Dollars & Sense – May 2011

By Dan Caballero, Columnist

Wow..we are almost half way through the year of 2011. How can that be? The good news is the days are getting longer and warmer -NBA playoffs are under way and MLB, Little League Baseball and Soccer are uniting families and communities across America. We are also finally past the April 15th deadline of filing our taxes. I know we are all glad that that one is out of the way.
No? Taxes are a necessary thing that keeps our government, schools, roads, bridges and other things going that makes the U.S.A. the greatest nation on Earth. It’s also a very sore subject for many families and small business owners because of the complexity of how they are calculated and how the rules seem to keep changing.
This is another area where the concept of the Financial Tune Up comes into play and where focus, education, research and planning can help minimize the stress and amount that is paid in the total amount of taxes per year. Now that 2010 Taxes have been put to bed, “Now” is the perfect time to prepare for April 15th 2011 taxes!
What can you do to make next year’s tax scenario better? One way is using various online tools provided by the IRS and other organizations that help you calculate the proper number of dependents and withholding allowances to claim on your form W-4. I am not a tax accountant or CPA and I advise you to sit down with one who is qualified to explain this procedure. However, I do know and can say that the average American receives a tax refund of about $3000 each year. That means that the withholding allowance most people claim on their W-4 is overpaying the amount of taxes to the IRS and is “Refunded” to the tax payer after they file their taxes.
That looks and sounds good at first, but here is some food for thought- you can structure the amount that is being overpaid to be “included” in your monthly pay (approximately $300) and take that money and invest it in a money market account or IRA and earn “interest” on your hard earned money. That amount is already earning interest, but not for YOU if you get a refund each year- it is the IRS that is earning the interest on your money. And I’m talking about a lot of interest. $300 saved over 35 years amounts to about $104,000.
If you were to take control of your paycheck and invest that money as it is earned rather than overpay it in taxes to the IRS, you could earn big dollars towards retirement in interest over time. 3% earns you about $183,000 over 35 years; 6% earns you about $360,000 and 12% earns you about $1,600,000.
Just think how much money is being earned on your taxes for all Americans who are paying into the system. It’s mind boggling. Most people don’t even know they can structure their finances to make an extra $80,000-$200,000 or $1,000,000,000 on their hard earned money over the course of the 35+ years they work earning it.
That’s why you sit down with a professional who has the expertise and software to run your numbers and figure this all out for you. Take control of your finances and life- or miss the boat to a secure and real retirement. Either way, the time is going to pass and the money will be earned, “but” how much of it will be in your account when it’s all said and done? Food for thought.
See ya in June!

Dollars & Sense – April 2011

Hope springs eternal- and spring is in the air!
Its hard to believe that the first quarter of 2011 is behind us. The days are getting longer which means its baseball season, time to put in the garden, do some home improvement projects around the house, get the kids to soccer practice. Of course, all of this requires money.
I am sure you have also noticed that almost everything across the board is going up in price and putting a strain on the family budget. The good news is that there are those who are focused and have been implementing the financial strategies I have been writing about and are actually getting ahead.
They are the twenty percent who can follow through with principles that are simple to do yet also simple not to do. It really is that simple!
Behavior is a very strong and subtle dynamic…and the big banks, credit card companies, fast food chains and other merchants all now how to shape this behavior that the eighty percent fall prey to and talk themselves out of the simple disciplines that get them ahead.
All in the name of convenience- think about it! It happens every day 24/7- the institutions are counting on it and can even forecast it into the future. They are the captains of consciousness.
I read the book in college titled “The Captains Of Consciousness- the Advent of Consumerism and the Industrial Revolution.”
This is why you need a plan – your plan! Because without it you are swimming against the current.
Those with a plan (Financial Tune Up) have put all their important papers, documents, policies, contracts, bills, invoices, statements and other “financial stuff” into an organized filing system and taken control of their finances. They have done an inspection of what the wording and figures really mean and thus know what they really have. In doing so, payments are made on time to creditors, balances are reduced, credit scores begin to move up and things get better.
They have also shopped out the cost of auto, home owner and life insurance and better understand what they have and what they need and found a better program and lower rate. They have also analyzed their food and grocery budget and pinpointed areas to reduce cost that further helps them save money on a monthly basis.
Now pay close attention to the next few lines, for this is the simple thing so easy to do that it is also even easier not to do.
Take what you have saved and put it into a money market account and call it your “Rainy Day Fund”.
Get the balance up to $1,000, then up to $3,000 and then shoot for $10,000 as fast as you can.
This will change your life. You were just spending it anyway, literally blowing it away, before you made all these changes. Make it count and get ahead in the game of life!
Then go back to your auto and home owner insurance company and request that they raise your deductible to $1,000. This will drastically reduce your monthly premium and then take that savings and put it in a long term IRA retirement account. The information contained in this article hold the key to financial freedom, better health and happiness and a sound good night’s sleep! See ya next month. Via Con Dios.

Dollars & Sense – March 2011

By Dan Caballero, Columnist

The Ides of March….here already. 2011 is unfolding very rapidly and tumultuously. Food prices are up. Have you seen the price of coffee??? uuggh. Fuel prices are up, serious debate ongoing with state budget cuts across the nation and then there is what is happening in Egypt and all across the Middle East. But the good news is that you are reading the Valley Bugler with the good news that is occurring all around us and tips on how to get ahead in inflationary times.
I am sure all families are noticing the squeeze on their budget- especially at the grocery store. Now is the time to further implement the cost savings strategies of the Financial Tune Up I have been writing about.
Action must be taken so that you are not caught with more month at the end of the money and swipe the credit card, provided its not maxed out, and go further in debt.
To recap the last two months of articles, we have now become aware of where we are financially and understand that most are not in a very good position for retirement and net worth.
Net Worth is not just a term for the wealthy or business owners, it is the reality of where you really are in terms of what you have and what you owe on it. More specifically Assets – Liabilities. Without studying your financial “goins-ons”,  you may end up surprised down the road, and not have enough time to correct your situation. Nobody wants to work basically until you drop to pay off creditors.
It is critical these days to know your numbers…your FIN, your FIN Date and DFD- and that stands for your Financial Independence Number (the amount needed to have saved for retirement) your FIN Date (the time and date you will hit this number) and your Debt Freedom Date (the time and date you will have your debt eliminated and paid off). Remember- there is no way you can retire with debt.
Ok..here are the specifics of what to do:
Credit Score (FICO): Be aware of the huge impact it has on almost all areas of your life. A low credit score often increases how much you pay in interest on your debt  (taking more money from savings/retirement), how much you pay for auto insurance (taking more money from savings/retirement), what kind of job you can get (often limiting your chance of a higher paying job that takes money from savings/retirement) and many other things.
Auto & Home Owners insurance: another must have and area you can shop out for monthly savings. Understanding the basics can empower you to keep cost down while maintaining necessary coverage, which are deductibles, limits of liability, Uninsured Motorist, stop loss on loans, 100% replacement coverage, endorsements and riders to cover expensive “stuff” and umbrella policies. Check with a financial consultant on the best way to shop for the best prices, or try it out yourself.
Life Insurance: another “must have” unless you don’t care that your family may be stuck with a huge amount of debt and loss of income in the case of a serious event. Once again, this is another topic that can take up an entire column and is probably one of the most important things to get right.
If you are finding yourself scratching your head at the above four topics, then it’s time to call a financial advisor. For minimum investment, you will have a professional guide and help you plan out your future. Feeling secure in your future will help you enjoy today. Here’s to becoming financial stable in 2011!
Dan Caballero is the owner and operator of Caballero Peloton, and is available for financial consulting and advising, or Mortgage Lending and Insurance. He would love to hear your questions or comments, give him a buzz at (509)727-0120.
Comment online @
valleybugler.com

There’s No Place Like Home.

It never ceases to amaze me as to how fast the end of each year passes. Now it is 2011…the economy is picking up steam, area merchants see a trending “up” in revenues and many financial indicators are looking good. Now it is time to get back to basics and resume building a better tomorrow for our families.
Last month I explained the concept of the Financial Tune Up. If you listen to any of the national syndicated experts who teach and offer advice on how to get ahead financially in today’s economy, you will hear a reoccurring theme- the importance of taking control of your finances, inspecting your paperwork and documents and finding areas to reduce cost and direct the savings toward debt or retirement.
On the other hand, there is the behavior thing I mentioned…you know, that little voice that talks you out of doing what you know you need to do.
This is our internal dialogue and we all do it every waking moment. This is the area that separates people who go on to be debt free and have adequate money on reserve and for retirement and those who are one paycheck away from disaster, with high balances on credit cards and no money reserves on hand or in retirement. Often these people are in the same family or have the same job- they make the same amount of money each year but end up in very opposite financial situations.
Here’s how to get on the right track, regardless of where you are or how to get into an even better situation…. follow the yellow brick road!
Just like Dorothy and Toto in the Wizard of Oz- looking for a way to get back home, she needed the help of the Professor in the end to show her the way. The same is true today, and as it always has been, to avoid the Wicked Witch of the East (Debt) and find your way through the dark forest (fine print in insurance, loan and legal documents) and get back home to Kansas (Your financial goals achieved/retirement/debt freedom).
You need a plan, tools, guidance and discipline. The Financial Tune Up is the Yellow Brick Road to your goals and dreams.
Specific How To’s:
Balance your total Financial Check Book.
Arrange and organize all of your important statements, documents, policies, bills, everything! This is the one step that gets you on the Yellow Brick Road, its easy to do with focus but is also easy NOT to do. Keep at it – don’t get discouraged.
You now have just done the one thing that can change your life: you have taken control of your finances. You know where everything is, it’s organized and up to date.
The next step is to hire a financial consultant and analyze what you have, interpret what the fine print means and explain it to you so you know what you really have. This will help create a “Legacy File” for your family: a filed system that your spouse or children can get to when there is an emergency!
It is also a good idea to take this Legacy File concept one step further and have all the documents scanned and stored in an outside place….on disc in a safe deposit box or some online service.
Learn the Financial Basics. Through this process, you will learn about what concepts mean, what the fancy fine print really says, where to look for the real relevant information in the miles of disclaimers that confuse you, how to ask the right questions about products to determine if it is right for you, how to compare apples to apples, oranges to oranges, how to win at the money game! This topic is not taught in school…even in some of our best Universities. The way the money game is set up is to be learned by trial and error thru the hard knocks of life. This information needs to be “Home Schooled” to you and your children. Eventually you begin to see that the money part of it is really simple, it’s the ‘behavior’ part that catches us all unaware.
It really is this simple.
Behavior can be changed, but it takes awareness, focus and discipline. It also takes creating the habit of reading the “Right Stuff”, like good news papers like the Bugler, not the stuff that that reinforces all that is bad in life. Just remember how the Wizard of Oz movie ended: With the Good Witch telling Dorothy how she could have went home back to Kansas at any time she had wanted…but she just didn’t believe that she could….There’s No Place like home…There’s No Place like home…There’s No Place Like Home!

Dollars and Sense! – January 2011

2011- the second decade of the 21st century. Sounds like a heading for a history documentary…as it is. For I strongly feel that this is the year our nation and it’s people  will begin to see the economy turn around…perhaps slowly, but a noticeable turn for the better. As we ease into the New Year, the tradition of resolutions will be made, new beginnings initiated, exercise routines and diets resurrected…you know the drill. This article and subsequent column will address another topic that will help families position themselves financially so that they too can get ahead economically:
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Take charge.

When it comes to your money and family finances, you have to accept responsibility and be in charge of decisions. There are a lot of sales people out there more than willing to sell you on a concept or product. We are all bombarded with advertising that is designed to be misleading though still legal. But the most frequent problem you encounter is making an impulse decision without sufficient knowledge of risk. Making a decision is easy. Making good decisions takes work and forethought.
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Financial Reform has finally made it down to our level.

One piece of reform legislation was related to your education of the use of credit. I am referring specifically to a requirement for the credit card industry to fully disclose how long it will take for you to pay your credit balance using minimum payments. It also requires some standardization for the format of our credit card bills themselves.
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Avoiding Surprises

Avoiding surprises. First, let me make it clear surprises cannot be totally avoided. Otherwise there would not be any surprises.

But every so often we have terrible situations occur that are absolutely avoidable.
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Dumbest things to do with your money.

The internet is a wonderful source of information and the following is a compilation of thoughts from a variety of sources. I say a compilation because I do not concur with some of the thoughts from a base article I encountered and have supplemented based on experience.

Falling in love—with your investments. You must continually assess if your invested dollars are still solid and meeting your goals. This includes all types of assets, not just stocks, bonds, mutual funds, etc. I counsel too many folks who are emotionally tied to their assets and unwilling to part with them when the value can be better used elsewhere.
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Being an ostrich is not smart

Once upon a time I was told that an ostrich will stick its’ head in the sand when afraid. Supposedly to avoid an unpleasantness it was expecting to face.
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