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Veteran’s Day


This Monday November 12th we will recognize Veteran’s Day. As a nation, even when we cannot agree on whether or not we should participate in a war or when we should disengage, I think we can all agree that we owe a debt of gratitude to those brave soldiers who carry out their mission.

It is likely difficult for most of us who never served to imagine the horrors of war. We go about our day to day routine and perhaps never give a thought to the hardships the soldiers and their families endure. Over the course of the last few years I have had the opportunity to hear about some of these hardships first hand. I have also had the opportunity to pitch in.

Recently, I sat in the audience and listened to Staff Sergeant Salvatore Giunta as he told of his action that resulted in his becoming the first living recipient of the Medal of Honor for actions since the Vietnam War. While sitting there my mind drifted back to some of the young men I had worked with at the Shepherd Center SHARE Program.

I reflected on the story I was told of a visit to Stone Mountain. A group of soldiers had gone out to spend a day in the park. Each night the day ends with a laser show. The grand finale is an explosion of beautiful fireworks. This is a time where families look skyward with enjoyment. For these young men it was something else altogether. They circled together back to back and made their way out of the park as quickly as possible.

My mind carried me back to a meeting with a soldier in a very dimly lit room because the light bothered him. We had to conduct the meeting so that he could keep his eye on the door at all times. A signal that he still couldn’t let his guard down. Although confined to a wheelchair he displayed the determination to change his situation for the better.

When I returned to Atlanta from the FPA Experience annual conference in San Antonio, my first appointment was to meet with two new soldiers to the program at Shepherd. When I got there while exchanging pleasantries with staff they gave me an update on one of the soldiers. I had met Clarence more than a year earlier. Clarence, like many of the soldiers, had a lot of challenges to overcome. Cleaning up problems related to debt. (Some of the debt was self inflicted, some not.) We developed a plan for Clarence to clean up his credit, eliminate his debt and go to school so that he could pursue a career in forestry. Things are going well for Clarence. I’m told that he enrolled and stayed in school. He has found work here in the state in a position that he loves and is suited to his disposition. In some small way, I felt like a proud teacher that gets a note from a former student.

In every city, in every state across our great nation there are veterans all around us. Just as equally, there are opportunities for all of us to give back. It may be as simple as saying thank you. On the other hand, allow me to implore you to share your skills and passion to help those who fight for the very freedom that affords each of us the opportunity to pursue those skills and follow that passion.

leeBaker

Lee Baker, CFP®
President
Apex Financial Services
Tucker, GA


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The Final Frontier


“Space: the final frontier. These are the voyages of the starship Enterprise. Its five-year mission: to explore strange new worlds, to seek out new life and new civilizations, to boldly go where no man has gone before.”

For many of us (especially if we are over the age of 40) these words are quite familiar. Even if you’re not a self proclaimed Trekkie and you only know of William Shatner from Priceline.com commercials the phrase ought to ring a bell. One of the things that struck me about the crew of theEnterprise, even as a child, was its diversity. To be entirely honest as a child I had no idea what diversity meant but vividly remember thinking that everyone on board was a little different. 

Coming on the heels of black history month, I find myself sitting here writing about exploration of a different frontier. The world of money. For far too many in our society, this world is just as alien as anything ever imagined by Gene Rodenberry. Unfortunately, statistics point out that it is significantly foreign to many in the African American community. 

For years we have heard of a wealth gap. This was used to define the disparity in wealth between the typical white household versus that of African American and Latino households. Following the Great Recession, this gap was newly described as a canyon. To be sure everyone suffered as a result of the down turn. However, the effects in the African American community are nothing short of startling. According to a study by the Pew Research Center, the median wealth in white households was 11 times that of black households in 2005. In 2009, the median wealth of white households was 20 times that of black households. It doesn’t take a rocket scientist to figure out where a lot of it went. Various studies have shown through the years that real estate has been the favored investment for blacks. Thus, the burst of the housing bubble rang very loudly in the ear of many blacks.

If we dig a little deeper, we see that in addition to losing a significant amount of our wealth, as a result of the housing bubble bursting, our lack of participation in the stock market prevented any offset from the rebound in 2009. Ariel Investments, one of the first black owned mutual fund companies, has done surveys dating back more than a decade, checking the pulse of African American investments. Through the years, the survey has shown the needle to move positively at times. At other times the situation has in fact regressed. John Rogers, Founder and Chairman of Ariel Investments, was quoted as saying “This could be a terrific opportunity for African Americans to become involved or more active in the market.” He made this statement in the July of 2010. Since that time using the S&P 500 or Dow as a measure markets have gone up 24% and 28% respectively. Hopefully, some of us took his advice.

Unlike the Enterprise with its United Nations feel, the world of finance is still very monochromatic and y chromosome dominant. It was even more so in 1983. This is the year that John founded Ariel Investments and Eddie Brown launched Brown Capital Management. In very short order the list of black owned fund companies went from zero to two. I can only imagine what trepidation they may have felt at the time. Although I don’t imagine it to be as frightening as staring into the face of a Klingon warrior for the first time, suffice it to say the journey was daunting.

In spite of the odds, John and Eddie persevered. Not only that, both men have lived long and prospered, to turn a phrase from Mr. Spock. I am most delighted by the fact they have made it their duty to give back to all communities in many ways in an effort to lift all boats in the sea of finance. The work that they, and others like them, have done needs to have a light shown on it every month of the year, not just in February. John and Eddie boldly went where no other African Americans had gone before but they have left an indelible path to follow for the Next Generation.

leeBaker

Lee Baker, CFP®
President
Apex Financial Services
Tucker, GA


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Skippin’ Rocks


I recently had the opportunity to be on an episode of NBC Nightly News with Brian Williams. The segment featured a client who was in her early forties and concerned about getting a late start saving for retirement. During the course of commentary from friends and colleagues, one comment in particular stood out for me. A childhood friend, Robert Lee, commented that being on NBC Nightly News was a long way from being in my back yard skipping rocks off the Ribault River when we were kids. My immediate response was that there are times when it would be nice to go back to those days and skip rocks.

Decades have passed since those days in the backyard, but in my work as a financial planner I find one of the most frequent facets of my work is helping clients position their lives so that they to can “skip rocks.” Even now I struggle with the concept of retirement and prefer to frame the discussion in terms of financial freedom. Very few people have ever come into the office and described their vision as one of no work and hour after hour on the golf course. In fact I can probably count on one hand the number of times it has happened. For many of us financial freedom seems to be an elusive dream.

Here’s the challenge, was there a time in your life when you felt the simplicity of life? Is there a dream you have of being at peace? What is that thing that makes it all seem worth while? Have you ever stopped to think about how you want to live your life once you stop getting up in the morning and heading off to work? I invite you to share your vision with our readers.

I haven’t been in the backyard since my mom passed away a year or so ago but I think I’m going to have to make a special trip. There was something almost magical watching those little stones bounce effortlessly off the surface of the river. My niece lives there now with her little boys. It will be fun taking them out back with my girls and teaching them to skip rocks. Who says you can never go home again?

Be well.

leeBaker

Lee Baker, CFP®
President
Apex Financial Services
Tucker, GA


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Takeoffs and Landings at the 57th Fighter Group


It’s the time of year when everyone gets together for holiday luncheons, dinners and other functions. I’ve always enjoyed this time of year personally. Everyone seems to be in a better mood. Greeting from perfect strangers are a lot friendlier. The excitement from children anticipating Christmas is almost palpable. 

As I sat down for dinner things went as normal. Discussions surrounding things that had gone on during the year, updates on the children, plans for the remainder of the year and so on were the order of the day. After checking out the menu and deciding that I would get started with a bowl of shrimp and grits (which were awesome by the way), I settled in for an enjoyable evening with friends and colleagues.

We sat at a table that gave us a great view of planes as they taxied the run way. Somewhere along the way, I was struck by the thought that the visual of the planes coming and going was a perfect metaphor for this time of year. The sight of the planes coming in for a landing gave me pause to consider all of the things that I had planned at the beginning of the year. I reflected on things that went well and things that I wish had turned out better. As I watched planes take off, it seemed to let me know that I was standing at the launching pad of a whole new year of opportunity – a time to plot out next steps.

Did you have any goals that you wanted to accomplish? Have you taken the time to review some of those financial goals that you set for yourself over the course of 2011? How’d you do? Were there any home runs? Did you strike out?

As we look to the future, have you given any thoughts to goals that you want to achieve in the coming year? Is there a credit card you want to get paid off? Maybe you’re saving up for a girl’s weekend in theCaribbean. Whatever your goals are, take the time to go through your personal pre-flight routine. Can you imagine hopping on a plane without the pilot reviewing things before take-off? Remember that you are the pilot of your personal plane.

It is my prayer that you guide your plane in for a safe landing at the close of 2011. It is my hope that you re-fuel and prepare for a flawless take-off at the dawn of 2012!

Be well.

leeBaker

Lee Baker, CFP®
President
Apex Financial Services
Tucker, GA


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Top 10 Reasons I’m Thankful


  1. I’m thankful that I’m not a turkey!
  2. I’m thankful that I have the gift of sight so that I can see the changing of the leaves and my little girls play in them after they have been raked up.
  3. I’m thankful that I have family and friends to visit during the holidays and know that there will be food on the table.
  4. I’m thankful that I can look forward to a round of golf with my brothers on Thanksgiving morning.
  5. I’m thankful that this is the first year I will celebrate without any parents because it means that over five decades there was always someone who loved me unconditionally.
  6. I’m thankful because I get up in the morning knowing that I work in a profession that truly makes a difference in the lives of others. I have a forum to reach people that I will never see and hopefully provide a nugget that will be of benefit to their financial lives.
  7. I’m thankful because I live in a country where people can occupy Wall Street or any other street peacefully.
  8. I’m thankful that I out punted my coverage by marrying a beautiful and intelligent woman who loves me in spite of myself.
  9. I’m thankful for second chances. We all make mistakes. The important thing is to learn from them and get back up again after being knocked down.
  10. I’m thankful for being endowed by the Creator with certain unalienable rights. Life, Libertyand the pursuit of Happiness. 

What are you thankful for?

leeBaker

Lee Baker, CFP®
President
Apex Financial Services
Tucker, GA


9 Comments

Occupying Wall Street


By now I’m sure you’ve seen the images of protestors occupying Wall Street. Maybe you’ve had the pleasure of one of your local streets being occupied as we did here inAtlanta. I’ll have to admit that my first thought was “What are these people doing?” I also found a little bit of irony in the thought that coincidental to the death of Steve Jobs, a lot of the communication in these groups was likely done using Apple products. Apple, depending on the day of the week, is either the largest or second largest company on the planet based on capitalization. $370 billion is a lot of money. So in some ways I thought they were protesting the very system that allows the device that helps them get together. And just about the time I was ready to dismiss the protestors as a group of nutcases, the voice of my friend Mark Johannessen popped into my head. I had a wondering.

Here’s what I mean. What if there really is something deeper going on here? Something deeper than a desire to protest because you’ve been out of work for a year or more. Something deeper than being mad as hell and deciding that you’re not going to take it any more. As I read multiple times, “people feel like the game is rigged,” I started to wonder even more. Funny thing is statements like this didn’t come from the protestors. They came from people like Warren Buffet, Laurence Fink (head of the world’s biggest asset manager) and Vikram Pandit (CEO of CitiGroup). They all effectively said we understand why these people are angry.

The more I wondered, the more my mind started to wander. I wandered all the way to Tunisiaon December 17, 2010. Mohammed Bouazizi, a street vendor, set himself on fire to protest corruption and ill treatment. This was followed the next day by massive protests. These protests are considered to be the beginnings of we came to call “The Arab Spring”. The Arab Spring roiled through many Middle Eastern countries and saw the change of leadership in a few. At this point it is still too early to tell what the lasting results will be.

As I watch the “occupiers” here inAmerica, I seriously doubt that anyone is going to set themselves on fire to protest the perceived or real injustices in our economic system. However, the idea of being an overmatched player in a rigged game may have some legs to it. Clearly the global recession that smacked us in the face a few years ago is a major contributor to the ugly economic realities that many of us now face. But there is a story here that is more than three years in the making. The median income for a typical male worker was $48,000 in 2009. In real terms it has not changed since 1969. On the other hand, those in the top two percent have realized a real increase of 75 percent. According to the U.S. Census Bureau, as recently as 2000 median household income was about $52,000. We experienced a steady decline (with a three year uptick) to where we are now with median income of about $49,000. When you add in real increases in the cost of bread, eggs and butter, it’s easy to understand the resulting friction.

None of this is to say that the wealthy don’t deserve what they have. Nor is it to say that the have nots are that way because they’re lazy and waiting on a handout. For now I’m just having a wondering. What do you think?

leeBaker

Lee Baker, CFP®
President
Apex Financial Services
Tucker, GA


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Life After the Ceremony


Earlier this year I had the opportunity to introduce you to a couple that had just gotten engaged. I thought it might be a good idea to look in on Timmy and Lailah to see how things were coming along. I recently had the opportunity to spend some time talking to Timmy over lunch at the California Pizza kitchen. Subsequently, I chatted with Lailah over the phone. 

The ceremony is now just 3 months away and most of their attention has been focused on the details of the wedding day. First there’s the good news. They made a budget and within reason have been able to stick to it. This is a particularly good sign because one of Timmy’s major desires is to “Not go broke paying for a wedding!” As they have worked their way through the process, they have negotiated with the various vendors and managed to get some nice discounts. With the economy being slow, vendors are more likely to make deals now than in past years. The couple is getting a lot of help from family and friends. Lailah is getting monetary assistance from her step dad and her dad. This is a huge plus. 

Now when the conversation turned to the future beyond the next few months, the picture was a little less crisp. They both admitted that they had not spent as much time as they should discussing how their life together will change after they exchange their vows. Here are a few key take aways that they are going to work on that might be helpful to you or someone you know. (Some of these make sense even if you’ve been married for awhile.)

  • Defined Roles – Questions like “Who will be primarily responsible for paying the bills?” need to be discussed beforehand. Who will take the lead on making financial decisions like purchase of life insurance, beneficiary changes and the like?
  • Household Accounts – Not only does a decision need to be made regarding who will be primarily responsible for paying household bills, but how much will each spouse contribute. Does each person get assigned certain bills? Is a certain amount contributed to a shared account from which common expenses are paid?
  • Children – This is perhaps the most significant “financial” decision that a couple can make. We had a new intern start here in the office. He made an off-hand comment about the number of children he might like to have when he gets married. He very quickly backed off of that number once he heard the current going rates for child care in our area. The act of having children should not be taken lightly and absolutely will have a tremendous impact on most family finances.
  • Communicate – Don’t make assumptions about how your spouse thinks about certain things. Take the time to ask. Find some quiet time to sit down and talk. Life can get crazy and when you’re planning a wedding it can be uber-crazy. Just be sure that you keep the lines of communication open. That way, life after the ceremony can be just as sweet as that special day.

leeBaker

Lee Baker, CFP®
President
Apex Financial Services
Tucker, GA


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Daddy’s Little Girl Learns a Money Lesson


In many ways I guess I’m just like any other father. If you’re the father of a little girl she’s probably the apple of your eye. Good thing for me I’ve got two eyes. I’ve got two little girls who clearly are my little apples. Watching both of our girls grow up has been an interesting experience for my wife and me. One child looks like me and the other looks like my wife. My wife and I still laugh to this day at a comment someone made years ago. “That girl looks just like you, with a paint job from her momma!” We’ve watched their physical characteristics develop and differentiate.  Their personalities have done the same thing, particularly their money personalities.

We started giving each of our children an allowance at the age of two. Quite a few people thought we were nuts, but we decided that if they could ask for things when they went to the store then they were old enough to start learning that things cost money. They get dollar less than their age per week. So our ten year old gets nine bucks a week and the six year old gets five. They also get performance bonuses for maintaining good grades in school. They are required to tithe from their allowances and pay for non essentials. Want that cute, cuddly new animal from Build a Bear? Save your money. Want to go the movies with your bff? Save your money.

The girls have really enjoyed summer camp this year at Kids R Travelin. The field trips have been both abundant and fun for the girls. Some of the trips are a little more fun when you’ve got some extra cash in your pocket. The final week of camp had a few of those trips. The big kids went to the Discover Mills on Monday, laser tag on Wednesday and Six Flags over Georgia on Friday. Monday morning I overheard my wife reviewing the trips for the week with Janae. She included and admonition to monitor her spending at the mall. Well let’s just say Daddy’s little girl went to the mall and “got caught up.” She spent every plug nickel she had. Well when Wednesday rolled around she got up the nerves to ask for an advance on her allowance and got a big fat “No.” Now I’ll have to admit that this was one of those “It’s going to hurt me more than it’s going to hurt you” moments. I’m actually pretty proud of myself because in spite of her looking at me with those puppy dog eyes, I stood my ground and didn’t cave. On Thursday, she took another run at getting her allowance in advance and got another no. On Friday, it dawned on her that perhaps she could get a loan from her little sister (who gets significantly less allowance because of the age difference) who had taken all of the trips and still had a substantial amount of cash on hand. I agreed to let her borrow the money from her little sister.

When we got home, my wife sat down with her and asked how her day went. She explained that she had a great time. She had already repaid her little sister, won a stuffed animal playing a game at the amusement park and enjoyed ice cream and soda with a friend. As it turns out she got a little lucky. Throughout the summer they earned merit money for learning bible verses and good behavior. She cashed her merit money in for cash. Knowing that our daughter had a good time, my wife proceeded to ask her if she had learned any lessons. Here are the three things she said.

  1. You should always have a budget before you go shopping.
  2. If there is something in particular that you want to buy, go there first.
  3. Always set aside money for later.

My wife added another one. “You can’t count on winning the lottery to bail you out.” We can only hope the lesson sticks.

leeBaker

Lee Baker, CFP®
President
Apex Financial Services
Tucker, GA


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Harry Potter and the Deathly Hallows of Finance


Okay, unless you have been living under a rock, you’ve heard of Harry Potter and the final installment in the movie series. As I write this on the eve of opening weekend, I’ll go out on a limb and wager that by the time you are reading this the movie will be the blockbuster hit of the summer. (I’m a big risk taker, right?) Anyway, aside from the fact that J. K. Rowling is a billionaire, what does Harry Potter have to do with finances? Honestly, I’m not real sure but let’s dive in anyway.

Let me start by saying that I am not a Harry Potter aficionado. My Sherpa on this journey through Hogwarts School of Witchcraft and Wizardry is in fact my ten year old daughter Janae, who read every book as soon as she could get her little hands on it. My first question to her was, “what in the heck is a deathly hallow?” Now that I’m a little more educated on the subject, I’ll tell you that they are magical objects that hold different powers. There is the elder wand, the cloak of invisibility and the resurrection stone. Through out the series Harry comes in contact with all of these objects at some point or another. Of course the major villain, Lord Voldemort, can’t wait to get his hands on some of the goods as well. In true fantasy world style there’s a big battle at the end and the good guy prevails but not with out a lot of angst.

Voldemort manages to get inside of Harry’s head and make him see things that aren’t really there. Harry has to learn and train to keep Voldemort out of his head. Tell me, is there a financial Voldemort trying to get inside of your head? Perhaps it is that friend who always wants to go shopping and by the latest designer handbag as soon as it comes out. Maybe, it is your buddy who seems bound and determined to play every golf course east of the Mississippi. Or maybe it’s those dang late night infomercials selling everything from egg scramblers to light clappers. If spending is after you, perhaps you can use the elder wand of budgeting to keep you on the right path. Using the wand at first is rarely easy, but with a little practice you eventually get the hang of it.

How many times have you seen a magazine at the check out counter that shouted the merits of “The Five Best Stocks” only to see the same magazine extolling the virtues of “The Ten Best Investments You Can’t Afford Not to Buy” a month later? Maybe it was your cousin who told you about a can’t miss opportunity over Thanksgiving dinner. If these type of incident causes you trouble, you should seek out the twin cloaks of invisibility, asset allocation and diversification. Take the time to develop a solid investment portfolio based on sound research and professional help if you need it. This will help you shroud your investments from spells cast upon you by well meaning family and friends.

Study after study points to the fact that the biggest fear of those in or nearing retirement, is the possibility of running out of money before running out of breath. The best antidote for this evil spell is the resurrection stone of income distribution planning. While not perfect, the stone has tremendous reliability when used properly and with care. Taking the time to assess your living expenses during retirement and matching them up properly with the right mix of “guaranteed” sources of income like pensions and social security (no jokes from the peanut gallery!) with a well protected portfolio as discussed earlier greatly increases the likelihood that your money will outlast your breathing. There may even be a little something left to pass on to future generations. 

Hogwarts, I mean life, can be scary at times. But using the right tools can make things a little easier to manage. See you at the movies!

leeBaker

Lee Baker, CFP®
President
Apex Financial Services
Tucker, GA


2 Comments

Faces of Inflation


Batman had Two Face. A formerly handsome district attorney turned into a physically and mentally scarred villain. Mark Zuckerberg gave us Facebook. In the 80’s we watched Faces of Death. (Well some of us watched for as long as we could stomach it.) And coming soon to a theater near you “The Faces of Inflation!” 

Honestly, if you’ve put gas in the car or been to the grocery store this year, you’ve already seen this summer blockbuster. Inflation can be just as villainous as Batman’s nemesis, Two Face or any other cartoon land bad guy. Back in 1984, a movie ticket cost $3.36. By 2009 that ticket cost you $7.50. In 1984, a Lincoln Town Car could be had for $18,059. By 2009 that smooth ride would cost you $32,781. If you got sick in 1984 and had to spend the night in the hospital, it cost you $884. If you went back to the same room to be healed in 2006, the tab was $6,800.

Fundamentally, inflation can be defined as the rise in the cost of a good or service over a period of time. Some changes are easy for us to see even though it isn’t easy to accept. One day you’re paying $3.00 for a gallon of gas and a month later you’re paying $4.00 a gallon. Some things are a little more difficult to spot. So let’s take a trip down a few grocery store aisles.

It’s summertime so let’s start with ice cream. Pick a flavor, any flavor. A carton of ice cream cost the same now as it did a few years ago. If you look closer you’ll notice that the manufacturer has pulled a Jedi mind trick on us. The package looks the same, but we’re getting less ice cream. With all due respect to Anita Bryant (if you’re under 40 years old do some googling), let’s go down to the orange juice section. That carton of OJ costs about the same as it used to. Only problem is that one of the cartons boldly declares “Still 64 ounces!” What the heck is going on here? Does that bag of chips feel a little bit lighter than it used to?

Even though the above scenarios don’t neatly fit the standard definition of inflation, the effect is just as damaging. So even if the price doesn’t rise for a particular good or service, if you get less of that good or service for the same price you’re getting smacked with inflation.

leeBaker

Lee Baker, CFP®
President
Apex Financial Services
Tucker, GA

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