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Antonio Filippone
PO Box 2698
Loves Park, IL 61132
Contents
FOREWORD
Acknowledgments
1 How The Wrong Advice Can Harm You
More Than You Know
2 Changing Times
3 Financial Security For All
4 How To Better Manage Your Debt
5 How To Protect Yourself And
Your Family The
6 Accessibility Is Important
7 The Ups Without The
8 How To Avoid Paying More Taxes
Than You Should
9 The Secret To Saving More Money
10 How To Finally Get The Right Advice
Chapter 1
How The Wrong Advice
Can Harm You
How To Avoid Listening To The Wrong Advice?
Where do you go for sound financial advice? Do you listen to the experts on CNBC or read financial publications like The Wall Street Journal or Money Magazine? Maybe you are like some of my other clients who tell me that they have a brother-in-law or someone they work with (like their boss) who seems to be doing better than they are so they take their financial cues from them. Let’s face it, financial decisions get complicated real fast and most of us just don’t feel like we know enough about the topic to form our own opinions so we tend to look to others when making important financial decisions. Does that sound like you? If so you may have a real problem.
If you do what everyone else is doing doesn’t it make sense that you will end up like everyone else? Guess what? Everyone else is broke! Maybe more broke than you. If you don’t believe me, there is an often sited study done by the U.S. Department of Labor and Statistics that states 96% of Americans are dead broke by the time they reach age 65 and only 4% are able to survive without relying on Social Security. Do you want to be in the top 4%? Then maybe you better stop listening to the bottom 96%.
But there is even more to this problem than you might realize. Even the financial experts are hurting you more than they help. Why do I say this? Are The W all Street Journal and Money Magazine part of some evil conspiracy to keep good people like you in the poor house? Not exactly, but too often that is just what they unintentionally do. You see, most of the advice brought to you by today’s media is information that is really geared toward the already wealthy and often does a disservice to us middle income folks. Wouldn’t you agree that wealthy people live in a different world, with different financial rules? Can’t they afford to take risks with at least some of their money? Are they concerned about getting rid of their debt so they can afford to save for their future? Do they worry about qualifying for financial aid so their children can go to college? Do they lose sleep at night wondering how they are going to put food on the table and at the same time pay for little Nino or Katie’s braces? No. They just don’t face the same problems and so trying to plan for our future using advice designed for the wealthy is like trying to tap in a nail to hang a picture on your wall using a sledge hammer. The recommended tools, too often, just don’t fit the job.
Now, if your well meaning friends and colleagues don’t have the answers and the media’s advice is not well suited for most middle income Americans then where can we turn to for sound financial advice? That is why I have written this book and it is why I devote so much time to lecturing and teaching. There are some very simple principals that if followed closely can help you easily get control of your financial life, pay off your debts quickly, start putting serious money away for emergencies and your future and have some of the better things in life.
Let me ask you some serious questions. How much debt are you in right now? Do you even know? Are you paying high interest rates of 9% or more on at least some of that debt? If you didn’t have that debt over your head do you think you could be putting more money away for your future? How would you feel if you were on track to paying off all of that debt in just a few short years? If I could show you how to get your debt under control and paid off would this be one of the best books you ever read?
Now let me ask you are you happy with the amount of money you have been able to save so far? If you save as much in the next 10 years as you did in the last 10 years how are you going to feel about that? If you could learn how to put more money away for your future without you having to change your lifestyle to do it would you want to know how?
Maybe you are already a decent saver but where do you save your money? Are you happy with the returns you are getting? Is at least some of your money at risk in the stock market? How do you feel about that risk? As hard as you work for your income can you really afford to lose ANY money? If this book can show you how to invest your money in such a way that you were guaranteed never to have any losses yet you could still have significant gains, wouldn’t you want to know how?
How about taxes? Are you happy with the amount of money you pay in taxes? With the way the government has been spending money do you think you will be paying less taxes later or more? Do you have a plan to help you pay less tax and enjoy more of your money later? This book will reveal to you some simple strategies that will help you address every one of these problems and more. So read on for the answer
To Order Click Here
Or send your check for $19.95 to...
Antonio Filippone
PO Box 2698
Loves Park, IL 61132
Chapter 2
Changing Times
What Used To Be True And What Is?
Did you grow up hearing this advice? Go to College. Get a good Job. Buy a house as soon as you can afford one. Pay it off as fast as you can. Save a little every month and you will be set for the rest of your life. Does this advice sound somewhat familiar? And who gave you that advice? Was it your Mom and Dad? Your Grandparents? Or someone else you respected and admired? Were they trying to hurt you? No, of course not. They had your best interest at heart. But what is wrong with that advice?
If you consider the source the advice made a lot of sense. After all, our parents and our grandparents lived in the same house for their entire lives. A good portion of them actually paid off their 30 year mortgages in 30 years! Many people from that generation also had only one job their entire lives. They often lived on only one income and they retired with a pension that they could count on for the rest of their lives. They had no credit card debt because almost no one used credit cards before the 1970’s. And they would save a little money every month. Their parents or grandparents had experienced the Great Depression and it was drilled into them to put some money away for a rainy day and they listened. Do you know what the national savings rate was in the mid 1970’s? On average people saved about 8% of their income. Wow, that is incredible by today’s standards. A few other things that made that generation different was that they not only were on track to receive a reliable pension from their company but they also could expect and rely on receiving a Social Security check every month for the rest of their lives. Speaking of the rest of their lives, they did not expect that to last very long. It was almost unheard of for people to live past the age of 100! They did not live in fear of outliving their money as their Pension and Social security were guaranteed to last as long as they would and quite frankly people did not last that long.
But have things changed for this generation? Is that rock solid advice still applicable for our day? Let’s take a look. Today, people almost never pay off a 30 year mortgage without refinancing. The mortgage experts tell us, that on average, people will refinance every 7 years. And if we are not prone to refinancing our loan we do tend to move every 4 to 6 years on average. Sometimes due to work relocation and other times just to upgrade. Many of us will have 3 to 7 different jobs over our life, sometimes we will get retrained and take on entirely new careers. And very few of us today actually live on one income. It often takes two people working just to make ends meet. But these are not the only differences. Here are some of the more important ones.
Today, the average family has about $19,000 in credit card debt and is paying, on average, about 15.5% for that debt. Are credit cards a problem for most people of this generation? You bet they are.
How about savings? Are we saving enough money to be able to reach a point of financial independence? In 1970 the national savings rate was 8% on average, do you know what it is today? It’s an embarrassing -1%. As a nation we are spending more money than we make every year. Where will that leave you?
Can we at least count on our employer’s pension plan to take care of us when we get old and are unable to work? No, because our employers have phased out pensions at an alarming rate. Or at least what we used to call a pension. There used to be something called a Defined Benefit Pension Plan that would guarantee your retirement income for as long as you lived. The company you worked for would use a formula based on your income and the amount of years you worked for them to calculate how big your monthly check would be. Most importantly it was guaranteed not to run out no matter how long you lived. It is estimated that while these plans used to be the norm they are going the way of the dinosaur and only about 30,000 companies still have one. (And many of these companies are trying to get rid of them or have already begun to faze them out) What’s worse is many of the companies that still offer these plans are having serious funding problems and many workers who counted on these plans and other benefits for retirement will end up receiving less money than they thought. This has already happened to steel workers, auto workers, airline workers, coal workers and so on. As if this was not bad enough when you take into account the volatile stock market, and a sluggish economy, and ad that to the fact that most of these pension plans have been under funded to begin with you have a pension system that is in serious trouble. The question arises, even if you still have a Defined Benefit Pension, will you actually be able to collect when the time comes?
There is an even bigger underlying problem that often goes unnoticed by most Middle American workers. It is more wool that has been pulled over their eyes in an attempt to divert the whole pension problem away from big business and onto whom? You guessed it, the little guy, the middle income worker. The truth of the matter is that Defined Benefit Pension Plans were an incredible program for the average worker, why? You didn’t have to figure out how much of your pay you should set aside. You didn’t have to worry about how to invest that money so that you would not lose it in the stock market. You did not have to figure out how to turn that money into an income stream in retirement. You did not have to worry that you would outlive your money. All of those problems fell on your employer and the good news was that they had the resources and knowledge to figure out how to best handle all of those problems. But it was expensive and inconvenient for them and when the 401(k) was introduced, they (big business) saw it as their ticket out of a very complex, very expensive problem. Think back to that meeting where your company told you all about the great new benefit they were offering you, the 401(k).
Do you remember when your company introduced you to the 401(k) plan? They made it sound like the best thing in the world didn’t they? You would now get a new tax-break that you didn’t have before. They were going to help you out by matching your contributions. And you would have all of these great investments to choose from where you would make untold profits and retire with a huge savings account. But why were they really so excited about this plan? By changing from an old system, the Defined Benefit Pension Plan to the new 401(k) plan, they could now relieve themselves of all of the investment headaches, all of the responsibilities of managing your pension for you and they shifted all of those problems on to you. Now, if you didn’t put enough away for your future. It’s your problem. You should have saved more. If your investments don’t perform well and you lose money, that’s your problem, you should have done your homework and planned better. And hey, if you run out of money in retirement you can’t blame us, (big business). After all we did give you a match and provide you with a plan. Is it really big businesses fault if you fail?
Do you see what they did? The took all of that expense, all of that hassle, all of that responsibility, and all of that obligation and dumped it on your lap relieving them of all future responsibility for your retirement needs. And they made it sound like they were doing you a favor. Now, if you get a little angry when you read this you should! After all how is the average working class Middle American supposed to all of a sudden become a financial planner. And do you really want to become one? My guess is if you wanted those kinds of headaches you would have left that company and started your own small business years ago. And if you do happen to be a small business owner then, yes, this responsibility has always been yours. The problem is you are too busy trying to keep your company going that you don’t have time to create a retirement plan for you and your workers. So, here you are with this whole problem that you did not ask for thrown on your lap. What are you going to do about it?
What most people do is blindly under fund their future by meagerly contributing to their 401(k) plan up to the company match and they pick a few funds that their boss (who knows less than they do about investing but won’t admit how much money he actually lost in the market over the last 10 years) helps them pick and then they bury their heads in the sand and use the following excuses for doing nothing about the problem. I can’t put anything more away for retirement I can barely make ends meet now. I can’t put anything away for retirement my company might be going out of business. I can’t put anything away for retirement I have to focus on getting out of debt. Since I can’t do anything now I will just do what I can and hopefully I will be able to get by on Social Security. Yikes!
First of all, I want you to know there will never be a good time to put more money away for your future and if you wait for that day to come you will miss the boat. The truth is that even if you make a modest income you will have over a million dollars pass through your hands over your working life. The question is how much of it will you keep? The answer to that question will depend much less on circumstances and much more on attitude. If you really want to change your future financial position it is most likely well within your power to do so. This book will give you many of the tools you need. But first, some of you may need a wake- up call. You will notice above that I used the word “Yikes” when referring to living on Social Security. Why? There are two reasons. Can you really live on that meager amount of income? The average Social Security check is around $1,200 per month or $14,400 per year. How much income do you make now? How much of that do you need to live? Could you live on $14,400 per year? Could you live on $14,400 per year even if you managed to pay off your home and your car and all of your other debts and never make another financed purchase as long as you live? Will the cost of living go up by the time you actually retire? Will the cost of living continue to go up after you retire? If this is your plan, Yikes!
Here is reason number two why I said “Yikes” to the “I’m going to live on Social Security reasoning. Every year you get a Social Security statement projecting your earnings. It comes in your mail about 3 moths before your birthday. If you are like most people you flip it open and start looking at how much you can expect to collect when you reach retirement age. Then, maybe, you glance at your income history to make sure they got your numbers right and then you file it away till next year never giving it another thought. Well, next time you get your statement, or if you have an old one lying around, I want you to actually look at the front page and read the section marked, “About Social Securities Future”. Here is what it said on my statement last year word for word. “In 2017 we will begin paying more in benefits than we collect in taxes. Without changes by 2041 the Social Security trust fund will be exhausted”. Now, while that sounds bleak, the real picture is even darker. This is just what they are willing to admit and does not take into account that Medicare is in even worse trouble. According to an article in Financial Advisor Magazine, “ current benefit levels (for Social Security and Medicare) are unsustainable…By 2020, as much as 26.6% of all federal income taxes would be required to sustain current Social Security and Medicare benefits for the greatly expanded population” Just think about that for a moment. If more than one out of every four dollars the government collects in taxes will soon be going to fund just these two programs, what will happen to all the other government programs? What will happen to taxes? If part of your retirement plan is to rely on Social Security “Yikes” you better think again.
My point in telling you all of this is not to scare the heck out of you but to give you a wake up call. So, here it is in plain English. Please, do not say you were never warned. Your company is not going to take care of you. The government is not going to take care of you. Benefits will continue to be cut and taxes will continue to go up. This is not a political stand it is simple mathematics. No matter what side of the fence you are on, these are the facts. The question is what are you going to do about it? Will you bury your head in the sand and go on thinking that someone else will figure it out for you, or will you start to take responsibility for your future and have a plan. Your future does not have to be bleak but the choices you make now will determine if you will be left out in the cold or well taken care of. Another way to look at it can be summed up in this old adage, “the only difference between a crazy old man and an eccentric gentleman is money”. Which one do you want to be? Do you have a plan to get there? Do you want a plan? Then read this entire book.
Or send your check for $19.95 to...
Antonio Filippone
PO Box 2698
Loves Park, IL 61132