So, I Have This Friend…

If you don’t have an estate plan, you are wrong.

˘My wife and I had breakfast with a friend the other day. She’s a really smart lady who’s getting a little older like us. No, I’m not calling her old and I won’t venture to guess her weight. But she’s been on earth for a while, and like us, she knows no one lives for ever. She’s also aware that planning for that certainty is often overwhelming for some. Her included. Maybe I should say she has lots of experiences and not mention age. Yea, she’s seen some things in the multi decades of living.

They mostly talk about their jobs, family, and other friends. I generally don’t contribute much to these conversations and enjoy listening to them talk about the latest happenings. On this particular morning, a topic came up that sparked me to participate more than usual.

The topic started with something like “I need to get a will done”. Oh, that caught my attention! Believe it or not, wills are very important. There’s not one person reading this that will not leave this earth some day. That’s a 100% guarantee. We leave everything behind in this imperfect world. As you know, you leave this world like you came into it. You leave with no earthly possessions like money, houses, investments etc. Also, I would bet that every single one reading this does not know when it will happen to them or their loved ones. They are sure it will happen, but unsure of when.

Oh, I’ve heard this statement many times or one very similar. For some reason, frequently it’s when people are getting a little older and feel somehow that it’s “time”. If you know when you are going to leave this earth, just schedule doing your will and other financial documents before you go. For the other 100% who don’t know you’re departure time, you owe it to the ones you leave behind to do your part. The time of passing is beyond your control. Getting the documentation in order for that time is definitely within your control. A will is only one document you need to have in place. There’s more, much more.

A properly executed will leaves directions for your executor to carry out your wishes with the things you leave behind. The things you left behind are called your estate. This is your chance to tell the executor of your estate how to carry out your wishes. The executor is the one charged with legally and properly dispersing things of title, such as houses, cars, boats etc. The executor is also the one who ensures any outstanding bills such as phone bill, medical, credit cards, etc. Access to bank accounts, investments, and other financial accounts will also need to be accessed to ensure payments and distributions are done promptly and properly. Just because you are gone doesn’t mean your affairs can go untended. Properly setting up the executor will ensure this part goes as smoothly as possible. Make sure the person you chose to be your executor is trustworthy, responsible, and stern. MawMawFI always says marriage and funerals always bring the crazy out in a family. So, despite best intentions, the executor may very well find himself in the middle of a heated family fued over how your family thinks your estate should be handled. It’s going too fast, slow, etc. Johnny wanted that and so does Jenny. Simple things are compounded by the heightened emotions of your recent death.

Every state has its own laws about how to handle an estate in a person’s death. So, when you set up a will, make sure you are meeting the states requirements. If you feel uncertain about how to make your will, seek a competent estate lawyer who specializes in this area. You’ll be surprised how many decent local law firms really do care about helping you do this important document correctly. On the other hand, there are scammers out there. So, ask around, check references, etc. A will is a very important document that must be given the proper amount of attention.

If you don’t have a will in place, most states will ensure your estate is distributed in accordance with their laws. That would likely include hiring a lawyer to act as an executor. The executor will act in accordance with the law. Without a will, the state appointed executor will not have clear direction from you on how to proceed. Not only will the executor not know your wishes, they don’t do that for free. So, while they are doing a good deed, they are expensive. So, take the time to ensure everything you worked for, saved, and want to go to whoever, actually goes there. Take the time to get your will done, filed and be prepared.

There’s other things you can do beyond just a will to help. On many bank accounts, there’s an option for a payable upon death (POD). The POD allows someone access to your money as soon as you die. This is important so things like bills get paid. Maybe just long enough to sell a house, pay for your funeral services, or whatever. But having been through this with a close family member, there will be unanticipated expenses that will come up. Having access to at least some of your money to pay bills is very important.

Investment accounts will have a beneficiary. Make sure you take the time to ensure your beneficiaries are updated. Life happens and things do change. For example, maybe your spouse passed before you and the spouse was the beneficiary. Now you have a problem during your death because your beneficiary has predeceased you. That will tie up assets way longer than if the beneficiary was just updated properly.

Life insurance also has beneficiaries. Frequently older parents have very old life insurance policies that they haven’t updated in decades. Don’t be that guy. Ensure that if you have a life insurance policy, the beneficiary is current. If the policy’s beneficiary is deceased, that will bring on it own set of problems by involving possibly two estates and even more people having a legal claim to it. So, just keep your life insurance policy beneficiaries current.

Things that have beneficiaries are not included in the estate. Passage goes directly from you to the person identified. This is an important distinction, so make sure you consider that for how your estate is ultimately distributed.

All of the documents mentioned here need to be updated periodically. Major events like marriage, divorce, death, births, and even family disownment do happen. So, ensure that maybe annually or whenever a major family event happens, crack open these documents to ensure they still match your current wishes. It’s great to have these in place, but you must also periodically update them.

Once you have the above Big Rocks in place, also consider if there are special circumstances you’d like to take into account. These things may not have title, but special things can cause strife in a family if not identified before you pass. This can usually be accomplished with a letter to the executor. Things to consider here are items that are particularly special to you or a family member. Maybe it’s your mother’s wedding rings. Maybe it’s grandad’s old shotgun. Maybe it’s a stamps collection, a special chair, jewelry, or tools. Whatever it is that is special to you for someone to receive, write it in the letter.

You should also have a few medical documents drafted at the same time as your will. These are important to relieve your family members of difficult decisions. When you are in the middle of a family emergency like a life threatening car accident, surgery, or terminal illness, that not the time to be unorganized. The minimal documents you should have are as follows:

Medical power of attorney. This is a document that tells the medical community who will speak for you and make decisions for you when you are unable. It’s also important to make sure that these are done while you are still medically able and in sound mind. This will come into play if you are in the middle of a surgery and the doctors need to maybe do something different. It’s not prudent to wake you up from surgery and ask. So, the medical power of attorney lays out this important decision before the surgery starts. This also will carry on if you become unable to act for your self due to dementia, a coma, or brain injury.

Directive to Physicians. This document lists the things you do or do not want done to you while you are receiving medical care. If you are in a terminal situation, do you want to be kept on life support indefinitely? Do you want them to “pull the plug” early? Are there religious reasons you would refuse something like a blood or organ transplant? Are you against artificial feeding tubes, kidney machines etc.? As much as you don’t want to think about this now, you should. To leave this up to a loved one in a time of need would be worse. I’d bet every one of your loved ones will be stressed out enough during this time. They don’t deserve to have to try to guess your desires in such serious matters. Please get this done as well.

If you have a complicated family structure or complicated estate, you may want to consider a living trust. This is a way to put your assets “in” a trust to separate it from your personal estate. It will cost a little more up front to set up and execute a trust, but it eliminates the probate process. Basically you can put bank accounts, titled vehicles, investments, etc in the trust’s name instead of your name. You can still use these for every day things, but upon your death, the instructions to distribute the trust’s assets are already defined. It’s a little more complicated, so please ensure you find a competent estate lawyer to explain this to you before you set this up. You’ll also want to talk to your tax professional to make sure that the tax consequences are understood as well.

So, as you can see setting up a proper estate plan is a fairly complex undertaking. Ensure you do your part while your are able. To set up your estate plan is your responsibility. If you do it for nothing else, do it to prevent complicating your loved ones during what will already be a stressful time. You owe it to them.

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023 The End of a Good Ride

One of my children who’s been making some sound progress in his finances was faced with an urgent decision that could a significant impact on his finances. He had been engaging in financial discussions, among various other topics. He’s sucked up plenty of of Choose FI podcasts and other resources. For the blog, I’ll mostly focus on the financial aspects of the decision he faced and a couple of paths that he could have chosen.

About two years ago, he started getting interested in deer hunting. Since some of the best bonding times with friends and family was during my hunting, I fully supported and encouraged him to pursue this worthwhile endeavor. There’s really something magical about engaging with nature. Watching the woods wake up in the morning or the second awakening before dark is awe inspiring. This environment helps put perspective on things. Whether a bug among the leaves, the bird that eats the bug, or the bobcat that eats the bird. Everything on the earth is temporary, including us human beings. Everything will eventually return to the earth from where it came. There’s no escaping that inevitable eventuality. As humans, in most instances, we have the power to choose. That’s what makes us human.

My son had been making solid choices in many areas of his life for quite some time. One of those decisions was hunting. While hunting isn’t necessarily something you can put a dollar sign on to get a return on investment, It’s definitely a valuable part of our American culture. It not only provides food for your family and friends, but it provides money for wildlife and conservation of natural resources like wildlife management and general access to nature through the Pittman and Robertson Act. This act is a tax on hunting and shooting products. That money goes back to support wildlife and their habitat for all to enjoy. Whether bird watching, hiking, camping or just about any other interaction you have with wildlife, this act has a positive financial contribution to ensuring all can enjoy for many years to come.

He’s hunted with me for the last two years. While we spent lot’s of time in the woods, our successes have been minimal. But his success at his job had taken him to Florence Alabama to live. He worked about 30 minutes out of town way out of town in the middle of nowhere. On his drive to work, he sees deer almost every day. On one of those days, he didn’t see a deer…until it was too late. The deer jumped in front of his car at the last possible second. The deer jumped right in front of his paid of Chrysler 300. The unavoidable happened. He hit the deer at a pretty good speed. The deer totaled his long ago paid off car that Friday morning.

He called me that night to discuss his potential plan of action to get a car before Monday morning. Time was of the essence, because he needed to work on Monday. The option he was considering was the “easy button” plan. He had a friend in the car sales business who was offering him a good deal on a gas sipping highly reliable Honda. He had a good deal on a good car all lined up. But he also remembered how much he hated having a car payment. The feeling of being strapped with a car payment wasn’t too far in the past for him. He still remembered all too well that he didn’t like that feeling. While it was a good deal on a good car, it wasn’t a good deal for his situation. He didn’t have the $16,000 sitting around. So the only way he could do this deal was to put his emergency fund towards a down payment and finance the rest. That was the plan he was leaning to because it was easy.

When he explained his plan to me, of course I didn’t like it. He assured me that he scoured the internet, Craig’s List, and some local car dealers. Being a remote place in Alabama, there were not many little gas sipping cars like the one he needed for the long haul to work that he could afford. So, we searched together. He was right. There were no good deals on a car he could afford with his limited budget in his area. Lots of trucks were available, but not any small gas sipping cars. So we racked our brains for another option. Neither of us wanted him to get in $16,000 of debt.

So I had an idea. I live in the Dallas area and there are many small gas sipping cars all the time for sale. That’s the ticket! We could search my local area. We searched the area and found almost 40 used Hondas in the Dallas area. So we just needed to come up with a plan to buy one and get it to him in Alabama. She searched some more and agreed on the top three in his $5,000 price range. My great wife and I agreed that we’d go look at them the next morning, Saturday. The clock stops for no one.

Since my son’s finances were in good order and ours was too, my wife and I would go look at the cars and purchase a good one for about $5,000. We found one that Saturday morning and purchased it. We weren’t just buying it for him as a gift, he was to pay us back immediately. By him and us having solid financial footing, we had other options than being “stuck” with that easy button solution of signing up to a $16,000 loan! We worked together and came up with a financially smart car that he could afford. The car was paid for, in his name, and in my possession!

It was Saturday afternoon and the clock was still ticking towards his Monday morning show time for work. So we continued to work out details of getting him his car. He could fly to Dallas, but that was expensive. So, I offered up another solution. I would drive the 8.5 hours to deliver it the next day to save some time for him before he had to work on Monday morning. So that’s what I did. But since I had to work Monday morning as well, I’d have to figure out how to do that. Luckily, I work remotely, so it was easy. I would just work remotely until I can get back home. Having the flexibility to do that is one of those job benefits that isn’t wrapped up in a salary. But it is very valuable. At least to me it is very valuable.

Rather that just drop the car off and head straight back home, I decided on something different. I would stay in Florence and work remotely until Wednesday when I fly home. The plane ride would be of minimal cost because I had plenty of airline miles since I’ve been using credit card hacking to stock up on points. He was able to get to work on Monday without incident.

Instead of this turning into a stressful situation of me buying a car, driving 8.5 hours, and rushing home, it was fun. I even got in an unsuccessful deer hunt on one of those early cold mornings before I started work! This event turned into a win-win situation for us. He replaced his old almost worn out car with a newer more reliable car. Since he didn’t have an expensive long term car payment, he was able to quickly replace his emergency fund cash with what would have been going to the banks as interest payments. I was able to help my son make a sound decision. I also got to spend a couple of days visiting with him and his girlfriend. Time like that is very valuable to me.

So, what’s the nitty gritty of the financials of this deal. The $16,000 finance a almost new car option would cost him $316 per month for the next four years. Grand total of this would be that $16,000 car would cost him $17,173. The $5,000 used purchase we did cost him less than $5,000. I did put a little towards this option to keep him with at least a little emergency fund. So, he avoided over $12,000 of car expenses by going the route he did. That doesn’t even take into account that his insurance would have also increased costing him more than just the $316 per month car payment putting it closer to $350 per month obligation that he avoided.

So, while this is an end of a good ride for his old Chrysler 300 that had served him well. It was a good car with low maintenance costs. He followed that good decision with an even better decision by not going in debt again. He bought a car that will cost him less in maintenance and he’s not strapped for the next 4 years with a car payment. He has flexibility to save more money and freedom to spend more of his money that will give him the most value. I’m proud of his progress as a young adult and know he’ll continue to make good decisions.

022 Optimization 2.0

My Office
Grandson Likes the new Office

Well folks, I’m sorry for the break in content. I’ll get back on track. Chronological followers of my site will remember my last post was I Quit! That was back in January. So it’s been almost two months since I posted any new content. Not my proudest moment. I’ve been putting a lot of effort into optimizing my mobility. Specifically, I’ve been focused on being able to work as flexible as possible, from wherever or whenever it fits into my life.

First off I had to set up my office. Since I didn’t have a decent desk I needed to get one. My wife found this beautiful desk and chair for $250 on Craig’s List – truly a great deal. Sure, we could have gone out and bought a brand spanking new 10k desk and chair. We “have the money”. But that would be wasteful of our resources. That’s not how we roll at PawPaw’s! We like to get the most value for our money. I could sell that desk years from now and get what I paid or more for it. I now have a place to work that’s even big enough to hold a small “bored” meeting with my grandson! He likes to come to work with PawPaw. If you look to the right you can see the nightstand on my side of the bed. My office is optimized for commuting. It now takes me longer to make my bed than it does to commute to work. Not too shabby.

A desk is a great place to work, but it’s useless to me without communications to the outside world. My new company really embraces remote working and is awesome at ensuring you can remain productive with solid communications. Shortly after I accepted the job, a new IPhone XS showed up. Then a large monitor, a laptop, a docking station and a printer/scanner/fax. Everything showed up at my house before my first official start day at work. I already have a fast internet connection, so hooking up all this new high tech gear was a snap.

Now that I’m all set up, it’s time to prove to my company and myself that I can do this remote working thing. Game on! There’s a lot for me to learn about the job and the whole remote arrangement to remain efficient. We’re doing teleconferences on multiple apps and video conferences on multiple apps as well. We have common file locations on SharePoint that allows us to edit common documents while in a meeting talking about them in real time. The number of tools available is unlimited. My brain isn’t though. So, I had to quickly learn how to use all of these new programs efficiently across my computer, iPad, and iPhone. I wanted to be mobile and not tied to my “office”. (Sometimes I require working from my backyard hammock swing!)

My productivity has increased significantly. The distractions in a formal workspace such as a cube farm, rows of offices, open workspaces, etc are excessive. I have far less distractions than actually “going in” to the office for work. Less distractions means more concentration, more deep thinking, and more productivity. I didn’t even realize it, but there are actual studies out there that agree with what I’ve been noticing. Also, when I take a break from work, my breaks are more productive. I cook, clean, make a quick run to the grocery store, wash clothes, and do numerous other small tasks that now don’t take away from being with family. With these small things knocked out during work, they no longer compete with quality time with those who matter the most. It’s a win-win. But wait for it…it gets better!

About two weeks into the job, I was presented with an opportunity to test my new mobile job. One of my sons wrecked his car on a Friday and needed a car to get to work on Monday. He called asking whether he should take his good buddy’s offer to get a newish car for about $16K. His friend had all the paperwork ready to go and it was a decent car. However, we agreed that it was outside of his price range. To make a long story short, there were no “under $5k small gas sipper” cars in his area. Living in Dallas, I knew we could find many and in a hurry.

So Friday night I searched some cars and we made a top three list. I purchased the best of the three cars the next morning. It wasn’t a loan…my wife and I don’t loan money nor did we need to! My son had done such a good job following some of the FI principles, he had money available to do this! I purchased the car, then he immediately transferred money back to my account.

I then drove his paid for car to his house in Alabama on Sunday, he drove his paid for car to work on Monday and I was able to spend some quality time with the one son who lives out of state. This is great! I was able to help my son in a time of need. I was able to extend my stay because I could work remotely. I wanted to prove this out for the many more times when I’ll do the remote thing! What a blessing that short trip was. I’m looking forward to more opportunities to maximize my quality of life by not being strapped to a location for work!

Since I’m the new guy on the team, I’ve been extra busy and neglecting this blog with recent material. My focus was on a Big Rock in my life. But this optimization isn’t as much about the money. Don’t get me wrong, this optimization is about the quality of life. I value my family more than any job. If I can be more available for my family and still have the same or better income, security of a job, and fulfillment from doing meaningful work then it’s a win-win for sure.

So far, the only thing that has suffered is this blog. The consistency has taken a dip. But with my work arrangement getting pretty well set up, tested, and proven, I’m ready to get back to blogging. First, I might need to hold a meeting with the grandson…in the hammock.

021, I Quit!

houses near the rice wheat field under the clear blue skies
Photo by icon0.com on Pexels.com

Well, I did it.  I quit my well-paying and pretty secure job to do something different.  I’m moving on to greener pastures.

My wife always says I don’t do change well.  Thus far, my career has consisted of 20 years in the US military followed by 12 years at a civilian company.  So, in the last 32 years, I’ve had only two jobs.  Maybe that is a sign of the old ways, but that’s been the path I took.  If you go back and read the first post , it will become evident that it’s not all about the money.  There are way more important things in life than money.

This blog has helped open my eyes to other things in life.  In some ways, this new job is just a continuation of similar things to help achieve goals.  It has a good salary to take care of monetary needs.  The job also has good insurance.  (You can read how important having good medical insurance is to my family at The $500,000 Tooth Ache post.)  There’s the 401K plan with company matching.  So, the base of security and steadiness needed for my family remains firmly in place with the new job.  More of the same.  No significant changes in that area.

However, the new job is radically different in other ways, which played a big part in the decision to make the change. This new adventure allows me to work from home!  At this point in my life, that has become very important to me.  My aging father, who is approaching 80 years old, lives with us.  We also have one of the kids and her 4 year old son living with us.  Our daughter is fairly young and at the stage where she’s working long hours, commuting, etc. to establish herself in her blooming career.  My new job allows me to be home with my dad in case he needs something.  It also allows me to be a backup to our daughter for when the grandson needs someone to stay home with him.  Or for that matter, any of the grandkids could be dropped off in a pinch.  I’m a sucker for those now 7 cute grandkids.

So, I’m going to practice what I preach.  I feel like at this time in my life, a change is needed.  This new career move will allow much more freedom to spend time doing what is most important. These things are more important and bigger than just punching a clock to run on the hamster wheel of work to make ends meet.  If nothing else changes, I’ll save 360 hours a year on the commute alone!  A lot can be accomplished in 360 hours!  Who knows.  Maybe I’ll even be able to blog more now!

Sure, there will be an adjustment period.  Staying focused, disciplined and effective at my new job is important to me as well.  Learning to avoid and manage the distractions will be critical to my success.  Of course, as anyone who works in a large office knows, there are always interruptions.  The distractions from home will be much less. In the old job, distractions were almost constant.  Many were work related, but not all of them.  So, even if slightly distracted at home, it can’t be nearly as many as in the previous office situation.

Just an important final note here:  I didn’t “quit” my job until I had another one in place. I had plenty of money in the bank to cover any transitional gaps.  My wife and family were supportive of my decision.  And, I remain in a field that both energizes and excites me.  It’s all good.

So, I’m off to greener pastures.  Wish me well!

 

020, The 2018 Christmas Gift

I wanted to take some time to wish everyone a Merry Christmas! I hope that everyone, their families, and friends have a wonderful and blessed Christmas. The picture above is my little granddaughter and her dad. What a precious picture of her first Christmas. I’m always thinking about the kids best interest which inspired a new Christmas plan for the kids.

Last year for Christmas 2017, my wife and I wanted to get our young, adult kids something beyond the typical “stuff”. We knew we wanted the “Gift” to somehow be related to personal finance and the discipline that is required. After much thought and discussion, we decided to start with the very basic, first step of FI. That’s Financial Independence to the “newbies”. Our gift to them would be conveying the need and proper use of an emergency fund.

So, last year for Christmas, this is what we did: We started each kid a savings account at our bank – a joint account for convenience. Their Christmas gift was a seed of $500 on Christmas morning. The start to an emergency fund.

However, our goal was not just to give, but to teach. To sweeten the lesson of needing an emergency fund, we threw in a way for them to double their gift. On Christmas morning, we told them that we’d match up to $500 if they added another $500 to their savings account by Christmas of 2018! We wanted them to have some skin in the game too.

Now, although we’ve pounded this necessary step of an emergency fund into the minds of our children multiple times, some are better at actually saving, budgeting and delaying instant gratification. There are also differing levels and understanding of an emergency fund. As it is with a lot people, something always seems to come along that puts the emergency fund on the back burner. Throughout the past year, the level in each of our kids savings accounts varied wildly. And as frequently happens, an emergency occurs when the account balance is down.

So, our “gift” sounded simple enough, right? Not so much.

You see, my wife and I have six kids between us. They are at various ages and stages with differing personalities, strengths and, yes, weaknesses. But we were offering to give them a 100% return on their own investment. We give you $500. You add $500 and get an additional $500.

As I write this (December 24th), the amounts in the emergency funds varied from $0.06 to over $4,200. Also, some of the deposits came as late as December 24th as to not miss the matching. FYI: Sliding to the finish line in just a nick of time is no way to run an emergency fund! As you can see, there was quite a range of how much seriousness the kids approached this worthy endeavor. However, we understand that FI is a process. Sometimes a painful process.

Now, here’s the initial intent as it was in my mind, including the numbers. We would deposit the initial $500. That money could only be used for emergencies and should be replaced if the balance fell below $500…as soon as possible. Then, sometime through the year, they would put away a little bit or lump sum until they added $500 to the account. The initial $500 plus their $500 they deposited in the account would equal $1,000. Then we would match their $500 contribution on or before Christmas of 2018. That $500 match would take their account up to $1,500.

Obviously I wasn’t clear to all the kids. Yes, they were even all in the same room and got to ask questions. I’ve also discussed the concept multiple times throughout the year with several. After talking to one of the kids a couple of weeks ago about his understanding of the Christmas gift, I committed to writing it down in order to ensure clarity. Since that conversation, I’ve also decided, for this year, to make it more complicated and add a bonus program. I like to try to encourage sound practices and discipline. So, here comes the 2018 Christmas deal:

1) For Christmas 2018, each kid will be gifted a deposit of $500 on Christmas Day. That’s their Christmas gift. Simple.

2) Bonus #1, The Match. Each kid should deposit $500 above and beyond the Christmas gift ($500) by December 24, 2019. This money must remain in the account on December 24, 2019 to qualify. If this is met, we’ll match the $500 with a deposit on December 24, 2019.

2) Bonus #2, Monthly Deposits. Each kid that does a direct deposit of $42 per month or a manual deposit of $42 per month will receive a $100 bonus on Christmas Day 2019. You must deposit $42 or more each month to qualify for the bonus. This is to reinforce paying yourself first & making small consistent deposits. The twelve $42 monthly deposits will amount to the $500 needed for the 100% match.

3) Bonus #3, The Intent Bonus. To meet our intent, each child that has $2,500 in their savings account on December 24, 2019 will get a $100 Bonus on Christmas Day 2019.

Here’s how I came up with the amount in Bonus #3, the intent amount of $2,500.

1) $500 2018 Christmas gift

2) $500 Kid’s contribution for 2018

3) $500 2018 Match

4) $500 2019 Christmas gift

5) $500 Kid’s contribution for 2019

If you add all the value of the above items 1-5, it adds up $2,500. Of the $2,500 they would have $1000 of their money in the account, the rest would be gifts. So, the incentive to follow the plan is pretty good by most standards.

And finally, here’s our thoughts on the emergency fund and our intent in general for this gifted lesson: An emergency fund is money on hand to cover emergencies. When an emergency arises and you spend from your emergency fund, you should return that money to your emergency fund as soon as possible. Having a $1,000 unplanned issue like a car problem should cause only an inconvenience , not a crisis. Also, this emergency fund’s value should increase every year until there is 3-6 months of expenses saved. (Expenses are everything that you need to pay each month to live like food, housing, bills, gas for the car to get to work, etc).

So, that was our gift to our kids for 2018. What do you think? Please leave comments as to your thoughts. I’d love to hear any ideas or improvements on this idea of mine.

Again, Merry Christmas to all!

019, Can’t Win Big Without a Strong Offense

Offense or Defense? How do you budget? Are you even watching your money? No matter what goals are trying to be achieved, it’s not likely to happen if no one is watching the money. An awareness of what’s going on with your finances is essential. What’s coming, what’s getting paid, and what’s going on with any remaining money. If money isn’t told where to go, it can’t be maximized towards your goals. It will slip through your fingers.

Having a great offense:

Playing offense would be knowing the money coming in for the month and designating each dollar where to go. Send it to pay for a bill, an expense, maybe pay down a debt, or put into savings or investments according to a plan. Yes, a plan is important too. Without a plan, spending is just random and not targeted towards a specific goal. Just like in football, there’s always a plan for both offense and defense. Time is put in to study how to play the game and maximize chances of success and winning. Finances are no different. Plan and have a great offense. Then execute as close as possible to that plan.

Goals (SMART goals) are key. SMART goals can be it’s own blog post. But the essence is Specific, Measurable Achievable, Relevant, and Time based. If goals are created using the SMART structure, they tend to be met more frequently. There’s a saying “If you aim at nothing, you’ll hit nothing every time”. So set SMART goals, plan to achieve them, and track them. That’s a great offense. Have short, medium, and long term goals. Just as mountains can’t be climbed in one giant step, goals can’t be met in one giant step either. Daily decisions move towards weekly, weekly move towards monthly, monthly towards yearly and on an on. Some will be met, some will be missed, and some will be excepted. But in general, you’ll be closer to where you wanted to be than if you just wandered through life.

Take an active role in keeping expenses down to a minimum. Often it’s difficult to make more money at a typical job quickly. Generally workers have to wait for an annual raise or an even less frequent promotion. That should be part of the plan too. But cutting expenses can yield immediate results. Decisions to buy one item over another could be the difference between spending a little money or a lot of money. Each of these decisions move you closer or farther away from your financial goals. Lots of small good decisions lead to big wins. Lots of small bad decisions lead to big losses and mistakes. To make a Smoking good decision, you have to be prudent, intentional, and consistent. Prudent, intentional and consistent purchasing is a great offense for personal finance.

A defensive budgeting perspective is much different. Some find themselves trying to make their dollars last to the end of the month. They may not be tracking all their expenses throughout the month. They may be struggling to come up with rent money. Maybe it’s emptying the change jar to keep the lights on. Whatever the situation, budgeting (or simply paying your bills on time) seems to be a struggle.

These struggles are real. These struggles stem from a lack of planning and poor execution. Not paying attention to the details and being on offense for your personal finance will surely lead to you playing from a defensive position. Defensive budgets are plagued with creeping expenses that go unnoticed until it’s time to pay the light bills. It’s trying to just get through just one more day, week, or month. It’s living paycheck-to-paycheck. That’s a defensive position.

There’s balance to this game. Sometimes there will be unexpected expenses that force you to go on the defensive posture. But if it is happening every month, you’re losing the game. Stop playing defense and make choices that get you back on the offensive drive.

Personal finances are not a game to be taken lightly. Families depend on security. It’s the most basic need. By playing offense with your budgets and directing your money, you’ll win a lot more frequently financially. Paying attention to your incoming bills and expenses and outgoing money will show you the play book for the month. Make choices that support moving into a better position today and in the future.

018, Do Your Part

Recently, I’ve been reading about “doing your part”. I heard something similar on a podcast. I’ve even come across it while reading about stoicism. Do your part is a pretty common saying that is often said, heard, or read. Do your part.

What stoicism teaches is that you can’t always control the outcome, but you can control your attitude and what you do. Do the things you can do, but don’t fret on the overall outcome. You did your part in whatever process, thing, or endeavor you participated in with your time. So be proud and content that the part you can control, you controlled.

An example of this was in our recent mid-term elections. Several ads were about doing your part to get out and vote. So, a lot of people got out and voted. Some may have voted for the candidate who was actually elected. Some may have voted for the candidate who wasn’t elected. However it played out for your candidate(s), you did your part and should be proud of that. You can control whether you voted or not. But you alone couldn’t control who won the election.

Another example is my nephew’s recent retirement from the Air Force Reserves. He did his part. He showed up every time he was called. He answered with a job well done. But I’m sure everything didn’t go as he planned. (I know my military career didn’t. I wanted different jobs, other promotions, and many other things.) So, I’m sure there were things in my nephew’s military career that didn’t go as planned either. But he did his part each and every time he was called. Whatever didn’t go as planned didn’t affect his attitude or cause him to quit.  Subsequently, he was honored with a well-earned retirement ceremony after 20 years of service. He couldn’t control every step along the way, but he did his part and was rewarded.

Of course I was thinking about how this applies to personal finances and, believe me, it applies to personal finances very soundly.  Personal finances can be controlled. I know, there’s a million reasons, excuses, explanations, or whatever that easily surface. But you must do your part. Perhaps you had hoped to contribute more to your 401K, IRA, Roth or savings account. Maybe you didn’t exactly reach a certain financial goal. Maybe your interest, dividend, or return didn’t meet your expectations.

The only thing that can really be controlled is what you contributed. Returns, interest, etc. can’t be controlled. Contribute what you can, when you can, and as much as you can towards your personal financial goals. Progress will never go exactly as planned. You can’t control exactly how all the other factors work out, but you can control what you contribute. Without contributions you’ll never meet your goal. Goals may be met far beyond your expectations or, they may be less than expected. That part can’t be controlled. If outcomes of investing could be controlled, there would be a heck of a lot more rich people in the world.  So, do your part and contribute to your financial future.

What else can be done? Due diligence is what.  Proper research and an education in financial matters can be controlled. A choice is made to either learn more about personal finances or watch TV, play video games, surf FB, or whatever other mind numbing tasks occupies your time. Do what you have to do and become well-educated on personal finances. Controlling your education can help you minimize your losses over time.

Whenever possible, do your part.  Things won’t always work out exactly as planned but if you do your part you at least have a shot!  If you don’t do your part, failure is guaranteed. Just DO YOUR PART.