WHY SHOULD I INVEST 15% OF MY INCOME FOR RETIREMENT?

Nowadays, everyone seems to be an expert on investing. How much you should invest, where to put your money, and when to get out before the value drops. So, who do you believe? What are the right answers? Why does this stuff seem so difficult?

I understand how you feel. The financial industry makes investing way more complicated than it has to be. There is a lot of bad advice out there when it comes to your financial future, and many people get overwhelmed when they’re finally ready to start investing. But there’s an easy approach I use, and it’s a good rule of thumb. Not just for me, but lots of other people.

Here it is: Every month, invest 15% of your gross income into tax-favored retirement accounts.

That’s it. I know it’s not trendy. It won’t make headlines or get you on the cover of a magazine. But it will get you where you want to go—to your retirement dream.

So why invest 15%? Good question. Let’s talk through the answer.

HOW MUCH YOU INVEST MAKES A HUGE DIFFERENCE

The U.S. Census Bureau says the median household income is around $59,000.(1) Fifteen percent of that would be $8,850 a year, or $737.50 a month. Over 30 years, that could grow to $1.6 million, assuming a 10% return. Sounds awesome, right? Who doesn’t want to be a millionaire?

But what if you only invested 10% of that gross income? That would be $5,900 a year, or roughly $492 a month. Invested over 30 years at the same rate of return, that percentage could get you just over $1 million. Not bad. But you’ve lost out on $600,000 you could be used to fund your retirement dream!

What about if you dropped that 15% down to 5.5%—the average personal savings rate in the U.S., including retirement savings and emergency funds? (2) At that percentage, you’re investing $3,245 a year, or around $270 a month. Over 30 years, assuming that same 10% rate of return, you could be looking at $586,256.

I know that’s a lot of numbers, so here’s a quick summary: Investing the average amount could get you about $586,000 for retirement. Choosing to be smarter than that could mean $1.6 million.

Which do you want to do? Yeah, me too.

SOCIAL SECURITY WON’T REPLACE YOUR INCOME

I’ve heard a lot of people say that they’re still counting on Social Security to pay for expenses during retirement. That’s a bad financial plan. In 2017, the average monthly benefit for retired workers was $1,369 a month. (3That’s only $16,428 a year. To give you some perspective, the federal poverty level for a family of two (that’s you and your spouse) is currently $16,240.(4Is that a wake-up call? I hope so.

A lot of people ask me about whether Social Security will be around when they retire. The truth is, I don’t know. Nobody does. Conventional wisdom says the program will stay in place, but the amount retirees get every month could shrink. If that’s true, then you don’t want to depend on it for your retirement income.

YOU’VE GOT SOME BIG EXPENSES COMING IN RETIREMENT

I know what you may be thinking: My monthly expenses will be much lower in retirement. I won’t have to worry about a mortgage because I plan to pay it off before I retire. My kid’s will (hopefully!) have graduated by then, so I won’t be paying for college. My gas costs will go down because I won’t be driving to work every day . . .

Yes and no. Some costs may disappear or drop, but you’ll still have to pay property taxes and insurance and utilities and all those other monthly expenses. Plus, you’ll have one major expense in retirement: healthcare. And that’s a whopper of a bill.

Fidelity estimates that a 65-year-old couple will need $275,000 for healthcare costs in retirement. (5Now that doesn’t include any long-term care costs, which could reach around $138,000 per person. (6) If you’re married, that means you need to be ready to pay over $500,000 for your and your spouse’s medical needs in retirement. Even if you’re healthy now, the Administration on Aging estimates that people turning 65 today have almost a 70% chance of needing some kind of long-term care in their remaining years. (7)

HOW DO I INVEST 15% FOR RETIREMENT?

The first place to start investing is through your workplace, especially if it offers a company match. If your employer offers a Roth 401(k) or Roth 403(b), then you can invest the entire 15% of your income there and you’re done. With a Roth option, you contribute after-tax dollars. That means your money grows tax-free, plus you don’t pay taxes on that money when you take it out at retirement (although the match is taxed). Talk about making investing super easy!

If your employer matches your contributions to your 401(k), 403(b) or Thrift Savings Plan (TSP; a plan for federal employees), you can reach your 15% goal by following these three steps:

  1. Invest up to the match in your 401(k), 403(b) or TSP.
  2. Fully fund a Roth IRA. (If you’re married, fund one for your spouse, too.)
  3. If you still haven’t reached your 15% goal and have good mutual fund options available, keep bumping up your contribution to your 401(k), 403(b) or TSP until you do.

For example, if your company will match 3% of your 401(k) contributions, invest 3% in that account and then put the remaining 12% in a Roth IRA. If that remaining 12% would put you over the annual contribution limit for a Roth IRA ($5,500 if you’re under age 50, $6,500 if you’re 50 or older), max out the Roth IRA and then go back to your workplace 401(k) to finish out investing 15%.

Here’s an example:

If your gross income is %59,000, then 15% of that is $8,850.  Follow me below.

  1. Contribute to your workplace 401k to get your full company match. If your company matches your contributions up to 3%, then you contribute 3% on an annual basis!  3% of $59,000 works out to be $1,770.
  1. Fully fund a Roth IRA. The federal limit for funding an IRA has increased to $6,000 a year.

Since we have invested $1,770 in our 401k to get the match and another $6,000 in our Roth RIA, we have so far allocated a total of $7,770.  But our goal is to invest the entire $8,850.  Remember?  What do we do with the other $1,080 we are to invest?  Where does it go?

  1. We go back to the company 401k and invest what is left of 15%. In this case, it is $1,080.

So, when we are done, we have invested a total of $2,850 (for a total of 4.8% of our gross) into our 401k and $6,000 (which is 10.1% of our gross) into our Roth IRAs.  The two contributions together make up 15% of our gross income.

I want you to notice two things: First, you need to invest 15% of gross salary, not your take-home pay. Second, do not count the company match as part of your 15%. Consider that extra icing on the cake!

SUPERCHARGE YOUR INVESTING

Whether you invest through your workplace plan or an IRA, you need to set up your account for automatic withdrawal—preferably with a percentage, not a flat amount. Your money will go straight from your paycheck to your retirement account. You won’t even see that money. That way, you won’t be tempted to skip investing to spend that money on something else.

Automatically withdrawing a percentage of your income from your paycheck also increases how much you’re putting away over time. For example, if your annual income is $59,000, you’d be putting away $8,850 a year. Let’s say your salary increases by about 3% a year for 10 years. At the end of that decade, you’d be making just over $79,000 a year and investing a little over $11,800 annually. See how your contributions increase? That’s a good thing!

So, what does that get you in the long run? If you keep investing 15% of your income no matter how much you make, you could reach the $2.1 million mark in 30 years, assuming a 10% return. If you increase your lifestyle instead of investing the raises you get, you could have $1.68 million in 30 years. Now, I know, that’s still a lot of money. But you could miss out on over $420,000 for your dream retirement! That amount would put a dent in any medical expenses you might encounter in your golden years.

IT’S TIME TO TAKE ACTION

Listen to people . . . what happens next is up to you. Your financial future is in your hands, not someone else’s. You start on the path to your dream retirement the moment you take that first step. Knowing this information won’t change your future if you don’t act on it.

Investing 15% might feel like a big step. But whether we like it or not, the clock is ticking—and now is the time to act! If you want to go from floating with no real plan to on track and investing in your family’s future, you have to create a plan and stick to it.

If you still have questions about investing, talk to your financial advisor. If you don’t have one, check out a SmartVestor Pro. These are the people I use to help me with my own investing, and they want you to succeed with money as much as you do!

Ready, set, go!

Written by Chris Hogan from ChrisHogan360.com

AUTO MECHANIC’S LIENS

A “mechanic’s lien” is a statutory lien used to secure payment of provided labor, service, material, equipment, or storage.  Most people have heard of mechanic’s liens in regards to repairs to their vehicles.  Have you ever wondered what your rights are?

CAN A GARAGE KEEP MY CAR UNTIL I PAY THE BILL?
Yes! If you authorized the repairs and do not pay the repair costs on time, an automatic lien can be placed on your car.   A “lien” means that the garage can legally keep your car until you pay for the repairs or it can sell the car if you don’t pay.  A garage must meet certain restrictions before an automatic lien applies.  The garage must comply with the Nevada law on written estimates discussed above.  Further, the garage must provide a written statement of charges and notify you in person or by registered mail.  They must also notify all other persons claiming an interest in the vehicle. (NRS 108.272(1)(b)) The notice must contain:

  • an itemized claim showing the sum owed and when it became due;
  • a brief description of the vehicle;
  • demand that the amount claimed to be paid on or before a certain date;
  • a statement that unless the claim is paid on time, the vehicle will be advertised and sold by auction at a specified time and place.

The written statement of charges must be sent to the last known address of the registered owner and any others known to have an interest or claim in the vehicle. This statement must include:

  • The name and signature of the person authorizing or requesting the repairs;
  • the total charges;
  • an itemization and description of all parts used to repair the vehicle, showing the charge for each part;
  • the charges made for labor;
  • a description of all other charges.

a garage that places a lien on the vehicle without providing this notice is guilty of a misdemeanor.  (NRS 487.690)  The garage may not advertise the sale of the vehicle until 10 days after the delivery or anticipated delivery of the lien notice. A sale advertisement must then be published in a newspaper located wherever the sale is to be held.  The ad must run weekly for three consecutive weeks. It must describe the vehicle, state the name of the owner or person on whose account it is held, and state the time and place of the sale.  The final sale cannot be held less than 22 days after the first publication of the notice.  (NRS 108.310 (3)).  After the sale, the registration division will issue a certificate of title to the new owner.  Note that at any time before the sale of the vehicle, you may satisfy the lien by paying the full amount claimed by the garage. (NRS 108.320)  The garage may keep the money from the sale to satisfy the lien amount.  Any extra money must be returned to you upon your request. (NRS 108.310 (4)) If the garage violates any of the above requirements, the owner/manager may be guilty of a misdemeanor.  You may file a complaint with the District Attorney’s office (702-671-2501) or the Nevada Attorney General’s office (702-486-3420).  Further, NRS 108 allows you to file a “motion for an order to show cause” with the district court when you believe that the “notice of lien” is frivolous and was made without reasonable cause or that the lien amount is excessive.  You may file this case by yourself or you may hire an attorney.  You have the right to contest the validity of a lien claimed by a garage, (NRS 108.350), but if you have already paid the garage the disputed amount to get your car back, you may still file a small claims action in Justice Court for up to $10,000. Copies of all estimates, receipts, and any other documents should be kept for use in court.

I DON’T WANT TO GO TO COURT OR COMPLAIN TO A GOVERNMENT AGENCY. DO I HAVE ANY OTHER WAY TO SETTLE A DISPUTE WITH MY GARAGE?
Yes!  You may file a complaint with the Better Business Bureau (BBB) of Southern Nevada.  After you file a written complaint, the BBB as a neutral third party contacts the garage to attempt to resolve the dispute.  If that effort does not resolve the problem, the BBB may offer the services of a professional mediator, and a professional mediator can be obtained through the Neighborhood Justice Center located at the Regional Justice Center.

4 LESSONS FROM MY MILLION-DOLLAR INVESTING MISTAKE

 

I’ve done my share of stupid things.

That’s one of the reasons I’m so passionate about helping people. I want them to avoid mistakes and poor decisions that could trip them up as they build wealth for the future. And let’s be honest—there are a lot of ways you can set yourself back five or 10 years with one minute of stupid.

So, let me share a story of one major mistake I made and how you can learn from it. Hopefully, it will serve as a lesson to stay laser-focused on your long-term wealth-building plan.

MY MILLION-DOLLAR MISTAKE

I was newly married. My wife and I were both working and making good money. I decided to risk $2,500 to dabble in some single stocks (bad move, I know) in a company called AOL. Before we knew it, the stock had more than doubled! Of course, our success got to our heads, so we bought more stock—to the tune of $10,000. In one stock. We thought we were winning, so we kept adding one dumb mistake onto another.

That $10,000 grew to $25,000. That was a huge amount for a newly married, young couple. We thought we were sitting on a proverbial gold mine! Even though that money was in a single stock, it was a large piece of our financial picture. Talk about unbalanced!

Rather than get some direction from a financial advisor, I thought I knew enough to manage my investment. I firmly believed that if my stock had grown that much already, it had the potential to go through the roof! What could go wrong?

A lot. A lot could go wrong. Before long, there was a small correction in the market, and my stock took a hit. Rather than cut my losses and run, I decided to double down. (Another bad move, I know.) I doubled my losses instead. In the end, I lost about $25,000 before I got out.

I did the math. If I had invested that $25,000 in a mutual fund with a 10–12% return, that money could have grown to $168,000 in 20 years. If that’s not painful enough, that same $25,000 could have meant $1.1 million by the time I retire.

Listening to my buddy and investing in a single stock cost me $1.1 million.

Even now, that stings a little.

WHAT YOU CAN LEARN FROM MY MISTAKE

The only thing that eases the pain of that loss is knowing that other people can learn from my mistake and avoid rash decisions that could cost them—literally. Here are a few things you can take away from my time in Stupid Land:

  1. DON’T INVEST IN SINGLE STOCKS.

I can’t emphasize this enough. You’re just asking for trouble. I know you hear news stories of people who invested early in some previously unknown tech company that’s now worth billions. And you think, Why not me?

Listen up, people: The chances of that happening to you are astronomical. Like finding a needle in a field full of haystacks. Basing a large part of your financial future on those odds is stupid. Plain and simple. I can’t be any clearer than that.

  1. DON’T FALL FOR A GET-RICH-QUICK PLAN.

My buddy convinced me that this was the deal of all deals. He said there was “no way I could lose,” and the early strong returns convinced me he was right. I fell for the myth of quick wealth. It lulled me into a false sense of security, and it took huge losses to shake me out of that slumber. I got impatient and greedy. And I paid the price.

If these overnight success opportunities worked, you’d hear about them every day! But you don’t hear about them—because they don’t work. There’s no such thing as a “sure thing.” Building wealth is a slow process. It takes time and stubborn persistence to stick to a proven plan—balanced investing in mutual funds. It’s not flashy. It won’t make headlines. But it works—if you stick to it and don’t get sidetracked.

  1. DON’T GIVE UP WHEN YOU MAKE MISTAKES.

When I was looking at an empty bank account after the AOL stock plummeted, I had two choices: I could wallow in self-loathing and regret, or I could pick myself up, learn from the experience, and get back on track. You have the same choices.

Notice that I said when—not if—you make mistakes? That’s because you will make mistakes. Hopefully, they’ll be minor ones. But when those happen, you can stay where you are—or you can move forward. And I guarantee that you won’t ever build wealth by reliving your past mistakes.

  1. GET ADVICE FROM THE EXPERTS.

One of the reasons I lost so much money is because I didn’t get the help of people who knew more about investing than I did. I thought I could handle it. My young pride didn’t think I needed help. If I had talked to someone—and if I had listened to their wisdom—I might be $1.1 million richer in retirement.

I can’t dwell on my past, but I can choose differently in the future. That’s why I meet with a financial advisor regularly. These people know to invest inside and out. That’s the world they live in. An advisor can keep you away from risky decisions and steer you in the direction of wiser ones (if you’re willing to listen). They can rebalance your portfolio, suggest changes in your investments, and explain tax implications you might face.

Everyone makes mistakes, but some mistakes can be avoided. No matter how much you have in the bank, you need to stay focused. Keep your eye on your goals. Don’t let anyone or anything distract you from your financial goals. Your future is too important to lose sight of the finish line.

If you want to learn from others who have built wealth the right way, get my book, Everyday Millionaires: How Ordinary People Built Extraordinary Wealth—And How You Can Too. We surveyed over 10,000 millionaires to discover the habits and practices that helped them hit seven figures in net worth. Their answers might surprise you!

 

Written by Chris Hogan from Chrishogan360.com

WHAT IS KEEPING THE MIDDLE CLASS FROM BECOMING MILLIONAIRES?

Middle-Class Millionaire.
No, that’s not a typo. And it’s not a myth or a fairy tale.
A middle-class millionaire is a real thing—or, rather, a real person just like you and me.
Despite what you’ve seen on the news or social media, middle-class people can become millionaires. In fact, anyone can—yes, even you. I have the stats to prove it. And I have a plan you can follow to get there.
HOW DID MOST MILLIONAIRES GROW UP?
This year, my team released the findings from the largest study of millionaires ever conducted—more than 10,000 people. One of the things we discovered is that most millionaires didn’t grow up in wealthy families. Rather, 8 in 10 millionaires we surveyed said they come from families at or below the middle-class income level.
When we break that down, 48%—almost half of all millionaires—described their parents’ household as middle class, 27% described it as lower-middle class, and over 4% of them described it as lower class.
Let those stats sink in. Half of millionaires come from middle-class homes. And one in four come from the lower-middle class. America, this is your wake-up call. The American Dream is alive and available. You just have to work for it.

HOW TWO PEOPLE LIKE YOU BECAME MILLIONAIRES
As a part of our research, we asked these everyday millionaires to tell us their stories. Here’s one such story that proves your background doesn’t matter:
Thomas grew up in the Midwest and started with literally nothing. In fact, he remembers only having two shirts and two pairs of pants for a long stretch of his childhood. He came from a dysfunctional family with an alcoholic father and a mother who struggled with mental health issues. As a result, he was in and out of three or four different foster homes as a child, and both of his parents died far too young. Those early years taught him two important lessons: First, he learned that drinking alcohol would lead him away from future success, and second, he knew that he did not like being poor. Despite coming out of poverty, loss, and hardship, Thomas had a clear vision for where he wanted his life to go, but he knew he’d have to work for it.
Thomas went to college in the 1960s and graduated with a math degree before being drafted into the Vietnam War. After serving four years, he returned to school to pursue a Ph.D. in math, which he planned to use working for the Department of Defense. Instead, Thomas got sidetracked by a new passion: teaching. He taught math in a few different colleges for his entire career, spending thirty-seven years in education before retiring with a net worth of $2.6 million.
Did Thomas come up with a new mathematical breakthrough that revolutionized education? Did he use his math skills to make a killing in Vegas? No. Thomas made his millions slowly and steadily, working in a job he loved and designing a life that allowed him to build wealth on his own terms. What was his secret? He says he stayed away from debt, paid for everything he bought with cash, worked extra hours, and made wise investments. Sophisticated stuff, huh?
I know what you’re thinking: Hogan, this guy built his wealth decades ago, when the economy was better and the cost of living was lower. You know what I call that? An excuse.
But just to show you that his story isn’t an exception, let me tell you about another everyday millionaire:
Larry came from humble beginnings. His parents were Wisconsin dairy farmers who had never gone past the eighth grade. They were hard workers who hated debt—and who taught their children to hate debt, too.
Becoming the first person in his family to graduate college, Larry left the dairy farm and began a thirty-five-year career in insurance. Throughout his working years, Larry kept his spending in check, just like his parents taught him. He avoided all forms of debt except a mortgage.
He and his wife lived well below their means throughout their marriage, making saving a priority from Larry’s first full-time paycheck. Even when he was only making $5,500 a year early in his career, he still prioritized his saving and managed to save $100 a month. When he got a raise, he increased his savings. When he got an annual bonus, he saved it. When his company introduced the 401(k), Larry maxed it out. He never played around with debt, and he never got distracted by risky investments that others tried to push on him. He worked hard, stuck to his plan, drove old paid-for cars, and didn’t pay any attention to what other people had.
The end result? He retired early at age fifty-five and has a current net worth of over $4.2 million. Now, he gets to travel, play golf and tennis several times a week, visit his children and grandkids whenever he wants, and enjoy long walks and bike rides with his wife.
Did you notice the similarities in their stories? They didn’t let their family upbringing stop them. They took control of their finances and determined to live, work and save on their own terms. And both of their stories are, well, ordinary. These millionaires are everyday people—just like you and me.
HOW TO BECOME A MILLIONAIRE ON ANY INCOME
So, how can someone who didn’t grow up wealthy become a millionaire? As the stories showed us, there is a familiar pattern. Here’s a quick outline:
1. GET OUT OF DEBT.
Think of debt as a ball and chain wrapped around your neck, slowly choking you. I know it’s a violent visual, but I want you to understand just how bad debt is. You have to hate it enough to get rid of it. Period.
2. FOLLOW A BUDGET.
The research revealed that millionaires stick to the budgets they create. Did you catch that? Millionaires budget their money! They also use coupons when they shop. In fact, our research found that 93% of net worth millionaires use coupons all or some of the time when shopping. Those are my kind of people!
3. INVEST CONSISTENTLY.
The millionaires we interviewed said their company’s retirement plan was the number one contributor to achieving high net worth. As their income increased, so did their monthly contributions to their retirement plan. They invested money month after month, year after year.
4. STAY FOCUSED—FOR A LONG TIME.
Here’s the bottom line: becoming a millionaire is a marathon, not a sprint. On average, our survey participants hit the million-dollar mark at age 49. If they started working right out of college, they kept saving, budgeting, and working toward their financial goals for almost three decades. Staying focused for that long takes discipline.
I know these steps aren’t flashy. They won’t grab headlines. But they work. I know thousands of people (about 10,000 of them!) who will tell you it worked for them. The process will work for you, too.
Are you in? Let’s do this!
If you want to learn more about building wealth, check out my new book, Everyday Millionaire: How Ordinary People Built Extraordinary Wealth—and How You Can Too. You’ll find lots of other stories about people just like you who hit the million-dollar mark. You’ll also learn about other myths that are keeping you from reaching that goal yourself. So, get your copy today!

Written by Chris Hogan from ChrisHogan360.com

 

3 MILLIONAIRE MYTHS THAT KEEP YOU FROM BUILDING WEALTH

Written by Chris Hogan from ChrisHogan360.com

 

 

Somehow, our culture has come to believe some myths about millionaires that just aren’t true. We’ve been fed a lie and swallowed it like cotton candy at the county fair. And that makes me mad.

Why? Because I want you to reach your financial goals. And if you believe the millionaire myths floating out there, you don’t think hitting that seven-figure milestone is possible—and you won’t even try.

But those millionaire myths are just that: myths.

You and I have been lied to. You can become a millionaire. You can enjoy financial security. You can reach your money goals. Don’t believe everything you hear or see.

Let me share some millionaire myths and tell you why they’re absolutely wrong.

MILLIONAIRE MYTH #1: BIG RISKS LEAD TO BIG BUCKS

One of the biggest myths out there is the idea that you have to take big risks to make big money. If you believed every commercial or online article, you’d think the path to wealth is paved with start-ups, Bitcoins, day trading and single-stock investments.

Think about it. How many late-night promos focus on a small investment that “guarantees” a big payoff? How many day-trading offers do you get online? I don’t think I’ve ever seen an infomercial about investing in a Roth IRA or a 401(k) as the best way to build wealth. That’s because it rubs against our instant-gratification culture that says you can get what you want when you want it. We don’t want to wait the 20 or 30 years it takes to build wealth the slow way.

But the majority of millionaires didn’t strike it rich by buying into an “opportunity.” They didn’t find a gold mine that nobody knew about. They invested in their company’s 401(k). Every month. Every year. For decades.

Building wealth is a marathon, not a sprint. And slow and steady will win the race every time.

MILLIONAIRE MYTH #1: BIG RISKS LEAD TO BIG BUCKS

Most TV shows and movies propel the myth that successful people got a leg up by having a degree from a fancy school or by having a high-paying job. That couldn’t be further from the truth. I know millionaires who worked for decades as janitors and teachers. And I know CEOs and high-power executives who have debt in the seven figures.

One look into the bank accounts of celebrities will prove my point. Michael Jackson. Nicolas Cage. Stephen Baldwin. Kim Basinger. Curt Schilling. Burt Reynolds. MC Hammer. All of these people blew through their money and found themselves in deep financial holes. (1)

Their stories are living proof that it’s not about the amount of money you make. It’s about what you do with the money you earn. If you live debt-free, if you put away 15% of your household income every month, and if you do that for 20–30 years, you’ll find yourself sitting on a pile of cash come retirement time. But it’s up to you to take those steps.

MILLIONAIRE MYTH #3: WEALTH WITHOUT WORKING

There’s an old commercial with a punch line that said, “We make money the old-fashioned way. We earn it.” And guess what? That’s absolutely true for everyday millionaires. Very few wealthy people inherited the bulk of their money. I’ve never met a millionaire who got their money from a lottery ticket—and I’ve talked to a lot of millionaires.

The millionaires I‘ve met at events and talked to on my show didn’t have some long-lost uncle who made them wealthy. They didn’t go hunting for food, strike oil by accident, and move to Beverly Hills. Instead, they tell stories of hard work, perseverance, sacrifice, and focus. Those are the real ingredients for building wealth. There’s no accident, luck or inheritance involved.

Here’s the truth, so listen up: Myths are excuses. If you think becoming a millionaire is due to outside forces, then you don’t have to take responsibility for your financial future. You can put the blame on something or someone else. You can sit back and wallow in frustration when wealth doesn’t land in your lap. But that doesn’t cut it, folks.

Your ability to become a millionaire is dependent on one thing: you. It’s not up to an inheritance, a big executive job or a fancy degree. You have to set your goal, create your plan, and do the freaking hard work it takes to hit that goal. This is the land of opportunity, not the land of “do nothing and expect to become a millionaire.”

But here’s the bottom line, and it’s good news: You can become a millionaire. I’ve met with and talked with thousands of people. People who turned $1 million in debt into $1 million in net worth. People who took smaller vacations and bought used cars. People who focused on their goals instead of the neighbor’s newest toy. People who didn’t listen to millionaire myths.

The big question is this: What do you believe about becoming a millionaire? Because what you believe determines what actions you take. And your actions will determine your future.

Believe in yourself and believe in your abilities. Believe in hard work and the power of time and compound interest.

Then get to work!

Between The Red Lines

Although I am typing this session of Money Matters on a laptop in the Denver airport, I grew up in an era when this was not always as practical as it is now.  When I was in high school, my English assignments were not typed, but they were written out on notebook paper (yeah, we actually were required to know how to write).  Do you remember standard or college rule notebook paper with the blue horizontal lines and the red vertical line down the side?  I understand the purpose of the blue horizontal lines.  They were there to make sure the writing was straight on the paper.  Without those blue lines, everybody’s writing would have an angle, a slant, or an arc which would make it completely frustrating to read.   But those red lines; are they really necessary?  I had a problem with this.  These lines were to provide margins.  The standard margins on notebook paper are 1 inch on each side and you were to only write between the margins.  Why was I being restricted from writing from one edge of the paper to the other?  I didn’t need margins.  I could do more without them. If I was able to use the whole sheet of notebook paper, I could get more done with less paper.  I would be more efficient, right?

I used to think I would be better off without margins.  I see things a little differently now.  Margins are a good thing.  Yes, they are restricting, but they are meant to be.  Margins provide structure, and structures introduce order where there is chaos.  The structure margins create to bring a sense of “alignment” that is badly needed but is missing.  Think about someone you know whose finances are a wreck.  I would be willing to bet (and I live in Vegas) that they spend without margins or their margins are a way to close to the edges.  I know, everybody thinks more money would fix their money problems, but, although popular, more often than not, it just isn’t true.  Everybody wants more money, but what are they doing with the money they already have?

Financial margins are a must if you plan to be successful with money.  How else will you know who much you spend on the essentials?  How will you know who much you can save?  How will you know how much you can afford to invest?  How can you ever expect to be consistent with anything if you don’t have defined boundaries?  You need a plan. A plan that is built on systems and defined by structures or margins.  And these margins are created in a budget.  That’s right, the dreaded “B” word rears its ugly head again. I get it, just the word “budget” is draining and brings up thoughts of mind-numbing pointless boredom.  While I admit, it can be that way, it doesn’t have to be.  Budgeting allows you to see, on paper, where your money is going.  They allow you to tangibly see what you are actually doing with your money on paper.  Now, you might not like what you see, but sometimes the truth is ugly.  But you still need to see it.  There is a simple test you can perform to give you an idea of how well you are doing handle money.  Ask yourself, some simple questions. How much money do you spend on food?  How much do you spend on bills?  How much do you spend on paying off debt?  Now, you may be able to answer those questions easily, but here come two or three questions that most people with money issues cannot answer.  Ask yourself, where is all this written down?  Can you account for all the money you earn?  Is there any money that is wasted or unaccounted for?  At your current rate, what is the exact date you will be debt-free? Uh-oh.  I heard a hush come over the readers.  Those are the tough questions to answer because an honest answer demands a different level of stewardship and greater attention to detail.  But those are the questions you need to be able to answer if you want to win.  A written budget gives you a picture, albeit in numbers, to answer these tough questions.

A life lived without margins is surprisingly unfruitful and often ends in tragedy.  The same is so with our finances.  Our spending habits need structure, and this structure actually turns out to be more enabling than restrictive.  A structured plan, or budget, helps bring clarity to a financial situation.  And with clarity, financial progress can be made.  Haven’t you compassed this mountain long enough? (A reference to Deut. 2:3 for you bible scholars).  It’s time to move forward.  It’s time to take your dreams and turn them into goals (goals are nothing more than dreams with a deadline).  It can be done, but it will take introducing a different level of order and discipline to your finances.  We serve a God of order (1 Cor. 14:33), and he expects us to do everything decently in order (1 Cor. 14:40).  Shouldn’t this apply to our finances too?  It’s time.  It’s time to make financial progress.  It’s time to break down and do the uncomfortable things we dread to get the results we want.  Are you willing to make that sacrifice?  Are you willing to do it God’s way?  God Bless.

Legacy Group

Financial Empowerment

The Magic Lottery Ticket


In an effort to raise money, many states have adopted a clever, but legal, plan that tantalizes people to pay just a little amount of money for the chance to win a lot of money in return. In common cases, the winner of the prize money must produce a specific combination (which is usually a numbers combination) to claim the prize money. But if no one comes forward with the winning numbers, more and more people continue to invest with the hopes that they will be the winner and pot grows. Just recently, in California, the pot to be claimed reached over $1.6 billion (that’s with a “B”). Amazing isn’t it? With no effort, no work, and no skill, you can instantly become a billionaire!

People who are having money issues may see this as a chance for them to get back on their feet. I mean, they don’t have to win the whole lottery; just winning a small portion can be life-changing. Well, if you don’t know, buying lottery tickets is a terrible, terrible idea. It is so bad; I don’t think it can even qualify to be considered an investment. The ticket buyer has absolutely NO control over the outcome and the chances of winning are almost zero. It is an absolute waste and a sure guarantee to lose your money.

But, do you know what is even worse than losing money in the lottery; developing a mindset that causes one to chase after the “winning lottery ticket”. What do I mean? Well, in the case of the lottery, I’m speaking of a mindset that starts with desperate people thinking the right combination of numbers, will instantly make their money problems disappear like magic. They think the right combination will be the “quick fix” to all their money problems. It’s just a matter of finding the right combination. So they forgo good judgment and Godly stewardship principles in search of the quick-fix magic lottery ticket.

I’ve noticed, as people, we love the spontaneous and the sensational. It’s exhilarating! Think about it. In sports, the most exciting plays are the big plays that change the momentum of the game in a few seconds. In baseball, everyone loves the home run. The tide of a game can be changed with one swing of the bat. In football, it is the long run or deep pass for a touchdown. It gets everyone out of their seats. Well, the same goes for money situations. We are drawn the lure of the immediate; even us Christians. We Christians do the same thing except we tend to use more “holy” words. For example, instead of searching for a combination of inputs or numbers for a winning lottery ticket, we will try a different combination of prayers. But a fallacy is a fallacy, irrespective of the language in which it is spoken.

If we want the blessings of God, we have to be willing to do it God’s way. And His way is outlined in His Word. When it comes to honoring God we cannot rob Him of what is His (Mal. 3:6-10, Proverbs 3:9-10). When it comes to our debt, we should try to get out of debt ASAP (Proverbs 6:2-6), and plan carefully to avoid debt (Luke 14:28-30) because we become servants to our creditors (Proverbs 22:7). When it comes to managing our money, we have to pay our bills (Romans 13:7), save for that proverbial “rainy day” (Proverbs 21:20), and carefully plan our next money move (Proverbs 21:5). And when we are ready, when we have paid our debts, we can then invest (Ecclesiastes 11:2-4). It’s not enough to just tithe and expect God’s blessing to dwell over our finances; there is so much more to God’s financial plan for our lives than just tithing. If you want ALL His blessings, you have to follow ALL His instructions. And I can guess what some of you are thinking. You are saying to yourself, “It will take me years to get where I want to be financially. I don’t have time to do it that way!” Well, it may take you years. But when are you going to trust what God has outlined in His Word? His way is better than you praying for the magic lottery ticket. Your way isn’t working. Aren’t you tired of doing the same things and seeing no results (Deuteronomy 2:3)? If you want to see a change, you have to change. It may take time. But you need that time. Why? Because the financial character you need to manage the wealth God has for you is forged in time. Time is expensive, so the process is not cheap. But nothing of any real value is cheap. It will cost you more time and probably some frustration as you break some bad money habits, but it’s worth it. Take God at His Word and do it His way. Your blessings are on the other side of your obedience. God Bless.

Money Matter-What Do You Mean by Traditional and Roth?

For far too many people, by the time they start having serious discussions about retirement, they are already behind.  They haven’t saved properly, or there is no solid plan forward, or they just haven’t executed the plan they have in place.  And getting behind (because you know, time waits for no one) causes people to try to “make up for lost time” and they become more susceptible to “get rich schemes”.  Well, if get rich schemes worked, everyone would be rich! That is why the last two articles have focused on the two most popular retirement planning vehicles of our time, 401ks and IRAs.  Both have their advantages and disadvantages, but here we explore and contrast the two major options that may be available to you and try to help you determine which one is best of you.  We are going to compare traditional 401ks and IRAs with Roth 401ks and Roth IRAs.

The traditional 401ks and IRAs allow a person to pay into their retirement without paying taxes on the money they contributed into the plan.  Sometimes, these types of contributions are called, “before-tax” dollars or “pre-tax” funds.  Not being liable for the taxes on the contributions reduces the amount of taxable income to the person pays less in taxes for a given year.   This translates to less taken out of your employment checks and more spending money in your pocket.  These contributions are invested in an account gaining interest (hopefully for years) and can grow to a substantial amount of money!  Meanwhile, thousands are saved in taxes during the contribution years.  But there is a catch, and it’s a big catch.  When the money is withdrawn from the account, it is taxable.  All the money is taxable, the contributions and growth!  So, those years of contributing without paying taxes are made up on the back end; at retirement.

Roth 401ks and Roth IRAs allow a person to pay into their retirement, without any immediate tax breaks.  These contributions are commonly referred to as “after-tax” dollars or “post-tax” monies because the taxes have already paid on their contributions being put into the plans.  And just as before, the money is invested and over years, it can grow to be a sizeable nest egg to be used at retirement.  But here is a nice advantage; when the money is withdrawn for the account, there are no taxes due!  Because the account was funded with Roth, or “after-tax” dollars, the contributions and the growth are tax exempt at retirement.

So which option is better?  Traditional plans? Or Roth plans?  Well, ask yourself the following:  Would you rather pay taxes ONLY on the contributions to the retirement plan, or would you rather pay taxes on the contributions AND the growth?  That’s a silly question! Everybody wants to pay as little in taxes as possible.  Who wants to pay more!  Besides, nobody knows what the tax rates will be in the future and I don’t want to have to worry about it when I am retiring.  That is when I’m going to need the money I saved.  And remember, after years of consistent investing, the majority of the money in a retirement plan will be growth from the investments, not contributions.  So why would I want to taxes on all that growth if I don’t have to?  These points make Roth plans so popular and my personal preference!  But, for some, the advantage of larger “take-home” checks is too good to pass up!

Retirement plans with Roth options look better for long-term investing, but traditional options are not bad and should not be ignored if Roths are not a viable option.  The important thing is to do something!  Start early, it’s never too early.  I tell my younger co-workers they should have started thinking about retirement their first day on the job.  Why?  Well, because according to an article the Business Insider [1], most Americans spend more time planning vacations than retirement.  And separately, true wealth, the kind of wealth espoused in the Bible, takes many years to build.  And most going into retirement, have worked hard enough to have a nice nest egg for their years after leaving the workforce, but if it is not properly planned, there will be a lack the funds to enjoy the golden years as they are envisioned.  Hard work and poor planning don’t translate to riches; in the game of life, you don’t get an “A” for effort.  So take some time now to plan your retirement strategy so you can maximize the opportunities God has given you.  Isn’t that what a good steward would do?  God Bless.

[1] Americans Spend More Time Planning Vacations Than Retirement

Libby Kane – https://www.businessinsider.com/americans-plan-vacations-over-retirement-2014-6

401ks for Dummies

I have been working for the same company for over 15 years. On the first day of starting my new job, I remember feeling overwhelmed by the amount of paperwork I was asked to sign and choices to make. I felt ignorant because I knew what I was doing was supposed to be important, but I didn’t know what I was doing. It was a lot! There were so many options; dental plans, vision plans, insurance plans, beneficiary choice. I remember being offered the option of participating in the company 401k pension plan. Once again, I knew it was a good thing, but I didn’t know who good it can be! Well, as I matured and became more educated on 401ks, I’m glad I started when I did.

So, what is a 401k? A 401k is a retirement saving plan like an IRA, but the 401k is offered by an employer, but not all employers offer this option. The name “401k” actually comes from the section of the tax code in the IRS regulation that gave birth to these plans which began to take their familiar form in 1978. At first, 401ks were looked upon as “poor substitutes” for the traditional pension plan Americans were accustomed to having. But now, they are the preferred source of retirement savings for most Americans.

401k plans came to usurp pension plans as the most popular retirement plan for a simple reason. Pension plans are generally expensive for an employer because traditional pension plans often pay out guarantee amounts to a qualified employee-sometimes these payouts are for life. And employee wouldn’t have to be very involved as the employer would handle most, if not all, of the investment choices. Today’s 401ks place the burden of saving for retirement on the employee. The employees are responsible for choosing their own investments from a selection of investments offered by their employer. The employee also has the power to change investments, increase, decrease, or cease contributing to the plan at their discretion. Today’s employee needs to be more aware to be as successful as the pension holder of yesterday.

401ks have some excellent benefits that contribute to their fame. To name a few:
First, just like IRAs, there are tax benefits with 401ks. The money within a 401k can grow tax-deferred (meaning the taxes are to be paid at a later date) or tax-free depending on options made available by an employer. But, in either case, both are advantageous to the investor.
Secondly, there is a lot of potentials to put money away from retirement and the limit keeps rising. The federal limit for 401ks in 2019 has risen to $19,000 a year! That’s a lot of money!
Thirdly, like an IRA, there is no limit to the value of a 401k, nor is there any limit to the number of 401ks a single individual can own. However, an individual is limited to one 401k per employer but may have multiple 401ks through multiple employers.
Fourthly, unlike pensions, 401ks are not managed by the employer, but they are operated by large financial custodians such as Fidelity, Merrill Lynch, Charles Schwab, etc. This means, that if the company offering the 401k plan goes bankrupt, your investment is protected.
And lastly, many employers offer an “employee match” with their 401k plans. An employee match is where the company agrees to contributes to your 401k. Yep, that’s right. Some companies give their employees free money for their retirement.

As great as 401ks are, they do have their restrictions. Some of the major ones are:
401ks have limited investment choices that only include stocks, mutual funds, and bonds (yuck!).
401k plans vary drastically between employers. One company may offer an “employee match”, while another may not. One company may offer great performing stocks or funds, while another may not. It really is up to the company.
Similar to IRAs, the investments in 401ks ARE NOT TO BE USED until the investor is at least 59 ½ years old. Investments withdrawn before 59 ½ are subject to a penalty for early withdrawing.

401ks are one of the best ways to get a good start on planning for retirement; especially if a company offers an employee match. Other than excessive debt which needs to be rectified, I don’t know why someone would not take advantage of their employer’s 401k matching plan. It’s literally free money! I was listening to the Dave Ramsey radio show when Chris Hogan, one of the hosts, claimed that a survey of over 10,000 millionaires revealed that about 78% of those surveyed have retirement plans such as 401ks. Even millionaires (who are thought to be wise with their money) take advantage of these government-sponsored retirement plans. Why would you not?