Scary Savings Rates

Back in the early eighties, trick-or-treating was the second holiday of the season (my birthday, Halloween, Thanksgiving, Christmas) and it was glorious.  After a night of hard work knocking on doors and lugging sacks of candy around, we would regroup at home and sort out the loot.  Now anyone who has enjoyed the trick-or-treating bonanza, and especially any parent, knows that you should not eat the entire bag of candy that night.  This is just bad form.  Once you realize you should not eat it all, it must be saved.  You can’t throw it out, after all.  The freezer, a corner of a dresser drawer, a jar on a desk, all decent options for saving the Halloween loot with their own limits on access and control over the bounty.  If you had (or still have) a good spot to save your candy at Halloween, please put it in the comments below.  This is serious business.

Like my Halloween adventures years ago, most of us have learned that we should not spend everything we make.  Following the same analogy, eating the entire bag of candy in one night is like spending the entire paycheck for the month.  You may feel good right now, but tomorrow you’ll be sick.  “Tomorrow” in the case of finances is typically years in the future, but the result is the same.  The bottom line is we need to save.  And recent studies* have shown that we need to save A LOT more than we have been.

The average savings rate is currently around 5% of disposable (after tax) income.  That’s the average rate, which means there are a good number of folks who are saving nothing.  In fact, over half of American workers currently carry $10,000 or less in their retirement savings accounts.  These savings numbers typically include all “qualified” plans recognized by the government and, as I’ve mentioned before, there is another option.  Even though I’m not a proponent of the 401(k), the savings rate is still much lower than it needs to be.

The scary thing is that we seem to already know this*.  As a group, Americans know they should be saving more, but aren’t for one reason or another.  On average, the group surveyed felt they should be saving nearly 25% of their disposable income, rather than the 5% currently being saved.

This is not a call for forced retirement savings managed by Uncle Sam, or any other sort of political suggestion.  I’m simply pointing out something that, deep down, we already know.  We know we need to put money away to fund our “passive income years”, we know Social Security cannot fund our lives in retirement, and we know the stock market can be a dangerous place to store savings.  Just ask anyone looking to retire around 2008 about safety in the stock market.

Using The Perpetual Wealth Code™ (PWC), we have helped clients increase their savings rate and reduce their risk of loss (to zero!) while helping them discover a better way to manage debt.  One of the primary reasons people give for not saving is the need to pay down debt, and the PWC tackles that issue head on.  If your debt it minimal, even better for you.

We’d love to answer any questions you have about how to get started using the PWC, and we’re also curious about your favorite Halloween candy (Krackel for me) or tradition.  Talk soon.

Happy Halloween!

* – https://mlaem.fs.ml.com/content/dam/ML/Articles/pdf/ML_Finance-Study-Report_2017.pdf

 

Like Fine Wine

On a recent episode of 60 Minutes, the interviewer talked with Bill Koch about a widespread scam in the industry of “fine wine”.  Mr. Koch is a collector of many things, including rare and valuable bottles of wine. He began the interview by talking about purchasing four bottles of wine allegedly once owned by Thomas Jefferson.  The price tag was $100,000 for each bottle.

After the purchase, Mr. Koch decided to do a little research on the bottles to get some more details, only to find that they were definitely not connected to Thomas Jefferson.  It’s possible that this research could have been done before making the purchase, but that probably would not have led to this fascinating 60 Minutes piece.  Silver lining.

The interview went on to reveal several well-known dealers in rare and valuable bottles were actually faking everything.  One guy combined different types of wines into vintage-looking bottles and sold them to high-end clients, while another created fantastical stories about where the bottles came from to inflate the price (similar to the Jefferson bottles).

Most of us don’t run the same circles as Bill Koch, so it may be tempting to write this off as a “problem” of the super-rich.  Who do you know that’s going to spend $400,000 (in one shot!) on wine, right?  Mr. Koch discovered through his investigation that there are quite a few bad apples in the wine industry.  He also realized that this has been going on for some time now, but nobody talks about it.  The sellers obviously aren’t going to say anything, the auction houses keep quiet to both save face and continue to earn their commissions, and the buyers simply try to re-sell the bottles and get their money back if they discover a fake.

This reminded me of a popular product in the life insurance industry called Universal Life (UL), along with sister products Indexed Universal Life (IUL) and Variable Universal Life (VUL).  People have been promised the benefits of whole life insurance while reaping the gains of the stock market and being protected from loss.  Sadly, some people who have heard of The Perpetual Wealth Code have been led to believe these types of policies would work even better than Participating Whole Life Insurance (PWLI).  Kind of like putting two-buck-chuck from Trader Joes in a forged Thomas Jefferson bottle.  PWLI policies are contracts where both the cash value and death benefit grow guaranteed over time.  UL policies not only do not have those guarantees, the cash value and death benefit will be reduced to zero over time.  It’s part of the design of the product.  Unfortunately, by the time the buyers realize this, it can be tough to recover the money they believed they were saving.   It also may be too late to purchase needed insurance on their lives, so it’s a double whammy.

It’s not necessary to use a life insurance policy when practicing The Perpetual Wealth Code, but Participating Whole Life Insurance is the gold standard when it comes to where you should store your cash.  Be sure to reach out with questions on how to implement this process in your life and business.

And if someone is presenting you with a Universal Life policy, ask them about the guarantees.  Then ask them how many UL policies they own themselves.  The answer will be zero.

Perfectionism, enemy of the good

Nearly two weeks ago I was in a training class talking about The Perpetual Wealth Code™ (PWC) and how we can help people to discover it for themselves.  During the class, we talked about blogging and how Access Your Capital has been out there for a little while now (thank you, McFie’s!), and many more post topics came to mind.  That was two weeks ago and it seems like yesterday.  All we need now is to say, “where does the time go?” and the journey to becoming my father will be complete.  I’m not the only one in this boat, am I?

The time has flown by, but writing has been sparse and posting has been non-existent.  Now that I’ve talked about the blog with this group it has to be great, right?!  Just reading that mock questions makes you realize that perfectionism continues to rear its ugly head, so we need to address it.  Not because of the mental block thrown up in the posting schedule, but because this issue can impact us in many areas.  Perfectionism may be driven by many things, but we’re going to focus on two – fear, and a misguided belief that we know what is going to happen in the future.

Fear is ever-present in our lives and perfectionism is just another destructive way to try to control it.  The easy answer is to say, “get over it” and move on, but we’ve gotten to this point for a reason.  One technique is to pretend you have done what you are trying to do and consider how you will feel in two weeks (or two months/years/whatever).  This allows us to reframe things a bit and can be a great tool when you’ve delayed posting to a blog, asking someone out, proposing an idea at work, and so forth.  In this case, two weeks from now there will be at least one more post so hopefully it will be spectacular (heh).  Even if your action doesn’t go as well as planned, it’s not the end of the world.

Along with fear, we have the notion that somehow we know (or have a good idea) what will happen in the future.  Do you ever catch yourself thinking this way?  “I know my boss will say no if this presentation isn’t the best thing they’ve seen, so I’m going to wait another week”, or “I’m not going to suggest this idea because I know I need to have every answer before I do so”.  Even if you haven’t had these particular thoughts, I have a feeling there have been times where action/decision has been delayed because you had already decided what was going to happen.  Forgive me for stating the obvious, but the future is not set.  When we continue to delay because everything needs to be just right, we give up control to those who know perfect can never be the enemy of the good.

While I’m happy to be back on track posting to this imperfect blog, it’s much more important for us to focus on our finances.  There will never be a “perfect time” when it comes to financial decisions, though there may always seem to be a good reason to delay.  There is also no reason to let fear limit the discussions you have, the questions you ask, or the sacred cows you need to tip.  This blog is named Access Your Capital because a major benefit of the PWC is having real control over your financial life, and access to your cash is key to that control.  While you may not consider yourself a perfectionist, conquering these feelings about finances can lead to much greater control.

Be sure to reach out or comment below if you have questions about The Perpetual Wealth Code™, or if you have thoughts on battling perfectionism.  I look forward to hearing from you!

Better than Dave

A friend of mine is a follower of Dave Ramsey and the other day she mentioned that everyone should take the Ramsey course that she had just completed.  The course centered on debt reduction, cutting up credit cards, and paying cash for everything so I was curious to hear what she got out of it.  I was especially interested to hear why she thought “everyone should take it”.

The short version of her answer is that it gives you a sense of control over your financial life, as well as helping to pay down outstanding debt.  Who wouldn’t want that?  But what happens at the end of the 36 or 48 or however many months it takes to reduce the debt?  Is there something to show for the years of penny pinching and card cutting?  Or is it just the feeling of control over the now-reduced debt?

Don’t get me wrong.  Dave Ramsey has helped many people with this type of program and some of his advice is great.  But what if there was a better way?  What if at the end of the months of disciplined payments you hadn’t just reduced your debt, but built an asset in its place?  Debt extermination vs. debt reduction, if you will.

Spoiler alert!  There is a better way.  All the benefits enjoyed by my friend, with the addition of a financial asset you continue to use once the debt has been exterminated.  We have proven this time and again with real clients, so please understand this is not merely a theory.  Ironically, the key to taking this process to the next level involves using something Mr. Ramsey has made a habit of railing against.

Participating Whole Life Insurance (PWLI) is a very powerful and flexible financial asset that can be used to enhance these popular debt reduction programs.  In addition to eliminating the debt, the interest you have been paying the creditor begins to come back to you and eventually you are the lone money manager.  This is the spot you want to be in.  Managing (controlling) your own money, free from bad debt, and with The Perpetual Wealth Code™ helping to grow your wealth.

Do you want to just reduce the debt or do you want to build something on top of the bad debt ashes?  Call me to talk about how to start building today.