10 Reasons To Take A 10-Day Vacation

10 Day Vacation-01For only the second time in my adult life, I just completed a vacation of more than seven days—10, to be exact.  Corroborating my first experience, I am now convinced that there is a certain magic to the 10-day vacation and have resolved to make them an annual habit.  Here’s why:

1. Most importantly, a 10-day vacation gives you the time necessary to surrender, to capitulate, to truly vacate.  It wasn’t until fully four days into our Grizwoldian adventure that my wife was able to observe a genuine change in my demeanor.  “You just seemed to visibly loosen up in that moment,” she told me.  The moment she was referring to was when she, our two boys and I got caught in a torrential downpour in the middle of a bike ride.  I wasn’t an overbearing ogre early in the week, but I was still in work mode; a tad too productive, efficient and compliant for vacation.  It took me the first four days of vacation to transition from being a hesitant bystander to a willing participant.

2. Travel consumes a lesser percentage of your total vacation time.  If you’re going someplace worth going, you’re likely sacrificing a day getting there and another getting back.  Whether by plane, train or automobile—and even if the actual travel time is only half-a-day—the stress and logistical maneuvering consume a full two days.  That’s almost 30% of the seven-day vacation, but only 20% of a 10-day break.

3. Because travel consumes proportionately less of the 10-day vaca, it also opens the door to a traveling vacation with multiple stops.  With the family truckster fully loaded, we drove to Charleston, South Carolina from our home in Baltimore for three days prior to heading northward to Williamsburg, Virginia for another week—a highly improbable feat if you only have seven days to spare.  This change in geographic context gave our single vacation the feel of two separate trips, each with their own set of lasting memories.

photo4. You’re gone long enough that you’re forced to off-load your duties at work.  If I take a three or four-day weekend, I rarely even set my email out-of-office notification or update my voicemail message.  I’m effectively taking a vacation while still on the clock in my mind.  When I take a seven-day vacation, I’m hesitant to completely check-out of my work responsibilities and even feel guilty asking for help.  But if I’m going to be missing days in more than two different work weeks, I really have no choice but to arrange for enough back-up help at the office to truly separate myself from the duties I’m hesitant to relinquish.

5. You’re gone long enough that you’re forced to budget financially for the vacation.  Heeding Carl Richards’ advice, I don’t take a trip of any length without having budgeted for it.  It takes away from the refreshment I seek when I have to wonder how I’m going to pay for the vacation when I get home.  The additional time and cost of a 10-day vacation really demand budgeting in advance of your departure.  Additionally, I recommend seeing where you stand financially five days in so you can recalibrate if necessary for the second half of your trip.

6. A 10-day vacation leaves sufficient time for the creation of memories through experience and the catharsis of do-nothing relaxation.  One of the books I enjoyed over vacation was Laura Vanderkam’s, What the Most Successful People Do on the Weekend.  I found much of the wisdom therein applied just as well to vacations as to weekends.  Vanderkam suggests that we “set anchors”—activities to which we apply some forethought, with the aim of memory creation—and allow relaxation to fill the gaps in between.  None of us wants vacation to feel like work, filled with have-to-dos, but these anchors are, in contrast, want-do-dos.  For us, a couple anchors were to take a horse-drawn carriage tour of downtown Charleston and to ride our bikes as a family into historic Williamsburg for Colonial-era root beer and ginger cakes.

7. You have the time to actually develop rhythms of life unique to that particular vacation.  One of my favorite things to do on vacations is to find new rituals that seem to apply to that particular area and our family’s phase of life.  Personally, I try to maintain some semblance of a workout regimen so I don’t feel quite so guilty about over-exposing myself to the local cuisine, so I found a fitness center I could ride my bike to most mornings.  Our boys, Kieran and Connor, are at those ages (nine and seven) when they could swim all day if you’d let them, so most nights we went for a night swim to cap off the day.  But it takes a few days to explore and find the rhythms that will work in a particular place and time.

8. You get the joy of seeing the week and weekend vacationers leave—while you’re kicked back “working” on reading your second novel by the pool.  There is nothing fun about leaving an enjoyable vacation, but when your vacation begins or spills over into the middle of a week, you get to watch other people yell at their kids for slow-playing the departure process while you order a fruity umbrella drink.  Those days on which everyone else is travelling and checking in or out are also great days for planning an anchor event (see #6) when you’ll likely have less competition.

9. You can avoid the dreaded vacation hangover.  Long weekends can feel torturously short and seven-day vacations often leave you wishing you could go back in time, but by the time a 10-day vacation is over, you’re starting to warm to the idea of getting life and work back to normal.  The idea of sleeping in your own bed has increasing appeal, eating out has started to weigh you down, spending money like the Greek parliament has begun to feel self-indulgent and you’re almost anxious to get back to the daily rhythms of work and rest.

10. You come home a better spouse, parent, employee­—a better person.  A 10-day vacation has the highest probability of providing the rest, relaxation and lifelong memories that we all hope to get, but rarely do, from the highlight of our summers.  Conversely, taking fewer days often leaves a residue of dissatisfaction that leaves us perpetually wanting more.  So go ahead, tack a few extra days onto your next vacation.  We’ll all be better for it.

How To Win $120,000 Playing Poker

poker_hand1My wife, Andrea, won $120,000 at Resorts Casino in Atlantic City playing Caribbean stud poker in 1997, before I even knew her.  She parted with exactly $16 in that fateful hand, and received 7,500 times her investment after being dealt a royal flush of a-girl’s-best-friend diamonds.  For the abstainers, that’s a ten, jack, queen, king and ace of the same suit—the best possible hand in poker.  The chances of being dealt such a hand are one in 649,740.  To put that in perspective, the odds of getting struck by lightning throughout your lifetime are one in 3,000.

Luck Be a Lady

After playing for over four hours with a $100 budget for the night at the Caribbean stud tables, Andrea was down to six dollars in chips and expecting it to be her last hand.  Indeed it was.  She made the minimum blind bet of five dollars to play and anted up an additional dollar to be eligible for the progressive pot.  The progressive pot fills up (and up and up) with the aggregate of the one dollar side bets at a collective of tables in the casino until someone with a qualifying hand earns some or all of it.  The dealer shuffled and dealt.  Andrea peeked at her five cards to reveal a royal straight flush arranged in the following order, from left to right: ace, king, queen, ten, jack.

As she choked down her leaping heart, she realized she needed to borrow a $10 chip from a friend to satisfy the minimum raise to win.  But even then, the dealer had to have a qualifying hand of at least an ace and a king, the hand that falls just below a pair of twos.  If the dealer has bupkis, so do you, receiving only a doubling of your initial bet—and no progressive pot.  The dealer qualified.  Then his face turned white when he saw Andrea’s hand.  Then everyone at the table saw Andrea’s hand.  Then everyone in the casino heard Andrea’s table erupt with a noise that sounds like corporate joy, but actually represents exasperated, alcohol-soaked, oxygen-infused envy.

Everyone now darted their gaze to the centrally located progressive pot sign, as the dealer struggled to turn the key to stop the number from rising, faltering enough to add a few more thousand dollars to Andrea’s winnings—in  all, $118,529.  The dealer was whisked away by the pit boss and Andrea was escorted to the casino teller as zombie-eyed gamblers pawed her in hopes of a mystical transmission of luck.  After tapes were reviewed to confirm she hadn’t gamed the system and taxes were withheld, Andrea walked with a pocketful of cash and a check for $81,786.  Not bad for a night on the town.

Survivorship Bias

THIS is the story the casino wants you to hear.  (They don’t want you to hear that Caribbean stud offers some of the worst odds at the casino.)

THIS is called survivorship bias, and it’s the foundation upon which casino empires and the “success business” have been built.

Survivorship bias draws our attention away from the failures which are more numerous to the successes which are fewer.  It makes us think that because Andrea won $120,000 off of a $16 hand of Caribbean stud poker that it is somehow more likely that we will.  Survivorship bias inclines us to believe that following the prescription of someone who’s enjoyed abnormal success—in their career or marriage or parenting or investing or any number of pursuits in life that require an incalculable number of variables to align in our improbable favor—will help us achieve a similar level of success, when the success guru du jour may have simply been dealt the 649,740th hand.

David McRaney gives a much more thorough explanation of survivorship bias in his article of the same name, warning us that “the advice business is a monopoly run by survivors,” invoking Daniel Kahneman’s brilliance: “If you group successes together and look for what makes them similar, the only real answer will be luck.”  But McRaney’s is not a pessimistic manifesto for underachievers.  He addresses the noticeable differences seen in the lives of those deemed lucky contrasted with those who aren’t.  Based on compelling research collected over a decade of observance, the following conclusions are reached:

Unlucky people are narrowly focused…crave security and tend to be more anxious…remain fixated on controlling the situation…as a result, miss out on the thousands of opportunities that may float by.

Whereas:

Lucky people tend to constantly change routines and seek out new experiences…tended to place themselves into situations where anything could happen more often…exposed themselves to more random chance than did unlucky peopletry more things, and fail more often, but when they fail they shrug it off and try something else.

This, however, is far from the self-deceptive “gotta play to win” approach off of which casinos have thrived.  The lucky put themselves in situations where they have a chance to succeed today, but never take such enormous risks that they lose the ability to take a chance tomorrow.  Yes, the optimist who falls down indeed gets back up, but the overly-optimistic gambler who gets hit by an 18-wheeler typically stays down.  As McRaney puts it, “success boils down to serially avoiding catastrophic failure while routinely absorbing manageable damage.”

In keeping with this theory, Andrea’s big take in Atlantic City wasn’t her first or last display of luck.  But to her, suffering the embarrassment of, say, calling a radio station for the chance to win a trip to the Emerald Isle, is a small price to pay.  And this gent of Irish descent very much enjoyed that trip.

If you enjoyed this post, please let me know on Twitter at @TimMaurer, and if you’d like to receive my weekly post via email, click HERE.

7 Reasons I Dumped Facebook

facebook-01It’s official.  I’m off the Facebook grid.  Nobody offended me.  I didn’t have a bad experience.  While I’m not thrilled about the idea of Big Brother watching my every move, I’m not particularly paranoid about social media sharing.   Therefore, I’m sharing why I’m dumping Facebook and committing to Twitter and Instagram.

1)     Facebook sucks time from my life, and unlike money, time is a zero sum game (thanks to Laura Vanderkam for reminding us).  Without question, some of the time I spend on Facebook is edifying and life-giving.  For example, my good friend, Nick Selvi—a husband, father, teacher and musician—is stricken with stage four rectal cancer, and his Facebook page keeps me informed of the battle he and his family are waging.  I’ll miss that, but hopefully I’ll be a real friend and call and visit to support him.

2)     Most of my Facebook friends aren’t (actually friends).  They’re not enemies.  It’s not that I wish them ill, but for the majority of them, there’s a reason we don’t associate other than on Facebook.  For most, it’s not because of a geographic disparity or because they don’t have an email address or phone number—it’s because we’re simply not actual…friends.  (This makes me wonder if the reason I initially got on Facebook was actually a matter of pride.  “How many virtual friends can I assemble?”  I appreciated the reminder from Leo Babauta this week that comparing ourselves to others is an exercise in futility.)

3)     There are other (better) options for photo sharing.  Seeing my friends’ and family’s pictures, and sharing my own, is what I like most about Facebook.  A picture and a caption can generate a belly laugh or bring tears to my eyes.  I also know that it is the real-time exchange of family pics that likely inspired 90% of the grandparents who are on Facebook today—so I’m not going to leave them hanging.  Now instead of merely using Instagram to obscure my lack of photographic skill and then upload pictures on Facebook, I’ll simply use Instagram as my photo exchange medium, inviting only family and close friends to follow me there.

4)     Facebook brings out the worst in people.  How I didn’t quit Facebook during the last presidential campaign, I’ll never know.  The willingness of so many to spew half-baked punditry that almost assuredly alienates them from half of their friends—and convinces precisely no one of their opinion—boggles the mind!  Yes, these offenders are buoyed by the 10 Likes they get from the people who think similarly, but scores more harden their opinion in opposition and are likely offended in the process.  (If this point doesn’t resonate with you, you may be an offender.)

5)     I learn more on Twitter.  Twitter is to Facebook as a biography is to a novel.  I know there’s nothing wrong with reading fiction, but I confess that I (wrongly) feel a little guilty when I spend time reading something that didn’t (or won’t) actually happen.  I enjoy being on Twitter, much as I enjoy reading a good biography, but I’m allowed to feel like I’m better for having done so—that I’ve learned something beneficial.  Twitter is now my number one source for hard news and opinions I value, as well as a relational connecting point.  Twitter is more of a resource and less of a popularity contest.  And let’s face it, for all too many, Facebook is really closer to the intellectual or emotional equivalent of eating a tub of Ben & Jerry’s in one sitting.  (It’s not good for you.)

6)     The presence of ads on Facebook is getting ridiculous.  I care more about you than the fact that you like Cherry Coke.  I certainly care more about you than whatever Facebook wants me to buy, and it seems like there are increasingly more ads every day.  Am I the only one who notices that?

7)     Less is more.  I’m on a mission to simplify life, to slow it down to a pace at which it can actually be consumed, not just tasted.  I don’t want to hide behind the ubiquitous, “I’m really busy” as a badge of honor.  I want a lower cost of living (not just financially) and a higher quality of life.  I want to limit the number of [things] that compete for my attention so that I can apply more attention to those [things] I care the most about.  Less is the new more.

Goodbye, Facebook.

If you enjoyed this post, please let me know on Twitter at @TimMaurer, and if you’d like to receive my weekly post via email, click HERE.

(And just to keep me out of any potential regulatory hot water, my comments here are regarding Facebook as a service—not an investment.)

The Art of Screwing Up

Screw Up2-01I was enjoying breakfast with my good friend, Danny O’Brien, recently, when our conversation moved to the topic of screwing up, making mistakes and the steps we take thereafter.  Danny said, “The quality of our lives is not determined by whether or not we screw up—because we all will.”

“No, the quality of our lives is determined by what happens next.  Will we hide or come clean?  Will we make excuses and search for justification or take responsibility, even if it means receiving consequences?”

Whether in our families, businesses or financial management, mistakes are a given.  So as long as screwing up is a part of all of our lives, why not make it an art form, transforming it from a curse to a blessing?  Here are three steps to doing so:

1)     OWN – Our first instinct is always to deny and defend.  Our self-preservative nature fights to keep our better judgment at bay, but in the face of a clear but yet un-owned error, we have an opportunity to claim full or partial responsibility.  And while family, friends and employers don’t love our mistakes, they hate buck-passing even more.  However, owning our failure isn’t easy, because owning also means accepting the natural consequences of our actions.  Claiming bankruptcy might eliminate your debts, but you’re also not likely to procure credit for another seven years or more.  Demeaning your children still weakens their resolve that you’re their biggest fan, blowing up at your employer can still get you fired, and calling your spouse a choice word could leave an impression that lasts for years, even decades.

2)     APOLOGIZE – John Wayne famously said, “Don’t apologize, Mister, it’s a sign of weakness.”  Hogwash!  (As someone from Wayne’s generation might say.)  A willingness to apologize is a sign of strength—an unwillingness to do so is a sure sign of both delusion and weakness.  Do you avoid apologizing to perpetuate a façade that people might perceive is impenetrably perfect?  Do you think people are more likely to trust, love, respect or follow you if you can (apparently) do no wrong?  The opposite is true.   If you try to prolong the ruse, the best case scenario is that people will fear you—if you’ve succeeded in fooling them—but it’s impossible to truly trust, love, respect or follow someone (in a healthy way) if we believe them to possess the inherent infallibility we know to be present in our own lives.

3)      REFORM – “Only the penitent man shall pass.”  Do you remember that classic line from Indiana Jones and the Last Crusade?  As Indie mumbled the cryptic phrase written in his father’s journal on his quest to retrieve the Holy Grail, he properly (and in this instance, necessarily) infers aloud that, “The penitent man is humble…kneels before God…KNEELS!”  And right as he drops to his knees, he narrowly averts sure decapitation.  Penitence, repentance, humility—whatever you want to call it—might be seen as only the first step of reform, followed by a second step, an action of a more preferable sort.  But true penitence quite naturally results in different (better) behavior; if it doesn’t, the humility itself is merely superficial.  Indeed, the root meaning of the verb “repent” actually implies a fluid continuum: contrition, followed by action that is the stark inverse of the errant behavior.

If you have followed this path before, then you know that the satisfaction of recovering from a mistake is often proportionately greater than the pain suffered in being humbled by our own fallibility.  You also likely know that when our misdeeds cause others pain, we can somehow mysteriously surpass the strength of our pre-mistake relationship after owning, apologizing and reforming.  Although it’s no guarantee, practicing the art of screwing up is often endearing to family, friends and even clients.  But let’s not forget that if we’re genuine in our penitence, we shouldn’t be screwing up quite so much in the first place.

Don’t Disregard Mom’s Financial Instincts

mothers-day-heartThe collective work of moms everywhere is so incredibly significant that it almost seems too limiting to honor them only one day each year.  Thousands of years of paternalism has allowed society to feel entitled to receive the oft unnoticed contributions mothers offer households, while presuming moms’ ignorance in other categories—especially household finances.  It would, however, be a dreadful mistake to ignore the keen financial instincts of moms.

Married couples have a tendency to dole out household duties in the form of roles for which individuals are best suited.  This is an entirely wise strategy that optimally leads to a more efficient and livable familial space.  But while handling household finances has historically defaulted to the dude in charge of changing light bulbs, taking out the trash and removing vermin, it is a mistake to presume that the mother of the house is the non-financial spouse.

Even if Mom is the household member least interested in asset allocation, insurance deductibles and itemized deductions, it’s vitally important to include Mom’s non-financial thoughts in financial decisions.  This is because personal finance is more personal than it is finance, among other things.  Here are three areas of personal finance where a mom’s stereotypical instincts are especially valuable, if not vital:

1)     Insurance – Guys have earned the stereotype for having a higher tolerance for risk and a lower tolerance for paying for that which doesn’t feature high definition pixels, buttons, wheels or triggers.  We also occasionally struggle to admit when we make mistakes, so paying for something that is intended to protect us from mistakes may seem like wasted money.  “I’m not going to die, our house isn’t going to burn down and I’m not going to have a car accident,” so let’s use that insurance premium money to buy a jet ski.  Yes, even if Mom doesn’t know how to read an actuarial table, her instinct to protect the homestead and its inhabitants from harm is a good one.  Of course, we still want to view insurance through the eyes of a risk manager, not a collector of insurance policies for every known fear, but Mom’s sixth sense brings a healthy balance to insurance decisions.

2)     Investing – Here again, Dad stereotypically makes investing decisions by focusing on that which gives the best opportunity for return, downplaying the inherent likelihood that the stock or fund with the greatest potential for return also possesses the highest probability of loss.  But woe to the man who ignores Mom’s gut feeling to make capital preservation a higher priority in the handling of the family nest egg.  The world’s best investors focus more on risk than return.

3)     Nurturing – Financial planning is a process, not a product, and much like moms are often the parent most attuned to the nuanced evolution of their offspring—from newborn to adult—a mother’s nurturing instincts are well suited to seeing that the financial planning process has a forward-thinking trajectory.  While dads are stereotypically project-oriented—occasionally spending weeks, months or even years in a special place called Oblivion—moms are often best suited to get the myriad of financial to-dos produced in a plan checked off.

It’s rare that we’d range as far as household finances to find affirming words for moms on Mother’s Day, especially when considering the plethora of other tangible and intangible benefits they bring to our families, but financial planning is yet another important subject in which a mom’s innate maternal instincts should be recognized and heeded.

Success Is Overrated

Success-01I’m curious, what pictures come to mind when you read the word SUCCESS?

Time’s up.

Almost invariably, this exercise results in visuals of sports cars, attractive people, tailored suits, high-end electronics, golf clubs, jewelry, home décor and stainless kitchen appliances.  Now please look past my stereotype-ing and recognize the one thing all of these have in common—they’re all material things, designed both to consciously give us pleasure and subconsciously increase our standing in the minds of our peers.  Please don’t feel judged—I’m right there with you.  But while most of us spend the bulk of our adult lives pursuing success (that is visibly recognizable) as the penultimate goal, I posit that it’s simply not what we really want in our hearts.   But if not success, then, what is it that we really crave that leads us to a satisfying life?

This morning, I had a breakfast meeting with four men, each from the generation preceding mine.  In their respective fields, each of them has reached the point where they are publicly recognized in the community as models of success.  Actually, they each reached that point a decade or more ago.  (No, I still haven’t figured out why I was invited.)  But we were convening to discuss, among other things, the establishment of a non-profit entity to serve the weary hearts of people and businesses.  People and businesses who, most often, are already recognized as successful.  People and businesses who’ve grown weary striving for the success they thought was the goal.

So, if it’s not success that brings the satisfaction in life we crave, what then?  It’s another “S” 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 discussion or speaking engagement 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, I invite you to call them whatever you want—I call them Personal Principles.  These are the collective essence that you want to mark your time on this earth.

It’s true that you can reach someone’s view of success by reading any number of financial and self-help books and periodicals telling you what to do with your life and money.  The downfall is that they’re telling you what you should be doing based on their personal principles—not yours—and that means you could end up achieving these financial or life goals successfully while still feeling hollow because your path lacked significance or your personal purpose.

Is life planning with significance as a primary goal extra work?  Could it mean leaving today’s success or money or influence or comfort on the table in pursuit of significance?  Yes and yes.  It will take some time and deliberation to articulate a defined set of personal principles and may well lead to an overhaul of that which you’ve come to know as life.  But it is time, effort and money well spent, because it validates—or sometimes, even more helpfully—invalidates the steps that you’ve taken and are taking in money and life.

Spring Cleaning Your Financial Plan In 7 Steps

Spring Clean-01Cliché or not, there is something refreshing about the vernal equinox and the advent of spring, isn’t there?  And yes, with the birds, flowers and warmth also comes a sense of optimism that often inspires us to get our proverbial house in order.  So while you’re cleaning out the garage and wiping down the lawn chairs, here are seven categorical to-dos you can check off to streamline and improve your financial plan as well:

  1. CONDUCT A CASH FLOW AUDIT – If you maintain an accurate weekly budget, you shouldn’t need to balance your checking and savings accounts incessantly, but it’s a good idea to do it at least semi-regularly to ensure that the transactions that fall through the cracks don’t come back to bite you.  If you don’t budget, consider relinquishing your self-deceiving notion that your household can be optimally run without its de facto Chief Financial Officer—you—doing his or her job.
  2. REVIEW YOUR LIFE INSURANCE NEEDS AND POLICIES – Have any big changes in life—a new family member, a new home, a new job—changed your life insurance needs?  It’s not easy to talk about life insurance because it’s not easy to talk about death, but it’s important.   Please don’t ignore it.  Unless you make over $300,000 per year or have net worth over $3 million, the chances are that your life insurance needs will be best handled with term life insurance.  If you don’t meet those thresholds and have whole life, variable life or universal life, you’re probably overpaying for less death benefit than your family needs.
  3. DO YOU HAVE/NEED DISABILITY INCOME OR LONG-TERM CARE INSURANCE? – If you’re in your 30s or 40s and haven’t asked the question, “Do I have enough/the right disability income insurance (DI) coverage?” you have lots of company; but you should absolutely consider insuring what is likely your biggest “asset” at this phase of life—the present value of your future income.  If you’re in your 50s or 60s and have adequate emergency and retirement savings at that phase of life, consider focusing less on DI and more on long-term care insurance.  Despite widespread misunderstanding, Medicare does not cover long-term care expenses past 100 days—and the care itself ain’t cheap.
  4. DON’T NEGLECT HOME AND AUTO INSURANCE – Save your household some money by reviewing your home and auto insurance.  It’s the most neglected insurance because it is so commoditized.  There are two ways to save money:  First, take a look at your deductibles for comprehensive and collision.  Are they below $500?  If and only if the savings will be material and you have adequate emergency reserves, consider increasing deductibles to $1,000 or $2,000—thereby self-insuring the non-catastrophic risk and saving some money on premiums.  Second, quote around to see if your rates are competitive.  And if you don’t have an umbrella liability policy, spend some of your savings buying one.  It’s one of the best values in insurance.
  5. CONSOLIDATE, CONSOLIDATE, CONSOLIDATE – One of the best ways to simplify your financial existence is to consolidate accounts to the greatest degree possible.  Do you still bank with a big name, brick-and-mortar bank—why?  If that question isn’t accompanied by a compelling answer, join those of us earning more interest and paying less in fees with fully-FDIC-insured online banks.  If you have a higher-yielding checking account, you may not even have to worry about a savings account.  Then consolidate your investment accounts: you don’t need more than one active 401k (or equivalent), Traditional IRA (likely housing your old 401ks) and Roth IRA for each spouse—as well as an individual or joint liquid, taxable brokerage account.
  6. UPDATE (OR INITIATE) YOUR ESTATE PLAN – I try to avoid the judgmental tone for which too many financial advisors are notorious, but if you have either assets or a family and you haven’t written estate planning documents yet—a will, durable power of attorney and advance directives—you’re simply doing yourself and/or your family a disservice.  Just do it and get it out of the way if you’ve been procrastinating.  Additionally, estate planning laws have been made (reasonably) concrete for the first time in over a decade.  So if you have an existing plan, and you were working to avoid federal or state estate or inheritance taxes, the chances are good that you’ll be making some changes that will benefit you and your heirs.  And please don’t forget that the beneficiary designations on your retirement plans and insurance policies should also match the intent in your will—because your beneficiary designations trump your will.
  7. ANSWER THE QUESTION “WHY?” – The WHY is the driving force—and often the missing piece—behind every financial plan.  Knowing WHY you budget, save, spend, insure, invest and plan at all gives meaning to the process.  Answering this question, and endeavoring to articulate the values and goals that underlie your life and financial plans will give you the much-needed fuel to do the type of financial planning that isn’t burdensome, but life-giving.

I’m happy to answer any follow-up questions you might have in the comments section or via email at tim@timmaurercom.wpengine.com.

There Are No Free Skittles

photoLast week, I went on a mission with my two sons, Kieran and Connor, ages nine and seven.  The mission was to acquire newly released Lego sets bearing the resemblance of Teenage Mutant Ninja Turtles with whom the boys particularly identify.  And while any expedition to Toys-R-Us can be fraught with peril, this one was an especially harrowing trip.

After claiming our intended purchase, we waited in line.  (Have you ever seen two boys, ages seven and nine, wait in a line?)  Not without a penchant for distraction myself, I wandered momentarily out of the cue and asked the boys to stay in line.  Upon my return—no more than 20 seconds hence—I noticed Connor chewing something.

“What are you chewing, Connor?”

“A Skittle.”

“Where’d you get that Skit—Oh, Connor, did you pick that up off of the floor?”

“Yup.” (Proudly.)

Later, when my wife asked him why he felt compelled to forage for food (we’d just eaten dinner, by the way) on the floor of the toy store, he answered quite matter-of-factly, “Free Skittle.”

Of course we know there are no free Skittles, but even we adults continue to be drawn to that which has no apparent cost.  How else is it, then, that a frightening plurality of the phone calls and emails we receive each day are goading us to simply receive a gift that is seemingly priceless with supposedly no price?  Obviously, there’s a market for it.  So whether it is our hopeless good nature that wishes to believe in the altruism of the free gift giver (unlikely) or our burning desire to receive something-for-nothing (more likely), the freebie-seeking thread is so persistent in us that the theme remains a constant in money and life.

We need not submit ourselves, however, to the entirely skeptical or willfully naïve camps.  There is a third option: to recognize that everyone (and nearly everything) has a bias.  The bias may be personal, but is quite often an economic bias—a conflict of interest where money is somehow involved.  It is most likely this bias that is affecting the behavior of the grantor of a “gift” and its actual price.  And lest you think economic bias is reserved for swindlers, it serves us well to recognize that it is actually quite ubiquitous.  Pastors, priests, aid workers and (gasp) doctors are no freer from economic bias than anyone—indeed, the bias may be even more powerful when it’s presumed nonexistent.

Everyone has a bias.  It doesn’t make them—us—bad people, but we’re all selling something, and the sooner you recognize that, the less likely you’ll be to get on that email list, hit LIKE on Facebook, sign up for that seminar…or eat free Skittles off the floor.

You Might Be An Underachiever If…

Here’s some humor and inspiration to send you into your weekend—another phenomenal guest post from my friend, mentor and co-author of The Ultimate Financial Plan, Jim Stovall—that is sure to make you laugh and think.

JIM PROMO PHOTO - SMALLSuccess is a wonderful concept. It is self-defining and self-fulfilling. Once we get past our school years with standardized tests and regular percentage grades, we emerge into the adult world where, to a great extent, we get to determine what is important to us.

In school, the labels “achiever” or “underachiever” are determined as compared to your fellow students; however, in the real adult world, you and I get to decide what is important to us and what levels we want to achieve in our lives. Only you and I know whether we are overachieving or underachieving because we establish the rules, set the target, and create the timeframe and deadlines in our own minds. There is probably no greater factor in our own personal satisfaction in life than our own assessment of whether we are overachieving or underachieving as it relates to our own goals.

Since the concept of achieving is elusive and hard to define, I thought I would borrow a time-tested technique from the comedian and entertainer Jeff Foxworthy. Mr. Foxworthy has singlehandedly elevated the term Redneck from an insult to a point of pride among many people simply by helping his audiences define the term. With that in mind, we can take a look at the term underachiever as it relates to your own personal goals that you have established for yourself and your life.

If the last goal you set for yourself involved a science fair project in the seventh grade, you might be an underachiever.

If you spend more time watching television every day than you spend on your own personal development in a year, you might be an underachiever.

If the last 10 books you read all involved comic character superheroes, you might be an underachiever.

If you consider the act of getting off the couch to change the batteries in the remote control to be vigorous exercise, you might be an underachiever.

If you have more creditors calling you than friends calling you, you might be an underachiever.

If the majority of your life savings is loose change that fell out of your pocket into the car seat or recliner, you might be an underachiever.

If you have more premium channels on your TV than you have biographies on your shelf, you might be an underachiever.

If friends, family members, acquaintances, and pets avoid you when they want to have a good day, you might be an underachiever.

If you spend more time planning your three-day weekend than you spend planning your life goals, you might be an underachiever.

If the greatest success you ever had or ever hope to have came during a Little League game when Richard Nixon was president, you might be an underachiever.

If you instantly know who got voted off the island, who picked which idol, and who’s dancing with what star, but you don’t have advisors and mentors, you might be an underachiever.

At the risk of encroaching on Jeff Foxworthy’s space, sometimes it’s easier to define what we don’t want and change it than to define what we do want and obtain it.

As you go through your day today, define your own success, set your own goals, and become an achiever.

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; by email at Jim@JimStovall.com; or on Facebook at www.facebook.com/jimstovallauthor.

3 Ways To Simplify Your Money Management

Simple Money-01“‘Tis the gift to be simple,” begins the legendary Shaker dance song, “Simple Gifts,” written in 1848 by Joseph Brackett.  And while virtually all of the world’s major religions have extolled the benefits of simplicity for millennia–many even making it a central tenet of the faith–the nothing-short-of-religious pursuit of money is marked by scores of painfully circuitous paths.

So, if you are one who enjoys being overwhelmed by hordes of statements for a collection of seemingly random latest-and-greatest investments, if you are prone to bending the tax law to the point of breaking in search of every last loop-pin-hole that might squeeze out an extra buck, if you are into manufacturing tax-privileged growth investments out of insurance policies optimally suited for another objective, if you enjoy bouncing debt from lender-to-lender, and you’d prefer to live on the hairy edge of financial sanity rather than rest in financial peace, this post might not be for you.  But if something in you yearns for a simpler financial existence, consider these three recommendations designed to reduce stress and increase efficiency:

1) CONSOLIDATE – How many 401(k)s do you have from past jobs still languishing in the old plan?  How many IRAs or regular, taxable investment accounts do you have?  How many bank accounts do you have, with how many banks?  Credit cards? Mortgages? How many financial advisors, stock brokers or insurance agents do you attempt to integrate?  I think you see where this is going…

You don’t need more than a single, current 401(k), 403(b) or other retirement plan–the one with your current company.  Then, you need only have a single Traditional IRA, which should likely be the receptacle for aggregating your old tax-deductible retirement plans.  If you’re self-employed, you may combine both of these into a single SEP IRA or individual 401k.  Hopefully, if your income falls below the threshold, you have a Roth IRA, storing up tax-free money for what is likely to be a tax-heavy future–but you only need one.  If you’re blessed to have money to invest beyond retirement vehicles, you need not have more than a single taxable, liquid brokerage account.  And in all likelihood, you don’t need more than one checking account and one savings account with one bank.  One of each–401k, IRA, Roth, liquid, checking and savings.  (There are exceptions, of course, but they are unique.)

Maybe you prefer to have multiple financial advisors–pitting different investment or financial philosophies against one another–but it probably means you simply haven’t found one advisor you actually trust.  Larry, Moe and Curley may be competing for your business to your detriment if they’re not each aware of the other’s strategy (and willing to accommodate).  When you enter into a trusting relationship with a single advisor–a truly professional (ideally fee-only) financial planner–he or she should have a suite of vetted referrals for all of your investment, insurance, tax and estate planning needs.

More is not better; it’s just more.

2) PRIORITIZE – Whenever I deliver a slate of categorized recommendations following a comprehensive financial review for clients, I invariably see a palpable sense of relief come over their faces and a burden lifted from their shoulders.  Yes, knowing what we need to do is indeed cathartic, but we still haven’t accomplished anything!  And a truly comprehensive financial analysis will likely unveil enough actionable recommendations to take months to complete.  The first step, therefore, is to prioritize, and while your internal compass should be your primary guide, your advisor can and should help with this process as well.  You hope to increase your retirement savings, save for education, increase your emergency reserves, pay down debt and revise your estate planning documents, but there is only so much time in the day and money in your wallet.  A simple prioritized list can be your guide through the implementation process, which takes on a circular form as life and laws change.

3) HIRE A QUARTERBACK – Yes, I acknowledge that this suggestion may appear biased coming from someone who makes a living giving financial advice, but I do believe that having a genuine relationship with a knowledgeable, experienced, educated, credentialed, fiduciary financial advisor can be the cornerstone of a simpler financial life.  Yes, there are many “advisors” out there whose benefit to you–net of fees and expenses–is negligible, and some whose net effect is sadly negative, but I am buoyed by a movement from within the industry away from sales to true advice.  Although it may seem like a secret, real financial planners are to be found, and a good starting point is the advisor search on www.napfa.org, the financial planning association with the highest continuing education requirements and a no-commission mandate.

Or, you could, in addition to maintaining your expertise in your profession and giving your family the time they deserve, become a bona fide expert in investments, insurance, taxes, retirement planning and estate planning on your own.  But that doesn’t sound very simple, does it?