|Credit: Vichaya Kiatying-Angsulee|
- Owning a bunch of stocks and real estate without having enough cash on hand is like having a whole bunch of macaroni and not enough cheese. The first time you face some financially significant, unforeseen expenses or are forced to live through a downturn in the stock or real estate market, you will find it a lot less pleasant trying to make ends meet with potentially depreciated stocks or illiquid real estate than you would if you had adequate cash savings in place. It could just be me, but if I’m going to err on the ratio of macaroni and cheese, it’s going to have a little extra cheese.
- Having a bunch of cash, CDs, and bonds, but no stocks or “growthier” assets to keep up with inflation, is like serving oatmeal without raisins, butter, or brown sugar. Sure, the oatmeal may initially make you feel nice and warm, but it’s not going to be enough to tide you over against long-term inflation.
- Saving only in retirement accounts like 401(k)s and Traditional IRAs, but not saving any funds in taxable portfolios or brokerage accounts along the way, is like stockpiling nothing but hot salsa for your chips. It’s good that you’re saving up, but it’s going to burn from a tax perspective when you need assets to supplement your cash flow in retirement (withdrawals would be taxed at ordinary income tax rates). Wouldn’t the taste of a little milder salsa or maybe some queso from a taxable portfolio or brokerage account help break up the tax heat in retirement (withdrawals would be taxed at capital gain income tax rates)?
- Keeping a bunch of debt without purposefully striving to extinguish that debt is like resigning yourself to the fact that your salt shaker has a gaping hole in the bottom of it without doing something about it. Plug the hole in your salt shaker and your monthly cash flow by paying off debt and eliminating its nasty monthly strain on your finances!
- Having a great investment strategy without addressing your life insurance, disability insurance, property and casualty insurance, or estate plan is like painstakingly picking out all of the best strawberries for a nice fruit salad, but closing your eyes and randomly selecting all the other types of fruit required to complete the dish. It only takes one really bad banana to mess the whole fruit salad up. So remember that it is crucial to address all parts of your financial plan and examine all components of your overall financial security.
- Trying to plan for retirement in an afternoon or completely fix the path your finances are headed down in one quick swoop is like trying to make a Thanksgiving turkey five minutes before company arrives. Developing and implementing a successful plan that helps you achieve your financial and life goals is more like making that perfect turkey, a six layer cake, or a really delicious stew; it takes time and care.
I really do enjoy cooking, and most days, I really enjoy financial planning. Maybe that’s because in many ways they are not that different. In terms of being a chef or a wealth advisor, I know that I’m not yet Bobby Flay, but my recipe book and cooking techniques are growing every day. As always, please don’t hesitate to let me know if you or someone you know needs “a cup of sugar” and think I might be able to help.
Finally, you might have noticed I titled this post “Two Recipes for Success.” If you’ve read this far, you’re in luck! Here’s a second recipe, and it’s one of my family and friends' favorite meals I make:
Tom’s “Barcelona Chicken”
Sweet Baby Ray’s Original Barbecue Sauce
Cholula Hot Sauce, Tabasco, or Hot Wing Sauce
Salt and Pepper
1) Preheat oven to 375 degrees.
2) Take chicken breasts and remove excess fat. Lightly season with salt and pepper on both sides and lay in a baking dish. Drizzle chicken breasts with Cholula (or Tabasco or hot wing sauce), Grandma’s Molasses, and honey. Generously smother with Sweet Baby Ray’s.
3) Place chicken in oven for 45 minutes.
4) Dice tomato into little cubes.
5) Slice onion and sauté in skillet with a little olive oil. If onions are very strong, throw in a little pinch of sugar. Sauté until slightly browned and then remove from heat.
6) After 45 minutes, remove chicken from oven and cut open one chicken breast to make sure it's almost done cooking. Then lay one slice of Velveeta cheese on each chicken breast. Toss back in the oven for 5 more minutes until the cheese is nice and melted.
7) Remove chicken from oven and serve on plates. Top each chicken breast with a few of the diced tomatoes and sautéed onions.