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No, don't tell your boss to shove it...at least not out loud. But in your head accept that from this day on you're a free agent whose number one workplace priority is your ...
No, don't tell your boss to shove it...at least not out loud. But in your head accept that from this day on you're a free agent whose number one workplace priority is your personal bottom line.
You should be as conscious of spending as you are of saving. Credit should be a rarely used tool for those few times (buying homes and cars) when paying cash is impossible.
Your work life should be a journey up and down hills, rather than a climb up a sheer cliff that ends with a jump into the abyss.
It sounds terrifying, the one intolerable outcome to your financial life. And yet, in truth, dying broke might be your best option for a life without fear: fear of failure and privation now, fear of impoverishment in the long run.
Unconventional wisdom. That's what I've been offering my clients and readers like you for more than three decades now. Some have even called my ideas heretical. So be it. I come by my heresy honestly.
Unlike most of the authors of personal finance, small business, and career books, I'm a hands-on practitioner. I practice what I preach. I have a coterie of dedicated clients, individuals just like you, who pay me to help them with their legal, financial, career, business, and consumer problems.
After careers as a real estate developer, venture capitalist, banker, and college professor, I launched a private legal and financial consulting practice on New York City's Upper East Side. Most of my clients are baby boomers from what used to be called the upper middle class. While only a few of them can be counted among the new breed of e-millionaires, most aspire to that level of financial success. They have combined incomes of well over $150,000, live in apartment buildings with doormen or rural homes on more than an acre of land. They take vacations to Europe or St. Bart's, go out to restaurants at least once a week, buy wine by the case, and drink single-malt scotch. They belong to gyms and spend most of their few free moments doting on, and catering to, their spouses and children.
While there are some uniquely New York elements to my clients' personas and while they may be more affluent than the average, in the most important ways they're just like most successful Americans, including you. They've acquired more possessions and experiences thantheir parents had at their age. They hold down decision-making and policy-setting positions in corporations, they are running their own successful small companies, or they have made a name for themselves in a competitive creative field. And they lead complicated lives filled with a variety of financial obstacles, from the monumental to the mundane. They've taught me, and continue to teach me, the real money problems that people face. I know how vexing seemingly ordinary tasks -- like deciding on a child's allowance, dealing with office politics, selecting an answering machine system, and shopping for a checking account -- can be.
Not only do my clients regularly teach me what matters most to real people like you, but they also hold me to a high standard: my advice must work; otherwise they won't continue as clients.
That means I can't be doctrinaire about money issues. My clients' money problems aren't hypothetical exercises; they're real-life dilemmas. So my approach to issues can't be theoretical and abstract; it must be pragmatic and practical. That holds true for my books as well as my consultations. I know the advice I'm offering you in this book works because it has worked for hundreds of my clients. It has helped people win employment contracts, negotiate business loans, finance post-retirement careers, and purchase weekend homes.
Because I work with clients my advice also needs to be unambiguous. I've found that when people are paying for advice, they want to be told what they should do. They come to me to get an answer, or at least my opinion, not to engage in a Socratic dialogue. In both my consultations and my writing, I'm direct about issues. You won't have to read far into an entry in this book to learn my opinion on a topic. You may not always agree with me or like what I have to say, but it's my best advice. Giving my clients-or you-any less would be unconscionable. I say you should always be looking for another job, you should lease rather than buy a car, you should never buy whole life insurance, and you should terminate any employees you possibly can.
I don't abandon clients who don't agree with me; if they wish, I continue to help them pursue their goals in the manner they've chosen. Similarly, in this book I'll provide you with enough information and guidance that you can follow paths other than those I recommend. If things work out, bully for you. If they don't, you can start over. I promise I won't say I told you so.
Dealing with real people day in and day out, I've learned that money issues can 't be neatly divided and filed into separate categories like investing, career, real estate, business, shopping, and personal life. Most authors limit their scope to one of these topics because their experience is more conventional than mine. This is understandable: having been trained as specialists, they focus on their area of expertise. I'm not a specialist. My clients have trained me to be a generalist. Through them I've learned that all the areas of our money lives must be viewed as a unified whole. When clients come to me for help in buying a home, I need to learn about their career status, investment portfolio, marriage and parenting plans, and even their health, before I can give them sound advice.
I've counseled clients to have physicals before undertaking a job search and to have children before buying a summer home. I've taught clients how to be savvier when shopping at supermarkets and when buying mutual funds. I've helped clients pick out engagement rings as well as real estate. In my practice I deal with any and every area of a client's life that is touched by money because I've learned that all these areas interact. That's why you'll find the first truly comprehensive approach to money in this book, with entries on legal, financial, career, business, consumer, and even some personal topics. You'll find entries on things you never think of in financial terms: topics like listening, reading, garb, and pets.
Finally, working with clients has led me to appreciate just how much the money world has changed. It's one thing to read survey results or view stock market tables. It's quite another to have a real-life embodiment of the information age sitting across the table from you, asking for your help.
During the past ten years many personal finance authors and pundits have been discussing Roth IRAs as if they were still state-of-the-art in financial planning, talking about refinancing your mortgage as if it was daring, and offering tips for landing a grand title and a corner office. They've been bending and tweaking and jury-rigging the conventional financial wisdom of the industrial age (in some cases, even the agrarian age) and trying to make it work in the information age. Another set of authors have been focusing on the lifestyles of the superwealthy, either self-made or accidental, suggesting that these silicon sagas are today's Horatio Alger tales.
During that same time I've been talking with my clients about viaticals, d4C trusts, prepaid tuition plans, and headhunters. I've been offering practical twenty-first-century money advice.The Die Broke Complete Book of Money. Copyright © by Stephen Pollan. Reprinted by permission of HarperCollins Publishers, Inc. All rights reserved. Available now wherever books are sold.
|Unconventional Wisdom: Live Rich and Die Broke||xv|
|Using This Book||xxvii|
|Answering Machines and Services||30|
|Answering Machine Messages||32|
|Antiques and Collectibles||34|
|ATMs and Cash Cards||47|
|Banking and Bankers||76|
|Bookkeepers and Bookkeeping Software||91|
|Business Interruption Insurance||106|
|Certificates of Deposit||126|
|Charitable Remainder Trusts||130|
|Client and Customer Relations||140|
|College Financial Aid Applications||147|
|College Grants and Scholarships||150|
|Condominiums and Cooperatives||165|
|Debt Consolidation Loans||192|
|Divorce and Mediation||200|
|Dollar Cost Averaging||207|
|Durable Powers of Attorney for Health Care||212|
|Employee Stock Ownership Plans||223|
|Family Limited Partnerships||241|
|Flex Time and Telecommuting||248|
|Franchising Your Business||257|
|Garb and Hygiene||268|
|Home Equity Loans||290|
|Initial Public Offerings||321|
|Internet Service Providers||325|
|Long-Term Care Insurance||373|
|Magazine and Journal Articles||378|
|Manners and Mannerisms||383|
|Marketing an Idea||386|
|Money Market Accounts||401|
|Pre- and Postnuptial Agreements||451|
|Prepaid Tuition Plans||457|
|Pro Bono Work and Volunteerism||461|
|Probate and Settlement||463|
|Promotions and Lateral Moves||466|
|Real Estate Investment Trusts||478|
|Records and Papers||481|
|Risk versus Reward||493|
|Safe Deposit Boxes||497|
|Simplified Employee Pensions||514|
|Suppliers and Vendors||527|
|U.S. Treasury Bills, Notes, and Bonds||552|
|Vacation Home Rentals||555|
|Wines and Liquors||564|
|Word of Mouth||567|
|A Note of Gratitude||575|
Resolve to Die Broke in the New Year
This January, do more than just organize your tax records. Instead, think of the month as an opportunity to finally take charge of your financial life by taking the following eight steps:
1. Pay down your debt. Forget all the talk about savvy borrowing. There simply is no such thing as good debt. If, after funding your retirement accounts you have extra money available, use it to pay off as much of your outstanding debt as possible. Paying off a credit card balance on which you're paying 15 percent interest is the equivalent of earning 15 percent interest on that money. And don't let tax ramifications cloud the issue. The single best thing you could do for your post-65 financial life is to have no mortgage.
2. Renew your job vows. Your stream of income is your No. 1 financial asset. Do everything you can to find out if your job is safe. Cross your fingers and let your boss know how much you love the company and your job. If the love seems unrequited, do everything you can to get back in good graces. Show up early and leave late. Become a profit center. And meanwhile, look for your next job. Talk to headhunters and network like crazy. From now on, everyone needs to constantly be in the job market.
3. Review all your insurance policies. If you're like most Americans, you have more life insurance and less disability coverage than you really need. Get rid of any whole life you were fooled into buying and get straight term. Take the savings and invest them in disability coverage that protects you and you family from potential calamities. See if you can trim your auto and homeowner's payments by taking out higher deductibles. Use those savings to buy umbrella liability protection. Even if you find no reasons to change coverage, put all your policies out for new bids to see if there's another carrier who's more eager for your business.
4. Examine your estate plans. While I think you should do everything possible to "Die Broke," there's no guarantee you'll be able to spend it all or give it all away before you die. That means you need to have some kind of estate plan in place. Odds are there will be changes made in the estate tax rules in the coming four years, so now is a good time to review your plans and get ready to shift in response to new regulations.
5. Discuss your professionals' fees. Accountants and financial advisers today often base fees on the size of your income or portfolio. That's nonsense. If you find yourself paying more for the same advice and work simply because you've gotten wealthier, negotiate new fee arrangements. If your professionals object, look for new ones.
6. Reallocate your assets. Your asset allocation requires constant adjustment. If your stocks have taken a hit in the past few months while your bond funds have soared, it may be time to shift your monies around to make sure your portfolio still matches your allocation formula. And while you're at it, reconsider your formula itself. Remember you're going to be living a lot longer and a lot healthier than was normal when those traditional percentages were developed. Even a 75 year-old today needs some growth funds or stocks.
7. Investigate charitable remainder trusts, annuities, and reverse mortgages. If you're not satisfied with the yields you're getting on your bonds or money funds, consider replacing them with investments that can not only provide guaranteed incomes, but whose tax status may result in your receiving greater net benefits.
8. Revisit your child's allowance. This is an excellent time to have a talk with your child about his or her allowance. Consider increasing not only the size of the allowance but also the scope of purchases for which your child is responsible. It's never to early to start teaching financial skills -- or to teach that January is the time for financial as well as personal New Year's resolutions.