From Hero to Less Than Zero

Despite earning the title of “Highest-Paid (Cumulative) Running Back in the history of the NFL,” collecting just shy of $100 million throughout his 12-year NFL career, Adrian Peterson has gone from hero (money wise) to less than zero.

We’ve all heard the rags to riches stories in the athlete realm, whether it be Michael Oher, Lebron James, or Manny Pacquiao. Unfortunately, we’ve also commonly heard the contrary. Poor investments, reckless spending, and even divorce (but not limited to) have each been a cause of reduced wealth. Whatever the circumstance, there are usually three commonalities between each rich to rags story – behavior, mistrust, and a result of shame.


I know what you’re thinking… “if only.” If only I had $99 million, there would be no way I could possibly spend it to zero.

Let me propose a short scenario to show you how this happens to the average individual/household:

Your gross salary is $50,000 annually and you live a comfortable lifestyle. You are able to cover your daily living expenses, your mortgage, and your car payment. In addition, you aren’t too conscious about your spending, because you think you have no reason to be. You also spend almost every dollar after your fixed expenses are taken care of. You spend your “extra” on entertainment, eating out multiple times a week, and taking spontaneous weekend trips once or twice a month.

One day your boss walks into your office and praises you for your efforts and dedication to the company you’ve displayed over the past two years. He rewards you by increasing your annual income by 50% effective the following year - resulting in a $25,000 pay raise.

As you receive your pay raise, you begin to get excited and your “dreamer” mentality begins to take over. At the beginning of the next year, your monthly income has significantly increased. You “suddenly” begin to get tired of the car you drive and decide to purchase a new one – doubling your monthly payment. You also decided to move into a new home on the opposite side of town, which increases your monthly mortgage payment significantly. Oh, and that jet ski you’ve seen your neighbor pull into their garage… Yeah, you bought one of those too.

See how quickly your $25,000 raise can be wiped out. This is a result of poor behavior and impulse spending. Just like APs multi-million-dollar contract(s) got the best of him; your raises can get the best of you.

Solution: Create a zero-based budget. A zero-based budget is simply taking your income and subtracting your expenses to equal zero. This means give each dollar you earn a purpose.


“The truth behind Adrian Peterson’s current financial situation is more than is being reported at this time. Because of ongoing legal matters, I am unable to go into detail, but I will say this is yet another situation of an athlete trusting the wrong people and being taken advantage of by those he trusted. Adrian and his family look forward to sharing further details when appropriate.”

The statement above made by attorney Chase Carlson claiming fraud on AP’s behalf may be accurate, of course only time will tell. Yet, although AP may be a victim of this classless act, the problem is deeper, and it cannot be pawned off just on mistrust alone. Trust is assured reliance. Most point fingers, but from my experiences when one is pointed, there are four pointing back. In any situation whether it be with $99 million or $50k, at times trust is initially misplaced in ourselves. We believe we have the awareness and financial acumen to manage our new circumstances, even without previous experience or insight. AP had choices, whether he pawned off responsibility in a “trusted” attorney or businessman, AP is still left in a situation resulting from a form of mistrust.

Solution: Seek wise counsel and properly conduct due diligence.


$99 million to $0. That is a shame. Unfortunately, this story is too common and unfortunately (or fortunately if someone will learn from it) it is public knowledge. Whether it’s a businessman, a movie star, an athlete or even the common man – shame is the result of poor behavior and misplaced trust. AP has sacrificed his body for years – pee-wee football, middle school, high school, college with the Oklahoma Sooners and now 12 years on the grandest stage. All these years of brutal wear and tear on his body with no financial gain to show for.

Solution: Stand in the shoes of AP and observe his shame to avoid shame for future self. Start beginning with the end in mind.


• Implement a zero-based budget and if you don’t like the word budget, call it a spending plan. Spending plans are implemented to minimize regret and maximize your freedom while staying inside the guardrails you placed.
• We all think we know what we should and would do when facing a new circumstance, especially when it comes to a windfall of money. If/when this occurs to you, take a step back, seek wise counsel and conduct due diligence before you place your trust and financial future with them.
• The only way to avoid shame is to internalize someone else’s “mistake” and do the opposite. One way to do that is to follow Stephen Covey’s advice of beginning with the end in mind.

Which Way From Here?

In a controversial 1945 cartoon, Bugs Bunny pops up from burrowing underground. He realizes that he is in the Black Forest of Germany controlled by Nazis (note the release date). Bugs famously quips, "I knew I should've made a left turn at Albuquerque!"

A contemporary, seven minute viewing of "Herr Meets Hare" would require some viewers to look past Bugs fat shaming a rotund, lederhosen wearing Hermann Göring character, donning "blackface" to spoof Hitler and finally Bugs as Joseph Stalin in the climax scene. It added up to spicy political commentary at the end of World War II that was shown as propaganda to German POWs while Warner Bros prohibited it from being broadcast. 

As investors are trying to decide how to get to their destination, potential detours and distractions abound.

This week the entirety of Germany's government bond issuance rallied to produce negative yields. Every Bund, as they are called, from 3 month to 30 year maturities now return less at maturity than what an investor would pay for one.

If this illogical financial condition existed in the 1940's, Germany may have won WWII. This negative rate phenomenon isn't unique to Germany. This is a pan-European head-scratcher. Swiss bank/broker UBS announced that they will start charging their wealthiest customers 3/4% for the privilege of leaving funds on deposit. Thanks to the European Central Banks policy actions, more than 1/3 of all bonds on the continent now have a negative yield. 

In the face of these negative rates from Europe washing up on our shores, our own central bank, The Federal Reserve, announced a 1/4% rate cut. This rate cut was anticipated by investors but Fed Chairman Jerome Powell stunned markets by obfuscating the Feds future intentions at his press conference with a quagmire of double speak. Will they cut again later this year or was this a one-and-done move?

A bevy of weak macroeconomic data released this week justified the Fed's near-term nervousness though. The economy is clearly slowing down. The question we've pointed out is a simple but profound observation: Is this weakness a natural by-product of the Feds rate increases last year or is the problem cyclical in nature and foreshadowing a deeper downturn or heaven forbid, a recession.

To add fuel to the fires of uncertainty, Trump poured pressure on China by adding new tariffs on imported Chinese products. By doing so, Trump's trade shaming is designed to bring China back to the negotiation table instead of waiting until the Presidential election in 2 years. It remains to be seen if his strategy will be effective before the drag from tariffs stilts consumer activity.

Taken in totality these three signposts point to different potential outcomes. Investors need to think through this crazy set of events to assess what could impact their investment accounts. If Trump brings the trade battle with China to a successful conclusion, that would be viewed as pro-growth by markets. The Fed would walk back talk of further rate cuts and the bond market would have a migraine headache.

If this tariff impasse persists, US consumers, who are already signaling spending fatigue, will be shouldered with keeping the world out of recession. That's a really big "ask". With the never-ending, adversarial political tone in our country right now, Americans are being constantly cajoled in opposite directions. Don't let these distractions affect you. Stay diligent and clear headed even if you find yourself in the minority. That's the best advice to avoid ending up in the "Black Forest".

Where's My Refund?

That’s a question I was asked many times over the past few months when I had to deliver some unusual tax results to several unsuspecting clients. However, my clients were not the only ones asking this simple question. During the 2018 filing season, there was much discussion about disappearing refunds and people owing money for the first time ever. Many stories contained complaints about the Trump tax cuts, but acknowledged people were paying less in taxes. At first, I was angered by the bias of these stories, but quickly remembered that many people have an emotional attachment to their refund, and they were looking for answers.

So that raises some interesting questions to explore:

  • How can you pay less in taxes yet see your refund disappear? -If you lived in Tennessee, where we are based, the simple answer is that your tax liability was likely less for 2018, but you most likely didn’t withhold enough federal income tax from your paycheck.

  • How could I not have withheld enough if my taxes went down? - The IRS changed the withholding tables starting in March to reflect the new tax law. The design was to give people the new tax cut in their monthly check instead of having to wait until year end to get a larger refund. Unfortunately, these tables didn’t work correctly for many taxpayers.

  • What happened to my refund? - The surprise came when people started filing their 2018 tax returns. The withholding tables resulted in many people receiving more than the Trump tax cuts in their monthly pay. This additional amount either reduced taxpayers’ refunds or caused them to have to pay some of the money back. There’s no doubt that people were not prepared to write a check when they were expecting a refund.

What do I do now? – 

The best next step is to work with your CPA to evaluate your 2019 situation and make the appropriate adjustments. If left alone, 2019 may have a worse result than 2018. Remember, the new withholding tables didn’t go into effect until March, so the 2019 results will be for a full 12 months.

When you and your tax professional figure out your tax situation, you should:
  • Work with your HR department to complete a new Form W-4
  • Withhold a new amount for the remainder of 2019. At this point, you have almost 6 months of paychecks left to get your withholdings where you need them.
  • Reset your withholdings for 2020. The adjustments you make in July, for the rest of 2019, have a catch-up aspect to them, so you’ll have to establish a new set for the full year of 2020.

Next Steps-

This would be a good time to evaluate with your CPA and/or financial planner the appropriate amount of refund to receive each year. There’s no reason to give good ole Uncle Sam an interest free loan when you could take that money and invest it! If you need guidance with this situation for 2019 or beyond, please let us know how we can assist you.

Take time to Change

I recently attended a financial planning conference and had the privilege to hear James Clear speak to our group. He’s the author of Atomic Habits (great read, btw) and spoke about getting 1% better in your life every day. If you accomplish that, you’ll be 33% better in a year’s time. This can apply to your health, your relationships, your job, your productivity or even your finances. Getting 33% better at anything seems daunting, but I can handle getting 1% better at something.

I’ve begun applying some of his talk into my daily life. I make my bed every morning and intentionally spend some devotional time before I pick up my smartphone. We also began implementing Clear’s system at the office. Small changes can bring big results especially if you chain these small tasks together.

When it comes to your personal finances, small tweaks to your behavior can have seismic results for your future. For example, if you forgo the Venti at Starbucks each day, you’ll save about $1,200 in the next year. If you put $20 a week into a savings account, you’ll have $ 5,200 in five years. Often, financial freedom is a result of what you don’t do, as much as it is what you do. We see that successful retirees developed a mindset early on to save more and spend less. They held off on spending too much on certain things and now live a fulfilled life in retirement.

For many that haven’t saved, retirement seems like an impossible dream. I like to say that you can’t change what happened, but you can control what happens next. You can’t go back and re-do what’s been done in your financial life, but you do have the opportunity to change what the next five years looks like.

Tolstoy wrote “true life is lived when tiny changes occur.” How are you going to get 1% better today?

Series: Essentially Essential – Compounding with Time

Time. You cannot hold it. You cannot see it. You cannot stop it.
But… you do have a choice. Utilize it or don’t.
When it comes to planning and building wealth (or for anything) – time matters. And, compounding most certainly does too.


Time Value of Money


Compound Interest

These two concepts are both fundamental, foundational and most certainly essential. The sooner you learn them and the sooner you apply them – the better off financially YOU WILL BE!

Whether you realize it or not, time and compound interest are powerful. Time allows for potential. Compounding allows for growth. Both concepts are simple, so let’s analyze why time and compound interest matter.

What is Time Value of Money?

Time Value of Money. You may have never drawn the comparison that time and money have a mutualistic relationship - it does. Money not only has a monetary value; it has a time value too. Let’s look at a quick example:
You completed a service for a client, and you are owed $10,000 dollars. The client calls you to let you know that he is ready to give you a check for the bill. He gives you a choice to swing by his house to collect the $10,000 before he goes out of town for a month. You have a choice. Do you wait for a month or do you go by his house to collect what he owes you?

Some may say it doesn’t matter as long as they get paid, but time value of money says it does matter. Why? Because receiving money today is worth more than receiving that same $10,000 dollars at any given point in the future. Yes, even if you had the option to receive it tomorrow. Your money has potential earning capacity. This means that the $10,000 you received today; you have the potential to earn money on that $10,000 today. So, if you took the $10,000 a month from now instead of today, you would miss out on all the potential earning capacity of each day you did not have the funds.

Simply put:
• If you receive the money today – you can make money on your money today.
• If you receive the money tomorrow or at any given point in the future but had the option to receive the money today – you lose out on the potential earnings of today and every day in the future that you delay receiving the money.

What is Compound Interest?

Formula: FV = PV (1 + r)^n
(FV): Future Value
(PV): Present Value
(r): Interest rate earned per year (%)
(^): Exponent – the number of times a number is multiplied by itself
(n): Number of periods

Said to have been described as “the eighth wonder of the world” by Albert Einstein, compound interest can be simplified from the formula above. Yes – FV, PV, R, and N are each important in making your money grow, but where you capture the most growth is often the most overlooked piece of the formula. The “upside-down v” or exponent allows for compounding. It allows you to exponentially grow the present value (PV) to a greater future value (FV). To get from PV to FV the compound interest accrues - this means that not only will you earn interest on the principle (initial amount), but also you will earn interest on your interest.

Yes, you read that right. You can earn money on the money you’ve earned.

Let’s take the previous example above and say you decided to swing by your client’s home to receive the payment of the $10,000. Let’s also say you immediately took those funds to the bank and put it in a savings account. It also turns out that the savings account at your local bank is yielding 10% (for simple math – FYI, most savings accounts yield less than 1% unless it’s an online bank). Here’s what that would look like if you deposited the $10,000 and did not touch the funds for the following years:

Year One: $10,000 x (1+0.1) = $11,000
Year Two: $1,100 x (1+0.1) = $12,100
Year Three: $1,210 x (1+0.1) = $13,310
Year Four: $1,331 x (1+0.1) = $14,641
Year Five: $1,464.1 x (1+0.1) = $16,105.10
Year Ten: $1,610.51 x (1+0.1) ^5 = $25,937.40
Year Twenty: $2,593.74 x (1+0.1) ^10 = $67,275

After year one, you would have made $1,000, because you earned 10% on your principal ($10,000). In year two you would have earned $1,100, because you earned 10% on your principal ($10,000) and the interest you earned from year one ($1,000). This is what compounding looks like.

How does time value of money and compound interest work together?

In the compounding example above, let’s assume you put the $10,000 under your mattress for ten years, then decided to put it in that same savings account that was offering a 10% yield. Instead of turning your $10,000 into $67,275, your $10,000 would only be worth $25,937.40. This is due to the fact that you decided not to make the choice to utilize time, you would have lost out on $41,337.60. That’s why time matters and coupling it with compound interest amplifies its importance.

Key takeaways:

• Money grows, but you must have it to receive the potential of growth. If given the option, ALWAYS take the money NOW.
• Compound interest is perhaps the 8th wonder of the world. You can earn money on the money you’ve earned.

Are you Psychologically Fit?

It’s the day you’ve dreamt of. The day that has caused your imagination to run like a stallion. You’ve watched others experience it many times over only wishing it was you in their place. This day, the day you’ve been working for is here.



So, you’re good financially? Great! But, what about psychologically? Asking the question, “Do I have enough?” is not the only question that you should be asking. Although it is important and can be liberating, having enough is just one of many steps along the path of a having a successful retirement.

Think back to the very first day you began your career. The excitement, the newness, the possibilities. Retirement is like that! Now think back to the day you began your seventh year. The normalcy, yet you're filled with questions and new roles. Retirement is also like that.

Change occurs early and often. Unfortunately, many retirees do not think practically past the first day of retirement or even the first year. The questions of worth, purpose and identity may creep in. What you must realize is that you are a creature of habit and when change occurs, you deal with it differently than someone else. Below are some questions/strategies to spur thought as you begin that transition into retirement and if you're already to that point - start where you are now.

  • Do I have enough?
  • Am I ready to retire or am I just retiring because that is the natural progression?
  • Will I miss the relevancy that my job provided? If so, what can I get involved in to fill the void I may experience?
  • What will I be leaving behind?
  • What is my purpose in life? In what ways can I go about accomplishing that?
  • Realistically, what will my lifestyle look like? Have I put off activities or interests that I want to pursue?
  • Who has transitioned into retirement that I know? Call them and talk about the transition they had.
  • What tasks will I implement to stay active, healthy and keep my mind sharp?
  • Just like your career goals, formulate retirement goals. Set short-term, intermediate and long-term goals.
  • After the bucket list items are checked off and the grandkids have been visited, what will my day-to-day look like?
  • If I am social, what organizations or clubs are available for me to join?
  • What type of legacy do I want to leave?

Final Thought: There is no one-size-fits-all solution to retirement. Everyone has different desires and different circumstances. What everyone can do is take those desires and circumstances into consideration before and during retirement and apply serious thought to them. Each decision creates complexities. Keep in mind that life happens, so remain adaptable just like you are in your career. Keep an open mind and surround yourself with people you trust and can have tough ongoing conversations with. This is where we want to end up:



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