August 28, 2014

Are You Ready for Life's Changes?

“The measure of intelligence is the ability to change.” – Albert Einstein

A few years ago I went to a conference that was aptly titled, "Change is the only constant." We all change. Our bodies, minds, opinions, families, friends, goals, financial situations, investments, etc., etc. In the previous list, every single one of them is important. So when your life changes, what do you do?

As an analytical person that is a financial advisor, I constantly view the financial aspects of change. Changes to employment, health, investment strategies, contribution or withdrawal habits, family situations, tax ramifications, etc. I know, I know... incredibly interesting stuff. Some of these things you can plan for and some you simply must react to, but is there something you can do to help yourself? The answer is yes, but it is not that simple. What I can say is that it is generally better to have made at least some preparations than none at all.

About two years ago my brother, Bradley August, was diagnosed with stage 4 esophageal cancer on his 34th birthday (August 20, 2012). Less than two weeks later (September 2, 2012), I was lucky enough to marry my beautiful wife, Danielle, with our families attending and privileged to have Brad as a groomsman. Danielle threw an incredible surprise 40th birthday party for me with family and friends in attendance (December 10, 2012). Then, six months and one day after his diagnosis, Brad passed away (February 21, 2013). Finally, Danielle and I were blessed to have our daughter, Caroline August (February 1, 2014). All of these events happened in less than 18 months and had obvious meanings on many levels, but how was I prepared for them?

First, Brad's diagnosis and subsequent passing came as a shock to all of us. A problem Brad had swallowing quickly was found to be a malignant tumor in his esophagus during an endoscopy. The next few months were tough times for our family. As an older brother, you never really get over being the protector for your younger siblings. There were numerous weekend trips to Dallas to help and spend time with Brad. Since this is a financial blog, yes, I focused on financial matters - learning about and applying for Social Security Disability Insurance (SSDI) for Brad, and at the very end, I helped with the movement of some of Brad's assets to make things easier after he passed. While they could be construed as minor items at the time, the time and money saved later was well worth the effort.

Next, being "more established" (i.e. older), my financial situation was quite a bit different in planning a wedding. That does not mean that there was not a budget, but we did not rely on our parents or drown in debt to have an incredible wedding and honeymoon. I was fortunate enough to have been able to save and afford a very nice wedding set for Danielle, and together, we paid for the vast majority of our wedding weekend sometimes against the wishes of our parents, and all of our honeymoon. On the financial side, Danielle and I are both pretty inline with each other. She is very much a saver that likes very nice things much like me. We took apart every piece of our wedding weekend and honeymoon to get the most enjoyment possible for our family, friends, and us while knowing that we were being fiscally responsible. I will not dive into the details, but planning ahead, being flexible, negotiating, and really knowing your own wants and desires really can pay off. An important note though - Do not forget the truly important things in life. The best gift to both of us though was being able to have that one great weekend that was full of pictures of family, friends, and Brad. Those photos never get old.

** - As a side note, getting married dramatically changes your financial landscape all in one fell swoop. Wills, Power of Attorneys, accounts, beneficiaries, etc. all need to be updated to reflect the changes that have just happened. For instance, your 401(k), 403(b), pension, etc. will automatically change to have your new spouse as the beneficiary whether you want them to be or not. In fact, if you do not want your new spouse to be the sole primary beneficiary, they must sign off on it. IRAs do not have this same change happen.

I had a great childhood, but I honestly could not begin to tell you the last birthday party I had. Unbeknownst to me though, Danielle orchestrated a surprise 40th birthday for me that included my dad, her entire family, our office, and numerous friends from far and wide. While nothing truly financial happened, my 40th birthday was an occasion that made me really start to work on our long term future. Yes, even financial advisors sometimes need to take a step back, assess, and plan for our futures.

Finally, becoming a parent earlier this year was something that I had always hoped for but wondered if it would ever happen. Thankfully, it did, and our daughter is beautiful (like her mom) and healthy. Now, since I had numerous nights without sleep for the first few months, I had plenty of time to plan our daughter's future... Ok, maybe I was so tired that when I could finally get up the strength, I made the first contribution to her 529 account, but it is a start. Wills, beneficiaries, life insurance policies, etc. suddenly need to be reviewed and altered again, and this is only the beginning.

What changes have happened in your life? How did you react, what did you learn, and are you ready for next time? There is never a good time to deal with everything that needs to be done, but do not forget, it needs to be done.

“We cannot change the cards we are dealt, just how we play the hand.” – Randy Pausch

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