In honor of Halloween, I’ve made a top ten list of the Scariest Financial Products. Mind you this is my list and using these products could be dangerous to your financial health.

Coffee Art: Skull

Are you scared yet?

  1. Viatical Settlement– Care to make some money on someone’s death? Buy a viatical and you get the leftovers from their life insurance policy. Basically you get more money if they die early. How morbid!
  2. Gold Futures– Want to loose sleep for 3 months and become a walking zombie? Investing in gold isn’t a great idea, but gold futures are one the riskiest investments around. Play this game and you could loose your sleep and your shirt!
  3. Zombie Insurance– Need protection against the undead? Look no further…ok this one is a gag, but great idea!
  4. A.R.M.- Want to loose your arm, a leg, and your house? Well, these Adjustable Rate Mortgages will scare the life out of you when the interest rate adjusts beyond your paycheck. Be sure to get a fixed rate mortgage and avoid loosing your body parts.
  5. Post Apocalyptic Insurance– Think you’ll need to eat after the apocalypse happens? There is a solution: Food insurance.  I find it funny that all the pictures on the website are of smiling people.Wipe that smile off your face! The earth is destroyed and almost everyone is dead, but smile because you bought food insurance and you’ll live to see another day.
  6. Whole Life Insurance– This product is scary indeed, especially with all the low cost of term life insurance. You might roll over in your grave when you realize your whole life insurance policy was terrible and you could have bought much better coverage for a cheaper price.
  7. Pay Day Loans– The interest rates you’ll be charged will make you think they are bleeding you to death.
  8. 401K Debit Card– You’ve been saving for retirement for years now. Great….now can I get a card that lets me spend all that money I’ve been saving and investing? What? I have to pay it back with interest? When I leave my job I have to pay it back in full ASAP or I’ll get charged huge tax fees? Yes! This little piece of plastic could make your retirement years a living hell. You’ve been warned.
  9. Any insurance company whose main mascot is a lizard or duck….these talking animals just creep me out. (Some of their products are legit and some are unnecessary)
  10. Tax rates when I “retire“- O.K. this isn’t a financial product, but who knows how high our tax rates will be in 30 years? This one is the most frightening of them all, especially since our national debt keeps growing.
(Photo by Alice Carrier )

Previously I wrote how investing a little each month will make you rich [What is Dollar Cost Averaging? Drip Your Way to Millions]. The question remains of where should you place this money each month?

I have an idea, though it is rather boring–yet it can make you rich. Gather around home plate and I”ll tell how investing in boring index mutual funds can make you more money than a minor league pitcher.

Boring Index Funds Can Make You Rich: Being Above Average is Tough Stuff

I love to be above average, don’t you? Here is a little secret I learned–all the above average people from around the world move to cities like New York and Los Angeles. Thus to be above average in such a world class city, you must be in the top percentage of the U.S. and maybe even the world to stand out.

To be above average in the investing world year in and year out is nearly impossible. Yet, millions of investors are following fund managers who are trying to be better than average.

Some years they succeed and some years they fail. What results are higher fees and taxes associated with the mutual fund due to buying and selling seeking gains.

For most investors, being average combined with dollar cost averaging is good enough to reach millionaire status.

Boring Index Funds Can Make You Rich: An Average Batting Average Makes Millions

Lego batter

Baseball players only have to be average when batting. Credit  eva.pébar.

If you know anything about baseball, you’ll recognize that professional baseball players can make a lot of money.

Let’s take Aubrey Huff, 1st baseman for the 2012 World Series winning S.F. Giants, as an example. He made a cool 10 million and batted .207 in regular season play. (The best 2012 batting average was Buster Posey at .336)

While batting average isn’t the only value Mr. Huff brought to his team, he was in fact average–hitting about 2/10 pitches, yet he makes millions.

Index funds can help you do the same.

Why Boring Index Funds Can Make You Rich: Be the Benchmark

What is an index fund? An index fund is formed from a major measure of the stock market, like the S&P 500 Index or the Russell 2000 Index.

An index fund is a mirror of these measurements. Thus an S&P 500 Index Fund is a combination of the largest 500 companies as reflected by the S&P’s rules of inclusion for their index.

Here’s where it becomes ironic. These measures on which index funds are based are the benchmarks in which managed funds are trying to beat.

Why not become the benchmark and be average. Sure, you might not strike it big some years, but you won’t also hit as low of bottoms either.

Index funds have:

  • Lower expense ratios and fees than managed funds.
  • Less ‘turnover’– buying and selling of stocks through the year resulting in more taxes.
  • Index funds outperform most managed funds over the long term.  Need proof? #1 #2 #3
It is very difficult to predict which funds, the small percentage that do exists, will beat the benchmarks over the long term. Can you find a needle in a haystack? Index funds are one of the few places where being average and boring isn’t a bad thing. In fact index funds could make you rich.

 

*As always consult an investment professional before beginning investing or changing your investing strategy.

 

What are your thoughts or questions about investing in index funds? 

Lego Doctors

Injuries occur through either natural disasters or man made situations. When those injuries happen, medical attention is needed and needed quickly.

Triage is a technique to give care quickly–Do the most good for the most patients. Sometimes in our financial lives triage needs to be performed. We need to act and act quickly to preserve life.

Financial Triage Basics

Financial injury prevention is best, but if injury occurs the goal is to reduce the impact of the injury and preserve life.

1. Determine the severity of injury– Asking a series of questions and observations to determine how bad is it?

Are you behind on your bills? facing foreclosure? Thinking of bankruptcy? Spouse threatening divorce due to money matters?

2. Initiate management– quick fixes, tag, prioritize, and basic treatment.

Apply a quick bandage if you are financially ‘walking wounded’ or you might need immediate treatment.

3. Perform field triage- This involves sending to the appropriate treatment center (trauma center, closest hospital, or hospital further away).

Depending on the level of your financial wound determines what kind of help you’ll need. You may need  financial coaching, bankruptcy advice, tax advice, or another financial profesional that can help with treatment.

S.T.A.R.T Financial Triage

As a first responder gets on the scene they’ll go through their triage checklist and begin assessing those injured on the scene.

Simple Triage and Rapid Treatment (START) is a method they might use. Let’s adopt this method and ‘field triage’ to a financial crisis.

Remember if you’re hurting, there is hope–your situation CAN improve.

1. Start where you are- No need to go back to the beginning of how your family didn’t teach you about money. Start where you are and begin to move forward.

2. Stop the bleeding- In order to get out of your financial crisis, you’ll have to stop bleeding money. Stop borrowing money and going further in debt.

3. Clear the Airways- Breathing is essential to life. Your financial airways need clearing to make income greater than outflow.
  • Sell unneeded items for quick cash and to establish an emergency fund.
  • Get a 2nd job for a short amount of time until you make ends meet.
  • Start the short sale process if your home is in foreclosure and no way to make up payments.
  • Do what it (legally) takes to get out of crisis mode so you can breath.
4. Prioritize– Keep the important at the top of the list. Faith, Family, and Friends.You’ll also want to keep the 4 Walls before paying any debt:

  • Food
  • Shelter
  • Utilities
  • Basic Transportation

5. Seek Treatment- This is where longer term solutions are found.

  • Minor wounds could be fixed with a good financial book or a financial support group like Financial Peace University.
  • More serious financial wounds might need a financial coach who can refer you to other trusted financial professionals.

If you are in financial crisis, it is scary and hard to know what steps to take. Seek help from friends, clergy, or financial professionals.

Ignoring financial problems can lead to more serious injury. A small scratch can become infected and need surgery. Seek help. Contact me and I will help or find someone who can.

Are you or have you been in a financial crisis? What did you do immediately that helped? 

Photo Credit atomiclizard (Creative Commons)

Moving Truck

Penske is now my first choice in moving trucks. Credit Crashmaster007.

I have been a lifelong user of U-Haul for moving trucks, but now I am switching allegiances. After a friend recommended Penske and I saw dozens of yellow Penske trucks on my 1,400 mile road trip, I decided to investigate Penske for our upcoming cross state move.

I am now convinced that Penske is a better choice for long distance moving over the traditional U-Haul, so I’ve added Penske to my Tips for Moving list and given several reasons why Penske trumps Uhaul.

5 Reasons Why Penske is Better than U-Haul for Long Moves

1. Newer Trucks- Penske replaces nearly half of their self move fleet a year, so you’re guaranteed a truck with low miles and high quality condition. The truck I drove had only 56,000 miles. U-haul trucks are traditionally older and in less than desired condition.

2. Unlimited Miles- With Penske you don’t have to worry about milage on one way moves. With U-haul there is the stress of being penalized for every mile driven over the allotted miles given. This can easily happen by taking a wrong turn or using an alternate route due to bad weather.

3. 7 Day Rental- 7 day rental gives extra time for packing, driving, and unloading. The extra time is a big plus for a long move. U-haul allows only 5 days.

4. Comparable Price or Cheaper than U-Haul- With Penske the price is comparable or cheaper than U-haul depending on which state you are traveling from and what state the truck will be dropped off in. Penske gives a discount for AAA members, military, and students too!

5. Guaranteed Truck Rentals at quoted prices- No fear that your truck or trailer won’t be on site or that you’ll be charged more. U-haul only guarantees your truck on site if you reserve it within 48 hours and has a history of overbooking and thus overcharging above the quoted price.

6. Great Customer Service I had to add another. A few days before my move date, I received a phone call to ensure my order was correct and to inquire if I had any questions. At my Penske pickup and drop off locations I had enthusiastic customer service and both reps had positive views about the company.

Penske is also Business Friendly with a large commercial fleet of vans, semis, and trucks.

Based on my experience and the large numbers of Penske moving trucks and semis on the road, I believe Penske has quietly overtaken Uhaul as the go to company for long DIY moves.

Consider Penske for your next out of state moving van rental needs.

Have you used either Penske or U-haul? I’d love to hear about your experience in the comments below!

www.ontargetcoach.com

Photo Credit: Leo Reynolds via Compfight cc

This last month we missed out monthly budget party. I figured we have budged for 81 straight months! Pretty good streak if you ask me; comparable to the Harlem Globetrotters 2,495 straight wins over Washington Generals. (32 other famous sports streaks)

It was a time of flux, transition, and [insert excuse here]. So my wife and I failed to have our monthly pow-wow over how we’ll spend our money and guess what…it didn’t matter that much.

6 Years of Budgeting and Marriage

A funny thing happens after 81 months of marriage and learning how to communicate about money–namely you figure out a plan and stick to it. That’s what ended up happening for the most party. We did what we always did.

I still kept up with spending and found out that groceries were pretty much the same, under actually. We did go a bit crazy with eating out, but that was part of the transition and celebrations over job promotions.

Our budgeting streak is over, but we had a good run. We do plan to jump back on the budgeting train; after all our income will be increasing, so we need to really keep our eye on the ball.

If you want to learn how we budget or tips on budgeting, read this series of articles about budgets.