I love posting this article during football season. If you’ve read it before, read it again, as it will be a good reminder for you. If you’re reading for the first time, enjoy!

OK, I admit it. I like football. Although I don’t understand all the strategies just yet, I enjoy watching the carefully
planned plays. Sometimes they work, sometimes they don’t, but nevertheless, very fun stuff to watch.

As I’m watching the games, it occurs to me that football and finances have a lot in common. (I admit, sometimes it’s hard for me to turn my ‘work’ brain off, even in the middle of an exciting game). The plays are carefully planned, the teams spend countless
hours practicing and strategizing, there is an experienced coach that guides the team to victory and they never give up. Their goal is specific, understood by all and there is serious motivation to win. Do you see where I am going with this?

Your money matters, your financial roadmap, requires the same mindset as those big, bad, burly football players. If you don’t have a specific plan in place, if you don’t practice and don’t have someone guiding you, you will probably not end up where you want to. When it’s time to send your kids to college, go on that vacation or retire, where are those funds coming from? What if you lost your job unexpectedly? Do you have reserves to fall back on?

Imagine those football players running onto the field with no plan, no plays. It would almost be painful to watch. Complete chaos. Is that what we enjoy watching? Doubtful.

So, is your financial picture complete chaos? If so, don’t panic. It’s never too late to get things in order.

Start by having a plan. Write down specific goals, what action steps are necessary to achieve those goals and by when. If lifestyle changes must occur, define what those changes are and commit to that change. Sit down and pull all your bills out for the last month. Determine your fixed expenses and compare that to what you actually spend every month. Sometimes this alone can be a real eye opener. Where does all that extra money go? The local coffee house? Lunch out? Those shoes you had to have?

Here’s an interesting statistic: If you saved $4 per day (one coffee) for 5 days per week for 52 weeks and invested that money at 10%, do you know how much you would have after 40 years? Some would say about $80,000, $90,000 even $100,000. Nope, you would have $553,396. Compounding interest is your new best friend.

So, make plans for your vacation and sending your kids off to college, just remember to plan for your money issues as well.

After my blog post last week, I got this great letter from a reader. She agreed to allow me to share her question and my response. You may resonate with her, and as she did, feel better after you read what I had to say. If you missed last week, read the article below this one.

Her question:

I read the article about teens working. I have read other articles with similar information. The part that I have trouble wrapping my mind around is this: once an adult, the child will forever be an adult. There is a short period of time where the child can just be a child. My son, 15 years old, schools 11 months out of the year 5-7 hours a day pursuing his bachelor’s degree while finishing his high school requirements. He participates in speech and debate, Moot Court, Model UN as well as organized sports. He has plenty of friends through those activities and is honestly very happy. So, am I a bad parent for not making him get a job? (He does do some landscaping when jobs are sent his way and he is required to do chores and he gets no allowance.) Is my perspective wrong? Should I pull him from his studies or activities that he loves so that he can work at the ice cream store up the road? I am not being cocky, I really need to know.

My response:

Thanks for asking such a great question. I can hear in your “voice” the struggle you are experiencing.

It sounds like your son is a very motivated and driven young man. To be working on a Bachelors degree at 15 years old is very impressive!

There are two main reasons I suggest a job for teens. One, it teaches them accountability. As an employee, they are required to be at a certain place, at a certain time, doing a job that requires work. The responsibility that goes along with that gives them a good indication of what life is about. Two, with the funds they earn, they can learn how to manage money wisely. They can start to save, invest, give back, spend and understand budgeting.

Having said all that, I believe your son has the first reason down to a science. Given what you have shared with me, he has a total understanding of being accountable and responsible. This is a non issue for you.

As far as teaching him about money, he does need some way to understand smart money management. I know you plan on purchasing the online money school, which will be a great asset for him. I’m hoping he enjoyed the book and learned a ton. This will give him a definite edge when he gets out in the world.

But, like playing tennis, until you go hit the ball, you can’t really know what it feels like to play the game. You can read and study, which will help you with strategy and rules, but until you get on the court, it’s hard to “feel” playing. So, I’m not suggesting he get a job at the local ice cream store, just for the sake of getting a job, but I do suggest he somehow gets some money in his “hands.” How? Here’s an idea I’ll run by you…

Come up with a figure that you spend on him every month, not including food.  Calculate what you spend on clothes, sundries, the activities you mentioned, play money etc. At the 1st of the month, give him that amount of money to budget for the month. Let him experience paying cash for these items and budgeting the money himself. If he runs out of money before the end of the month, let that be a learning experience for him.

You can also include him in your household payments, if this is something you wish to share with him. Take the opportunity to teach him with everyday situations. Whether it’s making him shop for a sale or negotiating a purchase, these daily experiences will help him understand that money management is the key to wealth. It’s not what you make that makes you wealthy, it’s what you keep.

Perhaps he can find a job that pertains to what he is studying. This way it becomes both work experience and income.

He obviously has a great work ethic and is very bright. You have done a great job in exposing him to some wonderful opportunities! As he learns the ropes to being money savvy, he will be well on his way to success!

I hope this helps.

She responsed with feeling much better and understood my point and suggestions.

It’s not often you walk into a doctor’s office with a few questions and leave with a life lesson. On a recent visit to my doctor, I had somewhat of an aha moment.

We got talking about different medical screening tests and how oftentimes they aren’t always dependable. With some medical issues, blood tests don’t alert us soon enough. He brought up the example of pancreatic cancer and went on to say that, more times than not, by the time that disease is diagnosed, it’s too late.

It was then he said something very profound, which stopped me in my tracks. He said, “you just pray you don’t get it and if you do, you pray that you’ve lived your life.” Wow.   Pray that you’ve lived your life. That statement just sat with me.

He left the room for a moment and I just sat there, in my lovely little gown, processing that statement. I quietly asked myself, ‘am I living my life?’ Initially, I got a bit sad, thinking, maybe I’m not. My mind raced with my responsibilities, my hours working, the various projects on my plate, single parenting and more.

As I left the office and spend the rest of the day contemplating that comment, I realized something very interesting. Yes, I was living my life. I found myself reflecting on those things I love; my son, my family, spending time with friends and doing something that makes a difference in the lives of others. I do spend a lot of time with my loved ones and that is precious to me. And, no, I wasn’t living my life. I realized I didn’t include much ‘play’ time. Actually, I had no play time.

We’ve always heard it’s important to live your life to the fullest and never take anything for granted. I totally agree with that and do feel immense gratitude for my life. But, I have to admit, I get caught up in my day to day responsibilities and stresses that I forget to slow down and ‘smell the roses.’

What does this have to do with teaching teens about money? Absolutely nothing. But, it does teach an invaluable life lesson. Yes, it’s important to plan for the future, manage your money wisely and make smart choices in life. But, it’s also important not to get so caught up in planning your future that you miss today.

So, go play. Live your life with no regrets. All the while, be sure to save automatically and watch your spending.  I’m off to play some tennis.

This week’s post is an article written by Alexander Green. I loved his message and had to share with you. Enjoy!

Over the years, my idea of what it means to be truly wealthy has changed a great deal.

As a young man fresh out of college, I equated wealth with a high income -- and soon found myself in one of the nation’s highest paying professions: money management.

It turned out I had a knack for it. Before long I had the spanking-new lakefront home, the ski boat, the Jaguar XJ-6 and all the other toys. When my friends came over for parties -- which were frequent -- most of them assumed I was rich.

I was nothing of the sort. Wealth is not the same thing as income. If you earn a lot of money and blow it every year, you’re not rich. You’re just living high.

My perspective evolved. I recognized that wealth is not about what you earn or spend. It’s about the financial assets you accumulate and the debt you avoid (or pay down). Your balance sheet -- not your income statement -- is the true measure.

Of course, idealists will tell you that money isn’t important, that it doesn’t really matter. I disagree. Money gives you the freedom to make important choices in your life. No one is truly free who is a slave to his job, his creditors, his circumstances, or his overhead. Money allows you to support worthy causes and help the less fortunate. It allows you to do what you want, where you want, with whom you want. In short, money gives you options.

It has its limitations, as well. Money doesn’t buy genuine love or friendship. (In fact, it may bring you just the opposite.) It won’t restore your health, fix your marriage, turn you into “a success,” or even make you charitable if you’re not already charitably inclined.

Money alone doesn’t make anyone wealthy. True wealth is a life rich in love, friends, projects and interests.

Like me, you may know high-net-worth individuals whose lives are impoverished. They are so obsessed with competing, winning and having “more” that they have little time for anyone or anything else. Other economically successful people are less obsessive but remain trapped in stressful, hectic lives. They lack something far more precious than money: time.

This is a bit odd when you think about it. Our ancestors just a few generations removed walked or rode a horse to work (where they often performed backbreaking labor). There were no automobiles, airplanes, cell phones, or computers. They couldn’t have imagined labor saving developments like dishwashers, microwaves, supermarkets, or the Internet. Yet they still found time for leisure -- and would no doubt be mystified by those today who choose to live their lives in a perpetual rush, as if being busy every minute of the day is a sign of success.

If these folks slowed down a little, they might gain a deeper understanding of what is driving them. Is it the intrinsic and monetary rewards of their work? Or is it fear, greed, envy, reputation, status, or some blinkered image of success?

What does it matter how much you make or how prestigious your title is if you spend your days rushing from one appointment to the next, pressured by deadlines and continually interrupting conversations and meals for emails and phone calls? That is not a rich life. Nor is it a terribly attractive image. As an old Chinaman once observed, “man in hurry cannot walk with dignity.”

True, we live in a competitive, 24/7 world. We all have responsibilities and obligations. We want to be productive and meet our professional goals. But that’s just the point, really. It’s a matter of balance -- and making a priority of what matters most.

You may know from my other letters that I am a huge fan of Thomas Jefferson. He was a statesman, historian, surveyor, philosopher, scientist, architect, inventor, educator, lawyer, farmer, breeder, manufacturer, botanist, anthropologist, meteorologist, astronomer, paleontologist, linguist, Biblicist, mathematician, geographer, scholar, bibliographer, translator, musician, gastronome and the nation’s first great connoisseur of wine. He authored the Declaration of Independence, was Governor of Virginia, served two terms as President of the United States, founded the University of Virginia and much more. Despite his many accomplishments, Jefferson noted near the end of his life, “Nothing really matters except your family and your friends.”

Our most precious resource is the short, unknown time we have left on this little blue ball. It is perishable, irreplaceable, and, unlike money, cannot be saved. Americans live, on average, just 28,000 days. That gives us, if we’re lucky, roughly 443,000 waking hours. (And most of them may be behind you.) So it behooves us to ask, “Am I using my time well?”

Surveys show that more than half of Americans feel rushed, stressed and pressed for time. How do you regain control? In much the same way we create investment capital…

You’ve probably heard that to become a disciplined saver you have to “pay yourself first.” That means setting aside at least ten percent of your income before you pay the rent, buy the groceries, or hit the mall. If you wait until you’ve bought everything you want, there is usually little left to save. To avoid this, we pay ourselves first.

Time is similar. If you intend to spend more time on leisure, or with your closest friends and family, or in other high-value activities once you get everything done, that moment remains elusive. Important but less urgent activities take a back seat to urgent but less important ones. So we have to make first things first. (Follow through, of course, is everything.)

In sum, a genuinely rich life is not about income, assets, or possessions. It’s about living your life your way.

Money helps. But that is a secondary consideration. How you spend your time is the first.

Carpe Diem,

Alex

Alexander Green is the Investment Director of The Oxford Club. The Oxford Club Communique, whose portfolio he directs, is ranked among the top 5 investment letters in the nation for 10-year performance by the independent Hulbert Investment Digest.

Given what is happening in our world these days, it’s easy to get stuck. Stuck in the unknown, stuck in fear, or stuck with worry…it tests us all. If we allow ourselves to only focus on the challenges and tragedies, our days can become very bleak.

I’m not suggesting we ignore what is happening around us. Quite the contrary, I feel we should take action to help those around us in every way possible. Whether it is our time, our money or our prayers, we should help.

So, where am I going with this? Over the last several years we have been bombarded with the financial crisis. It would be literally impossible to turn on the news without some sort of story related to our economic challenges. No doubt, we have had some difficult times.

But, I’m here to share some inspiring news! Here’s some statistics that I think will make us all feel better. As you probably know, in 1932 the U.S. experienced the Great Depression. Did you know that in the subsequent 5 years, the market experienced a 194% return? Exciting to think about, isn’t it?

In 1982, the U.S. had the worst recession it had experienced in the prior 25 years. But, in the subsequent 5 years, the market experienced a 183% return!

Here’s one more. In 1994, the U.S. had a dramatic tightening of interest rates, (which means interest rates were going up). In the following 5 years, the market experienced a 213% return! Wowza!

Even in our difficult times, we have rebounded, and rebounded nicely. Look to the future with optimism and hope, as we will surely look back at this time in history and appreciate the healthy rebound. It’s all going to be okay…

Shortly after the holiday break, my son came home from school, excited to tell me all about the new phones his friends got for Christmas. “They’re so cool mom, the phones have the capability to do…” he went on to share all the latest and greatest phone features known to mankind. He pleaded with me to upgrade his phone, before the contract allowed for an upgrade, just so he could have all the bells and whistles these new phones have to offer.

If it isn’t a cell phone upgrade, it’s a new outfit or a trip to the sporting goods store. I hear it from parents all the time. Seems that our kids want and want and want. Don’t get me wrong, there’s no harm in wanting. We all want, even as adults.

But, prioritizing our wants, separating those wants from our needs, and focusing on long term financial wealth is oftentimes difficult for adults, let alone our kids. But, prioritizing and focus we must!

Part of that challenge is the peer pressure our kids experience at school. Kids can be tough on each other; being popular, accepted and liked today are far more important than any issue in the future. Trying to convince a teenager that they should be saving for college, a house, or “just to have money in the bank”, rather than buy the latest gadget or pair of jeans is no easy task. Believe me, I’ve tried.

So, what is a parent to do to drive this point home?

First, acknowledge your teen’s feelings and let them know you once felt the same way. If you have an example to share from your younger years, tell them about it. Showing them you understand how they are feeling will help drop their walls.

Second, talk about the importance of balance. Sure, they can want, and have, the latest gadget, once they can afford it. Make them pay for it, once they have also socked away some money in savings. This teaches them several important lessons: one, delayed gratification; two, the importance of savings; three, balance is critical.

Third, lead by example. When you want something, but can’t quite afford it just yet, use the opportunity and discuss the situation with your kids. Show them how, you as a parent wants something, but you aren’t running out and buying it. You must practice what you preach or your kids will catch you every time.

In the end, peer pressure is a fact of life we can’t escape. As adults, we experience this as well, just on a different level. As we get wiser, we don’t let this nonsense get to us. Meanwhile, pack your patience and keep the lines of communication open.  Needless to say, my son never got a new phone.

Here is the question I was asked recently:

Is there an advantage to paying off your mortgage when you are in your 70′s with financially stable monthly income and retirement savings?  House is worth about 1 million and I owe $300,000.

First, I would like to say, well done! You’ve obviously done a great job of managing your money wisely.

Your question is a good one, with several factors to take into consideration. From a purely financial perspective, I recommend you contact your CPA to determine the tax consequences of paying off, or not paying off, your mortgage. Depending upon your income, tax bracket and other deductions, it may, or may not, make sense to pay your mortgage off.

From an emotional perspective, many find a sense of peace knowing the house is owned free and clear. They know the equity will be passed onto their heirs, without concern of debt issues. If you are one to feel at ease, knowing you have no debt, then paying off your mortgage may make sense, assuming of course, it doesn’t take a big bite out of your remaining assets.

Having said all that, I do have additional points that I think you should consider. Suze Orman would have my head for what I am about to say, but I’ll say it anyways. Although owning a home free and clear does bring a sense of peace, it may not be the best use of your funds. Here’s why: if the majority of your assets are tied up in your home, you may not have access to money when you need it most. If you needed funds for a medical emergency or if Mother Nature decided to surprise you with an unforeseen disaster, you cannot get to that equity immediately. Cash is king!

The other consideration is the interest rate on your mortgage. If your interest rate is very low, you may be borrowing cheap money. Perhaps you can put that money to better use by investing those funds in the stock market, real estate market or a business, rather than paying off your mortgage. Don’t get me wrong, I am not saying you should leverage your home to the hilt to invest in risky alternatives, especially at this time in your life! Capital preservation is paramount at any age, but especially in your golden years. But, making your money work for you is a wise investment strategy, so do weigh all your options.

Many factors go into this decision, as mentioned earlier. You must consider the amount of liquid assets in your portfolio, your present living expenses, interest rate on your mortgage, tax consequences, risk tolerance, age, and alternative uses of your funds.

Please discuss these details with your accountant and financial advisor, as these individuals know your personal circumstances. Doing this homework before you make any major decisions is always a must.

I was recently asked a question about credit card debt that I think many people can resonate with, so I decided to post my response. The question was, “I have about $8,000 in credit card debt and I’m making payments, but it seems I’m not making any progress. Should I just declare bankruptcy?”

Here is my response:

Your question is a common one, especially in these challenging economic times. People are using credit cards to buy groceries, gas and other necessities. I’m happy to hear that you are making payments and taking a proactive approach.

You aren’t seeing much of a dent because most of your monthly payments are going towards interest, not the principal. Take a look at what interest rate you are paying and try to get that down. Contact your credit card company and speak to a supervisor. Tell them you are doing everything you can to make these payments, but you are having a tough time. Ask them if they can reduce your interest rate or have any type of special programs for people in your situation. Bottom line, it’s in their best interest to work with you, because if you decide to declare bankruptcy, they may never get a dime. (By the way, bankruptcy should be avoided at all cost, as it creates havoc to your credit score for years).

Fortunately, there is a lot of help for consumers who are overwhelmed with their debt. Some of the ‘debt help’ or ‘debt consolidation’ businesses aren’t exactly legitimate. They will typically ask for a nice chunk of money up front and oftentimes, can create more of a mess than what you started off with. Only work with debt counselors that are recommended by the National Foundation for Credit Counseling (www.nfcc.org- 800-388-2227).

These counselors will sit down with you and work out a repayment plan. Typically, they will gather all your debts and you will make one single payment to the counseling agency. Oftentimes, the counselors will negotiate deals where some of your credit is forgiven or they can get your interest rate reduced. This service isn’t free though, so be sure to ask what their fee is.

Again, much of this can be done on your own. Don’t be afraid to contact your credit card companies and push a bit. If they say no, call them back in one month. Always speak to a supervisor or manager.

On the other side of the coin, let’s talk about ways you can make larger payments every month. Take a hard look at your spending habits and find items you can cut out of your monthly expenses. This part of the equation is always challenging, as we have certain habits that can be tough to break. Here’s a few simple ways to cut back:

• If you eat lunch out at work, consider taking a sack lunch
• Make coffee at home in the morning rather than hitting the coffee shop
• Check your cable TV and cell phone plans and see if you can cut back on services
• Watch the ‘emotional spending’ going on (buying something to feel better)
• When purchasing something, ask yourself “do I need this or want this”. If you answered ‘want’, put it back.

I realize this can feel like sacrificing quite a bit, but consider how great you will feel when your credit cards are paid off. Plus, the interest that you will be saving over time can be applied towards building your financial freedom account! I know you can do it!!

We’ve often heard the saying, “it’s not what you say, but how you say it that matters.” I agree with that statement; however I have a slight twist to it.

With the present state of the economy, we have watched many families struggle, if not our own family. People are fearful, worried about their future, their kids future, finding a job, paying the mortgage or putting food on the table. As parents, we are concerned that our kids will be traumatized by these experiences and somehow lead a life of ongoing challenges.

The language you use when speaking with your kids can dramatically affect whether they see “challenges or opportunities”, “tests of strength or life as unfair”, “tests of courage or I give up.” Here are three tips that can help you when speaking to your kids.

Tip #1

When the kids are pleading with you to buy something, rather than saying, “we can’t afford that” respond with, “that is not a good use of our money right now.”  This statement shifts the mindset from ‘living in lack’ to ‘living with choices.’  We all have choices; we just need to be aware they exist.

Tip #2

Empower your kids by shifting the opportunity to them. In the above example when your kids are asking you to buy something, your response could be something like “what can you do to afford buying this for yourself?” Now your kids have an opportunity to think about how they can make their own money and become independent from mom or dad.

Tip #3

Perseverance in life is a crucial life skill to teach your kids. Whether you are following your dream or getting out of debt, never giving up is a powerful message to give your kids. When talking at the dinner table or on a drive, bring up this important topic and discuss examples in your own world.

Kids are watching you and how you respond to life. Give them the gift of a strong mindset by shifting your own thoughts and beliefs.

The final mistake that I feel parents are making is not getting educated themselves. A recent Jumpstart Coalition survey showed that “relatively few teachers felt they were adequately prepared to teach personal finance topics.” Parents and teachers, struggle with feeling educated themselves when it comes to financial literacy. It’s no wonder these topics aren’t discussed at home (number one mistake). Some parents are ashamed or embarrassed to admit they don’t know how to balance a checkbook or truly understand how credit cards work. Understand that it’s okay not to know everything, but it’s important to seek help. Reach out and get the education that will benefit both you and your kids. Empowerment and independence is a gift for every family member. Besides, its good for your kids to see that we as parents don’t know everything.