Advising the Mirror

Practicing what I preach, defining and communicating my goals increases the likelihood of achieving them. So now you’re part of my accountability plan.

1. Complete my black belts in TaeKwonDo and Arnis by February, 2012. Cost for training = $1,200 less the credit given for instructing.

2. Complete the Seattle-to-Portland bike ride with my wife in 2011. Cost for better new (used) bikes for both of us = $3,000. We have many good friends who are experts at cycling and we’re going to use their expertise to help us find good used bikes at the right prices.

3. Have a 15 minute conversation in French with someone fluent in French by April, 2011. Cost of language instruction = $299.

4. Be able to swim 60 continuous minutes by 12/31/10. Cost = $0 (included in current club membership).

5. Play the drums to all songs written by The Police. Cost = $0.

6. Set date and plan family trip to Australia. Cost = $Figuring this out. We’re almost able to use our miles through our Alaska Airlines plan to pay for all four tickets! My wife’s a genius on hotel deals and budget travelling, so I’ll keep you posted on this.

 

This is what’s next and this is what excites me.

 

The Fear of Financial Planning

My smart brother-in-law and I were talking last night and he brought up a good analogy about why some people are uncomfortable talking about setting financial goals and then developing a plan for achieving them. He said that much like knowing you need to go to the doctor, there is a fear that you’re going to be told something that you don’t want to hear.


He went on to say that most people have that internal voice telling them “you should be saving for retirement”, or “you should cut back on your spending”, but to have someone present you with a written plan that tells you the same thing with all the charts and graphs demonstrating not only why you should but also pointing out the problems if you don’t is uncomfortable. Add to this the complexities and technical jargon of taxation, IRA-contribution limits, investment choices, etc., and it is no wonder that many people have a natural inclination to put off creating a formal financial plan.

I find this very insightful and very true. Bothered by this, I called a friend this morning whom I think has done a tremendous job of becoming more financially happy and I asked her about her fear of financial planning.

She claims to have been quite uncomfortable when she received her first financial plan. She had a lot to do and a lot to change. But she says she’s now a total convert and an evangelist for financial planning because it has given her the motivation and the design for creating small habits that over time have helped her tackle some of her bigger goals, like retirement. “Nobody likes the start of an exercise regimen, but everyone sure likes the results once it has become a habit. My financial plan was hard to start, but it is now exactly why I am so much happier with my financial situation. I know what I’m doing and I know where I’m going.”

"Secret" of Success

I was asked this question today:

Q: What is the secret to achieving financial goals?

No one competent in my industry really believes in any secret, but I do believe that the folks who are most likely to achieve their goals have these traits in common:

1. They have a very describable and specific vision of what their goal is.
2. They buy-in to the reality that every decision has a consequence.  In order to get X, it will cost them Y.
3. They have a strong sense and understanding of their own tolerance for risk.
4. They don't spend money accidentally and without knowing where every dollar goes and why.
5. During times of trouble they have an indomitable spirit.

Every one of those traits belong to someone prepared to keep a long-term focus and prepared to be intentional about what they want no matter all of the other details involved.  There are a huge number of details and plans that go into achieving a financial goal, of course, but none of those details matter without the traits that lend themselves to making good decisions.

And these traits have proven themselves in people from all backgrounds, income levels, ages, and occupations.  Financial success starts with the brain, not the paycheck.

Financial Planning With Intention and Ignition

Chad Wall and I talked about starting Wall Financial Group for a few years back in the 1990s without much courage to do anything about it. We’d talk about the concepts and the business plan and many of the other nuts and bolts of starting our business, but we lacked intention and ignition. We were motivated by the idea but didn’t act, and for more than a couple of years we fought the urge to start something we were excited about and instead stayed with what we thought was safe and comfortable.

The problem was, we weren’t happy in that safe zone. And as many people have found out over the last few years, “safe” isn’t always safe given corporate buyouts (and bailouts), acquisitions, down-sizes, etc. There are two futures ahead of you; one you can wait for, and one that you can go get. I’m not convinced that waiting has any real element of safety to it.

Ideas like making a career change, or moving to a different city, or choosing to become a one-income family, or retiring aren’t easy to execute. There are many working pieces to your financial machine and they all have to be clicking at the same speed if there’s to be any chance of success. This is why we stress the importance of goal-based planning. Putting those goals out there, making a statement as to what you want and how you intend to live is essential for getting your financial life ready to support how you want to live.

If you have a dream of occupation, or of charity, or of just living a happier life think of Abraham Lincoln’s quote, “The best way to predict your future is to create it”.  You start by declaring your intentions.  We then can help you take action.

Things to Learn

It’s not news to say that the economy and the financial markets have been under a bit of a dark cloud for the past few years. Somewhere in all of the uncertainty and bad news lie many lessons for making better financial decisions in the future.


Lesson 1: Don’t believe everything analysts say. One of the biggest reasons for the financial crisis is that investors didn’t do enough due diligence on their own to understand what they were buying and why. Knowledge is power!

Lesson 2: Whenever you leverage a purchase (home, car, investment), the impact of a negative performance is magnified. Leverage isn’t bad, it just magnifies the resultant tradeoff of risk vs. reward.

Lesson 3: We’ve seen this before. Some of us remember the financial engineering of the 80s (just replace mortgages of the 2000s with junk bonds) and some of the causes of our current crisis will sound familiar. Behaviors like over-optimism, short-term focus, and self-serving bias can lead to trouble.

Lesson 4: Attitude and sentiment are important. Valuation and study make a difference, but attitude is critical! Very similar to the pre-dotcom crash, many investors flocked to the soon-to-crash “latest craze” at the very moment things tanked.

Lesson 5: Keep a long range focus and be patient.

Lesson 6: Be prepared. How many families have either relied on their well-planned cash reserves, and how many families had wished they’d had an emergency cash fund? Be absolutely sure that your cash reserves are sufficient for your circumstance!

Why Are We Blogging?

We want our blog to do two things. The first is to provide useful tips and insights into ways you can improve your overall financial happiness. We think advice is best given on an individual basis and we’ll save that for our personal meetings with our clients. But there are plenty of ah-ha moments in our line of work which are easily shared and which can benefit nearly everyone.

The second is to help provide an insight into our company and our philosophy. We are still very much a relationship business where the better we know our clients and the better they know us, the greater the experience for everyone. So in addition to our newsletters and our regular conversations with clients, our blog is a good way for us to lay forth some of our manifestos (we have more than one) and at the same time show ourselves a bit more personally by sharing with you what’s going on at Wall Financial Group.

Someone asked me the other day, “What do you stand for?”. What a great question! You’ll note that our mantra is “Less Worry | More Happy” which is what we’d hope that our clients say is what they get by working with us. But before you can expect to get to that point, we believe very strongly that happiness is derived by making conscious decisions about your values and then choosing paths that you believe are going to lead you there. We do not believe in accidental success or accidental happiness.

Many families believe their financial life is something to fret over, but the management of finances offers no different opportunity to be happy than in all other aspects of life. Financial happiness is not about the amount of disposable income, or the growth of total net worth but is instead the confidence in knowing that your position and future is determined and guided by the conscious decisions you make with your intentions and your behaviors.

So we stand for people making conscious decisions about their own financial behaviors in order to achieve greater happiness. And we believe we help with that by being researchers, informers, advisors, managers, workers, confidants, and advocates.