2019 Goals

I decided to publish this post just before the New Year comes in, so that my last thoughts of the 2018 will be of the goals for 2019. I know a lot of coaches and mentors teach that the goals we set for the year should be thought of and planned towards the end of the previous year; this way, we are ready to hit the ground running once the time comes for us to start acting on those plans.

I am the first to admit that I like spontaneity and I live my days based on the way I feel. If you are like me, you probably can't stick to a plan that covers every moment of your day. I started fighting schedules ever since elementary school, when my mom was trying to make sure my afternoons and evenings were all planned out.

With this said, I am an advocate of setting goals - the bigger the better. I am a strong believer in visualizing my goals and in thinking of them often. I also base my actions on my intuition, which has never let me down. I run the information through my mind over and over until ideas start forming, and then details come forth for those ideas. I also share with my closest friends and family those goals, and talk about them often.

Back in 2016 I read a book by Brian Moran who was talking about setting goals for 12 weeks instead of the entire year, as if that was a year. According to Moran, this will encourage us to stay focused on the goal; what happens with most goals that are annual is that many people lose their focus, on the one hand - others don't really do anything for a long time and then try to catch up in the last weeks or month. Neither scenario is a great one. I must confess that I'm still working with myself on following Moran's strategy. Sometimes I do it, and sometimes it is more of a challenge for me to keep up with it.

Since 2018, it is proving more appropriate for me to use the 12-week year method of Brian Moran. With the BRIL Conference in the first quarter and the last quarter being used to talk to possible sponsors for it, I only have to cover the 6 months in the middle. This is a lot less of a challenge than having to deal with 4 quarters, right? For the 6 months in the middle of the year my main goals are related to my financial services business, and it is important to me to achieve more during these months because the other 6 months I cannot stay as focused on this side of my business.

For those of you who run multiple businesses, it is a good idea to base your 12-week year plans on the cycles of your businesses. Some have cyclical tendencies, and these will dictate which goal to focus on for that specific 12 week period.

As I already mentioned, this first 12-week period of 2019 for me the main focus in my professional world is BRIL Conference. The plan is to promote the event through an email marketing campaign targeting both previous attendees and new prospects, as well as my business contacts who fit into our target market. On top of that we are also running social media campaigns to increase exposure and create a buzz in the Central Virginia area.

And here is the SMART goal for #BRIL2019: to double the number of people in the room from BRIL 2018. With this specific goal, besides the fact that it fits the SMART formula, it also fits within guidelines by Zig Ziglar - "If you don't know where you are going, how will you know when you get there?" and "If you don't know where you are, you cannot find a direction to go into."

I would love to hear from some of my readers about their goals for 2019, and also hear about the progress on those goals. Please leave me a comment so we can connect. And, if you are not scared, feel free to share your SMART goals, so I can hold you accountable.

Happy 2019 to everyone!

My Stories from the Field - Chapter 12

This is the twelfth post in a long sequence where I want to share stories of real people I have met either while working with a life insurance company, or as an independent investment adviser. My goal is to share their stories so I can impart the lessons I learned in the hopes that these lessons will also serve others - this is for you, my readers!
*All my subjects will be either John or Mary, for privacy reasons.

On such an important day of the year, I have some funny stories to share and some important things to discuss. I want to bring to light a subject that may not be at the top of your list but it may be something that nags your subconscious. I remember a story from back in school when we learned that in Britain it was believed in the old days that animals could talk on Christmas. Celebrating the occasion, I want to talk about our fur babies. As a proud cat mama, this topic is very near and dear to my heart.

Quick side note, before going to today's topic: you may want to check into pet insurance. I'm not saying it is something everyone should have. I just believe it is great for some families, one of which was my own (back in 2015 and some before).The main reason to get it would be a pet that can develop serious issues. The rates vary and there are a few companies offering it now. Please do your research before you make a decision.

Main lesson: when making plans for what will happen with your family after you pass away, make sure to include your fur-babies (or feather-babies - whichever applies). If you have underage children (of the human variety) you should have documents in place that provide for their guardianship and their care in case you are not around to take care of them. The same things applies to the four-legged babies. The main difference is the fact that the latter need to be taken care of for the rest of their lives and not just a limited number of years.

When taking care of your estate planning, you need certain documents in place, such as a will, a living will and 2 powers-of-attorney (medical and financial). A more complex and defined alternative (also stronger after you are gone) is a living trust, which includes all of the above. The living trust is a great tool to protect your fur-babies after your passing and it can be set up for a cost that is not prohibitive for most people, though higher than the basic documents. In order to ensure you have the best protection in place, please contact a trusted attorney.

While working with the life insurance company, I met a lot of the four-legged babies of the people we served. Since pet insurance was never something we offered, my stories are more about the pets than about any financial implications on the family's life. For the holidays, this is my gift to you: a smile.

It's already been a few years since I left the life insurance company and I still remember some of the pets I met during the years I was visiting families in the field. They made an impression on me, and to this day I still carry them in my heart. I remember stopping by someone's house and meeting their German shepherd; she seemed so determined to protect her territory that I didn't have the courage to get out of my car. Later, I went back and met the owner and was told that she was very protective of the family and it was possible that she would have attacked me. My gut feeling served me well that day. I still have a lot of respect for her - wherever she may be today.

I also remember another German shepherd (from Norfolk, VA). I met him at a retired police officer's house and the dog himself was a retired police office. I remember how the owner had him in the sun-room and with one word, "stay," the only part of the dog I saw through the door was part of his nose; until he was permitted to come into the kitchen. I was honored to meet my first K9 police officer. I was very impressed and, as you can tell, he made a very long-lasting impression.

A funny story that just came to mind is meeting 3 pets in the same house, 2 dogs and a cat. The lady I met told me the dogs were little when they came into the family as rescues and so the cat had served for a surrogate mother. The big pitbulls were very well behaved and I could tell who the boss was. I remember sitting with the lady on the sofa, while one of the dogs was lying on his bed on the floor and the cat sat next to me. I didn't have any cats at the time, so I felt very special that the cat had come so close. I had already petted both of the dogs with the owner's permission, so I was about to turn around and give the kitty a little bit of love. The lady warned me that the cat is dangerous and she bites; a quick hiss and determined look convinced me of the wisdom of keeping my hand to myself. I remember smiling at the time at the idea that the pitbulls were more tame than the kitty.

Hope I managed to keep my promise and put a smile on your face with these quick memories I shared. If so, please let me know, and I might surprise you again with some more stories about four-legged babies in the near future.

All the best for the the holidays to you and your babies - with or without fur :)

My Stories from the Field - Chapter 7

This is the seventh post in a long sequence where I want to share stories of real people I have met either while working with a life insurance company, or as an independent investment adviser. My goal is to share their stories so I can impart the lessons I learned in the hopes that these lessons will also serve others - this is for you, my readers!
*All my subjects will be either John or Mary, for privacy reasons.

We have been talking about situations where people had to come up with money to bury loved ones who didn't have life insurance, as well as instances when I met people who had left behind policies for the family. This time I would like to share 2 situations that come to mind as examples of people who had coverage in place when I met them but it was not the right type of coverage for their needs.

Before sharing their stories, I would like to take a moment to state that I don't advocate for permanent insurance instead of term, any more than I preach for term insurance instead of permanent. I believe that each situation is unique and therefore each person will need something a little different from the next. Rarely are there situations, when it comes to life insurance, where one size fits many - and never all. This is why I always recommend a talk with a licensed professional who can assess the situation and provide a tailored solution that best fits the family's circumstances.

I met John and Mary late one evening while I was in the field, working with life insurance company. They had policies on their grandchildren with the company where I worked - and this is why I met them. During our conversation, they said they were covered through a different company for an amount that they felt was good for them. This was good news for their family. I offered to take a look at their policies, so they would know what they have - usually the average person is not 100% sure of the type of life insurance, and many times they don't even know the exact amount.

Once I saw their policies, I had to tell them that their coverage would become too expensive (to the amount of many hundreds a month that they would not be able to pay over a long period of time). Plus the monthly payment would be higher every year. Mary started crying when she saw the numbers, because they were in their late 50's and John was the only one with an income. By mid-60's this family would have lost their life insurance because the policies they had would become too expensive for their budget. 

This turned into a moment that made me appreciate the position I was in, to be able to help middle-class families have the protection their loved ones need. It was one moment out of many but still over 10 years later, I remember it with a mix of happiness, satisfaction and pride, as well as gratitude for the opportunity I had.

The second situation that I want to share here is Mary's story. She had just turned 50 at the time we met and shared excitedly that she had joined AARP. One of the benefits they offered her was a life insurance policy for a good price - her perception - and she had taken advantage of the offer. We reviewed her policy together and she learned that every 5 years she would have to pay more, with coverage ending at age 85. This is not necessarily a bad thing in and of itself, and this policy can be good for certain situations. Mary's approaching retirement meant that she would lose the policy before 85 due to premiums too high to be affordable for a single woman living off social security and a little pension. Being able to get her into a better place for protection made me appreciate more the opportunity I had, and also reaffirm the responsibility that came with it.

Please remember this:
Having insurance to protect your family is better than having no insurance. The best kind of life insurance is the one that fits your needs. Nothing is set in stone, therefore it can and should be updated periodically, to keep up with what you need. 

My Stories from the Field - Chapter 6

This is the sixth post in a long sequence where I want to share stories of real people I have met either while working with a life insurance company, or as an independent investment adviser. My goal is to share their stories so I can impart the lessons I learned in the hopes that these lessons will also serve others - this is for you, my readers!
*All my subjects will be either John or Mary, for privacy reasons.

As we are approaching the holidays, and that is a time to be spent with family, I want to talk about the different obstacles that are in the way of setting up life insurance on oneself - mainly, health issues. I mentioned a few times before that there are medical conditions that determine that a person cannot qualify for life insurance - this is known as decline in insurance lingo (or even autodecline - meaning it is for sure a decline, so there is no point in event sending the info to underwriting) - and this applies to most policies. The only exception are the guaranteed insurance policies, because they do not ask any medical questions.

Growing up in Romania, I only knew of only one elderly lady who had diabetes. I had a notion of what the condition meant but didn't really understand. While working in the life insurance industry, I met quite a lot of people who had diabetes. During my 8 years with a life insurance company that put me in front of many blue-collar workers, I learned that diabetes in pretty common in the US; in my experience about 20-25% of the people I met had it or had someone in the family who had it.

In and off itself, this wasn't a huge problems for the people I met, front the standpoint of the life insurance company, since they could still qualify for policies; as long as they had the condition under control. The challenges came when the people were not as diligent with keeping it in check as they should be. I came across such cases a few times, and I had to tell them they would not be eligible for coverage. This was a tough job because it was something that they could change with a little work.

The saddest moments with this medical condition happened when I met people with type I diabetes, and especially the children of the prospects. In those cases, about 90% of the times they were declined for coverage. It was hard not being able to help. And this made me a believer in life insurance coverage on the children - despite the advice of famous people within the financial industry who preach against it.

With this said, there are rare cases when the child needs a lot of coverage - and there are specific reasons to have that in place. Most cases, I recommended some coverage in place, that would also allow for an increase at a later time, as needed, up to a certain amount, without further proof of insurability (without having to answer medical questions). This advice that I gave in the past by no means applies to every situation and every family. Each situation is different and should be treated as such - with a professional. 

My main reason for sharing this information is that I wish you would all understand the importance of taking care of your health - for many reasons, among which is the ability to protect your family in case of situations that can affect the family emotionally and financially - such as unexpected death.

Just as you cannot buy car insurance after an accident, you cannot purchase life insurance when you need it. It must be in place before you need to make a claim.

Please remember:
Always see a professional for your family's insurance needs. Just like you see a doctor to diagnose and treat your medical conditions, you should talk to an insurance professional that can review your family's needs and advise you appropriately.

My Stories from the Field - Chapter 5

This is the fifth post in a long sequence where I want to share stories of real people I have met either while working with a life insurance company, or as an independent investment adviser. My goal is to share their stories so I can impart the lessons I learned in the hopes that these lessons will also serve others - this is for you, my readers!
*All my subjects will be either John or Mary, for privacy reasons.

I'm in a little bit of a melancholic mood today, so I decided to bring up a sad topic. I want to talk about some of my clients who have passed away. It's always sad for the family and loved ones left behind. Financial headaches only amplify the pain. After so many years helping people with life insurance, I am convinced of the importance of this type of protection. I understand how it can help alleviate the headache when at least the financial worries are lessened.

One family that is near and dear to my heart didn't have any life insurance in place when I first met them. I was able to help John and Mary purchase life insurance policies that were to take care of their final expenses, even though Mary had some medical problems, and their income was not regular. They had the wisdom to keep the policies in place over the years, while John got diagnosed with cancer and had a long and hard fight.

Through the tough years and the sad time that came, my heart went out to them. There was also a little light for me, from a professional standpoint: I was able to help this family find some peace of mind and lessen their financial burden. Even though this didn't help on an emotional level, it was still helpful; it gave Mary some stability when John passed away. For someone with very limited income and financial resources, not having to worry about the funeral expenses means the world at such a time. And I'm blessed to be able to play a role in setting this up for them.

The hardest thing I have ever had to do in my years with the life insurance company, was helping a grandfather fill out a claim form when his granddaughter died in a car accident. Knowing that John was suffering, was the only thing that prevented my tears from running down my face as I sat at the table, filling out the claim form. The silver lining in the situation was the fact that the family didn't have to come up with the money for the unexpected funeral arrangements. Even so, it was the hardest thing I had to do, and the one that most proved to me the reason why I need to keep helping people find their financial serenity by creating, protecting and transferring their wealth.

Please remember this:
"The best time to plant a tree was 20 years ago; the next best time is now." (Chinese proverb) - This goes for life insurance as well. 

My Money Story

Since October is gifting us with a fifth Monday, I decided to share the interview I did for my first podcast episode, when I launched Money Mondays with Sorana. If you prefer the audio version, please check out this and all the other episodes in the player on the right side of the page at the top. Here is the transcript:

1. What is your biggest money accomplishment?  

I think that my biggest money accomplishment is the fact that I have been able to be self-employed for over 10 years now in my adoptive country; and just being able to maintain that, and not having had to depend on anyone for a paycheck, represents an accomplishment that I’m proud of. And for me coming from a background within a blue-collar family that always depended on a paycheck, I think that is a major accomplishment. I am able to sustain my lifestyle and do the things that I want to do and not really depend on a 9 to 5 or a regular steady paycheck. Once I learned about

entrepreneurial ventures and the way they can work in the 

U.S., building my own business became a no-brainer. I’m happy to see the fruits of my labor and to wake up every morning knowing that I’m one step closer to my goals and dreams. 

2.     What is a money memory from childhood that comes to your mind right now?  

Well, growing up, my parents were, like I said, blue-collar. So, they went to work and brought home a paycheck. Back then it actually used to be cash. My mom’s job was to actually give out the wages in her department within the plant. Sometimes she would bring home new bills because since she was giving out the wages, she tried to put those to the side. So, she would take the money I had saved and trade it for new, crispier bills, better looking, prettier ones than I had at that time. And, for me, that was really cool because I liked the new money. Actually, to this day, I like the new bills that have no creases, and I’m still inclined to save them. 

So if I would get any new bills – let’s say instead of what in the U.S. would be five $20 bills, I would get one $100 bill – it would help me save money. I always had some cash stashed somewhere because I liked the feel of new money and I didn’t want to part with it. The newer and the bigger the bill, the better, because I would hold on to it the longest and I would not feel compelled to spend it on trivial things. I guess you could say this was how I learned to save.  

 

3.     What is your biggest money challenge? (currently or ever) – if past, how did you overcome it?

For me, the biggest thing was coming here (to the U.S.) and having to figure out how things are done in this country. Before coming to the U.S., I didn’t even know what a credit card was. I knew what a mortgage was only because we had one of those when I was growing up (though a lot different set up than here), but not what a credit card was. I didn’t know how those interest rates can cripple your finances for many, many years. So, I learned those lessons: some of them the hard way, some of them from other people. But it was a good lesson to understand all of that.  

My husband (the one I married before coming here, and whom  I’m still married to) is of the opinion that if he didn’t have enough money to pay it off, he would not buy it. And when I first arrived in the U.S. we needed reliable cars – or at least one, since at the time I was not driving. So, we got some clunkers for cars because he didn’t want to have monthly car payments. When I finally decided that was not going to work for me anymore, I had to learn how car financing worked, because he never needed it. So I had to learn on my own.  

We had 7 cars in my first 2 years in the U.S., and that was not because we had a lot of money and we wanted to have 7 cars, but because they were dying. At the time my husband was driving me everywhere. Based on that experience, when I started driving myself, and while having a career that required transportation because of a lot of field work, plus being a woman driving mostly by myself, I had to have a reliable car.

I had to have a car that would not die on the side of the road. That was a big one for me. From my need for reliable transportation, I learned a lot about credit purchases, credit score and credit history. It was quite stressful at the time but also very educational for someone who had no experience with the U.S. credit system. 

4. Share a money lesson you guide yourself by – your money mantra or belief.  

The most significant thing is to make sure that I have some money left at the end of the month. This way I know I’m OK at the beginning of the month. And the reason I’m saying this is because I’m self-employed, and I have to make sure that my months run together smoothly. I don’t know when the next check is coming, so I have to make sure that I have enough money for the next bill. That way, when I get my next paycheck, I have enough for the next bill. So that is my plan. As someone who had been working on commission for many years now, the planning from one check to the next is a little different from the employees with a predetermined amount coming to their bank account every week or every other week. 

I would not say I’m great at budgeting every dollar, but I became really good at establishing priorities and making sure the income went toward necessary expenses before going to unimportant things. Fluctuations in income (as all entrepreneurs can relate to) taught me to classify my expenses in 3 categories: fixed, flexible and discretionary. And this is how I managed my finances. 

5. If money were no object, what would your perfect day look like?  

Well, I’m an animal lover, so I would probably spend it with cats. I know that is not expensive, so it is not about the money, but that is what I would enjoy. I also like traveling so if money were no object, I would travel a lot more than I do now – and I already travel quite a bit. And if money really were no object and I had all the money I needed, I would probably take my cats with me on trips – which would be really interesting.   

I would also go back to Florida and visit the Big Cat Rescue, which is a sanctuary for big cats. And if I could have all the money that I wanted on a regular basis, and not just as a onetime lump sum but as cashflow, I would like to be able to donate to them enough to keep a tiger there. When I was there I learned that it takes about $10,000 per year just to feed the tiger – it doesn’t include housing, medicine, surgeries or whatever they might need. So I would like to literally adopt a tiger there – just feed that tiger for the rest of his or her life. 

Being able to help animals, especially cats big and small, and be a voice for them to enact changes in legislature and people’s behavior is my WHY for working on my business to grow it and make it a financial success. 

      6. Share a goal that you achieved that had a price tag.  

In 2015 I bought a brand-new car. I really needed it because my old one, even though it was still good and working, was kind of old by then. And I was able to buy the car paying it off in cash. That was really awesome because I don’t have to worry about a car note. I have a new car that hasn’t needed

(thank God) any repairs. And probably won’t need any for a long time. I’m a big fan of Corollas. I’m still in the same brand family, nothing fancy. But it is a car that I know I can rely on to take me where I need to go – and I do drive a lot. So I like to know that wherever I need to get, I can get there and I won’t risk dying on the side of the road because of the car failing.  

Achieving this goal was great not for flashy reasons and vanity but for practical reasons and because I wanted to practice what I preach. The new car was a necessity; a luxury vehicle was not. So I took care of what was necessary in setting and achieving my goal.  

For those listeners who want to get a car and cannot pay for it in cash and will have a 5- or 6-year loan, my advice to help pay that faster is to wait a little bit if you can. Look at your credit score and fix whatever you can on your credit report to raise your credit score – if it is not an emergency. If it is an emergency, then, of course, you go ahead and buy. If you don’t need to worry about your credit score, then you can buy. But most people have little bumps and bruises on their credit report. Fix your credit report as much as possible before committing to a purchase with a payment whose size is determined by your credit score. The higher you can get your credit score, the lower your interest and your monthly payments will be.  

Once you get the car, pay a little extra each month (however much you can, without putting yourself in a bind). My first car that I financed, the car I traded in last year, I had a 5-year loan on it. I wanted to pay a little more; so I actually didn’t take the whole 5 years on it. It feels really great not to have a car payment. That is why, though I wanted a new car, I was really determined not to get a new loan, because I knew how good it felt not to have a payment. So, if you can, and there is a way to ask them to put the extra toward the principal, that is what you want to do – make sure that principal goes down. 

7. If you could double your income, what would you do with the extra money?  

At this point, if I doubled my income I think that I’d probably save some of that toward purchasing my dream home. We do own the house where we live, but it is not the dream home. It is the house that we got, and we are glad to have it. It would be great to have a dream home at this time because I don’t want to be retired and cut grass and do maintenance, so by then, I would probably be ready to downsize. Therefore, if I can hurry up and get my dream home now, I can enjoy it for some years until that time comes. That would probably be what I would do with the extra money. And, of course, save some for later, because I’m always planning for my retirement. 

I need to point out that I don’t see retirement as a vegetative state – posing as a couch potato – but as a time when I work because I want to, and not because I have to. I also see retirement as a time when I focus more on giving back – through the charities that I support, and working on changing the world. Just heard the phrase “going from success to significance” recently and it spoke to me; it suggests a time when I would focus exclusively on helping the community, and most of all, the animals I love – without tracking numbers (activity and revenue) for my business. 

8. What is the one thing you wish you knew when you were 21?  

At 21 I graduated from college back in Romania, so I really had no idea what I wanted to do with my life, other than start a career in the travel industry. I started working for a travel agency that was owned by somebody that I didn’t really respect a lot because he didn’t seem to know what he was doing within the agency. If I could look back from where I am now and talk to myself back then, I would say “Don’t worry about working for these people, because that is not what you are going to do for the rest of your life, so you don’t really need this kind of experience.” But it is funny how we go to school… and actually my degree is in tourism – and I really wanted to work in travel agencies. My goal was to travel to different places and know more about places where I can tell people to travel. And once I moved to the U.S., even though I’m still traveling, I don’t do that for a living. So it is funny that I just am on a totally different career path. I would probably say that it is best to learn as much as you can about the business side of whatever business you are in. 

Even if it is not your own, don’t learn just how to do whatever your job is. Learn how the business is run because if at any point you want to start your own business, that is the number one thing that you are going to use. That is the most important knowledge: be an apprentice of the business, not just the craft. You can then use the knowledge with whatever craft you develop later. 

A lot of people fail in their businesses due to not knowing the business aspect, not because they are not good at whatever their business is. If you are a fantastic baker, you may have the best cupcakes or the best cakes ever, but if you don’t know how to run a business, you can still go bankrupt. Or if you are a good plumber, it doesn’t mean you know how to run a business. So that is probably what I would tell myself: “Learn as much as possible about running the business, not just the activity you are responsible for.” 

9.     What advice would you give a woman just starting her business/career?  

If she hasn’t started the business yet, I would say “Talk to somebody who is in the same business you are interested starting, someone who is already successful in that field, someone you admire and respect. And ask them if you can hang out with them, help them around their office or anywhere in their company and learn how things are run. Offer to be an unpaid intern and see what you can soak up.” You don’t have to do it forever. And don’t look at it like you are just slave labor and you have to work for free and they don’t pay you. But look at it as an opportunity to learn how the business is run. This is an opportunity to learn for free, whereas in college you have to pay for the information. Take advantage of this free education opportunity. 

Like I said, you may be the best baker but you have to have some business acumen. And really the only way to learn it is by soaking up from somebody else who is great at it. Because you can read books and go to school, and the professors can tell you, but ultimately, they are just professors, it is not like they have businesses – some might, but most don’t. 

So, if you talk to whoever you are working with, find a mentor that can guide you. Look for the person that you want to be when you grow up. Find that person, and then try to hang out with them as soon as possible and for as long as possible. Because that will help you learn a lot about how to achieve what they have already achieved. It is an opportunity to learn from the best. 

10. If you could spend 3 days with a millionaire/ billionaire, who would that be and why?  

One of my favorite people is Jon Bon Jovi – I really love his music. I’m not sure if he is really a multimillionaire (many times over) but I know he is very successful and I would love to spend some time with him and see how he runs his companies. If I could hang out with him for 3 days, I think I would learn a lot because it is not just about the fact that he can sing – which he can. Ladies, I hope you agree with me! But he also does have a great business mind.  

I was watching a documentary, and he was calling somebody about setting up a meeting, and they were giving him the runaround. And he said “I am the CEO of a multimillion dollar corporation, I demand that we do this or otherwise I don’t care; I’m not interested.” And at that point I realized that he is absolutely right; he does run a multimillion dollar corporation.

So I would love to learn something from him. I believe he knows what he is doing. Another great point I still remember from the same documentary is him saying “this is not a democracy” – when referring to the Bon Jovi company. I took to heart the idea that someone has to make the executive decisions and take responsibility for the outcomes.  

My Stories from the Field - Chapter 4

This is the fourth post in a long sequence where I want to share stories of real people I have met either while working with a life insurance company, or as an independent investment adviser. My goal is to share their stories so I can impart the lessons I learned in the hopes that these lessons will also serve others - this is for you, my readers!
*All my subjects will be either John or Mary, for privacy reasons.

I was thinking about a couple of my clients today. They have been my clients for over 10 years now, and I still remember them; not for the fact that they (like many others) have life insurance policies on themselves and their immediate families, but for the fact that they have purchased life insurance policies through me to protect family members whose funeral expenses they would otherwise have to cover - in these cases siblings, adult siblings. 

Mary has a brother who has never been married, nor has any children. While she is married and has grown-up children of her own, she understands that she will still have to deal with any final arrangements for her brother when the time comes. Knowing that she will be responsible for the final expenses, she made the decision to purchase a life insurance policy with her brother as the insured.

John had been for a couple of years when we talked about his sisters and brother, and how he is the best off, and expected to take charge of any final arrangements when anything happens. Out of his 4 siblings, only one has a grown child, while the rest have no spouses, nor children. John feels that he should have coverage in place for his siblings because they have not taken care of it themselves, and he knows they will look to him to take charge of the expenses when one of them dies. Even with a spouse with special needs, John feels it will fall on him to take care of the final arrangements for his siblings if they pass before him. So he chose to pay under $200 per month for all 4 of them, in order not to have to come up with the entire amount to cover the funeral expenses.

Mary has a sister who has never been married and has no children. Mary is now retired and has an income that allows her to live comfortably, while her sister never really had a steady job. She decided to make sure her sister has life insurance in place, so that she wouldn't have to borrow money for the funeral, should her sister die before her. She also made arrangements with her adult daughter to take over the policy, in case she predeceases her sister; she knows her daughter would be left to take care of the aunt. 

In these cases (as in many others), it is easier for the sibling who will have to be in charge of the final arrangements, to pay a small amount every month - usually (at least for my clients) under $50 per month - rather than come up with $10-12,000 for the funeral. This is how much a funeral costs now in the Richmond, VA area for an average funeral - not the cheapest, but certainly not fancy. These particular policies are not meant to make the surviving sibling rich by any means, they are simply meant to provide enough money to cover final expenses. In the examples above, the coverage is of around $10,000 on each person.

Please remember this:
Dinner conversations about funeral expenses may be uncomfortable but they can bring peace of mind. If you find out your siblings or parents have no money or policies to cover final expenses, you may want to consider purchasing life insurance on them - unless you can cover the expense from other sources.

My Stories from the Field - Chapter 3

This is the third post in a long sequence where I want to share stories of real people I have met either while working with a life insurance company, or as an independent investment adviser. My goal is to share their stories so I can impart the lessons I learned in the hopes that these lessons will also serve others - this is for you, my readers!
*All my subjects will be either John or Mary, for privacy reasons.

I want to spend the time today talking about the importance of getting life insurance while healthy, so that the family is taken care of, in case something happens. While working with the life insurance company, I met quite a few people who were not able to qualify for life insurance. In industry jargon this type of prospect is known as an autodecline. This means that even without sharing this info with the underwriters I was able to know that these persons were unable to qualify for life insurance.

A couple of the examples that come to mind are for single parents - a mom and a dad - both young, and both with children under 10 years old. In both cases I was unable to set in place life insurance for the parents. It was a bad feeling of inability to help them. Neither one was able to protect themselves with life insurance, and unfortunately both of them have passed away since. That was even more sad for me to find out. I had to tell their family when they called that no money was coming from the life insurance company.

I still remember meeting Mary many years ago, and she was a great baker - had the privilege to taste one of her cakes. I was sad to be in the position to tell her that because of her condition (sarcoidosis of the skin) she would be declined for life insurance. I remember she had a son - about 7-8 years old. I felt bad having to tell her that I could not help her make sure her son would be taken care of. She had just received the notification from her job that she could not have life insurance through them either, because they had changed providers and she had to go through the underwriting process.

Her medical condition stayed in my mind even though I met her about 10 years ago because it hadn't been long since Bernie Mac had died from sarcoidosis of the liver. Being a fan, this left a profound impression on me.

When I met John, I learned that he had a 5 year old son and he worked out of town - about 2 hours away - so he spent a lot of time driving up and down the highway. His medical condition didn't look too serious at the first glance. He had high blood pressure. Since I had been with the life insurance company for a number of years at the time, I already had quite a few clients with the same condition.

I remember John saying that he didn't really take care of this health but he was in his 30's, so I thought it was no big deal. I thought he still kinda sorta took care of his health. He had a son to take care of, right?! Well, I was surprised when his application came back as a decline for life insurance because his blood pressure was no way close to under control.

Some months later I received a call from his parents and found out he had passed - and not due to an accident. So I had to tell them that they had no life insurance money coming in to help with raising his child.

These situations are some of the saddest that I had to live through during my years with the life insurance company. It's hard to be unable to help people. On a logical level, I understand that it was out of my control. On an emotional level, I still wish I could have helped these families - as well as the other ones where I met people who could not qualify for life insurance.

Please remember this:
The best time to apply for life insurance is NOW. When you are healthy, it is the best time to protect yourself; once something happens, like being diagnosed with a serious medical condition or becoming terminally ill, it is too late. 

My Stories from the Field - Chapter 2

This is the second post in a long sequence where I want to share stories of real people I have met either while working with a life insurance company, or as an independent investment adviser. My goal is to share their stories so I can impart the lessons I learned in the hopes that these lessons will also serve others - this is for you, my readers!
*All my subjects will be either John or Mary, for privacy reasons.

Today I have on my mind a couple of stories related to the second big mistake people make when it comes to life insurance. The first mistake is that they don't have any life insurance, even though the family needs the protection life insurance offers, since the estate is not big enough (at least for the time being) to take care of the family in case the unexpected happens. The second mistake is that John (or Mary) has life insurance but nobody in the family knows where the policy is or what company it is through. Unfortunately, this mistake is quite common, especially in situations where all the children are grown and live away from the parents' home, and the parents are still in great shape - physically and mentally.

Since none of us can guess when we pass away, or whether we will have time to plan everything while being sick, or we might have an unexpected end, it is best to have all the paperwork in place for those we leave behind; and most importantly, let them know where everything is and who they need to contact.  If you are not sure how to keep track of your important papers and where to do it, I can share a document I created for women who want to take charge of their financial life. Please contact me via this site and let me know you want my help with this. I promise you will not receive a bunch of unwanted emails later.

While working with the life insurance company, I met a family that had recently taken care of the funeral for the grandfather of the family. Mary shared with me on that occasion that she and a cousin had been in charge of finding the life insurance policy that her husband's grandfather had had. They spent many hours in a room full of papers or all sizes and colors. This is how she learned that the elderly preserve all papers that were once important, even though they were no longer needed. The expected and much needed life insurance policy was never found.

Many years ago, one of my clients, Mary, had to deal with all the financial consequences of her mother's passing. She called me to ask how she could find out what life insurance company her mother might have had a policy with. I still remember her exact words to me, even these 10 years or so later. She said: "Knowing my mom, I'm sure she had a life insurance policy. I just cannot find any papers in her house. Is there a way to find out which company she had her policy with?"

And I had to tell her that there was no central place where this info would be listed. Sure, it seems logical to protect this personal info. However, even with providing all sort of security questions or info that nobody else can have, there is no way for a family member to find out in one place about someone's life insurance policies. The only idea that crossed my mind at the time was that she could call various life insurance companies and ask. There were 2 major challenges with her predicament: 1. she would have to spend a long time talking to each company while answering a lot of questions to prove the legitimacy of her question, while still not knowing whether she had the right company; and 2. she would never have the certainty of knowing for sure that her mother didn't have a life insurance company, since she would never call all the companies in the United States.

All this happened because Mary's mother didn't have any records regarding life insurance policies. There were no directions for Mary to follow upon her mother's death. And there were no electronic drafts by a life insurance company from the mother's bank account. At least this second element would have helped a lot with the search.

I hope these stories gave you some food for thought, maybe even some dinner conversations with your family - whether you need to tell your family where to find your documents or whom to call, or to learn from your parents and grandparents what you need to do when they pass.  I know this is not an exciting topic (it is even scary, perhaps) but I can assure you there will come a time when you are happy to have had this conversation, especially if you are the one left behind to face the passing of a loved one.

With the holidays coming up, this may be your best opportunity to tackle the subject with your family. According to the Chinese, "the best time to plant a tree was 20 years ago; the next best time is now."

Please remember this:
The best time to talk about painful things and about complicated financial things is when you have a clear mind and all your loved ones around you, and not when you are emotionally drained, or even in no shape physically or mentally to deal with final arrangements for a loved one. 

My Stories from the Field - Chapter 1

This is the first post in a long sequence where I want to share stories of real people I have met either while working with a life insurance company, or as an independent investment adviser. My goal is to share their stories so I can impart the lessons I learned in the hopes that these lessons will also serve others - this is for you, my readers!
*All my subjects will be either John or Mary, for privacy reasons.

While working with the life insurance company, I met a lot of blue collar workers in Virginia, as well as some in Tennessee (on a couple of road trips for the job). One lesson that always stood out to me regarding the importance of life insurance is that people need to make sure they have policies in place before something happens to them. None of us is guaranteed tomorrow, and we have to take care of our families for when we are no longer around to do it.

A couple of instances I met people who told me stories of their neighbors who passed away and didn't have life insurance in place. I will share here a couple of those stories.

In a family the adult daughter passed away unexpectedly, and the parents started asking the neighbors for donations in order to be able to bury her. Fortunately for the family, they were surrounded by helpful people who contributed what they could, and they were able to bury her. Unfortunately, not even a month later, John (the father) passed away due to a heart attack, also unexpectedly. He also left the family without the money to bury him - no life insurance either.

The spouse and remaining children had to go around the neighborhood again and ask for help. The second time around, things were event tougher - the neighbors were also tapped out now. The neighbor who shared this story with me never knew how they managed to pay for his funeral but they saw that the expenses were kept to a minimum.

While this is an example of solidarity and it shows how great it is to have helpful neighbors, the main lesson to learn is that covering the funeral costs is not a duty that should be passed on to the family, relatives or friends, and much less the neighbors. They are not responsible for someone not being considerate and caring enough to not leave the family in a tight spot financially.

The second lesson I want to share today is from someone in the Eastern part of Virginia. She told me of a friend who was caring for her grandfather in that area, let's call her Mary. She received a call that her father had passed away - he lived in the Western past of the state. She had to make arrangements regarding her grandfather's care in order to travel across state in order to take charge of the funeral arrangements. After running across state she found out that her father didn't have any life insurance, and she had to look for ways to come up with the money.

While in the process of figuring that out, she received a call from the person she had left with her grandfather and found out that he had also passed away. She ran across state to take care of his funeral - he did have life insurance. Afterwards she had to get back to the Western part of the state to take care of her father's funeral arrangements. She had to accumulate more debt by traveling back and forth because of the situation that she was left in.

Of course there is no reason to believe this is going to happen to any one of us. However, this does happen to people. So the moral of the story is to take care of our family by protecting ourselves with life insurance. The type and the amount will vary from one person to the next, so it is best to talk to a professional that can help. What is always true, is the fact that something is better than nothing. It can all be helpful.

Please remember this: 
"Dear life insurance company, please let me know how I can return this check I received when my spouse passed away. I now have too much money coming to me from all the life insurance policies we had," said NOBODY ever.

Create More Income Month - Chapter 4

For the last post of the month, I want to focus on creating a stream of income through investing the money you earn from your business. Before going into any ideas on this topic, I want to make sure that these are only ideas, and are not meant to be financial advice. Nor do they apply to all of you who are reading these lines. The one piece of advice I want to start with: talk to an investment adviser that will take into account your personal financial situation and create a plan specifically designed for you. Of course, there is no obligation for that person to be me, though I can be - for anyone who would like a consultation.

When deciding to invest, the first thing you need to know is that you have to make a long-term commitment. Getting into the market should not be seen as a short-term plan to get rich because that is very risky. There are people who are preoccupied with timing the market and buying stock that they estimate will grow in value and then sell it for more; also a great many of them end up losing even the shirt off their back. Therefore, unless you can afford to lose the money you play in the market, this most likely is not the best scenario for you.

The reason I decided to have this post as part of the month on streams of income, is that when you invest you are creating a stream of income for the future. This is a way to build your egg-nest that will generate your stream of income. It can be your retirement plan or it can be an investment that generates income that has no preferential tax treatment. This is a choice between qualified and non-qualified plans, in financial speak. Here is the translation:

1. Qualified plans receive preferential tax treatment - money that goes into these plans is either before-tax, which means it goes in before being taxed and gets taxed when it comes out; or the money goes in after-tax and is taken out tax free. These plans are either Traditional (with before-tax money going in) or Roth (with after-tax money going in). The money you invest in these plans has to be for your retirement or else you lose your tax advantages, and may also be liable of penalties.

2. Non-qualified plans do not carry any tax advantages - you are paying taxes on the money going in and also have to pay taxes on any gains as you accumulate them. This is the type of long-term investments that one would make because they want to increase the value of their estate and the market has traditionally had higher returns than any other investments. There is a risk involved because there are no guarantees of a return on the investment. The growth of the funds usually beats anything a savings account can generate over a long period of time.

My hope with this post is that I can inspire some of my readers to start investing (or continue) so they can have a stream of income for themselves in the future - be it in retirement or before.

Create More Income Month - Chapter 3

This week I would like to address those of my readers who are experienced in their field, achieved expert status and most likely have been in that industry for a long time. I'm not saying that someone who is in the first years cannot apply these ideas, I only have the opinion that an experienced person is more likely first to be interested in doing this, and second to have more confidence in their ability to go through with the plan.

One idea to make more money in your business is to start a new stream of income by teaching people in your field how to build a business in the field, or people who are interested in getting started in your field of business how to enter the industry.  

I have a friend who is an attorney, and a very good attorney with a successful practice. She came out of the big lay firm to start her own business a little while ago, and her business is growing to the point where she was able to bring in an associate. Besides growing her business in the field she operates in, the law, she has also developed a side business connected to her law firm, where she works with attorneys who are interested in opening their own practice. 

This friend has earned my respect with her business knowledge and acumen. I'm proud of her accomplishments and I feel blessed to be her friend. On top of the success she has achieved in her field, she also wants to mentor others to build businesses in the same field. Her idea to grow her business through this program comes from a place of abundance, where she understands that helping other attorneys build a practice does not affect her business - there are enough clients for everyone.

If you have a good understanding of your industry and know more than a lot of people who are in the same industry, or if you know how to build a business, you can develop a stream of income by teaching others to enter or build a business in your industry. There is no downside to this business endeavor. 

Create More Income Month - Chapter 2

This month we are talking about ways to make more money in your business. After we talked about the way to select ways to develop new revenue streams, we will talk about how to execute on starting and growing those revenue streams.

Let's first list a few revenue streams:
1. Start a new business
2. Develop a new product/service in your existing business
3. Expand in a new market: geographic or demographic
4. Develop partnerships with complimentary businesses and cross-sell
5. Write a book about your expertise

There are other ways to expand your business, so please write some of your favorite ones in the comments. This week we are exploring some ways to implement the strategies mentioned above.

The first step in working on any of these ideas is to write down the ideas you have about starting the business or the revenue stream. Once you list them all in the order you have them in your head, you start arranging them in a mind map, so you can figure out how they work together. This is a great way to make sure that you cover all the ideas that are in your head. Many times we think that the ideas we have will stay in our head - writing them down ensures that we don't lose them.

The second step is deciding what stream of income we are going to pursue first. After it passes the values test and we establish that this stream works with the mission and the vision, we figure out the actions that we need to do in order to start and grow the income stream.

If developing different products/services or expanding in new markets, your business plan is a great way to have a working action plan. The most important thing about a business plan is to use it continuously. It is not supposed to stay on a shelf, it is supposed to be worked on. A business plan is meant to be changed according to the needs of the business.

If your goal is to develop partnerships with complimentary businesses, you can consider business that are in areas that are also needed for your clients. While you can get referrals from your partners and make money from those sales, there is also the added possibility of making money by becoming an affiliate for your partners and making money from referring clients to them. You can also increase your revenue from these partnerships when your partners sell your products/services - while you pay them a commission or affiliate fee, your sales increase.

Many business people share their expertise through books they write, while also leveling up their expert status. This may not be a huge source of revenue but it can bring some money from book sales while also opening doors to new opportunities: speaking engagements, workshops and seminars related to your field of expertise.

These are a few ideas that hopefully will give you some food for thought. Please add your own ideas in the comments and let's exchange some interesting thoughts.

Create More Income Month - Chapter 1

Are you leaving money on the table?

We are talking to the business owners, independent contractors, mompreneurs and all women solopreneurs this month. As the summer is over and the families are back home and ready for the new school year, many entrepreneurs choose September to refocus and recommit to their business goals. We will be focused on business growth this month, so we can all grow our businesses together.

This first week, I would like to talk about business growth by developing new streams of income. This can apply to you if you own a business and are looking to develop new revenue streams, or if you have a job and are considering a side hustle to increase your income. Whether you have a business already or just considering one, you need to have a goal that motivates you to do the work, so you can succeed. 

Once you have a goal, you are set to start working on your business. The next step is to make a plan for it. If you already have a business, you probably already did this, but if your business is still just an idea in your mind (or on paper), you need to give some deep thought, put on paper and then make clear what your values are - personal and in business. You write down your business vision and mission; they should be reflected in your business goals. 

This will help you stay focused when you feel an inkling of the S.O.S. (shining object syndrome) - a condition quite common to the entrepreneurs. Too many times we all start new paths in business because we think that the new idea can be our next big success, because we get excited for the new opportunity and because we want to try multiple things when we think more stuff done will bring more money. While these ideas and opinions are not necessarily a bad things and are not necessarily wrong, they are not conducive to high levels of income. 

The best way I can illustrate this point is to paint a picture: if the income is in a bag in the middle and each of the ways you choose to get the money to come to you is a direction you pull the bag, you will not be able to drag the bag in any direction. You will move a few steps in one direction and then another few steps in a different direction, but will never make great progress in any direction.

If you focus on what thing and make progress in that direction, then you move the money bag in that direction for a while. You can always pivot and make changes in your business, then you will make progress in that other direction. You can add as make revenue streams as you want, as many times as you want, as long as you are committed to each new direction at the time that you are working on it.

The best way to make sure you stay true to your values is to ensure your actions are aligned with your mission and vision. As long as you focus on the goals that contribute to your mission, your actions will fall in line. Your actions will lead the money bag in the direction you are going. 

Let's go into more ideas next week.

Keep More Money Month - Chapter 4

Since we talked about tax deductions last week, we will finish off the month with a few more words about the way you can save money on your taxes. There are many things that people think they can deduct but that in fact not deductible. The one thing that comes to mind is the expense for clothes. I have talked to many women who think that the expense for business clothes is tax deductible.

Much as we can justify paying for business suits and using those suits to make a great impression, the expense is not a business tax deduction. Since the business outfits can be worn outside of business meetings, these expenses are not exclusively for business purposes, and therefore the price of the business clothes is not deductible. The only clothes that you can deduct are those that have a logo. If you wear apparel with your company logo you can take a deduction for the price. Besides, when you wear this outside of business meetings, you will be advertising your business all the time.

The opportunity to share your business with everyone you meet is also an advantage when it comes to tax deductions. You may not want to spend a lot or money on personalized apparel in the beginning, however it could be something to consider in the long run. This is one more reason to create a logo that you like and that represents you and your brand well. Of course, nothing is set in stone - there is always an opportunity to do better once we know better. And the same applies to your branding.

One tax deduction that a lot of people miss out on is the expense they incur with their car. Most women in business that I have talked to take the deduction, they are aware of the fact that the auto expenses are tax deductible, however, they don't keep good records of the mileage driven for business and therefore the tax deduction is many times a guesstimate. The biggest issue is that without good records, the IRS can decide that the deduction is invalid in case of an audit. The second issue is the possibility of the deduction taken being smaller than the correct amount; in this case the women business owner end up paying more taxes than required.

There are a lot of apps now available for mileage tracking. The most common ones are TripLog and MileIQ. Some of the business programs used for accounting and reports can also be used for mileage tracking - the one that I know of is TaxBot. If there are others, I would love my readers to post their favorites in the comments. I would like to know what others use, and what programs can do, so that I can check them out, and also improve my tracking for business expenses and deductions. 

Keep More Money Month - Chapter 3

As we are getting closer to the end of the summer, we are talking about keeping your money. And since this time of the year is the favorite time for travel for many families, I wanted to share some ideas about tax deductions you can take with your vacation travel.

Before I get into details, I will caution you to keep great records of what you actually do on the trips, so you can prove that the trip had business purpose. The good news is that your vacation can be (partially) tax deductible. It takes some math to figure out what percentage of the expanse you can take out, so please make sure you figure it out correctly.

There are 2 scenarios that I want to discuss today. The first one is when you plan to travel for business and decide to take your family with you. The second scenario is when you plan a family vacation and would like to be able to deduct some of it on the taxes.

If you plan to travel for a conference, convention or any other type of business reason, and you figure the location is just awesome enough to want to show your family, you probably decide to stay a few extra days at the destination. Let's say you travel for a 2 day conference that happens on Wednesday and Thursday, and decide to stay over the weekend and return on Sunday. You take your family with you and enjoy Friday and Saturday at that location. Now a 2-day trip became a 4-day trip, and since half of the time there was spent at the conference, you can also deduct half of the plane ticket price.

Another deduction can be part of the cost of the hotel room - make sure you only deduct the percentage of the room rate for the days of the conference. Let's say you use 50% of the first 2 nights, since you share the cost with your husband (technically). The time you spend with the family - the 2 extra vacation days - is not tax-deductible, so please stay away from any trouble with the IRS. Make sure you keep track of your food expenses for any meals you eat at the conference with fellow attendees - half of that will be a tax deduction.

In the second scenario, if you plan to travel with your family already, and would like to save some of the money off your taxable income, you need to make sure you have some business activities while you are away. These can be business meetings, prospecting - if you can provide services or products to people at that location.

Whether you plan to travel for business and then decide to extend the travel time in order to spend time with the family, or you plan a family vacation and then schedule some business meetings in that area, you can deduct part of your travel expenses. One word of caution: keep track of the time you spend for business and deduct the percentage that pertains to that time.

Keep More Money Month - Chapter 2

This week we will talk about another way to keep more of the money you make. As a business owner, you may need to buy items on credit, whether you have a business credit line or you have to use personal or business credit cards. This last scenario is often the case for solopreneurs and home-based businesses. 

One place to spend your money is the interest on loans you take out. Therefore, it stands to reason that paying less in interest means keeping more of the money you have. Many business owners finance big purchases in their business by using personal credit cards. For those who have good credit, the interest might not be high, which can help with not letting a lot of money go towards interest. most cases though, it proves more cost efficient to take out a loan - preferably for the business - instead of charging the purchase on a credit card. 

There are experts who can help you with building business credit, so you don't keep using personal cards. Even before this can happen, it is a good strategy to build a relationship with your banker, so you can take advantage of good advice when you need to purchase a big item on credit. Even though I recommend to my clients to use a couple of banks for their accounts, I believe in using the same branch (or a couple of branches) for most of your banking needs. This will help you build a relationship not only with the teller that attends you most of the times but also with the branch manager. As they get to know you better, make sure to talk to them about your business and its needs. 

If you do find yourself charging big purchases on your credit cards, make sure you keep track of your balances and make payments beyond the minimum, so you can pay it off as fast as possible. One way to spend less on interest is by asking the credit card company to lower your interest rate. Some of the companies are willing to negotiate when you make all payments on time and you maintain a good credit history.

It is not a great idea to risk your home by refinancing credit card balances into your mortgage, or as an equity loan. Though this may mean lower interest, it also puts a lot of pressure on you not to lose your house. Your health does not deserve this extra challenge! The tax savings you would get on the mortgage interest may be substantial though, so it is worth checking with your accountant or tax specialist.

Keep More Money Month - Chapter 1

We will talk in the month of August about different tools, tips and tactics that can help business owners and the self-employed keep more of the money they make. If you own a business and are committed to building it, then you may be putting all your money back into it. This is considered a good practice not only because it helps grow the business with the capital you reinvest, but also because it turns into a tax deduction.

I thought about sharing some of my thoughts on tax deductions today. I have been working with many people who are looking to reduce the amount of money they pay on taxes by taking deductions for the things they do. This can be a good thing, of course, because one gets to use the money for the things they need and also pay less in taxes at the same time. The only issue I see with this strategy is when one makes purchases or spends money on unneeded stuff for the sake of the tax deductions. 

I have always believed that the most important money one should keep in their money instead of spending is the money paid on interest to other people or companies. I have come across people who don't want to pay their mortgage down faster and save the interest because they want to use the mortgage interest as a tax deduction. Well, here is the challenge with that strategy: one pays $100 in mortgage interest to save $25 in taxes (for someone in the 25% tax bracket). In this case they would be better off keeping the $75 in their pocket instead of giving it to the mortgage company. 

As a strategy to save money on taxes, many people contribute to pre-tax retirement plans, such as 401K or IRA. This is a great strategy to keep more money for the present time. For most people, it can be a good strategy long-term, given that most Americans have less money in retirement than they do while they work. However, if you plan right and build your wealth to have a worry-free retirement, you may be better off paying taxes on your current income and then receiving your retirement money tax free. This would mean a Roth account - IRA or 401K. The wisdom of this strategy comes from a popular saying that states that it is better to be tax on the seed than on the crop.

These tips and strategies don't work for every single person or every single situation. Everyone is different and their strategies need to be adapted to their situation. For this very reason, it is important to sit down with financial professionals - financial planner, CPA, tax attorney, estate attorney.

Money Lessons from 2 Countries - Chapter 4

After talking about college education and the cost of it, and credit cards and other credit tools that are available more in the US than in Romania, this week we will talk about the way to earn money through work and investments.

I grew up during a time when all employees were paid in cash - in fact, my mother worked in the department that was in charge of giving out the wages 2 days a month. I remember my mom bringing home new bills, and then exchanging my savings to new crisp bills - the higher the value, the better. I have talked to many American friends who have memories from their childhood regarding saving money, and many of their stories are similar to mine. The main difference is the time of the childhood. My American friends talk about the 1960's and 1970's while my memories date from after 1985 - guess Romania was a little behind in adopting the plastic and the ACH as a method of collecting wages.

During the communist regime, we only have a central bank in the country and all the savings went there - building up a small interest for staying parked in the account. I remember taking a long time to collect an amount that I liked looking at and dreaming about. The system was set up in an artificial way that limited the inflation, therefore the value of money didn't go down much over time.

As soon as the Revolution changed the financial system in Romania - among other things - the inflation hit full force and many Romanians (including me) saw the value of the savings accounts shrink. the new "fashionable" savings accounts became the ones in foreign currency. This was quite profitable for a time - until the interest on in became so low that it lost all its appeal. The main challenge for the Romanians came a little later, when the banks caught on with the appeal of making more money from foreign currencies and started offering loans in foreign currencies. I have friends who are still struggling to pay off loans taken out in Swiss Francs many years ago.

From my experience with the financial system in the United States, I learned to appreciate the stability of the national currency that maintains the values of loans as well as savings on a level that can be easily understood. Since the banks make profits by trading money, the interest on savings is always lower than the interest on loans. This makes sense on a logical level, however much it affects the average Joe or Jane who is trying to make their money work for them. 

For now, I will stop the stories of my 2 countries. Next month we will be talking about money tips that can help you keep more of the money you make.

Money Lessons from 2 Countries - Chapter 3

This week I have decided to talk about the way people purchase stuff in both of the countries where I have lived. When you read this, please keep in mind that things have changed in Romania in the 3rd millennium and I have lived in the US since 2002. I would like to talk about the money habits I have observed in the adults that surrounded me growing up, as well as in my friends who still live in Romania, and who are now adults. 

When I talk to American friends, even now, about the ease of getting credit (especially via credit cards) in the US, they are surprised to find out that I had never even heard of a credit card while growing up - outside of movies (if that). I remember being fascinated by the amount of mail people found in their mailbox in the movies while I went for many weeks between letters from penpals around the world - in the world before the internet. After I moved to the US and I told this story to friends here, I found out that most mail consists of junk and bills. So my fascination with it died a quick death - especially once I started getting my own junk mail. 

Even now, when the banking system in Romania is much more developed compared to the 1990's and especially compared to the communist regime, there aren't many credit cards around - besides, most people still use the good old, hard cash when paying. Many of the mom and pop retail places don't even deal with any plastic. So if you believe in supporting local businesses, you don't really have a choice but use cash. 

When I first moved to the US, I had to figure out first what a credit card was, then what a credit history meant. I came from a country where you got a loan for a big ticket item, like a house, based on the fact that you had a steady job with decent pay. Nobody has a credit history somewhere for lenders to see, and a credit score is a foreign word - literally and figuratively. Getting my first credit card was exciting - event with a $500 limit, not because I could spend more, but because someone (albeit be it a big bank) believed I was trustworthy enough to have access to $500 that were not mine.

Of course, in the passing years, I learned that I wasn't that special, since almost every young American who turns 18 has the opportunity to into as much debt as he/she wants to. I found out that credit cards are a necessary evil if you want to have good credit - which allows you better interest rates on things many people can never pay cash for, such as a house or a good car. I also learned that they can get people in a lot of trouble because they show you there is money to be spent, even though it is not yours and you have to pay it back - with interest (and what an interest). 

If I didn't scare you with all this talk about credit cards, we'll talk some more next week.

Money Lessons from 2 Countries - Chapter 2

We talked last week about the differences between the school systems in Romania and the US. I would like to take this post to go over some other differences within the school systems, as well as the life of the students and their families during this period.

As I mentioned, during the communism, every high school graduate was offered a job - not one that required a lot of specific training or a certification, but still a job. Also, at the time that everyone graduated university, they were offered a job in the field of their studies. For instance, doctors, teachers and engineers ended up with jobs in their field - the only "catch" was that they went to very small cities and especially in villages. The only way for them to be in a big city or close to their hometown was to ask for favors or to bribe someone.

By contrast, after the revolution, just like in the United States, many of the graduates from different universities work in jobs that are different from their field of study. Also, with the increase in new universities after 1989, there are a lot more graduates than before. With all the changes that came with the revolution, the high school graduates had more options for university, and therefore many attended classes in fields that they were not passionate about, such as going to law school - similarly with many American students getting a degree in criminal justice.

While growing up both during the communist regime and afterwards, in Romania, teenagers and college students didn't have an opportunity to work - without the fast foods and grocery stores, like the big chains in the US, we didn't have a chance to earn money and have entry-level jobs that show up as "experience" on a resume. I still remember how hard it was after graduating college when I started looking for a job and everyone was asking me about experience. Yet nobody would hire me to give me the "experience" they were all requiring. 

I guess in this I always considered the students from Western Europe and the United States as fortunate to be able to achieve a certain level of financial comfort by providing the cash they needed for the things they wanted through their own jobs and efforts. As a funny side note, I also didn't grow up with an allowance, so I didn't have a "weekly wage" as a child, with which to make plans for things to buy. I always had to earn the money I wanted by maintaining good grades - which was not a hard thing for me (fortunately). 

Going away to college gave me an opportunity to manage my money while making sure I could buy the things I wanted while also having money to go home every time I wanted. For many Romanian students college is the first chance to leave home for a number of years and become independent (or at least depend on the parents less). What happens many times after graduation though, is that the graduates return to live with their family for a while longer - unless they find opportunities for work (most often out of the country). 

I used to think that the American and Western European systems, encouraging their youth to move out form their parents' homes in their late teenage years, was such a great set up. I longed to be independent back in my adolescence...

We will explore some of the other changes in the next weeks. Stay tuned! 

Money Lessons from 2 Countries - Chapter 1

This month is dedicated to talking about the ways the financial system is different in the 2 countries where I have lived my life. I grew up in Romania, first during a communist regime that believed that all are equal in rights and possessions (except that some were more equal than others, as we found out afterwards), and then in a democratic country that was designed in bits and pieces to mirror centuries old democracies in Western Europe - and not always for the good of the people. In my early 20's, I moved to the US and had to learn all about the financial system in a country that was totally different from the one I was raised in.

I decided to write some of my thoughts and the lessons I learn through my experience, so that both the Americans and Romanians reading these posts can find out what other people have to work with and through when trying to achieve their financial goals. It is my hope that readers from both sides of the Atlantic will take some of the info I share and use it so they can build better relationships with their money, and at the same time appreciate more what they have access to.

This week, I would like to address the school and university expenses in both countries. The similarity is that both countries have both state (public) universities and private ones. The differences are many on all the levels of schooling. I would like to also cover the differences in the Romanian system now compared to how things were set up when I went through my school years. I consider myself fortunate to have been in middle-school at the time of the revolution, when Romania overthrew the communist regime. I have always felt I was born at the right time, because it gave me a chance to experience life during the communism regime while being old enough to still remember it; at the same time, I was young enough when the revolution happened to benefit from the changes and the new opportunities that became available. 

The school system set up by the communists was designed to ensure all students graduated from high school, so all the students were supposed to pass, regardless of their actual level of knowledge or ability to pass tests. Also part of the propaganda was that university studies were not encouraged, because graduating from higher education was a threat to the regime - people became individuals instead of just one of the many average workers. Graduates of higher education were known as "intellectuals" and the way the pay system was set up (all under the control of the government) encouraged factory workers to have no aspirations for university degrees.  

The good thing about the universities during the communist regime was the fact that all education was free, with the only expenses related to the dorms or any other living conditions for the students who went to school in different towns. The hard part was not the cost but the entrance exam, because of the number of candidates for the student places available. When I went to college, there were over 9 of us for each of the 25 seats open in the Tourism Department. It used to be even worse back in the 1980's for Medical School and for Law School - sometimes even over 20 candidates were fighting for each spot. 

In the recent years the criteria have changed and now the entrance exam has been eliminated for many universities, while the grades from different subjects counted for the average considered for admittance. Along with the state universities that have been around for many years (a lot of them for decades and even hundreds), many private universities were founded after the revolution - these last ones not as picky in students admitted, and asking for tuition. The tuition there is a lot lower than what the American universities charge, but it can still be high for the average income in Romania. 

The private American universities, by contrast, are more prestigious and mostly more expensive than the public ones. The main drawback to going to college (for the majority of students) is the amount of student loans one gets saddled with, for many years after graduation. I think that the biggest concern for the families sending their children to college and knowing they will be taking on a lot of debt, is the statistic showing the small percentage of them that will actually work in the field that they are qualified for. Well, this is very similar to Romanian graduates, who also go for the diploma without a real plan to work in that field. This is more obvious for such graduates of business universities (named Economic Studies) and a lot of private law schools - Romania doesn't need that many attorneys. 

Now that I realize how much I can write on the topic, I decided to continue this subject next week, when we will explore some more details of the school system - similarities and differences.