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Good Financial Cents®

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Making Cents Of Investing and Financial Planning

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Making Cents Of Investing and Financial Planning

iTunes Ratings

92 Ratings
Average Ratings

Knowledgeable and practical

By elle heit - Jun 07 2019
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I really enjoyed his podcast and found his life lessons to be practical and well informed! Can’t wait to listen to more!

Excellent Mentor

By BabyShower Registry Time - Aug 26 2015
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Jeff’s vision is definitely contagious!

iTunes Ratings

92 Ratings
Average Ratings

Knowledgeable and practical

By elle heit - Jun 07 2019
Read more
I really enjoyed his podcast and found his life lessons to be practical and well informed! Can’t wait to listen to more!

Excellent Mentor

By BabyShower Registry Time - Aug 26 2015
Read more
Jeff’s vision is definitely contagious!
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Good Financial Cents®

Latest release on Sep 09, 2019

The Best Episodes Ranked Using User Listens

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Rank #1: GFC 091: Dave Ramsey Might Think I’m Crazy. Here’s Why:

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When I first read, Total Money Makeover, back in 2003, I was excited to find another personal finance expert that shared my recommendations regarding saving for retirement.

One of Dave’s core tips regarding investing is,

Get your free money first with your 401(k) match. After that, take advantage of the Roth IRA to get your tax-free money. Then go back to the 401(k) and max it out.

This is the same advice that I’ve been giving to individuals ever since I became a financial advisor.

But over the last year or so my opinion has changed. What I’ve realized is that the majority of people that save in their 401(k) s have no idea what they’re doing.

They’ve usually let their employer decide where to put their money and they never really have no clue in what they are investing into.

Are you one of these people?


Because of this, I have changed what I believe.

The Change

I believe that everyone should first, if eligible, open a Roth IRA.

Yes, that’s right Dave.

I’m a big believer and lover of tax-free money and, if available, to me I’d max out my Roth IRA in a heartbeat.

Unfortunately, I’m one of the unlucky ones that doesn’t qualify.

Note: Not sure if you qualify?  Check out the most recent Roth IRA Rules.

So you’re probably wondering why would I advocate first going to the Roth IRA instead of the 401(k)?

I don’t blame you for questioning. Here’s my logic….

What I See

I believe that people need to have more of a hands-on approach with their investments. By having to open a Roth IRA it requires you to go out and do research in where the best place is to open a Roth IRA.

You’ll then have to figure out a way to get the money into it, and forced to learn how to choose the investments you place inside it. At worst, you’ll have to sit down with a financial planner to help you make sense of it all.

Essentially, it makes you do some work; it makes you have some stake in the game – your game!

Without any stakes in the game you’ll just go through the motions and never really know where or how your money’s being invested.

What About Taxes?

Is there some flaws in my logic? Of course there is! Any tax expert could punch holes in this concept all day long.

But here’s what I know: I’ve talked to several, potentially hundreds of people over the years that don’t have the slightest clue what they are doing with their retirement money which is most often their 401k.

This needs to stop.

You think Dave Ramsey will call me nuts?

Let me know in the comments below.

The post GFC 091: Dave Ramsey Might Think I’m Crazy. Here’s Why: appeared first on Good Financial Cents®.

Apr 29 2017


Rank #2: GFC 090: Required Minimum Distribution Rules For IRA and 401k’s

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Remember the first day you put money into your retirement account?

You have seen your retirement account grow over the years and you have been blessed because you have never had to tap into it.

Now the grand-kids are your new focus and you have decided to just pass it on them since you will never need it.

You have just turned 70 and a friend of yours in a similar situation is griping because they had to pay taxes on their retirement plan because they had to take money out.

Puzzled on the IRS rules you do some research (or go to my blog) and you learn about Required Minimum Distributions.

We’ll call them RMD’s for short.

It’s Time To Take Your Distributions

The beauty of investing in retirement plans is the tax deferred growth. All these years you’ve seen your account grow but never had a 1099 you had to report any of those gains on. You planned well enough were you have prolonged withdrawing even longer now, but you can only hold out for so long.

The IRS is chomping at the bit waiting to get some of that tax money back. They do so with RMD’s by making you take out a portion of your retirement account each year and pay the respective tax on it.

If you don’t take it out, you get taxed 50% of the amount that you should have taken.

That’s a pretty stiff penalty that you want to avoid.

RMD’s and 401k’s

Typically, the same required minimum distribution rules apply to your 401k as your IRA.   The big difference, however, is if you are still working until after you’ve reached 70.5.  In that case, the IRS allows you to postpone your RMD’s up until the day you retire.  That’s a good scenario for those that haven’t saved enough and continue to work to boost their retirement savings.

When do RMD’s  have to start?

The IRS says you must start by April 1 following the year that you turn 70 and a half, and you must do it each year ongoing. Some retirement plans will allow you to postpone withdrawing so long as you are still employed by that company. Keep in mind that April 1 is for the first year and the first year only. After the first year, it falls back to a calendar year schedule and must be withdrawn by December 31.

RMD Example

Somebody born on July 1, 1945 would not turn 70.5 until January 1, 2016. That means that they would not have to take their first RMD until April 1, 2017 (which would satisfy 2016 RMD requirement).

They would, however, be required to take another distribution that year by December 31, 2017 to satisfy for that year. Each year following would follow the December 31st deadline.

How much do you have to take?

The amount will also be based on the previous year’s balance in your retirement plan. For example, to figure your RMD for 2017 you would take the value of your plan as of December 31, 2016.

The amounts to be withdrawn are based of life expectancy tables issued by the IRS which factor in your age, your beneficiary’s age, and your relationship with your beneficiary. Based on the 2016 Uniform Life Expectancy Table, you can expect to be required to withdraw 3.65% of your retirement plan when you turn 70.5. It then increases to 3.77% the next year and increases each year ongoing. The IRS tables are named:

  • Single Life Expectancy
  • Joint Life and Last Survivor Expectancy
  • Uniform Lifetime
The tables are helpful, but nowadays calculators are used to compute the amount with ease. Please seek guidance from a financial professional to ensure that you are taking your RMD’s correctly.

Do You Have to Calculate RMD’s on Your Own?

Luckily, no.  Most financial institutions will calculate the figure for you.   For all my clients that have reached RMD age, my custodian calculates the RMD amount for my clients and then I contact the client to notify them of the amount.

Another thing to consider is that since it is a taxable distribution, your IRA custodian will most likely require you to sign a form to take out the money (at least the first time).  If a form needs to be signed, don’t procrastinate and wait till the last minute.

What About RMD’s and Roth IRA Conversions?

With the rules regarding Roth IRA conversions now lifted, I’ve had several RMD candidates inquire about converting their RMD’s directly into a Roth IRA.

While the concept sounds good, it’s not allowed.  The IRS will make you pay tax and remove the RMD proceeds.  Anything left after the RMD can be converted into a Roth IRA – just remember you’ll have to pay the appropriate tax.

The post GFC 090: Required Minimum Distribution Rules For IRA and 401k’s appeared first on Good Financial Cents®.

Apr 21 2017


Rank #3: GFC 094: Net Unrealized Appreciation Rules

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I’ll never forget the conference call I had with a client who was getting ready to retire from the company she had worked for 20 plus years. She had saved as much as life had allowed her to and most was invested in the stock of the company which employed her all that time.

Almost Pulled The Trigger…. We were ready to give the instructions to do a 401k Rollover right before we learned that her cost basis in the stock was very low and she had an NUA (Net Unrealized Appreciation) opportunity to consider.   Upon learning that, we put it on hold and I had the luxury of trying to explain what Net Unrealized Appreciation rules were over the phone. If you don’t know, explaining NUA rules over the phone is not the wisest decision.   Not having the visual benefit of really snazzy flow charts makes it very difficult. In a real way, net unrealized appreciation has to be seen to be fully appreciated.

What is Net Unrealized Appreciation Anyhow?

What is this NUA, you ask? NUA is a favorable tax treatment on employer securities (usually stock) for lump-sum distributions from a qualified retirement plan. More and more companies are offering employer stock as an investment option inside their qualified plans, allowing NUA to provide a potentially lower tax bill.   The net unrealized appreciation is the difference between the average cost basis of the shares of employer company stock that has been purchased over the years when it was accumulated, and the current market value of those shares.

The NUA is important if you are distributing highly appreciated company stock from your tax-deferred employer-sponsored retirement plan, such as a 401(k).

IRC 402 allows employees to take a lump-sum distribution of their qualified plan, pay ordinary income tax on the cost basis, and then pay long-term capital gains on the growth, even if they sell it the same day. Does this sound too good to be true?  
    It’s actually an excellent way to take distributions on highly appreciated company stock. It may even be a more advantageous way of taking a distribution on the stock than rolling it over into another retirement plan, like an IRA – at least in certain cases.

Qualifications For NUA To Work:

In order to set up an NUA, there’s a long list of requirements that must be met:
  1. The employee must take a lump-sum distribution from the retirement plan.
  2. No partial distributions are permitted – the lump sum distribution must take place within one year of a) separation from your employer, b) reaching the minimum age for distribution, c) becoming disabled, or d) being deceased.
  3. The distribution must include all assets from all accounts sponsored by and held through the same employer
  4. All stock distributions must be taken as shares – they cannot have been converted to cash prior to distribution.
  5. The entire vested interest in the retirement plan must be distributed.
  6. The employee may be subject to a 10% penalty for premature distribution if he or she is under age 59 ½ unless the employee meets an exception to the premature distribution penalty under section 72(t).
  7. The cost basis is the Fair Market Value (FMV) of the stock at the time of purchase, regardless of whether the employer or employee contributed the money.
  8. The NUA does not receive a step-up in basis upon death, it is instead treated as income in respect of a decedent.
  9. If there is any additional gain above the NUA, the long-term/short-term capital gains will be decided by looking at the holding period after distribution.
  10. No Required Minimum Distributions (RMDs) are required.
In addition, you can only do an NUA if the employer company stock was originally purchased and held in a tax-deferred account, like a 401K. The NUA only applies to the stock of the employing company, which means the benefit is not available for individual stocks of non-employer companies you may have held in your account.   Note the 2019 changes to the 401(k) released by the IRS as you consider your best retirement options.                   Roth IRA limitation. Roth IRAs don’t qualify for NUA treatment because they are not tax-deferred, and brokerage accounts do not qualify because they are generally subject to the capital gains tax anyway.

Why an NUA May be Better than a Rollover

This is certainly not true in all cases, but it can work to your advantage under certain circumstances. If your 401)k) plan does have a large amount of employer stock, and it has appreciated significantly, you should weigh the pros and cons between doing an NUA and rolling over the stock into an IRA along with the other investment assets held in the employer plan. The primary consideration is the fact the appreciation on the employer stock over its original purchase price will be subject to long-term capital gains tax, rather than ordinary income.   So let’s first take a look at the benefit of the long-term capital gains tax rate. The long-term capital gains tax rate is lower than ordinary income tax rates and applies to investments held for longer than one year.  
    There are three long-term capital gains tax rates, and they are based on your ordinary income tax bracket as follows:
  • If your income is between $0 to 39,375(single), or $0-$78,750(joint), your long-term capital gains rate is 0.
  • If your income is between $39,376-$434,550(single), or $78,751-$488,850(joint), your long-term capital gains rate is 15%.
  • If your income is over $434,500(single) or $488,850(joint), your long-term capital gains rate is 20%.
How is the NUA more advantageous than simply keeping the stock in the employer plan, then doing a direct rollover into an IRA? It all depends on your ordinary income tax bracket, the cost basis of your stock, and your current need for the money.    Caveat: If you take a distribution of employer stock, and it rises in price to beyond its value at the time of distribution, the additional gain will be taxable at ordinary income tax rates, unless the sale occurs at least one year after the distribution, qualifying it as a long-term gain.

When an NUA Works Better than a Rollover

Let’s say that you’re in the 15% income tax bracket – which also means that any long-term capital gains that you incur will be in the 0% long-term capital gains tax bracket. You have $100,000 in the 401(k) of a former employer, $20,000 of which is in employer stock.   The stock was purchased at a total cost of $4,000, which means that they now reflect a gain totaling $16,000. You have $80,000 of the 401(k) – the non-employer stock portion – rolled over into a self-directed IRA, completely shielding it from income taxes.   But you may have an immediate need for at least some of the 401(k) money, so you take delivery of the employer stock, or more specifically, you have them transferred to a taxable investment account where they can be liquidated on short notice.   Though the stock has a total value of $20,000, only $4,000 of it – your cost basis in the stock – is subject to income tax. Since you’re in the 15% ordinary income tax bracket, only $600 of the $20,000 transfer must be paid for taxes ($4,000 X 15%). Should you decide to sell the stock, you will realize a $16,000 gain.   But since you’re in the 0% bracket for long-term capital gains there’s no tax liability due on the sale of the stock. In this way, you are able to gain immediate access to the proceeds from the sale of $20,000 in employer stock from your 401(k) plan for just $600.  
    That works out to be just 3%. If you have an immediate need for the funds, this would be a highly tax-efficient way to gain access to them. By contrast, were you to also roll the employer stock into an IRA, and you needed $20,000 immediately (or any portion of it), the distribution from the IRA would be subject to your 15% ordinary income tax rate. That means that you will pay $3,000 on the distribution, compared to just $600 using the NUA.

When an NUA Doesn’t Work Better than a Rollover

An NUA won’t make sense if you’re in a higher tax bracket and there’s less of a gain on the value of your employer stock. Let’s say that you’re in the 25% ordinary income tax bracket, which means that long-term capital gains are taxed at 15%.   Let’s say that your employer stock is currently worth $20,000, but it has a cost basis of $15,000. If you take an NUA on the stock, $15,000 will be taxable at ordinary tax rates, or $3,750 ($15,000 X 25%).   You sell the stock, at which time the $5,000 gain is subject to your long-term capital gains rate of 15%, or an additional $750. Your total tax liability is $4,500, or 22.5% of the value of the $20,000 stock position. That’s a bit less than the 25% you’d pay if you rolled over the stock into an IRA and later withdrew the money.   But if you don’t have an immediate need for the money, and you anticipate being in the 15% tax bracket in the near future, you might avoid the NUA and just do a full rollover of the stock along with your other 401(k) funds.   Strategy: If the employee has large gains in employer stock, take a lump-sum distribution, roll-over the non-stock assets from the qualified plan to an IRA, and take the employer stock asset under NUA. This treatment will defer taxes of already ordinary income assets and allow the employee to experience favorable long-term capital gains rates on the appreciated stock.

Is taking advantage of Net Unrealized Appreciation worth it?

The main consideration when exploring NUA is the ability for the employee to pay income tax on the basis of the stock in the year of distribution. If the employee has considerable gains in the stock, NUA may be a viable option to pay lower taxes on the sale of the stock.   Rolling over the qualified plan does allow the employee to defer taxes to a later date, but at the expense of missing the opportunity, NUA offers to have some of the income taxed as long-term capital gains. Without NUA, the entire amount will be taxed on distribution as ordinary income. What that equates to is a whole lot of tax you did not have to pay.

The post GFC 094: Net Unrealized Appreciation Rules appeared first on Good Financial Cents®.

May 21 2017


Rank #4: GF¢ 029: 7 Financial Advisors I Would Like to Punch in the Face

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People who know me know I’m not a very violent guy.

I’ve never been in a fist fight in my entire life, I very seldom ever yell (except when the St. Louis Cardinals would blow a four run lead in the bottom of the ninth), and I cover my face with a pillow when there’s a confrontation on the TV (go ahead and laugh…my wife does).

In short, my personality type is one that is constantly smiling, and can be easily labeled as “Joe Cool”.

But, like any human being, there are some occurrences that get me really fired up.

One of the biggest things that gets me fired up?

Financial advisors that lie, steal, and cheat.

These are the people in my industry that give financial planning a bad name (Madoff anyone?),  and unfortunately they’re everywhere.

I’ve been in the business for over 12 years, and I’ve had countless run-ins with these types of advisors and despite my laid back personality, I would like nothing more than to punch them in the face, seriously.

I’ll share some financial advisor horror stories that other clients have shared with me, the lessons learned, and let’s just see if you would want to pull a Rocky Balboa on their face, too.

Disclaimer:  No Financial Advisors were actually harmed during the writing of this post.

1. The “12%” Advisor

A few years ago, I was competing for a client’s business. I was one of two other advisors who were being interviewed, and I gave my traditional spiel. It turns out that one of the guys I was up against had guaranteed to the potential client that he could make 12% in the stock market.

Now, keep in mind that this was not before 2008, and even if it was, it wouldn’t matter. The advisor was using basic mutual funds and still had the audacity to claim to my client that he could would net him a guaranteed 12% return.

I was in shock.

Luckily, the potential client saw right through the smoke and mirrors and didn’t choose him, and chose me instead.

Lesson learned: If you ever come across any type of advisor that guarantees you any rate of return, and isn’t quoting you a fixed annuity, a CD, or some type of insured bond – don’t fall for it. It’s too good to be true. Get out of their office fast.

2. The “Surrender Charge Conversation is Optional” Advisor

I once had a person come to me who was very disgruntled with their current financial advisor. They had lost more money than they’d wanted to and really didn’t understand what they had. When I had a chance to take a look at their mutual fund portfolio, I noticed that all they had were B-Share mutual funds.

For those of you that don’t know, B-Shares, for the most part, are now non-existent. Although I can’t be certain why, my hunch is that they aren’t around anymore because too many advisors abused.  If they could still sell them, the advisor could make a handsome commission, and the client would never know.

Now, it’s not the commission on the B-Share that makes them so bad, it’s the fact that most of them had a six to seven year surrender period. That means if you buy the fund, you’re going to have to hold it for at least six or seven years before you can liquidate it without a penalty.

The client in my office had no idea what a B-Share was, and most importantly had no idea that she had a surrender charge attached to it.  So here she is – stuck in investments that had lost more money for her than she had wanted, and she can’t do anything about it because if she did sell it, she’d have to pay a surrender charge on top of her losses.  Talk about a slap in the face.

Lesson learned: Read all the fine print and make sure you understand if your investment product has any type of surrender charge attached to it.

3. The “Telling the Truth is Optional” Advisor

Another time I had a client who was retiring, and we were in the process of rolling over his 401(k) and pension. In our conversations, I had learned that he had purchased a fixed annuity at his local bank a couple years prior. Since they wanted to consolidate all of their investments, they were more than comfortable transferring everything to me – but I knew that they had just taken out the fixed annuity a couple years prior.

My inclination was that there was probably some type of surrender charge attached to it. I inquired about this to the client, and they were under the impression that there was not a surrender charge, and that they could take their money; principal and interest, and walk away at any time.

Why did they believe that, you ask? Because that’s what the advisor had told them. The advisor had told them they could take out the investment, take their guaranteed interest at any time, and walk away with everything without penalty.

Now, once I heard that, as much as I wanted to believe them, I knew something sounded fishy. I had them call the bank and talk to the advisor to clarify how it actually worked. As it turns out, it wasn’t that way at all.

Yes, they could walk away with the principal, but all the interest that they accrued would be forfeited, and in their case, it was approximately $7,000 that they’d be leaving on the table. Obviously, we weren’t about to give up a big chunk of money just for the sake of consolidating, so we left it as-is to revisit when the surrender period expired- which was four years away!

Lesson learned: Just because the advisor tells you something doesn’t necessarily mean it’s true. If something sounds too good to be true, ask for it in writing.

4. The “I Like to Churn”Advisor

And no, we’re not talking about churning butter. I was talking with another potential client who was considering switching advisors and although they lived in a small town in the Midwest, they had somehow started doing business with an advisor out of New York.

They had been with this person for several years, and had a hunch that things weren’t all what they seemed. They thought perhaps the advisor was selling funds and buying other funds just for the sake of earning a commission, and since I was the guy they were considering hiring, they were interested for me to take a look.

After reviewing their account statements and the trade confirmations, it was quickly and easily obvious that was what was being done. Sure enough, the advisor was selling A-Shares; another type of mutual fund, and turning right around and buying other B-Shares, sometimes it was the exact same fund. It made no sense other than the fact that the advisor made a commission on each of those trades.

Lesson learned: If you are using an advisor on a commission-based relationship, be on the lookout for an influx of unusual trade confirmations. If you see a lot of activity, it might be worth inquiring about.

5. The “I Can Use Anything, I Just Happen to Use My Own Company’s Mutual Fund”Advisor

I had just met with some folks that had recently moved in-state from the East coast. They were referred to me because they were unhappy with the advisor that they’d been with. The advisor had worked for one of those big insurance companies that also have their own proprietary mutual funds.

The advisor had always made the claim to them that he could use any type of investments that he wanted. What I found funny about that statement was when you actually looked at their account holdings, over 80% of all their investments were with that company’s mutual funds; their own proprietary product.

What was even more a bunch of crap, was the actual funds themselves were horrible. Their track records were bad, their fees were high, and their performance resembled that of a 16-year-old trying to make it in the NFL; it just wasn’t cutting it.

Lesson learned: If you’re using an advisor that works for a big company, be on the lookout if they always recommend their own company’s funds.

6. The “I Know You’re 80 and Should be in a CD, But Let’s Put You in a Risky Investment” Advisor

This is the type of advisor that deserves more than just a punch; maybe an eye gouge, a knee to the groin, or maybe even a “people’s elbow” from The Rock.

I had a client whose mother was doing business with another advisor a couple towns over. The daughter had a funny feeling about the advisor, so she urged her mom to transfer to me.

When her mom brought in her account statements, I couldn’t believe what I saw. I had asked the daughter and the mother what the intent of their investments was and both agreed that safety of principal was a major concern. The mom had living expenses to meet, and she was going to need to cash in some of the investments in the not-too-distant future.

When I hear an 80-year-old widow tell me that she’s worried about her principal, and she needs access to the money in a short amount of time, immediately I’m thinking CDs, money market, or savings account.

Well, not this advisor. No, this advisor put most of her money into different preferred stocks, and long term bonds.

One of the preferred stocks had a maturity date of 2040. Now, for those of you that don’t understand how preferred stocks work, they resemble a hybrid of a stock and a bond, so they can fluctuate like a stock, and pay interest like a bond.

Well, the time when the mother needed the money, interest rates were fluctuating and in just a few months time span she saw a 30% drop in principal on those preferred stocks.  When she needed to cash out those investments to generate some cash, she was taking a huge loss in principal. Sure, her investments were paying a very high dividend at the time but that was of little comfort after taking such a huge hit on her money.

Lesson learned: If you think you need to access the money in your investments short term, don’t let an advisor con you into buying anything other than a CD.

7. The “My Products Don’t Have Fees” Advisor

This is the kind of guy that I don’t actually want to punch in the face, I’d rather just have a good chuckle with him. One time, I was competing with another advisor who was offering a fixed annuity as their only investment solution. They were a pure insurance agent, and apparently that was all he could offer.

When the client chose me as their advisor over the insurance agent, they were not happy, to say the least, and they were so disappointed in my client’s decision that they were compelled to tell them (in a condescending tone)  that their products had no fees, whereas mine did, and that they (my clients) were making a horrible decision.

No fees, huh? Well, yes, if you buy a fixed annuity that guaranteed you 3%, you do get 3%. For someone to use the argument that their products have no fees is ridiculous. There’s a fee for everything; there is no such thing as a free lunch.

Lesson learned: If your advisor tells you that their products have no fees, I would suggest you first prevent yourself from bursting in laughter.  Then kindly remove yourself and sprint out of their office.

Have you ever had a bad experience with a financial advisor that you wanted to punch in the face? Break out your boxing gloves and share in the comments below.


The post GF¢ 029: 7 Financial Advisors I Would Like to Punch in the Face appeared first on Good Financial Cents®.

Sep 09 2019


Rank #5: 7 Money Lessons I Would Give to My 20-Year-Old Self

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In present day I’m a successful financial advisor and entrepreneur.

Based on some of the boneheaded money decisions I made in my 20’s it is a miracle I can even say that.

I’ve definitely learned from many of those mistakes, but if I had the chance to hop in a DeLorean and go back in time, here’s 7 money lessons I would love to give to myself.

1. Why do you have to be all GQ?

I’m not even sure if the term metro-sexual existed back whenever I was 20 years old, but there’s no question I was the epitome of it. While most guys who attended college were wearing American Eagle, and if they were lucky, Abercrombie & Fitch with their Asics running shoes, I was the guy shopping at the Gap-wearing button-up shirts, knitted sweaters, and slick stylish shoes all while attending a junior college.

Sure, I had a part-time job and I could afford some of it, but the reality is that most of it went on a credit card or student loans (especially since I didn’t get my private student loans without a cosigner) – stupid debt for clothes that in a year from now I could care less about. 

I don’t even want to try to guess how much money I wasted on clothes that could have been used for so many different things. I also wished I would have known these tips on how to make fast cash when I was young, and maybe avoided using that credit card so much!

2. Don’t miss out on the trip of a lifetime.

What are some of the other things I could have spent my money on? What about traveling to parts of the world I may never see in my lifetime. There are two traveling regrets I didn’t take when I was younger . . . .

The first one was going to New York a month after 9/11. The airline prices were super cheap and a flight to New York, understandably, was less than $100. I had never been to see New York and there was a part of me that just felt like I needed to be there – to be around the suffering our nation had just gone through. My best friend and I talked about it. I can’t remember the exact reason why, but we didn’t go. To this day, I still regret that.

The other trip I regret not taking was a backpacking trip to Europe. The same buddy that talked about going to New York also brought up the idea of taking a backpacking trip to Europe, staying in hostels, and seeing a part of the world we’d never seen.

Unfortunately, I had already amassed a good amount of credit card debt from all the stupid clothes and eating out I took part in while I was in college. The thought of putting even more of that debt on my credit card gave me an uneasy feeling. I can remember the conversation plain as day and it went something like, “Man I would really love to, but there would be a lot more debt added to my credit card and I just don’t feel good about that right now.”

Granted, in the financial state I was in, that would have left me even worse off. Since I got a grip on my finances, I still feel pretty confident that I would have eventually paid it off and still had those memories.

3. Start investing earlier.

For the most part, I was ahead of the curve. I started my Roth IRA when I was 24 years old. I was only putting in $50 per month and definitely could have put in more. I’m still kicking myself for not starting it much earlier.

See, I’ve been working almost 20-30 hours per week ever since I graduated high school. I always had plenty of money but I tended to waste it on crap.  I remember a friend of mine in high school was one of those weird guys who knew everything about saving money. He told me about the Roth IRA and told me I should definitely get one started.

I remember thinking to myself, “Yeah, that sounds pretty cool, but I’m going to go spend my money on [fill in the blank with something useless].

I can only imagine if I would have started investing into a Roth IRA just six years earlier or if I would have [GASP!] diversified into stocks, P2P investing with Lending club, or other short term investment options. Who knows how much money I would have today.

4. Cut down on the CDs and start reading more books.

I totally just dated myself. I’m referencing CDs. Millennials, if you don’t know what I’m talking about, do a Google search. I love listening to music and I owned almost every ’90s alternative rock band CD from that generation and I wish I would have spent more time investing more money into creating wealth.

It wasn’t until I turned my career into being a certified financial planner that a client, of all people, referred me to Robert Kiyosaki’s Rich Dad Poor Dad.

Prior to that, I don’t think I had read any book on investing or personal finance. Heck, I don’t think I even read a book that wasn’t required of me outside of school. That book forever changed my mindset and how I would approach business ventures, investing, and anything money related.

I’m amazed whenever I get a chance to speak at our local university and I start asking students about some of the latest books they have read – or even asked if they read some of my favorite books – and I’m shocked to learn that hardly any of them have read any books whatsoever. Many young folks are interested in entrepreneurship and investing, yet they don’t invest any time into reading any books on the topic.

The next book that had a meaningful impact in my life was Dave Ramsey’s The Total Money Makeover. The concepts were so simple yet I’ve come across people all the time that didn’t have an emergency fund and were drowning in debt. Dave’s “Baby Steps” were instrumental in helping me give advice to other people in those situations that weren’t familiar with his work.

More present day, a book by Tim Ferriss, The 4-Hour Workweek, was a wake-up call of all the things that I was wasting my time on when I could easily outsource that or delegate that to somebody else versus me having to do everything. That’s another one that I consider a “must” for anybody.

If you want to throw Soldier of Finance in there as a great book to read, I’ll be okay with that too.

5. Don’t waste your time with multi-level marketing.

Oh my gosh, I didn’t really want to publicly admit this. Yes, I was a part of not one, not two, but three multi-level marketing (MLM) companies (insert gag reflexes).

To my defense, I was young. I was looking for the next great business idea and these companies all had great promise. I don’t want to sit here and bash all multi-level marketing companies. I’m sure there are several of them that offer good products and services to those that need it but here is my beef with MLM . . . .

If you go in a multi-level marketing company and they’re more interested in you building up your team than actually finding customers that need the goods and services that the company offers, then that MLM is a scam.

It’s a rip off. Get out. Before you ruin the relationship that you have with friends and family.

The second and third MLM that we joined we had some very close friends that had gotten into this at the same time we had. They  joined before us so we were part of their “downline”.

You think about those annoying people that would contact you out of the blue to catch up or invite you to a meeting without giving you all the exact details of what was going to be discussed. That was this couple.

We made this mistake of giving them all of our friends contact and info and they called them.  Over and over again.  Giving them our friends’ contact information basically burned every single bridge of friendships they had and almost ruined ours.

It got the point that every time we hung out with him all they would ever talk about was the multi-level marketing company we were apart of. Talk about a major turn-off. We had to politely distance ourselves from them. Unfortunately, our friendship ended because of the MLM and their obsession with it.

As much as I now hate my MLM experience, I am thankful to have it so that now I know the right way to market a business: don’t harass people until they want to avoid you at all costs.

6. Seek out mentors who will give you advice.

Imagine if you were a football player and your dad happened to be a hall-of-famer. The odds are immediately in your favor that you’ll have success. The odds of me being financially successful were certainly not in my favor.

Both my parents were not the best financial role models. Even worse, when I was very young, they struggled with money – both of them filing for bankruptcy twice. I wasn’t given the basic fundamentals of personal finance I needed to succeed and I definitely wasn’t given any tips on investing or entrepreneurship.

Everything I learned, for the most part, was self-taught. Actually, I wasn’t self-taught, I learned through mentors and various coaching programs I made a part of my life.

Most of these mentors weren’t sought until well into my later 30’s so I wish I would have sought council much sooner.

7. Don’t let life flush your dreams.

This is probably not going to be a newsflash for many of you: life can suck.

Illnesses happen.

Jobs are lost.

Friendships are lost.

People lie.

People cheat.

It’s a cruel, cruel world.

As kids, we’re oblivious to these things. As kids, we still dream about being a race car driver, being an astronaut, becoming a millionaire, or driving a Lamborghini. We don’t know any different but as we get older and life starts to reveal itself to us we can become much more cynical or “realistic.”

“There is no way I could ever drive a Lamborghini.”

“There is no way I could even be a millionaire.”

“There is no way I could ever have the job of my dreams.”

It’s these limiting beliefs that can suffocate us and snuff out our dreams. Don’t let that happen. Is there something you really wanted when you were younger but just gave up on it? A silly one for me was driving a yellow Lamborghini.

I used to have a poster on my wall put up with thumb tacks I had won it at some random carnival.  My dad told me that if I worked really hard that eventually, I could buy a Lamborghini.  I believed him.

As I got older, I realized how much a Lamborghini cost and I told myself I’ll never be able to drive a Lamborghini.

It’s over 30 years later and I still do not drive a Lamborghini and probably never will.

Not because I won’t have the money – I just feel like I’d rather spend my money on other things that are much more impactful in my life.

There will be some point in time that I will be able to buy a Lamborghini and pay for it in cash. In fact, I’m close to it now.

The key is removing any limiting beliefs you have of things that you can’t accomplish and replacing that with a liberating truth.

As Henry Ford said, “Whether you think you can, or you think you can’t – you’re right.” Believe in yourself, it can happen. Don’t let life’s struggles rob you of the dreams for which you are destined.

Concluding Thoughts

If you’re in your 20s and can learn from a few of my lessons, please do. Why learn the hard way? You don’t have to! You can learn from the mistakes of those who are older than you. That might not sound like much fun, but believe me, it’s certainly better than reaping the consequences of years of mistakes.

If you’re older and are looking back like I am, it’s important to remember you really can’t change the past. That’s right, you can’t get in a DeLorean time machine and teach your younger self these lessons – I wish! Besides, that might cause a break in the space-time continuum, duh.

However, you can take the lessons you learned from past mistakes and apply them to the present time. If you do so, you’ll find yourself enjoying a much brighter future.

Don’t let the past hold you back as if you’re in prison. You’re not your past self, you’re your present self, and you can do amazing things right now.

The truth is that most successful people became successful by picking themselves up, brushing themselves off, and continuing forward even after they made mistake after mistake. You need some grit. And if you’re struggling with your finances, you might need some financial grit (here’s how to discover some).

Sit down, create a list of some lessons you learned over the years, and make an effort to change your ways. Keep your list close by. Read through your life lessons every now and then. By doing so, you’ll refresh yourself and will be more likely to do the right thing when a trial comes your way.

You don’t have to continue in your mistakes. You can learn your lessons. You can become a new person. You can be awesome. So go, be awesome!

This post originally appeared on Forbes



The post 7 Money Lessons I Would Give to My 20-Year-Old Self appeared first on Good Financial Cents®.

Jan 11 2018