Don’t Cut Your Spouse Out Of Financial Decisions

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Love and Money-01“I make all the financial decisions in my household, but does it make sense for my spouse to be involved in our financial planning?” is a question I’ve heard several times in my career and seen implied many more.  Absolutely!  is the answer.  Both spouses in a household need not be financial experts, but it is imperative that both contribute to the financial decision-making process.

While it is not always the case, we often find that there are two financial types of people in every life partnership.  One member of the team is the “financial spouse,” while the other is the “non-financial spouse.”  A conspicuous dose of historical paternalism has led many to stereotype these roles as gender-specific, and the male-dominated financial industry has shamefully reinforced this fallacy.  But our firm’s 30 years in the industry has proven otherwise—men and women seem to share the title of financial spouse equally, even if the household roles have been established to the contrary.

Typically, we know who is who within minutes of our introductions.  We don’t derive this knowledge from a fancy questionnaire or psychological analysis; we simply ask the couple.  It’s exceedingly rare that they don’t immediately spit out their respective roles.  This, of course, doesn’t mean that mismanagement of said roles doesn’t cause a great deal of disagreement in households.  With over 50% of marriages ending in divorce and over 50% of those splits citing financial disputes as the primary reason, having a clear understanding of which spouse monopolizes the fiscal prowess doesn’t seem to help much.  In fact, it may be part of the problem.

This problem comes to bear most often when respective partners fall into the trap of living out the stereotype of their role.  Non-financial spouses may deem it their responsibility to be irresponsible.  They may presume it the other spouse’s duty to handle the household’s finances, and focus more on the household duties that mesh better with their proclivities.  In extreme cases, non-financial spouses may even—hopefully subconsciously, but not always—permit themselves an allowance of financial foolishness.  And sometimes, the financial spouse almost deserves the punishment, especially if they’ve taken to condescension and judgment of every decision the non-financial spouse makes.

Yes, marriage does have a way of bringing out the worst in us, but it need not be the case.  It’s actually imperative that non-financial spouses not abdicate the role of participating in financial decisions and that financial spouses engender a collaborative environment for decision-making.  Here are three reasons why:

  1. Like it or not, one of life’s only guarantees is that it—our life—will eventually come to an end.  If it’s the financial spouse who leaves this earth first, it’s extremely important that the non-financial spouse knows enough about the household finances to survive that difficult personal transition without financial stress.
  2. It’s impossible to survive in this modern world without being at least reasonably financially literate.  Whether or not you’re a “money person,” nearly every decision we make involves money.  You don’t have to learn how to calculate the alternative minimum tax or understand the standard deviation of a mutual fund, but everyone must understand the basic s of cash flow (budgeting), banking, investing and insurance.
  3. Financial spouses make better decisions when inviting the non-financial spouse’s influence.  Financial spouses tend to be analytical and more prone to taking on risk, but financial planning and investing is not an exact science.  That means the non-financial thoughts of the non-financial spouse are vital to the success of a balanced plan.

I realize that money isn’t exactly romantic discussion matter, but making it a recurring topic of discussion in your household might just save your marriage!

Make Your Financial Advisor Sweat

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I was meeting with a new friend recently when she told me of an interaction with her financial advisor that completely changed her view of their professional relationship. She had received a lump sum of meaningful size, and following the advisor’s presentation of his recommendations for the new money, she did the unthinkable—she asked him how he would be compensated and how much he would receive if she followed through with his recommendations.

I know, crazy!  Who in their right mind would ask a service provider how they’re getting paid and exactly how much he or she would receive for services rendered?  The nerve of some people!

Yes, this is how the financial industry has treated the check-writers lining its mahogany-trimmed custom leather coffers for…ever.

Back to the story.  The advisor took off his jacket, began pacing and started sweating as though Ray Lewis (of the world champion Baltimore Ravens—woo hoo!) was staring him down.  The gig was up.  His list of recommendations was catered to his personal financial best interest and not his client’s; he was completely busted.  All it took was a simple question anyone would expect as common practice in any other business, and the advisor imploded.

But not everyone in the financial industry is so bashful.  I know one financial sales person, in particular, who told me of an instance in which a prospect popped the question.  He responded with indignant self-righteousness, “You have no right to know how much money I make!”  I guess he forgot that he was talking to the person making his mortgage payment that month, possibly throwing in a vacation on top of it.

Now, I’m not suggesting you become a crass inquisitor with your broker, banker, insurance agent or financial planner—they are due appropriate compensation for a job well done—but you absolutely have a right to fully understand how your advisor is compensated and to what degree, for the following three reasons:

  1. Without understanding your advisor’s compensation regime, you’re unable to balance his or her economic bias in your decision making process.  For example, if the advisor is going to make more money if you pursue one recommended path over another, you should be able to weigh that conflict of interest.  It doesn’t mean you shouldn’t pursue the option that pays the advisor more, but he or she darn well better offer compelling justification.
  2. You have other options.  Fee-only financial advisors are required to provide full disclosure of all fees received, and if they are truly fee-only (note: “fee-based” is not fee-only), they are unable to receive any other compensation from referral sources or otherwise.  It doesn’t mean fee-only advisors don’t have an economic bias, but at least the transparency offers you an opportunity to see exactly what you’re paying.
  3. You ought to be getting a service that is proportionate to what you are paying.  But if you don’t know what you’re paying, how can you know if you’re getting your money’s worth?

And here’s the best reason to ask your financial advisor how and why he is compensated based on the recommendations you decide to implement: if he starts sweating like he’s in your hot yoga class, you should probably work up a sweat yourself…running for the door.

Start With Your Obituary

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This is a guest post from my friend, mentor and co-author, Jim Stovall, who has overcome blindness to become a best-selling author and source of inspiration for literally millions.  Please enjoy.

Most people would assume that an obituary is the final word in a person’s life; however, there was a gentleman who lived in the 19th Century for whom an obituary was a new beginning.  You and I can join him.

Alfred Nobel was a Swedish gentleman who lived from 1833 to 1896.  He amassed a fortune as the inventor and mass producer of explosives including dynamite.  His story might have ended there except for a premature obituary.  When Alfred Nobel’s brother passed away, the press mistakenly ran an obituary on Alfred Nobel.  Among other things, this obituary stated Alfred Nobel was “a man who had made it possible to kill more people more quickly than anyone else who had ever lived.”

Alfred Nobel had the advantage of previewing his own obituary, and he knew he didn’t like it, and he didn’t want to be remembered that way.  So, he took action.

Relatively few people know of Alfred Nobel as the inventor of dynamite, but he will forever be known as the creator of the Nobel Peace Prize and Nobel prizes for literature, economics, medicine, and the sciences.

He changed his lasting legacy 180 degrees by simply becoming aware of his own obituary and rewriting it.  You and I can join Alfred Nobel today as we become aware of the fact that we are daily writing our own obituaries, and if we don’t like the first draft that we have today, we can edit it before it goes to the final press.

We have a tendency to look at the world through a short-term lens.  We consider today’s schedule, this week’s calendar, or this month’s expenses.  If we want to be a high-impact, self-actualized, successful person through the long-term lens, we’ve got to begin writing our own obituary and creating our lasting legacy today.

There are some people like Alfred Nobel whose legacy extends worldwide through the way they have impacted society.  There are some individuals who impact only a handful of people, but their impact is felt at a core level.  You can change the world and leave a powerful legacy either way.  Some people change the world while other people change the world changers.

There are teachers, pastors, coaches, and mentors whose names history will never record but whose legacies will endure as long as thoughts or discussions of greatness exist.  Stake your territory, make your claim, and begin writing your own obituary now while you can still make a difference.

Congress Ends Punishment Of Charities And Retirees…For Now

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It’s been a rough several years for charities and retirees, and the government hasn’t exactly made it any easier.  For years the Fed has pushed and held interest rates low, rewarding borrowers and punishing savers fearful of getting their nest eggs thwacked in the market.  And while the struggling economy has forced many non-profit charities to scale back the pursuit of their missions for lack of confident donors, Congress withheld a tiny provision in the tax code designed to connect charitably inclined retirees with causes in need of funding—until ATRA, the American Tax Relief Act of 2013.

One of the more overlooked provisions of the so-called Fiscal Cliff deal that arrived just in time for the market open January 2, 2013 is the renewed allowance of Qualified Charitable Distributions (QCDs) from Individual Retirement Accounts (IRAs).  But while weighed down by illusive acronyms and volumes of seemingly more prominent provisions in the updated tax code, this news is grounds for rejoicing for the charitably minded and non-profits alike.

Qualified Charitable Distributions allow donors over age 70 ½ to make direct distributions from their “Traditional” IRAs—free from the burden of taxation—to qualified charities of their choosing, up to a total of $100,000.  Those seasoned enough to have celebrated that quirky half birthday know that in all subsequent years, the IRS requires distributions from those retirement accounts which have received years of tax deferral, known as RMDs, or Required Minimum Distributions.  In most cases, these forced RMDs are 100% taxable as ordinary income.

For those blessed with sufficient income from pensions, Social Security and other sources, these distributions can become a taxable nuisance.  But in years in which QCDs are allowed, you may give the entirety of your RMD—and beyond, up to $100,000—directly to a charity and excluded from taxable income.  For the appropriately positioned donor, the net result may be a gratifying gift that reduces taxes.

Furthermore, if you are considering which assets you would prefer to bequeath to your heirs and to charity, in life and death, Traditional IRA assets become an especially attractive target for charitable giving.  Here’s why: You and even your heirs pay taxes on distributions from your retirement accounts that were funded with tax-deductible contributions—qualified charitable organizations don’t.

That’s the good news.  The bad news is that Qualified Charitable Deductions are not a permanent allowance in our tax code.  They were available in 2011 and some prior years, but election year partisan rancor put QCDs on the back burner in 2012.  Congress is trying to make up for that by making QCDs available in 2013, and even retroactively for 2012 if an RMD was taken in December and/or if the gift is made prior to January 31, 2013.  But it is my hope and prayer that Congress gets off its self-centric butt and makes Qualified Charitable Deductions a permanent part of our tax code.  (Can you hear the crickets chirping?)  This would allow the charitably inclined and qualified charitable organizations to make predictable plans to pursue their worthy missions, tax free.

The Most Stressful Event Of Your Financial Life: RETIREMENT

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I don’t mean to strip you (or anyone else) of your idealized view of retirement that may have helped you overcome Lord knows how many miserable days—or years—of perpetual, slave-to-the-grind ladder climbing throughout your career.  But, the first stretch of your much anticipated retirement is likely to be one of the most stressful events of your life.

I admit that this phenomenon was a surprise to me, initially.  I began my career with a partial mission to help clients reach and enjoy financial independence, so it wasn’t until I began walking some of them into and through the transition that I realized how nearly-traumatic it can be for so many.  But if you doubt my hypothesis on its face, please consider this reasoning:

Most of us Americans, fortunate enough to enjoy a middle-class or higher upbringing, are born into environments—households, churches, schools, sports teams and other associations—that breed into us a sense of independence and empowerment.  We are set on a trajectory of productivity and accomplishment, aiming less toward our vocation or calling—more toward our occupation.  We may hear or read, “You can do anything you want to do!” and “You’re special.” and “Dream big!” but by the time we enter the work force, many of us realize we have been set on a course designed to capitalize financially on our most marketable skills.

We are trained to be do-ers, but not, so much, be-ers.

And for many (although not most), it works.  We become “productive members of society,” producing enough income to reach the penultimate goal of financial independence, a visual snapshot nicely captured for us in the high-def, beach-front commercial renderings lathered on by banks, brokerage firms and insurance companies.

It’s our lives’ work to be voracious do-ers until we can afford to be aristocratic be-ers.

So even if we are financially prepared for retirement by every tangible measure—certified by the most certified of financial planners—the transition from do-er to be-er is an exceedingly difficult one, and most of us don’t entirely understand why because the rhythms of our lives have become part of us.  The real difficulty is not in dealing with the visible, but the invisible.

What, then, would life, work and retirement look like if we:

  • Placed a greater emphasis on be-ing, prior to retirement?
  • Were more deliberate about do-ing, in retirement?

We might cultivate ourselves more as individuals who are part of a community and less as employees who are part of a company.  We may allow the question “Who am I?” to precede “What am I going to do?” and certainly “How much am I going to make?”  This self-analysis might lead to a path more akin to finding a calling than a job and would be more relational than transactional.  It would be more others-oriented than individualistic, ensuring that those we labor with and for would remain a priority over the work itself.  Instead of establishing, arriving, cashing-in and checking-out, we might see our progression as perpetually evolving, even into and through retirement.

“That sounds great,” you say, “but it wasn’t my path…so what should I do now?”

Don’t retire from something; retire to something.  Even if you conceded the last 20 to 40 years of your life to the big hamster wheel, it doesn’t mean you’re relegated to settling into a meaningless, unproductive retirement.  Ask the questions you wish you’d have asked yourself at the onset of your education or career and answer them.  Envision your transition into retirement less as an encore and more as act two of a three act play.

2013 Personal Finance Reading List For The Attention Deficient

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When a student of mine recently asked for a reading list that could help satiate her budding interest in the intersection of money and life, I was pleasantly surprised and inspired to aggregate a list of titles that met the following criteria:

1)     Not boring

2)     Not long

3)     Not salesy

As you may have suspected, these criteria ruled out the vast majority of those books written in the subject matter, and forced me to expand my search well beyond prescriptive how-to books.  The list is bookended with two novels, but every entry utilizes a fair amount of narrative to communicate its message.  This is vitally important, because regardless of how much the financial industry lobbies to make your financial peace contingent on its proprietary products and processes, personal finance will always be more personal than it is finance:

Warm Up

The Ultimate Gift

Master storyteller, Jim Stovall, has sold over 4 million copies of this book that was turned into a movie and spawned a series of associated books and movies (one of which was co-authored by yours truly).  The original is a novel about a billionaire who dies and attempts to save his grand-nephew from destroying his own life with money.  Although it was never intended to do so, The Ultimate Gift attracted a cult-like following among financial, estate and tax advisors who bought the book en masse to give away as…gifts, pun intended.

Simplifying and Downsizing

Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money

This book is written by a good friend of mine, Carl Richards, who, in additional to being a great financial planner, also writes for The New York Times.  He uses simple drawings to distill the complexities of personal finance in a way that is practical and approachable.

You Can Buy Happiness (and It’s Cheap)

This book is written by Tammy Strobel, a woman who previously worked in the financial services industry and then went on a quest to radically simplify her life.  I doubt that many of us will take it to the extreme that Tammy has, but if you could take just a few of her principles into account as you craft your existence, I think you’d get more out of money and life.

Preach!

The Total Money Makeover

Need your butt kicked into financial shape?  This book, by radio/TV superstar, Dave Ramsey, is my first recommendation for people who are in trouble with debt.  Dave’s message has helped thousands (millions?) get out of debt and live true financial freedom.  And even if you’re not in debt, this book helps lay out a foundation for making sure you stay that way, save enough and keep your priorities straight.  Dave tends to oversimplify some financial disciplines to a fault—like investing—but nobody gives a better kick in the pants to those ready to receive it.

Wealth: Is it Worth It?

You don’t have to like chicken sandwiches to enjoy this book—and even have it change your financial life.  Truett Cathy is the 90-something founder of uber-successful fast food giant, Chick-fil-A, and while he does have a tendency to sermonize, he does so lovingly, and heck, he’s earned it.  (You can read my review of the book and hear an interview I conducted with Mr. Cathy by clicking HERE.)  In addition to much of his own wisdom, he shares feedback he’s received personally from other notable luminaries, like a guy named Warren Buffett, whom I’ve heard knows a few things about money as well.

Exposé

The Big Short: Inside the Doomsday Machine

This book, written by Michael Lewis (bestselling author of Moneyball, The Blind Side and others) is the best explanation of how the financial crisis really played out that you’ll likely find.  And because he’s an amazing author, it’s also very entertaining.  Please be aware that this is Rated R for language—the default vernacular under the pin-striped exterior of the financial industry.  (You can read more of my thoughts on this book HERE.)

Reminiscences of a Stock Operator

This book may be considered THE classic on security trading, but while it is the most technical of my selections, it’s actually a novel based on the life of famed trader, Jesse Livermore.  [Spoiler alert] The hero actually died—at his own hand—virtually penniless after making and losing at least four fortunes.  But while this book was written as a cautionary tale, many in the financial industry have strangely deified it, still handing it to new recruits as a how-to.  The morale of the story, in my opinion, is actually that beating the market is exceedingly difficult and that the voracious pursuit of money leads to, at best, a big pile of money and at worst, death.  Although it’s a great deal longer, I do recommend the annotated edition by Jon D. Markman, which embeds this fascinating story in historical context.

Life Planning—The Most Important Part of Financial Planning

Anything You Want

This is a very short book—more like a manifesto—by a guy named Derek Sivers.  Derek was a rock star who started a company, CD Baby, to help musicians sell their music online.  It became huge and he sold it for millions of bucks…but he donated all the proceeds to charity and moved on to his next project [insert screeching record sound].  You’ll love this short volume.

The Art of Non-Conformity

Chris Guillebeau is a lifestyle/travel blogger—not a personal finance guy—but this is a great book for opening your eyes to the type of career and life you want to have.

The 4-Hour Work Week

Speaking of non-conformity, meet Tim Ferriss.  This book has turned into a phenomenon and a “4 Hour” series by Tim Ferriss.  Read it and you’ll see why.

Life Changing

Same Kind of Different As Me

Let’s finish up with a break from all that wisdom and practical advice to enjoy this brilliant re-telling of a true-story in novel form.  This is really a book about greed and spiritual awakening, co-told by an adulterous big-shot art dealer and a homeless man.  This will break your heart…and then warm it.  Enjoy.

Oh, and I almost forgot…

The Ultimate Financial Plan

Yes, the one financial book that every one of my students is required to read[i] I did co-author, with the aforementioned Jim Stovall.  It’s intended to walk you through a comprehensive personal financial plan in the spirit of The Ultimate Gift’s timeless truth with timely applications you can use to the benefit of your todays and tomorrows, personally and financially.

Most of these books are pretty short and fast reads—I’ve got a touch of (depending on who you talk to) A.D.D. and it takes a really gripping book for me to make it through, but all of these passed the test!  I’d love to hear your thoughts if and when you read any of these, as well as your suggestions to be added to this list that meet the three criteria.

[i] The other required text for my class is the Strunk and White’s The Elements of Style, the short classic writing/grammar book, because one thing most educational institutions forget to tell their students is that if you can’t communicate well, your degree is WORTHLESS!

The Gift That Keeps On TAKING

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“Let’s be honest. No one ever wished for a smaller holiday gift.”  So starts one of the TV commercials that seem to be run in nearly every ad block throughout every month of December.  Since it’s not my desire to shed a bad light on the company who developed this marketing pitch, I’ll not mention them, but only give you a hint: it rhymes with Schmexus.

They make excellent vehicles, and many would argue they do so at a reasonable value as compared to other luxury car makers.  The beef I have with them, and nearly every other luxury car maker, is that they ask us to make the purchase of one of their vehicles a Christmas present.  You tell me—is stacking another $50,000 (with all the options) on top of your existing holiday gift budget doable?

As Cousin Eddie said in Christmas Vacation: “Clark, that’s the gift that keeps on giving the whole year!” (Watch that hysterical clip by clicking HERE.)  For most, the purchase of a new car is the gift that keeps on TAKING the whole year… or two, or five or six.  If, for example, you get the top of the line stocking stuffer, even with “attractive financing options at 1.9%,” you’ll be paying over $850 PER MONTH for FIVE YEARS!

I’m not expecting ad agencies to provide us with an ethical foundation as consumers—it could easily be argued that it’s their objective to melt away our common financial sense this holiday season.  But as I find myself staring longingly at luxury SUVs beset with bows as big as a Christmas tree, I thought it might be valuable to remind myself—and anyone else who might be susceptible to an indulgent moment this time of year—that a $50,000 present that requires an amortized mortgage on a depreciating asset isn’t really a gift…but instead, a burden.

Teaching Your Kids About Santa And Money (Spoiler Alert)

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Even the most well-intended and prepared parents must confess to the crime of inventing worldview improvisationally when faced with the query of inquisitive little ones.  We may even be building our own personal value system when faced with the inherent pressure of questions surrounding everything from the proper utilization of money to the existence of Santa Claus.

But this isn’t necessarily a bad thing.  This is one of the reasons having children is such a transformative experience.  Sure, you could just make something up when faced with the Whats, Hows and Whys, but it would be better still to actually determine a response in which you genuinely believe, even if that belief is newfound, and even if that belief is shrouded in mystery or fantasy.

That is why my wife and I decided to perpetuate the cultural myth of Santa Claus with our kids—because their little hearts and minds seem to yearn for mystery and fantasy, and because we both seemed to gain more than we suffered from that well-meaning parental deception.  But one area in which mystery and fantasy would serve our children poorly is the arena of money.

No, painting a mysterious picture of financial fairies and monetary monsters will likely do more harm than good.  I’m not discouraging creativity in teaching your kids about money, but I would caution you against personifying or deifying it.  It simply gives money too much credit, pun intended.  We best serve our children when we illuminate its uses as a connector of people, a facilitator of relationships, an extension of our values and a tool in reaching our goals.  (Ok, so maybe you should put it a little simpler for them.)

Most kid-oriented financial systems wisely segment money for children in one of three buckets: one each for spending, saving and sharing.  After years of reviews of both physical and digital systems, I’ve finally found one that works well for our family, and I’m happy to endorse it here: iAllowance.

What I Like:

1)     It’s fun.  Without sacrificing the functionality, its use of interactive icons easily recognized by kids brings the program to life.  I found many systems that lacked a fun-factor entirely, which made me question whether the developers were even qualified to render advice on parenting.

2)     It’s intuitive.  I’m far from a “techy.”  (I don’t even know if that’s how you spell it!)  But with a couple helpful online tutorials, I was an iAllowance expert.  Where other programs were clunky, this one flows with seamless and simple logic.  I can get where I’m trying to go and accomplish what I’m trying to accomplish without undue effort.

3)     It’s customizable.  When I open the home screen, I see my kids’ smiling faces.  I can use the program to manage Share, Save and Spend piggy banks, manage a regular allowance or goal-oriented funding, mange chores (either tied to an allowance or not) and also include a non-monetary reward system with stars.  Some people only use iAllowance for chores and some only for allowance—I use it for both.

4)     It works!  Eureka, it works!  You’ll find no shortage of systems online that promise the world, but I found more than one that simply didn’t follow-through on their pledges.  Some systems acknowledged glitches and I’m sure other misfires were human error—but if I can’t figure out how to make it work without too much effort, I’m not going to use it.

What I don’t like:

There is one major limitation to iAllowance, in that it is only accessed on iPhones, iPods and iPads, and while it’s not worth the cost of new phone or tablet that you don’t already own, I’ve found it worth a great deal more than the $3.99 I paid for the app.  Some are still attached—as I was initially—to the more tactile representations of physical piggy banks in which the kids can see their money accumulate.  But I ultimately concluded that virtual money will be the predominant way my kids transact throughout their lives, so why not start them on it?  Plus, I don’t have to get judgmental looks from a teller wondering if I’m headed to a “gentleman’s club” with all those one dollar bills!

Healthy dealings with money certainly isn’t the most important value to pass along to your progeny, but it’s one of the most important because it’s used—for better and for worse—in nearly every other aspect of life…long after they stop believing in Santa.

Decisions and Consequences

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by Jim Stovall

We all succeed or fail based on the decisions we make.  All the decisions you have made in your entire life have brought you to this place, at this time, reading these words in a newspaper, magazine, or online publication somewhere in the world.

A lot of people who are not where they want to be in their personal or professional lives like to think of themselves as victims.  There is something that appears initially comforting about not being responsible for the shortcomings in our lives; but unless or until you and I are willing to accept our current circumstances as a product of our own decisions, we can’t live the rest of our lives knowing that the decisions we make today can result in the things we want tomorrow.

One of my mentors, Lee Braxton, gave me two powerful pieces of advice on making decisions.  First, he said, “Don’t make any decisions until you have to.”  I found it ironic that, during this past election season, millions of people through early voting programs or absentee balloting, voted weeks before election day.  This presumes that there won’t be any factors or revelations that might change their minds.  Other than a potential conflict in your schedule, there is no benefit to voting early, and there may be a benefit to waiting on all the information and facts that can come at the last minute in a campaign.

The second piece of wisdom that Mr. Braxton gave me came from his statement, “When you can’t decide between two options, choose the one that leaves you with more options.”

If you own one chicken and can’t decide whether to make an omelet from the eggs or eat fried chicken today, choosing the omelet will give you future options.  Once you fry the chicken, there are no more choices to be made.  Recent surveys show that over half of the people who choose to have a tattoo later choose to have it removed.  This process is painful, expensive, and often doesn’t work completely.

Choices and options have a great value attached to them.  When you look at investing in the stock market, you can buy an individual stock, or you can buy an option which allows you to choose later whether you want to own or not own that particular investment.  You can sell your option to someone else as the right to make that choice has a recognized value in the marketplace.  Never choose until you have to and leave all your options open as long as you can.

Wisdom and knowledge help us make great decisions.  A wise person realizes that no matter how certain they may be about a choice right now, there will be more facts and information available later.

As you go through your day today, accept the fact that you are a product of your choices, and determine to make quality decisions.

Today’s the day!

Less: The New More

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One of the things that frustrates me most about financial planning and financial planners is that it seems we’re simply in the business of helping people accumulate more.  More of everything—cash, stocks, bonds, mutual funds, houses, cars, collectibles and other belongings.  Indeed, how many financial success stories are based on depictions of households who have LESS this year than last?  If anything, the financial industry may be in the business of inspiring a spirit of greed—albeit in the guise of commercials and marketing slicks with beautiful, ageless smiles in ideal settings typically involving sailboats, golf courses and vineyards.  Come pay us to help you get…more.

And I don’t think anyone would deny that we, as a country, bought it—hook, line and sinker—over the course of the 80’s and especially the 90’s, during the birth of the now foreclosed McMansion.  Yes, it was as if an entire generation of Americans consented to hopping aboard a giant hamster wheel of accumulation, all striving toward the imaginary objective of acquiring enough stuff and a pot of money big enough to sustain a comfortable level of consumption through to the grave.  The results speak for themselves: a housing bubble that has left a quarter of the country under water, the corresponding market crash that left a slew of investors without a positive rate of return for over a decade, perpetual car payments and credit card bills, the decline of selfless charity, the demise of the single-income household and millions of workers who abandoned their dream jobs for whatever would pay the most money.

Fortunately, we’re starting to see a shift away from our self-worth being determined by the square footage in our houses, the emblem on our cars or the title on our business cards.  Led by a generational strain more impressed with subjective quality than objective quantity, folks like Tammy Strobel, author of the book You Can Buy Happiness (and it’s Cheap) and the Rowdy Kittens blog, are showing us by example how LESS really can be MORE.  Prone to material minimalism and houses as small as a parking space, they are not condescending or judgmental.  They’re just choosing to live a different way, disregarding much of the supposed accumulation gospel preached by the financial services majority, and inviting a growing community to do the same.

Tammy and her husband, Logan, are both 34 years old, and while she told me it wasn’t a particularly easy transition to go from the life they had to the simplified one they have, it has been a wholly gratifying experience they’d never trade.  A few years ago, they were spending in excess of $70,000 of household income, and they owned two cars and a big apartment filled with stuff.  Now, they live in a tiny house—128 square feet!—have no cars and rarely have monthly expenses in excess of $700.  I’m sure your response to that was similar to mine: “That’s crazy!”  But they have simply chosen to value relationships, community, independence and the most valuable commodity of all—time—over the everyday trappings that dominate most of our lives.

What is to be gained by simplifying life from a physical and fiscal perspective?   It“… allows you to create your own lifestyle, one with the freedom, money and time to do what you love…” according to Strobel.  Sounds an awful lot like the promises offered in a retirement planning pitch, doesn’t it?  But many of these folks are living this unique style of financial independence decades away from a traditional retirement age.

While these simplifiers may be light years away from qualifying for any of the big dogs’ wealth management services, they’re actually living by the foundational precepts of sound, commonsensical personal finance.  And while some may be inclined to dismiss them as a cult of upstart hippies, their behavior is more vintage and classically conservative than nouveau and socialist, most closely representing the habits of our grandparents and their parents.  Those generations actually owned houses they could afford, using mortgages sparingly.  They put in a day’s work and enjoyed the balance of their time with family and friends.  They considered a single car—much less two or three—to be a luxury, and couldn’t have imagined using leverage to buy one.  And they spent more time seeking to reduce their expenses than increase their income.  What a novel notion.

If it sounds crazy for a financial planner to be lauding deleveraging, downsizing and dispossessing, please let me remind you that the goal of the best financial plan isn’t necessarily to have more money…but to have a better life.