Achieving Financial Security

ST. CROIX INSIGHTS

Achieving Financial Security

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

I’ve tried saying no, but it does occasionally offer some benefits…
These days, I limit the time I spend on social media. I check to see what’s happening with family, friends, and clients, and I log off quickly. I don’t even have the Facebook app on my phone. One useful group I did find on Facebook was a retirement group where people pose retirement/investment questions to strangers to solicit advice. In many respects, I find this scary (you have no idea who these people are or what their background or qualifications are for giving financial advice), but at the same time, it’s helpful to see what different people are thinking about as they approach or experience their retirement years.

One common theme among those I interact with is that most are seeking financial security. And why would anyone not? But “financial security” looks and means something different to each of us based on our background, our upbringing, and our lifestyle, as well as what we strive for down the road.

Many times, what “security” looks like is not just a mathematical calculation but an emotional one. One recent Facebook post broke down the three levels of financial security one can achieve: financial security, financial independence, and financial freedom.

Financial security is defined as having enough income to cover your basic living expenses. It’s a foundational level that takes decades of hard work and saving to achieve, where you’ve worked for thirty or forty years and can finally put in your two-week notice and not look back. (I often hear people say you need a million dollars saved up before you can retire. The truth is, you don’t.)

Financial independence is what I think most people seek when they use the term “financial security,” but it’s hard to differentiate between financial security and financial independence. Financial independence just means having more passive income to cover your lifestyle, which includes more than the basic necessities of financial security. That might include extra income to travel once or twice a year, eat out a few times a week, and have extra spending money each month.

The third level is financial freedom. Very few people will ever truly achieve this level of freedom. This is when you have multiple passive income streams in place to create the life you’ve always dreamed of, which enables you to do the things you love while also giving back. You still live within a budget, but this level of freedom allows you additional choices on how you live.

Common to all three of these definitions is the phrase “passive income.” Passive income comes in a host of different forms, from Social Security, an income stream from your investment/retirement accounts, a pension (though this is becoming less and less common for younger people), income from a business you own, rental real estate, and so on. For some, passive income is even viewed as part-time work in a low-stress position where they aren’t taking their job home at night.

When I think about financial security, I think about time. Time to take a relaxing vacation—so relaxed you don’t adhere to a rigid timeline. Time to cook those meals that take hours to prepare and eat, take naps you don’t have to set alarms for because you slept so well the night before, and finally start to conquer that mile-long to-do list. That time to invest in ourselves is what I want to help all my clients achieve.

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Ask yourself- can my portfolio support my lifestyle in my retirement? 

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The Dreaded B-Word

ST. CROIX INSIGHTS

The Dreaded B-Word

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

Photo by Carlos Muza

Not a day goes by when someone doesn’t say to me, “I wonder where all my money goes?” or “I wish the month were a week or two shorter” or “I make a lot of money, I just don’t understand how I can spend so much of it.” Most of us wish we better understood where we’re really spending all our money. Luckily for me, Mrs. Anderson has followed my financial advice over the years. (Almost too well—I’ve created a financial ninja. Sure, it’s great at times…but other times, she asks what I purchased from Amazon for $19.28) Everyone’s on a budget, whether formal or informal. But knowledge is power, and we can all stand to be more impactful with our resources.
If you’re the type of person who has no interest in budgeting, guess what? Unless you’re consistently spending beyond your means, you are already using a budget. Congratulations! Now, to curb your spending, just focus on achieving these three numbers:

  • 20 percent savings
  • 30 percent lifestyle
  • 50 percent housing

If you conquer your spending and savings rates, you’re more likely to enjoy life down the road. But no matter how well your informal budget may be working, one way or another, you still need to start tracking the numbers.

So what three steps can you take to understand where your money is going and how you can finally plug your financial leakage?

1. Make technology your friend.

Some Saturday or Sunday while you’re watching a movie or a ball game, invest a couple hours in improving your finances. Try using software like Mint, a website like www.youneedabudget.com, or Google for a host of other options to choose from.

Don’t worry about what happened six months ago; this your opportunity to start fresh. Establish where you are spending money each day, week, and month. You can categorize your spending by restaurants, events, home items, and any other useful category, right down to stamps. If you watch your pennies, the dollars will follow.

2. Create a budget.

I know, the word “budget” makes you cringe. (I hate budgeting too, and I’m in the money businesses!) But we all need to establish a baseline for how much we really have to save, spend, or give away each month. To truly achieve financial peace, you need to create a margin between your income and your spending. This is so much easier when you make technology your friend.

By looking at the numbers in detail, you can finally see each day, week, or month where you are over- or underspending. I know what you’ll discover: you actually have more money than you thought you did, and you’ll wish you would have done this exercise years ago.

3. Understand your priorities.

Prioritizing your goals for your money is the only way to truly master it and direct it where you want it to go. Priorities can range from paying off your debt, saving 20 percent of your gross income, tithing, helping others, paying cash for that new car, and so on. I believe that more stuff means more money and more stress; look for opportunities to spend your money in creative, thoughtful ways, not just on the acquisition of more “stuff.”

Spending a few hours reversing the flow of your financial leakage will be empowering. Now, you can direct where you want your money to go and align your actions and values. Become the master of your money instead of letting your money master you.

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Ask yourself- can my portfolio support my lifestyle in my retirement? 

5 + 14 =

2020 Presidential Election and Your Money

ST. CROIX INSIGHTS

2020 Presidential Election and Your Money

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

2020 presidential election
As we all know, our next Presidential Election occurs on November 3, 2020. I don’t know about you, but I’m ready for November 4, 2020!
It seems that with the power of the internet, we are all in a cycle of constant news, content, and connectivity. But even in today’s world, it’s still possible to find yourself without cell phone coverage, cable TV, or even the internet. I found myself in a place just like that for five days over the summer, and it was heavenly.

As I write this, we have about 49 days until the next President of the United States is elected. Those of you reading this are Democrat, Republican, Independent, Conservative, Liberal, and my list could go on. Yet one major commonality we all have is our money:

We’re all concerned with things like planning for our retirements, managing our investments and 401k plans, and funding our kids’ college.
We have two choices this next election. How will this outcome impact us, our money, and our investments? As of this writing, here’s what I’ve been able to decipher, along with my overall thoughts for the end of 2020 and the beginning of 2021. Keep in mind that I have no idea who is going to win (but I sure wish I did—it would make my job a lot easier!).
The markets have demonstrated it can perform well under both Democratic and Republican administrations.

No matter who wins the next Presidential Election, here are some of the common threads I see in the future we face:

  • Telemedicine was already growing and has now hit overdrive due to the coronavirus.
  • We strive for faster internet, and 5G will impact all of us.
  • Green/clean energy (e.g., electric cars) will continue to become more common, right down to autonomous driving.
  • Let’s not forget about the increase in automation.
  • Are you receiving more packages at home than ever these days? I don’t see that   changing.

If Vice President Biden wins, these are some potential market sectors to own:

  • Hydroelectric.
  • Solar and Wind.
  • Infrastructure companies that focus on roads, bridges, and airports (assuming people start flying again).

If President Trump wins, these are some potential market sectors to own:

  • Heavy equipment companies.
  • Heavily sales-driven internet companies.
  • Social media companies (Twitter loves him!).
  • Overall US-based manufacturing companies.

Under Vice President Biden’s tax plan (versus President Trump’s):

  • Capital gains tax would move to 39.6% on the wealthy.
  • Step-up in cost basis would be eliminated.
  • 1031 exchanges would be eliminated.
  • Corporate tax rate would increase to 28% (from 21%).

I’ve seen slightly different figures, but the Federal Reserve has printed over $3,500,000,000,000 in a matter of months. I don’t know what comes after a trillion—do you? I haven’t talked to anyone who hasn’t asked how this is going to get paid back.
Today, over 1,000 people a day are moving to Florida from the Northeast alone. I suspect income tax-free states will continue to see an increase in their populations thanks to newcomers from high-tax states.


This year, we’ve seen big stock market swings, though lately that’s settled down. You may be concerned about this presidential election. If you become worried about your investments or the markets or just need a sounding board, give me a shout.
Finally, here’s a reminder you’ve heard me stress: having some amount of cash on hand continues to be a solid strategy.

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Ask yourself- can my portfolio support my lifestyle in my retirement? 

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Broke vs Poor – Life Lesson 44 of 50

ST. CROIX INSIGHTS

Broke vs. Poor

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

broke vs. poor

So often we use the word “poor” to describe our financial state when what we really mean is “broke.” What’s wrong with that? Well, these term refer to two very different situations, and using broke vs poor interchangeably minimizes the very real experience shared by millions of Americans.

Being broke is a drag

Most individuals have experienced being broke at one time or another. I know I have. In my simple definition, “broke” means having a roof over your head, food in the fridge (even though you might think you never have anything good to eat in the house), clothes, shoes, and a car or bike—but your phone might be a few years old, and you make your own coffee before you head to work, and you probably aren’t taking lavish vacations.

Broke means not having enough money for the miscellaneous items we want in our life—the newest iPhone, expensive meals, or designer clothes—but, ultimately, getting by and hoping for brighter days.

Being poor is a crisis

On the other hand, poor means not having a roof over your head or knowing where your next meal is coming from. It means that a single surprise, accident, or medical issue would be catastrophic. It means hope is as hard to come by as a decent night’s sleep. Poor is a life-threatening condition that affects entire families across the country. I pray you and I never experience it.

We may not all have the newest car, shiniest toys, or top-of-the-line devices, but you know what? That’s OK. We can complain sometimes about not having the things we want, but we should be respectful of the difference between broke vs poor so we’re not silencing the struggles of so many Americans.

 

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Ask yourself- can my portfolio support my lifestyle in my retirement? 

2 + 14 =

Pursuing Your Passions: Life Lesson 29 of 50

ST. CROIX INSIGHTS

Pursuing Your Passions

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

pursuing your passions

Photo by Kal Visuals

If you’ve postponed pursuing your passions for the pursuit of money, don’t worry: there’s no shame in this, and you’re not alone. Over the years, I’ve found myself doing the same thing — but I’ve come to believe there’s a more fulfilling way to live.

There might have been something you enjoyed or loved doing when you were younger. But society, parents, or others in your life said you couldn’t make a living doing it. Their negativity ended up deterring you from pursuing your passions. Now you—and, sadly, many others—are just too tired from the daily grind to have the energy to spare for those passions. As a result, many people postpone the things they want the most until that magical future date called “retirement.”

Well, you know what? Retirement is, for many of you, in the future. This is now. Don’t let anyone tell you that you can’t make a living with your passions. People do it all the time! If you’ve got a calling, don’t let anyone tell you that you don’t deserve to go for it. Money is great, and it’s important to plan for your retirement, but life is too short to spend it waiting for the future. Time is a precious gift, and it’s your responsibility to spend yours pursuing your passions so you can live a fulfilling life.

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Ask yourself- can my portfolio support my lifestyle in my retirement? 

1 + 7 =

Dumb Ways We Spend Money: Lesson 21 of 50

ST. CROIX INSIGHTS

Dumb Ways We Spend Money

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

dumb ways we spend money

Have you ever thought about some of the dumb ways we spend money?

At the risk of embarrassing myself, here are a few of mine:

  • Cable TV (even though nothing good is ever on)
  • Cell phone plan (even though I hate always being connected)
  • Bottled water (even though I finally purchased a reverse-osmosis system for my house)
  • The occasional impulse buy when I see something on sale (even though I don’t need it)

The list goes on!

One overlooked (but still dumb) way we spend money is all those monthly recurring payments. They can accumulate quickly, almost without our notice, but the individual charges are small enough where we’re never actually triggered to cancel them.

Microsoft: $10. Dropbox: $10. Netflix: $10. Gym membership: $40.00 (“but I’ll go someday, so I’d better keep paying”). It’s not the mortgage or car payment that gets us; it’s these nickel-and-dime amounts that really start to add up.

Maybe it’s time to tally up all the dumb ways we spend money and consider dropping a few unused or unnecessary subscriptions from our monthly expenses. After all, when it comes to making smart financial decisions for our future, every little bit helps.

Article: Broke vs Poor

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Ask yourself- can my portfolio support my lifestyle in my retirement? 

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