How to Build Wealth Slowly

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

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

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

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

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

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

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

Enough!?!?

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

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

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

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

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

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

 

Do You Have a PSP?

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

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

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

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

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

National Average Budget Category Percentages of Net Income

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

 

Is Your Financial Advisor Broke?

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

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

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

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