Financial Planning and Retirement by George Block & Jim Montrella (2014)


[introduction, by Don Heidary]
Jim Montrella has coached over a hundred national age group top 16 swimmers including numerous national age group record holders. His swimmers have set two world records, 21 American records, and won over 50 national titles. He placed eight swimmers on Olympic teams earning eight medals – four gold. He has been recognized as an ASCA Coach of the Year two times, named as an Olympic Coach in 1976 and is an ASCA Hall of Fame Coach.

George Block is a former USA Swimming Vice President, ASCA President and current World Swimming Coaches Association President. He has a history as a coach and is equally impressive in his aggressive advocating for pressing issues facing our sport, issues which ultimately affect us all. I’ve had the great privilege of sitting in meetings with him over the past few years and can’t tell you how impressed I am with his knowledge, passion, and unparalleled dedication to the sport. And just personally, this is such a serious topic and if you think about the thousands of coaches in the sport and the number of coaches in this room, it is a reality and you couldn’t have two greater people talking about it than these two. So thank you very much.

George: And thanks for being here and thank you Don. This is one of those overlooked topics and people don’t want to deal with this topic this week because. I’m glad John Leonard brought us to do this and we’re talking about it because it is really important and I’m also delighted to see a perfect mixture of young faces and experienced faces here because that’s what we need in this room.

So my deal is this is really simple, because it’s just from a coach’s point of view. Neither of us are financial planners, neither of us are accountants; we’re just old coaches. And so that means there’s only two keys to doing it. For now, key number one is to spend less than you make, period.

Jim: I want to say a couple of words before we get into the outline. I’ll repeat the last two things George said, but a little bit different – we’re not selling you anything. We’re not here to sell you anything except your own security, the security of your family, security of your loved ones. We don’t have any auctions for you. We don’t have any stocks we’re recommending. We are just two guys that realized we needed to do something for ourselves. And a little quick background before George goes into the outline.

I was able to save a few dollars. That was the start. But I wasn’t really planning anything for my future. I was single at the time and, didn’t care about anything else. And Peter Daland, God bless him, walked up to me one day at a swimming meet and he said, “How much did it cost to buy a new club?” and I told him. He said, “You know, you’re the worst thing that happened to our profession in years.” Because I wasn’t charging enough, I wasn’t looking out for myself. I was selling it too cheap. And I thought, well, I’ll show you Peter, I’m going to keep my prices where they are.

And then I met a woman, a world record holder in 800 meters freestyle 30 or 40 years ago. Her mom got me started to saving on a regular basis. And at that point in my career, a lot of my friends were in teaching. The state teacher retirement system was doing a great job for them. But if you’re a coach and a professional coach, and that’s the only thing you’re doing, you need to kind of look a bit further because nobody is going to help you. The government is not going to help you. Social security is not going to be enough. And so that’s why I volunteered to help out here, looking at my own background, how I got started.

George: Well, the second key is to invest regularly. Take whatever that amount is, no matter what and every month, invest it. And so I said okay, there really are three keys and the third one is to start early. You can make it up late, but it’s just a bear. And that’s why I’m glad to see young folks here. So, the idea is to get started and start managing all of our personal finances because all of us want to retire at some point before we die. And, you know, I know I was one of the guys who said I’ll be at my desk, just carry me out of here, and then things changed.

I decided I wanted to go out vertically. You know, and you hear all of the typical excuses, I don’t make enough, I have too much debt. I’ve got student debt. I bought a car, I bought whatever, you know, I’ll get around to it. I don’t know how. But you don’t know how to give yourself a physical; you don’t know how to build your own car. And we all go to other experts when we want those kind of things and you’ve got to do the same thing here.

So this is a picture that Chuck stole yesterday and it’s just focusing on saving early. So that – this first line is two people that started saving early. And the dotted line breaks off and they call her Susan. And you don’t have to write any of this stuff down. It’s all going to be available, free download on the ASCA site. She puts in $5000 for 10 years, between 25 and 35 and then stops. And so she is that dotted line going out.

And so, that $50,000 investment at the end is $600,000. And the other line, the guy keeps investing $5000 a year all the way to retirement age and he has got $1.1 million. And then there is a guy, Bill, who tries to start late and so he starts at the 10 year mark and he invests $150,000 and he is down at $500,000. And so this is just showing you investing early is the critical point and investing early and staying with it is really how you get a million dollars and not that that will mean anything by the time here at our age.

On this chart the first column is – and we’re just putting you know – you’re putting $1000 a year, which is $83 a month. And I just assumed 8% because you can get 8% if you’re being robbed, really. And so some of you start at 25. The first column, some of you started at 35 and some of you just did it for 10 years.

And so the total amount, somebody put in if they went the whole way, 40 years, they put in $40,000. Some of you did for $30,000; some of you just did for 10 years and the value that that has at age 65, so again just start young. It’s just an excelled start. Another example – and these are all – none of these are assuming miraculous interest rates. I just did them at 6%, 7%, 8%, just so you could – I wasn’t doing 10 or 12. I wasn’t trying to do real market returns or anything hopeful; just ultra conservative so you could say what it would look like. But the 10 year difference and when you start is just amazing.

And so, again, reminder – and I do this with my team all the time if it’s important, I tell them 42 times. They’ll say coach, are you giving lecture 103 again? Yes, I’m giving lecture 103 – 103A or B, it’s 103A. Okay, they know what I’m talking about. So, spending less than you make and you know, I always encourage you to spend a lot less and people – well, how do you do that? How do you make it from pay check to pay check. So the question is really how do we control our own spending. So this is just my take: the biggest place we spend money is on housing.

Buy a less house than you can afford to buy. But that doesn’t mean that you put yourself in a scumbag neighborhood. You know, you want your kids to be in good schools, you want the investment of your house to appreciate, but just less than you can afford. But it will be plenty that you need, but less than you can afford because that’s the biggest place where you can save money. There is a ton of rules of thumb on buying a house, if you young guys are starting.
And you know, every place I looked, I found a different number. This is all based on take-home pay, not before deductions. But, I saw everything from a third to 30%. The feds, all the mortgage guys use that 28%. They look at your home equaling two and a half times your annual income. That’s sort of the gold standard. Dave Ramsey is really highly conservative. He is at 25%. So everybody is sort of in that ball park. But the lower you can make that number, the more you’re going to have to do something with the rest of your life.

Jim: Along with mortgage, I’m going to back up just a little bit. But I think everything that we’ve heard about, buying a home is very important. I would guess that a whole lot of people here, at least 50% haven’t bought a home yet or you might be thinking about it, here at the beginning levels of looking at a home. I want to back it down even more simple. I have a daughter. She is divorced, single parent mom, two children, eight and 12.

If I can just get her to put $10 a week, $40 a month and keep it building up, I’m going to be happy. She says she can’t afford it. I saw a Starbucks cup on the floor a moment ago. I won’t point any fingers. But if you took a regular coffee instead of the Starbucks, you can find $10 or $20 a month.

George: A day!

Jim: And you have to say what can I do without to get started on a savings program? Most of the time, and now I’m going to step ahead just a little bit, but it will be behind the mortgage discussion. We need to have an independent financial adviser. But they’re not going to look at you for the most part unless you’re a friend of the family and that they already have the rest of the family or you maybe, have five or at least 10 grand would be helpful.

A financial adviser, a professional person who knows the business, like we know coaching; we’re good at it and we search out other avenues to get better. A financial adviser is a specialist in their area and there’s no doubt will encourage you to find a good financial – independent financial adviser; not necessarily somebody to sell stocks. I wouldn’t go to the major brokerages and I go to a financial adviser.

Once you get five or 10 grand, they’ll probably take you on. But it’s going to take a while to get there. But as we’ve already pointed out, starting saving earlier, set it aside and you don’t touch it. Or, if possible have it taken out of your check, independently go straight to savings – every check. That’s the way to get started. And as I indicated yesterday when Chuck asked a question, if you just simply look at earning 8%, and you keep that 8% building over eight years, whatever you’ve started with will double. And it’s compounded, it gets bigger. I’m just giving you more reasons in a simplistic manner to echo getting started earlier. I’m going to let him go on with the mortgage and then I might chime in again.

George: Thank you, sir. And part of the independent help means you’re paying for that advice.

Jim: I’ll kick off here a little bit here. When you first get started, let’s say you only have 10 grand and it’s with the financial adviser, with independent financial adviser and I would suggest conservative independent financial adviser. They may charge you about a percent and a half on your $10,000 for their advice. But you get to $40,000 or $50,000 and they’ll probably only ask you to pay a percent and a quarter. If you get to $150,000 – $200,000, maybe they’ll only want a percent.

And when you look at it as I just described and George has said too, starting young, as you build up that retirement benefit, you get to half a million to a million, there may be only 1%. And then if you keep going with half a mil to a mil, they may only want 0.75% for their advice. That kind of a plan encourages them to help you earn more money because then you don’t pay them as much percent. So it’s a win-win when you have that kind of a set up.

They want you to earn more and you know, in a way you could say well – they earn less. But if you look at the numbers, they’ll earn more. But that’s okay. If they can earn more and you can earn more, you’re both ahead of the game. So again, more echoing – conservative financial – certified planner/adviser.

George: Certified means CFP, Certified Financial Planner. It’s a national designation, requires training, testing and there’s an association of independent financial advisers meaning they’re not working for something where they’re trying to sell you a product, but you pay for their advice. You just Google it, you’ll find them. So my second thing is something I tell my kids all the time. So you know they all hate this lecture.

But you know, buy a used car. You want to dump the depreciation on the other guy. Replaced cars lose the most money as when they first cross the border of the dealer’s lot to a public street. That’s 15% off the top at that point. My personal bias is the best value, is to get a high end car that’s certified because you do dump the depreciation, but you retain the value of a high end car. You’d retain the value of those high end warranties. Financing – I’d say 60 months max and now they’re stretching them out to 72 and 84. They want you to own this car and pay interest on it forever.

I encourage my own kids that catch is better. I don’t want to pay interest on an asset that’s depreciating. If you pay interest on a house, your house is generally going to appreciate over time. But the car is going to depreciate for 40 or 50 years, then it will start coming back as a classic. But you know, it’s going to depreciate. I don’t like paying interest when the asset is going down.

Other necessities, clothes and furniture, you know especially when you’re starting out, you can get some beautiful furniture at high end consignment stores. My daughter is way cheaper than I am and now she is running her own law firm, bought her prom dress at a consignment store. I mean she got it because it matched the fuzzy tennis shoes that she was wearing, it was the same color or something. But I was really thankful to that when I saw what it cost.

One of the places where people financially bleed to death in America is eating out. We all bleed to death there. Stop eating out. Lunches out, breakfast out, Starbucks out, dinner is out. If you can eliminate eating out, you can save a lot of discretionary cash. So this is just rule of thumb stuff. And I’m just throwing it out there for young people. So if you look at your gross annual income, no more than 8% should be – no more than 8% should go to a car loan, a student loan, a credit card or to your utility bills. And sometimes man – I’m at 15% of all of those. Then that says you’re not getting paid enough. You need a different job.

You can work on the expense side and you can work on the income side. So if you see the same percentage is on all of them, but it’s all a much higher number, that’s shows your income is too low. Credit cards – you know, I encourage people to cut them up. You know, you get basically the same benefit with a debit card and it’s automatic and you avoid debt. And for any young person who can avoid debt, avoid debt because there is no investment that I can think of unless you’re going to invest maybe in college tuition, is that 18% and that’s what you’re paying on credit cards. And so not paying off credit card debt is like gaining 18% returns.

I was consulting with a college last week and I had to explain to a university that the fastest way to make money is to stop losing it. And they’re just bleeding to death in a bunch of places they didn’t need to bleed. So then the key number two, once you’ve created some cash, is you invest the difference. Whatever you create monthly, invest the difference. And sort of the questions then become how and as Jim was talking about. You know, and the second half of it is do it regularly very month, automate it like Jim said.

If you can, have it pull straight out of your pay check, straight out of your bank account, all those things make you a better citizen. So what we’re actually here to talk about is retirement and then how much to invest. And I know – you know, when I had your hair color; I hated to see these numbers. But here is sort of the truth. The rule of thumb is 10% as everybody will tell you. You need 12% to retire at more than you’re making now or equal. And my suspicion is that at some point down the road, we’re going to have a big inflationary hit. And I just say this from college economics and watching politics; we’ve pumped all this money and continue to pump all this money into the economy.

It takes both real financial skill and real political skill to pull it out. And it takes financial will and political will to pull it out. And I don’t know that we have that in our country. And the easiest way for a politician to lower the debt to lower international bond debt to get things – to allow inflation to tick up. And you can inflate it away at maybe 9%. As a politician it is way easier than if you can pay it off. And so it’s just my suspicion that – and I apologize to my kids all the time. I am sorry that our generation is leaving a mess for your generation to clean up.

But your generation is going to have to clean it up and so I think you’re going to have to invest about 15% to keep up with inflation. That’s just my political guess. I don’t know where you are on that.

Jim: I absolutely would concur. One thing I want to – I think I’m going to back up a little bit in order to go forward. I think it’s really important that when you think of savings, you think of it as paying yourself first.

That’s a whole another subject. Talk to your financial adviser. I’m a little ahead of myself. When you get the check or even before you get the check, automatic – money being taken out and put them in your savings more in an investment account. You pay yourself first, then pay your utilities. Pay yourself first 15%, 20%, any percent that you can get. 5% is fine. And if it’s every week because you get a weekly check, do that. Make it automatic. Then pay your utilities, then look at the other credit that you may have built up at least to be paid off. The utilities, you want to pay first because they’ll hurt you the most. That’s really important and you’ll keep good credit. And then one of the little side corollary is on credit card. I think sometimes credit cards are good if you need to pay them off every month. Don’t go over what you can’t pay off at the end of the month. That can be a real service to you. It’s a bookkeeping service if you get it every month for free.

At the same time, don’t go over what you can’t pay off. The reason I say that is if you have a credit card and the limit is X thousand, that’s actually a credit reference because credit referencing agencies can utilize for you to show that you’re a safe bet in case you have to borrow money in the future. And so as you gradually continue to pay those off every month, you can go back to that credit card agency, that credit card company and say I’d like to raise my limit from $1000 to $2000 or $2000 to $20,000.

They’ll say, well sir, we see that – excuse me, I’ve been with you this long. I’ve paid it off every month. This is what I own. I feel you should do this and if you don’t want to do it, I’m going to another credit card company. And they’ll go, don’t do that yet sir. You can get that increased even though you never use it and that’s a key. Don’t ever use it unless you know you can pay it off at the end of the month. That helps build up your credit for later on and you might have enough money to buy that house or that car.

George: And don’t pay it off a day late; you pay 18% for the privilege of paying a day late. So again, retirement – here is the deal. You can borrow – like Jim was on – for any purpose you want except retirement. You can’t borrow to retire. You can borrow to go to college, you can borrow to buy a house, you can borrow for a car, you can’t borrow to retire because at the end of the retirement, you’re room temperature.

So yeah, again, absolute minimums, he said five, I say eight, close enough to argue about. You know, 15% – you can retire at 65. Once you get – once you’ve saved eight times your annual income, once you’ve got that saved in an investment, that’s sort of the absolute minimum you need to be – feel like, okay, I can retire, but you’re not really safe. Once you’ve saved 15 times your annual income, you know you can retire when you hit 65. And once you’ve saved 25 times your annual income, you can retire now.
You can say, dude, I’m out of here. So other things that I think you need to do – you need to have a rainy day fund. And a rainy day fund is a measure of your risk. It’s a measure of your income risk. So if you’re one of Jim’s friends and you’re working in a state school system and you have tenure, your income is at very little risk. So probably three months of income saved is plenty of rainy day funds. If you’re building your own pool and starting your own club and putting yourself at financial risk, well, you may want to have 12 months in a rainy day fund before you start that because suddenly your risk went way up.

And my rule is that you see opportunities with your head and you feel risks with your gut. And so you’ve got to learn to think with your head and listen to your gut. America’s biggest worry now is no longer retirement or healthcare; it’s how do they pay for a kid to go to college. And in that same report, it said more Americans have given up on the hope of ever being able to pay for their kids to go to college, they’re saying they’re on their own.

My rule of thumb was, save a third, borrow a third, pay a third. And I’ve had three kids going through and you really can’t pay a third because once they’re gone, they’re not eating – driving the car, all those – you really have that money to pay. If more than a third that really jacks up student debt. So if you can keep it to a third or less, you can get out without debt, that’s the best thing you can do. And probably for most coaches, a 529 plan is probably the best way to save for college.

If you’re a high income person, I probably wouldn’t say that was the case. But if you’re a high income coach, you’re probably not in this room right now. Ted Hesburgh who was the President of Notre Dame when I attended there said the biggest gift a father could give their children was to love their mother. And the second biggest gift you could give was a great education. And so both choices really are up to you, but if you can give them a great education, the number three thing is to start with the college fund.

I used to have an opportunity fund, so that you didn’t live with a bunch of regrets, that you’re squirreling some money away so if a great real estate opportunity comes up or the opportunity to buy into a great business or maybe I’m going to build my own pool and start my own club or – man, this is a great car, I’ve been wanting this car forever, I’ve got some money to take advantage or put it down payment – all the range of opportunities that come into your life – it’s not an emergency. There’s a difference between emergency and opportunity. You don’t use your emergency fund to take advantage of an opportunity because as soon as you do that, emergency will hit. Murphy is the hardest working person there is. But you want to have something that you can take advantage of opportunities with.

Jim: I want to mention something about fear, because fear definitely played a role in me wanting to save more. About 20 grand, maybe saved up and them I’m going to get married and I’ve got two children. I didn’t complete my bachelor’s degree. I just got married, I picked up two kids, I’ve got no bachelor’s degree. I earned a small amount of money – not much saved. I had a great deal of fear very quickly. What were these kids going to be, where are we going to be in four years, where will we be in eight years? Where will we be in 12 years? Some of you have youngsters right now, some of you maybe recently married or thinking about it. It’s a huge responsibility and you know that it’s going to take at least a quarter of a million dollars to raise your child from zero to 18, at least a quarter of a million to raise your child from zero to 18 years of age.

I hope that you hear that fear. I want you to be aware of it, and I want you to prepare for it. Uh, that helped me to say, okay, what are you going to do first, Jim? I’m going to complete the bachelor’s degree first. And then what are you going to do next? And I think that fear of responsibility, accountability of what would your kids think if you don’t have your degree? What will they think if you can never get them in a good school district? We talked about housing and a little bit more on a little while, but the idea of where can you afford to buy a house – first thing you want to do is look for a school district that’s in solid financial position and has a good record. Some of you already know, so good right now. That’s something you have to consider.

So that concept of fear looking down the line and then one other thing that I think and this is maybe unfair to you, but I’m going to do it anyway. You get an accident, life changing accident, whether it’s you, your family, whoever. That’s going to change financial perspectives. You have a debt in the family, you have a divorce. There’s so many things that the majority of people in the country come in contact with and we’re part of a microcosm of that macrocosm. Fifty percent of the marriages end in divorce.

George: Sixty.

Jim: Sixty. So that should tell you something about fear and preparation for the future. You can say all that will never happen to me, that’s going to be the other 60%. Thank you.

George: So then, sort of taking that fear, the next thing you do after you get these opportunity funds and your rainy day funds and your college funds is you protect your family. And the first thing is life insurance. Term life is the easiest way to do it; you know 10 to 15 times percent your annual income. As I should not be tied to work, lot of times, you get term life tied to your work. So that’s just a bonus because as soon as you leave work, it goes away.

You need disability insurance in case you can’t work and still got a family to support. If you start to succeed and start to accumulate some funds, funds attract lawyers. Uh, so you’ll need an umbrella liability insurance or somebody – if something happens, one of these accidents happen, everybody is not swarming all over you and you’re starting at the beginning again. And especially if you have teen drivers, you know until they’re adults, they’re your responsibility and it’s a terrifying thought. But one of their actions could wipe you out financially and so you need to have liability umbrella insurance.

And if you’re doing outside businesses, if your primary occupation is a teacher and your secondary is a coach, you’ve got different ways of getting attacked. And so you need to have liability umbrella to cover sort of all those activities. And you need to have identity theft. I was just doing a coaching clinic in Africa. And while I was there, I got hacked and it was just a nightmare and I was overseas. And no Wi-Fi and I didn’t get a cell plan because I was trying to save money. And so one call to my identity theft insurance company and they just stopped everything, protected everything, made sure I was okay And then they cleaned up all the mess basically. They just made me send out emails to everybody.

And there’s a bunch of other insurances that you need, you know, to – depending on your situation, but that’s just part of that fear thing. And you know, my daughter is an attorney and she was looking at this and she put this asterisk there and she said do your insurances first even before you start your savings because if you’ve got, you know a young spouse and a young child and something happens to you, the insurance can kick in long before investments can kick in.

Real estate; you get great long term returns. But it’s got to provide current income and it’s very non-liquid and it’s not linear. It doesn’t go from here to here. It goes from here to here to here to here to here to here to here to here and so it’s an investments category that everybody asks about. Everybody has done very well with it if you can hang with it over the long term. But the only way you can hang with it over the long term was if it’s providing income to you during that whole time. If the whole time you’re paying taxes and maintenance and insurance and it’s just draining away, you’ve got to sell it for 10 times what you bought it for just to equal all the expenses you paid along the way.

So you know, it’s a good investment, but you’ve got to really think it through. Estate planning again, this is all my daughter’s doing. She just emphasizes that every adult, 18 and over needs a will. So if you’ve got college aged kids coaching for you, they need a will. Then you think, why do they need a will, because if not and they’re in the hospital, the state takes over. It’s not their parents because they’re an adult. So you need a will and you just – you need a living will, a directive to physicians.

And my youngest child, it seemed like for a while every time I go on a swim meet trip, something would happen to one of our dogs and he would euthanize it. So my wife and I said if we’re sick we don’t want him making the decision. So – no, no, we’re okay, we’re okay. You know appropriate powers of attorney because you’re needing some medical powers of attorney, you need general powers of attorney, you need HIPAA releases, you need declaration of a guardian in case you’re incapacitated, even you’re going to need death details, you know. Who gets to dispose of your remains, you know. What happens to your bank account? You know, maybe you and your wife share a joint account, well, that account doesn’t say that it’s – on your death it’s payable to her. They suddenly freeze your joint account and you can just going along fine and suddenly you’re screwed. And sometimes that can take a year of probate to get a joint account unfrozen.

You know, and then insurance and retirement beneficiaries; they change as you go through life, you know, uh, so you need to sort of think about the stuff. And then if you’re successful of keys one and two meaning, spend less than you make and invest it, then you’re going to need to think about some form of trust for your kids. And if you have a disabled child that’s a much more complicated trust. But no matter what, you want to have some form of trust that the stuff goes into, so that it just doesn’t go into creating more national debt.

And for the coaches out there that share our hair color, our request to you is to be a mentor.

And this slide is just the – you know, one column is Ben and he goes down and he just invests $2000 a year for eight or 10 years and he’s got two and a quarter million dollars, and then just starts a day and then he is investing the whole way down and he has a million and a half. So getting your swimmers to start early is so powerful, getting your assistant coaches to start – even if it was just 3% to start with.

In fact, if they just – they can invest – I think it’s 3.9% if they start when they’re 18 or 19 and be a millionaire when they’re 70 at 3%. They’re starting real early and delaying retirement a little bit. You know so – Ben, the guy one side invested $16,000 for him to almost $2.3 million. Arthur invested, you know just drive a $100,000 that grew into a million and a half. The difference was starting early.

And this is the penalty for starting late. So age when you begin savings, is the month – how much you have to save each month to get to a million dollars and it’s only projecting 6% as really conservative, so it’s very real. You know, it’s not uncommon to double that. So if you start at age 20, $360 a month gets you there. If you start at age 60, you’ve got to put $14,000 a month away. If you can save $14,000 a month, you don’t need to save $14,000 a month, you know. And so that’s how the penalty works on delayed savings.

So I definitely have had colleagues who had to delay retirement and they had to put 100% of their salary into their retirement, you know.

Jim: I need to step in here. When we were talking, sort of – George was talking about insurance. You can get insurance right now. Oh. You can get insurance right now and it should cover whatever it is you’re getting, all of your debt including your mortgage. That’s a minimum because then the mortgage is paid off because generally that’s our biggest debt. But it should take care of all of your debt and then hopefully, there is some more left over in that insurance policy that takes care of your family.

I admit I started late. I’m one of those people that have the penalty. At the same time, again personal stories, I think sometimes hit home because some people here may be able to relate to them. I was 55 years of age before I was finally worth more alive than dead. I had insurance policies that covered everything in case I kicked off. But I was 55 years old before I had my own Roth investment fund or traditional IRA. Those actually were worth more than the insurance.

That’s a long time to be worth more alive than dead. So again, it’s another example of what are all your bills today, do you have insurance that’s going to cover everything and then you have enough to sustain whatever loved ones you have in your life for at least some given period of time. And all during that time, you have this insurance policy which is relatively small on a term life. Do you have enough – do you have the same commitments your athletes have to getting better to save for yourself, so that those investments are building at the same time you’re building a volume or the yardage or the intensity in your program?

I like to think of it in another way and again, it’s – I like comparison and contrast. Generally speaking when you do a bell shaped curve in a classroom, the best grades come out of the first couple of three rows in the middle. And then the grades kind of get a little lower as we go back – the guys in the back row. Generally in the classroom, that’s what happens. I like to think of it as being in the first row as an example that he wants and lane three and four right here.

And I tell them to sit, heat three and four or lane three and four and then go to the outside. The reason that’s basically true in a classroom and I think most of you know that because a lot of you are in education or closely related to it, is that you have less things that are going to interfere with your eyesight with what’s going on in the blackboard or the projector and the professor. If you have people in the back of the room, you’re going to see somebody scratching their nose or whatever they’re doing.

And that takes your mind off of what’s going on. So think of it as investing as in what volumes that the kids are doing – just a quick analogy and again it’s – it’s toward building the future. If you’re working with 11s and 12 year olds and you go 25,000 a week. That’s 100,000 a month, right. Okay, in 10 months, your kids are millionaires. Little bit, each day, each week, 25 grand a week would be four grand a day, six days a week, five grand a days, five days a week. That’s in yardage that your kids in their 11s and 12s or if they’re nines and 10s, hopefully, the nines and 10s aren’t going quite that much.

The national class where 11 and 12 are – so that’s what’s you’re doing with your kids. We’re here to try to sell you the idea of doing it for yourself.

George: Are there questions?

Male Speaker 4: Both mentioned in term life versus whole life ?

George: So there’s an over simplification. My financial adviser has me have 80% in term, 20% in whole. Terms; probably the easiest place to start because young people can get 30 years of great coverage for next to nothing. But my personal financial adviser has me on a mix of term and whole. He feels the whole is sort of the ultimate conservative investment. And frankly, I built up some whole life that I’ve used it to buy real estate, I’ve used – you know – I was able to loan myself money out of that policy. It was very beneficial.

I probably did a little bit more whole life than that average person because in my family, I’m the oldest male to not have had a heart attack. So my family genetically became uninsurable very young. And so I was assuming that would happen to me, and you know now it can really doesn’t happen yet. So I got – I’ve probably got more whole life assuming I become uninsurable. Uh, but the recommendation that I received was 80-20. And so the process that I went through was I got term policies that were convertible.

At a certain point, I had to decide whether I wanted to convert them or not. That was a really detailed question and probably beyond our actual legal expertise.

Female speaker: [Indiscernible]

George: In today’s environment, the generation that’s behind ours is not as well as off as we are. And I think a lot of that is because a lot of us grew up in or shortly after World War II. Our parents have gone through the collapse in the 20s and the 30s. They went through a couple of world wars or at least one; grandparents went through two. And so we are probably more out to saving and look long term. And I don’t think they’re programmed to prepare for long term and we’re at fault with that.

George: I think it’s more global than that. I think when we were in school, we could work a summer job and save up enough money to pay for college the next year and buy a car. And kids now work for a summer; they can’t pay for one credit hour with what they can make in a summer to the cost of college tuition. I think that’s really the big difference. So the incentive to work for school is gone because there’s no hope of possibly paying it.

But I think that was one of those typical well meaning government programs that all the student loans allowed colleges to just inflate their cost unbelievably. And knowing that kids don’t understand debt, and don’t understand that they’re going to graduate from college, be living at home and have a house payment to make because they’re debt is as big as your house. And so you know, helping your kids understand that and avoid debt and avoid student loans – you know, good intentions pave the way to hell, we have one, two, and then mortgage.

Male Speaker 5: If you have a more expensive house, you’re making – in some cases making more of a good investment.

George: It’s a possibility as we know a few million people made that bet and guessed wrong in 2008. It’s real easy to get brutally upside down. That’s why I added those two bullet points underneath. You want a house that’s going to appreciate because you can’t make more money sleeping. But my personal bias is to buy less than you can afford, that’s going to go up and is in a good neighborhood, so that you have cash to invest because you know, even if your house goes up four times, it’s not going to go up the difference of if you invested a small amount of that in the market because the market is going to go up much more. That delta is going to be much bigger.

Jim: But to give a counter to that, Southern California, South Orange County, we saw prices go from $289,000 to $750,000 on the same house in a matter of a couple of years because of the money that were identified by coach related it to the college funds. We saw the same thing in the mortgages and the big banks and the investment firms. And then what happened? They all collapsed.

And that’s what we’re here for; it’s to prepare you for the collapse and maybe help give you some guidance to –.

George: I definitely agree that your home is your biggest single investment. You need to take care of it. That’s going to go up and go up. But I sort of view investment real estate as separate from where you live because if something goes down, you lose an investment – you don’t want to lose where you’re going to live.

George: When I first got married, she was a nurse and I was coaching. And so she was making our first meal as husband and wife. We were living in a rat hole little apartment and you know, the tables and the kitchen and we had couple of rooms maybe. I think actually one of the rooms just had some bookshelves dividing one room. And so she makes this thing – she makes this meat loaf. And I was just ready to take a bite of it. She gets up to walk around the shelf into the kitchen. I put it in my mouth and that was the worst thing I ever put in my mouth.

And she was like – can I put it down. I was like – so you’re thinking really fast. Holy, this is our first meal. Is my rest of my life going to be like this? And then, what am I going to do about this? And then I see my dog and I stick my fork into my meat loaf and I give it to my dog. My wife is still working and my dog – and my dog spits it out. And so I’ve got my hand under the table. I got this meat loaf in my hand. My wife is walking back; I stick it in my sock. Well, you know there’s tears at the end of this. But she was a biochemistry major; she was getting her masters in nursing at the time.

She said – I’ve done all these chem labs, I can learn how to cook. And so she bought every cook book known to man and you can clearly see she doesn’t need to know how to cook anymore. She succeeded. But what a cook book does until you can learn how to cook — It gives you a plan. It’s like a season plan for your swimmers. Dave Ramsey, the financial author, is really conservative because his profession is getting people out of very troublesome debt. And so it’s sort of the financial equivalent of AA.

You know, if you’re in AA, you don’t go to a bar. You don’t toast with champagne, you don’t drink because Dave is – stay away from – and because you don’t go to Dave if you’re not in trouble with debt, okay. So it’s a very, very conservative program. But he makes it readily available. It’s easy to do. It’s on the web. It’s cheap. And it will get you started and he’ll even get you to financial planners who can sort of put you on a more moderate deal. But you know it’s that first cook book.

So you have a plan until you know how to cook. And if you don’t have a really hungry dog, you need a good plan.

Jim: Yeah. Again, like you’ve heard, this is available online everywhere. But this is more personalized. Simplicity; the things that I have done. Instead of making your house payment every month, you take that house payment and you pay it each two weeks – same dollars. If you pay it two weeks, so you pay the second week, you pay the fourth week. Pay the second week, pay the fourth week. A 30 year loan all of a sudden becomes closer to 25. And that’s better than making one extra payment a year because the compounding is now going in the other direction.

So your principal is paid off much quicker. And it’s kind of fun to see – for me it was fun to see. I wonder if I can save enough to make an extra payment or make the same payment when you have – same thing with the amount of mortgage – a car payment. I agree with George completely. Never buy new, whether I have or not it’s immaterial, don’t do it. But at the same time, you want to pay it down sooner. And that’s good for your credit ratings as well as getting rid of the debt, something you might want to consider and because if you’re making X dollars a month, you can take half of that amount and pay it every two weeks. And instead of a 30 year loan, like I’ve said, it drops to 25. It may drop further because you might get excited. You go – well, I can do this and then make one extra payment a year. Now you’re getting closer to 20s. Even if you’re at and we were at one time, we were at 14 and three quarters percent when we bought a house in 1980, biggest home we’ve ever had. We’ve definitely downsized now and fortunately could afford to do both at the time. But two years later, I bought it down to eleven and a half and two years later, I bought it down to eight something and then we started making extra payments. And you can do that if you plan ahead and you’ve organized. Now it’s not easy because you’re not going to stay at the same income. If you’re here today, you’re going to reduce your debt or you’re going to make more. Either way, you’re ahead of the game. So you’ll find ways to be able to do it.

George: And sometimes that way is having to reach out. You just got to put your hand on the fire and get it done. Are there questions?

How many people own their own club and you’re in the process? One, two – you’re starting. Three – is that three, four owners? How many head coaches in the room? Tons of head coaches, wonderful! So one is a comment and second is a question. On the comment, I think if you own you have building equity invested within. And the second thing is as a head coach; we presented our staff with the option if you’re growing either health insurance first or retirement. And these are guys that were in their 20s going to 30 at the time. And we’ve recently taken on health insurance, done pretty well. But now we’re going to be looking at you know, retirement, and they just don’t really want it. I don’t know what beyond the cost you’re giving today –.

George: It’s just, uh, yeah, it’s just young people’s disease, you know. And until you get old and are able to have old people’s regret –.

Jim: That’s why we’re here.

George: Retirement matching is the best thing you can do for somebody because it makes them immediately a better investor than Warren Buffet because even Warren Buffet can’t double your money every month. And so if they invest $100 and you match it with $200, they’ve doubled their money day one. And so you’re immediately making them the best investor in the world. They’re smarter than Warren Buffet just by taking the match because, you know, Warren is only going to get you 50% return.

You know, you’ll give them 100% return guaranteed. So what you try to do for your guys is wonderful and do anything you can to help them make that match. After I retire from coaching, I sort of took a job for my community of opening a homeless center. And so the Chairman of our Board has one of those friends, we talked him into doing this gig for three years. And we got it opened and so he was very big in supporting the United Way. And you’ll soon learn that I answer short questions with long answers.

And I said – what’s so big about the United Way, because well, first of all it’s important to be a giver and not just a taker. And in the non-profit world, we’re always taking. It’s important to learn to be a giver. But the second thing is you will find sites or departments that don’t give and you know they have a morale problem for some reason. And so okay, I’ve never heard of this. I’ve ran a United Way Campaign in a huge school district and nobody ever told me that. So we ran this United Way campaign. We had about 120 employees at the time. And sure enough, there were two departments that were really low on giving.

One was our security department which was huge in a homeless business. We had 1500 homeless people. So we need a lot of security. And the other was our case managers; people actually – social workers handling all these cases. So I went and sat down with them and the social workers were overwhelmingly young women, a bunch of them single moms, all of which had to have master’s degrees to get in our front door, generally from private universities and they had a ton of student debt.

The security guys were overwhelmingly veterans. They had come back, spent one to three or more months unemployed, lived on a credit card until they got a job and they had a ton of credit card debt. And so we had these two groups of pretty young people and pretty secured jobs living a life of panic because they had no idea how to deal with all this debt. And so what we did and I heard somebody mention it. We got Dave Ramsey for our whole corporation. And we bought it for everybody and we said Thursday at lunch hour is Dave Ramsey day.

And everybody went in there. We did all the course and we grouped people by age groups so that the 20 some things would be in one group, 30 some things would be another, the 40 some things – the AARPs would be in another. We invited spouses to lunch so that everybody could do it together. It changed the culture of our business right away and it made them much more savvy on the business end of our organization. It had sort of a spinoff benefit.

In fact, I finally found myself going into the case manager’s office saying it’s really okay to give that guy a bus pass. You know, the dollar – I appreciate the dollar you’re saving, but it’s okay to give him a bus pass. That’s not going to hurt us. They became very cautious in what they were spending in our corporation as well as in their home lives and they’ve got a handle on their debt. And so my guess is that in addition to having young people’s disease, they might have the corollaries that go along with it. They may have a bunch of student debt. They may have a bunch of car debt.

They may have a bunch of credit card debt. I bet the reluctance to take the match as a symptom of something else. It’s one of those symbolic deals and if you peel the onion back, you’ll find out what it is.

Male Speaker 8: It feels like it’s that. They can’t give up the $100. They want the $100 math. They can’t find that $100.

George: You know, you’ve got to – you’ve got to talk to them, you’ve got to evangelize. You’ve got to tell them about your mistakes. You’ve got to tell them where you are versus where you want them to be in life. You’ve got to pound it out.

Because once they’ve clicked that button, doesn’t even have to think about it anymore. I’m sure you told this to your swimmers about their seasons. Commit once. Don’t re-litigate it every day. Make a commitment and then live with it for the season and go. Jump out of the plane, pull the rip cord. Jump once, commit once – same thing with – they just have to make that decision once because if they have to make it every two weeks, every month, it becomes brutal.

Years ago, I did a series of columns in ASCA magazine. I think it was on coaches getting divorced. And one of the things I learn was that the two biggest reasons for divorce were sex and money. You definitely don’t want to hear about sex from old people.

The two hardest things to talk about are sex and money. And nobody wants to feel incompetent in either. And so there’s – everybody feels like they should know. Like, how should we know – we’re not supposed to know about our pancreas, we go to a doctor for that stuff. But yes, if you can create a culture where you talk about it and read about it and change the culture, but the more you can automate it, the better off you’re going to be.

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