Invest In Yourself | Live a Life By Design

More Than Numbers

Posted on December 9, 2021 by Jimmy J. Williams, CPA/PFS, CFP®

Your personal physician gives you honest and candid information to help improve your physical health. A Certified Financial Planner^TM professional provides you the same type of consultation about your financial health. You are more than a number to a wealth advisor. Your family’s current financial state, future security and transition of assets are the focal points to a sound financial plan.

The basic level of fiscal management is the utilization of your annual household income in a manner that provides for your needs today while saving for your future. In a utopian world, we could simply spend all that we earn, and the retirement phase of life would be funded by someone else. The problem with this thought is that the “someone else” is you!

By applying guidance of cash flow management, your family will enjoy a lifestyle that creates happiness today. The physiological needs such as food, shelter and clothing are the very primal items that help your family simply survive. By appropriately allocating your resources to allow for current living needs and accommodating for your future will instill confidence in your capabilities.

While working through life, you become clearer on what you seek after your career. It is vital that you properly fund your retirement or the pleasure you see in all those vacation posters will evade you. Time value of money is an accounting concept that states, “a dollar today is worth more than a dollar tomorrow.” To maximize the probabilities of accumulating sufficient capital to fund retirement, it is critical to work with a wealth advisor to, first, determine what is the target amount of funds you should save and, second, what is the most efficient approach to saving these funds.

This approach is illustrated with our older daughter’s lifestyle. Our daughter is working in her first career position after graduating with her master’s degree. While helping her with a budget for this new paradigm she is living in, I will never forget her comment of “Wow! It takes too much money to live the way I wish.” After I realized she was being serious, I started the “dad talk” and reminisced about 1987, my first year out of college and working in my career. As her eyes rolled, I could literally hear her think – “Not another “back in the old days” story.”

After a brief discussion, I gave her the secret formula to accumulating wealth for the future while living a happy life today. In remarkably simple terms, invest 10% of your earnings for the future, give 10% away to qualified charities and/or church, invest 10% in yourself through education and other skill-building programs and, lastly, live on the remaining 70%. When she received her first performance bonus, she was so excited! The amount of money she earned was more than she had imagined. Immediately, she began talking about a new car or furniture for her townhouse. I interjected the 10/10/10/70 formula she is currently using to help her live an abundant life. After convincing her that she may not wish to expand her lifestyle with funds that are not consistent, she did something that made my chest swell with fatherly pride – she invested the money in her future

Do not assume that a Certified Financial Planner^TM professional only works with investments. Many of us possess expertise in behavioral finance and other psychological functions of wealth. Just like your doctor, we examine your total picture and provide advice and coaching to reach your highest goals in life in a manner that you choose. With a short conversation, you will discover that a wealth advisor is far more than numbers – you will find a lifelong advisor and friend.

It is an honor to share stories, tax laws and other financial information with you each week. Most importantly, it is critical that each of us share the blessings we possess with those in need. This Christmas Season focus your energy and resources on others and you will receive the most valuable gift on this planet – joy!

Related Podcasts

A Little Gratitude Goes A Long Way

Posted on November 24, 2021November 24, 2021 by Ashley Stieb

Thankfulness versus gratitude. What does that mean? Well, they may have the same meaning at the end of the day, but lately gratitude has become something that holds a little more meaning. I am not sure if it has been the rollercoaster we have all been on for the last two years or not, but I have certainly noticed a theme on social media centered around that word and it has me thinking that some people may be onto something.

Gratitude has become more than just being thankful for something. It is as if it has become a lifestyle rather than a simple feeling. Sharing the things you feel gratitude towards on a daily basis has become a bit of a norm. It’s like intentionally starting the day on the right foot. Seeing the things that people are sharing can really make you think about the things in your own life that you are grateful for. It can be the simple things, such as being able to hear the crunch of the leaves when walking on a on a crisp Fall morning. The type of things that you wouldn’t look at and normally say, “I am so glad this is a thing!” Or it can be something big like being grateful to have a roof over your head.

I think that this can be especially healthy when we find ourselves getting upset. Imagine you are in a drive-thru line and it is moving rather slow. You expected to be through the line in under 5 minutes, but it has been 10 and you are not even to the first window to pay for your food. Something to feel grateful for in that moment could be having the opportunity to listen to the song on the radio or finish it while you wait. This kind of mindset can help you stay grounded and take your mind off the thing that is upsetting.

I want to challenge you to look around the room you are in and find at least two things you are grateful for and then continue to do so on a regular basis. The world can be such a negative place these days, so I think it is important to take a step back and find something positive to focus on for a moment, if not for our own sanity. Looking around my home office I am grateful my laptop that gives me the opportunity to work remotely and for my sticky notes that keep me on track each day. It can be so easy to find something to be grateful for if we just take the time to do so.

In the coming year, make a habit of finding one or two things to be grateful for and repeat this process every day. Do something that holds you accountable, like writing it in a journal or in a note on your phone. You don’t have to share it on social media like others do, but be intentional and start the day on a positive note. A little positivity and gratitude can go a long way and isn’t that what we all need after the last two years?

Related Podcasts

Things Money Can’t Buy

Posted on November 19, 2021November 19, 2021 by Jimmy J. Williams, CPA/PFS, CFP®

Typically, this column focuses on the wealth creation, tax savings strategies and estate transition planning. At this time of year, it is critical that we take a different perspective in providing you guidance as to the definition of “true wealth”. We work hard all year focusing our efforts generating income and support for our families, communities and charitable organizations. What actually is your net worth based on “true wealth”?

To define “true wealth” one must understand what is most valuable to her and focus on increasing the value of the item through commitment of mental and physical energy. For example, relationships that are important in your life (i.e., children, parents, grandparents, friends, etc.) require investment of time to truly yield the greatest return. I am not implying that you should expect any return from your input of respect, consideration and friendship but it is a typical response by someone who receives these “investments” to return the contribution in similar form.

Another asset of “true wealth” is charitable giving. How does this process help grow your wealth? By giving of yourself, you will receive an internal increase in your self-esteem. This process of giving was instilled in me by my parents. When I was a very young boy, my dad asked me to go with him to a pie supper. I did not know what a pie supper was but the word “pie” had my interest! My father, responding to my rapid-fire questions such as “Will they have a chocolate pie? How about a pumpkin pie? Coconut cream? Finally, as if I were badgering a witness on the stand in a courtroom, my dad relented and simply told me to get in the truck to see for myself.

Upon arrival at the high school gymnasium in a small Oklahoma town, I was shocked as to the number of people who liked to eat pie. I observed the gymnasium floor covered with tables that were filled with pies and a small stack of paper in front of each one. My dad walked over to a pie and wrote on a piece of paper. He then walked to another, and another until he had written on several pieces of paper. Now, I am really confused. He wrote on pages for pies that I don’t even like to eat!

After what seemed like four hours (but was really about one hour), a man started picking up the pages in front of each pie. This man, with a boisterous, deep voice, started yelling out names and amounts. Intrigued, I asked my dad why did he call your name and say $50.00? My dad explained that he bought the pie for $50.00 and our family would be taking it home to enjoy. I was only 7 years of age but I knew the value of a dollar in 1972 and told him mom would be upset that we spent so much money on a stinking, apple pie. He just smiled and told me to listen as other names and amounts were called.

After all the names had been called, I quickly added up the total of the amounts called after my dad’s name and it was $200. Oh my goodness! This was time in our country when $100 of groceries would fill a pickup bed and new Converse Chuck basketball shoes cost $16. We just spent $200 on pies?!?!

Once we loaded all the pies in the truck, my dad explained to me the purpose for the pie supper. A family friend in our little town had lost their home, furnishings, clothing, everything in a house fire. The proceeds of the pie supper will help the family with needed items to continue to survive. My dad told me that he had not “spent” any money today but rather “invested” it in his friend and community to help others.

My eyes were opened that day to charitable service. This Thanksgiving Season many families will not be as fortunate as you. Consider giving in a manner that aids those in need to experience the passion and compassion of our community.

To me, “true wealth” is all about family, friends and charitable investments. Trust you will enjoy the best of the Thanksgiving Season and help others to do the same.

Related Podcasts

IRA Planning for 2021

Posted on November 11, 2021 by Jimmy J. Williams, CPA/PFS, CFP®

The pandemic of the past two years has brought a tremendous amount of pain to many lives but there is a positive aspect in that dark cloud of gloom. One of the best attitudes, when performing tax and financial planning for your family, is to seize opportunities that are given you. In other words, capitalize on the negatives that impact your life and make the proverbial “lemonade from lemons.”

Many businesses are suffering net operating losses during 2021. If you are an owner of the business and the operation is conducted as a sole-proprietorship, partnership or S-Corporation, you may have a valuable tax saving asset in your future. The net operating losses of these entities are claimed on the tax returns of the owners. For example, if you were a fifty percent (50%) partner in a partnership that lost $100,000 in ordinary income for 2021, you would receive the benefit of $50,000 loss to be reported on your personal return.

With your personal return reporting a loss, or much lower income than you otherwise typically report, your Traditional IRA is holding a great value in it beyond its balance. Consider the conversion of your Traditional IRA, in whole or in part, to a Roth IRA prior to the end of 2021. A taxable event will be triggered when the conversion is performed but your tax computation is based on your taxable income which, when claiming your share of the net operating loss, may be lower than your typical year sheltering the income from the conversion from taxation.

The purpose for converting your Traditional IRA to a Roth IRA is to change the future taxability of the account. You will be taxed on distributions received from the Traditional IRA in the future. The Roth IRA does not mandate required minimum distributions to you at age 72 as a Traditional IRA. Also, you may use the benefits of the Roth IRA to accumulate tax-free income streams from a very young age.

If you believe tax rates are going down in the future, you may wish to contribute to a Traditional IRA to enjoy the current tax savings. However, if you think tax rates will be higher in the future, you may wish to forgo the tax deduction of today and contribute to a Roth IRA.

Both types of IRA may invest in many different types of investments – stocks, bonds, mutual funds, etc. The structure and taxation of the two IRA types are the distinguishing benefits each allows for a taxpayer. The IRS continues to close loopholes such as “back door” Roth IRA conversions and other planning opportunities.

To maximize your opportunities for most challenges in life, it is always an innovative idea to allocate your investments between qualified and nonqualified accounts. Qualified accounts such as IRAs and 401(k) plans are generally taxable upon distribution of the assets to the owner. However, nonqualified accounts such as transfer on death accounts and joint accounts pay taxes during the growth of the assets. When you wish to retire, the type of account may play heavily in your financial plan design.

IRAs are tremendous tools for tax planning. Don’t assume that you simply invest in the IRA every April to save taxes. There are so many other uses of IRAs for estate planning, gifting and lifetime income planning that are often overlooked. As retirement planning experts, we have witnessed a tremendous number of people who fail to maximize the benefits of IRAs.

Proper allocation of your assets is necessary to stage a retirement plan that will serve you well in life. Seek out the assistance of a CERTIFIED FINANCIAL PLANNER^TM professional to help you plan for the future that you wish to achieve. Remember, when you fail to plan, you plan to fail. Be the exception. Take a pragmatic approach to your lifetime of income and enjoy the best of life on your terms. See you on the walking trail!

Related Podcasts

Direction of Your Life

Posted on September 17, 2021September 17, 2021 by Jimmy J. Williams, CPA/PFS, CFP®

Do you feel like life is just a little out of sync? In the crazy world in which we now find ourselves, it is critical to create a safe place to give you hope and optimism. The best method of creating this stability in your life is to create and monitor your activities and emotions with a life plan.

Life planning has become an industry unto itself. There is more to your life than financial matters. You have relationships, hobbies and other activities that can’t be purchased with money. By properly setting your goals and life plan into motion, you have found your “true north”.

When you have properly placed your passions and actions into a formulated methodology that increases your probabilities for success, you are on your way. Think about these three aspects of life when planning your future. First, remember that life is finite. This is not a morbid tale but one that gives you urgency to seek your best life on your terms. If you are granted only twenty-four hours to do what you want to do in life, would you be doing what you are doing now?

Your happiness depends on the framework you have placed around yourself. Friends, community and family, all contribute greatly to the quality of life you lead. It is not all about money. I know several people who are very rich in worldly goods but bankrupt of happiness. On his deathbed, a very successful real estate developer in California told a young Darren Hardy that he made one mistake in life – he is poor. When the confused teenager looked at the dying man, he exclaimed, “You have 7 houses worth millions of dollars, cars worth millions of dollars and other investments that contribute to your overwhelming wealth! How can you say you are poor?” The wise, old man pulled the boy closer to him and, in a raspy voice wrecked by radiation and cancer treatments said, “I am poor because I spent all of my time making money and failed to create true wealth by having relationships with others.”

The second aspect of life is future thinking. Too often we find ourselves mired in the world of today. Thoughts of life in the future seem fleeting and so far out of our realm of thinking that they are irrelevant. By applying a little of your current assets and income to your future, you would be amazed at the potential results. The Chinese proverb comes to mind about our future. It states, “The best time to plant a tree was 20 years ago. The next best time is now.” Don’t allow the irreversible passage of time rob you from a lifetime of happiness by merely enjoying today beyond your means.

Lastly, the aspect of life that makes the most impact is choice. Og Mandino, the New York Times Bestselling Author, wrote in his book titled, Choice, “The key is choice. You have options. You need not spend your life wallowing in failure, ignorance, grief, poverty, shame, and self-pity. There is a better way to live!”

Live your life with passion and happiness. Set your future in motion as you define it. The best method of accomplishing these actions is to focus on your future while living for today. A CERTIFIED FINANCIAL PLANNER™ professional can help you plan for the best outcomes in your life. This choice is a simple one…

Related Podcasts

Your Philosophy Determines Your Success

Posted on July 23, 2021July 23, 2021 by Jimmy J. Williams, CPA/PFS, CFP®

Often people look at others in determining their success achievement as valid. What is not known about the person is their background, mindset and skillset. When defining your success in terms of control of your life, financially or in any other measure, it is critical that you understand the reasons for such accomplishment.

Philosophy is the basis for all of your functions in life. By learning and adapting a belief system that you are capable, deserving and endowed with potential, you are accepting your philosophy to be one destined for success. How do you define success? For example, recently a billionaire in the United States flew his own spaceship to the atmosphere of the Earth for approximately eleven minutes. He reached the Earth and was giving a press conference where he remarked, “The mission was a great success!”

The philosophy of the ultra-wealthy is one of unlimited capability. To create a mindset that you are capable of achieving your utmost desires and goals is a powerful concept. It is my belief that each of us is endowed with greatness awaiting to be shown to the world. This revelation may not come in the form of wealth as defined by the world but rather through knowledge, health, spirituality and other means.

First, you must think about your life and what would be the most impactful method of leaving your legacy. This seems to be the most difficult step of establishing a philosophy that will guide your life. In its basic terms, it is actually very simple. What do you value most in life? Is it your children, spouse, charity, church, community, grandchildren? Once the value determinant is defined, you may realize a different strategy for your life emerges.

For example, if you wish to leave a legacy to your grandchildren, your philosophy and approach to life would be a perpetual gift to each generation. You may decide to leave poems depicting your love and admiration for them. Or you may simply wish to leave photographs with descriptions of their ancestry and the wonderful history of their family.

One means in which I am leaving a legacy for my children is through journaling. Each time I write in my private journals, which will only be read once I have expired, I am leaving my philosophy of life, thoughts about the deeper meaning of relationships and values I hope to instill in my family. Even though I am verbally teaching our children these meanings, when they are older the words of my journals will resonate the teaching, they were granted while I was living.

Philosophy also applies to your financial approach to lifetime independence. When a person adopts a philosophy of living within his means, being charitable to others and investing in a prudent, consistent manner, success will truly be achieved. If you wish to learn more about philosophy, make sure to bookmark this site.

Disengage from the busyness of the world and think about your approach to life and its many wonderful facets that you wish to leave to your family and friends. The only negative in this process is that you may realize you have a lot of life to live.

Related Podcasts

Change Your Philosophy About Money and Change Your Life

Posted on December 18, 2020December 18, 2020 by Jimmy J. Williams, CPA/PFS, CFP®

One of the greatest powers of wealth is your philosophy toward money. This year has been a challenge to many of us and you may have not met your savings goal or some other type of goal. However, our philosophy of life doesn’t change whichever way the wind blows economically or otherwise.

Think about your deepest convictions about life – personal, professional, marital, charitable, etc. Most likely these deeply rooted philosophical beliefs came from someone in your family or a close friend or an author of a book you read. My beliefs about money came to me early in life from my parents and, surprisingly perhaps, Jim Rohn and Zig Ziglar. Philosophy is what keeps you grounded during times like this that we are currently experiencing.

One of the greatest habits you can foster is the creation and continuance of your philosophy of money. Too many of us are chasing wealth and overlooking diamonds on the way. What I am referring to is the fact that money doesn’t define us in life but rather it affords us the opportunities we receive and the freedoms to enjoy them. Let’s analyze the thoughts of the billionaires of the United States, a very small group, and attempt to understand their philosophy about wealth. Wealthy individuals view money in long-term time horizons. There are no “get rich quick” schemes to lasting wealth. By diligently and consistently working toward their goals for success every day, the billionaires of our country amass great fortunes that last far beyond their lifetimes.

Another philosophy upheld by billionaires is their optimistic attitude. Do you believe that positive people attract opportunities? It certainly does! By maintaining an attitude of positivity and optimism, the people you meet during your day will notice your demeanor and reward you with a smile or kind gesture in return. This is another means of billionaires discovering the next great investment that will continue to grow their wealth.

The philosophy of “pay yourself first” is evidenced by the lifestyles of the ultra-rich. This approach to life is to invest your money toward your long-term goals first and then use the remainder for your current lifestyle. The key to balancing this philosophy is to clearly articulate and write down your goals. By focusing on the bigger future, you will not frivolously waste your resources today. One method you can demonstrate this philosophy is your current retirement account. Instead of instant gratification for a new vehicle or boat, be deliberate about funding your future and save for the asset you desire. To illustrate the opposite of this philosophy, many people will utilize debt to purchase their “toys” and when retirement or an emergency arises, they are ill prepared and sink further into debt.

Lastly, money is nothing more than a ticket to freedom. Your choices that are availed to you through your preparedness for life are considerable. Think about your freedom of choosing a place to live, the freedom to choose the type of car you drive, the freedom to support the charity you believe is making a difference, etc. These freedoms are critical to the state of happiness you enjoy in life.

During my speeches across the United States, I often state, “Money has never purchased happiness but it can lease joy on a long-term basis”. I am amazed this statement continues to confuse people by its simple inference. It’s Christmas and time to think about your goals for 2021. Give some thought to changing your philosophy about money and life. The rewards you will gain are impactful and world-changing. If you wish to learn more about goal setting and other philosophical approaches to life and money, go to www.compasscapitalmgt.com.

Wishing each of you a wonderful Christmas and a Happy New Year!

Note: The “Invest in Yourself” column will not be published for the next two weeks. We will resume publication the week of January 4, 2021.)