A FIGHTER’S GUIDE TO

CONQUERING YOUR

FINANCES

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F O R E W O R D B Y RENZO GRACIE , W O R L D R E N O W N E D P R A C T I T I O N E R O F B R A Z I L I A N J I U - J I T S U A N D M M A $27.95 USA | $33.95 CAN

Trading either commodities or foreign currencies might sound exciting. But if you haven’t mastered even the basics of money management—establishing an emergency fund, maintaining a budget, and set-ting money aside for your children’s education and your retirement—can you honestly say you’re on the path to perfecting the art of personal fi nance?

In Financial Jiu-Jitsu: A Fighter’s Guide to Conquering Your Finances, fi nancial advisor and Jiu-Jitsu enthusi-ast Scott Ford shows how mastering your fi nances—like mastering a martial art—has nothing to do with perfecting thousands of exotic, technically challenging moves. Rather, mastery is as simple as performing a handful of basic moves thousands of times. These basic fi nancial moves include:

• Prepare to Win: Paying yourself fi rst, maintaining a cash safety net, managing credit wisely, and never procrastinating

• Balance and Base: Determining your specifi c fi nancial goals, and developing a vision for your life

• Closing the Gap: Overcoming your fear of the unknown by creating a personal balance sheet and using it to analyze your current fi nancial situation

• The Power of Respect: Choosing and working with a fi nancial advisor

• Timing: Taking advantage of tax-deferred invest-ments, maxing out 401(k) contributions, and contributing to IRAs

• Gain Control: The basics of an estate plan, living trust, pourover will, and power of attorney

• Position Before Submission: Protecting your-self with insurance

• Attitude: Planning for your retirement

Learning Jiu-Jitsu taught Scott Ford to face both personal and professional challenges head on—to anticipate problems, to be open to new ideas, and to seize opportunities. Now, in Financial Jiu-Jitsu, he teaches you how to use the guiding principles of

fi nance to build a solid fi nancial foundation that can then be leveraged to help you achieve your long-term fi nancial goals, while building lasting wealth for you and your family.

You can’t plan for everything life and the economy might throw at you. But after reading Financial Jiu-Jitsu, you’ll be prepared for almost anything.

SCOTT FORD is President and founder of Cornerstone Wealth Management Group. Named one of 2008’s

“20 Rising Stars of Wealth Management” by Private Asset Management magazine, he provides proactive investment and wealth management advice

based upon his trademarked system Way2Wealth to a limited number of business owners, entrepreneurs, and affl uent families. Ford has been a guest on NBC and Fox affi liates and has contributed to the Today show. Additionally, he has been featured in the New York Times, Christian Science Monitor, Wall Street Journal and, InvestmentNews. Ford studies Brazilian Jiu-Jitsu at Clinch Academy in Maryland.

JACKET DESIGN: C. WALLACE

JACKET IMAGES COURTESY ISTOCKPHOTO AND THE ARTIST: BELT ©

GERVILLE HALL, BILLS © MARK HICKS I I , CARDS © ANTHONY TAYLOR

AUTHOR PHOTO: JAMIE TURNER FROM TURNER PHOTOGRAPHIC STUDIO

F I N AN C I A LF I N AN C I A L

A FIGHTER’S GUIDE TO

CONQUERING YOUR FINANCES

What is mind over market?

The fi nancial market is like an adversary that’s bigger, faster, and stronger than you as an individual investor could ever hope to be. Financial Jiu-Jitsu: A Fighter’s Guide to Conquering Your Finances evens the playing fi eld, showing you how to be a smarter fi ghter in the battle for fi nancial freedom.

From year to year and even minute to minute, fi nancial markets change, sometimes dramatically. The average investor grapples with this fact in one of two ways: fear everything and do nothing, or get emotionally caught up in Wall Street’s every move, reacting impulsively and irrationally to each up or down. There’s a third option. And if it’s your hope to achieve a fi rm fi nancial footing, it’s your only option—master the guiding principles of fi nance to achieve mind over market, expertly and effortlessly adapting to and overcoming market swings. Financial Jiu-Jitsu shows you how to master the basic principles of fi nance to:

• Overcome fear• Set aside emotions• Build a fi nancial foundation that can be leveraged to build

real wealth regardless of what the market throws at you

Everyone’s fi ghting a battle for fi nancial freedom. Most are losing. Financial Jiu-Jitsu shows you how to win.

[ C O N T I N U E D O N B A C K F L A P ]

[ C O N T I N U E D F R O M F R O N T F L A P ]

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Financial Jiu-Jitsu

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Financial Jiu-Jitsu

A FIGHTER’S GUIDE TO CONQUERING YOUR

FINANCES

Scott Ford

John Wiley & Sons, Inc.

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Copyright © 2011 by Scott Ford. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the Web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at http://www.wiley.com/go/permissions.

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

“Way2Wealth” is a registered trademark of Scott Ford.

For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002.

Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books. For more information about Wiley products, visit our web site at www.wiley.com.

Library of Congress Cataloging-in-Publication Data:Ford, Scott. Financial jiu-jitsu : a fighter’s guide to conquering your finances / Scott Ford. p. cm. Includes index. ISBN 978-0-470-64830-8 (cloth); ISBN 978-0-470-91069-6 (ebk);

ISBN 978-0-470-91074-0 (ebk); ISBN 978-0-470-91075-7 (ebk) 1. Finance, Personal. I. Title. HG179.F575 2011 332.024—dc22

2010018281Printed in the United States of America10 9 8 7 6 5 4 3 2 1

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Contents

Foreword ix

Acknowledgments xiii

Introduction 1

Chapter 1 Prepare to Win —Now and Forever 5

Give Back 8

Pay Yourself First 9

Automate! 10

Maintain a Cash Safety Net 11

Manage Credit Wisely 12

Get Time on Your Side 13

Never Procrastinate 15

Make Reality Your Perception 16

Follow a Simple and Comprehensive

Strategy 17

Chapter 2 Balance and Base: What Is True Wealth to You? 21

Step 1: Forget Financial Goals (At Least

for Now) 22

Step 2: Develop Your Vision for Your Life 24

Step 3: Determine Your Specifi c Goals 29

v

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Chapter 3 Closing the Gap: Analyze your Current Situation 33

Before You Close the Gap: Overcome Your 34

Fear of the Unknown

Step 1: Forget about Budgets 36

Step 2: Make Sure You Have Positive

Cash Flow 36

Step 3: Create a Personal Balance Sheet 38

Step 4: Keep in Mind the Total

Financial Picture 42

Chapter 4 Family: Your Family Benchmark 45

Your Family Benchmark: An Introduction 46

The Family Benchmark in Action 49

Time and the Power of Compounding 51

Tie the Steps Together 53

Starting Point 54

Chapter 5 Your Team of Advisors: Two Is BetterThan One: The Power of Respect 61

Types of Advisors 63

All Those Initials: Professional Designations 66

How Financial Professionals Earn Their Keep 68

Choosing an Advisor 70

Interview! 74

Trust—But Verify 77

Chapter 6 Timing: What Is Your Investment Strategy? 79

Stage 1: Build an Emergency Fund 80

Stage 2: Own Your Home 84

Stage 3: Take Advantage of Tax-Deferred

Investments 86

Stage 4: Max Out 401(k) Match

Contributions 90

Stage 5: Contribute to Traditional and Roth IRAs 92

vi Contents

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Stage 6: Determine How to Invest

Your Funds 96

Stage 7: Diversify into Other Investments 103

Chapter 7 Gain Control: Your Estate Plan 107

Estate Plans: The Basics 108

Revocable Living Trust 109

Pourover Will 111

Health-Care Power of Attorney 112

HIPAA Power of Attorney 113

Property Power of Attorney 113

Family Retirement Preservation Trust 114

Estate Planning Letter 115

But Don’t Simply File Your Plan Away! 115

Pay Attention to Benefi ciaries 118

Chapter 8 Position Before Submission: Analyze Insurance Needs 121

Protect Yourself—But Not to the Extreme 122

Life Insurance 124

Auto Insurance 131

Property Insurance 133

Health Insurance 135

Disability Insurance 135

Chapter 9 Attitude: Life in Retirement 139

How Much Money Will You Need? 141

Current Spending Estimate 141

10-10-4 Rule 144

Chapter 10 Leverage: Establish Your Tax Plan 147

Tax Savings: Homeowners 149

Tax Savings: Students and Their Parents 150

Tax Savings: Retirement 154

Contents vii

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Chapter 11 Love, Discipline, and Dedication: Have Your Plan Updated 157

Conclusion 161

Afterword 163

Appendix 169

About the Author 183

Index 185

viii Contents

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ix

Foreword

Even when I started to feel ligaments tear and knew my arm was about to break, I stayed calm.

I was leading the match against Kazushi Sakuraba, but with about twenty seconds left I had made a mistake and gotten caught in a kimura arm lock. The kimura is a basic yet powerful submission hold; executed properly the elbow and shoulder are locked and when applied at full speed can easily dislocate the shoulder, rupture elbow ligaments . . . and break bones.

So I felt my arm start to go, but there was no way I was willing to “tap,” which in fi ghting terms means to concede defeat.

Don’t get me wrong. I’m not afraid to tap. Every fi ghter taps in training. We do it every day. That wasn’t the problem.

You see, I had time to tap, but I just couldn’t do it. Deep inside I had always wanted to answer the question, “Can I listen to a bone being broken and still not quit?”

I found out I could. Since I didn’t tap, Sakuraba continued to apply more pressure, and suddenly my elbow audibly snapped. My arm was twisted at what other people have described as a horrifi c angle, but I kept my face as calm and composed as possible, mostly for the referee’s benefi t.

The referee looked at my arm, looked at me, looked at my arm . . . and I tried to convince him I was fi ne. I even said, “No, I’m okay . . . this happens all the time in training.”

He didn’t buy it. He stopped the contest.Although I did lose the fi ght, I gained something incredibly

more important than any victory I could have won. I learned, once and for all, that my mind truly is stronger than my body. Today, when things get tough, all I have to do is remember that if I can

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x Foreword

watch my arm get broken and still keep fi ghting . . . I can do anything. Our minds can be incredibly powerful tools if we let them.

That’s why I agree completely with Scott’s perspective, which you’ll read about later, regarding the pain of discipline and the pain of regret. Scott’s point is simple yet powerful: The pain of regretting what you didn’t do or didn’t try is so much worse than the pain of doing your best—in any situation.

I hope I never feel the pain of regret. In fact I love the “pain” of discipline because it ensures that I will never feel the pain of regret. (I say “pain” because doing the right thing for yourself and your fam-ily is never painful; doing the right thing is rewarding in and of itself.)

I know that if you try, anything is possible—for you, for me, for all of us. If you can dream it you can do it: In your personal life, your professional life, and in your fi nancial life.

But you have to get started somewhere. I know. I’m not just a martial artist, an MMA fi ghter, and a passionate Brazilian Jiu-Jitsu practitioner. I’m a family man and a businessman as well. I spent the last years working to develop my schools so that I can provide for my family, teach Brazilian Jiu-Jitsu to future generations, and continue my family’s legacy in the sport. Family is at the core of everything I do. I apply the same skills, the same discipline, the same drive and passion to building a fi nancial future for my family that I bring to fi ghting.

Yet in all these areas the same principles apply. Think of it this way: Mixed Martial Arts is a blend of fi ghting styles and disciplines, but Brazilian Jiu-Jitsu is the backbone of MMA. Not a single great MMA fi ghter lacks Brazilian Jiu-Jitsu skills; even if you don’t want to apply fi nishing holds you still must be able to defend against them. Ground skills are the backbone of any fi ghting art.

Along the way Brazilian Jiu-Jitsu showed me how to see life diff erently. It taught me to look at every angle, to be open to new ideas, to anticipate problems and seize opportunities. . . . Brazilian Jiu-Jitsu has taught me how to do things the right way by seeing the whole situation and choosing the right move.

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Most important, Brazilian Jiu-Jitsu taught me to face challenges head on. If you face challenges, you learn . . . and those challenges are no longer new. There is no challenge you can’t overcome.

Building wealth may seem impossible. It’s not—at least it’s not as long as you try.

You will achieve nothing if you don’t try. You can achieve anything if you try. You may never step on a mat—and you may never have to won-

der whether you should tap or not—but each of us fi ghts to provide better lives for ourselves and our families. That’s a fi ght we all want and deserve to win.

Scott will show you how.

Renzo Gracie

Brazilian Jiu-Jitsu Black BeltOwner and Chief Instructor,

Renzo Gracie Academies

Foreword xi

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xiii

Acknowledgments

Thanks to my wife Angie, for her constant love and support. Special thanks to my pastor and church family, living reminders

of the fact that any good resulting from this book — and from every-thing else in life — is a gift from God. He deserves all the thanks and praise.

In addition, I would like to extend my sincerest appreciation to the individuals directly represented in this book:

Alan Weiss, President, Regent Wealth Management Group

Jeff Rozovics, CPA, financial consultant and partner, Rozovics & Wojcicki; Brazilian Jiu - Jitsu Black Belt and gold medal winner of the 2004 Pan American Games

Jim Lake, National Sales Manager of Guardian Annuities, Brazilian Jiu - Jitsu Purple Belt

Luke Rinehart, Head Instructor, Clinch Academy

Mike Brown, former World Extreme Cagefighting (WEC) feather-weight champion

Renzo Gracie, Brazilian Jiu - Jitsu Black Belt; Owner and Chief Instructor, Renzo Gracie Academies

Ron Carson, CEO and founder of Carson Wealth Management Group

Sam Sheridan, best - selling author of A Fighter ’ s Heart and The Fighter ’ s Mind

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