A Very Merry Christmas From My Family to Yours

This blog is a bit off my norm, but I want to take this time to reflect on the importance of this month. December. It is almost paradoxical. There is such a frenzied aspect to the month, yet at the same time so much joy and wonder. Around the world, it is estimated that “45% of the world population celebrates Christmas in some way or another” as noted by Journeyz.co, and, in America, according to a Gallup poll, 93% celebrate Christmas. Needless to say, a large percentage of the population celebrate the Christmas season in some fashion. Celebrate or not, we can get way too bogged down in this holiday and can get consumed with the statistics of the amount of time and money surrounding Christmas. But this blog is not about that. This is about the joy I wish all of you find during this wonderful time of the year. 

It is fascinating to delve into all of the different Christmas traditions around the world. For example, while most people in America put lights on their houses and trees, in Greece, a seafaring country, it is customary to decorate their boats. In England, children hang their stockings on their bedposts rather than on the chimney mantles which is more traditional in the United States. Other traditions surround food. For example, in Japan, many celebrate Christmas with a feast from Kentucky Fried Chicken. In fact, KFC in Japan has its highest sales on December 24 which is “ten times busier than KFC Japan’s annual average” as noted by Mint. In Poland and Polish communities around the globe, there is a tradition of sharing a piece of a very thin square wafer that is decorated with images of the Nativity on it to begin the Christmas Eve dinner. The wafer is called the Oplatek. Each person present breaks a piece off of the wafer and then shares a greeting with the other diners before passing it to the next person. 

From decorating to food all around the world there are different customs and unique ways to celebrate Christmas. To me it is such a wonderful opportunity, no matter how you celebrate it, to share time with family and friends. It is also a wonderful time to continue old traditions and to begin new traditions with your immediate family. These are the things upon which memories are built. Take this time to reflect on some of your fondest Christmas memories. Chances are your most cherished memories are not about what you got but are more about what you did and with whom. For me, December is the perfect time to create, build, and reinforce those lasting memories. I challenge you to take time to do that. Make time to pause and reflect on your many blessings and all the good that you have in your life. Soak in the joy of the season and be truly present in the immediate. Don’t get too caught up in the frenzy and the hype. Don’t buy into the commercialism. Enjoy the lights, the holiday food, and the music. This month, right now, it is the time to take stock in your assets – not your portfolio assets, I’m talking about all of your intangibles. January and the rest of the months will provide ample time to worry about the tangible things in your life. But now, as we near Christmas, I hope you take time to slow down and enjoy..

Having a financial plan all year long will enable you to sit back and relax, taking in the essence of Christmas, rather than stressing about the expenses you will incur. It is fundamental to plan ahead and to budget properly. We all know that Christmas is December 25th, and that there will be added expenses because of it. Whether those expenses are buying gifts, decorating your home, or entertaining friends and family, there are additional expenses. Don’t let a lack of planning and preparation dampen your holiday spirit. It can be stressful if you are not prepared. How much better to be in a financial position to really enjoy the holiday and all it entails rather than dreading it. It truly is a wonderful time of the year. 

I would love to hear from you about your favorite holiday memories and your family traditions. If you don’t have any traditions, perhaps now is the best time to start one. From my family to you and your family, I wish you much joy and peace and the merriest of Christmases. 

How To Fund College Without Saving A Dime

December is a busy month with all of the activities of the holidays, but it is also a huge month for seniors in high school as well as their parents. I am not big on living backward or living with regret, but I am an advocate of learning from mistakes and passing on information that will help others. Since I am the oldest of four boys, that is something I have tried to do as often as possible with my brothers and their friends along with those who follow my content. This doesn’t always include financial information, but other tidbits, especially on things that I could have done better. I don’t want others to make costly mistakes. One such important area concerns the ACT and SAT.

I did not take these tests as seriously as I should have or could have. I was a good student, but I didn’t spend time preparing for the ACT as much as was needed. I had a bit of a one and done attitude about it. In retrospect, I didn’t translate the test and test scores to money. Others who took the test multiple times and who were using prep books, online prep help, and even prep classes had an advantage on me. I know now how important the ACT and/or SAT were for college admittance and the money connected to them.  

How these tests translate to money is simple, but it is often overlooked. Most of the time, emphasis is placed on getting the score needed to get into college, or, more particularly, into certain colleges and majors. This score is contingent upon each college, and scores have changed over time. The list is extensive, so it is imperative to pay close attention to the college or university to which you or your child hopes to attend. For example, at the University of Louisville, my alma mater, the basic score with a GPA of 2.5 is a 20 for the ACT or 1030 for the SAT. Keep in mind that the ACT scores and the SAT scores are usually convertible, so it is not necessary to take both tests. However, it may be helpful to take both tests because individually people generally do better at one test compared to the other. You will want to know which test is best for you or your child. Regardless, that is the basic score to get admitted to the College of Arts and Sciences at U of L. But if you have aspirations of going into engineering, for example, to be admitted to the J.B. Speed School of Engineering at the University of Louisville, the scores are higher as well as the GPA. For engineering, with a 3.0 GPA, you or your child would need a 25 for the ACT or a 1200 for the SAT with a 25 subscore in math and a subscore of 25 in science or a 590 in math for the SAT. For students who have a 3.5 GPA, the scores on the tests drop to a 24 on the ACT and 1160 for the SAT with subtest scores of a 24 in math and 24 in science for the ACT or 580 in math on the SAT test.

But all of that just translates to admittance to the programs and colleges. That is NOT immediate money. The money comes in with the scores translating into scholarships. I will stay with the University of Louisville for consistency, and you will see in the following chart, the higher the score, the more money awarded. This particular information applies to the University of Louisville’s Trustees’ Scholarship that is offered to incoming freshmen.  Of course, each college and university has a plethora of scholarships and awards available, but many are contingent on the scores for these standardized tests.   

The following information is from the University of Louisville Office of Admissions. 

GPAACT/SATTypeAnnual Award Amount
3.526-27/1230-1290 or comprehensive academic review*Renewable $2,500
3.528-29/1300-1350 or comprehensive academic review*Renewable $3,500
3.530/1360 or comprehensive academic review*Renewable $5,000
3.531-35/1390-1560 requiredRenewable $7,000
3.536/1570 requiredRenewable$8,000

Just looking at this chart, and remember each college has its own scholarships and awards, there is a considerable difference between an ACT score of 26 to 27 compared to that of a 36. It translates to $5500.00 for a year, and, overall, $22,000.00 for four years of study. I know that $22,000.00 would have been helpful to me financially. And this is only the beginning of scholarships offered and available to students. But that is perhaps a blog for another day.  

Bottomline, taking high school seriously to secure a good GPA and investing time and effort into the ACT and SAT tests, is vastly important. Not only can it prevent a student from getting into a certain college or university, but it can also be a very costly mistake. Personally I know how costly of a mistake this can be. I didn’t take these tests seriously and came out of college with debt, but my wife did. She funded her college through scholarships, graduating debt free. Easy to see which was the better situation. Learn from me. 

So for all of those who are in high school or have children in high school, keep in mind that these tests along with a good GPA translates into money. December is a busy month for seniors who are trying to get the last tests taken before the cutoff dates for scholarships. For many universities all of the scores need to be submitted mid-December for their honors scholarships.  Keep in mind that these tests can be repeated, trying to better the scores of the previous tests. The scores supersede the previous scores, applying a higher score to a previous lower subscore. I recommend taking the SAT and/or ACT a first time just for familiarity and then subsequent times, each time attempting to improve the subscores. Believe me, it is worth the effort and can prevent making a financial mistake. 

For all of you in the throes of testing, sending off transcripts, and submitting college applications, I wish you the best. Do your homework about colleges you wish to attend, so you know what is ahead of you and can best prepare for your future or the future of your child. Come out ahead, not behind. It really is not that difficult, but it does take some time and effort but will be worth it. Honestly and sadly, I know. Also, it would be irresponsible of me to not remind you that college is not for everyone and there are other paths. The most important advice I can give you is to only invest time and money into things that get you to where you want to go in life. Do your research. Know your options Best of luck.

The BEST Investment Account That Only 9.6% of People Have

One of our biggest expenses we incur which causes too much stress is medical. We go to the doctor and worry about the high cost, pay for prescriptions, and even buy sundries for medical situations for which we don’t often account. Ultimately, we chalk all of this up to a necessary evil. Yet, medical items and bills can actually be something we can use as a huge tax saving. How? It is an often misunderstood and little utilized account called an HSA which stands for a Health Savings Account. 

An HSA is a tax advantaged account that less than ten percent of Americans own and/or invest in. Actually only 9.6% of Americans utilize HSAs, but they have more benefits and can even beat out a 401(k) and a Roth IRA.  

The purpose of an HSA is to save money intended for medical expenses. HSAs are for those who have a High Deductible Health Plan known as an HDHP. These are plans in which you pay most of the expenses out of pocket. According to the tax law, these plans must establish a minimum deductible as well as a maximum or limit on the out-of-pocket expenses. 

Using the information from Healthcare.gov, the 2023 minimum deductible for an individual is $1,500.00 and the maximum out-of-pocket costs is $7,500.00. That is the minimum and maximum an individual with an HDHP would pay for all health care items and services before the plan would begin to pay and the most a person would have to pay in the event that more health care items and services would be necessary. For families, the minimum is $3,000.00 and the maximum is $15,000.00 

HSAs are not for everyone such as those who have an insurance plan, usually paid for by their employer, with a low deductible. But for all others who are looking for tax advantages and ways to save on health insurance premiums, an HSA can greatly benefit you.  

A beauty of the HSA is that there is a triple tax advantage. This works because the money goes in tax-free as pretax income, this money grows tax free, and the money comes out tax free. HSAs are the only account that has pretax contributions AND tax free withdrawals, but you must have qualifying medical expenses. Following is a list of qualifying expenses as noted by Hsabank.com. 

  • Acupuncture
  • Ambulance
  • Artificial limbs
  • Artificial teeth*
  • Birth control treatment
  • Blood sugar test kits for diabetics
  • Breast pumps and lactation supplies
  • Chiropractor
  • Contact lenses and solutions*
  • COVID-19 diagnostic testing and treatment
  • Crutches
  • Dental treatments (including X-rays, cleanings, fillings, sealants, braces and tooth removals*)
  • Doctor’s office visits and co-pays
  • Drug prescriptions
  • Eyeglasses (Rx and reading)*
  • Fluoride treatments*
  • Feminine hygiene products
  • Fertility enhancement (including in-vitro fertilization)
  • Flu shots
  • Guide dogs
  • Hearing aids and batteries
  • Infertility treatment
  • Inpatient treatment at a therapeutic center for alcoholism or drug addiction
  • Insulin
  • Laboratory fees
  • Laser eye surgery*
  • Medical alert bracelet
  • Medical records charges
  • Midwife
  • Occlusal guards to prevent teeth grinding
  • Orthodontics*
  • Orthotic Inserts (custom or off the shelf)
  • Over-the-counter medicines and drugs (see more information below)
  • Personal protective equipment (PPE) like masks and hand sanitizer
  • Physical therapy
  • Psychiatric care
  • Psychoanalysis
  • Psychologist
  • Special education expenses that include tutoring for a child with learning disabilities caused by mental impairments (recommended by doctor)
  • Speech therapy
  • Stop-smoking programs (including nicotine gum or patches, if prescribed)
  • Surgery, excluding cosmetic surgery
  • Vaccines
  • Vasectomy
  • Vision exam*
  • Walker, cane
  • Wheelchair

For those who don’t have qualified medical expenses, there are still things that you can do pretax. There is also an age 65 rule. If you use the HSA other than for a qualified medical expense, you would pay the income tax minus a 20% penalty. But if you are 65, the HSA turns into a Traditional IRA. This means you can use the funds for anything if you pay income taxes. HSAs allow you to reimburse yourself for qualified medical expenses if you keep your receipts plus there is no deadline. The following is a step-by-step guide for how to navigate this.

  1. Pay for qualified medical expenses out of pocket.
  2. SAVE all of your receipts. I, personally, take a picture on my phone and categorize mine to help me keep them organized.  
  3. Reimburse yourself later. 

Following is a list obtained from Hsabank.com, though not comprehensive, of some of the common over-the-counter medicines that are HSA approved by the IRS:   

  • Acid controllers
  • Acne medicine
  • Aids for indigestion
  • Allergy and sinus medicine
  • Anti-diarrheal medicine
  • Baby rash ointment
  • Cold and flu medicine
  • Eye drops*
  • Feminine antifungal or anti-itch products
  • Hemorrhoid treatment
  • Laxatives or stool softeners
  • Lice treatments
  • Motion sickness medicines
  • Nasal sprays or drops
  • Ointments for cuts, burns or rashes
  • Pain relievers, such as aspirin or ibuprofen
  • Sleep aids
  • Stomach remedies

Take note that there are limits and restrictions regarding HSA Contributions. The limit for 2023 for an individual is $3,850.00 and $7,750.00 for a family. Those 55 and above are allowed to contribute an additional $1,000.00. That amount is not huge, but the HSA makes up for it in big ways.   

When investing in an HSA, you are investing in more than a savings account. Investing in an HSA also gives you the flexibility to also invest the funds inside of the account. This means that when you save with an HSA for 30 years, individually you would amass $695,300.00 and as a family, $1.4 million assuming the average 10% return. So yearly, the amount does not turn heads, but over time, it is noteworthy.  

HSAs are easy to obtain. Those who are employed should inquire whether or not their employer allows its employees to contribute to an HSA. Those who are self-employed need to ensure his or her health plan is HSA eligible through a High Deductible Health Plan.  

With all things, it is imperative to know the ins and outs of any insurance plan or savings plan, and it is just as important to fully understand all that an HSA can provide so you can utilize it to its fullest potential. Medical situations are stressful enough so don’t compound them by worrying unnecessarily. Be the less than ten percent who takes advantage of a plan that is in place by the IRS that actually helps people make money. Make your money work for you. For more specific information, contact me directly, so we can look into your unique situation. Let me help you save money and make money. Set yourself up for success, not stress. 

How to Become a Tax-free Millionaire

We have almost made it to December, the twelfth month. What I love about this time of year,  aside from the holidays, a great time to gather with family and friends, is that it brings us closer to the end of the year and provides an opportunity for reflection and adjustments. Mostly, I think of financial adjustments. You are on your own with personal and spiritual adjustments; that is out of my wheelhouse. But, financial adjustments and goals are my forte’. So now, as we get closer to the end of 2022, it is a good time to make changes and adjust your budget. MAKE time before you begin a whole new year with vast opportunities to construct objectives for improving your financial status and becoming financially secure..  

Amidst the rush of preparing for the holidays, take some time to look at your finances and see where you need to make improvements.  Do this now before the new year. Start 2023 with a solid financial plan. One account you need to consider adding to your portfolio is an IRA, specifically a Roth IRA. A Roth IRA can help you become a tax-free millionaire. Want to learn how? 

As I stated, If you do not already have one, your financial plan for 2023 should include an IRA. Only 6.6% of Americans have a Roth Individual Retirement Account also called a Roth IRA. This is a travesty and such a wasted opportunity. As you may know, there are two types of IRA’s: a traditional IRA and a Roth IRA. Today I will be specifically diving into the Roth IRA option and how this account can make you a tax-free millionaire.  

Many people have some type of 401(k) plan through their employer. Some simply have these because it is something their employers provide for them. Amazingly, many who are given the opportunity to have a 401(k) still don’t take it, but that is fodder for another blog. Unlike a 401(k), an IRA is something that YOU have to initiate with a broker. Some of the best brokers for IRAs are Fidelity, Vanguard, and Charles Schwab. Once you decide on a broker, you will contribute money that you have already been taxed on; this is where the Roth distinction comes into play. The money is then invested. A common misconception is that a Roth IRA is an investment, but that is false. A Roth IRA is merely an account. You select investments to buy within the account.  

The aspects that make Roth IRAs such good investments are that the money provides tax-free growth AND tax-free withdrawals. This means that you are able to buy and sell stocks within the Roth IRA when and as often as desired without getting taxed. Moreover, you can withdraw accrued money without paying taxes. While all of this sounds like only a win-win, there are a few rules attached to Roth IRAs, which I will explain below.   

Restrictions on Roth IRAs set parameters to age, income, and investment amounts. Specifically the limitations to Roth IRAs are as follows:

1. Earned Income Limitations – Beginning 2023, those who are single making $153,000.00 or those married filing jointly making $228,000.00, are NOT able to contribute to a Roth IRA. Period. But wait!. There is a workaround. It is a Backdoor Roth IRA. Those earning too much can contribute to a Traditional IRA then convert that money to a Roth IRA. Simply this means you open a Traditional IRA, contribute money to that account without investing it, then convert it to a Roth IRA. At that point, you can invest the money within that account. Those in this situation will want to work with a professional to be sure this is done appropriately.  

2. Tax-free withdrawals after age fifty-nine and a half – After reaching fifty-nine and a half, a person is able to withdraw gains without incurring taxes and penalties. Before that age, you will have to pay taxes and penalties unless you are withdrawing money due to a death, disability, education expenses, birth or adoption expenses, unemployed health insurance expenses, unreimbursed medical expenses, or for a first-time home purchase with a limit of $10,000.00. As long as the withdrawal falls under one of those reasons, you can withdraw contributions with no penalties. 

3. The annual contribution limit in 2023 is $6,500 – with exceptions based on age. First, this is an increase of $500.00 from 2022. For individuals who are 50 or older, the contribution limit currently is $7,000.00, but it increases to $7,500.00 in 2023.  

4. Account Time Frame – The Roth IRA account must be open for five or more years before money can be withdrawn without interest and penalties. This is in addition to the age fifty-nine and a half age requirement and includes contributions. Note that the same exceptions for Rule Two apply to this as well. 

Over and above the restrictions, which are minor and easy limitations to stay within, Roth IRAs are important to include in your financial portfolio. This is especially necessary for anyone expecting his or her tax bracket to be higher in the future. You will pay taxes now when your tax bracket is lower rather than paying later when the tax bracket is higher. Mathematically think of this which will drive home the real WHY for having a Roth IRA. If you invest $540.00 a month for thirty years beginning in 2023, you will have 1.1 million tax-free dollars. As you are planning that 2023 budget and creating your new financial plan, see if you can find an extra $540.00 a month to invest in a Roth IRA that will set you up to be a millionaire in the not too distant future. Plan now before we pop the champagne bottles and ring in the New Year. Plan ahead and reap the financial rewards and all of the benefits that go along with financial security and wealth.  Oh, and also enjoy the holidays!

Betting on the Stock Market to Fail is Betting on Yourself to Fail

Coming off the elections and looking toward the future, especially if you listen to analysts and pundits, everything is gloom and doom. Many are predicting a rough financial road ahead. And because of that, some will advise against investing in the stock market. This is a time to take pause and to really educate yourself before buying into all of the hype. Before stuffing your money under a mattress or halting investing, let’s look at things critically and get a good understanding of the stock market, so you can make informed decisions rather than those that are reactionary and emotional. I’m betting when you critically think about the stock market, you will not be so hesitant to invest in it but will actually understand that NOW is the time to invest.

First, ask yourself whether or not you would bet against yourself. In other words, how likely are you going to bet that you are going to fail? Of course, we wouldn’t bet against ourselves, but that is exactly what betting against the stock market is. It is betting against ourselves. How? Why? Well, we ARE the stock market. It is you and me and the companies that fuel our economy. This can be only those companies in the United States or in the whole world if we are thinking about global investments. So, investing in these companies is us investing in ourselves, our companies, our country, or our world that we will not fail. 

Paring that down, investing in an index fund or an ETF, an exchange-traded fund that is a collective investment such as $VTSAX or $VTWAX respectively, means you are investing in all of those collective domestic or global companies. For these to fail on a long-term basis would actually mean that every single company in that collective pool would have to go out of business. Again, every single business in that pool would have to cease operations. Logically, those odds are pretty slim. 

All of these companies are not all going to collapse.  We are consumers.  We fuel companies. Because of us, companies continue to grow, to produce goods and services, and to create new and revolutionary things. Of course, these companies are also concerned with their bottom line which is another thing that fuels the economy and is another reason why these companies collectively will not all collapse, acquisitions aside. We are a capitalistic and consumerist society, so businesses will continue to make money, and we will continue to buy goods and services. 

Again, some analysts spin doom, noting how regulations and governing bodies collapse things thus wrecking the economy and ultimately the stock market. Remember that everything is cyclical and things ebb and flow. So, take out the emotions and rashness and think about all of this rationally. We change and grow; we advance which is a good thing. I don’t know about you, but I enjoy the comforts we have today and wouldn’t want to go back decades to times when there was little to almost no technology or even comforts that we take for granted today without a thought. But as we change and grow, as we adapt just as we ALWAYS have, so will technology. This leads to good changes and an improved society. It also means companies will adapt, strengthening themselves or becoming obsolete. That is capitalism. 

So, why all the hype and fear about the stock market? Unfortunately, society tends to buy into the latest hype. In addition, we often have a limited view of the world, only keeping in mind our own perception, circumstances, and biases. But our country is a big place, and the world is wonderful with much to discover. Thinking about being a global world is beyond what many want to comprehend. The masses continue to buy into human biases and limited information. I beseech you to educate yourself in order to break away from all of the misinformation and near hysteria that is being pushed. Don’t follow the masses that go along blindly. 

Understand that many are reacting from fear because we don’t like when things are taken away from us. So, when the stock market corrects itself, pulls back, and changes, causing people to think they are losing all of their resources, people react from fear and respond poorly. This is EXACTLY the right time to see and understand the bigger picture. Don’t buy into the propaganda that all of the Doomers are spewing. They are trying to influence the masses to their advantage. There will always be naysayers out there. Educate yourself against them. 

The stock market will NOT fail because we will not fail. We are the inventors, the creators, the pioneers as well as the consumers who fuel our economy and will continue to carry our country and our world to new and interesting places. We are the stock market. We may change and adapt, but we will not fail.  

So if you still find yourself unsure of how to proceed and navigate this market, here are three things I suggest you do so that you don’t panic, end up selling, and lose an opportunity to make money., 

#1 Turn “off” the news. I’m not advocating for you to be uneducated, but unfortunately ratings drive the Media and the Media LOVES the gloom and doom shows. That’s what sells. Focus on educating yourself on personal finance and the stock market history. Read and listen to the news with an educated and informed mind. Read and listen to a variety of outlets to get a well-rounded perspective if you want to truly be informed. Many say history does not repeat itself, but it does rhyme. We can learn so much from the past.

#2 Do not check your portfolio daily. This is a time to let it ride. Again, being educated will help you understand that the market is never static. It is not supposed to be. There will be constant changes. You know we are the market. Think about the daily habits and patterns of people. Keep in mind what is going on such as Christmas spending, holiday travel, etc. Our daily habits and buying will drive and CHANGE the market. Remember to think globally as well. The volatility and daily swings may worry you, but as long as you are not imminently pulling from your accounts, sit back, and let them ride the waves that are inevitable. 

#3 DO NOT STOP INVESTING! Think of it this way. Right now the stock market is on a  MASSIVE sale. But the sale will end and everything you bought will be worth so much more than you paid for it! So now is a great time to buy. Don’t pass up this opportunity because you are listening to hype from the media that is just spewing disinformation and being disingenuous. 

As always, subscribe to this blog, and follow me on all the social media outlets for education on personal finance topics like the current recession, how to organize your finances, investing principles and so much more.  

Life Insurance Is A Must

Before I begin this blog, I want to say that every financial product is created with good intention to help a subset of people. The issue in the financial industry becomes when that financial product begins to get sold to the masses versus the intended sub group it was built for. This happens a lot in the insurance industry due to the commissions received on many of these products. With that being said, let’s break life insurance down.

Life insurance is a Must. When people ask me whether or not it is necessary to have insurance, I am always a bit confused. The word in and of itself tells us what it is. Insurance is protection; it is peace of mind. It is protection for when something happens. Believe me, things do happen. I know all too well that things happen. So, do we need insurance? It is a resounding yes! You need insurance especially if you have dependents UNLESS you are independently wealthy and money is of no consequence. So, if you have dependents and need to insure compensation for them if you incur any kind of illness and when you die, you need to have life insurance. However, how much and what kind are really the more specific questions people should ask.

How much insurance is relatively easy to answer. Most financial advisors will tell you to have between ten to twelve times your yearly salary. If, for example, you are making $100,000.00 a year, you would need about one million dollars worth of life insurance for your dependents. It is easy math: $100,000.00 X 10 = $1,000,000.00. Think about your lifestyle to determine if you feel more comfortable with ten, eleven, or twelve times your salary. But the point is that your spouse would be able to invest the payout sum and live off of the returns from that investment. 

The more important and confusing question is not whether you need insurance or the amount you need, but what kind of insurance. There are different types of insurance that you can get and many insurance agents will try to coerce you into believing you owe it to your spouse and family to be over insured. Remember, that is how insurance agents make their money. Don’t fall prey to getting more insurance than you need. You are simply paying the agent more commission than is necessary. So be wary and know what type of insurance you need before having the conversation with any agent.  

Basic Types:

There are two basic types of life insurance: permanent life and term life. There are several types of insurance that fall under permanent life. But before discussing the varieties of permanent life insurance, let’s delineate the fundamental differences between permanent life insurance compared to term life insurance. 

Permanent Life Insurance: 

Permanent life insurance is something to really think about before buying it. It is rather confusing and expensive. Life insurance is not supposed to be a savings account but is life insurance to replace your income when you die. Permanent life insurance is insurance that has an investing component to it. It is life insurance that you purchase for your entire life and pay through monthly premiums which are supposed to grow as an investment over the span of your life. This amount changes as you age. Also, the money grows at a very slow rate. You are not getting a good return on your money. In addition, it is much more expensive than term life insurance, ranging anywhere from five to fifteen times higher. Another negative aspect of permanent life insurance is its complexity. Unlike term life insurance, not only are there premiums that you pay for your whole life, but you often also have to pay fees and taxes. There are also other stipulations that can be associated with it. Something that can’t be dismissed, however, is that there is a cash value associated with it. Some people choose to take some of the cash before death, thinking of it as a savings account. Be careful. Remember what the intent of insurance is. So taking part or all of the accrued amount before death may not leave your loved ones with the necessary money once you die.

Term Life Insurance:

Term life insurance is quite different from permanent life insurance. Term life insurance is limited to the amount of time you select. You get to determine the length of time you are covered, and you pay premiums for that span of time. It does not cover you for your entire life span like permanent life insurance does. In addition, it pays a specified amount when you die. It does not incur interest like permanent life insurance does, nor does it pay after the term if you die after the term of the insurance contract. However, with term life insurance, you determine the length of time you think you need the insurance and the amount of payout necessary for your family when you die. The amount you need was noted above. The premiums for term life insurance are relatively low. Insurance companies use an amortization chart to determine the premiums based on your age, health, amount of death benefit, and the length of the term. Like permanent or whole life insurance, there are several different types of term life insurance that we will delve into to give you a better understanding of your options.  

Types of Each Category:

Let’s take a look at the different types for each of the two categories of life insurance to give you a better understanding, so you can best determine what will fit your needs. With permanent life insurance, there are many different types from which to choose. A few of the more common types of permanent life insurance are:

  • Universal life insurance which includes indexed universal life insurance
  • Guaranteed life insurance
  • Variable universal life insurance
  • Whole life insurance which includes final expense insurance both simplified and guaranteed
  • Variable life insurance

There are many other permanent life insurance plans that you can find such as group life insurance and accidental death and dismemberment life insurance. But for the most common ones that are noted, there are some definite considerations to keep in mind. Like permanent life insurance, term life insurance also has several types of policies. The most common are: increasing term life insurance, level term life insurance, and decreasing term life insurance. Each of these has things to keep in mind before deciding what kind of term life insurance policy is best for your needs. 

Universal Life Insurance

The basic premise behind any type of universal life insurance is that it is insurance that will secure your family’s future when you die and will grow your money over the course of the life insurance span. Many people fall prey to this trap, thinking that their money will grow at a fast pace, leaving their family well off when they die. That is NOT actually the case. However, it is insurance for your family, so they will benefit from you having some kind of insurance. The pitfall is in thinking the money will grow to be some kind of windfall. While all universal life insurance plans have definite drawbacks, they differ from plan to plan. 

  • Indexed universal life insurance – Be aware that the cash value, despite what you may be told, has a minimum and a maximum guaranteed interest rate which is based on a stock market index. The value in having this type of insurance is that there will be some cash gain over and above your premiums. Just know that there is a cap on the amount of increase which is based on the participation rate. Your policy will determine how much your cash value “participates” in the gains. An example is that if your participation rate is 80% and the S&P 500 goes up 10%, you will only get an 8% return. Also, there is a cap on the gains. Therefore, if the index increases 20% and your cap is 10%, you will only get a 10% return. Also, some policies will have flexible premiums and death benefits that will let you adjust your death benefit as the needs of your family changes. Another aspect of this insurance is that you may skip a payment or may even be able to decrease your premiums within limits but only as long as the amassed cash value covers the costs. However, if you skip payments and don’t have enough cash value to cover the cost of the premiums, your policy could lapse. An indexed universal life insurance policy is probably best for someone who has maxed out other investment accounts and is looking for additional investment flexibility or someone who is looking for a safe investment with guaranteed minimum values.  
  • Guaranteed life insurance – Another kind of universal life insurance plan is a guaranteed life insurance policy. Because it is “guaranteed,” the money accrued in it is stable. Also, the premiums remain the same regardless of how the market indexes perform. However, there is not a guaranteed cash value amount with this type of policy and missing any payments may forfeit the entire policy. This kind of universal life insurance is best for those who are risk-averse people who have permanent insurance needs.  
  •  Variable universal life insurance – The third type of universal life insurance is a variable universal life insurance policy which has a benefit of cash value gains. The way this works is that the money that the policyholder pays as premiums goes into a series of mutual fund sub accounts. Because the money is in these funds, there is a savings potential and the policyholder also has the ability to borrow against the policy. A major negative of this plan is that the policyholder  manages the investment portfolio. For some, this may be okay, but for the masses or those who are not financially savvy, this may be a mistake. In addition, since the policyholder can borrow against the policy, those interested in this type of policy must be disciplined to ensure the money needed for the family will actually be there at the time of death. Other negatives associated with variable universal life insurance policies are that the cash value and actual death benefit can fluctuate based on performance as well as the fact that there are high fees associated with these policies. This type of policy is only good for do-it yourself investors who tolerate risks. 

Whole Life Insurance: 

Let me start by saying I am not a fan of this type of life insurance for MOST people. According to Forbes, this was one of the most popular types of life insurances in the United States for most of the 90s, and it is still fairly popular, representing “33% of total life insurance premiums” as reported “‘from LIMRA, an industry-funded research group.’” Whole life is supposed to be just that, insurance that covers you for your whole life, having guaranteed premiums, cash values, and death benefits. Sounds somewhat appealing, right? Well, know that some whole life insurance policies actually have a limited, and, therefore, higher premium and the cash values or dividends grow very slowly. In addition, not all whole life insurance policies pay dividends. So, be careful when selecting between participating whole life insurance policies and non-participating whole life insurance ones that do NOT pay a dividend and are offered by stock insurance companies rather than mutual insurance companies. For those that are participating whole life insurance companies, you usually have the option when it comes to your dividends.  These options typically include putting the dividends toward your life insurance premiums, taking the dividends as a cash payout, or using it toward life insurance additions. My biggest problem with this type of insurance is that it is more expensive with term life insurance policies, and it negates the purpose of life insurance. Life insurance is not meant to be a savings or investment account, so I prefer to keep those two things separate and not have to pay as much for the insurance. I think you should not fall prey to the gimmicks associated with this type of insurance.

Variable Life Insurance:

Another type of insurance that is available, but another one I do not endorse, is variable life insurance. This type of insurance can be very risky. It is a life insurance policy that some use for life insurance needs as well as investment needs and goals. The intended purpose of this insurance is to pay a certain amount of money to your beneficiaries when you die along with having a cash value. These amounts are all determined by your selected premiums but also have attached to that fees and expenses. One huge downside is that the cash value is dependent upon the performance of the funds in which your money is invested. If the market is underperforming, you will lose some or all of the cash value. Additionally, there are fees that come out of the premiums and are paid to the financial professional. As I have already noted, I think insurance needs should be just that – just insurance and not savings or investments. 

Term Life Insurance: 

As noted above, unlike permanent life insurance or whole life insurance, term life insurance does not have a cash value associated with it, so it is only insurance and not a savings plan. It is more simplistic than permanent life insurance. In basic terms, term life insurance is nothing more than a contract between the policyholder and the insurance company stipulated for a certain amount of time, “the term,” that will pay the agreed amount of the policy to the beneficiary or beneficiaries at the time of death of the policyholder. One of the benefits of term life insurance policies is that they are affordable, usually five to fifteen times cheaper than permanent life insurance. In addition, you get to determine the “term” which typically ranges from one to thirty years. A downside is that the predetermined term often expires before death. If the policyholder wants to get a new policy, the cost at a later point in the person’s life is more expensive than the original policy. 

  • Increasing term life insurance – This type of term life insurance is one that has an added benefit of having a death benefit that increases over the term of the policy. In addition, the policy can have varying premiums if that is something the policyholder determines when establishing the policy. One caveat, however, is that this type of term life insurance is usually more expensive than other policies.  
  • Level term life insurance – This is the most common type of term life insurance for several reasons. First, it has a fixed price which most people prefer for budgeting reasons. Next, it is straightforward. The basics of this type of term life insurance is that there is a set premium and a preset death benefit. It is that simple. For most people, this is the best type of term life insurance.   
  • Decreasing term life insurance – As the name suggests, this form of term life insurance has a death benefit that decreases over the span of the policy. It does have a set premium like level term life insurance. This is the type of insurance a policyholder may desire until debts are paid. Often as we age, our salaries increase and we pay off debt, so we need to be less insured than when we are first starting out, have less income and more debt. In that case, we need to ensure that our loved ones are secure in the event of our death. For those individuals, this type of insurance may be of interest. Many who purchase this type of term life insurance do it as a safeguard until the mortgage is paid in full. This is often suggested and purchased through your mortgage lending company or bank. 


Overall, some kind and type of insurance is necessary. Remember the premise for the insurance; it is just that – protection. You need to safeguard your family in the event that tragedy strikes. Think about how vulnerable your spouse and/or family would be if that happened. Imagine how catastrophic it would be if they had to worry about not being able to pay the bills or stay in the family home. Protect them from those worries. You have the information to make an education decision regarding which of the two basic kinds of insurance would best fit your needs as well as what particular type. One thing I ask of you is not to wait. This is definitely something you cannot put off. Don’t be caught off guard. It is not very expensive and the peace of mind is priceless. 

Decreasing Stress for the Holidays and Staying on a Budget

Believe it or not, it’s November and that means the holidays are fast approaching.  Just walk into ANY store and you will not be able to miss the explosion of holiday décor, food, gift-sets, wrapping paper, etc. It amazes me how many people from year-to-year seem to be caught off guard as if the dates of the holidays change. Nonetheless, we all know from Halloween until New Year’s, it is a whirlwind of activities, spending, and stress. So while the holidays are supposed to be fun and a time for gathering with family and friends, people will feel undue and other self-induced levels of stress. Information published by Clarity Clinic in 2021 noted that of those surveyed, “45% of those people living in the United States would choose to skip out on the holidays” to eliminate the stress that comes with it. One of the biggest contributors to this feeling of stress is money. In fact, according to a poll conducted by the American Psychological Association, “69 percent are stressed by perceiving a ‘lack of money,’ and 51 percent are overly stressed by the ‘pressure to give or get gifts.’”

So what can be done to help alleviate some of the stress about money and, instead, really enjoy the holidays? First, stick to your budget. The holidays are not about wrecking your budget and then having to struggle to pay off holiday bills until the summer rolls around. Take a step back and think about what the holidays really are all about. Keeping in mind that the purpose of the holidays is to gather with family and friends, it does not have to become an over the top spending and gift giving frenzy and fiasco. 

Also, keep things real and be honest. It is fine to have a conversation with your family – immediate and extended – about your budget and your financial goals you are working toward. Chances are others may even be relieved to remove some of this burden as well. Your family should support your efforts to pay off your debts, save for a house, stay on a budget, or whatever your budgeting focus is. However, if gift giving is something that is really important to you and your family, keep it in check and make sure you budget for it well in advance. It is much easier to set aside a certain amount each week, biweekly, or monthly, ahead of time rather than having to come up with all of the money for decorating, gift giving, and entertaining beginning in November or December. Hopefully you worked this into your budget before the holidays were looming over you, but there are also things to help you enjoy the holidays and stay on a budget, especially if you didn’t. 

Entertaining: Entertaining will definitely cost more this year, so you will want to plan ahead to find the best bargains. The Farm Bureau’s 36th annual survey notes that there will be a “14% increase from last year’s average of $46.90 for a classic Thanksgiving dinner for ten.” Christmas will likewise be more expensive due to continually rising food costs. So, you know the cost is going to be higher which you need to account for when setting up your November and December budgets. In addition, watch the ads and shop around. Grocery stores will have key items on sale to bring in the crowds. Remember that you don’t always have to buy the most expensive brands. Many of the store brands are equally as good, yet less expensive. Another budgeting tip is to have everyone bring something to the meal. Spreading the expense helps everyone. Plus many people enjoy bringing a new or favorite food item. Lastly, keep it simple and remember you do not have to have the “traditional” meal. Don’t buy into all of the hype. Do your own thing. It is okay! This will also cut down on the stress level of having to do too much as well as the stress of blowing your budget. Lastly, live in the real world rather than trying to create a Thanksgiving meal that is straight from the pages of a magazine or some Pinterest post. Keep it uncomplicated, so you can spend more quality time with your guests rather than trying to create something that is overdone and excessive. 

Decorating: Just like entertaining, decorating does not have to be some major expense. Personally, I am a pretty simple guy and don’t put much stock in this. I also don’t buy into all of the hype dictated by big companies trying to tell me I need to do this or buy that in order to be happy or to be able to have a good holiday. It is not how I roll. For my wife and me, I can honestly say the more we simplify our lives and go against the norm, the happier we are. But if you so choose and feel the need to decorate, there are many discount places that have decorating items that you can buy that will keep your budget in tact. Again, keep in mind what is important. Assess your plan. Is it really necessary to have things decorated to the nines or can you use what you already have? Is it really that important to you or is sticking to your budget and paying off your debt more paramount? Maybe this is another time to keep things simple and understated. You may find that this is also a wonderful way to reduce stress and to free up your time. Keeping in mind the real focus of the holidays will help you here. Often a candle or two, some greenery that you can usually get free from places that give a fresh cut to Christmas trees, and a plate of cookies or an appetizer is really more than enough. Lastly, planning ahead and buying wrapping paper and other “necessary items” after the holidays for the next year when the stores discount it is a good way to save money. Just make sure you buy ONLY what you need. It is not going to help your budget if you buy more than you need just because it is on sale. That is not being frugal or staying on a budget. . 

Gifts: If it is a must to give gifts, see how you can tapper back. As you can imagine, I am not into “stuff,” so I don’t need or want others to buy me gifts. Obviously, this is a personal thing and clearly children are a different consideration. How do you feel about gifts? Instead of buying things to fill a quota or a dollar amount, get creative. Are there things you can do for the person rather than give to him or her that would be equally or more appreciated? Gifts of time and experiences are usually valued far more than tangibles that eventually break, are shoved in the back of the closest, or are thrown out. Really think about the person. What does that individual treasure? Food items are a great gift and can be made fairly inexpensively. For example, collecting all of the dry ingredients for cookies, muffins, brownies, or gourmet hot chocolates and putting them in a Ball jar with the directions is a gift that is economical and thoughtful. Often you can make several of these gifts, marking many people off your list while also keeping you out of crowded stores filled with cranky last minute shoppers. It is the thought that is important – not the cost. Another fairly inexpensive and very thoughtful gift is tickets to a movie with the promise to care for little ones for a needed date night. The list is endless. You don’t have to break the bank if you are innovative. However, maybe it is time to stop giving and begin new traditions. One that my wife’s family started several years ago was everyone bringing a new game to share that we then played that night. Every couple also brings an appetizer, so it is really just a relaxing evening that is not overly complicated. Think outside of the box. Dare to break away from the norm and don’t buy into believing that you have to do things that are not good for you and your situation. 

Bottomline, the holidays are meant to be time to gather with family and friends. Refuse to buy into all of the hype and commercialism. It is not helping you financially, emotionally, or personally. Take stock in what is important and stick to that. Celebrate the holidays in the way they really should be celebrated. To me that is simplistic, stress free, and with the people I value most in my life.  

The Elixir to Success: Consistency & Laziness

I am often asked about my success and what my special recipe is or the secret elixir to create success. I wish I could attribute it to something innovative or profound. But that is not the case. Truly, my success comes down to two key things: consistency and laziness. 

While many can understand how consistency plays into success, most look at me in disbelief and quizzically when I mention laziness. However, these two personal attributes really have fueled me and have helped me create my success. Let me explain how these two seemingly incompatible characteristics go together.

Outwardly I might appear to be energetic since I always seem to be busy and constantly moving. But actually I am very lazy! Sure I go to the gym and work out, clean things up because I can’t stand clutter and messes, and am task-oriented and success-driven. But when it comes to mundane minutiae, I procrastinate and am simply lazy. I know that about myself; it is not a positive attribute. Because of that, however, I automate everything, so I don’t have to deal with tedious tasks or even spend energy thinking about them. Therefore, I don’t waste time on making daily decisions about money, budgeting, investing, or finances. That is exactly how and why my laziness and consistency play into one another, creating my success.  

Stepping back on my road to success, when I got really and totally consumed with my finances, I planned out everything on a spreadsheet which became my blueprint for success. This blueprint is exactly what I guide my academy students to create for themselves, so they can build their own success. Once I had everything mapped out, since I know that I am lazy when it comes to things that I consider to be trivialities, I created ways to put things on autopilot. If there was a way for me to make it one and done, I did it.  

This method helped streamline and simplify my life, turning my laziness into success. That, of course, is coupled with consistency. Since I set everything up to be automated, I do not have to think about or worry about trivial matters and can focus on bigger, more important considerations. The following is the breakdown of how much time and effort I spend on each specific task with my finances. 


  • Investment Allocation Rebalancing 


  • Balance Sheet Review


  • Budget – thirty minutes every month 

Once (set it and assess each as needed): Remember this is NOT an excuse to constantly tinker with your plan. For example, if you have a large life event such as a birth of a child, it may be wise to reconsider insurance needs.

  • Plan to reach monthly goals – once decided, it is automated 
  • Paying bills – set up to be automated and then done
  • Investment Accounts – set up to be automated and then done
  • Investment Allocations – automated and then done
  • Insurances – made decisions, automated and then done
  • Trusts and Will – made decisions and completed 
  • Durable Health Care Power of Attorney – made decision and done
  • Financial Power of Attorney – made the decision and done
  • Tax Strategy – once decided, it was done
  • Investments Plan to Reach Goals – planned then automated 
  • Investments Resources – all bookmarked on my desktop (if necessary for use)
  • Amortization Schedules – set up, then done until debt is paid (I have happily removed this one due to no debt.)

As you can see, I spend little to no time on these activities since they are almost all automated. Again, I am lazy when it comes to spending time doing things that are mundane and monotonous. I took my exact roadmap for success and created Budgetdog Academy to enable everyone to take this approach and free themselves from the mundane and arduous tasks of personal finance. This gives you the luxury of an automated financial plan that will take no more than a half an hour a month. You can confidently set up and automate your finances to help you reach your financial goals as well as free up valuable time. Looking at the time allotment above, you will notice that the only thing I have to spend time on each month is my monthly budget since everything else is automated. But even that is quick and easy.  

This is a lazy person’s best friend! The most time consuming part is mapping out the blueprint but once you are through with this part, all you will need to do is put in a minimal amount of effort and watch the automation work. 

If you are ready to take control of your finances but don’t want to waste hours a month, The Budgetdog Roadmap is your key to success.  It provides every resource you need for paying off your debts, budgeting, and investing. I am always at your disposal for any questions you may have along the way. Your success fuels me, but I also feel your pains and understand your worries. Being consistent will pay off.  I teach and have recreated every step that allowed me to pay off $304,000.00 of debt and reach millionaire status so that all my students can have the same success and more. My students learn to stay the course and trust the process and I even give them permission to be lazy – in a good way!  

Subscribe to my Youtube as a source of the latest information for all things financial as well as some simple life lessons and inspiration. My mission is to make you successful – as many of you as I can. As long as you put forth the effort and stay with me through this journey, you will be on a great path to financial freedom and success. So what is your elixir to success? What do you want for your future? I think I know the answer. It is within your grasp; you can win.