Tag Archives: retirement

Mutual Fund Audit App

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This is the ninth exercise in a series designed to walk you through an entire financial plan.  The exercise is embedded in an Excel spreadsheet you can download and save for personal use.  You can read the backdrop for the exercise HERE, or just jump right in with the instructions given below:

Most of the information you’ll need to complete this exercise should already be together from the Personal Balance Sheet exercise earlier in this series, but if not, pull together the most recent holdings information that you have for your various investment accounts.  If you have online access to these accounts, it will be as easy as printing out the page with your current holdings.  If not, pull together each of the most recent statements for all of your investment accounts.

Aggregate your holdings using the form we’ve made available for this exercise online.  Segregate them between investments that are inside of retirement accounts (like your 401ks, 403bs, IRAs, etc.) and nonretirement accounts (there is a tab for each on the spreadsheet).  For any mutual funds, you’ll want to have the name of the fund and the five-letter symbol.

Now, navigate your web browser to www.morningstar.com.  With the tools here, you’ll be able to use that final column of your Investment Audit to fill in the Manager Category column.  (You can examine your mutual fund managers with the tools on Morningstar using the basic service at no cost.  Another good, free resource for the analysis of stocks and mutual funds is Yahoo’s Finance web site http://finance.yahoo.com/.)

Plug the symbol of each of your mutual funds into the “Quotes” field on Morningstar.  The main page for each fund will show you a 10-year chart with a graphical depiction of your fund’s performance alongside its benchmark.  Just below the chart, you’ll see a tool that will allow you to click and drag the timeline backwards to see a longer fund history if it’s
available.  You can also hit the “Performance” tab and select the “Expanded View” to see even more detail about the fund’s numerical performance.

Using the tips in this post, you should now be able to classify each of your funds.  In the Action column on the right hand side of the worksheet, check any of the Return Chasers and Index Huggers for additional review.  Again, Return Chasers should be well understood, carefully monitored, and dumped if misunderstood.  Index Huggers should be replaced.

Click HERE to access the Mutual Fund Audit app!

Life Insurance Needs Analysis App

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This is the sixth exercise in a series designed to walk you through an entire financial plan.  The exercise is embedded in an Excel spreadsheet you can download and save for personal use.  You can find the backdrop for the exercise HERE or just jump right in with the instructions given below:

This app is designed to help you determine what your life insurance needs are for final expenses, debts and mortgages, education, and income replacement.  If you conclude that you have policies you don’t need or want, and you’ve confirmed your research with an independent planner who does not accept commissions on the sale of life insurance, then you should have several options for terminating your policies.  These will differ from policy-to-policy, so check with your insurer.  But don’t make those decisions hastily.  Even if you shouldn’t have purchased the whole life insurance policy you bought 15 years ago and don’t need or want it now, in some instances it will make sense to keep it.

Requesting an “In-force Life Insurance Illustration” and a “Policy Cost Basis Report” from your agent (or the insurance company’s home office) will help you and your independent planner determine whether the policy should be kept or surrendered based on the investment value, future prospects for growth, stability of the insurer and tax consequences of liquidating.

Additionally, if you are considering replacing a current policy with a new policy that is more appropriate or economical, it is very important that you do NOT cancel any existing policies until you have received and paid for the new policy.  This is to ensure that no issues arise throughout the course of your underwriting that would disqualify you from receiving the new insurance policy.

Especially in these economic times, it is important to ensure that every dollar of yours is working hard for you, and that includes the dollars channeled toward life insurance.

Click HERE to access the app!

The Three Guarantees In Financial Planning

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Not much in the realm of financial planning can be guaranteed.  Even the best projections and technical analyses are filled with disclaimers noting, among other things, that “Past performance is no indicator of future results.”  You can lose money.  The company you’re counting on could go out of business.  But of this you can be sure:  Three sure-fire guarantees in financial planning are SURPRISES, CHANGE and FAILURE.

Reassured?  I was afraid not.

But fear not, these three guarantees do come with counter-agents that we can systematize in our financial planning to minimize any negative impact:

Surprises require MARGIN.  Change requires FLEXIBILITY.  And failure requires GRACE.

Margin is a lost art and missing in nearly all phases of life in our all-too-hurried, uber-productive, stressed-out lives.  We don’t leave enough empty space on our calendars, so if we get stuck in traffic or stop to help a stranded motorist, we’re likely to be late for something else.  We can’t do anything spontaneous because every minute is already filled.  And because all of our time is spoken for, we also don’t have much in the way of blank canvas in our, and all too often our hearts.  And this is especially true of our finances—because every dollar is already spent or pledged, often even small emergencies or organic opportunities can’t be absorbed or funded.  There’s no margin for error.

Our lack of margin feeds our inflexibility.  We often don’t even consider the possibility of change because we don’t have the time.  Change, therefore, is inevitably also a surprise, compounding the discomfort.  But we often struggle to accommodate even predictable change.   Can your finances adapt to another child—even if the pregnancy was planned—or the reduction of income in an industry-wide change that was anticipated?  That which doesn’t bend, breaks.

For most of us, so much of our life is spent protecting ourselves from failure that it can be devastating when it arrives.  And it will.  Failure is simply a natural byproduct of our human imperfection.  And if you’re unable to view it as the most successful people often do—as an opportunity for invaluable education and personal growth—please consider diminishing failure’s grip, if only for pragmatic purposes.  Remember the major-leaguer who qualifies for the all-star team when he only succeeds a third of the time (a .333 average in Major League Baseball isn’t bad).  That’s where grace comes in.  Grace isn’t for the guiltless; that’s called vindication or acquittal.  Grace is being forgiven—or forgiving ourselves—when we’ve screwed up, slouched, squandered or slandered.  You don’t have to deserve it to receive it.

So what on Earth could this possibly have to do with Roth IRAs?

I love the tax-free growth and retirement distributions available with Roth IRAs.  I love that you’re not forced to take Required Minimum Distributions after age 70 ½, and I think there’s no better gift you could give your heirs than a Roth.  But my very favorite element of the Roth IRA is its LIQUIDITY, and liquidity is the key to navigating the three guarantees of financial planning.

In case you’re not following me, Roth IRAs are unlike any other retirement investment bucket, for lack of a better term, as you’re allowed to back money out of the account for any reason at any time at any age and without any tax consequences or penalties.  There’s only one caveat: you can only take back your principal—what you contributed to the account—unconditionally.  Your growth is subject to all those typical conditions (taxes and penalties) you’re accustomed to in the realm of retirement accounts.  But if you put $10,000 into a Roth and it grows to $12,000, you can take back your $10,000 whenever you please and for whatever reason.

I’m not encouraging you to take the money out, forfeiting a lifetime (and maybe multiple lifetimes if you pass it to heirs) of tax-free growth and distributions.  But hey, “stuff” happens.  LIFE HAPPENS.

So allow a Roth IRA to become part of your strategy.  Use it as an extension (not the primary source) of your MARGIN, the foundation of which should be pure cash reserves in a bank savings account.  Allow it to facilitate your FLEXIBILITY to change, if and when it’s necessary.  And if you have to dip into it, give yourself GRACE.  Learn from the experience so that you’re better prepared for the next surprise and the inevitable change to come.

Complete Your Personal Financial Statements

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This is the third exercise in a series designed to walk you through an entire financial plan.  The exercise is embedded in an Excel spreadsheet you can download and save for personal use.  You can find the backdrop for the exercise HERE or just jump right in with the instructions given below:

Cash Flow Statement

Through the online banking systems of most banks, you can now view a history of your expenditures for specific periods of time in seconds.  If you prefer to do things the old fashioned way, your recent bank statements will also show you your spending past. Seeing what you’ve spent is step one in creating a cash flow statement.  Step two is categorizing your spending—where exactly have you spent your money?  This can be an eye-opening experience.

Balance Sheet

Collect all of the statements (online or paper) for every bank account, investment account, 401k, IRA, and so on, along with every statement detailing your debts—mortgages, auto loans, college loans, credit cards and such.  Add up your assets and your liabilities and then subtract the latter from the former.  The resulting balance is your net worth.

Budget

Every dollar that you expect to receive in the coming month should be allocated to a budgetary category.  Your fixed expenses are the easiest to plan for, but you must also estimate what your variable expenses are going to be.  You also can’t forget about those expenses that come quarterly, semiannually, or annually.  This should include things like your water bill or insurance premiums that you pay on an interval other than monthly, but it should also include those personal expenses like vacations.

Click HERE to access an online exercise to complete all three!

Financial Fact and Fiction

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by Jim Stovall

It is difficult to make good financial decisions even under the best of circumstances.  There are a myriad of tools and an endless supply of information available to us, but it’s difficult to sift through the debris and get to the true treasures that lie underneath.

In listening to one of the recent political debates, one candidate who felt his opponent was bending the truth was heard to say, “My opponent is certainly entitled to his own opinion, but he is not entitled to his own facts.”

As we try to boil down financial news into information we can utilize, we must separate the fact from the fiction.  Here are a few examples.

If you follow the news reports and talk shows, you might think that rich people don’t pay enough taxes or don’t pay their fair share.  This fiction would paint a picture of idle rich people frivolously spending hoards of money without contributing to the tax burden.  The facts are that the wealthiest few percent of people in America pay the majority of taxes while over half of working adults pay virtually no tax at all.

The fiction one might derive from the media would tell us that most U.S. consumers buy and consume goods that were made in China.  While China has a robust, thriving economy and will certainly play a significant part in global financial matters for the foreseeable future, the financial facts are that only 2.7% of goods purchased by Americans were made in China.  Over 88% of American money is spent on goods and services provided in America by American companies.

Another Chinese fiction would have us believe that China owns virtually all of our government debt which they might refuse to refinance at any point in time, putting the American economy into a tailspin.  The financial facts are that China owns 7.6% of our U.S. Treasury debt.  Our own government owns three or four times more than China, and state governments, municipal governments, and private investors like you and me own more than anyone else.  Our growing national debt is a concern, and once again, China is a factor, but when we’re evaluating the situation we must deal with fact, not fiction.

An alarming fiction tells us that the majority of the energy that the United States uses to keep our economy and defense going is imported from unstable or unfriendly governments in the Middle East.  While the amount of oil imports is certainly a concern and we can all agree that energy independence would put the United States in a more stable position, the fact is that currently the United States imports 9.8% of its oil from the Middle East.  This is down nearly a third over the last decade.  Almost half of our energy is produced right here in the United States with twice as much coming from Canada and Mexico as comes from the Middle East.  This means that approximately three-quarters of the oil consumed each day by the United States comes from right here in North America.

There are plenty of facts to be worried about without creating anxiety over fiction.

As you go through your day today, make good financial decisions based on facts, and eliminate the fiction from your thinking.

Today’s the day!

The Real Point Of Financial Planning

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Whether you’re a do-it-yourself-er or working with a professional financial planner, the real point of financial planning is often obscured in a process so deep and wide that it’s easy to get lost.  The most prominent mistake in financial planning is to allow the process to be reduced to an exercise in which success is solely derived from a single number—your net worth, today and projected into the future.  In truth, the real point of good financial planning isn’t to have more money, but a better life.

One may argue this point suggesting that more money is simply more…better, that few financial plans have suffered from a surplus of financial resources.  This is true at a moment in time, but the problem with making “the number” the ultimate goal of a financial plan is that it steers behavior to get there.  But that is the point, many of my esteemed colleagues may insist, that we subordinate our todays to our tomorrows in hopes of securing comfort and prosperity in both.  Then I ask you this:

Is comfort and prosperity the chief end of life?

I’m privileged to teach the Fundamentals of Financial Planning at my alma mater, Towson University, and every semester I pepper the class on the first day with a barrage of questions, among them, “How many of you are HERE because you WANT to be here?”  The average positive response is 10% of the class.  Most of them are accounting majors, so I engage them in discussion to determine WHY they chose that course of study.  The primary reason given is to secure comfort and financial prosperity in life.

“So you’ve chosen,” I ask, “to dedicate four-to-six years of your life becoming educated sufficiently to spend the bulk of your waking adult hours thereafter in a job you don’t particularly love to hopefully secure financial prosperity?”

Unfortunately, too many financial planning processes look just like this.  They begin with numbers and back into the actions—and life—necessary to achieve those numbers.  Planners may justify this by disclaiming that the client dictated the data (in the questionnaire designed to force the client into a box that can be managed by the planning software du jour).  The recommendation is simply the output.  But that’s because the process is backward.

It should start, instead, with three simple questions:

  1. WHO are you?
  2. WHAT do you want to be about?
  3. And, WHY?

Then and only then should the numbers come into play.  And the numbers shouldn’t exist to extinguish the who, what and why, but to support them.  If I’m really a good teacher, I may have to recommend you consider an alternative educational or vocational path.  If I’m really a good planner, I may have to recommend a course of action that could have a negative impact on your bottom line—today and in the future—but which leads to a better, more fulfilling life.

At best, the benefit of financial planning is minimized when reduced solely to a process intended to give you more money, today and in the future.  At the very worst, such a process could temporarily or permanently derail your entire plan for life.

Your financial plan must submit to your plan for life.

In the coming weeks, I’m going to take you on a blog journey through an entire financial plan, including an examination of topics you’d expect—like how to judge your investments and determine how much life insurance you should have—as well as many you might not anticipate—like how to create your own Personal Money Story and articulate your Personal Principles.  We’ll discuss everything from homeowner’s and disability income insurance to navigating death and taxes.

Each week’s blog post will be on a different topic, building on the last, and will include online exercises you can download (at no cost) for your own personal use in developing your financial plan.  It’s not designed to supplant the intangible benefits of a personal financial planner, but to be a starting point, a supplement and/or a second opinion.  And throughout, we’ll work to maintain the real point of financial planning—a better life.

Too Complex For Their Own Good?

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This week on my Forbes post, “Don’t Outsmart Yourself Financially,” I took issue with an article written by Nobel-winning economist, Paul Krugman, for his rationalizing of the enormous debt load of our country.  But while economists have and will wax eloquent on the past, present and future utilizing brilliant theories well beyond the bounds of common sense (and often practical application), we have no such allowance in the realm of personal finance.  Indeed, YOU SHOULD NEVER PURSUE A STRATEGY YOU CAN’T UNDERSTAND.

Here are a collection of financial strategies that sound impressive but may be too complex for their own good:

  • Equity Indexed Annuities—EIAs are actually fixed annuities, but if you ask one of their passionate purveyors[i] how they manage to offer market upside with none of the downside, I hope you’ve set aside some time because you’re in for a very long conversation…if the agent even knows enough about their inner workings to  educate you.  In short, insurance companies buy bonds with your investment and use the interest payments to purchase stock options to materialize the upside of the stock market.  They hedge their bets—I mean, positions—by handcuffing you with some of the biggest (7%, 9%, even 12% and higher) and longest (10, 15 or even 20 years) surrender charges in the business.  Like too many financial products, these instruments are sold, not bought, and I don’t recommend tying up your money in one of these financial experiments.
  • Life Insurance As Primary Retirement Vehicle—There’s a wow-inducing sales system (called the LEAP system) that was built for life insurance agents seeking to increase their sales in one of the best-paying commission products on the market, permanent life insurance (whole life, variable life and universal life).   After an hour of mind-numbing chart-flipping, you’ll be ready to divert your 401k savings into a brand new life insurance policy![ii]  But unless you make over $250,000 per year or have millions in net worth, you simply don’t need to worry yourself with the variables in permanent life insurance.
  • “Option Arm” Mortgages—The landscape of mortgage products has dwindled significantly from the pre-crash days when you could literally pick the payment on your mortgage in the now infamous option arm mortgages.  A mortgage broker in Pennsylvania at one point pitched me on a joint collaboration in which I would lend financial credence to his recommendations for clients to take on these crazy mortgages and they would, in turn, invest all the extra money they didn’t have to pay towards their mortgage in accounts I would manage.  I laughed at first, thinking he was kidding.  Then I realized he wasn’t.  Especially with rates as low as they are today, there are very few reasons to take on any mortgage other than a fixed mortgage, but there is NEVER a reason to take on a mortgage that increases your debt instead of paying it off.
  • Exchange Traded Funds—This one may surprise you, and I should be quick to point out that ETFs can be very wisely and properly utilized in a diversified investment strategy.  But you’d better fully understand what you’re buying.  Much like a mutual fund, an exchange traded fund is a single investment representing a basket of securities.  For example, you can purchase an ETF that will track the S&P 500 index or commodities like gold or oil.  But the question remains, what exactly is inside of the ETF?  Sometimes it is actual investments, (like stocks in gold mining companies, for instance) but often the underlying properties in an ETF are derivatives—options or futures—and subject to market forces beyond the commodity or index itself.  If you don’t understand how the investment is built, you may be in for a surprise when you see how it actually reacts to market stimuli.

There are many other examples out there, and I’d love to hear what you’ve run into in your financial journey.  Please share your good or bad experience, or ask any questions, in the comments section!

[i] Why so passionate, you ask?  These products have some of the biggest commissions in the business.  Up to and over 12%!

[ii] I worked with one agent in a prior professional life who regularly pitched a “Roth Look-A-Like,” an alternate retirement savings vehicle designed to give you all the tax advantage of a Roth IRA, and more…except that it was nothing more than a whole life insurance policy.  I saw one unfortunate 20-something guy who wasn’t even married and had no dependents buy a look-a-like when his money would’ve been better served in a true Roth.

10 Ways Budgeting Saved My Marriage

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Eleven years ago, my wife and I sat across the table from an experienced married couple squirming in their seats uncomfortably as though they feared we were about to deliver some terrible news.  But the source of their discomfort was the bomb they were about to drop on us.

You see, we were not yet married, but engaged, and the couple across the table was our mentor couple in our pre-marital class.  Upon review of our personality profiles and piles of personal baggage, they felt it their duty to discourage us from further pursuing the sacred vows of matrimony.  They’d never seen a hopeful couple more innately disparate, more inevitably destined for failure. 

We are indeed vastly different, but one thing my wife, Andrea, and I share in common is a penchant for resisting authority.  So with the blessing and support of family and friends, I’m thrilled to report we’ll be celebrating our eleventh anniversary this April with our two wonderful boys, Kieran and Connor, ages six and eight.

We have never forgotten, however, the well-intended admonishment of our mentor couple; indeed, we see much of life from vastly different perspectives, foremost among them our view of things financial.  And apparently, we’re not alone. Over 50% of marriages end in divorce.  Over 50% of those splits cite financial disputes as the primary reason for the break-up.

100% of marriages deal with money as a daily necessity.


This thought occurred several times when preparing my recent posts on budgeting on Forbes.com (How To Spend $1 Million At Starbucks) and TimMaurer.com (A Burdensome Yoke…Or A Path To Peace?).  It struck me that budgeting ranked right up there with prayer and counseling as a precious few factors that have helped keep us together.  Here are the top 10 ways budgeting has saved, and continues to save, our marriage:

10)  Budgeting forces us to collaborate.  It seems that as parents of young children, the level of commitments between work, school, church, sports and the arts leaves us functioning more as independent business partners than spouses.  We’re almost always in short supply of adult conversation and genuine collaboration, and (strange as it may seem) budgeting gives us the context for both.

9)     It offers healthy accountability.  Ronald Reagan famously said, “Trust, but verify,” and while 100% verification of trust in our marriage would be stifling, we’ve found periodic accountability to be a healthy way to build faith and trust in each other.  Our joint budgeting effort means all of our expenditures are accessible to the other.  Scrutinizing every penny spent would be unfair (a-hem, note to self), but knowing everything is visible is likely to encourage us each to spend more responsibly.

8)     It humbles us.  I’ve not found a more helpful tool in the pursuit of a successful marriage than humility, and since the use of money is so pervasive in our lives, small mistakes are the norm, not the exception.  Rarely a weekly cycle goes by in which we don’t each humbly acknowledge that we erred in some capacity, humbly submitting our mistake to the other.  And of course, a good budget is designed to withstand these small mistakes.

7)     It provides an opportunity for reconciliation.  The prevalence of small errors in our budgeting, however, provides fertile ground for a destructive tendency: that we’d develop a scorecard, real or implied, and shame the more regular offender (because there normally is one in most households).  So for us it’s very important that a humility ground-rule is established: Any time an offending spouse submits in humility to an irreversible mistake, forgiveness and reconciliation is the only way forward.

6)     It gives us reason to celebrate.  For each mistake, there are several successes in each budget cycle.  The long-term success of our marriage is often built on a series of small victories, and we should never withhold an affirmation for completing a project under budget or enjoying the security of a buffer when an emergency arises.

5)     It cuts down on surprises.  So many aspects of our life are subject to variability and volatility.  We can’t necessarily reduce the number of those surprises, but we can certainly reduce their negative impact by being financial prepared for them.  Financial strain, and especially shock, pushes many marriages to (and over) the brink.

4)     It makes us better parents.  All of us parents could probably agree that it’s possible to spend too little OR too much on our children, right?  We’re responsible to determine what the right levels of spending are for our children, and budgeting allows us to deliberately set aside appropriate levels of funding for education, clothing, sports, music and fun.

3)     It shows our dependence on each other.  Andrea and I do think very differently, and this inevitably leads to divisive thoughts like these: “You know, I think I could do this better on my own!”  But this decries the very essence of marriage as an institution in which each partner’s primary objective is to serve the other.  The process of budgeting puts our (literal and emotional) dependence on each other on full display.  That makes us vulnerable, but it’s good.

2)     It preserves a healthy level of independence.  The income production in most households is almost never perfectly equitable.  Andrea sacrificed a successful career in the financial industry when she chose to stay home with our young children.  This has been an incredible blessing in our family, but it’s also a breeding ground for insecurity and manipulation as I might have a tendency to overestimate my contribution to the family’s finances and underestimate Andrea’s.  It is imperative, then, that part of our budget is the preservation of a certain amount of financial independence for each spouse.  To offset this income inequity, we’ve established “His and Hers” accounts with unilateral privileges.  Many shun budgeting as too restrictive, but properly implemented, it actually gives us room to breathe financially, and we all need room to breathe.

1)     It preserves date night!  One of the interactions I’ve enjoyed most throughout my career was with a client who is a generation or two my senior.  He and his wife have five kids(!) and appear to be more in love today than they’ve ever been.  So at the close of one meeting, I got up the nerve to ask this gentleman what his secret to marriage and parenting was.  His answer?  They never fail to set aside time—and money—for each other as a couple.  He made a convincing case that we are better parents when we deliberately setting aside time to be together, away from the kids, and not just for date nights, but also long-weekends and even week-long vacations to remind ourselves that before we were parents we were lovers.  This proved especially difficult for Andrea and me because by the time we got to the end of most months, we’d already spent our discretionary cash on the rest of life and felt like we were taking funding away from other things to line-up a babysitter and enjoy a night or weekend out.  So now, much as we have preserved His and Hers accounts, we also have an Ours account.

Budgeting is not the slightest bit romantic, but it has the ability to promote and preserve the romance in our marriages and keep us on the right side of that daunting 50% divorce statistic.  There are as many good ways to manage this process as there are couples, and I’d love to hear some of the ways budgeting has helped preserve YOUR marriage also, so please share your story in the comments section!

It’s About You, Not Me

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I announced a few weeks ago that my second book, a co-authored project with best-selling author, Jim Stovall, would be coming out shortly.  Upon release of that news and the book’s title—The Ultimate Financial Plan—a few of my closest friends gave me some good-natured ribbing for a title that could be presumed a dubious self-proclamation of preeminence.  So although I know they were only kidding, I’d like to use this as an opportunity to explain the origin and meaning of the title and make an exciting announcement about TimMaurer.com blog posts in the month of September.

Jim Stovall and I believe with every fiber of our beings that contained in this book is, indeed, the ultimate financial plan.  However, it’s not about us.  We don’t claim to be the brightest financial minds in the universe.  We don’t purport this book to be the number one source of all facts and numbers pertaining to the discipline of personal finance (thank goodness, because it would be too long and boring).  Nor do we allege it to contain the most cutting edge thinking that will revolutionize the business or practice of financial planning — with an advisor or on your own.

Personal finance is more personal than it is finance.

The reason we believe this to be the ultimate offering in its genre is quite the opposite.  It’s not so much about us, but more about YOU.  This book is strenuously focused on you, your values and your plans for the present and future.  We may appear to represent a financial industry, which, even after a timeless humbling through the financial crisis, still seems to muster a condescending tone.  Even some of my favorite personal finance gurus are famous for calling out the stupidity of their followers.  But we’re not.  We’re not talking down to you from the pulpit, but instead across the table.  We’re not sharing insight about concepts we’ve ginned up to sell a book.  We’re sharing personal narratives and experiences we’ve gained from employing these concepts—both in our own lives and in the lives of those we advise and influence.

Let’s also not forget this book is another in a series of books Jim has written that began with The Ultimate Gift.  Selling more than four million copies and seeing it turned into a movie starring James Garner, Brian Dennehy and Abigail Breslin was affirmation enough that the heart of Jim’s novel, a story about a wayward young man learning to earn his inheritance, impacted people deeply.   It was followed by The Ultimate Life (also soon to be released as a movie).  Frankly, when I approached Jim about co-authoring a book that would allow the timeless wisdom of The Ultimate Gift to be translated through a personal finance guidebook, he hesitated, having maintained a personal policy of not co-authoring.  But then Jim realized this could be his contribution to a world ever increasingly in need of applicable wisdom facing the big climb out of the financial crisis crater.

Simply put, we believe personal finance is more personal than it is finance, so our stories and advice and practical applications are skewed heavily in that direction.

A very special September

We’re going to commit a cardinal marketing sin and take the focus further off of us just as this week marks our official promotional kick-off of the book’s release.  Over the next four weeks, I’ll be featuring guest posts from four world-class authors and bloggers that have been an inspiration to me and millions of others through their work.  I’m honored and humbled that they’ve each shown a willingness to engage you, personally, on this blog.  You’ll surely not want to miss them:

  • Thursday, September 8th, you’ll enjoy a post from entrepreneur and the best-selling author of Anything You Want, Derek Sivers, explaining why he, after building a company that revolutionized the music sales industry (CD Baby), gave the $22 million proceeds from its sale to charity.  (Yes, you read that correctly.)
  • Thursday, September 15th, I’ll share a post from Chris Guillebeau, a travel and career author and blogger whose every move is followed by over 150,000 online readers.  Chris took the time to entertain and educate us on “The $30 Hotel and the Battleship Slumber Party.”
  • Thursday, September 22nd, our guest post will come from J.D. Roth.  J.D. is a blogging pioneer in the realm of personal finance who started the uber-successful blog, “Get Rich Slowly,” voted as one of Time magazine’s “Best Blogs of 2011.”  J.D. will be sharing his take on the intensely personal elements of personal finance.
  • Finally, on Thursday, September 29, I’m excited to see what Carl Richards has drawn up for us.  Carl is the cutting edge financial planner who has worked his way into the hearts of so many through his Behavior Gap blog featured in the New York Times, employing little more than a sharp wit and a Sharpie pen in his exploration of the relationship between money and values.

I look forward to bringing you these world class writers through TimMaurer.com.

Oh, and by the way…

… The Ultimate Financial Plan IS now available for purchase on Amazon.com and Barnesandnoble.com.  You can also purchase it on your Kindle  and you should see it available on your Nook and in bookstores everywhere within a week.  Thanks for passing the word if you’re so inclined!

Chasing Tomorrow

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A couple days ago, I tweeted[i] a question that received some interesting responses:

“Is it possible that financial advisors’ bent towards long-term saving strips clients of joy today?”

The responses I got were vociferous, both in support and opposition of the implied comment in my question.  Interestingly, all of these responses were from financial advisors.  Here was the first grenade lobbed back in my direction:

“It’s just not possible; it’s a fact. We’re in the business of selling deferred gratification.”

That comment came from a good person who is no doubt an excellent financial advisor.[ii]  But, this faulty mindset is, without a doubt, the majority opinion of the estimated 500,000 plus who refer to themselves as some form of financial advisor or professional in the lower 48.  So, financial advisors are in the business of selling deferred gratification, knowingly stripping our clients—YOU—of joy today?  How do you feel about that?  Does that make you want to run out to hire a financial advisor?

This faulty premise leads to a number of mistaken presumptions and results.  First, many financial advisors DO see themselves as the protectors of their clients’ futures, an ostensibly noble mission until we’re reminded most financial advisors also just happen to get paid more when you defer more.  There’s no way around this blatant conflict-of-interest, and any advisor caught obscuring this truth behind a veil of self-righteousness is deluding himself or herself.

There is no question that the job—even the duty—of a financial advisor in almost every case is to encourage clients to consider and establish a reasonable plan for deferring some of today for tomorrow, and to occasionally protest an attempted withdrawal spurred by a temporary urge in spite of better judgment (like the time a 20-something client wanted to take an early withdrawal from his Roth IRA to buy a jet ski).  But I believe financial planning focused too heavily on the future is little better than planning encouraging an “eat, drink and be merry, for tomorrow we die” approach.

While I absolutely believe we, as humans, do have a tendency to overvalue that which is seen or imminent over that which is unseen and seemingly distant, there is no denying the “one-in-the-hand-two-in-the-bush” adage either.   We must repel the urge to make a comprehensive financial plan the protector of only the future—stripping funding from today for a tomorrow not promised.  The ideal financial plan (some might say, The Ultimate Financial Plan…ha, ha, ha…that wasn’t planned…) helps manage the short-, mid- and long-term, balancing money and life.

Encouragingly, I believe there is a movement among financial planners awakening to the reality that in order for a plan to be relevant, it must positively impact more of life’s timeline.  In response to my tweet, Nathan Gehring, a Wisconsin cheesehead (and financial planner and blogger), called for balance and Dr. Carolyn McClanahan, a physician-turned-planner in Florida, noted she feels a duty to provide a plan more relevant to today.  Interestingly, Dr. McClanahan and I both share near brushes with death, personally, that likely impact our insistence on this issue.  But it doesn’t take a near-death experience to grasp this important truth.

(By the way, the biggest mistakes planners and clients make regarding deferred gratification are not in our saving and investing patterns, but in our choices of vocation…how we choose to spend the estimated 101,568 working hours in our lifetime.)

In 1902, Alice Morse Earle wrote, “The clock is running. Make the most of today. Time waits for no man. Yesterday is history. Tomorrow is a mystery. Today is a gift. That’s why it is called the present.”

How much of life do you spend chasing tomorrow?

[i] Yes, it’s true.  I’ve embraced the social medium that took me the longest time to “figure out” or in which to find any redeeming value.  I’m officially a tweeter…or twit, if you will.  If you’re into that sort of thing, you can follow me via @TimMaurer.  And, if you’re like me, reluctant to see the value in Twitter, in next week’s post I’ll be sharing how Twitter has become my #1 source for financial news—if you can believe that—and why I think it could really benefit you too.

[ii] Please also be mindful, if you’re not a Twitter aficionado, that the medium restricts questions and comments to no more than 140 characters (as my regular readers gasp in amazement that I’m capable of articulating anything in so few letters!).  As a result, tweeters often do take short-cuts to get right to the point, sacrificing context that may help substantiate a point.