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Avoid these 2 common financial mistakes to live a more stress free life.

 

These two common financial mistakes lead to a greater sense of uncertainty and a more stressful life. The Life You Can Afford to Live is designed to provide you with tools to lead the best life possible. So, naturally we wouldn’t want you to miss two of the most common mistakes that we see people make in their financial life.

 

2 Financial Mistakes

 

Most often when someone speaks with authority on a subject its because they’ve had personal experience within the subject matter. Certainly true in this instance. I am bringing you this message from a point of I’ve been there and didn’t enjoy it and didn’t even get a t-shirt. Fortunately, my experience with this was early in my business life therefore the results weren’t catastrophic. However, the stress and tension that resulted taught me valuable lessons.

 

My goal is to provide you with enough information for you to know when to ask for help. We certainly can’t get to specific in this format but you should be able to glean enough that you know whether to raise your hand or not. Our team stresses these points throughout our process so we are well equipped to answer any questions that may surface.

 

The 2 Common Financial Mistakes to Avoid

 

1. Not Creating Contractual Wealth

Contractual Wealth is when someone else has a legal obligation to you. Contractual wealth also means that you have recourse if they do not fulfill their contractual obligation. This type of wealth provides you with a higher level of certainty and predictability. Certainty and predictability provide you with a more stress-free financial life.

Before sharing examples of Contractual Wealth building tools lets look at its counterpart, Statement Wealth. Statement Wealth is the most common form of saving and investing. Likely due to ease or someone lacking in knowledge of alternate investment options. The premise of Statement Wealth is that you save or invest into vehicles in which you have little control over the outcome as well as any recourse should it not have your desired result. Common examples are 401(k)/IRA Plans, Stock Portfolios, Mutual Funds, ETF Investments and Savings Accounts.

Some examples of Contractual Wealth include:

Secured Bonds – Mortgages – Rental Real Estate – Commercial Real Estate – Annuities – Life Insurance – Reverse Mortgages – Private Lending with Collateral – Asset Care Plans – Business Ownership – Grantor Retained Annuities

 

Click here for a quick 2 minute video explanation of Statement Wealth vs Contractual Wealth

 

2.  Not Creating Tax Free Income

Mark Twain once said, “the only certain things in life are death and taxes”. So true, but one thing Twain failed to mention is that Tax Rates are always changing. You certainly can’t ever count on paying the same tax rate. In an effort to reduce or even eliminate the risk of Higher Tax Rates we want everyone to take a more intentional approach towards creating Tax Free Buckets of money. The ease and allure of Tax deferral is great and we want you to have some funds in that environment, but not solely.

 

Particularly Tax Free money helps you to manage how and where you withdraw money from during retirement. Thus, creating the aforementioned predictability and certainty that reduces stress in the Golden Years.

Some examples of Tax Free Investments include:

Real Estate – Municipal Bonds – Life Insurance – Roth IRA – Roth 401(k) – SLIRPS – Some Captive Strategies

 

Hopefully, this will give you the ability to AVOID these two common financial mistakes. I’ll close with a couple of questions.

Have you addressed these two financial mistakes in your own plans?

Would you like help in avoiding these pitfalls?

 

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Congratulations to Robert Kiyosaki on reaching the 20th anniversary of his revolutionary book Rich Dad Poor Dad. Certainly myself and all of our clients have benefited from the wisdom within this book!

 

Kiyosaki Congratulations Opening Image

 

If you haven’t had the chance to read the book; Clearly I would recommend this as a first step in your Financial Education. If you aren’t a reader, Robert and The Rich Dad Companies have created numerous avenues for you to learn. You may want to purchase some of the videos or even a Board Game, Cash Flow and Cash Flow for Kids as other ways to learn from his valuable insight.

You can follow this link to a Blog Series that I wrote years ago highlighting some of what I learned from the original Rich Dad Poor Dad book. Visit YouTube to watch my personal Thank You message to Robert and Kim for this book and congratulating them on their years of success.

If you are looking for someone to work directly with on coaching you through some of these concepts in Real Estate Investing and/or Personal Financial Planning feel free to reach out to me directly, connect through social media channels in the sidebar, or visit Drive Planning On-Line.

Happy Advicegiving

November 20, 2016 — 2 Comments

The Thanksgiving and Christmas holidays are, by far, my favorite time of the year. There is cheer in the air and an overall feeling of generosity. Being in the financial field for the past 20 years I have also learned that this is the time of the year when advice is handed out most freely.

So take this as a word of caution for this “Advicegiving Season.”

Most of this advice is well intentioned however often unsolicited. It typically happens when the large meal of the day is finished, politics has been exhausted and the football games are winding down. Now enter the “rich uncle”, you know the one, everybody has one. (And they aren’t always rich) I can say everybody has one regardless of your economic situation or even knowing you. The rich uncle or relative is the guy that likes to tell you all of his huge successes throughout the year, whether they are real or not.

It almost always starts with a philanthropic tone of, “you should get into _________.” It starts this way so that everyone in the room feels like, wow! he is looking out for me or I am getting an inside tip. Then this person drones on and on about how well it has done. If it were to stop there I probably wouldn’t be even mentioning this non-event. Unfortunately, it doesn’t always stop there.

As I mentioned being in the financial field; Now I get to hear about all of these huge successes in the weeks following each of the holidays. It has happened repeatedly for the past 20 years. Which is both great and unfortunate?

It’s great to hear about these ideas/investments because I love to hear new ideas. Great because there are things out there that genuinely successful people do that I want to know about and be involved. Trust me, I certainly don’t claim to know it all and I also spend a great deal of time each year researching and learning anyways.

The unfortunate part is when it derails a financial plan that was totally on the right track. Unfortunately many of these proclaimed investment ideas aren’t always entirely true or even understood. Never does the afore mentioned rich uncle take the time to understand if his idea, be it good or bad, is appropriate for the season of life of the recipient or fits in to their overall goals.

So this holiday season take the advice and be gracious. However, I would caution you to think through who is giving the advice. Have they been successful? Are they in a different phase of life than you? Are their values in line with yours? Most importantly make sure that you overlay this advice with your well-coordinated plan to ensure that it fits into your families’ hopes and dreams.

Best of luck this Advicegiving season! I would encourage you to stick with throwing the football with the kids after lunch.

 

Do you have that Uncle? Let us know, maybe it would be even be fun to tag them on twitter or facebook as you respond:) 

 

Happy Holidays!

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