I remember it like it was yesterday. When I was in high school, I worked all summer to save up enough money to purchase a brand-new Sharp VCR from Wal-Mart. I remember how I felt when I finally walked into the store and laid down my hard-earned cash to make the purchase. I can still smell the fresh Styrofoam as I opened the box. I had zero regrets because it was worth the wait.
I also remember the times I’ve made impulsive purchases. Something would catch my eye that I wasn’t looking for (perhaps an infomercial??). After making the impulsive purchase, the product or service didn’t satisfy the same and guilt would eventually follow.
The Missing Word
There’s a word that’s missing from many of our vocabularies in America. That word is “No.” Saying “No” has become increasingly more difficult as we are now the most marketed to culture in the history of the world. That’s a fact. What’s more amazing is how much more effective (and less expensive) advertising is. The ads are more targeted now. They know what you want, or might want, based on your web and social media activity.
And what if you don’t have the money to make the purchase? No problem! It’s just 49 easy monthly payments of $1.99. Wait…what the heck did I purchase? A pair of running shoes?? And how much interest will I pay over these four years? Who cares…it’s just $1.99 a month. I can do it (although often the interest on an annual basis is anywhere from 39% – 400%). And no, that’s not a typo.
My old boss Dave Ramsey is often pleaded to by his listeners to run for public office. He responds with his classic shotgun laugh. But for fun, they came up with some slogans. One was, “Change…You’re Not Going to Like.” Another was simply, “No.” These were in reference to our government’s out of control spending habits.
Insert “No” Moving Forward
I read a time.com article just this morning regarding debt levels in America at every age group. The article opens with “Americans have fallen back in love with debt.” The statistics are staggering. We’ve exceeded debt levels prior to the Great Recession…just by a little. Below is from newyorkfed.org:
Aggregate household debt balances increased in the fourth quarter of 2017, for the 14th consecutive quarter, and are now $473 billion higher than the previous (2008: Q3) peak of $12.68 trillion. As of December 31, 2017, total household indebtedness was $13.15 trillion, a $193 billion (1.5 percent) increase from the third quarter of 2017. Overall household debt is now 17.9 percent above the 2013Q2 trough.
So how can we appropriately respond to this? Take a look at your budget and spending habits. Where do you see “No” inserted? Perhaps ridding yourself of credit cards would be a tremendous step. And what about that tax refund being applied to debt payoff or savings rather than a car down payment? Small steps like this go a long way.
Think about people from just a few generations ago. Could they finance a couch? Of course not. If they wanted a sofa, they were forced to save for it and delay pleasure. Today, we can stretch payments over five years. And no, I’m not buying the “Same as Cash” deals. It’s not the same as cash. Over 80% of these arrangements result in interest payments of up to 39% going back to day one. They win. You’re not beating the system. That’s why they keep on doing it and stretching out payments for even more years.
Saying “No” is healthy vocabulary. We need it in all areas of life. Prayerfully consider where you need to say “No.” Your freedom awaits.
There’s a story about a rich man whose land produced an abundant harvest. He was posed with a dilemma as he already had more than enough, but he didn’t have a place to store these additional crops. His solution was to tear down his existing barns and build bigger ones. He even imagined what he’d say to himself once done with this work: “Self, you’ve done well! You’ve got it made and can now retire. Take it easy and have the time of your life!”
So how do think this story ends?
“God showed up and said, ‘Fool! Tonight you die. And your barnful of goods – who gets it?’ That’s what happens when you fill your barn with Self and not with God.”
If you’re a Christian, this story may be familiar as it’s found in Jesus’ parable in Luke 12:16-21. If not a Christian, you may wonder what does this story have to do with you? A lot, I’d say.
We’re often asked at Rivertree, “What do y’all (or “you all” for my northerners) actually help people do?” We may answer that we help plan for their retirement. Isn’t that contradictory to the story above? It could be if we left out some essential pieces of the full process.
One of these “essential pieces” is us asking, “When you retire, what are you planning to do with your time?” A myth is the joy of the “couch potato retirement.” Now there’s nothing wrong with relaxing more and catching up on some shows. But is that your full-time plan?
I’ve read a book about those who bought into this plan. Their main purpose became themselves. Sound familiar? (Reference paragraph 1). What does the book say happens to these folks? They die sooner than statistically expected. Why is that? They lost purpose. Is there a better way to “retire,” you might ask? We’d say so. Insert “generous living.”
“One gives freely, yet grows all the richer; another withholds what he should give, and only suffers want.” (Proverbs 11:24)
Listen to Tim Keller’s reflection on this verse:
“The more you scatter your wealth, the more you gather it, and the more you try to keep it for yourself, the more it dissipates. How could that be? Think of farmers. The more they scatter seed, the more they will reap. And keep in mind that the seed comes back in better form, as harvest you can eat and sell. In the same way, spiritually wise people realize their money is seed, and the only way for them to turn it into real riches is by giving it away in remarkable proportions (cf. 2 Corinthians 9:6).
This is not a promise that the more you give away, the more money you will make. Rather the more you give away wisely to ministries and programs that help people spiritually and physically, the more your money becomes the real wealth of changed lives in others and of spiritual health in yourself. And you will be walking in footsteps of the one who was literally broken and scattered so he could gather us to himself.”
See the difference in self-living vs. generous living? It’s suffering want vs. gaining more. That “more” isn’t money. It’s joy.
There’s a quote from Randy Alcorn that has stuck with me: “The only antidote to greed is giving.” When we are tempted to clinch our fists around money (or build bigger barns), give it away. This breaks greed’s power, whether you’re a Christian or non-Christian.
I hope you had a nice February. If you live in Mississippi, we had our usual volatile whether. You may need snow gear one day and a swimsuit the next (slight exaggeration but you get the point).
Personally, this February is certainly one to remember as I had hip surgery. Fast forward to today, I’m doing well thankfully. I still have a journey of recovery ahead of me. But, to say it has been a joy ride would not be honest of me.
I had a close friend stop by recently to check on me. He was gracious to listen to me share how hard things have been. We all need folks to just listen sometimes, right? And sometimes, we need a friend to challenge us.
After hearing me share about the things I couldn’t do right now, he asked, “What are things you can do?” I paused. That had certainly not been my focus. I reflected on his question that night and the next morning. I started thinking about not just things I can still do, but what are new things I can do? I mentally came up with a long list and took action on some immediately. My spirits were lifted and some contentment returned.
I’m not writing a message about the “power of positive thinking,” but I am challenging myself, and you, to reflect on this question: “What are things you can do?” More specifically, “What are things you can do to make progress financially?”
With financial planning, there are many aspects that we can’t control and are forced to use some assumptions: inflation, rates of return, life longevity, etc. However, there are many aspects of financial planning that we can control.
What are steps that you can take TODAY to-
- Begin a debt elimination plan?
- Implement a budget?
- Call the lawyer to get your will completed?
- Increase your life insurance coverage?
- Increase your charitable giving?
Don’t be overwhelmed by this list. Prioritize. Need help taking steps and prioritizing? That’s exactly what we do. Give us a call. We’d love to help.
Spring is just a few weeks away which I always welcome (well, minus the pollen). Spring is a time of new life, and it can be a time of new hope and purpose.
Take a few new steps and see what happens.
I hope your January was a good start to 2018. I read an article recently referring to the third Monday of January as “Blue Monday: The Most Miserable (Planning) Day of the Year.” That certainly got my attention as I’m a planner by trade (and by personality my wife and others would say).
Why is that Monday so bad? Well it does make sense to me that the third week is quite hard for any weekly goals set. Getting motivated for two weeks isn’t too hard. But week #3? That’s hard. Maybe just acknowledging this will help some of you give yourselves a break, get back on the saddle and make the progress you desired for this year. Now to our topic…
The financial services industry has gone through some significant changes the past few years, particularly as it relates to advisor products, services and compensation. Many would say the industry began with stock brokers in the 1970’s. If you wanted to buy stock of a particular company, you would call your stock broker and pay a commission. Since then, insert the discount brokers: Scottrade, e-Trade, etc. You can do your own research, buy the stock(s) you want, and pay far less in commissions.
Then mutual funds became popular… particularly in the 1990’s. To have access to certain mutual fund families, you had to go through a licensed financial advisor who got paid a commission. Later on, came the “online mutual fund supermarket” as one advisor calls it. You no longer had to go through an advisor to access top-notch mutual funds.
Fast forward to today, our industry is working through significant legislation initiated by the Department of Labor. In short, advisors who work with clients’ retirement accounts are legally now fiduciaries with the exception of some accounts set up prior to this law. What does that mean? Simply put, advisors must put the clients’ interests above their own. I know what many readers may be thinking: “Wasn’t that requirement already the law?” Well, the short answer is “no” depending upon the setup for the advisor.
So what about us? “Us” being the Rivertree team. Know that we have always operated under the mandate to put our clients’ interest above our own. One way we have done this is by being an independent company. What does that mean? No quotas. We never want to have a conflict of interest when making recommendations simply to meet a quota.
What’s another way? All current Rivertree advisors have accountability to a certification board to operate in a fidiciuary capacity to clients. We did not need a law to make us do this. We wanted to have this additional accountability and have it through Fi360® (Brent and Jonathan) and the Certified Financial Planner® Board (Scott).
In addition, advisor compensation has been under additional scrutiny…and it needed to be. Clients need to know how advisors are paid, whether it’s by fee, commission or both. Which method is better? Well it depends. Our team sees the benefit of having both options available as one size doesn’t necessarily fit all.
For example, larger investment accounts can benefit from a fee-based management that involves multiple money managers using different strategies and investments. Additional oversight and accountability can also add value. However, we believe some accounts benefit from commission-based strategies where fees are less over the long run. The clients’ goals can be better accomplished utilizing this method.
Once we meet with prospective clients, listen to their goals, and gather their information, we fully disclose the compensation structure we believe makes the most sense for them rather than giving them a long list of “potential” fees and commissions. Prospective clients can then ask additional questions and make sure they have a full understanding.
In summary, our industry is shifting to a model of less-conflicted compensation. We have been ready for this change.
As always, please let us know if we can be of service. It would be our pleasure.
It’s no secret that Mississippi generally ranks first in the bad categories and last in the good categories. But, in this article on MarketWatch, we finally show up first in a positive category! (please pardon the artwork in the article…it’s not ours).
I love my State. I was born and raised here. And after 4 years in the happening city of Nashville, we returned to Mississippi. Why leave Nashville, many ask? Simply put, it wasn’t home for us. After being back for over 10 years now, we don’t see ourselves leaving.
So is $1 million enough for retirement? The article suggests this amount of money will get the average Mississippian retiree 25 years and 6 months of living, almost double that of Hawaii. So forget the islands, folks, come to Mississippi for good livin’!
So reader, do you have a number? Is it $200k, $500k, $1 million, $3 million, or more? Some investment company commercials sell us (not “tell us”) that having a number is critical to your retirement success. I don’t agree. I’d argue that living on a budget and not owing money is more critical to accomplishing your goals than a specific number.
We see it week in and week out in the office with our clients: Those who don’t owe money and live within their means experience far more freedom and peace than those who are working towards a number. Certainly, there’s nothing wrong with having savings goals. Just don’t forget the other “nuts and bolts” of financial planning which are critical to success.
Speaking of “success,” I’m reminded of Tim Keller’s book Counterfeit Gods. Keller wrote this book in the midst of the Great Recession when many of our counterfeit gods were taken away, including money, power, and success. Consider the opening of this book (warning: it’s graphic):
“After the global economic crisis began in mid-2008, there followed a tragic string of suicides of formerly wealthy and well-connected individuals. The acting chief financial officer of Freddie Mac…hanged himself in his basement. The CEO of Sheldon Good, a leading U.S. real estate auction firm, shot himself in the head behind the wheel of his red Jaguar. A French money manager who invested the wealth of many of Europe’s royal and leading families, and who had lost $1.4 billion of his clients’ money in Bernard Madoff’s Ponzi scheme, slit his wrists and died in his Madison Avenue office.” And the list goes on.
How can we come to this point when life is no longer worth living? Despair. Consider this:
“There is a difference in sorrow and despair. Sorrow is pain for which there are sources of consolation. Sorrow comes from losing one good thing among others, so that, if you experience a career reversal, you can find comfort in your family to get you through it. Despair, however, is inconsolable, because it comes from losing an ultimate thing. When you lose the ultimate source of your meaning or hope, there are no alternative sources to turn to. It breaks your spirit.
What is the cause of this ‘strange melancholy’ that permeates our society even during boom times of frenetic activity, and which turns to outright despair when prosperity diminishes? [Alexis] de Tocqueville says it comes from taking some ‘incomplete joy of this world’ and building your entire life on it. That is the definition of idolatry.”
Whew…this can be hard to read. But how can these writings be helpful? Keller gives some tools at the end of the book to help identify where we may have idols:
- Imagination: “The true god of your heart is what your thoughts effortlessly go to when there is nothing else demanding your attention. What do you enjoy daydreaming about? What occupies your mind when you have nothing else to think about? One or two daydreams are no indication of idolatry. Ask rather, what do you habitually think about to get joy and comfort in the privacy of your heart?
- Money: Jesus said, “Where your treasure is, there is your heart also. (Matthew 6:21). “Your money flows most effortlessly toward your heart’s greatest love…Our patterns of spending reveal our idols.”
- For Christians: “What is your real, daily functional salvation? What are you really living for, what is your real – not your professed – god? A good way to discern this is how your respond to unanswered prayers and frustrated hopes.”
- Emotions: “Look at your most uncontrollable emotions. Just as the fisherman looking for fish knows to go where the water is roiling, look for your idols at the bottom of your most painful emotions, especially those what never seem to lift and that drive you to do things you know are wrong. If you are angry, ask, ‘Is there something here too important to me, something I must have at all costs?’ Do the same thing with strong fear or despair and guilt. Ask yourself, ‘Am I so scared, because something in my life is being threatened that I think is a necessity when it is not? When you ask questions like that, when you ‘pull your emotions up by the roots,’ as it were, you will often find your idols clinging to them.
Keller goes on to give tools for dealing with idols. I highly recommend this book for everyone, including nonbelievers. If you’re reading this and struggle with a belief in the one true God, I’d recommend The Reason for God by Keller.
In closing, we all struggle with putting our hope and faith in things that don’t last (if we’re honest). Don’t let your ultimate hope be in accumulating a certain “number,” because once achieved, your happiness and joy will be short-lived.