Cash is King – It’s Useful For More Than Mattress Stuffing

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I seem to be having conversations with clients daily about cash.  We talk about how little they spend in cash anymore, the pennies in interest they are earning in their savings or money market accounts, and about how much they should be keeping in cash at all.  Here are a few short thoughts for you today about Cash and the most common conversations I have around it.

  • Carry Some In Your Wallet – When my 2 1/2 year old wants to play with her cash register, she doesn’t really understand what the paper things in the cash register are for.  She does understand the credit card and how it swipes, and how we use it to pay for things when we go to the grocery store or shopping nearly anywhere.  I now try to carry cash for this reason, to show her that some things we buy are one of the green bills, and some are 5 or more.  It’s a bit early to understand how they’re different amounts, but as your kids get older, can you start to involve them more in the process of understanding how your family spends your money?  If you want a fun question, ask a child where money comes from (even more fun if it’s not your own, I must say).  
  • Save Some For A Rainy Day – Cash in an Emergency Fund or savings account is a critical success factor for financial peace of mind.  When I talk to people who are struggling with spending, it’s a cycle of spending, digging out of a hole of credit cards or other loans, and then they can’t ever seem to make that next step of building up an emergency fund.  Once you have it, you don’t have to be focused on the return that it earns.  Return in an Emergency Fund is just bonus.  The point of it is that you have a stable, secure reserve of cash in the event that there is an emergency.  While you don’t see that return every day, all you need to do is think about a time when you needed some financial backup and it wasn’t there.  The financial return from an emergency fund comes in long-term savings, savings of credit card interest, the ability to have higher deductibles on auto and homeowner’s insurance and the savings you see there.
  • Save Some For An Opportunity – This is really where the old saying “Cash is King” comes from.  Cash isn’t king because you get a little bit of interest on it at the bank.  Cash is King because it allows you to take advantage of opportunity when it presents itself.  When you find the home that you’ve been seeking, having the readily available cash to make an offer and get an affordable mortgage is critical.  When your parents or grandparents invite you along on that big trip you’ve always talked about taking, or you finally decide it’s time for you to do that trip by yourself and you get an email alert about the airfare sale, having the cash on hand to move on it allows you to move forward confidently.

How else do you see Cash affecting your life?

National Retirement Planning Week

Past Now Future

You may know that April is Financial Literacy Month. What you may not know that last week was National Retirement Planning Week. While the whole month’s focus is to increase your knowledge (read: literacy) when it comes to all things financial, this past week was laser focused on retirement planning.

The merits of these are debatable (if you didn’t know they exist, what good are they doing?).  One thing is certain, we need help in these areas.  Survey after survey indicates that Americans aren’t saving enough for retirement.
How can we realize this enough to answer the survey but not enough to do anything about it?
It’s Abstract
Retirement is “over there”.  It’s somewhere off in the distance.  Is it 59 1/2 or 65 years old?  Who knows.
It’s difficult to commit to saving money now for an ambiguous concept down the road.  Humans are fantastic are registering immediate responses.  Just see how long you can keep your hand on a hot stove.  But we’re not so great at delayed gratification, which really is what planning for retirement is about.  How well do you want to live after you stop working?
Here’s the trick: as you begin planning your retirement, it becomes less abstract.  You start realizing how much you could save and what that means for your standard of living.  Once you have the numbers, you start dreaming about the vacations you want to take and items to cross off your bucket list.
It’s Complicated
Unfortunately being abstract isn’t the only roadblock to retirement.  There are lots of ambiguous terms like 401(k), Roth IRA, Mutual Funds, Bonds, Compound Interest, Taxes.  That is a lot going on.  There are different vehicles for your plan as well as a variety of ways to fund them.
It is important to balance two sides of the same coin.  One, understand that you don’t have to know it all.  Meet with a fee-only financial planner and investment advisor that has access to more information than you.  In the multitude of council, there is safety.  Two, don’t invest in anything that you don’t understand.  Identify professionals that have the heart of a teacher that are willing to coach you into understanding your options.  You don’t have to know it all to begin with, but this is your retirement. You need to know what you are doing when you begin putting your money into something.
It’s Important
You don’t want to work your whole life.  Or, at the very least, you don’t want to have to work your whole life.  Do you want to travel?  Do you want to leave your family an inheritance?  Do you want to donate money to charities and worthy causes you believe in?
Whatever your personal drive, find the motivation to start your retirement planning now.
(This is the latest post from Upperline Financial Planning intern Trevor Acy)

H. Jude Boudreaux Listed Among Top Financial Advisors for Doctors for Second Year in a Row


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We at Upperline Financial Planning are proud to announce that H. Jude Boudreaux, CFP® was recognized by Medical Economics Magazine as one of the Top Financial Advisors for Doctors again in 2012!  We are humbled by the honor and work hard every day to be worthy of the recognition.

We are proud of the company that we are building here, and would like to welcome you to contact us if you’re interested in learning more about our unique approach to financial planning.


Financial Rules of Thumb Series: Invest No More Than 10% of your Total Savings in Employer Stock

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This post is part of the Financial Rules of Thumb series. Check out the rest here!

(Today’s post comes from Trevor Acy, an Upperline Financial Planning intern)

Some companies offer great deals for employees to invest in their company stock.  While it’s not exactly too good to be true, there are definitely risks you should be aware of.

The Upperline: Diversification is important. Having too much investment tied to the same place your income comes from can be risky.

It’s tempting, I know.  They’ll give you a match or a discount to purchase company stock.  There is nothing wrong with taking advantage of those options.  We strongly recommend that you guard yourself against putting too many of your eggs in one basket.

Single stocks are riskier and even more so if it is your company’s stock.

Single stocks mean you are relying on the performance of one company to earn dividends and interest.  If that same company pays you too, you run the risk of losing your investment and your job.

One day, you will no longer work for that company.

You are going to find another job or retire, they are going to downsize you, or you will die.  You know your job is not going to provide an income for you and your family forever.  You will have to rely on different sources of income at some point which should involve your investments.

If your company goes bankrupt and you’ve invested heavily in their stock you’ve just lost your income and your investments.  That’s not a good one-two punch.  Take the match or the discount, but don’t overload your investments in your own company’s stock.

Make sure you are spreading yourself wide enough that poor performance from any one investment doesn’t derail your financial goals.

How can you take advantage of employer stock benefits and remain diversified?

  • Choose diverse options in your 401(k) plan.  Your company likely offers 20+ investment choices on their retirement plan lineup.  Choose low-cost, well managed options that cover the broader market and fixed income landscape.
  • Diversify away from employer stock as soon as possible.  Every plan I’ve looked at has different timing restrictions on how long you must hold the employer stock.  Familiarize yourself with the rules of your plan and put a reminder in your calendar to move funds from your company stock to your diversified investment choices on a regular basis.

What questions do you have about your personal investments in employer stock?