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We're Almost There



Jim Rohn the grandfather of all modern-day motivational speakers said, “We must all suffer from one of two pains: the pain of discipline or the pain of regret. The difference is discipline weighs ounces while regret weighs tons." 

Let's recap 2020 for a minute. From January to February we had a great start. The NASDAQ surged 11% in a month to a new all time high. Then the wierdness begins. Coronavirus arrives in the US and markets plunge in the fastest bear market drop in history. Washington counteracted the market velocity by passing a myriad of measures to minimize the economic pain. May hits and the south starts to reopen only to be met with racial unrest from the death of George Floyd in Minnesota. Black Lives Matter protests flourished in large metropolitan areas across the country. The contestants for the November Presidential elections enter the stage with starkly contrasting views of how to deal with the problems of 2020. Many kids are forced into a distance learning setting instead of in person education. Finally, as fall approaches in mid September, the west coast is is engulfed in wildfires and smoke while coastal gulf states are hunkering down to weather an active tidal storm season. 

There have been some bright points.

In many parts of suburban and flyover America homeowners are heading to the bank as a sea of stimulus-related financial liquidity and low interest rates turned up the heat on an already hot housing market. Amazon brings much of what we need to the front door and Door Dash will even deliver dinner hot and ready. 

I don't know if the good news in your household is enough to offset the bad news we are surrounded with. I recall a summer trip to New York City when my kids were young. We finished a visit at the Empire State Building on 33rd Street and started walking to F.A.O. Schwarz toy store. It was only a mile and a half but in the summer sun on the pavement in the Big Apple it felt like 5 miles. Half way to our destination my son chimed in, " How much longer do we have to go?" I replied, "We're almost there." 3 blocks later we repeated the same exchange. Another block, another complaint.



By the time we arrived, my navigational credibility was hanging on by a tenuous thread. The kids' joy upon entering the king of all toy stores overcame their tired feet. I was relieved that our persistence paid a worthwhile reward.    



With city leaders enforcing stringent lockdown orders, New York City in 2020 is a much different place. Some die-hard New Yorkers are throwing in the towel and putting the Big Apple in the rear view mirror. Along the way their kids may even start asking, "Are we there yet" even if their parents aren't really sure where "there" is going to be. 

Back to the small apple that we call home. 

At LeConte, we've remained focused on taking every opportunity presented to us and are making plans for the future. Kevin and I bought our office building a decade ago in a post-housing crisis bankruptcy sale. It has served us well as we built our business from less than $100 million in client assets to $190 million today. We've pursued other locations and real estate opportunities in the last 5 years. This spring we equipped our team with the technology to work from home during our brief shutdown period. When we reopened, we assessed how we can help our clients now and in the future. At the end of the day, we like our profit margins more than a trophy location so we're staying in our current location.

This summer we embarked on a renovation project to improve and modernize our offices. Along with the visual cosmetic improvements, we're bringing our facilities up to ADA compliant standards and improving the functionality of our workspace. We're developing a new website to communicate our problem solving solutions to the public and provide seamless financial access for current clients. It looks really nice and I cant wait to unveil it in the near future. Internally, our team worked through the summer to re-engineer our business processes to efficiently serve the needs of our growing client base. LeConte is 30% larger than we were 3 years ago but none of our team members are working 30 harder (or longer). 

The renovation project will likely take us into 2021 to reach completion. It's provided us with a mental break from the day-to-day headlines and put a bit of daylight between the messes of 2020 and the better times that lie ahead.

We decided to look to the future, take control of the things we have influence over and ignore things that we can't influence. In our mind it would have been wasteful to endure 2020 by moaning about what could have been. Instead we chose to set a course forward and adjust our sails when we need to.

Now if we can just get through the election. Hang on, just a little bit longer.
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5 Things to do before you turn 25 to Ruin Your Financial Life (Continued…)

 

In part one (click here to see part one), we looked at one of the five ways someone before 25 could ruin their financial life. In the first post, I discussed how everyone has an image of their future self that they would like to achieve. The problem is, many do not think about, prepare for, or get started on making that image a reality. Simply put, we want the reward without the work.  

In addition, I discussed the first way someone before 25 could ruin their financial life, which is refusing to accept responsibility. Refusing to accept responsibility is to have a mindset that someone else should be accountable for the decisions you make even though you make themThis allows an individual to avoid expectations and consequences from their own choices.  

The following are the remaining 4 things you should do to ruin your financial life by 25:

2. Accumulate as much debt as possible. 

Look around. Look around. (Maybe you caught the Hamilton reference) Debt is everywhere.  

Nations, federal and local governments, companies, institutions, and the guy next door to you are all caught in the borrow-and-spend cycle. This cycle has become ingrained into our society, so why should you do anything different? Besides, minimum payments can be set just about as low as you want, and you can afford just about anything with the right sales guy on your side. Just swipe with the plastic.  

Then, this could quickly become your life…  

Click this link: What happens when you just pay the minimum payment 

I would imagine you would prefer a different route, so here are some questions to ask yourself.  

  • Can I wait to buy this item?  
  • Have I purposefully saved for this purchase?  
  • Is going into debt for this item a wise decision?  

If you can answer each of these questions truthfully and still have no hesitation to make the purchase, then go for it… but if you can’t answer them without hesitation, then you should rethink your decision and consider what consequences the purchase may have. 

Don’t get me wrong, debt can be a productive tool (If you understand how to use it and you know how it fits into your overall financial picture), but unfortunately our society has become so consumed in debt and our views on its usefulness are rather flawed.  

Here is a simple concept to internalize - if you do not have it, do not buy it. I challenge you to educate yourself about the hindrances of debt, learn about effective ways you can utilize it to your benefit, and know the responsibility you take on when signing the dotted line. 

3. Disregard the intangible. 

Live in the moment. Embrace it, enjoy it, and take life as it comes. Do not consider or put any thought to the past and definitely do not think about what you may want, need, or desire in the future, because the future will take care of itself. 

I have lost count of how many times I have heard statements like the above from my peersWith this mindset, ruining your financial life becomes drastically easier. But, what if? 

What if you decided to forgo your instant desire and take advantage of the resource that has been given to you – TIME! 

How does time impact your financial future? 

Time Value of Money - Have you ever heard of this financial concept? 

Time value of money declares that a dollar today is worth more than a dollar at any given point in the future. This concept considers the present value of the money, the interest rate, the time frame, and ultimately the future value.  

Here’s a hypothetical example: 

Let’s say someone owed you $10,000 but said they would give you $11,000 if you allowed them to pay you back in 3 years. You know you can earn 5% in an interest-bearing savings account. Should you take the $10,000 now or wait 3 years? 

If you put $10,000 into a savings account that is paying 5% annually, your $10,000 would become $10,500 after the first year, thus earning $500. After the second year, the account balance would be worth $11,025, thus earning $525. After the third year, the account balance would grow to $11,576.25, earning $551.25. 

Time allows you opportunity and in this case, if you would have forgone the repayment and received the $10,000 3 years later, it would have cost you $576.25 or more (depending if you chose another investment). The opportunity made you an extra $576.25 ($11,576.25 - $11,000) 

Time value of money applies to your investment returns. The more time you allow your assets, the better the opportunity those assets can grow into a larger value. 

As late President John F. Kennedy once spoke, “We must use time as a tool, not as a crutch.” 

4. Don’t take the match. 

AKA, “Stick with the ‘YOLO’ perspective.” To benefit from the employer 401(k) match, an employee must contribute money as well. This would require an employee to forgo the money they worked for and tying it up into a retirement account for “x” number of years. To access the funds, the employee must wait until age 59.5 to withdraw the funds without penalty (there are a few exceptions for a penalty-free withdrawal). Why would you want to do that? 

Let me tell you. 

Free money. A 401(k) match is the only place where an employee can get 100% return on their investment. All it costs you is well nothing. You keep the funds you worked for and you get even more, because you decided to implement discipline by preparing for the future. On top of that, those funds can be invested, which gives both your contribution and the match to earn even more. 

***Understand that every plan is different and matching and vesting are different. So, be curious and ask your employer for the plan details if you do not know them already. Employers will set matching limits (could be partial or dollar-for-dollar up to a certain amount). In addition, some employers implement a vesting schedule. In short, this means an employee must stay “x” number of years in order to collect the full match.  

5. Who cares what you think? Let’s follow the Joneses 

Ever heard the phrase, “Keeping up with the Joneses”? What about “Keeping up with the Kardashians”? Yeah, your goal in life should be to do just that. It is a simple concept. If your neighbor, friend, or someone you associate yourself with obtains something, you should obtain one for yourself. It’s fun and it makes you feel really good about yourself… 

Hopefully, you caught my sarcasm and you see the many issues with this thought process. Comparing your social class and situation to someone else’s is not wise. Doing so is an ill-informed thought of comparing what you have to someone else and buying things to impress others you do not even care about. 

  • Why do we constantly fall into this flawed way of thinking? 

Because we do not ask the “Why” questions to ourselves. I encourage you to watch Simon’s Sinek’s Ted Talk:



 Consider, then apply this thought process to your financial life 

Ask yourself the following: 

  • “Why am I currently spending my money on this?” 
  • “Why am I not saving more?” 
  • “Why am I forgoing a match from my company?” 
  • “Why do I need to buy this now versus a few months from now?” 

I hope you take these things to heart. They will help you stray from the all-to-well-known path of the Joneses and will help you follow your own individual, prudent path. 

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Where and how to retire

As you already know, it has been a really odd year, and we are only halfway through at this point.  We still have a presidential election, schools starting back, an unsure football season, Holidays to celebrate, and a Flu-season to go through.  All of this might make us just want to stay in our houses and avoid the rest of the world.  However, if you know me very well, I can’t stand to sit still or not have a vacation I’m organizing, so I haven’t stopped planning.  Through my searches of places to visit, I came across an article in Kiplinger’s that was called “Find a Great Place to Retire”.  So now I was sidetracked, and my financial planning side kicked in.

One of the things I noticed immediately was that these cities were predominantly in the South from places like Huntsville, AL to Pensacola, FL.  But to my surprise, I saw Knoxville, TN on their list.  This is a great accolade for the place that I like to call home.  I guess sometimes you forget how good you have it in your own back yard.  This article on Knoxville focused on the relatively low cost of living in the city, which helps make your nest egg go further, but it also outlined many of the low-cost activities just outside our door.  It went on to point out that we are blessed with the Great Smoky Mountains filling our horizon, the abundance of lakes and streams that run though our communities, and access to a top educational institution like the University of Tennessee.  So, you should be able to find an abundance of free or low-cost activities to fill your day and time you’ve never had while working and raising families.

As I progressed down this path of thinking, I remembered a conversation I just had with a new client who is approaching retirement.  As usual, I got around to one of my favorite questions pretty quick: “What are you going to do in retirement?”.  That matters more than you might initially think because retirement lifestyle is one of the most important keys to the age-old question of “do I have enough?”.  His answer revolved a lot around the happiness of not working, but also the ability to take time and go hiking (a simple lifestyle).

I hope you find your happy place in retirement, but that process starts now.  We all need to make sure we are taking care of the things we can do today to help ensure our futures look like we want them to.

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This Summer's Hot Trade

As July creeps to a close, the thermometers in our part of the country are pegged north of 90. It's hot. Too hot to think about kids going back to school or off to college. Too hot to think about COVID. 

On the investment side, let's add Gold to the hot list. The popular GLD exchange traded fund is up 26% this year and increased 10% in July alone.



In the aftermath of COVID-related economic closures interest rates have plunged to all time lows. Five year Treasury notes only pay .28% and ten year US Treasury notes yield less than .6% which has in turn, pushed mortgage rates to all-time lows. Outside the United States other countries are experiencing the realm of negative interest rates which are manufactured by Central Banks as they attempt to stimulate economic growth.

The global pandemic of low yields is pushing investors to consider their alternatives. Safety-first investors overseas are fleeing negative rates and flocking into gold to avoid losing money. In the US, few investors can stomach tying their funds up for 5 years at a measly 1/4% return. Stock market valuations are stretched as speculators pile into momentum stocks regardless of weak fundamentals. Only folks who can endure stomach churning volatility are chasing this game. 

Washington's response to the COVID shutdown was to offer massive stimulus payments to almost everyone in America. Concerned investors have done a quick mental calculation on the cost of all of this and now realize that our national debt is on the verge of reaching a tipping point. With somewhere between 3 and 6 TRILLION in new debt added to the books this year alone, debt payments run the real risk of engulfing our budget. Exploding debt poses a big risk to the US dollar's reign as the safe-haven/reserve currency for the world.

This debt spiral has been building for years and it is the main reason that we have long advocated a position in precious metals. We view it as a reasonable insurance policy against the dollar declining in value. Gold prices have responded the confluence of economic events this year with a rally to new all-time highs. The question I'm fielding from friends is "can/should I chase it higher?"


Precious metals are becoming the hot trade and will attract the fast money crowd that likes to chase momentum plays. This will increase volatility (and therefore risk). When this ends, I don't know. We're enjoying the ride for now and using the big moves to sell gains down to our pre-determined exposure levels. This frees up cash to re-deploy into other asset classes that are still out of favor. This discipline is the essence of buy low, sell high. It keeps us from getting cooked in the hot trade and smart investors always have a plan to get out of the heat.

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Summertime



It’s one of my favorite times of the year.  I enjoy going to the local farmer’s markets in July.  You can find fresh tomatoes, squash, green beans and many other locally grown vegetables.  It brings back great memories of my grandmother and how she could masterfully prepare all of summer’s bounty from the garden.  I eat more vegetables during these months partially because of their availability and my own nostalgia for the food that was on our table in the past.  I’m trying to share some of that love with my own kids as we prepare weekend dinners.

I’m also hearing about friends that are “going keto”, trying intermittent fasting, or joining a new gym.  I’ve learned in my adult years that there is no “magic bullet” when it comes to diet and exercise.  It takes discipline, commitment, and time to see the results that you need to maintain a healthy lifestyle.  The same holds true in your financial life. 

As many prepare to send their kids to college this Fall, those that have saved for this goal didn’t accomplish this overnight.  They began preparing for this time years ago, likely saving money each month to plan for moving into the dorm.  Some have also paid off their mortgage in 2020.  That also wasn’t a goal that they were able to achieve (unless they had a substantial windfall) in a short time.  They likely paid an extra payment each year or added principal to each payment.

Whether saving for college, paying off debt or saving money in a 401(k), there is no method to snap your fingers and make that goal a reality.  It takes discipline to save rather than spend, and sacrifice to give up a temporary reward for long-term gain. 

And just like those that have lost weight, run a 5k or made long lasting health changes in your life, we find that our clients that are financially independent are equally as happy.   It’s never too late to start saving.  The incremental benefits may seem trivial or unimportant, but the long-term effects of those behavior changes will do you a lifetime of good.

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Change that Will Do you Good

I am recently married and my wife and I have spent the past few days consolidating our households, realizing that we have 2 of everything in our kitchen, and trying to find the best way to fit two cars and six bikes into our garage. 

We’re also combining our bank accounts, updating our wills and changing the beneficiary information on our retirement accounts and life insurance policies.  The process was fairly simple, but only because we had copies of those statements and contact information for those companies.

Part of my role at LeConte is to help our clients get organized and stay organized.  We provide an online vault for clients to keep their information in a secure cloud format that they can access at any time. 

Just as I have updated my estate planning documents and beneficiary information, perhaps now is the time for you to do the same. 

  • When’s the last time you reviewed those designations on your life insurance policies?
  • Can you easily find the policy number and contact information?
  • Have you had a life event that would cause you to change those?
  • Do you have a will, and if so, when’s the last time you had it updated?

I would recommend creating a folder or online location to store all this information.  Tell your loved ones about it and show them that information. 

Waiting on hold, filling out forms for these changes isn’t how one would choose to spend their Wednesday afternoons, but the peace of mind that comes from planning and preparing for my wife and children easily outweighs that.

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5 Things to do before you turn 25 to Ruin Your Financial Life

Conveniences, efficiencies, and instant gratification. This is what our world is full of. When we want something, we usually expect to have it immediately. If we do not get it, we simply get annoyed.  

Renowned author, Stephen Covey titled a chapter “Begin with the End in Mind” in his book The 7 Habits of Highly Effective People. A simple concept, yet so hard to follow or implement for many. When we think about the end, that is the position we would like to have achieved or the goals we would like to attain, we tend to be too late. We give no time for our choice(s) or decision(s) to get off the ground, face objections, and allow ourselves time to adjust. 

Right now, I want you to create a mental picture your future self. The self that is at the end of your life. What do you like about that image?  

Good, bad, ugly, or indifferent; now is the time to think, prepare, and get started on how you are going to make that image a reality. 

Often, we read the thousands of thoughts or ideas that can make our life successful (however you define that), yet we often disregard the hurdles that can severely hinder or even ruin the opportunity to reach those successes.  

After much thought and after initially writing a list that stretched multiple pages, the following are the 5 things you should do to ruin your financial life by 25:

 

1. Refuse to accept responsibility  

We each have seen someone live a life that is overflowing with stress. Although stress is a normal part of life for everyone, it can be minimized. You ask how? I tell you, simple… by not accepting responsibility.   

If you do not have any responsibility you cannot be blamed, you will have no anxiety from expectations, and you can daily choose what to do! Sounds amazing right? 

Besides, mom, dad, or surely the grandparents will step in and take care of whatever you need. You have more important things to do anyway. 

And then you are 75 

You wake up and have a flashback. You get dressed, hop in your truck and clock in for an eight-hour day only to realize it is not a flashback, it is reality. I am not saying going to work at 75 years old is a bad thing, but when you are 75 you should have a choice. Therefore, it is so important to take responsibility for your choices and actions now. It is the very reason why it is important to ponder the choices you have made and revisit them to make changes when needed.  

Responsibility - the state or fact of having a duty to deal with something or of having control over someone.

- Oxford Dictionary

By definition you have a choiceto work or not workto spend your earnings or save some of them. The choice you make is the choice you live with.  

The results of your decision is not your parents’ fault. It is not your siblings’ fault. It is not your friends’ fault. The choice was yours, so the consequences are yours. Own it. If you don’t want to own the choice(s) you make, then continue to point fingers at everyone besides the one who made the choice(s) and put yourself on the fast track to ruining your financial future. Remember, the choices you make have consequences. 

I’ll post the rest of the list next week. Stay tuned... 

 

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Don’t Miss the Opportunity

I spent last night taking graduation pictures of my son and fellow graduating neighbors in our yard. It was great to be around a small group of people again, but it was much different than the hypothetical plans we had made a year ago before the coronavirus changed our lives. There were no large graduation parties, extravagant trips overseas or even the traditional graduation ceremonies everyone just takes for granted. 

It could easily seem that so much was taken away from us, but I think we got more out of it than we at first realized. For months, we had my now 18-year-old son and his two younger brothers in the house together with no place to go. We played UNO, Wiffle ball, basketball, Monopoly, watched movies, and started a nightly work-out program. I truly believe very little of that would have happened if not given the opportunity to slow down, stay at home, and focus time on what is really important.



At the same time, I was working from home during this pandemic and missed out on so many opportunities. I found myself tied to my makeshift office desk trying to help people with PPP loans and Stimulus checks, and I had a hard time pulling away for lunch or to end the day anywhere near the 5 o’clock whistle. That doesn’t even take into consideration the multiple projects that seemed destined to be completed with all of this “extra time”. Instead, what I have now is stacks of paint cans ready to transition bedrooms into new teenage oases. Where did the time go to complete these projects?

What I’ve come to realize is we didn’t get more time, but it was just different and other things consumed my attention. Today my son selected his college dorm room, so he will soon be out from underneath my roof. He will be making important decisions that impact the rest of his life. I have had 18 years with him, but how many opportunities did I miss to show him the right way or help him figure out how to make difficult decisions? I’ll still have opportunities to be an influence going forward, but we only get one shot at today. If this virus was good for anything, I hope it slowed us down enough to think about the important things in life and to take the opportunity to enjoy or accomplish those things we’ve been putting off.

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A Well Earned Holiday

If I took a quick poll, I bet most folks would label Memorial Day as the official start of Summer. People who have family members who died in combat have a different perspective because of their personal loss. It's hard to recapture the honorable origins of Memorial Day from it's historical roots. Maybe this year we will reflect on the voluntary loss of freedom in the wake of the COVID "pandemic." The toilet paper shortages are disappearing and the beaches are opening up, but before we get back to our normal "busyness", maybe we can dedicate a few minutes of our families' time to discuss freedom and what it costs. 



How were you impacted but the economic shutdown? What part did fear play in your mind and decisions? What was the financial cost to your family? Did the government help you (stimulus, small business loans, unemployment assistance)? Did the government hurt you (extended closures, bad decisions)?

What could you have done differently to be better prepared to navigate through COVID craziness? 

The Trial of Socrates offers interesting parallels to the current debate over the limits of our government in the face of a public health scare. The philosopher was associated with the Thirty Tyrants who were overthrown. Socrates was perceived to prefer Technocracy instead of majority rule. He espoused that political decisions should be made based on facts and data that only learned and capable leaders possessed. Only these leaders on Socrates view would be competent to make the best decisions for Athens citizens. Do the names Trump, Cuomo, Fauci and Brix come to mind? 

At the end of the trial, Socrates was faced with the option to flee Athens in exile or accept his death sentence. At 70 years old, he chose the latter and downed a glass of Hydroxychloroquine. Not really it was actually poison hemlock.

Socrates was credited with the phrase "The unexamined life is not worth living" in the writings of one of his young disciples named Plato. This is the takeaway for us today. We've all faced an exile of sorts in the mandated quarantine rules. What did we learn from it? Have you discovered an appreciation for something after it was taken away during quarantine? What are you thankful for? What is important to you?  

Before summer gets started and you bring the seersucker out of storage, take some time to ask yourself some questions. Discuss with your spouse and kids what they could live without if the past few moths became a permanent way of life. What should you leave in quarantine even after they end? Use the Memorial Day break to give thanks for the men and women who paid the ultimate price so that we have the freedom to contemplate the luxury of modern American life.



America is still the best place on the planet.
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