3 things every indie author can learn from Walter Swan

There is a lesson all of us would be independent authors can learn from Walter Swan.

I met Swan in December, 2013. Not in person. That would be tough since he passed away in the 1990s. I picked up an autographed copy of Swan’s book “How to be a Better Me” at a Goodwill store in Tempe one evening. When I first saw the book, I couldn’t help thinking, “There is no way somebody could market a book like this” and “If this guy can sell a book, so can I.”

You know the old saying: You can’t judge a book by it’s cover. That was certainly true with this book.

Image of book: How to be a Better Me — How to be a Better Me, self-published book by Walter Swan

I cracked open the book to get a taste of the author’s style. What I discovered intrigued me: Short chapters of two to three pages with lessons on how to be a better person, written in the language of a good ole boy. I plunked down my dollar-fifty for the book, zipped over to the nearest Starbucks and dug in. Walter had me hooked. I felt like my grandpa was telling me these stories.

After reading the book for a few days, I decided to Google the author and find out more about him. (You should too.) Swan was a retired plaster contractor in southeastern Arizona with no higher education and no prior experience as an author. He couldn’t find a publisher to pick up his book, so he decided to publish it himself, with the help of a printer in Tucson, AZ.

Only a few stores would put his book on their shelves, so he rented retail space in downtown Bisbee, AZ and opened a store to sell his book. He called the store “The One Book Store.” Any guess as to what he sold in that store? It wasn’t the book I picked up. His first book was titled, “Me n’ Henry .” Turns out “How to be a Better Me” was one of many he went on to publish, although it’s hard to pin down all his titles. One person blogged about meeting Swan in 1994 and mentioned he had sold over 35,000 copies. I’m not sure if that’s in reference to his first book or all books combined. Nevertheless, it’s an inspiring number.

Walter has inspired me not only to be a better person, but also to become an author. I have several book ideas and one book that’s about 90% written. I have been sitting on it for about three years since I didn’t feel like I have enough clout. Neither did Swan.

What independent authors can learn from Walter Swan:

If you have good stories (and who doesn’t?), people will read them
Previous experience is not required; nor is advanced education
We don’t need the approval of a publisher to publish a book

These days it’s easier than ever to self-publish books in electronic format with the help of sites like lulu.com and etsy.com. All we have to do is have a vision, a story to tell and the determination to follow it through. It’s that last item that Walter Swan has inspired me with.

What Powerball can teach us about annuities

by @PaulFiarkoski

Dream with me for a minute. Imagine that you woke up this morning and realized that the quick pick numbers on the Powerball ticket you bought at the convenient store the other day matched all six balls in last night’s drawing.

Lump sum or annuity?
Among the many important decisions you’ll have to make is weather you want a lump sum or series of payments over twenty years. If you were to choose the series of payments, you’re opting for what we call in the financial planning world an annuity.

Now you know what an annuity is in it’s simplest form. Unfortunately, the insurance industry has added so many bells and whistles to annuity products that they’re far from simple.

When I used to teach my financial consultant trainees about annuities, I always found it helped them understand the concept better if we put them into categories. Most annuity products can be categorized as either a fixed annuity or variable annuity and again as immediate or deferred.

Fixed or variable
A fixed annuity means that it accrues interest at a minimum guaranteed rate. The interest paid is generated by underlying investments in bonds or other securities that pay interest and the eventual return of principal. Since annuities are also insurance products, fixed annuities are typically guaranteed to pay a minimum rate plus additional earnings (or dividends) on top of the guaranteed amount.

On the other hand, a variable annuity offers no guaranteed rate. Instead, the return generated by a variable annuity depends on the performance of underlying investments – usually publicly traded stocks and other non-interest bearing securities. Variable annuities can even lose principal in the event of a drop in the stock market.

Immediate or deferred
Most annuities can also be classified as either immediate or deferred, a reference to when the payments (to you) begin. As the name implies, an immediate annuity will begin payments right away. That could be in a month, a quarter or even a year from the contract date, depending on when you request your first payment. Deferred annuities often don’t begin to pay out for several years. During that time, you can typically increase the size of the annuity principal by contributing more premiums to it.

To summarize, you could have a fixed annuity that’s immediate or deferred. Likewise, a variable annuity can be either immediate or deferred.

The connection to Powerball
Okay, so how does this lesson about annuities tie in with Powerball? Remember, if you ever win the Powerball lottery one of the most important decisions you’ll have to make is whether you want to receive your winnings as a lump sum or annuity – a series of payments.

You don’t need me to tell you that your chances of getting hit by lightning in this life are better than matching all six Powerball numbers. However, anyone can purchase an annuity contract. If you have a sizable lump sum from insurance proceeds, the sale of property or a business or what have you, you can convert that money into a series of payments with an immediate annuity. In many cases you can even roll all, or a portion of, your retirement account into an annuity. (Be sure to educate yourself on potential tax consequences if you consider this move.)

Suppose you don’t have a large sum of money. You can purchase a deferred annuity with a smaller sum of money and add to it over the years to build up your own annuity “jackpot.”

6 financial resolutions you can live with

by @PaulFiarkoski

Here we are in a new year again. If you are a resolution maker and want to do a better job at managing your finances, consider one or more of the resolutions below.

1. Make a budget (or spending plan)
Budget – it’s a scary word, I know. Almost as bad as the word “diet.” If you don’t like the word budget, try calling it a spending plan. Whatever you call it, without putting more thought into what you spend, you are more likely to spend money recklessly.

Keep it simple. You don’t need any fancy software or apps; a simple spreadsheet is what I use. Plot out what income you expect to receive on a monthly basis and how much you expect to spend.

I have found that predicting expenses is a lot easier if you download transaction history from your bank or credit union for recent months or the same month a year ago. Although it takes a little more work, I like to plot out every day of the month so I can project how my account balance will likely change from day to day. This is a good way to help prevent unnecessary transfer and overdraft fees.

2. Spend less
Sounds painful, but this is actually the one of the easiest things to do. A simple way to find ways to save is to look at your bank statements. What always stands out to me are purchases like coffee or fast food places. You don’t need to give them up completely, but you can cut back on the number of times you go there or on what you buy. Try this: small-size rather than super-size. Or bring your lunch to work one more day per week. Taking these little steps can add up to big savings.

poll results top financial new year's resolutions — Top financial resolutions people make according to creditcards.com.

3. Pay down debt
This one is a real challenge and offers perhaps the greatest feeling of satisfaction. My wife and I paid off three loans that had been weighing us down in 2012 and we aim to get rid of our last two in 2013. Take if from me, there is no better feeling than calling to ask for the payoff amount for a loan then telling the service rep, “Thank you – now help me make my final payment and close this account for good.”

Opinions differ among experts as to which debts should be paid down first. We’ve been following the debt snowball method made famous by Dave Ramsey. You pay off your smallest loan first by getting aggressive with extra payments. As soon as that debt is gone, add the minimum payment that you would have been paying on that loan to the payment you’re required to make on your next biggest loan until it’s paid off. Repeat that sequence until your debts are paid off.

With interest rates as low as they are currently, now is also a good time to see if you can renegotiate lower rates with your lenders. Be careful about consolidating debt. By bundling all your debt into one large loan, it’s possible to become overwhelmed and feel like you’re getting nowhere.

4. Save more
Don’t confuse this with spending less. What I mean by saving more is actually putting money away for you to use later on. The best way to get and stay motivated on this goal is to think of it as paying yourself. Ideally, you should be the one you pay first always. Anyone just starting out in the working world should make this a high priority. However, it can be really tough to do if you haven’t gotten serious about spending less or paying off some debt.

5. Get in touch with your investments
When friends or family members ask me for advice with their investments, I’m always amazed to find out how little they know about what they currently have. How much do you have? Where is your money invested? What sort of return are you getting? If you can’t answer those basic questions, getting answers should be a high priority.

Once you have a better idea of what you have and how it’s invested, do some digging to find out if it’s appropriate for your goals. Learn about investing in stocks, bonds and mutual funds and get intentional about how your money is invested. You can only work so many hours per week to earn money for yourself. If you’re investing wisely, your portfolio can become like a silent partner for you – earning money for you even on your day off. Trust me, if you ever plan to retire you cannot grow your investment portfolio too large.

Don’t have investments? Make it a goal. It’s easier than ever to invest your money and have it go to work for you. The most convenient way to get started investing is with your retirement plan at work. If you don’t have access to one, look into setting up an IRA (individual retirement account) or mutual fund account.

6. Educate yourself
Learning more about what you currently have is an important step, but don’t stop there. Learn about the stock market and what impact the decisions made by the numbskulls in Washington have on the market. Find a few blogs or websites to follow, starting with mine. I learned a lot about financial matters in college and my formal training but the real valuable lessons I learned by reaching, watching and doing. Expanding your knowledge about finances is a responsibility you owe to yourself.

Some resources to get you started:

smartaboutmoney.org
mymoney.gov
morningstar.com
andthenwesaved.com
marketwatch.com
fool.com (it’s not what you think, I promise)

Tips for a productive household budget meeting

by @PaulFiarkoski

After seventeen years of marriage and countless arguments over money, my wife and I recently got serious about getting out of debt. We’ve been following the Dave Ramsey Total Money Makeover program where you take a series of steps with the ultimate goal of becoming completely debt free. First you cut out all frivolous spending and set aside $1,000 in savings. Then you start attacking all your debt from smallest loan to largest. After all your unsecured (no collateral) debt is paid off, you get aggressive with investing.

Pen and paper — For best results, take time to prepare for your household budget meeting.

One of the keys to cutting out frivolous spending is to hold a monthly budget meeting, presumably with your spouse. It’s a good idea for domestic partners and single people too. We’re prepping for our third monthly budget meeting and are really starting to see some results – mainly in the way of fewer arguments over money.

Below are some tips that we have found help us have successful budget meetings and outcomes. If you have questions, post them in the comments and I’ll respond the best I can.

Set some ground rules
Create some simple ground rules to review at the beginning of each meeting. You should read them out loud before getting into the money discussion. We have found it’s also good to pray before starting the money talk to get our heads and hearts in the right place.

Here are the ground rules we abide by:

We’re a team and we’re doing this activity for a mutually beneficial outcome.
It’s not about judging or finding fault; it’s about being responsible stewards with the gifts God blesses us with.
Each will listen and respect the other’s feelings and opinions.
We are not perfect and we won’t do it perfectly but we must get better over time.

Have an agenda
Make the best use of your time by sitting down with specific talking points and outcomes in mind. We use the same agenda from month to month. Below I have outlined the key things we talk about.

Track progress with net worth
Having been a registered financial consultant for over a decade, I learned that the best way to measure financial progress is net worth. Net worth is a pretty simple calculation; although gathering up the numbers can be a chore.

To calculate net worth, add up all your assets (what you own) and subtract your debt (what you owe). Include everything – home, cars, timeshares, retirement accounts, etc. On the credit side include all your debt, even credit cards and no short term furniture loans, etc.

Here is what we include in our net worth calculation:

Net Worth = Assets – Liabilties
Assets
Checking
Savings
Health Savings
Retirement account
IRAs

Liabilities
Mortgage
Overdraft line of credit
Medical bills

Pulling together the net worth data takes some time, but talking about it takes only about a minute. What I do is gather up the data and have it all set to go in a one page report prior to the monthly meeting with my wife. Websites like mint.com simplify this monthly task by aggregating multiple financial accounts into one application. Many banks and credit unions now offer these online aggregation services too.

The idea is to look at your net worth on a regular basis to see if it’s increasing or decreasing. It’s sort of like using a scale to keep track of weight loss.

Wins and losses
Next, talk about what you did well last month from a budget standpoint. This can be a great opportunity to score brownie points with your partner if you approach it right. Focus on things each other did well, rather than spotlight ways where the other blew it. This doesn’t mean you should ignore obvious “withdrawals” of fiscal trust; just be careful in how you approach shortcomings on the part of each other.

Talk about things that pulled you off course. If talking about who spent how much on coffee, nails, hair, etc. is likely to start an argument, consider making the decision that each of you get a set amount of cash each month to spend as you wish. Then take that cash out at the ATM and don’t hold each other accountable to it.

What’s coming up
Once you have made it through what will likely be the most emotionally charged part of the meeting, talk about what the next month looks like in terms of money coming in and money you need to pay out. I have found it helpful to use spreadsheet and plot out every day of the coming month and what money we expect to receive or to pay out. It’s time consuming and sometimes painful, but it’s what you will do if you want to break out of a financial rut.

Agreed goals
Finally, close the meeting by reminding yourselves of the financial goals you have in common and discuss how you’re tracking to meet them. If you haven’t established any goals, consider starting with the baby steps that millions of debt-free Dave Ramsey followers have based their success on.

How often to meet
My suggestion is to have the budget meeting once a month for starters. Sit down in a distraction free environment at least an hour and talk it out. We get together on the back patio. Stay in constant communication with each other about the budget, especially when one of you is about to spend money that wasn’t part of the last budget discussion.

Don’t put it off
The only way to fail is to not try it. Feel free to use some of the ideas that have worked for us or create your own approach. I have also found some great resources on Dave Ramsey’s website.