5 Ways To Master A “Super Saver” Mentality.

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“I can never retire.”

never retire

At the wake for a client’s son, in the lobby of a plush funeral parlor, a woman I was introduced to seconds earlier looked at me and confessed four impactful words. I wasn’t aware of her personal situation however I felt the weight of her conviction.

I asked: “So, how will you make the best of the situation?”

I hear this sentiment so often, it no longer surprises me. No matter where I go. As soon as people discover I’m a financial adviser, they’re compelled to vent or share concerns, which I value. I’m honored how others find it easy to confess their fears to me. Unfortunately, I rarely listen to good stories especially when it comes to the harsh reality of present-day finances.

Saving money whether it’s for a long-term benchmark like retirement or having enough cash for future emergencies is an overwhelming task for households and this condition has improved marginally since the financial crisis ended over six years ago.

According to a June 2013 study by Bankrate.com, 76% of American families live paycheck-to-paycheck.

Is that a surprising fact?

Consider your own experience. When was your last pay raise?

no rise office

Wage growth has failed to keep up with inflation and productivity for years. During the heat of the great recession in 2009, you most likely endured a cut in pay from which you never fully recovered.

On top of that, you’re probably juggling multiple responsibilities outside your original job description. To say the least, attempting to bolster savings is an ongoing challenge post financial crisis.

To develop a super-saver mindset you need to first accept the new reality and make peace with the present economic environment. Steady wage growth and job security are becoming as rare as pensions. The below-average economic conditions are more permanent than “experts” are willing to admit.

Before a change in behavior can occur, an attitude adjustment is required as saving is first and foremost, a mental exercise. For example, a super-saver feels empowered after all monthly expenses are paid, and a surplus exists in his or her checking account.

Instead of experiencing a “spending high,” super savers are happier and feel empowered when their household cash inflow exceeds expense outflow on a consistent basis.

You can feel this way, too.

I’ve witnessed hardcore spenders transform into passionate savers by thinking differently and keeping an open mind to the following…

Random Thoughts:

Embrace a simple, honest saving philosophy.

Start with tough questions and honest answers to uncover truth about your past and current saving behavior.

You can go through the grind of daily life and still not fully comprehend your motivations behind anything, including money. Ostensibly, it comes down to an inner peace over your current situation, an objective review of resources (financial and otherwise), identification of those factors that prevent you from saving more and then creating a plan to improve at a pace that agrees with who you are. A strategy that fits your life and attitude.

The questions you ask yourself should be simple and thought-provoking.

Why aren’t you saving enough? Perhaps you just don’t find joy in saving because you don’t see a purpose or a clear direction for the action. Long-term change begins with a vision for every dollar you set aside. Whether it’s for a daughter’s wedding or a child’s education, saving money is a mental re-adjustment based on a strong desire to meet a personal financial benchmarks.

What’s the end game? It’s not saving forever with no end in sight, right? Perceive saving as a way to move closer to accomplishing a milestone, something that will bring you and others happiness or relieve financial stress in case of emergencies. A reason, a goal, a purpose for the dollars. Eventually savings are to be spent or invested.

Recently, I read a story in a financial newspaper about a retired janitor who lived like a pauper yet it was discovered upon his death, that he possessed millions. What’s the joy in that? Did this gentleman have an end game? I couldn’t determine from the article whether this hoarding of wealth was a good or bad thing. I believe it’s unhealthy.

Living frugally and dying wealthy doesn’t seem to be a thought-out process or at the least an enjoyable one. The messages drummed in your head from financial services are designed to stress you out; they’re based on generating fear and doubt.  And fear is a horrible reason to save, joy isn’t.

dead money

Form an honest and simple philosophy that outlines specific reasons why you need to save or increase savings. Approach it positively, three sentences max to describe your current perspective, why you’re willing to improve (focus on the benefits, the end game) then allow your mind to think freely about how you will fulfill your goals. Don’t listen to others who believe they found a better system. Find your own groove and work it on a regular basis.

Much of what you heard about saving money is false and will lead you down a path of disappointment.

The “gurus” who tell you that paying off your mortgage early is a good idea didn’t generate wealth by saving (or paying off a mortgage early). They made it by investing in their businesses and taking formidable risks to create multiple, lucrative income streams.

So before you buy in understand the personal agenda behind the messages. “Worn” personal finance advice like cutting out a favorite coffee drink and saving $3 bucks sounds terrific in theory but in the long run, means little to your bottom line. The needle won’t budge. And you’ll feel deprived to boot.

Financial media laments pervasively how you aren’t saving enough. From my experience, this message is not helpful; it fosters a defeatist attitude. People become frustrated, some decide to throw in the towel. They figure the situation is overwhelming and hopeless.

Don’t listen! Well, it’s ok to listen but don’t beat yourself up.

Saving money is personal. Meet with an objective financial adviser and don’t give much relevance to broad-based messages you hear about saving; it’s not one size fits all. Create a personalized savings plan with the end result in mind and be flexible in your approach.  Appreciate the opportunity to improve at your own pace, to reach the destination for each path you create. Just the fact you’re saving money is important. The action itself is the greatest hurdle. Strive to save an additional 1% each year; it can make a difference. If not for your bank account, for your confidence.

Compound interest is a cool story, but that’s about it.

Albert Einstein is credited with saying “compound interest is the eighth wonder of the world.”  Well, that’s not the entire quote. Here’s the rest: “He who understands it, earns it; he who doesn’t pays it.”

I’m not going to argue the brilliance of Einstein although I think when it comes down to today’s interest-rate environment he would be quite skeptical (and he was known for his skepticism) of the real-world application of this “wonder.”

First, Mr. Einstein must have been considering an interest rate with enough “fire power” to make a dent in your account balance. Over the last six years, short-term interest rates have remained at close to zero, long term rates are deep below historical averages and are expected to remain that way for some time. Certainly compounding can occur as long as the rate of reinvestment is greater than zero, but there’s nothing magical about the “snowballing” effect of compounding in today’s environment.

Also, compounding is most effective when there’s little chance of principal loss. It’s a linear wealth-building perspective that no longer has the same effectiveness considering two devastating stock market collapses which have inflicted long-term damage on household wealth. What good is compounding when the foundation of what I invested in is crumbling?

Perhaps you should focus on the “he who understands it, earns it; he who doesn’t pays it.”

I asked a super saver what that means to him. This gentleman interpreted it as the joy of being a lender and the toil of being a borrower. True power to a super saver ironically comes from living simply, avoiding credit card debt, searching out deals on the big stuff like automobiles and appliances.

Super-savers don’t focus much on compound interest any longer. As a matter of fact they believe it’s more a story than reality. They are passionate about fine-tuning what they can control and that primarily has to do with outflow or expenses.

This group ambitiously sets rules:

“I never purchase new autos.”

“My mortgage will never exceed twice my gross salary.”

“I never carry a credit card balance.”

“I’ll never purchase the newest and most expensive electronics.”

I know people who earn $40,000 a year save and invest 40% of their income. Then I’m acquainted with those who make $100,000 and can’t save a penny. Pick your road.

Making tough lifestyle decisions aren’t easy but doable.

I believe the eighth wonder of the world is human resolve in the face of the new economic reality. Not compound interest.

Sorry, Einstein.

einstein half the crap

Place greater emphasis on ROY (Return-On-You).

The greatest return on investment is when you allocate financial resources to increase the value of your human capital. In other words, developing your skill set is an investment that has the best potential to generate savings and wealth. Your house isn’t your biggest investment (as you’ve been told). It’s your greatest liability.

Many workers were required to re-invent themselves during or after the financial crisis. Their jobs were gone. In some cases, the industries that employed them for years were history, too. If you still need to work then you must consider directing as much as your resources as possible to multiply the ROY.

Take a realistic self-assessment of your skills, sharpen those that fit into the new economy or gain new ones to boost inflow (income). If you must stop saving to do it, do it. The increase in your income over ten to thirty years is real compounding.

People are finally beginning to understand that their current job is a dead end for wage increases or promotions. Finally, the status quo isn’t good enough, and that’s a great motivator to a ROY.

Increase inflow, decrease outflow.

Let’s take an example – You earn $50,000 a year. You save 4% annually, that’s $2,000.  If you achieve a 3% return on that money annually after 20 years that comes to $54,607.91. It’s admirable; some goals can be met along the way. However, if you’re looking to retire at the end of 20 years, big changes are necessary.

Super savers embrace the math and take on big lifestyle shifts to increase cash inflow. They’re willing to take on new skills, consider bold career moves, postpone retirement, and downsize to save additional income for investment and add time to work their plan. Everything is open for discussion.

The results have been overwhelmingly positive. Super savers maintain tremendous resolve to stay in control of their household balance sheets. Emotionally this group seems less stressed removed from the chains of debt. They tell me they have achieved control over their finances.

You can’t put a price on that.

To embrace a super-saver mentality peel away habits and lessons you believed were correct and take on a different set of rules; a new, perhaps slightly unorthodox mindset.

Super savers definitely walk in tune with a different drummer.

And they’re happier for it.

no stress beyond

 

Retirement Lessons: Rolled From A Rock.

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A version of this post appeared on MarketWatch.

“How much does your money weigh?”

If people want to engage me and discuss retirement planning, the request I have is for them to take time and think back to their first memories around money. I want them to re-engage with how their views formed in the past, shape their present actions and motivations.

We undertake journeys together – back to the genesis of financial and investment philosophies.

I maintain a passion for client stories. Money plays a significant role in each; it’s a larger-than-life character in the human chapters of life.

Many of the conversations are emotional fire starters; over time, the discussions, although relevant, share commonalities. There are the ones you never forget, too.

I had someone share how adult money attitudes were shaped by spending much of his childhood summers exploring a neighborhood historic cemetery.

So, when I encountered a retiree who learned about handling finances from a rock, well, I anxiously listened.

He said – “everything I learned financially for me began with a rock.”

rock

You see, this 69 year-old gentleman is the seventh and youngest child of a large family from Oklahoma. At 10, he discovered quiet and space and off a rural route. A wooded, gravelly patch cordoned off less than a mile from the homestead.

A perfect (and creative) location to secure his valuables from prying siblings. Over time it became a sanctuary from the vestiges of conflicts that erupt among large families.

From pre-teen to teen, an elaborate system was devised. A natural roadmap outlined on a napkin and changed often to throw off those who may become a bit curious. It was a plan which marked how valuables including baseball trading cards, cash and coins would be secured underneath a labyrinth of various-sized rocks. On a regular schedule, the hiding rocks were changed up, covered or replaced by holes under several dead trees. On numerous occasions, items were lost. Eaten.

Dug up and carried off by small animals.

He employed cigar boxes, plastic sandwich bags with yellow paper covered wire to secure them, empty Wonder Bread wrappers printed with the memorable red, yellow and blue balloons.

I couldn’t imagine what was learned from all this effort. Well, I had ideas, however, I never heard of anything like this before in over two decades helping others make financial decisions.

As we met a few times, I began to understand how weathered rocks forged this man’s money behavior. How he rolled along through retirement remembering back so many years. The cold weather, the dirty hands, the lost treasures formed invaluable habits.

So, what were the lessons learned?

Random Thoughts:

Dig deep into your financial foundation on a regular basis. Lift the rock, move earth, start digging. Get dirty, expose what’s been hidden. Before financial planning, it’s time to expose the deepest fears about retirement.  If frozen by fear, your outlook will suffer; you won’t take actions (even small ones) to get you to retirement; you’ll feel hopeless.

The mind has a tendency to head straight for worst-case scenarios which most of the time, are far from reality. I find when people begin exposing what makes them anxious about retirement and progressively talk openly with those they trust, practical habits are started and forged. Stress is reduced. Make a list of what you fear the most about saving for and living in retirement. Move one rock at a time. Work with a financial professional to create a goals-based, fear-minimizing game plan.

Focus on what weighs heavy on your retirement budget. For the majority of people I counsel, fixed expenses are like boulders which press hard on their abilities to enjoy retirement. I’m not going to make it sound easy to lighten up. It isn’t. It takes some tough decisions. It could mean selling a family homestead to downsize, taking inventory of material possessions to gift, sell or donate.

My greatest friend, mentor and best-selling author James Altucher and his wife Claudia recently dug through and discarded almost every physical item they own – family photos, furniture, clothing. Rows of green plastic garbage bags out to the curb for trash pickup (I saw the photos). Ok, I’m not advising to go to this extreme: I was shocked myself. However, the lesson here is to devise a strategy that works for you to minimize overhead expenses; a liquidation and downsizing mindset is empowering. It allows you to take great control over cash flow, relieves the pressure of big fixed costs throughout retirement.

Move mental rocks and check on things. Let’s face it: Many people think of their company retirement plans as dark, mysterious holes. They may salary defer the maximum contribution yet still have little knowledge about available investment choices, how money is currently allocated or they fail to rebalance holdings on a scheduled basis. In other words, to be an active saver is admirable however, once earnings are syphoned into retirement plans, many of us grow passive about digging into them and shifting the location of financial treasure. The money is buried so deep under the rock, it’s forgotten. It might as well be lost.

A company retirement account is most likely your greatest liquid asset, so it makes sense to check on its progress. Make a point to dig under the surface at least annually. Compare your current allocations to choices provided by your employer and examine how investments are divided. Sell down what’s done the best and reallocate proceeds into underperforming asset classes.

For example, in 2014 U.S. or domestic-based large-company stocks and bonds were outperformers. The majority of financial “pundits” were touting how in 2015, domestic-based stocks would continue a winning run. So far, it’s apparent that international stocks are improving due to favorable valuations and aggressive action by the European Central Bank to purchase bonds, much like our Federal Reserve has done in the past.

Get your hands dirty and expose yourself to uncomfortable conditions. I partner with several retirees who refuse to undertake actions that temporarily feel unpleasant. For a few, avoiding proper estate planning (who really wants to deal with their own mortality?), failing to embrace healthy lifestyle choices like annual health physicals, and transferring potential devastating financial risks though the use of insurance, has led to family stress and negative outcomes for retirement portfolios.

A roadmap based on maintenance of health, proper estate planning and use of insurance where it’s needed, can make a tremendous positive impact on the quality of retirement.

Through the years, this gentleman who learned so much from rocks and dirt as a child, started to understand how keeping the location of his buried treasure so secret, was not such a terrific idea. He began to comprehend how secrecy may lead to great loss. He has a trusted partner, his wife, who keeps him accountable for fitness goals, regular meetings with his financial advisor (me), his board-certified estate planner and a physician for annual head-to-toe checkups.

Recently, one of his grandsons, knowing the well-told story of the rocks, began to do some digging at the same location near the homestead (still in the family). After months of work he unearthed a plastic bag. In it was a 1955 Topps Baseball Box made of tin with 10 trading cards inside including one of legendary player Ernie Banks.

There are lessons right in front of all of us. Some we can trip over (literally).

If we dig deep and often, potential dangers can be uncovered, avoided; treasures can be revealed.

The graveled road of retirement can be a blessing or a curse.

A lesson is to unearth early on what concerns you the most and expose them to bright lights from trusted professionals and loved ones.

Your retirement path will be a challenge, but like a rock, you can weather it and remain structurally intact for decades.

And keep rolling…

rolling rock

 

 

An Extended Warranty: Do You Really Need One?

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As featured in USA Today for NerdWallet. 

It seems you can’t buy anything without escaping that awkward encounter just when you think your transaction is concluded.

“You can buy an extended warranty for an additional ____ dollars. Wouldn’t you like to protect your purchase?”

It feels like a wallet violation.

At least buy me dinner first.

It’s enough to keep me out of brick & mortar stores forever.

cash register

I’m not sure why I consistently feel bad saying no, and I teach financial discipline for a living. I want to feel good about what I spend money on, not guilty. It feels wrong to leave my purchase exposed to who knows what. Most of the time I politely say no and quickly move on.

Extended warranties have become a profit center for businesses, especially retailers. The peace of mind can be costly. For example, on average, an extended warranty can add an additional 10% to 25% to the purchase price of an item. There’s no doubt they’re considered a formidable driver of revenue.

When you think of the most common extended warranty, you may think of those for cars. However, they’re now offered on almost every consumer durable you buy. Recently, a good friend was offered an extended warranty for $14 on a $75 football from a national sporting goods chain. Of course he was wise enough to turn it down.

So, how do you determine when it’s smart to consider an extended warranty?

1. If replacing the item would lead to financial strain, transfer the risk.

Regardless of the cost of the product or service, an extended warranty should be considered if repairs or replacement could drain emergency cash reserves or increase your credit card debt. You don’t need to decide on an extended warranty right away. You’ll have a period of time, usually 30 days from the date of the transaction, to add coverage. Review what is covered under the standard warranty; for example, most services and goods will carry some form of protection or replacement for at least a year. If a major repair or replacement has the potential to place your household balance sheet in jeopardy, then it makes sense to transfer the risk to the manufacturer and pay for protection.

2. The bigger the purchase, the greater the consideration.

Durable goods like refrigerators, televisions, dishwashers, washers and dryers all come with standard warranties. Extended protection may not be required, as these items don’t break down frequently. However, before you say no, it’s best to investigate objective sources for repair histories for brands you’re seeking to purchase. Examine ratings on a website like www.consumerreports.org. Rarely do durables break down during the warranty period, according to Consumer Reports.

3. Forget the warranty; remember your savings account.

Instead of a warranty, consider directing money you would have spent into your emergency savings or money market account. Think of it as a cash bolster to handle repairs. In the case of a $250 warranty, add $21 a month to your budget.

4. Don’t get caught in the moment.

You may think that spending an additional 10% to 25% is no big deal after spending hundreds of dollars on something you want. Your brain will consider the purchase of an extended warranty small when compared to the greater cost of the item. As consumers we have a difficult time maintaining a rational head when it comes to additional expenditures for big purchases. Take time to step back and weigh the pros and cons. Examine the extended coverage as a stand-alone expense and the odds of using it.

5. Buy with your weaknesses in mind.

I purchase extended warranties for all portable electronics including laptops and smartphones if they cover accidental damage. I know my weaknesses; I tend to be clumsy with computers and cellphones. Make sure to examine how many instances are covered (plans will have limits) and the specifics for accident coverage. Understand your faults and use extended warranties when it protects your purchases against them.

6. How much is that item used?

Extended warranties can be useful for durable used items like automobiles and appliances. To cover your automobile, compare the costs of a dealer warranty to an independent organization like www.carchex.com, which offers several tiers of coverage (Titanium being the most inclusive). Home warranties that cover aging heating and air-conditioning systems can be worth the cost. It’s important to understand that standard maintenance is not included nor is full replacement. However, to keep appliances in operation longer and avoid the potential of frequent costly repairs, the expense of an extended warranty should be investigated.

7. Sometimes, extended warranties just don’t make sense.

Like my friend who was offered an extended warranty to protect against a flattened football, there are occasions when you’ll wonder how retailers have the nerve to sell coverage. If the purchase is $100 or less, take the chance with the manufacturer’s warranty and don’t worry about paying for an extended agreement.

In the frenzy of shopping, it’s easy to relent and say yes to aggressive salespeople.

When it comes to extended warranty purchases, don’t rush. Make the decision after reviewing the facts in the comfort of home, not in a pressured situation like checking out at a register with a line of shoppers behind you.

Many believe that extended warranties provide peace of mind.

How much is peace of mind truly costing you?

 

Three Money & Life Lessons From “The Interview.”

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Before I continue, please note I refuse to (can’t) compare Franco & Rogen to Abbott & Costello.

Somebody I know just did that.

I can’t go there.

Readers are going: “Who is Abbott & Costello?”

SMH.

abbott and costello

I’m a firm believer there’s a lesson in everything. If my focus on the present is effective and I practice stillness in the manner of a Tolle master, i can learn from staring at a rock. No, seriously.

The movie  “The Interview,” which doesn’t star the beloved comedy duo of the 1940’s of course, has been a tremendous center of attention due to a hacking of Sony Pictures (allegedly, I’m still not buying it,) by get this – NORTH KOREA.

Wait: A country where blind hair stylists can make a “living” is smart enough to hack SONY Pictures and threaten us?

Tell me another one.

north kprea Who gets a haircut like this?

Now everybody needs to see this film. Even people who insisted they wouldn’t sit through this mindless nonsense are doing it “for freedom,” as it now represents our “God-given” right. They’re drawing a line in the sand. Don’t get me wrong,  I’m sure the flick is funny, however, it’s not like taking up arms at The Alamo.

C’mon, people.

davy crockett I shall die for Rogen & Franco,” Davy Crockett.

I give up.

I’m jumping on the bandwagon.

I love you guys!!

rogen and franco

I’m getting messages in my head (about money) from the hacking incident. Perhaps the stylist at SuperCuts was trying to do a North Korean Coiffure mind meld on me. Hmm.

Random Thoughts:

1). Decisions about money aren’t easy. Don’t kid yourself and don’t have financial pros make it sound easy (most of them are in debt like you). Money decisions are tougher than deciding to release a dopey movie after a hack and a threat of global annihilation. Money emotions flow deeper than the ink in your paper currency. Selling stocks to take profits, saving money is a big chore (especially since your wages rival a North Korean Palace toilet scrubber since 2009,) identifying your money weaknesses and working to change them, taking losses for the stock “dogs” you’ve held for a decade.

However, to be successful, you need to buy the ticket to greater wealth whatever that means to you. It could be $10,000 or $10,000,000, or being debt-free outside of the mortgage. Take a stand for more money in your pocket. A small step is still a step and it should be celebrated. Even more so than some dumbass movie.

Can you imagine the conversation between Sony pictures CEO Michael Lynton and Obama?

“I tried calling you.”

“No you didn’t.”

“I would have heard the phone.”

“Well, I tried.”

“I don’t believe you.”

“I don’t believe you didn’t hear the phone.”

“Michelle was talking to me.”

“Oh, now you’re blaming your wife?”

“No, it’s just a fact.”

“And how do you not know James Franco, you live in a hole?”

“I’m busy doing president stuff.”

“Like messing up names on TV?”

“That’s not nice.”

“I’m surprised you didn’t call Sony, Sunni.”

“That’s crossing the line, movie boy.”

“We make good movies. Things blow up and shit.”

“That’s not real.”

“I just want to get this damn movie in the theatres, can I do it?”

“Which one?”

“The Interview. GOD.”

“Just for that I’m going to tell you I think Ben Aflac would be a better James Bond.”

“It’s Ben AFFLECK and NO!…Are we good here? Megan Fox wants to re-make The Sugarland Express and she’s eating all the donuts in the commissary.”

“I wouldn’t want your job.”

“No shit.”

“Merry Christmas.”

“Happy holidays.”

“Oh, now we’re going to have this fight, huh??”

No, really. The NSA has all this.

2). Prepare for surprises. So, the car broke down, you got hit on the interstate, broke a leg. Died. Your farce film got the attention of a dictator. Whatever. A key to wealth is to anticipate the unanticipated. Make sure you have 3-6 months of living expenses in an emergency cash reserve, have enough life insurance to cover the family; you signed up for long-term disability coverage at work, the beneficiaries on retirement accounts are updated, you maintain expensive durables so they last longer (when was your last oil change?). You get the picture. Can you think of other surprises, outliers, “black swans” that can devastate your finances?

3). Know your enemies. Know your financial enemies. They’re all around you. Look in the mirror. Can they become your greatest allies? For Sony, overwhelming public attention will probably generate 1,000x the ticket sales for “The Interview.”

For example, I no longer hang out with people who skip out on financial obligations. Why be around those with horrible money habits? You know them. Stay away. Can you learn from the money mistakes you’ve made, others have made? My parents were the worst with money and both died in debt with the IRS knocking on my door. I’m the opposite. I learned that disrespecting money was not part of the egg and sperm union. Bad enough I have drug and alcohol abuse, depression and lunacy in my family. I didn’t need to inherit an insane money imprint, too.

So, today’s the Friday after Christmas.

I think I’ll head to the movies.

“Unbroken” sounds good.

unbroken

 

Have Kids? 4 Ways to Save Money: 4 Ways Dave Ramsey gets it Wrong.

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“Money is more than money, sometimes it’s memory.”

I’ll never forget the March day in 1973 when the birthday gift from my parents – a new lime-green Schwinn 10-speed with a prism-like banana seat (complete with black double-stripe down the middle) was stolen from outside the Brooklyn neighborhood toy store – Cheap Charlie’s.

green schwinn

I believed I did all the right things to ensure my prized possession was secured tightly to a small tree.  It was in my line of sight; no matter where I was, even checking out stacks of Hasbro Colorforms’ boxes at the back of my favorite five and dime, I could glance out the large plate glass windows and observe some part of the bike’s beautiful, clean lines.

Padlock checked twice. Pulled on the lock again, just to be sure I wasn’t fooling myself that the bike was secure.

It wasn’t enough to keep this new birthday purchase from disappearing.

Looked up from the new GI Joe Adventure Team play sets and in less than two minutes the bike was history. I bolted out the front door, looked around, up and down Avenue U as fast as my head could turn and eyes would dart.

mummy tomb My favorite!!

Nothing.  How did the bastard get away so quickly? Oh yeah, he was on wheels.

How do I now tell my parents the expensive gift that surprised me three hours earlier was now history?

Recently, Dave Ramsey or his people (he’s big time, he has people), wrote an article that rubbed me the wrong way. Usually, I agree with the information that Dave provides however, this piece (link below) inspired the line about money linked to memory.

10 Ways We Waste Money On Our Kids.

The Ramsey article was the catalyst to re-live a painful life episode from over forty years ago.

What happened after the incident was memorable, too.  In a good way.

And I’ll never forget.

Back to Dave’s article: Used bikes, no hamsters as pets – Made me grateful to not be a kid or grandchild under the Ramsey roof.

Is there a balanced approach here so rodents can still scurry through colorful Habittrail tubes in happy homes?

I think so.

habitrail I bet Dave would hate Habittrail (too expensive).

Let’s break it down.

Here are 4 ways to save and 4 areas where Dave Ramsey is way off the mark.

 Random Thoughts:

1). Go used or reused. I don’t believe our money has achieved the maximum return on thrift stores or consignment shops.

Thankfully, the stigma of shopping at a Salvation Army is dying; perhaps it’s the disappointing economic recovery where much of the middle class feels like the Great Recession never ended. Recently, my daughter and I went shopping for a winter week-long trip to New York City and found some astounding cold weather wear deals at a neighborhood place that sells gently-used teen clothing. Check out www.thethriftshopper.com for a national thrift store directory and a shoppers’ forum where all topics thrift are discussed.

2). Arts and crafts fun not boring. Crafting dollars still go a long way and what a method to engage your child in a family creative endeavor. I know it sounds old school, however some of the best returns on memory I have with my daughter is the Halloween and autumn-related crafts we did at home. We finished multiple joint projects including fall wreaths and small sentiments for family and it was short on cost, long on satisfaction. Sign up for Pinterest and investigate fall craft ideas. I was floored by the number of inexpensive DIY Halloween projects.

3). Get tricky. When I was a kid I drove my mother crazy because I was only interested in popular name brands of food. I was a sucker for television advertising. For example, I would only eat the bacon with the Indian head profile complete with full headdress, on the front of the package – can’t recall the name now. Of course, it was the most expensive and as a single parent household, mom was on a tight budget. I still remember catching her placing a less popular bacon in an old package of the brand I liked.  Come to think of it, I think she did this often. I recall on occasion my Lucky Charms not having as many marshmallows. Oh the shame! She was attempting to trick me. As I age I realize I’m fine with tricking children. Buy the Frosted Flakes, keep the box and replace with the generic brand to save money. Today, less expensive brands are tough to tell apart from the premium ones. Try it.

4). Don’t miss the forest for the trees. Visit local venues first. This time of year many autumn fairs pop up at farms, places of worship and even retail parking lots. Peruse the local fair festival guides in community impact newspapers and take inexpensive journeys.  It’s a great time to have children select and prepare fresh vegetables and fruits available from local vendors.

The stuff Dave Ramsey is saying is a waste may not be to you because money is not just a medium of exchange, it purchases long-term lessons and memories of places and people long gone.

So, despite what the Ramsey group says:

1). Get, or if you can, adopt a pet. The hamster or whatever suits your family. My hamster Benjy lived five years. Yes, five years! And he taught me great responsibility and love. He brought happiness and accomplishment to my life as a nine-year old. I thought he’d live forever. I taught him tricks. He chased my mother around our tiny Brooklyn walk-up (an added bonus). Dave says no Benjy. I’m sorry, this advice is wrong.

2). Say yes to movie tickets. Ok, you don’t want your six-year old to see The Equalizer, I get it. Although my father took me to The Godfather when it first hit theatres and Sonny getting converted into human Swiss cheese at the tollbooth affected me for years, there is a bonding experience between parents and children at the movies. So, you sit through Little Fluffy Bunny Finds a Carrot or whatever kids’ flick is playing. Take your children to the movies. Splurge on the overpriced candy and popcorn.

3). Yes to electronic games, too. My friend Jordan Shapiro, professor, teacher, author, contributor to Forbes and modern-day Socrates would advise you that electronic games can teach children much about life and ignite cognitive development. There are many ways to save here – plenty of gaming systems available used and in great condition, especially at pawn shops. I spent hours with my Batman coloring books; I agree crayons have a place in kids’ rooms, however, I don’t see how electronic games are a waste of money.

4). Buy the kid a new bike for gosh sakes. There’s nothing like the thrill of a new bike for a kid. All the adventures ahead – the feelings of freedom. Nothing but priceless. My head is reeling thinking about the places I went on two wheels.

Ah, so you’re wondering how I had so many great adventures when my bike was stolen the same day I got it.

Well, when I called my father from the kitchen Trimline phone crying hysterically, he immediately left work in the middle of the day (which only happened twice during my childhood),  and drove me to Frank’s Schwinn Shop on East 6th Street and bought me an identical replacement.

He said it wasn’t my fault.

On his deathbed, while he lapsed in and out of a coma, I whispered in my dad’s ear, reminded him about how I was grateful for him. And that damn bike episode. How it changed my life. He was there for me through a traumatic event.

It’s unfortunate when financial types become so successful they forget what money is truly all about. It’s “eat your vegetables, don’t have fun.”

No it isn’t.

“Money is more than money, sometimes it’s memory.”

So screw that advice.

remember moments

Seven Lessons from Small-Town Folk – A Texas Town Love Story.

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July 10, 1877: How can there be so much blood? John knew what he was seeing wasn’t good. Blood this dark meant something serious; something arterial hit by the bul­let. Heavy twill pants went saturated so quickly they might as well have been made of cheap linen.

cowboy r

A shaken, ashen-faced 30 year-old John Hardeman tried to remain calm.

He falsely assured his brother all would be well as William Hardeman bled to death in the gravel of a red-dust main street. The ground was so parched William’s life liquid didn’t soak in, it pooled in a warm bubble underneath him.

Nowhere to go, it rose and spread, beaded over the grit – light red, then dark to black. Like Texas crude rising from below.

“Get that dyin’ man out of the street, it’s bad for business!” bellowed “Rowdy Joe” Lowe who operated the only gambling house in town…

Allegedly the shooting was over an unpaid gambling debt. Justice swiftly rendered.

For decades the dusty mecca of Luling, Texas (pop. 5,500) has celebrated all that is cold, wet and sweet through its annual watermelon thump. Once coined the “toughest town in Texas,” Luling was initially known as a center-point rest-and-rambunctious stop for cattle drivers along the Chisholm Trail. It’s sort of odd it would become associated with anything as sweet and refreshing as ripe watermelon but so it goes in Texas.

dude melo

An acrid odor arises from oil pumps, punches the stillness, (I’m told it’s gas) and irritates the nostrils. The faint aroma of metal grind on metal as the railroad, along with an ear-piercing whistle, rolls through frequently and mixes with the fragrance of barbecue that rises and suspends in smoke-filled gossamer ribbons.

Luling’s era as a hub for heavy commerce and cattle are long gone. Yet warm shadows of the past embrace the inevitable invasion of the present. They cast vigilant shade. Progress is allowable only to a point, never enough to shut out the light of what was.

Current residents are far from back woods. There’s a clothesline here and there with large overalls hanging, I’ll give you that.

Most dwellings are not much to view. They’re worn from constant heat. Need work. Sun-faded remnants of outdoor plastic toys litter front and back yards.

A tattered couch on a porch catches the eye.

There exist old majestic structures that gleam white and border the center of town beautifully preserved. The history in the walls is nurtured. Artistry lives in the wood, expansive porches, columns that guard grand entrances halls.

Ordinary episodes of daily life strain through a time warp – polite words travel along bands of narrow streets within this close-knit town webbed to a rail line. When trains run, a round sound of train whistle sepia tones the sky. Clouds halt above. The current year fades in decade drips.

The signs of enlightenment are there for those open enough to accept them. The teachings carry strong on the smell of industry, the local smoked cuisine and in the sweetness of carnival caramel corn. White-hot brick walls and penetrating sunlight can’t stop history from fading. And for this I’m grateful.

True: Folks are comfortable with rusted memories of accomplishments long ago although they seem fine to allow the past to co-exist. In fact they relish and celebrate the idea, especially when the thump raises Luling’s map dot even if it’s for only for a few days.

luling theatre

Otherwise, not much happens. And I’m being polite. I mean nothing absolutely happens here. Just living and dying in a small town. Naturally, football pride (Friday Night Lights) is strong like most places in Texas. Oil and gas exploration is experiencing a renaissance in this area, too.

A slight claim to fame was the 2006 movie “The Return,” a horror/supernatural thriller starring Sarah Michelle Gellar who portrayed a young woman haunted by psychic visions of a murder that happened years back in the character’s hometown of, that’s right, Luling.

sarah return

Then there’s the watermelon. Lots of watermelon.

Every year, homage is paid to a produce-induced vision of a school principal from way back. Another world in fact: 1954.

Carnival festivities and watermelon-themed events like seed spitting (not as gross as it sounds) are bathed in ropes of colorful party lights for four fun-filled days.

A warm breeze carries a pungent wave from a teeter-tottering arm of an aged oil pump and bounces it across and through what seems like endless strings of tiny white lights. The lights flicker so much I can’t tell whether watermelon is a fruit or a vegetable in the ebb and flow of reflection. This is a big controversy on the internet by the way. I stick with watermelon as a fruit. I don’t like my vegetables sweet. That’s how I roll.

Activities kick off on a Thursday evening with the crowning of “Watermelon Queen,” selected from a small group of junior-high and high-school young ladies. Sponsored by community services and local businesses, the girls, dressed in formal best, gather at an outdoor aged wooden structure called the “pavilion” and sit nervously awaiting the judg­es’ decision. The “fresh-picked” Queen holds the primary responsibility of representing the town at upcoming statewide events and local school and business functions until the next thump and new royalty is crowned.

For six consecutive years, my daughter and I have honored the tradition and at the same time, created a strange one of our own by sweltering in the Texas humidity.

Partaking with gusto in all that small town hospitality has to offer.

For temporary relief at least, watermelon is plentiful. Icy-cold that stings the gums (two slices two dollars). Miles of funnel cake and food specialties are savory high-caloric backups.

I’ve visited at least a dozen times (for savory barbeque served on butcher-brown paper at the iconic City Market), and came to know business owners and residents at least on cordial speaking terms.

city market

I’m viewed as sort of odd man out and been laughingly called a Yankee a time or two, however hospitality runs strong in these parts and no matter how out of place I appear, I am treated as warmly as a native (after light jabbing).

A fascination with Texas history rolled me down Interstate 10. I have remained intrigued as those I encounter manage to survive, even thrive on modest financial resources (a per-capita income of roughly $13,000 a year).

I‘ve been a respectful observer. Under the radar. A speck on painted oil pump.

painted pil pup

My window of observation is usually limited due to the July blast-furnace Texas heat.  Surprisingly weather conditions were different this year. The late afternoon brought with it a front of cooler air which pushed out humidity, broke the heat and exposed a pinkish-blue Technicolor sky against a busy Ferris wheel dripping in colorful carnival lights.

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Over the years, I’ve compiled notes of the best of lessons from the residents of Luling.

Here are seven of the most memorable random thoughts:

“I don’t eat the whole chicken all at once, just a piece at a time.” You can’t make this stuff up! Those who seek immediate satisfaction or look to get rich quick are go­ing to suffer from incredible financial indigestion or worse. Growing wealth isn’t magic – it begins with a financial awareness of cash flow, consistently spending less than household income, managing debt and a saving and/or investment plan for specific life benchmarks like retirement.

Many feel the tasks too overwhelming. Why bother?

Well, listen to Luling: Take a baby step: If you’re not saving, start. Even if it’s an additional $50 a month to bolster an emergency cash stash. Increase your 401(k) or retirement plan contributions by one percent next week. Apply as much as you can to get credit card bills paid off quickly. Take the action now. Worry about the repercussions on the budget later. Take a step forward. Find a way to make it work.

“Don’t owe nothin’ to nobody.” Appears those with smarts in Caldwell County, mostly the “senior folk,” abhor debt. The gentlemen who blurted this insight at me had a mouth full of ribs and a face devoid of several teeth (meat falls right off the bone at City Market).

Wisdom happens even if those providing it are all gums. U.S. households are slowly getting their balance sheets in order and that requires reducing debt and work­ing to aggressively increase savings. Be proud of the eventual independence that comes from becoming debt free.cipal, inter­est, taxes and insurance doesn’t exceed 25 percent of gross monthly income. Stan­dard rule of thumb is 28 percent; my advice is to come in below as the rule is antiquated like many of the downtown Luling facades. I have been disciplined enough to follow a “20 percent of gross” mantra. But then I’ve never perceived a house as an investment – just a place to hang the hat.

Side note: City Market only takes cash – no credit cards, no checks. You can enjoy melt-in-your-mouth brisket without taking on additional debt. The establishment is eternally smoky and there’s no air conditioning. Spicy sauce makes the experience hotter. Don’t worry. As the sweating kicks in you feel cooler.

bbq

“You can fool yourself but the pigs’ll still laugh at you.” I needed to think outside the box with this one. Emotion is the greatest enemy of investment and financial suc­cess. Individual investors are constantly plagued by overconfidence (you didn’t beat the market, I’m sorry-you didn’t). You consistently sell low and buy high, hold on to losers too long, sell winners prematurely and create trends in your head where none exist. Understand your limitations and emotional biases and you’ll be much more successful. You’ll deny this at first.

Most important with the 200% run-up in markets since March 2009, I’m starting to observe (finally) signs of recency bias among retail investors as they project their most recent stock market experience into the future. In other words, we are growing too comfortable with lofty stock market returns and the unusual absence of corrections and that’s as dangerous as Luling’s Main Street in 1877.

Your performance should be gauged against specific goals you have for money, not an index like the S&P 500. Your performance should be compared on an absolute basis, to the return you require to hit the gusher (Texas talk). I consider it “financial life benchmarking.”

Financial life benchmarks are those specific milestones you create, accomplish and check off. They move you ahead, keep you focused and ostensibly bolster your household balance sheet.

There’s a point, a law of diminishing returns (or financial wheel-spinning) where you’ll take on more risk and not receive a commensurate amount of return. The problem is a bell doesn’t ring or an alarm doesn’t go off once you approach or breach the danger zone whereby additional risk is not complimentary but greatly detrimental to future results. When you’re focused on beating the market, you will lose sight of the risk and wind up like poor William Hardeman as your net worth bleeds away.

FLB helps you understand clearly the returns you require to get to where you want to be – It’s about you, not a market index. It’s your life, your attitude towards money, what’s important to you about having the money to meet lifestyle goals all wrapped together in a functional action plan. It’s your town and the roads are unlike any others.

By the way, those I’ve encountered with impressive success in markets rarely brag about it. Look in the mirror and understand how the stock market will humble you today. Always perceive markets as ornery as “Rowdy Joe.”

The heat won’t kill ya until it does.” I needed to sit a spell after hearing this Lone Star nugget of wisdom. What the heck did it mean? Then I realized-in Texas you respect the heat and understand the danger of oppressive weather conditions on your health. Ignore the heat and deal with the consequences. The famous quote by Albert Einstein comes to mind: “Insanity: Doing the same thing over and over again and expecting different results.” 

If your current relationship with money or yourself is subpar, it isn’t going to change it­self. Overextending on credit, not saving for retirement or at least forming a strategy, a lack of an emergency cash buffer, using spending as a substitute for happiness, not taking care of your body physically/mentally, failing to continue to learn will burn you to a crisp.

Start a personally heated change wave. It doesn’t need to be huge. A habit takes repetition to become second nature. Soon a healthier and wealthier routine will be yours but it doesn’t happen by accident.

“Hay is gold.” An unprecedented drought and elongated period of record heat, and hay becomes a valuable commodity in Texas. All of life comes down to supply and demand. Right now there’s a greater supply of you and little demand. Just look inside the unemployment rate or employment numbers. There’s a surplus of labor and lots of slack.

What makes you unique?

It’s a tough reality. The skills you had, or even the career you thrived on have a greater chance of being sour permanently since the Great Recession occurred. That doesn’t mean you don’t possess several core strengths to expand upon. Confidence in your personal skills and abilities has been shaken more than any other time in history outside the Great Depression. Take control.

“I’ll take small quality over big a big stack of nothin’.” I admit it. I overheard this one. Yes, everything is bigger in Texas. Texans also respect and appreciate quality and pureness of heart over size. It’s a good time to go smaller. How much you need anyway?

Luling is home to an interesting business: Tiny Texas Houses. Each house is made of 99 percent salvaged materials. No structure is bigger than 12’ x 28’ with a loft. How much square footage you need? Get yourself two dogs (they’re loyal), two acres and possibly a person to keep you company once in a while and you’ll be styling.

I’ve been preachin’ this two dogs, two-acre sentiment for years because it seems right to me. Feels like true independence. Peace of mind comes from taking in more than you need to meet expenses. I’ve been told that too, in Luling. I’ve seen it.

“The past has a place but shouldn’t interfere too much with the present.” The new owners and staff of the Francis-Ainsworth Bed & Breakfast are in the process of restoring the historic structure for a new generation of guests to enjoy. I feel history tap me on the shoulder here. It’s a presence which lightly beckons, lowers its head in deference as I enter, and invites me to never forget to respect what’s come before me. I’m merely passing through.

With that I learn how I must deeply preserve those in my inner circle, swiftly cut out negative presences, continue my understanding of the human condition and work to assist, respect my teachers.

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In August, 1922 another shaken, ashen-faced man watched as black bled into dirt. The flow of the liquid was so strong it cut a trail into sunbaked earth for over a mile.

The discovery of oil by Edgar B. Davis changed Luling’s landscape dramatically in 1922. He mortgaged everything he owned and was about to throw in the towel when Rafael Rios #1 became a gusher. Edgar Davis’ creation of the Luling Oil Field promoted rapid growth as the town population grew to 6,000 and 100 new businesses were created by 1928.

At its peak, the oil field produced 11,134,000 barrels.

One 100 degree-plus day in 2011 as I stood outside of Blake’s Restaurant on Main Street, a hot breeze overtook me. I could barely breathe. With it came the odor from nearby operating oil pump jacks. I crinkled my nose – who wouldn’t?

An elderly local walking by tipped his white cowboy hat at me, stopped and politely said:

“I wouldn’t do that son, that’s the smell of money.”

It was another trip. The same trip. But it was different.

The heat was cathartic.

The watermelon was sweeter.

The lessons were timely.

And the train kept going on through.

Until next year.

The whistle blows.

Knifing through the humidity of what now is past.

union pacific

 

 

 

Six Money Habits Of Unhappy Couples.

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We’ve all heard the horror stories of couples suffering in a toxic money mix.

Married or unmarried – it doesn’t matter.

screaming married

Financial harmony is crucial to a couple’s long-term synergy with money.

From my experience, the ones with cohesive financial strategies are the most successful.

Over the years, I’ve documented several unfavorable money behaviors exhibited by couples. In greater than 95% of the cases observed, the relationships ended on bad terms.

The top six:

1). They disrespect each other’s credit. One of the worst fiscal violations I’ve witnessed is how credit is misused in a relationship which causes a party’s credit score to falter as credit card balances are increased leaving the trusting partner in a relationship, on the hook for the bills. I have seen otherwise smart individuals allow a partner to use their credit and turn a blind eye to misuse. Until it’s too late and they’re in a hole financially – spending years paying back big debts.

Rule: Never permit a loved one, including a marriage partner to take advantage of your available credit and perhaps ruin your credit score, whether it’s intentional or not. It’s not a matter of trust; it’s a matter of control. You must be the steadfast gatekeeper of your available credit and scores. If it’s true love, the other party will appreciate your discipline. If you do share credit, make sure to carefully examine all credit card statements and access credit reports annually for free at www.annualcreditreport.com.

2). Lack of communication. Especially when it comes to life-changing financial decisions or big purchases. It’s ok if you fail to mention lunches or an occasional discretionary purchase. When it comes to large expenditures like expensive durable goods or making big decisions that may affect both parties like a new job offer or decision related to retirement, it’s best to share all relevant information with a partner or spouse before moving forward. Even if it’s a wise decision, the action of sharing and receiving feedback is crucial to the health of a relationship you cherish.

Rule: Before financial decisions bigger than $100 bucks are executed, think twice and open up beforehand. Take to heart information shared through open dialogue. Get an objective third party involved in the mix to listen to both sides and weigh the evidence.

3). Little consideration for the blueprint. Deep in you is a money DNA. Since a small child, you have handled money based on experiences. You also learned from observation and communication – parents, grandparents. If your money mindset conflicts with a partner, that’s ok. There are methods of compromise. If your money mindset is disregarded or even ridiculed, then it’s time to question the viability of the relationship.

Rule: Whether you’re a deep saver or big spender, be receptive to the manner you’re treated if your partner disagrees with your money DNA. The couples who endure are the ones who find a working medium or a hybrid DNA strategy. The key is to watch for language of judgment and money behavior that jeopardizes the current situation or the health of the future household balance sheet.

4). Multiple bailouts are acceptable. You know the type. They mess up with money and then seek others to bail them out like parents or partners. Then the same reckless behaviors are repeated and bailouts continued. It’s bad news. Rarely do I observe couples last long traveling this endless loop. Usually, an observant partner is suckered in more than once and leaves the relationship financially and emotionally fragile.

Rule: A one-time bailout, depending on your financial situation is acceptable. No excuses or money provided when similar mishaps are repeated. It’s a hard rule and it will save you financially. Perhaps you leave with your self-esteem intact, too.

5). Financial success is resented. According to a Pew Research Study from May 2013, a record 40% of all households with children under the age of 18 include mothers who are either the sole or primary source of income for the family. To keep it in perspective, the share was 11% in 1960.

Since the financial crisis I have witnessed women taking additional charge of their finances (and the families) and men in the relationship growing increasingly resentful.

I have worked with couples where women have become increasingly unhappy when partners have taken on additional work responsibilities and time away from their personal activities.

Resentment is poison to any close relationship and detrimental to elevating finances to the next level.

Rule: A resentful attitude over a partner’s success requires thorough and truthful self-reflection. Instead of wasting precious energy on negative emotions, objectively witness and attempt to find ways to mirror the good habits of a successful partner. Ask for guidance. Be open to criticism if it’s positive and leads to self-improvement.

6). Fractured retirement planning and savings goals. Couples who are hesitant to blend retirement goals and fail to align their efforts to meet jointly-created goals, ostensibly fall behind or at the least, miss out on the synergies that accompany working together toward a comfortable retirement.

Rule: Retirement planning is a partnership objective. Coordinating retirement account salary deferrals, examining company retirement plan allocations as one and periodically reviewing progress together must be mandatory for couples who are serious about the quality of their retirement years.

Random Thought:

Couples can be a galvanized force to greater wealth or rapidly deteriorate their combined net worth.

Ongoing financial drama can ruin a relationship.

Be open to the signs, fix them.

walking away

 

Or walk…