Stop Labeling Yourself

In my profession a question I hear posed to prospects and clients very frequently is “are you a spender or a saver?” In fact, until recently I was guilty of doing this as well – unfortunately it’s not helpful. You may enjoy spending or saving, but it’s not “who” you are; any more than enjoying a good book makes you a “reader”. We (humans) are not one-dimensional creatures, yet we assign labels almost willy-nilly to help put those we interact with into a box.

My son was the catalyst for this blog. As many of you may know, he has Autism. He is not, however, Autistic. The difference is important, because having a disorder or disability is not the same as being defined by the characteristics that typically go along with that disorder or disability. Autism is a neurological disorder with a broad range of associated challenges, and families like mine can choose to accept the “reality” or find ways to compensate and work-around those challenges. My son and I have worked together in the years since my wife passed away and I’m proud to say now he has achieved significant levels of independence we never thought possible – in fact I distinctly remember being told not to be disappointed when he plateaus at an early age by an elementary school teacher he had.

What does this have to do with being a saver or spender? I feel identifying yourself as a saver or spender hinders your sense of control. After all, if this is who you are what possible chance is there to change? And it shouldn’t be taken at face value that one is bad (spender) and the other good (saver). If you’re preventing yourself from doing what you enjoy or hoarding your cash for fear of what may come, being a saver can be detrimental. And not all spending is bad – if you plan and budget for your spending then I say go for it.

The trick is building habits to support what you enjoy doing – either saving or spending. It’s also important to own your actions, don’t go on an Amazon spending spree after a bad break-up and qualify it by telling yourself “I can’t help it, I’m a spender”. Maybe you did it because the act of buying things makes you feel good, because it’s something you have control over. When my wife died, I was definitely guilty of retail therapy – there is something strangely liberating about the act of buying. This doesn’t make me a “spender”.

This was a long-winded way of saying I think we are all spenders and savers. Maybe you don’t enjoy saving, or you have a hard time qualifying why you should save for an uncertain future when you’re living today. Or maybe you’re petrified of what the future brings so are unwilling to take any risks today. There IS middle ground, we just need to find it. But you may not be able to find it on your own – an outside perspective could be just what the doctor ordered. Whatever you do, don’t get discouraged if there are false starts or hiccups in the process, I have found those things I most value didn’t come easily.


Don’t Buy into the Hype

If you’re watching the markets you’ll have seen them enter record territory, and people predicting all sorts of potential endings. At the end of the day it doesn’t matter what the market is going to do in the immediate future unless you plan on withdrawing from your accounts. And if you’re planning on withdrawals, my hope is you’ve already shifted to a more conservative stance.

Here’s my view – markets are going to go up, until at some point they correct themselves and drop. Over the long term the money invested is going to grow, barring any mistakes on the part of the investor(s) – for example trying to time the market and buying high/selling low. I have yet to see proof anyone can predict the next winner with regards to asset classes, and in my opinion the best thing you can do for yourself is diversify your portfolio – considering when you will need the money and how comfortable you are with your accounts going up/down.

As a further hedge for yourself, set aside (2) years of cash for retirement. This way if the market bottoms out the year you retire, in most cases you will not need to withdraw from your accounts; providing yourself an opportunity to potentially gain some of the losses before taking distributions. This could be limited by age, if you must take required minimum distributions; but it will still lessen the damage by reducing the amount withdrawn.

Most of us have, or know someone who has; made an emotional decision they regret. That’s exactly what is happening when you sell because of fear of what the market will do after the inauguration, or Brexit, or any other headline that is bound to pop up. It’s also what happens when we buy something because it’s done so well – for example all those who were buying gold not too long ago.

If it’s not part of your plan, or the only reason you’re doing it is because of how you’re feeling in a moment, then take a step back and reconsider. Get an impartial opinion, from someone who isn’t living in the moment you are; and stay open to what they say. Of course, if this was easy I’d have nothing to write about. The first thing you can do to help yourself is create a plan, because it’s what you will come back to whenever you are in doubt. If you’re not sure where to start, or in what order you should do things, find a professional you can trust and work with her/him.

Pooled Trusts

This month rather than focusing on just one non-profit, I’m highlighting (3). Living in the DC metro area those of us with a family member with a disability are fortunate enough to have several options available to us – in Maryland, The First Maryland Disability Trust; Shared Horizons in DC; and The Arc of Northern Virginia Trust. It’s important to note, they are not geographically bound, meaning you don’t need to be a resident of where they are based to take advantage of their services.

So, what is a pooled trust? The Center for Disability Rights  provides a more detailed overview, but in a nut shell it’s either a first or third party (or both) Special Needs Trust managed by a non-profit. The advantage to using a pooled trust is the money for multiple beneficiaries is “pooled” together, allowing institutional level investing for each individual account. This benefits individuals who may not have a lot of money to invest, or don’t have anyone to act as a Trustee.

Pooled trusts offer the same protections individual special needs trusts provide, allowing individuals to accumulate more than $2k in assets while maintaining eligibility for SSI and Medicaid. Although there are costs, as there would be with any trust solution managing assets, I consider the fees very reasonable; and realistically speaking, when you have smaller investment accounts it can be difficult to find professionals willing to manage them.

Let’s explore each of the above organizations in a little more detail. First Maryland Disability Trust will serve as the Trustee for Payback Trusts, Pooled Asset Trust, Medicare Set-Aside Trusts, Third Party Pooled Asset Trust and Testamentary Trust (more information of each on their website). At this time they only manage investable assets, no real estate or anything else. They have also established a Charitable Funds Program to provide emergency assistance to their clients.

Shared Horizons administers two types of Pooled Special Needs Trusts – the Wesley Vinner Trust (1st party) and the Third Party Community Trust. Similar to First Maryland Disability Trust, they only manage investable assets – no real estate. All beneficiaries of the Trust receive quality of life planning services, starting with an assessment. This provides the beneficiaries with a voice when creating their budget. Finally, they also offer Charitable Fund Awards three times a year to anyone with a disability and financial need, living in Maryland, DC or Virginia.

The Arc of Northern Virginia offers The Family-Funded Personal Trust and the Self-Funded Personal Trust. What I find unique is their ability to manage real estate as well. So if you, or a loved one, has property without a mortgage and you want it left to an individual with a disability this is the only Pooled Trust option in our area (to the best of my knowledge).

Like any other solution, Pooled Trusts are not the answer for everyone. Other options include using an attorney or a bank as a Trustee and establishing your own Trust. I recommend against doing this when the Trust will be funded with less than $750,000, because of the associated costs with managing the funds and difficulty in finding a qualified resource willing to be the Trustee. ABLE accounts do not replace the need for Special Needs Trusts, they should be seen as another tool to be used in conjunction with. It’s critical people do not leave assets to individuals who are receiving SSI directly, because of the risk of losing their benefits. It’s equally important that this not be a reason to avoid leaving an inheritance of any sort to the individual – Special Needs Trusts allow individuals to receive financial assets without fear of losing benefits. Pooled Trusts, like the ones listed above, have staff specifically trained to help families through the process and take care of their loved ones when they’re gone.


Get Rich, Quick?!


In my experience, there are (3) time proven methods to getting “rich” consistently. And much like losing weight and keeping it off, none of them are magic buttons or are going to happen overnight. Sure, there will always be those who win the lottery or inherit, but for most of us this is not our reality. For us it comes down to increasing income, decreasing living expenses, and/or decreasing debt.

Since many of us have “day” jobs, earning extra income will likely come in the form of a “side hustle” or second job. Could be as an Uber/Lyft driver, renting rooms out for Air BnB, or just picking up hours at a local bar/restaurant. Whatever you’re doing, don’t lose sight of any costs. The extra money coming in should be weighed against what it’s costing you – lost productivity at work, extra miles on your car (leading to more frequent maintenance visits) or incurring additional liability. There are other, non-traditional, avenues available as well.

Many of these opportunities are Multilevel Marketing companies, and the way to make more money is to continue recruiting people below you. These aren’t all scams, Avon and Mary Kay have been around for years, and seem to do right by those willing to put in the time and energy. However, with today’s technology it doesn’t take much to put the infrastructure in place and start selling people on the idea of making money, especially when it doesn’t seem to require much effort.

If you’re willing to do your homework and understand the risks associated with Multilevel Marketing, more power to you. But please don’t delude yourself into thinking it’s going to be the answer to all your problems right away. Like anything else, it’s going to take time; and you’re going to have to work for it.

No time and/or energy to work a second job? Then look at decreasing your living expenses and debt. Interest on credit cards and loans chip away at savings – through the opportunity cost of not being able to save those dollars and taking advantage of compounding. You do not need to be in debt to have a great credit score, paying off cards monthly and doing your best to keep overall household debt below 20% of your income will go a long way towards allowing you to accumulate wealth.

This includes housing and education costs – be honest with how much you need, versus what you want. When purchasing your home don’t lose sight of the other costs you incur – heating/cooling it, maintenance, cleaning, etc. The mortgage you qualify for is almost never the mortgage I want my clients to get. Paying less for housing leaves more to save. The same is true for education. Depending on your degree path, do you need to attend a University right away; or would attending a community college or even using services like DANTES (veterans, active duty)CLEP and Excelsior exams be a better fit. They’re certainly much friendlier for your wallet.

I know, nothing in this talks about how you can get rich today – and I’m not going to apologize. True wealth requires dedication, hard-work and sacrifice, and even with these there’s no guarantees. It also requires honesty with yourself, what does it mean to you to be financially independent? I don’t believe in setting standards based upon what I see actors and sports professionals doing; it’s more important to understand what makes YOU happy, and work towards that. Professionals, like me, can certainly help and will give you tools to use; but ultimately it comes down to you deciding what you’re willing to save and how much you can live without now for the future you desire.