A Week of Thoughts September 29, 2018

Do you hold individual stocks?   Consider the size of your portfolio you may be taking too much risk.   Just consider the wide swings of stocks like Tesla or the problems of Enron and others in the past.   A diversified mutual fund or Exchange Traded Fund gives you the ability for a relatively modest cost often as low as $1000 to own a piece of thousands of stocks.   This type of investment will go up and down with the general stock market but not have the potential of wild price swings of individual stock holdings.   If you own the stock of your employer, it is often acquired at discount through employee stock purchase plans or stock grants and options. These cheaper purchases can be financially beneficial.   Consider that holding onto too much employer stock puts you at double risk as your salary and a large part of your portfolio are based upon the performance of an individual company.

College tuition inflation is horrible.   Today’s tuition rates are much, much higher than in the past relative to the cost of living.   The cost of sending a child to a four year school can be as much as the total of all their expenses from birth to high school graduation combined.   How will you pay for or help pay for your kid’s higher education? Will you need grants, loans or scholarships? Are you or grandparents saving in a 529 plan?   There are so many questions with answers that vary widely depending upon a particular family situation.   Consider first that retirement savings should come first and then education for the kids.   Will the salary of my child’s desired major justify the “investment” at a particular university or will another cheaper school do just as well?   Can my child take college classes in high school or post high school at a community college to reduce the first year or two of tuition costs?   Should we consider one of the many ways the military can help pay for college education?   There are so many questions to be answered.   Start today to consider your approach as you help guide your child through the maze to college.

Having trouble saving?   Have a 401K at work?   If “Yes” to both, slowly increasing your contribution amount is a painless with to increase savings.   Once the matching amount for 401K contributions is reached, many folks do not increase their retirement plan contributions.   Increasing the percentage saved by just 1% every other month can have dramatic effects on the amount put away overtime.   Increasing by just the 1% amount makes a relatively small change in take home pay while helping to reduce income tax and save for tomorrow.   I have clients who have done just this and now are either 30% of gross salary being contributed or have reached the annual maximum contribution limits.   These particular clients are setting themselves up very well for later in life.   They are giving themselves the gift of financial peace of mind.

Often life events will shift how we think about things.   Marriages, divorces, deaths, and births among other significant life events will change our perspective on life.   The answers to the question “How important is it?” change as we experience life.    For example, the birth of my son profoundly changed how I look at world and more importantly my current purpose in life.   As those parts of me have morphed, so has my financial decision making process and the criteria I apply to financial decisions.   Periodically I go back and reassess financial areas of my life to see if any changes are required in my accounts, insurance, estate planning, or education funding to name a few.   Have you gone backed and looked at how life has changed your financial picture and needs?

What happens to your stuff when you pass?   If you die early in life, who will take care of your kids?   These are all important and hard questions to answer.    For me and many others, the work of these questions ends up in Franklin Covey’s important and not urgent quadrant.   Items in this quadrant always seem to be put off until tomorrow.   If you are like me, I have had to push away the many seemingly urgent items of life in order to address such not urgent items such as my estate planning needs.   It took effort to pick up the phone and call the attorney, gather the documents and actually make it to the appointment.   My son was my motivation to get it done.   I am so glad I did it so to make my legacy wishes legally known.   It has cleared out part of that not urgent quadrant which unto itself is refreshing.   What is in your important and not urgent quadrant?

As a rule I believe that only 10% of the annual income should be used for auto purchases.   Translated that means someone earning $100,000 could spend $10,000 annually.   They could purchase a car worth $50,000 if they will keep it for years or longer.   I used this rule recently when purchase a replacement vehicle for my vintage 2007 model. Figuring out the financial number was the easy part for me.   Figuring out the vehicle was the hard part.   I read and read internet postings and reviews and consult consumer reports.   I considered the needs of larger trunk space, larger back seat area for my rapidly growing 9 year old, the latest safety features, and equal or better gas mileage.   With this criteria I narrowed the cars I was interested to three models and test drove those cars in succession on a Saturday afternoon.   One car stood out from the others.   Now I knew which car to purchase. Tomorrow I will share how I got the best price.


How I got a good price on a new car.Earlier this summer I purchased a new replacement car for 10% below MSRP on car that had only been in show rooms for just over a month.  I had previously narrowed down the desired specific model and color.   Then I researched the availability at local dealers through a number of different websites including the manufacturer’s and iseecars.com.   I used to the Costco car buying service and the Consumer Reports car buying service (administered by trucar.com) to initiate contact with dealers. About eight dealerships contacted me.   I requested their drive away price including all taxes and tags with no trade in to be considered.   As dealers started sending me numbers, it was clear which dealers where treating me well and which gave me good pricing.   If a dealership said I would have to come in for the best price they were off my list.   Via email and sometimes phone calls, I challenged dealers to see whom could meet the pricing of the most recent lowest price from another dealer till I reach a price that seemed reasonable based upon price researching.   I took proof of the best price offer to the dealer that had serviced my old car as I was happy with their service department.   They agreed to the price and we shook hands.   I am very happy with the purchase and will use the same technique in the future as it saved me  several thousand dollars in the price of the car and the 10% sales tax combined.


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