After reading How I Invest My Money by Josh Brown & Brian Portnoy, I thought it would be a fun exercise to do myself. I wanted to lead with “why” & a bit of my background, thanks for reading.
I grew up in a rural area in Northeast PA where we could not see our nearest neighbors. My parents purchased a neglected farmhouse on a 40-acre plot of land. They fixed up the small house, cleared some of the land, and even had a marsh area deepened where a serene little pond sits today. I’m not sure how my mom and dad did it but it jumps out to me that the starting point was hard work, love and a vision for a better future.
My dad was an electrician by trade but like most of us getting there wasn’t a straight line. My dad never finished high school and got his degree in hard work via a trip to Korea and his diploma was the Purple Heart. He then plodded along following the lead of his oldest brother, “Boots,” who was always looking out for his kid brother. I’m indebted to him as much as my dad.
My mom stayed at home with my sister and me while my dad was working, to this day I’m not sure how they did it. I suspect it was because their goal was to help my sister and I receive opportunities they never had. We grew up with space and an opportunity to be who and what we wanted to be. They saved for our college educations via EE bonds, even though they never went to college. My mom went back to work as a bank teller when we were a little older and my dad neared retirement. I remember being told by my parents that we “weren’t made of money” and I certainly made my share of financial mistakes as a teen. My parents didn’t have any debt other than home related debt and at times, modest car payments. My dad passed away a few years ago having never used a credit card; everything was cash or check. Money (let alone concepts like multi-generational wealth) was rarely discussed if only to say “we don’t have the money for something like that.” I don’t mean that as a negative because it was fact. Like most Americans, money was a taboo subject or something we didn’t talk about because we didn’t have much.
My sister and I were fortunate enough to have had parents who lived below their means, so they were able to save for us to go to college. My sister chose PSU while I chose a small school in Center Valley, PA. I worked through college, since my parents were paying the bills, I didn’t want to ask them for “beer money.” I’ve worked since getting my first job at 16 years old and enjoyed the experience of learning different jobs and especially the freedom of having my own money.
Upon graduation from DeSales University, I thought I wanted to pursue a front office job in professional baseball. In my third season with the team, the owner offered the ability to contribute to a 401(k), but without a match. I was already burnt out and without any incentive to save, I passed on that opportunity. I knew after three grueling seasons working 40+ hours per week in the fall and winter and 80+ hours a week during the season, that my career in baseball was coming to a close. The long hours at the baseball team were a great learning opportunity though. I learned I was not afraid of long hours and hard work. In fact, I found it was in the trenches that I really shined. It was hard work, filled with day to day complex problem solving, & something new seemed to go wrong each day. I attributed this work effort to my mom and dad and I am grateful to them for instilling the value of hard work and honest effort. Under the surface though, I am grateful to them for their attitudes. My mom and dad worked long hours, took care of two kids, and gave us a safe and happy childhood. Now as a parent of two young children myself, I know it must have been hard but I never once heard them complain.
So, after three seasons, I left the baseball team. It was the scariest time of my life. I didn’t have a plan but I knew I wanted to work with people and I knew I wanted to work for myself. I didn’t like the idea that no matter how hard I worked, I could be fired or replaced or downsized at any point without notice. That wasn’t how I wanted to spend my working life, always looking over my shoulder or kissing up to the right person. I knew that I wasn’t quite ready to be an entrepreneur so I’d have to spend a few years building something and acquiring as much knowledge as I could. I also discovered the value of networks and relationships. I knew if I was going to achieve my goal I couldn’t do it alone. I was fortunate to have friends who helped rebuild my self confidence after a rocky relationship, that left me temporarily without a place to stay. Additionally, I had friends who let me sleep on their couch and not let me feel sorry for myself, as well as put a newspaper ad for a job fair on my lap one morning. It was at that job fair I met another friend who would help me start the next chapter at then American Express Financial Advisors, later Ameriprise Financial.
I had a growing interest in personal finance since college, it was the late 1990’s and the dot com boom had everyone interested in the market, but I wasn’t ready for that. I was more interested in “what do you do with your money when you get some”. I had personal economics classes in high school, micro and macro economics in college, but was in search of things like “how mutual funds work, what is a Roth IRA, what is a 401(k)?” Amex provided a robust training program and allowed me to do what I really enjoyed, sitting with bright & diverse people, working out solutions to their problems. It was at Amex I’d also meet my best friend, wife, and co-CFO of our household.
Nikki and I got married on September 19th 2008 just as the markets were at their most volatile depths of the Global Financial Crisis. Great timing, right? Nikki had left Ameriprise prior to us getting married, seeing that us both being financial advisors was not likely in our best financial interests as a couple. The hours were long and the promise of a good income was still just a promise. Nikki sacrificed to take a position with a base salary, benefits, and more “normal” hours – though her commute was an hour each way. This was something we were going to need if we planned on starting a family. I credit her with having the foresight to provide us with some short term stability to allow us to bridge the gap and for me to continue to pursue my long term goal of independence. A few years later I was able to take the leap to “hang my shingle” in a small office in Center Valley. I was fortunate enough to have all of the clients I asked come with me to my new firm; it’s a debt I can never fully repay. If there is a lesson in that transition it’s in the value of relationships. While some of my peers were focused on investment choice, performance, or their own paychecks, I always tried my best to focus on the relationship with the person across the table from me. I’m reminded of a quote from Benjamin Franklin: “do well by doing good”. I knew I’d be okay if I focused on doing good for others first.
Nikki and I split our finances in a way that works well for us. Since we are a two income household, we maintain separate checking accounts but have joint accounts that we primarily use to transfer money to each other. I can’t think that there is a ‘right way’ to handle household finances, we simply communicate what works for us. When we had kids, we found it easiest for Nikki to pay most things related to the kids (daycare, food, clothes, vacations) and for me to pay the household expenses (mortgage, utilities, etc.).
As far as savings, I’ve never liked doing a budget or tracking expenses, instead my preference is to “pay yourself first” by deducting retirement, college, cash savings first. My personal theory is that once those savings are taken from my pay, I’m free to spend what’s left over. Nikki is in many ways the “yin” to my “yang” and we balance each other out well. She has always been diligent about tracking expenses and budgeting, she then saves what’s left over. We have that in common; though we come at it from different angles – we are both aggressive savers. Where we put those savings is where the roads diverge again. Nikki is comfortable with a large amount in cash reserves, this is something I have come around to only recently. I’d rather sock away monies into investments. Both have their merit and together we get the benefit of both. Rather than forcing me to save in cash, or me forcing her to take more risk with, we communicate and manage each area which we prefer: Nikki controls our cash reserves, I control our investments. Cash wise, since Nikki is comfortable with a higher cash reserve, I defer to her. Currently we keep 6 months of expenses in accessible cash and I’ve increased my cash reserves since leaving Ameriprise and starting my own business. As our cash reserves build beyond that, we invest into a taxable non-retirement investment account. I also maintain an open business line of credit and we have a home equity line of credit on our home for flexible financing options.
Debt wise, we refinanced our home a few years ago to a 20 year mortgage at 3.25%. I pay an extra $200-$300 per month on the mortgage to pay it off a bit sooner, but I’m not in a huge hurry to pay it off at this point but may accelerate in the future. We have one car payment on our Honda Pilot. I’m decidedly not a “car guy” and paid off my 2014 Honda Accord this summer and will likely keep it for another 6+ years. We avoid credit card debt but sometimes look for 0% interest offers on large purchases (we used this for new carpet and flooring a few years ago).
Investment wise we utilize the same 529’s I recommend for clients and fund them to the in-state public level. I have also calculated the cost if the kids choose to go to a private university and we fund the difference into our joint non-retirement account on a monthly basis. The non-retirement account is invested in mostly low cost Vanguard ETF’s and a few mostly non-dividend paying individual stocks for tax purposes. We also have small checking accounts for the kids that I put their allowances into. I do $7./week for Hannah and $10./week for Jack – those numbers reflect their ages and they get a ‘raise’ on their respective birthdays. I’ve told them about the accounts, bu they are mostly oblivious to their existence. These bank accounts are where birthday and ‘gift’ money go but once they get to $1,000 – I transfer the money to our joint non-retirement account and we buy a ‘stock.’ Jack has picked video game makers, Tencent & Activision Blizzard so far and I periodically tell him how they are doing.
I have a SEP IRA for my business, which I max out each year. I make smaller weekly contributions and larger variable quarterly contributions. My SEP IRA is comprised of similar investments, a core holding of diversified ETF’s and individual stocks of companies I use and like. My SEP IRA will have a few more dividend paying stocks since its tax-deferred and reflects similarly to how clients are invested. Nikki continues to fund her 401(k) starting years ago at the match and gradually increasing her contribution by 1% each year until reaching the max. Nikki’s 401k is mostly equity funds, with contributions being 100% equities to take advantage of dollar cost averaging.
My goal going forward is to continue to save and increase our savings rate each year. I continue to enjoy helping clients, being a guide and sounding board when they are unsure what path to take, and alleviating the stress of watching and managing their investments. More recently I’ve begun focusing on working with my clients children and grandchildren to help them avoid pitfalls I’ve made and teach them the things I have had to learn on my own…such as “what to do with your money when you get some.”