Three Steps to Wealth & Financial Security
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Comments by Readers About
Three Steps to Wealth & Financial Security
All That Glitters Isn’t Gold
I read your book last night. I’m incredibly impressed! It’s a huge undertaking to present an enormous wealth of REALLY important and helpful information in a streamlined way…but you guys did it! And, I think your readers will really appreciate the genuine tone and straight forward approach—life changing stuff. Great job! I see this book distributed in high schools, colleges (law schools particularly—some lawyers are not great when it comes to financial matters), vocational schools, and the like. I hope you’re aiming to reach the masses with this one—the subject matter is so salient right now, and this information is really resonating with people.
– Jennifer Manganello, Esq., University of California, Hastings College of the Law
I just finished reading your book. Outstanding! I love the unique way it was written in PowerPoint format—original, straightforward, and easy to follow. The information the book contains, and how it is explained, makes it stand out. You do not allow the reader to blame others or make excuses about their financial situation. You tell them to look in the mirror, take responsibility, and you show them that money problems are not hopeless but fixable. The stock and real estate investing sections are informative and easy to understand. You take the complexity out of stock market investing. You show real estate investors the pitfalls to avoid. Readers will especially benefit from how you compare and contrast real estate investing with the stock market and other investments — bonds, precious metals and cash.
It’s evident the book was written from firsthand experience, making it truly authentic. I am impressed both by your credentials and your experience counseling over 2,000 homeowners in financial distress since 2007. This book cuts to the core of what people need to know and do to put their financial house in order. I highly recommend your book! Read it and you will substantially increase your financial I.Q.
– Dory Laramore, Certified Registered Tax Preparer, and author of Get Your Finances Right: The Foundation for Success
“Three Steps to Wealth & Financial Security” is well written, concise and provides a wealth of financial advice for every American. What is truly unique about the book is that the authors, an attorney and an MBA in finance, experienced investors, have listened to and counseled over 2,000 homeowners in financial distress since 2007. They talked to a cross section of America—attorneys, teachers, judges, bankers, retirees, medical doctors, engineers, labor union members, dentists, realtors, pastors, police officers, nurses, government workers, business owners, active duty and retired military, even a few CPAs, economists, and financial planners.
The authors learned that the housing crisis did not discriminate. All of these people wanted the American dream. All wanted to achieve financial security; substantially all failed. The authors ask a number of profound questions. What are the lessons of the housing crisis? Why are savings rates in the United States so low? Why do so many retire on Social Security only? Why do so many mismanage their financial affairs? How do we put our financial house in order? What do we need to know and do to be financially secure?
To answer these questions, the authors give concise details about the financial dealings of others and relate them to issues facing Americans today. As a result, this book will be an easy read for people who find financial matters confusing or even frightening. The guidance and recommendations in this book will help many take charge of their financial futures and move forward with their lives.
If you are among the fortunate, that is, if you believe your financial house is in order, you will also benefit from reading this book. Understand the lessons of the housing crisis and fine tune your financial plan and money management skills. Understand the mistakes that so many made and continue to make. You will also obtain significant insight about financial advisers, as well as investment products sold or available in the U. S. I especially appreciated the insights on how important it is to work together as a family unit to discuss and manage financial affairs.
Recommendation: Read the book! Money management, financial planning, and wealth building are mandatory subjects not electives. I was so impressed I asked my adult daughters to read it. They did!
–Andrew J. Sussman, Esq., Partner, RSR Law Group, San Diego, California
THREE STEPS TO WEALTH & FINANCIAL SECURITY
All That Glitters Isn’t Gold
Increase Your Financial I. Q.
Make Smart Money Decisions
Gary M. Laturno, Esq.
Victoria K. Kuick, MBA/Finance
“Many people today do not make smart money decisions”. San Diego bankruptcy attorney
Copyright © 2013 by
Gary Laturno Realty Inc.; DBA Laturno Kuick Realty
All Rights Reserved – LIMIT OF LIABILITY AND DISCLAIMER OF WARRANTY: Gary Laturno Realty Inc. DBA Laturno Kuick Realty, a California corporation, (“THE PUBLISHER”), THE AUTHOR AND CO-AUTHORS MAKE NO REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE ACCURACY OR COMPLETENESS OF THE CONTENTS OF THIS WORK AND SPECIFICALLY DISCLAIM ALL WARRANTIES, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE. NO WARRANTY MAY BE CREATED OR EXTENDED BY SALES OR PROMOTIONAL MATERIALS. THE ADVICE AND STRATEGIES CONTAINED HEREIN MAY NOT BE SUITABLE FOR EVERY SITUATION BECAUSE CONDITIONS IN THE MARKETPLACE DIFFER FROM TRANSACTION TO TRANSACTION. THIS WORK IS SOLD WITH THE UNDERSTANDING THAT LATURNO KUICK REALTY AND THE AUTHORS ARE NOT ENGAGED IN RENDERING LEGAL, ACCOUNTING, TAX ADVICE, OR SERVICES. WE ARE NOT REGISTERED INVESTMENT ADVISERS. EACH INDIVIDUAL’S SITUATION IS DIFFERENT. BEFORE YOU DO ANYTHING YOU SHOULD CONSULT A COMPETENT PROFESSIONAL ADVISER FOR GUIDANCE. NEITHER THE PUBLISHER NOR THE AUTHORS SHALL BE LIABLE FOR DAMAGES ARISING FROM THE USE OF INFORMATION IN THIS BOOK. INVESTING IS A “BUYER BEWARE” SITUATION, AND NO ADVICE HEREIN CAN SUPPLEMENT A BUYER DOING HIS OR HER OWN ANALYSIS AND MAKING DECISIONS ON A “RISK RETURN” BASIS THAT WORKS FOR THAT INVESTOR.
ISBN: 1-4774-9781-1
ISBN-13: 978-1-4774-9781-4
eBook ISBN: 978-1-62347-251-1
Library of Congress Control Number: 2012920886
CreateSpace Independent Publishing Platform
North Charleston, South Carolina
TABLE OF CONTENTS
COPYRIGHT & LEGAL DISCLAIMER
PREFACE
PART 1 – THE U.S HOUSING CRISIS - LESSONS LEARNED
1. People Don’t Plan to Fail. They Fail to Plan
2. How Did We Go Astray? What Are The Lessons Learned?
3. Who Is to Blame?
4. The Good News! Money Problems Are Fixable!
5. The Bad News
6. Lessons Learned: Houses
a. Biggest Mistakes
b. What Percentage of Your Income Should Go to Your House?
c. Should You Ask for a Loan Modification?
d. Is Renting a Smarter Financial Decision?
e. Should I Pay Off My Mortgage?
7. Lessons Learned: Banks
8. Lessons Learned : FHA & VA Loans.
9. Lessons Learned: Credit Cards
10. Lessons Learned: Cars
PART 2 – STEPS 1 & 2: CREATE A WRITTEN FINANCIAL PLAN - PRACTICE SOUND MONEY MANAGEMENT
1. What is Wealth? How does One Become Wealthy?
2. The 25-50-25 Plan
3. Compare and Contrast: China vs. the United States
4. Get Ready for a Longer Retirement
5. Financial Plans That Fail
6. Sound Money Management – Get Started
7. Sound Money Management – Trim the Fat
8
. Sound Money Management – Move Forward
9. Financial Planning Software vs. a Spreadsheet
10. Secrets to Saving
11. Use Credit Wisely
12. How Will You Pay for Major Milestones?
13. Insurance is an Important Part of Your Plan
14. High Income Earners – How Will You Spend Your Money?
15. Smart Move – Delay Taking Social Security Benefits
16. What Can We Learn from Social Security?
17. Do Not Sabotage Your Retirement Plans
18. How to Make More Money
19. Stay Healthy – Minimize Health Care Costs
20. Married Couple Discuss Financial Planning & Money Management
PART 3 – STEP 3: INVEST IN LOW COST INDEX FUNDS
1. Introductory Comments
2. Compare and Contrast Investment Options
3. Houses vs. the Stock Market
4. Investment Accounts
5. Tax Deferred Investment Accounts
a. 401(k) – Employer Sponsored Plans
b. Individual Retirement Accounts – IRAs
6. The 529 College Savings Plan & the ROTH
7. Taxable Investment Accounts
8. Investment Advice and Strategies
a. The 2004 Google Teach-Ins
b. A Look at the Best Investment Portfolios in America
9. Avoid Common Investor Mistakes
a. Do Not Trust Your Financial Instincts
b. Read History to Become a Better Investor
10. Eight Guidelines to Successful Investing
a. One: Start Early; Take Advantage of Compounding
b. Two: Invest Regularly and Stay Invested
c. Three: Diversify Investments
d. Four: Invest Frugally
e. Five: Do Not Try to Time the Market
f. Six: Control Risk
g. Seven: Keep Your Portfolio Simple
h. Eight: Stay Married
11. Financial Planners and Other Advisers
a. Do You Need a Financial Adviser?
b. Is Your Adviser a Fiduciary or a Salesperson?
c. Recommendations
12. Tax Efficient Investing
13. Will Your Money Last Your Lifetime?
PART 4 – INVESTING IN HOUSES: PROS & CONS, BIGGEST MISTAKES, AND GUIDELINES FOR INVESTORS
1. Introductory Comments
2. A Negative View of Real Estate Investing
3. A Positive View of Real Estate Investing
4. Biggest Mistakes by Investors
5. Guidelines for Investors, Part I
6. Guidelines for Investors, Part II
7. Condos – A Mixed Bag
8. Tax Benefits of Investment Real Estate
9. Consider Short Sales and Foreclosures
10. Should You Buy Houses at a Trustee’s Sale?
11. Short Sale Success Factors – Tips for Buyers
12. Ideal Short Sale Buyers
13. Due Diligence in Hiring a Buyer’s Realtor
EPILOGUE
APPENDICES
A. What Gary’s Parents Taught Him about Money
B. What John Wesley Taught All of Us about Money
C. What You Should Teach Your Kids about Money
D. Couples Need More Than Love
E. Bear and Bull Markets Defined
F. The Dark Side of Bonds
G. Recommended Reading
H. Twenty Signs You Might Live to 100
I. Annuities
J. Reverse Mortgages – The Loan of Last Resort
K. VA Loans
L. Price to Rent Rations
M. Index Funds: Definition & Comments
N. Index Funds vs. Exchange Traded Funds
O. Index Funds vs. Hedge Funds
ACKNOWLEDGMENTS
ABOUT THE AUTHORS
PREFACE
Welcome! A little background about why Vikki and I wrote “Three Steps to Wealth & Financial Security –All That Glitters Isn’t Gold”. My law firm’s lease came to an end in 2006, and after practicing law for over twenty years, I was tired of fighting battles. I was not going to sign another long-term lease. So, I stepped down and became “Of Counsel” to my law firm.
The housing market crashed shortly thereafter. With time on my hands, I became active in the San Diego County Bar Association. Heather Rosing, the bar’s president, asked me to chair the bar’s Community Service Committee. Then I connected with Myrna Pasqual, Esq., founder of the Housing Opportunities Collaborative, a 501 (c) (3) organization, and Vino Pajanor, Executive Director of the collaborative. Both Myrna and Vino give a great deal to our community; they are super stars. For approximately four years, I served as the liaison between the Housing Collaborative and the San Diego County Bar Association, recruiting over five hundred San Diego attorneys to counsel distressed homeowners at HOME clinics in San Diego.
The challenge: Attorneys typically practice in one area of the law. They do not necessarily know about foreclosure law, mortgages, loan modifications, short sales, tax issues, deficiencies, bankruptcy, buying and bailing, and the like. I was asked to organize seminars and teach continuing legal education classes at the San Diego County Bar Association, other local bar associations, military bases, and the San Diego County Law Library, among other venues.
As a result of teaching continuing legal education classes, my phone started to ring. Attorneys who attended my classes referred clients, friends, and colleagues to me for counsel. Many of the attorneys who attended my classes became clients. Without these referrals, this book would not have been written. Please see the Acknowledgements section below for additional information on the many individuals and continuing legal education providers who made this book possible.
Since 2007, Vikki and I have counseled over 2000 homeowners in financial distress. We talked to a cross section of America—attorneys, teachers, judges, pastors, bankers, retirees, medical doctors, engineers, dentists, labor union members, realtors, housing counselors, PhDs, FBI agents, police officers, nurses, government workers, couples pending divorce, small business owners, active duty and retired military, even a few CPAs, economists, and financial planners. The housing crisis did not discriminate!
We wrote this book partly to share what we learned as a result of listening to a cross section of America—from wage earners at the bottom of the pay scale to people in the top 1 percent. Most people who contacted us were in default on their mortgages. Some had lost their jobs, experienced business failures, or had become disabled. Many were living beyond their means and had significant debt. Few had any savings or investments. Some wanted to keep their home. Some wanted to get rid of their home. Some simply wanted to understand their options.
Another event occurred in June 2011 that is pertinent to my decision to write this book. Mark, my son, graduated from high school. He came to me and said, “Dad, I want you to teach me how to buy investment real estate and to invest in the stock market.” Mark read several investment books. He also attended a class on personal finance for attorneys that Vikki and I taught at the San Diego County Law Library. At 19, Mark is now invested in three low-cost index funds—a total U.S. stock market index fund, a total international stock market index fund, and a total U. S. bond market investment grade index fund. Mark’s only regret is that he should have started earlier.
A few words about Vikki Kuick, my wife and business partner: When my dad met Vikki, he said, “Gary, she is smart and good looking too. Marry her!” Warren Buffet said, “The most important decision you make in life is who you marry.” I agree!
Vikki’s knowledge and insights on the financial issues that challenge Americans today are substantial. She has significant knowledge regarding the stock market and real estate, having invested in both for many years. See “About the Owners” for additional information regarding our education and experience.
I continue to speak regularly on these topics and would be happy to appear before your group or organization. Feel free to contact me! My emai
l is Gary@LandKRealty.com. Vikki’s: Vikki@LandKRealty.com.
PART 1
The U. S. Housing Crisis Lessons Learned
1. PEOPLE DON’T PLAN TO FAIL. THEY FAIL TO PLAN*
“We are our own worst enemy”. Cicero, Roman philosopher
“The majority of retirees get two-thirds to all of their income from Social Security”. New York Times
I recently met with Frank (not his/her real name) who told me that his finances were in “shambles.” He asked for my counsel to assist with his financial situation. Frank had been successful in business for many years and had excellent income, easily putting him in the top 10 percent of all Americans. His challenge: he had substantial debt including past taxes, alimony, child support, and credit cards. Like many, Frank had followed a high-end life style—owning luxury homes, driving luxury cars, and living beyond his means. After paying his creditors, he had little to live on each month. Frank’s biggest concerns: Would he ever get out of debt? Would he ever be able to retire?
Frank’s situation is not unusual. We have listened to countless people in financial distress since 2007. Many appeared to have wealth, but when we peeled the onion and examined their financials, we learned they had little or no wealth and no financial security. All that glitters isn’t gold. They shared common characteristics: None thought about financial goals or objectives.
Most made random, undisciplined decisions when spending; many did not know where their money went.
Nobody used a monthly financial statement.
They bought houses, cars, and other big ticket items without thinking how the decision would impact other financial needs.
Substantially all lived beyond their means with debts greater than their assets.
Many lived a high end life style and appeared to be doing well.
Few had assets, savings, or investments. Those that did save or invest typically had little money saved or invested.
Note the Center for Retirement Research and the Employee Benefit Research Institute report staggering facts about retirement savings in the United States: Less than half of all private sector workers in the United States have any pension coverage in their current job.