The Ultimate Financial Plan E-Book

Jim Stovall

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 471

Veröffentlichungsjahr: 2011

Beschreibung

How to build a financial plan that really blends into your life The latest volume in the bestselling Ultimate series, Jim Stovall and Tim Maurer's The Ultimate Financial Plan: Balancing Your Money and Life is a one-stop, comprehensive, personal financial planning book exploring the intersection of money and life. The Ultimate Financial Plan examines the connection between actions, thoughts, and feelings when it comes to all things financial. The key to getting the most out of your wealth, the authors argue, is certainly found in the wise utilization of tools, like budgets, bank accounts, 401(k)s, IRAs, Roth IRAs, education savings plans, and real estate, as well as home, auto, business, health, disability, and long term care insurance, but even more so in the contentment found in balancing money's influence in our lives with personal values and goals. * An insider's look into the recently humbled "Big 3"--the banks, brokerage firms, and insurance companies--and the inner workings that often set their proprietary goals and objectives above all * A critical examination of the role of various financial sales people, advisors, planners, and consultants * A guide to navigating Economic Bias--a conflict of interest involving money--and how it affects every financial decision we make The Ultimate Financial Plan is the application of the resources at your disposal for the purpose of living your life to the fullest, and this book will show you the quickest route to getting started on the path to ultimate success.

Leseprobe

Contents

Foreword

Preface

Acknowledgments

Introduction

Chapter 1: The Gift of Money

The Value of Money

Money Beliefs

Chapter 2: The Gift of Purpose

Personal Principles

Goals

Chapter 3: The Gift of Discipline

Personal Financial Statements

Financial Crises

Chapter 4: The Gift of Enough

Financial Freedom

The Danger of Discontent

Emergency Reserves

Bad Debt

Better Debt

Economics and Emotions

The Cure for More

Chapter 5: The Gift of Discernment

The Accident

Risk Management Techniques

How Insurance Works

Chapter 6: The Gift of Security

Life Insurance: Why?

Life Insurance Needs

Life Insurance: How?

Life Insurance Wants

Different Types of Life Insurance

Purchasing Life Insurance

Chapter 7: The Gift of Certainty

Auto Insurance

Homeowner’s Insurance

Excess Liability (Umbrella) Insurance

Chapter 8: The Gift of Health

Health Insurance

Types of Plans

HSAs and FSAs

Recent Health Insurance Changes

Disability Income Insurance

DI Moving Pieces

Social Security, Medicaid, and Medicare

Long-Term Care Insurance

LTC Moving Pieces

Chapter 9: The Gift of Clarity

Stocks and Bonds

All Things Considered Equal?

Mutual Funds

Economic Analysis

Market Valuation Analysis

Technical Market Analysis

Efficient or Not?

Passive versus Active

Investing with “Style”

Relative Return versus Absolute Return

Index Huggers, Return Chasers, and Risk Managers

Decisions, Decisions

Chapter 10: The Gift of Transparency

Immediate Annuities

Fixed Annuities

Variable Annuities

Equity Indexed Annuities

Annuity Disadvantages

Annuity Advantages

Chapter 11: The Gift of Preparation

Tax Myths

Tax Rules

Chapter 12: The Gift of Learning

Family Education Policy

Having The Talk (no, not that talk)

Education Savings Plan

The 50 Percent Rule

Chapter 13: The Gift of Fulfillment

Retirement Past

Retirement Present

Retirement Future

Employer-Sponsored Retirement Plans

401k Rollovers

Traditional IRAs

Roth IRAs

Traditional versus Roth

Roth IRA Conversions

Fulfillment Planning

Retirement Makeover

Chapter 14: The Ultimate Gift

Wills

Durable Powers of Attorney

Advance Directives

Beneficiary Designations

Probate

Estate Tax

Chapter 15: The Gift of Discretion

“The Big Three”

Financial Planner Compensation

Finding a Professional Planner

Chapter 16: The Gift of Action

Fundamental and Practical Change

Reprise

Stay Connected

About the Web Site

About the Authors

Index

Additional Praise for The Ultimate Financial Plan

“In my 38 years of banking, I saw thousands who could have avoided financial and life problems by reading the material in The Ultimate Financial Plan by Jim Stovall and Tim Maurer. This could be the best investment you ever made in yourself.”

—Don M. Green, Executive Director, Napoleon Hill Foundation

“The severe recession and financial crisis of 2007–09 have shaken the foundations of the American economy. Its rebuilding and restoration won’t come from looking elsewhere for help, but will take shape through the accumulated actions of individuals and families. To help, Jim Stovall and Tim Maurer have produced a book filled with insight and utility. We would all do well to heed their lessons.”

—Carl J. Schramm, President and Chief Executive Officer, Ewing Marion Kauffman Foundation

“Timing is everything, especially concerning your personal finances. As you face your own crossroads in life, this excellent book (like a GPS road map) gives you the timeless, as well as timely, truths you need to reach your ultimate financial goals.”

—Denis Waitley, author of The Psychology of Winning

“The Ultimate Financial Plan is a book for our times. The authors demystify the financial industry, explain the financial crisis, and provide readers with a financial road map for navigating each financial milepost of their lives. Stovall and Maurer have artfully combined their personal stories and a healthy dose of inspiration along with a step by step plan for mastering the complexities of our financial lives. However, their greatest gift in assembling this comprehensive and insightful guidebook is reminding us all of the importance of building ‘true wealth.’”

—Carol Anderson, President, Money Quotient

“The Ultimate Financial Plan is a useful guide to help readers build financial plans that will support their own unique life goals. Jim Stovall and Tim Maurer provide detailed financial information in a readable, storytelling style that addresses more than just the mechanics of managing money.”

—Rick Kahler, CFP®, co-author of Conscious Finance, The Financial Wisdom of Ebenezer Scrooge, Facilitating Financial Health, and Wired for Wealth

“The Ultimate Financial Plan is very conversational and it is just spilling over with excellent information. Where most personal finance books are all hat, no cattle, Jim and Tim have really delivered with a lot of actionable, quality advice. They’ve hit the nail on the head when it comes to life and money—they’re so intertwined—they do a great job of illustrating that your life comes first, and your money should simply fall in line.”

—Jesse Mecham, Founder and Creator, You Need A Budget (YNAB.com)

“Practical, personal, and fun, grounded in the wisdom of life’s realities, promises, and possibilities, The Ultimate Financial Plan puts our personal relationships with money in living perspective without nagging, harping, or preaching. It will give you much to talk about and even more to think about. Highly recommended.”

—Richard B. Wagner, JD, CFP®, President, WorthLiving, LLC

Copyright © 2011 by Jim Stovall and Tim Maurer. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

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Library of Congress Cataloging-in-Publication Data:

Stovall, Jim.

The ultimate financial plan : balancing your money and life / Jim Stovall and Tim Maurer.

p. cm.

Includes bibliographical references and index.

ISBN 978-1-118-07353-7 (cloth); ISBN 978-1-118-10794-2 (ebk); ISBN 978-1-118-10795-9 (ebk); ISBN 978-1-118-10796-6 (ebk)

1. Finance, Personal. I. Maurer, Tim. II. Title.

HG179.S8445 2011

332.024—dc22

2011012870

As always, I would like to dedicate this book to Dorothy Thompson, who, once again, turned my words into sentences and paragraphs that have become this book. Also, I would like to dedicate this effort to my mother and father, George and Florene Stovall, who taught me that money is important but is only one element of a successful life.

—Jim Stovall

I dedicate this book to my beautiful wife, Andrea, and my remarkable sons, Kieran and Connor, collectively my inspiration and reminder that money and material possessions serve no greater end than the furtherance of relationships.

—Tim Maurer

Foreword

“Begin with the end in mind” is an old saying, but it is as true as ever when it comes to planning. Planning for what? What is the end? What is the desired result? What is the goal? If you cannot answer these questions, then you are spinning your wheels and wasting valuable time.

This is true no matter what you are planning for. How many times have you been in “planning” meetings or have worked on business or personal plans? People spend enormous amounts of wasted hours planning how they are going to do something without knowing what the end is or why they are doing it in the first place. If you don’t know the “why,” your planning won’t pay off.

You need a driving purpose that is bigger than just getting there. It has to include the journey as well. Think about how many times you have started anything and stopped in the middle.

The classic Gone with the Wind recently celebrated its 75th anniversary. It was originally published by Macmillan Publishing Company in 1936. It sold for $3.00. It took author Margaret Mitchell 10 years to complete the masterpiece, typing chapter after chapter. But the first chapter she typed was the last chapter of the book. She began with the end in mind. Everything that followed had a purpose.

Having a purpose is a key element of any kind of plan. That is especially true when that plan involves money, which almost every plan does sooner or later. So it follows that creating a financial plan requires a vision and a purpose.

When it comes to money and financial planning, life gets in the way because most of us want to have both the financial success and also a life. People talk about having balance in their lives, but few people ever achieve it, mainly because they have no plan.

The Ultimate Financial Plan by Jim Stovall and Tim Maurer, which you are about to dive into, is your guide to help you find the purpose for your plan. It is the natural extension of The Ultimate Gift, where author Jim Stovall showed us the value of living life to the fullest. Now that you have the message, you have been given a road map; a purpose for the best use of your resources—your gifts.

You will begin this journey with the concept of money and why it is so misunderstood. Once you understand what your personal principles are—what fulfills you—you can move on to creating goals that are more likely to be achieved by using the many “Gifts” the book includes. You’ll want them all!

One of the keys for me was the review of Benjamin Franklin’s “13 Virtues” highlighted in Chapter 2, under the “Goals” section. These are certainly good reminders and can help determine the path you and your money take in building a life you can be proud of.

As you go through the book, you’ll be looking at everything differently. When you read about life insurance for example, you’ll understand the “why” part and how important it is to manage different kinds of risk. You’ll also have new respect for the “Gift of Certainty” when it comes to topics like auto, home and liability insurance in Chapter 7 and the “Gift of Health” in Chapter 8.

Managing debt is another issue that can keep you from your dream life. It’s important to understand how discipline and the “Gift of Enough” can help you steer clear of the financial drain of debt. Think about this concept in Chapter 4: “The inverse of savings is debt.”

You’ll read about my favorite subject, Roth IRAs. That’s a gift from the government and we don’t have many of those, especially in the tax code. I’m big fan of keeping more of the money you make, and tax-free Roth IRAs are the way to go. I was so happy to read this line in the book: “Everyone would be better off in retirement with a healthy bucket of tax-free cash.” Think about how much more of your life’s goals can be accomplished if your retirement fund is totally tax free! I did this myself.

The book travels with you in all phases of planning, from saving, to insurance, to education, through debt, to estate planning and even evaluating your financial professionals, whose job you will make easier if you can tell them what you want to accomplish, and more important...why.

You are holding The Ultimate Financial Plan. You will find that as you go through the book, you will discover many gifts and understand their purpose in your life and in the lives of those you love. As you begin with the end in mind, your path to financial freedom will appear. Enjoy the journey.

Ed Slott,

America’s IRA Expert and bestselling author of a number of retirement books, including the latest, Stay Rich for Life!

Preface

I have written a dozen books prior to this one. These books have included autobiographies, motivational books, business books, and several novels. As a blind person, I write in a totally unique and quite unusual way. I dictate each of my books to a very talented colleague, Dorothy Thompson, who is the best grammarian I have ever known. As I dictate, she puts the books into sentences, paragraphs, and chapters. We write very quickly and rarely make any changes or edits. With over 8 million books in print, we must be doing something right.

I have a number of unwritten rules that I follow when I am writing. I never plan or outline my work. I don’t title a book until it’s finished. And I rarely read what I’ve written until it is completed. Another of my unwritten rules involves never collaborating with anyone else in authoring a book. I’ve had a number of very flattering offers to cowrite a book with some very well-known and talented people. I have never accepted one of these offers because of the unique and unusual way that I work.

Now, for the first time, I find myself collaborating on a book. This goes against everything I have done to date, but I’m willing to alter my successful system for one very important reason: It is best for my readers and the overall project.

I’ve never considered collaborating on my novels because they merely require me to tell the story that is in my mind. Authoring autobiographical books would not lend themselves to collaboration, because I am still the world’s leading and undisputed authority on me and my opinions. But now, as I seek to write something meaningful about financial matters and the current economic conditions that affect every area of our lives, I find myself facing some new challenges that I have not dealt with before.

When I write a motivational book, it is simply a matter of telling my readers why they should do the things that they already know to do. In these matters, we don’t fail because we don’t know what to do—we fail because we don’t do what we know. However, as I face the daunting task of attempting to lead my readers through the turbulent times we are facing in the economy and in our own personal finances, I recognize it’s not only a matter of motivating individuals regarding why they should undertake a financial strategy, but additionally, they must know what it is that they should do.

We are facing an economic landscape that is totally unique and unprecedented. Furthermore, it is changing daily. These factors combined to convince me that the only way to address this effectively is to collaborate with an individual who has the expertise and track record of helping real families in the real world.

As an author, columnist, platform speaker, and founder/president of a television network, I have been interviewed on literally hundreds of radio and television programs. Only a handful of these stand out in my mind over the years. I remember the day when I arrived at my office, and I was told, among many other things, my calendar called for a one-hour interview on the radio to promote my book, The Ultimate Gift. I deplore long interviews as most radio and TV hosts neglect their homework, leaving you floundering to fill the time on their program. When you are facing even a 10-minute interview with one of these unprofessional interviewers, it can seem like a transcontinental flight just getting through a few moments on the radio.

When I sat down to do what was to be an hour interview with Tim Maurer, I will admit that I was filled with a bit of dread; however, when Tim and I began talking about The Ultimate Gift book and movie, as well as life in general and the things that matter to real people, the hour flew by before I knew it. I will admit that I was actually excited when Tim called the following year and asked me to do another full hour to discuss my business book, Ultimate Productivity. He was positive, upbeat, and—unlike most of his radio colleagues—had actually read the book. Talking with Tim Maurer is like talking with an old friend, while you let the radio listeners eavesdrop.

When Tim called and asked me to collaborate on this book project, my initial reaction was not positive, as it violates all of my rules to date; but since I had already built up so much respect and esteem for Tim, both personally and professionally in our radio encounters, I was willing to listen and give him the benefit of the doubt.

I came to the conclusion that if I’m going to write about anything at this point in time that will make a difference in people’s lives, it’s going to have to deal with financial matters and the economy as a whole. The current trends on Wall Street and on Main Street are affecting every area of daily life. Money is far from the most important thing in life, but it affects each of the areas that are the most important things in life.

I’m very proud to collaborate with my friend, Tim Maurer, as I tell you why money is important and how you should prioritize it and as Tim tells you what you should do and when you should do it. I feel as if I’m the travel agent or tour guide, encouraging you to go to a marvelous destination and enjoy everything it has to offer, while Tim is the captain of the airliner that will get you there safely, no matter how turbulent the conditions may be.

Being motivated to act is useless unless you know what to do. Conversely, knowing what to do is irrelevant unless you are motivated to act. Together, Tim and I will endeavor to help you plan your financial destination and help you get there safely and on time.

Just as I have offered the readers of my other books, I want to offer you the following opportunity. If this book raises questions that it does not fully answer to your satisfaction and comfort, or if somehow you don’t believe financial success and well-being is within your grasp or meant for you, pick up the nearest phone and call me at 918-627-1000. As always, I want you to know that you have one guy that believes in you, your dreams, and your financial success.

Jim Stovall

Acknowledgments

I would like to thank Jim Stovall for his willingness to consider, support, and undertake this collaboration. I learned very quickly why Jim is a highly sought-after speaker and prolific writer, as his words and actions breathed life into this project when it was little more than a hopeful notion.

Every word and phrase in this book benefited from the review and critique of Dorothy Thompson, Jim’s right and left hands, and Robin Maurer. The latter also answers to Mom when I or my brothers are around and helped ensure the book’s content was technical enough to teach but fluid enough to read.

I so value and have internalized Drew Tignanelli’s thoughts in the study of money and life, they most assuredly have been presented as my own throughout this book in addition to where he is quoted. I thank him for his selfless contributions to the book’s content, and to me and my family, personally.

Many colleagues and industry experts have contributed their comments and encouragement, such as Steve Forbes, Mark Victor Hansen, Don Green, Don Golden, Denis Waitley, Ezra Kucharz, Carol Anderson, Carl Schramm, Dick Wagner, Rick Kahler, Carmen Wong Ulrich, Pat Goodman, Addison Wiggin, Marcus Harris, Aaron Patzer, Jesse Mecham, Odysseas Papadimitriou, Dan Singer, Sean Kelly, Kelly Morrison, Russell Lagreca, Manash Ray, Eric Pines, Matt Rakerd, Greg Rittler, Chris Guillebeau, Kimberly Palmer, Robert Brokamp, and Josh Itzoe, lending considerable strength to this project.

Thought leaders in the arenas of money and life who unknowingly lent their wisdom and humor to this book are Stephen Covey, David Allen, Dave Ramsey, Ted Klontz, Warren Buffett, Richard Foster, Rob Bell, Bono, and, of course, Chevy Chase.

Special thanks to everyone at John Wiley & Sons for bringing this content to the page, but especially Laura Walsh for helping craft the vision for this project and Judy Howarth for aiding in the implementation of that vision.

Finally, I’d like to thank my colleagues at the Financial Consulate for their support of this initiative—Ben Lewis, Chuck Bender, Roger Bair, Kelly Allen, Sue Fenimore, Suzanne Hall, DeAnna Tefke, Amber Shinsky, Jeff Will, and especially Mike McCarthy, who worked tirelessly to create the online exercises for the Timely Applications in each chapter.

Tim Maurer

Introduction

“Okay, what did the old goat give me?”

In The Ultimate Gift, billionaire Red Stevens’s stratospheric financial success had created a generation of greed and sloth in his family. He had created an enormous estate, but no legacy of character that would be passed on. He hoped to make it right from the grave by putting his youngest relative, grandnephew Jason Stevens, through a grueling 12 months of life lessons to upend his view of money and life. The only way Jason would receive his inheritance was to comply.

Who is the main character in The Ultimate Gift? The billionaire, Red Stevens, or perhaps the playboy spendthrift, Jason Stevens? No, it’s MONEY. Or, at least, that’s what Jason thought. After all, who among us can claim that money is not a main character in our lives? We rarely escape a day in which it is not spent, moved, invested, swindled, wasted, or earned, and even if we sought to eliminate its influence in our lives, we’d be sure to fail at that task. And that’s okay, because while it is not an adequate love, passion, or muse, it is also not irrelevant, unimportant, or evil. Money must not be the hero in our story, but it is an excellent supporting cast member.

Much like Jason Stevens, we need to allow our minds to be reprogrammed (regularly) to put money in its place—or places, really. Those places often include tangible “buckets” like checking accounts, savings accounts, 401ks, IRAs, Roth IRAs, education savings plans, and real estate as well as home, auto, business, health, disability, and long-term care insurance. But other less tangible places are investments in our knowledge, understanding, and wisdom, which lead to purpose-filled careers, sleep-at-night security, artistic endeavors, creative philanthropy, fulfilled retirements, and meaningful legacies.

The ultimate gift is “life lived to its fullest,” so the ultimate financial plan is the deliberate application of the tangible and intangible resources at your disposal for the purpose of living your life to the fullest.

The word ultimate carries a great deal of weight. It must not be used lightly, lest it be considered a hopeful embellishment. How, then, can we be sure that a title as deep and wide as Financial Plan is deserving of such an adjective as Ultimate? Is it because this volume houses all of the objective facts known to exist on this vast topic? No, that’s impossible, and quite frankly, you’d never buy that book because of its ridiculous page count and tendency to cure insomnia. Is it because it has the backing and endorsement of the financial industry establishment? Again, no; while many industry experts and third-party outsiders have lent credibility to this project through the inclusion of their thoughts and affirming words, this book is certainly more independently minded than (if not counter to) the mainline thought processes in the financial industry.

The reason we can be so sure that this is the ultimate financial plan is because it is strenuously focused on YOU. The most brilliantly crafted financial plans often go unimplemented because they are more about defending the mainline industry thought processes and the financial planner rendering the recommendations than they are about YOU. We highlight the most important financial planning facts and we explain the industry’s presumptions (even as we often dispute them), but we always do so as your advocate first and foremost. And there could be no more important time to do so.

An Economic Pearl Harbor

“It really is an economic Pearl Harbor,” said Warren Buffett, speaking of our most recent, and arguably current, economic crisis. What brought us to this point? There is certainly no shortage of blame being spread around. Opportunistic, self-serving companies deserve their fair share of the blame. Their dedication to profit over service led them to create and sell products that were destined to hurt consumers in the future. Additional blame cast on us, as consumers, is also justifiable. Corporate greed would not have gained a foothold had we not cast aside the financial wisdom of generations past, instead seeking to have more sooner and save less, or never, while suckling off of our overinflated home equity. Much has been said, and more will be, of the actions (and inaction) of companies and consumers that led to this historic economic demise.

However, our actions are only symptomatic of our thought processes. A thought precedes every action, yet we rarely even recognize our thoughts about money. Indeed, talk of money and things financial is pervasive in our society, yet we address money as though it is purely objective, dollars and cents—an end, not a means. How then can we alter our money behavior without examining what we believe about money? What you believe about money will determine what you will do for and with it.

What would it look like to apply the money and life lessons learned by Red and Jason Stevens in your present and future?

This is a personal financial planning book exploring the intersection of money and life. We explore the connection between our actions as well as our thoughts and feelings regarding things financial. You may not be quite the cynic Red was or the spendthrift Jason was, but you needn’t go through a rock-bottom epiphany to learn how to better integrate money into your life. We’ll reintroduce timeless financial truths, many of which were forgotten in the run-up to our current economic crisis, and offer the timely practical application of these truths that can improve your life today. We’ll offer you an insider’s look into the recently humbled “Big Three”—the banks, brokerage firms, and insurance companies—and the inner workings that often set their proprietary goals and objectives over our own. These findings are not speculative but based on my experience working as a financial advisor in each of them.

Economic Bias Alerts

We’ll examine the role of the various financial salespeople, advisors, planners, and consultants and educate you on the economic bias of each to make you a better consumer of their product and service offerings. Economic bias is a term we’ll use throughout the book to point out a conflict of interest in which one party may have the motivation to alter its behavior for the reason that it will benefit financially based on the action or nonaction of another. Some economic biases are obvious; when we purchase a new or used car, we understand that the selling agent (a) wants us to purchase a car and (b) would prefer that we purchase it for a higher, rather than lower, price. When we purchase life insurance, we expect that the agent wants to sell us more so that he or she can make a larger commission. But many economic biases are not so easy to spot. Did you know that the economic bias of a home and auto insurance agent is actually to sell you less insurance?

We are well-served to recognize that economic bias exists in every service or transaction, corporation, or nonprofit. Car salesmen and insurance agents exhibit it, but so do financial advisors, lawyers, universities, authors, pastors, and doctors. Economic bias in and of itself is not bad, and it is not our objective to make you paranoid or judgmental of every interaction involving money. But you are a better-educated consumer if you know how to spot it, bring it to the forefront of your business dealings, and minimize it to the greatest degree possible. Throughout this book, we’ll offer economic bias alerts to point out examples of economic bias in the financial services realm.

Timeless Truths

In The Ultimate Gift, Red teaches Jason 12 life lessons in the form of gifts, like The Gift of Work, The Gift of Problems, Dreams and Laughter. These aren’t chic or trendy, but instead wisdom that has stood the test of time. Even while laws, governments, rules, regulations, and cultures change, there remain timeless financial truths. These truths are recognizable, but they’re shrouded among a host of equally timeless falsehoods. These falsehoods are reincarnated in each generation, like Gordon Gekko’s proud mantra in Oliver Stone’s movie, Wall Street, “Greed . . . is good,” and the entertaining but preposterous bumper sticker proclaiming, “Whoever dies with the most toys wins.” Throughout this book, Jim Stovall will represent the foundational truths upon which a successful financial plan is built.

Jim also has a unique ability to offer his helpful directives and have us receive them. We all have a unique history that we bring into our decision-making, but we often rely on our uniqueness to offer justification for our actions. “Yeah, that may have worked for you, but my situation’s different . . . it’s harder . . . it’s worse.” Few of us can say that when Jim asks us to consider an alternative course of action, because virtually all of his success has come despite incomprehensible odds.

When Jim, a promising college athlete with aspirations to play professional football, went to the doctor for a routine physical, he was told that he had a degenerative condition that would rob him of his sight completely. He’s human, so be assured he was extremely disappointed, but he took that disappointment and redirected it at a new competitive endeavor, becoming an Olympic weightlifter. He couldn’t read with his eyes, so he began listening to books. Though he wasn’t a big reader prior to his loss of sight, he now reads one book each day with the aid of a high-speed listening device. When told that blind people had nothing to gain from television, he responded by starting the Narrative Television Network, an Emmy Award–winning network serving the nation’s visually impaired.

Jim’s deep level of understanding regarding money issues isn’t superficial, it’s experiential. His first job was as a stockbroker, and although his message has broadened over the years, he has always lived the fundamental financial disciplines and inspired others to do the same. Jim doesn’t recognize can’t or hard or even impossible, and I hope that the confluence of his wisdom and his story will make it easier for you to find freedom in the Timeless Truths he shares.

Timely Application

Timeless truths may be simple, but they’re not easy to apply. All the education and motivation in the world will do very little unless you know how, where, and when to apply it. It took Jason Stevens a full year and series of lightbulb moments to benefit from real change in his life, but then again, he had to be blackmailed to even begin his process of transformation! Your ownership of this book shows that you’re a willing participant and have already built some momentum, and the Timely Applications contained herein will allow you the opportunity to put your motivation to work immediately.

I’ll offer concrete steps designed to help you accomplish your financial goals. But before you start implementing actions, you have to know what the goals are. I’ll give you an outline designed to help you create your goals. And before you can set goals, you must have a foundation upon which those goals are built. Let’s call that foundation your values, or simply the stuff in life that you want to be about—your Personal Principles. I’ll help you articulate them. The book’s web site, www.ultimatefinancialplan.com, has resources you can download for each chapter’s Timely Application to complete your own personal exercise.

Most financial plans speak of goals and occasionally values, but the recommendations often focus only on the final phase of your plan—the implementation—and most of the goals and values are dictated to you, instead of drawn from you. I’ll help you understand how to save for retirement, but before you do that, I’ll help you understand how to define retirement in your own terms, and whether or not a traditional retirement is even a goal consistent with your values. I’ll show you how to determine how much insurance you should purchase—if any—but I’ll also teach you to become a risk manager, instead of simply a consumer of insurance. I’ll tell you which essential estate-planning documents you should consider having drafted, and I will also explain how to spot signs that an attorney is giving you a sales pitch to buy an expensive document that you don’t need.

I will act as your buffer to and from the financial services industry, drawing on my experience working with clients and teaching the financial planners of tomorrow, as well as the experiences of my mentors and the thought leaders of the personal financial planning profession. I’ll also share eye-opening stories from the training I received growing up professionally in each of the aforementioned “Big Three,” exposing the sales techniques the industry uses that you need to know in order to effectively manage your cash, invest, and insure in the way that is best for you.

Our financial lives are embedded in our everyday lives. We’re not educating for the sake of philosophizing—all the information contained here is held to the standard of practical application. The following pages are designed to help you reframe the way you look at money and then build a foundation of education upon which a specific, personal plan of action can be created and implemented.

The Ultimate Gift begins by reminding us that “A journey may be long or short, but it must start at the very spot one finds oneself.” We’re pleased to meet you at that spot and have the privilege to take these steps of your journey with you.

Tim Maurer

CHAPTER 1

The Gift of Money

MONEY 101

Money is the most misunderstood commodity in our society, even on our planet. People today understand the price of everything and the value of nothing. There have been more conflicts, divorces, and disputes over money than anything else. In order to begin to have healthy attitudes toward money, we must understand that it is nothing more—or less—than a neutral tool or vehicle.

Ultimate Advice

“Money is nothing more than a tool. It can be a force for good, a force for evil, or simply be idle.” This is one of the primary lessons Jason Stevens learns in The Ultimate Gift and it’s exactly where The Ultimate Financial Plan picks up.

It is also critical to understand that money is not inherently bad, unimportant, or irrelevant. Many have misquoted and misused ancient wisdom, proclaiming that “money is the root of all evil.” The context here is imperative: “For the love of money is a root of all kinds of evil”1 is the actual quote, and the difference is profound. Nothing can take the place of money in the things that money does, but outside of the scope where money is useful, it has no value.

When it comes to your health, family relationships, or personal well-being, for example, money is of little importance. It serves us best when it is a facilitator of relationships, not an end in and of itself. This understanding will keep money and its detrimental pursuit in check. Once you see money with new eyes, you’ll use it better and more effectively.

Timeless Truth

There are only four things you can do with your money: Acquire stuff, buy security, create memories, and make the world a better place. There is no right or wrong place to put your money regarding these four areas. As in most life decisions, balance is the key.

Acquiring stuff has become our national pastime and obsession. Most people spend more time working than necessary so they can acquire stuff they don’t have time to use because they spend so much time working to get it.

Security is an admirable pursuit. But if you’re not careful, you will fall into the group of people who spend their whole lives preparing for a rainy day and it never so much as sprinkles.

Creating memories is a vital component in a fulfilled life. Those memories can never be taken from you, but if all you do is pursue memories, you will spend your entire life looking in the rearview mirror. It’s nice to look back there every once in a while, but if you drive through life very long looking only in the rearview mirror, you are bound to get a rude awakening.

And, finally, money—like any other tool—can be used for good or for bad, but it can, indeed, help to make the world a better place when it is put in the hands of the right people. You must be cautious here as well, because among those sincere souls who seek your money for admirable pursuits, there are many who—under the guise of good works—are prepared to rip you off.

Apply the following litmus test for proper money usage: Money used wisely enhances relationships; money used poorly is a relational stumbling block.

How would your life be different if money were no object? This is a difficult question to consider, because we seldom make any decisions that are not based on money. This is a poor way to look at the world. Decide what is good or right or meaningful, and then worry about the money.

Jim Stovall

The Value of Money

You may be interested to know there has never been a money shortage. There is, however, from time to time a creativity, service, or value shortage. Money is nothing more or less than a result of creating value in the lives of other people. If you stop worrying about money and concern yourself instead with creating value in the lives of those around you, you will have more money than you need.

What is the actual, literal value of the dollars in our pockets? Nothing. There was a time when that was not the case. The Bretton Woods Agreement, forged after World War II, pegged the value of a U.S. dollar to 888.671 milligrams of gold. Other currencies were then pegged to the dollar, and the U.S. pledged to convert dollars to gold, but the U.S. went off of the gold standard in 1971, never to return. Now, as Dick Wagner puts it, “we have traded money of intrinsic value for perceived value.”2 While some claim that perception is reality, perceived money is simply more easily manipulated, for better and for worse. Prior to our most recent recession, the value of a U.S. dollar steadily declined relative to other world currencies. The U.S. dollar, however, is still the currency used to conduct business around the world, so as the recession deepened, the inherent need for dollars to transact business around the world helped the dollar increase in value again.

The primary method used by the U.S. government to combat our current recession is “printing money”3—making cash more easily available to financial institutions in the hope that they make it accessible to the consuming populace in the hope that they spend it. (Hmmmm . . . sounds eerily similar to the problem that got us in trouble in the first place, doesn’t it?) The drastic increase in money supply is an attempt to avoid the deflationary downward spiral that occurred in the Great Depression. It will inevitably, however, play a role in a further devaluation of the U.S. dollar as we begin to forget about the Great Recession. The increased supply of dollars will result in a lower value for each dollar.

Ultimate Advice

If money be not thy servant, it will be thy master. The covetous man cannot so properly be said to possess wealth, as that may be said to possess him.

Francis Bacon

Therefore, money has no value other than that which we attribute to it. Academically, this makes sense, but why does it actually matter how we view money? Isn’t it only splitting hairs over semantics? How then does the once-almighty dollar have such a hold on us in our daily lives?

Over 50 percent of first marriages end in divorce. The majority of those suggest financial disputes as the primary impetus for the breakup, and not one of us can attest to money not playing a primary role in some relational disruption with family or friends. We must then be giving money power over us.

How do we give money power, and how do we recognize when we’re doing it? Let’s first examine the symptoms. My wife and I were on one of our first dates many years ago at a restaurant in the northern suburbs of Baltimore. While enjoying the romantic, candlelit environment, I displayed chivalry by inviting Andrea to be the first to give our server her order. She ordered the crab cake; I don’t remember what I ordered. The reason I’ll never forget her crab cake is because, as the waiter walked away, I scoffed at Andrea’s foolishness to ever order a menu item at the rate of “Market Price”—like the crab cake—without first asking what the market price is! I thought I was doling out financial wisdom, but Andrea heard that I thought money was more important than she. Romantic, huh? After what happened there, I’m lucky to be married! What was my money belief that brought about that embarrassing snafu?

Money Beliefs

Rick Kahler and Ted Klontz, a financial planner/psychologist duo, collaborated on the topic of personal finance culminating in the must-read, The Financial Wisdom of Ebenezer Scrooge.4 Note their explanation on how our beliefs about money and our actions surrounding it are likely to correspond:

Very early in life, people begin to internalize messages about money’s purpose . . . how it works, what it promises, its overall significance. . . . [T]hey translate what they see and hear into unconscious rules about life, including any internalized messages about money. . . . [E]very financial behavior, no matter how seemingly illogical, makes perfect sense when we understand the underlying beliefs.

In my first date example, it was not that I actually believed that money was more important than my wife, but that is certainly the message she received. And sadly, I think she’s received that painful message many times since then even though I’ve never intended to send it. What then could help us better understand our own beliefs about money and how they were formed?

What you believe about money will determine what you will do for and with it. Right thinking leads to right actions, but those outward actions do not spring from nowhere. In his 1902 work titled As a Man Thinketh, James Allen said, paraphrasing Proverbs 23, “Every action and feeling is preceded by a thought.” Ralph Waldo Emerson asserted, “The ancestor of every action is a thought.” This isn’t esoteric philosophy without application; it is practical advice that leads us to a better understanding of our interaction with money, and thereby, a better life.

Timely Application

Personal Money Story

Write your own Personal Money Story. What is the earliest memory you have about money, and how old were you? For many, it will involve some combination of a piggy bank and an allowance or birthday gift somewhere between ages 3 and 6. Then rate this experience numerically between +10 for a great experience and −10 for a scarring memory. Continue this pattern, marking all of the notable experiences you had with money—good and bad—throughout the course of your life. Then, with the +10/−10 continuum on the vertical axis and the timeline on the horizontal, plot out a visual picture of your history with money.

If you’re single, consider journaling on your experiences and/or sharing your conclusions, and any resolutions you make as a result, with a close friend or family member. If you’re married or heading in that direction, conduct this exercise individually and then share it with your loved one. You may have a “lightbulb moment” that changes the course of your life, but at the very least, you and the people who love you will better understand your background with money.

With that greater level of understanding, my wife will be less likely to see me as a greedy monster when she shares passionately about an improvement that she envisions for our home and I respond, “How much?” Conversely, I’ll be less likely to utter those words at that moment in the first place!

Visit www.ultimatefinancialplan.com to find a template to use in creating your own Personal Money Story.

Tim Maurer

Ultimate Advice

Money is a terrible master but an excellent servant.

P. T. Barnum

The name of the weekly radio show that I cohost is “Money, Riches, and Wealth.” It’s not what you think. Actually, the host of the show, Drew Tignanelli, derived the name from a study he did on the origination of those three words, and his findings are powerful. Money means something very close to what we believe it to mean today—currency. Riches in its original context implies what you’d expect—money, with an extra helping of extravagance and a pinch of greed. Wealth, however, has a far different meaning than that which is attributed to it today. The closest meaning to a modern word would be contentment. And isn’t that what we desire when we’re at our best? Contentment may be accompanied by money and even riches, but there are plenty of rich people who aren’t wealthy by this definition. Contentment is attainable for any of us at any moment.

Ultimate Advice

In The Ultimate Gift, Red Stevens believes that his great-nephew, Jason, lacks the proper appreciation for money and its best uses because he’s never been without it. “There’s always more,” Red says. “All you have to do is take the next breath.” So Red challenges Jason to find a way to improve the lives of five people—however he chooses—with an envelope filled with $1,500 in cash. Whatever your patterns of giving, I encourage you to complete an exercise in which you predetermine an amount of money that you will give to a source currently undetermined. Simply go about your normal course of life and work until you arrive at an interaction with an individual or individuals that impels you to make your gift.

Money has no power other than that which we give it. It’s hard to find contentment in a financial world that is filled with jargon, marketing, and economic bias. Let us provide the wisdom and knowledge that you need in order to have a better understanding of things financial so that you can be truly wealthy.

1. The quote used is from the TNIV (Today’s New International Version) Bible translation, from 1 Timothy 6:10. You may be more familiar with the King James Version, which reads, “for the love of money is the root of all evil,” but most newer translations seem to agree that the original authors of the text did not intend to imply that money was the root of all evil, but a root of all kinds of evil.

2. Richard B. Wagner, JD, CFP® is the principal of WorthLiving LLC, based in Denver. The quote is from Wagner’s article in the December 2003 issue of Financial Advisor Magazine titled “Survey stakes: How they enable financial planning as we know it.” If you’re interested in more of a discussion on how money is actually created, take a look at a very interesting series of YouTube videos titled Money As Debt.

3. Although it shouldn’t be seen as a comprehensively academic analysis, you might find the YouTube cartoon sensation, Quantitative Easing Explained, very entertaining and mildly informative.

4. Ted Klontz, PhD, Rick Kahler, CFP®, and Brad Klontz, PsyD collaborated on what is a surprisingly consumable read with immediate applicability:The Financial Wisdom of Ebenezer Scrooge (Deerfield Beach, FL: Health Communications, 2006; 3).

CHAPTER 2

The Gift of Purpose

PERSONAL PRINCIPLES AND GOALS

Most of us do not achieve our goals, financial or otherwise. The primary reason we fall short is not that we have unrealistic goals or a lack of ability to achieve them. It is because we have not completed an exercise of far greater importance than goal setting. Prior to establishing goals, we must understand the stuff in life that we want to be about. Stephen Covey1 calls them values, Ben Franklin called them virtues, but we’ll call them Personal Principles. What are the underlying principles that guide you, and how do you want to make a mark on this world?

Ultimate Advice

After his 12-month journey in The Ultimate Gift, Jason Stevens concludes, “I understand the purpose for my life.” It need not take 12 months to get there, but without a better understanding of our purpose, it’s exceedingly difficult to draft an excellent financial plan.

Personal Principles

Establishing goals that are not supported by our Personal Principles can only achieve one of two dissatisfactory results. Either we feel the inadequacy of falling short of our aim, or we change our value system to conform to the goal. For example, if I’m reading a financial magazine that tells me that I need $3 million dollars saved to retire comfortably by the age of 55 and I take the steps necessary to meet that goal, I may work two jobs that I hate and be perpetually absent from family functions and my kids’ events. If “Being present physically, intellectually, and emotionally for my family” is one of my Personal Principles, you can imagine how difficult it would be to achieve the early retirement goal without compromising the underlying value. Goals that are prescribed to us by a parent, teacher, book, or financial advisor and are not supported by our Personal Principles have little chance of success. Conversely, when we align our goals in life with our Personal Principles, we have a very high success rate.

Ah . . . success. Is that ultimately what we desire? I don’t think so. We long for fulfillment and contentment. Remember our definition of the word wealth? In the financial services industry, on television, in books—even textbooks—wealth means one thing: dollar signs! If this is true, many among us would never have the opportunity to be wealthy and, therefore, would not enjoy the satisfaction of being financially “successful.”

Stanley and Danko did an excellent job in their classic, The Millionaire Next Door2, helping us better understand what financial success looks like. Their conclusion is that it doesn’t really look any different from financial mediocrity. Most millionaires don’t actually fly around in corporate jets and drive Maseratis. They drive pickup trucks and live in nondescript houses and they don’t see the benefit in bidets. They’re successful in their dealings with money because they’ve put money in its rightful place as a means to an end, not the reverse. Success, then, is a natural by-product of a contented life lived fulfilling your unique purpose.

Ultimate Advice

The great and glorious masterpiece of man is how to live with a purpose.

Michel De Montaigne

Consider the slight difference in the two words compelled and impelled. The former you hear often, but not so much the latter. To be compelled is to have an external force move us to action. “I was compelled by my self-righteous sister to give up the family party on Thanksgiving to serve at the local homeless shelter.” One who is impelled acts on a force that comes from within. “I was impelled to sacrifice food and football this Thanksgiving and, instead, serve those at the local homeless shelter who don’t have the privilege of choice.”

You’re the only you, but most of us are so busy fulfilling an endless series of external requests on our time, talent, and treasure that we never take the opportunity to reflect on what our purpose really is. As often as is possible, be impelled to fulfill your own purpose in life, not compelled to live out someone else’s.

Timeless Truth

Money will not make you happy. I hasten to add that neither will poverty make you happy.

In a recent study on happiness, it was determined that, beyond basic food, clothing, and shelter (approximately $50K in the U.S.) adding more money to the equation did not necessarily make one happy. Money without purpose is like fuel without a destination. It is useless if not dangerous to have around if you don’t have a purpose.

I have written a dozen books, and I will never forget the day when an eminent financial planner and estate attorney called me to compliment me on my “book on finance.” He said he had given over 1,000 of the books away, and he wanted me to know how much the book meant to him. I was flattered but baffled at the same time. I was glad that one of my books had found meaning in his life and in the lives of the clients he served; however, I wasn’t aware that I had written a book on financial planning or estate planning.

When he told me he was referring to my book The Ultimate Gift, I had to stop and think about why that book was considered by this renowned professional to be a breakthrough in estate and financial planning.

The Ultimate Gift, and the subsequent movie from 20th Century Fox based on the book, is a story about life, principles, goals, and values. Money is not the major theme of The Ultimate Gift or the sequel book, The Ultimate Life. I only used a billionaire character in the stories to try to put money into perspective. Then I realized the ultimate lesson about money is not about money. It’s about life. The lesson is as personal and individualized as you and I.

We cannot do planning by looking at a financial statement any more than we could fit you with the perfect pair of shoes by talking to you on the telephone. Always remember, when you’re talking to a financial planner, lawyer, CPA, insurance salesperson, banker, or anyone else you call upon to help you with your personal finances, the most they can accomplish is to make your money do what you want it to do in the context of your life. Letting them drive your future is like letting the gas station attendant tell you where to drive your car.

Resource without direction, wealth without planning, and money without destiny is the height of human folly.

Jim Stovall

Goals

Once you have established your Personal Principles, it is then time to move on to setting your goals. Without goals, life is lived at the behest of a collection of circumstances. You’re compelled to do so much by so many outside forces that you’ve no time for your personal, purposeful impulsions.

In order for a goal to be valid, it must meet the following four criteria: specific, measurable, attainable, and most importantly, meaningful.