How to Make $787 in 15 Minutes…Legally

The other day I stumbled upon something that saved me a lot of money, and while I hope you never need to use this tip, I am sharing it with you in case it can help you or someone you know. 

Some of you know I had a pretty serious “medical incident” occur in June (I am fine now, thanks!). I was recently working through the medical bills from my little one-week vacation at the local hospital. The largest bill was from the hospital. I remembered from previous experience that they had offered a 10% “prompt pay discount” if you pay within 30 days of the bill. I called to see if this was still available, and they confirmed, so I paid. $400 saved. 

Then I called the next largest bill and stated “I am working through my medical bills, trying to decide which ones to pay this month. The hospital just gave me a 10% discount for paying quickly – can you offer that too?” The lady with whom I was speaking put me on hold and asked her boss, then came back and offered me a 25% discount. Yes, more than I asked for. Tough negotiator, you’ve got yourself a deal. $212 saved. 

The group with the next largest bill, without hesitating, offered me a 25% discount right away. Boom! $175 saved. There you go - three calls, 15 minutes, $787 saved. 

A few providers I called did not offer a discount – generally these were the occasions where I was talking to an outsourced billing processor rather than the accounting department of the actual provider. 

This is an “unadvertised sale” that is widely available, but I’d bet most people don’t know to ask for it. These opportunities were not offered on the invoices – I had to call and ask for it. So, spread the word – if you are going to pay your medical bills on time anyway, make sure you ask for a discount.

Dealing with a Devalued Dollar

We were recently asked by a client about the potential for significant devaluation of the U.S. dollar in the near future, and how we are approaching this issue. This topic has been in the headlines a lot recently, so I thought the response was worth sharing with others who might have similar questions. 

As the U.S. economy has become increasingly intertwined with the rest of the world, currency exchange rates impact us as producers, consumers and investors. A weaker dollar can be “inflationary” by making the items that we import more costly and by making it more expensive to travel abroad. On the other hand, it can also improve the competitiveness of our economy by making our exports less expensive for other countries.  

Investors in foreign stocks and bonds benefit from a weakening dollar as it allows returns denominated in foreign currencies to be exchanged back into more dollars. Likewise, the large American corporations in which we invest can benefit from a falling dollar when converting foreign income back to dollars. The net impact to any specific company or individual is not as simple as declaring that a weaker dollar is bad or good. And despite headlines that would lead one to believe that a decline in the dollar is inevitable and is bad, the future remains difficult to predict. 

So how do we position our clients’ portfolios in light of this ambiguity? First of all, we do not attempt to make short-term predictions about any market, including currencies. Our investment approach is driven by a longer-term perspective. If the U.S. continues to follow policies that are detrimental to the long-term health of the economy, we would expect to see a gradual and continual decline of the dollar versus the currencies of nations whose governments were making better decisions. 

Given the long-term expectation of a weaker dollar, one must decide (1) which alternative currencies to hold, and (2) how to gain exposure to those currencies. 

Currencies, historically, have been one of the most volatile and unpredictable instruments. Consider that as recently as early this year many experts were predicting that the dollar was headed toward parity with the Euro. In a dynamic world, policy shifts are made all the time - particularly in democratic countries - which makes it difficult to select one or two currencies to substitute for the dollar. Therefore, we diversify into a basket of currencies, including some from developed countries, developing countries and emerging countries.  

We believe that the U.S. economy is mature and will be outperformed by the latter two types of countries on an ongoing basis. There will be fluctuations, but they will occur within a definite trend. Rather than try to identify those short-term intervals that produce sharp re-valuations, we prefer to establish a more permanent position to diversify our exposure to the dollar.  

Maintaining a long term “short” position in the dollar (a bet against the dollar) can be quite expensive, so we have chosen to accomplish essentially the same thing through the use of non-dollar-denominated investments. There are three ways that we have built up that position over the last ten years. First, we have indirect exposure to foreign currencies that occur naturally through the ownership of large, global companies with a large portion of their earnings generated outside the U.S. Second, we have allocated 15% to 20% of clients’ portfolios to strictly foreign companies. Finally, and more recently, as our concern for the long term health of the dollar increased, we moved a significant portion of our clients’ fixed income portfolios into non-U.S. holdings, including some emerging market exposure. 

In summary, rather than engaging in short-term speculative bets for or against the dollar, our clients’ portfolios are permanently and naturally hedged to an appropriate degree through the diversification of their investments across domestic and foreign stocks and bonds. We believe this is the most prudent and balanced approach in the face of uncertainty.

How to Increase the Impact of Your Giving

Most people want to help make the world a better place, in some way, and are willing to share what they have with others to accomplish that. Here are some thoughts about how to maximize your contribution:

Give within the context of a plan.  All too often in life we tend to take the path of least resistance or are driven by “the tyranny of the urgent”. Charitable giving often suffers the same fate: we don’t carefully consider in advance how much we want to give, or to whom, and our giving becomes more a reflection of the requests that happen to come our way than of what we truly value.

At Alpha Advisors, we would suggest that to truly optimize your giving, you actually need two plans: a holistic lifetime financial plan, and an annual giving plan. The overall plan allows you to make informed giving decisions in the context of the rest of your goals. There is a lot of wealth tied up in the hands of people who have no idea how much they need for themselves, and as a result don’t realize how much they can afford to share with others. The annual giving plan provides discipline and ensures that your giving lines up with your own agenda, not someone else’s.

The point is, charitable giving is really an investment and deserves the same thoughtfulness that you’d give when deciding how to handle your portfolio. Be more intentional about your giving and you will have a greater impact.

Maximize the tax benefits.  You have limited resources and there is an endless need out there. By giving in the most tax-efficient way possible, you maximize the amount of money that you are able to share with others. It is costly – and needlessly so - for example, to make charitable gifts with cash and then fund those gifts by selling appreciated assets such as marketable securities, real estate or a privately-held business and paying capital gains taxes. But people do this all the time. By giving appreciated assets instead, you get the same tax deduction now, but also avoid capital gains tax. 

If you find yourself in a higher tax bracket from one year to the next, you should consider matching your charitable deductions with your higher-income year(s) to maximize the tax benefits. Uncle Sam is your partner in charitable giving, as he effectively subsidizes your giving by up to 40%. A donor-advised fund is a great way to accomplish this. Take advantage of every opportunity to reduce taxes and thus increase the money available for you to share with others.

Invest yourself.  No organization could survive without consistent financial support. However, money is not the only resource of which your favorite causes are in short supply. You can increase your impact by sharing some of your time and talents as well. What issue or organization matters most to you? If you are not sure what you have to offer, go and ask, and I am sure they will find a place for you.

We all face increased “busy-ness” in our lives, so it is easier to give a check than give ourselves. As a result we can find ourselves not really connected with the organizations we support. Beyond the benefit to the organization, you will gain something as well - the satisfaction that comes from a more direct impact on the lives of others or helping an organization operate more effectively.

The Financial Wisdom of Ebenezer Scrooge

by Sarah Byrd

Do you just have to have that new iPhone? Do happily you buy the newest computer game for your nephew but wear socks with holes in them? Do you feel driven to work just one more hour when you’d rather be playing with your children? Why do we behave as we do?

I recently read an interesting book titled The Financial Wisdom of Ebenezer Scrooge by Ted Klontz, Rick Kahler and Brad Klontz. The title seemed like an oxymoron to me. The authors use the characters and the story as a backdrop to discuss our relationship with money. The stated goal of the book is “to help you identify those hidden beliefs that are sabotaging your fulfillment in life, bring them into full awareness and deal with them so that they lose their power.”

The starting point is our beliefs.  Whether we recognize them or not, we all have hidden beliefs about money that drive our behavior. The authors call these “money scripts.”  They suggest that most of them are learned in childhood and internalized. “Since children can’t fully grasp adult reality, they translate what they see and hear into unconscious rules about life.” 

The problem is that “these perspectives don’t necessarily reflect reality from an adult perspective. Instead, they may represent only a distorted truth as seen through the eyes of a child.”  As we mature we often behave as if the partial truth is an absolute truth. It is now a money script. It can be difficult to recognize the script, because it’s how we’ve always thought about that aspect of money; it just makes sense to us.  

Seeing both Scrooge’s and Cratchit’s money scripts might help us recognize our own.

A few of Scrooge’s money scripts are:

• Don’t spend money on yourself or others.
• The more money you have, the happier you will be.
• Giving to the poor encourages laziness.
• Money will give you meaning in life.

When you remember his meager existence in a cold, dark house, his refusal to give to the poor, suggesting workhouses were the answer, and his miserliness with Bob Cratchit, you can see some of the negative effects of his scripts.

But he’s not the only character with detrimental scripts. Consider some of Bob Cratchit’s:

• There will never be enough money.
• You can never be happy if you are rich.
• If you are good, the universe will supply your needs.

His scripts keep him stuck in the role of victim, working for a tyrant. He accepts his miserable existence as his destiny.

Once you accept that you have money scripts, you need to be willing to challenge them. Simply stated, we need to be willing to look at ourselves objectively. This usually involves help from others. Scrooge had the ghosts. Seeing his past and present helped him see how he’d been affected by events and how they were continuing to impact his life. If you’re brave enough, sit down with a spouse, friend or sibling and ask some hard questions. Among others, the authors suggest some of the following:

• As best you can, recall the memorable experiences you have had with money, both good and painful. Go as far back in your memory as you can.
• Go back and put a feeling word next to each of the items. Can be as simple as angry, sad, afraid.
• Now look over everything you have written and ask yourself: “Looking at everything that has happened, if I had to write one or two sentences to summarize my experiences with money, what would they be?” Another to think of it is, “The moral of my story is…”

For some of you we’ve just reached the point of discomfort.

But consider this: Scrooge’s final epiphany came when he was visited by the Ghost of Christmas Future. It was seeing how these lifelong scripts would play out to the end that finally shook him up enough to make him want to change.  We don’t have to look death in the face to know there are things we can hope to see changed. It starts with understanding, which will only come by looking.

Doing it through the means of such an accessible story works well and the authors never have to stretch to make their points. Scrooge was exposed early on to possess little wisdom, and even less aptitude, for relationships. I, however, had always overlooked what financial wisdom he may have had. He amassed a fortune but couldn’t enjoy it. Until he changed.

Rarely do we think change is easy, but we all know when it’s the right change it’s worth the effort. So if you’re willing, ask yourself, “What are my money scripts? Could they be sabotaging me? What would my life be like if I changed them?” We would be happy to enter into this discussion with you.

Well, What’s Stopping You?

The economic upheaval we’ve experienced over the past year or two has caused a lot of people, myself included, to think more deeply about our lives and what is really important to us. Last year I ran across a series of questions that I believe can be a powerful tool to help people gain clarity about what they truly value in life. From a “wealth management” standpoint, this exercise can be valuable by providing a context for making decisions and for the deployment of resources (financial and non-financial) in the pursuit of the things that matter most to you.

My wife, Jessica, and I took some time to answer these questions individually and then got together to share our responses. It was a wonderful and eye-opening experience. Here are some of my observations:

• Most of the things that were clearly important to me were non-financial; that is, they had very little to do with money and in many cases, limited funds was not necessarily an obstacle to achieving those desires.
• It was great to write it all down – that made it more real. I still have the pages and intend to review them on a regular basis.
• It was even more powerful to read my answers out loud to someone else. It was a far more emotional experience than I expected, even more so than writing my thoughts down in the first place. Perhaps saying it out loud served as a confession of past failures and also as a commitment to doing better. If you do not have a significant other to do this exercise with, consider sharing your responses with a close friend.
• If nothing else had come of it, this exercise was a great way to get to know my wife better. Life is so busy that it is easy to let time slip by without a lot of deep, meaningful conversations.

So, here are the three questions, followed by one last question of my own:

1. Imagine you are financially secure; that you have enough money to take care of your needs, now and in the future. How would you live your life? Would you change anything? Let yourself go. Don’t hold back on your dreams. Describe a life that is complete and richly yours.
2. Now imagine that you visit your doctor, who tells you that you have only 5-10 years to live. You won’t ever feel sick, but you will have no notice of the moment of your death. What will you do in the time you have remaining? Will you change your life and how will you do it? (Note that this question does not assume unlimited funds.)
3. Finally, imagine that your doctor shocks you with the news that you only have 24 hours to live. Notice what feelings arise as you confront your very real mortality. Ask yourself: What did you miss? Who did you not get to be? What did you not get to do? (Careful: this question is not asking what you’d do with your last 24 hours, but rather asks you to look back over your life.)

Once you have thoughtfully completed this exercise, I challenge you to answer one more question: “Well, what’s stopping you?” If you are like most people, you have just laid out a list of desires and dreams to pursue, and probably many things you’d like to avoid regretting in the future. A lot of those things do not require money; they simply require a change of priority in how you use your time and perhaps an increased willingness to take risks.

This exercise may be way outside a lot of people’s comfort zones. But as the ancient philosopher Socrates said, “An unexamined life is not worth living.” My twist on that would be to say that an examined life is more worth living. We are here to help you with this kind of thinking and then help apply the answers in the context of a financial plan.