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Can Having Debt Actually Be a Good Thing

While most in Americans equate Cinco de Mayo to a day to celebrate with some margaritas and Mexican food, what marked this important day in Mexican history took place at the Battle of Puebla on May 5, 1862 in Veracruz, Mexico.


In 1861, Mexico was in financial ruin after years of internal strife, and the new president, Benito Juarez, was forced to default on debt payments to European governments.
In response, France, ruled by Napoleon III decided to use the opportunity to carve an empire out of Mexican territory. Late in 1861, a well-armed French fleet stormed Veracruz, landing a large force of troops and driving President Juárez and his government into retreat.


The battle lasted from daybreak to early evening, and when the French finally retreated they had lost nearly 500 soldiers. Fewer than 100 Mexicans had been killed in the clash.
Although not a major strategic win in the overall war against the French, the success at the Battle of Puebla on May 5 represented a great symbolic victory for the Mexican government and bolstered the resistance movement.
So what should we take from this brief story?


For starters, we can always find a way to turn something into a party if we try. Many people outside Mexico mistakenly believe that Cinco de Mayo is a celebration of Mexican independence, which was declared more than 50 years before the Battle of Puebla. For many Mexicans, May 5 is a day like any other: It is not a federal holiday, so offices, banks and stores remain open.


More importantly, it reminds us to be responsible with the use of debt. Too many have fallen prey to the consumer debt trap and struggle to get out of it. With more than 2 million Americans carrying a credit card balance of more than $20,000 with some just making minimum payments, it may take decades to reduce this burden and start growing their wealth.


Instead the focus should be to establish a strong emergency/opportunity fund (of at least 3-6 months) so you can handle unexpected changes that come your way and not require you to go into unnecessary debt.


Having debt can be a good thing if it’s the right kind…the productive kind.


Productive liabilities are attached to a corresponding asset that provides an increase to our cashflow now and in the long-term. Real estate is an excellent and simple example of this. Using liabilities wisely means never borrowing money for personal consumption unless it indirectly contributes to your ability to produce (e.g. need to purchase a car to get to work). There’s a big difference in having debt and being in debt.


By building your emergency/opportunity fund and focusing on securing productive liabilities, you’ll be positioning yourself for greater wealth and prosperity while also avoiding some angry creditors knocking down your door.



Can Gratitude Raise Your Net Worth

“Acknowledging the good that you already have in your life is the foundation for all abundance.”

– Eckhart Tolle, A New Earth

As part of my morning routine, I’ve started to write down things I’m truly grateful for in my life.  The normal things come to mind such as my family and our loyal dog Lucy.

However, I end it with some of the simpler things in life we can take for granted such as the air we breathe and even access to an ice cold beer (you can trade out for your beverage of choice).

I’ve found this habit to benefit me mentally, but can showing gratitude really have a positive impact to our financial wealth?

According to a research study published June 2014 in Psychological Science, when people feel grateful, they make better financial decisions. Being in a state of gratitude made participants more likely to have the patience to save for a higher return on their money.

Best yet, the study demonstrated that gratitude helps people delay gratification and save more money effortlessly – without having to strive for extra willpower.

David DeSteno of Northeastern University’s Department of Psychology led the inter-disciplinary research project, entitled “Gratitude: A Tool for Reducing Economic Impatience.” The study’s aim was to weigh how various emotions affected people’s ability to make better financial decisions by choosing to receive a greater amount of money in 30 days versus a lesser amount immediately.

In the Gratitude study, adult participants were given a choice between receiving $54 now or $80 in 30 days. While the dollar figure was modest, the rate of return was impressive – a monthly return of 48% or an annualized return of 577.78%!

Researchers discovered that those who put themselves in a grateful state of mind had a noteworthy increase of patience and self-control!  Not only were the participants in the state of gratitude more likely to wait 30 days to receive the $80, the results also showed that the more gratitude the participants reported feeling, the more willing they were to wait for the larger return!


“Be Thankful, Save More… Gratitude Helps us Reach Financial Goals” declared Psychological Science. “A sizable body of research shows that people tend to discount the value of future rewards in favor of short-term gratification, but a new paper… finds that thankfulness triggers patience and a willingness to hold out for greater monetary gain.”

So go ahead and be more grateful for what you have.  Not only will you feel good, but it can help you reach your long-term financial goals.


By whose financial rules are you playing

“Whenever you find yourself on the side of the majority, it is time to pause and reflect.” Mark Twain

As I reflect on my childhood and compare it to what my children are going through, it’s easy to see so many differences. Clearly technology has impacted our lives in such a profound way in the way we communicate, learn, enjoy, and manage our lives.

I still reminesce about the days of young when we’d be more outside than inside and be playing with physical games instead of digital ones. One game that always stood out to me growing up was “The Game Called Life.” It’s described as the “classic board game that breaks down an entire lifespan into a series of choices and chance.” You got to raise a family, deal with job changes, and even play the stock market to speculate with your money…good times!

In real life (especially related to our finances), the stakes are much higher and understanding the rules of the game of finance are vital to your success.

What rules are you playing by? If you’re not using your own, you’re likely following someone elses, and it may not be for your benefit.

If you’re not careful, you may be dealing with individuals and institutions who:
● Want your money
● Want it systematically
● Want to hold onto it as long as possible
● Want to return it little by little

One clear example of this is with qualified plans (e.g. 401k). Money from our paychecks automatically are directed to financial institutions so they get it first before we do. This happens over long periods of time accumulating money with the promise of tax savings (what direction do you think taxes are going?) while dealing with a lifetime of fees and is typically tied to the volatility of the market.

Consistent saving of money is a good thing but by using this approach we reduce the control of our money since there is a penalty + taxes to access the money before 59 1/2. Lastly, when we’re in retirement and desire to use our money, we’re told we can only access 3-4% per year to ensure it lasts long enough. Also, we don’t want to pay the taxes, so we keep most of it in the account even longer.

Does this sound like a sound strategy? Would you rather have more control and access to your money throughout your lifetime (not just in retirement) while reducing the risk associated with market volatility and future tax rates? To do so, you need to learn a new set of rules which puts the control back into your hands as opposed to leaving it to others to benefit.


Building Your Financial Foundation

Have you ever taken the time to visualize your future and what you want it to look and feel like?

What would you like to be doing every day and who do you want to spend time with?

If you don’t take the time to think about the most important things in your life, you’ll likely defer your dreams and passions, start heading down the road of regret, and not make the impact you truly desire.

There’s a great book called The Top Five Regrets of the Dying: A Life Transformed by the Dearly Departed. According to author Bronnie Ware, the five most common regrets expressed by people in their final days are below:

I wish I’d had the courage to live a life true to myself, not the life others expected of me.

I wish I hadn’t worked so hard.

I wish I’d had the courage to express my feelings.

I wish I had stayed in touch with my friends.

I wish that I had let myself be happier.

Are you seeing a pattern?

Fortunately, you have time to address these and other things that may be preventing you from living a more fulfilling life. Wouldn’t it be great to have no regrets when you sit down to write your memoirs, or just take stock of your life in your golden years?

Having a life of purpose—free of regret– pertains to our finances as well. I know what you’re thinking: “more easily said than done.” But, having a clear picture of where you are now with your finances and where you want to go, will enable you to live the life you’ve always dreamed of.

Many people come to see me when they’re at a financial crossroads in life. Usually they start asking me what they should be investing in or how much to put into stocks. Before we go down that path, however, I urge them to get their ready-cash situation squared away.

I recommend having a good chunk of your money in safe, liquid areas that you can tap at a moment’s notice. I know many successful people who have significant net worth, but they’re actually “cash poor.” That’s because all their money is tied up in investments that aren’t very liquid—i.e. they can’t get their money out quickly.

Why you need two kinds of ready cash

You really want two types of ready cash available: One type is for emergencies and one is for opportunities. The emergency fund should have 6 months of living expenses available at all times. It can be used for unexpected medical expenses, car repairs and major household repairs, etc. The opportunity fund can be used to take advantage of opportunities that land in your lap unexpectedly—say a limited partnership, a privately held business or a classic car comes up for sale. But if you don’t have liquid cash at the ready, you can’t take advantage of those opportunities.

The best place I’ve found to store cash is in a participating cash value whole life insurance policy. Imagine earning three to four times what banks typically pay, plus it’s tax-deferred (tax-free if accessed properly), with guaranteed cash value build-up, a tax-free death benefit, and access to the funds with no questions asked? Cash value whole life is the optimal place to store safe money for both emergencies and opportunities until needed. In times like today with a lot of uncertainty, there are bound to be opportunities for those who are prepared.

Guaranteed Financing and Protection

In addition, the cash value built up creates a guaranteed financing arm so that you can borrow from the life insurance company whenever you want for whatever you want. There are no applications, credit checks and outside of the interest rate, you control all the terms of the payback. Therefore, you can borrow someone else’s money while yours continues to compound with interest inside the policy.

Of course since it’s life insurance, you still get the protections for your family in the case of an untimely death and the proceeds are delivered tax-free to your beneficiaries.


You mom probably told you never to put all your eggs in one basket. Even if she didn’t know that much about investing, she cared deeply about you. To discuss how diversification can best be utilized for your financial and retirement plan, schedule an appointment today Book an appointment.


Biden Tax Hike will be severe

I ran across this article I thought you must see. There’s still so much uncertainty surrounding the economy, a vaccine, and the election. However, it’s our responsibility to keep abreast of what may come so we can properly prepare and withstand any significant storms that come our way. I’ve heard a number of CPAs describe it as Americans headed for an iceberg.

Check out this article from the WSJ earlier this month that outlines what tax changes may be coming to our doorsteps as early as next year. Maybe it’s time to get prepared by adjusting strategies.

Click HERE to view and download.


Biden Tax Hike will be severe – Round 2

With the Democratic National Convention in full swing, I thought it would be good to send this message around again. It’s hard to know what the future will hold but many signs point to rising taxes in the future. For some this could equate to a sizable portion of your wealth and income directed toward taxes. Is it your plan to work half your week just to pay for your taxes?

I ran across this article I thought you must see. There’s still so much uncertainty surrounding the economy, a vaccine, and the election. However, it’s our responsibility to keep abreast of what may come so we can properly prepare and withstand any significant storms that come our way.

Check out this article from the WSJ earlier this month that outlines what tax changes may be coming to our doorsteps as early as next year. Maybe it’s time to get prepared by adjusting strategies.

Click HERE to view and download.

Also, check out this quick 5-minute video that describes the looming challenges some will face in retirement if taxes do rise as many predict. The time to act is now before the window of opportunity closes shut and you’re left with fewer options.


Be the Bank by starting a Family Bank

Those who have succeeded before you have done so because they followed a plan, and you can do the same thing.

As Tony Robbins says, “Success leaves clues.”

Taking notice of the clues are a good thing, however that’s not enough.  Taking OWNERSHIP of your situation, making a PLAN, and taking ACTION is the only way to bring your dreams to life.

I recall back in my childhood I wanted to be like Mike.  For those who are basketball fans (and even those who are not), you know I’m referring to Michael Jordan.  His natural skill and talents were undeniable, but he still had to have the mindset, work ethic, and drive to push himself to greatness.  We might not have his athletic ability, but we can all learn about how he continually pushed himself to reach his maximum potential.

As it relates to our financial lives, what’s one industry that we consider successful, understands how money works, and could be a good clue to help you successfully build wealth?  Well, banks of course!

Banking has become a part of everyday life for most Americans.   Where does all your money go once you’ve earned it (well after the IRS taxes their initial cut)?

That’s right, your bank account.  Massive dollars flow through the banking industry each day and a lot of wealth is stored in bank accounts earning very little in interest.  It can’t even keep up with the reported inflation rate which is essentially causing your wealth to erode each year.

And what do banks do with the money stored with them?  Well, they are certainty not sitting on it earning nothing.  They understand the importance of keeping money moving to produce more wealth;  they are just doing it with other people’s money…our money.

What if you could take over the banking function for your own family’s wealth and recapture massive wealth that would have gone to these third parties?  What if you could create your own Family Bank that would give you the control to finance anything in your life while also providing funds future generations to thrive?

The Family Bank is proven strategy that some of the wealthiest of families have used to generate massive wealth and perpetuate it for generations.

And you don’t have to be an executive at a bank or a Rockefeller to benefit.

Take this free, confidential self-assessment test to get you started to owning your financial future and creating your own Family Bank.

Additionally, you can download a free guide, “The Family Bank:  A Foundation for Taking Control of Your Financial Future” by clicking HERE


Be the Bank by starting a Family Bank

A successful executive reached out to me recently for some guidance about his financial plan. By most measures he earned a VERY healthy income, had a generous health plan, a well-funded 401(k) and a burgeoning investment portfolio. But he wasn’t feeling all that wealthy because most of this money was tied up in risky assets for which he didn’t have much control.

Yes, his volatile assets seemed to be performing well when measured over the course of his lifetime. But, every time he was thinking of accessing his money for major purchases or investments, a market correction or other sudden drop in the value of his assets made it too hard to justify “cashing in some of his chips.”

By the way, this executive’s situation was not that unusual. In today’s extremely low interest rate environment, when so-called “safe dollars” are earning next to nothing, many people feel they have no other place to earn a decent return other than in risky assets.

Just know there are better options.

Wouldn’t it be nice to know you have some control over your financial outcome regardless of what the financial markets and economy are doing? As shown below in the Hierarchy of Wealth model, the more control you have over your assets and investments, the less risky your financial plan needs to be. This is where the concept of the Family Bank comes into play. It’s a proven strategy for maximizing control over your wealth.

By committing a sizeable portion of your wealth to a Wealth Maximization Account™ (WMA) your money grows moderately tax-free AND can be accessible any time for making investments. Since the WMA is essentially money you cannot lose, it is one of the best ways I know for successful people to boost their wealth and income substantially.

After I mentioned the Family Bank model to the executive I mentioned above, he immediately saw a better way to protect his wealth and allow it to grow income in assets that he (not outside forces) could control.

You don’t have to be an elite executive to utilize a Family Bank to take back control of your wealth while protecting your most precious assets. Take this free, confidential self-assessment test to see if a Family Bank is right for you.

Additionally, you can download a free guide, “The Family Bank: A Foundation for Taking Control of Your Financial Future” by clicking HERE.


Be Curious

The mind that opens up to a new idea never returns to its original size – Albert Einstein
When some people reach their goal and “arrive” they tend to fall back and say, “I’ve made it!”, and then not stay focused on behaviors that got them there in the first place.

They may feel that they have gotten so knowledgeable or skilled in an area that they don’t need to continue to hone their craft or learn anything additional.

That can be a dangerous position especially in the fast-paced life we live and the uncertainty that we still experience.

Part of the journey for our lives is to constantly challenge ourselves to become better so we can provide more value to others around us.

Having a curious and growth mindset can help us do just that.




Avoiding Wealth Transfers Can Significantly Improve Your Financial Life

“Risk comes from not knowing what you are doing.” Warren Buffet

We’ve all heard the philosophy that to obtain higher rates of returns and wealth we must take on more risk. What if you could improve your financial life significantly while taking on lower risk just by learning new strategies?

One of the strategies focuses on eliminating or reducing the wealth transfers that are occurring in your life. You likely are unaware of them, and they are oftentimes unnecessary. They can come in the form of losses, taxes, fees, and use of your money. The largest wealth transfers can be found in the way we pay for our house, how we manage investments, how we fund qualified plans (e.g. 401k or IRA), how we pay for college, how we pay for major capital purchases like cars, and how we pay for various insurances.

One simple example is term life insurance. Financial entertainers like Suze Orman and Dave Ramsey swear that it’s the only way to go. Let’s take an example of a 45 year-old male purchasing a 20-year term insurance policy for $2000/year providing $1MM of death benefit.

The reason most suggest buying term insurance only is that it’s cheap. Well, there are no deals in life insurance. The reason it’s cheap is that the risk to the life insurance company is small. In this example, there is a high probability the insured will outlive the term policy costing over $40,000 over the 20 years. In addition to the actual cost of the premiums, the insured loses the ability earn with those dollars during the period which adds another $69,439 of opportunity costs…ouch!

Take the premium and opportunity costs through the survivor’s life expectancy (earning a modest return), and the total cost amounts to $235,143 over this timeframe. The “cheap” term insurance policy has ended up costing much more than expected.

One final part of this story is the death benefit. Because the insured outlived the policy, the $1MM death benefit is never realized by the surviving spouse. After the insured passed, the $1MM would have grown to $1.28MM through the survivor’s life expectancy and when added to the lifetime cost of the premiums, the total cost reaches a staggering $1.51MM over their lifetime.

Unfortunately wealth transfers can occur in various places in our lives. To eliminate or reduce them requires you be open-minded to new principles and strategies that go against the conventional wisdom.