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Archives for March 2023

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How Creating Multiple Accounts or Savings Allocation Can Provide You with Funds When You Need Them

Our bet is you have never heard the term squirrel account. A buddy of ours once commented that we seemed to have funds for different reasons. He dubbed them “squirrel accounts” and it is a term that we have used ever since.

Now before you think we have gone off the reservation let’s outline a few challenges that have happened to us in the past and situations that have happened to those we know.

  • You had an unexpected car repair bill for $323
  • The garbage disposal at the house went out and you need $175 for a new one plus maybe a few extra bucks to have someone install it
  • Your pet needs to go to the vet and your pet insurance will not cover 100%
  • It’s now winter and you realize that the coat from last year has holes in it and is beyond repair

We think you get where we are going here. In life there are unexpected expenses that come up. This can greatly impact your monthly spending. You might have to decide if you are going to eat Ramen for 3 months or put the unexpected expense on a credit card.

We invite you to the magic of squirrel funds! These precious little funds provide you with funds when you need them while you store money (nuts) away in them on a regular basis.

If this sounds somewhat familiar we covered “how to hide money from yourself” in a different post. Today we are going to take it to the extreme and outline in even greater detail how to make this system work for you.

Why Should I Have Squirrel Piles Can’t I Just Have One Backup Fund for All Expenses

This is a common question we get when someone finds out about our squirrel pile methodology. Squirrel piles help with more than just unplanned expenses. They empower you to have money when you need it for items that you might not think about on a daily basis.

When you have all of your money in one account you might not be saving enough for say car repairs or you might not realize you have money set aside for clothes as it’s blended together with your pet emergency fund.

This methodology is designed to provide you freedom to spend money not to leave you a prisoner of a bucket of money in reserve that you can’t touch as you fear you won’t have enough to help with expenses should you or a loved one lose a job.

Decide How Many Squirrel Funds You are Going to Have

Now that we have you on board with the squirrel pile methodology let’s start breaking it down.

Step one in the new world of setting up your squirrel piles is to decide how many you are going to have. Let’s look at squirrel funds that we have either had ourselves or that we have encouraged others to adopt.

  • Bike
  • Clothes
  • Car Repair
  • Car Mods
  • Fun Money
  • Out of Work or Reduced Hours
  • Gift Fund
  • Medical Bills
  • Appliance Repair or New Appliance
  • Backyard Furniture
  • Golf Clubs
  • Pet Care
  • Car Insurance

Looking at this list you might be thinking “wow these two have totally lost it” or “this sounds insane”. We understand this might not be for everyone however what this method provides is having funds when you need them for expenses that you might not have planned for in advance. It’s especially helpful for unexpected expenses that happen on an infrequent basis.

Before going to the next step look at the list above one more time and select 2 or 3 that you might have encountered in the last 12 months where you had to either dig into an emergency fund or put onto a credit card.

Allocating Funds To Your Squirrel Accounts…You Are Now Like a Squirrel Always Preparing For Winter

Part of the magic of the squirrel accounts is that you are perpetually putting nuts away for winter. This might seem crazy however if you can stay with us for just a little bit longer we promise this will make sense.

Let’s look at how you might allocate funds to these accounts.

Squirrel Fund Monthly Amount Year One Squirrel Fund Year Two Squirrel Fund
Gift $25 $300 $600
Car Repair $35 $420 $840
Appliances $20 $240 $480
Pet Care $12 $144 $288
Furniture $25 $300 $600

Another beauty of the squirrel account allocation system is it’s made up of smaller amounts of money on a monthly basis. Each contribution is about the same amount as one would spend on eating lunch for two or a week’s worth of Starbucks (we promise we love Starbucks and we don’t pick on them).

Over time these smaller amounts of money really add up. In the chart above you can see that after two years you start to amass larger amounts of funds that can really help you tackle larger purchases with much greater ease.

There are online banks that allow you to accomplish this kind of saving set-up quite easily. One of the banks that we have used to do this is SoFi where they have a feature called “Vaults” and you can set-up all sorts of squirrel accounts. Who knows maybe one day a bank will set up a feature called “squirrel accounts”

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Hide Money From the Person Who is Most Likely to Sabotage Your Goals…You

It sounds harsh to say that the person most likely to sabotage your financial goals is you however it’s the truth.

Growing up when it was time to buy squirt guns Jamey always had more money for a better squirt gun than I did. Why? You see he was more disciplined and didn’t sabotage his “summer self” by buying excessive items like book marks and erasers at the book fairs. 

How does this relate to today and your financial goals? We are going to outline a process that will allow you to have money when you need it and it will prevent you from sabotaging yourself. 

Whether you need a squirt gun or want to take a mini vacation we are going to make sure you can hide money from yourself without putting it underneath the mattress.

Online or Internet Banks Make it Easier Than Ever to Set-up Ways to “Hide Money”

There is a certain magic to not being able to get your money right away. Internet banks have a few advantages over traditional banks. Many offer higher interest rates on savings and many have great online web and phone applications because they were effectively born on the Internet.

There are  many online banks that you can select from. A few of these online banks are Ally, Captialone, and SoFi. To make this strategy that we are going to outline work we recommend using these online banks in conjunction with your traditional bank or credit union. If your Internet bank is your primary bank it will still work, it will just require slightly more discipline.

Features of Online Banks to Hide that Money

Captialone lets users set-up multiple savings accounts all with no minimums. SoFi has a feature called vaults. Both of these features will allow us to accomplish the desired goal of hiding money from ourselves.

There are a couple of differences between these two features that are worth noting here.

  • Accounts – this is exactly what it sounds like. Capitalone lets you open multiple savings accounts. For each one you get to name the account, determine ownership (aka if you share it with someone), and you get an account number. This type of set-up is best if you want to connect other banks or institutions to an account. For example if you want to regularly contribute to a mutual fund from a specific account this structure and set-up is best.
  • Vaults – This is a feature of SoFi. What they allow you to do is set-up different allocations of your money. You get to see them in different allocations however they all exist under 1 account number. For example if you were saving money for a mini vacation, a new set of golf clubs, and some new clothes and you didn’t want separate account numbers this is your preferred set-up.

Putting These Features to Work to Hide Money From Yourself

Let’s be as direct as possible. When you have cash in hand or money that you can easily access from a debit card it’s harder to resist temptation for buying that item you saw while shopping late at night.

Using the features of online banks we want you to set-up vaults/accounts that hide money. Let’s look at some ideas you could set-up vaults/accounts for below.

  • Hobby
  • Clothing
  • Coffee
  • Mini Vacation
  • Vacation
  • Car Repairs/Future Car Down Payment

To make things slightly more tangible let’s put some numbers behind all of these items that you might spend on an annual basis and how you can hide money from yourself on a monthly basis.

Vault/Account Annual Spend Monthly “Hide” Amount
Hobby $1,000 $50
Clothing $1,200 $100
Mini Vacation $750 $60
Coffee $1,200 $50

You might be wondering “who spends $1,200 on coffee on an annual basis”. If you visit Starbucks 5 days a week and spend $5 on each trip you are spending $1,250 in 50 weeks with the caveat you don’t go to Starbucks while you are on vacation.

Using the table above as an example let’s look at the rationale for each one. In some categories we aren’t hiding all the money as we will be using it more regularly and in other cases we are hiding all of it to have more discipline.

  • Hobby – Whether you golf, do legos, ride bikes, running, or flying kites hobbies cost money. In most cases there are regular items you need for your hobby that come on a monthly basis and others that aren’t regularly occurring. We recommend you set 50% of your hobby budget away monthly in a vault/account. That way when you are in line for a larger purchase you can transfer money down from your Internet bank to your traditional checking.
  • Clothing – The reason we set all of the money in this category away monthly is we are making the leap that you…well have clothes right now. So setting this aside monthly will allow you to go on a mini shopping spree down the road or a really big one farther down the line. It may also prevent you from buying clothes you don’t immediately need
  • Mini Vacation – Much like clothing you aren’t on vacation now so setting it all aside till you reach your predetermined amount makes sense.
  • Coffee – If you really want to take this to the next level the $50 you keep monthly you can put right onto your Starbucks card. That way you can use it till you are out. You will then have to seriously consider how bad you want Starbucks as you have to transfer money in order to get more.

You can take this method as far as you desire. We encourage you to adopt it as you will find that having little squirrel piles of funds around makes it easier to make the purchases you want when you want them. It will also have the positive influence of making you pause before buying knowing you have to transfer money to get the item you covet.

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How to Take Steps to Determine How Much to Save for College in a 529 Plan

There is one thing that seems to catch headlines on a near daily basis and that is the cost of college. The cost has been on a steady increase for decades and at present doesn’t appear to be slowing down.

Today we are going to look at how you might approach saving for college for a child, grandchild, or some really lucky kid that you happen to know that you want to save for college on their behalf.

Reviewing the Options Available After Post Secondary Education is Complete

The first step to get a handle on things is to determine where the individual might attend college. There are thousands of options. To keep things as simple as possible let’s outline a few buckets below of options and then we will select one to work through this exercise.

There are a number of options when it comes to college and a few of them happen to be:

  • 4 year public college on in state tuition costs
  • 4 year college that is private where state of residency doesn’t apply
  • 4 year public college where part of the college experience will be paid at the out of state rate and the other at the instate rate
  • 4 years of college where the first 2 years are done at a community college and the remaining are done at a university
  • Enrollment in a trade program

The good news about saving for college is 529 plans can be used for any higher education. So even if the individual you are saving for decides not to go to a college and they go to a trade school you are covered.

Now that we have some of the options outlined let’s select one so we can work through the financial resources we want to invest on a monthly basis to pay for this education.

While we will work through details today about setting a goal for college savings we always encourage you to visit the financial goal planning worksheet and work through it for all of your goals.

Reviewing the Costs of College or Post Secondary Education

To keep things as simple as possible let’s say your child wants to attend public university and you happen to live in the state of California.

Your child loves the beach so they have selected the University of Santa Barbara. Side note that we looked at that school many years ago however our mom said “Joey you can’t go here however Jamey you can”. This stems from the fact that Jamey was and probably still is vastly more responsible.

To take a look at what this university costs we visit a college calculator over at Vanguard. There are 100’s of these college calculators all over the Internet. What we would encourage you to do is to make sure that you include room and board and not just tuition.

In order to get to a target amount for saving we want to see how much this college experience is going to cost so we plug into the calculator the following info:

  • 10 years till they start college
  • 4 years in college – because you are telling your child they get 4 years 🙂
  • 5% increase in college costs rise
  • The handy calculator tells you that UCSB will set you back $29,911 in today’s dollars so let’s see what we get

Information in the chart below was run using the Vanguard college calculator.

10 Years to College

10 years from now you are staring at over $221K in college costs. One year alone will set you back over $51K.

Please take a deep breath and realize it’s all going to be ok. Now that we have an estimated cost of tuition we can determine how much we want to help save for this experience and education.

Setting a Goal for How Much You Want to Help Save For College

Big numbers can seem very scary so let’s break it down into some smaller segments to see what we can do about it.

  • College Cost: $221,000
  • Financial Aid at 20% of the cost: $44,200
  • Scholarships at 15%: $33,150
  • New Total Cost: $143,650

Why are we estimating financial aid and scholarships in our projection? We are doing as the majority don’t pay 100% of the cost and receive some financial aid. The scholarship portion is that we would recommend everyone get involved in filling out scholarship paperwork to reduce the total cost. You would be surprised how many scholarships are available when you start looking.

For this exercise you determine that you want to make sure to cover at least one full year of tuition and as close to two years. The thought is your child could attend a more affordable junior college for two years first if necessary.

You need to save $68,250 for these two years. You have $3,000 saved up to start and you are committed to saving $250 monthly.

10 years from now you will have saved $63,984. So you are really close to the number you need.

How did we arrive at this savings amount?

We headed over to the Vanguard college savings planner. We plugged in some information to get to where we needed. 

A couple of items that we want everyone to be aware of:

  • The earlier you start saving for a child’s college the lower the monthly investment required to reach the number you need
  • Communicate with your child about the cost of college and involve them in the process
  • You don’t have to use the Vanguard college savings calculators. We used them because we find them easy to use and allow you to use them without entering any personal information

College Savings

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How to Find $50 In Your Budget without Giving up Starbucks and Having Ramen for Every Meal

The first step can be the hardest. It takes real effort and determination to begin a new journey. Improving your financial future can begin with making small tweaks and changes. Once you get the momentum going you might discover that “this is fun” and begin to find additional ways to locate investment or savings dollars.

We want you to start with the journey of finding $50 in your monthly budget. For some this will be easier than others. Regardless of where you are at we want you to make a commitment to finding $50.

If you are still with us then terrific let’s get into finding $50! For those of you who have $50 burning a hole you can skip to the bottom of this post where we show you how much that $50 can be worth and give you a couple of places to invest it.

How Often Are You Winning From Lottery Tickets?

We can hear it now…but it’s fun to play the lottery! We get it however the average American spends $223 on lottery tickets according to a study by Time. The odds are highly against you in the lottery. Various studies have the chances around .009%. This means that you are nearly guaranteed to take a loss on the entire $223.

Other studies show that Americans spend as much as $1,000 annually on lottery tickets. That is $83 a month. Depending on which study you want to use that means you might be spending somewhere between $18-$83 monthly on lottery tickets.

We aren’t going to ask you to give up the entire amount, although we think that would be a great idea so let’s say you cut your lottery ticket buying by 50%. You will have somewhere between $9 and $42 saved monthly. For those who will point out that $42 is not half of $83 we realize that we are rounding up so you can have more money in your pocket.

Enjoy Starbucks Maybe Just Consider Reducing How Much You Enjoy It

For some reason many finance folks love to come after Starbucks. You hear such things as avoid Starbucks altogether, give up coffee, or make all your coffee from home. We won’t disagree with the math that says if you do so you will have more in your pocket on a monthly basis however there is a balance.

If you do happen to go to Starbucks daily, where the Barista may know your name and order, and you spend $4 per trip $5 days per week your annual Starbucks bill is $1,040 or $87 a month.

Let’s be completely honest and admit Starbucks can bring great joy and cutting it out entirely seems a bit drastic. With that said we need to find $50 a month so we have to make some sacrifices. Let’s say you agree to cut 2 of your 5 days from Starbucks. By cutting those two days you will have put $416 into your pocket on an annual basis or $35 a month.

Reducing How Much You Spend at Convenience Stores

According to Statista 33% of people who made purchases at a convenience store made a purchase between $5 and $9.99. Let’s use the low number to be conservative and say you visited a store twice a week. On an annual basis you would spend $520 or $43 a month.

You can still buy Red Bull, full disclosure we love having sugar free Red Bull, you just may want to buy them from the grocery store or a warehouse store and get them from home.

Again we aren’t going to make you go cold turkey. Let’s say you cut this in half and you would put an extra $20 a month in your pocket.

How Much Have We Saved Now?

From just these three categories you could save somewhere between $9 – $97 per month depending on which options you selected. In this scenario you still get to go to Starbucks and visit convenience stores. We haven’t made you go cold turkey and we found you three categories where you can quickly locate $50 monthly.

How Much Difference Will $50 Even Make?

There are many who would say “Why bother it’s only $50?”.  While $50 will not cause you to retire a millionaire it will, in under 2 years, put you ahead of the 70% of Americans who do not have $1,000 in savings.

In the chart below we demonstrate what would happen if you invested that $50 in savings in a mutual fund earning 8%. While $50 may not seem like much $13K sure is quite a chunk of change.

50 Investment Over Time

Mutual Funds That You Can Start with $50 a Month That Mirror the S&P 500

The two funds below have a $0 minimum to get started. This means you can get started month one!

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How Penny Stocks Can be an Opportunity

As a general rule Penny Stocks (those under $1) are categorized by high volatility.  They can have massive swings in value going from mere pennies to more than a few dollars or they could go bankrupt and no longer be available for trading.  With this volatility we generally recommend avoiding them until you have a balanced investment portfolio.

Of course balancing risk is part of investing and if you have developed your financial portfolio to the point where you would like to try something with a bit more risk then we want to share how we have approached investing in penny stocks.  Investing in penny stocks should still align with your financial goals and contribute to your overall strategy.

Our approach to investing in Penny Stocks is based on the aspect that they won’t be held for a long period of time, meaning that you might hold the stock for a maximum of a few months.  This shouldn’t be confused with high volatility day trading that you might find others recommending as we believe that is a different skill set and one that can take up a great deal of time.  Consider the following aspects to identify the right opportunity for penny stock investing:

    • Market Movers – Most trading platforms will have a report that shows the largest of market movers for a given exchange (i.e. NASDAQ, NYSE).  When looking for an initial opportunity look at this report to find potential stocks to invest in.  While it might be attractive to look at the stocks that have had recent large %daily gains (i.e. 20% or more in a day) those are the ones we would encourage you to evaluate at a later date.  The screenshot below is from E*TRADE and your eyes should be drawn to the red to evaluate those as an opportunity.  Keep an eye on OCGN…more on that later.

Market Movers

    • Price – While it might sound obvious, you will be looking for stocks in the <$2 range.  This low price point will allow you to buy a higher volume of shares which will help you realize a larger monetary gain with a relatively small investment.  For example, consider that if you purchased 100 shares @.50.  Your investment would be $50 which is a great way to start investing in penny stocks.
    • Share Volume – As penny stocks have a lower per share price than your large cap stocks we would encourage you to purchase a few hundred shares if you can.  Purchasing a few hundred shares gives you a few benefits:
        • Monetary Gain – If you have 200 shares and the stock goes up by $1 then you can enjoy a $200 gain when you sell.  The % gain would obviously be very large at a $1 movement, but at the end of the day you are trying to cash in with actual dollars, not just demonstrate a strong % yield.
        • Opportunity to Sell a Portion – When you purchase a few hundred shares you have the option not to sell all of your holdings when it hits your target price (more on target price below) giving you an opportunity to experience an even larger gain while taking your initial investment back with a gain.
    • Large Delta in Current Price vs. 52 Week High – The goal of a penny stock purchase, from our perspective, is to look for a gain that can be 3-6x your investment and to get this we need a large delta from the current price and the 52 week high.  Take the symbol we shared above in the market mover report, SNDL, which at the time of our documentation (12/28/2020) was trading at .47 but the 52 week high was $3.88.  This means that, theoretically, if it reached its 52 week high again you could have a 7x+ return on your inveSNDL Stockstment!
    • Set Your Target High Price – Looking at the large delta to see your potential upside is key to identifying the opportunity and it is equally important to identify at what price you will be satisfied.  In the example of SNDL, if you purchased at .47 and it went to $2.00 you have 4x your investment.  While that isn’t the 52 week high that is still an incredible gain!  Set your alert in your trading platform at the price you are comfortable with and be prepared to sell some of your position as these stocks can have extreme volatility that can take away your potential gain in a single day.
  • Why is it Low? – Before making your purchase look at the company news feeds to determine why the stock is low.  In the small cap pharma stocks they are often low because they have been investing in R&D and their drug has not yet been approved.  Some companies are low because of industry shifts (i.e. fashion companies).  Read through the news to see if the reason for the current low price isn’t detrimental to the health of the company as you want to minimize the risk of it going to $0.

Keep in mind that going through this evaluation process will take time daily before you find a stock that you can have confidence in and has a price point you are comfortable with and provides the commensurate 3-6x+ return.  We would recommend purchasing 2-4 different penny stocks in different industries to allow you to see what will work.  This is not only a way to help you test your evaluation process but also can help you mitigate risk as if 1 stock fails.

Real World Example

Following the above outlined methodology, I purchased 1,000 shares of the stock OCGN.  Now keep in mind I purchased this stock over a period of months for varying prices ranging from .54 to .28.  We list it that way as truthfully the first purchases were at .54 and the stock went down over the next couple of months which certainly wasn’t the desired outcome initially.  

When the stock reached .28 I purchased 500 shares to bring my total to 1,000 shares which also brought my overall average cost down.  Just a few weeks after that purchase the stock experienced a large movement to over $1 which was above my original goal.  Of course, just like anyone, I let a day get away from me and I didn’t end up selling at that price.  In this scenario that delay was a big benefit as the next day the stock moved to $2.80 and that is when I sold 500 shares to take back my original investment and a 600%+ gain.  

After discussion with Joe I did keep 500 shares to see if it was possible that the stock could experience even larger gains.  As you can see from the screenshot below (from 12/28/2020) the stock is trading below $2.80 but my gain is still well over 600%.

OCGN Results

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Real Estate Marketing with Social Media

Having a well rounded online real estate marketing strategy means taking the time to incorporate your social networking efforts with your overall marketing plan.  This doesn’t mean that you will market your real estate business the same way on your social networks as you do on your blog and through your other organic content via SEO as there are different techniques that you will need to implement to achieve success.

With social media marketing for real estate one of the most essential methods is to understand that you need to provide value before your network will be able to engage with you where there is an opportunity to help someone buy or sell a property.  Providing value to your network doesn’t take massive amounts of effort, it just takes a focus on the needs of those you are connected with.

Here are four methods to focus on that will help you to provide value and to turn your social networking efforts into a powerful real estate marketing machine.

  1. Understand Your Audience on Each Platform – On each social networking platform (think Instagram, Twitter, YouTube, TikTok) the audience can have different needs.  Yes, your truly raving fans will end up following you on each platform and that is why on each platform you should offer something unique.  For example, country star Luke Combs, shares detailed stories on Instagram of the inspiration behind his hit songs.  Usually it’s a single powerful photo but for the actual song he will direct his audience to popular platforms such as YouTube or Spotify.  Understanding what your audience craves on each platform will help you to create the right content for each one which can increase your overall engagement.
  2. Content Schedule – Social media works at a rapid pace and your next customer is going to consume content on their way to purchasing or even selling their next property.  When many real estate professionals start out they are energetic about their first 6-12 posts but then get discouraged when they can’t “think” about what should be next.  To help you avoid content creation fatigue, create a larger content schedule that spans a month or even two.  Before you initially launch, consider creating your first two weeks of content ahead of time so you don’t feel like you are forced to do content creation daily (even if you are releasing it daily).  Remember content creation can take many forms such as sharing links of new websites you have found, commenting on the inventory in your area, or just sharing something interesting you did over the weekend.  A balance of updates will keep the conversation and allow those in your network to show interest in the topics that they connect with the most.
  3. Reach Out – Taking a marketing approach to your social networking means more than just sending out updates. Social networking allows you to easily connect and determine what the needs are of those in your network.  Take time to reach out to those in your network through commenting, quizzes, and direct emails to determine what their true needs are.  Their needs may not be something you can solve, but take the time to listen, and maybe even connect them with someone in your network who can solve the problem.
  4. Understand the Funnel for Conversion – In the online world people have the opportunity to gather greater volumes of information than ever before.  Research has shown that there are now 24 touch-points that people can engage with on their car buying journey.  Now think, if someone is going to engage in 24 touch points on a car purchase, how many are they going to engage with when purchasing a property?  While it is unlikely that you will be to be every touch point for someone on their research path before buying or selling a property you can cover a good number of these touch points when you understand the path to conversion which can tie in with your content creation schedule.  Your social media real estate marketing can provide different pieces of content that contribute to conversion and give prospects deep meaningful information (i.e. like a unique 10 page “Buyer Report” that has unique neighborhood information, stats, etc. that can’t be found anywhere else).  Think about how each piece of content is getting someone closer to meeting with you and then you are on the path of understanding your funnel for conversion.

Real estate marketing within your social network means balancing your needs with those you are connected with.  Having an overall focus on providing value will allow both strangers and those who you are connected with to help you with your real estate goals.

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4 Steps to Setting Financial Goals for Your Money and How to Make Sure You Reach Them

If you have set goals for grades in school, times for races, or savings for vacations in the past this post will help you take that mindset and apply it to larger financial goals. 

If you have never set a financial goal before, have no idea why you should do so, or if you should, this post is for you. We invite you to go through this financial goal setting with us. This is how we approach our financial goal setting and it’s one you can easily adapt to any goal you desire.

What is The Goal For This Money?

If you haven’t started setting goals for your money before that’s ok. We would like to encourage you to start setting some goals. So today is the day to take on goal setting.

Goal Setting Step 1: what is the goal that you are working towards?

We like to start with the end in mind. Are you looking to save for a downpayment on a house? Are you looking to save money for a new car? Is this money to be used for retirement or a once in a lifetime vacation? 

Some possible goals listed out that we would invite you to select from:

  • House down payment
  • Car down payment or outright purchase of a car
  • Saving for retirement
  • Saving for a child’s college or a loved ones college or someone you really like that you want to help them go to college

We have created a quick goal worksheet that you can download, make a copy, or print for your use in financial goal setting.

Goal Step 2: what priority does this goal take in your financial world?

Step 1 is easy as it is kind of like dreaming. We want you to do more than just dream. We want you to start putting action to your dreams. Step 2 is all about deciding where the priority for this goal should be in your financial budget.

In this step you have to answer a few questions about how important this goal is:

  • Is it more important than my digital subscriptions?
  • Is it more important than the number of times I eat out weekly?
  • Do I want this more than I want a latte and a scone from Starbucks?
  • Is this more important than the new iPhone?

Notice in this step we aren’t saying any of the other financial choices you are making are bad or are good. We are asking where the importance of this goal lies.

James has often said it doesn’t feel like sacrifice when you want something more. This mentality makes it easier to stick with your financial goals as you are no longer “giving something up”, rather you are working toward your best possible financial future.

When you want that down payment for the new house more than you want a latte it will be easy to accomplish. 

To get started on priority we want you to select a number between 1 and 10. These are your top 10 financial items. A 1 would mean that this goal is more important than the place you live right now and you are willing to move to save money for this goal. A 10 would mean it would come after items such as cell phones, eating out, and vacations. In other words it would be a nice to have vs a has to have. 

For most goals we would recommend somewhere between 2-6 to keep you focused on achieving them.

Goal Setting Step 3: how much do you need for that goal?

Now that you have your goal written down and it’s priority it’s time to do a little math and determine how much money you need to reach this goal. 

Throughout this entire process we encourage you not to judge yourself or your goal. Even if the number that comes out of this step is a large number or bigger than anything you have ever accomplished before that’s 100% ok. This is part of the process of growing.

For illustration purposes today we are going to use the goal of saving for a car. For our example we are going to make the assumption that you have a car that is paid off, you believe you have some good years, and for your next car you would like to make sure you put down a large down payment for a smaller monthly payment.

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529 College Savings Plan – Why This Plan Is a Great Planning Tool

Saving for college can seem like a daunting task. We have found there are often two groups when discussing saving for college. There are those who have started practically from the day the child was born and there are those that say something like “I really need to get started on that”.

Whether you started at day zero or your child is now in school a 529 college savings plan can help. By the way if your child is already in college well this might be one of the few times that a 529 might be less valuable.

Before we get into too many details let’s get the definition of what a 529 savings plan is from our friends at the SEC.

What is a 529 Savings Plan

According to the SEC a 529 plan1 is a tax-advantaged savings plan for future education costs.

So what is it then? By saving for education now, that will cost more down the road (think college), the government rewards you. They reward you by allowing your money to grow without having to pay the taxes along the way on the gain of the assets in the plan. Provided you use the account proceeds for qualified education you won’t owe any taxes on the gains at all. This makes the account advantageous to growing and not affecting your finances from a gain perspective.

In Plain English Why Do I want a 529 Savings Plan

Your money will grow without taxes and you won’t owe any taxes on the gains provided you use the money for a qualified educational expense. When you make regular contributions say $25, $50, or $200 or more a month you effectively help chip away at a large college bill in smaller increments.

This Sounds Like Work…How Long Does it Take to Set-up a 529 Plan

A 529 is surprisingly easy to set-up. If you are focused it takes maybe 15 minutes to set-up. The challenge comes in deciding which plan to select. Each state generally has a plan and companies such as Vanguard, Fidelity, and TD Ameritrade also offer plans.

We recommend taking time to research 529 plans and then blocking off time to set-up the 529. To ensure that you get this task done we recommend setting a deadline for setting up the account to avoid procrastination.

There are many dedicated websites to 529 plans and one that we have found great information on is Saving for College.

Questions to Ask and Have Answers For Before You Open a 529 Account

Answers to a few questions will help you decide on which plan is the right place to start. Please keep in mind we are recommending that you get started and the questions below are by no means an exhaustive list of the questions that you can ask before putting funds away in a 529.

  • Do I want a plan that has no minimum balance to start? – Certain plans allow you to start with no minimum while others may require $3,000. Check out 529 plans with no minimums to get an idea of what is available.
  • How much should I put into the 529 plan to start? The answer to this question will also provide guidance as to whether you select an account with no minimum or one that has a higher minimum account. As to the actual dollar amount you are investing in the 529 plan we encourage you to weigh this against the rest of your financial picture. For example if you have a tax return coming up, have an emergency plan in place, maybe you can put in more dollars compared to if you just had an expensive car repair bill come due. Whatever dollar amount you select we encourage you to get started.
  • Do I want a plan for my specific state? Some state plans offer tuition incentives or specific state tax incentives for choosing the state plan.
  • Do I already have an account at the financial institution? If you already have an investment account with say TD Ameritrade opening a 529 with that firm can be easier compared to starting from scratch.
  • How many years away from college is my child or the child I am choosing to help? An answer to this question will help you select a fund that is either more aggressive, you have 10+ years to the college years, or more conservative, you have 3 years or less to the college years.

Other Than Minimums What’s One Big Item To Watch For When Saving For College

We would tell you to watch the fees. Fees will eat away at your return. 1% may not sound like much however it makes a difference.

Additional College Savings Resources

A few websites that we like when looking for more information about saving for college are listed below.

1https://www.sec.gov/reportspubs/investor-publications/investorpubsintro529htm.html

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3 Mistakes That Can Kill Your Real Estate Career

Real estate can be a great career provided that you have a foundation to build upon. Once you get that license you feel like you rule the world and can conquer the real estate market but that doesn’t happen for everyone.  The courses you study for your license are practical for following the law, but it won’t necessarily translate to monetary success.

You most certainly can conquer the real estate market; however, there are 3 big mistakes that new (and sometimes experienced) agents make that kill their careers. I would invite you to read below to discover these 3 mistakes and how you can avoid them.

  1. Failing to have a plan for the business. The plan doesn’t have to be so detailed that printing it kills a rainforest. It should be simple and to the point. A successful real estate plan should have an outline of the goals along with how to achieve them. Break down a yearly goal into a monthly goal and turn that into a weekly and daily plan. That way you only have to focus one day at a time.  Your plan shouldn’t just include your topline goals (i.e. number of transactions and commissions) but should also include the activities that will lead to that success (i.e. leads and appointments).  When you have the leading activities as a goal you can then hold yourself accountable to those metrics each day on your way to your larger economic goals.
  2. Not taking real estate seriously as work. Is real estate fun? It most certainly can be. What isn’t fun is doing real estate and not making money. Most agents make this mistake completely by accident. They don’t mean to not take it seriously. They model after agents who have been in the business awhile and figure that is the way to do it. This can mean they see activities such as going to a broker’s open or going to the weekly team meeting as “work” but then they struggle with why those activities aren’t leading to more business.  What you don’t see is what is usually the secret sauce. What are people doing when the door is closed? To  make money in real estate it is work. Make sure the model you are basing your success on is one that fits you and your personality.
  3. Failing to base your real estate business on marketing. When economies get tight, like the one we are in, companies change their tunes on real estate marketing. Suddenly marketing isn’t as good as it used to be. Marketing should always be the foundation of a business, but it rarely is put in place correctly which means people cut their marketing when the economy gets tight.  When your marketing is done correctly, stopping your marketing efforts is the equivalent of not filling your car with gas when the economy gets tight….it just doesn’t make sense. Does this mean you spend money and “hope” people call you. No! What it means is that your marketing should generate leads and you should aggressively follow up to see if they are interested in your product or services.

Mistake #3 is probably the biggest mistake of all. You will discover that a real estate business based on marketing that generates leads can weather any economy.   As technology changes you will find that your marketing can also change.  Often you can get many years out of a particular marketing channel (i.e. Google Paid Search, Facebook Marketing, etc.) before the channel either gets too competitive or is no longer attracting the types of customers that you desire in your marketplace.

Hold your marketing accountable to performance, meaning you know exactly how much of your marketing dollars are driving each lead, appointment and sale.  There are many ways to build your marketing strategy for your business. Take the time to understand your local market, your personality, and how much success you want to have and watch your real estate business grow.3 Mistakes That Will Kill Your Real Estate Career

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3 Methods To Jump Start Your Efforts of Selling On The Phone

Have you ever looked at your phone with fear?  Maybe the thought of “dialing for dollars” just makes you sick to your stomach.  You know you need to call to make sales, but the thought of getting rejected or the somewhat positive “let me think about it” just makes it tough for you to pick up the phone.  

Even with the advancement of online conversion funnels, ability to meet prospects at in-person events, and more ways to meet prospective customers there is still the need to convert on the phone. When you are good on the phone it can bring you to a multi-six figure or sometimes even a multi-seven figure income.  When you struggle with conversions on the phone it can mean looking for yet another “job opportunity” where they give you the time to build up a roster of prospects and you secretly hope that this time will be different. 

In any sales professional’s career it’s possible to run into these moments where you experience the good and also experience the bad of converting on the phone to appointments or sales.  When you are in a slump with conversions, it can be the time where you might blame the economy or point out features that the competition has that you don’t. Surely it couldn’t be your skill on the phone causing your slump…could it?

To get out of the sales roller coaster and eliminate your fear of the phone I invite you to consider the following.

  1. Everyone Wants What You Have To Offer – Before you pick up the phone understand that everyone wants what you are offering; they just don’t know it yet.  The more questions you ask, the more interest piquing they are, the greater likelihood that they will come to realize that they would be insane to pass up on what you have to offer.  Whether you are selling insurance or something as boring as paper supplies the same rules apply.  Be confident to know that what you are selling is a great match; you just have to help your prospect see the value.  Remember they won’t really see the value if you are reading the endless copy of features and benefits that marketing promises will make the difference.
  2. Only Ask Questions – You can’t sell someone something they don’t really want.  The concept of selling “ice to Eskimos” only applies in the Summer time for the Eskimos or if maybe the Eskimos were opening an ice cream shop (you get the point).  Asking questions puts you in control of the conversation.  It allows you to see who qualifies for what you are offering and who isn’t.  The better you get at asking questions the quicker you will get to the sale and the quicker you can eliminate the people who are a waste of time.  Questions should be designed to help the prospect see that you have value to offer them.  Questions should also help the prospect see that you aren’t right for every customer (and that usually makes them want to do business with you even more).
  3. Understand That YOU Will Reject People – It is impossible to have a 100% conversion rate each day.  The reality is that the people who don’t invest in what you are offering aren’t rejecting you, YOU are rejecting them.  Let your prospects know that you don’t feel they are a match and watch them reach toward you and try to convince you that they really are!  As part of your arsenal of sales scripts, you should even drop hints in your conversation, like the following “I want to ask you more about X with your business, because I’m not sure my solution would even be the best fit.” Planting seeds of doubt that your solution might not be a match will have them understanding that you aren’t just trying to sell them something (i.e. product, service, etc.) but you truly are looking out for their interests as well.

There is no reason to fear the phone when you understand that you are in control.  By asking powerful interest piquing questions combined with the confidence that you can REJECT your prospects you will be crushing your sales goals.