When The Stuff Hits The Fan

“Riches do not consist in the possession of treasures, but in the use made of them.”

- Napoleon Bonaparte

Egypt. Libya. Bahrain. The Mideast is boiling right now.

Mass protests in Madison, WI. Fear of inflation. Fear of deflation. Rising public debt. Worst of all for some: the NFL season for 2011 is in jeopardy!

I don’t mean to make light of all this turmoil by that last example. But what I do want to point out is that fear has become a regular part of the national diet. It truly is frightening many people into all kinds of “worst case scenarios.”

One of the simple tonics for your fear is to take actual action against it. For many, this is a mindset issue: the “diet” for your brain may require some adjustment, i.e. what are you allowing to pollute your thoughts these days?

But an even better action step is to take steps of preparation, so that you are ready for whatever comes. So, in response to some conversations I’ve had with clients during the course of this tax season, I thought I’d take a time out to lay out for you six basic steps for financial preparedness in this week’s Note.

Jon Neal’s

“Real World” Personal Strategy

How To Prepare Your Finances For Emergencies

It’s my firm belief that how you choose to think about your circumstances has a subtle, yet profound, impact on how you handle storms. I’ve written often on this subject, so I won’t belabor it here.

Instead, this week, I thought I’d give you a short run-down on specific, financial steps to put in place so you can be ready for whatever kind of situation you might find yourself in.

1) Put $1,000 aside. It doesn’t amount to a real emergency fund, but it will do until you get your finances in order. You can accumulate the $1,000 by allocating $10 a day for just over three months. Most people go into debt because they live hand to mouth, spending 100% of their take-home pay. Then life happens. Having a mini-emergency fund can help you get out of debt and stay out of debt.

2) Remove yourself from credit card debt–forever. I suggest paying off your credit card by starting with the smallest balance in order to achieve small successes and then working to snowball your payments as you tackle the larger balances. These first two steps, having $1,000 and paying off debt, simply prevent you from facing a financial emergency by starting out wounded and bleeding.

3) Improve your ability to handle fluctuating monthly expenses. If you can, set up a monthly budget so your day-to-day expenses are less than 65% of your take-home pay. The difference between those growing rich and those remaining poor is not the salary they make. It is the salary they keep. Relative to their income, the rich are frugal. They save and invest. They spend less than 65% of their take-home pay on day-to-day expenses. They save at least 10% in their retirement accounts and another 5% in taxable savings. They direct another 10% toward unknown big purchases. And they even live frugally enough to give another generous 10% to charities.

4) Automate your cash flow to promote saving and investing. Every month, have 10% transferred into your retirement account before you receive your paycheck. Then automate the transfer of 25% of your take-home pay into an investment account a day or two after your paycheck is deposited. Automating your savings makes savings a high priority and ensures that you pay yourself first. This investment account will grow over time, and you can use it to pay for big emergencies and charitable gifts.

5) Set up an asset allocation for your investments that’s diversified for safety while being invested for growth. If you make it to this step, you’re well ahead of the game…but the game ain’t over yet! Diversification works, and it’s never more obvious than in times of market turmoil. Without diversification, portfolios can have a zero return over a decade. After being well diversified, the likelihood of no return over a decade drops significantly.

6) (If necessary) Mobilizing during an actual emergency. Having the discipline to budget for small financial emergencies will help you be prepared when you encounter larger financial crises. When some unknown spending need strikes, take the money to cover the expense from your growing emergency fund. Then, determine if you have been budgeting for this level of unknown expenses adequately.

Usually emergencies don’t happen. So the money you have socked away makes more money. Keep an emergency fund for several years and it should double in value, giving you an additional emergency fund. Whether you need it or not, being prepared for a financial emergency means peace of mind, knowing that your lifestyle is frugal, so you won’t be in trouble.

With gratitude for your trust!

A Friendly Tip (Not About Taxes)

"It is well to give when asked, but it is better to give unasked."
- Kahlil Gibran

Last Monday, there was a certain holiday to attend to, and it’s pretty easy to let things sort of slide on by after that point. But here’s my advice for you:

Don’t stop there.

Yes, yes — the old canard: EVERY day is Valentine’s Day!

And I’m very aware that you may have had a budget for your expressions of love, so I’m taking a different approach.
These are some non-budget-busting ways to go "above and beyond" —
when it matters. Sure, wives may scoff at this list, and be gratified when their husbands successfully surpass it. And husbands, well, I know some are skilled at romance; and others … well, here’s some help!

You see, how nice would it be to have "come through" last week
(or, well, not, as the case may be), but then follow up with
something more?

And again, I know that many families on my list have a certain
amount of means at their disposal, and others don’t. Which
makes this list even more helpful. Because *whatever* your budget,
the simple gesture of coming back around AFTER Valentine’s Day
is how real magic happens.

So, yes — today’s Note is not about taxes, per se … but as part of my
continuing quest to serve you "above and beyond", I thought I’d offer
you a friendly reminder.

[But, on that note: Have you contacted us yet to get your taxes
in order? Because our schedule is rapidly filling up. And please rememeber to sendyour friends our way! Just have them let us know you sent them, and we'll give them a special deal -- just from you.]

Jon Neal’s
"Real World" Personal Strategy

Making Your Love Gestures Stick
It’s no secret that our economy is in tough shape. And whatever your particular financial situation, wouldn’t it be great to create romance "magic" without spending an arm and two legs? So, perhaps you’ve done the old "flowers, candy and chocolate" routine already last week. Well,  here are a few modest and occasionally tongue-in-cheek suggestions for a sizzling follow-through … that won’t torch your wallet!

Be Green – Save Money and the Environment at the Same Time!
With the economy taking its toll on virtually every industry, even the high-rollers are looking for ways to spend their cash more effectively. One Hollywood studio saved $40,000 on cards and postage by doing e-Cards and videos for all of their clients and friends.

Seem cheap?  Spin it this way – you’re being green by not using snail mail – that’s so 20th century anyway. You’re keeping with the times, utilizing powerful technology and reducing your "footprint" at the same time! What environmentally-conscious woman could resist?!

Make a Video.
You can use the video setting on your digital camera, and create a heartfelt message of love for your sweetie. Then, you can post it to YouTube, or another online video-sharing site and send it on! Um, just be sure to adjust that YouTube setting to "private" unless you want to share with the world your dying love for your honey.

Learn a Romantic Song and Sing it to Your Sweetheart.
Even if you can’t sing, your more-than-a-valentine will give you kudos for the effort! You could step it up by writing an original song and then sing it. Or, for the slightly-less courageous, you could pull a page out of John Cusack’s book in Say Anything and hold a boombox (or iPod) above your head and blare Peter Gabriel’s "In Your Eyes". That seemed to work.

Not a singer? More of a writer? Or artist? For the artistically and/or musically inclined:

- You could pen a poem on nice paper
- or even paint it
- You can paint a picture of your honey. Just be sure it looks good.

The "Mix Tape" (or Playlist)
This is an old standby of high school kids everywhere. Except these days, the "tape" part is a bit less convenient. Instead, make a CD or mp3 playlist of Sweet Love Songs and make a cover list/ liner notes on the memories of you and your honey from the songs. And you can make a Personalized Photo Album using a service like Apple’s iBook service and iPhoto.

Romantic Picnic
Surprise your love with a ‘picnic’ in the park, at the beach, or any other outdoor nature spot. If the weather isn’t ideal for outdoors, you could bring the outdoors inside -find a fake palm tree, flowers, sand, beach umbrella, radio, towels. Nothing says "I love you" like fake palm trees!

Write a Message To Be "Stumbled Upon"
Well, perhaps not *literally* stumbled upon, but try a nice outdoor surprise. If you do have snow outside, you could stomp out the message and fill in the letters with spray paint or flower petals or rocks.  If there’s no snow, you can use sidewalk chalk to write a message to your sweetie.

You see, anybody can go out and "buy something" – but it takes effort and thoughtfulness to make it personal … and it doesn’t require a lot of money!

Just remember … follow-through is everything!

Genuinely Cares

Very friendly and attentive, quick to respond to calls and or inquiries. I feel like I am dealing with an accountant/advisor that genuinely cares about my business, not just someone that prepares financial statements. I also appreciate the straight talk given to me in layman terms and not a lot of jargon I may not understand.

-Libby Wick

Fast Turn-Around Service

I love the office hours, fast turn around tax service, ease of email return and the welcome feeling at the office. I wanted to give my daughter a gift to help her purchase a new home. I had no idea how to do this. I called The Neal Group, asked the question and got the answer within 24 hours. With their help, my daughter is now the owner of her own home. PS – she qualified for the $8 thousand credit.

-Peter Spera

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