I recently posted ten great things about the book Retire Inspired: It’s Not an Age, It’s a Financial Number.
I could have listed many, many more and I have recommended the book as a supplement to my 12 books to make you a financial expert in a year.
That said, I’m not 100% on the same page with the author, Chris Hogan. I generally like Chris — both his teachings and his style — but there are some things we don’t agree on.
BTW, I don’t agree 100% with anyone, so don’t hold it against me, Chris. 😉
I thought I’d list Chris’s thoughts, detail what I disagree with, and let you share your opinions.
In addition I have a couple open-question issues the book shares that I’d like your input on.
Before I begin, let me say that I think Chris’s work is influenced by the Dave Ramsey school of financial advice since Chris works for Ramsey. This is likely the foundation for much of what Chris says, which I’m sure he believes, but which also causes some disagreement with me.
With that said, here are the areas I disagree with Chris from the book Retire Inspired…
You Always Need a Budget
Let’s begin with what Hogan says about budgeting. Here are some excerpts from the book:
It is important to understand that, no matter what phase of life you are in, you will never outgrow the need for a budget. Budgeting is and always will be your road map to financial success, no matter how much or how little money you have.
Remember this rule: from now on and for the rest of your life, you have to prepare a written budget every month — before the month begins.
Every retirement success story I could ever share with you involves one common practice: budgeting.
I disagree with this one in a couple ways:
1. You do NOT always need a budget throughout your life.
My advice is that a budget is critical for the first few years of your financial journey. It will help to establish control over your money and allow you to manage it.
But once you get a handle on your money (and especially as your income grows and you keep expenses low), the need for a budget becomes less vital. Of course someone could argue that without a budget you lose at least a bit of money from lack of control and I’d concede that. However it’s probably not so much as to slow you down on the road to financial independence.
I would also say that as you approach retirement, it’s good to re-establish the budgeting habit, maybe a couple years before you retire. There are two reasons for this:
- You need to know exactly what your expenses are so you know you have enough to retire. The only way to know exactly is to develop a budget and manage it.
- Retirement is critical because you’re going to be leaving behind a large source of income and living on your savings. There’s no margin for error so you need to control your money more closely, which a budget supports.
This is what we did. We had a budget the first ten years or so of our marriage, then stopped doing one as we were making a ton of money and spending very little.
Then I picked up the habit again prior to retirement and still update it monthly. I might switch to quarterly updates as things are going pretty well and I don’t need to have such tight control.
BTW, it’s not just me who believes budgets don’t have to be a lifetime commitment. Millionaires think so as well.
2. Budgeting is not the most vital part of retirement success.
I know this is not exactly what he said, but it is implied.
I would say having a plan is the most vital part of retirement success.
Sure, having a budget might be part of that plan, but without the plan you are dead in the water even if you do have a budget.
And if you don’t have a budget and yet work your plan, you can still have a great retirement.
Maybe nit-picky, but I’m kinda feeling that way today. 😉
You Can Retire by Buying Used Cars Alone
Yes, I have a problem with this. I think it’s over-stated, but we’ll get into that in a minute.
Here’s what Hogan says:
If you choose to drive nice, reliable, used cars that you pay for with cash, your retirement dream could be a reality — with just that one decision.
He then runs the numbers, showing that if you take the money you would have spent on new car payments and invested that at 10% for 30 years you’d have $2.9 million. More than enough to retire, of course.
But there are a couple problems with this:
1. He doesn’t factor in the costs of buying a used car.
Ok, so you skip the new car purchase. But you still need a car. Where do the payments for the used car come from? And what about the higher maintenance costs? Are we just assuming that a genie appears and pays for everything?
Of course not. He’d answer that you save up and buy the used cars with cash. That means, you need to SAVE UP, taking at least part of what you would have spent on the new car and putting it aside for the used car. In other words, you wouldn’t have the entire new car payment to save and invest for 30 years, far from it. And taking a big bite out of this, you’d lose a good portion of the returns he touts.
He also doesn’t account for the fact that used cars, on average, have higher maintenance costs than new cars. This would further reduce what you’d be able to set aside and invest.
2. It’s never about one decision.
Ok, let’s say you take Hogan’s advice and only opt for used cars. Now that your retirement is set, you can blow the rest of your money on a big house, fancy vacations, and the like, right?
See what I’m getting at? You have to make and enforce multiple decisions to create a great retirement. It’s not “just that one decision” with anything. There are always other factors.
For example, if I was naming something that would be close to one thing to make your retirement it would be to “spend less than you earn” or something similar. And while that’s a decent start, it still needs some help. Like how much should you save? What should you do with the savings? (You need to invest it correctly, right?) What about the other ga-zillion factors needed to make a great retirement?
I get what he’s saying and I generally agree that buying used cars is a good idea (though I didn’t do that myself — I always bought new at a great price and drove them into the ground — but that fit into my plan.) I just think he over-stepped in saying that if you take this one step you’re good to go. That’s way too much over-emphasis on one item IMO.
BTW, it’s interesting he uses 10% as his return rate. It’s lower than Dave Ramsey’s 12% but higher than my 8%.
There is Not One Debt That’s a Positive
You’re going to LOVE this one. LOL!
Here’s what he says:
Debt is never a good idea. There are simply no circumstances where you can possibly rationalize debt.
It’s obvious that the biggest roadblock between you and your dream retirement is debt. But some people will claim that there is “smart debt” such as school loans. Let me tell you, though, debt is debt, and it always shows up at your door and demands to be paid each month (with interest), whether you can afford it or not!
The people I know who are diligently creating real wealth over the course of many years will tell you that debt is the number-one enemy of progress.
Really? There are “no circumstances where you can possibly rationalize debt”?
How about when you borrow $5k to create a career that earns you several million (which would have been a few million more if I hadn’t retired)? That certainly sounds like a great rationalization for debt.
I’m sure many of you will pile on with thoughts of your own, so I won’t say a lot more. I do think Hogan is hampered by the Ramsey connection here. There’s NO WAY he can say that some debt, if managed properly, is good. That’s a clear no-go from no-debt Dave.
Let me begin by saying that I’m a big believer in low or no debt. I haven’t been in debt myself for almost 25 years (including my mortgage), so I’ve lived the debt free life and it is great.
That said, I think a small amount of debt in the right circumstances and managed correctly can give you a financial head start. In particular, I’ve used debt to get a valuable college degree (as noted above) as well as to initially buy my house. Both times, the debt was small in proportion to the expected benefit and/or what I could afford (FYI, here’s how we paid off the house — which started with buying less of a house than we could afford.)
I know some of you have used debt to invest in real estate and others actually hold off paying down debt to invest instead. While I didn’t use either of these methods, they too, if managed and done conservatively, can greatly enhance wealth.
In the end, I think we can come up with many ways to “rationalize debt”. I look forward to your examples in the comments below.
You Must Hire an Investing Expert
Batten down the hatches for this one!
Here’s what Hogan says on the subject of getting professional money advice:
You don’t want to do this stuff on your own. The truth is that you need an expert to help you — a true investing professional.
You need to consult a professional about your retirement plan and options.
We have addressed a few of the most common behaviors I see getting in the way of people’s retirement dreams, but now I want to address one of the biggest: the mistaken belief that you can navigate the retirement waters alone. I believe the most important investment behavior you can engage in is to go out and find a professional investment advisor.
An investment professional is essential to your financial well-being.
Hogan is an advocate for both financial planners and “investment advisors.” I’m assuming these could be the same person, but am not 100% sure.
I think this is another way that Hogan is hampered by the Ramsey association. They make a lot of money recommending advisors (especially focusing on investments) so not being a strong advocate for advisors just isn’t an option.
That said, let’s look at what Hogan says. Is it true that having a professional help manage your money is that vital?
I’ll start by siding with Hogan. I do believe there are people who need a financial advisor for even basic money guidance. These include:
- Those who have no interest in managing their own money.
- People who can’t stick to a plan and need someone to hand-hold them.
- Those not willing to invest the time and effort in learning about money.
If you fit into any of these categories, you need help. You are not willing to do the work yourself so someone needs to assist you. It’s not the ideal option IMO, but it’s better than the alternative (eating dog food in retirement).
That said, for anyone with average intelligence and even a bit of initiative, you can manage your own basic finances. If nothing else, you could take a year, read the 12 books I recommend (or listen to them if reading is too difficult), and after that year be in pretty good shape for managing your finances — including your investments.
Yes, there’s a bit of a time commitment, but it’s nothing too strenuous and certainly not anything too intellectual. Then if you can apply what you’ve learned, you probably have 80%+ of personal finances covered.
To me, this is the best option since it’s your money, your retirement, and your life. I think it’s best if you’re both knowledgeable and in charge.
And I believe that most people could manage their own finances if they wanted to, so I’m not talking about the top 10% of people. I’d go so far as to say that the majority (at least 51% of American) are able to understand basic money principles. I’m less optimistic about their ability to stick to a plan though (it takes sacrifice, which many Americans don’t seem to embrace).
Notice that I said “basic” finances above. I do believe there are times when you need a bit of help with complicated financial issues (like taxes and estate plans.) In these cases, paying an advisor is probably going to save you a boatload of money (time too) and/or do something you couldn’t do on your own, thus making hiring them worth it.
But for basic finances, you can invest in 12 books, manage your money yourself, save a ton, avoid the chance of being taken advantage of, and be financially successful. A financial advisor is certainly not “essential” nor is hiring one “the most important investment behavior you can engage in”.
You Should Wait Until 70 to Claim Social Security
From here on out we’re moving into issues I only slightly disagree with Hogan on.
He says the following:
Unless you will absolutely depend on those Social Security benefits to fund your retirement. I recommend holding off until age seventy.
This is the general consensus advice out there today and at least decent counsel for most, so I’m not too upset with this.
That said, there are so many complications and possibilities with SS, that I think 1) the advice should be “generally wait until 70” and 2) this may be one time that hiring an “expert” would be worth it — to help you get the most out of SS based on your life situation and goals.
Other than that, I’m ok with the advice, though taking it early can be a good idea too.
You Need LTC and Identity Theft Insurance
In listing the types of insurance coverage everyone should have, Hogan includes long-term care (LTC) insurance and identity theft protection. Quotes:
Spending your last several years in a nursing home can completely destroy your retirement account. That’s why LTC coverage is so important.
You need coverage that provides restoration services and a counselor who can work with you to help clean up the mess left behind when your identity is stolen.
Let’s begin with the Dave Ramsey connection. I’m working on a post about LTC insurance and found this article which is pretty much a sales pitch from Ramsey for LTC insurance. So again, Hogan HAS to recommend it.
Aside from that, I thought the very poor (because the government will pay for them) and the wealthy (over $2 million in net worth or so, since they can pay for long-term care themselves) were generally dismissed from needing LTC insurance as a rule of thumb. That means only those in the middle need it.
I’m interested in what you think and what, if any, LTC insurance you have purchased. Admittedly, I don’t know much on the topic but I’m starting to research it and would be interested in your perspective.
As for ID Theft insurance, does anyone have it? Is that even a thing? Is it different than credit monitoring, etc. that a company like LifeLock offers or is that what Hogan means? Or do you buy it from an agent with the rest of your insurance?
Seems like this might fall more in the same category as pet insurance — something that exists but that you don’t really need.
You Should Save/Invest 15% of Your Income
Here’s what Hogan says about how much to invest:
You’re ready to start [investing] only when you’re out of debt (except for the house) and have a fully funded emergency fund of three to six months’ worth of expenses. If you’re there, you’re ready to start investing 15 percent of your income.
Note that he says you shouldn’t count the company 401k match in your 15%, so you’d actually be saving more than 15% total with the match.
I’m wondering on this one:
- Should you really wait until you’re completely out of debt to invest? Even if your interest rates are high, should this keep you from at least putting in enough to get your full company match (which is generally a 50% match)? Waiting until you’re out of debt wastes a lot of time — and time is your most valuable investing asset.
- Is 15% the right number? Should it have a qualifier? Like “save 15% if you want to retire at 65, 20% if at 60, etc.” How does early retirement fit in? You certainly need more than 15% for that. I guess what I’m wondering is 1) is there a good rule-of-thumb on what percent everyone should save and 2) if so, what is it? Any ideas?
Interesting Retirement Concepts Worth Considering
In addition to the issues above which I took exception to, there were a couple of others raised that I think deserve discussion.
I have thoughts on them but wanted to run these two by you for your opinion…
1. Is there a responsibility with success?
Hogan talks about one couple who retired “right” and says:
They had means to travel the world if they wanted. In fact, they had the money to go sit on every beach on the planet, but they were driven by what they called the “responsibility that had come with success.” They wanted to put that money to work to bless other people.
He’s not saying that everyone has an obligation that comes along with wealth, the couple said that.
But do you think that’s true? Do you believe those who are wealthy owe it to those less fortunate to help them?
I’m sure there will be a lot of discussion on this one!
2. Should you be debt free at retirement?
Here’s another of Hogan’s rules worth discussing — in his words:
A true retirement dream killer [is] carrying debt into retirement.
Let me be crystal clear here. When you retire, you want to owe nothing to anyone. You do not want to have any debt — including a mortgage. Every dollar of your retirement income should go toward funding your dream, not paying off debts.
Is this true in your mind?
One school of thought says you should be completely debt free at retirement because it lowers your financial obligations and thus makes retiring easier.
Another school of thought says that as long as you have the funds to cover all your expenses (including a mortgage and even other debt), then you’re fine.
What do you say?
And what do you think of the objections I have?
Dave @ Accidental FIRE says
I do wish I had gotten LTC insurance for my Mom when she could get it. She’s 90 now and there’s no chance she’d be approved in her condition. We’re now planning a strategy to take care of her and it might just involve Medicaid since she doesn’t have all that much money herself. But it’s not an easy road, and LTC insurance is definitely something to consider if you have parents who are getting up there in age.
Julia says
My experience with LTC is watching clients who bought it for parents. Only one (out of 6) actually had LTC pay out. The others have fought tooth and nail and discovered clauses, pre-existing conditions that excluded (including really vague things), and one company went out of business. I think it was something that was a better product years ago, but as more people live longer, insurance companies are finding ways to exclude/not pay.
Arrgo says
From what I’ve read on LTC, I agree with you. I think its gotten more expensive and they’ve probably added many more specifics/ clauses to cover themselves from paying out as easily. Also, you better have some sharp family members that are good at interpreting and fighting back when they say they wont pay. I dont think its worth it anymore in most cases.
Dave @ Accidental FIRE says
Interesting perspective Julia, now maybe I don’t feel as bad for not having gotten it.
Diogenes says
Good. Don’t feel bad. I’ve been researching LTC for myself and for a parent for years, and all I have learned is scary things regarding LTC: Very expensive for very little benefit, companies going out of business or suddenly rising premiums that force the insured to drop the policy, declined claims for no good reason, etc.
JeffB MI20 says
We bought LTC insurance for our MIL 20 years ago. She has been using it since last August. It has inflation protection and had zero days to take affect. It pays $275 a day, so she is in memory care facility that is $8,200 a month. We have gotten our payback in six months. It was about to hit $500 a month, but that is way cheaper than $8,200 a month. It is well worth it, but like any insurance, you might never need it.
m says
LTC Insurance is complicated and I think its plagued by the perception that the policy will change the terms of what they’ll cover, or the premiums, over the life of the policy. I am not a huge fan of buying into something that I can’t fully understand/value.
Relative to the question about responsibility with success, I think it probably should not be tied to “success”….whatever that word means to someone. I would vote that there is responsibility of everyone that is living within a society.
JeffB MI20 says
They can’t change anything without your authorization. My mom has the same policy as my MIL and my mom reduced some of the benefits in order to get a cheaper premium.
Bernd Doss says
Back in the early 80s my trusted friend and financials advisor (CFP) diligently advised me to take the cost of LTC insurance into consideration and forego buying it, yet use that LTC cost amount to Invest in mutual funds. I followed his advise and after being retired for many years, now supported financially by two pensions, social security, Medicare and investment holdings, feel that I made the right decision for me, and that I can weather the storm, should it come.
Margaret Barnes-DelColle says
Brilliant! Wish I had thought of that a long time ago… I too am suspicious about LTC policies.
Xrayvsn says
I personally am against LTC insurance. Too many variables and too far in the future for it to be something reliable to count on.
First is the company providing the insurance going to be actually around when you need it? Plus as previous comments mention, there are many clauses etc that make it tough to qualify for a payout.
And there is a possibility you will never end up needing it.
I do think self insurance is the best way to go and agree that those with a higher net worth should take that route.
JeffB MI20 says
That would apply to any term life insurance you would have as well. Any company can go out of business.
MI173 says
I am so with you on debt and on not needing an adviser. I think the right way to look at debt is smart debt up to 5 years before retirement can make a ton of sense. If it’s smart debt. In my case, that was $30k in student loans, which led to a degree at an outstanding academic university. There is no doubt the return on that debt is way, way more than $30k.
Carrying a sub 5% mortgage on personal residences for most of my life – I have no doubt that I’ve earned way, way more than 5% in stocks over that 20 year period. I definitely plan to pay off the mortgage in full before retiring though. I’ve come around to the view that there’s major, major peace of mind in a no debt retirement.
And an investing adviser – really? I mean, Vanguard has a target retirement fund where you can literally invest in one fund and never have to rebalance even. I like to manage things a little closer, but it’s really not that hard to learn a very simple investing plan. I think the far bigger challenge is being unemotional about the process. When money is involved, people get emotional, and trading based on emotion is a recipe for disaster. An adviser can help with that, sure.
Stephen Kansas says
The investment manager I used at Vanguard recently gave me a 99% probability of success with my retirement plan. I’m 64 years old and I told them I’d spend $125k in retirement when the most I could conceive of spending would be $100k. I have a net worth of $3.5M.
That said, I’ve never had a budget–ever. My wife and I just saved the maximum you were allowed in our retirement accounts and maxed out the Roth opportunities. We just thought that was what you did! So yes, Chris Hogan, it doesn’t have to work your way to be successful!
With regard to taking Social Security–if I take it at 64 and add in my pension benefits, it totals $91k. Here’s what is never discussed in deciding when to take it–it’s called PEACE OF MIND. If I have $91k coming in reliably and I need $100k/yr in expenses, that’s just hard to take a pass on. Has anyone stopped to think that if they use the SS and pension dollars to pay current expenses that they then don’t have to pull money out of investments that are yielding 6%-10%? All the breakeven analysis on when to take SS gets pushed back even further! I’m taking it at 64 because it makes sense to me and gives me peace of mind. (No, I’m not one of those people who will likely live to 100 years old)
I have LTC insurance and ID theft insurance. I even have insurance in case the water line from the meter to my house breaks. I could self-insure these things, but they give me peace of mind and I like that!
Finally, I bought my first pickup truck ever so that I could do some recreational things in retirement. I bought it new and it was insanely expensive. I confess I used the 0% financing so I wouldn’t have to dip into my savings (I’ve been debt free for over 15 years). I have CD’s for the loan balance dutifully working to pay me interest while I pay off the car loan at zero interest. Am I supposed to pay off this debt just so I can say that I’m debt free? Guys like Chris Hogan are starting to make me feel like I should–should I?
Let me close by saying thanks to ESI Money–great posts and I saved about $4k this tax year because you woke me up to Donor Advised Funds! Thanks for the tip and for all you do to help people!
Ted says
We bought LTC for my wife when she was 50. $3500 a month benefit with a 30 day waiting period from Genworth. Your reader is correct in making sure it is a solid company.
What I did not know is that if she is placed in an assisted living facility that the LTC can be used in most cases for payment.
I did not qualify due to health concerns but for the $1200 a year it costs it could save us many times over as we currently watch our parents and others who did not plan go broke in nursing homes and other care facilities.
JeffB MI20 says
There are like 2 out of 5 daily things that she would not be able to do in order for the policy to kick in. You should reread it or call the insurance company to know what those daily things are. It’s like dressing and taking a shower and things like that.
Marco says
Would add one additional category to your list of those that should have an advisor: those that may be tempted to react to market swings! Other than figuring out where to start, which many feel they need a professional to talk them through, being talked back from the edge and not falling for the “this time is different” mantra is an area that many benefit from having counsel.
On the standard percentage for investing, 15% is a great place to start and waaaay more than most Americans are currently. That said, while it’s a good starting place, there is no percentage that can be used as the perfect solution for everyone, given varying goals, timelines, risk tolerances, etc.
Shawn says
Whether you’re ‘tracking’ your spending very carefully or not, one always needs a budget. One must always know how much they can afford to spend and to argue otherwise seems like folly to me. I think what you’re describing is being able to work within one’s budget without needing to track each expense too carefully. (Ie I used to track my calories so I could learn to what my ideal caloric intake looks like, at which point i stopped tracking – but did not increase eating).
Vigaro says
Valid criticism to be sure . . . I took him for a blowhard, day one, little surprise coming from the Ramsey complex. Same problem with Suze Orman these days, once very useful, now of little use. Best thing to come from Ramsey were the baby steps, with which I now find multiple issues. Gateway drugs . . . MMM, stopped caring. ESI, still excellent for surveying high-quality nuts and bolts, multiple categories, plenty of valuable commentary. For philosophy and further examination of certain choice topics, recently turned to Tressider / FinancialMentor . . . plenty of access and content without pulling out a credit card. Finding a financial mag or paper worth browsing through would be hardest; IBD turned me off with narrow propaganda. Kiplinger’s and Money were early trash . . . TEN HOT STOCKS FOR TODAY and so on, boring, trite, sketchy. Barron’s? Maybe try it at a discount. Don’t care much for Forbes, though it’s better than fortune. The Economist, too tilted, and I really don’t have the time, considering; WSJ lost me and its own way years ago, nothing left there beyond offensive editorializing and corporate news creation vs. reporting. Seattle Times used to have an excellent Business section with articles by Scott Burns, always excellent. They went stupid, barely readable now. Personal blowhard opinions, come and get it (lol) . . . the beauty of a free market by my lights. Make me pay attention, tell me something I don’t know. Seems crass, just the hunger for good content and pertinent information as the master plan evolves.
Vigaro says
Should say Fortune (magazine), and yet the small f fits. I canceled after one issue.
renae says
I think long-term care insurance has become less beneficial over time. We recently had it added to our benefits at my office, 100% employee paid. Monthly premiums are high, and the standard policy only covers 3 years of care. For even more expensive premiums, the policy will cover 6 years. So those who have long nursing home stays may run out of money even with long-term care insurance.
According to a quick internet search, the average nursing home stay for those who pass away (not those discharged or in for short-term rehab) is 835 days or 2.29 years. We will have enough retirement savings to cover 2.29 years. We’re gambling that we are average or less than average. 🙂
MI 162 says
Agree with most of your comments/disagreements with Hogan.
2 Caveats:
-USED CARS….1/2 agree. REALLY cheap cars is what freed up most of my income to invest and to build a big base. As I said in my interview it was the #1 thing that helped me get the first 1M.
-Debt:
“The people I know who are diligently creating real wealth over the course of many years will tell you that debt is the number-one enemy of progress.”
Yeah, No.
High interest consumer debt and low interest fixed rate collateralized debt are very different animals.
I used to be a member of those groups, they a GREAT for people who don’t have a high income, in a lot of consumer debt or don’t have a lot of money control. Their balance sheets are often capped at 1M to 2M by age 60 because they only followed the steps which prioritizes 0 debt vs investing for the future.
JayCeezy says
“As for ID Theft insurance, does anyone have it? Is that even a thing?”
LOL! ESI, I like that added inflection on your questions, you are very funny. fwiw, Dave Ramsey (and all affiliates) has a pass-through relationship with (an insurance company) for ID Theft insurance, LTC insurance, and “all your insurance needs.”
There is a style of radio programming that appeals to an age demographic that is not valued in mainstream advertising, but is very lucrative in specific products that sell with age 64-and-up. Lifelock, HomeAlert, LifeAlert, hearing aids, gerontology professionals, etc. And that advertising works for that age group. My own mother called me, enthusiastic to purchase ID theft “protection”. I gently talked her out of it “for now”, as it would simply duplicate coverage she (and everyone) has. Will be very surprised to hear from anyone who has needed it.
Nichole says
I do have the ID theft insurance that Hogan is speaking of. And I do think it’s better than Lifelock or similar credit monitoring services. Back when I first bought this product, that nut job who started Lifelock was putting his soc# on billboards and got his ID stolen 🤦🏻♀️. The one I have is actual insurance. You monitor your own credit. Call them if/when there is a problem and they spend the man hours to fix it. Plus there is an amount of money you can get to be made whole.
Mike says
1. Is there a responsibility with success?
Personally I believe we all have a responsibility to other people, simply as a participating member of the human race. That is not to say we have a financial responsibility simply because we have the means to do so; But we do have a responsibility to consider how our actions affect every other person on the planet; We should make money in a responsible, ethical way, and we should spend money in a responsible, ethical way. As a society we should treat our sick, elderly, infirm, helpless, and underprivileged as we would want to be treated (golden rule).
rt-texas says
I think LTC is a scam. My mom paid over $70k for her LTC and when she needed it, they won’t pay. Sister is still fighting with them today trying to get something out of them.
They get to decide what, when and if they pay so your totally at their mercy.
She was so proud to have kept up the payments so it would help when she needed it and she got nothing for that 70k. It would have been better off in even an MMA making zilch. At least she would have had the principal to draw from.
JeffB MI20 says
It would all depend on what she was trying to claim. Our MIL policy is working just fine. She is getting reimbursed every month for her stay in memory care.
Marco says
While I agree with the point on used cars not being the only consideration for wealth building, I do think that on this point alone most Americans could retire as a millionaire.
Instead of carrying an average new car payment of $550/mo (which many carry consistently), if $150/mo was saved for the next 4-5yr old vehicle (resulting in $9K every 5 yrs plus $3K from sale of vehicle being replaced – enough to buy a nice $12K used car), plus $40/mo set aside for repairs (avg repair cost for 5-10yr old vehicles), that would leave $360/mo to invest. $360/mo from age 22 to 60, at 8%, would result in retiring with over $1M.
Again, I completely agree with not focusing solely on vehicles, but the vast majority of Americans could be retiring as multi-millionaires if they only took this simple step of not carrying new car payments throughout their working years, which is the point Hogan was likely trying to make.
Phillip says
When done in a responsible way, there is nothing wrong with indulging in a few splurges throughout your journey to wealth accumulation. We (well my wife) enjoys having a new upscale cars (Lexus, Acura) and we’ve bought 3 of these over the past 20 years. We drive them to the ground but bought new so we can get exactly what we want. Saved up and paid them in full since car debt is stupid (unless it’s something like 0% financing for a year and you pay it off after the first year). Don’t sacrifice buying and enjoying things you really like along the way. In addition to our new car purchases, we probably have a bit more house than we really need too. Nevertheless, we will still likely have plenty for retirement. For responsible households like what I suspect are readers of this blog, not smelling the roses along the way may be seen as a big mistake when you’re 90, have multiple millions in your portfolio and regret not enjoying life more while you were still mobile and healthy.
Apex says
Everybody is for sale.
Ramsey, Orman, Kiyosaki, …
First they experience something and learn from it and tell others. (the downside is that one thing they learned was what they experienced is universal and no one could do differently and succeed.)
Then they get popular and start to make real money from it.
Then they get solicited to use their following to promote other products.
Then they sell out and sell their followers down the river for money.
Then they get others to promote the same thing under their banner and take a cut off of it “The Ramsey way, The Rich Dad way, etc.”
I am not impressed.
I avoid “experts” with zealot followings. Zealots are easily manipulated and leaders of zealots cannot be trusted not to sell them out. The same thing happens with religious cults. (Jim Jones, David Koresh, etc. It’s why we have the phrase drinking the Kool-Aid.)
I wasn’t very impressed with the positives from this author. The negatives listed above are Ramsey on steroids. It’s actually humorous how Ramseyish it all is.
a whole lot of Kool-Aid.
ESI says
“Then they get solicited to use their following to promote other products.”
I get offers all the time to offer this product or that product to ESI Money readers. You wouldn’t believe some of the pitches — it’s like they don’t even read the site. 😉
JeffB MI20 says
There are thousands of people on the internet saying the exact same thing as Ramsey/Orman etc. If they can’t get on the air or with a podcast, then who is going to listen to them.
Vigaro says
WORD, Apex, ESI, MI20 . . . we might be polar opposites otherwise, but I couldn’t be more with y’all on this. Painful stuff the wiser you get. In the year 3000, Ann Landers might be a robot, reflecting thirty generations of secondary followthrough and corporate predation. Still using the same picture, talking up the same stupid sh*t every week in your brain chip or something, age 150.
Vigaro says
Like watching ‘Backdraft’ for the third time as I ruminate, as if it might get better or something. They call that insanity. I only feel the pain, so turned it to CMT. Yeah, modern country music (lol) . . . plenty of fresh ideas there, too.
MI236 says
“Zealots are easily manipulated and leaders of zealots cannot be trusted not to sell them out.” – I am going to borrow this when arguing with people online regarding the events of Jan 6th. 🙂
This just fits for all kinds of situations, religious, finance, politics…
Other than our wedding, the birth of our kids – there are two seminal events that I will never forget and the time and place when I watched them happen live on TV, the first was 9/11 and then it’s 1/6. Still traumatized by it…
Chris says
I agree with what Mike said above about what are your responsibilities with success, well put. Those of us who are blessed are in a position to help those who come in our paths and spouse and I take that seriously. It is part of the way we live our Christian Faith, which I know you also practice.
Interesting thoughts about the LTC insurance. We did not purchase because we should have enough to meet our needs unless everything goes to he**, but then everyone would be in the same boat anyway, except the very, very wealthy.
We are in the camp that the mortgage is paid off before retirement so your expenses will be less, and the house is an asset for the spouse who doesn’t die first, so there is at least some money if they have to go into a nursing home, so hopefully they won’t need Medicaid from day 1.
Pete says
My wife is an actuary and very familiar with the LTC product her company sells. She purchased it before age 40. I “enjoy” MS so it’s simply not an option for me to buy. When factoring in the expense, and remembering that the goal of insurance is to not “get your money’s worth” since that means something went wrong, it’s good for us knowing that if my wife goes down for a while, our funds are still left alone (up to a point of course.)
As for needing to bless others if you’re wealthy? I generally find humans demanding other humans do something tends to not go over well. I would not push that one someone. As for us? Yeah, we plan to leave nothing to heirs and all to charity. Our spreadsheet for retirement has us giving a higher percentage of our annual income during retirement as well. But again, I’m not saying others have to do that.
Debt. One thing that doesn’t come up often enough is the cost of the debt in interest. If I can take debt that’s less than my annual wage increase, I take the debt. Even cars; we take the loan and invest the cash instead. There’s some risk to be sure (job loss for both at the same time and then needing to access funds which are invested) but we’re willing to risk that. Even in a job loss, I don’t have to pay off the loan in one shot. I just need to make the monthly payments from the cash that I have.
Might we have a mortgage when we retire? Eh…maybe. Planning on not but it’s just a math problem. Whatever the rates are will be a factor. That said, cash purchases of properties seem like they’ll save some bucks in the right circumstances.
Margaret Barnes-DelColle says
I love reading all your posts and then the comments. I don’t need any publications charging for subscriptions. I just need to read ESI money. Thanks to all of you.
One of my biggest issues is what an American has to pay for retirement/nursing homes. They base their fees on your assets and can drain those pretty quickly.
I’m a dual citizen and in Canada they base what they charge for retirement/nursing homes on your income. Your assets that you worked your whole life to acquire are not touched.
My mother got excellent care in Canada when she got to be of an age that she needed both retirement and then nursing homes.
Debbie In Texas says
Thanks for this, now I don’t have to read the book. I declined LTC insurance and plan to self insure for all the reasons previously listed. My mother had it and it wouldn’t pay anything, I guess she wasn’t debilitated enough. I looked into lifelock and declined that because they don’t do much but monitor the credit bureaus which you can do yourself.
L says
My parents are both collecting on the LTC policies. It will likely pay off for them big time. Mom’s bill is $7900 a month because she is in full nursing care and it pays for about $7000 per month. Dad is in assisted living and his pays about half of his costs. They both qualified easily as they need help with at least 2 or 3 of the daily living tasks. They are in a wonderful facility right now. The Medicaid facilities are horrible where they live. Their policies are with Genworth.
I am struggling as a single person whether to try to self insure or at least get some level of LTC insurance or a life insurance policy with a LTC rider.
JeffB MI20 says
You won”t need LTC insurance until you are 60. We paid for our MIL policy and spent about $50K over 18 years and it paid back in about 9 months at $8,200 a month for memory care.
117 says
I listen to Ramsey and he probably does help a ton of people get out of debt. But like many hear I don’t agree with everything and he seems fine peddling insurances and services. I hate his position against credit cards.
On a personal level, and I’ve said this a million times- gotta live and enjoy life while we are young too. I love cars, some don’t. Some redo their kitchens every five years, some love travel. I drive a new Porsche and live in a 2400sq ft house. Everyone has their vices. Just make you earn as much as you can and save some!
Challenge for people. SS tax is 6.2% and employer pays 6.2%. Even though SS is capped, figure out how much that money would have earned if you made 7% a year. Mine would be in the millions. Save 12-15% (or more) of everything you make and you’d be good to go.
Phillip says
Agree. Make sure you save enough but go ahead and splurge if you got extra. In my earlier years, I may have been a bit too frugal, could have splurged a bit more and will likely still be fine. I say this even as the market drops 8%+ today and we enter deeper into bear territory.
JeffB MI-20 says
We live under housed and spend most money on travel and donations. don’t have expensive cars, boats or county club membership
Steveark says
Although I agree with you down the line I’m not sure you can use results based logic to rationalize debt. For every person that borrows $5K to start a million dollar business there are a hundred who simply lose the money and are in worse shape for it. I think you can make a case for borrowing for an appreciating asset like a house, but borrowing to speculate on an uncertain outcome is akin to gambling. That’s what’s so bad about student loans for expensive colleges and semi useless degrees. Great post, I like Hogan and Dave, they help so many people, but like you I don’t agree 100% with anybody all the time.
Fuzzy says
Debt is dumb and cash is king! Like and agree with Hogan and Ramsey. Would have done much better if I did their plan instead of highly leveraged real estate and small business investing, where I nearly lost my shirt early on in multiple deals.
I’m not big on budgeting, but it’s great to know where your money’s going and you certainly want to avoid debt payments except for a home loan or well bought real estate with a decent down payment.
What’s wrong their baby steps, budgeting, and avoiding debt including student loans with work, savings, and common sense!
Being retired with no debt and no stress may not be sophisticated investing but is a great way to live! 😊
DaveM says
Julia, I hate to disagree with you but everyone does need a written budget for each month (even millionaires). If you’re playing football and you don’t know where the goal line is, you’ll never know if you scored.
117 says
I think there are many that disagree- many millionaires I’m sure have a sound understanding of their cash flows but don’t have written budgets. I don’t have a budget but I have a real good knowledge of what my cash flows are. Just read more of the millionaire interviews here.
There are many ways to win a football game.
JeffB MI-20 says
I disagree. I know saving more than 15% of our income gets us to early retirement
MI236 says
Since we are making football analogies – I played soccer in mud, sometimes with nothing but rocks placed as goal posts – we still knew if we scored or not. 🙂
I used to track every $$ but the effort to crosscheck all receipts, balance the checkbook every month and asking my wife for receipts from her shopping – that just never ended well, so I stopped doing it. No written budget but we know where the goal line is.
JeffB MI20 says
I don’t see the point in tracking ‘every’ dollars. Utility payments run the same, do you need a receipt from eating out? All your money can be tracked from Mint or Quicken. Most have an idea of what they are saving and spending. Even our Kroger you can see what was bought at the store online. Unless she is a shop a holic, I just don’t need every receipt.
DavidM says
Our “Debit card” is for consumables only, like groceries, gasoline, dining out, and entertainment (excluding vacations, which comes from an escrow account we set up for large, infrequent expenses). We have a monthly budget for all consumables. Debit cards and Visa is where people usually blow their budget.
DaveM says
I don’t keep track of each receipt. I have budgets for categories. “Utilities”, “debit card”, “Visa”, “Mortgage”, “Escrow for Maintenance”, “Investments”, “Estimated Taxes”, etc. 10 min. each month. Piece of cake.
JeffB MI-20 says
We have never had a written budget, but as a former Cash Manager, I have a cash forecast with income and projected spending and saving. If i overspent, I just don’t save as much. Still up around $8.5M in portfolio. Haven’t ever used a financial planner. 98% of our money at Vanguard. Maybe with a written budget I would have $9M.
DaveM says
Touche!