I'm writing this on Monday morning, and it won't be until tomorrow (Tuesday) that the Obamacare Marketplace opens up. [The reasons we don't send these instantly after writing are that we want to A) avoid your Monday Morning Email Mess and B) make sure everything I say here is said correctly. :)]
But even if I were to be writing this on Tuesday or Wednesday, I'd still reserve comment on the Obamacare implementation until later.
Why? Well, it's extremely politically "hot" for one. Too many passions flying around. And my regular readers would know that I always prefer not to unnecessarily enflame passions when it serves no useful purpose.
Secondly, let's judge this program after we've seen it in use for a little while. As a tax professional, my involvement with the process begins in earnest for preparing NEXT year's taxes (the ones which would be due on April 15th of 2015), as we are not required to make any representation of whether or not you are carrying insurance until we file taxes on 2014 income.
Believe me, I'll have much more to say about all of this in the future. But for now ... the only thing relevant for you this week is that you can begin to shop the exchanges. And, of course, we all watch whether the government will shut down, the world ends, insurance companies go under, or other such apocalyptic portends of doom. We shall see.
On to my Note ...
Last week, I got a lot of great feedback about my Note on aligning our money and our values. Obviously, I tend to do a lot of working with and thinking about money ... so this week, I'm beginning a new occasional series: How We Lie To Ourselves About Money.
Hope you like it!
Michael Kessler's
"Real World" Personal Strategy Note
How We Lie To Ourselves About Money
Part 1: "As Soon As ..."
"You get the best out of others when you give the best of yourself." - Harry Firestone
Most of us rationalize why we can't get our finances together right now. Many Americans prolong these excuses during their entire working careers. Here are three lies you must stop telling yourself in order to build a solid financial foundation.
Consider these statistics. The average American family currently saves less than 6% of their take-home pay. They donate less than 2% of their income to charity. They have an astonishing average credit card debt of $8,000. If they saved and invested just the interest of what they pay in credit card debt at normal market returns of 10%, they would add a million dollars over a 44-year working career.
But the average American family runs their financial affairs in such a way that if they were a publicly traded company, their stock price would plummet, the company would go bankrupt and the members of their accounting department would be taken away in handcuffs.
You are called to live your life in a radically different way than the average American. You are called to a millionaire mindset. Not because being a millionaire is the goal, but because the typical millionaire next door lives a simple lifestyle, in order to build and manage real wealth.
Whatever you decide to do with the wealth you build will be better than living hand-to-mouth. Start a business and employ people. Buy rental property and help the housing market. Invest in the stock market and own a piece of global corporations. Or save the money and eschew the need for government charity in your retirement.
Some families live simply so that others might simply live, donating from their excess to worthwhile charities. But what they don't do is continue to live on the edge and postpone getting their financial house in order by self-defeating lies.
The first lie comes in this form: "I will get my finances in order as soon as . . . " You can't postpone financial faithfulness any more than you can postpone marital faithfulness. Faithfulness is simply a long time in the same direction. Your habits set your financial DNA, and habits are simply habit-forming.
Many people support this first lie with the idea that life comes in three stages: learning, working and recreation. They wrongly believe that until they are toward the middle or end of the working stage of life, they don't need to worry about finances.
There is a time value to money. At 10% average market returns, your investments will double every seven years. [Of course, in my line of work, I have to be careful to add that I can't make you any promises about market yields, but for the sake of us doing some quick, hypothetical math together...] Savings and investing a dollar when you are 20 is worth the same as $2 when you are 27. It is worth as much as $4 when you are 34, $8 when you are 41, $16 when you are 48, $32 at 55, $64 at 62 and $128 at 69. Saving a single dollar at age 20 is worth $100 in retirement!
And saving for the next seven years is worth more than starting in the eighth year and continuing for the rest of your life. After saving for seven years, your portfolio, on average, will be earning more than you are contributing. Put another way, for every seven years you delay beginning to save and invest, you cut in half your ultimate retirement portfolio.
In a future installment, I'll discuss the second big lie.
Let's all be as honest as possible with ourselves, shall we? And, perhaps THIS might help ...
Warmly,
Michael Kessler
(516) 449-2852
