Chris Miles discusses the myths people buy into in accumulating money rather than “utilizing” money, and how cash flow creates more financial freedom. Listen to learn why this is.
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Posts Tagged ‘Retirement’
Which Is Better Creating Wealth - Accumulation or Cash Flow?
Thursday, April 30th, 2009
What’s Causing Retirement Plans to Fail?
Saturday, March 21st, 2009(This is updated from a previous blog on www.killingsacredcows.)
When I was a “traditional” financial adviser, I would rattle off some assumed 2000 Bureau of Labor Statistics that came out with a longitudinal report that studied where 25 yr olds in 1960 were in 2000. It showed:
29% of 65 year olds were deceased,
66% totally dependent on others or still working,
4% financially independent, and
1% wealthy (By the way, I have never seen any government source confirm these numbers, but I have seen many financial institutions quote it).
The Tragic Truth
The REALITY is much worse! According to the National Centre for Health Statistics, a 25-year old only has a 16% chance of death before age 65, not 29%. Of the surviving, the 2000 Bureau of Labor Statistics:
24.4% of 65-69 year olds were still working,
66% of them depend on Social Security to provide at least 50% of their income (22% are totally dependent).
This means that of the original group, only about 8% are either 50% or less dependent on Social Security or financially independent…at the time of the study. I would bet the majority of this 8% were supported or eventually supported by Social Security to a certain extent.
Furthermore, the median household income for those 65 and older was only $33,802 in 2002. In addition, the 2000 U.S. Census said that this aging population had a net worth of $108,885. However, $85,516 was home equity leaving a measly $23,369 for savings and retirement. If you read my blog on hidden 401(k) fees, you would also notice that the average balance in a 401(k) for 65 year olds (in 2007) was only $60,000. Could you live like that for one year? Two years? How about 25 more years?
Hadn’t more than 8% of Americans implemented some sort of retirement products during their life, like 401(k) and IRA’s, some through financial advisers? Weren’t many of these “Prime lifers” born in 1935 strict savers because of the influence of the Great Depression? What happened?
The Cause
There are many factors contributing to this. For instance, most financial planners will quote some “average” return in the markets that someone can supposedly count on for the long haul. However, the “actual” return often is different. See my blog “The Retirement Titanic” to get more specifics. For example, I illustrate how a positive ACTUAL rate of return of 12% could become a negative return in reality!
The Solution
Get further educated on leveraging the assets you have. One cannot expect to get different results by believing the same things about investing as everyone else. Education is critical to changing your paradigm and taking different steps to create freedom and gain control of your life. Learn more on our blogs and listen to our podcasts to increase your ability to become financially free.
Why Are My Spirits High When the Stock Market Is Down?
Monday, March 2nd, 2009
With the Dow Jones Index currently around 6700 points today, its lowest point in nearly 12 years, I hate to say “I TOLD YOU SO!” Oops, I guess I just did.
However, although I am not a big fan of investing money in mutual fund-based investments, like 401(k)’s, IRA’s, etc, I NEVER want people to suffer heavy losses that compels them to wake up and listen to what we are teaching. Nevertheless, loss does cause us to question our assumptions and explore new, and more effective, possibilities.
I had several clients last year (when the Dow was around 11,000) ask me about what I felt the market would do. I told each one of them that even though it seems irrational (at that time), expect the Dow to tank somewhere near 6000, and quite possibly lower because a Depression IS coming. Some took action while others did not. The ones that took action, even when it hovered around 8500, are smiling much bigger now that they took their own initiative to reallocate to safer funds.
For those that still question whether to get out or what to do, I will have you answer the following questions so you can decide for yourself:
- Do you KNOW what the market will do next?
- Do you keep hearing financial “experts” telling you to stay in for the long haul, although the long haul seems to be getting longer?
- Can you make the markets go up?
- Are you only investing in these because someone, like a financial planner or HR representative at your company, told you it was a “wise” thing to do?
- Will these vehicles REALLY help you retire well? Watch “The Retirement Titanic.”
- Are you “in the dark” about what is the best investment for you?
You are not alone if you couldn’t answer these confidently. Will you wait for it to drop further before you do something? If you have more questions, feel free to comment, email me, or Dale, at cmiles@freedomfasttrack.com or dclarke@theaccreditednetwork.com.
Why Dave Ramsey Doesn’t Help You Become Financially Free (Podcast)
Tuesday, January 6th, 2009A lighter, more humorous topic. To read the previously written blog, click here.
For strategies to pay off debt better than what Dave Ramsey teaches, listen to this podcast!
To get other FREE financial secrets and tips, click here!
Cash Flow Tips Podcast
Saturday, January 3rd, 2009We offer more cash flow tips and details on this related blog we did last Fall. For updated cash flow secrets to get more cash back in your pocket each month, read “7 Secrets to Freeing Up Cash Flow Today” now!
To get FREE tips on this, and other financial topics, subscribe to our FREE weekly money tips!
The Retirement Titanic
Thursday, December 11th, 2008Watch and learn why so many are not able to retire even when they invest the way most people have due to a few financially destructive myths! To see further details why retirement plans are failing, click here. I also recommend reading the book, Killing Sacred Cows by Garrett Gunderson. To read a book review and synopsis, click here .
Why Is Dave Ramsey Not Helping You Become Financially Free?
Tuesday, December 2nd, 2008
Why are so many people NOT financially free?
Is it only because of debt?
Does it only apply to those living beyond their means?
Are there others who have, by most people’s standards, a good amount of money that are still in financial bondage?
Is being out of the financial “rat race” REALLY financial freedom like many are claiming? (Click Here for more on this topic)
Can any amount of money make anyone TRULY free?
Financial freedom is a state of being, NOT a state of your wallet or purse! It’s a choice, not a circumstance! Do you know someone (like your grandparents, parents, friends, etc) that had/has plenty of money and no “debt,” but never wants to spend it and complains about having no money? I have met many of these people who worry more about money than many who survive month to month. I know people who would be Dave Ramsey’s poster children, but have a hard time driving 20 miles because gas prices are more than $1 per gallon!!!
Financial pundits, like Dave Ramsey, have added value to those that are uncontrollable spenders. What about those of us who are not? Can paying off a mortgage and calling into his radio show screaming “We are debt free!” while Dave plays Mel Gibson’s voice screaming “Freeeeeedommmm!” really make me free??? Please! If that’s the case, I’ll sell off my home, rent, pay off my credit cards and auto loan, and then play my Braveheart soundtrack so I can feel warm and fuzzy inside!
The only “tyrant” that threatens our freedom is our own mind, not debt or the seeming lack of money. It’s relative to our perspective. Although financial conditions can affect us, we still choose how we act in that moment. Wise stewardship of our resources will help create conditions towards financial freedom, but ultimately, our perspective determines whether we are broke or free.
To hear more, listen to our podcast on this subject. To hear strategies to pay off debt safer, and potentially faster, than Dave Ramsey recommends, listen to Pay Off Debt Better Than Dave Ramsey.
To receive other FREE financial secrets and tips, click here!
Tips To Increase Cash Flow Productively
Monday, October 6th, 2008The following are tips that one can do to increase cash flow and identify resources more productively to be applied towards your economic well-being and/or Soul Purpose. Remember, that one’s perspective is more important than just going through the motions. The key is discipline to be productive with the money freed up rather than spending it on consumptive or destructive items. Each of these points can be utilized to recapture lost dollars, but can also be abused in a way that could lead to financial misery.
- Track income and expenses and eliminate expenses that are destructive to your human life value and Soul Purpose.This could include overdraft charges, excessively eating out, monthly charges for memberships that aren’t being utilized, etc.
- Look to getting some food items by finding deals from local “grocery gurus.” Warning - do not just buy things because they are on sale. However, if you are going to purchase certain items anyway, then see if you can capitalize on special sales. For those in Utah, the web link for weekly specials is http://www.pinchingyourpennies.com/forums/forumdisplay.php?f=62 (Yes, I do think the name of the website is very ironic considering the conversation).
- Increase tax exemptions. If you receive a tax return each year, increase exemptions to receive it on a monthly basis rather than yearly. Consult with your tax accountant to know what number is optimal.
- Temporarily pay minimum payments on credit cards and other loans. If you are making extra principal payments or anything beyond the minimum payments, identify that as a resource. If you do not know what else could be more productive than paying down high interest credit cards, then please put it towards your credit card payments. If you are paying extra on your loans, be willing to question if that is the highest utility of your dollars.
- Consider stopping contributions to 401(k)’s and IRA’s. This may be an obvious choice considering the volatility of the markets. Most would have been better in money market accounts over the last few years, if not the last 10 years.
- Sell off any unutilized assets. This may be time to clean your clutter and get rid of things that are only taking space but providing no utility in your life. Look to sell these off or donate to increase tax exemptions.
- Get rid of duplicate insurances. If you have life insurance tied to certain loans, it will likely be more cost efficient to get an individual term policy. Most life insurance offered through banks or credit unions are expensive for the coverage and benefit the banks more than the client.
- Consolidate, refinance, or negotiate lower interest rates on loans. Many of us can call our credit card companies and ask if they will lower the current interest rates on credit cards or other loans. Try it! You may be surprised.
For other updated cash flow tips, check out my recent blog on “7 Secrets for Freeing Up Cash Flow Today.”
