Louboutin, Nike, Adidas, Vans, Tom’s…. the list goes on and on. But should you really splurge on those name brands and make your mother roll her eyes (while she’s STILL doing your laundry even though you own your own business) or save the money and make your parents smile from ear to ear because we all know how baby boomers like to save (insert wink towards my Pops here)?
My advice? Do both.
We all value lifestyle, and many of you out there are trying to start your own businesses or start an awesome career. Look the part. Launch your life. Buy the shoes.
Want to help those in need — like when you buy a pair of Tom’s, they give one away? Buy the shoes. (Whatever your cause or passion is, there is now a clothing line geared to help.)
Saving money is important, too
On the flip side… and there is ALWAYS a flip side… you want to maintain your lifestyle AND flourish in your career – well then, you need to save the money.
OK, so how do you buy the shoes and save the money, when you’re not Kanye West?
One suggestion: shopping online takes away a lot of the burden and cost. One name brand piece makes your less expensive pieces pop and gives you the street cred. In short, cut back in other places for that signature piece AND put some money in the bank. Look for clothing rental services so that you save on dry cleaning. There are so many Internet based ways to save on clothing and shoes in today’s market, but you probably already knew that 😉
OK, I bought the shoes. What’s the financial impact of an expensive fashion purchase?
A pair of Christian Louboutin “So Kate Pointy Black” pumps is going to run you back $675. This is a great purchase since black pumps will carry you from day to evening easily. They are very versatile — and if you care for them — they will last you a long time. The key to this purchase is that you don’t have a ton of other shoes to purchase. Louboutin Kates take the place of several pairs of shoes you won’t need…. especially dress shoes that are vital to your business or career. Let’s pretend you own them for 10 years until your fiancé’s dog chews them up.
How mutual funds can fit into your financial plan
Now, let’s say you also invested $675 in a mutual fund that returned 5% (and yes – at this stage in your financial life you should be more aggressive, but we will talk about that in later blogs).
Here’s the important part — because you already owned the Louboutins, you resisted the urge to buy a lesser quality $100 pair of pumps every year for 9 years. You know the urge, right? You resisted it. You saved that money in your mutual fund instead.
The result? The $675 you invested, plus the $100 per year for 9 years that you didn’t spend and saved instead, is going to be worth roughly $2420 in year 10.
So, it takes discipline… but you CAN do both! Share ways YOU dress like a rock star AND save money, too!
How do we find the value of a life?
This is a common question in my line of work as a financial advisor, but I recently experienced this in my own life with the loss of my father-in-law. I was a personal witness to the other side of the table.
Immediately after my father-in-law passed, the hospital room was overwhelmed with silence. It was so loud — in its own, very quiet way. As if you could hear a vacuum in the void of our lives. We sat in that silence weeping and praying. As our lives stood still in that moment, we began to talk about memories and thoughts of the last couple of hours. We sat there to capture that moment and to honor a great man.
Then, just as our lives stopped, they started again, with what felt like a greater velocity as we started to plan the next steps that were required, both financial and otherwise. My in-laws had done a wonderful job planning by preparing their legal documents, accounts, and arrangements to ensure there would be no question of their wishes.
The unseen expense of losing a loved one
However — even with all that planning — life finds a way to sneak up on you. From the planning of his memorial to the day-to-day needs, the weight of every decision seemed amplified. The week of his passing, their house showed the absence of its handyman. The toilet broke, the boat’s fuel sensor malfunctioned, and the yard was in desperate need of attention. We were one set of (very skilled) hands short. We witnessed firsthand the day-to-day expense tied to the cost of serving his memory well.
Financial dependency is a risk
This is a risk we live under in this life — creating a dependency. This affects parents that provide for dependent children, to retirees that depend on each other’s income. Dependency is not easy to lose in the moment of death, no matter the situation. We do not create it overnight, and it is not easily replaced. How can you help alleviate this in your own life?
Mitigating dependency with strong financial planning
A strong strategy for your — and your family’s – financial future can help to mitigate this risk. A financial advisor can help you. Work with that person to assess your areas of risk and create a long term plan.
- Review life Insurance: Have your advisor review your life insurance and make sure the financial benefits that it provides will meet your needs. Life insurance is an easy way to cover your income, which could be your most valued asset.
- Plan the funeral: Plan carefully and clearly communicate your wishes, so others do not have to make difficult decisions. A person’s wishes are so important, even after they can no longer speak themselves.
- Sort out your legalities: Meet with an attorney to review the needed legal documents so that you and your family are not lost in the throes of legality. This is the last thing that anyone wants to face in the wake of losing a loved one.
- Adjust your plan as life goes on: When all of this is complete, do not stop. Your life will change, and your plan needs to follow.
The benefits of planning for death
So, what’s the reward in all of this? It will feel difficult at times to plan for this eventual reality we all face, but its rewards are many.
When the inevitable moment arrives, your family will be allowed time to grieve with dignity. Family and property will not be left in disrepair. Lives can learn to be whole after being dismantled. Our communities would be burdened with love and not taxed with monetary support. That the generosity that you have shown towards family and the community will be a legacy left many years after your passing.
Given a heavy workload and some down time thrown in, I’m barely under the wire for this to be an August column rather than a September column. As I write I’ve seen the news reports of Hurricane Harvey hitting the Texas coast and flooding Houston and other areas. The cost to human life and lives hasn’t begun to be measured yet, but it is certainly devastating. Our hearts and prayers go out to those suffering such loss.
I fear for New Orleans as well. Should there be a little jog in the storm path in the next 24 hours, it could bring renewed devastation to The Big Easy 12 years after Katrina. Does it seem like 12 years to you? It doesn’t to me. Life seems to be spinning with the speed of a tropical storm, and just as inexorable.
Clients have asked me what effect the storm will have on the stock market. As I write this, oil stocks are down and gasoline is up at the pump. I heard today that if Houston’s GDP was measured against countries; it would be the 27th largest in the world. While it would have severe impacts to the US and world economies if the Houston economy were disrupted over the next year, the ‘experts’ are talking about economic recovery being measured in weeks.
The economy should be just fine and not rocked by the recent storm. The market should not see significant impacts either. But one never knows what will change market sentiment. Such is the nature of investing. The market, as we know, will continue to defy predictions.
I’m also asked if the political storms in Washington will affect the markets. Brian Wesbury, Chief Investment Officer of First Trust Portfolios, L.P. is a great friend of Allen & Company and has provided lots of insight over the years into what drives the economy and stock markets. His take on what I call the “Washington Shenanigans” is worth a listen: Click here to watch the latest Wesbury 101 – Political Games and Stocks.
You may recall what I wrote late last year: “the stock market would probably respond to the presidential election with an uninspired “meh” with gridlock to follow.” Clearly the US equity markets have been much more positive from November 2016 to August 2017 than a blasé “meh”, but gridlock, just as clearly, reins.
These two storms, the hurricane on the Gulf coast of Texas and the fussing and finger-pointing in Washington, remind me of a quote from the Jeff Goldblum character in that dinosaur movie. He said something like “nature finds a way” or “life finds a way.”
Yes it does, doesn’t it? Whether it’s calamity caused by natural forces, or man-made disasters planned or inadvertent, life does find a way. After the clouds pass, the sun eventually comes out, and the grass blooms anew. How long that takes, we just don’t know, and I don’t think we’d be any more content if we did.
I do know the clouds can last a long time. In case I had forgotten, I was reminded during a recent reading of a novel of the dustbowl years. “Whose Names Are Unknown” by Sanora Babb reinforced perspective about suffering and poverty in a seemingly never-ending season of drought. Some people in Hurricane Harvey’s path will have their lives changed forever in ways that will leave behind heartbreak and despair, never to recover.
But for most of us, life will go on. As we think about how these ‘storms’ affect us – our life choices and core values, our beliefs, our hopes and dreams, and yes, even our investments, we would be well served to remember to separate ourselves from the noise and stick to our principles that brought us safe thus far. Sending a dollar or ten to storm relief wouldn’t hurt either.
Take care of yourself out there. There will be storms. And new dawns.
“What are we, a mile from the sun?” asked Lawrence Bourne III in one of Tom Hanks’ lesser films. Hanks played Lawrence, a spoiled rich kid that inadvertently gets himself enrolled in the Peace Corp and shipped off to the tropics. The only thing I remember about the movie was the Hanks character getting off an airplane with the temperature reaching for the 100s and the humidity over 90, and asking that (presumably) rhetorical question. That, and John Candy playing the lovable lug loser he did so often, “Hi, Tom Tuttle from Tacoma!”
Have you been outside this month? It is hot, Robin Williams as Adrian Cronauer as Roosevelt the weather reporter hot. They tell me the Southwestern United States is worse, but it’s a “dry heat”. Yeah, so is my oven, but I don’t want to vacation there.
After Dad died five years ago, my siblings and I elected to let the U of F football tickets go after 50 years. It was hard to let go of so many memories, but not nearly so hard to let go of sitting in the 1:00 early September Florida sun with 85,000 other overweight, overheated alumni.
You’ll have to tell me if it’s age, too many days at the desk in air conditioning, or climate change, but this heat is hard to tolerate anymore. Summer used to be my favorite season. I still enjoy it, but I do like a little breeze and some shade to go with it now. But at least we have hurricane season to look forward to … or not.
So far, you may be wondering what this column has to do with investing. I haven’t been able to find anything yet either, but maybe it’s taking shape. Although, as Sigmund Freud didn’t say, ‘Sometimes a weather discussion is just a weather discussion.”
But despite the heat, people from all over the world are flocking to the Florida theme parks. I heard a news story that said Disney World had increased ticket prices, only to see attendance increase. The number of people that will take kids in strollers to the Orlando parks in the middle of summer is a constant source of amazement to me. I’m not critical mind you, I’m happy for the people and the parks, but the parks start to lose their magic for me somewhere in the high 70s – temperature and capacity percentage both.
Although I’m skipping the parks this season, I am doing my part to celebrate the time honored family vacation. This year, since all the little urchins are grown and gainfully employed, time off is at a premium so it’s just a few days at the beach. I’m taking the whole crew to Vero. We’re going to the east coast since that’s what my parents and grandparents did for me. Those granddaughters of mine are just the right age for playing in the surf and pathetic attempts at sand castles.
So there we are. I found an investment theme after all. It’s about giving back. We started with Tom Hanks joining the Peace Corp and somehow got to keeping family traditions alive.
My siblings and I had a text-based discussion about our ancestors just this past weekend. My sister has done the research on the websites and in the graveyards to identify people going back about four generations. Before that, it’s pretty much a mystery. It occurred to me that so many of us work so hard to make our ‘mark’ and except for a famous few, we tend to disappear from memory in a just a few generations.
Realizing this, it seems that maybe I don’t need to join find a cure for the incurable or even join the Peace Corp to be a person that makes a better world. Maybe, going outside in the heat and teaching a grandchild to ride the waves on a raft, to tie a fish hook, to earn a dollar and to save one too, how to cook for one or twenty, and how to be a family, maybe these, and a few more, will do.
And, oh yes, if you’re doing the same this summer, remember have a little fun while you’re at it.
My Sirius radio preset channels are a rather eclectic lot: I have the 60’s, Willie’s Roadhouse, Jimmy Buffet, the Metropolitan Opera, College Sports, Fox Business News and newly added to the lineup, the Beatles channel. I wish they had a history or book channel; something like Michael Connelly’s Harry Bosch novels, only without the random profanity that makes me cringe every time someone spews a most vulgar, and most unnecessary, spate of vulgarisms.
But today I’m thinking of my one channel dedicated to the country music genre. As I was scrolling through the channels last week trying to find something to soothe the frazzled noggin, I came across George Jones singing, “The Bartender’s Blues.” Here are a few lyrics (penned by James Taylor!) for all the working people out there:
“Well, I’m just a bartender
And I don’t like my work But I don’t mind the money at all”
Ha! Isn’t that a great line? I always quote it when people complain to me about their jobs. Have you ever noticed how many people complain about the job they have, and then fall into desperate panic if they lose said job? I understand, it’s human nature to grouse. Remember the Israelites in the wilderness? They longed for the good old days of slavery in Egypt because there, at least, they “had all the cucumbers, melons, onions, leeks and garlic [they wanted].” Really? Leeks?
But to today’s point, and to why a Financial Advisor would be referencing George Jones, I must turn to Ben (“Ben” sounds better than “Benjamin” when paired with a Nashville old-school artist) Franklin, alias Poor Richard of Almanac fame. “A penny saved is a penny earned.”
Ben and George, George and Ben, separated by a pair of centuries, had a lot in common. They were ‘accomplished’ womanizers and purveyors of strong drink, but that’s neither a topic we wish to examine today, nor attributes we wish to encourage. Really, I mean it: stop that! If for no other reason (and there are plenty) it will make your finances a mess to travel that “Lost Highway.”
So where I am going with this you ask? Well, in the first place some of you expressed a distinct lack of whimsy in my columns recently, and complained of too much politics and too little of my “free association” trains of thought. As Grandma said, “Be careful what you ask for.”
George Jones sings on:
“I’ve seen lots of sad faces
And lots of bad cases
Of folks with their backs to the wall”
I think Ben Franklin was thinking of these same types of “sad faces with their backs to the wall” when he was encouraging people to spend frugally and save vigorously. If we are not already, we need to start that lifestyle today to avoid ending up in a George Jones’ song in retirement.
“Now the smoke fills the air
Of this honky tonk bar
And I’m thinkin’ ‘bout where I’d rather be
But I burned all my bridges
And I sunk all my ships
And I’m stranded at the edge of the sea”
Now that verse right there is about the saddest word picture I ever did hear. So be a Ben Franklin devotee, and not someone stuck in a sad old tune: build some bridges, save some pennies and dollars too, keep your boat in fine trim and set your sights upon the horizon. Then sing your own song.