Exclusive: Jody Tallal explains Step 1 in path toward fulfilling personal plan

Over the next eight columns, I will be showing you how to create your own financial plan. These columns will be linear in format, so starting with this one, we will go through a step-by-step processes to build your personal financial plan. The end-result will be a personal financial plan that can guide you to personal financial independence.

Accomplishing financial goals is much like taking a trip. While some people enjoy jumping in their car and heading off in whatever direction they feel like going, applying such a free-spirited attitude to your money will only lead to disaster.

To reach a specific financial destination you will need a map, but not the kind sold in gas stations. You will have to create your own.

You can begin by filling in the chart at the link below. This will help you determine where you are right now.

Precision counts

When taking a road trip it is usually sufficient to identify your starting point as the city where you live. However, when taking a financial trip it is important to narrow down your starting point even further.

You see, there are probably items included in your net worth you would not want to liquidate in order to meet your financial goals. For example, you may not want to sell your home to help your children pay for college. Therefore, before you begin your financial journey, make a list of only those assets you want to use to achieve your financial goals. I suggest you leaving off items like your home, cars, jewelry, clothing, etc. The link below shows a list of items I recommend being included in what I call your Hard Worth calculation.


Budgeting: A pre-journey tune-up

Before beginning any journey, it is important to look under the hood to make sure your vehicle’s engine is running smoothly. Applied to a financial journey, this means looking at your cash flow. And yes, this is leads to the dreaded word “budget.” But wait … keep reading.

A budget is not such an awful thing. In fact, if you give it a chance, having a smooth-running budget can be just as reassuring as a smooth-running car. It will enable you to live without fear of a financial breakdown.

Admittedly, this will require a bit of hard work. However, when you are zipping along toward the financial destination of your choice, you will be glad you did this work.

“Billionaire Cab Driver: Timeless Lessons for Financial Success” is an easy-to-read financial primer from a man who revolutionized the personal financial management industry. Jody Tallal’s latest book offers timeless lessons for financial success, no matter your occupation, salary or personal savings

Budgeting: In the driver’s seat

Creating a budget is not as difficult as you may think. In addition, once established, it will take you just a few minutes each night to keep your budget current. This is one of the most important steps you can take to help ensure your Financial Success.

There are dozens of free budget templates available on the Internet. Just Google “budget template,” and find one you feel would be easiest for you to use. Make sure it has categories that most closely align with where you spend your money and additionally has a space to input your “target expenses” for each category.

Then at the end of each day, write down what you spent according to the categories listed in your budget template, and at the end of the month total up the columns. Once you know how much you are spending on food, entertainment, etc., you can decide how much you want to spend in each category.

Plug your target expenditures for each of the subsequent months’ daily records. Then continue to fill-in your expenditures each day and you will be able to see how you are doing.

With periodic expenses, like a semi-annual insurance payment, break each one down to monthly cost and plug that amount into savings each month. Then when the bill arrives, you will have the money to pay it in the bank.

Maintaining a budget will put you in control of your finances instead of letting your finances control you.

How you compare

Most people like to know how their situation compares with others. The Bureau of Labor Statistics publishes a Consumer Expenditures Report each year showing the average expenditures of the average family. You can review 2016’s report at Remember, what this report shows are the average expenditures; these are not meant to be absolutes as each person’s situation depends on his or her income and other goals.

In next week’s column, we will discuss maximizing you most important asset.


Exclusive: Jody Tallal offers wisdom about securing the right policy

Note: This is Part 2 of a 3-part series of columns. Read Part 1, “Your Personal Financial Security Formula,” and Part 3, “Last step in your Personal Financial Security Formula.”

In Part 1 of this series, we explored the concept I call your Personal Financial Security Formula, with life insurance being the first element. The next part of your P.F.S.F. is protection against potential disability. Your profession determines the kind of insurance you need to buy to protect against this. Many people belong to professional societies and associations that offer group disability programs.

If you became disabled to a point that you could no longer work or practice the duties of your profession, would you be capable of performing any other job for wage, means, or profit? This question must be asked before you determine what kind of disability insurance is adequate for you. If you are a neurosurgeon and suffer a heart attack from the stress of your regular occupation, your cardiologist may tell you to rest and work only in your garden. If your insurance policy disability definition is “inability to perform any duty or occupation for which you may receive remuneration or profit,” then you are not disabled under this definition, because you are capable of being a gardener.

You should therefore analyze your policies to determine if disability is defined based on your “own occupation” or “loss of earnings” basis. The “own occupation” coverage is what the neurosurgeon wants because the policy would pay if he were unable to render services as a surgeon. The policy would not consider his being able to obtain gainful employment outside his specialty. You also need to look out for any restrictive words in the policy’s definition of disability, such as “any and all,” “completely unable,” or “each and every duty.”

List the forms of disability that could render you disabled from your profession. Determine which of those disabilities would not prevent you from assuming other employment. If you are in general labor and become disabled, you probably would be unable to perform any other job. If so, any disability policy with a fairly restrictive definition will cover you.

If your profession is a specialty that requires the use of hands, eyes, hearing, mental alertness, and so forth, then you may pay particular attention to specific things that could disable you in your profession but would leave you capable of working in another occupation. For those of you in this situation, be careful in the purchase of your disability policy. Definitions become critical!

“Billionaire Cab Driver: Timeless Lessons for Financial Success” is an easy-to-read financial primer from a man who revolutionized the personal financial management industry. Jody Tallal’s latest book offers timeless lessons for financial success, no matter your occupation, salary or personal savings

Your disability policy is the security blanket in your P.F.S.F. Your most important asset is your income. With the exception of gifts and inheritance, all of the assets you ever acquire will be byproducts of your earned-income stream. If you were to become permanently or partially disabled, this all-important earned-income stream would obviously cease or diminish.

Without your income you could not even be able to purchase other forms of insurance, much less provide for the other financial needs of your family. Therefore, buying the proper disability insurance is critical. Select a company that has a policy you can understand, and read that policy carefully. See if the policy can be canceled by the insurer. If a company can cancel your policy at any time, your security blanket has a gaping hole.

Once a primary disability has occurred, the probability of a secondary, related or unrelated disability increases. This is unlike death, which can occur only once. If your policy can be canceled at the option of a company, one disability is all it will take to make you uninsurable for any future disability. Make sure that the policy you have can be canceled only by you, through nonpayment of premium.

Next, make sure the premium rates cannot be raised. If the policy is non-cancelable, but the company has the right to raise the premiums, then once you become an unusual risk, the company could raise the premiums to an unattainable level. Locking in a premium from the date of purchase ensures that no matter what your future health may be, you will always be able to maintain the coverage. This removes the fear of losing the coverage because of the insurance company’s re-evaluation of your physical condition.

You need to select a monthly indemnity that fairly represents your needs and your family’s in the event of your disability. Far too many people are under-insured when it comes to disability. Determine your personal cash flow, the costs (such as house payments, groceries, taxes on property, etc.) that would continue if a disability occurred tomorrow, and make sure your disability insurance will be enough to cover your continuing expenses.

Another variable, other than the amount of benefits, to be considered is an analysis of the waiting period. The waiting period represents the number of days between the date of the disability and the date when coverage will commence. Disability coverage can be purchased in waiting-period increments of 1, 7, 30, 69, 90,180, days. The longer the waiting period, the less you pay for the same coverage. Suppose your disability occurred today and you had $50,000 in liquid reserves and expenses of $6,000 a month. This would carry you for approximately eight months. Therefore, a waiting period of not less than 180 days is recommended.

It is wise to select disability insurance that covers you to at least the age of 65 for sickness and accident. Disabilities usually will be either short-term or permanent. Should you have only a five-year coverage, you would face financial disaster after the fifth year. (If a disability runs as long as five years, the odds are that it will be permanent.) Don’t be afraid to pay a higher premium for a good disability policy, because in this particular area of the insurance industry, you get exactly what you pay for.

Purchasing a group disability policy through an association or society of which you are a member for your main coverage will be considerably cheaper. But it has one major flaw: The group is the owner of the policy. The group decides whether it wants to keep the coverage with that carrier. This may not seem to pose a problem at present.

Let us consider a 50-year-old man whose only disability insurance was through his group. He suffered a coronary at age 51. The insurance company paid him benefits without protest.

At age 52, this man was back at work and seemed very healthy. When he was 54, his group became dissatisfied with the disability carrier and decided to look around and renegotiate for a better premium rate. The new company it selected said that coverage would be provided at a much cheaper group rate. The catch was that the group would have to submit members over the age of 50 to an insurance physical examination and eliminate the coverage for those who could not pass. The group evaluated the number of members over age 50 who would not qualify and decided at most 5 percent would fall into that category.

Because the group had to negotiate for the benefit of the majority, it chose a premium reduction for 95 percent of its members, forcing the 5 percent who could not qualify to find insurance elsewhere. Our friend, at age 54, lost his insurance, and because of his past coronary is now uninsurable. He will never again be able to acquire disability insurance.

One option is to balance the amount of the inexpensive group coverage with the more expensive permanent coverage.

Disability should be the Rolls-Royce of your insurance programs. The other areas of insurance can very easily be stripped down to the Volkswagen model.

Note: This is Part 2 of a 3-part series of columns. Read Part 1, “Your Personal Financial Security Formula,” and Part 3, “Last step in your Personal Financial Security Formula.”

Last step in your personal financial security formula

Exclusive: Jody Tallal explains why liability insurance is critical for the well-to-do

My last two columns have explored the first two areas of what I call your Personal Financial Security Formula. The third area of you P.F.S.F. is health insurance. A number of years ago, health insurance used to break down into three areas: basic hospitalization, major medical and excess major medical. In recent years, with the advent of the PPOs and HMOs, all three types of insurance have merged into one type of plan.

In addition, with the advent of Obamacare, the questions of what type of insurance you should buy are much more complex. This is compounded by the fact that many areas in the U.S. have only one Obamacare carrier in their market, and some have none. This will only get worse year by year until lawmakers either repeal, modify, or replace Obamacare. Below is a map showing the number of carriers projected to be available on a county by county basis in 2018.


Obamacare offers four basic plans for those not covered through an employer-based policy or other government program. These plans are named after metals, and quality and coverage under the plan improves based on the value of the metal after which they are named. The four are called Bronze Plans, Silver Plans, Gold Plans, Platinum Plans, and descriptions of each are detailed on

In my opinion, you should design your health insurance to protect you against catastrophic medical expenses. The broken arm or a $500 hospital visit is uncomfortable financially, but certainly should not spell financial doom for anyone. Remember that an insurance company’s premiums will be contingent on the number of claims it expects to pay. There are far more people who will break an arm or go to the hospital for a $500 visit than there are who will suffer major health problems. Therefore, keep this in mind as you determine what type of plan and deductible you buy.

You can also check the Internet in your state to see which companies there still offer individual coverage. Depending on your health and past medical conditions, this might be a better option for you than an Obamacare plan.

Your health insurance is designed to prevent financial disaster during times of unusual medical problems. Just remember to insure against the things that could mean total financial disaster, and self-insure against the smaller problems.

“Billionaire Cab Driver: Timeless Lessons for Financial Success” is an easy-to-read financial primer from a man who revolutionized the personal financial management industry. Jody Tallal’s latest book offers timeless lessons for financial success, no matter your occupation, salary or personal savings

Although I have pointed out the disadvantages of a group disability program, group major medical can be the best coverage you can buy if you work for a company that offers this type of coverage. A group usually can obtain a far better program than you can buy through an individual policy.

Liability and casualty protection

To complete your P.F.S.F., you have to acquire the proper amounts of liability and casualty insurance. Possible casualty losses lie in your automobile, home, boat, or airplane. Comprehensive insurance should protect against fire, theft, collision, or anything else that could harm or destroy your personal property. When it comes to your home, select a deductible you can afford to pay. The higher the deductible, the cheaper the insurance. Evaluate the value of the building structure of your home as if it had just been destroyed by fire and you intend to replace it. (Do not include the value of your lot, but do account for the rapid increase in the cost of building that has occurred over the last couple of years.) This value should be the amount of basic coverage of your homeowner’s policy. You should review your policy at least once every two years and continually update and increase the amount of basic coverage.

One of the smartest ways to record all of the contents in your home is to lay everything out and take photographs; or better still, make a video. This helps you remember what you had after a disaster that destroys your belongings.

Put a value on your belongings and make sure you have adequate coverage in your homeowner’s policy. Include a “floater” in your policy for items of intrinsic value. Obtain original invoices if you do not have a professional appraisal, which, incidentally, is an inexpensive luxury you should consider. If you keep the supporting information in your home, store it in a fireproof box; better yet, put it in your safe deposit box off the premises.

For automobile insurance, as for other types of insurance, the higher the deductible, the cheaper the premium. Determine the cost of insurance for a $100 deductible, $250 deductible, and $500 deductible, then determine what it would cost you in your tax bracket to keep $100, $250, or $500 available in the bank as self-insurance. If the cost of liquidity is less than the cost of insurance, buy the higher deductible. If the cost of insurance is less than keeping the money liquid, buy the lower deductible.

Be sure that you have adequate liability coverage on your automobile, as well as your residence and other items of personal property that could be liabilities for you. Your financial status should determine your coverage. If you are a doctor and have the initials M.D. after your name, or you have a high-profile business, you are more susceptible to a large liability suit than someone else is. If you are obviously financially well off, you suffer from the same problem. It is important to protect your assets with adequate amounts of liability insurance.

Now that you have covered yourself against death, disability, illness or injury, property loss, and liability, you have a sound P.F.S.F.. You will enjoy peace of mind, knowing that you are prepared to deal with any threat to your financial security. You will actually have more financial security from any pending disaster than if you had maintained $1,000,000 in the bank. With your mind at ease, you can turn your efforts to a more productive development of your estate.


Exclusive: Jody Tallal list the 4 problems created if you were to drop dead today

In the next series of columns, we will be discussing what I call Your Personal Financial Security Formula (“P.F.S.F.”). Your P.F.S.F. is more than just a plan for the evaluation of the potential disaster areas within your estate. It is a formula that creates the defenses that will eliminate the vulnerabilities in your financial plan. An adequately prepared personal security formula should enable you to have greater security than if you had $1,000,000 or more in your savings account.

To develop your P.F.S.F., list all potential problems that would be solved if you had $1,000,000 or more in the bank. These problems are the same for almost everyone.

  1. Death of the breadwinner
  2. Disability of the breadwinner
  3. Illness of yourself or a family member
  4. Casualty losses involving your automobile, home or other personal belongings
  5. Potential personal or business liability suits

All these areas can be covered by some form of insurance. When discussing any form of insurance we have to differentiate between buying insurance and self-insuring. Self-insuring is when you keep cash available to cover potential losses instead of buying insurance to cover them.

Cash kept for this purpose represents a form of insurance. However, keeping cash available for this purpose still has a cost because to the value of the money is depreciating due to inflation. If you look back to my column explaining the First Financial Fallacy That Will Ruin Your Financial Future, you will see that money kept in a saving account loses money after evaluating its yield, less taxes and inflation. Therefore, you should look at this cost each year as your cost of self-insurance and allow that to help you determine when this makes sense or not. Any time you can insure yourself more cheaply by keeping cash, this is the form of insurance you should maintain in your security formula.

The eventuality of death

The first aspect of a P.F.S.F. to consider is death. Therefore, life insurance appears to be the obvious solution.

The only way I know how to find out how much life insurance you truly need is to assume that you will die tonight. If you did die, all the financial problems created by your death would be on your family’s shoulders tomorrow morning. After all my years as a financial planner, I have only been able to find four categories of economic problems that can arise by a client’s premature death that money can solve.

“Billionaire Cab Driver: Timeless Lessons for Financial Success” is an easy-to-read financial primer from a man who revolutionized the personal financial management industry. Jody Tallal’s latest book offers timeless lessons for financial success, no matter your occupation, salary or personal savings

These four problems are listed below:

  1. Estate Liquidity (covering the costs of dying);
  2. Survivorship Income Needs (providing an income stream to replace the deceased’s income);
  3. Special Obligations (such as providing for a college education fund or buying out a business partner); and,
  4. Liquidating Liabilities (extinguishing debt the family would have trouble servicing in the event of the death of a breadwinner).

The first problem listed above is Estate Liquidity. When you die, your estate has to be probated, and any taxes due have to be paid to the government, usually within nine months. If you use the unlimited marital deduction, neither you nor your spouse would owe any federal estate taxes on the first death. However, there are other miscellaneous expenses of dying such as funeral and last expenses, probate fees, appraisal fees, accounting costs, etc. I suggest you have a minimum of $50,000 or 6 percent of your net estate, whichever is greater, to cover these miscellaneous expenses.

The second potential need is survivorship income. If you, the breadwinner, die, your family must replace your income stream for it to survive. In order to determine how much is needed to solve this, you first need to establish how much monthly survivorship income you family will need. Then you need to actuarially determine the size of estate you need to have to resolve this. How to do this is described in greater detail in my book “Billionaire Cab Driver.”

The third potential problem area is special obligations like building an education fund to guarantee the education of your children. If you have yet to fund your children’s college educations, you may want to ensure that there are special assets to provide for these. I discussed the process of how to do this in an earlier column. Another example of a special obligation might be buying out a business partner or some other area of financial need.

Finally, the fourth area evaluates liabilities and mortgages. While you are working and earning money, you are capable of paying the monthly mortgages and/or other loans you have incurred. However, if you die and your family loses your income, the monthly debt service on these loans might create a burden, which your family could not afford.

When I worked with a client, I simply computed the need in each of the above areas as if he had just died. I then determined whether his needs were permanent or temporary so I could then decide whether he needed term or cash value insurance. After totaling up all his needs, I subtracted his net hard worth. The remainder was the amount of life insurance he needed.

In my next column we will explore the other area of your P.F.S.F.

Most money-saving ‘shopping mall’ online just got better

Exclusive: Jody Tallal explains exponential impact of ‘CashBack’ program

A few columns ago, we discussed “The most money saving ‘shopping mall’ online.” This mall is called “, and it just got even better!

CashBack Shopping Malls get the CashBack they pay members from commissions received from the Internet merchants that pay for sending people to their stores. These commissions are an actual percentage of the transaction’s purchase price.

Each person that opens a free mall account and then shops with any merchant in the mall receives CashBack on his or her purchase based on what is receive from that merchant. The amount of CashBack from a merchant can range from just under 1 percent to as much as 25 percent depending on what the store pays.

The goal is to give shoppers an extra reward for using the mall to help them achieve an even higher and better use of their money. This extra CashBack is money they will not receive from the merchant if they go directly to its store instead. If they use a CashBack credit card, they receive that on top as well.

This means if you shop in the mall, not only will it help you find the best deals available, you will also earn extra CashBack you would not receive if you went directly to the store’s website to shop.

A number of years ago, Facebook and Twitter roared onto the scene, and the viral nature of these networks changed the Internet forever. People freely shared Facebook and Twitter with their friends and never expected or received a cent for doing so. One person simply invited their friends, and those people invited their friends, and so on; and in just five-to-seven generations down the genealogy chain, there were tens of thousands to hundreds of thousands of people that were directly related to the invitation of that original person. Additionally, this phenomenon never stopped, as Facebook went from 10,000 members to 1 million, to 5 million, to 50 million, to 500 million, to over 1.7 billion members in just over a decade.

“Billionaire Cab Driver: Timeless Lessons for Financial Success” is an easy-to-read financial primer from a man who revolutionized the personal financial management industry. Jody Tallal’s latest book offers timeless lessons for financial success, no matter your occupation, salary or personal savings

What would have happened if Facebook or Twitter had rewarded each of these people building their network just a small percentage of what that company earned from the geometrically expanding network of people that had developed because of the friends they invited to join? That amount would have gone a very long way toward helping each of those members find the extra money they needed to be investing to meet their financial goals.

As reference above, the way a normal CashBack mall works is that it takes a percentage of what it earns from the merchants based on what people buy from them and then gives that back to that shopper as CashBack. What has decided to do differently is to take an extra percentage of its earnings from these same transactions and share that with the person who invited the shopping member to join who just made the purchase. Then it also shares it with the person above that who invited them to join, and so forth for several generations up the line.

In deciding to do this, it means they have created the world’s first free viral network that is 100 percent free to join and then rewards its members for inviting their family and friends to join and use the benefits of the network. They call this viral sharing process the “Family Tree,” and you can learn more about it at itself is a great tool for helping you get the highest and best use of your money on almost everything you need to buy; and you are earning CashBack on every purchase you make. However, now you can also share this with your family, friends and business associates so they can shop, save and earn CashBack just like you – and the membership and use of the mall is absolutely free for all of you.

So now, on top of the personal benefits you receive from using, when your friends shop, save and earn CashBack (plus when their friends do the same, and their friend’s friends, all the way down for seven generations below you), you will earn money on every purchase. This additional money can be a real game changer if you build a network like you did on Facebook or Twitter!

I encourage you to use to get the highest and best use of every dollar you spend. Then share it with your friends and family and explain to them how important it is that they learn to get the highest and best use of their money as well. Then just sit back and watch as one of the most exciting new sensations on the Internet unfolds.

How to decide in what to invest

Exclusive: Jody Tallal stresses the need to identify problem you’re setting out to solve

As discussed in a previous column, I operate on the simple philosophy that any investment should be a direct solution to an individual’s personal problem. If a person had no personal financial problems, it would be foolish for him or her to expose his or her money to risks if they had nothing to gain.

Most people operate with the philosophy that their principle goal when making any investment is to make as large a profit as possible within an acceptable range of risk. Other people carry this philosophy a step further and try to implement a system of asset allocation to diversify the risks. The theory of asset allocation attempts to predict the future economic cycle, inflation’s rise or fall, and then creates an asset allocation mix to use on investment assets.

While I feel that there is a lot of merit to this system, it does not focus on the real problem. Why are you making investments in the first place? What are you trying to achieve? An investment made just for profit is like a boat without a rudder. While it may be completely seaworthy and sound, it cannot be directed to any specific location.

If investments should be made as a direct solution to an individual’s personal problems, wouldn’t it make more sense to first identify each specific problem and then find the best investment solution? Investment types are designed to offer different benefits. Some are designed to be extremely safe and only produce an annual income while offering no opportunity for growth. Others offer the potential for a mixture of both income and growth, while still others concentrate solely on growth and have little or no opportunity for income. Obviously, each investment area offers varying potential degrees of risk and reward.

Therefore, it would be best if you operate on the concept of first identifying the specific problem the investment is trying to solve and then selecting the best investment solution available. Additionally, instead of applying a global asset allocation philosophy to your investment portfolio, you should focus your asset allocation formulas to each specific need at hand. This way each investment problem will be addressed with the best, well-diversified options available.

Let me give you an example on how this philosophy works. Let us say your goal for making an investment is to build the funds needed to help your children or grandchildren with their education costs.

The first step in your education planning should be deciding the actual number of years your child(ren) will attend college and the current annual cost of the assistance you wish to provide. The next step should be to factor in an inflation rate to decide your child(ren)’s actual future capital needs. Once calculated, a sinking fund should be calculated which assumes an annual yield on your newly invested funds that will accomplish your goals. Finally, you need to determine the annual investment amount that need to be invested each year to build the appropriate sinking fund using the previously described factors.

“Billionaire Cab Driver: Timeless Lessons for Financial Success” is an easy-to-read financial primer from a man who revolutionized the personal financial management industry. Jody Tallal’s latest book offers timeless lessons for financial success, no matter your occupation, salary or personal savings

There are several things on which to focus to resolve this goal. First, any investment vehicle(s) that might be considered should be viewed with a predominate emphasis toward “moderate growth” as opposed to “speculative growth.” Choosing a more speculative potential yield would obviously reduce the annual funding requirements; but it would also substantially increase the chance for an overall loss. Therefore, investments selected for this need should be more conservative in nature.

It is important to note, however, that you not select the most conservative investments available as their yield would be the lowest and this would drive the cost of funding this program to an unnecessarily high level. Therefore, it is suggested that you use a philosophy of selecting investments that offer a moderate growth potential with an equally moderate risk.

Other factors to be considered are the required minimal time factor necessary for an investment to perform to the desired standards and the predominate need for liquidity. If funds from an investment need to be withdrawn within a two-year period, there may not be enough time for the investment to perform. As a result, this particular criterion is not intended for anyone with an investment-funding requirement of less than two full years.

The final factor to consider is “investment diversification.” In this regards, it is not advisable to “put all of your eggs in one basket.” The odds for substantial loss can be dramatically reduced using a diversification philosophy. However, if you only have one egg to invest, you should not break that egg up to put the shell in one basket and the white and yoke in another. As a result, if your monthly investment needs in this area are under $300, then investment diversification is no longer advisable; you should invest all of your money in the best option you can find.

Focusing on the above-described parameters, there are many investment alternatives. Real estate programs, annuities, equipment leasing programs, hard assets, oil and gas programs, mutual funds, etc., just to mention a few. However, if you evaluate each potential investment based on your actual desired needs, most can be eliminated due either to lack of liquidity, risk factors, or annual investment “minimums,” which exceeded most people’s education funding requirements.

For many investors that are not well-educated in a specific investment area, one of the best solutions for this particular problem of investing is mutual funds, because professionals manage them. Another benefit of selecting mutual funds to solve this need is that you will not have to spend a substantial amount of time managing this portion of your investment portfolio.

Obviously, you do not just want to pick a fund out of the thousands available without some additional considerations. Some parameters you may want to consider to help in narrowing down the field of options are that any potential fund considered should have performed in the upper 25 percent of all funds available; have at least a 10-year track record; have at least $500 million under management; and have performed statistically well in both “up” and “down” markets.

Based on this example, you can follow the same processes described above for any other goal for which you might invest to build assets such as your retirement.

Read more about Jody Tallal, a pioneer in the financial-advice industry, in the WND story announcing his new column.

Having as much money as you want: Could Become A Nightmare

Exclusive: Jody Tallal warns of danger ‘when there are truly no limits’

Getting everything you want presents a real danger. In our daydreams, when we are sailing on that yacht or driving that fancy car, we feel fantastic and are having the time of our lives. When we daydream and see ourselves experiencing something we really want, we always associate that with feeling good.

There is an old saying that “Money won’t buy you happiness.” I personally know that this is true. One of the most miserable periods of my life came when I was at the end of my building process and had everything. This was the most volatile situation I have ever experienced because life had suddenly lost a lot of its meaning.

If you are thinking, “Yeah, I know, but just a few million and I’ll show you how to do it,” let us try a little experiment. Suppose you are married and you and your spouse just won a one-month all-expense-paid trip to Europe with $25,000 a day spending allowance, tax-free. You and your spouse arrive in Europe with $750,000 to spend. However, something happens at the airport and you get into the worst fight of your lives. You both say horrendous things, and by the time you reach the hotel, you will not say another word to each other.

By nightfall you still haven’t spoken and all night in bed you are extra careful not to accidentally touch one another for fear the other might mistake this for trying to concede guilt and as an effort to make up. The next day, all you hear is this screaming little voice in your head telling you how your spouse has ruined the most important vacation of your life. This gets worse each day for the remaining 29 days of the trip.

“Billionaire Cab Driver: Timeless Lessons for Financial Success” is an easy-to-read financial primer from a man who revolutionized the personal financial management industry. Jody Tallal’s latest book offers timeless lessons for financial success, no matter your occupation, salary or personal savings

How much fun would this vacation be? It would probably be the most miserable experience of your life!

What about all the money? Money will not buy happiness if you are not already happy. If you are unhappy and fantasizing about how happy you would be if only you had this or that, stop that now! It just does not work that way.

I have seen several people I know, including my wife and myself, who suddenly found themselves without monetary boundaries. They made a fortune very quickly and could buy anything they ever wanted.

As much of a dream as this sounds; it can quickly turn into a full-fledged nightmare. As we discussed in a previous column, boundaries create security. You can push hard against the walls; which are strong and will not yield. This creates a kind of safe zone that says, “It’s all right to bounce around here.”

When the walls do come tumbling down; at first it is sheer excitement. You can buy this and get that and get everything you ever wanted. However, pretty soon it becomes a test. How far can you go before you have to stop? What happens if you do not reach that point? You might decide to reverse directions and run another way trying to find the safety of a nice firm wall. But when there are truly no limits and you can have all the clothes, jewelry, cars, home and travel you want, then you begin to think, “What’s next?”

The most dangerous part is that when you were driving in your Rolls-Royce in your daydream, you were ecstatically happy. Now, when this is happening for real, after the initial excitement wears off, it is just a car. Your jewelry was supposed to make you sparkle like the diamonds, but you do not. Then a little voice inside you starts saying:

“You have everything you’ve ever dreamed of, and you are still not happy.”

“What is wrong with you?”

“You’re just never satisfied.”

“Boy, are you a mess; anybody would be thrilled to have everything you own.”

From this unhappiness, you can quickly grow little seeds of discontent and disgust into a huge negative field full of poison in which to live.

No doubt, some of the success suicides and drug addictions we hear about are an outgrowth of this exact problem. In your dreams, all you needed was money to buy your happiness; but then it did not.

If you are not happy with yourself, more money will only make it worse. Do not forget that being a success with your family, friends, charities, church and community is what life is really all about.

Read more about Jody Tallal, a pioneer in the financial-advice industry, in the WND story announcing his new column.


Money is a boundary — how much is ‘enough’?

Exclusive: Jody Tallal discusses similarities in lifestyles between disparate incomes

Money is a boundary in life. In fact, as adults it is one of life’s biggest boundaries. It defines who you are in society. It tells you what you can and cannot have or what you can or cannot do. It is a structure that governs your very existence.

I have heard many psychologists say that if a child is not provided with clear, definitive boundaries of what he or she is not allowed to do, he or she will grow up confused and maladjusted. A child actually finds security in knowing exactly where the limits are so he can function within them. If they cross the line and are promptly reprimanded, they can then jump back again and things are copacetic.

Most of us have learned to live within boundaries: first at home set by our parents, then at school set by our teachers. Later in life, it is usually a job and a boss who set the boundaries.

Money is a definitive boundary. If you make $50,000 a year, it sets the limit of what you can do. It says what type of car, what size home, what quality clothes you can enjoy. If you are like most people, you quickly learn to live within this boundary. If suddenly, you get a $15,000 a year raise, within a year or two you probably will be living at the limit of $65,000 per year.

In the mid 1970s, I used to teach financial management to graduating seniors at Southwestern Medical School. Quite often, a student would become a client a few years later. The transformation from the first year in medical practice to the fourth or fifth year never ceased to amaze me.

I remember young doctors just starting out in practice. They would say, “As a student, I’ve been living hand-to-mouth for the last six years, and I can’t believe I’m going to earn $50,000 my first year (remember, $50,000 around 1975 was a good income). I’ve dreamed about having this much money for so long.”

In the second year, their income went up to $90,000, and shortly thereafter, their lifestyle expanded proportionately. The third year they were making $120,000, the fourth $170,000 and the fifth $225,000. What was amazing was that by the sixth year they couldn’t live on $200,000 a year.

What happened? As their income increased, they quickly learned to live within the boundaries of their money.

“Billionaire Cab Driver: Timeless Lessons for Financial Success” is an easy-to-read financial primer from a man who revolutionized the personal financial management industry. Jody Tallal’s latest book offers timeless lessons for financial success, no matter your occupation, salary or personal savings

My research projects on money and lifestyle over the years show that a couple who earn $75,000 a year in this country enjoy the same basic lifestyle as one who earns $275,000. Impossible? Let us see.

A person who earns $75,000 a year drives a luxury car equipped with cruise control, an am/fm/cd stereo, power windows, door locks, automatic trunk release, tilt wheel and climate-controlled air conditioning. They are driving a fully equipped $30,000 Chevrolet. The person who makes $250,000 a year drives a similar car with exactly the same options, but it has a star within a circle as a hood ornament. It is a $75,000 Mercedes Benz. Multiply this difference by two cars.

Both couples dress nicely. At a cocktail party you will notice that the $75,000-a-year couple are dressed in a $250 suit and a $300 cocktail dress. The other couple are also there, but the man’s suit cost $1,200 and the woman’s dress $2,500. To observers in the room they both make stunning couples. Multiply this difference by two wardrobes.

Both these couples live similarly in their homes. Both have kitchens with all the modern conveniences, but the $275,000-a-year couple’s breakfast room is four feet longer and two feet wider than the other couple’s. They both have nice master bedrooms that accommodate a king-size bed, two nightstands and dressers. However, one is 13 by 15 feet while the other is 16 by 20 feet. In the master bathroom, one has a sunken man-made marble tub that cost $600, the other a Venetian marble tub that cost $6,000. One home has 2,700 square feet of space and costs $225,000; the other is 6,000 square feet in size and costs $850,000.

When is enough, enough? I can remember when my wife and I moved into the new home of our dreams. The living room was 30 by 50 feet. It was a couple of hundred feet from our bedroom to our children’s bedroom. We felt lost. Within a week we were afraid that we had made a mistake, that it was too big to be comfortable. Within a couple of years, it was not big enough, so we added on.

Money is indeed a boundary!


Exclusive: Jody Tallal on how ‘daydreaming’ technique helped him earn a million by 25

Most people readily accept the power of setting goals. Life is full of clichés concerning the value of one setting and achieving goals. However, many people just do not know how to put real shoe leather to this technology to get it to work in their lives.

When I was 16 (which was back in 1967), I read the book “I Can,” by Dr. Ben Sweetland. In this book, Dr. Sweetland instructed me to list my wildest financial fantasies on a 3×5 card. Then I was to pull this card out several times a day and daydream about what it would be like to actually own all those things. The exercises went something like this:

Suppose someone rang your doorbell with a certified letter, which stated you had a rich uncle who just died and left you everything on your list. Next, visualize yourself enjoying each one of those things you just received. Then play this game as often as you can each day for 30 days.

I listed on my 3×5 card that I wanted:

  1. to take a trip around the world;
  2. own a Lincoln Continental with a car telephone (car telephones were extremely rare then and only people like James Bond had them);
  3. own a Corvette sports car;
  4. have $10,000 in the bank;
  5. have a wardrobe of custom-tailored clothes; and,
  6. live in a five-bedroom home with a swimming pool.

Not bad goals for a 16-year-old back in 1967!

On my first day, I read the 3×5 card and fantasized about my new goals approximately 10 times. The second day, I did it about seven or eight times, the third day maybe five or six, and then once or twice a day for maybe the next several weeks before I lost the card.

“Billionaire Cab Driver: Timeless Lessons for Financial Success” is an easy-to-read financial primer from a man who revolutionized the personal financial management industry. Jody Tallal’s latest book offers timeless lessons for financial success, no matter your occupation, salary or personal savings

Four years later, when I was 20 years old, I was moving out of a house in which I lived when I came across a book that contained an old crumpled up 3×5 card. I uncrumpled it and, to my surprise, found it contained my original goal list (long since forgotten). That may have been one of the most riveting moments of my life.

Here I was moving out of a 5,000-square-foot, six-bedroom house with a pool. I was still single but had two cars: a Lincoln Continental with a telephone and a Lotus sports car. (I apparently changed my taste in sports cars.) I had a closet full of custom-made clothes, had $10,000 in my savings account, and I had previously traveled around the world for three and a half months.

I can remember to this day the exact feeling of elation as I grabbed a new 3×5 card and began selecting new goals. These new goals appeared just as absurd to my current financial picture then as the earlier ones were that I had written down when I was 16. What I wrote down on the new 3×5 card was that I wanted to be a millionaire before the age of 25, be worth $10 million before I was 30 and $25 million before age 35. I wrote that I wanted to live in a multi-million dollar estate on prime acreage in the center of Dallas, own a Rolls-Royce Corniche convertible, a limousine and a yacht. Finally, I wanted to have a million dollars in cash in the bank.

Once again, these wishes were completely out of my grasp, and I had no plan of action to get them. But I did follow the exercise that had served me so well in the past and began daydreaming all over. By the time I was 35, I had reached every goal on my list.

I wanted to share Dr. Sweetland’s philosophy with you because it worked for me, and I believe it can work for you.

Are you planning for $90 ice cream cones?

Exclusive: Jody Tallal explains why inflation is ‘the silent killer’ for future retirees

In my past couple of columns, we have discussed the first two out of four financial fallacies that will ruin your financial future. Fallacy No. 3 is: Not seeing inflation as your biggest financial problem.

Most people see taxes as their biggest financial obstacle. However, as we have discussed in past columns, inflation is your biggest financial challenge that each of us must overcome.

Inflation can destroy your chances of ever retiring if you do not take action today to overcome its incredible influence. Let me give you a simple example of the real impact of longterm inflation.

Fifty years ago, a candy bar cost a nickel; an ice cream cone cost 10 cents; and movie tickets were $1.25. Today, a candy bar costs $1.25 (25 times more); an ice cream cone costs $3 for one scoop (30 times more); and movie tickets are $13 in most major cities (an increase of 10 times). The reason I am using 50 years in this example is that this is the average number of years a person works in their lifetime. Therefore, look at the costs of these same items starting today for a 20 year old when he or she retires at age 70.

If things only stay the same and don’t get any worse, in another 50 years, it will cost $31.25 to buy a candy bar; $90 for an ice cream cone; and $130 to go to the movies. In addition, this is not projecting anything other than what has already occurred in the last 50 years. With over $20 trillion dollars in federal debt, inflation can easily get far worse.

“Billionaire Cab Driver: Timeless Lessons for Financial Success” is an easy-to-read financial primer from a man who revolutionized the personal financial management industry. Jody Tallal’s latest book offers timeless lessons for financial success, no matter your occupation, salary or personal savings

This is the reality of inflation. In planning for long-term financial goals, you need to be thinking in very large numbers that far exceed what most people think is rational. You will need much more money than you think if you want to have a large enough asset base at retirement to meet your needs, or have enough money set aside to pay for college educations.

Let us focus for a minute on the cost of college educations to get a better feel for how inflation is affecting that. According to investment management company Vanguard, the average costs for college in 18 years, including tuition, fees and room and board, will be $54,000 a year for a public school and $120,000 a year for private schools. That is almost $500,000 for 4 years of education at a private school and a quarter of a million dollars at for a public school per child. How many children or grandchildren do you plan to help?

The financially trained person realizes that inflation is the silent killer, and the only way to offset its incredible impact is through investing in assets that grow faster than inflation after taxes. If your investment can earn more than inflation, then they will completely neutralizes its negative impact. Therefore, start researching different investment areas to find those that grow because of inflation instead of lose money because of it.

If you wait to start your investment until later, it is like watching this whole ball game from the bleachers. Unfortunately, there is almost nothing you can do from there that can impact the game.

The financially trained person knows that if you are not actively playing the game, down there on the field in real time, you will most likely end up one of those statistics I referenced at the beginning of this series of columns.

Read more about Jody Tallal, a pioneer in the financial-advice industry, in the WND story announcing his new column