Thanks to your support and reach, we have received some very exciting media exposure over the last few weeks and months. I wanted to share two pieces that have appeared in the main stream media over the last month. The first is an article from the Wall Street Journal’s website titled, “PRACTICE MANAGEMENT: Simple Works Better Than Spinning Heads”. This article was written by a fan of the show, and it is a profile of my firm. It ties in perfectly with a show we did a few weeks ago titled Bringin’ Simple Back, and I think it really captures the message we try to convey each week.

The second piece was a segment from WSB TV with consumer reporter Clark Howard. It is a short video clip on Free Extended Warranties offered through credit cards. Click on this link to view the video.

Thank you for your support and let’s continue to spread the word of making intelligent financial decisions!

If you have been listening to this show for any length of time at all, you have no doubt heard me sing praise of the Roth IRA. The Roth IRA is an amazing planning tool for those individuals who qualify. Not only do you get tax deferred savings for retirement, but all of those earnings actually become tax FREE if certain requirements are met! To make the deal even sweeter, there are no Required Minimum Distributions at age 70 and a half like there are with qualified retirement plans or other types of IRAs. But maybe you are one of those individuals who is no longer eligible to contribute to a Roth IRA due to income limitations. Is there a way for you to get a piece of the tax free pie? Or perhaps you are maxing out your Roth contributions, and you feel that the Roth contribution limit ($5,000 for 2009) isn’t quite enough to provide for the retirement of your dreams. Is there a way for you to sock away more and still receive potentially tax free growth?

The answer is YES! Yes there is! The way to do this through the relatively new Roth 401k option offered by many employers. If your employer doesn’t offer a Roth 401k or 403b option, then take notes as you listen to the show and it may be worth it to schedule a meeting with the decision makers at your firm.

Before I get into all of the benefits available through a Roth 401k, you may be asking why Uncle Sam would be willing to fore go all of that potential tax revenue? The answer is because the federal government has realized that they are in trouble. As you’ve heard in previous shows, Social Security has some very serious problems right now, and it’s only going to get worse going forward. This, coupled with the near extinction of defined benefit retirement plans, has allowed the government to realize that the burden of providing income for retirees has shifted from government funded programs and employers to the employees themselves. Therefore, to encourage individuals to get excited about saving, Uncle needed to provide an enticing incentive to defer gratification into future time periods. Not having to pay taxes seems like a pretty big incentive to me!

So what’s so great about a Roth 401k? Well, let me start by telling you the one caveat: you do not get a current tax deduction (actually a decrease in taxable income) like you would through a traditional salary deferral into a regular 401k. Therefore, for individuals in the highest tax brackets and depending on retirement assumptions, there is an argument that a traditional 401k may make more sense than a Roth 401k.

Now to the exciting part. As I mentioned above, for 2009 the most you can put into a Roth IRA is $5,000 ($6,000 if you are over 50) if your Adjusted Gross Income is below $166k MFJ ($105k Single). However, if your employer offers a Roth 401k option, you can put away $16,500 ($22,000 over 50) with NO income limits! Contributions are made with after-tax dollars and the assets in the plan aren’t taxed at retirement if they are held in the plan for at least 5 years and not withdrawn before age 59 and a half. At retirement or separation of employment, the funds can be rolled into a Roth IRA for further tax free growth (also an amazing estate planning tool!) and are not subject to Required Minimum Distributions. This plan is still ERISA protected and follows the same guidelines as a traditional 401k.

Considering the current state of the economy, our budget deficit now, and projected future government spending, I feel it is safe to assume that taxes are going to go up. If we feel strongly enough that taxes will be higher in the future than they are now, it is nearly a no-brainer to pay tax now on Roth 401k contributions and then reap the tax free benefits at retirement.

Also as you listen to the show I talk about the new Visa Black Card. I’ve been getting many questions from individuals receiving this ‘exclusive offer’ for this new luxury card. I wanted to make clear that this is NOT the American Express Centurion Black Card made famous by the super wealthy, celebrities, and James Bond.

I also share some amazing listener comments from last weeks show. It never ceases to amaze me how intelligent and insightful listeners to this show are. Keep the comments coming!

Sometimes individuals have those moments where they wake up in the middle of the night, and it hits them! It’s that thought, or idea, or realization that is so thought-provoking and so revolutionary that they can’t shake it. This is what happened to me a few nights ago!

I started thinking about the economy (as I often do) and about where the markets are currently and where they could possibly be heading. Are we in the recovery? Have the markets settled back into a nice equilibrium? If we are starting a steady upward movement, how is that possible when one considers all of the government obligations and the health of our overall financial system? What about Social Security, Medicare, and the trillions of dollars of debt?

After trying to wrap my head around all of these moving parts and complex systems, I honestly got angry! So then, rather than focusing on the uncertainty and confusion, I shifted my thinking to how did we get into this mess? And I’m not talking about excessive leverage, credit default swaps, black box investing, short-selling, crazy mortgage products, sub prime, or any number of ‘reasons’ for this financial turmoil. I wanted to figure out on a macro level, how in the world did we get here? How did we let America the Beautiful get here?

Then it hit me, and I mean it hit me like a ton of bricks! At first I got mad about how political our country has become, but then I realized that the partisanship is just smoke! Republican, Democrat, left, right… it is all smoke! The fire is actually something very very different! I want to go ahead and warn you, however, this theory and these thoughts are controversial, and it will not surprise me one bit if this upsets some of you. BUT, I think if you take a step back, and remove your individual self from the equation, you will realize how eye-opening this realization is!

As I was thinking and studying, I began to realize that there are some incredible correlations between the generations of the last 100 years and the cycle of personal wealth. Due to my background of working with wealthy individuals and managing wealth in general, I feel that I am uniquely qualified to make this connection.

Before you can truly understand what I am talking about, though, you need to understand what successful individuals have in common. It is these exact same principles that made us extremely successful and prosperous as a country. As you listen to the show, I will read a few excerpts from the bestselling book The Millionaire Next Door including this one:

“The large majority of these millionaires are not the descendants of the Rockefellers or Vanderbilts. More than 80 percent are ordinary people who have accumulated their wealth in one generation. They did it slowly, steadily, without signing a multimillion-dollar contract with the Yankees, without winning the lottery, without becoming the next Mick Jagger. Windfalls make great headlines, but such occurrences are rare. In the course of an adult’s lifetime, the probability of becoming wealthy via such paths in lower than one in four thousand. Contrast these odds with the proportion of American households (3.5 per one hundred) in the $1 million and over net worth category.”

As this passage describes, 80 percent of millionaires are first generation. So, with that being the case, what happens to the family fortunes? As you listen, I share a great case study that I think will help you understand exactly where that wealth goes.

‘But Brian, what in the world does this have to do with the economy, how our country got into the mess, and more importantly, what does this have to do with me?’ Well, I thought you would never ask

I want you for a second to think about the ‘Depression-Era’ generation. What were some of their common characteristics? They lived well below thier means and wanted their children to have a better life. But what did this ‘better life’ mean? Well, for most of them, it meant they wanted their children to live in fine homes and have a life style of consumption. HOWEVER, while working hard and saving and trying to make the world better for the next generation, that younger generation (the Baby Boomers) forgot or neglected to remember the elements that were the very foundation of what their parents built (aka the amazing and innovative powerhouse country of the United States). These baby boomers came to a point where they wanted to reject the life style of thrift they had grown up in and were no longer willing to subject themselves to a self-imposed environment of scarcity.

So then what were some traits common to this Baby Boomer generation? They lived lives with high levels of consumption, were under accumulators of wealth, subscribed to ‘head in the sand’ policies, and have somehow developed this idea of leaving the next generation to pick up the pieces. Somewhere along the line, individuals in the ‘Baby Boom’ generation lost the foundation that their parents subscribed to that allowed them to build this country to what it has become.

So how does this relate to wealthy families? In many cases (and not all, I know, there are absolutely some exceptions out there) the first generation builds the wealth, then the second and third generation blow through it. I can’t help but feel like that is EXACTLY what has gone on in America. The older generation, aka Depression-Era, lived below their means and had an amazing work ethic and built wealth and a wealthy country. Now, nearly two generations later, it would appear as though that wealth has been squandered.

What can we do to change it? My thought is that we can return to those same ideals that originally made this country great! We can begin to save for the future, live below are means, and defer gratification into future time periods. But I also want this to be a movement! I want to know what you think about this topic. Let’s turn this weeks show into a forum for discussion, whether you agree or disagree, leave a comment and lets see if we can come up with some effective ways to make a change!

This week’s show comes from two of my favorite newsletters, Consumer Reports’ Money Adviser and Kiplinger’s Retirement Report. These publications are great and I thoroughly enjoy reading them each month. The three topics I’m going to cover today are some of the best bargains that have happened as a result of the recession plus some buying tips, the increase in litigation against brokers and money managers and why the process might not be as easy and straight forward as you think, and then I want to close out by reminding you that part of reaching financial independence is optimization.

So it comes as no surprise that the economy is cyclical by nature. There are periods of expansion and there are periods of contraction. What you may not realize is that the nature of being a consumer is also cyclical. Just as the best time to begin investing is during a trough in the economic cycle, the best time to purchase big-ticket items occurs in the trough of a consumer cycle. In the June issues of Consumer Reports’ Money Adviser, the cover story was Best Recession Bargains. The article explains that if your finances are in good shape, now may be the time to make those purchases of big ticket items that you have been putting off. The article walks through buying tips for: televisions, automobiles, travel, digital cameras, homes, major appliances, clothing, cell-phone service, furniture, gas grills, desktop computers, and fitness equipment.

Some highlights to listen for include using online shopping bots (PriceGrabber.com), watch for seasonal sales, determine what and how much you truly need, and make sure you know all costs including ongoing maintenance. Another strategy to save some extra bucks that I LOVE is haggling. But just like dating, this takes a good technique to be successful. Listen for some of these tips:

• Play nice – Don’t demand discounts or give ultimatums. Simply ask, can you work with me?. Go for the ‘kill ‘em with kindness’ approach.

• Know the merchandise – Goods with limited shelf lives are more likely to be negotiable.

• Deal for extras – If you can’t get them to come off the price, ask for accessories or waived shipping, delivery or installation.

• Visit when stores are quiet – Salespeople will be able to show you more personal attention when there are less distractions around.

• Speak to authority – If the salesmen isn’t the one who can provide discounts, politely ask to speak with the individual that can.

• Carry cash – Sometimes extra discounts are available if you pay cash because the retailer won’t have to pay a transaction fee to the credit card company.

The second article I found particularly interesting comes from Kiplinger’s Retirement Report. It is titled Fighting Your Broker is an Uphill Battle. This article explains that over the last 12 to 18 months, arbitration and litigation hearings against brokers and money managers have increased. The process isn’t as easy as you may think, however. To win a claim, you must show the broker engaged in some misconduct. Simply picking poor investments won’t win the case. As you listen , I will also share a personal story of a client whom I tried to assist in an arbitration hearing and realized first hand that the process wasn’t as straight forward as I thought it would have been.

To close out the show, I want to remind you  that this recession has taught us many things. The one thing you will notice that I have been harping on is keeping adequate cash reserves. I want to remind you, however, that just because you have cash reserves, you shouldn’t have to necessarily forego all growth. This is what I meant earlier by optimization. I’ve already told you about online savings accounts (FNBOdirect.com or Dollarsavingsdirect.com), but I also think  you should know about online checking accounts. There is a really great website, CheckingFinder.com, that will allow you to search for institutions nearby that offer high yield checking. These accounts pay high rates on balances up to a certain limit set by the institution. When I did a search on my zip code here on the south side of Atlanta, there was one bank 31 miles away that will pay 4.5% on the first $50k and then 1.25% on amounts above $50k. Another institution 33 miles away offers 4.18% on the first $50k and then 1.01% above that. To qualify for these rates you must meet certain requirements that vary by institution. Generally, you must use your debit card 10-15 times per month (this could be for gas, groceries, etc.), receive direct deposits (could be set up to come from your paycheck of even another account at a different institution), and get your statement by email.

Remember, please,  only implement these strategies if they make sense for your specific situation. There is a fine line between optimization and micro-managing. A $1,000 high yield checking account may not be worth the effort.

I really hope you all like the new site. If you would like to receive an email every time we post a new show, sign up for our FREE membership. Not only will you get email updates, but you will also have access to our 12 latest shows and show notes.

Our Premium Member section is also up and running. If you REALLY want to go beyond common sense, you should check it out.

As always we love to hear your thoughts and feedback. If you really like what we’re doing, drop us a line on iTunes. Every positive comment helps!