A Bodey in Motion

Building momentum, one step at a time

FPU Lesson 7 – Retirement and College Planning

Once the debt is gone and you’ve put together an solid emergency fund, it’s time to start working on funding the future. Both for yourself and your children. Below are my notes from the lesson, including the key points that I highlight from the video when leading the class, and some supplemental material that I think could help the class go further on this topic.

Financial Peace Unversity

Lesson 7, Retirement and College Planning

Key Points

Independence in the future is up to you. Work with investment advisors who have the heart of a teacher. You are responsible for funding whatever kind of future you want to have. Do not count on government programs or handouts to provide for you. Make a plan and start now.

The best way to invest is to be out of debt first. Work the Baby Steps. If you try to fund your future while trying to save for emergencies, put aside money for your kids college, and make all of your debt payments, well you’re not going to do any of those things well. Multitasking is a bunch of crap. Only work on one goal at a time until you’ve mastered it, and then move to the next step.

Don’t put all of your eggs in one basket. You must diversify. Spread your money around. You should never pile all of your wealth into one particular investment. The more you spread it around, the better your money will grow.

Fund college education only after you are fully funding your retirement. Your kids future in college may or may not happen. Your future (and your spouse’s) is definitely coming, and you need to be ready for it. There are a lot of options for your kids to fund their education, and it’s probably healthy to let them explore them as a part of the process.

Challenges

Can You Get a 12% Return? Investing is about long-term growth, and requires patience. Dave bases the 12% number on the average performance of the S&P over the past 80+ years (11.84%). Individual annual returns are going to fluctuate:

2010: 15.06%
2009: 26.46%
2008: -37.00%
2007: 5.49%
2006: 15.79%
2005: 4.91%

Based on 20 to 25 year averages, I feel 10% is more realistic, but ask me again in 5 years.

What’s Your Magic Number? How old are you going to be when you retire? Is 65 set in stone?

Consider Life-Long Work. If you are doing work that you love, why would you want to stop doing it? What does that do to the concept of retirement?

Say No To Student Loans. The average student graduates with $27,000 in loans (In 2011, it was $24,000, and in 2008 it was $18,000. Not a good trend). In most circumstances, these are NOT able to be bankrupted.

Is Education Changing? Almost everyone predicts that the next big economic bubble will be in education. At the same time, how we learn and what we need to learn has changed. Will the next decade do to the education industry what the last decade has done to the newspaper industry?

Go Deeper

  • Thou Shall Prosper by Rabbi Daniel Lapin
  • 48 Days to the Work You Love by Dan Miller
  • Stop Stealing Dreams by Seth Godin
  • Debt Free U by Zac Bisonette

Next week: Lesson 8 – Real Estate and Mortgages

April 17, 2013 Posted by | Marriage and Family, Work and Money | , , , , , , , , , , , , , , | Comments Off on FPU Lesson 7 – Retirement and College Planning

FPU Lesson 6 – The Role of Insurance

Insurance is a topic that few people enjoy, but its presence during key points of our lives can have a huge impact. It’s financially vital to understand and purchase the right kinds of insurance. Failing here can have huge repercussions. Below are my notes from the lesson, including the key points that I highlight from the video when leading the class, and some supplemental material that I think could help the class go further on this topic.

Financial Peace Unversity

Lesson 6, The Role of Insurance

Key Points

Understanding and having the right insurance is playing good defense for your wealth. Insurance is all about transferring risk. Your emergency fund and monthly budget needs to be in place to manage the small stuff, but a medical emergency can devastate your savings. Pay a little every month in insurance to cover the possibility of a future crisis.

Learn the types of insurance you really need and get it now! There are so many kinds of insurance out there, but only a few of them are really necessary. The rest are a waste of your money. Cover the core risk areas, avoid the fluff.

Don’t fail to leave a legacy. Get a will. 70% of Americans die without a will, don’t be one of them. Setting up a will is neither expensive, nor difficult, so there isn’t a good excuse. Don’t leave your family in the lurch.

Challenges

Check Your Options. Your employer may not be the best way to get your insurance. If you lose your job, you can lose your health or life insurance. Plus, you might be able to get a better deal by shopping around.

Check Your Credit Report. Review your credit report at least once a year. You can go to annualcreditreport.com, choose your state, click ‘Request Report’ and follow the simple steps to get a current free credit report from one of the three credit agencies.

Next week: Lesson 7 – Retirement and College Planning

April 10, 2013 Posted by | Marriage and Family, Past and Future, Work and Money | , , , , , , | Comments Off on FPU Lesson 6 – The Role of Insurance

FPU Lesson 5 – Buyer Beware

With the fifth lesson, we start putting up our shields and gaining power over our spending habits. Below are my notes from the lesson, including the key points that I highlight from the video when leading the class, and some supplemental material that I think could help the class go further on this topic.

Financial Peace Unversity

Lesson 5, Buyer Beware

Key Points

Learning the methods used to market products to you can put you back in control. Major corporations and organizations spend millions of dollars determining the best ways to convince you to buy their stuff. Color (Century 21 signs are an ugly shade of yellow for a reason), repetition (who deserves a break today?), perceived value, product placement, and on, and on. What they’re doing isn’t necessarily illegal, or even immoral, but it’s important for all of us to be aware of  it.

Always talk to your spouse before making any major purchase. Each family has to determine for itself how much constitutes a “major purchase.” (On average, it’s about $300.) When you get ready to buy something over that number, though, everyone has to agree to the reasons the money is being spent. No exceptions.

Wait 24 hours before making a major purchase. One of the biggest traps we fall into in our culture is the false sense of urgency that is applied to everything in our lives. We’re always being urged to “ACT NOW!” It causes to move on a purchase before we’ve completely thought it through. By taking the time to sleep before you spend the money, you give yourself the chance to feel the true weight of that purchase.

Challenge

End Immaturity. On its own, “I want it!” isn’t a legitimate reason to make a purchase. Tell your inner child to shut up by memorizing and implementing these five key strategies:

  1. Wait Overnight. (We’ve already covered this one.)
  2. Consider Your Buying Motives. (Consumption will never result in happiness.)
  3. Never Buy Anything You Don’t Understand. (If you can’t explain it, then you don’t understand it.)
  4. Consider the Opportunity Cost. (If you spend this money here, what are you unable to use it for later?)
  5. Seek Counsel. (Start with your spouse, but also have wise friends. Maybe even a financial coach is needed.)

Go Deeper

  • Affluenza: The All-Consuming Epidemic by John de Graaf, David Wann, and Thomas H Naylor
  • Stop Acting Rich: …And Start Living Like A Real Millionaire by Thomas J. Stanley

Next week:, lesson 6 – The Role of Insurance (Everyone say “Yay! Insurance!”)

April 3, 2013 Posted by | Marriage and Family, Past and Future, Work and Money | , , , , , , , , , , , | Comments Off on FPU Lesson 5 – Buyer Beware

FPU Lesson 4 – Dumping Debt

The fourth week of FPU attacks the biggest problem most of us have when it comes to winning financially. Out-of-control debt. Below are my notes from the lesson, including the key points that I highlight from the video when leading the class, and some supplemental material that I think could help the class go further on this topic.

Financial Peace Unversity

Lesson 4, Dumping Debt

Key Points

Consumer debt has only become accepted as normal in America over the last 40 years. The credit card has only been in existence since 1950. It wasn’t until after 1970 that their use became widespread. Your ‘need’ for a good credit score is a recent invention. The Sears catalog used to warn customers against buying on credit, and now it’s their biggest money-making department.

Don’t believe myths about debt. It isn’t part of a healthy financial plan. Debt is a product being sold. Remember that whenever they offer a financing option. You’re being sold a product that is tremendously profitable for them. You don’t have to have a car payment. “90 days same-as-cash” isn’t actually the same as cash. Your FICO score has nothing to do with your financial stability. You can live a perfectly normal life without ever touching debt.

Remember the importance of gazelle intensity. It’s very easy in our culture to wander into a crippling amount of debt. Between stupid loans and consolidations, you can suddenly wake up and find yourself under a mountain of payments. Escaping from that kind of mess takes focus, sacrifice, and intensity. The same motivation a gazelle has when it’s running for its life.

Challenge

Chop some plastic. The first step to getting out of debt is to STOP borrowing more money. This is the week we break out the scissors and ask the class if they’d like to cut up some credit cards.

Go Deeper

If you want a more honest picture of how debt and wealth really works, check out these resources:

Next week, Lesson 5 – Buyer Beware.

March 27, 2013 Posted by | Marriage and Family, Past and Future, Work and Money | , , , , , , , , , , , | 1 Comment