Money in “801(k)” Plans…

Every now and again the market creates something out of nothing. The “801(k) Plan” sales letter you might receive in your inbox creates nothing out of something.

A sales letter published by Stansberry Research touting the “801(k) Plan” seems to be describing what are commonly called Dividend Re-Investment Plans or DRIPs. The claim of Stansberry Research that these plans are somehow “secret” is a stetch at best. So also are their claims that you can make millions with such plans investing only a few dollars a month.

DRIPs have a place and can be a valuable addition to your money plans. Beware, however, that if you were relying on a DRIP from ENRON or MCI your drip became a drop and then evaporated. Investment advisors do not normally recommend this approach because there are no commissions involved so you’ll need to do some research to discover if it is right for some small portion of your savings and investment dollars. DRIPs are designed to be consistently funded and can have fees associated with them that make buying and selling DRIP shares less profitable.

More importantly, you’ll want to have clearly defined set of money practices in place before you ever embark on any investment program. A DRIP, for example, that is funded by tax free dividends from a participating whole life insurance policy can produce very good tax advantaged returns without putting a single dollar of your guaranteed accounts at risk. Advisors who practice and teach Money for Life know of these strategies. Most others don’t.

You’ll never regret knowing more than you do now or owning - without debt-to-others – more than you do now…

www.TheMoneyForLifeBook.com

Tax Free – Myth or Magic?

Is there any truly tax free money? Judge Learned Hand, in an opinion written decades ago for the US Tax Court of Appeals wrote, “There are two systems of taxation in the country – one for the informed and one for the uninformed.”  The IRS – along with most of the Federal establishment – doesn’t seem to work for us as much as we seem to work for them. There are, however, some pockets of opportunity in the 66,000 page tax code that are available to anyone who is aware of them and this short post is going to tell you about two of them that are available to almost everyone who is informed.

Health Savings Accounts (HSA’s) allow you to put money aside to pay for your health insurance deductibles and co-pays and dozens of other medical, dental and eye care expenses that may not be covered by your health insurance plan. You can deduct whatever you put aside, up to a generous annual limit, from your income each year. More importantly, the tax deductible dollars you deposit in your HSA, and don’t use from year to year, grow tax free. When you reach retirement age the money in your HSA can still be used – tax free – to pay for medical and long term care expenses that are not covered by Medicare, Medicare supplement insurance or other private insurance plans. If you start now – even if you are in your 50’s or early 60’s – you can offset at least some of the estimated $200,000+ medical expense that you can expect to face after you retire but before you die – or kick the bucket, whichever comes first. If you are lucky enough to have money remaining in your account when you die, that money will pass to your spouse tax free and can be used by him/her for medical expense. If you are the second to die the money in your HSA would pass to your named beneficiary. It would be taxable as ordinary income to the beneficiary.

Perhaps the most misunderstood and overlooked tax free benefits allowed by the IRS Code are the ones you get with whole life insurance.  The money you deposit in a whole life insurance contract grows tax free, the dividends that are  paid on whole life contracts are tax free and the death benefit paid when Uncle Harry kicks the bucket is entirely tax free – no income tax, no capital gains tax, no estate tax…no tax of any kind. Properly structured and managed whole life policies also deliver tax free income whenever you choose – no age restrictions, no waiting a certain period of time, no tax.

These are just two of the tools you will learn to use effectively if you adopt the Money for Life Practices that are thoroughly and clearly described and explained in www.TheMoneyForLifeBook.com

Money Mechanic…

I just returned from dropping off my 1993 Geo for its 200,000 mile service – oil change, top off the other fluids, replace the left brake light and run the routine computer checks – yes there were computers in cars in 1993.

My cars last a long time because they regularly receive attention from a qualified and competent mechanic. He’s probably not going to win any prizes for his work and displays only ASE Certifications on his office wall, but he knows my cars and has over 5 years records of the work he’s done on them.

It dawned on me during the walk back to the house – his shop’s just a couple of blocks away – that a personal economy is a lot like a personal car. If you fail to care for it on a regular basis, it will break down and your neglegence will have cost you dearly. Also, if you abuse you car it will fail. If you abuse your personal economy, it too will fail.

The routine of maintainence is not attractive. It’s so much more fun to discard the old and acquire the new. However, when it comes to your personal economy, there is no new. The Geo will eventually wear out and will have to be replaced. Your personal economy will last as long as you live. If you fail as a money mechanic, you don’t get to go to the Personal Economy Store and buy a new personal economy. You find yourself, instead, with dust in your pocket and – unless its gold dust and a lot of it – you have to start all over and build a brand new personal economy from nothing.

If you’ve been through this, you know how painful it is. If you haven’t, beware. Following the conventional wisdom that invades your conscious and unconscious during every waking hour will eventually destroy what you are working so hard to build. Remember, the sellers of product – cars, houses, mutual funds, annuities – want you to believe that you are making yourself wealthier buying their stuff. The fact is, they get paid in dollars, not in kind, for selling what they sell. They are the one’s getting wealthy because they get money – not stuff.

There is a better way. I stronly encourage you to learn the secrets to building and maintaining a personal economy that lasts – in good times and bad – and I recommend (of course) that you start by ordering and reading

Money for Life…in good times and bad – How to Thrive in the 21st Century

You can learn much more about the contents of the book and order the e-book on line at:

www.YouBeTheBank.com/theMoneyforLifeBook

Banks and Bankers…

What America needs is a good dose of common sense…and that includes the bankers…especially the bankers. However, counting on that from the bankers (pun intended) shows a lack of common sense. Counting on it from the government – especially the lobby manipulated puppets in congress – is naive.

It’s time

• * time to take control of the money that flows through your life;
• * time to recognize that the financial institutions that are beholden to shareholders are not beholden to you;
• * time to discover that you must be your own banker;
• * time to begin making deposits into a financial product that only you control;
• * time to recognize that government regulation and banking security are always subject to manipulation by the dishonest and the greedy;
• * time to step away from debt as the basis of your financial future.

The link to the NY Times article below discusses one problem that Eduardo Porter (the author) sees in the banking business. There are many others as well, so if the one highlighted there doesn’t convince you that a program that lets YouBeTheBank is better than one that enslaves you to the bank, just remember the tip of the iceburg is just that, the banks are the Titanic and if you want a lifeboat you better have your own.

http://www.nytimes.com/2008/01/28/opinion/28mon4.html?_r=1&oref=slogin

Discover how to escape the servitude to banks, credit cards and even mortgages. Now the e-book version of Money for Life…in good times and bad is available on line at www.YouBeTheBank.com/theMoneyforLifeBook - Order today and get two additional FREE reports – a $45 value – that will contribute a great deal to your understanding of the benefits of a plan that lets YouBeTheBank.

Money Architect or Money Archaeologist?

As I look back at the 67 years that have passed me by, I realize that my interests in architecture and archaeology contribute to my profession as a financial teacher and guide.

The new paradigm that I construct for my clients and those who seek my advice is based on the architectural analogy of laying a solid foundation, erecting supporting pillars, and building a financial structure.

To support this approach I refer to the wisdom found in ancient practices that are articulated in financial calssics such as Benjamin Franklin’s The Way to Wealth and George Clason’s The Richest Man in Babylon. In addition, when I wrote the book Money for Life…in good times and bad – How to Thrive in the 21st Century I felt compelled to recount a brief history of the money paradigms that led American’s to the paradigm that enslaves us today and the model that frees us from that servitude.

Perhaps these analogies don’t apply to someone who relates more to the growth cycles of an agricultural economy or the volatility of the market economy. For this I apologize. Whatever your point of reference, however, Money for Life…in good times and bad – How to Thrive in the 21st Century is still a valueable contribution to the financial literature of the early 21st century and is worthy of your time, attention and money.

You can finally order the e-book on line (and there are still a few of the 100 first-to-order offers available – a FREE signed copy of the paperback when it is released later this quarter.)

Order your copy today at www.YouBeTheBank.com/theMoneyforLifeBook

More 2008 Financial Predictions…

The pundits in the press, radio and TV are unable to come to any agreement about our financial future thru the end of 2008. A good number predict a recession. Another few predict significant growth in the equity markets. Some say the real estate market will rebound by mid-year while others tell us it won’t happen till sometime in 2009.

The presidential candidates use smoke and mirrors to try to convince us that they know what’s needed to assure a great 2008. They claim we are either dumb, oppressed, incompetent or fully capable; then they tell us that they know exactly what we need – regardless of the catagory we represent. The  congress – bless their stupid little hearts – and the president are going to give back some money they collected in 2007. Think about that one. I wonder if we’d be in the shape we’re in had the IRS not demanded it in the first place?

Here are Dr Agon Fly’s predictions:

• * if you practice Money for Life…in good times and bad you will thrive in 2008 and have more money in your “banks” at the end of the year than you have when you start;
• * if you make cash value life insurance the foundation of your financial future, you will have a future;
• * if you rely on guarantees instead of “maybe, if everything goes just the way we’ve shown it,” you will be far ahead two, five, ten and twenty years from now;
• * if you change your mind about money and discard the tenets of the current financial model, which is designed to make others wealthy at your expense, you will actually achieve wealth – and wisdom, too.

Wake up America! The pudits and politicians (especially the congress) both rely on popularity for their jobs. The truth is subject to scrutiny based on that alone. I live in a congressional district where the rep has never voted other than the party line and has risen in the ranks because of it. How dumb is that? The TV icons who gain popularity by regurgitating whatever is the latest greatest fantasy of the hottest “guru of whatever,” lead America down rabbit holes, and, when they emerge in the den of the fox the TV advisors lose nothing. They made their money giving bad advice – which they often don’t follow themselves – and now move on to the next “latest-greatest.”

Release of Money for Life…in good times and bad – How to Thrive in the 21st Century e-book is imminent. To order an advance copy and receive a FREE signed copy of the paperback when it is released late in the 1st quarter visit  www.TheMoneyForLifeBook.com

Enter the Financial Planning Labyrinth…

Yesterday I compared the financial planning process to a labyrinth. Later in the day I taught a class on financail planning for a group of seasoned financial advisors and presented them wth this same analogy. I suggested that they may not be advising their clients properly if they were not advocating the use of cash value life insurance – particularly dividend paying whole life insurance from a mutual company – as an essential component of the clients financial plan.

It was not a surprise when not even one of the advisors knew enough about this product class and this strategy to even present it as an alternative.  Remember, a labyrinth does not allow choices. It is a path to nowhere. That is great if you are on a spiritual journey and are traversing a labyrinth to achieve clamness and clarity of mind. It is entirely unproductive if you are mapping out your financial future. These advisors, like most of the advisors, who are informed and trained by companies that do not have dividend paying whole life in their portfolio, were only taught about other forms of life insurance – the types that their companies had for sale.

They were taught that combining term life insurance and investments – either as two separate products or combined in a single product such as universal life insurance - offered a better approach to financial planning. They were shown the entrance to the labyrinth and told to lead their clients on this path as if it were the secret to finding the holy grail.

In fact, when you enter a labyrinth there is only one path and one destination. You relinquish choice. You give your decisions over to a rigidly defined set of strategies and tactics that lead you to a predefined destination. The path offers no options. The rules of the labyrinth are that you must proceed to your desitination without evaluating either the path or the destination.

There’s another troubling aspect of the financial planning labyrinth. It is two dimensional. It is a flat outline, a mere diagram. The only way to invest it with depth is to enter it. When you enter this labyrinth you invest it with meaning. The problem is that the meaning assures the success of the designer of the labyrinth, not necessarily the success of those who traverse it.

The issue is not whether or not you should have a financial plan or engage a financial planner. You should. Your concern should be whether or not the planning process you are undertaking is a two dimensional labyrinth with a single path and a cookie cutter destination or a plan that is designed to help you create a foundation upon which you can erect the Four Pillars that are essential to EVERY successful financial plan but unique to every person:

1. Freedom from debt-to-others
2. Ready money to deal with life’s surprises
3. Income you don’t have to work for and you cannot outlive
4. A legacy of wealth and wisdom for those you care about

If you already have a financial plan or are considering one, measure it carefully against the Four Pillars. If it doesn’t measure up with guarantees that it will deliver the foundation and the Four Pillars you may want to ask your advisor why not – or find another advisor it the answer isn’t satisfactory.

To learn all of the secrets of Money for Life visit www.TheMoneyForLifeBook.com

www.YouBeTheBank.com

Money and the Labyrinth…

A labyrinth, unlike a maze, offers only one path to its center. To exit the labyrinth you have to retrace your steps.

The financial planning and advising business has become a labyrith of sorts. There are so many shibboleths (oft repeated statements that are held to be true just because they are repeated so often and by so many people, even when evidence indicates otherwise) forcing Americans to the center of the financial planning labyrinth that the obvious is ignored.

Today I am teaching financial planning concepts to a group of licensed advisors. I will try to expose some of the foolishness that prevails in that business just as I do in this blog. I’ll try to write a post at the end of the day to let you know how it went.

Visit  www.TheMoneyForLifeBook.com to discover what we’ll talk about.

The Vanishing Wealth of the Stock Market…

American’s who follow the practices of Money for Life…in good times and bad may have money in the markets. They may even be experiencing losses as the markets self-destruct. The equities they hold may lose value. They have no reason to panic, however, and they are able to maintain peace of mind about their money situation.

Money for Life taught them how to protect their wealth from the turmoil that is the market. Money for Life taught them to build a foundation for their personal economy and to erect The Four Pillars upon which every successful personal economy rests:

1. Freedom from debt-to-others
2. Ready money to deal with the ever present risks to wealth and well being – job loss, market crashes, accidents and sickness, children in trouble, divorce, con artists, dishonest business partners, and on and on and on…
3. Income they don’t have to work for and they cannot outlive
4. A legacy of wealth and wisdom for those they care about – family, religious and charitable causes, etc.

Americans who follow Money for Life practices have built their financial structure to withstand the earthquakes of the markets and the tsunamis of fear and panic that follow.

Americans who follow Money for Life practices will still have more money at the end of 2008 than they have today

• because they are using cash value life insurance as the foundation and support for their Four Pillars;
• because they are recovering both the principal and interest that others pay to retailers, credit card companies and banks;
• because they are growing their dollars tax free;
• because they never put foundation dollars at risk without the commitment to replace them;
• because they have learned that being the bank is better than being the servant of the banking system.

Discover what American’s who follow Money for Life practices know that most Americans (including most financial planners and advisors) don’t know…

Place your advance order: Money for Life…in good times and bad – How to Thrive in the 21st Century  www.TheMoneyForLifeBook.com The e-book will be released by the end of January 2008 and you too can have a Great 2008!

Dr_Agon_Fly@YouBeTheBank.com

The Wall Street Journal: A quote from 1993

“History shows that once nominal growth slows in a heavily indebted economy, there can be no recovery until the excess debt is eliminated…Too many people have become complacent about deflation. But watch out. Debt has grown too large to be sustained out of cash flow. As soon as the balance sheet is depleted, a deeper crisis of asset liquidation will catch the world by surprise.”

Source: James Dale Davidson, The Wall Street Journal, 1993.

What’s true for the economy in general is also true for your personal economy. Once the credit card balances reach their limit, home equity is depleted, and the 401(k) is decimated you, and your entire economy, will be up for auction. If you are not yet on the brink, you can probably avoid this crisis by applying the practices of Money for Life…in good times and bad to your current personal economy.

“The significant problems we have cannot be solved at the same level of thinking with which we created them.” Albert Einstein 

You cannot expect to apply the practices that are the stock in trade of conventional wisdom and escape the tsunami of financial failure that is about to engulf the world. The debt structure that lies below the surface of the ocean of money that covers the earth has collapsed and the tidal wave of financial failure is forming.

2008 is not going to be a great year for the world economy. 

2008 can be great for your personal economy. It’s your choice.

Dr_Agon_Fly@YouBeTheBank.com