Stewart Welch Videos


Monday, December 28, 2009

Stewart Welch - What's the Outlook for 2010 Finances?

“What's the 2010 Economic and Market Outlook?”
2008 and 2009 were tumultuous years to say the least. We experienced an economic and stock market collapse second only to the Great Depression followed by a breath-taking stock market recovery to close out this year. So what should you expect for 2010 and how should you position your investments?

The Economy. It’s important for you to separate the economy from the stock market. You need look no further than last year to clearly see the two do not move in lock-step. Throughout most of 2009, the economy continued to worsen but at a slower and slower pace while the stock market soared over 60% from the March 9th lows.

There are many signs that the economy is continuing to improve amid historical low interest rates that have been orchestrated by Federal Reserve Chairman Ben Bernanke. Expect interest rates to remain at current levels at least through the first half of 2010. As inflation becomes more evident next year, the Federal Reserve is likely to reverse its course on interest rates and begin raising rates in the third or fourth quarter. The Obama Administration and Congress finally understand that priority number one is creating jobs so look for unemployment to fall. Unfortunately, unemployment will remain in high single digits suggesting we will see a mostly jobless recovery next year.

The Stock Market. Historically, the stock market leads the economy out of a recession and this recession appears to be no exception. Since the March lows, the stock market has risen over sixty percent and may be due for a breather before building a new base and rising further. On the bright side, corporations have diligently trimmed the fat from their organizations and are poised to be highly profitable as the economy reignites. Further good news is that there is approximately $3.2 trillion sitting in money market accounts. This is ‘scared’ money that is currently earning less than 1% but is anxious to move into the stock market once confidence is regained. In summary, we are likely to see one or more downward spikes before the market rebounds to what could easily be double-digit returns by year end.

What to do now. It’s impossible to know when a market correction will occur. If you have money on the sidelines, consider averaging those funds into the market over the next twelve months. Domestically, I like blue chip dividend-paying stocks. Make sure you own a minimum of twenty companies in at least five different sectors. Companies like AT&T, Southern Company, Kimberly Clark and Consolidated Edison are good prospects and pay dividends yielding three to four times the interest paid on current money market accounts so you’re getting paid handsomely while you wait for stock performance. International stocks should also do well. You’ll want to own a large basket of stocks so a good choice is an Exchange Traded Fund such as EFA. For emerging market stocks one of our favorites is EEM. Ultimately, you’ll want to plan on a holding period of at least three years. As always, seek guidance from a professional advisor.

Monday, December 21, 2009

Stewart Welch - Creating Accountability for Success

How can I Achieve my Goals?

It’s that time of year when people all across the globe reflect on what changes they are going to commit to for improving their life in the coming year. While people set their goals with the best of intentions, most fail to stick to the promises they make themselves because they are not good goal-setters. Use these 5 steps to create massive achievement:

Create clear, written, measurable goals. Many people believe that having a goal clear in their mind is enough. It’s not. This is what I call a ‘dream’. When you take a mental picture of what you want and articulate it in the form of writing, something magical happens and the brain automatically begins a process of solving the problem of how to get where you want to go as compared to where you are. The written word helps to create clarity. You must also include measurability. Measurability is the ability for you and someone else to know if you accomplished your goal.
Create a giant ‘Why’ for each goal. Setting goals creates a certain amount of excitement. But that excitement begins to wane as the hard work of implementation begins…unless you have a really big ‘Why?’ As you are writing your goal, include a section on why achievement is imperative for you.
Review your goals daily. Writing a goal and never reviewing it rarely results in high achievement. It only takes a couple of minutes each day to review your goals. This simple habit ‘re-boots’ your brain to maintain its focus. As part of this process, make sure that your daily activities are consistent with your goals.
Track your progress. Each goal should be broken down into ‘mini-goals’ or ‘actions’ that allow you to measure your progress towards the big goal. The best results tend to come from weekly measurements. For example, for each goal set a mini-goal for the week; schedule time directly into your calendar for completing the task related to that goal; then, at the end of the week, determine your progress. Create mini-rewards for accomplishing the weekly activities you set for yourself.
Create accountability. To achieve massive results, you are going to need an accountability partner. It’s one thing to fail when nobody (but you) knows. The more people that know about your goals, the more leverage you will create for yourself. Consider creating a Success Accountability Group of three to five people who are all committed to massive achievement and are willing to support each other. This can be as easy as a group email once a week. Step one: share your goals with your accountability partners as well as the ‘Why’ you must accomplish each goal. Step two: list the activities you intend to accomplish during the coming week. Step three: report whether you completed those activities and set your activity goals for the upcoming week. If an accountability partner begins to falter, you hold him or her accountable. Support him or her in re-committing to his or her goal.

You can achieve anything you choose if you are motivated enough. Think big; write it down; create a ‘Why’ that is bigger than you; review goals daily; track your progress; get support from others.

If you’d like a goal planning worksheet, email me at

Monday, December 14, 2009

There's Still Time to Cut Your 2009 Tax Bill

As the clock ticks down on calendar year 2009, don’t forget to use these last minute tips to reduce your income taxes:

Review realized and unrealized gains and losses. From the stock market peak in 2007 to its bottom on March 9, 2009, the market lost more than fifty percent. However, since the March 9 bottom the stock market is up over sixty percent. With this wide range of volatility, now is a great time to review your investment accounts. Figure out your net ‘realized’ gains or losses based on sales you’ve already made this year. If the net result is a loss, you can take up to a $3,000 deduction against ordinary income. Any excess losses can be carried forward and used in future tax years. If your losses are less than $3,000, consider selling other securities with losses to maximize the $3,000 deduction. If the net result is a gain, consider selling enough shares with losses to offset your gains, particularly if your gains are short-term which will be taxed as ordinary income versus long-term capital gains rates (15% federal).
Make your January home mortgage payment by year-end. By paying your January mortgage payment in late December, you’ll get to deduct an ‘extra’ months worth of interest this year.
Claim a tax deduction for a new car purchase. While the Cash for Clunkers deals are no longer available, the federal stimulus package offers tax incentives for the purchase of a new vehicle bought between February 17 and December 31, 2009. Under this temporary law, you are allowed to deduct the state and local sales and excise taxes on the purchase of new cars, light trucks, motorcycles and motor homes. The amount of the deduction is limited to the amount of taxes paid on the first $49,500 of the purchase price and the deduction is phased out for taxpayers filing a joint tax return whose modified adjusted gross income (MAGI) is $250,000-$260,000 and single filers whose MAGI is $125,000-$135,000.
Don’t panic over Required Minimum Distributions from your IRA. Normally, if you are age 70½ or older, you are required to take a minimum distribution from your IRA account each year. For calendar year 2009, the government has waived this requirement. Use this as an opportunity to defer the income taxes on retirement account distributions for an additional year.
Give to charities. Don’t forget that gifts of cash, securities, clothing and other personal items to charities are deductible. With an estimated fifty million people either out of work or facing severe financial stress, it’s more important than in any time in recent history that we support the charities that support those in need.
Contribute to your retirement account. If your company offers a 401k plan, you still have time to up your contribution and receive a tax deduction this year. Contact your Human Resources Department for help. You’ll have until April 15, 2010 to make a tax deductible contribution to your IRA account.

Monday, December 7, 2009

Free Money for Home Buyers

Mortgage rates are near all time lows and Congress has extended tax credits for first-time home buyers that was set to expire last week. In addition, they expanded the law to provide tax credits for existing homeowners who purchase a new home. It all adds up to an excellent opportunity to buy a home now. Here are all the details:

First-time home buyers. If you have not owned a home for the past three years, you qualify as a first-time home buyer under this federal program. Buy a home now and you can receive a tax credit of ten percent of the purchase price up to $8,000. Unlike a tax deduction, a tax credit is a dollar-for-dollar offset against federal taxes owed. For first-time home buyers, homes bought between January 1, 2009 and May 1, 2010 qualify for the tax credit.

Long-term homeowners. To qualify as a long-term homeowner, you must have owned your current home for a minimum of five years. The tax credit for you is equal to ten percent of the home’s purchase price up to a maximum of $6,500 for homes purchased after November 6, 2009.

General rules. The home you buy must be your primary residence, so a vacation home at the beach won’t qualify. Also, under the extended and expanded law, you don’t qualify if you purchase your home from a family member. You are likewise ineligible if you make too much money. For single tax filers, the tax credit is phased out between $125,000 to $145,000 adjusted gross income. For joint tax filers, the phase out is between $225,000 and $245,000. Homes purchased for more than $800,000 do not qualify for the tax credit. “If you sell your new home or fail to occupy it as your primary residence within three years of the purchase date, you’ll owe the federal government back all of the tax credit you received,” according to Scott McFadden, a Certified Mortgage Planner with MortgageBanc, LLC in Birmingham, AL.

It’s also important to note that you won’t be able to use the tax credit as part of your down payment. You’ll receive the tax credit at the time you file your tax return, which for most people will be April 15, 2010. If the tax credit exceeds your federal income tax, you’ll receive the excess as a tax refund.

Combine these tax credits with low mortgage rates and a very favorable home buyers market and now is a great time to buy a home. Both 15-year and 30-year mortgage interest rates are under five percent. And while the housing market is showing signs of recovery, home prices are still very attractive. This is a great opportunity for parents and grandparents to get involved in helping adult children buy their first home by assisting with the down payment. You might even help them become a real estate investor.

Consider this strategy. Sometime after the required three-year primary residence period, your child could turn the home into a rental property. The result? Your child bought the home at a time when home prices were depressed with the help of the government at a low interest rate and he or she is now receiving rent and tax benefits of owning rental property.

Monday, November 30, 2009

3 Rules for Holiday Spending - November 29, 2009

There is no one that has not been touched by the current recession. Past habits of overspending will not serve us this year and it’s imperative that we begin next year in better financial shape. To make sure that this goal becomes your reality, follow these three rules for holiday spending:

Don’t spend money you don’t have. If history serves as an indicator, most people will face January 2010 with more bills than money because of holiday gift buying. Your goal should be the opposite. Don’t count on future paychecks to cover holiday spending. Take a moment to check your bank account balances right now…then set a goal for higher balances, this time in January. To achieve this, you’ll need to do a little planning. Take a moment to determine how much money will be coming in between now and then plus calculate your upcoming expenses, paying particular attention to any non-periodic expenses such as an insurance premium payment. Once you’ve added up the money coming in and subtracted the expenses going out, decide how much you can afford to spend on gifts while creating higher account balances in January.
Make a list. The next step is to make a list of everyone you plan to give a gift. This is a critical step because it helps give you a perspective of how much you can afford to spend on any one person since you now know the total amount of money available. You might even want to pencil in estimated dollar amounts by each person’s name. Make sure that the total does not exceed your total from rule number one above.
Follow the money. Choose one of two methods to make certain that you stay within your total spending goal. By way of example, let’s assume that under rule #1, you’ve decided on a budget of $1,500 for your holiday gift giving. You can get cash and put it in a separate envelope. Once the envelope is empty, you’re done. An alternative is to track your spending on a separate piece of paper. Down the left side of the page, make a list of all the people you plan to give gifts. At the top right of the page, enter $1,500. As you buy gifts, enter the amount beside the person’s name and then subtract that amount from your $1,500 total… keeping a running, declining balance. Stop spending once you hit $0.

Great deals should be plentiful this season as retailers anticipate that shoppers are going to focus on bargain shopping. To get the best deals, compare pricing by checking your newspaper ad inserts, store ads and Internet. Once you run through your budget, consider what I call, ‘love’ gifts. This could include gifts of time such as baby sitting or chores; bakery goods; the gift of a family heirloom; or it could be as simple as a hand-written heart-felt letter.

Ultimately, the best gift of the holidays is spending time with people you care about. Enjoy the comradery and eggnog. By following these three rules for holiday spending you’ll guarantee you won’t end up with a financial hangover come January.

Tuesday, November 24, 2009

“The True Meaning of Thanksgiving” - November 22, 2009

Thanksgiving Day is coming…a time for families to get together and share turkey dinner. It’s a tradition that goes back to the founding of our country. Consider the true meaning of Thanksgiving: ‘To give thanks’. This Thanksgiving, take a moment to give thanks for all of your blessings: all the things you have; all the people that you care about and that care about you; that you live in a country that embraces freedom and allows everyone the opportunity to turn their dreams into reality…to achieve their highest potential.

Here’s my prescription for leading a life that you can be truly thankful for:

Feed your mind. A positive attitude can be a powerful antidote for the many challenges we face today. The mind’s natural state dwells in protectionism. Like the sentry on the ship, it screams, “Iceberg!” at just about every situation it encounters. Take control over your mind and train it to react with ‘possibilities’ and ‘learnings (from mistakes)’ versus fear and avoidance. We all have a certain ‘comfort zone’ that we live within. All personal growth is a result of pushing through fear into our ‘uncomfort’ zone. Train yourself to constantly challenge your comfort zone. For once you’ve broken through it, it is expanded forever.
Feed your body. Our bodies are truly amazing. Literally trillions of cells operate both independently and in harmony with each other. These bundles of energy require constant fuel in order to operate and we get to choose whether that fuel is high octane or low grade. Based on the obesity epidemic in America, it’s clear most of us are choosing low grade. Use Thanksgiving Day as a new beginning. Stop at one helping from the buffet line and focus more on the foods that support a healthy body. Commit to getting physical exercise every day, even if it’s just a short walk after dinner. Advancing medical science is dramatically extending life expectancy. If you want your retirement years to be active and healthy, adopt a healthy lifestyle starting now.
Feed your spirit. You are your ‘input’. What you read, watch, think about and talk about on a daily basis becomes who you are. Think of your mind as a computer with a massive hard drive. Your ‘computer’ is nothing more than the sum total of the data you have programmed into it. Make sure that you spend time feeding your mind subject matter that will support your mental growth. It has been said that you are the ‘average’ of the five people you spend the most time with. Who are those five people in your life? Are they a positive influence or is it time to ‘upgrade’?
Feed the Universe. In my experience, the deepest happiness comes from helping others. Ultimately, the purpose of life is to become the best person you can be so that you can help others become the best they can be. This requires that you become a person of action. Don’t just think about it, do something about it! This Thanksgiving, reach out and help someone less fortunate than you. Take dinner to a needy family; serve at one of the many food shelters; make a donation to a charity.

Stewart Welch, III Appearing on Fox 6 News - Charitable Giving

Saturday, November 21, 2009

“Helping Charities While Reducing Taxes- Part II” - November 15, 2009

Last week, I discussed a strategy for making charitable gifts by using the beneficiary designation under your retirement account instead of a specific bequest under your will and thereby potentially saving hundreds or thousands of dollars in taxes owed by your heirs. Today, I’ll review the various ways to give to charities before the end of the year.

Cash. Cash gifts must be post-marked by December 31st in order to receive a tax deduction for this year. Deductions are limited to 50% of Adjusted Gross Income (AGI) with any excess carried forward for up to five years.
Personal items. Giving clothing and other personal items is a great way to help people in need and do a little pre-spring cleaning at the same time. You’ll need a detailed list of the items along with the fair market value for tax purposes. Be sure to get a receipt of the gift from the charity.
Appreciated property. While the stock market is still approximately thirty percent below its 2007 high, we have seen a remarkable recovery of over sixty percent from this year’s March 9th low. This means that some of you own stocks that have substantial gains. By giving appreciated stock instead of cash, you effectively ‘give away’ the imbedded tax liability as well. If you want to continue to own the stock, use your cash to purchase an equal number of shares. The charity receives their money and you now own the stock with a new, higher cost basis. Gifting appreciated bonds, real estate or other personal assets can also be advantageous. The tax deduction for gifts of appreciated property held for more than one year is limited to 30% of AGI and the transaction must be completed before December 31st.
Retirement accounts. If you are age 70½ or older, you can transfer up to $100,000 of retirement plan assets directly from your retirement account to a qualified charity. While you do not receive a tax deduction for the gift because you already deducted your contributions to the plan, you avoid reporting any income. In the past, an additional advantage of this strategy was that the transfer counted towards your Required Minimum Distribution (RMD). However, for 2009, no RMD’s are required.
Donor Advised Fund. Sometimes people have the money available to make a gift and the desire to do it now in order to reap the tax benefits but have not decided which charities they want to benefit. An excellent solution is a Donor Advised Fund which allows you to give this year, receive a tax deduction this year, but designate the charities sometime in the future. Donor Advised Funds are often administered through the more than 650 Community Foundations across America. To get more information or to find a Community Foundation near you, go to In Birmingham, contact The Community Foundation of Greater Birmingham at 205 327-3800.

At a time when official unemployment rate has eclipsed 10% and true unemployment exceeds 50 million Americans, it is more important than ever that those of us who do have jobs and excess funds, give to those charities that touch our hearts.

“Helping Charities While Reducing Taxes- Part I” - November 8, 2009

I recently met with a client couple as part of an estate planning review. As is true with so many people, this couple expressed a strong desire to give to charities both during their life and at their death. This week, I’ll focus on a strategy for giving to charities at death.

Often people will make charitable gifts by designating a Specific Bequest in their will. The typical logic is that they want to make sure that all of their assets are available for their support during their lifetime. Then, at the last of them to die, they want to make a gift, typically of a certain dollar amount, to their church, college or other charity. While this is pretty straight-forward planning, there may be an even better way to accomplish the same goal while significantly reducing taxes that will have to be paid by heirs.

Think of your own situation or maybe a family member. Do you (or they) plan to make charitable gifts at death? Instead of making a specific bequest in your will, consider making the same gift by using your retirement account. You see, contributing to a retirement account is one of the best ways to accumulate wealth during your working years because you receive a tax deduction for your contributions and tax-deferred growth until the funds are taken out during retirement. During retirement, people often leave as much money as possible in their retirement account in order to avoid income taxation on their withdrawals. As a result, they often die with money still left in their retirement account. However, a retirement account is one of the worst assets for an heir to receive. This is because not only are retirement accounts potentially subject to estate taxes, the heirs must also pay income taxes as they make withdrawals. For the wealthy, this combination of estate taxes of possibly as high as 55% and income taxes of possibly as high as 39.5% could eat up nearly 70% of your retirement account!

Here’s a strategy for making smarter testamentary gifts. Let’s assume that you and your wife have decided to leave your alma mater $100,000 at the last of you to die. Instead of making a specific bequest under your will, you change the beneficiary designation under your IRA account to reflect your wife as the primary beneficiary and your alma mater as the second beneficiary for $100,000 with the balance going to your children. If your wife predeceases you, your alma mater receives $100,000 and the balance goes to your children. If you die before your wife, she receives your entire IRA account and can ‘roll-over’ the account into her own name. She’ll then need to name your alma mater the primary beneficiary for the first $100,000 of the retirement account while naming the children the primary beneficiary for the balance. As a result, at her death, the charity receives the same amount of money, $100,000, from the retirement account instead of from the personal estate. You have effectively ‘given away’ the tax problem. Another advantage is that if you decide to make changes regarding your charitable contributions, changing beneficiary designations is easy and free while changing specific bequests under your will would require you to engage an attorney.

“Congress Plays ‘The Guessing Game’ With Our Estate Tax Laws” - November 1, 2009

Current law does not impose death taxes unless your taxable estate exceeds $3.5 million. That $3.5 million becomes unlimited for calendar year 2010 unless Congress takes action before year-end. This means that if Bill and Melinda Gates died next year, instead of the government receiving perhaps billions in death taxes, they would receive nothing…nada…zippo! And think of all the wealthy people who are in hospitals on life support. Avoiding millions in estate taxes would give a whole new meaning to 'Pull the Plug'! We all know the government is not going to allow this to happen, but time is fast running out.

Prior to the 2009 trillion dollar-plus deficit, both Democrats and Republicans had arrived at a consensus opinion that the estate tax exemption (the size estate you can own before you are subject to death taxes) should be set at $3.5 million dollars. The combination of distraction over passing healthcare reform and the almost incomprehensible rising national debt has now left the final decisions regarding new estate tax rules up in the air.

To complicate matters even further, the current estate tax law is scheduled to automatically be repealed as of December 31, 2010 and revert back to prior law. This means that if Congress does nothing, anyone dying with an estate exceeding $1 million could be subject to death tax rates as high as 55% on amounts above the $1 million limit. This would include millions of middle-class American families who own a home and have adequate life insurance.

Here’s what I believe will happen:

In November, Congress will extend the current estate tax exemption for one year. Meaning that for 2010, the estate tax exemption will remain $3.5 million. This will buy Congress time to focus on this issue, which will likely be one of the top campaign issues of the 2010 mid-term elections. Politicians running for re-election are likely to feel the pressure of cross-currents of voting for a law that helps the rich avoid taxes (i.e. making the $3.5 million exemption permanent) versus doing nothing and allowing the current law to 'sunset' on December 31, 2010, which will, in effect, cause millions of middle-class Americans to be subject to death taxes.

What you should do now:

Congress’ failure to take action makes it extremely difficult to properly plan your estate. Take a moment to estimate your Estate Net Worth: All of your assets plus all of your life insurance on both spouses minus all of your liabilities. If the net result is greater than $3.5 million, sit down with an estate attorney to review your estate plan.
If the net result is greater than $1 million, watch closely to see what Congress does next year regarding estate taxes. They’ll either do nothing and allow the amount you can pass on free of death taxes to revert back to $1 million or they’ll make a permanent change based on a higher limit. Plan your estate accordingly.
Let your voice be heard. Contact your congressional representative and demand that they address this issue quickly so that you can properly plan your estate for your family. Go to the Resource Center at; click on ‘Links’; then Congressional Representatives Contact List.

End of Life Decisions” - October 25, 2009

One positive result of the national healthcare debate is that it has Americans talking about many facets of healthcare. Even such red hot topics as ‘death panels’ have encouraged conversations about end of life issues among folks who before would never breach the subject.

In last week’s column, I offered a five-question quiz that would help you decide if you need estate planning. The first question was, “Do you have an Advanced Directive for Healthcare?” With current advances in medical science, doctors and hospitals have the ability to keep someone’s heart beating way beyond the point where there is any quality of life. Without specific directions from the patient, the physician and hospital face the awkward dilemma of deciding to what extent to allow medicine and machinery to keep a patient alive. The decision to continue life-sustaining treatment can literally devastate families from a financial perspective. Current medical insurance policies typically have provisions for both co-pay and lifetime limits which can quickly exceed a family’s ability to pay.

The best solution? Decide now, while you’re healthy and of sound mind, exactly what level of care you wish if you were to end up in a vegetative state, terminally ill or in a coma with little chance of recovery. Fortunately, every state government has made this easy for you by developing a fill-in-the-blank form for making these types of healthcare decisions. It’s commonly referred to as an Advanced Healthcare Directive and consists of two directives:

Living Will. The Living Will portion walks you through a series of situations and allows you to say what level of care you would prefer. For example, if you are unable to feed yourself, would you want a feeding tube? Or, if you cannot breathe on your own, do you want to be on a respirator?
Medical Power of Attorney. As you might imagine, a single document such as the Living Will cannot address every situation that might occur. You’ll need someone to speak for you in situations that are less clear. In your Advanced Healthcare Directive, you will appoint someone to fill this role known as your Attorney or Agent for medical decisions. Choose this person wisely and be sure to have a detailed conversation about the level of care you want. They’ll need to be strong enough to stand up to doctors, hospital administrators and family members who may have a difference of opinion. You’ll also need a successor agent should your first choice be unable to serve.

I realize that end-of-life planning is not a typical topic for dinner conversation and most people would rather avoid it altogether. But to do so, may very well put your family at risk of financial ruin and create a divide between family members who have a difference of opinion about the level of care they think you would want. My recommendation is to deal with the issue now and commit to revisit it periodically. To download the Advanced Healthcare Directive fill-in-the-blank form for your state of residence, visit the Resource Center at; click on Links, then Living Wills- State by State.

“Take the Estate Planning Quiz” - October 18, 2009

“I’m often asked, “Do I need estate planning if I don’t have a lot of money?” The answer is, most often, yes. Estate planning is definitely not only for the wealthy. Take our estate planning quiz to see if you need your own plan:

Do you have an Advance Health Care Directive? In cases where you can’t speak for yourself because of incapacity, an "Advance Health Care Directive" allows you to designate someone to be your voice regarding critical healthcare decisions. This document also lets you specify the level of care you want when death is imminent. Such decisions include your desire for life sustaining treatment including feeding tube, hydration, life-support equipment, and ultimately, organ donation. Failing to document your wishes places your family in the unenviable position of ‘guessing’ what level of care you would want.

Do you have a Durable Power of Attorney that’s less than 5 years old? The Durable Power of Attorney gives legal authority to another person to make financial and legal decisions on your behalf should you be unable to do so because of your incapacity as a result of illness or accident. Without this document, should you become incapacitated, someone will have to hire an attorney, go to court, and get a limited power of attorney—which can be an expensive and time-consuming process. This document should be re-signed about once every 5 years.

Do you have a properly executed will? If you have accumulated any assets, you should consider having an attorney draft a will directing who will receive your assets when you die while also minimizing taxes and settlement costs. If you don’t have a will state law determines who will receive your property. If you have minor children, you’ll want to designate a guardian for them in your will should you and your spouse die unexpectedly. Without a guardian election, the courts must decide who will have custody of your children.

Do you have adequate life insurance? If you have minor children or other dependants, you’ll want to make sure that you have adequate life insurance to provide for their financial support including college tuition. Once you have your life insurance in place, you’ll need to consider setting up a trust through your will. A trustee is someone charged with managing money for your child so choose someone who is good at handling money or choose an institutional trustee such as a bank.

Are you certain of your beneficiary designations? Not all assets pass through your will. In fact many, if not most, of your assets are likely to pass “by contract”. This includes life insurance policies, retirement accounts and jointly titled property such as your home. You’ll want to make certain that these assets that will pass outside of your will are going to whom you wish as well as in the form you wish, whether it be outright or in a trust.

These are just a few areas of estate planning that most everyone should consider implementing now. If you answered, “No” or “I’m not sure” to any of these questions, it’s time to take action. To help you think through these important decisions, contact your attorney or financial advisor. Go to the Resource Center at and then click on ‘Links” for more information about Advance Healthcare Directives (see Living Wills), Life Insurance Needs Estimator, free Life Insurance Quotes, College Costs Estimator and State by State Intestate Laws.

“Credit Card Roulette” - October 11, 2009

Last year as the wings came off the banking sector causing the economy to spiral out of control, credit card companies responded to mounting customer defaults by raising fees, raising interest rates, instituting hidden transaction fees and reducing credit limits with little or no notice. The reaction from consumers was loud and angry and congressional representatives responded by passing pro-consumer legislation under The Credit Card Act of 2009. While tighter restrictions on credit card companies is a good thing, don’t be fooled into thinking that all the credit card mess has been solved. Many of the changes do not take effect until February 2010 and until then some credit card companies continue to exploit their customers, even the ones with good credit. You’ll need to remain vigilant and closely monitor your credit card activity.

Avoid late fees. Many card companies have significantly increased fees for late payment. If you mail in your payment, be sure to mail it early enough to get there on time. On two recent occasions, I mailed payments that I thought allowed ample time to arrive by the deadline only to find out they ‘posted’ my payment one day late. The result…a $39 late payment fee. One solution is to go on line on the due date to be certain your payment was received. If not, you can pay immediately, on-line to avoid the penalty.
Keep your cards active. Because of the financial crunch, many card companies are terminating cards of customers who are not using their credit card. The reason? The company has extended you credit that you are not using and because of the financial crisis, they are under pressure to reduce the amount of credit they have extended. Since they are not making any money on you, terminating your credit becomes their best solution. Your best move is to use your credit cards but pay off your balance every month, on time. Think of it as an extension of your checking account rather than a source for borrowing money you don’t have.
Shred those ‘convenience’ checks. These are the blank checks that your credit card sends you and encourages you to use to pay off bills or treat yourself to a trip to the mall. First, the checks are nothing more than an advance against your credit card and carry very high transaction fees and often much higher interest rates. There is no ‘grace period’, meaning interest is calculated from the moment you use the check and you lose protections that go with credit card purchases granted under the Fair Credit Billing Act such as refunds for defective merchandise. You also don’t receive bonus or reward points such as free airline tickets. Shred them so they don’t fall into dishonest hands, or even better, contact your credit card company and tell them not to send them in the future.

Credit cards continue to be a useful tool in your money toolbox. They help establish and build your credit; are a convenient method of paying for goods and services without having to carry large amounts of cash; and can provide reward points that you can use for free purchases such as airline tickets.

"Reversal of Fortune" - October 4, 2009

If you are a perpetual optimist, you can always find something good that, like the Phoenix, rises from the ashes of something bad. Take the generational bear market of 2008. From the peak of the market to its lowest point, the U.S. stock market was down more than 50%. Even the most recent market run-up has left the vast majority of investors with steep losses from the peek of their portfolio. So where’s the silver lining? Prior to the stock market crash, the savings rate in America hovered between zero percent and negative. Fast forward twelve months and today that savings rate is an amazing six to seven percent. Research suggests that this is likely a long term trend. As a financial advisor, it’s great to see people taking financial responsibility and doing what they should be doing…saving. It appears that the bulk of this savings is going into money market accounts for the purpose of storing up cash in the face of job uncertainty. As workers begin to regain a sense of job security, they’ll need to develop a plan for their current and future savings. Here are five suggestions:

Contingency Reserves. Finally, everybody understands the true meaning of contingency reserves. Having money set aside for unexpected expenses and opportunities is a good idea.
Debt Reduction. Part of accepting financial responsibility is avoiding paying eighteen to twenty-one percent to borrow money for consumer purchases. It’s nothing more than borrowing from your future to pay for your past.
Systematic investment program. Get in the habit of paying yourself first from a portion of every paycheck. After a few months, you’ll find you don’t miss the money and after a few years, you’ll be amazed at your progress.
Save for College. The 529 College Savings Plan remains the best strategy for saving for your children’s education. As a bonus, the rules allow you to remain in control of the money until you actually spend it on qualified college expenses. This means that if you have a financial emergency, you could tap those funds. There is a 10% federal penalty, but that penalty may be partially or fully offset by tax deferred growth.
Invest in a Roth IRA. If you qualify, a Roth is a good choice because you can access your money without penalty after five years. If you don’t need it before retirement, your money will have grown tax deferred and withdrawals during retirement are tax free forever.

Plan to take your monthly savings and divide it equally among the above objectives. Automate your plan as much as possible and use any pay increases to increase your savings.

Special Posting - "The Secret to Success-Magic Formula" - October 1, 2009

What if there was a magic formula that would guarantee you could become, have or achieve anything you truly desired? Think for a moment…if you possessed such a magic formula, what would you choose to accomplish? In the financial arena, what would you buy? Where would you live? What would your home be like? Would you travel…and to where? What kind of relationships would you have? Would you learn to speak multiple foreign languages? Would you author a best-selling book? What would your career look like? What would be your contribution to humanity?

Well, there is a magic formula for achieving anything you truly want in life…and here it is:

V + A = D

‘V’ stands for Vision. Most people settle for a day-to-day existence and are happy to have enough money to pay their bills…on time! But there is a much bigger world out there that is full of adventure, excitement and fulfillment for those who dare to break out of their comfort zone, stretch themselves and seek to achieve their true potential. In order to achieve extraordinary results in your life you must have a clear vision of what you truly desire. The clearer the vision, the easier and faster it is to accomplish. Let’s look at a few examples.

Jim Carrey was a little-known comedian in 1990 who clearly envisioned himself as a top-paid Hollywood movie star. To help maintain focus on his vision, he wrote a check payable to himself for $10 million… ‘for acting services rendered’, and dated the check Thanksgiving 1995. He worked hard at his craft and kept the check in his wallet so that every time he opened it, he was reminded of his vision, his goal, his intention. His big break came in 1994 when he starred in three films: Ace Ventura, Pet Detective; The Mask; and Dumb and Dumber. By 1995, he was one of Hollywood’s highest paid actors at $20 million per film.

On January 9th, 1970, Bruce Lee wrote himself a letter stating that “By 1980 I will be the best known Oriental movie star in the United States and will secure $10 million dollars. In return, I’ll give the very best acting I could possibly give every single time I am in front of the camera…” In 1973, he starred in Enter the Dragon and became an instant martial arts legend and international superstar. His untimely death robbed him of the full realization of the achievement of his vision but martial artists around the world benefited as he set a new standard for martial arts excellence.

I have personally experienced the power of creating a clear vision in my own life so many times, I lose count. In 1996, I set the intention and wrote a goal to have a personal finance book published by ‘a big fancy, white-shoe publisher in New York’. Certainly, none of my English teachers would have believed this possible! I did not have a natural ability or affinity for writing but I knew a published book would be one of the best methods to get my message out to tens of thousands of people...and that was my vision. Well, intention became reality with my first publishing contract with Simon & Schuster in 1998. Since then, I have had three additional books published by three different ‘big, fancy New York publishing firms’.

Several elements have proven vital to this ‘Vision’ stage of self-manifestation:

Write it down. Visualization is a powerful tool. When you take your vision from your mind’s eye and convert it to writing, something truly magical happens. Research suggests that the mere act of writing a goal increases the likelihood of accomplishing it by 200%. That’s because the process of written articulation creates a connection with your brain, and in turn, the Universe. My personal belief is that God created the Universe and everything in it…so everything and every person is connected. All of the answers to all of your questions are available if you just know where to look or whom to ask. Once you write out your vision, your brain then sets about the business of solving the problem that exists between where you are right now and your intention (vision). It will work both on a conscious and subconscious level constantly sorting through possibilities and seeking solutions to the puzzle you have created. This process of searching and sorting will open doors you never expected and give you an extra-sensory awareness related to your vision. Expect miracles to happen.
Clarity of Vision. As I’ve already stated, the clearer your vision, the easier it is to accomplish because you are excited, focused and you have engaged the Universe in your cause. Instead of writing, ‘I want a winter vacation home”, write “I want a 5,000 square foot home facing east on the shore of Maui by noon the day before Thanksgiving 2013.” Continue to describe what your dream home looks like in as much detail as possible. What type of construction, interior furnishings, infinity swimming pool, and all glass across the ocean-facing side of your home. Clarity includes making certain that your goal, this vision, is measurable by both you and someone else and typically answers two questions: How much? (or what)/ By when? To help ‘see’ the vision, some people use ‘vision boards’, which are cut-outs of magazine photos that depict their goals. For example, if you’d like to own a yacht, cut out a picture of the yacht of your dreams and post it where you’ll see it every day as a reminder of your goal. When NASA began the planning and work for sending a man to the moon, they painted a moon, floor to ceiling, in the construction area to keep them perfectly focused on their vision. There are web sites that allow you to create a virtual vision board. Google ‘Vision Boards’ or check out Professional speaker and author, John Assaraf (, cut out a magazine photo of his ‘dream’ home in 1995 and put it up on his Vision Board, then a few months later forgot about it. Five years later as he was opening boxes from the move to his new 7,000 square foot residence, he pulled out and dusted off his Vision Board and began to weep as he realized that he was now living in the exact home he had envisioned. Not a similar home, but the exact one he had cut out! The Universe works in mysterious ways once you get in alignment.
Dream Big Dreams. When I originally began creating a vision for what I wanted to accomplish in my life, much of what I sought seemed like the equivalent of climbing Mt. Everest…insurmountable. My vision included becoming a published author; a millionaire; guest expert on national television such as CNN, CNBC and Fox News; and building a multimillion dollar company. When I reflect back on these goals, I actually feel a twinge of embarrassment that I didn’t dream big enough. This is normal for most people. Now I realize that what we can accomplish is only limited by our ability to dream big dreams. Many of us will have to learn to exercise our dream ‘muscle’ as we achieve, learn and grow emotionally. As one vision becomes reality, it signals the timing for creating a bigger and more compelling vision. One helpful tool you can use is what I call the 101 Dream List. The idea is to make a list of 101 accomplishments or lifetime milestones you would achieve if there were no barriers to your success…unlimited financial resources, intelligence, physical capability. John Goddard ( did this at age 15 when he developed his Life List of 127 goals. He had some big goals including climbing Mt. Kilimanjaro, Mt. Rainier, and Mt. Everest; exploring the Amazon River; learning to fly a plane and flying in a blimp, balloon, and glider. This list from a 15-year-old boy turned into a lifetime of adventure and learning where only 15 of the original 127 goals remain. The purpose of the 101 Dream List is to, well, dream…get your creative juices flowing and write down everything you could imagine would excite you and create a life of fulfillment and adventure. From there you can narrow your focus to a few key areas that create the most ‘charge’ for you. Typically one or a small number of items will bubble up in the form of ‘burning desire’. You’ll know burning desire because when you are working on them, it’s not like work at all. It’s the feeling of passion. At this point you’ll write a vision statement in as much detail as possible. Then you can begin to develop an Action Plan for turning your vision into reality.

‘A’ stands for Action. The Universe rewards action; or as comedian/actor Jonathan Winters says, “If your ship doesn’t come in, swim out to meet it!” Once you have a clear written vision of what you intend to achieve, you’ll want to develop an Action Plan to help you get there as quickly as possible. In most cases you will not know all of the steps necessary to achieve your vision, but invariably you’ll know the first few steps. If not ask someone who has gone before you. You’ll find most people are more than willing to help fellow travelers. Be satisfied to take the action steps that you are aware of and trust that the Universe will illuminate your path as you continue to travel. It’s like driving a car at 60 miles per hour down a two-lane country road in the middle of the night. Your headlights only allow you to see maybe 100 yards ahead of you. You have no idea what might be ahead in the darkness. Yet you continue to press forward trusting that your path will continue to illuminate as you continue to press forward.

There is a saying, “A journey of a thousand miles begins with a single step”. The journey to your vision will be made of many steps…some small and some giant leaps. The key to maximum speed is to develop an attitude of ‘disciplined action’…creating a process whereby you are consistently moving forward until you are at your destination. Start by brainstorming, on paper, a list of Critical Success Factors (CSF) with timetable. What are the key things that ‘must happen’ in order for you to succeed? What is your target completion date? Under each CSF, list all the Supporting Actions (SA) that will move you closer to your CSF. This will be a ‘work in progress’ as you will continually add to your action list as you check off completed actions. Then, every evening, make a list of 2 SAs to complete the next day and commit to getting them done before your day is finished. When you’re done with one SA, ask, “What’s next?” and add to your list. Keep track of your progress and be sure to celebrate your successes…even the small ones.

Avoid ‘paralysis by analysis’ and adopt the mantra, “Ready, FIRE, Aim”. Too many people get bogged down in analyzing the problem or waiting for the perfect time to execute their strategy. All successful people are highly action oriented. They’ll spend some time brainstorming the Critical Success Factors and the companion Supporting Actions, but then they’ll jump in the game knowing they’ll need to ‘correct course’ as they continue on their journey. A great analogy for ‘correct and continue’ is flying a plane. If after taking off you simply chose a correct course heading, say due north, and held that position, you will miss your destination. That’s because you will be required to make numerous ‘course corrections’ for a variety of unpredictable reasons, including wind speed, wind direction and barometric pressure. For you this means get in the game as quickly as possible and expect to make numerous course corrections along the way as you’ll ‘learn’ (make mistakes) your way to success.

Somewhere along your journey, you’re likely to come face-to-face with the proverbial ‘brick wall’ and wonder whether it’s time to give up on your vision. Consider this a test of your tenacity and commit to going over, around or through the wall…whatever it takes. You can get leverage on your success journey by having an accountability/support partner. This can either be one person or, even better, a small group of people (a mastermind group). The idea is to communicate your vision and they agree to support you and hold you accountable for the actions and timetables you’ve committed to. This is done through periodic contact (weekly, monthly, via phone, email, etc.).

This leads to my final thoughts on the importance of disciplined action. Never underestimate the importance of pure unadulterated perseverance. Tell yourself (out loud as a daily exercise) that, “I can achieve anything!” and “I will never give up!” For it is in perseverance that success lies. A great example of perseverance comes from Jack Canfield and Mark Victor Hanson. Unknown at the time, they had co-authored their first book called Chicken Soup for the Soul which was a compilation of heartwarming stories. The problem was that no publisher thought much of their idea. They got turned down not once, not a dozen times, but 144 times before they finally found a publisher who believed in their dream. How many of us would have given up after one, two, or a dozen rejections? Jack and Mark persevered and they became two of the most prolific and successful authors in America selling well over 100 million copies of their books. Never, ever give up on your dreams!

‘D’ is for Destiny. Each of us is unique and perfect in our own way and has been placed on this planet for a reason. Rather than drifting through 75 to 100 years allowing life to happen to you, wouldn’t it be better to seek to discover your true purpose and then live out your life striving to achieve your maximum potential? By developing a clear vision for your life; one that is compelling, exciting, fulfilling and improves our universal community…and then executing a disciplined Action Plan, you can take control of your own destiny. We are able to create the life we choose…and not just in the area of finances, but in every area of our lives. In my book, “The Complete Idiot’s Guide to Getting Rich”, I provide a process for creating the life of your dreams in six areas: spiritual, family, physical, social, intellectual, career and financial as well as help you develop Guiding Principles from which all decisions are made.

Do not be fooled by the simplicity of The Magic Formula for Success. Too often people decide that an answer is so ‘simple’ that it couldn’t possibly work so they discard it in search for something more complex. ‘Simple’ is very different from ‘easy’. If you choose to do nothing, then you must settle for being a passenger on the bus of life with destination unknown. However, if you choose to take control…then you become the driver. You get to decide whether you drive a Ford or a Ferrari. You can make life as exciting as you choose. You see, the choice has always been and will always be…your choice. Choose your destiny wisely!

“Obscure Social Security Law Yields Big Benefits” - September 27, 2009

If you follow my weekly column, you know that I have written cautionary tales about the survivability of our Social Security system in its current form. It is a Ponzi scheme of grand proportions and, in the near future, Congress will be forced to provide solutions as the money coming into the system falls short of the payments going out of the system. However, the greatest risk, I believe, is to the age sixty-and-under workers. No congressperson is likely to grab the political hot potato of reducing benefits to current Social Security recipients. This opens the door to an obscure financial strategy that may mean tens of thousands of dollars in additional Social Security benefits if you fall under the right circumstances.

Often, workers choose to begin taking their Social Security benefit as soon as they are eligible, which is age sixty-two. By doing so, they accept a reduced benefit for life. For example, if your normal full Social Security retirement age is sixty-six and you begin benefits at age sixty-two, your benefit is cut by 25%. A $1,000 per month benefit becomes $750. Had you postponed benefits until age 70, they would have risen to $1,320. Here’s where the financial opportunity comes into play. A little known law allows you to ‘re-set’ your Social Security payments by paying back the money you have received. By doing so, you have created two financial benefits for yourself. First is a tax-free loan from the government because there is no interest or penalties imposed related to the payback. Second, you’ve created an ‘annuity’ that will rival any commercial annuity in the marketplace.

Let’s see how this might work out. As in our example above, assume you took early Social Security retirement for $750 per month at age 62. You are now age seventy and have decided to pay back all the money you have received and ‘re-set’ your payments based on Social Security retirement at age seventy. The math looks something like this: You must repay Uncle Sam the $72,000 in benefits you received. You’ll now begin receiving $1,320 per month for the rest of your life and the life of your spouse. This ‘extra’ $6,840 per year benefit is the equivalent of a 9.5% payout on your $72,000 ‘investment’. If you were to take that same $72,000 and buy a commercial joint life annuity, the payout would be approximately 7% (Charles Schwab & Co. Initially you’re about 25% better off plus Social Security benefits increase based on cost-of-living adjustments (COLA) whereas commercial annuities do not. This COLA advantage can be huge assuming at least one spouse lives a long time. In addition, another obscure law allows you to get back taxes you paid on your Social Security benefits.

Who are the ideal candidates for this strategy? First, it’s someone who has the financial where-with-all to repay benefits received. Second, one or both spouses should be in excellent health with a family history of longevity. In our example, you’ll get back your $72,000 ‘investment’ in about 4.5 years while your ‘break-even point’ for this strategy is about 10.5 years. If you’d like to receive a detailed report on this topic, email me at and put “Social Security Re-Set Strategy” in the subject line.

“Cash for Clunkers- The Sequel” - September 20, 2009

Even though the government botched the administration of the recent Cash for Clunkers program, it did stimulate auto sales nationwide. While auto dealers continue to wait for federal reimbursement of customer rebates, appliance dealers are bracing for the rollout of the sequel to Cash for Clunkers appropriately dubbed Cash for Appliances.

The target kickoff date is pre-Christmas and will offer consumers a rebate of up to $200 for purchasing energy efficient appliances. If you’re in the market for new appliances, get your track shoes ready. In total, the government has allocated a paltry $300 million for this program so we might expect the money will run out soon after the program launches. If this program plays out in a similar fashion to the Cash for Clunkers, lawmakers will be voting on additional funding to meet consumer demand.

What’s different with this latest government handout program is that it will be structured and administered by each individual state. Another new twist is that this rebate program does not require that you turn in your old energy inefficient appliance. So what will likely happen to the clunker refrigerator? My best guess is that it gets moved to the basement as an ‘extra’ fridge; passed down to adult children; or sold. So much for cutting energy consumption! There are no restrictions on who is eligible for the rebates so this program seems tailor-made for more wealthy consumers who can afford the added costs of more expensive energy efficient appliances.

While each state will determine which appliance purchases receive rebates, the list will generally include: refrigerators, central heating and air systems, heat pumps, room air conditioners, clothes washers, freezers, water heaters, boilers and furnaces.

In addition to this stimulus project, additional incentives are available as a result of the Emergency Economic Stabilization Act of 2008 passed under former President Bush. Tax credits of 30% are available when you purchase qualifying energy-efficient appliances during calendar years 2009 and 2010 with a maximum credit of $1,500. Additional credits are available for energy-efficient home improvements including insulation, roofing, and window treatments. Also included are credits for alternative energy sources such as solar and wind. These credits are available for both existing homes and new construction.

Finally, be sure to check with your local utility company or appliance dealer. They often provide significant incentives to ‘switch’ to their products.

How much money can you save? You purchase a new energy-efficient tankless water heater for $3,000 versus the standard water heater for $1,000 which does not qualify for the credits. You’d receive a $200 rebate under the Obama plan, plus $900 under the Bush plan, plus a $200 rebate from the local utility (Alabama Power); reducing your cost to $1,700. An estimated 33% savings off your annual utility bill means your breakeven point is less than seven years. Over the estimated thirty-year life of your new water heater, it adds up to quite a bundle on money you save.

“Should You Invest Overseas?” - September 13, 2009

With acts of terrorism overseas becoming more common and swine flu morphing into a pandemic, Americans have become more reluctant to travel overseas. But should you be investing your money in foreign companies? As Americans, we tend to think of America as the center of the Universe and fail to realize America only represents 23% of the global economy. A full 77% of the financial ‘action’ is happening outside the United States. In a global recession of the nature we now find ourselves, emerging market stocks will tend to lead us out of the recession, followed by developed country foreign stocks, then U.S. stocks. We saw this in the recent run-up in the stock market that began March 9th. Since that time, emerging market stocks gained 76%; developed country international stocks gained 64%; and U.S. stocks gained 49%.

Taking a look back at the bear market of 2000-2002, a similar scenario occurred in 2003, the year that marked the end of the bear market. U.S. stocks rose 29%; developed company international stocks rose 38%; and emerging market stocks rose 42%. How likely is it that this trend will continue as we move from a global recession to a global recovery? I believe it is highly likely. Even with the unprecedented financial stimulus that has been, and will continue to be provided by our government, the U.S. economy will likely take years to fully recover. In other words, we will experience slow growth compared to foreign countries. Part of this will be due to increased regulation imposed by our government and part will be due to the hangover resulting from the massive amount of debt the government has created.

Investing in foreign stocks creates a separate set of risks compared to domestic stocks. Reduced political stability and market transparency are especially evident in emerging markets such as China, India, and Brazil. You also encounter currency risks. For example, if you invested in a European stock mutual fund that rises 10% and the U.S. Dollar rises 10% against the Euro, your gains in stock values will be negated by your loses in currency values. This creates a risk and an opportunity. The opportunity here and now is that the U.S. Dollar has risen against most foreign currencies during this economic downturn because global investors have rushed to buy our treasuries as a ‘safe haven’. As global economies recover, it is likely that the U.S. Dollar will fall compared to foreign currencies creating the potential for a double-opportunity for Americans who invest in foreign stocks. Foreign stock shares will rise faster than domestic stocks and you’ll get an additional boost from foreign currency exchange.

There are many ways to invest in foreign stocks including individual shares, mutual funds and exchange traded funds. Two excellent choices are exchange traded funds:
EEM for emerging markets
EFA for developed country international stocks

Stocks, having risen sharply since the March 9th lows, may ‘fall back’ and build a new base. Your best strategy is to dollar-cost-average over the next six to twelve months and plan on a minimum holding period of two years. Consult your financial advisor before implementing this advice.

Selling Your Home in a Down Market" - September 6, 2009

Recent home sales data suggests that home sales are finally turning up indicating that the housing market may have finally bottomed out. Still, if you are thinking of selling your home, the current market remains a very challenging one. To get the best price for your home, consider these tips:

Do a cosmetic makeover. There’s a lot of competition in this buyer’s market. The market is flooded with foreclosure properties where banks are discounting prices in order to quickly move these toxic assets off their books. You’ll want to do everything possible to make your home stand out. Remember, buying a home is a particularly emotional purchase where if the buyers ‘fall in love’ with your home they may be willing to pay thousands more than another home of comparable location, square footage, etc. Your best source for deciding what cosmetic surgery will provide the best bang for the buck is an experienced realtor. These professionals have viewed thousands of homes with buyers and can tell you which improvements will be most attractive to potential buyers.
Don’t over-price your home. In this market, it’s important to get your selling price right. What you paid for the home or what you think your home should sell for is immaterial. Your greatest opportunity to sell your home is in the initial few weeks that it goes on the market. Price it too high and you run the risk of it being ignored by the realtor community and individual buyers. If it then stays on the market a few months, people begin to wonder what’s ‘wrong’ with the property? A realtor has the ability to run comparable sales and determine what would be a competitive price for your home. If it doesn’t sell in the first four to six weeks, be prepared to lower your price.
Maximize your visibility. In today’s high-tech world potential home buyers are using multiple sources for their search so be sure you are covering all of your bases. In addition to the basic ‘For Sale’ sign in your yard; brochure flyers in a box in your front yard; an ‘Open House’, and newspaper and community circular advertising, consider Internet advertising including a ‘virtual’ tour of your home where you showcase its most prominent features. Your realtor can help you develop a multifaceted ad campaign.
Don’t get caught with two homes. You find your dream home and decide to put it under contract assuming you can sell your home before you have to close on the new one. Big mistake in this home market and this economy. While the housing market is improving, it is still taking longer to sell homes than in the past. One way to protect yourself is to make your offer contingent upon the sale of your home. This strategy sometimes weakens your negotiating position as sellers strongly prefer non-contingent offers. Another strategy is to get a contract on the sale of your home before placing a contract on a new home. A final strategy is to make certain that you have the financial where-with-all to support two house payments until your home sells.

“A Glimpse into the Future of Healthcare” - August 30, 2009 Stewart H. Welch III, CFP, AEP Founder, The Welch Group, LLC Sunday, Aug 30, 2009 As th

As the healthcare reform debate rages in town halls across the country, Washington politicians and Americans are taking sides in one of the most important decisions of our generation. There appears to be consensus that some level of reform is needed but there is a passionate difference of opinion whether the new healthcare system should include a public insurance option. Those in favor, argue that a government run health insurance program will guarantee coverage for all and create greater competition among insurers. Those against believe that the government, with unlimited access to taxpayers money, will have an unfair advantage and eventually become the sole source of healthcare in America (socialized medicine).

Should the government be in the health insurance business? The best way to look into the crystal ball of the future is to look at the past. Most recently, the government got into the car business with their ‘Cash for Clunkers’ stimulus program. This program, from an administrative viewpoint, should have been a piece of cake to run efficiently. It was all Internet based with car dealers submitting proof of clunker transactions over the Internet and the government then wiring reimbursements to the dealers bank account. Sounds pretty straight-forward, right? Here is a typical dealer experience:

The government announced to the public that the program would begin July 1. However, it was not until July 24 that the 19,000 dealerships were eligible to participate. Local dealer, Hoover Toyota, completed 115 clunker transactions and so far has been reimbursed for four deals. The dealers were prohibited from making any money on the clunker but must use their own capital or borrow money to pay the customer for the clunker while they wait on government reimbursement. Some dealers, expecting the promised 10-day government reimbursement, ran out of capital, were unable to meet payroll and had to drop out of the program. Virtually all dealerships experienced ‘blackouts’ where it was impossible to submit required paperwork due to the government’s computer system crashing on numerous occasions. The whole experience can best be summed up by Gordon Stewart, president of Hoover Toyota. “While I was thrilled with the increased store traffic and resulting sales, as a businessman, I was appalled at how this program was administered.” The government has given Mr. Stewart no indication of when he will receive the balance of reimbursements he is owed.

This is not a particular political party problem; rather it is a politician problem. Most politicians have never experienced the challenge of running a for-profit business; meeting a payroll; or making the kind of decisions that business owners must make each day to survive, much less be profitable. It’s difficult and it takes a certain set of skills…skills that politicians don’t have.

There’s a perfect litmus test that will guarantee we get the best healthcare possible for the least costs. Require that 100% of our congressional representatives and senators be on whatever healthcare plan they pass! You can be part of the solution by contacting your representatives and demand they are covered by the same healthcare plan as the rest of us. It’s easy…go to the Resource Center at; click on ‘Links’; then ‘Congressional Representatives’. If you choose to do nothing, don’t complain about the final result. You got what you deserved!

“The Biggest Ponzi Scheme in America” - August 23, 2009

While Charles Ponzi didn’t invent the Ponzi scheme, the technique became widely associated with him after he bilked investors of millions of dollars in 1920. The deception is a simple one. Promise investors huge returns then deliver on those promises by using the funds of new investors. As long as new investors invest more money than is paid out to existing investors, the scheme works. Modern day Ponzi scheme specialist, Bernie Madoff, perfected this strategy by adding an element of credentials (he was chairman of the NASDAQ stock exchange) and exclusivity to the scheme stealing more than $60 billion from investors over thirty years.

The deception that these hucksters managed to orchestrate on thousands of Americans pales compared to the largest Ponzi scheme in American history…Social Security. Originally signed into law in 1935 under President Franklin D. Roosevelt, Social Security has morphed into the largest government and social program in the world representing over 20% of our federal budget. Originally the Social Security Trust Fund was funded as you might expect. Taxes on wages were deposited into the trust fund which, in turn, paid retirement benefits. Excess money was held in the trust fund via treasury securities. In 1982, the trust fund fell into financial crisis due to large-scale unemployment (sound familiar?) and was in danger of running out of money. To address the crisis, the government created a commission chaired by none other than Alan Greenspan. The commission recommended, and the government adopted, amendments that increased tax rates and the full benefit retirement age as well as taxed benefits above a certain income threshold. The trust fund swelled so the government, using slight-of-hand accounting began including excess Social Security funds as part of general funding…meaning there is no longer any money in the trust fund, only government IOU’s. This has created the world’s largest Ponzi scheme. You see, since that time the Social Security system has been funded based on the premise that there will forever be more workers contributing to Social Security than retirees taking money, hence, no need for ‘reserves’. In the beginning this was true as you had sixteen workers for every retiree. But that ratio has constantly dwindled over the decades. Today, the system faces a one-two punch as the Baby Boomer generation is beginning to retire (80 million people) and we face massive unemployment (15 million fewer people paying into the system). Social Security is again on the threshold of financial crisis and may face deficits as early as next year.

While no one is talking about this, I expect this to be one of the biggest crises of Obama’s administration. If you are a taxpayer, any solutions are likely to impact you directly in your wallet. Possible solutions include: the Next Great Bailout; higher payroll taxes for employees and employers; taxes on Social Security benefits; reduction of future benefits; or the adoption of needs based benefits verses the current entitlement based benefits.

What you should do. If you are ten years or more away from retirement, don’t count on Social Security as part of your retirement planning. This will force you to save more and invest more wisely. Because of the potential political fallout, I expect that current Social Security recipients will not be materially affected.

“Senior Citizens, Don’t Surrender That Life Policy!” - August 9, 2009

The primary purpose of life insurance is to replace income should a bread-winner die prematurely. Most families accept this responsibility as a necessary expense, as they do other forms of insurance such as auto or homeowners insurance. What you might not realize is that most life insurance policies are surrendered long before the policyholder dies. Think about it for a moment. The insurance company collects premiums for years, even decades and then the policyholder drops the policy before he dies. In fact the insurance companies count on high lapse rates and use this information to lower premiums.

In recent years, investors have recognized an opportunity and have begun stepping in offering to purchase policies from policyholders who no longer want them. The transaction can mean big money for investors and policyholders alike. Let’s look at a recent case example. A policyholder decided he no longer wished to pay premiums on his $1 million policy. The life insurance had originally been purchased for the purpose of providing liquidity (cash) to pay estate taxes at death. However, through a combination of excellent estate planning and an increase, in 2009, of the federal exemption for estate taxes for estates up to $3.5 million, the insurance was no longer needed. Also, to keep this policy in force would require future annual premiums of approximately $50,000. In steps investors who offer to purchase the policy for nearly $300,000. The investors now own the insurance and will be responsible for paying all future premiums until the insured’s death at which time they’ll collect $1 million. The insured wins big because typically he would have surrendered the policy with little or no value. The investors, who purchase large baskets of these policies, expect to return a handsome profit on their investment.

What I have just described is called a Life Settlement and there are a number of guidelines that are involved in cases of this nature:
The insured’s must typically be age 65 or older.
The face amount of the life insurance policy must typically be at least $200,000. This is because the time and resources required are not case-size dependant and it’s not economical for smaller cases.
The investors will require access to the insured’s medical records and have them reviewed by a medical actuary who determines the insured’s life expectancy based on his or her current state of health.
Both term life insurance policies (that are convertible to permanent insurance) and cash value policies are eligible.
Payouts vary based on the life expectancy of the insured.

Here’s the lesson. If you are age 65 or older, or know someone who is, be sure that he or she is aware that their life insurance policies could be worth thousands of dollars. As people become more elderly, sometimes they make less well thought out decisions and will allow an insurance policy to lapse because they no longer want or feel they need the insurance; can’t afford the premium; or simply forget to pay the premium.

If you do decide to sell your life insurance policy, be sure to get several quotes since offers from investors can vary widely. This is still a highly unregulated industry and you’ll need to get help from a trusted life insurance representative.

"First-Year College Students Financial Checklist- Part II" - August 2, 2009

Last week, I began a discussion about the top 10 tips for college students. If you’d like to review that column, go to the Resource Center at then click on ‘Stewart’s Column’. Here are the remaining 5 tips:

Credit card companies are notorious for coming on campus and enticing students with free T-shirts for applying for credit cards. They know that the students will use, and often abuse the cards only to eventually be bailed out by parents. Own no more than two cards and save them for emergencies unless you are certain that you can pay off the full balance each month. As with the use of the ATM machine, be sure to keep a running balance of credit card charges. The easiest way to do this is to enter ATM withdrawals and credit card charges directly into your check register as if you had written a check and then subtract the balance. This will allow you to keep an up-to-the-minute record of your cash balance. Responsible use of credit cards is a great way to begin to build a good credit history.
If you get funds from student loans, be sure to deposit the money in a money market account so that it is earning at least some interest. Current interest rates are low but it still pays to shop around. If you will not need a portion of your funds for several months, you may get a better yield by buying a certificate of deposit (CD) from a bank. To find the highest rates, go to
Identity theft is a multi-billion dollar business and you’ll want to make sure that you don’t become a victim. The typical college students have roommates, suite mates other students roaming through their housing. Be sure to keep all of your passwords, bank account statements, and credit cards well guarded. Also, be careful what information you list on the various social websites. It’s best not to list your exact birth date and definitely guard your Social Security number with your life! Never leave ATM statements behind and be aware of your surroundings when accessing cash from the ATM. There have been cases where the next person in line used their video cell phone to steal a PIN number.
Get a part-time job. Even if you don’t need the money, this is still a good idea. Start by speaking with your professors and department-heads. I got a job as a grader during college and it proved to be a great experience allowing me to get to know my professor on a whole new level. Having some extra spending money that I earned was also a nice benefit.
Network with abandon. Building relationships is just as important as getting a college education. My advice is to ‘be a joiner’ and active participant in as many organizations as time and interests allow. Opportunities abound including student government association, academic clubs and social clubs. The more people you connect with, the more enjoyable your college experience will be and that success will likely translate into financial success after college.

Have a great college experience and make sure that you also learn about personal finance! These lessons will serve you well your whole life.

First-Year College Students Financial Checklist - Part 1 - July 26, 2009

With summer fast coming to a close, many once high school grads are about to declare ‘independence day’ as first-year college students. Along with increased freedom comes increased responsibility. You can offer a helping hand by sharing these 10 top financial tips with your favorite college student:

Whether you are paying your way with a part-time job, student loans or receiving an allowance from your parents, it is time you take control of your money by setting up a budget. The best way to do this is by using a software application such as This software downloads, categorizes and graphs all of your spending automatically everyday. You’ll know where you’re spending without spending any effort!
As soon as you get to your school, open a checking account. Many college-town banks offer free checking for students and some may even offer $25 to $50 to open an account. If available, be sure to get overdraft protection. This feature allows you to avoid expensive fees for bounced checks. You don’t plan to bounce checks? I hope not but get the coverage just in case! Also, choose a bank that has convenient ATM locations so you won’t be paying fees when you use another bank’s ATMs. Be sure to keep a running balance of all expenditures, including ATM withdrawals. This will help make certain you don’t have bounced checks!
Class text books can cost you hundreds of dollars…or not. Once you know what text books you’ll need, do an online search for discount new books or used books. is a good place to start but there are many other sources as well. At the end of the semester, you can then sell your books online and recoup part of your costs. One of my associates sold a $170 retail book for $70.
Get in the habit of saving some money each month. This is perhaps the most important habit to establish if you want to become wealthy once you venture into the real world. Even if you are saving only $25 to $50 per month, this is a great start. Have your bank set up a money market account for this purpose and have the funds automatically transferred from your checking account each month. This automated system is the key to creating consistency in your savings program. If you have earned income, a ROTH IRA is an excellent choice.
If you are renting a house or apartment, you should realize that your 'stuff' is not insured. This includes your TV, iPod and furniture. If you want to protect these items from fire or theft, you will need renter's insurance. This coverage is not expensive and should cost you no more than $100 per year. Choose replacement cost coverage versus actual cash value. If your iPod is stolen, replacement cost coverage will allow you to buy a new one whereas cash value coverage will only reimburse you for the value of your 'used' one. For more information about renters insurance and free quotes, go to or have your parents put you in contact with their property and casualty insurance agent.

Michael Jackson - King of Estate Planning? - July 19, 2009

Love him or not you have to admit Michael Jackson ‘had the moves’. He is the undisputed King of Pop and his dance moves are the stuff of legend. For all his bazaar personal behavior, it turns out Jackson also had the right moves when it came to his estate plan. Here are the key elements and what you can learn from his example:

Revocable Living Trust. A revocable living trust is a trust that you establish during your lifetime while retaining the right to make changes including terminating the trust. At your death, the trust becomes irrevocable, meaning all the provisions of the trust become non-changeable. The primary purposes of a revocable living trust are two-fold:
Privacy. All assts held in a revocable living trust avoid probate and therefore remain private and out of the public eye. Had Jackson not done a revocable living trust, his assets would have gone through probate whereby a personal representative compiles a detailed list of all of his assets and post the list with the probate court…all of which is open to the public for viewing.
Continuity of management. Another reason for setting up a revocable living trust it that it allows for smooth transition of financial management should the beneficiary become incompetent. For example, had Jackson lapsed into a coma, this would have triggered provisions allowing his appointed financial managers to take over. Without the revocable living trust, an expensive and time consuming legal battle could have ensued. An alternative strategy he could have used was to have General and Durable Power of Attorney whereby you nominate who will be in charge of your financial affairs should you become incompetent.

Will. In addition to the revocable living trust, Jackson had a will. While your first reaction may be, “So what?” realize that the majority of Americans don’t have a will. In this case his will directs that any assets not held in his revocable living trust be transferred into the trust. Through this ‘pour-over’ will he made sure to tie up any loose ends.
Competent trustees. For his trustees and personal representatives, he chose two business associates, one of whom is an attorney and the other an astute businessman. Your goal should be to choose people who are good at handling money.
Guardians. Jackson was very explicit when choosing the guardian for his three children. His 79-year-old mother is their guardian, with long-time friend 65-year-old, Diana Ross as back-up guardian. I would have encouraged him to choose a guardian closer to his own age, perhaps a sibling, but he did make his wishes clear.
Specificity. In his documents, Jackson wisely anticipated certain problems and included language to protect his estate from challenges. For example, he included a ‘no contest clause’ that would automatically ‘disinherit’ anyone who challenges the estate thereby removing any financial incentives for would-be treasure hunters. He was also careful to include the names of each of his three children and to specifically exclude his ex-wife, Debbie Rowe, making clear his intentions.

You don’t have to have a $500 million estate to take away valuable lessons offered by Michael Jackson. Consider, now, whether this is a good time to review your own estate plan. It turns out that the King of Pop was also the King of Estate Planning!

"College Costs Rice 50% - July 12, 2009

College costs up 50%! “What?” say. Ok, I used this headline as a cheap trick to grab your attention. But in many cases, it’s ‘almost’ true. First, college tuition has risen approximately 6%; then subtract 40% or more for the stock market decline and your costs of paying for college have risen almost 50% if you had a substantial portion of college funds invested in stocks. Maybe your situation is not quite this bad but the combination of continually rising college tuition and fees along with the depressed stock market and a faltering economy are reason enough to stop and re-evaluate the college strategy for your children.

College graduates earn in excess of $1 million more during their careers than those without a college degree so skipping college is a poor choice. But let’s consider some ways to get that degree for less money.

Attend a public university instead of a private college. This is particularly pertinent if your child is likely to pursue a career in a field that typically has limited earnings potential. The math can be compelling. Currently the average costs including tuition, fees, room and board for a public in-state four-year university is $18,000 annually while the same for the average private college is twice that amount or $36,000.
Start at a two-year college then transfer to a four-year public university or private college. This strategy can save a tremendous amount of money. First, tuition for the average two-year community college is about half that of a four-year public university. Also students often live at home saving the cost of room and board. Finally, the lower financial output gives your stock portfolio two more years to recover…enough time for a stock market rebound.
Become a financial aid expert. There are tens of millions of dollars available for student aid in the form of grants, scholarships and loans. Your best strategy is to start early researching financial aid possibilities based on your financial situation, your child’s situation and your college preferences. Remember that there are scholarship and grant programs that are not based on financial need. These include programs for gifted athletes, students with high grades or high entrance exam scores, gifted students in art, music, computer science. Get started now by visiting The Resource Center at; click on “Links”; then “College Scholarship Search Engine”. You’ll be able to search over 3 million scholarships worth over $16 billion!
Have your child work during college. Whether it’s a part-time job during college or a summer job, the extra money can make a big difference as well as increase the child’s appreciation for the college education they ‘earned’. Well, maybe they’ll appreciate it later in life!
Accelerate college studies. There’s a mindset today that college is now a five-year program. Such a mindset will only increase college cost 20% or more. It’s still possible to finish college in three or four years and this should be part of your strategy. Your high school student may be able to take community college courses that will transfer to college. Also, inquire if any high school advanced placement courses qualify for college credit. Finally, consider summer courses at the local community college. This will cut expenses significantly while speeding up your child’s graduation date.

"Be Your Own Boss? Plan for Success! - Part II" - July 5, 2009

Last week I began a discussion of the three keys to success for any business as related to me by one of Alabama’s most successful entrepreneurs. His first key to success is, “Stay close to your numbers”, meaning that it’s imperative that you watch your money very closely. The ‘tools of the trade’ include a Balance Sheet, Cash Flow Statement and Profit and Loss Statement. The context for last week’s and this week’s column is ‘start-up’ entrepreneurs…those of you who are ready to start your own business and want to make certain you succeed. However, the lessons are valid for every business. To review last week’s article, visit the Resource Center at; then click on “Stewart’s Column”.

This entrepreneur’s second rule for success is, “Stay close to your customers”. Well, as a start-up entrepreneur, you don’t have any customers yet but you do need a detailed written plan of who is your ‘ideal’ customer. Further, you’ll need to develop a plan for how to serve these customers better than anyone else along with a plan for reaching your new customers (your marketing plan). You might even consider creating a focus group with a handful of ideal customers to get their input regarding your proposed product or service. Finally, you’ll need to develop a process for getting customer satisfaction feedback on a periodic basis. One final note. Generally, the worst marketing strategy is one that attempts to drive business growth by becoming the lowest price leader. Eventually, someone will figure out how to compete with you and you’ll see your profit margins shrink and your demand for aspirin rise! The most successful businesses build growth based on a product or service niche. How can your create a unique customer experience?

The final key to success is, “Stay close to your employees”. In the beginning, you may serve as the president, secretary, treasurer and janitor but soon you will need to develop your team. Start by developing an organizational chart based on a successful business five to ten years into the future. What ‘positions’ would need to be filled between now and then? Look for people whose strengths counter-balance your weaknesses. For example, if you excel at sales and marketing, hire someone who is excellent at operational details and managing financial systems. One lesson I learned in building my businesses is to hire the very best people…people who are smarter than you and who are self-starters. They will be more expensive, but they will be worth it. Once you have great people in place, the best way to keep them is to set up a communications system that allows you to give and receive feedback regarding expectations, progress and ideas for improving the business environment.

Start your team by engaging ‘experts for hire’ including an accountant and business attorney and perhaps a financial planner. Another excellent source of business talent that you can access for free is through SCORE. SCORE is a nonprofit association dedicated to helping small business owners succeed. Both working and retired executives and business owners donate time and expertise as business counselors. For more information about SCORE, go to

The ultimate key to success will be your passion for your chosen business. When you find yourself at a low point, it will be your passion for your business and your passion to succeed that will sustain you.

Be Your Own Boss? Plan for Success! Part I - June 28, 2009

As unemployment approaches 10% and job prospects for those seeking employment remain stilted, more and more people are considering pursuit of the dream of owning their own business so they can control their own financial destiny. Many great success stories were born out of adverse situations. For example, Julie Trade of Scottsdale, Arizona was happy as a stay-at-home mom. Then in 2007 her husband was laid off and unable to find a job. She decided to use her marketing background to start a marketing communications business from her home. At first her goal was to make some extra money to make ends meet but as she built her internet marketing skills her business began to grow rapidly. Today, she enjoys a six-figure income.

Unfortunately, the majority of new businesses fail within the first four years. Years ago I was the executive producer and host of a cable TV show where I interviewed self-made millionaire entrepreneurs who would share their secrets of success. I’ll never forget the advice one multimillionaire business owner gave me. He said the key to success for any business is three things. The first key is, “Stay close to your numbers.” Let’s see how we can apply this rule to tilt the odds of success in your favor.

I often hear that start-up entrepreneurs should expect to lose money for the first three to five years. Nonsense! Your business strategy should include a ‘plan’ to be profitable your first year. Two key points here:
Most new businesses require start-up capital to cover rent, equipment, salaries, etc until such time as the business revenue can cover ongoing business expenses. One of the biggest mistakes entrepreneurs make is underestimating these costs. Often the entrepreneur is seeking capital from either a bank or friends and relatives and they typically ask for what they estimate will be needed, which more often than not, turns out to be inadequate. Going back for additional funding typically proves to be a much more daunting task because the entrepreneur has now lost credibility from a business management perspective. To your initial estimate, you should add 50% to 100% because my experience is that you will have underestimated your capital needs by that much money.
Once you’ve raised the needed capital, you’ll need to develop a detailed month-by-month cash flow projection for the first 12 to 24 months of operation along with a summary cash flow estimate for an additional two to three years. Technically, you’ll want to follow three sets of numbers on a monthly basis: Balance Sheet, Profit and Loss Statement and Cash Flow Statement. The Balance Sheet lists all of the business assets, liabilities and net worth. The Profit and Loss Statement tracks income and expenses to arrive at your profit (or loss). The Cash Flow Statement tracks the sources and uses of your cash. Managing your actual income and expenses against your budget will be one of your most important tools for success. In good times, good cash management is your key to growth. In bad times, it’s your key to survival!