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3 Things 6-5-23

Thing One


Earl Nightingale’s Sage Advice


The famous radio personality, Earl Nightingale once said, “Whatever the great majority is doing, in any circumstance, if you do the exact opposite, you’ll probably never make a mistake as long as you live”.  If you apply that advice to some of the everyday financial decisions you will encounter, you’ll be much better off as a result.


Want proof? Here’s one.  The great majority of college graduates (the average to be more statistically accurate) graduate with around $35,000 in student debt.  That debt is typically paid back over the course of 10 years but can stretch out depending on employment prospects deferment, etc.  What if you figured out a way to get a degree without borrowing the $35k and instead put that money to work for you over the next 40 yrs? Well, instead of making level monthly payments with nothing tangible to show for it at the end, you could, assuming the historical 7% average annual return over 40 years, accumulate around around $560,000 without adding a single nickel to the pot.  Regular additions to your initial $35k would dramatically increase the end amount.  Of course 7% is the historical average return for the S&P 500 index over the long run and there is no guarantee that history will hold exactly.  That said it is highly likely that you will have a lot more at the end of 40 yrs, were you to invest, even though the actual amount is only subjectively quantifiable.


Want more proof?  The average credit card balance for an adult with a credit card is $5,047.  Half of credit card borrowers are always carrying a balance and 11% of that half are only making the minimum payments.


We’ll use as an example someone who owes $5,047 on a credit card with an 22% annual percentage rate (APR) and a minimum payment of 3% due monthly. Assuming that only minimum payments are made, it will take 20 years and 9 months to repay this debt and the total repayment would be $12,472. That’s right, for every dollar borrowed, 2.5 dollars will be paid back.   Think you’d be better off paying off any borrowed money before incurring interest charges?  We do.  But lots of people don’t even consider the consequence of living their lives like everybody else does.


Mr. Nightingale’s advice is sound.  The sooner you take it to heart, the sooner you'll start to see the benefits.




Thing Two


Life Insurance Isn’t For You


Life insurance is for the people you would leave behind.  Most financial experts suggest an individual be insured from anywhere between 6 and 12 times his annual salary.  Of course, the devil is in the detail, so a complete examination of an individual’s financial circumstances would provide a much more reliable estimate of the actual amount of insurance needed.


That said, here’s a series of questions:


Do you have a family that depends on you financially?  If you don’t, this post isn’t directed at you.  If you do or will, answer this next question;  


Would your family be able to continue living in the same “financial world” were you to die today?


If the answer to that question is yes, we commend you for the conscientious manner in which you have handled your financial affairs.  But if the answer is no, here are a few, very direct questions:


1)  Is it because you haven’t gotten around to it?


2)  Is it because you don’t think you can afford the premium?


3)  Is it because you don’t care what happens after you’re gone?


If your answer is anything other than #3, we should talk – or at least you should talk to someone who can help you figure some things out.  


If the answer is number 3, no judging here.  Come talk to us if that sentiment ever changes.


Thing Three


Just A Thought


“The bad news is time flies. The good news is you’re the pilot.”

Michael Altshuler


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