Thursday, May 22, 2014


Shanna and I have a saying that has proven true for us and many others. We learned it first hand, so we point fingers at ourselves when we say this.....

Some people have a good heart but a dumb head...

It doesn't take an MBA or PhD to verify this simple statement could define the daily status of many. Those of us who are good intention-ed can also become a statistic of failure, or failure to excel, if these lessons are not learned early. 

I think financial lessons have been one of the more painful to learn for people in my generation. We survived the longest recession in American history. But not before believing that moments after we were married, we should have all the things our Baby Boomer parents had after 25 years of working. Many believed the lie that comfort and indulgence was an entitlement, not a luxury. And in one generation we created a target audience of in-debt, hard working, broke, depressed, consumer driven families for Dave Ramsey to capitalize on.  

There are three primary financial issues I wish I would have known about at a young age, to appreciate them, to find wisdom in them. These are not profound or complicated. They are ignored and misunderstood by most Americans, however. Again, we have a good heart, with good intentions, but we often have an ignorant head. We needed mentoring, teaching and training, but most of us would not have listened even if we had gotten it. For me, I wish I would have believed these three items were important when I was 20 years old. 

1. Debt Kills - Nothing can kill a marriage, family or a person's joy faster than the negative affects of the wrong kinds of debt. Again, Dave Ramsey has grown a multi-million dollar, world class business on the broken dreams of Americans who took on too much of the wrong kinds of debt and suffered for it. I did the credit card thing, then the cars, then house, then more credit cards, then second mortgage, and more. I have since paid much of it off, but there was a season where I was not sure how we would ever stop the madness. We now live within our means and have just a little debt left to pay off, besides our home. We have options now and think much more healthy about life, marriage, work and family. We are also more prepared for a sudden loss of income or major medical issue. (Such as a full on brain bleed, like I had last November)

2. Compound Interest is Exponential - Investing where compound interest accumulates yields the best results when given enough time to multiply over and over. Twenty extra years could mean hundreds of thousands of dollars when looking at an IRA with just moderate risk mutual funds. There are many other investment products that can create wealth over time, but my point is...I really do wish I would have known or listened when others talked about retirement funds, savings or investments. As usual, my American Dream was to work, work, work and never get old. We seek comfort or pleasure instead of wisdom. We feel like we must have all the "goodies" in life. Instead of being the business owner, we become slaves to the spending that keeps the business owners in business. We must eat out, we must buy new clothes and new cars, we spend first, save later. Because we never learned to save, invest and take advantage of the "power of time & compound interest" we see some troubling statistics.

* 80% of Americans ages 30 - 54 believe they will not have enough for retirement. 

* The avg. 50 year old only has around $43k saved for retirement with less than 15 more years to save. (avg. retirement age is around 62)

* Only 1% of our retirement population will be considered wealthy. 

Even though we grew up believing wealth, fame, power and influence were at our fingertips, truth is, most of us are on a track to retire one step above "broke". Most of us will NOT be prepared to absorb a major life crisis and even more disturbing, most of us will pass along near to NOTHING by way of financial Legacy. 

The most damaging myth, perhaps, is that we do not have the ability, within a middle class income, for example, to provide long term investments that will matter. Again, we fail to recognize the power of compound interest. 

An example would be the following calculations....

Beginning Investment $1,000 
Adding $3,000 per year at 7% compound interest

A) 20 years = $135,466
B) 40 years = $655,803
C) 50 years = $1,334,415 


3. Residual Income is Better than Hourly Income

Residual Income, like Compound Interest, continues to earn money after the initial investment is made. Many of us began work for an hourly wage or a small salary. We worked hard to climb the ladder and earn more. There is nothing wrong with hard work. If we add on residual income, as early as possible, again, we run much greater chances of seeing exponential increase over long periods of time. 

Just this week Shanna and I watched "19 Kids & Counting". This is the reality TV show, documenting the life and times of the Duggar family. 

Obviously they are different than most families and obviously not everyone cares to have a huge farm of kids, but there is one major example they set for us all. Financial Wisdom & Legacy. They pass along a smart, value based, debt free financial legacy. Legacy does not have to mean we leave our kids a pile of money they spend frivolously. For them, it means training in proper money management and business, with a reward at the end of being given a substantial part in the family business. The ability to care for their own family and to pass on skills, wisdom and business acumen is a greater legacy than most kids raised under the name brand driven society we were raised in. The residual nature of "owning" the businesses, in some cases, multiple businesses, like commercial real estate, can change the stars in a family legacy. 

Last week I was on a date with my wife Shanna. We sat watching the COS Philharmonic together. While there, we received notice of a team member making significant sales to a new client. We earned income while on a date. That is the short term power of residual income models. In the long term, consider the family highlighted in the movie "The Blind Side". Sean and Leigh Anne Tuohy, as depicted, had a substantial residual income derived from many different fast food businesses. Even when Mr. Tuohy was not working he was working. 

Some say the perfect variety of income sources is Real Estate, Business and Leadership. Meaning we work a "day job" with leadership flexibility and income, own a business that provides present or future residual income and invest in real estate that also provides residual income streams. 

The Ramsdell Group (aka the RamFam) has spent several years making adjustments to align with this kind of thinking. We hope to diversify income streams and invest well, to recover time past by accelerating time future.

For others, ages 16 to 25, there are HUGE opportunities to do it better from the beginning. The fact is, we just don't teach families and individuals to think about good stewardship of money and resources and time. We (Media, School, Parents, even Churches) tend to train young people to think short term, think small and desire immediate gratification. It is time we change our thinking. Not because we want to be wealthy for selfish gain. Rather, because we want to leave the lies of poverty, lack, comfort and indulgence to leave legacy, wisdom and skill to the next generation.