Train Wreck Ahead!

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Periodically AARP surveys Americans on a number of subjects, including whether they want to “age in place”—that is, stay in their own homes as they age. While it varies a bit over time, the vast majority of Americans say they want to age in place. I find this vaguely disturbing for reasons that became clear to me last week. I was listening to Krista Tippett’s interview with Atul Gawande (physician and author of the phenomenal book Being Mortal: Medicine and What Matters in the End) on her “On Being” podcast (What Matters in the End). Dr. Gawande described how his paternal grandfather had lived in the family home in India, continuing to participate in family and community life, until his death at 108. Wow! Who wouldn’t want that? Then he goes on to explain that this was only possible because younger family members, particularly women, “were more or less enslaved to his needs”. This resonated deeply with me. Aging in place requires tremendous resources, usually in the form of sacrifices of women caregivers.

Blinders On

As Americans live longer, baby boomers are discovering the joys and burdens of caring for their declining parents. And, as Jane Gross points out in her excellent book A Bittersweet Season: Caring for Our Aging Parents—and Ourselves, even as we experience our own parents in decline, we continue to believe we ourselves will remain vital and then suddenly one night die in our sleep. This belief goes hand in hand with our desire to age in place. Why would I give up my home and independence to live in an institutional setting when I don’t need to? I’ll continue to be able to maintain the house, do my grocery shopping, mow the lawn, and get out to visit friends, see movies, go for hikes, eat in restaurants, just like I do right now, I’ll just have more time to do it once I retire. I will ignore the fact that it isn’t working that way for my parents and pretend that it’ll work this way for me. This is magical thinking! It’s like smokers believing that they won’t get lung cancer! Yes, there are people who can happily live alone in their own homes at very advanced ages…but there are more people who can’t. The San Francisco Bay Area Institute on Aging reports that, for people who live to be over 80:

  • 29% will need assistance, and

  • 56% will report being severely disabled

 It isn’t just the very old. Between 65 and 74, 13% of men and 19% of women say they are unable to perform at least one activity of daily living: eating, bathing, dressing, toileting, transferring (getting in and out of bed or a chair without assistance) and maintaining continence.  The data indicates that the majority of us will NOT be able to age in place without a very extensive care team.

Promise me

Explicitly or implicitly, we are asked to keep a loved one “out of a nursing home”. We’ve heard the horror stories of inadequate care and low standards, maybe even spent a depressing hour visiting a resident (inmate?). No one wants to end up in one of these! But have you also witnessed the life toll that making such a promise takes?

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My friend Jeanine’s mom never asked her to promise that she would keep her in her own home, but Mom’s wishes were clear. They both just assumed that Mom would continue to live alone in her own home. At the start, Jeanine would do the grocery shopping and heavier weekly cleaning and leave a meal or two in the freezer each week so Mom didn’t have to cook all of the time.  Then she organized meals on wheels and prepared all of the other meals Mom would need, plus stopping by daily to see that Mom got her medications. She also did all of the house-cleaning, paid someone to take care of the yard, and started paying all of Mom’s bills. As Mom declined, both physically and mentally, she needed medication twice a day and to be bathed and dressed. She could still undress at night and remembered to go to bed, but she would call Jeanine many times during the day and night, confused and sometimes frightened. At this point, Mom hadn’t participated in anything social in years and was basically a shut-in. And Jeanine, with the support of her husband but no meaningful assistance from her siblings, was on the verge of a breakdown. She never had a day off cause there was no one else to take care of Mom. She hadn’t been out of town or on a vacation in close to a decade. The stress of an unrelenting list of caregiving tasks paired with watching her beloved Mom’s decline, with no light at the end of the tunnel, left Jeanine feeling suicidal. Yup, it’s a gift to have time with an elderly parent (or whomever it is you’re caring for)…but it is also the enslavement mentioned by Dr. Gawande.

Plan B

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Almost two decades ago, my own parents sold their small home (they had downsized 15 years earlier) and moved into a retirement community. They had modest means—Dad was a high school teacher and guidance counselor and Mom stayed home with us kids. Still, they were able to find a place they could afford in the area that was their home. Their apartment was small but had a great balcony and beautiful views. The common areas were attractive and the activities were frequent and varied.

My recollection is that this move was unprompted, but Ron has reminded me that I suggested that we together take a look at some of the retirement communities in their area. I do have distinct memories of their home falling into disrepair, needing cleaning and maintenance beyond their abilities as they aged. More and more days of the week they were eating fast food so they didn’t have to shop, cook, or clean-up. My siblings who lived closer were engrossed in their own growing families and careers and couldn’t take up the slack. When Ron and I made our annual visit from the Virgin Islands, we tried to check off as many tasks as we could. I’ll never forget taking my folks out to shop while Ron stayed behind to scrub the mold off of their windows and shower stall. They couldn’t see it and he didn’t want to humiliate my mom, who always kept her house immaculate, by making her aware of it.

Maybe I see the positives because it was my idea, but I do believe that my parents’ quality of life improved when they moved into a community setting. Mom still had her privacy to read and study undisturbed but enjoyed lunches and dinners in the communal dining room. They continued to have a quiet breakfast in their apartment while reading the morning newspaper. Dad loved all of the activities and played cards and pool and anything else the activities director dreamed up. He was part of the residents’ counsel and the welcome committee. Mom started a Bible Study in that first community that continues to this day. They still got out to church, to visit friends and family, and to see movies or shop. They ate better because they didn’t have to prepare meals to do so.

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The fact, by the time they needed assisted living, they were already living in a retirement community that offered it, made the transition much, much easier! Several assisted livings later, my 97 year young widowed father continues to live as independently as possible because of the care available in his assisted living. Because it is the assisted living’s job to provide help with activities of daily living, Ron and I are freed to devote our caregiving energy to providing love, companionship and stimulating activities. We couldn’t do it all. If we were spending our days bathing, dressing, feeding, and keeping Dad clean, that’s all we would do and we’d struggle to get it done.

Do it for your loved ones, if not for yourself

By definition, you love your loved ones, right? Whether they are children, a spouse, a dear friend, do your loved ones a favor and come up with an acceptable alternate plan in case you do actually have a decline. A significant loss of cognitive function (dementia) or physical disability will preclude you from living independently. Have a plan for it, just in case. Your first step is to go out and learn about the care options in your current community. If they seem limited, consider care available anywhere you might happily live out your life. Whatever your financial circumstances, there will be options:

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  • Home care

    • Help with activities of daily living

    • Meal preparation, light housekeeping and chores

  • Senior living communities

  • Co-housing/shared housing

  • Continuing Care Retirement Communities (CCRCs)

  • Independent living facilities

  • Assisted Living

  • Skilled nursing (aka long-term care or nursing homes)

 

Imagining our own decline doesn’t come close to making the list for our top 10 favorite activities. But some forethought and preparation increase the odds of greater happiness later on for ourselves and our loved ones. If we don’t prepare, care for baby boomers in the US is a train wreck in the making. Give me a call if you need some help planning for yourself or a family member (336-701-2612).

Investment advisor representative of and investment advisory services offered through Garrett Investment Advisors, LLC, a fee-only SEC registered investment advisor. Tel: (910) FEE-ONLY. Fair Winds Financial Advice may offer investment advisory services in the State of North Carolina and in other jurisdictions where exempted.

Where there’s hope, there’s life

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What defines quality of life for you? It’s a moving target and very personal. An IESE Business School articles elaborates:

"Quality of life" is subjective and multidimensional, encompassing positive and negative features of life. It's a dynamic condition that responds to life events: A job loss, illness or other upheavals can change one's definition of "quality of life" rather quickly and dramatically.

Have you taken the time to think about what makes life worth living? And, if you have, have you shared your thoughts with the people close to you? They’re the ones who will have to make decisions on your behalf, if you are unable. By definition, these will be stressful times. Operating without enough information only exacerbates the stressfulness.

My mini survey

While struggling to define quality of life for myself, I quizzed several friends on the subject. (Note: this is not a random sample, nor is it statistically significant…only interesting!) I vaguely recall Ron telling me, when we were decades younger, that he wouldn’t want to live in a wheelchair. How does he feel about that now? Being able to walk is no longer a deciding factor in his quality of life. Even if he couldn’t walk, he could still read, listen to music, operate his ham radio. His definition has changed.

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My dear friend Cecile is a sociologist with a professional interest in gerontology, the scientific study of old age. She has given this subject a lot of thought, done research on it, and published papers in academic journals. When I asked her what quality of life meant for her, she quickly responded “Waking up in the morning with something to look forward to.” That might mean a visit from a friend, a cuddle from her pups, working in her garden, teaching a class at the Y. The important ingredient is hope. As Anne Frank wrote “Where there’s hope, there’s life.”

Rachel’s factors were similar to Ron and Cecile’s:

  • to experience nature, feel the sun and the wind on her face;

  • pets to cuddle and love

  • a hug

  • the taste and smell of wonderful food

  • the ability to communicate

  • music…of her favorite genres, please (no elevator tunes!)

  • access to book based on her abilities to read, whether print, audio, or braille

  • companions who like to smile and laugh

 

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I found myself nodding my head and agreeing with everything my friends shared (ok, maybe not the ham radio part). From years of observing my dad, I would add

  • Being loved, continuing to have friends and family

  • Making a difference

At 97, my father has lost more loved ones than many of us have even had! He treasures his children, grandchildren, great grandchildren, nieces and nephews, and his friends, old and new. His life has been devoted to others as a teacher, coach, father, husband, and friend. Dad lives to do for others. He continues to encourage and support me in all aspects of my life, professional and personal. Ron and I make an effort to point out and remind him of his ongoing positive influence on other people’s lives—family, friends, his church family. Being loved and making a contribution are essential to my father’s will to live.

Who will speak for me?

The dynamic nature of quality of life makes it all the more important that we talk about what matters most to us with our friends and family regularly. The better they understand what we care about today, the better equipped they’ll be to make decisions if we’re suddenly incapacitated. You don’t want a decision maker who doesn’t really understand your wishes!

Most of us haven’t been trained to make tough medical decisions under trying circumstances. We’re likely to:

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  • Question the patient’s stated wishes, uncertain the person had this specific situation in mind. If there are multiple family members with different views, this is even more likely. This lack of confidence can lead to making choices that aren’t consistent with the person’s stated preferences. My friend Gwen told me the story of her good friend who had a massive heart attack. Even though she had a do not resuscitate order in place and did not want extraordinary measures taken, in this moment of stress, her son agreed to have her resuscitated and airlifted to the hospital. Gwen was thankful that her friend died en route to the hospital and was spared further “treatment”.

  • Mistakenly substituting our own wishes for the patient’s. We tend to do this subconsciously, without realizing that our own preferences aren’t identical to those of the person for whom we’re deciding. In caring for my parents over the years, I have had to frequently remind myself not to impose my wishes on them. I felt for years that they needed help managing their medications—there were many, with lots of different requirements on when, how and how often they were taken…and I saw my folks make obvious mistakes during my visits. However, they were still cognitively able to choose. And their choice was to take the risk of taking their medications incorrectly and maintain complete independence.

Your local hospice can help you and your designee understand what kinds of decisions may need to be made. Preparation through education and dialog is the best route.

Thinking about what is most important to you, sharing that information with those close to you, learning more about situations that you may face are all important steps. But unless you’ve executed advanced directives, your chosen advocate won’t have the legal ability to stand in for you. When it comes to preserving your quality of life, both healthcare and financial decisions play major roles. You need to a healthcare power of attorney to name someone to make medical decisions. With a durable power of attorney, you’ll appoint a representative to make financial decisions. These are documents an estate or eldercare attorney can help you put in place, or contact your local hospice for education and referrals. If, like me, you’re eligible for membership in the North Carolina State Employees Credit Union, check out their very affordable estate planning service utilizing attorneys in your area. And while you’re preparing these documents, make sure to name at least one alternate, in case your designee is unavailable or unwilling to act on your behalf at a critical moment. I know, I’m the only person on the face of the earth who gets charged up about estate planning documents…but you need these! You can thank me later.

This should scare you

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I hate to close on a somber note…but do you want a random ER doctor or hospitalist making life decisions for you? If you’re very cynical, you believe they’ll be making decisions based on what will squeeze the most money out of your insurance company. If you’re not, you’ll expect them to do what they are trained to do—preserve any type of life at virtually any cost. Keeping you alive and “safe” will be top priority, even if that equates to spending your remaining days lying in a hospital or nursing home bed. Take steps today to talk with your loved ones about what matters most to you and get your legal documentation in order!

I’m passionate about living my best life. I want to help my friends, family, and clients identify and find ways to live theirs! Please share your thoughts with me at beth@fairwindsadvice.com. For assistance in planning for your best life, give me a call at (336) 701-2612.

Investment advisor representative of and investment advisory services offered through Garrett Investment Advisors, LLC, a fee-only SEC registered investment advisor. Tel: (910) FEE-ONLY. Fair Winds Financial Advice may offer investment advisory services in the State of North Carolina and in other jurisdictions where exempted.

Advice for my younger self

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My youngest niece just graduated from high school. Achieving this rite of passage is a turning point in our family—the last of her generation to move in to adulthood. And while 17 may not seem like an adult, this young woman has already shipped out for basic training in the Air Force. She’ll be a grown-up very soon, ready or not! Jordan hasn’t asked her wise old aunt for any advice (yet!) but I’ve offered to give her some tips about money. Makes me nostalgic about my own youth. What do I know now that I wish I had known then?

Just do it!

I knew money was tight when I was a kid. My dad loved to shop and did all of the grocery shopping. He would tear the corner off of the check he gave the cashier at the supermarket when it was getting close to payday. He explained to me that this would keep the check from being automatically processed. Manual processing would result, he hoped, in enough of a delay that his paycheck would be in the bank before the check was presented to clear. Though I was aware my parents didn’t have a lot, I always felt like I had everything I needed. Geez, we lived in the suburbs and I had my very own horse when I was 12—was I living a charmed life or what?

Dad helped me open my first checking account (at the credit union where he was member #7) and my first department store credit card. He taught me how to balance said checking account and pay my credit card bill. But the rest of what I learned I absorbed from my family home—living from paycheck to paycheck. We never talked about savings. I don’t think my parents ever had a savings account until they sold the family home and downsized to a small place when they were in their 60s. They taught me what they knew about money, but their perspective was limited. What shall I tell my niece that I wish my parents had known to tell me? Easy!

Pay yourself first

From your very first paycheck, automatically save a chunk first. I hope she’ll start out at 10%, but even if it’s just 5% that’s a start to the habit. And if done every paycheck and automatically, it will become a habit, just like brushing your teeth. Habits, good or bad, just happen, we don’t question them. A savings habit established at an early age sets us up for financial independence—the ability to spend our time in the ways that are most meaningful for us. This is what life is all about.

The alternative is a much harder road, and I speak from experience. Not trained to save at an early age, I believed that I would start saving when…I started earning more money, paid off my student loan debt, bought a boat, you name it. We fall into the trap of procrastinating. Want to know how I started saving money? It was when I was living on a sailboat in the Virgin Islands where I neither had nor needed much of anything. There was no easy way to spend the money we made taking people on sailing vacations. No easy way cause we were occupied with our business during the winter season and off exploring cool places on our boat during hurricane season. Spending money, particularly on things we had no room for, didn’t make it onto the fun activity list.

Later, when we moved back on land, we quickly fell out of the savings habit. Once we made the transfers to savings automatic, we didn’t even miss the money and the savings account grew steadily. That financial buffer—savings—gives us the freedom to shape our destiny. All of that, just from paying ourselves first!

Stuff won’t make you happy, but experiences will!

I wish I had heard these very words, repeatedly, from the time I was a kid. I’ve had it easier than many. While not a born saver, I was also not enamored with stuff. Even as a child, I loved books. My allowance went for inexpensive paperbacks. I spent hours pouring over the Scholastic catalog to make my choices. I wasn’t that particular about clothes or accessories or toys.

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Having a horse was expensive and there was lots of gear that you could use. Like any young horse owner, I loved spending money at the tack shop! But when my friends decided to get in to the really big money pit—showing their horses Western Pleasure with all of the attendant clothes, silver adorned saddles and bridles, professional trainers, horse trailers, I went my own way. I spent many an afternoon riding miles alone on the trails in the surrounding undeveloped hills while my friends rode circles in the arena back at the stable. (I’ll save the stories of all of the miles I walked after my horse threw me and took off in said hills—fortunately she couldn’t open gates!) While still an adolescent, I was learning both to value experiences and to make my own decisions instead of following the crowd. Both are necessary to escape the materialism of our culture.

Too much stuff—to buy, sell, store, maintain—keeps us from the very experiences that make us happy and give our lives meaning. When we told people in NYC that we were getting rid of everything and moving on to our 31 foot sailboat to sail away, one acquaintance said, "I'd love to do that, but I just bought a couch." That happened 25 years ago, and while I've forgotten who said it, the comment has stuck with me. Don’t let things keep you from moving towards your dreams, whatever they are! 

But will she ask?

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I’ve got my two tidbits of advice ready…but will Jordan ask? Two simple ideas can change a life’s trajectory. Advice, however, is only useful if it is sought after. I can wait.

Do you have a story about paying yourself first or prioritizing experiences? Or, what do you wish that you could tell your younger self? Let me know at beth@fairwindsadvice.com. If you’re ready to enlist a partner to get you on track to your goals, give me a call at (336) 701-2612.

Investment advisor representative of and investment advisory services offered through Garrett Investment Advisors, LLC, a fee-only SEC registered investment advisor. Tel: (910) FEE-ONLY. Fair Winds Financial Advice may offer investment advisory services in the State of North Carolina and in other jurisdictions where exempted.

My destiny, myself

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My life has always been a great adventure—I’ve lived and worked in New York City, Morocco and the Virgin Islands, had a horse, a sailboat, a race car, taught scuba, sailed off into the sunset, screamed around world class racetracks. I put myself through college and graduate school. I have earned big bucks, walked home because I didn’t have enough money for the bus, and most of the time been fortunate to live somewhere between those two extremes. Whether it’s true or not, I believe that I control my destiny.

My parents grew up during the Great Depression. They were the first college graduates in their families. My mom put herself through college after her father told her that a college education was wasted on a girl. My folks left their home towns on the eastern seaboard in 1950 to head west because the pay for school teachers was twice as much in California as it was in New Jersey. Work hard, learn a lot, you’ll be rewarded—I absorbed this mantra during my childhood and have lived by these words all of my life.

In John Bogle’s excellent book Enough, he tells his story about founding Vanguard. He espoused hard work, doing the right thing, living according to your values. Bogle suggested that others will find rewards in doing so as well. Then I listened to an inspiring interview with a woman who described starting out in her company’s call center and progressing to the C-suite, through a combination of working hard, earning college degrees and volunteering for projects to gain experience in a variety of areas. This is the way our careers should be!

The universe doesn’t always cooperate

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But it isn’t necessarily what happens. The value of the skills and professional growth that we attain through taking on new challenges is ours to keep, but for every worker whose efforts have been rewarded, there’s at least one whose efforts have only led to…more work! You know these folks—they’re chosen first for every project. Heck, you may be one of them. To achieve our goals, we have to learn from all of our experience. That means objectively reflecting on all of the outcomes of our actions, including how they are valued by others. This was a hard lesson for me to learn.

Over the years, I’ve worked in many different environments, from my own small businesses to large organizations. For most of my career, I didn’t even realize, on a conscious level, that I operate on the belief that hard work and dedication will eventually be recognized and rewarded. I love a challenge and thrive on problem solving. It’s my nature to look for things to improve and to try new things. This is such an obvious, out-front, part of me, I attract challenges organically.  (This, by the way, makes me a perfect fit for financial planning--bring me your troubles, we’ll craft some solutions!) But it didn’t turn me into a star in organizations that I served for years. And it took me years to look at the evidence—my achievements are much greater working for myself than as part of a larger organization. Working for others I’ve done work I’m proud of, made close ties with colleagues within and outside my organization. But only in my own businesses have I been able to do work that changes lives and delights people. With our sailing vacation business, Ron and I made lifelong friends, people who are still saying 20 years later that their week on our sailboat was a highlight of their lives.

The light bulb comes on

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It took a thwarted dream, a major professional disappointment, to force me to look at the evidence. My team hatched a plan to very inexpensively address a couple of our organization’s primary challenges. We were so passionate about this project, we were shocked to be turned down—the executives said they just didn’t want to make any quick changes. It was easy for me to see the writing on the wall for my subordinate. I encouraged her to look elsewhere for better opportunities and, within a few months, she had a new job. I’m thrilled to report that she has since been able to implement many of our ideas in her new organization! It took longer for me to realize how stubbornly I had been persisting in a belief that my hard work and good ideas would eventually be rewarded. An objective review clearly showed that my ideas were not valued in the arena I had chosen. To have the freedom to implement my own ideas and do work that is meaningful to me, I had to redirect my attention to changing the only thing in my control—me!

When I finally lifted my head from the “hard work will be rewarded” grindstone, I was able to channel my energy more productively. I came up with a plan to transition to my own financial planning practice and got to work on my financial planning certification. My days didn’t suddenly have more hours…but I conserved some of the energy that would otherwise have gone in to my existing job to prepare for my next phase. It wasn’t easy! When you’re curious, like to learn about new things and help other people, narrowing your focus and saying no is a major behavior change. But my new path was clear and these concessions had to be made. It was hard to learn to say no to all kinds of things, even those that interested me. People were baffled, some were even angered, by my changed behavior. I’m not a fan of conflict—it wasn’t pleasant. I stayed the course because I knew it had to be done.

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I’ve been vocal in sharing what I’ve learned with others, mainly younger women just starting their professional careers. In my perfect world, everyone who worked hard, lived by their values and had good ideas would find the success that John Bogle did. In real life, it’s good to learn early to pay close attention to the signals you receive from your employer (or the market, if you’re running a business as I do today). Persistence is a wonderful thing, until it gets to be foolish. Take the time to look at the evidence. Only you can judge when you’ve tried enough and need to set your sights elsewhere. What’s that much repeated definition of insanity—repeating the same actions and expecting a different outcome?

While my examples are about career and realizing professional goals, these truths have applications in all aspects of our lives—personal, spiritual, financial. We really are in control of our destinies…it’s just that the path is sometimes longer and more circuitous than we expect! Keep your optimism, be true to yourself, and be willing to take a detour if your chosen route is blocked. The best use of persistence is to keep you taking steps towards achieving your dreams, forks in the road and all.

Do you believe you’re in control of your destiny? Have an experience to share? Please let me know at beth@fairwindsadvice.com. And feel free to call me if you would like a partner in planning to reach your dreams (336-701-2612).

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Investment advisor representative of and investment advisory services offered through Garrett Investment Advisors, LLC, a fee-only SEC registered investment advisor. Tel: (910) FEE-ONLY. Fair Winds Financial Advice may offer investment advisory services in the State of North Carolina and in other jurisdictions where exempted.

The precious gift of knowledge

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Over Memorial Day weekend I had another adventure in health care with my 97 year young father. Sunday morning he mentioned that his left thumb was sore, but it looked ok to me. By Monday morning, the thumb was swollen and very painful. We took a Memorial Day trip to the urgent care clinic. The experience reminded me how lucky I am that, over the course of our shared lives, I’ve come to know my dad well enough to make good decisions on his behalf. My definition of a good decision, in this context, is a decision that he would have made for himself, prior to his cognitive impairment (dementia). A good decision is not necessarily what I would want, for him or for myself, or a decision that is easy or comfortable. To know a person well enough to confidently make the choices he would wish, when he is no longer able to do so, is a tremendous gift.

Speak Up!

People never want to talk about this stuff, but it is too critical to leave unsaid. If receiving the type of healthcare that you want isn’t enough to motivate you, how about giving your loved one(s) peace of mind when they have to make tough decisions on your behalf? Over the decade or so that I’ve cared for my aging parents, this one gift has had an outsized impact on my ability to sleep at night and my quality of life. As a result, my partner and closest friends hear frequently about my own wishes for care. I understand how important it is that they know me and my wishes, so they won’t be stressed out trying to imagine the choices I would have made but can’t when the time comes.

This is a two part process: have the correct documentation in place and then have conversations about your wishes with the people who will have to make decisions when you can’t. If you think you’ll be one of the charmed few who lives independently right up until the night you die peacefully in your sleep, recognize that you’re in denial and take these steps anyway. Who knows, maybe being prepared for a less desirable outcome will keep it from happening, like carrying an umbrella holds off the rain.

Advance Directives—the legal documentation

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Letting the world know your wishes for medical treatment is accomplished with advance directives. On its CaringInfo.com website, the National Hospice and Palliative Care Organization defines advance directives as “legal documents that allow you to plan and make your own end-of-life wishes known in the event that you are unable to communicate. Advance directives consist of (1) a living will and (2) a medical (healthcare) power of attorney. A living will describes your wishes regarding medical care. With a medical power of attorney you can appoint a person to make healthcare decisions for you in case you are unable to speak for yourself.”

You may not feel any time pressure to act on these—you’re not feeling old and near your end-of-life. However, things can change in an instant. If you are knocked unconscious during a league soccer game, wouldn’t you like someone who knows and loves you to decide whether you are put in an ambulance and which hospital you’re taken to? Hope you’ve got your health care power of attorney in place!

Unless you’ve been intimately involved with a somewhat lingering death, you probably don’t understand all of the choices that you face at that time. Respirator or not? What about a feeding tube? IV fluids? Our local hospice held sessions during which they helped people fill out living wills and explained what some of those end-of-life questions mean. During my mom’s last few months, her hospice caregivers did a good job of helping Mom and me understand the implications of these decisions. It felt a lot different in the moment than it had going through the living will like a checklist when I created mine. An estate attorney can help you prepare these documents. Consulting with those who are actively involved in end-of-life care so you can make informed choices is worthwhile!

Find the words

Creating a living will and healthcare power of attorney is the first step. Admittedly, even though it is the easier of the two steps, I have a hard time convincing my friends and financial planning clients to take this step. If you’re reading this, I hope you’ll be persuaded to take action! The second step is more difficult—you must let your nominee know what your wishes are in detail. Yes, you need to think and talk about subjects you would prefer to leave unexamined. Because we’ve been involved in caring for elderly parents for many years, Ron and I have conversations about our own wishes frequently. Stuff comes up in taking care of my dad and it’s an opportunity for us to think about what we would want in a similar circumstance…and then share that information. You’ll need to look for or create catalysts in your own life to start these conversations.

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Directly expressing your wishes to your loved ones is the best way to put them at ease and receive the care you want. I was on the receiving end of this gift with my mother. My mom was a real communicator and we were quite close. She also remained sharp and lucid up until very close to the end of her life. As a result, we were able to discuss her wishes as each new decision unfolded. Because she knew her condition was terminal, we also discussed what was to come and I made sure I understood what she wanted. She wanted to die at home, not in a hospital, and she didn’t want anyone but immediate family to see her in her final days. She wanted people to remember her as she had been, prior to her final illness. This seems like a small thing, but it ended up being an important one. People wanted to come see Mom one last time, even after she was no longer able to speak. Just hearing voices in the other room made her anxious because she didn’t want to be seen. I had to put my foot down with my father and brother who felt we should honor friends’ wishes to see Mom one last time…and even insisted that they not invite friends into the living room, where Mom could hear their voices and would feel frightened. I knew what my mom wanted because she had told me. In a difficult time, it was a comfort to know that I was giving my mom her final wishes, even if I made loved ones unhappy in doing so. This is the gift I’m asking you to give your loved ones—tell them now what you would want!

Alternatively, life unscripted

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Understanding isn’t always so easy to come by. I’ve learned much more about my dad through observing his choices over the years than I have from his words. He’s a warm, friendly, gregarious guy…but he likes to focus on making others happy. That doesn’t leave much room for talking about his personal needs or preferences. Dad is a man of action, happiest when he’s out and about, fixing what’s broken and taking care of others. While obvious and not particularly insightful, this perspective on my father is one of the keys to my making good decisions for him—to keep him active and involved. In addition, in his later years, I noticed Dad’s aversion to nursing homes (skilled nursing or long-term care facilities). After having both hips replaced at 79, he was sent to a skilled nursing unit for rehab. He took one look at the seriously impaired residents of the facility and checked himself out to do his rehab at home. Years later, my mom suffered a serious stroke and was transferred to a skilled nursing facility for rehab. My brothers and I took turns spending the days with Mom at rehab. Dad couldn’t bring himself, after one visit, to spend any more time with his beloved wife of 60+ years in that facility. This is the second principle that guides my decision making on Dad’s behalf—avoid nursing homes at all costs.

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Knowing what makes life worth living for Dad means making decisions that go against mainstream medical recommendations, repeatedly. Dad has occasional falls and his assisted living’s protocol is to call an ambulance and send the resident to the local emergency room to be checked out. Nope, not my dad. When a 97 year old with congestive heart failure, diabetes and occasional atrial fibrillation shows up in the ER, he may be admitted for observation, especially if he might have a concussion. When you have low mobility and are a fall risk, observation means being confined to a hospital bed. For my dad, one day without getting up and walking decreases the odds that the next day he’ll even have the strength or remember how to get up and walk. Without the ability to get up and move, he can no longer engage in the activities that give him quality of life—going to baseball games, the theater, concerts, shopping, dinner at our house or restaurants. The risk of the loss of quality of life actually outweighs the risk of a concussion or his other chronic health conditions…none of which the medical professionals can fix, by the way. I understand and appreciate that the folks in the assisted living and the doctors at the hospital are all trying to act in my father’s best interest, to keep him safe and cared for. But they don’t know, as I do, what is really most important for Dad’s quality of life. So his assisted living knows that they need to call me, not an ambulance, unless there’s uncontrolled bleeding or a broken bone (and even then, they need to call me at the same time as the ambulance).

I share my own stories to illustrate the importance of knowing deeply the person for whom we’ll make decisions…and of giving this gift of knowledge of ourselves to those who will have to make decisions for us. It isn’t simple, comfortable or easy but that makes this gift even more priceless to the recipient. Isn’t this a treasure that you want your loved ones to have? Don’t leave your loved ones to try to decipher your wishes from your actions, as I’ve done with my father. Make it easier for them--talk to them today!

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By the way, Dad’s Memorial Day visit to urgent care was relatively straightforward. He wasn’t happy having an abscess lanced, but he sure felt better afterwards! Antibiotics are battling the infection and he’s back to normal.

Want help crafting your own plan for care as you age? Give me a call at (336) 701-2612.

Investment advisor representative of and investment advisory services offered through Garrett Investment Advisors, LLC, a fee-only SEC registered investment advisor. Tel: (910) FEE-ONLY. Fair Winds Financial Advice may offer investment advisory services in the State of North Carolina and in other jurisdictions where exempted

Life in Abundance

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Even before Stephen Covey wrote about the scarcity and abundance mindsets in 1989, life was giving me a crash course. I moved to Morocco in 1984. Being a young naïve Californian, I was blissfully unaware of the reality of life for those less privileged, whether in other parts of the world or the U.S.  Understanding poverty in theory wasn’t much preparation for seeing it up close and personal. It was shocking to see vast numbers of people living below subsistence level and many more just at the line. The scarcity mindset was visibly at work in Morocco, superimposed on a culture that is otherwise the epitome of generosity and graciousness. Particularly when it came to opportunities to get ahead, people behaved as if there wasn’t enough to go around. There were no win-wins, only win-losses. Case in point—I tried to help a friend get a visa to send his brother to the U.S. to study. We were repeatedly stymied by low-level bureaucrats, first in the Moroccan passport office, then in the U.S. Embassy…who evidently believed that this man’s ticket out would otherwise be their own. It didn’t matter that all of the requirements were satisfied, we were never able to get the visa. The jealousy and envy surprised me…but the people involved believed there weren’t enough opportunities to go around.

Scarcity mindset is marked by feelings of fear and envy. Conversely, abundance mindset is synonymous with feelings of personal worth and security. An abundance mindset stems from a paradigm that there is enough for everyone, therefore enough to share.

Experiencing abundance

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My most memorable experience with abundance came at a time in my life when I had very little money. We left New York City and sailed off into the sunset on our small sailboat, leaving behind my financially secure job. We had no more than one month’s salary in the bank, though we had no bills (this was before cell phones became ubiquitous). And we had so much else—sunshine, clear water filled with tropical fish and coral, gentle breezes, new friends, time to enjoy reading a book, exploring a new anchorage or watching a sunset. These were the best weeks and months of my life, and they were achieved living on a shoestring. It was easy to compare favorably the simple joys of my new life with the more expensive but less satisfying habits of my past.

Fake it ‘til you make it

Moments of abundance are one thing. Choosing to leave a scarcity mindset behind and live in abundance is a process. The first step to changing our mindset is realizing that we have one! If you discover, like I did, the roots of scarcity in your outlook, change is possible.

Living in scarcity sucks—we’re victims, fearful of life, jealous of others. If our lives look like that, there’s little risk in choosing an alternative! Let’s pretend all we want and need is abundant—that we can choose our actions and affect our outcomes. Then take the following actions:

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  • Keep a gratitude journal—you’ve heard this advice repeatedly. The data shows that people who are grateful are happier. Jot down at least three things for which you are grateful each day…and strive to name new things each day. This helps move our focus from what we don’t have in our lives to what we do have--abundance.

  • Give to others—when we feel we don’t have enough, giving time, attention, money or possessions to others is difficult, but freeing. Supporting others results in almost immediate good feelings about ourselves. It also shows us that we do have enough—we can give something away yet still have enough for ourselves. This feeling is a key to living abundantly.

  • Celebrate your uniqueness—get to know yourself better. Embrace the ways you’re different, the characteristics that make you You. Pay attention to the factors in life that bring you joy and learn to ignore the noise—what others do, want and have. Knowing what truly moves the happiness needle in your life allows you to make better decisions and feel the abundance around you.

  • Edit the inputs—media and social media encourage us to compare ourselves to others, often in superficial ways. It can be hard to screen out (pun intended) what marketers want us to buy and friends already have to make our own choices, true to our unique selves. Cut back and be selective with these inputs.  Give yourself space to consider what you want and need, regardless of the pack.

 

Practicing the steps to abundance will change your mindset. Recognizing the abundance we have is the key to designing the lives we want. Getting our financial houses in order becomes an organic part of the design.  If you would like to talk over your unique life design with a financial professional, give me a call at (336) 701-2612.

 

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Investment advisor representative of and investment advisory services offered through Garrett Investment Advisors, LLC, a fee-only SEC registered investment advisor. Tel: (910) FEE-ONLY. Fair Winds Financial Advice may offer investment advisory services in the State of North Carolina and in other jurisdictions where exempted.

The Things We Do For Love

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When it comes to taking care of loved ones, we’re accustomed to putting their needs first. Parents would do anything for their kids. Children of aging parents feel the same way about their folks. This feels right. However, when we’re making decisions in the moment to prioritize our loved one’s care, we may be unknowingly jeopardizing another loved one’s future. Today we’ll focus on elder care. A future blog will consider the other piece of the caregiving sandwich—children. Be forewarned: some of the following stories and the images they evoke are unpleasant.

Planning for Mom and Dad

Picture this: Lakeisha is in her 60s. She cares for her aging parents, both of whom have been diagnosed with Alzheimer’s. As her folks became more impaired, they needed increasingly expensive daily care in more and more specialized facilities. We don’t get a script for how life will play out, so it is impossible to predict whether Lakeisha’s parents’ remaining nest egg will be sufficient to cover the escalating cost of care. I asked about her strategy for her parents running out of money. She didn’t want to consider any type of government assistance and pledged that she would pay for their care out of her own savings, delaying her own retirement if necessary. Love inspires us to make decisions like these! The sad news is that Lakeisha’s parents did not outlive their nest egg. The silver lining is that she was saved from making good on her willingness to provide for her parents financially, even to her own financial detriment.

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Another client, we’ll call her Charlotte, made a similar decision. But her parents did exhaust their nest egg. In order to pay for their care, she used her emergency savings, then cut back on her retirement contributions and finally borrowed from her 401(k). All along, though she’s in her 60s, she’s telling herself that she’ll just continue working and will have time to get back on track. Then her company is sold and she’s downsized, unexpectedly finding herself out of work. This is a frightening picture! Having used her resources to take care of her parents, she doesn’t have enough to secure her own situation. Not only does Charlotte have to find a new solution for the folks, without money or time on her side, she has to do it under the added financial pressure of being unemployed. Charlotte has adult children with their own young families. They face a new burden--not only is Mom in financial distress now, she may be for the rest of her life.

Jerry has made the same decisions for his father’s care that Lakeisha and Charlotte made. A high-earning attorney, he planned to extend his working life however long was necessary to cover his dad’s care and then get back on track so that he and his wife would be able to retire. He is the primary breadwinner in his home. Jerry didn’t plan on his disabling stroke. Now his wife is trying to care for him and his father and make ends meet, without Jerry’s income. Jerry’s adult children, who have children of their own, are scrambling to figure out how they’ll take care of their parents and grandfather. This isn’t something any parent would wish on a child…but it happens when we make loving decisions in the moment without considering the longer term ramifications.

I don’t have children who will suffer the consequences if I impoverish myself taking care of my dad. Still, someone who loves me—a sibling, friend, niece or nephew, will likely try to help me if I get in to financial trouble. My love for these individuals motivates me to think through the far-reaching implications of my caregiving decisions.

Caregiving and your relationships

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Caregiving has ramifications beyond today’s cost. The time and emotional energy we devote to looking after a loved one in decline leaves us with less to devote to the rest of our lives. Like parents with small children, caregivers have less bandwidth for careers and other relationships. Many marriages would not have survived the past decade during which I’ve cared for my father, which followed a couple of years of taking care of both of my parents before my mom’s death. I acknowledge my bias, but my father is an outstanding, kind, caring, funny, lovable person. Shout out to Ron for being willing to have both of our lives revolve around my dad for many years so far and no end in sight. It’s easy to imagine a less lovable parent or a spouse less able to deal with being neglected by a caregiver who is busy elsewhere. Caregiving will stress your other close relationships.

How does your career fit in?

You’ve heard of the mommy track? Women who try to have it all but need career flexibility to raise children face fewer opportunities for career advancement. This impacts both earning power and job satisfaction for years to come. The caregiver track is similar. Caregivers may not have the energy or life flexibility to pursue career opportunities. I delayed a career change during the time I cared for my ailing mother. My work was no longer fulfilling, but I didn’t have the energy to pursue a change. My life was consumed with organizing Mom’s care from a distance and flying to California for a week each month to be with her.

My friend Sue cared for her mom through more than a decade of decline. As the years passed and her mom’s needs increased, Sue cut back on her work commitments. In the final year of her mom’s life, Sue was so depressed and overwhelmed with her mom’s situation, her own physical and mental health were being jeopardized. Thankfully, she was able to see her mom through to the end. She is rebuilding her business and regaining her strength, and is grateful that she was able to care for her mom…but what a cost!

Planning makes it possible!

OK, so now you’re depressed—sorry for the wake-up call. Caring for declining loved ones is demanding, but can be rewarding, too. I’ve had more one-on-one time with each of my parents in their later years than I ever had before. These days and years of feeling my father’s love and having the opportunity to demonstrate my love for him will warm and hearten me when he is gone.

You can reap the rewards of caring for a loved one and take care of yourself, too! Take the time, as you start the journey, to plan thoughtfully, get the help you need, and weigh the financial and life consequences of your care decisions. My local hospice sponsors caregiver training and group support sessions. The senior services branch of the hospital offers respite care and caregiver counseling, in addition to education about resources for caregivers. My parents’ health insurance covered the cost of a social worker who early on taught me to navigate the maze of care services. Are similar resources available to you? It is worth the time to seek these out and take advantage of them. Getting help is a necessary step in preparing for the long-term.

Discuss the financial implications of your caregiving choices with a trusted advisor. Get your thoughts outside of your head and see how they hold up in the light of day! Considering the options and their ramifications on the front end with an objective third party will help you make the best decisions for you and your family. Need to talk over your situation with an advisor who is on the same path? Give me a call at 336-701-2612.

Investment advisor representative of and investment advisory services offered through Garrett Investment Advisors, LLC, a fee-only SEC registered investment advisor. Tel: (910) FEE-ONLY. Fair Winds Financial Advice may offer investment advisory services in the State of North Carolina and in other jurisdictions where exempted.

Debt--the good, the bad, the ugly, the useful

I’m practiced in the art of using debt. Like most things, debt in moderation can be good—it opens doors to opportunity. Overuse ruins lives. The consequences of having borrowed money can slam those same doors shut. How do you walk this line? You’ve heard about good debt and bad debt. Rules of thumb like these are useful to make the world understandable and complex decisions easier. Let’s start with the rules of thumb, then personalize them to apply to your circumstances.

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Bad debt

Good debt

Credit cards
Auto loans
Personal loans
RV, boat and airplane loans
Second mortgages/home equity lines of credit
Mortgage (other than primary residence)
Payday and pawn shop loans

Mortgage (primary home)
Student loans (federal and private)

 

More bad than good

You noticed, right? Most types of borrowing show up, at least initially, on the right side of the chart. Point well taken—if we generalize, debt is not a good thing. What, then, might move a debt to the good side for you?

Let’s define some ground rules for good debt:

  1. The interest rate is low and fixed.

  2. Interest paid is tax deductible.

  3. After taking all expenses in to consideration, you are better off (financially and/or life experience-wise) for having taken on the debt.

If you have overspending issues, you should apply these ground rules strictly to improve your financial situation. When it comes to rule #3, a debt has to meet both tests—it will both improve your life and put you in better financial position. That’s a high bar!

What does bad debt look like?

  1. The interest rates are high and variable, making it difficult to whittle down balances.

  2. It is used to make discretionary purchases you can’t afford.

Some debt won’t fall neatly into either category. For these shades of gray, you’ll need to make a judgement call based on your own situation.

Making it personal

To categorize debt as good, bad, or somewhere in-between, carefully consider both the opportunity and the consequences. Let’s walk through the categories together:

Mortgage debt: Mortgages are the epitome of good debt—they meet all three criteria:

  1. Fixed mortgage interest rates are still close to historic lows. Just say no to an adjustable rate mortgage loan, even if the initial rate is lower than a fixed rate loan. Interest rates are more likely to rise than fall. When your adjustable rate goes up, you won’t be able to refinance at a fixed rate comparable to those offered today. Take the fixed rate mortgage and sleep easy knowing that your mortgage payment amount isn’t going to change!

  2. Though there are now some limits, mortgage interest is generally deductible on your income tax return. If it is, your effective interest expense, after factoring in what you’ve saved on income taxes, is even lower than the stated mortgage interest rate. However, you have to be able to itemize deductions to take advantage of this tax benefit. After the Tax Cuts and Jobs Act (TCJA) came in to effect in 2018, only about 10% of Americans can still itemize deductions, down from 30% prior to TCJA. If you’re in that 10%, enjoy the benefit of tax deductibility!

  3. If home ownership is your goal, using a mortgage to finance the purchase can make it possible. Your desire to own your own home speaks to the life experience improvement. Two factors make home ownership, and the accompanying mortgage, attractive financially:

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  • Homes generally appreciate over time, and

  • Home ownership may cost less than renting.

You may want to pay your mortgage off before retirement to reduce your monthly expenses, but otherwise there isn’t a rush to get rid of mortgage debt. For most people, this is the kind of good debt we can live with.

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Student loan debt: We borrow for education because we expect it to lead to better opportunities. Interest rates are usually reasonable. Most taxpayers can deduct student loan interest without having to itemize deductions. Our three criteria for good debt are satisfied! But be careful here! As a nation, we borrow more for education than we can easily repay…which sounds like bad debt. As a community college administrator, I saw students borrow thousands of dollars for degrees that led to very low paying jobs. (Don’t even get me started on the logic of offering college degrees that lead to non-living wage jobs…). Others borrowed but never completed a degree at all.  From a financial perspective, these weren’t good investments. However, if your education allows you to do something you truly love and consider your life’s work, then the life experience boost may trump the financial cost. Your prospects, in additional to the amount of debt and its interest rate, all need to considered for you to decide if student loan debt is good for you.

Credit card debt: Credit cards have so many different options today, they do everything but the dishes. But they still carry stiff interest rates if balances aren’t paid off each month.

  • If you aren’t prone to overspending, you can use credit cards for purchases to get cash back and earn rewards. Then pay the balances in full every month. This isn’t debt and there is no interest.

  • If you are carrying a balance from month to month, it’s debt, and it’s likely the bad kind, even ugly. If you’re using a no fee, zero percent interest offer on a credit card and it’ll be paid off without problem, that’s debt, but not bad debt. If you used that offer to pay down other higher interest rate debt, it’s even useful debt.

  • Running a balance and paying interest because you bought things that you can’t afford right now is bad debt.

There’s some wiggle room between the two extremes. Be honest with yourself about where you are.

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Auto loans: In a perfect world, we would save and buy cars with cash. In the US, more than 80% of new cars are financed. We borrow to buy new cars even while knowing that they won’t be worth what we owe when we drive off of the lot (this is the definition of being upside down on a loan). If a car is a necessity—to get to work, for example—and you don’t have cash, you can minimize how bad your auto loan is:

  • Keep your purchase modest and inexpensive to maintain—you don’t need a Corvette to get to work. Scour the reviews to make sure that the car you’re buying is going to be reliable. I don’t care how reliable the Ferrari is, if you need to finance the purchase you can’t afford the maintenance.

  • Get the lowest interest rate possible—shop for the best financing offer. Consider tapping your credit union for an affordable interest rate.

  • Buy used—a lot of the depreciation has already occurred and the prices are lower.

  • Maintain it and drive it until the wheels fall off. During your current car’s life, set up automatic monthly savings deposits to build up your next car purchase fund.

Personal loans: Credit unions and banks offer personal loans to borrowers with good credit. Unlike a mortgage or auto loan, these loans are not secured by a physical asset. The lender is relying on your ability and willingness to make payments. Because this is a risk for the lender, you’ll pay a higher interest rate than you would for a mortgage or secured loan. However, the interest rates are typically substantially lower than those on credit cards. The lowest interest rates go to borrowers with the highest credit (FICO) scores.

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RV/boat/airplane debt: If you’re living in it, you could call it a necessity, and maybe it’s good debt. Even so, you don’t get the other benefits of home mortgage debt—attractive interest rates and potential income tax deductions. And if these are really toys, this isn’t good debt.

Even though traditional financial planning wisdom says that you should save and wait to make a luxury purchase instead of borrowing, that’s not what we did to buy our boat. We bought Phoebe Alice with a loan several years before we left NYC. Though she was only 31 feet, we had never sailed a boat her size. We chose to pay more (purchase price plus interest over a couple of years instead of purchase price alone) so that we could have the boat during those couple of years to learn to sail her. It also gave us time to get her equipped for long distance sailing and to become our floating home. She was paid for and equipped before we took off and we had experience sailing her. Was this good debt? No, but it wasn’t bad debt either—it was useful. We paid more to have the boat sooner and never regretted it. What are your personal decision factors?

Home equity debt: A second mortgage or home equity line of credit (HELOC) can be used to make improvements to the home, in which case the interest expense is deductible within limits, just like a primary mortgage. Since TCJA, however, interest on a second mortgage or HELOC that isn’t used to make improvements isn’t deductible, even with the other limitations imposed (that you have to be able to itemize and the limit). A HELOC can be used to supplement your curveball fund when unexpected expenses crop up. This should be kept in tight bounds—you don’t want to lose your home because you’ve borrowed on your HELOC to cover living expenses after losing your job. Good or bad—depends on you and the specific circumstances.

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Second home/vacation home mortgage debt: Now we’re veering into the luxury territory. While mortgage interest rates may be attractive, interest deductibility isn’t guaranteed. TCJA introduced new limits on the total amount of mortgage debt interest you can deduct, if you are in the 10% of taxpayers who still itemize deductions anyway. Few people can make the case that a second home is a necessity. Debt for a luxury shouldn’t go in the good debt column, even if it satisfies the first two good debt criteria.

We ventured into second home ownership a few years ago. Mortgage rates were low and real estate prices continued to be depressed in the Blue Ridge Mountains, where we hoped to relocate. We decided to go ahead and buy a second home in the area where we would move “in a couple of years”. Then life took a turn and we moved my dad to North Carolina so we could take care of him. The move to the second home had to be pushed off.  Much as I love the place, our lives would be much easier today without a second home. What started off as useful debt is now edging in to the bad column.

Payday and pawn shop loans: Use of either of these is the red flag of financial distress. The Federal Trade Commission can guide you in Choosing a Credit Counselor. Get started today!

Understanding the role debt plays in your life can help you make better decisions. Need a second opinion? Give me a call at (336) 701-2612. 

Investment advisor representative of and investment advisory services offered through Garrett Investment Advisors, LLC, a fee-only SEC registered investment advisor. Tel: (910) FEE-ONLY. Fair Winds Financial Advice may offer investment advisory services in the State of North Carolina and in other jurisdictions where exempted.

Cruising into retirement—time for a mind shift!

You’ve spent years in the workforce and have bulked up your retirement and savings accounts—good work! Your financial planner confirms that you have enough to fund your post career lifestyle so you pick your date. This is a momentous transition in many, many ways. Today we’re going to talk about just one area that likely wouldn’t occur to you—your attitude to money.

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Time is on my side

Our attitudes to money evolve as we move through life. Often life events, whether a brush with serious illness or career-induced stress, teach us that money isn’t the key to happiness. But we spend decades in the money earning mode. There is plenty of time for an asset growth mindset to develop and be constantly reinforced.

During our earning years, we focus on both growing our income and, hopefully, saving for later. We have lots of lead time to reach our financial goals, if we maintain good money habits (saving early and often, living within our means). During this growth phase, we can handle a fair amount of risk (varies by individual, of course) because we have the time to earn our way out of downturns. An expensive car repair, an unexpected medical bill, student loans, the birth of a child, the loss of investment value in a down stock market…these are all things that we can weather over time. The market will come back, we’ll continue to earn money, probably even more money than we make right now, and the bills will be paid. I don’t recommend it, but I spent my younger years living as if my income were going to double the next year…and I got away with it! Our attitude towards risk is heavily influenced by our focus on growth.

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New era, new attitude

Your transition from working for money to living on your accumulated assets can happen overnight...but the money scripts you’ve followed for years won’t simply adjust! In fact, without conscious effort, your attitudes may not change at all. But they need to, if the level of risk you’ve been taking no longer fits your life circumstances. During our earning years, we focus on growing our asset base over time. However, a typical retirement goal is to have a reliable fixed income that will keep up with inflation over time. Our objective is no longer growth but protecting our income source. This is a completely different game and requires a money mind shift.

When you have spent a lifetime accepting, maybe even seeking risk, in order to grow your net worth, it feels normal. Ratcheting down the risk in order to protect what you’ve earned can feel scary after years of earning good returns by taking risk. If you’ve stayed invested in stocks for decades, your investments have likely multiplied many times. We like seeing that! We don't want to miss out! How will you react when your financial planner suggests that, now that you’re ready to retire and draw down your assets, you need to move more of your money out of stocks and in to more conservative bonds…earning lower returns? It can be a hard change to embrace!

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This is an instance where I know from personal experience that knowledge isn’t enough. As a financial planner, I help clients match their investment mix with their goals, taking in to account the amount of risk they are willing and able to take. I have a thorough understanding of the underlying principles—as the time you’ll be drawing on your investments gets closer, you gradually shift into less risky investments. But for years, I just didn’t do it with my own investments. Knowing does not equal doing! Only as I prepared to have my own financial planner review my situation did I strong-arm myself into lowering the risk (as if she wouldn’t notice that I had just made the investment change!) to better match my stage of life. Being aware of the need to change is good, having an accountability partner is better!

Whether you’re on the brink of retirement or another exciting life transition, we can help you navigate the change! Give me a call at (336) 701-2612.

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Investment advisor representative of and investment advisory services offered through Garrett Investment Advisors, LLC, a fee-only SEC registered investment advisor. Tel: (910) FEE-ONLY. Fair Winds Financial Advice may offer investment advisory services in the State of North Carolina and in other jurisdictions where exempted.

Climbing out of the overspending hole—first steps

Many of us have a vague concern that we may be living beyond our means. It is tempting to believe that next month will be different. It’ll be the month when there are no unplanned expenses and our income more than covers our expenses. There’s something to be said for remaining ignorant. If we don’t examine the details, we can keep thinking next month will be different without really having to face up to our true situation. After enough sleepless nights, though, we may be willing to make a change.

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As Peter Drucker famously wrote, “What gets measured gets managed.” The opposite is at work in our unexamined lives—what we don’t measure, we can’t manage. The key to turning around our spending habits is looking at the details. Though it is hard work, we can measure our income and expenses and use what we learn to get on a better track financially. Which, by the way, leads to less stress and fewer sleepless nights on the way to our achieving our dreams!

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Taking a closer look

To change your spending habits, first you must commit to at least 30 days of tracking every penny of income and expense. I was first introduced to the idea of tracking in the 90’s by Joe Dominguez and Vicki Robin’s classic Your Money or Your Life. It literally changed my life. Tracking the details gave me the foundation to live a more deliberate and meaningful life, leaving the corporate world to sail to the Caribbean and discover subsequent careers that closely reflect my values.

For at least 30 days (more is better, but you know best what you can live with), track every penny that moves through your life, whether cash, credit or any type of electronic transfer. You can use an app, there are plenty, or an old-fashioned spreadsheet that you update frequently. If you use a spreadsheet, you’re going to need a method of capturing transactions in real time, with a paper or electronic receipt, for example. Pick the system that you’re most likely to use, recognizing that detail tracking is not a favorite task for most of us.

Real-time money tracking gives us a detailed picture of our cash inflows and outflows. The details are useful come review and decision making time! For example, I want to know whether I was out for drinks with a girlfriend or coffee with a client. Did the trip to Costco include a standing rib roast for a birthday celebration or just the usual groceries? By capturing detail, I can more realistically target areas to reduce.

I admit that I’m a financial geek—I think the numbers tell a story. Stay with me here, because your next step, after collecting a lot of data, is to see the story your money is telling you. Group expenses in to categories that make sense to you, then look at your monthly totals. If expenses exceeded income, you know you have some digging to do. Reflect on how you feel about your income and spending and how it aligns with your values.

  • Individual expenses: Some purchases that felt good at the time may not hold up well in review. We’ve all convinced ourselves that we couldn’t live without an item only to find it still in an unopened box in a closet weeks or months later.

  • Categories: Any surprises here? Often our detailed review confirms our nagging suspicions—yes, you have been eating out/ordering in five nights a week.

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Decision Time

Like losing weight, overspending has two variables—inflows and outflows. In a perfect world, earning more cures overspending. In the real world, until we learn to spend less than we make, earning more means overspending at a new, higher level. Focus on your outflows. Which expense categories stand out as being out of sync—not providing satisfaction that equals or exceeds the expenditures? What areas of spending need to be reduced because they aren’t in-line with your priorities? If your overall spending is keeping you from achieving your goals, pick the areas that you want to cut. We’ll share tips for implementing your cost-cutting decisions in a future blog post.

Mindful Spending

Living within our means and loving it takes practice. However, pausing before purchasing gets us on our way. Before you make any purchase, from paying the electric bill to buying a coffee to charging a Caribbean cruise, stop briefly to reflect. Merely pausing will eliminate some of those unconscious purchases—not a bad outcome! Checking in to see how the impending purchase makes you feel and asking yourself how it fits in with your priorities will allow you to make a better decision for you. With the awareness you’ve gained from tracking and critically reviewing your money story, you’ll be more discerning when you pause to consider a new purchase.

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Celebrate the progress you’re making as you start to see daylight and climb out of the overspending hole! That progress will build your confidence and motivate you to take another small step. Changing our habits is hard work. Find an accountability partner. It’s a process to turn around our tendency to overspend. The best time to start was when you were five, but the second best time is today!

Need coaching to change your own financial picture and start moving towards your dreams? Give me a call at (336) 701-2612.

Investment advisor representative of and investment advisory services offered through Garrett Investment Advisors, LLC, a fee-only SEC registered investment advisor. Tel: (910) FEE-ONLY. Fair Winds Financial Advice may offer investment advisory services in the State of North Carolina and in other jurisdictions where exempted.