Anyone here having to consider bankruptcy?
My biz down about 40%. Running out of money and options. Yeah I know I f’d up, but what can you do. I definitely have learned a major life lesson with this. Phone rings off the hook all day long with bill collectors. Home, work and cell. Driving me frigging nuts. How do you handle a bk and your firm? Who do you tell and when? If I could wait till the forefront bonus in Sept, if they even pay it, I’d be ok, but I dont think I can hang on that long without crap like garnishment and levy’s starting. Other FA’s I know, many facing the same problem. None know how to deal with this. We could take deals, but I have been down that road before and Im not willing to imperil myself any further with a deal that may not work out.
I dont know much about this stuff. But it seems to me if you could get a decent deal, that would help you pay off your debt, you should take it and then work your arse off to get your book going again.
Better hurry though, the deals are going to disappear real quick, like don’t blink.
Good luck, tough situation, i feel for you
Thanks Bob…I am speaking with other firms. Just very reluctant to go just for money. I did that once and it was a disaster. I dont want to go BK, but I really have no options. I cant borrow from family. Dont really have any. The interest on the damn debt will just eat you alive. Its just criminal. Obama people ought to be looking at the 30% credit card interest rates. Very tough to ever get rid of that debt. I dont live extravagantly. Its just stuff that built up over time. Just debt trying to take care of a family. Been handling it up until end of 08 started having trouble and income just getting crushed. I cant meet my obligations for the first time in my life.
Don't you have 30% credit card interest because you have proven yourself uncredit worthy? Instead of going to another firm, shouldn't you be looking for a different career?
If you quit making payments on your debt because you truly can't afford to pay, eventually you'll be able to settle for 40% or less on the dollar.
I would suggest that you visit Dave Ramsey’s website.
www.daveramsey.com
His logic on running the cash flow side of your life is great. Even though I am not in this situation, I watch his show and like his logic.Check it out. If you and your wife adopt his philosophy, it might help you.
While it is possible to have a bankruptcy on your record and work as a financial advisor, most firms have extra compliance requirements and do not like to hire this profile. Therefore,if moving firms is part of your strategy you want to do it sooner rather then later.
Personally, If I were you I would go to the above website and make a list of the things that you can do. Then if you nalready have not deone it you need to sit down and have a good honest conversatioon with your wife.
Good luck.
Showmethemoney, my last post probably came off as jerkish. It's not meant that way. They're meant as serious questions. Also, the simple fact that you are getting these calls may be something that your firm requires you to report to them.
Best of luck to you!
[quote=showmethemoney]My biz down about 40%. Running out of money and options. Yeah I know I f’d up, but what can you do. I definitely have learned a major life lesson with this. Phone rings off the hook all day long with bill collectors. Home, work and cell. Driving me frigging nuts. How do you handle a bk and your firm? Who do you tell and when? If I could wait till the forefront bonus in Sept, if they even pay it, I’d be ok, but I dont think I can hang on that long without crap like garnishment and levy’s starting. Other FA’s I know, many facing the same problem. None know how to deal with this. We could take deals, but I have been down that road before and Im not willing to imperil myself any further with a deal that may not work out.
[/quote]
Sounds like you’re trying to sell people something that they don’t want to buy. Figure out what they want to buy and sell it to them.
as far as the taking a deal option, not only are deals going away for most producers , a bad credit situation could also prohibit you from getting a good deal. Since most of them are structured as forgivable loans, a lot of companies will check your credit. a friend of mine had his deal cut dramatically after a credit check.
I feel for you, man. it's tough out there and there's a not exactly a large pool of sympathy out there from the general public for guys in our situaion.You can have a successful career beyond bankruptcy. I know a rep that had one 8 years ago, he is just fine. It is part of his U-4 forever. I would exhaust all options before doing it, but doing it isn't necessarily the end.
I agree with the Dave Ramsey comment. He can change your life, if you follow his simple steps. You must change your behavior. If you can get on top of this and take control, you will be fine. You have the choice and the power...........let it control you.........or you control it. Good luck to you.......hang in there.Both of the million dollar guys in our office have left and took deals at the very end of last year. They were both dead broke, they had taken deals to come to MS and they ended in 2006. Their gross was dropping fast year end 2008 (both would be way under 600K in 09 staying, now doing 15-20K at the new place), and they needed to do something and they both went to UBS. One guy had to borrow 15K from me to pay his property tax in December. You are not the only one out there, big and small guys all over the place are in trouble. If the rumor of UBS canning guys under 400K is true later this month, and it starts to spread that’s the beginning of the end for most wirehouse brokers, me included.
I think that all of the wirehouse will follow UBS. Most have actually done it by not offerring deals/retention packages to those under $500,000. It is simpley the economics of the wirehouses. There overhead is to high versus the regionals.
The regionals like Stifel, Baird etc. will grow FA headcount a lot as the $250,000 - $500,000 broker is very profitable to them. Also, there is nothing wrong with the regional firms products and services.
You are not the first and will not be the last. I look around my office and wonder how some of the advisors who are down 30-40% and still living the high life are doing it. I imagine one or two of them are in a state similar to yours.
Maybe now is the best time to reflect and determine whether this is the career you want. If so I am confident you will make it work. If not, there is some pleasure in realizing that and moving on to what you really want to do.Unfortunate Bankruptsy on U4 not good. Try to work it out. Go see a lawyer…maybe they can delay until you get bonus in Sept. Then make a decision.
If it is credit card debt, call the credit card company and explain your income problem(just to let you know, they probably know you don't have the money to pay.) A lot of banks are looking to cut credit lines and will do almost anything to do so. I talked to BAC two months ago about lowering my rate(12.99) and they said if I closed the account then they would take it down to 4.99.... So I closed it, much easier then xfering a balance and 4.99 fixed is a rate I will take...and so will the bank because they don't have to worry about my credit line anymore..
Dave Ramsey has some good ideas if A. You have the income B. Aren't already cutting back on things like $5.00 Starbucks C. Are willing to get a second job. Other than that there is nothing special about his method. Build up a savings(yeah thanks for that tip) pay off your debt in smallest to largest increments and live with in your means... I think if people can't do the third then the first two are kind of hard..I'm sorry if I sound naive about this, but how does this possibly happen???? I'm not going to kill the guys since they sound like they may be your friend since you gave them a nice chunk to borrow, but if they're million dollar guys, the least they are grossing income-wise is a quarter-mil. The LEAST they are grossing is that. Don't you pay property tax on your mortgage bill each month? I just cannot fathom how someone could gross that much biz and need to borrow money from a friend to pay off a bill. Unless they sold themselves annuities and the money is tied up, ha ha.Both of the million dollar guys in our office have left and took deals at the very end of last year. They were both dead broke, they had taken deals to come to MS and they ended in 2006. Their gross was dropping fast year end 2008 (both would be way under 600K in 09 staying, now doing 15-20K at the new place), and they needed to do something and they both went to UBS. One guy had to borrow 15K from me to pay his property tax in December. You are not the only one out there, big and small guys all over the place are in trouble. If the rumor of UBS canning guys under 400K is true later this month, and it starts to spread that’s the beginning of the end for most wirehouse brokers, me included.
It’s because guys like that tend to think they’re invincible and they can’t possibly see their income drop by 40%. So, they set up their lives to meet their income. That’s not just a 3/2 house. It’s the trophy house they “deserved”. Probably 7000 sq feet, 5 beds, 6 baths, pool, bar, media room, etc. And of course the huge mortage to go with it. And you can’t park a Ford Focus in your 7000 sq ft house. It has to be German with lots of letters and numbers on the trunk lid. Private school, lake house, $5000 suits, blah blah blah. They probably tell their clients to live within their means while their banker runs the numbers and tells them they can afford the second house in AZ for the winters.
Thus the reason we're in the mess we're in.[quote=Spaceman Spiff]It’s because guys like that tend to think they’re invincible and they can’t possibly see their income drop by 40%. So, they set up their lives to meet their income. That’s not just a 3/2 house. It’s the trophy house they “deserved”. Probably 7000 sq feet, 5 beds, 6 baths, pool, bar, media room, etc. And of course the huge mortage to go with it. And you can’t park a Ford Focus in your 7000 sq ft house. It has to be German with lots of letters and numbers on the trunk lid. Private school, lake house, $5000 suits, blah blah blah. They probably tell their clients to live within their means while their banker runs the numbers and tells them they can afford the second house in AZ for the winters.
Thus the reason we're in the mess we're in. [/quote]Indeed.
This is why I'm having a tough time feeling much sympathy.
How can someone who claims to be a financial advisor get themselves into a mess like this where they are so over extended?
I know a handfull of guys who had to file after the 2001-02. It shows up under brokercheck. However, when I still had my 7 (pre RIA) I would always tell prospects to pull up my record to show I was “clean”. 90% couldn’t figure out how to do it. Those who could, didn’t understand what they were looking at.
With that said, I think you need a good reason why you are filing. A buddy of mine filed after his wife had cancer. Their insurance didn't cover everything and they were left with a pretty big bill. He has always been upfront with it and has never had anyone make a big deal. I understand where you are coming from. Back in my wirehouse days, I rememeber the sales managers (we had 3 in our branch) would try to get everyone pumped up by telling them what the next expensive thing we would buy. Everyone had a new car. We all had picutres of the big house we would buy someday. Looking back, the culture was you would work harder if you had more obligations. I admit that I got caught up in it too. If I had a 40% plus decline during those years, I would have been wiped out. I would look take a hard look at your business and decide what the next five years will look like. Best of luck to you.[quote=HymanRoth]
[quote=Spaceman Spiff]It’s because guys like that tend to think they’re invincible and they can’t possibly see their income drop by 40%. So, they set up their lives to meet their income. That’s not just a 3/2 house. It’s the trophy house they “deserved”. Probably 7000 sq feet, 5 beds, 6 baths, pool, bar, media room, etc. And of course the huge mortage to go with it. And you can’t park a Ford Focus in your 7000 sq ft house. It has to be German with lots of letters and numbers on the trunk lid. Private school, lake house, $5000 suits, blah blah blah. They probably tell their clients to live within their means while their banker runs the numbers and tells them they can afford the second house in AZ for the winters.
Thus the reason we're in the mess we're in. [/quote]Indeed.
This is why I'm having a tough time feeling much sympathy.
How can someone who claims to be a financial advisor get themselves into a mess like this where they are so over extended?
[/quote]
The same way a doctor with a broken arm can tell one of his patients, with a broken arm, to get a cast.
Just to piggyback on this, if you walked away from a mortgage, foreclosed on it, would that impact your record?
[quote=HAAIC] [quote=HymanRoth] [quote=Spaceman Spiff]It’s because guys like that tend to think they’re invincible and they can’t possibly see their income drop by 40%. So, they set up their lives to meet their income. That’s not just a 3/2 house. It’s the trophy house they “deserved”. Probably 7000 sq feet, 5 beds, 6 baths, pool, bar, media room, etc. And of course the huge mortage to go with it. And you can’t park a Ford Focus in your 7000 sq ft house. It has to be German with lots of letters and numbers on the trunk lid. Private school, lake house, $5000 suits, blah blah blah. They probably tell their clients to live within their means while their banker runs the numbers and tells them they can afford the second house in AZ for the winters.
Thus the reason we're in the mess we're in. [/quote]Indeed.
This is why I'm having a tough time feeling much sympathy.
How can someone who claims to be a financial advisor get themselves into a mess like this where they are so over extended?
[/quote]
The same way a doctor with a broken arm can tell one of his patients, with a broken arm, to get a cast.
[/quote] Totally different but nice try. We have a choice in how we live our lives, last I checked, most drs who are practicing with broken appendages did not get that way by choice. I am not saying that advisors who overextend themselves are incapable of good advice, but I do think they have a duty as sensible business owners to be there for their clients and part of that involves the ability to manage their own affairs prudently.
I would do everything you can to avoid filing BK. You can workout a small payment plan with your creditors till biz picks up. If you’re able to get a deal --go for it. The peace of mind of having your debt paid or almost paid is worth it. You can then focus entirley on rebuiling your business.
I got myself into financial problems after the 2000 dot com bust. it took me 5yrs to dig myself out of it. I have since promised myself to live below my means. Good Luck!Are the brokers that left and took a check at UBS end of last year concerned w/ the rumors? I have heard that UBS is drawing a line in the sand at 400. If they can the new recruits will they get to keep the upfront check? If so are your buddies at UBS thinking indy?
[quote=Iocaine][quote=HAAIC] [quote=HymanRoth] [quote=Spaceman Spiff]It’s because guys like that tend to think they’re invincible and they can’t possibly see their income drop by 40%. So, they set up their lives to meet their income. That’s not just a 3/2 house. It’s the trophy house they “deserved”. Probably 7000 sq feet, 5 beds, 6 baths, pool, bar, media room, etc. And of course the huge mortage to go with it. And you can’t park a Ford Focus in your 7000 sq ft house. It has to be German with lots of letters and numbers on the trunk lid. Private school, lake house, $5000 suits, blah blah blah. They probably tell their clients to live within their means while their banker runs the numbers and tells them they can afford the second house in AZ for the winters.
Thus the reason we're in the mess we're in. [/quote]Indeed.
This is why I'm having a tough time feeling much sympathy.
How can someone who claims to be a financial advisor get themselves into a mess like this where they are so over extended?
[/quote]
The same way a doctor with a broken arm can tell one of his patients, with a broken arm, to get a cast.
[/quote] Totally different but nice try. We have a choice in how we live our lives, last I checked, most drs who are practicing with broken appendages did not get that way by choice. I am not saying that advisors who overextend themselves are incapable of good advice, but I do think they have a duty as sensible business owners to be there for their clients and part of that involves the ability to manage their own affairs prudently.[/quote]
Exactly. The analogy would only hold water if the doctor had a broken arm because he had weak bones due to a poor diet...perhaps.
FA's who end up in BK have largely brought it upon themselves, unless there is some disastrous health situation in the family or something similar.
Too often it's due to the syndrome described by other posters, where managers and colleagues encourage conspicuous consumption.
When I first started my regional VP talked to the newbies and said when he was a lowly field vice president he would force his newbies to immediately go to the Benz dealership and buy/lease a Benz. He said it would force the newbies to market and dial their asses off so they could afford the bill. I knew he was full of crap but the fact he’d say something that absurd put a bad taste in my mouth.
I know a tun of “million dollar producers” who took a huge check last year, and now because of the “market reduction” do not have the cash to pay back; interest/taxes. It is hitting everyone
But did they really have to spend the entire check? Couldn’t they have saved some of it?
yeah, invested in the market
[
This is why I’m having a tough time feeling much sympathy.
How can someone who claims to be a financial advisor get themselves into a mess like this where they are so over extended?
[/quote]
The same way a doctor with a broken arm can tell one of his patients, with a broken arm, to get a cast.
[/quote]
Squash
What do you mean when b of a closed the account and lowered your interest rate. So you can’t use the card but pay the monthly payment at a lower rate?
exactly… Banks are looking to decrease credit lines(because credit cards are the next bubble) I have already seen a decrease across all of my credit lines except Citi.(I only have 4, JPM-no balance line decreased by $1,000, BAC-Agreed to close card for fixed rate-line shut down completely, AXP-no decrease, Citi-no decrease). Only carry one balance just happen to have the cards… the citi is real nice lots of plane tickets bonus(best buy gift cards)…
After calling b of a equity line of credit they have lowered my apr from 4.49 to 0 percent for next 2 years. I m also in the process of working with wells Fargo mortgage on my first to get my interest rate down. Same case for the credit cards.
[quote=iceco1d] [quote=Iocaine][quote=HAAIC] [quote=HymanRoth] [quote=Spaceman Spiff]It’s because guys like that tend to think they’re invincible and they can’t possibly see their income drop by 40%. So, they set up their lives to meet their income. That’s not just a 3/2 house. It’s the trophy house they “deserved”. Probably 7000 sq feet, 5 beds, 6 baths, pool, bar, media room, etc. And of course the huge mortage to go with it. And you can’t park a Ford Focus in your 7000 sq ft house. It has to be German with lots of letters and numbers on the trunk lid. Private school, lake house, $5000 suits, blah blah blah. They probably tell their clients to live within their means while their banker runs the numbers and tells them they can afford the second house in AZ for the winters.
Thus the reason we’re in the mess we’re in. [/quote]Indeed.This is why I’m having a tough time feeling much sympathy.How can someone who claims to be a financial advisor get themselves into a mess like this where they are so over extended?[/quote]The same way a doctor with a broken arm can tell one of his patients, with a broken arm, to get a cast. [/quote]
Totally different but nice try. We have a choice in how we live our lives, last I checked, most drs who are practicing with broken appendages did not get that way by choice. I am not saying that advisors who overextend themselves are incapable of good advice, but I do think they have a duty as sensible business owners to be there for their clients and part of that involves the ability to manage their own affairs prudently.[/quote]
OK, word it this way…it’s the doctor that smokes, but advises his patients to quit.[/quote]
My preferred analogy is the attorney with no will or trust at death and the family has to run the estate through probate. Very common.
It’s all about cash flow. As posted, an advisor takes a big check and is now living in a very different world. Even if the advisor was “smart” with the money and invested it he/she’s in big trouble now. Income down 30 to 40% but expenses are not reduced. In fact the biggest monthly bill is the tax nut on the front loan. Between the reduced revenue and the big tax bite these guys are getting seriously squeezed. How can anyone fault their ability as advisors because of this? They didn’t crash the market. They didn’t reduce their own income through any fault of their own. Bad luck? Their ability to come out of this in the black depends on where the lines marking an income recovery and their own dwindling assets cross. The longer the recesssion lasts the more unlikely a positive outcome becomes.
This same scenerio applies to trainees and those young in the biz. Most used assets to launch themselves. Some used credit cards to help cash flow, racking up debt now with the promise to pay it back later when the hard work paid off. How is this different than any other small business? In fact, Ira Walker, one of this bizes biggest producers used credit cards to launch himself. he's a five million dollar producer. If the market had done then what it's doing now, he'd be selling siding in his families business. Again, I see no reason to be critical of those caught on the underside on the financial coin.I came here to ask a question - but will answer this one. All bankruptcies aren’t the same. For wage earners - there is Chapter 13 - which basically gives you some breathing room to pay off your debts through a wage earner’s plan (might be useful in your case because of the scheduled payment in September). Note that I am a retired attorney with no special expertise in bankruptcy law. I just know that this section of the bankruptcy code exists. I would set up a consultation with an attorney who specializes in consumer bankruptcy law and see what the story is. I don’t know how this would affect you professionally in terms of licenses/businesses and the like. You’ll have to check the rules and talk with your colleagues about tese things. Robyn
[quote=BondGuy]It’s all about cash flow. As posted, an advisor takes a big check and is now living in a very different world. Even if the advisor was “smart” with the money and invested it he/she’s in big trouble now. Income down 30 to 40% but expenses are not reduced. In fact the biggest monthly bill is the tax nut on the front loan. Between the reduced revenue and the big tax bite these guys are getting seriously squeezed. How can anyone fault their ability as advisors because of this? They didn’t crash the market. They didn’t reduce their own income through any fault of their own. Bad luck? Their ability to come out of this in the black depends on where the lines marking an income recovery and their own dwindling assets cross. The longer the recesssion lasts the more unlikely a positive outcome becomes.
This same scenerio applies to trainees and those young in the biz. Most used assets to launch themselves. Some used credit cards to help cash flow, racking up debt now with the promise to pay it back later when the hard work paid off. How is this different than any other small business? In fact, Ira Walker, one of this bizes biggest producers used credit cards to launch himself. he's a five million dollar producer. If the market had done then what it's doing now, he'd be selling siding in his families business. Again, I see no reason to be critical of those caught on the underside on the financial coin.[/quote] This is an excellent post.I agree with BondyGuy, those of us who started directly after college racked up large bills to launch ourselves in this business(let’s be honest, most forms of marketing takes cash to do.) We expected to increase our income to the point where the bills would be eliminated(or at least manageable).
But BondGuy, I’m talking about guys that were making over a quarter of a mil or more(Not the initial poster, I’m talking about the guys who were million dollar producers). Ok, so you take a big bonus check and all of a sudden you’re making $150-$200k, all in the same year. You’re telling me that bonus check, used wisely, couldn’t cover the missing income for one year, and then some? Being that high of producers, there isn’t a cash reserve or investments to liquidate before bankruptcy? And if income is going down 40%, why aren’t some expenses being reduced? Unless you have a $900k mortgage and 3 german cars to pay off. There is absolutely reason to be critical of those who lived frivilously and did not prepare for an emergency with some type of 3-6 months of expenses cash account or weren’t smart enough to cut some unnecessary expenses when their income started dwindling.
Bud:
First of all a $1,000,000 producer has not been a very uncommon broker for the last 4-5 years. At $1,000,000 your pre tax income is about $400,000 after tax about $250,000. For $2,000,000 double it. A $2,000,000 broker in 2007 will be about a $1,000,000 in 2009. That is a huge change in cash flow.
Second, your largest expenses are your mortgage and private school for your children. So, when you talk about substantially altering your expenses you have to sell your house and send your kids to public school. In these times, the second is much easier then the first.
Third, most brokers are not very good managers of their own funds. For example, how many friends do you know at wirehouse who owned a ton of stock and had a bunch of options. And, how many of them waited way to long to sell in 2008.
Fourth, you should never run up your credit cards for anything. The item that gets you to be a million dollar producer is not some fancy marketing campaign. It is by focusing on a target market that has a lot of money. For example, pension plans, endowments, foundations, concentrated positions etc. The narrower the focus the quicker that you can make it to your goal. Getting to a $1,000,000 + is much harder when you are a generalist.
Fifth, if you take a deal you should not be stupid enough to:
1. Increase your exposure to the market. You are already extremley exposed by your job.
2. Buy “stuff” with it like cars etc.
3. Always try to live beneath your means. Remember, you have a job that has a variable income stream.
With regard to your bankruptcy, I would try everything I could before I declared. It is not a good thing even if you get out of the business.
All of us neeed to run our financial lives in a conservative manner. If you do and re successful in this business the rewards both financially and emotionally are huge. If you are not cut out for the business it is just frustrating.
So, I would recommend that you start out with the fiollowing:
1. Go to Dave Ramsey’s website.
2. Sell assets you do not need. If nothing else, start with a garage sale. Look at your cars etc. Try to follow his plan.
3. Contact your credit card vendors and mortgage company. See what is available. If you do not speak with them they can not do anything.
Above all start implimenting a plan that you map out today. Taking the steps will make you feel much better.
If you have not sat down with your wife and told her about this please do.
Good Luck.
What's frivilous? Everthing is relative. So, even to a lower producer, not a million dollar guy, they have their own hurdles to jump through every month. The question is; how long can you go with a reduced income or no income before the hammer falls on your lifestyle? Thousands of people, laid off from very good jobs, are struggling with this question right now. It's a scary thing because there for the grace of God go us all. We've already passed the 6 month emergency slush fund stash that all top planners recommend. It's gone or will be gone very soon. Now what? Now what for these people? Back to our business. let's look at our million dollar producer. He's 15 years in the biz. He's been at the million dollar level for two years. He's been above 1/2 million for the past 8 years. His gross income is $450,000. After tax, not including deal, his take home is about $247,000. That's about $20,625 per month. That does not include his sales assistant's monthly bonus of $1500. Our guy lives an upper middle class life style not unlike other highly paid professionals. He owns two homes. His primary residence is a home purchased 3 years ago on Harmony Lane for $750,000. It's an average house for the neighborhood and actually, less than average for the toney town he lives in. The place is very nice but needed some work as it's getting older. He and his wife chose this town because of its excellent school district. He has a $500k mortgage on the place at 7% giving him a mortgage payment of approx $3300 a month. Let's make him a Jersey guy and put his property taxes at $1500 per month. Total housing cost including homeowners and utilities comes in at under 6k a month. Note: well within guidelines of what is acceptable. Home number two is a townhouse at the Jersey shore. Our advisor bought this place for $160k cash before prices took off. It looked to be a great investment as well as a family refudge. No mortgage is good news, taxes and homeowners association fees, bad news. Taxes are $800 a month, association fee is $200. Utilites run about another $300 a month. At the dock behind the summer house sits a 26 foot Searay Sun Dancer. With 15% down in cash he financed 75k two years ago giving him a boat payment of $700 a month. Additional boat costs are insurance, hauling and storage which adds another $200 a month. Our guy adds this cost to his family recreation budget. Speaking of recreation budget; he takes his family of five on one kick butt vacation every year. Cost is usually in the 4 to 5k range. On the transportation front our guy is not a car guy and leases a run of the mill Lexus ES370. Wifey tools around in a leased Lexus RX350. Leases for both cars run about $1200 per month. The kids are teenagers, two are driving and one is about to start. He bought the eldest a car for cash but is leasing a Honda Civic for the middle child. That cost is about $200 a month. His total car insurance bill is $900 a month. Remember this is in New Jersey. Add it all up and we're at about $12,400 per month. Yet there is more. Gotta eat: monthly food bill is $1250 a month. Additionally, our guy eats out-orders in lunch every day, eats cheap, but add $300 per month. And every Friday he and his wife go out with friends to a new restaurant of choice burning another $100 per week. So, all up his food bill is about $2000 a month. Cars use gas; he has four cars to fill every month. Average family mpg is 22mpg and total miles driven by all is 45,000 miles per year. About $300 a month in the Garden State. And clothing takes another$5000 per year. Adding in these living costs brings monthly cash burn to about:$15,000. And yet there is more: Life insurance cost is 300 per month for he and his wife. And we can't leave out the dog, Spot, that costs them about $1000 per year for food and vet bills. I'm sure i've left out quite a bit. But our guy has about a $5000 cushion every month. That's 5k positive cash flow that goes to savings every month. In other words the guy is saving about 25% of his take home pay after all the bases are covered. How many out there doing that? Now let's add in a deal. Our guy gets a 100% front money 7 year deal. That's a million bucks! Whoo who! So, what does he do with that money? First thing he does is add $200k to to the $150k he got saved for his kid's education. That should get him close to what he needs there. Next move is to pay off the house. And even though his accountant advises against it he writes a $450,000 check to become mortgage free. Next is paying off the boat, that takes another $70K. Our guy mulls around a little bit about how to invest the rest of his cash. His 401k is about $400k, and he has about $150k sitting in a brokerage account invested in various stocks. He budget's about 5 months take home, 100k, to getting his business up to speed at the new place. He knows it won't take that long but, better to be safe. He takes 80k and buys some zero coupon munis and banks the last 100k in a short CD.But BondGuy, I’m talking about guys that were making over a quarter of a mil or more(Not the initial poster, I’m talking about the guys who were million dollar producers). Ok, so you take a big bonus check and all of a sudden you’re making $150-$200k, all in the same year. You’re telling me that bonus check, used wisely, couldn’t cover the missing income for one year, and then some? Being that high of producers, there isn’t a cash reserve or investments to liquidate before bankruptcy? And if income is going down 40%, why aren’t some expenses being reduced? Unless you have a $900k mortgage and 3 german cars to pay off. There is absolutely reason to be critical of those who lived frivilously and did not prepare for an emergency with some type of 3-6 months of expenses cash account or weren’t smart enough to cut some unnecessary expenses when their income started dwindling.
Now let's look at cash flow once our guy is up to speed: The house and boat mortgages drop off saving $4000 a month. Hmmm, yet they are repalced by yet another bill, the monthly tax nut on the front money. Our boy has to pay taxes on about $143,000 in income every year on oncome he isn't getting. Of course he already got it all up front. Now paying off the house doesn't look so smart. Or does it? Well, from a cash flow POV the tax bill is about the same amount, $4000 a month. So, as it stands our guy has increased his net worth and did not increased his monthly expenses. He could of held out the money for the taxes and fed it in monthly to his income but it's six of one half a dozen of the other. He's still about 5k to the good every month and now owns the house free and clear. But trouble is brewing. In the spring of 2008 the market is scaring his clients. They don't like what they're seeing. Biz drops 5%. Still no strain. Then the other shoe drops with a vengence in the fall of 2008 and biz is off 35% total from a year earlier. Our guy is now a $650k producer. With the grid reduction his income falls to $273,000 a year. His monthly take home, before the deal drops to $15,000, with the deal it's $11,000. Which matches his at home out of pocket expences. He's at breakeven. And he's got that without being frivilous with his money. He covered his bases, house paid off, kids college taken care of and money in the bank. Still, with six plus years left on his deal, unless he picks up the slack the lines will cross. He will be forced into liquidation. Just for fun and because i'm under the weather at home let's finish the story and see how our guy could end up completely under water. His brokerage account is down to 90K and the zero munis he bought are worth about 60k. His CD is good but he doesn't renew it. He put the cash into his money market. His biggest client decides to move his account, reducing his production to $600,000. Then he number three client dies unexpectedly, reducing his production to $570,000. Think this stuff doesn't happen? Think again! Now it's really ugly. Our guy's grid is now 40%. His take home is about 160K per year-$9000/month after deal. Net capital burn per month is $2000. And here's the problem, He has no way to get positive. He could brown bag it and stop going out to dinner. Butt! He feels trapped and uncomfortable. He wants to restore financial security and also batten down for the future. He wants to put the shore house on the market and hires a realtor. Bad news! He bought the place for $160,000 in 2000. And it climbed to $280,000 by 2007. But now, it will only bring $190,000 max. But there is a problem. While the homeowners association is on the hook for all the outside maintanence that doesn't include the dock or bulkhead on his slip. Both of which need to be brought up to the new code put in place in 2006. Cost $54,000. OMG! Our guy tries to put the boat up for sale but can't find a broker who will take the listing. "Waste of time right now, those boats are a dime a dozen. Nobody wants them. Now if you've got a center console fishing machine we can talk. " comes the retort. Meanwhile back on Harmony Lane one of the kids notices a bad smell coming from the mud room, a small room leading from the garage to the kitchen. The wife says it smells like mold and she is right. There is mold growing in the plaster wall. She calls their local handyman to take a look. The news isn't good! The mold is being caused by an outside leak in the roof. And there are two more leaks causing unseen damage. The lowest of the three estimates to replace the roof is $17400. But it's gotta get done, our guy writes the check. Fixing the mold takes another 2g's out of the bank. Our former million dollar producer finds solice at his office where things are about to change. The BOM announces that they are closing this office and all the advisors who qualify will be moving to the office in Capital City. The staff, including our guy's assistant is being laid off. The BOM will not be making the move. really negative news as the Capitol City BOM is known as an A-hole who doesn't support his people. Without support from the mgr, and without his assistant whom he was just managing to hold on to, he can't run his seminar marketing program. Our guy comptemplates this when the phone rings. It's his wife. She can't get the hot tub on the deck to turn on. He can't believe this call and tells her to call Mr. Handy. She does, and calls back three hours later with more good news. The hot tub has termites! Actually the entire 1200 square foot deck, which is the center piece of their back yard and outside entertaining has termites. And by the way there is a water stain on one of the ceiling tiles in the basement. 30k to replace the deck, 5k for a new hot tub and that water stain? The dishwasher in the kitchen above is leaking. It's ruined the solid plank floor, $4000, and damaged the subfloor, $1000. Plus one ceiling tile at Home Depot, $7.95. Our guy suffers another production drop because 15 clients with 11 miilion in assets think the 40 miles to Capitol City puts them too far from their money. His monthly net drops to $5000 after deal tax is taken. Net monthly cash burn is now $6000. The news doesn't help our guy's mood as he fights the depression of having a broom closet interior office. He shares an assistant with seven other guys. He had only one attendee at his last seminar serving to further darken the sky of his future. Between the markets and the loss of clients, his production is half what it was a year ago. The BOM has no repect for any of the new transferees and a cast system has developed in the office. There are those who get and those who don't. He's on the wrong side of that equation. Our guy considers remortgaging the house to give him some more breathing room. The probelm is it will only deepen the cash flow shortfall. If business doean't come back anytime soon he'll be in a worse off position. The realtor calls with an offer for the shore place. She's embarressed to tell him, but by law has to present it-$119,000. "It's a done deal at that price?" he asks. "Well, as soon as you get the dock and bulkhead up to code" comes the reply. He hangs up without responding just as the BOM pops his head in to his office. He'd like to talk to him in his office when he has a chance. He takes a client call and then goes to the BOM's office. The BOM announces that our guy is now below the minimum to maintain employment at this office. He puts our guy on three month probation and says, off the record, it's time to consider other options. All the transferrees get the same speech. Shell shocked, back in his office, his head spinning his assistant delivers a message from his wife... the Sub Zero has stopped making ice and there's another water spot on a basement ceiling tile... And so it goes. At home trying to entertain myself on a sick day. But, as you can see, even for those who are secure, 400k in a 401k, hundreds of thousands saved outside those plans, plenty of income, all the bases covered, things can change. Business conditions, major illness, unexpected expenses. All can take one's lifestyle to the matt. It has nothing to do with being a good financial advisor. And as i said way, way above, it's all relative. Here we are talikg about a million dollar guy. The numbers may be less and there may not be things like second homes or two Lexus' in the driveway, but this scenerio is the same for us all.
Bondguy, is this what i have to look forward to when i’m; a million dollar producer, married w/ children
Suddenly being a $400,000 producer and single doesn't seem so badYou know what they say about the restaurant biz…
How do you make a million?...start with 2M. The marriage equivalent... How do end up with a million?...give her 110% and leave 1M in a swiss bank account that she never new existed!!!Ice ,you’re missing the point. While it might seem that my fictional guy was living high on the hog, how do you think people pulling down half a million or more every year live?
I make that amount. I associate with people who make that amount. Most of these people are business people. Every business person has a variable income, not only salespeople. Yet, every one of these people has a second home. Most are at the Jersey shore. One guy, my neighbor, who makes less than me has a shore house that's worth over $3,000,000. Another, an Architect, has a house in Barbados. The point is, this is the way people who make discretionary money live. The buy things they want. The live a certain lifestyle that comes with having money. Yet, anyone of these people could fall on hard times. As in my example, a fairly well grounded guy, not living beyond his means, saving 25% of his income, gets taken out by forces he couldn't imaging existed a year ago. I know if anyone told me a year ago that ML would be owned by Bank of America and that UBS would be cutting sub 400k producers I couldn't imagine that. I couldn't imagine that the markets would come so unglued and that munis would decouple so completely from treasuries. And of course in my story my guy has many "fill in the blank" options available to him. The point of my story, isn't to exact pity, nobody pitys the rich falling down. But to understand. Understand, it's not about how good an advisor one is. Adversity can affect us all regardless of what business we're in. How prepared are we suppose to be? As for how ridiculous some of the details of my story sound, each is taken from real life experience: I found out my 1200 square foot, featured in Better Homes and Gardens 10 years prior, deck was riddled with termites when the hot tub wouldn't turn on. The hot tub was infested with termites. The low estimate to replace the deck was 30k. However, i didn't pay 30k. Not counting the pick up truck I bought because i kept getting screwed on delivery of materials, i paid about 8k for decking, screws, and tools to do it myself. Let me tell you doing the math to install over 400 balisters, some fun! As was tearing out the old deck. I got to use a Sawzall which my kids nick named the Bitch. The movie Training Day was playing at the time. And it took me a summer of weekends to get the project done. I kept the truck for about 3 years and sold it for about 5k less than i bought it for. So total cost for the deck-13k. I forget how much it cost me termite proof the house, which was also on the must be done list. The dock/bulkhead story came from a friend with a house on Barnegat Bay. True story. The mold- back to my house-it was in the mud room and was caused by a roof leak. Cheapest guy was 12k and he got the job. I gave our fictional guy a bigger house. One of the guys in one of our FL offices just paid 40k for a roof. So, I toned it down. The water stained ceiling tile-my house again, and it was the dishwasher and it did ruin the plank floor in the kitchen. My house came with the Sub Zero and we just found it to be leaking. Here we go again! The roof, dishwasher, and leaking fridge, all in the last year. Then again, I left out some stuff. Like the six figure tab it cost me to save my daughter's life when , not in college and not covered by cobra, someone had to step up to pay the bill. Like you said, one of life's unexpected surprises. So, yeah, sh*t happens. Again, how prepared are we suppose to be?I think iceco1d made a good point about variable income. My husband and I have both had variable incomes since we left the DA’s office a couple of years out of law school. Very variable - both in terms of our legal practices when we were working - and our investments after we retired. Made us pretty conservative. No second home - no boat - etc. We do spend a lot on travel and restaurants - but those (and some other expense items) are discretionary expenses.
But I can see us - or people in similar situations - getting in trouble. What if our munis start to default? (I forget which ratings agency just put *all* local governments on negative credit watch.) We will probably lose our State Farm windstorm insurance within the year - and wind up self-insuring - because the crummy companies left in Florida seem to have less liquid net worth than we do! We could afford to rebuild our house after a storm - but it would be a financial stress. And what if we lose our medical insurance before we go on Medicare? Most of you work for companies that offer health insurance - but health insurance is perhaps the single largest financial problem for early retirees (or people who have lost good jobs). Health care/insurance is the single largest item in our annual budget (we don't have a mortgage). We are lucky in many ways. For example - our parents - children of the Depression - managed (and I have no idea how in the case of my-laws) to save enough money to pay for their retirements and even the care they needed in skilled nursing homes. We have friends/family members whose parents need to be in skilled nursing homes (with Alzheimers and the like) - and the parents can't afford them (but they have too much money to qualify for Medicaid). You're talking about much more than the cost of fixing a deck! Then there are family members who get into trouble. My brother and SIL support her sister. Whose husband abandoned her and her child shortly after the kid was born (he is now 15 or so). They used to pay a little - but now she has lost her job (she worked for a newspaper). They can't see her thrown out on the street. We have some family members who might wind up in really bad shape - but - knock wood - they haven't gone over the edge yet. So perhaps the answer to a certain extent is be conservative - but you still have to keep your fingers crossed. RobynGreat post Bondguy as one who is in the region known as Socal your numbers are very accurate from the lifestyle I see many business owners and highly paid professionals live. I also think it is a great post for wirehouse guys to see the in my opinion as an Indy the folly of chasing a deal when either starting your own Indy show, RIA, or joining an existing one will add much more to your bottom line then a deal ever will.
I respect the way you put that post together and put a lot of thought into it, BondGuy. While I can agree that many high-income earners do spend a lot of their money due to the joy you get out of being able to reap the rewards of hard work, there is some disagreement with part of the theory.
Robyn made a good point about being heavy on "discretionary expenses". Dining at the finest of restaurants, taking a cruise on the most elegant liner this side of the Atlantic, putting your kids through private school, these are all expenses that are one-and-done. You make a half a mil a year, go eat at Ruth's Chris 5 nights a week. I see it as not irresponsible, but very risky to tie yourself up to a $750k mortgage, a $160k beach home w/$1,300 of upkeep/taxes each month, a $75k boat and 2 lexus leases. These are things that you'll be paying on for 30 years. (Unless you come to your senses and decide to purchase the Lexus after a while). I can't say there's no need to have these things, because I think you should reward yourself for doing well and being good at what you do, but when things go sour and you don't work on a set half-mil salary but on a variable income, you reap what you sow with the aftermath. I know your example was off the wall, but he didn't have one penny of a cash reserve, except the last part of his bonus that went to muni's and a CD, but that was set aside to pay for taxes. Its hard to say how I would react if I was in the situation where I had the choice of how I wanted to spend $500,000 worth of income each year, because I'm not in that position. Nor do I want to judge, although it may come across otherwise, but I think there's a big difference between living the high life and taking $10k trips and drinking the finest bottles of wine known to man kind vs. locking yourself in to $10,000 worth of fixed monthly expenses for the next 30 years of your life.Great example, bondguy.
What would you say to that guy if you were his advisor? You couldn’t really find fault. He’s funding his retirement, he has life insurance, he has college expenses covered, he’s investing in his kids’ future with private schools (which are pretty near a must once you are making six figures. … Up until recently, you would even consider the second home an investment. His business presumably has value after he retires … The boat is the only thing I’d consider over the top.
That guy — apocrophyl though he is – is why I think we’re in more serious trouble with this economy than the conventional wisdom says. Almost all of us are less than six months out of work away from bankruptcy and many of us are halfway there already because of rising unemployment and falling asset values.
sh*t happens and reversals of fortune occur all too often. Many successful people have setbacks.
I have a client that is an excellent insurance defense attorney. His biggest account, AIG, decided to hire a new law firm to administer cases. That law firm identified a different firm in our area, and poof!, my client lost 60% of his business. The first thing to go was his month long stay in Paris (he’s a graduate of Sorbonne).
It’s very difficult to live on 40% of what you actually make. Maybe our parents (those born in the 20’s-40’s) were able to do it, but for me it would be a hardship, especially for the wife.
BTW Bondguy, that was nice writing.
Well color me cheap, but I think many of the examples listed were certainly avoidable with a bit of foresight and discipline to live a more modest lifestyle. My gross was down about 8% last year, but had it been down 40%, I would have easily been able to meet all my monthly bills with plenty left over. This past week, I bought a new riding mower and next week will pay in cash for my wife’s outpatient surgery (two procedures…one covered, one not). Neither expenditure will even touch my emergency stash of 6 months cash. If I made $60,000 a year, I wouldn’t have to eliminate any necessity and even some non-necessities like cable and cell phones. I have no car payment outside of the business lease for my Chrysler 300. My entire debt for my house, two rental units, a lot set aside for a weekend cabin in retirement, two motorcycles, a van a truck and a car, is a whopping $66K. I could literally write a check for the entire payoff if I needed to. I don’t often socialize with people who make what I do. Too many of them are pretentious assholes anyway. Most people around me know that I make a pretty good living, but most would also be shocked if they knew exactly how good a living that was.
If I buy a boat, plane or other toy, I'll damned sure know that I can carry the expense even if my income is cut in half, and I sure as hell won't borrow money to make the purchase. I carry zero personal credit cards and all of two business cards which rarely see $1,000/month in charges and never see a balance carried over. Next spring, I will break ground on a new house and it is unlikely that my total debt will exceed $150K as a result. I'll likely clear all debt within 3-5 years, even if termites, mold or some other unforeseen problem is visited upon me (although I'll give you, a non-covered bout with cancer or similarly expensive disaster would be an exception). The weekender cabin will not be built until all debt is gone and I have the cash set back to pay for it without borrowing. If I WANT something, it will simply have to WAIT until I have sufficient resources to BOTH pay for AND maintain it. I'm not saying that all financial difficulty is avoidable, but I AM saying that a hell of a lot of it stems from our impatience and desire to have the best NOW. The advisor who takes a big check should keep an amount necessary to take care of all taxes in a CD ladder or some similarly risk-free vehicle. The advisor who wants to buy a new toy had better understand the costs associated with keeping that toy and plan accordingly. Many of us work hard and do a job that most cannot do and many don't have any desire to do, especially when times are tough. We deserve what we earn and we deserve to enjoy it. However, when we get overextended, very few of us have a story that will elicit any sympathy from Joe Six-Pack. If you find yourself in a tough situation and you can honestly look back at your lifestyle and spending habits and see little or nothing that you could have done better, you have my sympathy (especially the guy with huge medical bills from his wife's bout with cancer). The rest of us who find ourselves behind the 8-ball because (shock) a serious market decline happened at some stage in our careers, need to man-up and start being accountable for our lapses in judgement and poor management of our personal finances. I don't care how nice a guy is and how good of a salesman he is, if he's foolishly spent himself into a corner, I sure as hell wouldn't go to him for financial advice. You all can point to extreme examples of things that couldn't be avoided, but I can tell you from experience, that I can look at most high-income failures and point out many avoidable mistakes. I don't fault people for the mistakes themselves...I fault them for the "poor me" attitudes and the lack of accountability..."If the market had just continued averaging 10-12% a year for my entire career, I would have been just fine." Bullsh*t.Indy…curious what part of the country you live in.
Not an Excuse but making 200k in one area of the country is like making 75k in another.
That impacts spending…some people don’t want to live in a 2 BR apt when they make 100k a year lol
[quote=skeedaddy2]sht happens and reversals of fortune occur all too often. Many successful people have setbacks.
I have a client that is an excellent insurance defense attorney. His biggest account, AIG, decided to hire a new law firm to administer cases. That law firm identified a different firm in our area, and poof!, my client lost 60% of his business. The first thing to go was his month long stay in Paris (he’s a graduate of Sorbonne).
It’s very difficult to live on 40% of what you actually make. Maybe our parents (those born in the 20’s-40’s) were able to do it, but for me it would be a hardship, especially for the wife.
BTW Bondguy, that was nice writing.
[/quote]
Yes, it would be a bit rough to live on 40%, and I also agree that BG put up some thought provoking stuff that was well written.
Yet, I will tend to side more with Indy or Ice. I think that folks who own a business with variable income need to have enough common sense to live well within their means, or even below their means, and they need to set aside a LARGE portion of the excess cash flow during good times to have it available in case things get rough.
I’m sorry…but it’s just not wise to take on a 750k mortgage unless and until you have a good 350-400k MINIMUM in a taxable portfolio of income paying securities…securities that you can sell or take the income stream and help use it to keep up with the mortgage when business is slow.
Shoot…some would argue that if you need to take on a 750k mortgage you can’t afford the dmn house in the first place!
If he had BOUGHT a 5 year old Honda for the kid and a couple of 2-3 year old Lexi for he and the wife(and kept them for at least 3-4 years), the cash flow picture would also be considerably different.
But too many of us feel like we have to keep up with the Joneses…
Nest, I understand that living in NYC, etc. costs more than living in rural midwest…no question about that. Again, I’m not saying that there are not legitimate financial difficulties amongst us. I’m just saying that I see a tremendous amount of POOR financial management among my brethren and a lot of our problems could be avoided if we’d simply practice what we preach. There are plenty of idiots even here in rural midwest who drive gas guzzling Escalades and live in 7,000 square-feet homes and make considerably less than I do. I don’t shed the first tear when I see their foreclosure notice in the newspaper. I watched a competitor borrow and spend a ton of money a couple of years ago upgrading his house and I wonder how well he’s sleeping hese days with his revenue down and a giant mortgage looming overhead.
It's pretty obvious to me that none of these people have read "The Millionaire Next Door".There is a huge difference between being able to afford a monthly payment on something and being able to afford the item. As long as people don’t realize that, drops in income will cause huge financial difficulties.
Damn! I forgot to add in the guy’s cable bill! OK he has Comcast On Demand and pays $160 a month.
Seriously, you guys are tough! A few points: My guy has a 500k mortgage on a 750k house - net equity= 250k He owns free and clear a second property- at cost net equity=160k He has a 401k worth 400k - net equity= 400k He has 100k (predeal) put away for his kids-net equity=100k He has(predeal) a brokerage account worth 150k- net equity=150k So, adding this up my guy has a net worth of $1,060,000. Of that, 250k is liquid. And he has the abilty to borrow, short term, against the rest if circumstances dictate. After the deal, his net worth is increased by roughly $650k. He gets rid of the biggest threat to his families future security, the mortgage, and banks $430k in various pockets. All the bases are covered. This guy has between 400k and 600k in liquidity, depending on the market, and what pockets you count, and he's still a frivilous idiot? I don't think so. First let's talk house. He owns a 750k pad with a 500k mortgage.I live just outside Philly. I live an upper middle class neighborhood in an upper middle class town. My house was featured in the magazine Better Homes and Gardens. Point being, it ain't exactly a shack. Today, my house would sell in the $450,000 range-give or take. Two of my cousins live 75 miles north of me in the town of Morris Plains. Nice town! But not Rumson, Little Silver, or Short Hills. Not even Saddlebrook, or Leonia. Both of my cousin's homes, together, could fit inside my house. Yet, today, each would sell for more than my house. To buy my house in their neighborhood would be about a million dollars. Move that house 50 miles east and were talking over $1.5 million. That being the case- exactly how is my guy being frivilous? It's all relative. We don't all live FT Myers Florida where 4000 sq ft homes are going for 80k. As I said my guy lives in a below average neighborhood for his neck of the woods. Yet, in that neihborhood, like my cousins, home prices for very ordinary homes are extradinary. This is reality for many advisors who live on the West Coast and in the Northeast beach states from MD to Mass. Next, on the amount of his mortgage, $3300/month carrying positive net equity of about 35% on a $450k annual income. And this, some of you find fault with? Ok, lets reduce everything. Our guy makes $112k, carries a $125k mortgage on a house worth 188k. Anyone here making just over 100k carrying a buck and a quarter mortgage? I'm sure there is. The point is: a guy making 112k carrying 125k mortgage is in exactly the same position, relatively, as the higher earner with the bigger mortgage. Everything is relative. Yet, the perception is that the higher earner is being financially irresponsible. IMO he's not, he's just living at another level. One he's earned. no different than Joe the plumber, AKA, the millionaire next door, a businessman making big bucks. Let's carry that over to the cars. Our guy, at 450k is forking over $1200 a month for two cars. How about our 112k guy paying $300 a month? Sounds reasonable doesn't it? That's because it is. Except that the average car payment per dave ramsey is $384.month. So, our 112k guy has only one below average car. Anyone here making car payments in excess of $300 a month on a 100k income? Consider that the higher income guy is most likely more financially secure. I disagree that my guy was living beyond his means. At an 11k cash burn per month, not touching the 401k, not taking on debt, the guy has a liquid assets that would last him over 3 years. That doesn't touch the 401k and doesn't touch the kid's money. Ok, i don't call his accounts an emergency reserve. In 26 years in this biz I have yet to have one client open an emergency reserve account. Take it from someone who has, unfortunately, lived it, in a financial meltdown it's all hands on deck. Every pocket counts. So, let's add it up, 1.5 milllion after deal net worth. Positve equity in everything he owns with a debt to equity ratio of zero(no debt), six figure income, even though reduced, and you guys have a problem with two leased luxury cars and what you perceive as an over priced house? This is a tough room!
S&P, thanks for the video link, and making me cry with joy. Best part of my day (so far).
I came here to get cheered up and get perspective, thanks to all the thoughtful posts on this thread.
As a "planner", I think: You gotta go for it and take risks, that means taking chances but living the good life too. Stay out of bankruptcy. Maybe the poster could sell his book, pay off some debts and establish a cash reserve, and go work for someone for a while (even if being an employee to the buyer of his own practice while he goes "indy" with a b/d or RIA switch, or whatever. I've been in this too long, but I think having your own book isn't what it's cracked up to be. Okay, my revenues are down 40% and I still play too much golf. I'm just saying this business isn't as much fun as it was when I was building it. Consider going to build something else, or just get some cash and a paycheck for a while, but don' t go banko, for us, that's defeat. Look, Indy, being cheap isn't virtuous. I respect it, just like maybe I respect some guys who maybe hosed some people to get rich (hey, this is still America, I have less patience for dumb whiney liberalsl). Live and learn.[quote=BondGuy]Seriously, you guys are tough!
A few points: My guy has a 500k mortgage on a 750k house - net equity= 250k He owns free and clear a second property- at cost net equity=160k He has a 401k worth 400k - net equity= 400k He has 100k (predeal) put away for his kids-net equity=100k He has(predeal) a brokerage account worth 150k- net equity=150k So, adding this up my guy has a net worth of $1,060,000. Of that, 250k is liquid. And he has the abilty to borrow, short term, against the rest if circumstances dictate. After the deal, his net worth is increased by roughly $650k. He gets rid of the biggest threat to his families future security, the mortgage, and banks $430k in various pockets. All the bases are covered. This guy has between 400k and 600k in liquidity, depending on the market, and what pockets you count, and he's still a frivilous idiot? I don't think so. First let's talk house. He owns a 750k pad with a 500k mortgage.I live just outside Philly. I live an upper middle class neighborhood in an upper middle class town. My house was featured in the magazine Better Homes and Gardens. Point being, it ain't exactly a shack. Today, my house would sell in the $450,000 range-give or take. Two of my cousins live 75 miles north of me in the town of Morris Plains. Nice town! But not Rumson, Little Silver, or Short Hills. Not even Saddlebrook, or Leonia. Both of my cousin's homes, together, could fit inside my house. Yet, today, each would sell for more than my house. To buy my house in their neighborhood would be about a million dollars. Move that house 50 miles east and were talking over $1.5 million. That being the case- exactly how is my guy being frivilous? It's all relative. We don't all live FT Myers Florida where 4000 sq ft homes are going for 80k. As I said my guy lives in a below average neighborhood for his neck of the woods. Yet, in that neihborhood, like my cousins, home prices for very ordinary homes are extradinary. This is reality for many advisors who live on the West Coast and in the Northeast beach states from MD to Mass. Next, on the amount of his mortgage, $3300/month carrying positive net equity of about 35% on a $450k annual income. And this, some of you find fault with? Ok, lets reduce everything. Our guy makes $112k, carries a $125k mortgage on a house worth 188k. Anyone here making just over 100k carrying a buck and a quarter mortgage? I'm sure there is. The point is: a guy making 112k carrying 125k mortgage is in exactly the same position, relatively, as the higher earner with the bigger mortgage. Everything is relative. Yet, the perception is that the higher earner is being financially irresponsible. IMO he's not, he's just living at another level. One he's earned. no different than Joe the plumber, AKA, the millionaire next door, a businessman making big bucks. Let's carry that over to the cars. Our guy, at 450k is forking over $1200 a month for two cars. How about our 112k guy paying $300 a month? Sounds reasonable doesn't it? That's because it is. Except that the average car payment per dave ramsey is $384.month. So, our 112k guy has only one below average car. Anyone here making car payments in excess of $300 a month on a 100k income? Consider that the higher income guy is most likely more financially secure. I disagree that my guy was living beyond his means. At an 11k cash burn per month, not touching the 401k, not taking on debt, the guy has a liquid assets that would last him over 3 years. That doesn't touch the 401k and doesn't touch the kid's money. Ok, i don't call his accounts an emergency reserve. In 26 years in this biz I have yet to have one client open an emergency reserve account. Take it from someone who has, unfortunately, lived it, in a financial meltdown it's all hands on deck. Every pocket counts. So, let's add it up, 1.5 milllion after deal net worth. Positve equity in everything he owns with a debt to equity ratio of zero(no debt), six figure income, even though reduced, and you guys have a problem with two leased luxury cars and what you perceive as an over priced house? This is a tough room![/quote] ...yeah, BG, I AM tough. I'm not saying that your friend is a trainwreck...far from it. At the same time, he's made liberal use of credit and that's what has him boxed in...to reduce/eliminate his debt, he's put a serious strain on his liquidity. We all want nice stuff and want to feel the reward of our labors, but why are we so ^%!$!%&# impatient?!! There's no good reason your friend has ANY car payments. I'll use a Dave Ramsey example (with apologies to those that don't like Dave) on your guy. Why couldn't he have banked $1200/month for a year and bought a used Honda Accord or something similar for cash? Within a 2nd year, he can buy another similar vehicle for cash. By the end of the third year, he can take the first car and $14K cash and trade up...still with no car payment. This cycle can be repeated until your friend is buying nice cars every 4-5 years and paying cash for them...for less than the price if his lease payments. Kid needs a car? My daughter is 12 years old and is saving for her first car. In the summer, she will work for me 2-3 days a week on my file imaging project and make money for her car fund. At 16, I will match whatever she has saved and we will buy her a car for cash. She will be responsible for paying the insurance for that car. My assumption is that she will be more careful if she knows that the bill gets much higher with accidents. Want a boat? Not until I have the cash for it. I have no desire to be saddled to a $700/month boat payment just so I can have a boat like my neighbor has. Leverage for a house or investment real estate with appreciation potential I understand...leverage for a toy is not the way I do things...at least not in the 20+ years since I finished school and had my epiphany. $400K in his 401K? How in the H- is he going to maintain his standard of living with that little put away over a 15-year career? My standard of living is considerably cheaper (partly due to geography and partly due to choices) and I have more than that in retirement. I don't think I have nearly enough at this point, so if I were in his shoes, I'd be very concerned, especially with the monthly nut he's got to cover. Private school? Killer vacation? These are all choices. If you are struggling to cover your nut, they are still choices that can be passed on. I want the best for my kid too, but if it comes down to private school and being liquidated, that choice gets much simpler. If I am in BK, private school is gone anyway. This guy may need to just swallow his pride and make some hard changes...the kids may have to go to public school for awhile. The wife may have to get a job. The boat may well have to be sold at half the original price and the deficiency might have to be renegotiated and paid off at say, $300/month. Supper may be tuna salad sandwiches for awhile instead of eating out 4-5 nights a week. Clothes may have to be bought at Old Navy. This year's vacation may have to be tent camping in a state park with some canoeing and fishing on the park lake. Life could be worse. Once your friend cycles through a rough patch like that, I'm guessing he'll use leverage very carefully as a result. 40 years ago, something like 4% of the population had a mortgage. Today, it is more like 4% DON'T have a mortgage. Can we go back to those standards? Probably not to that degree, but I believe for many individuals, it's certainly possible. Did I say it was easy and/or fun? Heck no! I'm not saying that your friend is wrong to have a mortgage and use leverage. What I am saying is that use of leverage comes with risk and potential consequences and to not consider the possibility that you could get squeezed by debt is at least short-sighted. If your friend gets squeezed and liquidated while living what 95% of the population would consider the good life, he's not going to find much sympathy from the guy that's carrying a lunchbucket with a bologna sandwich and driving a 15-year old Ford Ranger while fretting about his overtime being gone and wondering how he's gonna make the next payment on that modular home he bought three years ago. That's as diplomatic as I can put it. I wish your friend well, but if he's serious about digging out of the hole he is in, he might want to read Dave Ramsey's "Total Money Makeover" and "The Millionaire Next Door" (Stanley/Danko).
Indy, with all respect, you can’t take it with you. Some folks want to burn the candle at both ends, and they are willing to bust their a**** for it. You and I are not exactly the biggest risk takers in the world, working in the most exciting, innovative industry. I’ve had some great adventures, I’ll bet you have too. Dave Ramsey is BORING and pedantic, makes a lot of money being that way, too. Living on the edge is FUN most of the time, and it helps keep you young, I know from experience.
Yeah, almost real, Ice. BG and Indy almost represent the left foot, and the right foot. And we all get up again in the morning. Left foot, right foot, left …
Back to topic…
RE: you thinking about a bk filing I think you tell your manager and your compliance dept. as soon as you can. They need to know, don't surprise them or they just may terminate you. I hear ya. I know a broker (independant) who has gone through a terrible divorce spending incredible amounts of money trying to do what he thinks is the right thing for his situation and children and has paid the lawyers over the IRS. His thought was this will only take a year or so, but it has dragged on much longer and cost a lot more than originally thought. He has thought about the 13 filing to get on a payment plan and take care of this obligation. Now he thinks his broker dealer will terminate him becasue they are scared that a broker with a large liability could cost the firm a lot of money if does unscrupulous business to cover his debt. Mind you, this broker with over 20 in the industry doesn't have one complaint on his record and even though his IRS debt has added up over 3 to 4 years, now the BD is scared of him. He cant be the only broker in this type of a position!!!!!!! So, anyone have any words of wisdom here? If they terminated my friend for filing a 13, would it be a wrongful termination? Do they have cause?[quote=BondGuy]
Seriously, you guys are tough![/quote]
BG you make some interesting points.
But still, I'd suggest that when you live on a variable income that rises to a certain threshold, one needs to think about protecting oneself against a severe drop in that income.
One way to do so is to NOT mortgage oneself as greatly as Joe the Plumber. Just because you CAN get approval for that mortgage you don't have to take it.
When I moved a number of years ago, more than one banker told my wife and I we could easily qualify for a 75-80% mortgage on a 850k-900k home. We chose to transfer our equity to a 650k home(at least it was then...) with a much smaller mortgage and thus a smaller monthly nut.
It's not as big, but to borrow your words, it's no shack either.
And I sleep at night even during these crazy times.
So you're fixing to die tomorrow? I am 61 - my father is 91. My father's folks died when they were 96 (his Dad) and 103 (his Mom). If we all knew exactly when we were doing to die - we could all do a lot better in terms of financial planning. Be at zero net worth when we were buried. Living on the edge is fun as long as you don't go over the edge. And to not go over the edge - you have to stay somewhat away from it. Whatever that means in terms of your own personal financial situation. What do you think it is about spending money that keeps you young? I sometimes spend ridiculous amounts of money on some things. I enjoy the things I spend money on. They make me feel pampered - but they don't make me feel any younger. Perhaps you are buying a pair of 18 year old twins for a night on the town . Interesting story about a friend of mine - a golf pro who became a FA about 1999 or so. He had a lot of friends who took golf lessons from him. Who lived pretty big life styles. $1+ million dollar houses. Expensive cars in the driveway - etc. They all promised him business. And when he became a FA for MER - he went to them. He was a pretty conscientious guy - and did all his homework. Most of these people - after analysis - had negative net worths. And - being an honest guy - he said he couldn't do better for them than to advise them to pay off their high interest debt (second mortgages - HELOCs - car loans - credit card balances - etc. - the old Dave Ramsey stuff). Most didn't follow his advice and many came to grief in later years. After a few years at MER - he went to work for the PGA tour. Where he is doing fine - and is much better off IMO. RobynIndy, with all respect, you can’t take it with you. Some folks want to burn the candle at both ends, and they are willing to bust their a**** for it. You and I are not exactly the biggest risk takers in the world, working in the most exciting, innovative industry. I’ve had some great adventures, I’ll bet you have too. Dave Ramsey is BORING and pedantic, makes a lot of money being that way, too. Living on the edge is FUN most of the time, and it helps keep you young, I know from experience.
[quote=bustedbroker]Back to topic…
RE: you thinking about a bk filing I think you tell your manager and your compliance dept. as soon as you can. They need to know, don't surprise them or they just may terminate you. I hear ya. I know a broker (independant) who has gone through a terrible divorce spending incredible amounts of money trying to do what he thinks is the right thing for his situation and children and has paid the lawyers over the IRS. His thought was this will only take a year or so, but it has dragged on much longer and cost a lot more than originally thought. He has thought about the 13 filing to get on a payment plan and take care of this obligation. Now he thinks his broker dealer will terminate him becasue they are scared that a broker with a large liability could cost the firm a lot of money if does unscrupulous business to cover his debt. Mind you, this broker with over 20 in the industry doesn't have one complaint on his record and even though his IRS debt has added up over 3 to 4 years, now the BD is scared of him. He cant be the only broker in this type of a position!!!!!!! So, anyone have any words of wisdom here? If they terminated my friend for filing a 13, would it be a wrongful termination? Do they have cause? [/quote] Whether or not they have cause - it depends on the wording in his contract. Which probably varies from firm to firm. So the first thing to do is look at the contract. There may perhaps be special public policy rules which would void a specific contract provision in a particular state. Since there are 50 states - most with different rules - second thing to do is consult with a lawyer experienced in this area of law where he lives. And - as you probably know - if he were to be terminated - his remedy would be arbitration (used to be that only industry arbitrators handled these cases - don't know what the story is today). And I am not sure he has had terrific legal advice if he paid his lawyers before he paid the IRS. If you have a roof over your head - a bed to sleep in - and aren't starving - IRS comes next. Perhaps a second legal opinion is in order. FWIW - if the divorce isn't yet final - many states have divorce mediation these days - where everyone sits down in front of someone who isn't perhaps the sharpest legal knife in the block - but who tries to work things out so peoples' lives aren't destroyed in the process. RobynAll of Bond Guy’s theoretical posts are Exhibit A as to how not to live your life. I have absolutely no sympathy for idiots who buy boats, expensive cars, and million dollar houses to “get noticed”. When I first got into this business, I was on a Jones diversification trip, and Jim McKenzie came and sat next to me at breakfast one morning. All the Jones guys know who he is. (Spiffy is getting misty-eyed about now, but I’ll get to the point.) He could tell from my nametag that I was fairly new, but having some success as I was on the trip. He asked me, “What do your best clients have that you don’t have?” I threw out a few shallow answers before he helped me. “Net worth. It’s net worth. Work on your own net worth every day. Not just stocks and bonds, but real estate, collectibles, a business, intellectual property, what have you. Commit yourself to that–everyday–and this business will treat you well, and you’ll have the respect of other people who have a significant net worth.” (Spiff reaches for Kleenex about now.) I swear to God this is true, and it has stuck with me ever since. I came home and started working on my net worth.
I bought a house I could afford in 1999. Since that time, there are years that I have made almost 7x as much money as I did then. I still live in the same house, only now it is paid for. I got involved in a significant commercial real estate development project in 2002. I collect cash flow from serveral of those properties today, and used the profit to own the building where my business is located. There are also 6 other tenants in my building ranging from a small law firm to an engineering firm. The success of that project made me a millionaire at age 39. I had my second million 3 and a half years later. I drive what would be considered a "luxury" automobile, but never buy new. I have a good friend and client who is sales rep at a luxury dealership. He calls me when idiots like BondGuy's wife bring in their 30-month lease car with 24K miles on it. I pay 50-55% of what the car stickered for when new, and pay cash on the spot. 2 years later I will sell it private party, which usually means it costs me $200-$300 per month to own it. Usually a car like this is still under warranty and has no maintenance costs. I sell when the warranty is about to expire. My kids go to private school not to impress anyone, but because--well, read my tagline at the bottom of this post. I don't have a country club membership, but I do have a gym membership. I don't think about or worry about money much anymore. I have everything I need. I never took an upfront check from a wirehouse. Went from Jones to indy. Own my book. (Again, that decision add to my net worth. I volunteer and help out on many fronts in my community and church. I don't think people that I come in contact with think less of me because I don't live in a 4500 sq. ft. house. I do think they probably figure that I'm financially secure although I don't flaunt it. I don't have to. I never did have to. All that BS is for guys who just aren't comfortable in their own skin. For Christ sake, we're not Hollywood celebrities or rock stars, we're financial advisors. Act like one. Live live one. And remember, work on your own net worth every day. Life is what you make it.Some do...many don't. It depends upon your definition of rich and the variety of rich you run into. Many of my clients with net worths in excess of a million (which is questionably rich these days) are living well and not worrying about it. I don't like golf (blasphemy, I know), but I do enjoy fishing. It's not an expensive hobby unless you do a lot of fly-in trips. I live a pretty simple life, but I don't feel the least bit deprived. Simple is the way I like it. Soothsayer has taken a similar road and I seriously doubt if he feels the least bit deprived either. Living a fullfilling and interesting life doesn't necessarily mean spending a lot of money. If it does mean writing a large check, I don't want that to be a mentally stressful thing, so I do systematically save for the unexpected and unnecessary. There are many different ways to live a happy and fulfilling life. Your way would stress me out and my way would probably bore you to death...chacun à son goût.Rich people just worry about staying rich…
Right on, Indy.
I'm just trying to challenge conventional thinking here, not win any points. For example, tax deferred investing is one of the biggest scams ever devised by our industry - with some notable exceptions, like picking up matching contributions. Tax deferred investing is mainly for employees, or those of average intelligence - and Uncle Sam. Try saving a couple hundred thou in money markets, muni ETFs, high dividend (taxable) stock ETFs, paying off your mortgage and cars, and see how that changes your life. So much of this industry is recycled crap. Most of the rich people I serve drink too much, or lead weird lives. Okay, they have a lot of fun, too. I used to love fishing, but I realized I could get the same thrill playing golf, and not have to stink like fish :). Fishing is cool.Michigan, most,…most of the rich people you serve drink too much ? Or are weird ?
Yeah. Well, at least, their rich kids are weird. As for the drinking part, I know this sounds really basic, but I bet a lot of us were drinking better wine a few months ago. It’s amazing how well really, really good wine goes down.
[quote=Mishigun]
...I like to spend money on golf, organic food for my body, good health insurance, kid's college... [/quote] Agree about golf. But you like to spend money on health insurance? You must be pretty young - with fairly cheap rates. Don't think you'd like to pay what we have to pay . Robyn[quote=Mishigun]
...I'm just trying to challenge conventional thinking here, not win any points. For example, tax deferred investing is one of the biggest scams ever devised by our industry - with some notable exceptions, like picking up matching contributions. Tax deferred investing is mainly for employees, or those of average intelligence - and Uncle Sam. Try saving a couple hundred thou in money markets, muni ETFs, high dividend (taxable) stock ETFs, paying off your mortgage and cars, and see how that changes your life... [/quote] What's wrong with tax deferred investing? Robyn[quote=RobynG][quote=bustedbroker]Back to topic…
RE: you thinking about a bk filing I think you tell your manager and your compliance dept. as soon as you can. They need to know, don't surprise them or they just may terminate you. I hear ya. I know a broker (independant) who has gone through a terrible divorce spending incredible amounts of money trying to do what he thinks is the right thing for his situation and children and has paid the lawyers over the IRS. His thought was this will only take a year or so, but it has dragged on much longer and cost a lot more than originally thought. He has thought about the 13 filing to get on a payment plan and take care of this obligation. Now he thinks his broker dealer will terminate him becasue they are scared that a broker with a large liability could cost the firm a lot of money if does unscrupulous business to cover his debt. Mind you, this broker with over 20 in the industry doesn't have one complaint on his record and even though his IRS debt has added up over 3 to 4 years, now the BD is scared of him. He cant be the only broker in this type of a position!!!!!!! So, anyone have any words of wisdom here? If they terminated my friend for filing a 13, would it be a wrongful termination? Do they have cause? [/quote] Whether or not they have cause - it depends on the wording in his contract. Which probably varies from firm to firm. So the first thing to do is look at the contract. There may perhaps be special public policy rules which would void a specific contract provision in a particular state. Since there are 50 states - most with different rules - second thing to do is consult with a lawyer experienced in this area of law where he lives. And - as you probably know - if he were to be terminated - his remedy would be arbitration (used to be that only industry arbitrators handled these cases - don't know what the story is today). And I am not sure he has had terrific legal advice if he paid his lawyers before he paid the IRS. If you have a roof over your head - a bed to sleep in - and aren't starving - IRS comes next. Perhaps a second legal opinion is in order. FWIW - if the divorce isn't yet final - many states have divorce mediation these days - where everyone sits down in front of someone who isn't perhaps the sharpest legal knife in the block - but who tries to work things out so peoples' lives aren't destroyed in the process. Robyn[/quote]
PEOPLE HELPING PEOPLE, IT'S A POWERFUL THING!
Excellent syopsis, Ice! On top of that, most tax-deferred accounts will be subject to the whims of the federal government. Tax rates are just part of it - they have all the control to change the minimum age for withdrawals, add excise taxes on large balances, etc.
Dam, I think I just found the smart people here. And then there’s the " be a good little boy, an’ put your money in the IRA (which usually ends up being something like an Oppenheimer fund [Barron’s #59/59 one year winner] with an outrageous expense ratio that ends up screwing the advisor AND client, but helps the manager and the b/d the most.
[quote=iceco1d]
To be brief, the argument is that tax rates will probably be going up, not down, in the future (not trying to have a crystal ball, just being logical and applying basic economics). So, theoretically, you could be deferring your taxes from now, when you may be in a 15% bracket, to 30 or 40 years from now, depending on your age, when you may be in a higher tax bracket. Instead, you could just invest in a tax-efficient manner today, and forego the tax break now, and pay (theoretically) lower capital gains taxes (or invest in something that pays tax-free interest) in the future. You could also forego the tax-deferred accounts today, and opt for the tax-free Roth options available in most plans/accounts. The other consideration is for higher net worth people, and the transfer of wealth. If you have multiple-millions to transfer upon death, your heirs could end up paying more than 100% in taxes on the money you hold in qualified, tax-deferred accounts...of course, this depends on your NW, and the estate tax exclusion levels, etc. Disclaimer - this isn't my original thought, this is just some ideas where that comment ccame from.[/quote] I agree with some of this - under certain circumstances - but don't think it's a one size fits all situation. For example - for someone in a low tax bracket - a Roth may be perfect (assuming the person otherwise has sufficient savings outside the Roth). If you're in a really high tax bracket - a regular deductible IRA (or pension plan) may be better. My husband and I were in a 50% "earned income" tax bracket - and a 70% "unearned income" tax bracket during quite a few of our high earning years. Tax brackets can go higher than that - but we were willing to take our chances at those levels. And with taxes almost certain to go up in the near future - the value of the deduction will go up. Unfortunately - the rules on pension plans for small corporations became really onerous quite a few years ago (I used to have qualified plans - but terminated them and rolled my money over into an IRA). Still - if I were a high wage earner running a small business - and had few or no employees - I'd look into them now - run the numbers - and see if they make sense. Of course - the primary advantage of tax-deferred plans is avoiding the friction of taxes. And then there is the freedom of investing without regard to taxes. I've seen people who refuse to sell because they'll have to pay taxes on their gains. It's kind of silly - but a real psychological phenomenon. I don't pay much attention to things like 401k's - but my impression is that the investment options are usually very limited and not so great. Even if there is an employer match - you are still putting some of your own money into a not so great deal. Is my impression correct? Note that I don't believe in putting all savings into tax-deferred vehicles. I think there should be a mix. I agree that tax planning can be a nightmare (it can take a couple of days to figure out a "stretch IRA" - assuming you don't die from boredom before you finish reading). But if you have a fair amount of money - you can afford an accountant and estate planning lawyer to walk you through the options. Anyway - like most things having to do with financial planning - many of the options/concepts aren't easy to understand - the reading is stupendously boring - and the best solution for a particular person may depend not only on his profile "by the numbers" - but on his personal goals - risk tolerances - etc. For example - if you're 25 - and your dream is to save money and start your own business before you're 30 - you don't want to tie up your money in any retirement account. I think if the average investor spent as much time investigating the area (with professional assistance if necessary) as he did reading about LCD versus plasma TVs - he might wind up doing a better job of figuring out which options are best for him. RobynForgot to mention one thing. I would be wary of muni ETFs. I sometimes trade junk bonds. Used to do it through mutual funds. During this last cycle - I’ve been experiementing with junk ETFs. And they have a lot of problems (they tend to trade on relatively low volume - bigger buy/spread spreads than I care for - act more like closed ends than open ends in terms premiums/discounts to NAV - etc.). Doubt muni ETFs are any better.
Unless a client has almost no money (in which case he or she probably doesn't need munis when interest rates are normal) - just buy (and hold) a diversified portfolio of high quality bonds (I am only buying state GO's these days). I tend to be an opportunistic buyer of long paper when I think rates are pretty high - but a more conservative investor might be more comfortable in a laddered portfolio of intermediate term paper. FWIW - one of the better websites I've found that deals with ETFs is ETFConnect. RobynI hate it for you. Only one REAL way out ... start busting your arse harder than you ever had and get your production up.
Robyn, are you … like … a hobbyist or something?
I don’t know how old Bond Guy is - but one thing he has neglected is a sense of historical perspective. Since he lives outside Philly - I’ll give a Philly example. My husband and I moved there shortly after we got out of law school. Worked as assistant DA’s. Made a grand total of $19k/year between the 2 of us in 1972. Sounds awful. But we rented a 1 bedroom 800 sf apartment at the Dorchester (a luxury high rise on Rittenhouse Square) for $280/month. Bond Guy - will $280/month even get you a parking space in center city these days?
We had a car - a Mercury Cougar - bought new for a little more than $3k. We used to drive to NJ to save money on gas (which was then about 25 cents a gallon). A can of tuna fish was 19 cents. At the time - my father was building and selling houses in south Jersey for about $19,000 (side to side splits with maybe 3 bedrooms - 1 bath). My husband's family had a similar house in Montvale NJ (you NY/Jersey guys will know the area) that cost about the same amount. When we went to Harvard Law School ('68-'71) - room tuition and board was less than $2k a year. My father could afford to send me. My husband's father couldn't afford to send him. So my husband worked during the school year as a bartender - and summers on the Ford Motor Company assembly line at the Mahwah plant (he was a member of the UAW). Between the two of us - we graduated with $500 in debt (lack of bartending gigs my husband's last year in law school). Yada yada yada. Flash forward. What do all these things cost today? And what do people earn - like a newbie DA in Philadelphia? Obviously - prices of these things have risen more - in many cases a ton more - than peoples' earnings. So people a generation or two younger than we are have had to run very hard just to stay in place. What kid today could put himself through an Ivy League school by working part time? The double income family is now longer an oddity - but - in many cases - a necessity. Children have become a luxury. (Which is why gay customers are frequently prime customers - they tend to be DINKs. It is an unfortunate but harsh fact of life that Obama may think you're rich if you earn $250k before taxes - but you aren't. You are probably about the same or worse off than we were when we were earning $19/k year - particularly if you're trying to raise a family in a relatively high cost area of the country. All I can say is I'm glad I'm not starting out now. Robyn[quote=Mishigun]Robyn, are you … like … a hobbyist or something?[/quote]
Maybe she’s an FA groupie?
Seems vaguely familiar. I did like the part about financial planning being stupendously boring, and the alligator story. But not the corn.
Hobbyist? Not sure what you mean. My hobbies are golf - gardening - travel - and food (cooking and dining). Investing is dead serious work. We're retired - and investments are our only source of income (except for my husband's SS - I'll start getting SS this year - but I'd like to remain in the position we were in when my husband got his first SS deposit - he bought a new set of irons). If you invest long enough - you have to explore new stuff - whether it's new products or new technology. The investing landscape of today bears little relation to the way things were when I started 30 years ago. Or even 5 years ago. And if you are around 30 years from now (I probably won't be) - I'm sure things will be very different then. So - as long as I'm capable of learning - I'll keep plugging away. RobynRobyn, are you … like … a hobbyist or something?
[quote=RobynG]I don’t know how old Bond Guy is - but one thing he has neglected is a sense of historical perspective. Since he lives outside Philly - I’ll give a Philly example. My husband and I moved there shortly after we got out of law school. Worked as assistant DA’s. Made a grand total of $19k/year between the 2 of us in 1972. Sounds awful. But we rented a 1 bedroom 800 sf apartment at the Dorchester (a luxury high rise on Rittenhouse Square) for $280/month. Bond Guy - will $280/month even get you a parking space in center city these days?
We had a car - a Mercury Cougar - bought new for a little more than $3k. We used to drive to NJ to save money on gas (which was then about 25 cents a gallon). A can of tuna fish was 19 cents. At the time - my father was building and selling houses in south Jersey for about $19,000 (side to side splits with maybe 3 bedrooms - 1 bath). My husband's family had a similar house in Montvale NJ (you NY/Jersey guys will know the area) that cost about the same amount. When we went to Harvard Law School ('68-'71) - room tuition and board was less than $2k a year. My father could afford to send me. My husband's father couldn't afford to send him. So my husband worked during the school year as a bartender - and summers on the Ford Motor Company assembly line at the Mahwah plant (he was a member of the UAW). Between the two of us - we graduated with $500 in debt (lack of bartending gigs my husband's last year in law school). Yada yada yada. Flash forward. What do all these things cost today? And what do people earn - like a newbie DA in Philadelphia? Obviously - prices of these things have risen more - in many cases a ton more - than peoples' earnings. So people a generation or two younger than we are have had to run very hard just to stay in place. What kid today could put himself through an Ivy League school by working part time? The double income family is now longer an oddity - but - in many cases - a necessity. Children have become a luxury. (Which is why gay customers are frequently prime customers - they tend to be DINKs. It is an unfortunate but harsh fact of life that Obama may think you're rich if you earn $250k before taxes - but you aren't. You are probably about the same or worse off than we were when we were earning $19/k year - particularly if you're trying to raise a family in a relatively high cost area of the country. All I can say is I'm glad I'm not starting out now. Robyn[/quote] RobynG-What did i say or not say that lacks historical perspective? Or even call for such perspective within the confines of this discussion? Yes, you can get a center city parking place for less than $280. In fact $180 will get you monthly parking at 23rd and Arch, w/i easy walking distance of the center city office canyon. Add a buck a month and you can park everyday at 18th and Market. And just for the ofishall record I'm 24.[quote=Indyone]
...yeah, BG, I AM tough. I'm not saying that your friend is a trainwreck...far from it. At the same time, he's made liberal use of credit and that's what has him boxed in...to reduce/eliminate his debt, he's put a serious strain on his liquidity. What liberal use of credit? The guy had an easily affordable mortgage and a boat loan. Before the deal he had a million dollar net worth even with this debt. Good to know that at least qualifies him as "not a train wreck!" Relatively speaking he's in the same financial position as 112k earner with a 112k mortgage to support. That's not out of line in anyone's book. He is far from boxed in. We all want nice stuff and want to feel the reward of our labors, but why are we so ^%!$!%&# impatient?!! There's no good reason your friend has ANY car payments. I'll use a Dave Ramsey example (with apologies to those that don't like Dave) on your guy. Why couldn't he have banked $1200/month for a year and bought a used Honda Accord or something similar for cash? Within a 2nd year, he can buy another similar vehicle for cash. By the end of the third year, he can take the first car and $14K cash and trade up...still with no car payment. This cycle can be repeated until your friend is buying nice cars every 4-5 years and paying cash for them...for less than the price if his lease payments. In my example my guy could buy any car he wanted for cash without going through your ridiculous buy a used car and bank the difference example. I didn't get that detailed. As for leasing, plenty of people on this board lease cars paid for out their own pockets. There are many business reasons for leasing as well as some personal reasons as well. Using your math, with $1200/month being a really poor financial decision for a $450,000 wage earner, what does that say about the people here who make a fraction of that and don't buy 7 year old used Hondas? How about the $150k guy who has a $400/month lease payment? Trainwreck? Understand i'm not saying that buying a used car is wrong, just ridiculous in this example. During the first year of saving that money up to buy that old car what do you do -ride a bike? Certainly, anyone who choses can get off the car payment wagon whenever they want to. Kid needs a car? My daughter is 12 years old and is saving for her first car. In the summer, she will work for me 2-3 days a week on my file imaging project and make money for her car fund. At 16, I will match whatever she has saved and we will buy her a car for cash. She will be responsible for paying the insurance for that car. My assumption is that she will be more careful if she knows that the bill gets much higher with accidents. Good luck with that! How lucky she is that she can actually earn money as a 12 year old. Not to get side tracked, but i'm about ten years ahead of you with the ages of my kids and i disagree with your plan. But I'll keep this to cars for kids. When my first came up for a car i bought him a 5 year old Pontiac Grand Prix with 55k on the clock. No warranty, but car faxed showed it was an off lease car with one bank owner before it went to auction about a month before we bought it. We had the car checked by our mechanic and it was in excellent condition. I paid 7k for the car, about the going rate. Within a year the car had two major break downs- the transmission and the ECU. Total cost to repair-$4000. Then within a year the car needed a variety of minor repairs totalling about another $1000. So all up, in two years this low cost used car in excellent shape cost us about $12k. So we took the car down to the local Honda dealer and bought a new Civic LX. I bought the car because the mileage he was then driving killed any leasing opportunity. Now kid two comes up for a car and i leased her a new Civic DX for $188 a month for 36 months. The car stayed under warranty through the entire lease period. Total cost to me-about $6800. Relativly speaking-a good deal! My daugher had a new car and we had no worries. Kid number three comes up and I buy him my daughter's Civic from Honda for 8k. The car was problem free until last night, when it was totalled in an accident in center city Philly. On a side note my accross the street neighbor's daughter smacked my neighbor's S550 into a parked car last night. It wasn't a good night for kid driver's on our street last night. She just got her license on Friday. back on point, there is more than one way to skin a cat. leasing turned out to be the cheapest option for us. Indy, while your plan is to buy a used car- know going in that leasing a cheap car for her might be an option to consider. Lemons and fraud abound. My neighbor just had Honda buy back his new Accord. A friend is in the same process with an Accord. Some states don't have consumer protection laws preventing the resale of these vehicles. Something BMW took great advantage of with their 20002 seven series debacle. Want a boat? Not until I have the cash for it. I have no desire to be saddled to a $700/month boat payment just so I can have a boat like my neighbor has. Leverage for a house or investment real estate with appreciation potential I understand...leverage for a toy is not the way I do things...at least not in the 20+ years since I finished school and had my epiphany. $400K in his 401K? How in the H- is he going to maintain his standard of living with that little put away over a 15-year career? My standard of living is considerably cheaper (partly due to geography and partly due to choices) and I have more than that in retirement. I don't think I have nearly enough at this point, so if I were in his shoes, I'd be very concerned, especially with the monthly nut he's got to cover. $400k isn't unreasonable. Figure he's made about 3 million over his career. Depending on matches/contribution amounts etc. For the first five years or so, most people are light on contributions as they are trying to max out cash flow. Retirement savings is one of those bridges we'll cross later. In the middle years 5 thru ?, we move beyond survival and increase our contributions. Our guy hasn't reached the next stage yet so that's where he is. So the 400k number is OK. Also, our guy has taken money that could potentially be used to support him in retirement and invested it in other arenas. The vaca home, for example. Private school? Killer vacation? These are all choices. If you are struggling to cover your nut, they are still choices that can be passed on. I want the best for my kid too, but if it comes down to private school and being liquidated, that choice gets much simpler. If I am in BK, private school is gone anyway. This guy may need to just swallow his pride and make some hard changes...the kids may have to go to public school for awhile. The wife may have to get a job. The boat may well have to be sold at half the original price and the deficiency might have to be renegotiated and paid off at say, $300/month. Supper may be tuna salad sandwiches for awhile instead of eating out 4-5 nights a week. Clothes may have to be bought at Old Navy. This year's vacation may have to be tent camping in a state park with some canoeing and fishing on the park lake. Life could be worse. Once your friend cycles through a rough patch like that, I'm guessing he'll use leverage very carefully as a result. Our guy isn't struggling. Until an unprecendented market event reduced his income he was banking 25% of his pay. I think that qualifies him to go out to dinner and take nice vacations and not live like a hermit. 40 years ago, something like 4% of the population had a mortgage. Today, it is more like 4% DON'T have a mortgage. Can we go back to those standards? Probably not to that degree, but I believe for many individuals, it's certainly possible. Did I say it was easy and/or fun? Heck no! I'm not saying that your friend is wrong to have a mortgage and use leverage. What I am saying is that use of leverage comes with risk and potential consequences and to not consider the possibility that you could get squeezed by debt is at least short-sighted. If your friend gets squeezed and liquidated while living what 95% of the population would consider the good life, he's not going to find much sympathy from the guy that's carrying a lunchbucket with a bologna sandwich and driving a 15-year old Ford Ranger while fretting about his overtime being gone and wondering how he's gonna make the next payment on that modular home he bought three years ago. That's as diplomatic as I can put it. I wish your friend well, but if he's serious about digging out of the hole he is in, he might want to read Dave Ramsey's "Total Money Makeover" and "The Millionaire Next Door" (Stanley/Danko). You keep saying my friend. My guy is totally fictional. For some of the house problems i took from my own experience. Ok, so what you are saying is that everyone who who gets a mortgage is short sighted? After-all lightning could strike any of us? Maybe the answer is save up to buy a cheap used house. Live in a tent, bank the mortgage payments and then buy a bigger tent with the savings. Sooner or later the amount saved could be used to buy real house for cash! Yup, that'll work! Point is, we can take saving money to the ridiculous. I do know a guy who worked for years for Pratt and Whitney in Florida. He's an engineer. He lived, first with his parents until he was 35, not kicking in. And then in a van for about five years at a county park. The guy had well over a million bucks in the bank and finally bought a house in Ft Pierce FL. We found out about the money when he confided in his mother, my mother-in-law, and she told us how much money he had. Our only question- When was the last time he took a shower? After-all, water costs money.[/quote]You guys need F lives…
[quote=BondGuy]
...And just for the ofishall record I'm 24.[/quote] Having very little experience with living life - I don't think you're in a great position to go through "life scenarios". On my part - I think they're mostly personal choices. I don't tell people what to do unless they ask me (unless any problems they have as a result of poor choices could affect me). BUT - big but. When one is young - one has something terrific going in his favor. Time. And the 8th wonder of the world - compound interest. Plus - when you're young - you're not accustomed to the luxuries of life. Living without them isn't a deprivation. So when you're young - it's the ideal time to sock away lots of money (if you're making it). And concentrate on the luxuries down the road. Thirty years later - even with conservative investments - unless the world falls apart - you won't have to worry about flying first class and staying in luxury hotels. Robynsomeone should close this thread
Or get it back on topic.someone should close this thread
[quote=BondGuy]
What liberal use of credit? The guy had an easily affordable mortgage and a boat loan. Before the deal he had a million dollar net worth even with this debt. Good to know that at least qualifies him as “not a train wreck!” Relatively speaking he’s in the same financial position as 112k earner with a 112k mortgage to support. That’s not out of line in anyone’s book. He is far from boxed in.Understand i'm not saying that buying a used car is wrong, just ridiculous in this example. During the first year of saving that money up to buy that old car what do you do -ride a bike? Certainly, anyone who choses can get off the car payment wagon whenever they want to. [/quote]
I guess I fall somewhere between you and Indy, although leaning more towards Indy's perspective.
Your hypothetical broker was blessed with a thriving business and a nice income. Even taking into account the lean early years, he was in a position where he could have lived a comfortable life and yet put himself on a path to financial independence, where a drop in income such as this year's hardly put a dent in his daily life.
Instead, like many in our business, he chose to let his expenses grow as quickly as his income. Living like the good years would go on forever....
Instead of leasing 2 new luxury cars, he could have purchased a pair of 2 year old Lexus for cash and kept them for 3-4 years. Far less expensive than leasing. Maybe the first time around he might have bought it on a note, but soon enough he could have bought them for cash.
The beach house and the boat? MAYBE you could argue the beach house was an investment, but only over the very long term. Unless he was going to set it up to provide rental income, it's just another expensive luxury.
Take the fancy vacation every other year...and in the off years spend a week in the beach house, or go camping, or take several "long weekend" mini-vacations throughout the year. More savings over his current lifestyle.
True - he was already banking 25% of his income...what if he had been putting away 30-40% in the good years? He would have had a much greater cushion and also a smaller nut to cover when things did turn down.
Food for thought.
RobynG needs to get a series 7 and go into the business. She has all the answers.
Good posts. I should become a lawyer like RobinG. Moral stable income stream than this broker gig.
[quote=HymanRoth] [quote=BondGuy]
What liberal use of credit? The guy had an easily affordable mortgage and a boat loan. Before the deal he had a million dollar net worth even with this debt. Good to know that at least qualifies him as "not a train wreck!" Relatively speaking he's in the same financial position as 112k earner with a 112k mortgage to support. That's not out of line in anyone's book. He is far from boxed in.Understand i'm not saying that buying a used car is wrong, just ridiculous in this example. During the first year of saving that money up to buy that old car what do you do -ride a bike? Certainly, anyone who choses can get off the car payment wagon whenever they want to. [/quote]
I guess I fall somewhere between you and Indy, although leaning more towards Indy's perspective.
Your hypothetical broker was blessed with a thriving business and a nice income. Even taking into account the lean early years, he was in a position where he could have lived a comfortable life and yet put himself on a path to financial independence, where a drop in income such as this year's hardly put a dent in his daily life.
Instead, like many in our business, he chose to let his expenses grow as quickly as his income. Living like the good years would go on forever....
Instead of leasing 2 new luxury cars, he could have purchased a pair of 2 year old Lexus for cash and kept them for 3-4 years. Far less expensive than leasing. Maybe the first time around he might have bought it on a note, but soon enough he could have bought them for cash.
The beach house and the boat? MAYBE you could argue the beach house was an investment, but only over the very long term. Unless he was going to set it up to provide rental income, it's just another expensive luxury.
Take the fancy vacation every other year...and in the off years spend a week in the beach house, or go camping, or take several "long weekend" mini-vacations throughout the year. More savings over his current lifestyle.
True - he was already banking 25% of his income...what if he had been putting away 30-40% in the good years? He would have had a much greater cushion and also a smaller nut to cover when things did turn down.
Food for thought.
[/quote] Hyman, you are not wrong. And for that matter, neither is Indy. The question is; where do you draw the line? That being the line between thrift and spendthrift. I think you guys are being overly cautious. One can build a house strong enough to survive a cat 5 hurricane, but then it burns down from an unattended candle. My guy has a net worth in excess of two million dollars, but gee, he needs a lot more?
[quote=RobynG][quote=BondGuy]
...And just for the ofishall record I'm 24.[/quote] Having very little experience with living life - I don't think you're in a great position to go through "life scenarios". On my part - I think they're mostly personal choices. I don't tell people what to do unless they ask me (unless any problems they have as a result of poor choices could affect me). BUT - big but. When one is young - one has something terrific going in his favor. Time. And the 8th wonder of the world - compound interest. Plus - when you're young - you're not accustomed to the luxuries of life. Living without them isn't a deprivation. So when you're young - it's the ideal time to sock away lots of money (if you're making it). And concentrate on the luxuries down the road. Thirty years later - even with conservative investments - unless the world falls apart - you won't have to worry about flying first class and staying in luxury hotels. Robyn [/quote] I disagree, at age 24 i believe i've got all the answers.RobynG made a comment to the effect that she didn't know how old i was but that my comments lacked historical perspective. Just for fun i replied that i was 24. Interestingly, I also asked how or why my post lacked such perspective. Instead of answering my question she bit on the 24 thing and said at that age i wasn't qualified to give life experience advice. Jimi hendrix died when he was 27. How old do you have to be to have lived a life? But actually, I agree with RobynG. I'm not qualified to give life experience advice. For that reason i don't. But business advice from the vantage point of 26 years in the same business? Yeah that i can do.What the heck is with the age 24 thing?
RobynG made a comment to the effect that she didn't know how old i was but that my comments lacked historical perspective. Just for fun i replied that i was 24. Interestingly, I also asked how or why my post lacked such perspective. Instead of answering my question she bit on the 24 thing and said at that age i wasn't qualified to give life experience advice. Jimi hendrix died when he was 27. How old do you have to be to have lived a life? But actually, I agree with RobynG. I'm not qualified to give life experience advice. For that reason i don't. But business advice from the vantage point of 26 years in the same business? Yeah that i can do. [/quote] Figured you were jerking my chain - just didn't know how hard. Now I know. I saw Jimi Hendrix at Woodstock. He was a great guitar player (even according to Eric Clapton). Don't think I'd care for him to manage my money .[quote=iceco1d]What the heck is with the age 24 thing?
Ha ha, well, for you kids and old folks alike, if you get a chance, visit the Jimi Hendrix museum in Seattle. Easy on the Purple Haze, though. For my part, maybe a little of what BG feels, I'd much rather work with people who have money, than train folks to skip lattes and fund their IRA. And I'm going to enjoy my life. Because compound interest (minus expenses) has been negative over the past years, I'm glad I went for the big house and nice lifestyle. Robyn, you've been a good girl, good for you! Now go out a stimulate this economy!
etfconnect? I have never heard that website before. thanks. lol
Thanks Ice!
RobynG- just havin' a little fun. Still, where did my posts lack historical perspective?Squash
Doesn’t that effect your credit score negatively to close out an account? Does that get reported on u4 or finra?
[quote=Mishigun]
Ha ha, well, for you kids and old folks alike, if you get a chance, visit the Jimi Hendrix museum in Seattle. Easy on the Purple Haze, though. For my part, maybe a little of what BG feels, I'd much rather work with people who have money, than train folks to skip lattes and fund their IRA. And I'm going to enjoy my life. Because compound interest (minus expenses) has been negative over the past years, I'm glad I went for the big house and nice lifestyle. Robyn, you've been a good girl, good for you! Now go out a stimulate this economy!
[/quote] Compound interest has been negative in equities. But it's been fine in fixed income. Our IRA accounts are up 6% compounded annually for the last decade. I know the taxable accounts (spending accounts) haven't been negative - because they've been pretty stable - and we haven't been living on day old bread. You don't have to get me to do my part in terms of spending money. My husband is fond of reminding me of the quote - "Traveling abroad isn't expensive. Now traveling *with* a broad - that's expensive." BTW - one of the silliest things I hear financial planners say is you'll spend less money after you retire. We spend more. Stands to reason. If a husband and wife are both working - and don't have kids (our situation) - they don't have time to spend money until they retire. RobynIt lowers your available credit, so you available credit(which is factored into your score) would decrease, but it would only decrease your credit score if you available credit was severley hampered by closing that account. Also I closed it as opposed to the credit company and that makes a difference. Why would it be reported on my U4 or finra? I am not claiming bankruptcy. It is simply a credit obligation(like all credit cards) it just happens to be closed from further use... Similar thing happened when my wife's Wamu card was taken over, they tried to raise her rate 10% so she opted out, and by doing that she can't use the card anymore...Squash
Doesn’t that effect your credit score negatively to close out an account? Does that get reported on u4 or finra?
[quote=BondGuy]Thanks Ice!
RobynG- just havin' a little fun. Still, where did my posts lack historical perspective?[/quote] I thought you were being a little hard on younger people who can't seem to make ends meet today. And I was simply pointing out that the cost of living for a lot of basics (like housing and education and cars and health care - etc.) has gone up a lot more than incomes since we got out of school. And it was possible to indulge in some pretty nice things when you started to make some money without "breaking the bank". For example - we enjoyed our first 3 star dining experiences in France when we were in our late 20's. Dinner for 2 ran about $100-150. Today - you're talking low 4 figures for the same meal. Even the CPI - which badly distorts the true cost of living as a result of things like "owners' equivalent rent" - hedonics (you can read stuff like this http://seekingalpha.com/article/24933-substitutions-and-hedonics-inflation-data-absurdities) - and leaving out items that almost everyone pays (like taxes and insurance)says you need 5.2 (after-tax) dollars today for every dollar you needed in 1971. IOW - I have some sympathy for the younger person who is starting to make some good dough - but finds that it doesn't go as far as he thought he would (not so much sympathy though that I think that person should "overleverage" to buy a lifestyle bigger than he can afford). Perhaps I have you confused with someone else in terms of being a little hard (in which case I apologize) - but that was my point. Back to the garden to finish today's "to-do" list. Robyn[quote=Mishigun]
Ha ha, well, for you kids and old folks alike, if you get a chance, visit the Jimi Hendrix museum in Seattle. Easy on the Purple Haze, though. For my part, maybe a little of what BG feels, I’d much rather work with people who have money, than train folks to skip lattes and fund their IRA. And I’m going to enjoy my life. Because compound interest (minus expenses) has been negative over the past years, I’m glad I went for the big house and nice lifestyle. Robyn, you’ve been a good girl, good for you! Now go out a stimulate this economy!
[/quote]Right, because as we all know it makes far more sense to use the returns of the last few years to make your investment decisions, as opposed to buying things when they are cheap.
Good luck with that big house and that big monthly nut too.
I haven’t made a car payment for 18 months now, and if all goes according to plan I’ll never make one again. If I have to drive an older car for an extra year before I trade up to accomplish that, it’s all good with me. I’m committed to continually building my net worth, not my expenses. That’s a much bigger thing than “skipping lattes so I can fund an IRA”, and I make every effort to teach that to my clients and my kids too.
After all, there’s a HUGE difference between being wealthy and merely having a nice income.
I’m sure no one will “win” this pissing contest. You’re right, for you, of course.
The kind of wealth and net worth I'm building doesn't live in IRAs. Part of that is investing in a couple of businesses and generally wasting less in taxes by aligning personal and business interests. I'm sure a few here know what I'm talking about. Yes, I know how run a fleet of used luxury cars. As for compounding at 6% using fixed income in IRAs, that "nice". Heck, take the latte money and buy some insurance, at the very least.Mishigun - You might have forgotten there are people with rollover IRAs from qualified pension/profit sharing plans (lawyers like me and my husband - doctors - etc.). Ours are in 7 figures - and we know people in the same situation. Although we have put some of the rollover money into Roths - there is no way to move all of it without having one huge current tax bill. Which doesn’t make sense when you’re over 60 - not enough time to make up the money lost on taxes. I’ve gone over this with our accountant - and run some “what if” spreadsheets. Best we can figure out - if you’re over 55 - and live an average life span (or shorter) - the math of the conversion doesn’t work.
2010 will be a little better than prior years. Because - unless the tax laws change - you'll be able to convert even if you have a reasonably high income - and you can spread the tax bill over 2 years. Still - the conversion isn't likely to make sense tax-wise. So we are facing some pretty big required minimum distributions about 9 years down the road. My best thinking at this point is the possibility of taking pre-tax IRA money and turning it into some kind of out-of-IRA annuity (charitable or otherwise). Where the first 13 years or so will be mostly a return of principal - as opposed to income. But this is a very fuzzy thought at this point - because my husband and I may both be dead by then. And who knows what the tax laws will look like? I have no intention of turning over control of any of our money to a third party to save taxes possibly owed almost a decade down the road. BTW - what kind of insurance were you thinking about? Don't need life insurance - long term care insurane - anything like that. But if you can sell me some windstorm coverage from a company that has a higher liquid net worth than I do after State Farm leaves Florida - give me a call. As for cars. You know - I would like to like cars. I've been looking for a new car for 2 years now (I drive a 1999 Lexus - bought new) - and can't find one I like. Even went to the Paris auto show last October when we were in Paris to see what was new. The Lexus 460 drives like a Buick IMO (and you can't fit 2 golf bags in the trunks of the smaller models without a hassle). I liked several of the BMWs in terms of "road feel" - but the interiors were kind of spartan considering what the cars cost. All the "mid-life crisis" guys here drive Porsches - but I don't know how to use a manual transmission - and am too short to deal with the clutch pedal even if I did know how to use it. Plus - there's the golf bag problem. Any suggestions? BTW - I agree that people who are so inclined should explore starting their own businesses. Both my husband and I had our own law firms a reasonably short period of time after we got out of law school. Worked out well financially. OTOH - being a small business owner is a big PITA unless you like to deal with employees - payroll taxes - the people who keep all your equipment running - the landlord - clients - etc. - etc. By the time I quit - I was spending maybe 1/3 of my time practicing law - and the rest on administrative stuff (which I hated). RobynOnly a lawyer would come on a down and out chatboard titled “Anyone here having to consider bankruptcy?” and talk about how bummed they are going to be in 9 years when the RMD’s kick in because they’re so brilliant and wealthy. You’re in your 60’s and have no kids. You should probably be much wealthier than you actually are. None the less…shouldn’t you be in the clubhouse sipping mojitos and talking about your handicap or something else completely irrelevant.
Slipping triptronic and sipping mojitos. Good call, Fawn. Everything I ever did in this business was mostly about enjoying my children, and financing them.
Yup - I guess I could have worked longer - and had more money and a couple of stents by now. Mea culpa. As for down and out - we (husband and I) employ people who are in much more dire straits than the OP here - many of whom have worked for us for years. The people who clean our house - do our landscaping - handle household repairs - etc. The guy who does our household repairs was in construction - steady job - and did repairs on weekends - until there were no more construction jobs left - and now all he has left is repairs (luckily - his wife is an office manager at a medical office with a steady source of income and medical insurance). My BIL in Michigan used to sell chemicals to the auto industry. Earning low six figures. Job gone. He is now doing household repairs too (luckily - he wife also has a steady job with medical insurance). Typical stories for a lot of workers these days - including those who work for us. And not a single one is talking bankruptcy. Because they all lived well within their means for years with minor indulgences - whether it was a Harley - or some hunting trips in deer season. I cannot imagine telling them about OP's story. They would probably say he's getting what he deserves. We have our own personal WPA going now. Things that we might have put off until next year - we do now. And we keep thinking up new projects. Also - we spend a lot of time helping the people who help us to sort things out when they have problems. Am I as rich as I could have been? No. Am I as good as I can be? No. But I like to think that I am an ok person. Do you have contact with blue collar workers or similar these days? What have you been seeing? Robyn (too old for mojitos)Only a lawyer would come on a down and out chatboard titled “Anyone here having to consider bankruptcy?” and talk about how bummed they are going to be in 9 years when the RMD’s kick in because they’re so brilliant and wealthy. You’re in your 60’s and have no kids. You should probably be much wealthier than you actually are. None the less…shouldn’t you be in the clubhouse sipping mojitos and talking about your handicap or something else completely irrelevant.
are you just bored or something?
Okay, “Robyn”, thanks for all the patronizing details of your “life”, now maybe consider getting some contact with blue collar workers or similar these days.
[quote=RobynG]
Still - the conversion isn’t likely to make sense tax-wise. [/quote]Are you operating under the presumption that your marginal tax rates will remain the same?
Have you considered the impact of estate taxes? Your desired legacy?
Consider the fact that most assets right now - other than treasuries and cash - are valued quite a bit lower than they were only a few quarters ago, and that as hysteria subsides valuations might trend towards 'normal'.
These are all issues that you and your CPA might want to ponder as you review your spreadsheets.
Food for thought.
Those RMD's can be a biotch.
Robyn-I do think you’ve confused me with someone else.
Now back to our regularly scheduled thread diversion.I have a client like robyn g. They like to have large account with wirehouses to have an ego but never appreciates what u do for them. When their account moves up n value it’s the market but blames u for any losses. They ll try to squeeze out every penny out of the bond credit but never says thank u for any discounts. They also think that they have more knowledge in investments but realistically have less than those fa who just passes series 7
Oh, you think she might be cheap? :). SK, one of the great honors of being a humble servant to our clients is we get their stories. Do ya think Robyn really just wants a life? I see your client. Maybe she just wants to mingle with the masses, before Uncle Sam takes milks that RMD. If I was her, I might go out and buy the compleat works of Led Zepplin while I was still breathing.
[quote=iceco1d][quote=RobynG]
. All the "mid-life crisis" guys here drive Porsches - but I don't know how to use a manual transmission - and am too short to deal with the clutch pedal even if I did know how to use it. [/quote] Simple. Tiptronic.[/quote] Interesting: http://en.wikipedia.org/wiki/Tiptronic Thanks - never heard of it before. Robynshe’s a bored house wife
I got wrong link: http://en.wikipedia.org/wiki/Histrionic_personality_disorder
I don't generalize about FAs - and you shouldn't generalize about clients. I have about as much ego involved in picking and staying with an FA (or a financial services firm) as I do when picking and staying with a health care provider. I am looking for a good degree of knowledge - competent service - and reasonable pricing - in both (e.g., I will never again go to a health care provider where 75% of the clients are un/under-insured and my bills are twice what the Mayo Clinic charges). Not that my accounts demand much service (there's not much "turnover"). As for not appreciating things - speak for your own clients - not me. E.g., I've sent flowers to one of my FAs (a woman) as a "thank you" for some great help with something. Other gifts for some OTT service. I freely admit I have expertise in only one area - fixed income. And I know more than the average FA (I don't necessarily know what you make on things - but I do know what I pay - which is all that matters to me). And I have both the time and inclination to do research when necessary. Let me give you a "for example". I assume at least some of you have clients with muni bonds in insurance wrappers where the wrappers are now next to worthless (or worthless). Have any of you personally undertaken an analysis of the underlying credit quality of those bonds in the last year (I always used to look at underlying credit quality of insured munis when I bought them - but never looked again until last year) - something that goes behind the bond ratings? Admittedly - after doing a lot of work (helped in some cases by an FA who dug up ancient prospectuses) - I wound up identifying some bonds that I couldn't figure out in terms of sell/hold. But I did the best I could short of attending water utility board meetings. If any issues go belly up - I will not blame anyone. Because no one could have foreseen what is happening today 5 years ago. Do you do any independent credit analysis on companies which issue annuities? I don't own annuities - but my father owns some immediate fixed income annuities. Some from AIG and other "fallen stars". In his case - it doesn't make much of a difference now - because the cash value of those annuities is almost zilch (he is 91 and bought the annuities quite a while back). But it would make a big difference in terms of a client investing today. Have you ever done TA on any NYSE listed corporates your clients own (you can actually get the price data on listed bonds and chart them)? To figure out whether to buy/sell/hold? Note that I wouldn't blame you for not doing this kind of work (you probably have lots of clients with tons of different investments). And you probably have bigger fish to fry these days - the clients who are at their wit's end due to losses in portfolio value - reduced dividends - etc. (one reason I haven't spoken to either of my FA's at full service firms more than a few times in the last year - they're frazzled). But don't assume something about a person without knowing that person. And you know - if you hate a client - you can fire a client. At some point in my law practice - I figured the 20% of my clients that I hated took more than 20% of my time and were responsible for less than 20% of the business gross. They weren't worth it - so I "fired" all of them. Clients can fire professionals - and professionals can fire clients. Life is too short to deal with people you don't like - for whatever reason. Robyn P.S. A lot of you guys (and women) seem to be really tense and defensive. Which I can understand these days. It's a ridiculously difficult period in terms of investing. Just don't use me as a pinata because I happen to be here.I have a client like robyn g. They like to have large account with wirehouses to have an ego but never appreciates what u do for them. When their account moves up n value it’s the market but blames u for any losses. They ll try to squeeze out every penny out of the bond credit but never says thank u for any discounts. They also think that they have more knowledge in investments but realistically have less than those fa who just passes series 7
Robyn,
Your father's "immediate fixed income annuity" would not have ALMOST zilch in cash value. It would BE zilch. It has been zilch since the day he annuitized it. That is one of the main features (not necessarily benefits) of an immediate annuity. Lifetime income (or some various form of it) and no current cash value.This is a business about building trusts and relationships. Most of the folks here have learned a lot about reading people, and many might question your "cred" based on some of the things you have said. Even newby door knockers get more "instant cred" than the hit I get from you. You don't demonstrate much people knowlege, I give you a "pass" on your exposure to personal finance concepts.
No one cares about your life experiences and your knowledge in bonds so why don’t u just move on.
[quote=ytrewq]Robyn,
Your father's "immediate fixed income annuity" would not have ALMOST zilch in cash value. It would BE zilch. It has been zilch since the day he annuitized it. That is one of the main features (not necessarily benefits) of an immediate annuity. Lifetime income (or some various form of it) and no current cash value.[/quote] We actually called AIG (among other companies). They were willing to cash him out at about 8-9% of cash he paid. Which sounds about right. Fixed annuities are X% return of principal - Y% in interest. Until you're about 12-13 years into them - you are still getting mostly return of principal. That's the way the IRS sees it - and that's apparently the way the company sees it too. FWIW - I was doing this math in terms of figuring out what the annuity would be worth if the company went under and we had to make a claim under state insurance guaranty fund laws. YMMV depending on what question you're trying to answer. Robyn[quote=Mishigun]
This is a business about building trusts and relationships. Most of the folks here have learned a lot about reading people, and many might question your "cred" based on some of the things you have said. Even newby door knockers get more "instant cred" than the hit I get from you. You don't demonstrate much people knowlege, I give you a "pass" on your exposure to personal finance concepts.
[/quote] You're someone who sells stuff. I am not selling anything. I don't have to please anyone - except my husband . Think about that. RobynRobyn, if he’s the only one that you are trying to please, just take out your teeth.
Many of you guys are a pretty sorry excuse for your profession. What is this - a chat board just to commiserate with one another and bad mouth clients? Just FWIW - I get at least 2 or more cold calls a week. Today’s was Suntrust from Atlanta - whatever that is in terms of a brokerage firm - don’t have a clue (at 12:15 pm - don’t they know when people eat lunch?). But even though I am always - “thanks but no thanks” - I try to be positive - and try to have some encouraging words to say to the younger FAs who have to “cold call”. Because I was there once in terms of trying to get clients - and because I am a civilized person. Which - apparently - you are not. Luckily - I will not take out what you say on them. Robyn
[quote=anonymous]
Don't you have 30% credit card interest because you have proven yourself uncredit worthy? Instead of going to another firm, shouldn't you be looking for a different career?
If you quit making payments on your debt because you truly can't afford to pay, eventually you'll be able to settle for 40% or less on the dollar.
[/quote] Does the idea of not paying until collections screw with your license in some way?[quote=RobynG][quote=Mishigun]
This is a business about building trusts and relationships. Most of the folks here have learned a lot about reading people, and many might question your "cred" based on some of the things you have said. Even newby door knockers get more "instant cred" than the hit I get from you. You don't demonstrate much people knowlege, I give you a "pass" on your exposure to personal finance concepts.
[/quote] You're someone who sells stuff. I am not selling anything. I don't have to please anyone - except my husband . Think about that. Robyn[/quote] Now we're getting somewhere. We all sell our ideas continuously, and selling is totally based on emotions and relationships and trust. So you have to admit, the anonymous comment about taking out your false teeth is pretty funny. Maybe it takes an old broker to appreciate it, but there's not a mean bone in it.We post here because sometimes, this is the f****** coolest profession in the world. And you know it. But I'm starting to wonder if you are PD groupie from way back...Many of you guys are a pretty sorry excuse for your profession. What is this - a chat board just to commiserate with one another and bad mouth clients? Just FWIW - I get at least 2 or more cold calls a week. Today’s was Suntrust from Atlanta - whatever that is in terms of a brokerage firm - don’t have a clue (at 12:15 pm - don’t they know when people eat lunch?). But even though I am always - “thanks but no thanks” - I try to be positive - and try to have some encouraging words to say to the younger FAs who have to “cold call”. Because I was there once in terms of trying to get clients - and because I am a civilized person. Which - apparently - you are not. Luckily - I will not take out what you say on them. Robyn
[quote=ytrewq]Robyn,
Your father's "immediate fixed income annuity" would not have ALMOST zilch in cash value. It would BE zilch. It has been zilch since the day he annuitized it. That is one of the main features (not necessarily benefits) of an immediate annuity. Lifetime income (or some various form of it) and no current cash value.[/quote]"Cash Value" used as an insurance term would be zero.
However, the income stream derived from the annuity does have a present value, which is dependent upon mortality assumptions and the discount rate you select. I would assume that is what RobynG means speaking from the standpoint of an educated layperson.
As an advisor, wouldn't you be expected to make an effort to understand what people are actually trying to communicate rather than nitpicking?
Robyn, you do realize that it was joke that was brought on by you saying, "I don't have to please anyone - except my husband . Think about that."? It comes from an old joke. Question: "What's the perfect woman?" Answer: "Someone waist high, with no teeth, and a flat head to hold your beer." Anyway, my apologies if you found this offensive. It was not my intention.Many of you guys are a pretty sorry excuse for your profession. What is this - a chat board just to commiserate with one another and bad mouth clients? Just FWIW - I get at least 2 or more cold calls a week. Today’s was Suntrust from Atlanta - whatever that is in terms of a brokerage firm - don’t have a clue (at 12:15 pm - don’t they know when people eat lunch?). But even though I am always - “thanks but no thanks” - I try to be positive - and try to have some encouraging words to say to the younger FAs who have to “cold call”. Because I was there once in terms of trying to get clients - and because I am a civilized person. Which - apparently - you are not. Luckily - I will not take out what you say on them. Robyn
Indy,
I’ve always enjoyed your posts and now I know why.
Its great to know there are other people who can live without asking a bank for every little or big purchase in their life. Banks are great but we can learn to live without a loan for everything.
For all the advisers considering Bankruptcy, how does it feel to be giving someone advice about finances when you can’t maintain your own? Shi**y I presume…
Guy at my MS branch, just got a pt job loading truck for major freight company M/W..3:am to 7:00am. 27.00 an hour and pays for his family health insurance. He did 400K in 2007, 300K in 2008. He told me and one other guy, at lunch last week. He rolls in now to the office at 7:30 instead of at 7:00...no one else notices the difference. Sign of the times.Indy,
I’ve always enjoyed your posts and now I know why.
Its great to know there are other people who can live without asking a bank for every little or big purchase in their life. Banks are great but we can learn to live without a loan for everything.
For all the advisers considering Bankruptcy, how does it feel to be giving someone advice about finances when you can’t maintain your own? Shi**y I presume…
its obvious that you’re not pleasing your husband enough or else you wouldn’t be spending hours on this board.
[quote=HymanRoth] [quote=ytrewq]Robyn,
Your father's "immediate fixed income annuity" would not have ALMOST zilch in cash value. It would BE zilch. It has been zilch since the day he annuitized it. That is one of the main features (not necessarily benefits) of an immediate annuity. Lifetime income (or some various form of it) and no current cash value.[/quote]"Cash Value" used as an insurance term would be zero.
However, the income stream derived from the annuity does have a present value, which is dependent upon mortality assumptions and the discount rate you select. I would assume that is what RobynG means speaking from the standpoint of an educated layperson.
As an advisor, wouldn't you be expected to make an effort to understand what people are actually trying to communicate rather than nitpicking?
[/quote] Yes Hyman, as an advisor, you are mostly right. However, start making trades based on your opinion of what someone "meant" versus what they actually told you verbatim to do and I bet you get yourself a complaint or lawsuit or two. I was not trying to play an advisor to RobynG. I was trying to play someone posting on an internet forum. Robyn was explaining, in detail, how she does far more thorough and accurate analysis and research than most "advisors" on this site. I politely pointed out a mistake of fact that she made concerning the "traditional" definition of an immediate annuity. I have no idea why you needed to define the calculation of present value of an immediate annuity. It was not part of the post. If you read Robyn's response you will see your assumption was, not suprisingly, wrong. She was offered a cash settlement in lieu of the annuitized payments remaining. Your effort to understand what Robyn meant (read not listen to her) would have been complaint/lawsuit #1. That nitpicking might have saved you and your client some money. Accuracy is important. You can't just assume you are all knowing.
[quote=ytrewq][quote=HymanRoth] [quote=ytrewq]Robyn,
Your father's "immediate fixed income annuity" would not have ALMOST zilch in cash value. It would BE zilch. It has been zilch since the day he annuitized it. That is one of the main features (not necessarily benefits) of an immediate annuity. Lifetime income (or some various form of it) and no current cash value.[/quote]"Cash Value" used as an insurance term would be zero.
However, the income stream derived from the annuity does have a present value, which is dependent upon mortality assumptions and the discount rate you select. I would assume that is what RobynG means speaking from the standpoint of an educated layperson.
As an advisor, wouldn't you be expected to make an effort to understand what people are actually trying to communicate rather than nitpicking?
[/quote] Yes Hyman, as an advisor, you are mostly right. However, start making trades based on your opinion of what someone "meant" versus what they actually told you verbatim to do and I bet you get yourself a complaint or lawsuit or two. I was not trying to play an advisor to RobynG. I was trying to play someone posting on an internet forum. Robyn was explaining, in detail, how she does far more thorough and accurate analysis and research than most "advisors" on this site. I politely pointed out a mistake of fact that she made concerning the "traditional" definition of an immediate annuity. I have no idea why you needed to define the calculation of present value of an immediate annuity. It was not part of the post. If you read Robyn's response you will see your assumption was, not suprisingly, wrong. She was offered a cash settlement in lieu of the annuitized payments remaining. Your effort to understand what Robyn meant (read not listen to her) would have been complaint/lawsuit #1. That nitpicking might have saved you and your client some money. Accuracy is important. You can't just assume you are all knowing.[/quote]
You are certainly entitle to your opinions, as am I.
By my perception, because you do not especially like Robyn's persona on this board, you chose to nitpick at a technicality, based upon her layperson's understanding of the term 'cash value'. I chose to try to understand what she was trying to communicate to us. Big difference IMO.
You don't understand why I was trying to explain the present value of the annuity stream of payments? My assumption was wrong? How do you think the annuity company came up with that cash-out settlement offer? Did they just guess a number?
If your client was the one receiving that settlement offer, how would you determine if it was reasonable? How would you explain your recommendation to your client?
Thanks for your concern regarding my processing of orders. Trust me junior, I don't act based upon what I "thought someone meant". Orders must be clear and unequivocal and confirmed before I process them.
Thanks for trying.
Hyman,
Your whole response is just like your prior post. BS!
1: I do not dislike Robyn. Nothing in my single post to her would suggest that I dislike her. As a matter of fact I like her a good bit more than I like you. On the whole, her posts are far more knowledgable than a "layperson". I do not have to "try to understand what she was trying to communicate to us". She is perfectly clear and coherent. 2: I am not nitpicking a technicality on cash value. I assumed it was zero as it is an immediate annuity. She pointed out that he was offered a cash value so it was not zero. You, in your infinite wisdom, assumed she was talking about the present value of an income stream. She was not. She was talking about actual cash value. I took her at her words. You assumed she did not know what she was talking about. You were wrong. 3: Had you taken my post as the words were written as opposed to "make an effort to understand what people are actually trying to communicate" and make up your own meanings, we wouldn't be bothered with this ridiculous back and forth. 4: You shouldn't have to ask for or demand trust. I may be your junior but it is pretty unlikely unless you have been an advisor for over 20 years. 5: I wasn't trying so no need to thank me. I was responding to your words not my opinion of your words.Lighten up Francis! Goes for pretty much everyone on here. I'm only pointing you two out because they were the last one at night and the first one this morning. Hyman, from reading your post you went to bed a little peeved at ytrewq. ytrewq you went to bed and woke up grumpy. "Can't we all just get along?" I've found myself more than a little off at times this past year. It's no wonder with the stress that we have all been under, it is immense. Anyone else notice that their patience is a lot less? I'm snapping at my kids for no reason, I have to take a step back and chill!
I have no problem with Robyn being on this board. She's livened things up a bit. You may not want to admit it but she probably knows more than most advisors when it comes to fixed income. But I ask you this Robyn, please no more talking about satisfying your husband! You're 61 and unless I see proof that you are a GILF, that is a visual image I don't want to have in my mind.
Robyn,
Keep posting...Everyone on here is posting about stress and how tough things are...but they're right here posting instead of talking with clients or prospects about what they should be doing right now. I like your posts...articulate, mature and spot on.Busy day today. But I want to clarify 2 things. I was an NASD arbitrator for a short period of time.
And - regarding the annuity - the "cash value" was the amount actually offered by AIG to my Dad. Haven't done the math - but I assume it is the difference between the amount he invested originally - and amount of his principal that has already been returned to him. I realize the company is under no obligation to do this. But he is 91 - and in excellent health. His Dad died at 96 - his Mom at 103. I assume the company was trying to make the best of a bad situation from its POV. RobynThe amount that they offered had nothing to do with how much he originally invested or how much principal was paid to him.
Rather, they are currently paying a 91 year old healthy man $xx/month for the rest of his life. They think that it would be cheaper for the insurance company to give him a lump sum payment of $Y, thus they are willing to do that. There are companies who make their living by giving lowball lumpsums to people in exchange for their annuity benefits. (Think J.G. Wentworth)[quote=bspears]Robyn,
Keep posting...Everyone on here is posting about stress and how tough things are...but they're right here posting instead of talking with clients or prospects about what they should be doing right now. I like your posts...articulate, mature and spot on. [/quote] Yeah, spow own, and in post-industrial, post racist, post sexist Americar, we neet sum Sheilas on this board. Spears, you go ahead and take all the new biz this year, and take the profits and pay the taxes. I'm on strike.I don't generalize about FAs - and you shouldn't generalize about clients. I have about as much ego involved in picking and staying with an FA (or a financial services firm) as I do when picking and staying with a health care provider. I am looking for a good degree of knowledge - competent service - and reasonable pricing - in both (e.g., I will never again go to a health care provider where 75% of the clients are un/under-insured and my bills are twice what the Mayo Clinic charges). Not that my accounts demand much service (there's not much "turnover"). As for not appreciating things - speak for your own clients - not me. E.g., I've sent flowers to one of my FAs (a woman) as a "thank you" for some great help with something. Other gifts for some OTT service. I freely admit I have expertise in only one area - fixed income. And I know more than the average FA (I don't necessarily know what you make on things - but I do know what I pay - which is all that matters to me). And I have both the time and inclination to do research when necessary. Let me give you a "for example". I assume at least some of you have clients with muni bonds in insurance wrappers where the wrappers are now next to worthless (or worthless). Have any of you personally undertaken an analysis of the underlying credit quality of those bonds in the last year (I always used to look at underlying credit quality of insured munis when I bought them - but never looked again until last year) - something that goes behind the bond ratings? Admittedly - after doing a lot of work (helped in some cases by an FA who dug up ancient prospectuses) - I wound up identifying some bonds that I couldn't figure out in terms of sell/hold. But I did the best I could short of attending water utility board meetings. If any issues go belly up - I will not blame anyone. Because no one could have foreseen what is happening today 5 years ago. Do you do any independent credit analysis on companies which issue annuities? I don't own annuities - but my father owns some immediate fixed income annuities. Some from AIG and other "fallen stars". In his case - it doesn't make much of a difference now - because the cash value of those annuities is almost zilch (he is 91 and bought the annuities quite a while back). But it would make a big difference in terms of a client investing today. Have you ever done TA on any NYSE listed corporates your clients own (you can actually get the price data on listed bonds and chart them)? To figure out whether to buy/sell/hold? Note that I wouldn't blame you for not doing this kind of work (you probably have lots of clients with tons of different investments). And you probably have bigger fish to fry these days - the clients who are at their wit's end due to losses in portfolio value - reduced dividends - etc. (one reason I haven't spoken to either of my FA's at full service firms more than a few times in the last year - they're frazzled). But don't assume something about a person without knowing that person. And you know - if you hate a client - you can fire a client. At some point in my law practice - I figured the 20% of my clients that I hated took more than 20% of my time and were responsible for less than 20% of the business gross. They weren't worth it - so I "fired" all of them. Clients can fire professionals - and professionals can fire clients. Life is too short to deal with people you don't like - for whatever reason. Robyn P.S. A lot of you guys (and women) seem to be really tense and defensive. Which I can understand these days. It's a ridiculously difficult period in terms of investing. Just don't use me as a pinata because I happen to be here. [/quote] Robyn, based on this post I'd rate you an informed buyer. That's not a bad thing, but! I like informed buyers but there is a problem. That is, their expertise at times gets in the way of a good deal. For example, today I had an IDA bond that for all intents and purposes is a G.O. bond. In fact, it's such a strong credit, we call it a back door G.O. bond. However, the credit backing the bond used an obscure authority to get the deal done leaving the issue with a less than stellar investment grade rating. This bond is an opportunity for those who invest in it. The problem with the "informed buyer" is that when bonds like this come on the market they go very fast. Faster than the informed buyer can ramp up their research machine. By the time they call back, the bond in most cases, is gone. For that reason trust is a major component of all my client relationships. Once we are beyond the intial get to know you stage, if you don't trust me, you are gone. That doesn't mean my clients need to buy everything I show them. It does mean they can turn me down for any reason, except "I've got to check it out myself. " The fact is, if this bond didn't fit their parameters, and didn't pass my sleep at night test, they wouldn't have gotten the call. Hopefully, you trust your advisors enough to defer to their judgement when a quick decision is called for.[quote=skbroker]I have a client like robyn g. They like to have large account with wirehouses to have an ego but never appreciates what u do for them. When their account moves up n value it’s the market but blames u for any losses. They ll try to squeeze out every penny out of the bond credit but never says thank u for any discounts. They also think that they have more knowledge in investments but realistically have less than those fa who just passes series 7
I might just be a dumb IAR, but if I was a fixed income investor, even a do-it-yourselfer, I’d probably be getting in touch with BondGuy. Not to pick his brain but to become a client. Hint: Robyn
No offense to BG, retail bond peddling is knowledge based, high touch and personal, and generally more expensive to clients. I’d go with ETF and managed sector funds ( discounted unrated munis, whatever) in a wrap, and focus on the bigger planning picture and service. And, nobody around in general is admitting much of anything about certain bonds that “blew up” recently. I realize you have to pick your time frames, I’m just wondering how much value gets added. Maybe BG is an exception, I doubt if he is a rocket scientist. He has just as much right as the Jones guy to specialize and make a living, I doubt if the result is much different.
I agree with what you say for the most part but his value is his knowledge and access that he has. As evidenced in his post about the back-door bond. To a conservative FI investor that is value.
[quote=BondGuy][
Robyn, based on this post I'd rate you an informed buyer. That's not a bad thing, but! I like informed buyers but there is a problem. That is, their expertise at times gets in the way of a good deal. For example, today I had an IDA bond that for all intents and purposes is a G.O. bond. In fact, it's such a strong credit, we call it a back door G.O. bond. However, the credit backing the bond used an obscure authority to get the deal done leaving the issue with a less than stellar investment grade rating. This bond is an opportunity for those who invest in it. The problem with the "informed buyer" is that when bonds like this come on the market they go very fast. Faster than the informed buyer can ramp up their research machine. By the time they call back, the bond in most cases, is gone. For that reason trust is a major component of all my client relationships. Once we are beyond the intial get to know you stage, if you don't trust me, you are gone. That doesn't mean my clients need to buy everything I show them. It does mean they can turn me down for any reason, except "I've got to check it out myself. " The fact is, if this bond didn't fit their parameters, and didn't pass my sleep at night test, they wouldn't have gotten the call. Hopefully, you trust your advisors enough to defer to their judgement when a quick decision is called for. [/quote] Interesting post - but . I am better when it comes to interest rate analysis than credit quality analysis. So I decided a *really* long time ago that I would only buy state/city/county GOs with strong credit ratings - and higher quality essential services revenue bonds. After the last year - well I've been so nervous (doesn't make me unique) that I've been sticking with state GO's. I did a fair amount of "opportunistic buying" in the last year or so when hedge funds and the like were throwing munis out the window. Got some pretty good deals. A general suggestion in case you guys are trying to juggle a lot of balls. I assume most/all of you have access to data. Keep a running chart of the Bond Buyer Index somewhere (unfortunately - the muni bond futures contract is history - I used to like that too). It was easy last year seeing when the market was going nuts and it was time to "go shopping". I used to do a lot of corporates (straight debt - no preferreds). Over the years - I got rid of most of them due to credit quality concerns (sold Ford, GM, etc. years ago). Sold Nationsbank (BAC) early this year. And now have only 2 individual corporates left (and a small trading position in a junk ETF). I no longer trust credit ratings - and have concerns watching the government trying to "strong arm" GM/Chrysler bondholders into giving up valid claims against debtor assets. Reminds me of when ITT broke into 3 parts and strong-armed its bondholders (I was one) with a below-market deal with the threat - "we'll turn the company into junk if you don't take it". I would rather wait for callable or other CD yields to go up than get involved with individual corporate bonds again. I don't think this bothers my FAs - because I have been with them so long (longest is 20+ years - and shortest is perhaps 5 - and that is at E*Trade) that they know what I like to buy. They don't bother me with stuff they know I won't buy - and I call them when I see items of interest. Even if they're a little weird (like I own some "yield curve inversion CDs" - a portfolio manager friend of mine freaked out when he saw them - didn't understand how they could be sold in the retail market - on my part - I think they're about as easy to understand as TIPS - which aren't all that easy IMO although everyone is recommending them these days). IOW - I have always been a "belt and suspenders" kind of investor. And now I'm wearing two belts and two sets of suspenders. Really boring. Getting some extra BP won't change my lifestyle - but may cause me to lose sleep. Not worth it (at least for me). Obviously - other investors may be a lot different than I am. And what you're talking about may be of great value to them. Now I do need a little financial excitement once in a while. So I system trade part of my IRA (mostly in equities). But I have had just about all the excitement I can stand recently! And this year - I've made about as much as I lost last year. Running hard to stay in place . If you have a great trading system for this market - let me know . I hope I haven't offended anyone by saying too much about myself. But sometimes I think it would be a useful exercise if every individual investor spent a couple of hours writing a short essay about his investments - with emphasis on goals - and special emphasis on risk tolerance - and showing it to his FA. And this would be a great time to do it IMO - because so much conventional wisdom (like buying bank stocks because the dividends were "safe") has been blown out of the water in the last year. RobynDuplicate.
[QUOTE]Robyn, you do realize that it was joke that was brought on by you saying, “I don’t have to please anyone - except my husband . Think about that.”?
It comes from an old joke. Question: "What's the perfect woman?" Answer: "Someone waist high, with no teeth, and a flat head to hold your beer." Anyway, my apologies if you found this offensive. It was not my intention.[/quote] Apology accepted. And I actually found it kind of funny because I have dental implants. You obviously had no way of knowing that - but I doubt a mouth full of titanium and gold with little spikes is what you had in mind . RobynOkay, I know I'll catch some s*** for this. Robyn, you seem like a nice person, but on this board, you sound like a kid in a candy shop. And I'm not trying to be sexist, I think the following applies to both genders: I knew a hot young woman I trained with years ago, she said the "selling" of ideas in this business is like having sex with someone you just met. Consider getting spending some money, and getting laid. Who cares about you losing some sleep because you're not betting some extra BP? Try paying ticket charges and getting calls from your compliance guy, and drinking too much when the US financial system caves and you're ABC.
[quote=RobynG][QUOTE]Robyn, you do realize that it was joke that was brought on by you saying, “I don’t have to please anyone - except my husband . Think about that.”?
It comes from an old joke. Question: "What's the perfect woman?" Answer: "Someone waist high, with no teeth, and a flat head to hold your beer." Anyway, my apologies if you found this offensive. It was not my intention.[/quote] Apology accepted. And I actually found it kind of funny because I have dental implants. You obviously had no way of knowing that - but I doubt a mouth full of titanium and gold with little spikes is what you had in mind . Robyn[/quote] See, that's what I'm talking about, you're doing kinky smily faced apologies to gruff brokers and slapping around your own financial advisors. How is this different than rough sex?You are right. Putting together a bond portfolio is very "hands on". The main problem with ETFs and mutual funds is that they lack one important feature of individual bonds. I.e., a fixed maturity date. I've owned (high quality) bonds over the decades that have fluctuated 30 points or more due to interest rate fluctuations. Remember that 70's show? But - as long as the credit quality was good - all you had to do was buy and hold 'til maturity to get all your principal back. This is true whether you're talking about a 5 year CD ladder - or a 30 year muni ladder. Now whether we will see state bankruptcies down the road - or the FDIC not paying off on CDs - well I can't tell you what the future holds. But states didn't go bankrupt even in the Great Depression - and the FDIC has always paid when banks go belly up. Perhaps this will all change in the future - but I wouldn't bet on it just now. Like Art Cashin says - don't bet on the end of the world - because it will only come once. I do believe that some ETFs and mutual funds may be useful for some people and some purposes. For example - I never put enough into junk bonds to diversify - and I trade in that area - so I don't buy individual bonds. There is also the matter of diversification for a small bond holder. But anyone who isn't putting at least $100k in munis probably doesn't need the tax advantage (at least when tax-free/taxable yield differentials are normal - which they aren't today). And - even with only with $100k - just buy 4-5 high quality issues and be done with it. Plus - there is the matter of expense ratios. When you are making 4-6%/year - 1%/year more or less eats up a lot of your income. FWIW - I know about lots of bonds that have "blown up" in the last year. Some - like small muni issues - blew up (in terms of pricing) because no one can figure out what they're worth (some small issuers never bothered to pay for underlying ratings - they just bought insurance - so they are a big ??? for a trading desk that doesn't have the time or inclination to figure out how to price a $25k trade). Others - including many corporates - blew up because the underlying credit quality went from very good to horrible. I don't disagree with you - but did you have any particular bonds in mind? Robyn P.S. One area that used to be highly touted was muni funds that used leverage (borrowing short and buying long). Works great sometimes - but can blow up in your face. P.P.S. Don't know TPTB here - or how the software works. But perhaps this discussion about bonds can be set up in a new thread on bonds. Doesn't have much to do with the original questions about bankruptcy.No offense to BG, retail bond peddling is knowledge based, high touch and personal, and generally more expensive to clients. I’d go with ETF and managed sector funds ( discounted unrated munis, whatever) in a wrap, and focus on the bigger planning picture and service. And, nobody around in general is admitting much of anything about certain bonds that “blew up” recently. I realize you have to pick your time frames, I’m just wondering how much value gets added. Maybe BG is an exception, I doubt if he is a rocket scientist. He has just as much right as the Jones guy to specialize and make a living, I doubt if the result is much different.
Good luck to you, Robyn.
RobynG…your posts are fking irritating. You are killing the vibe here. You seem like a nice lady, but this is a locker room. Frankly, I ( we ) don’t give a rats a** about you or your portfolio.
Most women as bored or boring as you would have an affair instead. Help us out, go join that club and find something else to do.
Thanks.
PS. ever seen that bumper sticker. "Encylopedias for sale. Just got married. Fking wife knows everything"
PPS. get one for your hubby.
[quote=RobynG]
Interesting post - but . I am better when it comes to interest rate analysis than credit quality analysis. So I decided a *really* long time ago that I would only buy state/city/county GOs with strong credit ratings - and higher quality essential services revenue bonds. After the last year - well I've been so nervous (doesn't make me unique) that I've been sticking with state GO's. I did a fair amount of "opportunistic buying" in the last year or so when hedge funds and the like were throwing munis out the window. Got some pretty good deals. A general suggestion in case you guys are trying to juggle a lot of balls. I assume most/all of you have access to data. Keep a running chart of the Bond Buyer Index somewhere (unfortunately - the muni bond futures contract is history - I used to like that too). It was easy last year seeing when the market was going nuts and it was time to "go shopping". I don't think this bothers my FAs - because I have been with them so long (longest is 20+ years - and shortest is perhaps 5 - and that is at E*Trade) that they know what I like to buy. They don't bother me with stuff they know I won't buy - and I call them when I see items of interest. Even if they're a little weird (like I own some "yield curve inversion CDs" - a portfolio manager friend of mine freaked out when he saw them - didn't understand how they could be sold in the retail market - on my part - I think they're about as easy to understand as TIPS - which aren't all that easy IMO although everyone is recommending them these days). IOW - I have always been a "belt and suspenders" kind of investor. And now I'm wearing two belts and two sets of suspenders. Really boring. Getting some extra BP won't change my lifestyle - but may cause me to lose sleep. Not worth it (at least for me). Obviously - other investors may be a lot different than I am. And what you're talking about may be of great value to them. Robyn [/quote] There was a buying opportunity in munis last year? Damn, i must have been juggling another ball! Robyn, could you do us a favor? Next time you see a buying opportunity could you chime in? With all the bond peddling and all, you understand, we don't have time to pay attention. THX BGMake my day.RobynG…your posts are fking irritating. You are killing the vibe here. You seem like a nice lady, but this is a locker room. Frankly, I ( we ) don’t give a rats a** about you or your portfolio.
Most women as bored or boring as you would have an affair instead. Help us out, go join that club and find something else to do.
Thanks.
PS. ever seen that bumper sticker. “Encylopedias for sale. Just got married. Fking wife knows everything”
PPS. get one for your hubby.
[quote=Mishigun]
Okay, I know I'll catch some s*** for this. Robyn, you seem like a nice person, but on this board, you sound like a kid in a candy shop. And I'm not trying to be sexist, I think the following applies to both genders: I knew a hot young woman I trained with years ago, she said the "selling" of ideas in this business is like having sex with someone you just met. Consider getting spending some money, and getting laid. Who cares about you losing some sleep because you're not betting some extra BP? Try paying ticket charges and getting calls from your compliance guy, and drinking too much when the US financial system caves and you're ABC.
[/quote] Can't say I know anything about getting calls from compliance officers - but I was in Paris the first week or so October last year. Maybe the only person in the hotel without a Blackberry. Watching a slow motion train wreck from abroad. Came home late on 10/9. And woke up totally jet-lagged to watch the action 10/10. Reminded me of an earlier trip (we flew home from the UK the Sunday before Black Monday in 1987 after spending the weekend stranded in Oxfordshire after the "Hurricane of 1987"). But that is neither here nor there. You (in the collective sense - not you individually) are professionals - and you have clients. Probably many in their late 50's - and older - many much older. And a lot of their financial planning/portfolios for retirement - or their current retirements - are in ruins. I don't blame you for hitting the bottle (I've been known to do so myself) - but many of you are young. And can pick up the pieces. Ask the 80-90 year old in my father's independent living retirement community who can longer afford the rent and has to move in with kids what he (or most likely she) thinks. These people are crushed - absolutely crushed. And they don't have the luxury that a younger person has - the luxury of time - to rebuild their lives. And I'm not taking into account the Madoff victims here in Florida. I'm Jewish - and everyone here knows someone who knows someone who was wiped out. Not only the really rich people in Palm Beach (who probably should have known better) - but the elderly widows of dentists and doctors and the like who lived in more modest circumstances - people who had high six or low seven figure net worths. Those without helping/caring children (or any children) have turned into bag ladies virtually overnight. I am no kid - much less one in a candy shop. I have represented people on death row - and I can tell you that it is probably harder to face a client who "lived by the rules" - spent modestly - but who is now looking into the financial abyss - than to represent a murderer. Go on a bender now and then if it suits you (sometimes it suits me). But wake up on Monday morning and try to figure out how best to help your family - your clients - and people in your community . Particularly those who are older - and didn't simply lose their "latte money". Give - your time - your skills - your money - whatever you can afford to give that might make a difference in peoples' lives and bring them back from the precipice. IOW - grow up. My father was a teenager in the Great Depression- and - if you want to know what it meant to grow up in hard times - becoming a man long before you were meant to be a man - ask someone his age. RobynA lawyer goes swimming with the sharks. Why won’t sharks attack lawyers? Professional courtesy.
G O A W A Y
Reportedly Wells Fargo Advisors is offering to let AGE reps extend out their retention loan and at a lower % rate. And are allowing harship withdrawls from the 401k plan…
maybe the should offers some relief on the hurdle, minimum commissions, and ticket charges !? FA's are hurting out there.... SP500 is where it ws 10 years ago.. . a lost decade.Id tell a client to face reality.
Do the nasty crap you have to do to survive. (sell stuff, beg credittors, make momma work, etc) No "hopeing" or "denial" f your ego acceptance tell the family get everyone on board lose stuff you dont absolutly need to survive focus on positive stuff to survive work you ass off like a rookie to do gross honesty this wil allow you to do the crap you need to do. work every MF angle like a stock you bought higher market doesnt give a crap what you paid. your reality is the only thing that matters dont waste time on "what ifs" or any other negative crap dont beat yourself up screwing up is huamn HOW you handle it is everything stuff happens for a reasonShowmethemoney:
How are you doing? Curious about an update.I had to consider it. I liked it!
How are you doing? Curious about an update.
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surviving. no BK. production off by 25% annualized. bonus will take care of debts soon and then we dont go back to that place ever again!! Will be getting rid of the nice ride when lease up and will pay cash for a used vehicle. Reduce debt folks wherever you can and as soon as you can. If we dont get back to biz as usual soon, we are all gonna need to be as debt free as possible. Even if biz gets back to normal, i dont ever again want to be a slave to the CC companies. Nothing like getting 30 phone calls a day cause your late on your cc bills. Not my way of life. Its all for the best anyway. You learn what you can do without and where all your money is being wasted.
I read in a recent survey that the average Advisor’s income is down
around 30%. I have felt the pain as well. Don’t think I’m down 30 but
probably 20%.
I agree with what has been said about not running up credit cards and
living within our means. When things were really going great in 2007,
I built a nice house, and am paying a nice size mortgage, but other than
that we have lived conservatively. I am driving a 2001 Nissan Maxima,
and the wife is driving a 2000 Ford Explorer. Both with well over 100k
on them. In my case the one thing that has made it a little tougher than
what it could have been is that my wife quit her job about a year ago.
So far, we’ve made it ok, but the possibility of her going back to work
is always on the table.
I took a check for 2.1 in 1999. went all in. pissed a bunch of it away. Ive made money also have owned M-5's, z06's etc. Boats, houses etc took a check for 2.25 in oct 08. went all in. was down a good bit. up a bunch now (i love global story) would you you whining pussies please STFU. gezz man. life is mde to be lived. your name is secret knowledge? secret knowledge give me a break you sound like a real know-it-all wanna be g*y pussy. go take you candy ass scared of teh dark CPA budget and KMA Im gonna spend MORE mf money now cause everything is cheap. Im gonna piss more money away just because ive listened to all you cry babies whine. You in a bind? get off your ass and work as hard as it takes to do enough gross to pay your bills. if that means 6:30 am to 9 at night-do it these posts are embarrising. go work at the DMV with Obama if you cant stand the heat. I hope I die spending my last cent at a crap table with a bimbo on my arm and a Johnny Black in my hand. (AND-im pretty conservative and good with my clients money. all fee based.) This is the BEST opportunity EVER in the biz. people BEGGING for advice i love getting new business i love working hard in times like this
Bud:
First of all a $1,000,000 producer has not been a very uncommon broker for the last 4-5 years. At $1,000,000 your pre tax income is about $400,000 after tax about $250,000. For $2,000,000 double it. A $2,000,000 broker in 2007 will be about a $1,000,000 in 2009. That is a huge change in cash flow.
Second, your largest expenses are your mortgage and private school for your children. So, when you talk about substantially altering your expenses you have to sell your house and send your kids to public school. In these times, the second is much easier then the first.
Third, most brokers are not very good managers of their own funds. For example, how many friends do you know at wirehouse who owned a ton of stock and had a bunch of options. And, how many of them waited way to long to sell in 2008.
Fourth, you should never run up your credit cards for anything. The item that gets you to be a million dollar producer is not some fancy marketing campaign. It is by focusing on a target market that has a lot of money. For example, pension plans, endowments, foundations, concentrated positions etc. The narrower the focus the quicker that you can make it to your goal. Getting to a $1,000,000 + is much harder when you are a generalist.
Fifth, if you take a deal you should not be stupid enough to:
1. Increase your exposure to the market. You are already extremley exposed by your job.
2. Buy “stuff” with it like cars etc.
3. Always try to live beneath your means. Remember, you have a job that has a variable income stream.
With regard to your bankruptcy, I would try everything I could before I declared. It is not a good thing even if you get out of the business.
All of us neeed to run our financial lives in a conservative manner. If you do and re successful in this business the rewards both financially and emotionally are huge. If you are not cut out for the business it is just frustrating.
So, I would recommend that you start out with the fiollowing:
1. Go to Dave Ramsey’s website.
2. Sell assets you do not need. If nothing else, start with a garage sale. Look at your cars etc. Try to follow his plan.
3. Contact your credit card vendors and mortgage company. See what is available. If you do not speak with them they can not do anything.
Above all start implimenting a plan that you map out today. Taking the steps will make you feel much better.
If you have not sat down with your wife and told her about this please do.
Good Luck.
So, I would recommend that you start out with the fiollowing:
1. Go to Dave Ramsey’s website.
2. Sell assets you do not need. If nothing else, start with a garage sale. Look at your cars etc. Try to follow his plan.
3.
Contact your credit card vendors and mortgage company. See what is
available. If you do not speak with them they can not do anything.
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The Dave Ramsey classes are very useful. My wife actually pushed for us to do this through our church and interestingly she had not been previously on board in facing our financial reality and the need to cut back. Nothing I could explain or tell her helped, but the beauty of the Dave Ramsey class is she is now understanding what I have been saying and accepts what we need to do and how we need to alter our lifestyle. Its going to be ok. We are on the same page now and the Dave Ramsey class gets credit for it. Well worth the time for the 13 week Financial Peace University.
[quote=Soothsayer] All of Bond Guy’s theoretical posts are Exhibit A as to how not to live your life. I have absolutely no sympathy for idiots who buy boats, expensive cars, and million dollar houses to “get noticed”. When I first got into this business, I was on a Jones diversification trip, and Jim McKenzie came and sat next to me at breakfast one morning. All the Jones guys know who he is. (Spiffy is getting misty-eyed about now, but I’ll get to the point.) He could tell from my nametag that I was fairly new, but having some success as I was on the trip. He asked me, “What do your best clients have that you don’t have?” I threw out a few shallow answers before he helped me. “Net worth. It’s net worth. Work on your own net worth every day. Not just stocks and bonds, but real estate, collectibles, a business, intellectual property, what have you. Commit yourself to that–everyday–and this business will treat you well, and you’ll have the respect of other people who have a significant net worth.” (Spiff reaches for Kleenex about now.) I swear to God this is true, and it has stuck with me ever since. I came home and started working on my net worth.
I bought a house I could afford in 1999. Since that time, there are years that I have made almost 7x as much money as I did then. I still live in the same house, only now it is paid for. I got involved in a significant commercial real estate development project in 2002. I collect cash flow from serveral of those properties today, and used the profit to own the building where my business is located. There are also 6 other tenants in my building ranging from a small law firm to an engineering firm. The success of that project made me a millionaire at age 39. I had my second million 3 and a half years later. I drive what would be considered a “luxury” automobile, but never buy new. I have a good friend and client who is sales rep at a luxury dealership. He calls me when idiots like BondGuy’s wife bring in their 30-month lease car with 24K miles on it. I pay 50-55% of what the car stickered for when new, and pay cash on the spot. 2 years later I will sell it private party, which usually means it costs me $200-$300 per month to own it. Usually a car like this is still under warranty and has no maintenance costs. I sell when the warranty is about to expire.
My kids go to private school not to impress anyone, but because–well, read my tagline at the bottom of this post. I don’t have a country club membership, but I do have a gym membership. I don’t think about or worry about money much anymore. I have everything I need. I never took an upfront check from a wirehouse. Went from Jones to indy. Own my book. (Again, that decision add to my net worth. I volunteer and help out on many fronts in my community and church. I don’t think people that I come in contact with think less of me because I don’t live in a 4500 sq. ft. house. I do think they probably figure that I’m financially secure although I don’t flaunt it. I don’t have to. I never did have to. All that BS is for guys who just aren’t comfortable in their own skin. For Christ sake, we’re not Hollywood celebrities or rock stars, we’re financial advisors. Act like one. Live live one. And remember, work on your own net worth every day. Life is what you make it. [/quote]
This is probably one of the best posts that I have read on this whole site. Kudos
[quote=Ronnie Dobbs] [quote=Soothsayer] All of Bond Guy’s theoretical posts are Exhibit A as to how not to live your life. I have absolutely no sympathy for idiots who buy boats, expensive cars, and million dollar houses to “get noticed”. When I first got into this business, I was on a Jones diversification trip, and Jim McKenzie came and sat next to me at breakfast one morning. All the Jones guys know who he is. (Spiffy is getting misty-eyed about now, but I’ll get to the point.) He could tell from my nametag that I was fairly new, but having some success as I was on the trip. He asked me, “What do your best clients have that you don’t have?” I threw out a few shallow answers before he helped me. “Net worth. It’s net worth. Work on your own net worth every day. Not just stocks and bonds, but real estate, collectibles, a business, intellectual property, what have you. Commit yourself to that–everyday–and this business will treat you well, and you’ll have the respect of other people who have a significant net worth.” (Spiff reaches for Kleenex about now.) I swear to God this is true, and it has stuck with me ever since. I came home and started working on my net worth.
Well Ronnie, arnt you the impressive little prudent saver. B*&^ me. I bet your one boring mf and you wife is probalby riding the hobbie horse with the mail boy at work (im sure you have her butt working). Your kids will probably end up in rehab because your such a d***. Im going to go piss some money away in your honor.A b–
Sorry the business hasn't worked out quite so well for you. My wife is still really hot (and into only me) and has not worked outside the home in more than a decade. The kids are doing great. All 3 had outstanding school years and are having fun and productive summers. No rehab, but they are starting to ponder some kind of study abroad program in the next couple of years. Go ahead and buy yourself a 24oz can of Steele Reserve, and curse my name with each and every gulp. Get it all out of your system, and then go and hit it hard tomorrow. Try to learn something throughout the day. You'll be a better advisor at 6pm than you were when you got there in the morning.This stuff needs to talk much..I suggest you should consult a personal bankruptcy attorney in which you find good suggetion and solution to your problems.They will provide more ideas regarding your clarifications.
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