Bracing For A Storm

“Riches do not consist in the possession of treasures, but in the use made of them.”
- Napoleon Bonaparte

Egypt. Libya. Bahrain. The Mideast is boiling right now.

Mass protests in Madison, WI. Fear of inflation. Fear of deflation. Rising public debt. Worst of all for some: the NFL season for 2011 is in jeopardy!

I don’t mean to make light of all this turmoil by that last example. But what I do want to point out is that fear has become a regular part of the national diet. It truly is frightening many people into all kinds of “worst case scenarios.”

One of the simple tonics for your fear is to take actual action against it. For many, this is a mindset issue: the “diet” for your brain may require some adjustment, i.e. what are you allowing to pollute your thoughts these days?

But an even better action step is to take steps of preparation, so that you are ready for whatever comes. So, in response to some conversations I’ve had with clients recently, I thought I’d take a time out to lay out for you six basic steps for financial preparedness in this week’s post.

Rowel Manasan’s
“Straight Talk” Personal Strategy
How To Prepare Your Finances For Emergencies
It’s my firm belief that how you choose to think about your circumstances has a subtle, yet profound, impact on how you handle storms. I’ve written often on this subject, so I won’t belabor it here.

Instead, this week, I thought I’d give you a short run-down on specific, financial steps to put in place so you can be ready for whatever kind of situation you might find yourself in.

1) Put $1,000 aside. It doesn’t amount to a real emergency fund, but it will do until you get your finances in order. You can accumulate the $1,000 by allocating $10 a day for just over three months. Most people go into debt because they live hand to mouth, spending 100% of their take-home pay. Then life happens. Having a mini-emergency fund can help you get out of debt and stay out of debt.

2) Remove yourself from credit card debt–forever. I suggest paying off your credit card by starting with the smallest balance in order to achieve small successes and then working to snowball your payments as you tackle the larger balances. These first two steps, having $1,000 and paying off debt, simply prevent you from facing a financial emergency by starting out wounded and bleeding.

3) Improve your ability to handle fluctuating monthly expenses. If you can, set up a monthly budget so your day-to-day expenses are less than 65% of your take-home pay. The difference between those growing rich and those remaining poor is not the salary they make. It is the salary they keep. Relative to their income, the rich are frugal. They save and invest. They spend less than 65% of their take-home pay on day-to-day expenses. They save at least 10% in their retirement accounts and another 5% in taxable savings. They direct another 10% toward unknown big purchases. And they even live frugally enough to give another generous 10% to charities.

4) Automate your cash flow to promote saving and investing. Every month, have 10% transferred into your retirement account before you receive your paycheck. Then automate the transfer of 25% of your take-home pay into an investment account a day or two after your paycheck is deposited. Automating your savings makes savings a high priority and ensures that you pay yourself first. This investment account will grow over time, and you can use it to pay for big emergencies and charitable gifts.

5) Set up an asset allocation for your investments that’s diversified for safety while being invested for growth. If you make it to this step, you’re well ahead of the game…but the game ain’t over yet! Diversification works, and it’s never more obvious than in times of market turmoil. Without diversification, portfolios can have a zero return over a decade. After being well diversified, the likelihood of no return over a decade drops significantly.

6) (If necessary) Mobilizing during an actual emergency. Having the discipline to budget for small financial emergencies will help you be prepared when you encounter larger financial crises. When some unknown spending need strikes, take the money to cover the expense from your growing emergency fund. Then, determine if you have been budgeting for this level of unknown expenses adequately.

Usually emergencies don’t happen. So the money you have socked away makes more money. Keep an emergency fund for several years and it should double in value, giving you an additional emergency fund. Whether you need it or not, being prepared for a financial emergency means peace of mind, knowing that your lifestyle is frugal, so you won’t be in trouble.

With gratitude for your trust!

The Importance Of Trust

“Men are alike in their promises. It is only in their deeds that they are different.”
- Jean Baptiste Moliere

I hope you took my advice from last week, and that
Valentine’s Day was a bit more than just  … one day.

Yes, love is a big part of what we do … ensuring that your
loved ones are properly cared for, no matter the circumstance,
is a beautiful act of love, in my humble opinion.

But there seem to be some misconceptions about how best
to accomplish this, in the midst of the current estate law environment.

That’s why I wanted to revisit a subject I wrote about last month,
as it keeps some families from expressing their love in the way
I describe, above. So, I’m going to put out some questions that
we often receive about an important vehicle for your love: the
Living Trust.

Rowel Manasan’s
“Straight Talk” Personal Strategy
Important Questions, Revisited

“Isn’t a Living Trust just for the very wealthy?”

Nope. A Living Trust helps anyone protect his or her family from unnecessary probate fees, attorney’s fees, court costs and federal estate taxes. In fact, if your estate (homes, cars, bank accounts, intangibles, etc) is greater than $100,000, you’ll find a Living Trust offers substantial benefits for you and your family.

That happens to include the vast majority of homeowners, and, likely, YOU!

“Will the ‘Living Trust’ regulations be some kind of loophole which the government will eventually close down?”

Thankfully, the Living Trust has been authorized by the law for centuries. The government really has no interest in making you or your family go through a probate … which will only serve to further clog up their already-overloaded legal system. A Living Trust avoids probate so that your estate is settled exactly according to your wishes. It does so NOW, and will do so for decades, and centuries hence.

“Can just any attorney create a Living Trust?”

This is somewhat self-serving, but the simple fact is, well, no.

You should choose an attorney whose practice is focused on estate planning. Good estate planning attorneys receive continuing legal education on the latest changes in any law affecting estate planning, allowing them to provide you with the highest standard of estate planning service anywhere.

The simple fact, further, is that even many estate-planning attorneys don’t take the time to keep abreast of what changes DO come about in the different codes which affect Living Trusts…and, unfortunately, get their clients into problems which wouldn’t have happened if they stayed on top of things.

And yes…of course, that’s a big focus for me and my firm. We are on top of these issues so you don’t have to be!

“Can I set up a Living Trust once and leave it alone?”

My answer: NO!  This is a common misconception. 

A living trust is a living document, which means it needs to be updated throughout your lifetime due to changes in the law, changes in your assets and changes in your life. If it’s been more than three years since you’ve reviewed your trust with a lawyer (and the title of your assets), you’d better give us a call to make sure everything is still in place the right way; otherwise, a lot of that time and money you invested in your estate plan could unfortunately be wasted, or a lot less effective than intended.

To you and your family’s financial peace!

It’s Never Too Late For Love

The important work of moving the world forward does not wait to be done by perfect men.

- George Eliot

This Monday, there was a certain holiday to attend to, and I thought I’d give you a little advice:

Don’t stop after Monday.

Yes, yes — the old canard: EVERY day is Valentine’s Day!

And I’m very aware that you may have had a budget for your expressions of love, so I’m taking a different approach. These are some non-budget-busting ways to go “above and beyond” — when it matters. Sure, wives may scoff at this list, and be gratified when their husbands successfully surpass it. And husbands, well, I know some are skilled at romance; and others … well, here’s some help!

You see, how nice would it be to have come through on Monday (or, well, not, as the case may be), but then follow up with something more?

And again, I know that many families have a certain amount of means at their disposal, and others don’t. Which makes this list even more helpful. Because *whatever* your budget, the simple gesture of coming back around AFTER Valentine’s Day is how real romance magic happens.

Rowel Manasan’s

“Straight Talk” Personal Strategy

Making Your Love Gestures Stick

It’s no secret that our economy is in tough shape. And whatever your particular financial situation, wouldn’t it be great to create romance “magic” without spending an arm and two legs? So, perhaps you’ve done the old “flowers, candy and chocolate” routine already this week. So  here’s a few modest and occasionally tongue-in-cheek suggestions for a sizzling follow-through … that won’t torch your wallet!

Be Green – Save Money and the Environment at the Same Time!

With the economy taking its toll on virtually every industry, even the high-rollers are looking for ways to spend their cash more effectively. One Hollywood studio saved $40,000 on cards and postage by doing e-Cards and videos for all of their clients and friends.

Seem cheap?  Spin it this way – you’re being green by not using snail mail – that’s so 20th century anyway. You’re keeping with the times, utilizing powerful technology and reducing your “footprint” at the same time! What environmentally-conscious woman could resist?!

Make a Video.

You can use the video setting on your digital camera, and create a heartfelt message of love for your sweetie. Then, you can post it to YouTube, or another online video-sharing site and send it on! Um, just be sure to make that YouTube setting to “private” unless you want to share with the world your dying love for your honey (hopefully with clothes on!).

Learn a Romantic Song and Sing it to Your Sweetheart.

Well, I’m no singer, so I can’t say I’ve tried this … but I hear it works well. Even better, if you can’t sing, your more-than-a-valentine will give you kudos for the effort! You could step it up by writing an original song and then sing it. Or, for the slightly-less courageous, you could pull a page out of John Cusack’s book in Say Anything and hold a boombox (or iPod) above your head and blare Peter Gabriel’s “In Your Eyes”. That seemed to work.

Not a singer? More of a writer? Or artist? For the artistically and/or musically inclined:

- You could pen a poem on nice paper

- or even paint it

- You can paint a picture of your honey. Just be sure it looks good.

The “Mix Tape” (or Playlist)

This is an old standby of high school kids everywhere. Except these days, the “tape” part is a bit less convenient. Instead, make a CD or mp3 playlist of Sweet Love Songs and make a cover list/ liner notes on the memories of you and your honey from the songs. And you can make a Personalized Photo Album using a service like Apple’s iBook service and iPhoto.

Romantic Picnic

Surprise your love with a ‘picnic’ in the park, at the beach, or any other outdoor nature spot. If the weather isn’t ideal for outdoors, you could bring the outdoors inside -find a fake palm tree, flowers, sand, beach umbrella, radio, towels. Nothing says “I love you” like fake palm trees!

Write a Message To Be “Stumbled Upon”

Well, perhaps not *literally* stumbled upon, but try a nice outdoor surprise. If you do have snow outside, you could stomp out the message and fill in the letters with spray paint or flower pedals or rocks.  If there’s no snow, you can use sidewalk chalk to write a message to your sweetie.

You see, anybody can go out and “buy something” – but it takes effort and thoughtfulness to make it personal … and it doesn’t require a lot of money!

Just remember … follow-through is everything!

To making EVERY day – Valentine’s Day!

More People Are ‘Going It Alone’, To Their Detriment

“It is not who is right, but what is right, that is important.”

- Thomas Henry Huxley

With technology being what it is, all kinds of firms are trying to “compete” in the online space, and with all of the estate tax changes that have gone down in 2011, they are trying to make the case that it’s easier than ever to make estate plans on your own.

However, this would be a big mistake.

Yes, it can be seen as self-serving to make this case, but it’s important that my readers know the truth about this — as well as a few other mistakes we regularly see.

So, to wit, I’m beginning a short series on clearing the air regarding these and other all-too-common mistakes which we see on a regular basis.

Rowel Manasan’s

“Straight Talk” Personal Strategy

The Truth About Online Legal Options, etc.

Why do so many families end up with a big fat mess on their hands in dealing with their estate when there is a change in circumstances? Well, here’s two reasons to start…

1) Going it alone with “cheap” online options

Did you know that many lawyers like to joke to one another about how good those online legal programs (LegalZoom®, Pre-Paid Legal®, etc.) are for our business? Why would that be?  First, because they are NOT as “easy to use” as claimed, and secondly…they actually cost you an arm and a leg in the long run!

You might think they seem like an inexpensive and safe option. But I’m not referring to the money for the service itself.

Using those programs can end up leaving thousands (or much more) of YOUR assets in the coffers of Uncle Sam, or in the probate process…even if you follow all of their instructions to a tee. I see it all the time–frustrated clients standing upon a poorly-constructed legal foundation, not just for their assets, but for the disposition of other important wishes (like the taking care of children).

The security you get is actually false security.

Even worse…

Choosing the wrong asset allocation method can end up leaving your estate owing more to the IRS than if you had done nothing at all.

Now, it’s not my intention to scare you, but again–I’ve seen it more than I’d like. Frustrated families coming to see me during a period of great stress, and my staff and I having to attempt to “undo” poorly-crafted plans created by well-intentioned families (or even other lawyers) which ends up costing everybody far more than they’d like.

So, I hope you are with me:  Choosing a well-trained and caring professional, who will put YOUR interests first–rather than just making another “sale” online is critical for any disaster plan.

With all that, now we come to the issues you’ll deal with in choosing the right planning lawyer for your needs. Here’s another mistake:

2) Choosing a lawyer who will charge you overly-high hourly rates for simple services.

Many lawyers will lure you in with (again) “cheap” basic services…and proceed to rack up the fees as they execute planning services which really should have been covered by the flat fee.

When you’re investigating flat fee services from a lawyer, here are some simple questions to ask:

• “Are all of your fees flat fees?”

• “What about ongoing work after the initial completion of my estate plan documents?”

• “What happens when I call with legal questions 2 years after my planning documents were completed?”

• “What if the questions are about something other than my estate plan?”

You need to be satisfied by the answers you receive to these questions, as they often sneak up on families after-the-fact, and can be a major drain on your family’s cashflow.

To you and your family’s financial and emotional peace!