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

The Legend of the Monk and the Merchant

The Monk and the MerchantI received a copy of this book when I was out in Nashville getting trained as a financial coach by Dave Ramsey’s team. (Actually, I received a half-dozen books for free while I was there. That was pretty awesome.) If you are an employee at his company, then this book is required reading. That sounded like a ringing endorsement to me, so I moved it to the top of my reading list. At 160 pages, I found it an easy read, and I was able to tear through it in less than a day.

At its heart, this novel is trying to impart twelve principles that are to be the building blocks of a successful life. The author, Terry Felber, has couched these principles in the fictional story of a grandfather retelling his history as a lifelong merchant to his grandson who is about to enter the marketplace. The story is set in and around Rome in the 16th century, but the setting merely serves as a painted canvas backdrop for the conversations between the main characters. The struggles of a young merchant learning to become a success in business while serving his Maker are what takes center stage.

     Antonio turned the page of the book in his hands and laid it down on the table  in front of him. With his eyes still connected with Julio’s, he spun the book around so it faced his grandson.

     “This is the first secret to success,” he said as he pointed to the only writing on that page. Julio looked down at the book and read the words out loud.

Each of the book’s twelve principles are taught within the context of how they were learned by the old merchant, and the story flows very smoothly from tale to tale. Felber is clearly making the case that being in business, either as an owner or employee, is a spiritual action. Our work is a form of worship, and we are honoring our God by serving our customers. Work is a ministry, no matter what the profit margin is.

Unfortunately, the simple wording of a few of Felber’s principles can be misinterpreted. For example, the first principle is “Work hard and God will prosper you.” That can easily be taken to mean that God delivers riches to those that please him. That’s not biblical, and within the context of the story, it isn’t what is being said. Based on my reading of the book, I seriously doubt that Felber is pushing a prosperity gospel. He simply wants us to approach work, money, and business with the right attitude.

     “Antonio, you have done well. You have followed your passion and built a great empire to the glory of God. You have used your gifts and talents to serve people and to extend the reach of your influence. Now it is time for you to reach up.”

I recommend The Legend of the Monk and the Merchant. It’s not a perfect book, but what is being shared is a great introduction to the concepts of work as ministry and biblical money management. The simple language and short length make it a quick read and easily accessible by young men and women in your life. I’d encourage you to get the version that includes the forward by Dave Ramsey, as his take on the material does a good job of setting the tone for the book and is well worth the read.

March 18, 2013 Posted by | Read and Reviewed, Work and Money | , , , , , , , , | 1 Comment

Quick Hits of the Week

  • Each person who comes to me for financial coaching knows that they need to make some changes. Part of my job is to identify what obstacles they’ve set up that keep them from changing, and teach them to overcome those obstacles as quickly as they can. Dave Ramsey’s team has identified a few of the really common hurdles that we set in our own way. What’s your biggest obstacle?
  • Why should we go above and beyond? Because it’s a privilege. Seth Godin on doing the extra work.
  • If you are serious about the shrinking of individual civil liberties you should look at this chart. On the other hand, if you’re primarily interested in reducing wasteful government spending, you should take a look at this chart. If you have any questions, or want to learn more, you should go here. We can argue over the minutia presented, but the overall message is correct, and it’s time this country made a change.

Is there something valuable or important or cool or funny or weird or awesome out there I missed this week? I can’t hit it all, but you should let me know about it by dropping me a line or sharing it in the comments below! I’d appreciate the heads up.

October 18, 2012 Posted by | Quick Hits and Links | , , , , , , , , , , | Comments Off on Quick Hits of the Week

It Doesn’t All Pay the Same

Currently, I’m employed as a software engineer at a huge corporation. The bureaucracy and overhead of a large organization can unfortunately result in times of unsteady work. I don’t want to get into the details of the seasonal ebb and flow there. Suffice to say there are times when the tasks that we are presented with to fill the gaps between major efforts are…less than gripping.

That’s not to say that they’re not important. We get paid way too much money to be given just meaningless busywork.

(Alright. Some of it is meaningless busywork. Not that much, though.)

Anyway, when a few of my comrades have a moment to sit together and talk about our individual drudgery, there’s a phrase that gets thrown around to justify our toils and trials:

“It all pays the same.”

In other words, no matter what tasks your days are being filled with, your salary, or the hourly rate you are paid, remains the same. The work may not be interesting, or challenging, but it doesn’t matter as long as you continue to get your regular paycheck. That’s true, right?

In a word, no.

Work must provide the opportunity for spiritual and personal growth as well as financial success.  The irony is that if it does not provide all three, there will be a natural pressure to keep the financial rewards low.  The search for money alone will always be self-defeating.

– Dan Miller

Our paycheck doesn’t tell the whole story. There are more rewards for your work than just the money you earn. We are paid on emotional and spiritual levels, too. Not every task does that well (especially not meaningless busywork).

The organizations loses out, too. You will never be as productive when doing a task that you are not skilled at or emotionally suited for. Despite your best intentions, your response to working at something that you hate will never compare to the quality you produce when doing something you love.

Understand, I’m not saying that every assigned task should be in your special ‘zone of excellence.’ It’s good to be stretched now and then. Important work needs to happen even if the right person isn’t available to do it. We just need to recognize and accept the inevitable loss. It won’t pay the same.

Question: What’s the one task that you hate doing, but has to get done at work? What can you learn from it?

September 17, 2012 Posted by | Work and Money | , , , , , , | Comments Off on It Doesn’t All Pay the Same