Monthly Archives: December 2011

Madhoff Insurance: Personal Accountability & Due-Diligence

Yesterday’s blog referred to an article about some great investment books for those that want to become more engaged in their investing; more and more people today are doing their own investing, or at the least becoming more informed so that they are partnering with investment professionals in the investment process. Today I want to expand on this subject a bit more.

It seems to me that part of the reason people have faced financial hardship is that they have never taken the time to learn about personal finances, or they trusted others too much. Not to take away from those that have had financial setbacks due to unemployment, healthcare or other circumstances.

People today are making more effort to be personally accountable, such as learning about financial concepts, properly managing cash flow and doing a lot of their own planning. They take classes such as Dave Ramsey’s Financial Peace University, read books and blogs.

In the wake of the Madhoff scandal they are become more  scrutinizing who they do business with by researching prospective firms, and asking a lot of questions.

Informed investors know to avoid temptation by the ‘Madhoff’’s of this world who promise or have a reputation of paying people a high rate of return, with perceived low risk and low volatility (low fluctuation in rates of return or income paid), or to invest in things that are so complex that even the people offering them don’t understand them. They also know the right questions to ask and expect to be provided understandable answers and documentation about products and services offered. People taking personal accountability take the time necessary to ask questions and do research.

It is inconceivable that some very large banks, charitable organizations, investment firms and wealthy people didn’t ask for important financial information before they invested with Madhoff. Interestingly, the few wise people who investigated Madhoff before investing were not given the information and were turned away by his organization. The following websites provide some guidance when reviewing potential firms,

Wise investors write investment checks or transfer funds to financial institutions, not to individuals; they are cautious, they aren’t in a hurry, and they don’t make emotional decisions. They have gained an understanding and familiarity with the people, firm, broker dealer or registered parent investment firm (always look for this e.g., Schwab), and they are provided with all sorts of documentation about the products and firms with which they are doing business. They receive regular statements directly from the broker dealer home office (not a local branch) to their address. Informed investors get Web access to their account, so that at any time they can log in and see live activity, values, and other information.

Wise investors during economic difficulty like we have experienced the last few years, don’t give up on proven investment methods and make emotional decisions and make drastic changes like moving everything into gold or real estate.

Lastly, Christians pray for guidance and seek the advice of many counselors (Proverbs 15:22) before making decisions.

Best Investment Book Recommendations

I stumbled upon this blog article about the Best Investment Book Recommendations. These books look to be great reads for those who want to be engaged in the investment process, whether doing it themselves or having a professional help them.

Financial planning is more of a partnership today, with clients becoming more educated about financial matters. More informed investment consumers ask their advisors better questions, and better spot when answers don’t seem right, or see warning signs about the advisor or firm they are doing business with.

Tax Cut Deal Agreed to

The House plans to vote on a new version of the Senate-passed bill to extend the payroll tax cut that was set to expire January 1st. What this means immediately to your personal finances is that your net take home pay decrease remains at least for a couple more months, by not reverting to the 6.2% regular tax, but stays at the current 4.2% rate. If you earn $50,000, this means about $80 more per month in take home pay. This means more to you if you are self-employed, because your tax will remain temporarily at 8.4%, instead of 12.4%, if earning $50,000 you will continue to have about $160 more per month in net pay.

The Social Security Tax (also known as FICA Federal Insurance Contributions Act) is made up of Old Age, Survivors and Disability Insurance (OASDI) and Medicare. The FICA tax rate for employees is 7.65% (OASDI 6.2% {temp 4.2}, Medicare 1.45). For self-employed it is 15.3% (OASDI 12.4% {temp 8.4%}, Medicare 2.9%). The taxable wage base for OASDI is $110,100 for 2012, which means your income above this figure is not taxed OASDI, except for Medicare.

Long Term Care Planning

The odds of a person needing long-term care when they are older depends upon a number of factors, some reports say that the odds of someone needing nursing home care are over 50% for those 65 or older. A 2007 USA Today article said that 7.4% of Americans aged 75 and older are in nursing homes in 2006.  Long-term care assistance comes into play when people are unable to care for themselves because of cognitive impairments (e.g., Alzheimers) or physical impairments. The key determinant for physical impairments is the ability to perform the Activities of Daily Living (ADL) to a specified level of proficiency. The Six ADLs are: 1. Bathing; 2. Eating; 3. Toileting; 4. Transporting; 5. Incontinence; and 6. Dressing.

There are several types of care: Skilled Care – daily 24 hour nursing care, Intermediate Care – occasional nursing care, and Custodial Care – providing assistance with the ADLs.

Care can be provided in the Home (Home Health Care) by a friend, relative or professional, or at a Nursing Home, Adult Day Care, or Assisted Living facility. LTC assistance can also entail Hospice care provided in someone’s home or in a hospice facility. Many nursing homes today provide several levels of care within one facility. People with diminishing health and spouses who may require different levels of care find these multi-level care facilities to be a good fit for their changing needs. Many nursing homes today provide nice home environments that are not institutional, making the change from independent living much more comfortable.

The average cost for LTC today for a private room in a nursing home is over $6,000 per month, according to AARP. The average stay can easily be 2–3 years, at a cost of more than $225,000. What are the options to pay this? Private major medical health insurance (group or individual) provides little to no benefits. Medicare health insurance for people over 65, or for anyone with certain disabilities, provides for care in a skilled nursing facility for 100 days following a 3-day stay in a hospital. After 100 days there is no coverage. Medicaid welfare-type benefit for those with a very low-income or little to no assets. Veteran’s Affairs provides for service-related disabilities or for certain eligible veterans. These are not viable options for a lot of people, therefore Long Term Care insurance is often worthy of consideration.

Individual Long-Term Care Insurance policies are available to provide various levels of care up to benefit limits. Group Long-Term Care Insurance can be provided through employers, funded with group rates and through payroll deduction. Qualified LTC Insurance may provide tax advantages on the premium and tax-free benefits. Some states offer “Partnership Policies” that shelter some of your assets should you require some assistance from Medicaid. Obtain several quotes from different insurance companies, and evaluate their history of rate increases, benefits, features, and company ratings (the agent should be able to provide this information); purchase only what you can afford. Consider various riders, including Cost of Living Adjustment (COLA), which increases your benefit each year prior to claiming benefits. Some life and annuity insurance policies also have various riders on life insurance policies may provide funds for long-term care.

Without insurance, savings and investments until depleted are used to pay the costs, then Medicaid pays. Home equity can fund LTC through sale of the home or by the use of a Reverse Mortgage. Financial planning should take into consideration one’s potential need for long-term care assistance. 

Many people ask about Medicaid Planning. Government (e.g., Medicaid) has limited resources to meet the growing demand of our aging population. Qualification requires that individuals spend down their assets to $1,500 and have limited amounts of income. Married couples have different limits; they should seek qualified counsel if either spouse is applying for Medicaid-paid long-term care assistance. Change in the law makes it much more difficult to transfer assets in order to qualify for Medicaid.

As with all planning, seek the assistance of qualified professional trusted advisors prior to making decisions and implementing your financial plans.

Unions Win More Freedom to Organize

Article in today’s Wall Street Journal about Unions Won More Freedom to Organize. This is a win for labor,  and a loss for big business, however time will tell if giving more power to unions will lead to more of them organizing, and effect business growth and their hiring. Most people though are concerned about how this will affect their personal finances. If you work in a position that could be unionized, that could mean better benefits and pay, if companies can afford it. On the other hand, companies wanting to expand by adding new factories or more employees always estimate their total human resource cost, and if unions make this higher, they may look for ways to cut back now, or open expand in a country that has lower labor costs. There is always a teeter totter effect to consider, and considering a poor economy and people just want any job, now may not be the time to give unions more power.

Social Security Retirement, to Be or Not to Be?


Social Security Retirement Benefit, or shortened to SSRB for this article, is a major cornerstone for most Americans. Many people wonder: how it works, whether it will be there for them when they are eligible, will it change, and should their plans include the assumption that it will be there for them. This article addresses these questions.

The Dependability of SSRB is questionable by many younger workers today. Many people wonder if there will be enough in the trust fund for them when they retire. When old-age retirement benefits were originally designed back in the 1930’s, the life expectancy was much shorter than it was today. When someone retired, the Social Security Administration didn’t have to pay out benefits for very long on average. With many workers paying into the system, and these short pay-out periods, it was easy to be financially solvent. Today proportionally fewer people are paying into Social Security and as our population ages, and with people living longer, challenges will be great to make changes. People even wonder if Social Security Retirement Benefits will be there for them and if their financial plans should take into consideration Social Security retirement income.

Social Security will probably survive, because retirees and pre-retirees are one of the largest blocks of voters, so no politician who wants to be re-elected will ever want to see the end of Social Security during his/her watch. In addition, the government can easily print or borrow money, but at the end of the day they will be forced to make changes, especially during long-term economic down turns with tax revenue down.

Changes to Social Security always happen during economic and demographic shifts. If you were born in 1937 or earlier, your Full Retirement Age (FRA) is 65, but you can start receiving SSRB at age 62 with a 20% – 30% reduction in benefits. If you were born after 1937, your FRA is older than 65, as late as age 67 for those born in 1960 or later. Your actual FRA depends upon your date of birth. It is very possible we will see older FRAs being proposed.

The Social Security Tax (also known as FICA Federal Insurance Contributions Act) is made up of Old Age, Survivors and Disability Insurance (OASDI) and Medicare. The FICA tax rate for employees is 7.65% (OASDI 6.2%, Medicare 1.45) and it is 15.3% (OASDI 12.4%, Medicare 2.9%) for those who are self-employed. The taxable wage base for OASDI is $110,100 for 2012, which means your income above this figure is not taxed OASDI, except for Medicare.

If you are not following all of the haggling in Washington, politicians are fighting over the Tax Relief extension from 2011 into the coming year of the OASDI from 6.2% to 4.2%.

As our government looks for ways to reduce expenses and increase revenue, it is considering many solutions, such as increasing the FRA, increasing or eliminating the OASDI wage base, and finding some way to change high income retirees’ benefits. If you think the current battle over temporary tax relief is intense, we have seen nothing yet when politicians and voters fight over benefits and income cap on OASDI.

Supplementing income has always been the original intent of SSRB, not providing more than 50% of a retiree’s income. The original design was to help provide some of the basic necessities of daily living for the elderly. However, today it is often the only source of income for some, or it provides a significant source of income for many. Given that corporate America is cutting back on defined benefit pension plans, and people are losing substantial value of their retirement investments because of a bad stock market, SSRB will continue to play an important part in retirement planning for many people.

Your decision to include Social Security in your retirement calculation is a personal one. When you use financial planning software be aware of this, most provide the choice to or not to include it in your calculation. You may be well advised to use conservative assumptions for Social Security and rates of return when running your calculation.

Social Security Retirement Benefit estimates can be calculated within your software, which bases your estimated income on your age and income. Your actual benefit will be based on your earning history and eligibility; the Social Security Administration provides this more accurate estimate at That website instantly calculates your benefit after you input your name, Social Security number, income and state of residence. They track your earnings history so they can provide you a more accurate estimate of retirement income at 62 and at your full retirement age.

People wonder when they should start receiving SSRB: take the reduced benefit at age 62, full benefit at the Full Retirement Age (FRA), or delay it, thus increasing the benefit. The answer to this is a little difficult; it depends on the life-span of the person receiving benefits, the inflation rates for both SSRB increases and the cost of goods in the future, and rates of return earned on investments. Financial planning software will help you make these calculations, because you can enter different retirement ages and income amounts, and you can compare the growth of your investments. Then you can determine which scenario allows your assets to last longer or to be larger.

Break even analysis can also be used to help you make your decision. For example, assume someone was eligible for $24,000 in SSRB at FRA (age 65) or could wait until age 70 and receive $31,800, but the person decides to retire 3 years early and receive $19,200. For this example comparing Age 62 to FRA, the BEY (Break Even Analysis) is 12 years for age 62, compared to 12.19 years for age 70. Comparing FRA to age 70, the BEY is 15.38 years. There are several Web sites I found that can run the breakeven analysis for you.

Other considerations: if you continue to work and receive SSRB benefits prior to FRA, your benefits may be reduced. In addition, a portion of SSRB may be taxed as well for beneficiaries with income above $25,000 for a single individual and $32,000 for a married couple filing jointly. Also, don’t forget that Medicare health insurance doesn’t start until age 65, so your plans must consider the cost and issues related to individual health insurance.

Your trusted professional tax and financial advisors should be consulted before making final decisions about the best way for you to receive income; they can also help you with some of the other related issues.

Device Saves Car Repair Expense

Does the little check engine light on your dashboard light up?  It may be telling you vital information about your car, that if not attended to right away could result in a significant repair. On the other hand it may indicate something really simple such as a loose gas cap. How do you normally tell what it means? You take your car to the repair shop or automotive dealer, fork out $50 – $100 so that they can tell you what is wrong. You may still need to do this, but not always.

My ’99 Lexus that I purchased used for almost half the Blue Book retail, has almost 300,000 miles on it now, and sometimes the little light goes on, and then for no reason goes off. This has been an incredibly low-cost car to maintain, but this has been maddening. Several years ago I was told it was oxygen sensors, then catalytic converter. After replacing two of each, the little light was reset. A few weeks later the light came back on, and I was told it was a different sensor. I had this checked by about 3 different mechanics over a year to two, and got mixed answers very frustrating.

My daughter and wife’s cars has had similar check engine lights pop on, as have friends and relatives of many makes and models, often with similar results as mine. For a while I just ignored the light, and then it would go out. This was very disconcerting to me, as I am trying to get many more miles out of my car, and not really knowing if a serious problem was occurring.

I didn’t want to have to pay a mechanic every time the light comes on our cars, so I recently purchased at NAPA a car repair computer code reader, or diagnostic code scanner. It is really easy to use: I just plug it into a computer plug located in my dash-board just below my steering wheel. It reads the codes, the website tells me what the codes indicate, the part that is needed and how much it will cost for me to repair it if a mechanic installs it, and where to order the part if I want to order it. If I decide to take a chance and do nothing I can reset the code and the light goes out.

This might be risky, because mechanics will tell you it is sometimes not this simple, and their experience might make the difference to correctly diagnose and repair. This is true, but for some codes they can come on when something is not really necessary to be repaired. For example, only on  a few hot days of the year, a light comes on for my idle sensor and anti-skid control, and a few cooler days later I can reset it, and the light never comes back on. Perhaps this is caused by heat and humidity. If I am concerned, I call the dealer or mechanic, and they are more than happy to discuss the problem with me. If I am treated fairly, and need a repair, I will take it to them. I did this last summer when I needed regular transmission and differential service which they did surprisingly for a very competitive price.

This is handy device that helps me to evaluate my options, and reset that annoying light when a repair isn’t needed, and save me time and money.

Monday AM Liftoff: Jesus the Model of Giving

During this wonderful and joyful season of celebrating  the arrival of Jesus the messiah and deliverer, we reflect His wonderful giving trait in the giving of gifts. Generosity to one another to friends and families is a major part of the Christmas season. The first Christmas illustrated the enormous wealth that was given to Christ by the magi. It was given out reverence to God and His purposes and the hope of the Kingdom of God being manifested.

God truly is the great giver: this started in Genesis 1:29,30 Then God said, “I give you every seed-bearing plant on the face of the whole earth and every tree that has fruit with seed in it. They will be yours for food. And to all the beasts of the earth and all the birds in the sky and all the creatures that move along the ground—everything that has the breath of life in it—I give every green plant for food.” And it was so. 

It didn’t end there, God gave counsel, direction and blessings to mankind at chronicled in thousands of Bible verses. Every good thing bestowed and every perfect gift is from above, coming down from the Father of lights . . . (James 1:17). God is a giving god, and it didn’t end there.

The ultimate gift is when Christ gave all that he had, his life so “…that they might have it more abundantly. (John 10:10)” God’s care and concern for all of mankind and the universe was out of love “For God so loved the world, that He gave His only begotten Son . . . (John 3:16)” God not only gives, but he took! He stole from Satan death and sin, and took that away from us by the act of his sacrifice. On Christmas we celebrate these gifts and thefts.

The heart of God is giving. He creates and gives. He saves and gives. He gives to us, we who are undeserving of this wonderment, we instead deserved punishment — that is what we earned. The gift of grace is perhaps the best gift ever given. It is easy to give to those that bless and love us, quite a bit different when it someone who has offended us greatly. All of mankind totally offended God, through our choices of sin and turning away from Him. Christ the shepherd pursues us like a lover to save us from sin, from ourselves into eternity. The heart of God is loving and giving to those who offend and do wrong, because he wants to win us back through love.

What are the best gifts that we can give this Christmas, we may all be wondering as we hit the shopping malls and online stores for last-minute gifts.  The best gift we can give is to give our hearts to Jesus. Whether new or long time believers, we can further give our hearts wantonly to Him, and whatever that may mean. Secondly, we can give to people who hard to shop for, really hard! This list has three people on it, the one who has offended us (or hates and opposes us), the poor and the alien.

  •  But I say unto you, Love your enemies, bless them that curse you, do good to them that hate you, and pray for them which despitefully use you, and persecute you; (Matthew 5:44)
  •  For the poor will never cease from the land; therefore I command you, saying, ‘You shall open your hand wide to your brother, to your poor and your needy, in your land. (Deuteronomy 15:11)
  • And you are to love those who are foreigners, for you yourselves were foreigners in Egypt. (Deuteronomy 10:19)

When we forgive, we give. When when we bless the poor, the alien, and the prisoner, we like the magi give to Christ, and we give our hearts to Him.

Matthew 25:34-46 “Then the King will say to those on his right, ‘Come, you who are blessed by my Father; take your inheritance, the kingdom prepared for you since the creation of the world. For I was hungry and you gave me something to eat, I was thirsty and you gave me something to drink, I was a stranger and you invited me in, I needed clothes and you clothed me, I was sick and you looked after me, I was in prison and you came to visit me.’ “Then the righteous will answer him, ‘Lord, when did we see you hungry and feed you, or thirsty and give you something to drink? When did we see you a stranger and invite you in, or needing clothes and clothe you? When did we see you sick or in prison and go to visit you?’ “The King will reply, ‘Truly I tell you, whatever you did for one of the least of these brothers and sisters of mine, you did for me.’ “Then he will say to those on his left, ‘Depart from me, you who are cursed, into the eternal fire prepared for the devil and his angels. For I was hungry and you gave me nothing to eat, I was thirsty and you gave me nothing to drink, I was a stranger and you did not invite me in, I needed clothes and you did not clothe me, I was sick and in prison and you did not look after me.’ “They also will answer, ‘Lord, when did we see you hungry or thirsty or a stranger or needing clothes or sick or in prison, and did not help you?’ “He will reply, ‘Truly I tell you, whatever you did not do for one of the least of these, you did not do for me.’ “Then they will go away to eternal punishment, but the righteous to eternal life.”

Is a car lease a fleece?

Dave Ramsey says that no one should ever lease a car, he calls car leases fleeces, is it true, is this fair, should no one really ever lease a car, and is it always a rip off? Basically a lease is the purchase of the car’s value that you will be using.

Dave’s overall recommendations are to minimize transportation costs, because we often see people  making bad (expensive) decisions in this area of personal finances. It is not unusually for us to see people buying cars that they normally couldn’t afford, with large payments that they are stuck with. At best this just is a hurdle to accumulate sufficient wealth for things like retirement, or at worst people end up in poverty. I know this to be true for myself, and for the 100’s of people who I have counseled or had in class over the last few years. I believe Dave’s point of perspective comes from similar experiences as mine, plus he is communicating to millions of people, for this wide audience he wants to keep his message simple, and it makes sense: Buy good used cars cheap, drive them a long time, learn personal financial management, don’t borrow to buy deprecating assets, pay off debt, save and pay cash for things that are needed, such as your next used car. Eventually when your house is well in order as defined by no debt, a lot of savings and funded retirement, then sure go buy a new car now that you can afford.

I think this is sound wisdom, that most people should heed.  However, I am car guy, and I love cars, is this from a mathematical standpoint always true?  Is this information fair to the auto industry, vehicle dealers, sales people and finance companies?

Keep in mind, whether you lease, borrow, or buy outright, there are always costs of ownership. That is where the devil is in the details. The cost of ownership can be computed to dollars or cents per mile, or for the total number of years of ownership.  The calculation should include: 1) purchase price (including financing), or lease payments 2) gasoline usage (this is huge and often underestimated by the SUV crowd) 3) maintenance 4) insurance 5) opportunity cost, or the lost interest on the money if you saved or invested it instead of putting it into car payments or a lump sum purchase 6) depreciation or the value the car is worth at the end of ownership when you sell it or trade it in.

This is a difficult calculation for most people to do, however in a few hours, with a calculator, note paper, and a few different websites, I think you could come close estimating at least 1 through 5 above. I recommend using the Total Cost of Ownership TCO at www.edmunds to only estimate the repairs, maintenance, gasoline, insurance and depreciation of used versus new for the same make and model. Use the auto finance calculators at to estimate the total costs of financing. Comparing say 8 years of ownership: new cars will have an advantage of lower repairs and maintenance costs, and higher residual value. Used cars will have the advantage of lower insurance, and no, lower or shorter finance payments. If you follow the advice of many good articles of how to purchase a good used car, and you find a good one, most of time your TCO will be much less for used versus new. If the difference is small for your analysis, and you will own it for a long time, then a new car might be the wise decision. If you want to then look at comparing leasing, then compute the costs to lease three cars for your comparison, since you will have to lease that many for the same ownership period as your purchase. The advantage will probably be to own instead of leasing.

Do I ever like leasing?  Sometimes, but usually only if there is absolutely no money down, the payment is a super low deal probably offered by the manufacturer to move a back log of inventory, and after doing a good analysis like here. However buyers need to be very cautious, become sometimes their emotions get the best of them, and they are tempted by that really nice up market vehicle, and before they know it they have a high payment.  Lastly, it might make sense too to lease or purchase new sometimes, if you can get a low-cost high gas mileage car, with low maintenance versus keeping the a low gallons per mile car with constant repairs, but only again if you do the analysis above. Be extremely careful leasing, watch your mileage limit and talk to many advisors before doing it, because after the car is delivered it is almost impossible to get out the deal later and you will be stuck with payments for the duration.

Praying for Others Finances

I urge, then, first of all, that requests, prayers, intercession and thanksgiving be made for everyone—  for kings and all those in authority, that we may live peaceful and quiet lives in all godliness and holiness (1 Timothy 2:1,2 ).

All around us we have friends and families struggling with a whole host of issues, including financial ones. In addition almost all world economies are in severe crisis, not to mention the other challenges they face. This powerful Bible verse encourages us to pray for everyone for their needs and for our leaders (often we just argue about them),  so that our lives may be lived in godly and holy ways.

Mortgage Settlement Possibly Forthcoming

Housing and Urban Development and some state officials are negotiating a settlement in the ballpark of $25 billion, with the 5 largest mortgage providers: J.P. Morgan Chase, Bank of America, Citigroup, Ally Financial, and Wells Fargo that could benefit some homeowners with troubled mortgages, the Wall Street Journal reported yesterday.

Some homeowners could benefit by having the principle of their mortgage decreased, interest rates reduced, and other alternatives including cash.

Stranger Owned Life Insurance

The Wall Street Journal reported yesterday, that a Federal judge has ruled for Prudential Financial Inc. allowing them to void a $10,000,000 Stranger Owned Life Insurance policy. Surprisingly Prudential is also allowed to keep over $600,000 in premiums. This is huge blow to investors, because many sellers of these products believed that if cases like this were lost, at the very least premiums would be returned, providing them with some expectation of downside risk for the investors.

Stranger Owned Life Insurance is also known as STOLI is when investors purchase life insurance usually on an elderly person. Many states regulate or restrict STOLI and insurance industry associations and experts have also come out against it.  They cite  various reasons; it violates the intent of insurance to provide protection, possibly creates a market where there might be a lot of fraud, and whenever someone’s death is tied to investors making money there are moral implications to say the least.   STOLI policies are often for many millions of dollars, often pay the person being insured, may involve financing of large premiums, the commissions can be hundreds of thousands of dollars, and the insurance companies are not always notified when the application is submitted.

This latest case is another blow against the STOLI industry. Investors, insureds, and their family and advisors should be more cautious than ever, including for-profit and non-profit entities that are sometimes pitched STOLI programs.

Upcoming Financial Classes

The following are classes that we have scheduled for the coming year at Vineyard Columbus:

Dave Ramsey’s Financial Peace University- Thursdays, February 2 – April 26, 2012

Dave Ramsey’s FinancialPeaceUniversitycomprehensive 13 class series on managing your personal finances – more information is available online and at the 30 minute free previews Sunday, 12/18/2011 and 1/15/2012 at 10:45.  You can attend the first class free, and if you like it, you can pay then.  Class runs for 13 weeks, from 7 to 8:45 pm. Cost is $100 per person or couple (covers our cost of the material) childcare is available for $36/child or $60/ for 2 – 3, ages 3 – 9.

Paz Financiera (Spanish Financial Peace Univeristy), Lunes 5 marz-9 ab

Andrés Gutiérrez presenta un curso completo de 6 semanas para el manejo de sus finanzas personales. Le recomendamos que se registre con anticipación ya que tenemos espacio limitado. Hay un costo de $43 por persona ó pareja (incluye el costo de materiales). Para registrarse por internet visite la página, bajo la sección de “Activities-Educational”. Para más información , contacte a Ana Torres

 Make Cent$ with Coupon$, 1/10, 2/14 and 3/13

In these 3 classes, you will learn how to save hundreds of dollars each month on your grocery bill.  During this class you will learn couponing basics and some savvy coupon secrets that will make you become a pro at saving money.  You will learn where to get your coupons and how to organize and use them.  Some of the insights you will glean is how to match coupons to sales ads, finding unique bargains specific to stores you shop, rebates and promotions.  Other non-couponing shopping tips will also be covered.  Cost is $20 for all three classes (1/10, 2/14 and 3/13) which includes the cost of a coupon organizer and other materials you will be given.

Budget Workshop Saturday, February 18, 2012  9:30 AM – 11:30

Free workshop is being offered to help those who have or are attending Dave Ramsey FPU, Crown Financial Bible Study or any personal finance course- basically this is a workshop to help people that have made significant effort to budget but are struggling, need to get back on track, or just need someone to help them. Class will provide instruction and a one-on-one meeting with a budget coach for individual help designing a budget. Pre-registration required. Bring to class the following: paper, pencil (laptop if you have one) calculator, and completed Spending Plan from

Space is limited, please pre-register for any of the above classes online

Dave Ramsey’s “Generations” Class for Middle School and Senior High Students, Wednesday evenings January 4, 11, 18 & 25

Talk to Alen Auguste or Brett Evans

To be announced: 7 week small group financial Bible Study- stay tunned

Blackest of Fridays?

Interesting essay at “The Blackest of Fridays,” commenting about the biggest shopping day of the year following Thanksgiving “On this day, people consume gluttonously without regard for the harm they’re inflicting on themselves. On this day, greed becomes ravenous. On this day, people live without real meaning, buying gifts to fill a void that can’t possibly be filled with any amount of material possessions.”

Bold statements for sure. It does seem insane that following a few hours of excessive eating, shoppers are tearing down the doors at stores that couldn’t even wait to open Friday, and instead opened Thursday night. Many financial difficulties can be traced for sure to our consumer culture. But was this all frantic consumerism, people just getting into the holiday spirit, or something else? I know hundreds of people who are really struggling financially, some in part to no fault of their own. My wife had an interesting question, she wondered if some of the frantic shopping was actually people with very modest means trying to get deals for loved ones, or buying basic needs for themselves.

I plan to visit this website, and checkout their book to learn more of what they are up to in their minimalist journey, so far it is all good. When I put on my financial planner hat, and consider retirement, living minimally definitely has numerical advantages. It sure is a lot easier to plan for the future when expenses are low, and under consumption probably has positive effects on health, which will have good financial side effects too.

Monday Liftoff: God in the Fourth Quarter

Let me start off by saying I am not a huge football fan, I root for our hometown college team, and watch a little NFL out of the corner of my eye. Lately, the goings on in Denver have caught my attention. Tim Tebow is the quarterback for the Broncos, and lately his team is on a winning streak and may make the play-offs. Tim also happens to be a Christian, who is takes every opportunity to point to Jesus on and off the field, although he is careful to point out that God doesn’t care who wins.  What seems to be amazing to the sport’s writers, is that most agree doesn’t have all-pro quarterback skills. His faith and unlikely wins is causing all kinds of attention, including a full-page article in this past weekend’s Wall Street Journal. He must have other skills that work for him, perhaps leadership, confidence, and peace under pressure are hard to measure.  The fun part of all this is that he continues to win, and the wins are often not pretty, and they sometimes come in the fourth quarter or overtime, and then Jesus gets glory in the national media. This got me thinking.

I meet people all the time, who are in the fourth quarter and they are behind financially. Prior to the recession, when people had financial difficulties, they could get a job more quickly if they lost one, and sometimes get a better one. If debt was too much they could sell their home or refinance it, and consolidate other debt, things would be back to normal. These options might not be possible, and to exacerbate things more, now health insurance if you have it has higher deductibles, groceries and gasoline have gone up; the three highest consumables in the average budget cost more. Now it seems that the financial difficulties of life are more in many of our faces than ever before.

“Life is difficult. This is a great truth, one of the greatest truths.” These words open best-selling “The Road Less Travelled” written a few decades ago M. Scott Peck.

Life always has difficulties, but I think the truth is, the silver lining in many of them, is that some difficulties can actually be God’s grace. This is because that during difficulty, we reach out to him and we find not only strength and power, but a life that is better with him.  The fourth quarters of challenges are often where we see the greatest blessings, have success and experience him.  This can be true for both young and old. Biblically I think of Moses when he was in the last generation of his life and the things he experienced.  I think of youngish David, that was brought in at the fourth quarter to kill Goliath, and then had to wait years of torment before being crowned King.  Then there is Joseph whose life got so low his brothers threw him into a well, but later ended up being a modern-day equivalent secretary of state.

I remember at the beginning of the recession, one of my pastors saying God didn’t just wake up one day and read the paper and say “Oh no, what am I going to do?”  No matter the turmoil going on around us, Christians can rest assured that God always has an end game, and will use us and bless us for his victories in the many fourth quarters of our lives.

Lord help us to be wise stewards and to re-pay all of our debts and be released of those shackles. Lord in the difficulties we face, let us pause to not miss the opportunity to see that you are at work growing us, and making us more like you. Progress is sometimes slow, give us perseverance, for in you we place our hope that you are forming us; “Yet, O LORD, you are our Father. We are the clay, you are the potter; we are all the work of your hand. (Isaiah 64:8).”  Father prepare us for and deliver us into those days of victories that you are leading us to.

Variable Annuity Guaranteed Income Benefit Risks

Interesting Article in the Wall Street Journal today about Variable Annuity’s Guaranteed Benefits. Variable annuities provide nice tax deferred growth, their rates of return aren’t bad if they have great sub-accounts, which are accounts similar to mutual funds. Variable annuities don’t guarantee rates of return, nor do they guarantee the principle unless the annuity holder chooses the fixed or money market account, values totally rely on performance (this is unlike fixed annuities which do). However, many variable annuities offer future guarantees to provide income even if the underlying performance is poor. Many older variable annuity owners wishing to use their variable annuities for retirement income, find that their values are low, will instead choose to take their money by using the income options such as annuitization or a guaranteed income benefit, they might be called GIB or GWB for guaranteed withdrawal benefit. The income might range somewhere between 4% – 7%.  Considering how low-interest rates have been on savings and bonds, and low returns of stocks, this income might be very attractive to variable annuity holders.

How are insurance companies financially able to make their income promises? The companies offering these products invest the fees they charge and purchase hedging instruments, such as stock options, and have reserves to help them pay these guarantees. The companies reserve’s investments and the variable annuity sub-account performance also play a role. Lastly, if the company is publicly traded, the stock price may also affect their ability to meet the promises. The article cited above raises concerns about ING, since their stock value has decreased 4.7%, and it is expected that more variable annuity holders will choose to take their money in income, for the reasons stated in the previous paragraph.

Purchasers of annuity products may be wise to consider the financial strength of the insurance company by looking at rating from multiple rating agencies such as A.M. Best, Fitch, Moody’s and Standard & Poor’s, and do other research. In addition it may be wise to purchase annuities from more than one company, this is especially true if investing a large amount.

If an insurance company becomes insolvent, is there a government agency that guarantees principle?  There is no federal guarantee like FDIC, but most states have set up agencies to protect policy holders (within limits), however there is one big hitch, they don’t back variable annuities.

What is Estate and Legacy Planning?

Legacy planning is the new phrase that is used synonymously with estate planning these days, and is the general process of arranging your financial affairs in a way that reflects your main priorities and values. People often think about wills and trusts, and this type of planning will always incorporate that, but the documents are not the tail that wags the dog. Legacy planning has evolved today into holistic approach to incorporate people’s overall financial planning goals and concerns:

  • Providing for many aspects of the financial, emotional, professional, and legal needs of surviving spouses and children
  • Maximizing and controlling their wealth for themselves for long life spans
  • Gifting to family members while they are alive, so that they can transfer wealth in a way that helps rather than hinders the individual
  • Transferring their business (possibly to a family member) in a cost-effective way, taking into account all possible tax concerns
  • Charitable concerns for which they have a passion
  • Transferring their important values and beliefs to the next generation
  • Providing enough assets for their minor children and surviving spouse if they die, but also arranging it in such a way that maintains privacy, protects assets from creditors, and provides ongoing professional management
  • Transferring wealth to spouses and adult children, that cares for the surviving spouse, and transfers remainder amounts to the intended children, which is especially important if there are blended families, or the spouse becomes remarried

When people have discussed their concerns about these items and many others with their attorney and trusted financial advisor, then it is the attorney’s job to draft up the wills and trusts that work  to address these concerns.

 The next issue that many people neglect is to change the beneficiary arrangements to work hand-in-hand with the legacy plan. A beneficiary is someone you designate in writing in an appropriate form (beneficiary form) directing the holder (bank, insurance company, investment firm) of an asset, where to send your money when you die. When doing estate planning be sure that your beneficiary arrangements are consistent with your overall plans. Check your beneficiary arrangements for life insurance, IRAs, annuities, and retirement plans. In addition, investment and savings accounts can have beneficiary arrangements too, called Transfer on Death arrangements. Be sure that you have them and they are up-to-date!

This type of planning is also very Biblical:

  •  A good man leaves an inheritance to his children’s children (Proverbs 13:22).
  • House and wealth are an inheritance from fathers (Proverbs 19:14)
  • Observe and seek after all the commandments of the Lord your God in order that you may possess the good land and bequeath it to your sons after you forever (1 Chronicles 28:8). 
  • “Teacher, tell my brother to divide the family inheritance with me.” But He said to him, “Man, who appointed Me a judge or arbiter over you?” And He said to them, “Beware, and be on your guard against every form of greed; for not even when one has an abundance does his life consist of his possessions” (Luke 12:13-15).
  • An inheritance gained hurriedly at the beginning, will not be blessed in the end (Proverbs 20:21).
  • Now I say, as long as the heir is a child, he does not differ at all from a slave although he is owner of everything, but he is under guardians until the date set by the father (Galatians 4:1-2).
  • Thus I hated all the fruit of my labor for which I had labored under the sun, for I must leave it to the man who will come after me. And who knows whether he will be a wise man or a fool? Yet he will have control over all the fruit of my labor for which I have labored by acting wisely under the sun. This too is vanity . . . When there is a man who has labored with wisdom, knowledge and skill, then he gives his legacy to one who had not labored with them. This too is vanity and a great evil (Ecclesiastes 2:18-21).

Financial Counsel from God

Christian personal finance literature often mentions the Biblical guidance to seek counsel from others before making decisions. This habit is definitely not practiced much in 21st century America, or so it seems if we look around us. The  following verses are the most common ones referenced:
  • The way of a fool is right in his own eyes, but a wise man is he who listens to counsel (Proverbs 12:15)
  • Where there is no guidance, the people fall, but in abundance of counselors there is victory (Proverbs 11:14)
  • Without consultation, plans are frustrated, but with many counselors they succeed (Proverbs 15:22)
This time of year in churches and halls we hear Handel’s Messiah, and I love the “wonderful Counselor” stanzas taken from Isaiah 9:6, but I haven’t given the full idea of this appropriate thought, although I do pray for God to direct my decisions and give me wisdom, but reading the following verses I really have to re-think some things.
  • With Him are wisdom and might; to Him belong counsel and understanding (Job 12:13)
  • I will bless the Lord who has counseled me . . . (Psalm 16:7)
  • Who is the man who fears the Lord?  He will instruct him in the way he should choose (Psalm 25:12)
  • I [the Lord] will instruct you and teach you in the way which you should go; I will counsel you with My eye upon you (Psalm 32:8)
  • . . . and His name will be called Wonderful Counselor . . . (Isaiah 9:6)
  • And the Spirit of the Lord will rest on Him [Messiah], the spirit of wisdom and understanding, the spirit of counsel (Isaiah 11:2)
  • This also comes from the Lord of hosts, who has made His counsel wonderful and His wisdom great (Isaiah 28:29)
  • . . . O great and mighty God.  The Lord of hosts is His name; great in counsel and mighty in deed (Jeremiah 32:18-19)
  • They quickly forgot His works; they did not wait for His counsel, but craved intensely in the wilderness, and tempted God in the desert.  So He gave them their request, but sent a wasting disease among them (Psalm 106:13-15)
  • For to one is given the word of wisdom through the Spirit . . . (1 Corinthians 12:8)