Navigating the New Year  

We are two months into the New Year.  Do you set goals or make New Year’s Resolutions?  Is this an exciting year for you, with new possibilities, personal growth, or career advancement in your plans?

Or maybe this is a year of unknowns, with a mixture of fear and anxiety, possibly including a career move, changes in the family structure, or adjusting to the “new normal” of retirement or loss of a loved one.

Whatever circumstances you find yourself dealing with today or facing tomorrow, it helps to have a plan to guide you along the way.

Like driving in an unfamiliar area, having a GPS to guide the way can make the journey less stressful with more certainty you’ll end up where you want to go.

What makes a GPS so useful in finding your way through unfamiliar territory?

It simply takes you where you want to end up and provides the easiest route available to get there.

GPS can tell you how far and how long it will take; It will even provide step-by-step instructions for every turn, so all you need to know is the next step, the next turn.

This can make the overwhelming seem manageable!

The GPS even warns you if you make a wrong turn and how to get back on track.

Wouldn’t it be great to have a GPS for your 2019 goals?

Just plug in the end point, press “calculate best route” and your ideal navigational route appears with step-by-step instructions.

Since that technology doesn’t likely yet exist, maybe we can design our own GPS.

Designing Your GPS

G   =         Game Plan

P    =         Priorities

S    =         Singular Purpose

Our G.P.S. begins with the end in mind (our Game Plan to reach our goal).

The coordinates that set our course are determined according to our Personal Priorities.

This provides the filter for “calculating the best route” by avoiding areas where we shouldn’t spend our time and energy and directing our path by staying focused on what matters most.

This last statement is maybe the trickiest to nail down, “what matters most.”

It should become apparent when we focus on the “S” of our G.P.S. or our Singular Purpose.

A wonderful book I recently finished brings this issue of singular purpose into acute clarity (the book is The One Thing by Gary Keller).

I’ll paraphrase for the context of this discussion.  What is the ONE THING you could do this year, this month, starting now, that having done it will make other things easier or unnecessary?

1. If your singular purpose is FINANCIAL your response may include things like, “live within my means” or “save adequately for retirement” or “eliminate my debt” or “automate my bill pay.”
2. If you singular purpose is about CAREER your response may include things like, “make more money” or “achieve a promotion” or “make that career move” or “bet on myself this year.”
3. If your singular purpose is about RETIREMENT your response may include things like, “discover a plan for a ‘new normal’” or “establish new priorities and a renewed sense of purpose.”

Our lives are full of unknowns.  Some things we can control.  Some things we can’t control.

Knowing (and accepting) the difference can make all the difference in our level of stress and joy.

How Can We Help?

Lotus Group is committed to helping each individual maximize their human potential.

That could mean generating investment income to support your  lifestyle needs, while allowing you to bet on yourself in a new venture, career change or next opportunity.

It could also mean outsourcing a key responsibility of your life (finances), so that you may prioritize on yourself or your family.

Or it could be as simple as just wanting a quick chat “pick me up” chat.

Don’t hesitate to reach out and let us know how we can help make that happen.

We truly enjoy helping clients to setup their financial G.P.S. and helping to steer it towards long-term security and financial independence.

If you’re early in the game and need the encouragement to start – we can help you clarify the best moves now.

If you’re late in the game, maybe early into a life transition or retirement – we can help you navigate the unknown.

Setting and achieving your goals for the year ahead can be a daunting process.

Just as your GPS provides you with step-by-step instructions to your desired destination, your own internal G.P.S. can do the same.

As always, our Private Client Advisors can help you “calculate the best route” for 2019.

The 2019 Game Plan begins and ends with our company motto:

Make.Life.Count.

How can we help you?

Best,

Doug

The post Purpose & Priorities – What is your Game Plan in 2019? appeared first on Lotus Group.

Have you ever met someone who is extremely successful that also seems completely happy and wondered what they were doing differently?  As it turns out they don’t have any secrets, they simply focus on happiness and success follows.

Happiness and success are subjects that have been researched and written about endlessly. Shawn Achor, who wrote the bestselling book The Happiness Advantage, conducted some of the best research.  He found only 25% of a person’s success is determined by their intelligence and technical skills, the other 75% is determined by three things:

1)      Optimism

2)      Social Connection

3)      Stress Management

The good news is all three of these things can be learned with a conscious effort, practice and time. His studies have also shown that success does not bring happiness.  When people who base their happiness on success achieve a goal the resulting happiness is short-lived before they set their sights on a new objective. Optimism, Social Connection, and Stress Management are imperative to success for good reason.

Optimism

It isn’t a surprise that optimists are happier and healthier than pessimists, so it makes sense that they are more successful as well.  Although pessimists see the world more accurately, it can come at the expense of their health, success, and happiness.  Some of us are naturally optimistic, but what about others who are naturally more realistic or pessimistic?  Fortunately optimism can be a learned trait.

Changing an attitude is as simple as changing the internal story that occurs during a negative event.  Pessimists tend to think of negative events as permanent (it will never get better), universal (everything is against them), and personal (this was my fault).  Optimists have the exact opposite reaction to negative events.  They tend to see them as temporary, having a specific cause, and not their fault.

All that is needed to change from pessimistic outlook to an optimistic outlook is to change the internal story.  Instead of permanent, universal and personal, consciously change the story to – a temporary setback that had contributing factors outside of your control that can get better. It may seem too simple to be true, but research has this process actually works.

Social Connection

Having friends and family to connect with, build deep connections with and to lean on when necessary is paramount when it comes to increasing happiness and success.  The more you give, the more you get, this is due in part to the law of reciprocity.  Reciprocity is so strong, that people feel obligated to return a favor regardless of how much they like the person that gave the favor or even if they did not want or ask for the original favor.  Reciprocity is its strongest when it comes to friends and family.

Stress Management

Stress has a presence in all of our lives and we have to deal with it on a fairly regular basis.  How someone handles stress makes a significant impact on their level of success.  The book Choke, by Sian Beilock studies stress and how top performers handle it.  Similar to optimism, changing the way you see problems is not only key in becoming a top performer, but also  in being a happier person.

The people that handle stress the best are people that see problems as challenges and are excited to conquer them.  The people that handle stress poorly see problems as threats and they worry about them.  If you interpret your bodies’ signals as you are in trouble and need to get out, you will likely ‘choke’.  There’s likely been a time in your life when a stressful situation caused you to ‘choke’.  Instead, try to think of the situation as a challenge and a call to action.

Make. Life. Count.

The wonderful thing is that the research has been done, and the process to being happier and more successful is proven, all you need to do is utilize it!  Make changes today to become happier and healthier and in turn more successful.

Take action, and enjoy the results!

The post Increase Your Success by Having More Fun appeared first on Lotus Group.

Did you know the language you speak has an impact on your disposition towards saving money and how you make financial decisions?

Part of the challenge we face with saving today for our future self is that in the English language, we speak of the future differently than we do of the present or past.  In other words, our future self is different from our present self.  This concept was detailed out in a intriguing Ted Talk by Keith Chen titled Could Your Language Affect Your Ability to Save Money?, and helps shed light into this phenomenon.

This language nuance feeds into a number of misconceptions about retirement planning.  This article will explore these misconceptions and address different approaches to help you overcome them and set yourself up for a lifestyle that you desire.

#1: I can put off saving for a number of years; it’s just not a priority right now

On the surface, this can be rationalized.  As your earnings increase over time, your disposable income also increases, thus your ability to sock more money away into your retirement savings will increase.

This thinking is flawed on a number of levels.

People who earn an increase in their income routinely choose an equally proportionate increase in their spending and lifestyle.  Nicer cars, bigger TV’s, more toys, a newer/bigger house in a more expensive neighborhood, the list goes on.

Making matters more challenging is that by forgoing the establishment of the behavior to save a certain % of your income when your earnings are lower, it makes it all the more difficult to establish that behavior later on.  There’s always something else that can be enjoyed now.

Equally damaging is the loss of years for your money to grow.  Time is the greatest asset for investors, and the real benefit of being an investor is the long term compound rate of return that your money will enjoy if invested in a consistent and disciplined manner over 20-30 years.

Think that a small amount of savings (or additional savings) is pointless?  Over a 25 year period, saving an extra $100/week will translate into an additional $400k with an 8% return.  Add another 5 years and it’s over $600k.  If you were to put off saving for 10 of those years, you’d need to save about $270/week instead of $100/week to hit the same number.

Overcoming this challenge starts with simply being aware of it.  Think of where you are today, and think of how it would feel today if you had made a different spending/savings decision 5-10 years ago, and it resulted in you having 30% more money in your retirement account.  How would that make you feel?

Saving early translates into your money working for you, instead of later on you having to work for your money.

#2: There’s no sense having a retirement plan when my life is likely to change so much anyway

This is an excuse, not a plan.  Everyone’s life changes, and unexpected things, both good and bad, will come up and alter the course of your life.  That doesn’t mean you should put off saving and avoid having a plan or a defined set of goals.  Doing so just means that you are only thinking of your present self, ignoring what your future self will want or wish you had done.

Retirement planning is an ongoing process, not a one-time event that lays out the exact course of the rest of your life.

A well-constructed plan serves as an invaluable tool to help you navigate the optimal course for your life…….the course that will give you the most options, the best understanding of implications of different choices, and the least of amount of unexpected surprises at critical milestones in your life.

#3: I love what I do, so my plan is to just keep working

First off, that is AWESOME!  Many people can’t say that about their career, so you should be commended for developing a career that you love.  That concludes the good news.

The notion that you can just continue to work forever and thus not need to save for your retirement ignores a hugely important factor.

Things change.

Laws, regulations, industries, markets, disruptive technologies……all are subject to or can drive dramatic change to the way things are done.  This means that there is no guarantee that your career as you know it today will be the same or even similar in 10 years or 20 years.  Think of the world we lived in 10 years ago, and how much things have changed.  Imagine what the next 10 years will bring in terms of innovation and change.

You can’t plan your retirement (or non-retirement in this case) around the assumption that things will stay the same.  That things will change is perhaps the only certainty that we can count on.  You do yourself a disservice and severely limit your options by not saving based on the assumption that you’ll just keep doing what you’re doing because you love it.

Your ability to succeed at your career may also change as a result of physical or mental ailments that become more common as we grow older.

Plan for the fact that life will be disrupted and you’ll be in a far stronger position to adapt and be financially secure.

#4: Maxing out my 401k is sufficient for my retirement savings

Wouldn’t it be great if IRS knew (or cared) what your specific lifestyle and goals looked like?  Limits on the amount that can be contribute into retirement accounts apply to everyone, regardless of lifestyle.

Saving the max allowable amount into your 401k (currently $17,500/year) every year for 30 years will yield you a retirement portfolio of around $2.5MM (assuming 8% return and 2% increase in contributions each year).  This would be sufficient assets to fund a retirement income of about $100k/year in future dollars.  Discounted back to today at a 3% inflation rate equates to a retirement income of about $3,500/month in today’s dollars.  And that is pre-tax.

So in addition to this likely being an under-funded retirement portfolio, every single dollar that comes out of your 401k in retirement will be taxed.  This means you have a lot of tax risk exposure.

Contributing additional savings into in a diversified set of retirement accounts, including taxable brokerage accounts as well as tax-free Roth accounts, reduces your future tax risk along with increasing your portfolio balance to better support your goals and lifestyle.

Most investors have more options available to them for saving than they take advantage of, so taking the time to understand your options and coming up a plan that utilizes those options and spreads your retirement asset tax base is a critical component of any financial plan.

It’s also one that your future self will thank for you having done.

#5: Since my kids will go to college prior to my retirement, I need to save for that first

Chronologically this is correct, but financially this is a mistake.  Saving for and paying for your child(ren)’s college expenses is absolutely a noble goal for which you should be commended.

However, saving for college expenses should not come at the expense of not saving for your own future self.  You lose a significant number of years’ worth of compounding returns, and in the end, you end up having to work more for your money than having your money work for you (refer to #1 above).

Perhaps most importantly, you don’t want to put yourself in a position where you are going to be reliant upon your children to take care of you or you would find yourself at an assisted living situation because you failed to take care of yourself first. It is worth considering and calculating the cost of nursing home care or home care services (contact NDIS Support Sydney for more info), or consider going to a center such as the Home Care Assistance 9050 W Olympic Blvd, Beverly Hills, CA 90211 (310) 857-4730 at https://www.google.com/maps?cid=4994661453016816924.

#6: An inheritance or financial windfall is going to come my way, that’s my plan

What if it doesn’t?  What if it is far less than you thought?  Enough said.

Literally everyone has a different view of what their retirement will look like, and the view that many middle-aged Americans now have is quite different than the perspectives of their parents.  There’s more focus on living for the now, enjoying the ride, worrying about the future later.

The optimal answer lies in the middle.

At its most fundamental level, Retirement planning is about giving yourself choices and avoiding unexpected or undesirable outcomes.

It’s about delaying some level of gratification by investing for your future self.  Along the way, limit your expenditures on the things that you don’t matter much to you, while pursuing your passions and living life to the fullest……

In other words, MAKING LIFE COUNT!

The post 6 Misconceptions about Retirement Planning and How to Overcome Them appeared first on Lotus Group.

Quantifying the value of any service can be difficult, and quantifying the value of the service provided by a financial advisor is no exception.  Vanguard is known in the financial industry for its low-cost funds, index investing, and has been spearheading the do-it-yourself movement.  However, they recently released a report using their very own data that found that investors who used an advisor had an average return over a full market cycle that was 3%/year greater than investors who did it themselves.

The above graph shows hypothetically how an additional 3% a year in returns compounding for 30 years increases the investors portfolio of $100,000.  The investor’s account value is nearly double if they use an advisor vs. do-it-themselves.

This is not from beating the market every single year, but rather from the guidance and advice that advisors offer during critical points in the market cycle.

Their data showed that advisors add value in 7 specific ways that contributed to the increased returns.

The 7 Advisor Advantages:

1)      Behavioral coaching: This is where advisors added the most value to client returns.  Investors who stayed disciplined through the most crucial times (market peaks and market valleys) values will add large returns.  We talk about this often as being the single largest contributor to generating long term returns, making good decisions and staying the course at market extremes.  The natural human tendency that many investors have is to take on more risk when the market is doing well because it seems safe to do so (since the market is doing well, it will surely continue to do well, right?).  And when the market breaks down and declines, the natural reaction is to sell and get out.  We speak about this often with our clients, that this is the exact opposite behavior that leads to real returns in the long run.

Dalbar produces an annual report called the Quantitative Analysis of Investor Behavior that we often cite, and the most recent edition shows the 20-year return of the market to be 7.81%/year, while the average investor returns from equity mutual funds is 3.49%/year.  This gap is entirely attributed to making the wrong behavioral decision at the wrong time.

2)      Asset Allocation: Investors who do it themselves often end up in an asset allocation that is driven by headlines and gut reactions.  This is important because it drives the return volatility and performance, which often leads one back to the behavioral decisions noted above (taking on too much risk at the wrong time, and taking on too little risk at the wrong time).

Investing in a diversified portfolio of securities that will deliver the right risk/return characteristics is a significant contributor to generating better returns over time.

3)      Cost Effectiveness: On average, investors using an Advisor saw an increase in return of about .45% related to fund fees.  This was primarily the result of being placed in lower-cost funds by the Advisor.

These savings can also come from the efficiencies of having all accounts in the portfolio managed together, thus avoiding redundancy and/or holding all the same positions in each account.

4)      Rebalancing: In order to reduce risk and volatility, investors must rebalance.  Rebalancing can take advantage of short term corrections of certain assets while reducing risk in short term highs of other assets.

Although rebalancing’s primary function is to reduce risk, it is also a disciplined and systematic way to buy low and sell high little by little over time.

5)      Asset Location: The knowledge of what types of accounts to have and how much to have in each account is imperative to building wealth.  Putting too much money into the wrong account can have tax implications which in turn hurt the returns of that account.  Choosing the correct types of accounts to invest in depending on their independent purpose can give you tax deductions, tax free growth, or tax free withdrawals.  Investors who do not take advantage of these properly leave significant money on the table by paying too much in taxes.

6)      Withdrawal order from assets: When the time comes of retiring, knowing which accounts to take from first and which ones to leave alone can leave investors with more money to use.  In general the correct formula depends on the investor’s situation, but it is usually best to use the tax free money last and use investment gains first.  Having the correct order of account withdrawals adds returns in the form of saved taxes and extending tax free money.

7)      Total return vs income investing: Instead of relying on the old rules of retiring, a savvy advisor can add longevity and stableness to investors’ money.  Decades ago investors could depend on bonds to provide the income necessary for retirement through their dividends and interest.

Now interest rates are hovering around all-time lows bonds do not have the interest needed to support retirement.  An advisor can help by using creative investments that have higher interest rates and growth than bonds.  Also, deciding what assets to take money from and which to let grow further can have significant implications on an investors retirement and having a knowledgeable advisor’s expertise helps immensely.

How To Capture the added 3%/Year

All together these portfolio improvements along with behavioral guidance and advice add 3% annualized a year to investor’s returns.  The majority of the added returns occur during market peaks and valleys which tend to be when advisors talk clients into staying the course and not getting greedy or fearful.

When investor’s returns deviate from what their friends and the markets are returning, people can have a hard time staying the course even though these strategies can potentially have much greater returns in the long run.  This can have added benefit of potentially greater returns over time, but are also more challenging in the short term market peaks when the US market is the best performing asset class.

Successful investors find an advisor that they trust and will take advice from and simply follow their guidance.  This adds more in returns than any sort of fancy investment strategy can possibly add.  Find yours and your added 3% a year in returns will compound to a fortune through your lifetime.

The post Vanguard study finds how much value is added by advisors, and it’s a lot. appeared first on Lotus Group.

In the US, 45% of people make New Year’s resolutions.  The third most common goal (behind losing weight and getting organized) is spending less and saving more.  Sadly, only 8% of people will achieve this goal because they don’t have an action plan to help them do it.  Although their intentions are the same as the 8% who achieve their goal, they do not get their desired results. (1)

Here is a 3 step plan to achieve your financial New Year’s Resolution:

1)      Find out where you are spending your money

2)      Plan how much you can save

3)      Automate

Find out where you are spending your money

In order to spend less and save more you must know where you are spending money. There is no shame is asking for help, either from friends and family, a professional consultant or a finance program/app. Technology has given us excellent means of tracking our spending, using the best personal finance tools for 2018 can help turn your finances in the right direction. Once you have a solid understanding of where your money is going, you can then make a thoughtful decision as to where you can cut out spending,  that will not affect your lifestyle or happiness but you still need to make sure to get personal guarantee insurance.

The best way to easily see where you are spending your money is a free program – mint.com.  Mint shows you where you are spending your money by category, merchant, or date,  it’s quite flexible.

The beauty of mint.com is that once you set up an account, which takes all of 7 minutes, it does 85% of the work for you.  It automatically categorizes your transactions for you, and then if you want to go in and spend some time cleaning up or re-categorizing you can.

For example, if you’re an everyday latte drinker, an easy place to save some cash would be to cut them out at $4/each, but if you in fact love lattes and they make you a happier and more productive person, then don’t cut them.  Another example might be if you look at your spending and see that you’re spending a lot every week on eating out for lunch with co-workers, but you don’t actually enjoy it (or don’t see at being the healthiest option), then  cut that out of your spending and bring your lunch to work.

Going at it using this detailed approach will help ensure that you’re able to reduce spending without cutting your happiness.

Once you see where you’re spending, decide where to cut and start a savings plan.

Plan a certain amount to save a month

Now that you know where you’re spending your money, you can develop a spending plan to figure out exactly how much to save every month.  Here is a link to the tool that we use with our clients (click on the link under the title): Template – Spending Plan

This spreadsheet can help you stay on track as well as identify where things are going well and how things are breaking down.

Automate

The next step is to automate as much of this as you can.  Instead of trying to save money by spending less then depositing what is left over at the end of the month, to increase your odds of success take out what you are saving every month at the beginning of the month.  That way you don’t have it in your account to spend through the month and the temptation is out of your hands.

Check out our video for a step by step guide on how to automate: Automate Your Finances

Automation can be set up with nearly every bank and investment account.  The best thing to do is to have the account you are saving into pull money from your account the day after you get paid.  So if you get paid the 1^st and 15^th, have your desired saving amount pulled the 2^nd and 16^th.  That way the money is cleared to transfer, but you will not have it long enough to spend.

Keep it up

The most important thing to keep in mind when going through this, is that savings and being disciplined about your spend is a marathon and not a sprint.  If you miss a month of saving it will not matter as long you pick it up again the next month – assuming of course that the pattern does not persist!

To make it easier to track your savings goal, set a monthly or quarterly savings amount and track against that, rather than a large yearly goal. This will make it more attainable optically as the numbers will be smaller as well as give you check-in periods periodically to see how you are doing against your goals.

1: http://www.statisticbrain.com/new-years-resolution-statistics/

The post Financial New Year’s Resolution Starter Kit appeared first on Lotus Group.

Black Friday is this week and it is the greatest test of your financial behavior of the year.

The promise of getting the most incredible savings of your lifetime on that TV or computer you’ve been eyeing all year, as well as the chance to get all your holiday shopping done in one day.  Oh, how sweet it sounds!

Black Friday is the single most advertised shopping day of the year, and retailers pull everything out of their bag of tricks to get you to spend as much as possible in the pursuit of a ‘good deal’.  But proceed with caution, these ‘good deals’ are not what they seem and can lead you to big money mistakes.

Door buster deals for people are like catnip for cats, we just can’t stay away.

The Allure

Retailers have become masters of making consumers believe that they are there getting a once in a lifetime deal on Black Friday.  Further, they build the emotional trap to make you feel like you’ll completely miss out if you’re not there when the doors open before the crack of dawn with your Thanksgiving feast still digesting in your stomach.

What most people don’t realize (or care to think about) is that retailers have what are called “loss leaders”, which is the crazy cheap TV or the 50% off computer that turns you into a ravenous consumer ready to purchase more.  They are not discounting for charity, these loss leaders get you in the door to spend more money than you had planned.

The Trap

The problem is, on your way out you are likely to pick up a couple of movies from the $10 bin and some gold plated cables for your new TV.  Oh, and don’t forget the new game for your nephew, it’s projected to sell out before Christmas, better buy it now before it’s too late.  By the time you’ve fought through the crowds and make it to the checkout aisle, you’ve got a cart full of stuff you never knew you needed and have spent way more than you thought you were “saving” by being there in the first place.

Retailer’s ploys continue to work year after year.  Last year during Black Friday weekend, which has been expanded to include Thanksgiving Day, retailers put up some very staggering numbers:

–   Total spending on Black Friday weekend was $59.1 Billion

–   139.4 million people shopped Black Friday weekend, nearly 1/2 our population

–   The average American spent $423 during Black Friday weekend

–   Walmart served 22 million customers on Thanksgiving Day alone

–   Walmart sold 1.3 million TV’s and 250,000 bicycles during Black Friday

Those are eye-popping numbers on a massive scale.

The Tactics

Scarcity – only 50 T.V.’s available!

A game they like to play is perceived scarcity of the products that you are looking to buy.  They will limit the number of door buster items to get you in line earlier.  Even if they don’t limit the number, you may assume that they will sell out unless you get there at the crack of dawn.  Overall, this perceived scarcity helps get people in the door early, as no one wants to be 51^st when there are only 50 door buster TVs.

Sunk cost – after all of this work, I have to go home with something.

Even if you are too late and don’t get the item that you woke up early for, you tend to stick around and buy things. You woke up at 2am, drove to the mall and found parking.  After all of that effort you must leave with something or the entire trip would have been a waste, and you’d having nothing to put on your Facebook page.  The best thing to do would be to call it a day and leave empty handed, instead you stay and shop until you find something that’s ‘worth’ it.

Pain anesthesia – how retailers make the prices hurt less.

Retailers pull everything out of their hats for this one-day super-sale.  You will find store credit with purchase, instant rebates, low or no interest layaway.   All of these are designed to make you spend more money. They are distractions to further distance your focus from what you are spending.

How to take advantage?

This isn’t rocket science, but behavioral finance rarely is.  When the 50 pages of ads come out, toss them aside.  When the commercials air during the football games, turn the channel. When the radio is blasting in your ears about amazing steals, switch the station.  Remember this, Black Friday deals were invented to make people behave like idiots.

So how do you take advantage of the undeniable great deals?  Stick to your list, and if you can save big money on an item on Black Friday, then GREAT!  Better yet, focus on trying to find the items on your list on the web, so you can stay focused and not get stuck in the store feeling like you need to buy something.

Remember, if you don’t need something at regular price, you don’t need it just because it’s 25% off either.  By sticking to your list and saving some cash on the items you actually need, you can turn Black Friday back in your favor and not into the trap that the masses fall into.

The post How Black Friday is Designed to Make You Behave Like an Idiot appeared first on Lotus Group.

FOMO Defined

FOMO, or the “Fear Of Missing Out”, can lead to a fun, spontaneous life, but it can also lead to financial ruin.

We’ve all heard the age-old saying, “The best things in life are free”, but in reality, living a fun-filled life of travel and adventure requires a constant flow of cash.  Unlike their predecessors, Gen-Xers and Gen-Yers are much more interested in living in the now, a lifestyle more focused on instant gratification.

Of less importance is suspending life’s luxuries in favor of delayed satisfaction and saving for the future. The implication of this behavior is that money, and a lot of it, is being spent now and isn’t going into savings that will lead to financial freedom and stability in the long run.

The Allure

You’re sitting at home on a sleepy Friday evening, content with your glass of wine or a beer and a movie when it happens.  You get a text from a friend spontaneously requesting your presence for a fun night out. Your initial reaction is a quick, “nah”, but with just a tiny push from your friend you start thinking about what you could be missing out on, who they might see, what memories they might create without you.

FOMO isn’t always nights out, it comes in a variety of disguises.  Sometimes it reveals itself in trips, concerts and other experiences. It can also be shopping that induces FOMO. You fear missing out on fitting in, having the latest fashion, enjoying the best TV watching experience, not being able to play Madden on the newest gaming console, and so on.

Financial Implications

This gut reaction, undisciplined spending style is the exact behavior that forces people to live paycheck to paycheck seemingly never able to catch up, let alone get a step ahead.

FOMO quite literally denies people the most basic level of financial freedom, an ample emergency fund and a growing retirement portfolio.

To be clear, financial freedom does not entail an inactive or a meticulously planned lifestyle, but it does require a strategy that includes saving a set amount every month.  You can still live an exciting, adventurous life; you just need to temper that with a bit of discipline.

Counter with a Lifestyle Plan

Budgets don’t work for the same reason diets don’t work, people simply aren’t disciplined enough and don’t want to live a confined life.  The ones that do work don’t overindulge, but they still allow some of the good stuff.

To conquer FOMO you need a lifestyle plan that negotiates the right balance between saving and spontaneous luxuries.

So how do you do that?

Implementing FOMO Protection

Creating a lifestyle plan and sticking to it takes a lot of expertise and work that normally require a professional to help build it correctly who can also hold you accountable, but that doesn’t mean you can’t get started on your own.

1. Get a handle on your fixed monthly expenses, such as rent/mortgage, car costs, utilities, cell phone, TV, memberships, insurance, etc.  Are there areas you can cut some monthly cost?  Are there things you spend money on each month in a fixed manner that aren’t really that important to you

2. Determine how much you should be saving each month for your long term lifestyle and financial stability.  This could be retirement savings or emergency account savings, but it is the ongoing maintenance and support of your lifestyle.  It’s imperative that you have a plan to save the amount necessary to ensure you get to where you want to be down the road in the short and long term.

3. Whats left over after your fixed expenses are paid and your savings are taken care of is your monthly discretionary spending (groceries, dining, clothing, etc.) and your FOMO spending.

The key here is automation.  You must automate your savings every pay period or every month to ensure it happens and that you are paying yourself first.

Where people get it wrong is putting their discretionary and FOMO spending before their savings, making savings the ‘whatever is left over’ pile at the end of the month, which is often nothing.

With a properly crafted lifestyle plan, when you spend the last of your FOMO money for the month, there is no mo’ FOMO for you!

If you’d like guidance on crafting your lifestyle plan, or help figuring out how much you should be saving to hit your short and long term goals, send me a note and we can discuss.

The post The Financial Implications Of FOMO (The Fear Of Missing Out) appeared first on Lotus Group.

The pulse of Awolnation’s Sail is flowing slowly, steadily and intensely through my headphones.  Sweat is dripping from my brow onto my hands as I keep peddling faster despite the burning in my legs, but I hardly notice as my tires hum on the asphalt.  I am experiencing flow and have tunnel vision on the hill ahead.  All I can think about is tackling the hill and what is on the other side when suddenly I hear a loud snap and my right leg violently flies off the pedal.

The Challenge

The 30 day biking challenge originally came about because I was having trouble making it to the gym, but there were added bonuses as well.  I hate the commute to work and this would be a way to forgo rush hour traffic.  Could I solve all of this by simply making it a habit to ride my bike to work, meetings, and around town?

I also am always finding new ways to save money and relaying them to my clients. This challenge provided solutions I hadn’t even been looking for and there were only two rules:

1)      No driving allowed in the city of Denver for 30 days.

2)      Be safe.

Benefits

Save Money

The money saved was on more than just gas; I saved on vehicle upkeep, parking, and tickets.  I help people save money every day, and although extreme, during the challenge I was practicing what I always preach.

Be Happier

Warren Buffet famously said that he tap dances to work.   I always had trouble with this quote because even if you love your job, there is no one that loves the commute to and from work, especially when you’re dealing with Denver drivers.

By the end of the 30 day challenge I could understand where Buffet was coming from a bit more. I came to truly enjoy the serenity and Zen of getting to and from work. Biking relaxed my mind and I was able to come up with some of   my best ideas and brainstorms during my commute.

Every day was granted a positive start, no matter what was in the calendar. Plus the ride home was also a chance for me to clear my mind; I arrived home without any baggage from the workday.

Be Healthier

Biking is an all-around very healthy thing to do, without the wear and tear on your body and joints that can come from weightlifting or running.   With minimal effort I was active and burned calories throughout the day.

Riding

To keep the challenge accurate and simple I used MapMyRide, a free iPhone app that tracks miles, time, calories, and routes, among many other things.

Here you can see the tracking from a few weeks in:

My bike is what I would consider ‘garage sale quality’ (see below), so I wasn’t necessarily expecting smooth sailing throughout the challenge, but overall riding was much easier than I had anticipated. Fortunately Denver is full of great bike paths and bike routes that take you wherever you need to go.

Surprises

1)      The biking challenge certainly cost me some extra time in commuting, although not as much as I had predicted.  Biking around the city of Denver is often just as fast as driving if not faster.

2)      I broke, and therefore had to replace parts that cost more than I had expected, including a stem for the handle bars – $25, a pedal – $27 and a tire – $32 with a grand total of $84 spent on the bike.

Results

I spent around 14 hours on the bike, which took me 184 miles and burned around 7,878 calories* which is equal to 2.25 pounds of body fat.   My car gets 20 miles a gallon, so I saved 9.2 gallons of gas and decreased my carbon footprint by stopping 180.7 pounds of carbon dioxide (CO²) from being released into the air**.

I saved about $72.50 on gas and parking with gas prices at $3.50, but spent $84 on bike repairs and came out spending an extra $11.50.  Although I did not save money this month, as I continue to ride my bike I will start to save as repairs have already been made.

Most importantly I felt better and over time learned to focus on deep thinking and meditation during the ride.

As my pedal snapped at the beginning of this article, and my foot flew off my bike, I did not panic.  I gently tilted and corrected, and rode the rest of the way with no pedal.  I did not stress or worry, as I would have done if something would have happened to my car.  Instead I kept my focus on the hill and the ride.

Take Away

The challenge shows that making small changes in your life can lead to various large impacts.  When you make a positive change in one area of your life, it bleeds into other areas and inherently your life is improved.  On the flip side bad decisions and behavior have the same affect; this is where the phrase ‘downward spiral’ comes from.  Unfortunately the phrase ‘upward spiral’ is not commonly used, but it does exist.

Our lives are the sum of every choice that we’ve made, and by deliberately making choices that have positive impacts we can shape our lives to be healthier, happier and richer.

Because of the 30 day biking challenge I will be a bike riding regular and will continue to ride my bike to work and meetings every day that time allows.

*Calories are estimated and are a mixture of calculations from MapMyRide, and a formula written by Dr. Edward Coyle of the University of Texas who has worked with athletes to measure their calorie burn rate while biking.

** Calculated using U.S. Energy Information Administration calculation: http://www.eia.gov/tools/faqs/faq.cfm?id=307&t=11

The post 30 Day Biking Challenge appeared first on Lotus Group.

When you say to a new homeowner – “Congratulations on your new home!”  What you’re really saying is – “Congratulations on $400,000 of new debt!”

Owning a home is part of the American dream, for better or worse.  If executed correctly, home ownership can absolutely add net worth in the long run. However, it can also lead to being ‘house poor’ and push retirement back by years if mistakes are made. In case you are facing foreclosures, experts in the field can help by offering you a fair price for your home very fast.

We have not seen a real estate market like this in a number of years, and likely will not again for some time.  It seems like everyone is buying a home, but should you?

Don’t allow yourself to get caught up in the hype and make costly mistakes.  Buying a home is the largest purchase you will make, and has a larger impact on your finances than anything outside of your job. Sometimes a mortgage, or refinancing options, even a loan from family is required. Check out HouseBuyerNetwork.com to make the home-buying experience straight forward and stress free.

Why is the real estate market so crazy right now?

1)    Interest Rates

Rates are starting to creep back up, according to Eric Kuchinsky, property sales manager for Redstones Willenhall,  “Home rates remain near the historic lows of last year, but a small change in percentage points could add up to a lot of money over the life of the loan.  We are seeing people that have been waiting rush in to get a mortgage now before rates rise.”

2)    Supply and Demand

Scott Boyer, a top Real Estate agent in Denver shared his thoughts on the current Real Estate market.  “If the listing agent has a house last through a weekend, they are not doing their job.  A successful broker used to be judged by the amount of for sale signs that they would have up, now if you have signs up you are not selling fast enough.”

The inventory is low because the retail buyer, the mom and pop investor, and the institutional investors are piling into the market.

Blackrock is an investment firm that currently holds more than 26,000 homes and has spent $45 billion buying them.   Home prices across the country have risen 11% this year, and rents have only risen 2.4%, so at this point if you have not gotten in the market yet, it may be too late to make financial sense.

Houses are going for well over their asking price in just a day or two, and as a result we have been asked more home buying questions than ever.

Mistakes to Avoid

Home ownership costs a lot more money and time than advertised, and avoiding these mistakes will help you down the path to the American Dream, rather than the broke, in debt, American Nightmare that plagues many Americans.

1)    Using your emergency account for the down-payment

Having an ample emergency account that contains 3 – 6 months of income is step 1 to financial success, but they tend to get raided for down payments because of their size.  This is your lifeline and cushion should something happen to prevent taking on more debt, that is why you should know what is down payment assistance in Texas or any other state you are currently located. The down-payment must be saved for outside of the emergency account.

Additionally, homeowners need more in their emergency account than renters.  A homeowner has a lot more financial responsibility, and one water main break or bad storm can wipe out an ample emergency account.

2)    Spending more than 25% – 30% in monthly income

A healthy cash flow spends no more than around 30% of monthly income on housing.  Spending more than 30% is not prudent, and can have major credit and lifestyle impacts.

3)    Spending too much on a house

The age old rule of thumb is to spend around 2 to 2 ½ times your annual income on a home.  So if you make $80,000, you should spend between $160,000 and $200,000 on a home. Visit Danny Buys Houses for professional real estate services which let you buy a home at a great price.

4)   Forgetting about extra costs

The true cost of owning a home is much higher than the mortgage paid every month.  To get the true cost, you need to add in the property taxes, utilities, maintenance, repairs and services like gutter installation Loveland, and home insurance, and where applicable, HOA fees, mortgage insurance, and closing costs. Check out GettysburgGutterGuards for reliable, affordable gutter cleaning services.

5)    Buying somewhere you don’t plan on living for 7 years or more.

Writing a large check to your landlord every month can feel like a waste of money.  After all, you are not earning anything on it. But if you buy a house, and have to sell for any reason inside of around 7 years and don’t choose a company like HomeBuyerCA.com, you will very likely lose money due to closing costs, commissions, and other expenses.

6)    Not paying attention to your credit score

A poor credit score can add tens of thousands of dollars in cost to buying a home.  Find out what yours is and how you can improve it before taking on a  mortgage.  Check out this graphic to see what different credit scores yield in monthly payments and overall costs.

Planning for home ownership

The best way to approach home ownership is going in with a plan that takes into account your current cash flow, accounts, and most importantly your future plans.  These variables drive if you should buy a home or not, and what you should pay for a mortgage and a down payment.

A long-term plan will help you understand the implications of home ownership on your retirement, cash flow, investment accounts, savings accounts, and credit.  Talking with a professional Advisor beforehand will help ensure you get the right amount of house, and will set you up for the best financial future.

The post 6 Home Buying Mistakes To Avoid appeared first on Lotus Group.

Close your eyes (only for a moment and then keep reading!).  Now imagine you managed to ‘find’ a few extra hours every week.  In fact, imagine that you have more time than everyone else around you.  You can spend your extra few hours on anything you’d like, whether that be closing an extra deal, or going on a long date.

Think hard, what would you do with a few extra hours every week?  How would you spend that new free time?  How would gaining extra time change your life, or would it?

Hacking Time

There is one thing in the world that you can never earn more of, and that’s time.

This is why outsourcing exists, to free you up from tasks that you don’t want to do or that don’t improve your life, so you can spend more time on things that you enjoy and that add more value to you.  The tasks that make you feel bogged down, but that you have to do, should be first on the chopping block.

“Lost time is never found again”, said Benjamin Franklin, and time spent on tasks that you dislike, and that you can hire an expert for, is in fact lost.

Of course outsourcing only adds value to your life if you use your extra time productively.  If you instead sit in front of the tube to veg out you’re simply spending money without adding any value.

Develop Your Expert Team

Not only do you free up your time outsourcing, you also hire an expert.  A personal cook can probably cook better than you, a maid is likely to clean more efficiently, and an investment advisor should be better at guiding you to a successful financial future. Many people always consider hiring experts to help them out with marketing, if you don’t like the idea, why not find out more about hiring agencies here before you give up on the idea.

Get CreativeTake time to handpick and develop your team, then lean on them to take over your workload that doesn’t forward you to your future goals.  This way you can focus on the big wins, such as getting a promotion, landing a new client, or beating your personal record in a hobby.  Go ahead, launch yourself to the next level.

To make the most of outsourcing, think of something that will really help change your life.

For example, have you ever tried to work your hardest and focus on the task at hand, only to semi-consciously login to Facebook and waste a few minutes?

This happened frequently enough to Maneesh Sethi that he outsourced his attention span to someone else.  Maneesh hired a woman named Kara to slap him in the face every time that he strayed onto a social media site ⁽¹⁾.  And guess what happened?  His production quadrupled from when he was working without the pressure of slaps to keep him on task.

This isn’t the only case of creative or strange outsourcing, but it deals with a very common problem.  People often get off task due to the endless entertainment of the internet.  Each has his or her own favorite online distraction, whether it’s Facebook, YouTube, BuzzFeed, checking stock tickers, etc. Let’s call these ‘vice sites’.

How much would your production increase if you actually felt physical pain if you visited your vice site?  As crazy as it sounds, it may be worth hiring someone, or something, to keep you on track.  It can add hours per day to your life and drastically increase your output and results.  How much is your time worth?

There are of course other ways to stay on track and outsource your attention.  The best and most popular is Chrome Nanny ⁽²⁾ which blocks sites for a certain duration or time of day. Think about some of the distractions and useless time sucks that are in your life.  How can you creatively minimize or eliminate them?

(1)    Maneesh Sethi

(2)    Google Nanny

BONUS: Interview With An Outsourcing Expert

Dave Hensley built his business, a photo and document scanning service (www.scangaroo.com), by leveraging outsourcing.  He has gone through the trials and tribulations, and knows how to outsource and leverage Virtual Assistants as well as anyone else out there.  He shares some of his insights with us below.  I have bolded the best parts for those of you with short attention spans, enjoy!

Tell me a little bit about how you got started outsourcing.  What was the first thing that you outsourced?

“The first thing I outsourced was a job to build index books of the photos that we scan.  Actually, I didn’t end up hiring anyone for that.  I didn’t get a great response on that job posting because of how I wrote the job description. I learned that a lot of it depends on how well you write your ad and how detailed you are. 

You are dealing with people that may not have the best communication skills, and their English can be limited.  If you use slang or references, someone overseas may not get that.”

What was your first successful outsource?

“We do a number of scans of old slides like the ones that you put up on the wall in the living room and the whole family would gather around.  Those have gone by the wayside and people have boxes of these lying around decaying.

We have a scanner that scans the image with a border around the outside.  So someone has to crop out the border on each slide for the image to be pure.   I had gotten quick at doing it, but my time is better spent correcting the color back to the original state.

I was very specific in the ad, even with the software to use while cropping the slides.  I get screen shots of what they are working on, so I get to check in on them and help them get better at their work.”

So you actually train your virtual assistants?

“Yeah, you can.  Out of the group of responses I had the top 3 hired for the first job as a test.  One at $1/hour, one at $2/ hour, and one at $3/ hour.   I used this first job as a test to see their efficiency and skills, and ended up hiring the $1/ hour guy.  He listened better, was the quickest, he wanted feedback, and cared about the work.   He wanted to make sure that he was doing the work the right way, and asking what he could do better.  This was his first job; he had no experience and ended up being the best option for us.

The best way to do it is to identify a job that is not the best use of your time, set up the job, and hire a few people for it.  Whoever you like the best at the end of the job is the one that you will hire for the services down the line.  You have to do a little bit of work to get exactly what you want, but if you put in your time it is well worth it.”

What other tasks have you outsourced?

“We have a list of different places that want to have guests, such as radio stations and other interview opportunities.  We needed the list narrowed, and organized, so we hired a Virtual Assistant to do this for us.  Eventually they will also be sending out templates that we’ve written to the list.”

How do you decide when your Virtual Assistant graduates to a more complex task?

“What you decide to do with the Virtual Assistant depends on how they do with their previous tasks.  You find a great Virtual Assistant: you keep testing them and growing their talents.  As they prove themselves you move things into their pile.  They are almost like an employee. You can give them bonuses and raises, but they are on contract work.  I just gave my $1/ hour guy a raise based on his performance.”

How do you choose what to outsource.

“If you go through your day and write things down you will see that a lot of your time is spent doing busy work and is not building your business, and your time can be better spent elsewhere.  These tasks are the best places to start.”

What are you looking at outsourcing in the future?

“Identifying potential customers and leads.  Say we want to do a campaign and get a mailing out to every historical society in Colorado.  The old model is to dig on the internet, ask around and pull out the phone book and make calls, and this takes a lot of time to do.  The new model with a Virtual Assistant is to say, we want to list of every historical society in Colorado.  We want their phone number and email in an excel spreadsheet, and we want it delivered on this date, that’s what texting solutions for small business are for.”

You’re outsourcing part of your marketing strategy up to finding leads and building lists, have you looked at outsourcing and implementing part of the marketing or call strategy.

We actually show them where we are in each step, and they understand the process and where they are in the overall scheme. We’ve referred a myriad of websites like https://www.salesforce.com/hub/crm/improve-customer-service-with-b2c-crm/ on how customer service can be enhanced, as that’s one aspect which cannot be compromised. We’ve built in Virtual Assistants in our process maps already with our customer satisfaction.  They send out the meeting reminders, confirmations, and thank you cards.  We have the templates and formats built out to where our Virtual Assistants are part of the process.

What is your advice for someone looking to start outsourcing?

“Start by identify one thing to outsource to get the experience of how it works.  To learn the most you have to act and do.  For example, every business needs a list of leads. A Virtual Assistant can mine data online, which is very time intensive. They can also piece together the data on your spreadsheet.  Then you can focus on how to best reach those people.”

Any last thoughts or suggestions?

“The biggest piece of advice is to try it.  If you try it and it’s a failure you will only be out $10–20 dollars to find out that it isn’t the right job for that person.  You can spend many hours and days interviewing people and training them and they don’t always work out.

To make it easy you can have them carry out a very small task that is easy, then you will see how it works, and once you feel more comfortable you can outsource bigger and more important jobs.”

The post How to Improve Your Life Through Outsourcing appeared first on Lotus Group.