Menu

Securing Family financial futures

0

One of the smartest things I have done since retiring is to learn about financial literacy. After being a direct mail printer for the last forty years I thought I knew how to manage money. After all, I had a house that was almost paid for, I had a wife, family, and three cars. I had several collections of valuables and hobbies to keep me busy the rest of my life. That should have been enough for me to be content. But I still wanted more.

I still had a few items on my bucket list that I still wanted to be able to check off that list while I still had my health. Success, in my mind, was how much money I had access to. Even though I have been blessed with good health, I still felt I needed to accomplish more.

I did not want to just become a couch potato and watch TV for the rest of my days when I retired. My wife told me that I had earned it. I did not need to work. I should be happy in my retirement years not doing anything.

This was not enough for me, though. I had been working with my hands since I was 16 years old, and old habits are hard to break. At 68 years old, you would think that slowing down would have been a good thing. Now I knew hard physical labor was out of the question. I’m no longer bullet-proof. But deep down I felt I needed to do more.

Getting back to my bucket list, I have a new desire in helping people avoid the mistakes I made financially. I want their retirement years to be free from money worries. Now that I have been educated in financial literacy, I want to be a blessing to others by passing the torch, so to speak.

“The biggest expense you’ll ever have isn’t your house or your car. It’s what you don’t know about money”

Let me ask you a simple question.. “If your paycheck stopped today, how long could you continue living the way you do now?” For most people, the length of time would be very short. What could you do to stretch out that length of time to not have to worry about that next paycheck?

Financial Literacy isn’t about becoming rich – “it’s about making sure your money serves your family instead of your family serving money.”

A New Investment Strategy

I’m not here to sell you anything today. I’m here to share information that most of us were never taught in school – information that can change the financial future of your family. Let me ask you another question: “If someone had shown you a better way to build wealth, reduce taxes, and protect your family years ago, would you have wanted to know?”

One of the things that financial literacy has taught me is consistent savings along with compound interest leads to wealth. One of the many financial products today is the Indexed Universal Life, or IUL, for short. I may have said this before, but had I used the 1031 exchange to reinvest my 401(K) into an IUL, I would have created a retirement account that would provide income for life!

A goal

Mime - A goal without a plan is just a wish

The first commercially available IUL policy was introduced by Transamerica Occidental Life Insurance Company in January 1997. It was a life insurance policy that allowed the interest being earn to mirror the S&P Index. If the S&P had a positive return that month, the life insurance policy would reflect that positive growth. Another key component of the IUL is when the Index fell in value the IUL would not fall, it would just have a “0” percent growth for that month.

This is one of the best growth strategies anywhere because your money not only grows along with the Index it is tied to but it is also protected from falling! Some months your money will grow up to the cap rate, whatever the policy is set to. The cap rate is a ceiling, or maximum amount your policy can grow. An example is if the cap rate is 13%, if the Index rises 18%, your policy only gets credit of 13%. By the same token, if the Index falls to a negative 3%, Your policy is only credited with a 0% growth for the month.

As in the two charts below, the top chart shows your money growth in the stock market with its up and down swings and what happens to your money. In the bottom chart, this shows the results of your money in a protected account like the IUL where your account never loses money.

chart that shows the result of a downswing in value
Chart shows result of an IUL account value in index downswings

Text content

The differences in the results of the stock market index downswings was something my financial advisor never explained. I had always thought that once the stock market recovers that my money would start growing again. Boy, was I wrong! This is the main reason I became a financial advisor – to educate people about the advantages of life insurance.

As a financial professional I am so excited to provide this protection to everyone. Stay tuned for new developments coming soon..

Related Posts

Is Dave Ramsey Wrong?

Back when I was an employee and trading my time for money, I was a follower of Dave Ramsey’s philosophy. I listened to him every day on the radio while going to work. His process seemed logical. Debt is bad. Any debt, according to uncle Dave, was bad. He was a big supporter of ”Term” insurance and preached permanent insurance is a fallacy. Dave said to invest into mutual funds as well as your employers 401(K) plan to grow your money.

I was a direct-mail printer for most of my life. I had a 401(K) fund with my employers, and I faithfully saved 9% of my income every month. I realize that Dave preached 15%, but I just didn’t earn that much. Then I lost my wife in 2010 from her Chemo Therapy treatments for her lung cancer, so my income was only half as much as before. I knew that I was going to need some form of income after I retired because my 401(K) wasn’t going to last.

Before I retired I was invited to attend a real estate seminar in my area. It was sponsored by Than Merrill, the HGTV home improvement star. This seminar had opened my eyes for the first time. I actually understood everything that they were talking about. I learned there was a different form of debt; it is called good debt. This was totally foreign to what I had been indoctrinated about for my financial foundation, to avoid debt like the plague. This was the opposite of everything that Dave Ramsey preached. In real estate, debt is a tool that can be used to earn money. You can use debt to NOT pay taxes. This concept was never taught to me in school. It was like opening my eyes to see what was possible.

I learned there are two types of debt; Good debt, and Bad debt. Consumer debt, which is the debt that Dave always talked about, was the “Bad Debt”. “Good debt”, something that Dave never mentioned, was using debt as “leverage” to buy properties with OPM (other People’s Money). As an investor if you can show that there is enough money left over after paying for the purchasing, rehab, marketing, and closing cost of a property, the money will come. I was looking forward to a new career in real estate where I wasn’t trading my time for money. Plus the fact that I wouldn’t be limited to how much money I could earn was also very stimulating.

I retired in the summer of 2023. Just before I retired, the stock market had a correction, where my 401(K) lost about $4000 before I could get the hemorrhaging stopped. This left a very bad taste in my mouth. Of all the time for my retirement plan to lose money, was when I needed it most! The philosophy of Dave Ramsey to invest and forget was giving me profound complications! This was the first lie I realized I was sold in 2003. All the financial advisors back then were telling all of us employees the same lie.. To invest your money into the company sponsored 401(K) plan. This will defer the taxes you would be charged on this money to later when you retire.

No one wants to pay taxes, right? This sounded like a good idea. These same advisors are also telling us that by the time we reach retirement age, we will probably be in a lower tax bracket, so consequently, we will be paying less taxes. Did you hear their “probably” explanation?

Think about that last statement.. [we will probably be in a lower tax bracket, so consequently, we will be paying less taxes.] OK, answer this question.. When was the last time you remember the government ever lowering your taxes? In 2003, for some reason, this sounded logical. After all, these were financial advisors with college degrees. They must know more than we do, right? For all the years that I have been working, only twice did the government ever balance their own budget. So for me to be believe that the government’s intentions were good, was of course, a mistake.

Fast forward to 2024. Once I saw the amount of my 401(K) account that somehow I had to make last, I learned a very valuable lesson: that 78% of all American retiree’s face this same bridge to having income last a lifetime.

If you remember I said earlier that I knew I would have to earn some type of income after I retired because I still had a house payment plus living expenses. I knew I didn’t save enough money throughout my lifetime to become a “couch potato” in my retirement years. Since I didn’t have the luxury of time on my side to teach myself another occupation, I decided to take a shortcut and hire a mentor to hold my hand while I learned the right way of buying and selling properties. I could loose a lot of money quickly if I made any mistakes. I needed a way to become successful in the shortest amount of time.

Several thousands of dollars up front and I would have a ready-built system with an advisor to talk with 24/7. This sounded like an affordable option, considering the money and time I would save from learning the hard way.

I had decided to chase foreclosure properties as my niche. After all, this was 2023, and there were a lot of property owners facing foreclosure because of Covid-19. The government had told homeowners they would install a “forbearance” program to stop any foreclosures because homeowners couldn’t afford their mortgage payments. A Forbearance is a double-edged sword, meaning it can help but it also holds significant consequences if not used correctly.

These homeowners didn’t use this program correctly, so consequently, many of them found themselves in default on their mortgage. I made every payment on time, so I was not effected by this program. Others, however, instead of making their mortgage payments, they opted to go buy a new vehicle, or found something else to spend their money on. When the forbearance program was ended, all those payments were due immediately!

Many homeowners had not made any mortgage payments for over two years! They found themselves owing thousands of dollars! This is the reason I decided to chase foreclosures.

My First Real Estate Deal

My first real estate deal looked like a deal made in heaven for me. It was a duplex property in the newer part of the city, The property was about 15-20 years old, 3 bedrooms, two bathrooms, 2 car carport. It was listed in the Parish (Louisiana has Parishes, not Counties) sheriff sale. On the city’s sheriff sale website it displayed only $15,150.00 owed on the property. The current value of this property on Zillow.com showed an estimated value of $174,000.

The man I talked to at the property was the son of the property owner, and he had recently placed his mother into the nursing home because of Alzheimer’s disease. He claimed he had no idea the house was in the sheriff sale. He was interested to learn all his options on the property since he had a Power of Attorney document for his Mother.

I explained to him he had three options: pay the arrears to get the property out of foreclosure, sell the property to me at a discount and save his credit, or loose the house in the sheriff sale and get a foreclosure on your record. His best option was obviously, sell the property to me because it would put money into his pocket and save his credit. What I called a win/win scenario.

The man I will call Dan, waited until the sheriff sale was only one week away. Originally Dan wanted as much profit he could get for the property. However, he only had one week before the foreclosure auction would be held. I didn’t have either the Fifteen thousand dollars to buy the mortgage nor any money to buy his equity. I explained this fact to him. He decided that $25K for his equity would be enough, so the total I would have to come to closing with was $40K plus any other fees the mortgage company placed onto the property. After the mortgage company jacked around and delayed the process, I finally received the mortgage payoff for the property at $24880.00, almost $10K more than the price listed on their website. The only bad caveat about this deal, I only had one week to come up with the total amount due.

If I could find someone to loan me the $50K plus closing costs to purchase the property, I could turn right around and sell the property for $150,000, and make $100K profit! This makes the deal so heartbreaking because I was a new investor with 0 experience and 0 deals on my resume. I couldn’t find anyone that would loan me the money! Sad, but true.

The day before the auction I contacted another investor and explained the dilemma that I was in. He offered to help. Split the profit three ways and the investor knew a man that had the money. I would get one third as well as the investor and the man with deep pockets. Thirty thousand sounded much better than losing the sale all together.

To make a long story short, this investor stabbed me in the back. He wasn’t an honest investor. Since I didn’t think to get anything in writing about the deal we had agreed to this investor, along with the man that had the money took the deal away from me and left me with nothing!

This was the learning curve that I hoped to avoid. I didn’t lose any of my own money; However, I didn’t earn any money from all my effort in finding the deal. I made mistakes. I assumed too much. I learned some very valuable lessons.

This was my first deal in real estate that could have been sweet and set me up as a major investor.. But it didn’t unfold as I had imagined. I had two other deals that came and gone without making any money.

The year after I retired we sold our house and moved to Baton Rouge. I now have a much larger mortgage payment than before. I still follow real estate sheriff sales on my days off when I am not driving for Uber. It only takes one deal to win. I’m still waiting for that shut-up check.

I am not a quitter. I refuse to lose. After about a year of having earned 0 dollars from all the money I spent to get all this real estate knowledge, I have invested a much smaller amount toward my future. I invested my time in learning about financial literacy and took the state test and received my license to sell financial products. I am officially a financial professional. I can sell health and life insurance products, like life insurance, IUL’s, annuities and even Medicare.

This new direction or path should provide a much brighter future for me and my family. I will be adding more posts and articles describing my financial future. I hope as an interested follower I can direct you into becoming financial literate and learn how to handle money and be successful in any occupation you have chosen.

I am now living the dream, for every person I help with their financial goals, Is one more person that will no longer be struggling with their finances once they retire.

Leave a Reply

Your email address will not be published. Required fields are marked *