by Glenn J. Downing, MBA, CFP®
The foundation for any sort of financial planning begins with cash flow management. Income -expenses = dollars available to be invested toward future goals. We’ve worked with people from all walks of life who have cash flow issues, including those with very high incomes. It all comes down to the same thing: you have two choices. Increase income or cut expenses to make savings happen.
To frame the thinking here, I challenge clients to separate out necessary spending from discretionary spending. Necessary spending is just that: what must I spend to house myself, feed myself, clothe and groom myself, and get back and forth from work. Bare bones, in other words.
The exercise I bring to my readers then is this: Let’s look at every expenditure you’ve made in the last several months. Now sort them: necessary or discretionary. Here’s a...
You may have noticed in all CameronDowning email signatures this text:
Where 5% of all revenue is donated
To homeless assistance in Miami.
What’s behind this? I thought my readers might find the story interesting.
Shortly after Jonathan Cameron and I founded CameronDowning in 2014, I read a piece in the Wall St. Journal about companies that fulfilled their ethical obligations to the community by giving money to charitable endeavors off the top, rather than as planned gifts. This really caught my attention. Lots to consider here.
An obligation? As a business do we have an ethical obligation to the community at large? After all, one...
Child: But Daddy – that’s not fair!
Daddy: Well, son, life’s not fair. Whoever said it is lied to you. Fair is where you go to ride rides.
Anyone who’s ever been in one of my CFP® classes has heard me use this expression, and indeed I picked it up in one of my own CFP classes. Yes, the practice question you’re trying to answer may not be fair, but the CFP® Board tests you with questions like this, so toughen up.
I’ve been thinking about fairness lately, along with justice and equity, and the different shades of meaning in the words. I think of fairness in terms of fair play, i.e. the referee applies the rules even-handedly to both teams with no partiality. Justice, on the other hand, speaks to issues of right and wrong in our relationships with one another. Right behavior is just behavior, and wrong...
Ah, greenbacks, lettuce, clams, or Benjamins – no matter what we call it, cash is still king! There are few places in the world that will not take the American dollar as payment. I fact, I can only think of two: inflight on American Airlines, and Uber.
Here’s a valid reason NOT to use cash: if some young socialist decides to knock you over the head to redistribute your wealth, those dollars are gone and cannot be replaced. Had the young socialist only reaped your credit cards, you can get on the phone and stop those cards, and you have only a maximum $50 liability per card, if even that.
Another reason not to use cash is airline miles and hotel points. This is my personal practice. We run as much as possible through the American Airlines cards and the Marriott Visa, and the points (and benefits) really add up! But if you’re going to do this, you must have the...
Here’s a question for you, ladies. You’re out on a first date at a restaurant with someone new. You’re interested . . . not sure, but interested. It’s just a date . . . let’s see how the evening goes, you think to yourself. When it comes time to pay the check, he:
If it is #3, dump him right then and there and block his phone number.
But between #1 and #2, which impresses you the most?
Way back when I was a young man people paid cash for most everything. In fact, it was a mark of pride to do so. Credit was for people who couldn’t afford to pay cash – losers, in other words. But now! After working with many clients on cash flow organization, I can tell you that most people simply use a card to purchase everything, and most millennials don’t even carry cash....
Everyone at some time or another needs some cash - and quickly! The question is, have you anticipated this need and saved into it? Or do you need to scramble? What follows is a list of ten helpful suggestions.
What follows is one of my all-time favorite quotations, from Alice’s Adventures In Wonderland. The background is that Alice has come to a fork in the road and wonders out loud which way to turn. The Cheshire Cat materializes, and the following conversation ensures:
Alice asked the Cheshire Cat, who was sitting in a tree, “What road do I take?” The cat asked, “Where do you want to go?” “I don’t know,” Alice answered. “Then,” said the cat, “it really doesn’t matter, does it?”
This gets to the very heart of financial planning. How are your invested assets to be used? What is the purpose for these dollars? What do you want to accomplish?
Our point is that investment accounts don’t (or shouldn’t) exist in a vacuum. Purpose and time horizon inform the ultimate investment choices. ...
I can now pay for a Tesla with Bitcoin. And the Mayor of Miami wants to pay City employees in Bitcoin and allow tax payments in the same cryptocurrency. Honestly, until I can go into Bloomingdale's and buy a shirt with Bitcoin, it doesn't much matter to me.
And neither should it to you, if you’re in the process of getting your financial house in order. In my world of financial planning and investment management, the basics are still the pathway to financial freedom and prosperity: spend less than what you earn and invest the rest.
The rub is that many people don’t know what they spend because no one uses cash anymore. It used to be that if a man wanted to impress a lady, he’d flash a bankroll when paying the restaurant check. Now, she’d probably flee the table at such Neanderthal behavior: it is the gold or platinum cards that...
by Glenn J. Downing, MBA, CFP®
With mortgage rates so low, we’ve been looking at mortgage refinancing for a few of our clients lately, to see if it might be in their best interests. Here’s what we know:
A common question I’m asked in a financial planning engagement is this: Glenn, should I plan on receiving Social Security? Will it even be there for me? I’ll say yes – plan on it. Social Security is the third rail of politics, and it is my belief that it will always be there in some form or another. For those of you who’ve never lived in a city with a subway, the third rail is an electrified rail that runs along the tracks. There is a foot from the rail car that rides along the third rail, thus powering the car with electricity. Pretty much instant electrocution if you touch it.
Throughout its history Congress has bought itself votes by increasing the benefit, but they haven’t always raised revenue, i.e. taxes, in a...