I Can’t Believe the Year is Over!

I’ll bet you have heard someone say that recently. I know I have heard it several times, but I have one response to that. NO, IT IS NOT!!! What happened to finishing strong? As of this morning, we have several days left in this year and I feel like people have just written them off. Please stop it – time is too valuable to dismiss. Put your helmet back on, lace up your shoes, and let’s finish this thing the way we started – with a purpose. Here are 3 tips for ending your year strong.

Revisit Your 2017 Goals: Whether it be money goals, physical goals, or spiritual goals what did you set for yourself in 2017? Reflect on why you set those goals in the first place and how far you got in accomplishing them. For each goal that you set for this year, draw out a progress bar with 0% at one end and 100% on the other, then put a mark on the line where you currently are on that goal; this doesn’t have to be exact. Just make your best guess. Being able to see this visually will help you see what progress you made this year.

Make a 12-3-1 List: After you complete the step above, write down 12 things you should do between now and the end of the year. Then reflect on the list being honest with yourself and narrow that down the 3 things you can actually accomplish before the end of the year. Next, decide which 1 to start with. After you complete that one item move to the next highest priority on the list of three and so on.

Plan for 2018: Why wait till January to plan for 2018? Get started now. Revisit goals from this year that you did not achieve, look at new goals, and set a pace for year. Taking a few minutes to get your mind right for the next year will go a long way into getting you off to a good start in the new year.

 

Actions > Words

We have all heard that actions speak louder than words. I recently heard it another way; “The way you treat people reflects who you are infinitely more than your bumper stickers and Facebook posts.” I think the actions that we take with our money paints a pretty clear picture of what’s important to us. So, if someone got a hold of your bank and credit card statements what kind of picture would they paint?

Self-absorbed, obsessive, spendthrift, wasteful, giving, balanced, focused, intentional, diligent – which adjective would be used to describe your money patterns? If your adjectives make you feel uncomfortable, remember I don’t care where you have been or how you have been acting. I simply want you to be aware so that you can change if you need to. Matthew 6:21 says, “For where your treasure is, there your heart will be also.”  This is why how you spend and save your money is so important. Because where you send your money is where your heart goes and we must intensely guard our hearts!

To be clear, I am not just talking to the spendthrift here. In the last 10 years I have seen people become wealthy through diligently spending less than they make each year and saving money. Likewise, I have seen some of those same people get consumed by their savings accounts. The guy driving a Ferrari is no different from the guy that squanders money away in a saving account. 1 Timothy 6:7 reminds us that we brought nothing into this world and we will take nothing with us. I do not think leaving a handsome legacy should be our goal, nor do I believe that living on the edge and dying with a penny left should be the goal. My objective with this post is challenge you to take back your intentionality. Deciding how much money to spend, to give, and to keep for later should not be an easy decision to make! Stop, think, and pray before you make a decision that could ultimately change the condition of your soul!

Actions are important because ultimately, they paint a picture of who you are. Think about your actions with money – maybe it’s time to start painting a new picture.  Execution and accountability are key to any change. Let us know if we can help.

Now or Later

Do you want your money now or later? Recently, I was introduced to a person writing an article about budgeting and they asked, “What is one thing that a person can do that would have a $300 per month impact on his budget?” That was a hard question for me because honestly most people don’t have single budget items, besides their house, car, or insurances that cost more than $300 per month. Take cable for instance; cutting out cable would have a positive impact on the budget, but I really, really hope you are not spending $300 per month on cable! So, cutting out the cable all together still wouldn’t swing the budget by $300. I thought about this for a while and came up with some ideas that all kept pointing back to taxes.

In 2016, the national average individual tax refund was $3050.00*. That means, on average, the American worker over paid their tax bill by $254.17 per month! Yes, I know it feels awesome when you finish your taxes and realize you are getting money back, but that is like your boss saying, “We are giving everyone a $3,000 bonus this year, but your monthly income is going down by $250.” Would it still feel like a bonus then? Simply put, adjusting your tax withholding could put $250 a month back into your budget! What could you do with that extra money?

Over paying your tax bill feels good only once per year. Adjusting your withholdings to increase your monthly take-home pay could have huge benefits on your long-term financial success. When you are trying to get out debt, build emergency funds, save for college, or prepare for retirement, an upswing in the monthly budget by that much could be huge. If you’re nervous about it I encourage you to talk to a professional – maybe start with the person that does your taxes and then make an adjustment. If you find that you really miss giving interest free loans to the government, then I’m sure they would be happy to have you over pay again later.

*https://www.cnbc.com/2017/04/17/heres-the-average-tax-refund-people-get-in-every-us-state.html

Grinkmeyer Leonard Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.

Shut the Front Door!

No seriously, “Shut the door! We aren’t trying to cool the whole neighborhood!” Does that sound familiar? If I had a dollar for every time Momma Bagwell yelled at me about leaving the door open, the lights on, or, by far the worst offense, standing there staring into the refrigerator with door open hoping something delicious would magically appear, I would be a very wealthy man! The point is, utilities can be expensive, yet somehow, we have decided that they are a necessity so we don’t worry about the cost. When is the last time you did a self-audit of your utility costs to see if you could save a few bucks here or there?

Chances are it has probably been awhile, but it can be a great exercise when you are trying to be a good steward of your money. Power, water, gas, cell phones, cable, internet, car and home insurance, credit cards (interest specifically) are all areas that you can review to fight for your money. Listen, it may seem trivial but finding an extra $50 per month that could be used for other goals could be huge. An extra $50 per month applied to principle on a $150,000, 30 year mortgage at 4% would allow you to pay off the house 42 months early and save $14,371.75 in interest!!! Or $50 per month put into a retirement account that averaged 8% rate of return for 30 years is over $74,000 extra for retirement!!

So audit your monthly expenses. Write down all your reoccurring expenses and what they cost you each month now. Then ask these three questions:

• Is this expense a necessity or desire? (Note, I’m not saying they all must be necessities, I just want you to have a truth talk with yourself)
• Is there a cheaper option of this expense that I could live with? (cough cough, cable)
• Are there other vendors that I could get a price from that could be cheaper for the same service? (car insurance, cable/internet, credit cards)
• Can I make an effort to keep cost low? (turn off lights, take shorter showers, adjust the thermostat)

After you have audited, reviewed, and answered these questions, write down your new totals (estimated or actual) and see how much you have won by fighting for your money.  Then make a plan for it. DO NOT, I repeat, DO NOT let that money magically disappear in the next month’s expenses after you have done all this work to fight for it. Increase your retirement savings, college savings for kids, or increase your monthly payment on your mortgage, but do not be unintentional about your raise. Small changes can lead to big impacts on your financial situation and puts you in control of your money.  Let me know if I can help or just motivate you to get started.

Sources: Commonwealth Financial Network’s Mortgage Payoff Calculator
Commonwealth Financial Network’s Compound Savings Calculator

Money Habits

Think about your habits. Okay, let’s narrow it down to only your good habits. Now think back to when those habits began. How did they get started? I would guess in most cases good habits, like brushing your teeth, making your bed, and exercising, started out of accountability. When you were a kid and you did not want to brush your teeth, someone made you and sooner or later you began to understand the benefit of brushing your teeth. Suddenly, no one had to force you to brush your teeth anymore. The level of understanding that led to a willingness to do something that is good for you came after a period of resistance. A new friend of mine explained it this way when talking about his weight loss journey. He said that accountability led to success which led to a lifestyle change.

Generally, habits that are good for you may not be easy or painless to create and generally, you will want to push back against them in the beginning. That is why having accountability and an accountability partner is necessary. Eventually, you will gain an understanding about the benefits that the good habit has for you and this will lead to a lifestyle change. However, to get to that point you may need stern voice to help you out.

Money habits are no different. Budgeting, saving, giving, planning, earning, etc. can all be essential to your success with money. Yet, building those habits is not easy and in most cases you are left with no accountability. Part of our comprehensive financial planning is to give you that accountability. You will not need me to review your budget with you forever, but just like having a personal trainer to slap pizza out of my hand when I want to lose weight, sometimes you need a pal to say, “I know you’re tired and making your lunch sucks and you might not get to sit at the cool table today, but you can laugh all the way to the bank knowing that you saved $15 on something that would have only satisfied you for about 4 hours.”

Habits lead to lifestyle changes and lifestyles can either lead you to success or away from it. By not intentionally choosing good money habits are you subconsciously choosing bad ones? You may not be going bankrupt but are you really succeeding? If you struggle creating good money habits, let’s talk. I promise not to slap anything out of your hand…at first.

How to Build Wealth Slowly

“The best way to get rich quick is to get rich slow. The tortoise always beats the hare.” – Dave Ramsey

I see it pretty regularly; someone schedules a meeting and they start asking questions and kind of dancing around the topic of building wealth…fast. What they are looking for is an easy button (thank you, Staples). The truth is, the stories we hear of people doubling and tripling their money overnight, or even in a year, are rare and usually anomalies at best. However, all it takes is to hear one story about how my brother’s dentist’s daughter’s boyfriend bought some investment at $2.00 a share and now he’s a millionaire, and suddenly we have this epiphany, “Hey, maybe I should pick the exact right investment at the exact right time and put all my money in it, and by next year I’ll retire! Brilliant!” and then they look at me and say, “You can do that, right?”

No, I can’t and if I could I’d probably be on a secluded island not telling anyone how I figured out how to do it – no offense. What I can do is teach you how to build wealth, be generous, and leave a legacy of happiness and impact through persistence and patience. Yes, I know the first way sounds more fun, but I have thousands of success stories of families that built great wealth over time and I have maybe two stories of people that did it quickly. What do all of my success stories have in common? Work, time, and the willingness to follow a plan. Not always the same plan, but always some sort of plan.

Try to remember these three words – cheap, fast, great. In everything you do in life, you can only pick two of these words. So, if you want something fast, it cannot be both cheap and great. If you want it fast and great it is most likely going to cost more than you can pay. Wealth is no different.

Building wealth over time is also for our own good. It gives us time to gain wisdom and respect the wealth that was hard to build. The statistics around individuals that receive a windfall of money, like winning the lottery, suggest that without the respect for wealth that comes from working hard for it over a period time, we will most likely blow all the money and be back were we started from quickly.

In the business world there is a quote that says, “It only takes 20 years to become an overnight success.” I believe that to be true here. If you don’t have a lot of time left to build wealth, that’s okay. We can change the discussion and set realistic goals for what we can accomplish in the time we have. Remember, you don’t have to be rich to leave a legacy.

Step 1: Don’t go chasing waterfalls
Step 1.5: Call us
Step 2: Set realistic goals for your time frame
Step 3: Become informed and build a plan
Step 4: Execute the plan every day

Enough!?!?

How much is enough? Do I have enough? More than enough? Not enough?

Enough is enough. Enough – it’s word that I never gave much thought to until it became the one word that almost every one of my clients wanted to talk about. I understand many of my clients want to hear me say, “that’s enough” or “you have enough.” I feel that way because the number one question I get asked is, “How much is enough for me to retire?” While my training has given me many answers to that question, the truthful answer should be, “I have no idea.” The truth is we don’t know and can’t possibly know short of being able to predict the future. I can tell you it “should be enough” or it “probably won’t be enough,” but to give you a definitive answer that is built on assumptions that change constantly would be irresponsible.

What I have concluded is, at its heart, the question is really “Can my money give me security?” And the answer to that question is a resounding, thunderous “NO!” Money does not give you peace and it does not give you security. Money is just a tool. Nevertheless, society would have you believe that happiness lies in the next raise and that comfort and security are found in well-funded retirement accounts. However, monetary security is false security; false peace because money alone can’t give you those things.

My goal is to have a positive impact on people’s lives and I believe part of that is to give you a healthy understanding and relationship with money. What I really want to see is for people to stop chasing the almighty dollar and realize it is actually the Almighty’s dollars. I want to see people pursue passion, happiness, time with family, serving others, and obedience to God and stop sacrificing those things in order to get more change in their pocket or in their savings account. Do you need money? Yes. Should you work to earn it? Yes. Should it consume your life and leave you feeling worried and exhausted from the day-to-day grind? NO.

A good financial plan starts with a healthy understanding and relationship with money. It is built on education and understanding. Our goal is not to give you financial freedom but instead freedom from your finances.

Step one: Money is a tool, nothing more nothing less
Step two: Get some training on how to use that tool (this is where we come in)
Step three: Live life, work hard, play…

 

Do You Have a PSP?

Definition: PSP is a personal spending plan, a.k.a. a budget, a.k.a. I tricked you by not using budget in the title to get you to read a blog about budgeting. Look, I get it. Budgeting is hard, but I think it’s because we make it harder than it has to be. When I was going through my weight loss phase I was given a simple task: eat fewer calories than you burn each day. To be able to do that I had to know two things – how many calories am I burning and how many calories am I consuming? I didn’t do the really hard or complicated things like buying a food scale to measure out every calorie or visiting a lab to test my resting metabolic rate. Instead, I started with things that were easily accessible, like researching online to figure out a close guess of what my metabolic rate was and reading the labels of the food I was eating. I increased my exercise and decreased my calories and you know what happened? I lost weight. Budgeting or building a Personal Spending Plan is the exact same.

There’s no need to analyze every penny or to spend hours trying to figure out your equation. I performed a little research on Google which lead me to this website and found information on what an average family or individual is spending on certain budget categories. For example, I found that average family of four spends between $850-$1160 per month on groceries. Obviously, your family may be different, but if you are way above this range you should look at this category.

I have included a sample budget I found on the previously mentioned website that lists the percentages average families are spending on certain categories. Use this as base for how many dollars you should be spending in certain areas each month. Become aware of the money that you are spending. Most credit cards and banks have online tools that will tell you how much are spending in certain categories and by identifying your weak spots you will gain a better idea of where you need to cut back and where you can splurge.

Please know the chart below is based on data gathered nationwide and every family is different and there are many different belief systems that dictate what’s right for you.
If dieting was easy, everyone would look like Mario Lopez and if budgeting was easy, everyone would be rich. I don’t think budgeting will ever be fun, but it can be less complicated and it is so worth it. If you need help or just a kick in the pants, call me.

P.S. I lost 60 pounds in 5 months and I take very little credit because I was shown a plan and had proper coaching from people that wanted me to succeed. I want you to succeed too.

National Average Budget Category Percentages of Net Income

Category	Percent of Overall Spending
Housing (mortgage/rent, Real estate taxes)	24%
Utilities (water, power, garbage collection,	8%
Food	14%
Clothing	4%
Medical/Healthcare	6%
Donations/Gifts to Charity	4%
Savings and Insurance	9%
Entertainment and Recreation	5%
Transportation (car payments, gas, service)	14%
Personal/Debt Payments/Misc	12%

 

Is Your Financial Advisor Broke?

Or maybe I should say, “Does your Financial Advisor practice what they preach?” I thought about this after a conversation with a friend whose brother is a financial advisor. He jokingly made a comment about how his brother has a pretty big practice, but he is actually broke. I probed a little to see what he meant and he explained that on the outside he looks the part. He has a nice car, nice wardrobe, great looking life on Facebook, but what that looked like behind closed doors was entirely different. He is living pay check to pay check, has no budget, is underfunded for retirement, and has too much debt. If these qualities were listed on your advisor’s resume would you still work with them?

I was 21 the first time someone told me, “fake it till you make it.” What a load of garbage! Unfortunately at 21, my brain didn’t work the way it does now and had I not recently read a book that warned me against this type of thought, I would have probably fell into the trap of trying to fund the lifestyle that made me look like I knew what I was doing when really I was going broke.

Now let me be clear – those young advisors that “fake it till they make it” aren’t doing it just because they want a luxury lifestyle. They are doing it because that’s what you want to see. If your advisor showed up to a meeting in a junky old car what would you think? Our culture celebrates the quantity of your wealth instead of the proper use of that wealth, and because of that, many people, including financial advisors are going broke.

There’s always two sides to any story, but I am going to address the fault on the financial advisor’s side. I am not making a blanket statement that says you can’t be in debt and have an underfunded retirement account and be a financial advisor. What I am saying is if a financial advisor has money problems, and that advisor is not following the same advice he gives his clients, then there is a problem. I encourage each of you to ask your financial advisor, “What is your current debt status and what is your plan?” Don’t ask them details. That may be none of your business, but at least know where they stand generally and do they have a plan to improve? You wouldn’t take fitness advice from someone who is out of shape, so don’t take financial advice from a financial advisor who is broke and unwilling to follow his own advice.

What Happens if You Can’t Work?

If you read my last post about life insurance and you’ve joined me again, thank you. Really, I am very thankful for your time and I hope these posts bring you value. Now, let’s get cooking. If you didn’t read the last post here’s question I asked, “Why do you have life insurance?” There are many valid reasons why someone has life insurance, but I think it’s funny that we call it LIFE insurance. I get it, but think about it. Do you buy life insurance because someone or something is literally dependent on your life? Like your heartbeat is the determining factor of the success of something or someone else. NO, that is not it at all. Life insurance is there because someone or something is dependent on you being alive so that you can earn income or provide value to the family. Think of it this way – if your income was guaranteed to pay out until age 67 whether you were alive or not, would you still buy life insurance?

So, what happens if you’re still alive but you can no longer earn income? Why do we spend so much time and money on life insurance but give no thought to what would happen if we were to become disabled.

69% of private sector workers do not have long-term disability coverage! That is a huge percentage of people. To throw another statistic at you – 1 in 4 people in their 20s will become disabled in their working years. To clarify, disabled means you can no longer earn your income. So, let’s think about the math. You stop earning income, but you’re still alive and need more care than before. Normal life – income + increased expenses = up the proverbial creek. If you have determined you need life insurance, you probably need disability insurance as well.

There are a lot of factors that go into deciding IF and HOW MUCH coverage you need so I highly recommend you talk to a professional about your personal situation. I hope you call us, but at least call someone. Today let’s assume you don’t have coverage and need some. There are two definitions you should know.

1) Short-Term Disability: Short-term disability coverage is just like it sounds; it generally starts to pay-out 2 weeks after your loss of income, but will generally only pay-out for around 6 months, then it goes away.

2) Long-Term Disability: Again as it sounds, it generally doesn’t start to pay-out for 90-180 days after your loss of income, but can pay-out all the way till age 65.

Which do I recommend? I am not a big fan of short-term disability insurance. I want you to have an emergency fund that would cover around 6 months of expenses. Then, in the case you become disabled, you would not need insurance to replace your income for 6 months. If you are a dual income family you can stretch that emergency fund out a little further. On the contrary, having long-term disability is a no brainer. Becoming disabled is a bigger financial risk to your family than dying! Sorry to be blunt but seriously, if you are disabled, you can become a drag on your family financially. Here are some things you need to know if you are not covered.

First, just like life insurance, you need to do a needs analysis. Most long-term policies will pay-out 60% of your current income (keep in mind that if you are paying your premiums yourself, that 60% payout is tax-free). 60% is probably close to your take-home pay now. However, if you are one of those super budgeters that live on much less than 60% of your income, then you may not need to pay for coverage that high.

Second, brace yourself. Disability insurance is not as cheap as term life insurance and it can get a bit complicated. Try to work with someone that is committed to educating you on all the options before making a recommendation. Industry terms like Owner Occ., Partial Occ., and others will get thrown around in your decision-making process and you need to understand what they mean in order to make the best decision.

Ultimately, if you have a need for life insurance because someone/something is depending on your income, you probably need disability insurance too. It’s not fun to talk about  but if something happens you and your family will be grateful you took the time to discover what’s right for you. If you find you need a partner for this, we would love to help.