Monday, October 29, 2018

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.  

Monday, October 22, 2018

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.

Monday, October 15, 2018

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. 

Monday, October 8, 2018

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. 

Monday, October 1, 2018

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.