Financial Planning Stuff You Need to Know » Money Values

Are You Thinking of Changing Your Career?

Chris Long — Mon, 08 Aug 2011 17:41:52 +0000

Perhaps you are wondering what would it be like to do something else for a living? So many questions and doubts are raised. Is it worth the risk? How can you afford to do it? Where would you begin? If the mere thought of actually taking some action is exciting, scary and overwhelming, you are not alone! This is where the right coach can be of immense value.

Coaching is all about transformation. You may hear an inner voice of discontent and you recognize your need to make changes. That inner voice becomes persistent and you decide you want to take action. You are ready.

How can “the right coach” be of value? What does a coach actually do?

Helps you to focus, be honest with yourself and explore options.
Listens deeply and helps you see what is true and right for you.
Challenges and motivates you.
Builds your confidence.
Helps you step back and see the entire picture.
Helps you set goals that match your values.
Facilitates in the process of developing strategy.
Is present in every way – truly caring about what you want.

How do you find “the right coach”? Ask the people in your life if they know of anyone. Google the names of some coaches you have become aware of and visit their websites.

Some questions to consider when choosing a coach:

Do you want an accountability partner? Do you want someone to bounce ideas off of?
Do you need someone to motivate and support you?
Do you need help in creating a game plan?
What would be your desired outcome?

To fully understand if coaching is an opportunity to help you make this transition – please arrange a complimentary call by emailing Diane MacPhee at diane@dmacconsulting.org

Diane MacPhee, CFP is a business coach and owner/president of DMAC Consulting Services, LLC.

Do Something Great and Save Big on Taxes

Chris Long — Mon, 25 Oct 2010 14:43:42 +0000

This post combines my personal and professional interests. I am a former board member and current finance committee member of Sarah’s Circle, a service agency for women who are homeless.

Sarah’s is in the midst of a campaign to raise funds to purchase and rehab a building that will house their daytime service center (currently in a rented space) and provide housing units and support services.

During a recent finance committee meeting I was shocked to find out that gifts to Sarah’s for this project qualify for a 50% state tax deduction. This means that if you are in the 28% Federal tax bracket you can reduce your taxes by an astounding 78% of your gift to Sarah’s for this project! (50% state + 28% federal)

For example, if you contribute $1000, $780 comes back to you meaning that your out of pocket contribution is $220.

Below is some additional information from Sarah’s Executive Director, Kathy Ragnar

“Sarah’s Circle, a 32 year old agency serving women who are homeless has a unique means of raising funds for a new building. The new facility will expand their ability to house, train and support societies most vulnerable women, women who are homeless.

This organization offers a unique tax benefit to those who donate funds. This is not only a wonderful cause to support, but donors also receive approximately 80% of their donation back as a result of a unique state tax credit combined with the federal deduction.

This project has excellent backing – the agency has two top global firms providing services on a pro bono basis. Perkins +Will is providing all the architectural services and Mayer Brown is providing legal services. Additionally, the agency has been awarded a new HUD grant which will not only provide much needed capital, but operating dollars to operate the building once it is up and running.

This is a way for donors to improve the lives of women for years to come, while easing their tax burden in the coming year.”

Sarah’s website is www.sarahs-circle.org

Information of the new building is at www.sarahs-circle.org/ways-to-help/new-home-for-sarahs-circle.html

Having children could be a million dollar decision.

Chris Long — Mon, 21 Jun 2010 17:33:31 +0000

Having children could be the biggest financial decision people make, even bigger than a home purchase. According to the USDA the cost of raising a child to age 17 is $222,360. If you send your child to private school in Chicago that could add an additional $260,000 on top of that. A top private collage? Add another $240,000 and your up to $722,360. If you tack on the costs of buying a larger car or a larger home, or if you hire a nanny for child care, your cost could easily top $1 million.

See the Chicago Tribune Article for more.

Money Bus Serves Over 100 People in Chicago

Chris Long — Tue, 27 Apr 2010 22:01:29 +0000

Well the numbers are in and the Money Bus (www.yourmoneybus.com) served over 100 people in two days in the Chicago area. The Money Bus was sponsored by the NAPFA Consumer Education Foundation, Kiplingers, TD Ameritrade, and FiLife/WSJ. The bus travels the country and at each stop local NAPFA advisors provide free advice (no product sales!!) to consumers. We answered questions about retirement planning, 401ks, credit card debt, college savings, emergency funds, layoffs, foreclosures, mortgages, etc.

Bet On Red!

Chris Long — Thu, 25 Feb 2010 20:27:30 +0000

I’m sure you have seen those mutual funds ads where they brag about their performance. Well I have a new fund that blows most of them away! It’s called Bet on Red — 100% return last year — really! Watch the video for the whole story . . .

Investing – Some Lessons From 2009

Chris Long — Mon, 18 Jan 2010 16:49:07 +0000

2009 was not a year for investors with weak stomachs. After a plunge of 46% from August,2008 through March, 2009, the U.S. markets started rising, recovering almost all of the losses since last August. The same was true for international stock markets. Unfortunately, many investors I spoke with locked in their losses by selling in late February, and then never got back in and missed the 50% rise from March on.

Lesson 1:

When the markets fall by 40% or more in a year it almost always signals we are near the bottom of the market. The major post-WW2 declines have been about 40% (1974, – 37% in 9 months; 2001-2, -35% in 14 months; 2008-9, -46% in 6 months). So once the market has declined sharply in a short period selling will almost guarantee a big loss.

Lesson 2:

Although the market declines are steep and fast, so are the rebounds (1974-5, +45% in 14 months; 2002-3, +47% in 14 months; 2009,+63% in 6 months). Most people who sell at the bottom are also slow to get back in since they are afraid of future declines and miss out on most of the rapid gain.

Lesson 3:

Younger investors should not be soured on investing. Poor market performance in their younger years could benefit them in the long-term. If you are in your 20s or 30s the markets have not seemed to be a great place to put your money. That is not long-term thinking. Your time horizon is at least another 30 years. The lower prices are now, the more shares you can buy and the more room your have for appreciation.

Make Your X-mas Spending Checklist

Chris Long — Fri, 11 Dec 2009 21:52:09 +0000

Even affluent families can easily overspend at this
time of year. Although one year of overspending will
probably not affect your long-term goals
significantly, a pattern of over spending certainly will.
Plus, if you have children think about the messages
and values you will demonstrate to them with your
spending patterns.
Here are some quick ideas to help you stay on
budget.
1. Make an overall budget and then assign
certain amounts to each category (e.g. Presents, Decorations,
Travel, etc.).
2. Have a plan for how you will pay for your holiday expenses before
you spend the first dime. (Hint: borrowing money is not an answer).
3. Assign each person responsibility for a category, (tip – assign the
most frugal to the budget items most likely to be exceeded.).
4. Suggest a holiday grab bag for adults so you are not buying gifts for
siblings, parents, etc. who may not need nor want a gift; or consider
a card exchange only.
5. Put all receipts in an envelope and review them on occasion to see
who has been naughty or nice with keeping to the budget.
6. Resist the urge to splurge, even with all of the sales and media
attention to them. What the media isn’t focusing on is the damage
to your long-term goals that overspending creates, even when you
buy on sale.

Index Funds Make Even More Sense in a Downturn

Chris Long — Mon, 03 Aug 2009 21:21:40 +0000

According to the Wall Street Journal many large institutional investors are turning too index funds after finding that actively managed mutual funds have not performed well during the downturn.

They would rather have the guaranteed lower cost of an index fund vs. the unfulfilled promise of better performance through an actively managed fund.

This is the strategy that I use with my clients. Although some actively managed funds will out perform an index fund the percentage that do is actually less than chance would predict. It is also difficult to predict which managers will outperform and index fund year after year. This is especially true for bond funds. According to Morningstar the Vanguard Total Bond Market Index Fund has outperformed 83% of its peers over the last 10-years.

Index funds charge substantially less than their actively managed peers. A low cost index fund costs about 1% per year less than its actively managed peer. That means that the actively managed fund would have to outperform the index fund by 1% per year just to be equal. That is very difficult to do for almost all managers.

Long & Associates Clients Featured in the WSJ

Chris Long — Tue, 07 Apr 2009 20:34:32 +0000

Recently two Long & Associates clients were featured in an ongoing series in the Wall Street Journal called “Savings Strategies”. In December, 2008 Mike Casner and John Stryker were featured, and on April 7, Jody Feczko and Rob Lukens were featured.

I’d like to publicly thank these clients and the many others who have been willing to open up their financial lives so that others can learn from their experiences.

To Read about John and Mike:

To Read about Jody and Rob:

Is an Upgrade really and Upgrade?

Chris Long — Thu, 06 Sep 2007 15:16:05 +0000

I just read a statistic that most luxury cars are leased. I’m not surprised since many people who purchase cars especially luxury cars can’t really afford them. I guess this is part of the whole upgrade trend.

From $200 jeans, to $6 cups of coffee people have decided that it’s ok to upgrade to more expensive things whether they can really afford them or not. The easy availability of credit cards makes the upgrade lifestyle easy. That is until the crushing debt load kills any hope of achieving any long-term goals.

Of course the upgrade trend didn’t spring up from nowhere. It’s funded by marketers who spend BILLIONS of dollars per year to put ideas into your heads and make you think you came up with them. (I know I used to be one of them).

Now back to cars. I happen to love cars. I subscribe to a few car magazines, read the auto reviews in Consumer Reports and I’m a frequent visitor to the Edmunds.com website. I recently even bought a car and I will admit it was hard to pay cash when I know I could have leased or financed a much more expensive car that could have impressed my family and friends (well at least my parents).

Over time the difference between buying a modest car vs. upgrading and leasing a luxury car is substantial. Purchasing a $25,000 car every 10 years would cost you about $112,000 over 25 years, accounting for repairs and inflation. Leasing a $45,000 car would cost you about $320,000 or almost THREE TIMES AS MUCH! The difference is even more substantial if you were to invest your savings over time.

It drives me crazy when I read postings on Edmunds from people who are leasing their cars saying for $9,000 more over 2 years it was worth it to drive a nicer car. The problem with this thinking is that it is short term. That $9,000 could grow to $72,000 in 25 years. Plus what will the person do when their lease is over? If they do the same thing it will be another $9,000 or more in additional costs.

I now have a pretty reliable system for guessing a new prospect’s net worth before our first meeting. If they drive up in a really nice car, almost inevitably they are not on track to meet their long term goals. The nicer the car the more in trouble they usually are. An old car is usually a good sign that they are quite wealthy. One of the wealthier prospects arrived by city bus.

A fancy car is a sometimes a good predictor of income but not of wealth or ability to meet long-term goals.

Perhaps its time we upgraded the importance of our own life goals and used or money to achieve them vs. purchasing $6 coffee, $200 jeans, and luxury cars.