Is Occupy Wall Street the Beginning of 21st Century Civil Rights?

People have taken to the streets because something is really wrong in America and they want change. What type of change they want and from whom is unclear at this moment, but Action is always a good start.

Is Occupy Wall Street the beginning of a 21st century civil rights movement? My answer is Possibly with a smile. I smile because although we have revised history to make ourselves the most moral people on the planet earth, the truth remains that we are far from completing the goals of the 20th century’s Civil Rights Movement. The truth is America ALWAYS takes a very long time to do the right thing. And lots of people get hurt in the meantime.

We are the country that wiped out most of the native people who were here before us, kept slavery in effect for 4 centurys, called the country free in 1776 but didn’t allow women to vote until 1920. Of course we didn’t have a Voting Rights Act until 1965. It took until 2011 for Gay Rights in the military. And yes we used to have children working in coal mines because our child labor laws were terrible for the first few hundred years. I could mention so many things that are basic human rights in the country that took way too long to come to pass but you get the point. We can see injustice and keep going along with it better than anyone on the planet but once we decide to do the right thing we want the world to adopt that view and we condemn anyone who is not so enlightened as America.

Occupy Wall Street can build itself into one of the great movements.  At its center is the idea that people should have a fair chance in life and not have to worry that the banks and other financial institutions are stealing their futures. It is a great idea that is taking shape but it will take time and those in power will not go quietly.

More importantly those that lead and support Occupy Wall Street should know that they will not be supported in word nor deed by the majority of people who will be helped by their efforts. 

The leaders of Occupy Wall Street should be prepared for lots of criticism from the very people they seek to help. Just as Martin Luther King and the civil rights workers did. Just as the women from the womens rights struggle did. Just as the first abolitionist did. They may live and die with high disapproval ratings like King only to one day be remade into champions of all Americans.

Power concedes nothing.  This system was not undone by credit default swaps and bad banking. It was doomed with passage of the Retirement Act of 1978 that created the IRA, 401K, thrift savings plan, and 403B. At that moment all of America’s workers became stock market gamblers with no real experience. That moment brought us here because America’s life savings flooded the market and created faux wealth of every type. That is what we must undo.

Slay that dragon and maybe we have a chance to survive. If we keep that system alive and keep training advisors the way we do now with the greatest compensation going to the plans with the highest risk we can not recover.

Will a 21st century civil rights save the people? I have no idea but we should do right because right is the right thing to do.

Will we recover? Yes we will recover, but perhaps not in your life time because in America we take a long long long time to do the right thing.

Wealth Wellness and Wisdom

Mark Fuller

Manager of Wealth

No time to sit back and watch the Wall Street Train Wreck!

I’m going to make this super short so that you can hear me through the noise.  A confused mind often opts to do absolutely nothing and so what you can count on is that most people in America will do nothing as their money evaporates in their retirement plan. Occupy Wall Street will not change that. When people get scared they usually do nothing but stand in one place and wait for the train wreck to happen.

Data from the social security administration says that only 3 out of every 100 working people retire securely with enough income to not be totally dependent on the government for the rest of their lives. That means we have a 97% chance of failure and it’s largely due to not knowing enough and making the right choices. 97% of people are good, decent, hard-working people. But they can’t retire well because every few years they lose most of their savings in the stock market. This will be the legacy of the tax deffered retirement plan. Write that down because in the future it will sound profound. It’s not profound but you can’t hear the truth of this through all the noise.

Our advisors were trained to believe in a plan that has a 97% chance of not working out. This doesn’t make your advisor a bad person.

This doesn’t make you a bad person. 

You will be like most of the 97% who thought they would make it without being properly educated and taking the right steps to secure themselves.

Truthfully, you can’t earn enough money to buy your way out of knowing what you need to know. Being rich now doesn’t make you wealthy in the future. In fact, if it did there wouldn’t be a 97% failure rate. If being rich now secured your future then the success rate would be over 25% for American Seniors. But its only 3%.

What ever you do don’t just stand there and do nothing! Think and act. A huge train is coming down the track.

60 Minutes told people two years ago but most are still just watching. http://www.youtube.com/watch?v=q8C1ZUrYhC0

Wealth Wellness Wisdom

Mark

Leaving a financial legacy , Seniors can do much more with retirement income than pay off homes!

Imagine working your whole life and paying every on time or early. You have done all the right things, raised your children, and worked for 40 years on a good job. Now you are retired and drawing a fixed income of $3500.00 per month from your pension and social security. You are also like many American seniors who are still paying a mortgage. You live in a $250,000.00 house but you have paid down your mortgage so you only have $100,000.00 left to pay before you house is paid off. Now when you got this mortgage you were ten years from retiring and earning $70,000.00 per year on a full-time job. The mortgage payment of $1700.00 per month represented less than 30% of your income but now in retirement the mortgage payment is now 50% of your monthly income. Taxes, insurance, utilities and medical expenses  have almost all disposable income going to bills. With 20 years left to pay on this mortgage and a life expectancy of 85 you might be paying for this property for the rest of your life.

But there is a great option that creates additional income and provides an opportunity to leave a much greater financial legacy than bill paying ever will. Instead of mortgage payments for the next 20 years you could create a great financial nest egg with the same money. Most never consider this option because they want to pay off the house and leave it to their kids(who already have homes of their own, and will sell your house as soon as they are able)

Lets assume $1500.00 a month was going to principal and interest and $200.00 was going to taxes and insurance. If you stopped paying a mortgage and started sending $1500.00 a month to a saving account paying 5% over the same 20 year period of time you would amass $620,619.46. So the same dollars that only pay off a house could have built up a huge financial legacy for your heirs. In addition, it could have acted as a safety net in case you fall on financial hard times.

For many seniors once they retire their retirement income is so low they can’t qualify for a home loan because their debt to income level in too high.   Most live on a lower fixed income than they had while they were working. With 85% of American’s net worth is in real estate equity and 65 %to 70% of the wealth belongs to seniors. This reality creates a huge problem or a huge opportunity. Being equity rich and cash poor is a disaster waiting to happen.

The reverse mortgage is one of the few government programs that actually performs as promised, if you use it properly. Advice form a great mortgage adviser and a great investment advisor can be invaluable. I hear more mythology about these products which is far from the truth and has seniors scared to death.

This is a mortgage that accrues interest instead of one that you pay monthly.  It is not you signing over you home to the bank. I have heard people say these mortgages are for poor people who can’t pay their mortgages . Everyday I see wealthy people use these mortgages to capture the equity in their properties and move the money to savings accounts where they can keep the growth.

Don’t let misinformation steal your opportunity. Get educated. Why would a person take half their income for 20 years to pay off a house when they could amass over $600,000.00?  Only because they don’t know any better. If people knew better they would do better.

For more information please contact my mortgage planner Omar Smith 443-271-5952 and get all the facts.

Wishing you Wealth Wellness and Wisdom

Manager of Wealth

The Good News about what your Rent/Mortgage Payment can buy! Part 3

Good Morning Manager of Wealth Family. I’ve never seen a topic that garnered so many text messages and inbox messages. I’m glad this conversation about the allocation of money is taking off.  For so long people have complained about how they were not being paid enough. They complained about how expensive housing was.  They complained about having too much month left at the end of money. But now people are looking for answers because we all know what the problems are.

Here is some good news. Getting to the point that your monthly savings deposits are equal to or greater than your Mortgage payments/rental payments means an incredible future for you and your family. Check out the simple illustration below:

Mortgage/Rent

$300,000.00 loan balance @ 6% equals a  $1798.65(taxes and insurance not included)

over 30 years that amounts to $647,514.57 in mortgage payments

* This is the same rent you would pay for an average 3 bedroom townhouse in many suburbs.

If you allocated the same monthly payment to your investment accounts and got an average return of 6% over the same time period you would have achieved the following:

Savings deposit $1789.65 per month @ 6% for 30 years

account value  in thirty years – $1,877,245.97

Even better news is that the choice is not one or the other. The house or the great future. You can have both easily but the money makes the house possible in the opposite way that the house can make the great financial future impossible. If you current monthly debt service is making it hard to save it’s time for a change.

The rewards for paying your investment account first are incredible. Not only will you have a much better retirement but you will also be more secure everyday for the next thirty years. If done properly your income from your savings can come to you tax-free in your retirement years and you could leave a multimillion dollar nest egg for your heirs. If you want to see what your mortgage payment could be doing for you go to this link and enter your numbers and think about how you want your future to look.

Simple savings calculator:

http://www.bankrate.com/calculators/savings/simple-savings-calculator.aspx

The truth is many people bought their first house for $100,000.00 and their second and third for between $300,000.00 and $500,000.00 without considering their savings. They just qualified and committed to the payment. When will we commit to the savings account? Some people retire poor due to forces beyond their control but many others have been their own worst enemies. The good news is that the power to spend is in your hands.

What will you purchase with your hard-earned dollars? A big house or a grand future?

Wealth Wellness and Wisdom

Manager of  Wealth

If your Rent/Mortgage is greater than your savings deposits make these changes ASAP

I freed a thousand slaves I could have freed a thousand more if only they knew they were slaves. Harriet Tubman

There is no simplistic answer to getting out of the trap that many have created by choosing to consume before choosing to save. The reasons why someone makes the choices that they do early on in their professional career are many and varied. Some people own certain homes and automobiles because the bank said yes ,not because they had the money to outright purchase them. In that sense for most people the idea of signing up to 30 year contracts on houses and up to 6 year contracts on cars seems like a great idea at the time. It is about ten years into these decisions that we start to feel a little trapped by them. They are limiting our freedoms,  limiting our travels, and limiting our ability to change careers. At least that is what we begin to believe.

It’s very common to say that debt is economic slavery but no one makes you get the credit cards , cars or home loans. On the reverse side of that statement, no one can make you keep going forward in those bad decisions.

Your freedom is in changing course quickly and with as little damage as possible.

Don’t do anything crazy, crazy got you here, so let’s do something practical. Let’s sit down and figure out what we want to accomplish with our money and second if our current actions are moving us toward that goal.

Our money does two things very well.  It can enrich our lives and the lives of our families or it can enrich the people we owe obligations. The money you save enriches you. The money you pay in bills enriches others.

At this point in life, what do you want? I’d like to expand my career in financial education and make a huge difference in how my people build wealth, realize dreams, and transfer knowledge to future generations. I’d also like to have as few monthly bills as possible and no personal debt. In addition, I’d like to travel at least 8 weeks a year for pleasure outside of business. Most importantly, I am building a system that will provide my family the income and information to generate wealth for generations to come.

Your goals are the fuel to get you through any of your past missteps so start with them. If you start by looking at your errors you may become distracted and unmotivated. Defend these goals with all your might. Taking your eye off your long-term goals can get you caught up in short-term money traps. Owning a series of cars can keep you from owning your dream car and owning a series of ever more expensive homes can keep you from ever purchasing your dream home. Add up all the car payments you have paid for all the cars you have ever owned. For most people by the time they are 45 yrs. old you have paid for a Bentley with all the car payments. Break the cycle and pay cash for the next car even if that means going to the auction and buying an affordable car.

Where is all the money going?

What is your salary or income?  How much is going to taxes? How much is going toward housing? How much is going toward your car or cars? How much toward household expenses? How much toward education for children? How much toward charity? How much is going toward long-term savings? Right it all down because it’s all going to help free you from bondage.

Don’t just look at these numbers and come to the conclusion that you need to earn more money. Thinking you just need to make more money without getting into the proper relationship with money will just cause you to make much bigger and more costly mistakes when money begins to come in. I have seen households with over $200,000.00 a year in earning that can’t save 20,000.00 a year. This is because when there are no strong goals and  plans to get there, all you have left is consumption.

Now that you see what your money is going toward you reduce the big money items. Maybe you should sell your house and get a more affordable house to create cash. If the house is worth less that you owe now is the perfect time for a short sale. I am seeing clients reduce their housing expensive by 1500.00 dollars or more a month just by selling and going to rent in a smaller home but a better neighborhood that meets their needs. What would it mean to your stress level to go from a $3500.00 mortgage payment to an $1500.00 a month rental payment. How much financial pressure is being relieved.

What about the car

Can you trade your car and car payment for one that is totally paid off or much more affordable? I have had clients trade in their cars with big car payments for used car in great condition. Don’t be afraid to turn in a car if the payment is killing you financially. I hear people saying but that will hurt my credit. Being broke will mess up your life and it’s only a matter of time before you drown in your payment.  What would it feel like to go from a $700.00 car payment to a 150.00 car payment or no car payment?

Reduce Your Income Taxes by Starting a business

This is a whole other topic but the easiest way to reduce taxes is to start a small business on the side to create expenses that can be deducted from your gross income. Seek the advice of a great accountant and you will be amazed at how many of your travel, food, entertainment, transportation, and housing expenses can be written off. Reduce your tax basis, this is huge! The system in America was set up to favor small businesses and land owners not working people. Remember this at all times.

While you are considering the move make sure to move to a great school district

It is better to rent in a great school district than to own in a bad one. Many will disagree it is their right but great public schools pay for themselves in two ways. First private schools can cost $1000.00 to $1500.00 per month. many people have more than one child and 12 years of schooling is the difference between them retiring with millions of dollars for retirement or retiring in poverty. Your kids need to be educated well and unless a private school is going to give your child a scholarship, save yourself a fortune and move to a great district. I’ve seen people move from $500,000.00 single family home communities to large townhouses in a great school district and save $2000.00 a month on housing and another $2000.00 per month on school. How much faster could life get better if you were able to save $4000.00 per month?

Recap

1. Unless you are saving money in your account you are working for free, what you keep is what you earned the rest belongs to the banks

2.Write down your life’s goals

3. Write down where your money has been going, now and what it could earn you if it was going in your savings

4. Until you can afford to buy the house and the car your dreams only buy foreclosures, distressed property, and vehicles from dealer auctions. This will save you hundreds of thousands in payments and interest

5. Reduce taxes by opening a small business

6. Live in a great school district and educate your kids for free

7. The more money you save the more free and secure you become, personal debt equals economic slavery

8. Remember if you can’t get out of economic slavery your children won’t be able to get free either

Get help with reducing your large expenses now. Call me if you need help 410-484-2717

Wishing you Well Wellness and Wisdom

Manager of Wealth

In Life as in Theater, A Professional Production has an Understudy waiting in the Wings, Amateurs hope for the best

Yesterday I was talking with a dear friend who is starring in a wonderful stage play and is playing every night to rave reviews. In live theater, every night it is a different experience for the actors and the audience. In short it’s like real life.

My usual questions were about how last night’s performance had gone and how the critics reviews were going when I learned something  interesting. Two nights ago the entire production was thrown into jeopardy because one of the main actors had overslept and the show could not go on without him to play his role. Being naive I asked, why the understudy couldn’t take his place. I learned that in most regional and community theater there are rarely any understudy.

Apparently one monkey can stop a show in regional theater. On broadway, in movies, even in Vegas there is always a backup plan but in everyday theater if one cast member gets sick or has an emergency it can bring the whole production to a  halt.

It seems that regional theater is run like most Americans run their family lives. Everything is ok as long as nothing major happens. If something does happen there is rarely a real well thought out plan.

The recession caught many of us without a plan. Deadly car accidents catch families unprepared everyday, when parents are suddenly taken away and no provisions are made. Deaths from cancer, heart disease, and diabetes are killing more young people in their 30s and 40s than ever before.

How many funerals have you been to in the last few years for young people? Few had a really solid plan in place to take care of their families and continue the work they had been engaged in everyday of their lives. No plans to replace income or address the expenses that come from a parent not being there. No college plan left in place. No financial legacy left for the next generation.

There were however devastated and overwhelmed survivors; there are always survivors. Devastated by the lost and overwhelmed by having to carry on life without a partner or parent.

Life is a professional production and it should be run that way. There must be back up plans, understudy, and back up dancers waiting in the wings in case the stars of the show can’t perform. If community and regional theaters want to truly prepare actors then they need to prep for what can go wrong.

You may not be wealthy but you need to have a well thought out back up plan like the wealthy.  The pain caused from not having a plan is greater on a small family. Plan for every eventuality  and you can more easily concentrate on the rest of your life.  Get advisors to educate and train  your family.

Good luck in the professional production called Life.

“Break a leg”

B of A and Wells Fargo signal the Apocalypse for American Seniors and Everyone else

It may already be too late; but in America I am way before my time. For the last few years we have been warning people to take steps to guard their assets and equity from the impending downturn. Now in a major move that should be front page news Bank of America and Wells Fargo are exiting the reverse mortgage market.

Please read the article in the New York Times: http://www.nytimes.com/2011/06/18/your-money/mortgages/18reverse.html

This is bad news for American seniors because Bank of America and Wells Fargo are taking the position that they don’t want to be overly exposed to the huge downturn in home prices that is about to happen. Instead they are willing to leave 43.6% of the reverse mortgage market on the table and opt for safety. When the two biggest players in a market walk away you can bet they know something that the American public doesn’t know.

If seniors lose the ability to borrow with reverse mortgages they will affectively be cut off from their equity because most can not qualify for loans on their fixed incomes. Great news for banks and really bad news for seniors. This move would also cut seniors off from what could be 85% of their net worth; because 85% of American’s net worth is real estate equity.

Why should the rest of Americans who are not seniors care? Because statistically the baby boomers are holding this country together. 65% to 70% of the wealth belongs to the boomers and 85% of that wealth is the real estate. If the Boomers get hurt we all get hurt and by the way, the boomers are our parents, grand parents, aunts and uncles who will look to their broke children for help.

There is time but not much to get educated and make some much better decisions, Don’t be like the majority of people who simply let their equity evaporate in 2008 even though all the best financial people were warning of an impending crisis. In a high inflation period interest rates soar for lending but they also soar for savings. So you would rather have your equity in a safe place earning interest for the next decade(because it will take at least that long to recover) 0r losing 30% to 40% with the drop in home prices.

And please don’t forget that the government is proposing to raise home down payments to 20% which will further kill home prices and equity.

It is time to make a move.

Watching the whole place burn to the ground is not an option. When the informed money moves away from the table you better wake up and do the right thing before the options are taken away from you.

Manager of Wealth

New York Times Article : http://www.nytimes.com/2011/06/18/your-money/mortgages/18reverse.html

Reasons to mind your Parents’ Financial Business

The old saying goes “Once an adult, twice a child”. If you are blessed you will one day know what this saying really means. Either because your parents will get old and need you to care for them; or you will get old and need your children to care for you. If you are blessed and lucky both will happen. Regardless, you should not wait to have conversations about money and how things should be handled until it is too late and someone has lost the mental of physical ability to have a direct conversation. I was reminded of this yesterday on Mother’s Day while visiting my parents.  We had a brief conversation about a matter they needed my help with. It is unique a situation for parents and children to have open conversations about finances.

There are many reasons your parents need you minding their financial business but I’m going to talk about four very quickly.

1.Things get more expensive in the future

You can be debt free and have your house paid off but it will not stop the cost of bread, eggs and gas from going up in the future. Gas was $1.16 in 1990. Everyday people who live in paid off homes and are debt free are struggling with $4.00 gas and $4,000.00 property taxes.  As a family you must sit down with an adviser and talk about how to prepare for the future. Parents are not prepared for $8.00 gas and $12,000.00 property taxes, but those things will happening anyway.

2. If you get sick and need government help the government expects to take your assets down to your last $2,000.00 before they will help you. This is avoided ONLY by proper planning.

Hopefully your parents and older relatives will live a long time. Of course, living  a long time means possibly being ill from time to time. This is a fact of life and so there is a safety net called Medicare. Medicare is a good safety net for a lot of Americans who can’t afford medical care. Here is what you don’t know about Medicare.If you get sick and need medicare to help you they will take up to your last $2000.00 in assets before they will pay a dime. In addition, they will do a five year look back into your finances and if you transferred assets out of your name to other people in that time they want that money too!

There are lots of people who are not rich but they are not poor either. Getting sick even once can and does wipe out a life savings. Chemo is expensive, hip replacement is expensive, rehabilitation is expensive, nursing homes are $5,000.00 per month and up.

Losing everything can be totally prevented by getting paperwork in order and making sure assets are titled properly.

 3. Today’s financial instruments are complicated.

Do you know what a reverse mortgage is and how it works?  Do you really know or do you know what you have heard?  In almost 2 decades of talking to people about money few take the time to learn about options until they are in trouble. The wealthy use instruments like reverse mortgages, insurance , and annuities while the middle class and poor use IRAs, mutual funds, and live in paid off homes. You need to understand the reasons for this. Your family needs to protect everything your parents have worked for.

 

 4. Well advised families take advantage of the fact that nobody lives forever. Many middle class families with a great advising created generational wealth from this absolute certainty.

Only two things in life are certain, death and taxes.  GE found a way around the tax issue but no one lives forever. Every person in your family could use their mortality to generate 1 to 2 million dollars for the family trust fund. If the principal of that fund was not touched,  the interest of that fund could pay future generations. How well off would your family be in two generations?

People always talk about the trust fund babies but a lot of trust funds are no more than simple insurance policies and annuities. A family had the foresight to set this up a generation before. Parents think all they have to leave their children is a house. Most children sell their parents’ homes. That money might have bought the parents an even larger insurance policy or allowed them to generate and even greater nest egg.

These conversations need to happen because the law of unintended consequences is lurking in the shadows.  So many missed opportunities because of poor planning. Some think they are so well off there is no need to plan further ; others don’t think they have enough assets to warrant a plan. Both are wrong.

 Mind your parents business and watch your own financial IQ grow.

Mark Fuller

Manager of  Wealth

If you have less the 40 yrs. left before Retirement you need to see this, NOW!

There is a myth floating out in the financial world that over the long-term the stock market returns 10% or better. Well consider that from 1999 to 2009 the market returned a whopping .08%. If you where 50 yrs of age or older how will you make up for making no money for a decade. how can you make up that decade even if you are 40 yrs old. Whats more important, how will you make up for not making money for the next decade. I know you heard the recession was over and because your retirement account needed that to be true you breathed a sigh of relief. Let me give you the actual and factual truth in a picture that has nothing to do with my opinion or anyone else’s. Look at the picture and tell me where we are headed for the next decade.

click to enlarge

 

This chart shows the last 100 yrs in the stock market. The green area shows bull markets where the economy and the stock market were growing. The red area shows secular bear markets which is when the market goes a decade or more and basically finishes exactly where it started.

I hope it is not lost on you than every bull market was followed by a much longer secular bear market. Much shorter bear markets were followed by 11,16, 17 year secular bear markets.  We just came out of the longest bull market in recorded history 18 yrs,  7 yrs  longer than any other bull market in history.  It would stand to reason that we are headed for an at least equally as long bear market to get us back in line.

Notice we are only 10 yrs into the secular bear market. Are you prepared to go another decade without making money in your retirement accounts? Look at you balance asset portfolio in your IRA or 401K and you will see that you account reflects what this chart shows.

Also notice that on the  graph even in the red never stays flat so people stay in because every now and then the market shows signs of life and they are convinced to ride it out. But in the end it ended right back where it started and the only money in most people’s retirement accounts is the money they contributed.

I’d love to help point you in the right direction and get you the help you need to stop going decades without making a profit. My company works with the smartest investment advisors, accountants, lawyers, and mortgage planners and we can get you the information and education you need to thrive.

How will you beat the Bear!

When it comes to building Wealth Buffett is willing to invest in a sure thing!

Why is Warren Buffett and Berkshire Hathaway buying up the cash value policies that people want to surrender? Its simple, its the tax free return on investment. The chances of everybody passing away is 100%.
Warren Buffetts rule number 1 is never “Don’t Lose Money” and rule number 2 is “Read Rule Number 1″

check out this article on Cash Value insurance.

http://blog.riscario.com/2007/10/does-warren-buffett-buy-term-and-invest.html