Investing column | A resolution: live simply

January 23, 2013 

If there are any lessons to learn about economic, political and financial events of this past year, it's that no one really knows for sure what's going to happen. We can all get caught up in the "crisis of the day," concerned about how it will affect our lives.

Someone once hypothesized that only 10 percent of what we worry about ever comes to be.

After some personal reflection, I've committed to try and "live more simply" this year. I'm hopeful it will result in a lifelong mindset. I'm striving not to just know a lot of things, but know a few really important things and do those really well.

Spending some time each year on your financial health sets you up to handle the uncertainties of life. Here are some suggestions to help you stay money-wise without needing a college degree in financial planning. I believe focusing on a few really important items will help you feel more in control.

1. Reduce your debt load. When the economy and real estate markets are soaring, we often lose sight of this very important tenant. Ask yourself this simple question, "If I

didn't have as much debt and the payments that go with it, would I have an easier time meeting my goals and less stress in my life?"

Work to rid yourself of consumer debt and make at least one extra payment on the mortgage this year. When considering purchases, follow these two simple rules. First, don't take on debt for something that has little or no possibility of increasing in value. Second, if you lost your main income source and couldn't keep up with the payments of all your debt for at least six months, don't do it.

2. Start or increase your systematic savings. That means putting aside at or about the same amount on a regular basis. If possible, try it before you pay other bills. I would suggest building an emergency savings equal to at least six months' worth of expenses and save approximately 10 to 15 percent of your income each year towards retirement. You can make up for years where markets underperform by consistently increasing your savings rate. Evaluate your spending habits. Focus on sacrificing high consumption today for financial independence tomorrow. Real wealth is determined by what you save, not by what you make.

3. Maintain adequate protection for your family. This includes satisfactory amounts for medical, disability and in case of premature death. What you're buying here is peace of mind. The benefits from these should allow your family to maintain a similar lifestyle in case of an unexpected event. They shouldn't have to worry about how to eat next week or if the bills will be paid.

4. Write down three to five items you want to accomplish in the next 12 months that will improve your financial health and put steps in place to accomplish them. Be very specific.

As I've said before: Hope is not a strategy. Just putting them down on paper increases the chances of success. Why not tape them on the bathroom mirror or to your desk at work? Constant reminders mean they will be foremost in your mind when faced with tough decisions. Remember, people don't plan on failing; they just fail to make a plan.

In the future, have an annual check-up to review progress, set new goals and gain motivation. It's amazing how encouraging it is to continue a plan when you see the fruits of your labor.

Kris Flammang, co-founder of LPF Financial Advisors with offices in Lakewood Ranch, can be reached at 941-907-0101 or

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