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The Truth Shall Set You Free… or Make You Poor

Before I start, let me say I try to steer clear of discussing politics, religion or personal preference with clients and friends. Everybody is entitled to their opinion, and we are all right and we are all wrong. With that said, I've got a couple of thoughts.

With the elections still almost a year away, the mud has been slinging as well as claims, promises, predictions, and sometimes outlandish and impossible promises. Our country is seriously in need of a revamp, and it seems the 15 or so candidates all have their vision of how to do it. Some it seems, are a bit more vocal than others and I'd like to talk a bit about that issue, and how it relates to you. I read about 2 hours a day in the morning before the market opens-research mostly, but also politics and news of the day. What I find particularly fascinating is the fact checking people- those who listen to the politicians statements and claims and research what they say and publish "the truth." One New York candidate who is a prominent businessman with orange hair (who shall remain nameless!), according to fact checkers, has been researched and found that 60% of his statements and claims are absolutely false. The same is true for most of the candidates to various extents- things that come out in their stumping has led to falsehoods and hedging... making stuff up to look good, with not a shred of truth to it. With that said, I began to think of how this relates to ourselves, and how we manage money. How much of what we tell ourselves is true and we believe, and how much of what we tell ourselves would be nixed by the fact checkers?

Let's talk retirement. It's easy to say "I'm not worried... I'm putting money into my 401(k) or IRA or other savings vehicles, and I'm sure I'm going to retire just fine and comfortably." Really? How would you know if you have not done an in-depth analysis of your current style and expense of living, and done extensive projections to determine hypothetically how much it would cost a year in retirement? Have you taken the amortization of your mortgage or inflation into account? How about the ridiculous amount of property taxes we pay in this area, or the more ridiculous raises each year. Then there's health insurance: the average person pays about $1000 a month per person, and for the last two years, got raised about 15% a year... and who knows from year to year going forward? All this from a simple statement the fact checkers would be all over.

Let's talk estate planning. 4 out of 5 new clients we meet have no estate plan, and no legal documents such as a will, power of attorney living will or health care proxy. The reply: "my kids will know what to do." The fact is, without proper estate planning, all you're leaving to your kids is a big mess. In comes the attorney's, courts, time, money... you get the idea. Fact check- if you don't have your house legally in order, anyone can lay claim to anything you own. It doesn't necessarily mean they will get it, but in today's litigious society, anyone can sue you for anything. So, don't think because you had a talk with your family it will come to be... if it's not in writing, it doesn't legally mean a thing. I’ve had the agonizing displeasure of helping to settle estates with no documents: it's an absolute mess.

Let's talk family. There's nothing that will split up a family more than a bunch of money left with no instructions. Leaving a disproportionate amount to different children will surely create a bad situation for your kids. Disagreements and fighting means you left a mechanism for your kids to stop talking to each other- sometimes for life. The same applies to jewelry, cars, and anything of value that one child feels slighted against the others depending on how you set up your bequests to your heirs. Give great thought to how and who you leave things to: and do yourself a favor- talk to your kids. Don't leave a surprise or think by keeping it a secret you will accomplish anything other than bad blood. Take care of it now, while you can- not later, when you have no input.
So, don't think that fact checking only applies to public folks or politicians. It very much applies to you too- so do yourself a favor, and don't give them anything to find false... it will only come back to bite you in the bum in the end.

A belated Happy New Year to all my readers- may it be healthy, wealthy and include a whole lot of fun!

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