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Open World Financial Life Planning - Ian Bloom

A Good Villain (Blog Post)

Every story wants a villain. Villains make stories feel complete, and full of excitement. It would be a lot less exciting if Luke and Darth Vader were a normal father-son duo, right? What if there was no light and dark side, just a grey side? The story would not be told the same way. The epic battles would cease to be the focus. It would become another less-interesting story of a civilization just existing.

Stories don’t just want villains. The best stories want grand villains with a striking image. In Skyrim you battle Alduin, the World-Eater. Alduin is a dragon that seeks to enslave and end the various mortal races inhabiting his world. He makes a good villain because his motives are clear. You can, and should, oppose him just by hearing him speak of his desires to dominate.

In 2020 we are facing a villain. It’s not a sentient being and it’s not striking or grand. The virus that our society faces is difficult to write about or even think about, because we cannot perceive it. That also makes it harder to research and to predict.

To illustrate this confusion, let’s look at the S&P 500’s movements over the last few months. The big drop in the market began on February 20th, 2020. Over about a month the index fell about 33%. During that period you could argue that the American people understood (or thought they understood) how the villain would affect them. The market is emotional, and this drop largely reflected the way people assumed the economy would be hit.

Sure. That makes sense. But then how do you explain the next month? From March 23rd to today (written on April 27th) we saw the market climb over 28%. We’re still not back to the highs we started with in February, but the uncertainty around how our society will actually deal with this has resulted in “business as usual.” A recovery and slow uptick is what tends to happen following drops in the market.

Losing ~50,000 Americans, and countless other global citizens, is not “business as usual.” It is certainly a major cause for concern. Losing millions of jobs, having business suspended, and having unemployment payments support a huge percentage of those folks is not “business as usual” either. But, the enemy is not visible. We have no idea how long this will last, and so we return to a sense of normalcy pretty quickly...as long as it’s not affecting us. Humans are creatures of habit, after all.

I did not write this piece to encourage you to be normal in this moment. I wrote this piece to point out a helpful resiliency we have, but a feature of humans that ultimately does not aid us well in this case. We don’t have some big villain to fight, there’s no statue to topple, but that also doesn’t mean things should go back to “business as usual” for you yet. You should spend more time caring about some specific things.

On the financial side, care about your income and your savings, be able to weather a coming financial storm. On the personal side, care about your level of activity and your mental health. On the health side, care about your distance from others and the limited list of people you should be physically near. On the social side, you should care about each other. We need each other more than ever right now. We need to laugh, to smile, and to allow ourselves to be vulnerable sometimes.

So here’s where I share with you all my moment of vulnerability. Right as all of this started, as our invisible villain began dismantling our normal, I faced another challenge in my personal life. It was another story without a clear villain. It’s not one you will write an epic novel about, or that will be featured in a video game.

My wife and I got separated. I’ve written about Rebecca here before. She was, and still is, someone I care about very deeply. However, our invisible enemy was change. The two of us began a relationship with very aligned goals. Stay together forever, no children, build a life that is fun, exciting, and adventurous.

Change took Rebecca down a different path than me. Having a child became very important to her. I understand why, and I don’t hold it against her, but I still do not want that for myself. My big change, becoming a business owner, took its own separate toll on our relationship as well. So because of this change, there was no real resolution besides separation. She’s not the villain in this story either. We both changed. But, that did not make the separation and the eventual divorce that will follow any less painful.

So there’s my moment. There’s my villainless struggle that I needed to be vulnerable about. The good news is much like our current global crisis, the same human resiliency is pulling me back to a state of normalcy. There is no good or bad with this habitual behavior, it just is.

Even though my situation may seem dramatic and sweeping, that does not detract from the struggles that I know many of you are going through right now. So whether your struggle makes for a good story and has a clearly-defined villain with horns and pointy teeth or your struggle is more emotional or mental, please make sure to share it.

It helps. It really does. Thank you for reading and please, stay safe and healthy.

All of That Extra Stuff

Ian Bloom, CFP® Covers the Extras tier of the Hierarchy of Cash Flow. All of that extra stuff we want, that's advertised to us constantly, is a lot more exciting to purchase if you know you don't have to give up your future goals and dreams to acquire it!

Transcript:

What's up internet? My name's Ian Bloom. Welcome to nerd finance. I'm your resident financial life planner and huge nerd. In today's episode, we're going to be talking about the final stage in this hierarchy of cash flows, which is extras. From a gaming perspective, which is how I like to talk about everything if you haven't figured that out by this point in the series, extras is when you are super powerful in the game. Not only do you understand the system, but you have maximized it to your benefit in every other aspect possible, and now you're just adding the icing on the cake. That cool legendary sword, or that piece of equipment that enables you to dominate any of the enemies or opposition you come up against. Extras is really just the extra stuff to enjoy the spice of life.

It might be getting takeout once a week. It might be spending extra money on gaming accessories, or sporting equipment, or going to concerts. Any of those things can be extras that are very enjoyable. And as we already talked about, extras can be woven through the different stages in some form or fashion. We do live in a consumer culture. So you will be advertised a lot of extras, like maybe that League of Legends skin that you want, or maybe that really good food that you saw in the commercial.

Those things are okay to buy occasionally for yourself in any one of these stages. But once you have all four of the previous stages taken care of, you get to enjoy the extras that you can afford guilt-free, which is the amazing part. It's way less stressful to spend money on extras when you know that the other things are taken care of, you have made sure that you have a roof over your head and the utility bills paid, you've made sure that you can continue to do that for the next six months, regardless of what happens with your employment. You have money that is growing towards your future and your financial independence, and you have some of the things that were core to the things that you wanted out of life. Whether that be that extra home in the mountains, or the cool car, or the trip to Europe.

And so now you get to focus on spending money on yourself, just for the heck of it. And boy, is that a joyous place. When you see people who are clearly living in the extra stage and have no guilt about it, you can see the joy on their face when they give to others. You can see the absolute purity of the fun that they're having. And it's all because they made sure to address the other four stages first. And moreover, all the other four stages and the extra stage look different for every person.

Some people like to live their lives very frugally. And so their retirement contributions in the future stage might not need to be that large. And some people like to live their lives a little lavishly. And so their retirement contributions might need to be greater in that same future stage, which may delay the amount of money that they have to focus on the extras. But whatever the situation is for you, just make sure that you're taking care of the core things before you move on to spending money on all of the flippant extras, though they are very enjoyable.

I hope you have a wonderful day. And I hope that this video has been, and the series has been, very, very helpful to you. The cashflow, a hierarchy tool is one that I have loved using with my clients. So I hope it benefits you as well. Have a wonderful, wonderful day. And thanks for watching.

Animal Crossing and Mindset

Ian talks about the coronavirus and how it presents an unprecedented challenge for our mindset. Tips for getting through this alright include patient progress, relaxing music, and social interaction.

Transcript:

What's up, Internet? My name's IanBbloom. Welcome to Nerd Finance. I'm your resident financial life planner and huge nerd. In today's episode, we are going to be wrapping up our three-part Animal Crossing series by talking a little bit about something that I think is especially important during this time of social distancing and the Coronavirus, and that is simply mindset. Animal Crossing does something for a gamer's mindset that almost no other game does, which is that it puts you in a state of patient progress and total ease. I want to talk about a couple of things that you can do in your life that you can pull out of Animal Crossing that will give you the ability to maybe get through this time a little bit easier.

Now, I want to start this off by saying that I'm not a psychologist, but I do practice a lot of mindfulness as part of life planning. The first thing that I think you can do to maybe make your life a little bit less stressful is put yourself in a mindset of patient, measured progress. Animal Crossing is all about this. There's almost no sense of urgency in the game. The loans that you take on from Tom Nook to upgrade your house have no interest rate. The trees re-spawn and refill on a three-day cycle, and so you don't necessarily have to harvest every day. There are only a certain number of certain actions that you can perform during the day. Everything is about patience and a little bit of iterative improvement in Animal Crossing.

Something else that I think is important is finding a sense of calm that can be gotten through music, mindfulness, or meditation. Animal Crossing's soundtrack is all low, happy tones. It's all calming and soothing, and whether you get your soothing feelings from music, like a lot of people do, or whether just sitting and meditating or relaxing via any other means is your particular cup of tea, I think it's important to have a ritual that puts you in the mindset of relaxation every once in a while. Animal Crossing does this very well through its music and slow, I won't call them mind-numbing, but patient tasks that it asks you to perform, like harvesting from your trees or chopping down wood, things that take very little physical effort in relation to your physical body, but are attentive in the game and allow you to focus on something different outside yourself.

The last thing that I think is important is Animal Crossing promotes social interaction. Social interaction is extra important during a time where you're stuck in your home, and that doesn't mean that I'm telling you to go outside and go to the local pub or brewery and spend time there. They won't even let you in. But what I am telling you to do is find ways to interact with your friends in a new manner. You see, Animal Crossing asks you to go to other players' islands to get the different types of fruit that you need. It asks you to go there to sell your turnips at higher prices. It asks you to go there simply to interact with other players and see what their Island is all about, because one of the biggest parts of Animal Crossing is the creativity and customization that you have. So, I think that that is a good lesson that you could take away from it. This is a trying time, and other people will help you get through it.

So, anyway, wrapping up the three things that I think are really important is to adopt a mindset of slow, patient progress. Don't beat yourself up over things that you thought you might get done that day, but maybe didn't have the energy for it. Just try to do them the next day. The next thing is that I think you need to find a ritual that puts yourself in a place of calming and soothing mindsets, whether that's music, meditation, yoga, exercise. Whatever does it for you, I think that's important. Then the third thing is make sure that you find yourself some social interaction every now and again. Animal Crossing does that on purpose, because it knows that games are more fun with other people, but turns out everything in life is more fun with the involvement of other people at the level that you desire. Keep in mind, I understand that introverts exist. If you don't want to see tons of other people, just find one friend or family member that you can check in with every day. Anyway, I hope that this video was helpful to you, and that's the end of our series on Animal Crossing. Thank you so much for watching, and have a wonderful day.

Are Financial Planners Worth It? l Min/Maxing Money

Ian talks about the process of working with a financial planner and answers the incredibly self reflective question. Oh yeah, and he gives you three simple stats to understand.

Aspirational Cash Flow

Ian Bloom, CFP® covers the Aspirational tier of the Hierarchy of Cash Flow. Aspirational goals might be buying your dream home or taking that trip around the world. The important part is that if you've taken care of the previous three stages, achieving aspirational goals will be more freeing.

Transcript:

What's up internet? My name's Ian bloom. Welcome to Nerd Finance. I'm your resident, financial life planner and huge nerd. In today's episode, we are going to be talking about tier four of this graphic, the Hierarchy of Cash Flows. Tier four is aspiration. Aspirational expenses are some of the things that give our lives that extra little burst of meaning, so they are important, but it's important to have the other three stages taken care of first.

Aspirational stuff is what you think about when you're thinking about the moment in a game, where you have finally started to do the really cool stuff. Maybe you in Saints Row, and now you can leap tall buildings with a single bound. Or maybe you are in Skyrim, and now you have all three parts of Fus Ro and Dah, and you can throw enemies feet away from you whenever they are trying to attack you.

This is the really, really cool stuff that isn't necessarily to beat the game or to play the game at all, but is some of the extra stuff that you might be aspiring to. In real world terms, this is the savings for those extra, but meaningful, things in life. So you might have to contribute to a brokerage account over and above your retirement savings in order to make sure you get some of these things like a travel budget, or buying that perfect house that you've always wanted, or making sure that you have the dream car that you've been wanting since you were a kid.

Those things don't necessarily strike me as extras because they have significance to you. Traveling to a lot of people is what gives their life some amount of meaning. But making sure that they have all of the other foundational pieces in places, how they are comfortable with going on the trips, and not worried about how much money they spend while they're on the trips. Trust me, traveling is a lot more fun when you don't have to worry about the budget, which again is why all inclusive resorts have such a great business model, even though they make money hand over fist.

So all that being said, aspirational expenses come after you have already ensured your survival. You've built up an emergency fund via consistent savings. You've started contributing to your retirement and you have a little bit left over after that. This is a hard stage to reach because this means that your income is not just a little bit greater than your expenses, it's probably significantly greater. And you've probably done a lot of hard work to make sure that you have the emergency fund and the retirement contributions going in the background before you start planning for the Porsche, or the new house, or that amazing trip to Europe that you've always wanted. Those sorts of things matter, but they have to come after the other stuff.

For instance, if you spend money on experiences before you start saving for your future, you may get to take a great trip, but you may come back to a bunch of bills and expenses that you weren't planning on, like your car breaking down, or medical bills because of breaking your leg on the trip, or something like that. Those are not the things that we want to have happen in life. That causes extra stress, and cashflow is about getting a handle on the day to day of your finances, so that you don't have to be stressed out about it.

I hope that this continued conversation around the hierarchy of cash flows is interesting to you. We've now moved through survival, which is keeping the roof over your head and the food on the table. We've talked about stability, which is making sure you can meet those short term emergencies. We've talked about future money, which is focusing on retirement or those other long term moments that you want to have occur. Then now we've moved on to aspirational stuff, where you are making the cool things in your life happen.

The final thing we'll talk about are extras, which are little fluff pieces in the day to day that you need to make sure to budget for. That is the fifth tier of the Hierarchy of Cash Flows. And maybe the self actualization moment, although you could argue that that comes in at the aspirational stage. Anyway, I hope this video has been helpful to you, and I hope you have a wonderful day. Thanks so much for watching.

Creating Cash Flow Stability

Ian Bloom, CFP® discusses how to move from the Survival Tier of the Hierarchy of Cash Flow to the Stability Tier. This level up involves the creation of an emergency fund that can insulate the household from unexpected expenses. Creating cash flow stability is very necessary before moving on to the exciting ways to spend money.

Transcript:

What's up internet? My name's Ian Bloom. Welcome to Nerd Finance. I'm your resident financial life planner and huge nerd. In today's episode, we are going to be continuing to focus on this graphic, the Hierarchy of Cash Flows that I've been using to help my clients understand where they are in their cashflow journey. This is our second stage, stability. Stability is interesting because it comes after you've started to get a handle on things, whether it's in real life or in a game. See, stability is developed when you understand the mechanics of what you're trying to do and have somewhat of a basic rhythm to them. In a game it may come when you have your go-to combo of your sword and then your spell to take out the bad guys. Well, in real life, stability as a cashflow thing comes about when you have a consistent amount of income that is exceeding your expenses and have started to allocate the money properly.

What I mean by this is if you have $2,000 a month coming in and $1,500 you must spend on bills and needs like groceries, and you have $500 leftover, stability starts to develop. But instead of just spending that $500 on things like Xboxes, Nintendo Switches, and awesome games, or maybe the furniture that you want in your apartment, you actually start to allocate this money towards savings. You see, savings in an emergency fund is where stability actually comes from. Knowing that you have three to six months worth of expenses there to absorb all of the changes that will occur in your life. Life is bound to change, the rules of the game change every day. Your tire may pop or your hot water heater may break, and you may need to spend some money to replace those things. Well, it's going to be a lot easier to come up with the money if you already have it in savings. And it will disrupt your day-to-day life a lot less if you have built up these savings and can therefore absorb those impacts.

For instance, that $1,000 car repair sucks a lot more if you have $500 a month and you have to put it on your credit card and pay it off over two months, then if you already have $5,000 in savings and so you just pull a $1,000 out of that. Now, $5,000 in savings doesn't happen overnight, which is why stability is a stage and not just a step. See, you have to save the money over time. Let's go back to that earlier example. We have $2,000 in income coming into the household every month, we have to spend $1,500 of that on bills like groceries and things, and so we have $500 leftover. You may decide to allocate $250 a month to your savings to start building it up. And then you may spend the other $250 on the extras and things that you're having fun with. That is how you develop stability. It doesn't happen immediately, it happens by those repeated actions towards saving over time.

I hope that this video has been helpful to you. Stability is the stage that you want to reach to get rid of that financial stress that's been plaguing you for a while. It helps make the day to day less stressful. It helps you avoid that paycheck to paycheck dance. As we move through the rest of the series, we'll start focusing on the more aspirational things, the future stuff. Anyway, have a wonderful day. I hope the video was enjoyable.

Future-Focused Cash Flow

Ian Bloom, CFP® covers the Future tier of the Hierarchy of Cash Flow. The Future tier is all about contributing toward your retirement or future financial independence. Future-focused cash flow enables you to make long-term financial progress, not just prepare for the now.

Transcript:

What's up internet, my name's Ian Bloom. Welcome to Nerd Finance. I'm your resident financial life planner and huge nerd. Today we are focusing on the third stage in this graphic. You see, the future stage is very, very important to the development of a financial plan. And it's incredibly important to the hierarchy of cash flows going forward. Once you have developed stability and you can take care of those immediate needs, you will then be focused on what you can do for the future. The future is really important, because stability in the now is nice. But knowing that your future is taken care of is amazing. So the way that you start entering this stage is very, very simple. Let's use some gaming terminology. You have got a good grasp on the mechanics, and you have decided that your one, two punch of sword and spell works really well right now. But it will not work against the end game bosses. So you start to plan out the skills that you need to purchase at each level up in order to make sure that you're ready for the end game.

That is the future stage in a nutshell. As far as cashflow goes, it's when you start contributing to things like 401ks and Roth IRAs. It's when you start allocating dollars towards future use, so that future you will thank you today. And that's really, really important. Because creating wealth doesn't happen on accident. It is an intentional decision that has to be made once the household is safe, comfortable, and taken care of from a financial perspective. So what does this look like? Well, if you work at a traditional employer, it may look like just deciding that you need to put five or six, or seven, or eight or 10% into your 401k every month. And that after that, you can still maintain the household and keep up with your savings, right?

That will allow you to build towards a financially independent future. It may also look like something that's a little bit more in my neck of the woods, which is sitting down with a financial planner and saying, "Hey, how much money do I need to save in order to make sure I can have this life I want at age 55 or at age 65?" Whatever the age where you want to reach that financial independence stage is. And we can give you some exact numbers on that. But the least you can do is make sure that you're contributing something towards your retirement every single week or paycheck, or month. However you want to think about it. If you're in a non-traditional employer, you could also just contribute to something simple like a Roth IRA. A Roth IRA can be held at any custodian.

And it stands for Individual Retirement Account. So you're not required to have a particular employer to do that. You just have to have an income. So anyway, future focused money is money focused on the long-term. It's money focused on the things that you know that you will need later on, like the ability to take care of yourself financially. I hope this video was helpful to you. Keep in mind that the stability and the survival stages need to come before the future stage, because if you contribute money to your future, and your now is not secure, then you may end up needing to take the money out of the future focused account just to make ends meet today anyway. So make sure to do these things in ascending order. Though, don't put off your future contributions until you're all perfectly financially set, or you'll almost never start making those contributions. Thanks so much. And again, I hope this video was helpful to you. Have a wonderful day.

Hit Reset (Blog Post)

Transcript:

The sunk cost fallacy is a powerful, real psychological effect. You can see it at play in both personal decisions “But, I already bought X...so I have to pay Y for upkeep.” and in the decisions of corporations “We worked so hard on X project...it’s 90% to completion. We may as well pay our employees to have it finished.” In both cases, X has been invalidated by a new idea, technology, or item. Yet, in both cases, X is still pursued because we spent money or time on it, and we like to see outcomes from those investments. This effect can also explain why gamers will pour time and energy into finishing the narrative of a game, even if they’re not enjoying it.

What’s the solution?

Hit the reset button. Take a step back and pull the plug. Redesign it from the ground up. Stop doing it.

Financial planning often addresses this in the form of an annual review. After recapping all of our work together over the year, I will often ask my clients: “What did we miss?” they will often say “Nothing, we did great!” So then I follow up with a simple. “Okay, if you were to design your ideal life, what would be most important to you?”

Sometimes my clients roll their eyes at me then, and I laugh. We almost always uncover something new in that conversation though. It goes back to human nature. Our plans are invalidated by our new desires. You may have thought you wanted to buy that house and that would be the pinnacle for you, but once you have it...well, there’s a new pinnacle. We never fully self-actualize. There’s always another level.

How do you hit the reset button personally, especially in a time of chaos like we’re in right now?

The answer for you will likely be deeply personal. What puts you in the state of mind most necessary for reflection and planning will be your own solution. I can tell you that what I will be doing this weekend is kicking off a week in the mountains on my own. I’ll be sitting in solitude, writing down my thoughts and vision for the next stage of my business and my life. I’ll redesign things as if I was starting from scratch. I’ll reflect, think, and analyze all the new data and thoughts from the last six months that I can to come up with. That will determine the next step.

That said, my business likely won’t change dramatically. I’ve been doing this process for the last three years, every year. How I’ve gotten the time, such as my mountain retreat this weekend, has been different. But, the core idea and process has remained the same. I simply know that I need to look at things from the outside every so often. Otherwise, I’ll fall prey to the same fallacy and human tendencies we all do.

So hit reset. Look at your life anew. If you were starting from now, with the resources you have and no major constraints, what would you do differently?

How To Evaluate a Mutual Fund

How To Evaluate a Mutual Fund: Ian walks through three basic criteria that he uses when he's evaluating a mutual fund quickly. When you are evaluating a mutual fund, make sure to pay attention to the cost, relative performance in the category, and category that the fund is invested in.

Ian Calmly Talks Again: CARES Act

Wondering when you're going to get your check? Filing for new unemployment benefits? Listen to Ian Calmly Talks Again about the CARES Act. There are a lot of changes in this bill. Ian tries to walk you through the basics.

Introducing a New Series! Min/Maxing Money

Ian introduces Min/Maxing Money, a new series that we'll be diving into on this channel over the next few months. What financial product do you want to see broken down into a 3 stat format?

Transcript:

What's up, internet? My name's Ian Bloom. Welcome to a new video series. We're going to be calling this series Min-Maxing Money. So let me introduce you to the basic premise.

In Min-Maxing Money, we are going to be talking about a singular financial product, whether that is an investment account, a type of investment, an insurance product, or anything else that we might study in the world of financial planning. I'm going to be giving you some basic stats for that thing. We'll talk about the complexity or the knowledge required to use the product properly. We'll talk about the cost. How much money will this cost you, or what is the opportunity cost of using this product? Then we are going to talk about the time required to monitor or get the product or utilize it correctly because those are the three elements that you'll want to know.

If it has a high complexity, you're going to have to spend a lot of time and energy researching this or get a professional involved, which will increase your cost. The cost is important because this is financial planning, and we want to utilize our dollars properly. We want to min-max them just like min-maxing stats in D&D.

In the time category, it is important because your time is valuable. It is the one thing that I cannot get you more of as a financial planner. So if we are going to be giving up time on something, it better have a pretty huge financial payoff for you.

So those are the three stats that we'll be covering. I will also talk about the relative payoff of each product when it's being used properly within the financial plan. Now, I want to put a little asterisk here and say properly is important because just because you're utilizing an annuity or a certain type of investment, doesn't mean you're getting the most out of it. You may need to do some of that complexity research or get a professional involved to make sure that you're utilizing the product properly. So that is the rundown on this series.

I wanted to go back and redo some of the old school web cam grainy Ian recording for the first time on YouTube videos, because I thought that some of the topics were really important and the content really wasn't as good as it could be. So over the next two weeks or three weeks, you will get two of these videos per week. Then following that, we'll be back on a regular weekly release schedule. I wanted to get a few of these out so that I could remove some of the older videos on the channel, or at least usurp their throne, so to speak.

If you have any topics that you definitely want to see covered, make sure to let me know. I would love to cover the topic that is on your mind, whether that's anything from buying a house to some specific financial instrument, to something that may not even have a direct financial product, but might be a financial concept that you want to see covered. So just let me know about that. If you're a viewer, then I'm way more interested in covering something you're interested in than something I'm interested in.

I hope that you enjoy this series. The stats graphics will hopefully be very eye-pleasing, and the videos will be short, sweet, and to the point to make them easier to consume and to make the products easy to understand. Anyway, thank you so much for watching. I look forward to bringing you a lot of content over the next three weeks, and have a wonderful day.

Is A Roth IRA Worth It? l Min/Maxing Money

Ian talks about Roth IRAs and gives you the simple stat breakdown. What are the levels of complexity, the costs, and the time investments associated with having a Roth IRA?

Is Refinancing Worth It? l Min/Maxing Money

Ian discusses the three things about refinancing you should know and covers when refinancing is worth it. Have you refinanced recently?

Journey Home (Blog Post)

Transcript:

The sound of my FR-S’s engine is the only noise that permeates the stillness of the tranquil mountainside. My hand hangs out the window, feeling the cool air rush past it. I turn sharply at the next apex, relishing the force that carries my little car around the corner. I feel free. The engine carries me up the mountainside toward my family’s cabin. I can already picture the creek and the nighttime campfire. The vision causes me to press my foot down, moving up the mountain faster toward my destination.

Imagine knowing nothing of a career, not even dreaming it would exist, and then standing on its most sacred ground five years later. It’s awe-inspiring. Hana is the epicenter of life planning, brought into existence by George Kinder. With the goal of connecting the mental side of money with the meaning that we are looking for in our lives, life planning is an incredible way to work with clients. If you missed the previous blog posts in this series, please go read or listen to Journey to Hana and Journey in Hana. Those blog posts form the basis for this one and will provide great context.

The snippet of a story that I started this post with is both part of my vision statement, developed in Hana, and something that was a reality last week. My vision for the future of my life involves time in the mountains. I love being surrounded by nature, by familiarity and calm. I know that by having more of that in my life, I will be a more devoted friend, family member, and partner. It also inspires me creatively and refreshes me, making me more able to do the work I’m passionate about upon my return.

All of this came from a simple, meaningful question we were asked in Hana: “If you could design your ideal life...what would be most important to you?”

That question is the foundation for one of the conversations we have with our clients as life planners. It doesn’t just ask the client what is important to them now, but what would be most important to them if the restrictions were removed. It opens up a vision for the future. It allows the person responding to the question to create their perfect life, free from judgment.

I’ve asked this question to clients countless times since returning from Hana. It has served to deepen already-existing relationships, and get new ones started off with a deeper level of understanding. It has given me the fuel to “Light the Torch” for them and show them that their ideal life is possible, or something very close to it. It provides the motivation to get the work done that needs to be done.

You might be thinking “That’s silly, it’s just a question! It can’t do all that!” And you would absolutely be correct. Questions like this one are not powerful outside of context. What we also learned in Hana was how to set up the question and the space for its asking, how to listen when the client responds, and how to follow-up the question with more than just “Oh yeah, I’ve felt the same way!” All of these skills matter or the question falls flat.

There is, of course, much more to life planning than just that one question. That’s just the beginning. There are the Three Questions we use in the next meeting, there are obstacles to overcome, and innumerable ways to fine tune what the client is telling you. But, I chose to focus on this question for a reason.

This question has been the foundation for my work on myself over the last six months. Since I returned from Hana my life, like yours, has changed dramatically. The training in Hana was in January, which for most of us feels like a lifetime ago. That was back before we couldn’t see all of our friends or family, before we had to skip out on trips and outings we’d planned, and before an officer killed a man by kneeling on his neck, drawing attention to the systemic racism that has plagued our country. It was also before I knew whether my step mom would make it through her cancer treatments, before I got separated from my wife, and before my business surged dramatically, giving me a ton of new work to focus on. It was a different time.

Over the last six months I’ve focused on designing life the way I want to be living it, following that simple question. What does my ideal life look like? What things, people, or feelings are at the center of that world? Who do I want to be? How can I get there?

That’s what the Journey Home has been for me. It hasn’t been about literally getting on a plane and flying back from Hawaii. It hasn’t been about driving from the airport to an apartment I no longer live in. It most certainly hasn’t been about a physical location or a roof over my head. I am thankful to have that, though.

The Journey Home for me has been about reconnecting with things that I’d pushed away. There are aspects of myself that had, for good reasons, not been a priority in my life over the last few years. There are goals that hadn’t been able to be focused on while I was starting a business or going through my CFP® certification. My ideal life includes a lot of those things that had been shut away for years. Now that I have the time, freedom, and resources to start looking at that future, it’s been an absolute thrill to start working on it.

That’s what Life Planning and Hana are all about. The system for Life Planning is a necessary container, it creates the structure the planner needs to interact with in order to help the client do this work. But, the beauty of Life Planning isn’t the system. The beauty of Life Planning is the result.

The result is moving forward toward a life that inspires you. It’s vigor that can take you up the mountain toward the cabin you want, no matter what the turns look like or how the weather is that day. It’s vision that can show you what is possible and knowledge of the path that can get you there. The result is inspiration.

If you are asking yourself the question that I posed at the beginning of this post and the ‘ideal life’ is hard to see, or if you know what the ideal life looks like, but it feels almost dreamlike or unattainable, reach out to a life planner. We’re here to help you, because that’s what Hana was about. The Journey wasn’t about us getting back to the feeling of ‘home’, though we did get that. It was about us getting to learn how to life plan for you, so that you can find your own ‘home’ in your ideal life.

Journey to Hana

Imagine knowing nothing of a career, not even dreaming it would exist, and then standing on its most sacred ground five years later. It’s awe-inspiring. Hana is the epicenter of life planning, brought into existence by George Kinder. With the goal of connecting the mental side of money with the meaning that we are looking for in our lives, life planning is an incredible way to work with clients. The following blog post and two more to come will be focused on my Journey to Hana, my Journey in Hana, and my Journey Home which I hope will ultimately convey some of the substance of life planning itself and not bore you to death.

My journey as a financial life planner began in college. I was a psychology major at Appalachian State University. And like many other juniors, I was sitting through the “Careers in Psychology” course all too late. My mind had been made up until this point - I was going to be a therapist. I wanted to help adolescents sort their ways through the difficulties that I’d experienced in middle and high school. I saw the same problems that were increasingly prominent in my generation - increases in anxiety and depression. It was my inclination that my place to help was in that painful transition of puberty.

Until the reality of five more years of school was shown to me.

A Ph.D. is an incredible thing to have, but I no longer wanted one. I wanted to make a difference sooner. Five years is a long time to sit in a classroom not helping people, and I’ve always been more of an action-focused person (sometimes to a fault.) The reality of how few options I actually had was paralyzing. What can I do with a bachelor’s in psychology?

Like all good stories, mine does involve a partner. My wonderful wife Rebecca and I began dating that same semester. From the first few weeks we began dating, I remember remarking on how simple our relationship felt. The communication was easy, and we both enjoyed each other’s company. She even liked that I was a nerd!

During my time of crisis, she took me home to meet her parents. On that trip I met the second person in the Brody family that would change my life, Steve. Steve and I met in the same uneasy way most fathers and boyfriends meet, but I do remember feeling a lot of warmth from him immediately.

Rebecca and her mother left the house that evening for something, which left Steve and I calmly sitting in the living room. We were watching some show I wasn’t particularly interested in, but I was happy to just be sitting there. I’m sure we were talking casually, but I don’t remember much until the question came. “So...what’s your degree in? What are you going to do when you graduate?” What are you going to do to take care of my daughter?

I have no fucking clue. “I...uh...honestly don’t know, sir…” And I elaborated, as I always do. I’m a long-winded talker when I’m in an interesting conversation. I explained my current nervousness about the future and my lack of direction, a feeling I was unfamiliar with.

“Well...why don’t we go to my office tomorrow and talk about that?” He replied, calmly.

I had little idea what he meant by that. Rebecca had told me her Dad was a financial planner though, so it wasn’t altogether weird for him to want to chat about it and give me advice. It was a little odd that it was on a Saturday we’d be going to his office...alone…

Reader, I don’t know if you’re from the South, but where I live there are a lot of half-jokes told about protective fathers and shotguns. I believed he was intelligent enough to hide a body, too.

But what actually happened that Saturday morning is Steve showed me life planning. He showed me the future. He gave me a window into something that I would be good at, something that would help others, and something I loved. He changed my life. It all started with the question “What’s important to you?”

After a winding road to graduation, a boring sales job, and a lot of begging, I became his understudy. I was put through a crucible of his mentorship. License-getting in record time, mock client meetings, learning the processes, listening with intention, and hours upon hours of driving down a long, empty highway in the mornings and evenings. It all paid off though. I was thriving and learning, which was something I was very good at.

After six months of preparation, I started running my own client meetings. He wouldn’t let me do them alone of course, but if I booked appointments he made sure he was available to sit in on them. He would take tons of notes! The clients thought the notes were about them and the substance of the meeting, but they were really about all the things I could improve. We would spend as much as an hour reviewing after each meeting. And man, did I get better quickly.

Just over a year later, I was winning awards within the larger region for our company. I was blowing my competition out of the water...in sales. With my clients, I was constantly learning how to meet more and more of their needs and deepen the relationships. Oddly, the two always seemed related. Do the right thing and the money will follow.

It all changed when the fire nation attacked. Corporate consolidation, I mean. The large insurance company we worked for decided that it was no longer doing business with individuals, so we were given short notice that we’d be moving firms. A year and a half into my career and I was already on the move. The new company made a lot of promises. Almost none held up.

My motivation waned. Around the same time we were moved, a lot of the things that had been joyous and business-driving at the previous firm started to dry up. We used to teach these wonderful courses for employees at large tech companies, for instance. Those were gone. The inefficiencies of the transition and inept movements of management cost us. Steve and Eric, the other member of our team, had less need of me. As a result, I lost quite a bit of enthusiasm.

During this time I slowly moved through my CFP® education and tried to go deeper with my clients. My “numbers” weren’t stellar on the product side, but my fees for planning were going up dramatically. Even with the few clients I had in those days, I was making a decent amount and feeling very fulfilled in that role. That said, pressure from the office and structure of the company weren’t far from view at any moment over my 18 months with this new firm.

There was an incident that made me leave. I distinctly remember a conversation with my sales manager that went something like this.

“So, let’s talk about your numbers.”

“Well, sir, sure! It’s only the end of the first quarter, and I have $25,000 in planning fees already. I’m pretty happy with those numbers. Financial planning seems to be paying off.”

“Congratulations. I’m really happy for you...that said...because you haven’t sold any insurance yet, we’re going to have to put you in the Sales Starter class. The GA is worried you won’t make contract by the end of the year at this rate. Insurance pays the bills around here, you know that.”

What about the $5,000 that you took out of my fees?

And so I left. The situation was untenable. They wanted me to sell insurance, and I wanted to do what was right for my clients. A few months later I launched a firm with XY Planning Network. Granted, the transition was not as smooth as I would have liked, but the industry is set up that way. It’s remarkably hard to give a two-week notice in the financial services industry.

My new firm Open World Financial Life Planning was about serving my people, nerds, better. Life is in the title on purpose. I had been practicing a form of proto-Life Planning the entire time, and I intended to grow more into that. The first step was finishing my CFP® certification, which I did within six months. Then I focused on growing from the five clients I brought with me to something more sustainable.

There was stress in that, as you might imagine. I was grateful for my five clients, but I’d lost about that many in the transition in some form. That meant that income was quite a bit lower than I’d imagined. Anxiety about money and building a business are really one and the same, however. I’ll be writing a blog post about that soon too.

Then a big reminder about Life Planning slapped me in the face - XY announced that they would have George Kinder himself hosting a 2-Day workshop at the annual conference. I knew I had to be there. Revenue was still tight, so an extra thousand dollars wasn’t that appealing, but to go any other time would be much more. And it was very worth it.

At the 2-day I was introduced to the EVOKE methodology by George himself. George is someone who commands a room not with a booming voice, but with a bold smile and a calmness that is almost palpable. That said, the calmness doesn’t mean he doesn’t work. We were in the 2-Day workshop for about 12 hours each day. The work is largely introspective, focusing on an understanding of your own money stories and ideal future so that you can see the same in clients.

Then came the end of the two days, where George life plans a member of the class. In the middle of the room, in front of 70 others, I watched a colleague well up with tears at the vision of his ideal future. George painted a wonderful picture with his words, showing my colleague just how simple and clear it could be. I would later come to realize that is the essence of life planning, it’s not magic, it’s just putting exactly what your client wants in full view and clearing the roadblocks in their mind. But, as another colleague of mine described it “Watching George work in the 2-Day was amazing and humbling. How am I going to do that?”

It was like seeing my future. I wanted to do that with clients, and moreover, I wanted to help spread the word that it could be done for clients.

I left the workshop feeling determined. I was going to practice my own life planning and find a way to make it to the 5-Day soon. I knew it couldn’t be right away...I just don’t have the money. I need to develop the practice. I wish I could, I mean...this one’s going to be all XY people...

I got a text from my wife the next day, after recapping all of the feelings and sentiment with her, that said: “My dad said he’ll pay for us to go to the 5-Day in Hawaii in January. He wants us to get life planned together.” I called her immediately, trying not to cry. “A-Are you serious?”

Given that this post is about life planning, I’d be a hypocrite not to admit that I have trouble accepting help financially. I was given a sort of “Life Start Fund” by my parents, and sometimes it feels like accepting help beyond that is just too much privilege for me to stomach. That said, this was important enough that I overcame that reflex of mine in favor of what I knew I needed to be doing.

So we booked our trip to Hana, and set off on a journey I will never forget.

Look For Joy

I want to start off by addressing the obvious. Writing is hard right now. Creativity has been difficult for people across the spectrum of my profession, as we are seeing the same things everyone else is seeing - infections, job loss, and confinement. These things have their effect on our lives. That said, much like joy, creativity is something that you can latch onto in these difficult times as a reminder that removing one’s freedom of movement does not remove their freedom of expression.

Creativity and joy have a lot in common as it turns out. Both are things that have an aspect of intentional action and an aspect of emotion. Both are rare right now, but both are very much needed. So let me tell you some stories about joy from this week.

This week a client of mine asked permission to do something that was a part of his ideal life. He’s been seeking a dream car for a while and every time he talks about it, his smile gets a little bigger. This week he told me he found it. The Porsche 996 C4S that he wants is available.

Clients don’t come to me just because they want to be financially successful. They come to me because they feel a misalignment between their current actions and the life they want to be living. For this client, he was now living in alignment with where he hoped to see his life go, and it shone through him in pure joy. I told him he could have the car whenever he was ready to buy it. The light got even brighter. Then we began to figure out the details. Following the conversation, he was so excited that he emailed me pictures of the car! Which I loved, because I love cars and I love seeing my clients happy.

This week a separate client of mine came back to me with a simple statement. “I’m retiring at the end of July. Or at least, that’s my plan.” We sat down for the first time in a while with the intention of actually figuring out what was possible. It turns out, we’d made an accidentally amazing thing happen. His portfolio, last year composed largely of his employer’s stock, was diversified at the end of the year last year. It was barely down as of yesterday, which is amazing given market conditions. Better yet, we’d created an intentional cash reserve for when he decided he was ready to retire. He wouldn’t have to blow up his portfolio to step away from work.

The relief and joy that washed over my client’s face was heartwarming. This was the moment he’d been hoping for since we started working together. He could step away whenever he was ready, like at the end of July. Now we’re just going to work on the finer details of his retirement, such as which health insurance he’ll be taking. The money is all there, and so is the excitement.

This entire post may seem like a humble brag. “I’m so great, I help my clients do amazing things!” I do help my clients do amazing things, but it’s because they’re great. Not me. I simply wanted to take a moment amidst all of this chaos and change to highlight that amazing things are still happening every day. Life has changed, but it is not all doom and gloom.

Hopefully this post encourages you to seek out your ideal life. Look for joy. We’re all craving those highlights right now, and I’m sure if you shared yours, they would be celebrated.

If you aren’t experiencing highlights, let this be a turning point for you. Seek the personal or professional help you need. Make a plan for how to get those moments filled with joy. And if you don’t know how to make a plan, my colleagues and I are here to help.

Finally, I wish you all the best during these tough times. Stay safe and healthy.

Non-Stock, Non-Bond Investments

Ian covers some commonly-used non-stock, non-bond investments. What alternative investments do you have experience with?

Survival Tier Cash Flow

Survival Tier Cash Flow: Ian Bloom, CFP® covers the Hierarchy of Cash Flow and the Survival stage. Thinking about your cash flow in the survival tier, you should be prioritizing more income and reducing expenses so that you can afford your basic needs.

Transcript:

What's up internet? My name's Ian Bloom. Welcome to Nerd Finance. I'm your resident, financial life planner and huge nerd. In today's episode, we are going to be talking about this graphic that I just came up with. And it's going to be the subject of a couple of conversations we're going to have on this channel over the next three, four weeks. You see, this is a hierarchy of cash flow, and basically it's designed to help you think about where you are and what things you should be focusing on with your spending money. Now, what I want to emphasize is much like the Maslow's hierarchy of needs or the food pyramid, just because something is foundational and comes first like survival, it doesn't mean that you should never spend any money on extras if you're in the survival stage. But what it does mean is that most of your money, time, and energy should be focused on the thing for the stage that you are currently at.

So let's talk a little bit about that in terms that a nerd like me might think about it. The survival stage, this first stage is when you are level one. It is when you're first starting to get a handle on the games mechanics, and the things that you should be thinking about and focusing on in order to make sure your character doesn't die or put themselves in a very unfortunate untenable situation. You might be learning how to cast your first magic spells or do battle with an Orc. But in reality, what this looks like is maybe you're graduating from college, or maybe you've been out of college for a while, but finances were pretty hard for you. And so you're starting to figure out that your income needs to be greater than your expenses in order for you to ascend to the next stage, which is stability, or maybe you've been here for a while.

In fact, unfortunately, a lot of Americans are back in this position due to the pandemic for the first time. You see, survival is when you're focused on keeping the roof over your head. It's when you're focused on putting food on the table or paying the bills. And essentially, the thing that gets you out of the survival state is having a consistent income that is greater than your expenses.

Now, this may mean that your income needs to rise. Like you just lost your job and you need to find a new one, or you need that new promotion, or it may mean that your expenses need to fall. And expenses falling is one of the hardest things to do because you get used to the spending and all those things. Also, even though I said earlier in the video that you don't need to not spend any money on extras during the survival stage, because sometimes spending a little bit on yourself can keep you sane and rewarded, some people tend to spend a little bit too much on extras way too early in this hierarchy.

You see, extras are those things that are advertised to you all the time. And so they're very tempting to spend money on, but for survival, you need to focus on the basics, food, water, shelter. And probably electricity and internet in this day and age, let's be honest. It's hard to work without the internet. So anyway, for the next three, four weeks, we're going to be ascending through this pyramid and talking about the rest of the stages. And I hope that this conversation is interesting to you. There's a lot to talk about here. Cashflow is something that I deal with as a financial planner all the time. So if you have questions, make sure to leave them down below or send me an email or just book an appointment on my website. Anyway, I hope this video was helpful to you. Have a wonderful day.