I still can hear my professor’s voice from grad school echoing through my head repeatedly… “What gets measured gets done.” I am not going to say that this mantra is full proof nor will I say that things that are not measured do not get done, but it is amazing how if you are willing to go through the process of measuring things… to keep track of them, that they often seem more likely to get done.

In work, that is why it is important to not only have things that are measured but to think about the implications of what may be ignored due to the items that are chosen to be measured… Often in the workplace, whether a small business or a large corporation, this has led to the arrangement of a balanced scorecard where different things are measured to hopefully alleviate not having one important thing sacrificed for the sake of another.

In financial planning as it exists today, there often are tendencies to try to focus on one thing in terms of looking at priorities. Though there is definite power in focus, especially if one is willing to sacrifice other areas of one’s life to achieve something, this may not always be practical or advisable. Often it is not.

In goal setting, many may have made New Year’s resolutions as it related to health and wealth. These may include a goal to lose so much weight by such and such point, or to be able to complete a certain activity by a certain point of time, or to have accumulated X number of dollars.

I have completed a number of marathons. It involves a lot of training and a lot of time. I had to sacrifice other things in my life to be able to do these things. Though I reaped a number of benefits, including feeling better physically and in the training for one of them, losing a fair amount of weight, I also had less time that I spent on my relationships and some of them may have suffered accordingly.

Part of the beauty of planning is in trying to find the balance of what should be measured. What should be priority? What should we make certain is kept in the picture so it does not suffer? How often will we check in to make sure that we are going in the right direction? Are we prepared to readjust if our goals have unintentional side effects?

What measured does get done… and it can be used for significant benefit. It is also important to remember that there is more than just one thing that most of us face.

As always, please send your questions and comments to






Some may think I am about to speak out of the other side of my mouth as it relates to financial planning. How it is important to start off with goal setting, refine these goals, budget accordingly, and then use whatever forms of planning you can to help you achieve these goals. Perhaps, that may not be the right place to start. Perhaps the best place to start is with legacy.

Legacy is how you are remembered by others. I loved my grandmother. I knew her growing up and remembered when she passed away while I was in college. When I came back for her funeral, I also remember that during her eulogy that the person talked about her volunteering for this charitable group, the twenty years she played the piano for the church, etc. However, as I went around I overheard a number of conversations that truly captured her legacy. “Who was she again? You know, Mary Sue… she was the one with all of the good recipes.” Or “I am going to miss her flower arrangements so much…” Not one person aside from the eulogist talked about the charities or the twenty years of playing the piano for the church. Most people talked about her cooking or her flower arranging. That was her legacy. My grandmother was a great cook who freely gave out recipes and loved to make dried flower arrangements. I will suggest there are far worse legacies one can have.

There are some important lessons to be learned about legacy from this example. It is other people who in the end decide our legacy. We may do some very worthwhile actions in our lifetime, but they often may pale in comparison to who we are at our core. Though I know my grandmother played the piano, in the end, I too have to admit that I could see how most people would remember her for her cooking and her dried flower arrangements. I would personally like to add that she was a doting grandmother to me.

There are others who may commit a tragic or several tragic mistakes which will haunt them beyond their graves. I will not mention names specifically in this case. They are mentioned often enough in the news for one to readily come up with a list. The lesson is that though it can take a long time to build up a positive legacy, like reputation it does not take long to develop a negative one.

The good news is that even though we can only influence our legacy, we can take actions to change how we are remembered assuming we find it important. The story goes that Alfred Nobel had a life-changing moment when he read his obituary. From someone who was perhaps best known for his propagation of destruction, he went on to be known as the person who honored those who bettered humanity with his institute for Nobel Prizes. Perhaps this would be a good time to stop and think how you would like to be remembered.

Some may wonder why this relates to financial planning.  If one truly cares about how one is remembered, this would suggest that one may need to take different actions and/or set aside resources whether time or money to help shape one’s legacy. This could be life-changing for some as it was for Alfred Nobel when he read “his own” obituary published by a French newspaper.

As always, please send your thoughts, comments and questions to

Live Your Own Life

People are often surprised at the amount of time that I spend trying to find out about what it is they that want, their likes and dislikes. I hate to say this. I am also a little surprised that I feel I have to say it. There are many people that are living someone else’s life. They are devoting their resources: time, energy, and possessions to items that are not truly important to them. Instead of focusing on what they may list as truly important,  they instead spend time keeping up with the Jones’s… buying a certain type of house, a certain type of car, etc. not because they truly want that, but in order to keep up appearances.

Are our lives truly so dictated by others? Do we find ourselves succumbing to the same peer pressure that we as a society preach against to our children? I run across a number of couples each year who I have to give permission to live their own lives. That if time doing something is important to them, then focus on the things that will allow them to do that without worry rather than building up a bunch of stuff that would please someone else. If you have to buy something to impress your friends, perhaps you should ask yourself if they are really your friends.

I read through this article and realize that many will take a look at this and think to themselves, where is the financial planning here? There are no numbers. There are no investment selections. There are no directions for special tax treatment. There is no protection or estate planning. To those of you who are wondering, I challenge you to contact me, because there are many people who are wasting hundreds of thousands of dollars if not millions living someone else’s life. By first deciding to bark up the right tree, one can save years of heartache.


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Savings or Spending?

More often than I would care to admit, I hear people brag about how much they have saved. Often I will hear people say that they saved $50 on their groceries or they saved fifty percent on some purchase. Some people may even talk about saving for a vacation or some luxury item. I will suggest that such saving may not be truly saving at all, but rather spending in different areas. This is not to say that I am not guilty myself of saying I saved money when I felt as if I got a good deal or that I never put aside money for a large purchase.

I would argue that such savings is not really savings, though I may be able to purchase nicer stuff or nicer experiences. All of the above really translate into spending. At the end of the month if you do not have any extra to show for the money you saved while shopping, it really isn’t savings now is it? At least it is not the savings that will matter on a rainy day when you find that you need the money because of an accident or you were laid off of work, etc.

What then would I truly consider to be savings? Money that is not spent for over a year and is not designated for a specific purchase I would qualify as savings. Some of these savings may be invested, while others may be held in cash.

Spending less on items may lead to savings, but only if one has the discipline to actually put aside the amount spent rather than purchase another desired item or experience. It is an important mindset to maintain if one wants to build wealth.

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The Danger of Comparison

Let us get something straight. At least as I write this article, I am fat. I am not just overweight… I am technically obese. Am I as fat as other people that I know? No. I know people who are obviously less healthy when it comes to body size, etc. Am I fatter than other people I know? Yes. I definitely know of plenty people who are thinner, more muscular and healthy than myself.

Perhaps some of you are wondering where this is going. After all, this is supposed to be a blog at least in some sort related to financial planning…

The point is this. There is a very great danger in comparing yourself to others and using it as an excuse rather than focusing on what matters… where you should be in relationship to the capacities that you have and your goals.

People often tell me “but so-and-so spends more than I do and they make the same amount of money.” Unless your goal is to be so-and-so and to try to live the exact same life that they do, does that even make sense? Of course it does not.

Focus on your own stuff. Do what you need to do to get to your own goals. In my case with my weight, I need to exercise and watch my calorie intake. There are many ways in which I can exercise and there are many different foods which I may eat and either gain or lose weight respectively. What I may not do is take a look at other people and think that looking at other people is going to help me achieve success. If the ship is sinking… just being on a higher deck of the ship may not prevent me from being in trouble. Likewise, when it comes to peoples’ finances there are many ways to earn money, to invest that money so it will grow and to control spending so that you get the results that you want.

If you are in a situation where you truly do not need to work again because you have enough wealth built up to last you the rest of your life, please let me extend my congratulations. If you have not, then may I suggest that you need to do the things that will get you towards your financial goals instead of comparing yourself to others?

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The Benefits of a Roommate

In previous articles, I have pointed out that Americans have more space than they had 100 years ago. I have also pointed out that this space tends to cost more in terms of taxes, upkeep, and utility costs. Besides living in a smaller space, what can one do to leverage the space that one has currently?

May I suggest the benefits of having a roommate or renting out a room as a possible alternative? Often I will hear people say that they would like to be able to have a rental, and yet question when I suggest starting by letting out a spare bedroom. Sometimes they may point out that this is for when family/friends come to visit. Or they may say that they value their privacy and do not want anyone else sharing a space with them.

Let us take a look at some of the financial implications of being able to rent out a room for $450/month. Let us assume that you have a vacancy rate of 10% or that it takes a little more than a month to find a roommate. Let us also assume that due to various reasons that it costs $600/year to have the roommate in terms of upkeep costs, etc. Doing the math in this situation we would come up with an additional $4,260 in income.

If we were to have multiple rooms available to let, this figure could be increased accordingly. It is acknowledged that this amount could vary depending on the room in question.

What could you do with an extra $4,000+/year in income? What if you were to have this extra amount set aside for four or five years?  Would you then potentially be able to purchase a small rental unit of your own, or at the very least be in a position where the possibility is much more feasible?

For some people, the cost of loss of privacy is not worth it. I understand this. For those that do not mind, there may be some opportunity to be had in terms of improved cash flow and potential investment savings.

Let us take a look at the long term effects of having a roommate as described in our hypothetical example if you were able increase your rent by 3% per year and what would happen if you were able to get 3%, 5%, and 7% returns on your money respectively.

As you can see, we are talking about an opportunity cost that could be equal to several hundred thousand dollars over the course of 30 years. Now granted, this amount could vary based on returns and your tax rate. However, given the amount of money that is at stake, it behooves the question for many Americans, how much is your privacy really worth?

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In recent times there has been discussion of the 1% vs. the 99%. Strangely enough, in order to be in the top 5% of net worth you have to have $1.5 million in net worth including your home. The question is does a large net worth make you “wealthy?”

It depends.

Perhaps the best explanation that I have run across on what wealth means is that it is how long you could live given your current lifestyle, net worth, and investment income without working another day.

What sort of lifestyle are you living? If you need $300,000/year to live and have a net worth or $1.5 million, you are certainly wealthier than most. I would argue that you are not necessarily wealthy.

You would most likely have a little over 5 years-worth of wealth. That is to say you could live your current lifestyle for a little over 5 years (I am assuming at least some of it produces income) without working.

Now, what if we to have a true makeover and you were to cut your expenses down to $40K-50K per year and most likely live in a more modest home? All of a sudden, I would probably say that you are wealthy. Chances are you could live the rest of your life without working.

For those of us who are the 95%, I have several pieces of good news. One of the first is that you do not need to be in the 5% of net worth to enjoy life and enjoy it responsibly. For example, let us say that you own your own home. And you have $3,000/month in expenses as a couple. Let us also say that as a couple you bring in $2,000/month in social security. It is altogether possible with $300,000 in investments you could live a very comfortable retirement. The second is that you can usually make changes to adjust your lifestyle which can increase your wealth. The third is that it is never too late to increase wealth.

Wealth is a function not only of net worth/income producing assets; it is a function of our expenses as well. It is altogether possible that a man who owns a car wash and lives a modest lifestyle can be wealthier than celebrities who make millions, but spend it as fast as they make it.

On the other hand, if you increase your expenses, it is easy to lose wealth as well.

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Perhaps the Most Important Question

It is a question that most of us have annoyed our parents with when we were two or three years old. And yes, it can be one of the most annoying questions there is available. I will also suggest that it is the most important. The question is “Why?”


The reason that why is so important is that it allows us to gage the importance of anything we do and if we are honest… if we are stupid for doing something or not doing something. If we do not have a good answer to the why, then I will suggest that the rest of the questions, how, what, when, where, and who are meaningless.

This relates to almost any area in life. Two of the most important areas it relates to are goal setting and budgeting. Why do you live where you live? Why do you spend your time the way you do? Why do you eat what you eat?

There is a danger of getting caught into doing something simply because it is easy or because other people around you are doing something. But are these things truly what you value? Do you enjoy the results you are getting? If the answer is yes, I love what I am doing and the results that are coming from it, then fine. If the answer is no, perhaps you need to rethink some things. More importantly, are you taking different actions. After all there is a saying that the definition of insanity is doing what you have always done but expecting different results.

Don’t be insane.

Ask why you do things that you do. Or better yet, have someone you trust or someone who is objective ask you. Answer honestly and fearlessly. Through acknowledgment of the current situation you have a far better chance to change and hopefully to improve. Why would you want to improve? With that question I will answer it with another.

Why not?


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The Importance of Reflection

As the year draws to an end, perhaps this would be a good time to look back and reflect on 2011. What have you accomplished? Where have you fallen short of your goals? How do you feel about your accomplishments? Do you feel the goals that you did not achieve (if any) are still worth pursuing?

If you had goals that completely got disregarded, perhaps this may say something about the goal itself or at the very least, its placement in your life at this stage.

If you have met all of your goals for a number of years, please let me congratulate and challenge you. I am glad that you have met those things for which you have strived. However, if you always reach your targets, perhaps you are not setting your targets high enough given your capabilities. By the same token, if you consistently fall short of your goals, perhaps it would make sense to scale some of these down whether in terms of time frame or amount achieved.

Most likely, there may be some mix of goals that were attained, missed, or completely disregarded.  It is important to realize that most people’s priorities change with changing seasons or circumstances in life. What may have been important to us at one point can strike us as foolishness years later. This phenomenon can help us recognize the importance of trying to seek outside advice and perspective from those we trust before we commit to any of our goals.

In other blog posts I have mentioned a method for goal setting. Before you begin to write down your New Year’s Resolutions (if any), I would suggest that this could be a good time to go through the goal setting exercise again and look at exercises you may have completed in the past.

I look forward to hearing of your successes and the challenges that you face in reaching your goals. Please write and share them at


If you are reading this on the day that I post this, “Happy Thanksgiving!”  I encourage you to take the time and think about all of the things that you are thankful for in your life. Some of them can be regarding relationships such as family and friends, while others can be more mundane such as running water. Write these out.

What things are you glad that you have?

What relationships do you value?

What do you like best about your work?

Once you are finished with this list, consider taking the time to think about why those relationships or items are important to you. Is there anything else that is missing?

If so, write those down. Now, is there anything else missing? Anything for which you are truly thankful and not just writing down that you are thankful. If so, repeat. If not, I would like for you to think about your life and where you have spent your resources.

Now, what items are you surprised are not on your list?

Thankfulness is useful in that it often gives us an indication of what it is that we truly want to preserve.  As it relates to financial planning, this can give us an indication of where at least a portion of resources (time, money and skills) should be directed. And no, just because you may be thankful for running water does not mean that you necessarily have to purchase a fancier faucet. It does show that you would like to make sure that by and large that this remains in your life… that it is preserved. Preservation is a substantial part of financial planning as it relates to wealth and risk management.  The final question can be an indicator of changing priorities. Now it can be that some things are being taken for granted. For example, if you have electricity, I am fairly confident in suggesting that is something you should want to preserve. If however, something truly does not mean something to you, why maintain it? Consider focusing on the things and relationships for which you are thankful.

Please feel free to share what you are thankful for this Thanksgiving by writing , and have a very Happy Thanksgiving.