Financial Planning for the Financial Planner

Here is a piece from Marcee who has helped me with my financial planning over the last many years.  She doesn't do a lot of writing to my knowledge so this story about her personal family experience in the Thanksgiving Season was worth passing on--ENJOY!!

We are watching the slow disintegration of Europe's political and financial safety net that it so carefully constructed after WWII to ensure that it would never have a reason for war within its borders again.  It is clear that there is no escape from the global consequences, though we cannot discern what those consequences will be.  We are living in an era of epochal change (think "fall of the Roman empire" or "discovery and exploitation of America").  We don't have a choice in the matter and there's nowhere to hide where we would be protected from the fallout.

The likelihood that the future won't look the way you imagined it is quite high.  That doesn't mean that you'll be tossed onto the garbage heap of life, and have nothing to look forward to but some version of the End of the World as We Know It (as depicted in so many movies) but it does mean that you shouldn't cling to your expectations or your sense of what's due you.  Life isn't fair, and for most of history people have had to live with what we consider to be extreme uncertainty.  We were the unfortunate generation that came to believe that life owed us everything, and that "every day in every way things are getting better". Not so.  We are now having to come to terms with the reality that we are no different from any other generation of people who have lived on this earth, and no more in control of our lives than they.

However, we do have control over the choices that are presented to us (there are always choices) and it is in making prudent choices that we can affect our personal outcomes and those of the people closest to us.  For some time now I've been talking about FLEXIBILITY and CUSHION.  You'll need both to successfully navigate the rapids  we find ourselves in.  

The Age of Aquarius

In Jr. High School chorus,  sounds weird to say now, we sang this song (Aquarius) in addition to others like "Rubber Duckie".  Here is a link if you want to see the lyrics and be reminded of the Pop Chart hit of 1969.    http://www.elyrics.net/read/0-9/5th-dimension-lyrics/age-of-aquarius-lyrics.html  That's enough nostalgia so on to today 11-11-11.  This is a date that for many is considered the beginning date for the Age of Aquarius and the end of the Piscean Age. 

Now I'm not into astrological signs and stuff like that but let's assume for a minute that TODAY is the beginning of the time of AWARENESS versus the era we are told is being left behind--that of INFORMATION. 

Lately we have been asking ourselves and others what skills and characteristics would be desirable in this new era.

Precious Mail

The photo attached to this post is of me at the age of 15.  The birthday wish I never saw until this week came from my step grandmother Beaulah who died recently at the age of 98.  She loved to fish and show me how you could freeze catalpa worms and later thaw them out and they would come to life.  Great stuff for a kid for sure. 

Dovie, the stepmother, found this in Beaulah's things and took the time to send it to me.  At 54 years old now I was all choked up reading a message encouraging me and lifting me up all these years.  The power of a handwritten note along with the thoughtful words and pictures trumps any email or virtual message I have received EVER.  Why is that I wonder?    I am inspired to put words on paper in purple ink to support and encourage others (especially kids) even if they never even know it was written. 

I think Beaulah would be proud to know me today. For the readers of this post--if you think you are one of the "wrong crowd" folks-- please let me know as soon as possible :)  You see there is a legend about Beaulah that suggests it is not a good idea to disappoint her.

Best vs. Suitability Standard

You ever go to a store when a sales person asks--"Can I help you find something?" To which you reply--"I'll know it when I see it."  That is similar to what is often said when we meet with new prospective clients.  "I knew there were people like you I just didn't know how to find you." 

There is a HUGE debate right now in Washington regarding accountability and legal responsibility for companies who claim to be FINANCIAL-- ADVISORS, CONSULTANTS, PLANNERS, ETC.  The companies who manufacture products--insurance, mutual funds, etc.-- like to call themselves anything but salesmen.  The products are needed but the "advice" they give struggles to be objective.  

I Do Dis Cuz I Can

1. Last week or so I was told about an article in the Oklahoma Gazette about the biggest users of water in Oklahoma City.  There were acknowledgements both for Commercial and Residential consumption.  I have not seen the results but here are a few observations:    1)  the people telling me thought the residential consumption was impressively high.  2)  The commercial user was government.  3)  The picture of the car in this article says "I Do Dis Cuz I Can" which is of course their right to do and for me seems silly but appropriate for this post.  4)  I am much better at judging others behavior than my own ;) 5)  Is whoever has the biggest pipe, the strongest pump, gets there first, best lawyers etc. the "I Do Dis Cuz I Can" mentality the way we want to do Water?  

Death by Spoon?

It doesn't come to me the context of our conversation at the time so be gentle with me on this one.  While talking to my 10 year old (double digit) friend recently the question came up "If you knew you were going to die would you rather die from a spoon or a sharp knife?"  This question has now been repeated to several boys of a similar age to which each responded much the same--A SPOON.

How Would You Vote?

Today, it was announced that the Greek Prime Minister (not going to try and spell Pop and Drayo) is going to put the Euro Zone bailout plan to the vote of the people. The European Union came up with a plan to bail Greeks out from their significant debt and make it possible for them to repay.

In a separate conversation, it was also mentioned that when you look at total debt for the United States, including Social Security, Medicare,  consumer debt, corporate debt, and government debt, our ratio is eight to one. That'd be eight times more debt than we have in income.  According to the commentator, that is worse than Greece. 

So, my question is. How would you vote if some kind of an austerity

Rock and a Hard Place

About two weeks ago my 14 year old Little Brother (LB) needed money for a school trip.  We sat and talked for awhile about the situation and why there was no money available at his house to pay for something like this.   His grandmother and her boyfriend have never worked in the 3 years I have known them.  The money in the home comes from State and Federal support mainly for the two grandchildren.  I told my LB that our relationship is not going to be about money and that if he needed the money for the trip i would give it to him under the promise that he would earn enough to pay me back by Halloween.  My goal is to encourage him to work for his money and make good on a promise. 

GCI (grandchildren conscious investing)

Today on a phone call with a thoughtful couple from Utah, the topic of SRI (socially responsible investing) was mentioned.  Since they used to live in Oklahoma we usually do a weather check and I told him I was going to have a hard time sympathizing with his getting ready for the snow remarks after the summer we had here. 

Come to find out Utah is one of the driest states in the USA and relies totally upon snowfall melt and capture for water.  Good snowfall equals good  recreation in the winter and farming in the summer.  I asked what the drought plan is for Utah and he said "prayer if you are a religious person and hope if you are not."

Creative Destruction is a Good Thing

UNTIL IT HAPPENS TO ME!!!  Recently a thoughtful commentator suggested we could make a major step toward the financial health of the USA if we did 3 things--
1) Get out of Iraq
2) Get out of Afganistan
3) Simplify the tax code
This is the tricky part--all of these ideas destroy
jobs at a time when JOBS JOBS JOBS
seems to be the mantra. 

The Most Beautiful Place in the World

I'm sitting on the plane as I write this--it is 9/11/2011.  It didn't even dawn on me until Wolf Blitzer announced on a news show that there was a travel alert due to the 10 year anniversary of the World Trade Center tragedy. 

Ten years ago today while in a foreign country on the trip of a lifetime the hotel clerk asked--"Aren't you American?".  I was shown in to a black and white TV with pictures of the twin towers going down and news tape across the bottom was all I could understand.  

The next day was my scheduled return to the USA.  After 5 full days of hotel roulette--that is giving up your hotel room betting you will get a seat on the plane--I got to see the most beautiful place I have ever seen--Will Rogers World Airport in OKC.

Nothing beats home when the world is in an uproar. 

 

OKC Sprawl

There is something about the term urban sprawl that sounds country to me and Reba oughta do somthing about it.  Y'all agree?
Last night I attended an OKC Town Hall meeting hosted by new city councilman Ed Shadid on the topic of "Urban Sprawl".  Speakers included 8 leaders of city government--police, fire, planning, code, utilities, public works, transportation, architectural. 
Councilman Shadid was in my opinion the most articulate, clear and compelling speaker on the platform.  In summary I think he and other speakers said--
1) We have no long-term plan to deal with many of the issues facing us.  2) There are few if any good examples of how to deal with a city of our size
     (621 sq. miles). 
3)  Few benefit from sprawl but everyone pays.
4) Buying local helps a bunch since we are the only large city in the country
    primarily funded by sales tax.
5)  Pain is the primary inducement to change (he is a spine surgeon by
     trade).  We need to anticipate the pain and make the changes while we
     can.

It was inspiring to see the large room at the Marriott crammed full of concerned citizens and having to bring in more chairs--YEE HAW now that will bring out my hillbilly bones.
 Below are my notes from that meeting. 

I don't give a @%*#

"You riding your bike around the lake?"  Yes I am I said.  "Lived here 30 years and never seen it so low.  I don't give a BLEEP though--I'm on a well."  That was the unsolicited conversation I had with a fellow while in line to buy a bottle of water at 7-11.

Symphony with a mouthpiece

On the way home tonight from taking my Little Brother home after a bike ride, an interview with a trumpet player had me laughing out loud. Manny, the lead trumpet for the Minneapolis symphony was explaining how his teacher taught him the importance of being prepared. He told Manny that if you were invited to play for a group and you forgot the trumpet but had a mouth piece--you should be ready to entertain the crowd. Manny subsequently played a nice melody on the mouthpiece which cracked me up.

Can you picture the fancy pants symphony guy tooting out a song on just a mouthpiece? It got me to thinking about how often in business and in life we are just playing the best tune we can with the tools we have available. With the national economy and weather in Oklahoma lately I often feel like we are playing a symphony with only a mouthpiece.

NOW you tell me!

Sometimes it's good to be reminded of some simple things over which we have control that might improve our chances of success. Below is an article excerpt with the full link at the bottom if you want to read more. For now at least for myself I am going to ponder their term--"conserve willpower".

FINAL PARAGRAPHS OF ARTICLE

“Good decision making is not a trait of the person, in the sense that it’s always there,” Baumeister says. “It’s a state that fluctuates.” His studies show that people with the best
self-control are the ones who structure their lives so as to conserve willpower. They don’t schedule endless back-to-back meetings. They avoid temptations like all-you-can-eat buffets, and they establish habits that eliminate the mental effort of making choices. Instead of deciding every morning whether or not to force themselves to exercise, they set up
regular appointments to work out with a friend. Instead of counting on willpower to remain robust all day, they conserve it so that it’s available for emergencies and important decisions.

H2Oklahoma

Interesting factoids—

•  Water in Oklahoma—the OWRB comprehensive water plan (not final yet) shows 18 years of adequate water for the Oklahoma City area assuming average conditions, consumption and population growth.
•  It takes 34 Five gallon jugs of water to produce a loaf of bread.
• 15% of the water used to irrigate crops in Texas was used to fracture wells in Texas.  Subsurface aquifers (essentially underground lakes) are considered “private property” where surface water is considered “public property”. 
•  I was only able to float the sailboat at Hefner for one month this year due to lack of water. 

Truckful of Life Lessons

18 months ago the son of a friend borrowed the money from me to get his first truck.  His family did not have the resources to help him and he did not yet have a job.  He had to save the first months payment and have a job to qualify.  Along the way 18 months for a 16 year old seemed VERY long.

Man's Search for Meaning

Written by Summer Intern--Rosie Atkinson

A Quote from Victor Frankl from his book “Man’s Search for Meaning”—a classic.

We had to learn ourselves and, furthermore, we had to teach the despairing men, that it did not really matter what we expected from life, but rather what life expected from us. We needed to stop asking about the meaning of life, and instead to think of ourselves as those who were being questioned by life—daily and hourly. Our answer must consist, not in talk and meditation, but in right action and in right conduct, Life ultimately means taking the responsibility to find the right answer to its problems and to fulfill the tasks which it constantly sets for each individual.

These tasks, and therefore the meaning of life, differ from man to man, and from moment to moment.

We Don't Even Know Our Neighbors

Written by Summer Intern Rosie Atkinson-- A few days ago, my dad and I were asked to attend a very special get together at a friend’s house. Moses, a Hispanic man who does remodeling work at our house and the few rental properties that my dad owns, invited us to come over for authentic Mexican enchiladas. So we drove down to south Oklahoma City, a predominately Hispanic part of town, where Moses lives with his wife, Viviana and their three children. Their house is a quaint two bedroom residence that my dad loaned Moses the money to buy, a priceless investment that has provided us with endless gratitude and an unlimited amount of delicious homemade tamales.

Lean Beef

Can a cow go on the Atkins Diet?  Well in money and complexity terms--YES.  Jeff in our office knows a guy in Mustang who raises some cattle.  Jeff asked if anyone at the office would like to go in on a BEEF raised down the road by someone we know and butchered just the way you want.  We don't know
for sure whether it is going to save money but we do know ALL the money is going to people here in our community and we know where the hooved beast has been along the way. Compare that with Wal Mart. Lots of value in that for Oklahoma.
With the new Outlet Mall opened up lately how can we get in the habit of asking if there is a LOCALLY owned store or restaurant we could try first? 

Statistic Or Tragedy?

One of my all time favorite sayings is—“When a thousand people die, it is a statistic.  When one person dies, it’s a tragedy.”   I have found it difficult sometimes in today’s world of trillions of dollars and 24 hour news to connect personally with people from outside my daily routine.  This is a photo of Amy Williams, an Oklahoma volunteer, with a student in Uganda to whom I have sent tuition money for several years.  When I look at the picture, I wonder about her as a person in ways that just sending the money doesn’t address. How can we improve our personal connection with communities outside our own?  If you have your own stories, please feel free to send them along with a photo if you have one.

How Can I Tell Whether It Is A Good Time To Refinance My Mortgage?

It may be worthwhile to refinance if you can lower your monthly payment by a significant margin and you plan to stay in your home long enough to recoup the cost of refinancing.

To Refinance or Not

Consider this example: If you had a $200,000, 30-year mortgage with an 8% interest rate, your monthly payment would be $1,468. If you refinanced at 6%, your new monthly payment would be $1,199, a savings of $269 per month. Assuming your new closing costs amounted to $2,000, it would take eight months to break even. ($269 x 8 = $2,152) If you planned to stay in your home for at least eight more months, then a refinancing would be appropriate under these conditions. If you planned to sell the house before then, you might not want to bother refinancing.

All Mortgages Are Not Created Equal

When considering whether to refinance, don't choose a mortgage based only on its stated annual percentage rate (APR), because there are many other important variables to consider.

•      The term of the mortgage Shorter terms can result in significantly reduced interest costs over time. On the other hand, they may require higher monthly payments.

•      The variability of the interest rate An adjustable rate may be lower initially when compared with a fixed rate, but adjustable rates are likely to move upward over time. With a fixed rate, there is greater certainty regarding your monthly payment over the life of the mortgage.

•      Points Also known as origination fees, points are paid to a lender or mortgage broker at closing. One point usually equals one percent of the loan's value. Mortgages described as "no-cost" or "zero points" do not carry this upfront cost but may charge a higher interest rate, which may add to the long-term cost of the loan.

•      Other mortgage-related fees When you refinance, you may pay a mortgage broker fee (assuming you do not go directly to a bank or other lender), a title insurance premium, a commitment fee, attorney or settlement fees, an appraisal fee, and other costs that add up quickly.

The amount of money you may save and how long you plan to live in your home are key variables that influence whether you should refinance your mortgage.

How Much Could You Save by Refinancing?

 

A homeowner with a 30-year, $200,000 mortgage charging 8% interest would pay $1,468 each month. This table illustrates the potential monthly savings and the various break-even periods (assuming $2,000 in closing costs) that would result from refinancing at different rates.
Source: ChartSource, Standard & Poor's. Months to break even rounded up to the next highest month. Does not consider the impact of taxes. (CS0000215)

© 2011 McGraw-Hill Financial Communications. All rights reserved.

July 2011 — This column is provided through the Financial Planning Association, the membership organization for the financial planning community, and is brought to you by Troy Jones, a local member of FPA.

Five Strategies for Tax-Efficient Investing

Key Points

• Invest in Tax-Deferred and Tax-Free Accounts

• Consider Government and Municipal Bonds

• Look for Tax-Efficient Investments

• Put Losses to Work

• Keep Good Records

• Points to Remember


As just about every investor knows, it's not what your investments earn, but what they earn after taxes that counts. After factoring in federal income and capital gains taxes, the alternative minimum tax, and any applicable state and local taxes, your investments' returns in any given year may be reduced by 40% or more.


For example, if you earned an average 8% rate of return annually on an investment taxed at 28%, your after-tax rate of return would be 5.76%. A $50,000 investment earning 8% annually would be worth $107,946 after 10 years; at 5.76%, it would be worth only $87,536. Reducing your tax liability is key to building the
  value of your assets, especially if you are in one of the higher income-tax brackets. Here are five ways to potentially help lower your tax bill.1

Invest in Tax-Deferred and Tax-Free Accounts

Tax-deferred accounts include company-sponsored retirement savings accounts such as traditional 401(k) and 403(b) plans, traditional individual retirement accounts (IRAs), and annuities. Contributions to these accounts may be made on a pretax basis (i.e., the contributions may be tax-deductible) or on an after-tax basis (i.e., the contributions are not tax-deductible). More important, investment earnings compound tax deferred until withdrawal, typically in retirement, when you may be in a lower tax bracket. Contributions to nonqualified annuities, Roth IRAs and Roth-style employer-sponsored savings plans are not tax-deductible. Earnings that accumulate in Roth accounts can be withdrawn tax free if you have held the account for at least five years and meet the requirements for a qualified distribution.
Pitfalls to avoid: Withdrawals prior to age 59½ from a qualified retirement plan, IRA, Roth IRA, or annuity may be subject not only to ordinary income tax, but also to an additional 10% federal tax. In addition, early withdrawals from annuities may be subject to additional penalties charged by the issuing insurance company. Also, if you have significant investments, in addition to money you contribute to your retirement plans, consider your overall portfolio when deciding which investments to select for your tax-deferred accounts. If your effective tax rate -- that is, the average percentage of income taxes you pay for the year -- is higher than 15%, you'll want to evaluate whether investments that earn most of their returns in the form of long-term capital gains might be better held outside of a tax-deferred account. That's because withdrawals from tax-deferred accounts generally will be taxed at your ordinary income tax rate, which may be higher than your capital gains tax rate (see "Income vs. Capital Gains").

Income vs. Capital Gains

Generally, interest income is taxed as ordinary income in the year received and qualified dividends are taxed at a top rate of 15%. A capital gain (or loss) -- the difference between the cost basis of a security and its current price -- is not taxed until the gain or loss is realized. For individual stocks and bonds, you realize the gain or loss when the security is sold. However, with mutual funds you may have received taxable capital gains distributions on shares you own. Investments you (or the fund manager) have held 12 months or less are considered short term, and those capital gains are taxed at the same rates as ordinary income. For investments held more than 12 months (considered long-term), those capital gains are taxed at no more than 15%. The actual rate will depend on your tax bracket and how long you have owned the investment.
Consider Government and Municipal Bonds

Interest on U.S. government issues is subject to federal taxes but is exempt from state taxes. Municipal bond income is generally exempt from federal taxes, and municipal bonds issued in-state may be free of state and local taxes as well. An investor in the 33% federal income-tax bracket would have to earn 7.46% on a taxable bond to equal the tax-exempt return of 5% offered by a municipal bond, before state taxes. Sold prior to maturity or bought through a bond fund, government and municipal bonds are subject to market fluctuations and may be worth less than the original cost upon redemption.
Pitfalls to avoid: If you live in a state with high state income tax rates, be sure to compare the true taxable-equivalent yield of government issues, corporate bonds, and in-state municipal issues. Many calculations of taxable-equivalent yield do not take into account the state-tax exemption on government issues. Because interest income (but not capital gains) on municipal bonds is already exempt from federal taxes, there's generally no need to keep them in tax-deferred accounts. Finally, income derived from certain types of municipal bond issues, known as private activity bonds, may be a tax-preference item subject to the federal alternative minimum tax.

Look for Tax-Efficient Investments

Tax-managed or tax-efficient investment accounts and mutual funds are managed in ways that can help reduce their taxable distributions. Investment managers can employ a combination of tactics, such as minimizing portfolio turnover, investing in stocks that do not pay dividends, and selectively selling stocks that have become less attractive at a loss to counterbalance taxable gains elsewhere in the portfolio. In years when returns on the broader market are flat or negative, investors tend to become more aware of capital gains generated by portfolio turnover, since the resulting tax liability can offset any gain or exacerbate a negative return on the investment.
Pitfalls to avoid: Taxes are an important consideration in selecting investments but should not be the primary concern. A portfolio manager must balance the tax consequences of selling a position that will generate a capital gain versus the relative market opportunity lost by holding a less-than-attractive investment. Some mutual funds that have low turnover also inherently carry an above-average level of undistributed capital gains. When you buy these shares, you effectively buy this undistributed tax liability.

Put Losses to Work

At times, you may be able to use losses in your investment portfolio to help offset realized gains. It's a good idea to evaluate your holdings periodically to assess whether an investment still offers the long-term potential you anticipated when you purchased it. Your realized losses in a given tax year must first be used to offset realized capital gains. If you have "leftover" losses, you can offset up to $3,000 against ordinary income. Any remainder can be carried forward to offset gains or income in future years, subject to certain limitations.
Pitfalls to avoid: A few down periods don't mean you should sell simply to realize a loss. Stocks in particular are long-term investments subject to ups and downs. However, if your outlook on an investment has changed, you can use a loss to your advantage.

Keep Good Records

Keep records of purchases, sales, distributions, and dividend reinvestments so that you can properly calculate the basis of shares you own and choose the shares you sell in order to minimize your taxable gain or maximize your deductible loss.
Pitfalls to avoid: If you overlook mutual fund dividends and capital gains distributions that you have reinvested, you may accidentally pay the tax twice -- once on the distribution and again on any capital gains (or underreported loss) -- when you eventually sell the shares.
Keeping an eye on how taxes can affect your investments is one of the easiest ways you can enhance your returns over time. For more information about the tax aspects of investing, consult a qualified tax advisor.

Points to Remember

1. Taxes on income and capital gains distributions reduce your after-tax rate of return.

2. Maximize opportunities to invest in tax-deferred and tax-free retirement accounts.

3. Consider your overall investment portfolio when selecting investments for tax-deferred and tax-free accounts. You might first allocate investments that generate interest income to tax-qualified accounts, since withdrawals from these accounts are taxed as ordinary income.

4. Income from municipal bonds is generally exempt from federal and in some cases state and local taxes. Capital gains are taxable, and returns from some types of municipal bonds may be subject to the alternative minimum tax.

5. Tax-managed mutual funds and investment accounts employ strategies aimed at reducing taxable distributions.

6. Realized capital losses can be offset against capital gains, and up to $3,000 in losses can be offset against ordinary income in a given tax year.

7. Maintaining good records of investment purchases, sales, and distributions is essential to evaluating the best method of determining gains and losses for tax purposes and calculating the adjusted cost basis of an investment.



1This information is general in nature and is not meant as tax advice. Always consult a qualified tax advisor for information as to how taxes may affect your particular situation.

© 2011 McGraw-Hill Financial Communications. All rights reserved.





July 2011 — This column is provided through the Financial Planning Association, the membership organization for the financial planning community, and is brought to you by Troy Jones, a local member of FPA.

Too Big To Fail

I got an interesting phone call today from a banker. Scott called me from the bank today and asked how I was doing.  To which I replied, "What's up Scott, I only hear from you if there's a problem."  He responded, “Well, we got this check in and there wasn't enough money in your account to cover it.”

After a bit of anxiety and wondering how that could happen, since we try to pay pretty close attention to not writing hot checks, we discovered that the bank had deposited a fairly good sized check not in my business account, but in my personal account.  The back of the check was stamped with the corporate information, no reference to my personal name anywhere on there.  But this is the fourth time something strange like this has happened in the last few months.  

We've been hearing in the news for the last few years, the term “too big to fail,” especially as it relates to banks and financial institutions.  We have kind of coined the phrase around here, “too big to succeed” whenever we have situations come up and regular people just don't feel like anybody is paying attention to them. It's our goal at our office to do what we can to avoid being too big to succeed.  If anything comes up that makes you feel like that might be an issue, it would be really good for us to know.

Page Seven

Today, I was on a telephone call with the Financial Planning Association's ethics committee.  On the call, we were reviewing the case of a financial planner from Oregon.  I just thought, “Hey, I want to look at his website and learn a little about his company.”  I went to Google and typed in his name, which is an unusual name, and, bam, up it came.  His name was listed on seven pages before I could get to his actual website.

Every web service, search engine, marketing scheme, everything under the sun was listed in there before I finally got to a link to his company website.

One of the things that I've complained about before is being too big to succeed.  I just wonder, in the world of the Internet and yellowpages.com, if it's really even possible now to go to the Internet and find what you're looking for with any kind of ease.  So that just came to make me think, if you're looking for a financial planner on yellowpages.com, it might be a good idea to skip several pages deep before you expect to come across someone who actually does financial planning.

Rainy Day Fund

Recently, the state of Oklahoma reported having only $2 left in the rainy day fund. Now, I don't know how much was in there a few years ago, but it was in the hundreds of millions. Also, for those of you who, like me, lived through the 80's, this recent economic downturn was a walk in the park compared to the one back then.

This makes me wonder how in the world our state could have spent several hundred million dollars more than was in our budget, while in the 80’s, we made it just fine without the rainy day fund.

Just today, I heard a statistic that I found interesting. In a similar vein, Greece, the average debt per citizen is $42,000. The average debt for a United State's citizens is $44,000. Now, I'm not talking about personal debt, I'm talking about government debt.

300 Laughs per day

Recently, I heard a statistic that stated that the average child laughs 300 times per day, while the average adult only laughs 7 times.  What makes you laugh?  Can you remember the last time you nearly wet your pants laughing or spewed a soft drink out your nose trying to keep from it?

Many believe that laughter is healing and there is even a company in Oklahoma City called "Laughter Yoga".  I once sent a Laughter CD to a client recovering from difficult cancer treatment.  I hope it helped, but I am sure it did not hurt.  It is said that if you want to make God laugh you should show him your plans.  Well, if your plans include laughter, then we'll all be laughing together.

Don't Outsmart Your Commonsense

While driving down the road on 4th of July weekend listening to a country tune, I heard the line, "Don't outsmart your commonsense".  We  often find ourselves having that conversation in our meetings around the office.  Sometimes, it's hard to imagine how the system could be so complicated, and how smart people could overlook such basic concepts. I wonder in each of our lives and each of our businesses how we might keep asking ourselves the question--How am I outsmarting my commonsense?

True American

Yesterday, I was having a conversation with a 31-year employee of a locally-owned services business.  Business is good and they are very financially responsible people, and I was talking to them about how it is having a hard time seeing what's really going on in the economy from our bubble.  To which he replied in this fashion:

“Look, Troy, when I make a sale or win a sale, I create business to bring into a company where men and women in the manufacturing plant take steel and put it in the machines that make equipment that we sell all around the world. Then they take those paychecks home and they buy groceries and they make house payments and they move their lives ahead one month at a time. Now what is wrong with that?”

It was really fun to see someone so enthusiastic about their job as an employee, and about extending that down to just how connected he was with the people in this particular case in a completely different division of the business than he was in.  He also referenced the owners of the business and some of the many and varied things they do to contribute back to the community, and how at their ages, they are still engaged and still enthusiastic about being involved in business.  How can we all exercise our true inner-Americans?

The Pickle Jar

The Pickle Jar

The pickle jar as far back as I can remember sat on
the floor beside the dresser in my parents' bedroom.

When he got ready for bed, Dad would empty
his pockets and toss his coins into the jar.
As a small boy, I was always fascinated at the sounds the coins made
as they were dropped into the jar.

They landed with a merry jingle when the jar was almost empty. Then
the tones gradually muted to a dull thud as the jar was filled.

I used to squat on the floor in front of the jar to admire
the copper and silver circles that glinted like a pirate's
treasure when the sun poured through the bedroom window. When the
Jar was filled, Dad would sit at the kitchen table a nd roll the
coins
Before taking them to the bank.

Taking the coins to the bank was always a big production.
Stacked neatly in a small cardboard box, the coins were
placed between Dad and me on the seat of his old truck.

Each and every time, as we drove to the bank, Dad would
look at me hopefully. 'Those coins are going to keep you
out of the textile mill, son. You're going to do better than
me. This old mill town's not going to hold you back.'

Also, each and every time, as he slid the box of rolled
coins across the counter at the bank toward the cashier,
he would grin proudly. 'These are for my son's college
fund. He'll never work at the mill all his life like me.'

We would always celebrate each deposit by stopping
for an ice cream cone. I always got chocolate. Dad
always got vanilla. When the clerk at the ice cream
parlor handed Dad his change, he would show me the
few coins nestled in his palm. 'When we get home,
we'll start filling the jar again.' He always let me drop
the first coins into the empty jar. As they rattled around
with a brief, happy jingle, we grinned at each other.
'You'll get to college on pennies, nickels, dimes and
quarters,' he said. 'But you'll get there; I'll see to that.'

No matter how rough things got at home, Dad continued
to doggedly drop his coins into the jar. Even the summer
when Dad got laid off from the mill, and Mama had to
serve dried beans several times a week, not a single
dime was taken from the jar.

To the contrary, as Dad looked across the table at me,
pouring catsup over my beans to make them more
palatable, he became more determined than ever to
make a way out for me 'When you finish college, Son,'
he told me, his eyes glistening, 'You'll never have to
eat beans again - unless you want to.'

The years passed, and I finished college and took a
job in another town. Once, while visiting my parents,
I used the phone in their bedroom, and noticed that
the pickle jar was gone.. It had served its purpose
and had been removed.

A lump rose in my throat as I stared at the spot beside
the dresser where the jar had always stood. My dad
was a man of few words: he never lectured me on the
values of determination, perseverance, and faith. The
pickle jar had taught me all these virtues far more
eloquently than the most flowery of words could have
done. When I married, I told my wife Susan about the
significant part the lowly pickle jar had played in my
life as a boy. In my mind, it defined, more than
anything else, how much my dad had loved me.

The first Christmas after our daughter Jessica was born,
we spent the holiday with my parents. After dinner, Mom
and Dad sat next to each other on the sofa, taking turns
cuddling their first grandchild. Jessica began to whimper
softly, and Susan took her from Dad's arms. 'She probably
needs to be changed,' she said, carrying the baby into my
parents' bedroom to diaper her. When Susan came back
into the living room, there was a strange mist in her eyes.

She handed Jessica back to Dad before taking my hand
and leading me into the room. 'Look,' she said softly, her
eyes directing me to a spot on the floor beside the dresser.
To my amazement, there, as if it had never been removed,
stood the old pickle jar, the bottom already covered with
coins. I walked over to the pickle jar, dug down into my
pocket, and pulled out a fistful of coins. With a gamut of
emotions choking me, I dropped the coins into the jar. I
looked up and saw that Dad, carrying Jessica, had slipped
quietly into the room. Our eyes locked, and I knew he was
feeling the same emotions I felt. Neither one of us could
speak.

While this is not MY story it is one to which many of us can relate.  What gets me here is the simplicity and clarity. How do we duplicate this in our complex, jargon-filled financial lives today?  Also send us the story of your life that this reminds you of.

Kicking the Can Down the Road

I bet this morning I heard on the financial programs the term "kick the can down the road" four different times. It seems like the phrase of the month award winner for talking about dealing with political problems around the world. 

However, in my life, kicking the can down the road sort of reminds me of simpler times and dirt roads near Stigler, Oklahoma. And I wonder if others have specific stories or memories of kicking the can down the road and what that might mean to them. If you have a story or an experience in your life of literally kicking the can down the road, send us an e-mail and tell us that story.

Airplane

“I'm going to build this plane. I may not finish it during my lifetime, but if I didn't have this plane to work on, my health would go down 10 times faster.”

That was what was told to me by a retired man today. He was talking about the benefit and value of having a meaningful project to occupy his time and mind, and productivity. This is in contrast to a conversation I had this week with someone else, who was talking about their concerns that the world is going to come to an end in December of 2012. And while that might be the case, for all I know, it was just really satisfying to see a man talking about building this plane. It's taking him several years to get it done, and it still doesn't even have an engine in it, but just hearing him talk about the importance of having that kind of a project going on in his life was really uplifting.

What is your Currency?

Recently, I went down to meet with a client in the hospital.  We had a number of documents to complete, including a power of attorney and a living will, and we needed to have the services of a notary.  Well, according to hospital policy, they do have a notary on premises, but not for patients.

However, this particular patient happened to be a pink lady in the hospital on the volunteer staff.  They showed up promptly with the notary and got copies made and everything that needed to done was completed without difficulty.

This got me to wondering about how we save for retirement.  Oftentimes, we think of saving money exclusively as our form of currency.  In this particular case, the years of volunteer service that this person offered to her community resulted in an effortless transaction that made her and her family all feel better at the time.  What's your currency?

Health Care Perspective

I had a meeting with a client today who sent a letter to a rehabilitation hospital after her husband was released.  It was an example of something that we can do as citizens to make a difference in health care costs and how the system works.  This couple is retired military and they are on a Tricare health insurance plan, which is essentially government paid health care.  

When she and her husband were in Arizona recently, he experienced a heart attack and had to go to the hospital.  Upon arriving to the facilities and sharing that they had Tricare, they were basically given the royal treatment.  They had an improved billing situation, a painless check out procedure, the whole bit.  

When he transferred to a rehabilitation facility, there were several procedures being done that his wife questioned and indicated that they not be put on her bill.  At the end of the day, she was extremely angry because she felt like the facility was taking advantage of their government sponsored health plan.

I wonder how many times each of us are in situations similar to that of this couple.  I also wonder if we can fully comprehend the depths of the impact of somebody other than ourselves paying for these bills.

Just imagine if you went to a car dealership and they asked you what kind of car you wanted.  You say, “I'll take the fanciest one you've got and everything on it, since I'm not paying for it anyway, let's just get it all.”  The dealer, knowing that they're going to get paid and knowing they'll make more money the more cars they sell, they just load it up.  So you've got the fanciest car they've got with all the options available and they're happy and you're happy and all is good since you're not paying for it anyway.  That's sort of the state of our health care system as it stands right now.

Middle Class Citizens

I was listening to the radio this morning and heard an accented recorder talking about life in Syria.  This person was recording under an assumed name because of the fear of reprisal and danger to her family.  

One of the things that she commented about was how most of the people living in Damascus, the capital of Syria, are in the middle to upper middle class economically.  And what she said was that it is not common for them to want to upset the apple cart; they really do not want to see a lot of change because life is okay for them.  They're not necessarily opulent, not necessarily doing excellent, but they're doing well enough to say that they are not willing to take a chance on a whole lot of change.  

She also said that while it is relatively easy to get people who are disadvantaged involved in an opposition, it is often very difficult to get average middle class people occupied in a conversation about reform because it has turned steadfastly into either pro or con.  Meaning, in her words, there is no voice of moderation that is neither all for or all against, which drowns out where most people are: in the middle.  

Listening to that story, I just wondered how much like the United States that sounded.  In a meeting this morning, a client reminded me that 40% of Americans are receiving some form of food stamp program.  I wonder just how much we are like the Syrians in that way.