Financial Basics Part III: Automatic Wealth

I realized looking through the site that I have neglected to finish some of the basics so I am going to work on populating the rest of the Start Here: Read First topics.

One of the key things I learned as a financial planner for the wealthy was automating investing and savings.  Most people tend to spend all the have and then try to save money or invest and what happens 99% of the time is there is no money left for it. 

So the key to easy investing and savings is through Automatic Wealth or the "Pay Yourself First Principle".  This simply means that all savings and investing is automatically withdrawn from your income sources before you ever see it.  This way the money is already saved or invested and you are forced to live within your budget. 

For example:  Every pay check I have money deducted for my ING savings account, my 401(k) and my Roth IRA.  I never even see the money.   Therefore their is no temptation to spend it on other things. 

Another benefit of Automatic Wealth is that you learn to live on less.  I here the same excuses all the time:

"I don't have any extra money to save"
"We'll start investing when we get out of debt"
"When I start making more money, we'll start saving." 

But the truth is these people are usually overspending.  One of the first things I did with clients just starting out was to have them write down every single penny the spent for one month.  The results were amazing.

$100 per month on premium cable
$250 per month on Starbucks Coffee
$300 per month on lunches and snacks at work
$100 per month in extra fees (Movie rentals, extra insurance on credit cards and checking accounts)

With most people I could find $300 per month of extra income that was being wasted.  By simply taking a sack lunch and coffee from home, we could add almost $400 per month of income. 

When I first started, I thought there was no way to save 10%.  Then after a year, we found it easy and began saving 15%, then 20% and every time I got a raise instead of buying bigger toys, we increased our savings and investments. 

A great new program that we are using is called Mvelopes, click on the Quick Tour link for a demo video.  Mvelopes is a a fully integrated financial management system that breaks your income down into spending "envelopes" and keeps you on budget.  It also offers a free full service bill payment system "you can pay any company or individual, schedule automatic or recurringpayments or transfers and receive, view and pay your bills all online" 

It also allows you bi-monthly billing that will help you automatically pay off your mortgage and loans quicker.  And throw in an anytime mobile access that you can use your cell or PDA to make transactions with.

All this for about $11 per month. 

On average, Mvelopes users save an additional 10% per month.

Why do I support this product so much? 

It establishes the "pay yourself first" principle, it ensures your bills are always paid on time, it allows bi-monthly payments and it keeps you on budget. 

I've used Quicken and Microsoft Money and they simply do not compare. 

The whole point here is to automate all your savings and investing, as well as bill paying and then keep careful track of your budget. 

Along with Mvelopes there are two great books that explain the power of this concept further:

Four Laws of Debt Free Prosperity
and
Automatic Millionaire

Kid Nation

I don't have time to watch much television but I did catch a trailer for CBS's new series Kid Nation.  This show is based on 40 kids in their own town with no adults.  They cook, clean, run the services and have a working town counsel to air grievances.   

This show  looks very intriguing and sometimes very emotional but child development experts are already attacking the show and trying to have it blocked from being aired.  They argue that putting children into this situation too young can have psychological effects later in life.   

I'm no expert but the trailer looks exciting and I love this idea.  Children are still innocent and have not yet been polluted by many of life's pressures and expectations.  They still dream and still believe in making a difference. 

Watch this trailer:

Wordless Wednesday: Potala Palace, Tibet

Remembering

Remember Why

When Bad Parents Happen to Good Sports

It happens every year and by now it shouldn't upset me but it always does.  When parents think that a child's success in sports is the end all be all. 

I sat at the season opener for my son's Under 10 Soccer League, lots of parents cheering, the kids were excited in their new uniforms.  I was standing (I can never sit down when my kids play) next to an older lady who said her granddaughter was playing on my sons team. 

The game started and the kids were having fun while the parents cheered. 

Then the guy enters. 

He is the father of the older ladies granddaughter.  From the second he gets here, he has this look of disgust on his face and begins screaming at his daughter to run faster, try harder, help her teammates out. 

By the second half, the girl is winded and holding her stomach from cramps, still not a positive word or comment from dad.  Only the comments on her performance which was not up to dad's MLS standards. 

I began to ponder if this idiot knew the effect he would have on his daughter. A lot of men I talk to can relate to this type of "encouragement"  The have fond memories of their fathers yelling at them or berating them for a sports performance. 

And for what? 

So dad could feel better about his own personal shortcomings in his life.
To exercise his past demons from his youth?

Many things are important and critical in life. 

The outcome of a child's sporting event is not.

Luckily, grandma had enough and finally gave her son some parental wisdom stating something to the effect of "All you are doing is tearing your daughter down and looking like a bad father."

The father stopped and the next time I saw him, he was much better and more encouraging.

As parents we have to look at everything we do and ask ourselves

"Is this better equipping my children for the future?"
"Does this really matter in the big picture?"
"Am I helping or hurting my child by my actions and words?"

Until next time...

Brickianity: Part II

We continue are discussion on rigid beliefs and Rob Bells definition of Brickianity in his book Velvet Elvis.  We left off in Part I talking about having Jesus as our foundation and having flexible doctrine to follow...

A good example is the scriptures, the scriptures are man's divinelyinspired accounts of the Christian faith. Yet many cannot agree on some of thetranslations.  For instance, the word "Virgin" in the scriptures, according to scholars, could have meant an unmarried girl, a girl who  conceived her first time with a man, or simply a young girl. 

Many of the pagan religions at the time of Christ, also have stories similar to Christianity, including a savior being born of a virgin and dying and raising again after 3 days. 

What if early Christian writers added some of the pagan traditions in their writings to make the teachings more acceptable and familiar to their current beliefs? 

For those who believe in Brickianity, these questions  are heresy and anyone who asks them are surely not "True Believers."  However, I find many young Christians today asking these questions and asking about the Theory of Evolution and the church has to have answers to these questions, not simply shun those questioning their faith. 

I personally believe that questioning and challenging ones faith leads to great growth.  The times in my life when I have searched or challenged my faith have lead me to find even more solid proof of my faith and why Jesus is the example we all need to follow. 

I once argued with a group of women that having fights and stress in your marriage only strengthens your marriage and prepares you for greater adversity.  They argued that they knew they had a strong marriage and didn't need any tests to prove it.  However, Dr. John Gottman of the Unviersity of Washington , has proven with 91% accuracy that how we handle fights and stress in our marriage is the real factor in a successful marriage or divorce.  Brickimarriage?

These are my final thoughts, God is divine and man is human.  So anytime man enters faith, you have to leave a margin of error.  Translations can be wrong, history can be wrong.  But if we base our faith on Jesus and let all the dogma and doctrine be flexible, we can grown stronger in our faith and not feel threatened by the worlds challenges. 

      

Brickianity: Part I

I just finished reading Rob Bell's "Velvet Elvis", which was probably one of the most controversial Christian books of 2006.  Part of the controversy lies in Bells theory that challenging and questioning faith is the way to growth and greater spiritual happiness.  Many Christian however follow the belief of "Don't rock the boat." 

They believe Christianity should be Brickianity.

In Brickianity, people have a rigid set of beliefs that are essential to their faith - a system with no compromise.   Read Bell's definition:

"Each of the core doctrines for him is like an individual brick thatstacks on top of the others.  If you pull one out, the whole wallstarts to crumble.  It appears quite strong and rigid, but if you beginto rethink or discuss even one brick, the whole thing is in danger.

Godis bigger than any wall.  God is bigger than any religion.  God isbigger than any world view.  God is bigger than the Christian faith.

...oneof the things that happens in a brickworld: you spend a lot of timetalking about how right you are.  Which of course leads to how wrongeverybody else is.  Which then leads to defending the wall. 

You rarely defend the things you love.  You enjoy them and tell others about them and invite others to enjoy them with you.

Theproblem with brickianity is that walls inevitably keep people out.Often it appears as though you have to agree with all of the bricksexactly as they are or you can't join."

I run into a lot of people who believe in Brickianity but it is not the system for me.  For some reason, I also meet a lot of Catholics who have left the faith never to return.  Most say it is because of the guilt and rigid dogma that surrounds Catholicism.  Although I am not Catholic, I went to a Catholic School and I found myself also questioning some of these "truths" later on in life.

For instance, did you know the word "Holy Trinity" is not found anywhere in the Bible?  It is a phrase that was inserted somewhere in Christianities history and now is believed to be core doctrine.  This is an example of a Brick. 

A lot of people grow up in Brickianity Churches then go off into the world or college and have some of their bricks challenged or even proved historically inaccurate and all of a sudden their wall of faith comes tumbling down. 

But Bell goes on to explain another type of faith as well.  A faith he compares to a trampoline.  In this faith, Jesus is the foundation or mat and the mat is held up by flexible springs or different sets of doctrine and belief.  If your doctrine is flexible and you don't always see yourself as being right, you are not threatened when others challenge your doctrine. 

In Part II we will look at some of these challenges and why basing your faith on Jesus as the foundation will actually help answer questions and help you grow in your walk with the Lord.

The Screwtape Letters: Noise

In C.S. Lewis's classic The Screwtape Letters, Lewis discusses some of the various "techniques" that Satan and his demons use against us.  One of those techniques is what Lewis calls "Noise"Here is my friend Les's struggle with Noise.  Les originally wrote this story talking about getting started in real estate investing, I changed a few sentences to emphasize biblical principles.

Noise: The Well Story by Les Gee

Here's a personal story.

After 16 yrs of education now with a BA in Statistics from UC Berkeley coming out feeling like a total idiot even though I did well there...I decide to go to a farm in Oregon. A three-month experience design to learn about oneself through doing. Milk Cows, Feed Chicken, build barbecues etc. It was during those countless times of doing that I became acutely aware of the "noise" in my head that says I can't do that because I didn't go to school for it. Oh, how easy we are programmed.

If you hadn’t taken a class in it, how do you expect to know the subject? What are you doing Les? You don't have a degree in electricity. How can you possibly wire a light bulb? You never even picked up a hammer before. This ranch was design to give you enough information and then let you at it.

Remember, seeing the foreman lay carpet by himself. Mine if I help. ...Only 15 minutes gone by before… “Go ahead and finish It.” said the foreman. "Huh?", was in my head, but of course my voice, said, "ok". Didn’t want to seem unsure of myself. You know that manly macho thing.

Why is it that I had so much doubt and fear? I come to a startling realization after years of tackling this noise problem. We all have it. Must be born with it. Maybe or parents constantly saying “NO” to us.

To live for greatness in life, we must learn to overcome this for any chance of success.

A life changing moment

When I was working on a well, another supervisor of the ranch said all I want you to do is change this fitting with a cap. By the way when you take out the pipe fitting, water will be gushing out pretty fast. Off he went. Wow, my first plumbing job. (By the way, I screwed up the carpet job, but no job is perfect!) Take off one fitting and put on a cap. No problem, how hard can this be? Sure enough off came the pipe...water spilling out in this hot day. Panic set in as I attempted to put on the cap. In one second, "It doesn't fit! It doesn't fit! Yelled the noise in my head. "Go for help!" After 5 seconds of more noise screaming.... Enough! Shut up you stupid voice, how hard is this! (This is the moment I look at when I want to shut the noise and to believe that we all have within us the common sense and divine guidance to do whatever we want in life.)

Well, after calming down and letting the water gush at my stomach...aha...I'm turning the fitting counterclockwise, not clockwise in my panic. Wha-La it worked. Wow, what a powerful voice that was. Where did that come from? Do we all have it? Only one second and instant noise saying call for help? BA degree Les, you can’t put on a stupid fitting?

The noise is powerful. Don't underestimate the voice that says you can't do something. Trust in yourself. Trust in what you believe to be true. The more you don’t give in to the noise, the less power it has over your life.

3 years later I could be found working as a electronics technician fixing the machines that made the computer chips at Intel. It is truly amazing to me that the “noise” would pop up daily.

Les what in the world are you doing here? You can’t fix this? You haven’t been trained. Those other techs have more experience than you. You are a bookworm not a mechanic.  If you flip that switch the whole line of machines will shut off.

You better stop.Do no harm.Better quit.Why don’t you find another line of work.They are going to find out you know squat.

Yadda yadda yadda. Constant noise in the head. Every day striving to bring me down. Man do others have this noise?

The job description basically was to fix machines you were barely trained to fix. By the seat of your pants you had to fix it. Was the most stressful job I ever had, more so than air traffic controlling

Here I was working on the state of the art machinery. Trying to fix these machines, with little to no schooling on the machines. I vividly remember my first day. Went on call on a clean station. The supervisor was looking at the thing and said to me, I’ve never work on this before. Within 15 minutes he had it up an running.

Maybe 1 month later I could be found underneath a machine looking at all these values. Les you can’t shut that off, you can causes thousands of dollars of damage. “SHUT UP NOISE, it just a simple value. Let’s see it only goes to my machine. Yes, I’m flipping the switch. No explosion….sigh. No one yelling production is down…sign. Another noise successfully shut up.

3 years later, my last year remember working on a wet station.I was the expert on this machinery. Could remember my bosses boss and his boss looking over my shoulder as thousand and thousand of dollars were riding on when I can get this equipment up. The whole line of production was down. “I don’t know, I just got here, could you give me a minute?”

It's a fun game, "Life"...if you learn to follow your dreams and don't let the noise get in your way.

Maybe most of us do need a mentor just to remove all the noise one gets bombarded with?

Yes, life is fun. Realize we all have noise and it can be managed with constant supervision.The key to true greatness in life is overcoming the noise.

Oh, and it never stops. Just this week 5/18/04 was in dialogue with Out of state acquisitions…. Noise, laws, property management, etc. Out of country business proposition… Noise, laws, customs? Buying an existing medical practice… Noise, don’t have a clue about the profession or businesses $200,000 in 3.5 hours from request to cashiers check….Noise, never did it that fast…Completed  Disbursing another $500,000 in 48 hrs…Completed. (no noise…hey getting better, this was actually simple…hmm)

If you hadn’t figured it out by now, I will tackle almost anything. Won’t let noise stop me, however will pass if it does not make sense.

Let me ask you are you letting NOISE in YOUR head stop YOU from being what God truly designed you for in life?

Or you letting NOISE in YOUR head stop you from being a Mother Teresa?

Find you passion, and don’t let it go.

Follow your passion and don’t let your limiting beliefs stop you. Be rigorous in your self-talk. Watch your language that you say to others and yourself. Be around doers in life, not couch potatoes.

Life is too short to be playing small. Shoot for the stars and you will reach the moon.

Les