Category Archives: Wealth

What are you willing to do to get it?





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Is a maxed out 401(k) the new luxury item?

President's Advisory Panel for Federal Tax Reform

(Photo credit: Wikipedia)

Most of us have no idea what retirement is going to look like but we know we can’t work forever. After working hard for 30 years nobody wants to be stressed out about not making ends meet or out living their savings. Let’s talk about balancing the delicate mix of enjoying life today while saving for a comfortable future. When balancing fun and sacrifice the three things that you have to consider and adjust are how you spend, save and invest. It is not as much about how much money you earn but more about how much of it you can keep. Whether you earn $50,000 a year or $500,000 if you spend all that you earn you are broke either way.

Many are in the mind frame that we earn money to spend it. Where that may be true we don’t have to spend it all at once. Some money is for today and other money is for a rainy day or a later day. There is a battle between what we want and what we need. The best way to always end this battle quickly is to have a spending plan that reminds you of how much money you can spend and when. If you do not have one, visit my website to download the one I use with my clients.

The percentage of spending, saving and investing is based on the risk tolerance, goals and time horizon of the client. I also consider their bad habits or vices. If you know you have a sibling who borrows and doesn’t pay back or if you know that you are going to travel 2 or 3 times a year just work it in. Do not try to pretend that it doesn’t exist. At least this way you may be able to sacrifice in other areas to prepare for these things. If we don’t account for them we are setting ourselves up for failure.

In your spending plan it is natural for living expenses to take up the majority of your earnings. The amount will be based on how much fun you plan to have verses how much sacrificing you plan to do. When it comes to saving and investing you decide how much you want to put there based on how many goals you have and how far off they are. The earlier you begin the less stressful it will be when the goals are right around the corner.

Savings are the liquid accounts that you would use if you became unemployed or if there was an emergency. Investments are the longer term goals like college and retirement. These goals are the two most common areas we have to invest for and it is often difficult to juggle how much to put toward each when you have to invest for both. There is a saying in wealth management, “you can borrow for college, but not for retirement.” For that reason retirement goals should take priority over college. The idea is that you should first save up 6 months of expenses, next max out your 401(k) investments and then invest for college. Also, most people want to include a portion of their spending plan to giving to church, charity and/or organizations that are dear to them.

All these things are important and choosing which one to fund can be tough when you want to live the luxury lifestyle. This is where you have to make decisions on what makes you feel better, driving a Lexus or knowing you are financially secure for your future. If you try to breakdown your earnings in to four sections and allocate a certain percentage to each section you will be able to keep yourself in line.

Give 10%, save 15%, invest 15% and spend 60% of your after tax income to enjoy life today and in the future. Cut cost where you can and make good financial decisions along the way. Impressing others with a remodeled kitchen or fancy cars will not make you feel safe. So secure your future first then by the luxury item.

Redefining luxury…Now That’s Presidential!

Where is this financial decision likely to lead?

Dollar Sign in Space - Illustration

(Photo credit: DonkeyHotey)

Most of you have heard me say either in my blog, my speaking engagements or in my book, “The Art of Starting Over” that one of the most important questions you should ask yourself before taking action is, “where is this decision likely to lead?” When you consider that almost every decision is a financial decision you should be especially concerned with where the decision will lead you financially.

Having a clear thought process is of the utmost importance when it comes to how we spend, save and invest. We waste so much money, time and energy and we miss out on important opportunities because we do not take the time to consider the consequences.

Trying to keep up with the crowd or making decisions based on what other people are doing can get us into financial trouble. You make decisions for your life and they make decisions for their lives. So do not consider what others are doing or what they will think about what you are doing. Be unapologetic for doing what is best for you and your family.

Have finances on the top of your list when deciding when to do what. One costly financial mistake can change your life. The process may call for you to put the purchase off until a better time or to not make the purchase at all. It is imperative to be clear on the difference between wants and needs. Acknowledging these differences can keep you on your path to financial security. Do not let emotions affect your decision making skills.

If you feel yourself drifting over to the materialistic side or you are in doubt and need strength say these words, “grant me the serenity to except the things I need, the courage to manage the things I want and the wisdom to know the difference.

This will allow you to think before you act and listen to the right voice inside of you when deciding on what is best. Remember to do what is right for you, your money and your future.

Stopping to thinking…Now That’s Presidential!


saving and spending

saving and spending (Photo credit: 401K 2012)

In order to be wealthy you have to choose to have more money than bills. Being wealthy is not about how you look, who you know or who knows you. It is a lifestyle, but that lifestyle is the practice of leaving as much money in your pocket as possible. I have clients with great incomes who over extend themselves by spending every dollar they earn and sometimes more. Even if you earn millions technically if you do not have enough money to pay your bills you are broke.  It doesn’t matter how much money you earned if you did not keep any of it.

I have also worked with people who made less than $100,000 a year and because they had great spending habits they had less stress, all their bills were paid, they could afford their lifestyle and they were not broke.

I often share a spending plan with my clients that I love so much. It is called the 4, 3, 2, 1 method. This one will keep you in line very easily if you follow it. It is good for self employed people too. Once you take out money for taxes you can begin splitting up your money in this manner. Your household expenses should be 40% or less of your earnings. The next 30% should go to meals, entertainment, rewards, shopping, travel and things of that nature. You should save and invest 20% of your money and the last 10% should go to gifts, tithes and charity.

For example, if you make $6,000 per month estimate your taxation at about $1,800.  This will leave you with $4,200; 40% of that is $1,680.  That should go towards things like mortgage, utilities, household maintenance and insurance. 30% of $4,200 is $1,260 and this amount should fund your dates, girl’s nights out, your basketball league, amusement parks and eating out.  20% of $4,200 is $840 and that should be split up between your savings and investment accounts.  The last 10% is $420 and that should be used to pay your tithes or if you don’t go to church often, use it as a gift and charity fund.  People will ask to borrow money, but do not loan it to them.  Just give them a gift and do not worry about getting it back.  It will come back to you 100 fold.

In order to do this you may need to live in a smaller house, drive a less expensive car and curb your shopping enthusiasm. I am not suggesting you stress yourself out being frugal or stretching every dollar. I am suggesting that you do not worry about whether you look wealthy because looks are deceiving. If you have a fancy car or big house it doesn’t mean you are wealthy; it means you have a lot of bills. And if your bills exceed the amount of money you have allocated to pay them you are broke in your fancy house.

Don’t be careless. Spend 20-30 minutes a day managing your money and earnings and you will feel wealthy, look wealthy and actually be wealthy.

Counting the zeros…Now That’s Presidential! 


This is the most selfless thing you can do. Help someone else do or have the very thing you desire. This life exercise will teach you humility and erase any selfishness you have inside of you. If you have been selfish in the past this is a great way to teach yourself to be giving at all cost.

The great thing is the sayings, “what goes around comes around” or “the things that you do come back to you” are true. Lucky for you, karma works in good and bad situations alike. So if you help someone get the business connection they need you will get the connection you need.

If you volunteer to help a friend conduct research for an important project they are working on the information you need will come flowing toward you. Helping others can feel good and that feeling is a reward but the benefit it reaps is an even bigger reward.

So if you choose the best food and wine for yourself also provide that for your guest. If you wish for peace also give peace and if it is knowledge you crave file it away. Remember you teach what you need to learn. Give what you need and you will never need anything again.

Giving…Now That’s Presidential!


Did you know that April is financial awareness month? And in light of this we are dedicating this blog post to a few very important questions. How do you save for a rainy day when it is raining right now? And is it more important to pay off debt or to build up savings?

There are any people who do not have this problem. These people make more money than they spend and they save what is left over. Those people are blessed because the majority of the world today is struggling and does not have enough left over at the end of the week or the month to pay all the bills much less save and pay down debt. They are trying to figure out how to save and invest for future needs while enjoying their lives today and paying down debt that they have accumulated over the years.

The answer to the first question is you just do it. You may not save thousands at first but you have to save something so create the habit now no matter how small. Even if you are only putting $100 a month in your savings do it to create the habit. I recommend having your savings account at a different bank than your checking account to make it difficult for you to get to it. Try using an online bank like Ally, INGdirect or HSBC. When you need to get money from these accounts it will take 2-3 days to transfer it into your account which will make it harder for you to spend it. Do not have a debit card connected to your savings account. Pretend as if the saving account does not exist until you hit your goal. PNC bank has a virtual wallet tool that helps you track your savings and helps you figure out when you will get there.

Once you hit your goal reward yourself. Not necessarily by spending a lot of money but by doing something that really makes you feel good. Building a savings account is a big deal and if you accomplish it you should be proud of yourself. The import thing to remember is it will take some sacrifice. Sometimes you will have to tell yourself, your children, your friends and your family “NO”. You may not go to the old school concert or out to eat every weekend but you will be prepared when you need new tires or when the hot water heater busts.

Answering the second question is a bit more complicated. The Financial Advisor in me wants to lean toward my left brain and say pay down the debt because the interest is eating away at your money and you will never get 28% interest on any saving or investment vehicle. However, if you do not save more you will always have credit card and loan debt. You have to find a balance between saving and paying off debt. Focus on one loan at a time. Pay just over the minimum on all your other debts. Double or triple the minimum on the loan you will focus on first and put the rest toward savings. This way you are paying down debt while saving. Set a goal for the savings account and once you reach it adjust your plan by getting more aggressive with the debt you have left but continue to add to your saving.

Once you pay off the first debt go to the next one and do the same thing. Also, as you pay debt off take that amount and put it toward the next loan. For example, if you were paying $100 a month to HSBC once you pay them off take that $100 and add it to payment of the next debt you will focus on paying off. Stop using your credit cards all together. You should not close the accounts but if you need discipline I suggest you cut the cards up.

When you think about a comprehensive financial plan there are still other things to consider like paying for children to go to college, starting your own business, purchasing a bigger home and retirement. Juggling all of your life desires is daunting. How many ways can you split a pay check right? When you understand that almost every decision is a financial decision you understand that you have to be thoughtful and practical about the decision you make on a daily bases so that you can live the life you desire. It may not happen today but it can happen if you take your time, live within your means, refrain from using credit and create the habit of saving.

Of course all this is easier said than done when you want the Presidential Lifestyle but you have to do it or you will never truly have the Presidential Lifestyle. Remember Presidential is not about spending all the money you earn, keeping up with the Joneses or impressing anyone. It’s about living a peaceful and enjoyable lifestyle in the most time and cost effective manner.

Creating financial solutions…Now That’s Presidential!


Every year between January and April there is always a buzz in the air about tax refunds. Many Americans look forward to them and plan a portion of their lives around this refund. It’s almost like a Christmas present to pay for the Christmas presents you bought last year.
What happens if you don’t get a refund? Wealthy people usually don’t. What happens if you owe every year? Wealthy people usually do. And more importantly, what if you haven’t been saving for this April 15th Christmas present that you owe the IRS? (April 17th this year).
The first thing to remember is, don’t try to sweep your tax payment under the rug because there is not a rug big enough to hide it from the IRS. This could turn out to be an expensive mistake. There will be penalties, interest and if you owe in the future you are just making it harder to pay your future tax bills.
There are some steps you should take whether you have the money to pay or not. First, you really need to know what you owe in order to make a decision on how to pay it. You can file your taxes and once you have that figure you can then request to pay in installments. Use IRS Form 9465 – Installment Agreement Request to apply for an installment deal. (Ask your accountant for help.) Don’t wait and try to come up with the money first before you ask for an Installment Agreement because the amount will continue to rise. Penalties and interest will add up every month you are late.
Your second option is to file for an automatic extension until October 15th. This will give you the option to defer filing your previous year tax return until later in the year. This may give you time to pull together all the documents you need as well as the money. However, there is one catch. Just because you file for an extension doesn’t mean you do not have to estimate your tax liability or that you won’t accrue interest and penalties.
If you take action you can save money and the headache of a possible audit. Please read form 4868 for all the details on filing an extension, interest and penalties. This post is just to give you a general idea of what is to come. Do your own personal research to confirm your situation. Call or email me and I can help or refer to you to someone who can assist you.
If you do nothing you run the risk of getting hit with a penalty and interest payment. Why pay more when all it takes is a trip to your financial professional’s office to get a one page form if you are filing an extension or you could do it online at Look at it this way; if you had a traditional job taxes would have been taken out of your check every month. When you are self-employed you control when your takes are taken. So use your power wisely.
In the past I have charged a portion of it on my American Express and paid it off the next month. I am not suggesting you pay more interest than the IRS is going to charge you. I am suggesting that if you know you have more money coming in soon a credit card may help you stretch your time frame. Especially if the current interest rate on your credit card is lower than the fees the IRS will charge you.
There are a few ways you can pay your tax bill. As mentioned earlier you can ask for an installment agreement. You can also pay estimated taxes throughout the year so when you do file your taxes you will have a lower tax bill or maybe even a refund depending on your situation. If you file an extension you can also file for an installment agreement if you still don’t have the money.
It takes a little extra planning and saving but it’s your money so you should have a plan for managing it anyway. Paying taxes is part of money management. There is no way to get out of paying taxes but nobody wants to pay more than their fair share. Wealthy people have financial advisors and accountants to insure they never do. So make sure you are getting all the deductions, credits and write-offs that you deserve. And stay ahead of the deadlines. Get a team of financial professionals on your side so you can file your taxes like the wealthy.
Getting a refund can feel good but keep in mind that means you gave the IRS a loan all year and they didn’t pay you interest. If you think about it you could have kept that money for yourself and done something productive with it. Either way, be responsible with your refund and with your money over all. Save, Invest and Enjoy your money.
Meeting deadlines…Now That’s Presidential!