Tyranny of the Urgent

As we approach the end of the year and I prepare my plans for 2012, I am reflecting about what worked, areas I need improvement and lessons learned. One of the areas that I want to share with you based on the countless meetings, conversations with family, friends and business partners is the management of time. Specially this time of the year, where we should be filled with Joy; many seem stressed and worried.

Many people seem to be "running out of time" and wishing for a 30-hour day. I am sure that if we had an extra six hours every day that would solve our problems; or would we end up as frustrated as we are now with our 24-hour days? Is the problem that God did not provide for us enough time for us to complete our tasks or is the root of the problem our choices of priorities? In 2004, Ipsos (a global marketing research firm) announced that almost everybody agrees with the statement "There is never enough time in the day to get done what I want to get done". Americans were among the most likely to agree with this statement with 64% of us agreeing with it.

Back in the 60s, Charles Hummel published a short booklet that became a quick hit in the business community called Tyranny of the Urgent.  In this classic, Hummel argues that there is a constant tension between what is important and what is urgent. He goes further to say that in most cases the urgent wins. We live in a world where the urgent tasks collide with the important tasks. The urgent tasks are constantly screaming for attention and demanding to be addressed now! Whereas the important tasks many times does not have to be done right now, what if you missed dinner with your wife tonight?, what if you missed your daughter's ballet recital?, what if you missed your son's basketball game? There is always tomorrow, next recital and next game.

The momentary appeal of a "business opportunity" screaming at you and wanting to pull you away from home and your important tasks, seems irresistible. However, when put under the light their deceptive prominence fades. Then you realize that it is not that urgent, then with a sense of loss and frustration we realize that time is not forgiving and we look at the important tasks that we pushed away to attend the urgent. That is when it hits you that you are a slave to the tyranny of the urgent.


If we stop to evaluate  the situation, we will realize that the root of the problem goes much deeper than shortness of time and that the real problem is how we establish priorities. In other words, many times we allow the "urgent", though less important, to be elevated in our list of priorities, and therefore the important is put on the back burner. We see this happening at work and home all of the time,  we focus on the urgent things in front of us, and at the end of the day, the things we really care about — the important — were barely looked at. We leave undone the things that we have to complete and attend and complete the tasks that we did not have to.

Hummel in 1967 identified the telephone as among the "worst offenders" against our peace. That was before we decided to carry the offending equipment with us everywhere (and I mean everywhere). As Hummel stated back in 1967 it is true today, the issue is not that we have a shortage of time, the real problem is our priorities. The greatest danger to our peace is letting the urgent things crowd out the important ones.

God invented time to keep everything from happening at once. Looking ahead to 2012, do not expect to have time to do everything you want to do. However, resolve that you won't let the urgent get the upper hand on the important events in your life.

Estate Planning

Estate planning is an area that most people avoid talking about. They pretend that if I ignore it, it will take care of itself. It is understandable the aversion to talk about your estate since it has to do with the planning of our end. There is not easy way to talk about this topic, it is painful and it is a reality. Regardless of how difficult this subject may be to you, you must address it if you want your assets after your death to pass to the proper hands.

John D. Rockefeller founded Standard Oil in 1870 and became the richest man on the planet. When he passed away, his accountant was asked, “How much of an estate did he leave?” His accountant’s answer was: “All of it.” During his lifetime John D. Rockefeller accumulated many assets. He also gave generously
both during his lifetime and through his estate. But he also understood Psalm 49:16-17, “Do not be overawed when a man grows rich, when the splendor of his house increases; for he will take nothing with him when he dies, his splendor will not descend with him.” (NIV)

During our lifetime we work more than forty years to accumulate assets and spend approximately ten years conserving what has been earned. However, the sad reality is that on average we do not spend even two hours to plan for distribution of those assets accumulated. Many times there is little planning and in some cases no planning at all. The chaos that often occurs following the death of a loved one can be burdensome. However, this burden can be eased, through proper planning.

A key element of proper planning is the implementation of an estate plan. The basic document in any such plan is a will and many plans also include a trust. I have prepared a Guide to Planning Your Will and Trust which is designed to encourage you to think about how you want your assets to be distributed at death and assist you in gathering the information your attorney will need to prepare a will and trust that accomplishes your goals. This will help you organize your thoughts and save you time and money in professional fees.

If you are a Christian, you understand that through proper planning, a legacy of love and care that you leave for your family and friends can be encouraging and in many cases even inspiring. The Bible tells us, “If anyone does not provide for his relatives, and especially for his immediate family, he has denied the faith and is worse than an unbeliever.” 1 Timothy 5:8 (NIV). Part of becoming a “good and faithful servant” is to create a good plan for your family, regardless of the size of your estate. This important stewardship of the property that God has entrusted to you can both protect and provide for your family.

The reality is that every day has 24 hours – 1,440 minutes – 86,400 seconds. Or does it? A short day is coming for all of us – a day when we will not reach the 86,400th second, and will pass on to our final reward. We may have lived a long and useful life, filled with great memories. First, the “learning” years – youthful and vibrant time spent in school with classmates. Second, the “earning” years – that first job, building a career and meeting many friends and business associates. Third, the “retirement” years — when you finally have time to enjoy visits with all of your family and friends.


I encourage you to take time, sooner than later, and prepare or update your estate planning. If you are interested in the guide I have prepared, please email me and I will gladly send you the guide at no charge to you. The guide will be emailed within 48 hours after receiving the email (emails will start being sent January 3, 2012).

As was true with John D. Rockefeller, everything will be given to someone or for some purpose.

Reality Check: Most Americans Don’t Have a Retirement Plan

The population may be aging, but that hasn’t gotten a lot of Americans to plan for retirement. According to a survey released by ING Retirement Research Institute, 71% of Americans lack a formal investment plan to help them reach their retirement goals.

The study, conducted by the ING Retirement Research Institute, showed that nearly half (48%) of respondents aged 25 to 69 who are employed full-time and earn at least $40,000 a year don’t feel prepared for retirement. That’s despite the fact that 75% of that same group do contribute to their workplace’s retirement plan. The study also found that only 43% of those surveyed calculated how much money they will need to continue their current lifestyle once they retire. And only 28% are working with a financial professional to help meet objectives.

Basics of Personal Finance

As we approach the end of 2011, we must reflect about the accomplishments during the year and the areas that we could have done better. One area that I would like to encourage all of you that read my blog is to take the time to build a solid financial future. Just like when a builder constructs a house on a solid foundation to withstand the elements, you need to have a solid financial foundation. 

The development of a solid financial foundation are the same regardless if you make $25,000 or $250,000 a year. It is important that you understand that mastering personal finance goes beyond the development of a budget. Personal finance covers a sleuth of topics that range from budgeting, taxes, debt, insurance to name a few. It is also critical that you understand how these areas of personal finance relate with each other and its impact to your financial goals.

Today I want to share with you some principles or pillars that will help you develop a solid financial foundation for your family. The information shared here comes from my personal experience, many conversations with people from different generations over the last twenty years, and thousands of books read in the area of financial planning. One thing that came to my attention is that our grandparents and great-grandparents were much better at savings than the most recent generations. There is a lot of wisdom we can learn from them and we better pay attention if we want to get this country back on its feet.

The principles that I will share with you today are very basic, these principles are tested and true. However, over the years we lost focus and the results are known to us today. The financial markets and economic trends may come and go, but saving money never goes out of style. I invite you today to revisit these principles and apply them today.

1. Frugality - our ancestors were shrewed and frugal. We made fun of them, while the spending party was good and it did not seem to end. However, they had a better understanding about money and expenditure. They only spent on the important and critical things for their families, they focused on value. Here are some ideas from the past that you may want to apply to your finances today:

* If a "newer and cooler" version of something is released this holiday season, wait to buy it until the one you have no longer works.
* Teach yourself skills that expand your practical knowledge.

 

2. Accountability - The only way to gain control over your finances is by being accountable of the money spent. Our grandparents knew the money spent because they truly felt it in their wallets. However, today credit cards create a "swipe and reconcile later" mentality. This mentality also creates a disconnect between the expenditure and the accounting (or responsibility) for that expenditure. The "reconcile later" became more like I will "figure it out later". However, our grandparents had a more visual experience of their expenditures since it was a tangible experience.

What can you do differently today? 

* Avoid the excessive use of credit cards. Only use them when they are truly necessary.
* Learn to live within your means.
* Review your spending on a daily basis.
* Keep track of your expenditures.

3. Be Grateful - The generation that lived through The Great Depression experienced great challenges and learned to be truly grateful for everything that they had. The challenging experiences made them painfully aware of the potential for future hardships and what foolish financial behavior can cause to a family.

*  Stop the self-entitlement attitude: You only deserve what you have worked hard for.
* Nothing is free in life.
* Be grateful for what you already have.
* Be honest with your "wants" vs "needs".

4. Learn to Save - Saving does not make you wealthy. However, when savings have accumulated sufficiently they should be used to buy assets. Also, savings are used to create emergency reserves. Most of us know that we should save money, however doing it is a different story. It takes self-restraint, determination, and strength-of-mind to resist “keeping up with the Joneses” or buying the latest iGadget.

* Work on liquidity
* Create a reserve equal to three months of your household expenditures.

5. Patience - I am sure that you have heard “patience is a virtue.” This is a vital lesson in finance as well as in life. The desire for immediate gratification drove us into this current recession. When this trait is left to run out of control it will lead a person to financial ruin. The use of credit cards, combined with the constant temptations and enticements of advertising, provides the perfect vehicle for immediate gratification.

* Start teaching your children the gift of patience through the allowance given to a child. Teach them the principles of building a savings account and spending less than what they will need to buy what they want.
* Be patient in the implementation of your personal financial program. Don't expect it to magically disappear what it took years to make the mess.

Our Battle To Save Family Values

The rat race is on and families are the big losers. In a society that is running at unhealthy speed, our families, which are our most precious blessing, are being left behind. There is a thief in the house. Like the rest of America, the Christian family is facing great challenges. How do we live in a environment that is constantly seeking immediate gratification, idolatry of money, and unhealthy views of wealth.

We are seeing the tragic effects in our American families and unless something changes soon, we will find many tired and worn out families and many that wont make it and fall apart. At the center of this battle is one of the most poorly managed resources we have, the use of our time. Making time for the family, which is vital to build strong communities as well as Godly family traditions, is becoming more challenging. Many times it seems impossible, if you follow the expectations of a consumerist society; a society that expects you to demonstrate your love by the amount of gifts you put under the Christmas tree.

The problem is not a lack of time, the real problem is the lack of prioritization. Unless you take control of your time, someone or something will. If you do not take control of your time, the tyrant "Colonel Urgent" will control your schedules for you. The results at the end is not pretty; feelings of unfulfilment, frustration, pain, guilt to name a few. See Colonel Urgent does not care about values, principles, boundaries, balance, humility, and priorities. All he cares is about having more and now. He does not care about what will the consequences will be later, how many casualties we have in the end as long as the reward is immediate gratification.

Make it a conscious effort this year to fight the temptation of immediate gratification. Teach your children the importance of delaying gratification and developing discipline which will build in them character. Without discipline, we all have the tendency to accept short-term rewards regardless of the consequences. It is evident now that this short-sighted behavior does not work; actually it is destructive. In this recent recession we are living, bankers AND investors engaged in business transactions that generated short-term gains for a few, which in turn created tremendous losses for them and the rest of the country. Unfortunately their short-sighted view and their desire for short-term gratification not only affected them, in the process many innocent families were destroyed in the name of greed.

This holiday celebrate the importance of families, family life and community. Remember that values such as honor, courage, generosity and truthfulness begins at home. This year make it intentional to develop a plan to preserve values, priorities and unity of your family. You may be one of the few in your neighborhood, don't worry. Remember that your are doing this for a greater cause and not to please your neighbors. Your investment in your family will be greatly blessed.

Time Is Running Out! Special Charitable IRA Rollover Expires Dec. 31

The charitable IRA rollover legislation allows you to transfer lifetime gifts up to $100,000 using funds from your individual retirement account (IRA) without undesirable tax effects. This opportunity is only available through Dec. 31, 2011.

IRA funds are heavily taxed whenever you draw them out, at rates as high as 35%. What’s more, the tax burden never goes away – even your heirs will pay income tax on IRA funds they receive from your estate, and federal estate taxes may apply, as well. You can increase your usual gift to qualified organizations by the amount of tax that otherwise would have come due on your required distribution. For example, let's assume that you normally give your home church a check for $5,000 every year. Instead of writing a check, you could instruct your IRA trustee to send them $5,000 directly from your IRA account. If you had withdrawn the $5,000 from your IRA, assuming you are in a 25% tax bracket, you will be subject to $1,250 in taxes. In other words, your $5,000 withdrawal become a $3,750 donation and you would have to send a letter to the pastor telling them that the government kept the other $1,250 you intended to donate. However, if you send the funds directly from your IRA, your retirement funds would have more impact as 100% of the funds would go towards the benefits of the church programs – and you will have increased your support by one-third, paid for by the IRS.

Important: IRA gifts, under this special tax law, must be made by the trustee or custodian of your IRA. The funds cannot go to you and you deliver them to your local church or qualified organization.

You may contribute funds this way if:

    * You are age 70½ or older at the time of the gift.
    * The gifts total any amount up to $100,000 in 2011.
    * You transfer funds directly from an IRA.
    * You transfer the gifts outright to one or more qualified charities, but not to supporting organizations, or for gift annuities, charitable trusts, donor advised funds or any gift from which you receive a personal benefit.

Who benefits from the IRA Rollover?

• Donors who do not depend on their required minimum distributions for income and are interested in making a highly tax-advantaged gift of significance.
• Taxpayers who don’t itemize their deductions. The IRA rollover most benefits the nearly two-thirds of Americans who do not itemize deductions on their annual income tax returns and therefore do not receive a tax benefit for their charitable contributions. Non-itemizers include lower- and middle-income taxpayers, as well as an estimated 5.2 million higher-income individuals.
• Itemizing taxpayers who’ve reached the charitable giving limit. Donors who itemize their taxes are prohibited from deducting more than 50% of their AGI for the purpose of making charitable donations. However, donations from an IRA are excluded from the percentage limit, allowing individuals who have reached the 50% threshold to give more.
• Taxpayers whose tax deductions decrease as their income increases. Several federal tax deductions – dependent and personal exemption deductions and deductions for medical expenses and non-business casualty losses, for instance – become smaller as a taxpayer’s income increases. By making charitable donations from an IRA, rather than making regular, required distributions that qualify as income, taxpayers keep their annual income down and qualify for other tax deductions.
• Qualified charities that are depending on significant gifts this year more than ever to help support the ongoing and growing needs in our both locally and globally.

What are the requirements to take advantage of the IRA Rollover?

• Age Requirement. You must be 70½ years old or older when the distribution is made. The legislation is very clear that you must be 70½ at the date you make the gift.
• Donation Limit. Your total combined charitable IRA rollover contributions cannot exceed $100,000 in any one year. Charitable contributions from an IRA totaling more than $100,000 will not be eligible for tax-free treatment and will be counted as part of your annual gross income.
• Eligible Charities. Any charitable contributions you make from an IRA must go directly to a public charity. Contributions to supporting organizations, donor-advised funds, and private foundations, except in narrow circumstances, do not qualify for the tax-free treatment.

Important: Before making an IRA rollover contribution, contact the recipient charity to confirm that it is eligible to receive tax-free gifts from IRAs. The charity’s determination letter from the IRS will indicate whether it is a qualified charity, exempt under Sections 501(c) and 509(a)(1), 509(a)(2), or 509(a)(4) of the Internal Revenue Code; or, if it is an ineligible supporting organization, exempt under Section 509(a)(1)(3).

• Eligible Retirement Accounts. Distributions can only be made from traditional Individual Retirement Accounts or Roth IRAs. Charitable donations from 403(b) plans, 401(k) plans, pension plans, and other retirement plans are ineligible for the tax-free treatment. You can give your required distribution to a qualified charitable organization without having to count it in your taxable income.
• Directly to the Charity. Distributions must be made directly from the IRA trustee payable to the public charity.
• No Gifts in Return. You cannot receive any goods or services in return for charitable IRA rollover contributions in order to qualify for tax-free treatment. Ineligible benefits include auctions, raffle tickets, fundraising dinners, or any other type of quid-pro-quo transactions.
• Written Receipt. In order to benefit from the tax-free treatment, you must obtain written substantiation of each IRA rollover contribution from each recipient charity.
• Qualification Towards Your Minimum Distribution Requirement. If you have not yet taken your required minimum distribution, the charitable IRA rollover gift can satisfy all or part of that requirement. Contact your IRA custodian to complete the gift.
• Multiple Organizations. Under the law, you can give a maximum of $100,000. For example, you can give to two organizations $50,000 each this year or any other combination that totals $100,000 or less. Any amount of more than $100,000 in one year must be reported as taxable income.
• Combined Efforts of Spouses. If you have a spouse (as defined by the IRS) who is 70½ or older and has an IRA, he or she can also give up to $100,000 from his or her IRA.

Before making IRA rollovers, consult with your tax advisors about how you can benefit from this opportunity.

Basics of Retirement Planning

Retirement planning is probably the number one reason why people do personal financial planning. Most people like to daydream about the things they hope to do someday when retire. Making those dreams come true is an important part of the retirement planning.

There is a lot information available on this topic, sometimes I think too much. However, it is important to remember that your retirement goals and objectives are unique and should not be based on a "cookie-cutter" approach. This is one area that you should not be cutting corners. Retirement planning is an interactive process of clarification and adjusting of goals as our lives unfold and new circumstances evolve. 

Mapping out a retirement plan is particularly complicated for today’s middle-aged baby boomers. They face financial pressures that other generations have not had to deal with - such as supporting kids in college while at the same time providing help to aging parents. This squeeze forces many to postpone retirement planning. Also, the current situation of our economy has put undue pressure on their retirement planning.

Another mistake that should be avoided is treating retirement planning as purely an investment planning exercise. Even though the financial aspect of the retirement planning is critical there are other factors that must be taken into consideration. As our lives  unfold, new circumstances emerge, new values are embraced and new emotions may develop. The retirement planning process is a delicate balance between the financial and non-financial  realms. According to age, personal characteristics, and circumstances, the range of applicable investment tools varies too. For example, annuities are not  for the 30 years old, while sector funds are not for people in their seventies, even though there are both good financial vehicles.

Because of what we have discussed here, it important that retirement planning be started early and be reviewed on an annual basis. There are many ways to develop a proper retirement plan, do not allow that your plan to be designed around the goals and objectives of another person, you wont be happy with the results. Finally, a sound plan requires the ongoing counsel of a financial professional who can help you obtain your retirement objectives.