Small Changes May Be Necessary

Excerpt Adapted From: The Financial Shepherd-
Why Dollars + Change = Sense by Glen Wright and Sy Pugh

I have a client who told me that she had been taught to have zero debt; none. She paid cash for everything, had no credit card debt, and even paid off the mortgage of her first home in 10 years. On the surface, this sounds like a really good thing. Fast forward a few years, and she wanted to move to a more prestigious part of town and was wondering how to make this happen. Her thoughts were to sell her home and take all of the earnings and invest in her new home, then sign up for a 15-year mortgage to pay it off faster. All of this sounds great, except that she had a few holes in her plan.

First, she did not have an emergency reserve fund; she only had a line of credit on her home. She also has a son who was 10-years-old at the time and she had not saved anything toward his education. At age 45, she would have to work until age 70 before she could retire comfortably because she had not saved enough in her retirement to cover her living expenses. So I recommended some changes in her plan:

Save and invest. Put only 20 percent down on the new home and invest the difference. Her mortgage rate was 5 percent fixed for a 30-year loan (versus 4.75% for the 15-year, not including its deductible); and over the last 10 years the S&P 500 index has averaged over 8.5 percent.
Invest for the future. The payment difference between the 15- and 30-year mortgages was $900 per month. I recommended that she save that extra $900 to invest and help build a college savings fund for her son.
Earn rewards. She loved to travel, so I suggested she get a travel reward credit card and pay it off every month to get extra bonus travel points. She put everything on her credit card and paid it off every month and received multiple free airline tickets which saved her thousands of dollars per year simply by paying with a reward card.

Just by taking some basic, straightforward steps, she was able to take a good financial situation and make it much better in addition to being much better prepared for the future.

The Importance of Wise Counsel

Excerpt Adapted From: The Financial Shepherd-
Why Dollars + Change = Sense by Glen Wright and Sy Pugh

At the end of this book, in the Top 50 Financial Terms section, we define what to look for when identifying Wise Counsel: advice, information, warning, direction, suggestions, recommendations, caution, guidance, or admonition that provides direction as to a decision or course of action or in setting standards or determining a course of action. When it comes to finances, rarely does Wise Counsel come in the form of friends and family who haven’t been professionally trained as financial planners or licensed counselors to help you face or navigate some of life’s more complex issues. If your money and your children’s futures are on the line, it is worth investing the time and energy to locate quality, well-trained, certified individuals who have some level of accountability for properly handling your money and money-related matters.

A good place to start is with referrals from respected individuals whose judgment you trust. Be prepared to ask a lot of questions and take notes to identify reputable financial planners and counselors in your area. It’s also worthwhile to research the recommendations of various professional associations such as the Financial Planning Association, the National Association of Personal Financial Advisors, the American Institute of Certified Public Accountants, and the National Board for Certified Counselors.

Licensure is the key when looking for a qualified counselor/therapist. Be mindful that the terms counselor and therapist are often used interchangeably. In fact, the terms themselves can be related to many other areas outside the intended use in this book. People without any specified skill sets are calling themselves counselors and therapists. For example, there are credit counselors and massage therapists. Neither of these two jobs requires the licensure process that identifies the service provider as a counselor/therapist that is highly skilled and trained in this area of expertise. The difference in the use of the term and the actual discipline is the licensure and the stringent requirements that are needed to obtain and maintain such licensure. This licensure comes with a governing body by which ethical guidelines are provided and enforced. This licensure also tells the consumer that this person, at the very least, completed a master’s degree program

from an accredited university. Among professional groups, a Licensed Professional Counselor (LPC), Licensed Clinical Social Worker (LCSW) or Licensed Psychological Associate (LPA), are good resources that should be considered when seeking wise counsel to help guide you and your family through uncertain or challenging situations.

[Glen] The Bible says in Proverbs 11:14 (KJV), “Where there is no counsel, the people fall; but in the multitude of counselors there is safety.” As a certified financial planner with a firm that has vast resources, I could help my clients with their banking needs. However, I feel that it would be a disservice to my clients because that is not my expertise. Keep in mind that your financial planner should act as the quarterback for your team and pass the ball to the appropriate receiver at the right time – with no interceptions. Remember, ultimately, you are the owner of the team, so make sure you have the right players on your squad.

Should Children Be Involved In Family Financial Discussions?

Excerpt Adapted From: The Financial Shepherd-
Why Dollars + Change = Sense by Glen Wright and Sy Pugh

Training and teaching children how to become Financial Shepherds starts before they know anything about money. It begins with the toys and the belongings that parents provide for them. As parents, we should teach our children to take care of the things that belong to others even better than their own things. Notice this change from the typical mindset of our society.

Since everything belongs to God, we teach our children “everything belongs to God”: the house, cars, money, everything! Since this is the case, we are to take care of God’s possessions better than our own. Children are more impressionable, so this will sink in sooner than you realize. In fact, my 5-year-old daughter finds joy in saying, “Daddy, this is God’s house.” If she understands that lesson at age 5, imagine how far ahead of the financial game she will be when she’s older and responsible for her own finances. The most important way to teach this principle to children is for parents to live it daily. When you change the way you think about finances, those that depend on you and follow your lead, will also have a changed mindset.

Don’t be afraid to talk to your children even if you aren’t where you want to be financially. Make it a point to tell your children the truth (age-appropriate information that they can comprehend). Even if you are in a bad place, give them a basic sense of your family’s financial reality so they don’t live in fairy tale land and have unreasonable expectations. This level of honesty will prevent your children from making the same mistakes you made. On the flip side, if you are financially stable or well-to-do, inform your children of that as well. Focus on the fact that God has blessed your family with more resources so that they will demonstrate the principle of ‘blessed to be a blessing.’ The point is to be honest with your children and prepare them to be good stewards and future Financial Shepherds.

Invest in Yourself – March 2017

Notes from The Financial Shepherd

Why Dollars + Change = Sense by Glen Wright and Sy Pugh

Proper investing allows you to purchase into tangible companies, products, and services that meet a real need or supply a demand. True investing correlates with the cycle of business and the production of goods and services, not a whim, lucky numbers, or a hunch. Even still, it is important to seek out qualified professionals to lessen the chances of losing in the market. And remember there are some strategies that allow you to participate in market gains, but not market losses (Index Annuity). Did you know that (former) Federal Reserve Chairman Ben Bernanke has nearly all of his retirement dollars in annuities? Not a bad strategy. And if it is good enough for the chairman of the FED, then it might work for you as well.

When you invest in the stock market you are literally buying companies. The stronger and larger the company, the better the odds are for success. For example, we know Walmart probably will not be going away anytime soon. Also, investing allows you to participate in the collective brain trust of experts and access the experience of successful people. I often hear people say that because they didn’t go to the “right” school or get in the “right” circles, they can’t succeed on a higher level. That is not the case. Although you may not know John Bogle personally (Vanguard Funds Founder) and may not have his Ivy-league education, you can still invest in his Vanguard mutual funds and benefit from the company’s expertise. Investing opens a whole new world!

The people who are most successful in life are those who envision the future-based version of themselves and use their present-day self to plan on achieving that goal. Our God is a God of vision, and not just for today. We can learn a lot from other people who are already where we want to be in life. We can pray to God to send us the right people to help guide us down the path to financial independence so that we don’t get misled by wolves in Financial Shepherd clothing. If you desire to be wealthy, you have to purposely meet with professionals who are trained to work with wealthy individuals and who know how to grow and maintain wealth. Also, if you know someone who has amassed wealth the right way, don’t let your pride get in the way of reaching out to them.

Here and Now