Eating My Own Cooking

Ever come across a dentist with 10 cavities, an overweight doctor, or the contractor who's house is falling apart? I'm not sure about you, but I have a hard time taking advice from anyone who doesn't have their own $h#t together.

I realize I ask a lot of my clients; go visit the estate planner, change your 401(k) investments, save more cash in the bank, buy an umbrella policy, etc. These tasks represent brain damage for most folks. I get it...

Jurisdiction

Before I ask my clients to execute anything in their financial plan, they should know I'm speaking from authority and personal experience. I know too many financial advisors that would love to tell you what to do with your money, but they don't do it personally for whatever dumbass reason they justify to themselves.

A good friend of mine once taught me in order to get people to follow you or take advice, you first need to establish jurisdiction. This is achieved when someone shifts from agreeing with you in theory to whole heartedly accepting what you say is going to improve their situation. Without jurisdiction, no one will take you seriously.

Eating My Own Cooking

One of the best ways to establish jurisdiction is to practice what I preach. There's also credibility, experience, accountability, and expertise. But let's focus on what I do in my own financial life. I share the following with you to demonstrate that if it's good enough for me to recommend to a client, I better be doing it myself.

• After getting married, Melissa and I paid an attorney to create trusts. Our legal work also included pourover Wills, Powers of Attorney, and Medical Directives. Everyone who potentially needs to act on our behalf is aware and has accepted that responsibility. I've made all our documents available to those family members we've carefully chosen.

• I carry $1.25M in term life insurance coverage. Combined with Social Security surviorship benefits and the sale of my advisory firm if I expire early, Melissa won't ever have to get a job and she definitely won't need to remarry for financial reasons.

• There are 10 months worth of living expenses stashed away in cash. Our liquid emergency fund can withstand some of the biggest hits life might someday throw at us.

• We pay for a $1M umbrella policy to insulate us from personal liability lawsuits. This protects our assets and safeguards our future.

• I hired a tax advisor to make sure I was paying the lowest tax possible. The first year I hired him, I was able to reduce my tax bill by nearly $6,000. This coming April will be my third year taking his advice, and I estimate that advice has saved me approximately $15,000 compared to what I would have done myself at TurboTax.

• We save. Earlier this year Aspen Leaf Partners adopted a 401(k) plan. Last month was not an exceptional revenue month for me, but I still saved $3,000 of my take home income. I'll do the same thing in November.

• We stopped using our debit cards for everyday purchases. After a discussion with Melissa, we agreed traveling was important to us, so we opened up a SouthWest Rapid Rewards card. In only 10 months, we have enough points to fly our family of four almost anywhere in the country for free.

• Our non mortgage debt has been eliminated. No car loans. No credit card balance carry forwards. No home equity lines of credit. Our balance sheet looks pretty bare on the liabilities side.

• 529 plans have been established and funded for each of our kids.

• We resist (mostly) irrational purchases. I want a new road bike so bad, but I'm forcing myself to wait until there's enough extra cash to buy it. There are also a few home improvement projects we want to pay for, but it's more important to continue progress towards our aggressive goals than spend the money on cosmetics. Our kids will be fine brushing their teeth in their 1970's bathroom.

• I've linked all our accounts in my financial planning software. I enjoy checking in on the expenses report which auto categorizes how we spend. It has lead to productive conversations with Melissa such as "how the hell did you spend over $1,200 at Costco last month?". Love you honey...

• Last and most important, I buy the exact same index funds I recommend to clients. I subscribe to the same portfolio philosophies I implement for everyone who does business at Aspen Leaf Partners.

I can't tell you how hard all this was for us! First, we are busy people! At the end of the day all I want to do is sit on my ass and watch Game of Thrones. Second, when I started my company in 2013, I barely made $20,000 my first year. Years two and three were much better, but today it's not like I make buckets of money. Melissa and I achieved everything on the list above while making less than $100,000 per year. Everything.

The point of me sharing personal financial details isn't just about being transparent, and it's certainly not meant to boast (we have a long way to go to reach our income and savings goals). It's about motivating and challenging you to do the same thing, no matter what level of income you receive. Most important, it clearly demonstrates I follow my own advice, even when it feels so insanely hard.

That, is jurisdiction. And it's definitely eating my own cooking.