Mortality, Motivation & Your One Shot at Life

Mortality Motivation & Your One Shot At LifeI recently received the following email from a long-time client:

“Can we set up a meeting time? I’d like to review plan options.

My friend died suddenly a month ago….no warning. She was 57 and gone,  just like that. Shook me to the core.

Looking at making time to achieve a better life balance.”

Which brought to mind a quote from professional boxer Mike Tyson,

“Everybody has a plan until they get punched in the mouth.”

I don’t want to make light of their friend’s death, but the mortality of friends and family can often serve as a stark reminder that we only get one shot to make the most of our life.

And whether it’s death, a health scare, an accident or just the daily uncertainties that we all deal with, it can be a catalyst to reevaluate your life and how you want to live it.

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The Danger of a Permanent Financial Outlook

Permanent Financial OutlookWhile it seems more likely these days that you’ll hear a term like “wrinkle free” or “wrinkle resistant” used to describe a piece of clothing or other fabric that is designed and treated in such a way as to resist wrinkles and hold its shape, this was originally called “permanent press.”

I have a couple of shirts that are permanent press, and they’re great. They can be worn multiple times before they start to show wrinkles and signs of wear. Then, after a trip to the dry cleaners, they’re right back to resisting wrinkles.

In theory, no matter what conditions you subject a permanent press piece of fabric to, it will hold it’s shape. It won’t change.

Which makes me think of a different type of permanent press . . . all the “perma bulls” and “perma bears” you’ve likely seen or read in the news.

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Eat Cheese, Avoid Cats

Eat Cheese, Avoid CatsIf you consider the common mouse and not only their capacity, but also their motivation, for making decisions, we might describe them as wanting to pursue pleasure and avoid danger.

Or, eat cheese, avoid cats.

I heard this idea from a guy called Dean Jackson who used this “eat cheese, avoid cats” concept to frame a discussion around how you and I make decisions and why.

Again, in simple terms, we’re all about seeking pleasure and avoiding danger.

So I was thinking about how this idea translates to your financial planning and your money decisions.

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Your Most Important Financial Planning Number

ImportantI recently read an article from a financial planner stating that net worth is your most important financial number. As a reminder, your net worth is what’s left over after you subtract your total liabilities (loans, debts, etc.) from your total assets (home, car, investments, etc.).

In fact, if you’re curious how your personal net worth stacks up against others in your age group, here’s a January, 2015, article from the Motley Fool that you may find interesting.

And while I think net worth is indeed an important number, I disagree that it’s your most important financial planning number.

I believe the most important personal finance number is your “MDI.”

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Avoiding IRA Account Penalties

Avoiding IRA Account PenaltiesMany people use Individual Retirement Accounts (IRAs) in an effort to minimize income taxes, both current and ongoing, while saving for retirement.

But IRA owners also need to understand and avoid another type of tax that can impact your IRA.

Excise taxes.

And here’s the kicker . . . these potential excise taxes are in addition to income taxes that you’ll already be paying to access funds from your IRA.

The important thing about IRAs is that you don’t want to take your money out too early or too late.

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