Bank on Yourself (r) Authorized Advisor and radio talk show host Teresa Kuhn explores various money myths and misconceptions, advises readers how to get out of debt more quickly, avoid paying unecessary and excessive interest, and how to legally pay less in taxes.
Teresa's contrarian approach to building a solid financial future flys in the face of conventional wisdom.
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I recently read an article in Business Insider outlining some of the ways in which wealthy people differ from average people both in actions and mindsets.
For example: while many of us are consumed by saving and being as frugal as possible, most self-made millionaires are busy looking for ways to EARN more money and then put that money to good use-making even more money.
A study of over 1,200 wealthy people conducted by Steve Siebold, a self-made millionaire and author ("How Rich People Think.") concluded that the vast majority of millionaires did not fall prey to the same "nickel and dime" mentality that plagues the majority of Americans.
Indeed, even in the toughest times, when others are cutting back, laying off workers, halting research and development and investment, these entrepreneurs are searching for ways to profit from the shaky economy.
According to Siebold, when a business owner or individual is so consumed by searching for ways to trim expenses, they often miss huge opportunities to grow their wealth. He also maintains that most of us fall victim to old school thinking when it comes to the pursuit of financial prosperity.
Writes Siebold in "How Rich People Think":
"The average person believes the harder they work the more money
they’ll make. Their linear thinking equates labor and effort with
financial success. This is why most people aren’t rich. They’re following
an outdated model of success and are confounded when they
reach middle age with little money to show for twenty years of hard
Another obstacle to financial success (perhaps the BIGGEST one of all) is that few of us abide by that very excellent piece of advice:
Pay yourself FIRST!
I can't overemphasize the fact that this one simple action has profound consequences for your financial future. Yet, an overwhelming majority of people continue to feed their wealth with "leftovers and crumbs." They sit down, pay all their bills, and give themselves whatever tiny portion remains.
This is, according to Siebold and other experts, a self-defeating mindset. No wealth happens until you reach a point where you have made a firm commitment that, no matter what, you will pay yourself before you pay anyone else.
Paying yourself first, of course, is not the same as spending on yourself. It is simply a discipline where you set aside a payment to yourself before you take out any other funds. You are, in essence, treating yourself like a creditor. Setting up a system to "bill" yourself can help cement this habit, as can having an automatic deposit made from your check into a savings account.
I realize that the high cost of living and flat paychecks are the prime reasons people can't seem to find the cash to pay themselves or start emergency funds. However, when I have sat down with clients and they've been honest about expenditures, I have usually found places where money can be saved and used to pay themselves.
The point of all this is that if you really want to achieve financial independence, you MUST change and adopt the habit of paying yourself first.
For many of my clients, having Bank on Yourself policies in place is the ultimate way to make sure you pay yourself first, consistently, EVERY month. Having money automatically deposited into a BOY policy allows you to pay yourself and achieve safe, steady growth of that money without having to expose it to Wall Street turmoil.
If you want to move from giving yourself crumbs and leftovers, call us and ask how hundreds of my clients have discovered a better way to pay themselves first...every time.
re: January 4, 2013- The worst start of trading in Chinese history. by Teresa Kuhn, JD, RFC, CSA Living Wealthy Financial Host, Living Wealthy Radio While it wasn't entirely unexpected, (at least to those of us who've been paying attention), the meltdown of China's stock market on the first of post-holiday trading triggered massive sell-offs in the United States and Europe and caused more than a few folks to clench their teeth. China's new "safety" mechanism, which had just gone into effect that day, halts trading of index futures, options, and stocks for 15 minutes whenever there is a move of 5% in the CSI 300. As Zero Hedge reported, "Following the initial halt in CSI-300 Futures at the 5% limit down level, the afternoon session opened to more carnage and amid the worst 'first day of the year' in at least 15 years, Chinese stocks collapsed further to a 7% crash. At 1334 local time, stock trading was halted for the rest of the day across all exchanges (at least two hours early)."
While there was an immediate impact on the rest of the
world, the plunge’s initial effects are somewhat muted due to the fact that
China tightly controls and limits foreign investment in mainland stocks. Foreign investors own less than 1% of Chinese mainland stocks.
The lion's share of losses from the January 4th meltdown were
felt by less than 14% of the Chinese population who are active investors.
But before you breathe a sigh of relief and head back out to do some more risky business, consider this:
In the age of globalization, world economies are so intertwined that someone in China can cough and everyone on Wall Street runs to get a flu shot.
There is absolutely no way that this won’t
ultimately affect every person who has exposure in the stock market. After all, Chinese investors have lost more about $3.4 trillion in
equity value from the markets mid-June peak until the July 7 close. And the slide looks like to continue as the bubble stretches until it can stretch no more.
3.4 trillion in personal wealth can't just vanish without causing a ripple effect across the globe, especially since Chinese consumption has been a driving force in so many economies, particularly the anemic US economy.
ZIRP and the Zen of Chinese Economic Maintenance
A central factor triggering the Chinese meltdown was their central bank's insistence on following a Zero Interest Rate Policy (ZIRP) which created a frenzy of borrowing. Cutting rates to rock bottom had the understandable consequence of driving people who were desperate to grow their wealth into the market. In other words, it just didn't pay to save...at all.
If any of the above sounds familiar to you... it should. It's exactly the same thing that has been going on in the United States for years. Savers have been crushed, debtors rewarded, and the whole system has become highly fragile and suspect.
I am not alone in thinking that having your precious cash on Wall Street right now, especially if you are at or near retirement, is like playing hot potato with a loaded grenade. Sooner or later, the grenade is going to explode and leave a big hole where your money used to be. Can you get SANE GAINS and still keep your nest egg safe?
I'm a big believer in legitimate investing, and I encourage my clients to seek out ways to increase their wealth that don't involve hard core gambling on overvalued stocks.
The first thing I tell them to do, though, is get themselves a Bank On Yourself policy to help manage their cash flow and provide safe, steady, and risk-free gains. Bank On Yourself (R) is a proven and safe cash management strategy that uses a versatile kind of life insurance to accomplish financial goals.
BOY can be used to finance large purchases such as income producing properties, houses, cars, businesses or to pay for vacations, medical emergencies, educational expenses, or other big ticket items. With Bank On Yourself as your financial linchpin, you will have the cash you need to control your own financial destiny without having to rely on banks or expose yourself to risk on Wall Street.
If you can afford to lose your money, then you probably won't benefit from learning more about Bank On Yourself. But, if you are like most people and are concerned that losing even one dollar of your cash could spell trouble in retirement, you should call our office now at (800) 382-0830.
I will be happy to send you a packet explaining all the details about the amazing financial tool that is Bank On Yourself.
Life has a habit of derailing even the most well-thought-out plans. That being said, there are still some simple steps you can take to ensure that your wealth stays intact as much as possible in the coming years.
Friend of Living Wealthy Radio, economist Harry Dent, believes that prudence is the best course of action over the coming years as Wall Street hijinks and demographics prove themselves incompatible.
Writes Harry in a recent edition of his newsletter:
"Most analysts think the U.S. economy is OK outside of these dollar and global slowdown factors.
But here’s a few thing they don’t see coming… happening this next year…
They don’t see the slowdown of the affluent sector, wherein the top 20% control over 50% of income and spending. This group peaks at age 54 – that’s this year – and they hold almost all of the bubbled up financial assets like stocks. That’s where QE has had its impact – not on Homer Simpson.
Analysts also don’t see that car sales, which have been strong up to this point, will lead the downturn in 2016 as they also peak with that affluent sector at age 54."
With this in mind, I thought of a few things that you can do to prepare yourself for the wild ride.
1.Eliminate debt as much as possible. Debt, especially consumer debt, can absolutely strangle your economic progress and get you caught in an endless "two steps forward, three steps back" loop. Do anything and everything you can to pay off your debts, even if all you do is kick in a few extra dollars on your car payment or place a moratorium on your credit card use. If you have cash built up in your Bank on Yourself policies, consider using some of that to pay down debt or to make major purchases. Doing so will not only help you get out of debt, but you will build up your pot of cash even more quickly.
2. Start learning more about asset planning and protection. Protecting what you own with proven asset protection strategies Asset protection trusts are powerful tools that you can use to help stem the erosion of your wealth. A great place to start is with an E- copy of Arnold Goldstein and Ryan Fowler's Asset Protection in Financially Unsafe Times Download it here:http://www.mediafire.com/view/qoiaura2ljfadwz/AssetProtection_%281%29.pdf
3. Call our office and schedule time with a Living Wealthy advisor. Even if you have someone else doing your financial planning, it never hurts to have a second pair of eyes evaluating your financial blueprint. We'll look for potential weaknesses in your current plan and make suggestions as to how you can shore them up. If you are already a client, now might be the perfect time to check in with us to ensure you are on track to your goals. Call now and get on the schedule! (800) 382-0830
Remember, it's not all "gloom and doom, " especially when you have a Bank on Yourself policy as your ultimate cash-flow engine. With a mindset that includes debt and cashflow management and a conservative approach toward genuine investment, you will emerge in a better place, even if the economy takes a nosedive.
There’s a certain amount of trust and faith required when
entering into a business relationship, as well as a fair amount of reliance on
companies to follow accepted practices and do the right things for their
And, while most of us realize that the way
products are marketed may be the polar opposite of how they actually work, we
continue to have faith that what we are being told about the things we buy is
at least somewhat truthful.
As some of the most trusted and respected entities, American
life insurance companies have been successful mostly because ordinary people
have put so much faith in them and their promises.
Throughout our country’s history, people have bought
insurance policies that last for years, often entire lifetimes. They do this believing that the insurer would
never violate their trust by failing to honor the original policy terms or by
doing things that would harm them financially.
Most people, for example, never
expect the company to suddenly exercise a provision in the contract that would
have an adverse financial consequence for them.
Unfortunately, however, such trust may no longer be
Except for whole life insurance policies, most other
permanent life insurance policies have a right to increase the cost of insurance
built into their contracts.
In the past, most people did not pay much attention to this
particular provision simply because insurers realized it would be bad business
for them to use it. Increasing the cost
of insurance (COI) was just something that was seldom, if ever, done.
Recently, though, unprecedented types of premium increases have
begun to hit consumers. These rate hikes
call into question the trustworthiness of insurance companies and threaten the
At least four major
insurance carriers have published significant rate hikes with no warning to
These rate hikes result from increases in the cost of
insurance (COI) companies charge their existing customers.
For those of you who may not know what COI is, it is the
pure insurance protection portion of a policy and is tied to mortality risks.
In the past, COI increases have been unthinkable and
consumers have relied on the implicit and explicit promises of life carriers that they will never have COI
increases. The breaking of this promise
by four big insurance companies virtually guarantees that others will follow.
There’s nothing subtle about these premium increases,
either. Policy holders are getting bills
with anywhere from 40% increases in premiums to over 100 percent! Such increases come at a time when health
insurance, automobile, and other insurance premiums are also increasing.
The impact on older Americans, especially those over age 65,
is tremendous. This is because the highest COI rates occur as
people approach and surpass their expected mortality.
So why are these carriers suddenly starting to raise these
rates and what can you do to avoid having this happen to you?
To understand the reasons for this situation, you need to
know a little bit about how life insurance works.
Nearly all permanent life insurance policies, including indexed
universal life, whole life and variable life, use projected COI to help
determine how the policy will be priced.
Even “guaranteed universal life” contains a mortality
component found on the company’s side of
the risk equation.
If an insurance company’s projections are off and more
insureds die than expected in a particular group, the company can pass those additional
costs along to their policyholders.
This has always been
a possibility, but until this year, COI rate hikes were very rare. Insurance companies realized that doing this
would create massive PR headaches and potentially tarnish their public image.
Now however, major insurers such as Transamerica say they
can no longer afford to maintain public perception at the expense of
The company recently
revised COI costs for a huge block of universal life insurance business written
in the 1990’s and now requires all proposals for these policies to be
illustrated at the guaranteed mortality rate, guaranteeing large rate
Another large issuer of universal life insurance,
Financial has also notified many of its’ universal life policyholders about coming rate increases.
AXA , which is the largest insurance company in the world,
also recently increased COI rates for a block its’ universal life policies. These policies, in addition to being singled
out due to bad mortality rates, were also chosen according to premium payment
Universal life and flexible
premium policies let owners choose how much they pay each year, provided there
is sufficient cash value in the policy.
In addition to adverse mortality rates, the Fed’s stubborn
insistence on maintaining ZIRP (zero interest rate policies) has had a negative
effect on customers’ abilities to fund policies.
If you have one of these types of policies and you’ve
experienced rate increases such as those above, you should contact our
office. We’ll suggest alternate
strategies that may help you offset some of these increased costs.
As an advisor and agent, I can’t believe that insurance
companies would have such callous disregard for their loyal policy
holders. The consequences of increasing
COI are not reflected in a bunch of numbers on the company balance sheet, but
rather in the daily lives of people, especially older Americans who must
somehow deal with this blow to their budgets.
On a positive note, I work hard to ensure that none of my
clients will ever experience such devastating impacts on their budgets. At Living Wealthy Financial we are extremely
selective about the companies we use to implement our Bank on Yourself®
We know that other permanent life solutions shift the risk
back onto the insured, which in effect means the INSURED is now responsible for
making the insurance company’s guarantees work.
How crazy is that?
Sure, whole life might not seem as “sexy” as these other
types of insurance, but how much of your savings can you afford to risk? I would guess your answer is “none.” If that’s the case, then you need a strategy
that reflects the true purpose of insurance- to pass risk from the INSURED to
the COMPANY, not vice-versa.
If you are working with a stock company, versus the mutual
companies with whom I work, then you should know that those stock companies are
geared toward making decisions designed to maximize their shareholder’s
wealth…not yours. That means that in the
long run they are not too motivated to do what works best for policyholders.
PS: If you have a policy that is with a stock company, and you’d
like us to analyze it and make recommendations, at absolutely no cost or
obligation to you, then call our office now at(800) 382-0830 or visit our website at http://livingwealthyfinancial.com/
There are three words that could have the biggest impact on whether you enjoy a comfortable retirement... or you have to struggle and forego life's luxuries – and even life's necessities.
But almost no one is talking about these three words. And there's a good chance you've never even heard of them.
These three words could have more impact on your retirement lifestyle t han living longer than you expected... or than being forced to retire sooner than you planned (which happens to nearly 50% of Americans, according to the Employee Benefit Research Institute).
The three words may sound a little technical, but I'm going to make them brain-dead simple to understand.
The three words are: sequence of returns. Specifically, the "unfavorable" kind.
It's a fancy way of saying that retirees who have a big portion of their assets in equities and mutual funds face the very real risk that the market will fall as they are withdrawing money from their accounts.
Many people plan to use the widely recommended "4% rule," which advises retirees to take out no more than 4% of the value of their retirement accounts (adjusted for inflation) each year. Studies show that rate of withdrawal has a good chance of making your money last as long as you do. (It should be noted that more recent studies show that a 3% annual withdrawal is the maximum needed to make your money last.)
That means that if you have $100,000 in your retirement accounts, you can safely pull out $4,000 a year using the 4% rule. If you have $500,000, you can withdraw $20,000 a year, and if you have $1 million in your account, you can take out $40,000 a year.
If you haven't thought much about what kind of lifestyle withdrawing 4% a year from your accounts would give you, I'm guessing you might be feeling a little queasy right about now. Oh! And don't forget to take whatever you'll have to pay in taxes that you deferred in your 401(k) or IRA off the top of that number!)
It's easy to see that if we experience another market crash of 50% or more – as has happened twicesince 2000 – as you're nearing or already in retirement, it could have a devastating impact on how much you can withdraw each year.
If your million-dollar 401(k) suddenly becomes a 201(k) worth $500,000, withdrawing 4% will provide you only $20,000 a year, instead of the $40,000 you had planned on.
But here's where it gets really sticky... timing is everything...
When you run the calculations, you discover that the impact of a market decline in the first few years of retirement is even worse than in later years. It turns out that when you begin to take withdrawals, market volatility has a far greater impact than rate of return.
An unfavorable sequence of returns may make you have to cut back significantly on your retirement lifestyle, or force you to work longer than you had planned.
The BIG problem, of course, is that there is no way to accurately predict when the next market crash will happen, or where the markets will be when you are ready to retire. We may be at the beginning of the next major crash... or several years away from it. Nobody knows for sure.
One way to protect yourself from this very real threat to your retirement lifestyle is to diversify your assets.
What if a portion of your savings were in an asset that is guaranteed to grow by a larger dollar amount every year? That would be a favorable sequence of returns that translates into financial peace of mind for life.
Such an asset exists, and it's called Bank On Yourself. It's never had a losing year in more than 160 years!
It also lets you fire your banker and become your own financing source for your cars, vacations, a college education, business expenses and more.
And the best part is that it's easy to find out UP-FRONT what your bottom-line guaranteed numbers and results could be if you added Bank on Yourself to your financial plan.
For a long time now, I have been encouraging my clients, friends, and family to take charge of their own financial destinies by becoming more educated about how money really works.
It's always shocking to me when I read the latest studies demonstrating just how few Americans grasp basic financial concepts. Even well-educated Americans who consider themselves to be savvy in the area of personal finance often fail when given simple money tests.
Pamela Yellen recently joined the Living Wealthy Podcast to discuss her short, simple, but ultimately revealing new money quiz and the alternative to Wall Street offered by the Bank On Yourself system.
Each year, over 15 million United States residents have their identities stolen.
The resulting financial losses have been estimated at nearly $50 billion annually.
According to the US Department of Justice approximately 7% of all
American adults have experienced identity theft with the average loss per incidence at $3,500.00.
As the technical expertise and savvy of would-be identity thieves increases, so does their ability to extract information from government and corporate databases, even those with high-level security.
Breaches of these databases occur much more frequently than you might expect, making your risk of identity theft even greater than before.
For several years now, I have recommended that my clients take advantage of the legal access and identity theft protection offered by LegalShield.(R)
LegalShield Platinum Council member Larry Smith says that as the danger of identity theft has grown, LegalShield's product has become stronger and more effective, offering features that other identity products can't match at a price nearly anyone can afford.
In June of 2015, security powerhouse Kroll International partnered with LegalShield to launch "IDShield," an innovative solution to guard against identity fraud.
"Everyone needs this, says Smith, "and the monthly cost is such that anyone can afford it. Your financial information is vulnerable and you need to protect it as best you can."
Learn more about the legal and identity services offered by LegalShield by going here: