Today, more than ever, in an overwhelming world of financial complexities, there is a need to reintroduce simple concepts about money management. Contrary to popular thought, the real answers are not the exclusive property of the affluent, white-collar population. We all have the ability to succeed financially-through basic discipline and common sense. In Fields of Green, author and CPA Terry Brown shares some commonsense strategies for intelligently navigating today's complex financial opportunities. From his days growing up on a farm, Brown learned a strong work ethic and a clear vision of financial realities from a young age. Years later, lessons gleaned from working in corporate finance rounded out his approach to financial management and stewardship. Regardless of background, education, or vocation, everyone faces similar challenges-needs and wants, credit card debt, college funding, and retirement planning. Today, retirement and medical plans are much less attractive than they were even a generation ago. The keys to financial security are within your reach, but you need to understand the basic truths first-and those are what Brown offers here. By breaking down what most consider to be impossibly complicated financial theories, Brown shares these truths with the layperson. Financial wisdom is really quite accessible, once you break it down to the basics. In Fields of Green, he gives you the tools you need to confront today's toughest financial challenges.

Fields of Green

The Simpler Way to WealthBy Terry Brown

iUniverse, Inc.

Copyright © 2012 Terry Brown
All right reserved.
ISBN: 978-1-4759-5458-6

Contents

Dedication........................................................vPreface...........................................................ix1. Needs: Give Abraham His Due....................................12. Wants: Do You Really Want That?................................53. Net Worth: So Where Am I?......................................114. Assets: What We Own............................................195. Liabilities: What We Owe.......................................276. Hang with Me...................................................377. Investments and Insurance......................................398. Insurance: Term or Whole?......................................499. College Funding................................................5510. Tax Avoidance: Don't Get Carried Away.........................6311. 'Tis Better to Receive—Part 1...........................7112. 'Tis Better to Receive Cash!—Part 2.....................7713. What We Live In...............................................8314. Money on Wheels...............................................9115. How to Earn a 175 Percent Return..............................10516. Don't Fall in Love with These Two Things......................11717. It Bears Repeating—Part 1...............................12318. It Bears Repeating—Part 2...............................12719. Texting behind Home Plate.....................................13120. I Think I'm Done..............................................137

Chapter One

Needs: Give Abraham His Due

In both high school and college I never had a problem studying things I liked, especially math and business. However, I would not have given a dime to take another psychology or sociology course. For some reason, those just never captured my interest. However, in psychology I managed to retain two pieces of knowledge. One was B. F. Skinner and his tests with rats. The other was Abraham Maslow and the hierarchy of needs.

Basically, Maslow's hierarchy categorized needs from the most critical at the base of the triangle, upward to the less critical needs at the top. Examples of most critical needs are food, clothing, and shelter, while lower priority needs would be self-esteem and social approval.

Perhaps because I am a simple thinker, Maslow's hierarchy appealed to me. It just made sense that until you satisfied the basic needs of food, clothing, and shelter, all else didn't really matter.

In my grandparents' generation, and to a slightly lesser extent in my parents' generation, the base of Mr. Maslow's hierarchy pretty much summed up life in my part of the world. If you were clothed, fed, and had a nice home, you had the good life.

However, in my generation, particularly in the 1980s, advances in technology took a strong hold, and the advances have since accelerated at a dizzying pace. Specifically, a household's "basic need" of phone service as defined thirty years ago has changed drastically by today's standards. As a teenager, I distinctly remember having a four-party house phone, which we had to share with three elderly ladies down the road. Try carrying on a teen social life with that kind of communication network today. Now, the term "basic need" would encompass a private land line, two or three cell phones, texting, and Internet service.

Generations ago, education through high school was considered a great asset, and college was looked upon as almost an elite privilege. Today, high school education has become a bare necessity, and a college education has become more of a need than a luxury.

In both examples, advancements have naturally come at a cost. In many cases, per-unit consumer costs have actually decreased, such as long-distance phone service. However, the scope of services we now have at our disposal has expanded so that overall household costs have increased. In simple terms, our former wants have become needs, and we have been introduced to new wants along the way. Such is the territory that comes with a higher standard of living.

Whether we care to admit it, we all have hierarchies of needs and wants. In general, I think it is safe to assume that we would share Maslow's three basic needs of food, clothing, and shelter. Beyond that, we could fill in charts of needs and wants that would be as diverse as the American population.

Are three cars in a household a need or a want? Is an inground pool a need or a want? The truth of the matter is there is no right or wrong answer. Rather, I think it is merely a good exercise to assess one's definition of needs and wants, as this is undoubtedly something that we as a society rarely stop to consider. Hopefully, this will come back to you as a frame of reference as you read later chapters.

According to how you define your needs, the related costs are essentially what it is going to take for you to exist in terms of financial responsibilities. I prefer to label these as fixed costs, because as long as your heart keeps beating, the financial commitment must be made. This concept would apply to food, in particular. The need is always there, or fixed.

If you care to know my modern-day version of Maslow's needs, I would list in order of importance as follows: (1) food, clothing, and shelter (2) a vehicle and fuel to drive to work (3) insurance and health care, and (4) college education for my children. Granted, there are other things I could put on this list. But in keeping things simple, these four categories pretty much describe what drives me to get out of bed on cold winter mornings and go to work.

Simply put, I am driven from within to meet my definition of needs. Otherwise, I fail my family and possibly my very existence.

Summary Points

• Yesterday's wants have become today's needs.

• A more advanced society means more cost commitments.

• Maslow's hierarchy of needs helps explain how we spend our money.

Chapter 1 Exercise

List the top five needs, in order of priority, that drive you to be a financial provider. Then estimate the annual costs of these needs.

Need Annual cost

1.___________________________ 1.___________________________ 2.___________________________ 2.___________________________ 3.___________________________ 3.___________________________ 4.___________________________ 4.___________________________ 5.___________________________ 5.___________________________

TOTAL___________________________

Chapter Two

Wants: Do You Really Want That?

I am a firm believer in the 80/20 principle, which can be applied to a great many facets of life. For instance, I have often heard it stated that in a group setting, whether charitable or business, 20 percent of the people do 80 percent of the work. While I do not hold this to be an absolute truth, I do think the concept has a good bit of validity.

In presenting my thoughts, I likewise feel there is an 80/20 ratio of relevance to the population of potential readers. For example, on the upper extreme of income levels, there is a group of people who will manage to spend every dime they possess. Individuals who immediately come to mind are professional athletes with multimillion-dollar contracts. I realize it is the overall exception, but in my opinion we hear way too many instances of these individuals in bankruptcy. Personally, I...