“I’m Back”
After taking more than one year off from this column I have decided to return. Since times are still uncertain we find most people need straight talk regarding their finances I will continue to give you common sense solutions that will strengthen your financial situation. I will be writing this column once per month and will try to give you one strong recommendation each month. For those that have followed my articles over the years you will remember I warned back in “09” that this recovery may be long and hard. Some of the solutions I recommended were paying off debt, saving more in your retirement accounts and diversifying your portfolio. We also suggested you pay attention to investment cost since they are one of the few things you can control. If your portfolio is generating two percent and your overall investment expenses are three percent; you automatically lose money. If you followed our advice over the last three years you should be in a much stronger financial position than you were back in 2008. You should have less debt, more cash flow, higher cash reserves and a stronger retirement account; these changes have you in a much stronger position even though the economy doesn’t seem any better. If you pay attention you will find that most of corporate America is doing the same. The banks have more cash; corporations have more cash and less debt along with stronger cash flow and profits since expenses are down (less employees). Therefore when the economy starts to turn you will have the wind to your back instead of in your face. The economy will eventually turn around and by paying attention to the things you control you will be ready. Over the last three years we have had our clients systematically moving first into fifteen year mortgages and now have started moving into seven to ten notes. In many cases this will eliminate fifteen to twenty years of mortgage payments. Think about how that one change will impact each of their lives and we are now in position that virtually all of our clients will be debt free by retirement. That one change will not only give our clients tremendous flexibility and options but “Peace of Mind”. If you have a thirty year mortgage please contact your banker to discuss moving to a twenty or fifteen year note. If you already have a fifteen year mortgage look hard at a seven or ten year mortgage. Don’t forget to shop rates and cost; they vary widely so do your homework. Many homeowners are under the impression that they can’t refinance since they have lost most of their equity with the housing bust; this is not always the case so check with your lender because there are many programs to get you a shorter note with less interest many times even if you have no equity.
A recent article indicated that nine of ten investors are unhappy with their advisors or their strategy during the last five years. Next time we will discuss where to find someone you can trust, how much it should cost and what you should learn from that meeting.
Mark R. Folgmann is President of Ark Advisors LLC a fee-only firm in Traverse City. He has spent the last 28 years helping people simplify their lives and gain “Peace of Mind” over their financial situation. He can be reached at 668-4118.
