The Great Recession has affected my family like it has affected most families. I lost my job, my business went down the tubes and my lifestyle has changed. Yet, I am happier than I have been in a long time. While I make and spend less money, I have found ways to experience life in a more positive, fulfilling way.
I was thinking about my years as a banker and financial advisor and the lies I told people during that time. Mostly, I was saying what I was trained to say. I was ignorant of the truth. This is not an excuse. It's inexcusable to knowingly give destructive advice and it's inexcusable to regurgitate information, even if it comes from your boss, without verifying it first.
For years, I told people not to pay off their mortgage. I convinced them they were better off investing the money with me and keeping the tax benefits of the mortgage (interest deduction.) Now I know better. The amount of interest the average person pays in a year is enormous compared to the tax benefits. It makes no sense in most cases to stay in debt.
I sold debt as a good thing, convincing people they should take out equity lines and loans and credit cards. There is nothing good about this. When your banker tells you to get an equity loan for emergencies, beware. Their intentions may be pure, but will you have the discipline to really use it only for emergencies?
I tried to convince people that it was always their fault when they overdrew their account. Truthfully, if you overdraw your account, it is your fault - with the exception of fraud or the rare bank error. However, banks stack incoming items largest to smallest regardless of the time they came in. Why? If you have $1,000 in your checking account and seven items come in totaling $,1079.00 in ascending order (smallest to largest) by paying the largest item (let's say $900) first, the bank will clock you for 5 or 6 overdraft fees. If they let them post in order of arrival, with the large one being last, they can only hit you once. It's disgusting. I was one of the space monkeys convincing people this was done for their own good because larger items are typically more important (rent, health insurance, car payments, etc.)
Of course, you are ultimately responsible and should have enough money to cover your bills.
Don't ask me which bank I worked for, it doesn't matter. They're all about the same.
If you decide to work with a financial advisor, ask for his credentials. Licensing means nothing, you need to know what his experience is. Most of these guys are just good salesmen. Do your homework and ask tough questions. You may be better off doing your own investments with the help of your CPA. I knew one "top producer" who had previously been a waiter at Denny's. I don't mean to make ends meet while earning his MBA, I mean he was a waiter! And now he was offering "sound" financial advice. What he really was was a commission hound slashing and burning his way through his prospects.
You must make the time to watch your money. You must make a budget. You must balance your checkbook. You must put money away for retirement. You must save for your children's college. You must get out of debt. These things are simple, but not easy.
You wouldn't take medical advice from a waiter at Denny's would you? Of course not! Do you really think financial advice is different?
Go to daveramsey.com and see about getting into Financial Peace University. It's a great way to learn about money management.
More than half of divorces are on account of money. Mine was. I don't wish divorce on anyone. Especially over something as common as money.
You do have the time for this. You can learn these things. Shut off the TV and get serious about it. Social Security will not be around much longer and do you really want to spend your retirement clearing trays at McDonalds? Didn't think so!
God bless you and your finances. Make it your best day yet.
- Adolfo
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