Today I would like to ask my readers and visitors to the blog's site for their financial questions and resolutions for 2009. Whether it is controlling/paying down debt, contributing more to your retirement account(s), or just learning about your financial well-being. Whatever you want, just e-mail me at rschultz@rollinsfinancial.com. I ask my clients too, and it is always interesting to hear some of the responses.
"Chance Favors Only the Prepared Mind"
I have been doing this little blog for educators for about the last 7 months, and I can honestly say that I never expected to get the number of visitors to the blog or some of the questions and responses that I have received. It is somewhat gratifying, but at the same time, it is somewhat troubling.
On one hand, it is gratifying because I am happy to know that I have helped some individuals. Whether it has been to answer a question or just reassure them that the world is not ending, I have found some joy in being able to help.
On the other hand, I am troubled because I believe that there are a number of educators that have not really understood the place where we are right now. They sometimes rush to make decisions rather than looking to history and seeing anything beyond right now.
I have seen many queries from people that have come to this site, and they have asked "How do I cash out my 403(b)?" or something similar. When I have been able to talk with these individuals, I have tried to preach the long term outlook along with the fact that keeping your retirement in a retirement account will save you untold tax problems. Sometimes this opened eyes and other times, it fell on deaf ears.
I am not trying to say by any stretch of the imagination that there is any one person that is the "know all be all person" of financial matters (the Madoff scandal opened a ton of eyes to that realization), but I do hope that everyone does find some person or group to help them with financial questions.
I will give one quick example, and then I will let everyone get back to their daily lives...
Some months ago I had an individual send me an e-mail wondering about taking a lump sum distribution or taking their pension (a spouse of an educator). The lump sum distribution being offered was roughly $100,000 versus the pension of roughly $8,000 a year. The person wanted to take the lump sum distribution to pay off their entire debt (a $5,000 auto loan was all) and then invest the rest.
I explained that the best answer would be to take the guaranteed pension, and then use the payments to pay down the debt. They could not understand the difference between the two, so I tried to explain it the best way I could.
If you take the lump sum, you have this amount of money forever, and there will not be any additional money. If you take the pension, you are guaranteed $8,000 a year for the rest of your life - which is approximately 30 years - so you would get $240,000 guaranteed. After they looked at everything, they finally agreed the pension was the best way to go.
The only thought they had was dealing with the car debt. They wanted to make one decision to pay off a high interest loan (a very good idea), and couple it with a very bad decision to take a lump sum distribution thereby causing an issue 5, 10, 15, or 20 years down the road.
Personally, I have been known to try to think things through too much, but I would rather be slow and deliberate with financial decisions. I know a hasty decision can sometimes cause you great angst later if not thought through initially.
My wish to all of you this year is to be patient and make thoughtful decisions - financially and otherwise. They will not all be right, but if you have done your research, you are much more prepared to succeed.
As the great scientist Louis Pasteur once said, "Chance favors only the prepared mind."
"Chance Favors Only the Prepared Mind"
I have been doing this little blog for educators for about the last 7 months, and I can honestly say that I never expected to get the number of visitors to the blog or some of the questions and responses that I have received. It is somewhat gratifying, but at the same time, it is somewhat troubling.
On one hand, it is gratifying because I am happy to know that I have helped some individuals. Whether it has been to answer a question or just reassure them that the world is not ending, I have found some joy in being able to help.
On the other hand, I am troubled because I believe that there are a number of educators that have not really understood the place where we are right now. They sometimes rush to make decisions rather than looking to history and seeing anything beyond right now.
I have seen many queries from people that have come to this site, and they have asked "How do I cash out my 403(b)?" or something similar. When I have been able to talk with these individuals, I have tried to preach the long term outlook along with the fact that keeping your retirement in a retirement account will save you untold tax problems. Sometimes this opened eyes and other times, it fell on deaf ears.
I am not trying to say by any stretch of the imagination that there is any one person that is the "know all be all person" of financial matters (the Madoff scandal opened a ton of eyes to that realization), but I do hope that everyone does find some person or group to help them with financial questions.
I will give one quick example, and then I will let everyone get back to their daily lives...
Some months ago I had an individual send me an e-mail wondering about taking a lump sum distribution or taking their pension (a spouse of an educator). The lump sum distribution being offered was roughly $100,000 versus the pension of roughly $8,000 a year. The person wanted to take the lump sum distribution to pay off their entire debt (a $5,000 auto loan was all) and then invest the rest.
I explained that the best answer would be to take the guaranteed pension, and then use the payments to pay down the debt. They could not understand the difference between the two, so I tried to explain it the best way I could.
If you take the lump sum, you have this amount of money forever, and there will not be any additional money. If you take the pension, you are guaranteed $8,000 a year for the rest of your life - which is approximately 30 years - so you would get $240,000 guaranteed. After they looked at everything, they finally agreed the pension was the best way to go.
The only thought they had was dealing with the car debt. They wanted to make one decision to pay off a high interest loan (a very good idea), and couple it with a very bad decision to take a lump sum distribution thereby causing an issue 5, 10, 15, or 20 years down the road.
Personally, I have been known to try to think things through too much, but I would rather be slow and deliberate with financial decisions. I know a hasty decision can sometimes cause you great angst later if not thought through initially.
My wish to all of you this year is to be patient and make thoughtful decisions - financially and otherwise. They will not all be right, but if you have done your research, you are much more prepared to succeed.
As the great scientist Louis Pasteur once said, "Chance favors only the prepared mind."
No comments:
Post a Comment