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Summer’s Over! August 22, 2008

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Summer’s over and my family and I will be heading to Florida to get my son back in school.  I will take a few days off the blog while we travel back.  Today, I will be talking about the summer, my first full summer away from our Florida home.  Last year I did six weeks in New Hampshire, while my family did the full summer so this year we did a pilot program having the whole family in New Hampshire for the entire summer.

First, let me say that five years ago to spend the whole summer with my family in New Hampshire was only a far away dream, that seemed to be getting farther away.  In the interim many things have happened; I got laid off from my job, my investing has taken off, I started my own business, my father who was in a nursing home in Florida died and of course we bought the condo.  This  process happened faster than I ever imagined.  So when I speak to people about the process of taking control of ones life, I speak from experience.  In short, I imagined it, put a plan in place, and then acted upon the plan.  Not that I am anywhere near my goals, just through the first stage of the process!

Many important things happened this summer as a result of me going through the process of learning to live wealthy.  Here is a partial list:

1. Had the privilege to attend and contribute to a fundraiser for a family that recently had their 4 year old daughter diagnosed with leukemia.  I imagine every parent upon reading this had the same reaction I did when hearing of this situation.  No doubt this situation is every parents nightmare and why it stands out so much to me.

2. My wife was able to go to Boston for long stretches to help her family when her mother had a serious health issue that required extensive hospitalization.  I think this was important from both a psychological standpoint and a functional standpoint.  Having older parents creates both wonderful benefits and also burdens, but the bottom line is 5 years ago we would not have been able to pull it off.

3. The Shafer Wealth Academy keeps marching on with many new clients on board this summer.  Whenever you start a new business you never know how well it will do, especially if it is a unique service.

4. Caught a game at Fenway, simply the best place in the world to watch a baseball game.

5. My son had a great summer full of outside activities and play with cousins and friends.

6.  Escaped the Florida summer heat.

7. A real estate investment is coming quickly to a successful end.

Now for some of the downer parts of the summer:

1. The rain. For six weeks it rained almost every day!

2. It went way to fast.

3. Because of the rain, my hiking schedule was destroyed.  Means a lot of hard work in the pool when I get back.

4. We have two days to get packed up, the house in order, and everything done as we will not be back until December.

5. Did I say it rained a lot!

I hope you all had great summers and your families remain happy and healthy.  Remember if you dream it, build a plan, implement the plan, it will happen.

Shafer Financial Philosophy? July 22, 2008

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Its been a while since I have outlined my philosophy, so I thought I would go over it for new readers.  I am a refugee from the standard financial planning community, undoing its damage to my personal finances, as well as offering an alternative opportunity to building wealth.

I practice what I call evidence based financial planning, a hyper-dose of reality for most people.  Not willing to cheerlead failure, I constantly research what works and what fails with wealth building.  This is not to say that any particular strategy couldn’t work for somebody, but figure the odds are against most folks in general, so why apply strategies that the masses of folks (I call the herd) have failed at over the last couple generations?  I eschew all those “retirement calculators” that require crazy assumptions like monthly inputs for decades and a never ending time horizon.  Having said this, I don’t believe you can get “rich quick,” but the get “rich slow” crowd also gets it wrong. 

Here is a quick hit list for what my research found out:

1.  You must have an in depth plan;

2. You must change what you are doing now;

3. You must want to become rich, not average, but rich;

4. Your mind is the most important financial tool you have;

5. It is not easy, simple or automatic; and

6. Copy what the rich do, not what the average or even mass affluent do.

If you internalize those six points, and operationalize them, you will become rich.

Now here is the final point, ironically our society is designed to get people to do the exact opposite of the above six points.  Our society, through the use of schools, creates mass consumers, with their independent thought processes disabled.  Fortunately, this can be a temporary situation.  I will give you one example of this in action.  Most people understand that only a few people become independently wealthy, in other words capable of living off of their finances without being employed or helped by the government.  Knowing that the vast majority of people fail at this basic task, people continue to do the exact same things the majority of people did to fail, just because that is what they are told to do by the mass media.  This is how the schools work; substitute the masses of people for the students,  the mass media for the all knowing teachers, and Wall Street agents for the school bureaucrats (administrators) and you have the system for financial planning.  It is designed to be self-serving, just like the schools.

Here is what I found out about creating wealth:

1.  You need to get double digit returns in order to build it and that requires learning to invest yourself, not be dependent on others who will suck the returns away from you;

2. You need to use leverage, either financial, labor or value leverage;

3. You need to either own or be a primary investor in a small business where you can apply labor leverage and/or value leverage (this can be concurrent with being an employee);

4. You need to learn to legally avoid taxes, the biggest drain on your finances; and perhaps most importantly

5. You need to change the way you think about yourself developing the thought patterns of the wealthy.

Hopefully, everything I post is about one of those five items.  I know the Shafer Wealth Academy adheres to those points.

I also point out that everything I suggest above, I personally do.  I blame that for my ever increasing net worth.

Beliefs and Desires v. Clear Goals June 12, 2008

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I have had three conversations about the Shafer Wealth Academy in the last couple days that were all remarkably similiar.  There is a singular question asked that usually results in a uncomfortable silence, followed by an admittance.  What is your current wealth building plan? Ah………………………………….I don’t really have one.  The next question coming out of their mouth is usually how much the tuition for the academy is? ($1950 or 4 monthly payments of $495).  That is the key moment.  At that moment the decision is usually made, will I spend $1950 to get a wealth building plan?

Most folks have a desire to build wealth, at least enough to get them to a comfortable retirement.  Many understand it is possible and most folks really believe they will get there.  All that is important, but here is where folks stop.  You see it is painful to actually admit you have no idea how to get there, that you have no plan.  And it is even more difficult to take a look at the reality of your situation.  Better just to go on with your day to day activities and skip that part about financial reality.  Better to assume you will get there by doing what you are currently doing, however haphazard.

In his book, The Path of Least Resistance, Robert Fritz describes the dilemma.  There is a tremendous difference between believing something is obtainable and setting clear goals.  If you set clear goals you become responsible for getting there.  You then can measure your progress, or lack of progress.  However, with this measurement and clear goal setting we lose our ability to make excuses about any lack of progress.  Our self-limiting beliefs become challenged by clear goals and measurement of progress.  Psychologically, we lose the thing that makes us feel good about ourselves.  This is the dilemma.  Lose our ability to deny our reality, in order to make progress toward our desires/goals.

Large organizations literally spend hundreds of thousands of dollars, sometimes millions, to have consultants come into the organization and create clear goals along with metrics to record progress toward those goals.  I ask for $1950 to do the same for your finanical life.

If someone said to you, you have a choice; retire frugally, in a way that you need to constantly worry about having enough money to feed, clothe and shelter yourself or retire with enough to live comfortably, travel if you like, give to charities/your family, and have peace of mind, which would you choose?  That is an easy question, right?  But is it?  You have to give up the comfortable lies you tell yourself.  You have to take responsibility for the financial outcomes.  You have to stop living in the past and live in your current reality.  Whatever mistakes or great things that happened to you become irrelevant.  The only thing that matters is your current reality and your goals.   

Now if someone said, along with working hard to achieve a comfortable retirement, you have to pay for it up front.  And it costs $25,000 the same as a new car, would you forego that new car to get it?  How about skip that flat screen TV/entertainment center?

Somehow, I don’t really think it is the $1950 that is causing people to forego the academy.  No, the fear of losing our excuses; the economy is bad, my business has gone down, I lost money years ago in an investment,  it costs too much, I will get started sometime in the future, I don’t have the time, the government/my employer should take care of me, etc. is driving the bus.

I insist upon creating clear goals and instituting measurables toward those goals.  I insist upon members of the academy taking responsibility for their own retirements.  And yes I charge for my services, about the same amount as that Flat Screen TV/Entertainment center.  One will get you to your goal of a comfortable retirement while the other will drive your desires and divorce you from your reality.  You choose!  

If you are ready to shed those excuses click here: http://www.shaferwealthacademy.com/membership.htm

If you need to talk to me click here: www.shaferwealthacademy.com  and click on contact.  Fill out the contact information and I will contact you.