On 8 October, HBA Albuquerque in conjunction with the HBA Southwest region had the pleasure of hosting a webinar to highlight and review "Making the Most of Your Money" with financial experts Joe Limke, AAMS, CKA financial advisor and Brian Cochran, CFP, CKA financial planner.
Brian started the webinar by explaining the John Moore Associates definition of financial planning: “the continuous, predetermined, allocation of limited financial resources to unlimited, changing, alternatives.” The key point is that all clients have limited resources but have unlimited alternatives. Brian continued by explaining that part of their job is to help the client allocate the limited resources among the unlimited alternatives the client may have. An important question asked was “do you have a plan?”
Brian then proceeded to discuss the important five uses of money which he explained using the analogy of “buckets.” The five uses of money include: income, live, give, owe and grow.
The “income” bucket is your net annual income. The “live” bucket is what it costs you to live your lifestyle each year and the examples given were your living expenses such as buying a car and or buying a house. The “give” bucket included the use of a charitable giving fund. For example, give over a couple of years or double up one year and skip the next.
During the second half of the webinar, Joe discussed the “owe” bucket in more detail. He explained, “it is our obligation to pay back debt and pay our taxes, debt may be necessary at times in our lives.
We need to manage our debt and does it make sense? Debt can quickly get away from you as it is easier to get into debt than get out of debt.” Joe continued to explain that it is better to be a loaner of the money versus the owner of the debt.
Example: A typical pharmacy student upon graduation has incurred a student loan debt of approximately $160,000. Graduate or professional average interest rate charged is six percent (undergraduate rates four and a half percent). With the average interest rate of six percent, the total cost of the student loan is approximately $213,000. An important fact is the $53,000 in interest paid over the lifetime of the loan.
With this example, Joe reiterated that it is easier to go into debt than getting out of debt.
Joe continued to elaborate on the topic of “why long-term planning pays?” He recommended paying cash for cars instead of a loan because you save the interest. Stating that, “overtime those small amounts add up and it is better to keep it than to owe it.” Joe also stated that “in long-term planning, the appreciation of existing assets, plus the surplus cash for the current year, helps enable my net worth to grow.” And, he continued to state that “the reason I want my net worth to grow is to meet my long-term goals.” Typically, goals may come and go throughout the life of a client.
The last bucket “grow” was discussed by both Brian and Joe. They recommended taking advantage of savings such as a 401(K) plan and take advantage of the company matches. Stocks were also discussed in detail.
The presentation ended with the six keys to financial success:
- spend less than you make
- be prudent about debt
- build liquidity
- set long-term goals
- act like a manager, not an owner
- give generously
Brian and Joe recommend that you have a financial plan or are thinking about creating a financial plan for your future. Below is additional contact information.
financial planner, CFP®, CKA®
financial advisor, AAMS®, CKA®
Thank you to the HBA Albuquerque board and HBA leadership for the support to make this event a success. Additionally, we would like to thank Brian and Joe for an informative and interactive webinar. We greatly appreciate the impact that you had on our professional development.
We appreciate your willingness to support our affiliate as we work to build our network and HBA membership.