Call the A-Team to Rescue Your Finances

The A-Team

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Remember the A-Team? That was an American TV series from the 1980s about a fictional group of ex–United States Army Special Forces personnel who worked as soldiers of fortune, while on the run from the Army after being branded as war criminals for a “crime they didn’t commit”.

I don’t know about you, but the series was “must-see TV” for me. During that time I was in college in Puerto Rico sharing a house with 4 other guys.

“The A-Team” aired every Wednesday at 6:00 PM and we all worked our schedules to be at home and have dinner ready in time to see Hannibal, Face, B.A. Baracus, and Murdoch come to the aid and rescue of those who could not rescue themselves.

I believe we all could use the help from the “A-Team” with the management of our finances. Here is why you and I need these 4 commandos on our side to rescue our finances:

The Face: Templeton “Faceman” Peck

The “Faceman” (or “Face”) was the smooth-talking con man who served as the team’s appropriator of vehicles and other useful items, as well as the team’s second-in-command. He could basically pass himself as virtually anyone.

In order to change the destiny of your finances, you might need to change who you are in some aspects. For example, you might consider yourself useless and easily bored with the details of finances. Reviewing a budget spreadsheet is a good remedy for your insomnia.

But in order to win with money you need to get involved with how you plan to spend it. You don’t have to become a financial wizard but you need at least to know the basics.

Or you might be the free-spender who lives for the pleasure of today and worries about the consequences later. You may have to change into a person which actually is patient and saves to buy what they want. That person can actually distinguish between “wants” and “needs”.

Will you decide to change and adapt your “face” for the good of your family?

The Muscle: B.A. Baracus

B.A. was the team’s strong man and mechanic. Whenever the team ran into some tough customers, B.A. led the fight. When something big needed to be pushed or a vehicle needed to be rigged, Baracus was your man.

In your finances, the muscle comes from having a working monthly budget. Your budget provides your income the strength it needs so you can meet your obligations, save money, and get out of debt. When your budget works, you learn to live on less than you make so your money can do more for you and your family.

Are you ready to apply some muscle to your money?

The Crazy: H.M. (“Howling Mad”) Murdock

Murdock was the team’s pilot and also the resident crazy member of the team. Most of the time, they had to extract him from a mental institution before they could complete their next mission. The team always could use Murdock to try some of the most impossible stunts. He was a great pilot, but crazy enough to try the unorthodox.

Your finances need a little bit of a crazy touch. You could go crazy and have a garage sale this weekend to sell anything that’s really not needed to finish your beginner’s emergency fund. You could become obsessed with e-Bay and Craigslist and sell everything but the children in order to get out of debt.

Or you could go even more insane and cut the cable bill or eating out expenses until you get on a firm foundation with your money. It might sound crazy to you and your friends but guess what: you don’t need credit cards to survive.

How crazy are you willing to get in order to win with money?

The Mastermind: John “Hannibal” Smith

The leader of the team was Lieutenant Colonel/Colonel “Hannibal” Smith. Regardless of the situation, Hannibal had a plan and he always had the confidence that it was going to work. His team did not always understand all the pieces of the plan but they trusted him. His catch phrase was: “I love it when a plan comes together”.

You need to have a plan for your money that will bring financial wellness to you and your family. How are going to get out of debt? When could we buy a house? How are we going to pay for college? How are going to live in our retirement years? What kind of insurance do we need? What’s our estate plan?

Your plan has to be adjusted to your personal needs and reality. But you do need a plan or otherwise you won’t be able to achieve your goals. Work with your spouse to develop your plan. If you are single, seek some wise counsel to layout your goals and how you will achieve them.

Start putting your plan together today so you can quote Hannibal and love when it all comes together.

Which member of the “A-Team” do you need the most on your finances today? Leave a comment and let me know!

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Marriage and Money: You Need a Financial Management System

Couple Working on their Finances together.

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As I have stated previously, if you are married, you need to be working with your spouse on money matters in order to have success.

You should no longer be discussing “yours” or “mine” but “our” money, “our” finances.

When you work together with your spouse on your finances, you are demonstrating:

  • Respect for your Spouse. You are saying that you respect your spouse’s capability and intellect to handle money.
  • Trust in your Spouse. You are saying that you know they have integrity and honesty and can be trusted with money matters.
  • Humility before your Spouse. You are honestly acknowledging you don’t know everything and that you can use some help in dealing with your finances.

When you deal with your spouse with respect, trust, and humility in the management of your finances, you will reach a new level of intimacy in your relationship.

What’s the practical side of working together on your finances? In order to handle your finances well, you need a financial management system.

And the best way to demonstrate respect, trust, and humility with our spouses is to have a system where both you have equal access to the information and equal ability to handle and act on the information.

Now, it is quite possible that one of the spouses routinely handles most of the load of managing the finances (e.g., preparing the budget, paying the bills, etc.). But what happens if that spouse is not available for an extended period of time?

This situation could be due to an illness, being away from the home for work or family matters, or in the worst possible scenario, that spouse dies. What happens then? Can the other spouse pick-up the load?

Again, both spouses need access to all the financial information and the ability to act on that information.

Here are the key elements of your financial management system:

1. How Do We Pay the Monthly Bills?

Your monthly budget should tell you where the money is going before the month begins. However, both you and your spouse need to also know the following with respect to your monthly expenses:

  • What are our monthly bills?
  • When are the payments due for each bill and when are the payments made for each bill?
  • What is the name and contact information for the payees for each bill?
  • How are the payments made (e.g., paid through your on-line banking system, regular check via mail, etc.)
  • How are we tracking monthly expenses?

It does not matter if your bill payment system is the old fashioned checkbook register, an Excel spreadsheet, a software program like Quicken, or an on-line program like Mint.com or YNAB.

It does not matter if it is a combination of some of these tools; the point is that both spouses need the access and the ability to use the system to pay your monthly bills.

2. What are Our Assets and Liabilities?

Besides being able to handle the monthly bills, both spouses need the ability to access the information on all your assets (what you own) and liabilities (what you owe).

You both need to be able to ascertain what your current financial position is at all times.

Assets

You need the documentation on each of these asset accounts listed below. If there is paper documentation make sure you both know where it is stored.

You both should be able to access all the details and statements on the following:

  • Checking and Savings Accounts
  • Investment Accounts
  • Retirement Accounts
  • Medical Savings Accounts (e.g., Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs))
  • Home Appraisals

In today’s world, much of this information is kept on-line, so make sure you both know where to go get the information and how to access it (provider’s web sites, userids, passwords, account numbers, etc.).

Liabilities

It is critical that you also know what your financial responsibilities are at all times.

You need to know what the current balances are as well as the record of payments made.

  • Credit Cards
  • Car Loans
  • Student Loans
  • Personal Loans
  • Medical Bills
  • Mortgage Statements

Again, much of the information today is kept on-line so you both need the access information. But if you also have a physical filing system, make sure you both know where it is kept.

3. Where are our Key Household/Estate Documents?

Finally, both spouses should be able to access these key household/estate documents at all times. Some examples of these documents are:

  • Deed/Title information on your personal home and any other real estate you own own.
  • Insurance Policies (Life/Auto/Health/Home/ID Theft/Long Term Disability/Long Term Care)
  • Tax Returns
  • Credit Reports
  • Wills/Trusts

Regardless of how you implement it, your household needs a financial management system. And if you are married, both spouses should have the ability to access and act on that management system.

Take sometime today to make sure you love each other well by taking the step to create or revise your system.

What is your financial management system? How are you and your spouse sharing the load? Let me know!

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My Summer Reading List

Summer Reading List

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I am looking forward to the Summer for many reasons. One of them is that I expect to have a little more time to catch-up on my reading.

Reading and learning is essential for personal growth. Here are the books that I have on my list. What’s on your summer reading list?

  • Twelve Unlikely Heroes” by John MacArthur. How God commissioned unexpected people in the Bible and what He wants to do with you.
  • 7 Men and the Secret of Their Greatness by Eric Metaxas. This book covers seven biographies of men who experienced the struggles and challenges to be strong in the face of forces and circumstances that would have destroyed the resolve of lesser men. Each of the seven men profiled- George Washington, William Wilberforce, Eric Liddell, Dietrich Bonhoeffer, Jackie Robinson, John Paul II, and Charles Colson- call the reader to a more elevated walk and lifestyle, one that embodies the gospel in the world around us.
  • Debt-Free U” by Zac Bissonnette. In this book the author describes how he paid for an outstanding college education without loans, scholarships, or mooching of his parents.
  • Start” by Jon Acuff. Punch fear in the face and move from average to awesome.
  • No More Mondays” by Dan Miller. Fire yourself and other revolutionary ways to discover your true calling at work.
  • EntreLeadership” by Dave Ramsey. 20 Years of practical business wisdom from the Trenches.
  • One Perfect Life” by John MacArthur. Jesus’ perfect life is the culmination of history and the theme of all Scripture. It’s not surprising that John MacArthur has spent more than half his pulpit ministry preaching through the four books dedicated to that life. You know them as Matthew, Mark, Luke, and John. In One Perfect Life, John weaves the life of Christ into a seamless, compelling, chronologically organized story.

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The Best Way To Catch The Stock Market Upswings

Dow Jones over 15,000 (May 2013)

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Did you catch it? Did you get to ride this week’s stock market upswing? On Tuesday (May 7), the Dow Jones Industrial Average closed over 15,000 points for the first time in its history. If you are new to the topic of investing and the stock market is as foreign to you as a farmers market, don’t worry. I will try to give you the basics.

The Dow Jones is simply an index that shows how 30 large publicly owned companies based in the United States have traded during a standard trading session in the stock market. In combination with other indices it gives us one perspective on the health of the national economy.

It was a big celebration day for Wall Street (commemorative caps were even made) and rightly so. I do believe that a key component of your financial plan should be investing for the future and I believe the stock market is still good place to invest for retirement and for wealth building. Whether  you are new to investing or a seasoned pro, I want you to be ready to make the most of it.

The best way to catch the stock market upswings is to find your balance, learn about investing, pick an investment strategy, and staying consistent with your investing.

1. Find Your Balance

The stock market consistently has ups and downs (you might remember that the Dow Jones got as low as 6,000 points during the 2008 recession). It changes constantly so it reminds of those massive waves that surfers try to negotiate on a regular basis. Now, I don’t surf but I have observed that one of the keys for negotiating the waves is to find a balanced position.

How do you find that balanced position with your finances? There are some foundational steps you need to complete before you start diving into investing:

  1. Get control of your money via a monthly budget.
  2. Pay off your consumer debt (everything but the mortgage).
  3. Save 3-6 months of expenses in an emergency fund.

If you complete those 3 steps above you will be on a firm foundation with your money. You need to invest from a position of strength and not a position of weakness. Build a firm foundation and never, never borrow money to invest.

2. Learn about Investing

As I watch surfers, I don’t think they began by simply jumping in the water and braving the waves. That would be a sure way to get hurt. You need to understand terms, techniques and you need to practice. Most likely you will need a coach to guide you through the learning.

When you are ready to begin investing, learn all you can. You need good information: What’s a stock? What’s a dividend? How do I get into mutual funds? Are bonds or stocks better in the long run? Is it all right to invest in single stocks?

Find someone who is already investing and doing well and ask questions. You can also find a financial planner that is not simply interested in selling but is interested in teaching and helping you to reach your goals. Read about investing via books or good press/blog articles. The more you learn, the more comfortable you will be with investing.

3. Pick an Investment Strategy

Now we are really talking about the core issue. What is it that you are trying to do? I bet if you ask one of those surfers, their strategy for riding the waves is not very complicated because they need to act and react very quickly. Similarly, just like with anything around finances simple and basic is the way to go. You need to make sure you understand it and that you can explain it to someone else.

For example, my investing strategy is simple. In both my 401K and Roth IRA I am investing solely in 4 kinds of Stock Mutual Funds with a long track record (of at least 10 years). A mutual fund is an investment where thousands of people combine their money to purchase a wide diversity of stocks, bonds or other types of investments. The mutual funds are limited to the type of investment shown in their prospectus.

I am avoiding investing in single stocks and I am not investing in any bonds funds. My wife also has an IRA and a Roth IRA and we are applying the same approach to those accounts. This has been my strategy for the last 7 years and I am sticking with it. I have seen good results so I know this can work.

4. Stay Consistent with Your Investing

Did you know that for those surfers to ride the waves, they need to actually be in the water? Sounds silly, right? Investing works the same way. You have to stay in the market and not panic every time it goes down; or get super excited and alter your investment strategy the next time it goes up. If you stay in the market, you will catch the upswing of the market every time!

The market will change. I got a little worried when the Dow Jones hit 6,000 points in 2008 but I stayed the course and I have reaped the benefits. I have also learned to ride the lows. You have to think long term if you are going to invest. If you need the money within 5 years (car replacement, down payment on a home) you are better off saving it into a money market savings account where it will be safe. If you have more time (like for retirement, college, wealth building), then invest the money and leave it alone. Be consistent!

What’s your investment strategy? Leave me a comment and let me know!

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