Читать книгу The Copperjar System: Your Blueprint for Financial Fitness (US Edition) - Alan MacDonald - Страница 3

There are few of us who have not, at some point or another, dreamed of winning the lottery. Just imagine all that wealth. The ability to put an end, once and for all, to the constant quest to fill your bank account before the next series of bills goes through. Like the happy millionaires in the commercials we see on television, we could quit the rat race, present our loved ones with dream homes and luxury cars, and be free from the anxieties of managing our finances. Ongoing wealth and security would be ours forever.

This picture of financial Nirvana is created by lottery corporations in a bid to get you to buy another ticket to the next big draw. Somebody has to win, right? And even though you might have a better chance of being run over by a dump truck while swimming, you should go out and buy that ticket!

The actual experience of real-life lottery winners, however, stands in bleak contrast to the marketing pitch we’re all so familiar with. Most lottery winners, for example, end up broke not long after the big win. Paul and Al have known four lottery winners over the course of their careers. Of the four winners, three are now totally broke.

You may think that getting rid of all that money so quickly would be just about impossible. Surely most winners are able to sock away enough at least to avoid going bust!

But lottery winners are not the only ones who burn through countless millions in short order. Consider all the professional athletes who show up in the paper a few years after their multi-million dollar contracts end, not because they’re on the comeback trail, but because they’ve just filed for bankruptcy.

Then there are all those dot-com millionaires who burned through their brief bonanzas. Most of us have heard the warning “from shirtsleeves to shirtsleeves in three generations”—stories of family fortunes built in one generation, used in the next and lost in the third. It almost doesn’t matter how much money you start with, if you don’t have the financial discipline to manage your wealth, it will soon find another home.

As we battle our day-to-day anxieties about money, most of us give little thought to just how prosperous we are. All of us who live in the Western world at the start of the 21st century are the biggest lottery winners in history. The middle class of today is wealthy beyond the imaginations of 99 per cent of the people who have ever lived on this planet. Yet, in a recent poll, the number one concern of North American families is a lack of money.

This is because, despite our collective prosperity, we still share the same bad financial habits of the busted lottery winners and broke former professional athletes. On our own smaller scale, we spend more than we make, we acquire things that cost us money every month we own them, and we make financial decisions based on our emotions rather than using a disciplined approach that reflects our real goals and aspirations.

Sound familiar?

Think about it this way. Financial fitness has a lot in common with physical fitness. To achieve success in either takes a combination of good habits, discipline, the right information and a little skill.

This is a book about financial fitness. Its purpose is to give you the knowledge and tools to manage your money well, and achieve your personal financial goals.

As with physical fitness, the first major step on the road to financial fitness is to honestly assess where you’re starting from. Are you financially out of shape right now? If so, what can you do about it? To fix a problem, you first have to face the facts and deal with them. Then comes the hard part: finding the willpower to change your current habits in order to reach your new-found goals.

There are some strong similarities between being physically unfit and being financially unfit. For one, neither state is immediately obvious at a glance.

For example, you don’t have to be seriously overweight to be physically unfit. It is medically possible to be thin as a rail and still have arteries that are clogged with cholesterol. You can even have a physique that’s the envy of the gym, and still not be able to engage in vigorous cardiovascular activity for more than a few minutes. The person who looks slightly overweight may actually be in better aerobic shape than his leaner companion, with healthier blood pressure, cleaner arteries and a less-stressed heart.

The same is true about a lack of financial fitness. You may have a fancy house, a stylish car, lots of snazzy electronic toys and an expensive lifestyle—but that doesn’t necessarily mean you’re really wealthy. You don’t have to live in a trailer park to be financially unfit. The harsh truth is, that guy living in a trailer may in fact be more financially fit than you if he lives within his means, has a few dollars of savings and is debt-free.

If you can’t climb a single flight of stairs or walk a few blocks without panting for breath, then it’s fair to assume that your physical fitness may need some work. The same is true with your money. If you have to scramble to pay your bills every month; if you’re living from paycheck to paycheck; if you’re taking cash advances from your credit card and running outstanding balances; or if you have to keep dipping into your line of credit just to meet your current expenses—then odds are, financially, you’re probably seriously out of shape.

Over the years that we’ve worked in the financial business—and between us, we have more than half a century of front-line experience with helping people manage their money—we’ve seen a lot of people go astray for want of a few simple tips and principles.

Alan has been a broker, banker and financial advisor for more than twenty years. Paul is a tax lawyer who has handled personal and corporate finance issues for more than thirty years. In all that time, we’ve had many a chance to observe human behaviour when it comes to money—to see the common mistakes so many people make, and to learn what can be done to correct them. Seeing the unnecessary carnage and misery that resulted from these mistakes led us to create a program that, if properly followed, will give you the ability and the tools to work your way reasonably painlessly up to a level of financial fitness that properly reflects your circumstances, needs, ambitions and means.

Like any other fitness plan, our system works by giving you the help and support you need to boost your own discipline. A good place to start is by being honest with yourself. If you’re like most people, you probably aren’t perfect. Believe it or not, neither are we. If you’re in trouble with your finances, it’s likely because you were a bit lazy or too casual about your affairs. You either knew the rules and didn’t make the effort to follow them, or else you just turned a blind eye to the whole subject and hoped it would somehow work out for the best.

What you need now—what everybody needs when they first make a constructive effort to turn their lives around—is help to deal with the problem. Think of our program as the financial equivalent of Jenny CraigTM, Weight WatchersTM or the YMCA. All those services are based on the simple reality that most people need the help of a coach to permanently change their existing habits.

We’ve named our program the Copperjar System™ after the jar that Al’s grandmother used to put aside the family savings. In some ways, it resembles the workbooks we all used to have back in school. Think of these as exercises to get you back on the path to better financial health.

Some people may want to do these exercises and work their way out of their situations on their own, with no assistance. They just want a road map to point them in the right direction. Others may prefer to have ongoing help to check their financial “vital signs” as they go, sort of like a monitor for their progress. Either way, our step-by-step program is designed to be user-friendly—meaning you don’t need a degree in economics or in-depth knowledge of the investment markets to understand the advice and benefit from it.

Most of us are familiar with the problems of losing weight, and with the best solutions to that problem. We have applied the same attitude to the challenges of trying to become financially fit. That’s why, throughout this book, we keep comparing the process to a physical fitness program. (After all, that’s a challenge that virtually all of us have had to address at some stage in our lives!)

So if you’re serious about pursuing your goal, this book will help you get there. It’s not fancy, it’s not complicated, and it doesn’t just hand out a bunch of glib tips of limited practical value. It doesn’t provide a series of isolated exercises that only fix part of the problem. Nor does it start off holding your hand, only to abandon you when the going gets tough. Instead, this book offers a complete program to get you financially fit, which is based almost entirely on accumulated professional experience and a lot of plain old-fashioned common sense.

At each step of our program, we explain clearly why that stage is important, and we give you guidance to help you to navigate your way through it. The end of every chapter includes a summary of the key principles that have been covered, which are themselves gathered together at the end of the book into a handy “checklist for financial health.” (But if you’re tempted to just skip the next 140 pages and jump straight to the last chapter, be warned: that magic checklist won’t make a whole lot of sense if you haven’t read enough to understand its elements and how they all fit together.)

So be patient. It isn’t a long book—we promise! As you read through each chapter, you’ll find some tough questions for you to answer, and some tough issues for you to deal with. This book is meant to be read in stages and reread as necessary. Like life, financial fitness is a process. You can start, fail and start again, and still succeed in the long term.

To give you a rough sense of what you can expect, here’s a brief summary of what follows:

•Chapter One helps you set your initial targets, goals and values, to establish the framework that will guide your decisions as you go forward. It asks you to honestly assess your current financial situation and attitudes, as well as how they affect your big picture. There’s no single right or wrong answer to the question of how you spend or save your money. That depends on what’s important to you. Your values aren’t the same as someone else’s, and their goals aren’t necessarily your goals. The aim of this chapter is to help you focus on those elements, and identify what’s vital to you and what isn’t.

•Chapter Two asks you to undergo a “check-up,” just as you would when starting a physical fitness program, to assess exactly how fit (or un-fit) you are right now. This baseline information will help you determine what your next goals should be, what kind of rigours you can withstand, and how much you should try to do in the early stages of your new fitness program. This chapter will give you a firm foundation on which to base your financial outlook.

•Chapter Three builds on that baseline and sets out the platform that will sustain your program going forward. The aim of this chapter is to get you to understand where your money is going, how you are spending it, and why you are spending it that way.

•Chapter Four allows you to set your own personal financial fitness goals for your life—long-term goals that include saving for your retirement, so you can sustain the lifestyle you want or imagine you’ll want in the future. The object of this chapter is to help you take control of your financial future and get the advice you need to make the right decisions for you and your family.

•Chapter Five sets out the routine that will allow you to develop the level of financial fitness you need. This includes illustrating how you can start with a modest program, and build the confidence to succeed in your plan.

•Chapter Six addresses the issue of building equity. The aim of this chapter is to show that equity opportunities are everywhere, and don’t necessarily have to involve putting all your hard-won assets at risk.

•Chapter Seven shows you how to trim the fat from your expenditures, and asks you to carefully examine your spending patterns and make any changes needed to ensure that your spending habits accurately reflect the new goals and values you’ve established for yourself. This chapter is about making spending a question of choice, not compulsion. By the time you’ve worked your way through it, you should be well on your way to being in control and conscious of how and why you spend.

•Chapter Eight is about understanding your limits and knowing what’s achievable for you—and what isn’t. Some financial programs promise the moon and instil false expectations, setting people up for failure. This chapter will tell you exactly how to deal with your individual circumstances in the context of your own unique reality.

•Chapter Nine brings together the big picture and provides direct advice and guidance with respect to the preservation of wealth and protection of your assets. It will help you learn how to protect and preserve the wealth you’ve worked so hard to build, both for your lifetime and for your children’s.

•Chapter 10 wraps up all the advice offered in the book, and summarizes (in that long-promised checklist!) the essential things you need to remember. This chapter says it all ... again. After all, it’s your life. You own it, you can run it and enjoy it.

Let’s be clear about one thing: this book is not about getting rich. There are plenty of other “experts” out there who are all-too happy to tell you about their schemes for making a million bucks quickly and painlessly. You are quite free to listen to what they have to say. (Alan likes to quip that nobody ever “saves themselves rich.” That’s true, Paul says, but it’s also true that nobody ever stays rich if they spend ill advisedly).

But in our 50-plus years of collective experience helping ordinary people manage their money matters, we’ve seen over and over again that there’s simply no substitute for learning the basic lessons of finances. We believe that what’s most important for you, and for every adult—old or young, male or female, rich or poor—is knowing how to create and sustain the resources you need to live well, live within your means and stay solvent throughout your life.

Although our topic is a serious one, there’s no reason why it has to be boring. So we’ve tried to keep these chapters amusing as well as informative. That said, this certainly isn’t the kind of book that’s designed for light reading at bedtime or on the beach. It’s also not one you can likely read right through at a single sitting. Make no mistake: there’s a lot of hard work to be done here if you want to get the full value out of it.

But don’t let that discourage you. Again, it’s like an exercise program: what you get out of it depends on what you put into it. If you take a leisurely walk rather than going for an hour-long jog, you’re still better off than somebody who stays at home on the couch. Similarly, if you can make your way through even the first chapter of this book, and it helps you refocus your financial priorities as a result of what you learn, then that’s a major achievement!

With that one step, you’ll be much further ahead in understanding your situation and making serious choices about how your financial life should be. The same goes for the rest of this book. Every chapter is designed to help you improve your financial knowledge and fitness.

Another aspect of the Copperjar System™ that we’re particularly proud of is its interactivity. Information is available not just in this book but also through our website, www.copperjarsystem.com. We’re trying to create a learning model that gives people a framework where they can learn how to handle and take ownership of their own financial affairs, in whatever way works best for them. It’s about you taking control over an aspect of your life that you may feel is controlling you. Every success stays a victory for you, but each setback is just another lesson to be learned—and built upon.

If you read this book and want to let us know what you think about it, good or bad, feel free to contact us via our website and let us know your thoughts. If you disagree with anything we say, let us know. If you think it’s great, we’re pleased to have that feedback too. And if you have stories of your own to share with us and with other readers, we’d love to hear them.

We’ve worked hard on the Copperjar System™, and we believe in it. By the time you’ve finished reading this book, we hope you will as well.

At the end of each chapter you will find a few exercises. The exercises are designed to get you moving towards your financial independence.

Sir Isaac Newton, the great 17th century physicist, postulated three laws of motion. The first stated that a body that is at rest tends to stay at rest, while a body in motion tends to stay in motion. The Copperjar SystemTM book is designed to get you into motion. Theory is nothing without practice, and we firmly believe that the exercises in the Copperjar SystemTM will start and keep you on your path to financial success. The exercises in this workbook are not designed to tell you what you must do. Our objective is to help you arrive at your own conclusions about your progress.

Everyone is different; your path and definition of financial fitness are probably different from ours. But one thing that all fitness has in common, whether you are training to be an Olympic skier, a concert violinist or a good gardener – is repetition. It’s tough to get in shape for anything if you don’t do the work.

One final note: we started to write this book just before the worldwide financial meltdown took place in 2008. At the same time that the markets were collapsing, Paul had to undergo heart bypass surgery. After his recovery, we considered whether we should proceed with the manuscript. After much deliberation, we decided that this book was even more relevant than ever. In fact, if anything, the meltdown in the markets demonstrated on an aggregate level what we had been talking about on an individual level for years.

The meltdown in the markets was a direct result of behaviours that collectively reflected exactly the types of issues that we have been addressing and will address throughout this book. The financial system was unfit. People had excess levels of debt, negative saving rates and wasteful consumer spending. The net result was that they were over- extended and unable to withstand substantial shocks and reverses in the market. Like some of the people whom we refer to in this book, they were making lots of money because they had to. They were over- leveraged, and they were making decisions based on the assumption that asset prices had no way to go but up.

Paul’s bypass operation was as shocking to him as the collapse of the markets was to the rest of us. Before the surgery, he was generally physically fit, with good exercise and eating habits. But he suddenly found himself faced with the prospect of a quadruple bypass.

The reason in Paul’s case was genetics. You might be tempted to translate that analogy to the argument that people are financially unfit as a result of their circumstances rather than their behaviour. While the circumstances in which we find ourselves are certainly important, we cannot overestimate the power of the choices we make and the actions we take to impact our lives for the worse or the better.

Paul’s doctors, for example, made it clear that if he had not been physically fit, he likely wouldn’t have survived to make it to the operating table. Paul’s fitness also greatly shortened his recovery period, making it possible for him to get back on the road to recovery that much sooner.

We strongly believe that this is also the case when it comes to financial fitness. Being financially fit in bad times will enable you to withstand the shocks more successfully, and allow you to rehabilitate your financial future more effectively.

This book has definitely been an adventure for both of us, in terms of the experiences we brought to it, the process of putting it all together during the market meltdown, and Paul’s cardiac surgery. The result has been both educational and entertaining. We hope you find that this book offers the same experience for you.

Alan MacDonald

Paul LaBarge