gripe about their job, I can’t help but think they ARE doing something that they don’t do well, because generally, we enjoy doing things that we do well.

I’m entirely sure that the most interesting man in the world is not making an attempt at profundity here, but I’d like to twist his humorous comment into an affirmative one that I do believe would serve you well as foundational career advice no matter how old you are or the status of your employment. That is, “Find out what it is in life that you DO well… and then DO that thing.”

The foundation of every solid financial plan is the cash flow mechanism; the driving force behind every cash flow mechanism is most often a job or jobs; if that job is primarily made up of duties for which we are well equipped, excellence is almost invariably the outcome; when we do a job with excellence, we tend to advance thereby increasing the household cash flow… which tends to improve our overall financial health.

But our career is really less about money and more about life. Most of us spend the majority of our waking hours working, and if we do so with the primary if not sole purpose of bringing home a paycheck to THEN enjoy life, the mathematical truth is that we’ll spend the minority of our lives actually… living. I’m not affirming workaholism; nor am I suggesting you “live to work.” I also understand that the realities of our current economy make it even more difficult to drop the job you hate cold turkey to pursue your passion. But I am inviting you to join the minority of workers who have infused their occupation with their life purpose and incorporated their job into their life.

Watch the short embedded video—laugh—and then consider what a first step in this regard might be for you. As my co-author, Jim Stovall, signs off, “Today’s the Day!”

The Financial Crossroads Co-Author Tim Maurer Appears on CNBC

2010-05-25T21:21:00.001-04:00

Tim Maurer appeared on CNBC on May 25, 2010 to discuss the "flash crash" and it's impact on 401(k) balances.

Life Insurance, Part Deux: NEEDS & WANTS

2010-05-24T13:14:00.008-04:00

Last week we introduced the topic of life insurance conceptually and debunked the myths surrounding life insurance agents and fashion. This week, I want to give you some tangible tips on how you can understand the role of life insurance in your life. We’ll start with an excerpt from The Financial Crossroads:

Like all of financial planning, there is both a science and an art to life insurance planning. While there is enough subjectivity in the thought processes surrounding life insurance to create an exception for nearly every rule, we will begin by separating the various reasons to purchase life insurance into concrete NEEDS and WANTS. Life insurance needs are those things that would allow the surviving family membe

rs to continue on, unencumbered by the financial loss of the deceased. If no one else is reliant on your financial wherewithal, you have no life insurance need. Life insurance wants, then, are anything else that would further improve your situation beyond what it is today. Let’s look at the primary examples.

Life Insurance Needs:

Final Expenses
Payment of Debts and Mortgages
Education for Children
Needed Income Replacement

Life Insurance Wants:

Pre-insurance
Build Cash Value
Estate Creation
Wealth Replacement
Charitable Bequests

***********************************************

Determining exactly HOW MUCH life insurance is required to satisfy your needs and wants is quite simply too much information to pack into a blog post (it’s even a challenge to do so in a chapter, but we give it our best shot in Chapter Seven of The Financial Crossroads entitled, “Life Insurance, Part II: How?” and offer free online spreadsheets and exercises to help you determine your life insurance needs via the Tools & Applications tab on www.TheFinancialCrossroads.com) but I do have the space to sum up for you WHAT TYPE of life insurance you can consider in satisfying your needs and wants…

In the vast majority of cases, “Life Insurance Needs” are best covered with term life insurance. You’ll note that most of the needs listed are temporary, and as we mentioned last week, IF you have successfully reached financial independence—retired or not—you don’t have any life insurance needs. “Life Insurance Wants,” conversely, with the exception of Pre-insurance, almost always require the use of permanent life insurance (whole life, universal life or variable life).

I certainly recognize that the shortfall to every rule is its exceptions, and I look forward to addressing them—and any additional thoughts or questions you might have surrounding life insurance—on our blog, so please join me there!

Brown Corduroy Jackets & Life Insurance

2010-05-19T21:27:00.007-04:00

Did you know that the brown corduroy jacket is back in? It appears again true that fashion recycles itself, which should be a relief to the stereotypical insurance salesman clad in his (the ladies would never do this) brown cord jacket with the leather elbow patches!

Today I had lunch with two insurance agents. One I was meeting for the first time, and when he mentioned that he happened to read LAST week’s blog—“Don’t Be Sold Insurance! Manage Risk”—I braced myself for a less than pleasant conversation; after all, this gentleman makes his living in the insurance business. But I was pleasantly surprised to hear that he loved the concept and believed that it was indeed his job to help clients manage risk first, and that the final step in risk management is to transfer risk via insurance. By the way, both of these dudes were impeccably dressed… and not in brown corduroy.

This week I’d like to give you some more introductory thoughts on life insurance, while our next post will be dedicated to some tangible steps that should help lead you to conclusions regarding your personal life insurance decisions. Here’s how we introduce the topic of life insurance in The Financial Crossroads in Chapter Six…

From “Life Insurance, Part I: Why?”

You don’t even want to read this chapter, do you? I say “life insurance,” and you immediately get a picture of someone in a plaid short-sleeved shirt accented with a squared-end tie and maybe even a brown corduroy jacket with the elbow pads and a serious comb-over. You picture someone sitting across the kitchen table launching a guilt blitzkrieg with a hefty price tag in your direction. You picture someone who has as much conflict of interest as the hungry lion circling the wounded wildebeest on the National Geographic show.

And, you may be partly right, but that doesn’t mean you can ignore the duty of properly managing the financial risk associated with death. There are certainly times when properly managing risk warrants or even mandates the transfer of that risk with——you guessed it——life insurance. If you are already financially independent, you have self insured the financial risk that you might die prematurely. Whereas, if you are a young parent with a good income, but not enough saved to keep paying the bills indefinitely if you leave this earth, you need to purchase some life insurance. We will give you the guidelines you need to begin making this decision.

It is not easy to talk about life insurance because it’s not easy to talk about death. It is especially difficult to pin a numerical value on a person, but that is precisely what we do with life insurance. It is important to recall in this chapter the lesson we learned in the first chapter: money is not powerful, but your relationships are. The point of life insurance is not to “buy off” someone’s pain and suffering over the loss of a loved one; it’s to provide the financial stability so that the survivor doesn’t have to worry about the money and can instead properly mourn their loss. I encourage you to have deep and meaningful thoughts and discussions surrounding the topics of life and death, but when you are doing life insurance planning, an objective approach is wisest.

Don't Be Sold Insurance! Manage Risk.

2010-05-11T23:21:00.003-04:00

In The Financial Crossroads, we begin our discussion about the various insurance products that are often used in financial planning with an entire chapter on viewing insurance as a risk manager. Before you tune out, let me assure you that this is not your typical insurance discussion, and recognizing the intensely personal nature of life, health and other forms of insurance, I decided to share a very personal story of my own that has become useful in explaining the various ways that we manage risk. This snippet isn’t likely to give you a bunch of answers, but I’m quite sure it will get you thinking, and I look forward to addressing your thoughts and questions on the blog.

From “Don’t be Sold Insurance! Manage Risk”:

There are four primary risk management techniques: risk avoidance, risk reduction, risk assumption (or self-insurance) and risk transfer (or insurance). Let’s analyze a real-life example to illustrate the various techniques.

The summer I was 18 years old, I was a punk. You know, a cocky know-it-all who would rather stick a hot poker in his eye than respond positively to any authority figure. I was invincible and omniscient. That’s why I knew that even though police officers had given me three separate violations for driving without a seatbelt, I had nothing to fear driving around without shoes or a seatbelt. To say that I learned several lessons the hard way that summer is an understatement.

I spent part of that Tuesday working, if you can call kicking back on a platform soaking in the sun while twirling a whistle around your finger and occasionally calling out, “Adult swim!” work. After I clocked out, I did what I did every summer Tuesday (and Wednesday, and Thursday)——find the party. I partied until a friend drove me back to her house where I slept off the day’s activities. Feeling sufficiently rested at 2:00 a.m., I got in my car to drive home. Ten or so minutes later, I was awakened to the sound of my tires hitting the rumble strips, and before I could respond, the car descended over an embankment.

Since I wasn’t wearing a seatbelt, I bounced all around the vehicle as it rolled down the embankment, finally resting on its wheels. My right femur (the longest bone in your body) was visibly broken. I had also suffered a broken pelvis and several internal injuries as I’d later learn. Possibly because I had watched too many action movies, I had an irrational fear that the car would blow up, so I tried to open the driver door and then the passenger door to “escape” before the impending explosion. When they wouldn’t open, I painfully crawled into the back seat. Neither of those doors would open either. I didn’t know that the car metal had rolled down over the doors.

Laying there in the back seat, I moved in and out of consciousness for hours. It wasn’t until 6:00 a.m. that a truck driver finally spotted my car from above and called in the accident. I can’t report that I was brave and unflinching, that I fought for every breath to cling on to life. I actually gave up. The last thing I remember hearing was the sound of a helicopter and a voice saying, “This doesn’t look good. I don’t think this kid is going to make it.”

God used Baltimore’s legendary University of Maryland Shock Trauma Center to save my life. They said I was only minutes from bleeding to death in the car. Shortly after arriving at the hospital, my left lung collapsed. After fighting the machines that were providing my oxygen, they induced a coma, in which I stayed for five days. I learned later that my chances of living fell below 10%. Since this is a financial book, I should point out that those are not favorable odds.

Why do I tell you this story? Because I think it will help you remember the concept of risk management. Let’s examine the personal and financial risks that I faced and the various risk management methods in the example of an automobile accident.

So, which of the four “primary risk management techniques” did I use?

What is Success?

2010-05-04T12:33:00.007-04:00

I’m going to say a word, and I want you to tell me what the first picture that comes to your mind is. OK, the word… is… SUCCESS…

Time’s up! So what came to mind? If I’m to be honest, the first thing that came to my mind was the picture of a business man in a nicely tailored suit opening the door of a Porsche 911. How about you? Was it something that had anything to do with money or material possessions? It’s not your fault. You’re not a shallow person, but that exercise shows you how effective incessant marketing can be. They—the multi-level marketers, infomercials for “abdominizers”, purveyors of secrets that aren’t actually so… as well as banks, brokerage firms, insurance companies… heck, even the companies that want us to buy their beer—they want us to keep their picture of success in our minds so that we’ll help them create their picture of success.

OK, now I’ll give you a few more seconds to get beyond your gut reaction and tell me what you’d rather picture…

For me, it’s sitting in my family room or around a campfire or at a scenic destination with my wife and two boys where everyone is laughing. That’s my picture of success. Now, that picture can certainly be enhanced by money or material things, but that picture of success is entirely possible without spending a dime. Conversely, all the money in the world would not make that picture a genuine success if there is brokenness in those relationships. Success may be accompanied by a pile of money, a sports car, or a 42-foot yacht pulling up to a second home in the Bahamas, but success isn’t actually any of those things.

But if not success, then, what is it that we really crave that leads us to a satisfying life? It’s another “S” word—and no, not THE “S” word, but instead, the word SIGNIFICANCE.

In all of us, there is a desire for significance. We want to be about something. And that’s why I start every financial planning engagement, discussion or seminar by telling folks to clear their minds of all things financial for just a moment—forget about 401ks, IRAs, taxes and insurance—and focus first on what it is that you want to be about in this world. Franklin Covey calls them Values, Ben Franklin called them Virtues—and since each of those words has taken on a slightly different connotation since those wise men used them, Jim and I refer to these foundational bricks of life in The Financial Crossroads as our Personal Principles. We encourage you to create a tangible list in writing of the 5 to 10 founding principles of your life—the stuff you want to be about.

It’s true that you can reach someone’s view of success by reading any number of financial books and periodicals telling you what to do with your money. Their downfall is that they’re telling you what YOU should be doing based on THEIR personal principles—not yours—and that means that you could end up achieving these financial goals successfully but still feeling hollow because your path lacked significance or your personal purpose. Is it extra work? Yes, it will take some time and deliberation to articulate a defined set of personal principles, but it is incredibly worth it because it validates—or sometimes even more helpfully, invalidates—the steps that you’re taking in money and life.

You can find tools to help you flesh out your Personal Principles and Goals at our website in the Tools & Applications section by clicking HERE. And, of course, you can read more about how to go through that process in The Financial Crossroads—specifically in Chapter 2: Cart Before the Horse.

By the way, be sure to check out the latest 90 Seconds or Less video where I explain the importance of placing values over money. It is called Cart Before the Horse.

90 Seconds or Less

2010-04-28T09:49:00.016-04:00

I’ve had the distinct privilege over the last couple of years to work very closely with Ben Lewis. Ben is the owner of Perception, Inc., a public relations firm in Gaithersburg, Maryland that maintains a focus on helping financial advisors… communicate. He’s helped (and continues to help) me hone my written and verbal communication skills—and that’s no small task… because I write… and say… a lot!

Those who know me know that I have a tendency to use MORE words than FEWER in any given circumstance. But Ben also knows that I’m also pretty competitive and would be likely to accept most challenges when the proverbial gauntlet is thrown… so he tricked me. He suggested we create a series of super SHORT videos in which I attempt to break down relatively complex personal finance topics—in UNDER 90 seconds.

And off we went. The idea was to take simple forms of communication and infuse them with some visual aid and a sense of humor to make some entertaining but meaningful points in an ultra-short format to fit our busy schedules. We have 10 of them “in the can,” and we’re happy to present the first five to you for this installment of the Crossroads Conversation. We’d love to hear your positive AND negative feedback!

So, without further delay, we are pleased to introduce you to Personal Finance in 90 Seconds or Less.

More vs. Enough

2010-04-19T08:19:00.002-04:00

Question: What happens when the government, institutions and consumers of the world’s leading economic power engage simultaneously in deliberate overconsumption? Answer: The Great Recession. This week’s Conversation is an excerpt from the fourth chapter of The Financial Crossroads, “More vs. Enough,” which has become one of my favorites because of the transformative power of its message. Here we feature a gentle but convicting “Timeless Truth” from my friend and co-author, Jim Stovall.

From… “More vs. Enough”:

**************************************

Timeless Truth

If your goal is to acquire a certain standard of living or lifestyle for you and your family or for your future security, this is admirable; however, if it is your burning desire to keep up with the image portrayed by the commercials on television or in the glamour magazines, you have been afflicted with the dreaded disease called more.

More is a disease which feeds upon itself like a thirst that can never be quenched. As we rush about aimlessly trying to accumulate more, we become aware of even a greater number of things we don’t have and must obtain. Instead of seeking the impossible goal of reaching more, we should, instead, seek the internal goal which is called enough.

Ironically, we can find people who are literally billionaires who have long ago lost count of all of their possessions; however, these people are still driven on that eternal quest for more. On the other hand, there are people of seemingly modest means who have attained the state of enough. They no longer judge themselves based on what they have, but instead, on who they are. They have come to the conclusion that it is more important to be someone special than to have a vast accumulation of possessions. They have reached a state of being where they understand that it is not important to be a “human having.” It is only important to arrive as a “human being.”

In the final analysis, many times reaching the state of enough will give you the confidence and peace of mind to be an even better person who will attract more success, resulting in the tangible possessions that have become such an addiction in our society. Focus on who you are, and allow what you have to become a result of your personal success.

- Jim Stovall

**************************************

Timely and Timeless

2010-04-14T08:11:00.003-04:00

The Financial Crossroads has two authors. We’re discussing the intersection of MONEY and LIFE. The duality throughout the book is purposeful and intentional, and one of the rhythms in each chapter is the balance of foundational timeless truths upon which we can rely along with the practical timely applications which we can directly and immediately apply to our lives. In his nationally syndicated column, my friend and co-author, Jim Stovall, took the time to discuss this important concept that we thought you’d enjoy for this week’s Conversation. I know that you’ll resonate with Jim’s sentiments, and Jim and I would love to hear YOUR stories of how timeless truths have “interrupted” your timely daily pursuits recently. (You can do so by posting a comment at the bottom of this column…)

*****************************************

Timely and Timeless

by Jim Stovall

This morning, as is my usual habit, I awoke in the four o’clock hour and began planning my day. This is a habit I enjoy as it enables me to get a head start on most of the rest of the world. As I was planning my activities, I was reminded of my motto that “Anything worth doing is worth planning, and anything worth planning is worth doing.” After going through my schedule, and checking on any overnight messages, I read until it was time to go to my breakfast meeting with our corporate staff at Narrative Television Network.

Everything seemed planned and organized until I received a call that my mother was in the hospital, and they were running tests to determine the nature of the problem. All of a sudden, each of the timely things I had planned for the day faded into insignificance in the light of the timeless truth that our loved ones are one of life’s priorities. Thankfully, Mom was fine and left the hospital later in the morning.

It is important that we strike a balance between timely activities and timeless values. Without the timely activities, we will never create all of the value in the world that we otherwise could; but without timeless values, the daily activities have no purpose.

Recently, I co-authored a book with Tim Maurer, CFP® (www.TheFinancialCrossroads.com). In the book, Tim deals with all of the timely financial tips that each of us needs to address in order to reach our financial goals. I deal with the timeless principles without which financial success cannot be achieved.

Timeless values teach us about the things that are important in the perspective of our entire life and even beyond. These principles are the roadmap that show us our destination and the priority of getting there. Timely activities are the simple, routine tasks such as filling our car with gas, getting on the right road, and taking the correct exit. These timely activities make it possible to reach the destination embodied by our timeless values.

In business, we describe some people as “big picture” people, and others as “detail” people. Big picture people are those who see into the distance and make sure we are all going where we want to be. Detail people make each of the minute-by-minute and day-by-day steps necessary to move toward that big picture destination. Without both priorities, we don’t succeed.

These two tasks cannot be totally compartmentalized in an organization or even within a person. If the big picture people are not aware of the time, effort, energy, and cost necessary to reach the goal, they cannot be effective. The detail people cannot perform with excellence and enthusiasm if they don’t know where they’re going. You and I, as individuals, have to straddle that same fence. We’ve got to constantly keep our eye on the big prize in the distance while being ever mindful of the next step before us.

As you go through your day today, focus on your timeless values as you prioritize your timely tasks.

Today’s the day!

Why You Should Ditch Your Retirement Plan

2010-04-07T09:37:00.011-04:00

Last week, CNBC featured The Financial Crossroads “Fulfillment Planning” concept in a new network feature on retirement planning. I had the opportunity to give a few tips on the concept, and my friend, Greg Conderacci, joined me to discuss how he is living out his own Fulfillment Plan. Greg left the corporate realm as the Director of Marketing for Alex. Brown to live out his personal purpose and passions as a marketing consultant, college instructor and long-distance cyclist.

You can read an excerpt from Chapter Fifteen, “Retirement" Fulfillment Planning below and view the CNBC piece by clicking HERE.

From “Retirement" Fulfillment Planning:

What picture comes to mind when you read the word, RETIREMENT?

Is it Picture #1? A handsome, gray haired couple manning the helm of a restored, vintage sailboat in excess of 35 feet that had to cost them at least half-a-million dollars. Strangely, the sailing seems to take little to no effort, and all they do is smile lovingly at each other.

Or perhaps, Picture #2? A similar couple, equally as abnormally thrilled about their surroundings, playing their third round of golf——that day.

Or finally, Picture #3? The slacker couple, who have made it their lives’ work to simply siton the beach in khaki pants and brilliant white shirts toasting Pinot Noir looking over their shoulders at their modest, 5,000 square foot, right on the beach, second home.

Those pictures, or some very close variant, are what we’re fed by the banks, brokerage firms, and insurance companies daily in the advertisements flooding the screens, pages, and airwaves. But it is not just the advertisements that promote the non-stop pursuit of seemingly unreachable financial goals. It is also the way that most financial plans are developed——especially by the majority of planners who work for one of “The Big 3” proprietary product producers. In those plans, the pinnacle moment of the presentation is when the retirement projections are revealed.

The retirement plan becomes the central point from which all other recommendations are made. Cash flow should be strictly monitored to ensure that you're amply filling the retirement coffers that will serve you at some hopeful point in the future. Insurance is purchased so that the retirement plan can be protected under any number of unexpected circumstances. Estate planning is making sure that your retirement plan continues on even if you don't. Education planning is making sure that you save enough for your children's college so that you don't have to impinge on your retirement savings.

What is the downside of retirement centric financial planning? For most people, it creates a goal that feels out of reach for the majority of their lives. You stress to hide away all that you can in your early working years before you have kids. You stress to keep your savings objectives on track through the expensive years of child rearing. You stress to save anything at all during your peak expense years of having children in college. You stress to get caught up on your savings objectives after your kids have passed through college. And then, if you're privileged enough to reach some seemingly arbitrary number that should produce enough income to live off of without working another day, you stress because––for the first time in your life––you no longer have any power over your income and you’re forced to subsist off of what your aggregate savings can spin off in growth and income. If it sounds like a lot of stress, it is.

The biggest problem with our current view of retirement planning is that it rarely brings a level of satisfaction and fulfillment into the present. It's always about the future. It rarely helps serve the dreams and goals that you have in life, but instead becomes the goal in life; the goal around which everything else revolves. It discourages independence and creativity and seeks to bring people to the conclusion that their financial goals in life should be dictated to them by an “expert,” as opposed to drawn from them by a professional. Is it possible that this modern day notion of retirement and retirement planning is prescribed more for the benefit of those who are writing the prescription than for the patient?

How To Spend $1 Million at Starbucks

2010-03-29T13:15:00.010-04:00

The Financial Crossroads In the News:

*******************************************

This week’s Conversation includes another excerpt from the book’s third chapter that answers the question, “How could you really spend a million bucks at Starbucks?” This chapter is a study in running your household finances with the same level of responsibility that a business should. And, as my co-author, Jim Stovall, puts it in this chapter’s Timeless Truth, “…it’s simple to manage household cash flow. Anyone can do it. It’s agonizingly hard, however, to manage ourselves.” The following true story gives you a glimpse of what is possible—for better and for worse—when we take the time to actively manage our household finances.

From the third chapter - How to Spend $1 million at Starbucks:

My good friend (Scott, we'll call him) is, by any standards, wealthy. His net worth is in the multi-millions. In early 2008, he decided to do a complete analysis of his cash flow. What he learned so shocked him that he now tracks his monthly cash flow with religious fervor. He realized that in the calendar year of 2007, he had spent over $12,000——at Starbucks alone! You're probably thinking, “I know Starbucks is a little pricey, but it's impossible to spend $12,000 at a coffee store in one year!” Here's how it happened:

Scott lives in an affluent neighborhood in one of the most expensive cities in the world, where there is a Starbucks less than a block from his residence. In the morning, afternoon and evening, Scott would treat himself and his wife to a Ventimochalattesoychaifrappacino (or something like that) at the bargain price of $5.50 per. That means that he spends $33 every day. Anyone who appreciates Starbucks knows that an addiction of that nature can simply not be broken once it is well established, so after 365 days of that, Scott spent $12,045 in 2007!

If Scott was willing to break with his addiction and put the $12,045 into an investment account that earned 7% per year, in thirty years, his account would be worth $1,137,780! Yeah, tracking your cash flow is important, and it is possible to spend a million dollars at Starbucks!

Cart Before The Horse

2010-03-23T07:00:00.003-04:00

"Not only must we be good, but we must also be good for something."

- Henry David Thoreau

"The great and glorious masterpiece of man is how to live with a purpose."

- Michel de Montaigne

Most of us do not achieve our goals, financial or otherwise. The primary reason we fall short is not that we have unrealistic goals or a lack of ability to achieve them. It is because we have not completed an exercise of far greater importance than goal setting. Prior to establishing goals, we must understand the stuff in life that we want to be about. Stephen Covey calls them values, Ben Franklin called them virtues, but we’ll call them Personal Principles. What are the underlying principles that guide you, and how do you want to make a mark on this world?

Establishing goals that are not supported by our Personal Principles can only achieve one of two dissatisfactory results. Either we feel the inadequacy of falling short of our aim, or we change our value system to conform to the goal. For example, if I’m reading a financial magazine that tells me that I need to have $3 million dollars saved to retire comfortably by the age of 55 and I take the steps necessary to meet that goal, I may work two jobs that I hate and be perpetually absent from family functions and my kids’ sports events. If “being present physically, intellectually, and emotionally for my family” is one of my Personal Principles, you can imagine how difficult it would be to achieve the early retirement goal without compromising the underlying value. Goals that are prescribed to us by a parent, teacher, book, or financial advisor that are not supported by our Personal Principles have little chance of success. Conversely, when we align our goals in life with our Personal Principles, we have a very high success rate.

Ah...success. Is that ultimately what we desire? I don’t think so. We long for fulfillment and contentment. Remember our definition of the word wealth? In the financial services industry, on television, in books—even text books—wealth means one thing...dollar signs! If this is true, many among us would never have the opportunity to be wealthy and, therefore, would not enjoy the satisfaction of being financially “successful.”

Stanley and Danko did an excellent job in their classic, The Millionaire Next Door, helping us better understand what financial success looks like. Their conclusion is that it doesn’t really look any different than financial mediocrity. Most millionaires don’t actually fly around in corporate jets and drive Maseratis. They drive pickup trucks and live in nondescript houses and they don’t see the benefit in bidets. They’re successful in their dealings with money because they’ve put money in its rightful place as a means to an end, not the inverse. Success, then, is a natural byproduct of a contented life lived fulfilling your unique purpose.

Money and St. Patrick

2010-03-15T10:47:00.006-04:00

For this week’s Crossroads Conversation, I decided to spend a moment away from The Financial Crossroads, in honor of St. Patrick and this week’s celebration of Ireland’s Patron Saint. But lest ye think St. Patty has nothing to teach us about money and its optimal management, I invite ye to think again (can you hear the Irish brogue?)…

Thomas Cahill does an excellent job in his bestselling book, How the Irish Saved Civilization, painting a picture of the venerable Patrick:

"Patrick was a hard-bitten man who did not find his life’s purpose till his life was half over. He had a temper that could flare dangerously when he perceived an injustice—not against himself but against another, particularly against someone defenseless. But he had the cheerfulness and good humor that humble people often have. He enjoyed this world and its variety of human beings—and he didn’t take himself too seriously. He was, in spirit, an Irishman."

Consider the following thoughts on both money and life that St. Patrick and the Emerald Isle invoke in me:

The least expensive stuff in life can often be the most valuable. Patrick most certainly did have an impact on Ireland, effectively converting the whole of it to Christianity, but the Celtic traditions also had an impact on him. Both Celtic pagan and Christian traditions involve a deep sense of reverence for life in this world—human, of course, but also animals and especially nature. (Hold on, I’m getting to the money part…) When we go through financial trials, we often feel a sense of deprivation, from which springs bitterness and envy. These hollow feelings can bury us and strip away the joy of life, but if in those moments we can turn our attention to that for which we are not asked to pay a dime—a meaningful discussion with a loved one, a long walk or hike in a scenic area in solitude, the simple appreciation of a sunrise or sunset—we may be reminded that so much of what is already ours or offered to us is priceless…and free.

Cahill tells us that Patrick didn’t “find his life’s purpose till his life was half over.” Money plays a role in just about everything we do in life. The primary source of our personal money creation is our job, our career. Therefore an understandable, but unfortunate, conclusion we often make (consciously and subconsciously) is that the purpose of our careers is simply… to make money. This is a poor purpose for the thing that consumes the majority of our waking hours. If the primary purpose of your career is just to make money, you may very well achieve that purpose… and little more. Instead, find a purpose. Create a story that builds meaning into your life and the lives of others, and when you find yourself impelled by genuine purpose instead of compelled by the scramble for cash, the beauty is that you’re likely to have more of the green stuff than you’d expected. As Jim Stovall, my friend and co-author, put it in The Financial Crossroads, “If you stop worrying about money and concern yourself instead with creating value in the lives of those around you, you will have more money than you need.” For more on “writing a better story” in your life and career, look into Donald Miller’s book, A Million Miles in a Thousand Years.

The Power of Money

2010-03-08T20:22:00.005-05:00

"If money be not thy servant, it will be thy master. The covetous man cannot so properly be said to possess wealth, as that may be said to possess him."

- Francis Bacon

"Money is a terrible master but an excellent servant."

- P.T. Barnum

Money is the most misunderstood commodity in our society, even on our planet. People today understand the price of everything and the value of nothing. There have been more conflicts, divorces, and disputes over money than anything else. In order to begin to have healthy attitudes toward money, we must understand that it is nothing more—or less—than a neutral tool or vehicle.

It is also critical to understand that money is not inherently bad, unimportant or irrelevant. Many have misquoted and misused ancient wisdom proclaiming that “...money is the root of all evil.” The context here is imperative. “For the love of money is the root of all evil,” is the actual quote, and the difference is profound. Nothing can take the place of money in the things that money does, but outside of the scope where money is useful, it has no value.

When it comes to your health, family relationships, or personal well-being, for example, money is of little importance. It serves us best when it is a facilitator of relationships, not an end in and of itself. This understanding will keep money and its detrimental pursuit in check. Once you see money with new eyes, you’ll use it better and more effectively.

You can read more from the first chapter in the excerpts section of the book's website by clicking HERE.

The Financial Crossroads

2010-02-28T16:47:00.001-05:00

By Jim Stovall

We make decisions every day that greatly affect how we live now and into the future. We are at a unique time and place in the economy in which there will be decisions made, individually and collectively, that will have an impact for generations to come.

The Financial Crossroads is the title of my latest book that I coauthored with Tim Maurer (www.TheFinancialCrossroads.com). Tim Maurer is a financial planner with all the credentials and expertise you would expect from such an individual, but that is not why I agreed to write a book with Tim. I agreed to coauthor a book with Tim Maurer because he understands the relationship between money and life.

He hosts a talk show in the Baltimore/Washington, DC area and makes guest appearances on many national media outlets. I believe Tim’s expertise is in viewing money as a tool necessary to live your life instead of viewing your life as a resource to make money.

The subtitle of the book is The Intersection of Money and Life. When we divided up the project of writing The Financial Crossroads, we decided Tim would write the Timely Applications, and I would write the Timeless Truths. Both are necessary if you are going to succeed with money.

Few people have ever thought about how money relates to how they live their life or how they would like to live beyond financial considerations. Even if people had considered these elements, it is rare to find anyone who knows how to get from here to there.

As we view the economy today, we are at the proverbial crossroads as a nation and as a society. We are going to have to determine whether or not we are going to continue mortgaging our children and grandchildren’s future to pay for things we cannot afford today. As important as this societal crossroads may be, a much more critical issue is how you and your family are going to strategize and organize your money and your life.

In The Financial Crossroads, we do not tell you what to do with your money other than how to make it fit into the life you want to live. Financial decisions are predominantly personal decisions. It’s much like ordering from an extensive restaurant menu. There are no right or wrong decisions, but if you don’t decide what you want, it is impossible for you to reach your goal.

The decisions you need to make are much simpler than you probably assume them to be. Once you have decided where you want to go, you will find getting there to be a matter of applying some orderly step-by-step strategies. There are no right or wrong answers, but you cannot simply continue to avoid the questions.

As you go through your day today, determine to make your money work for you as hard as you work for your money, and decide where you want to go beyond the financial crossroads.

Today’s the day!

How Does Money Intersect with Life? Just Released Book Helps People Understand How to Control Money Before it Controls Them:

2010-02-22T11:48:00.002-05:00

International bestselling author Jim Stovall and financial planning expert Timothy Maurer, CFP® team up for the newly-released book The Financial Crossroads: The Intersection of MONEY and LIFE

Hunt Valley, MD (February 22, 2010) – Consumers around the globe have been greatly impacted by economic volatility, a crumbling housing market, and rising unemployment levels. All of these have created a sense of financial insecurity across the demographic landscape. A better understanding of money—its proper uses and common misuses—shows us how we could have avoided a personal catastrophe, even in the midst of a global economic meltdown, and will help us be better prepared for the next inevitable collapse.

What you believe about money will determine what you will do for and with it. This is the driving ideology throughout The Financial Crossroads: The Intersection of MONEY and LIFE (Companion 2010, ISBN# 0967242703). Unlike most personal financial books, this book not only educates, but strives to enlighten, empower, and enrich the reader. Enlighten the reader to the reality of what money is—and isn’t—and what it is meant to do, as well as its misuses. Empower the reader to take control and not let money be the driving force in their lives, providing concrete steps to that end. Enrich the reader by reclaiming the word wealth and making it available to millionaires and non-millionaires alike.

Authors Jim Stovall (author of the bestselling book The Ultimate Gift) and Timothy Maurer, CFP® (nationally recognized financial planning expert) each provide their unique perspective on the role money plays. Jim offers Timeless Truths that are the foundational truths upon which a successful financial plan is built. Tim outlines strategies readers can use for the Timely Application of those truths.

“The Financial Crossroads is very personal to me,” said coauthor Tim Maurer. “A successful financial plan is not a document, chart, or even a book. It is a perpetual lifestyle, and regardless of my standing as a financial planner, college instructor, or author, I am living out my financial plan—including successes and failures—alongside of my clients, students and readers. This book has been a labor of love for my co-author and mentor, Jim Stovall, and me, because as we instruct, we invite the reader into our personal narrative, our financial plan.”

The Financial Crossroads, now available in bookstores and through online booksellers, features a companion website with information about the book and authors as well as tools and applications that readers can use to apply the lessons to their own lives. The website (www.TheFinancialCrossroads.com) is now online and features a social media program and blog.

“In my previous dozen books, I have focused on attitudes, outlooks, and perceptions that can bring success,” said Jim Stovall. “While these are critical to getting started toward financial success, without the specific tools that my friend and partner Tim Maurer provides, you will have a wonderful vehicle with no fuel. Through The Financial Crossroads, Tim and I have come together to provide the heart, mind, and soul of financial success.”

For more information on The Financial Crossroads, or to secure an interview with Jim Stovall or Tim Maurer, please contact one of the following public relations representatives: For Jim Stovall contact Kelly Morrison at 918-627-1000 or kelly@jimstovall.com For Tim Maurer contact Benjamin Lewis at 301-963-7555 or benjamin.lewis@perceptiononline.com.

ABOUT THE FINANCIAL CROSSROADS

There are an endless number of books that tell you what to do with your money. There are even more books that tell you how to, and how not to, live. Why is it that these two things that are so inseparable—money and life—are only addressed separately? The Financial Crossroads addresses the intersection of the two.

This is not another financial how-to book, nor is it a collection of philosophical rambling that is hard to apply to daily life. It is the Timeless Truths of personal finance. Many of these have been forgotten, destining so many into financial hardship, but they are the essential foundations for your successful financial future. We also offer Timely Applications, giving you the opportunity to apply these Timeless Truths to your daily life.

Visit www.TheFinancialCrossroads.com for more information.

###

Money and Snow: It's All Relative

2010-02-12T08:31:00.001-05:00

Isn’t it amazing how two different people can look at the same exact thing and have a completely different opinion?

This winter, we’ve received over 70 inches of snow where I live… about four feet of that has come in just the last week. Where I live, you’d think that we had been attacked by aliens! The snow has completely shut everything down and they’ve had round the clock local news coverage. Do you know the kind I’m talking about? Where local networks actually interrupt regularly scheduled programming to have anchors sit there for hours on end finding almost interesting things to say and showing footage of crews “on assignment” in various neighborhoods reporting “news,” like Mrs. Johnson saying that she’s never shoveled so much snow off of her porch?

Now this certainly is snow accumulation worthy of note in almost any city, but it’s front page news… because I live in Baltimore, Maryland, where the average annual snowfall is around 20 inches. Worthy of note, however, is that our record breaking snowfall wouldn’t even be news in cities all over the country and to millions of inhabitants. Maybe you live in one of those cities. Even in our relatively small state, there is a county that averages over double our record shattering snowfall and occasionally logs years in excess of 200 inches!

So what does this tell us? We tend to be pretty self-focused and view life in relative terms—that is, relative to our own lives, not the broader reality.

This is especially true in our financial lives. That is why I know a couple who felt as though their world was crashing down when they had to reduce their monthly income from $25,000 to $20,000 per month… and why I know others who live quite comfortably with monthly cash flow of $4,000. But regardless of where you stand—whether you have comfortable margin in your budget or if you are stressed out every month—the good news is that you have control over your personal financial reality. Most of the stuff that we worry about in life falls outside of our control and therefore doesn’t even warrant anxiety. So instead of worrying about the stuff that we can change, we should just… change. I know—it’s not easy. But it is simple. $x comes in… $y goes out.

Your personal reality is not unimportant—even if you’re having trouble seeing the forest for the trees…or over the snow bank—and knowing that yours is not the only reality out there can help you do a better job of managing your own finances, and your own life.

The Cure For Greed: Special Haiti Message

2010-01-18T19:53:00.000-05:00

Check Out The New Video - "Worse Than A Hangover!"

2010-01-13T14:23:00.001-05:00

Want to Know the Cure for Greed? Watch this Video!

2009-12-31T16:21:00.001-05:00

Check Out the New Promotional Video for The Financial Crossroads!

2009-12-29T09:32:00.000-05:00

Tim Maurer of The Financial Crossroads in this New Video Titled, "King of the Bad Words - Don't Mortgage Your Car"

2009-12-21T09:55:00.001-05:00

Personal Finance is More Personal Than it is Finance

2009-12-14T20:19:00.001-05:00

By Timothy Maurer, CFP^®

Roth IRA, 401k, life insurance, income taxes, estate documents, stocks, bonds, mutual funds, asset allocation…dollars…money…

These words might evoke some thoughts or feelings, but they’re not actually meaningful unless they’re used in conjunction with… you. They’re not independently and inherently good—or bad—until they’re viewed within the context of life… your life.

Most financial planners and financial publications have a tendency to create preconceived “laws” that mandate certain courses of action designed “to make your life better.” These presumptions are typically well intended, but they are rarely offered with a foundational understanding of who YOU are. Without that understanding, there is no wonder why it is estimated that 80% of the financial planning recommendations that are rendered are never implemented.

This is where the conversation begins in The Financial Crossroads: The Intersection of Money and Life. This book is a collaboration that I’ve undertaken with the international best-selling author, Jim Stovall. Jim wrote The Ultimate Gift, a book where life is the subject and money has a prominent role. We came together to shed new light on your personal finances at a time where most Americans have more questions than answers.

Financial planning doesn’t start with a financial planner’s recommendation and it doesn’t end with you changing your 401k allocation. It starts with YOU understanding your personal principles and goals in life and ends the day you spend your last dollar… hopefully many years from now.

Learn more about The Financial Crossroads at www.TheFinancialCrossroads.com.