Personal Finance & Retirement Living by Morning Star Publications

Morning Star Publications 2011 Personal Finance & Retirement Living

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Personal Finance

And Retirement Living

Financial Independence . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Education is the key to great success . . . . . . . . . . . . . . 5 Retirement Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Reduce stress and enjoy life more . . . . . . . . . . . . . . . . . 7 Top 10 reasons not to plan for retirement . . . . . . . . . . . 8 How will the tax laws affect you? . . . . . . . . . . . . . . . . . 10

Ideas to put you tax refund to work . . . . . . . . . . . . . . . 11 Become a customer driven leader . . . . . . . . . . . . . . . . 12

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IRS encourages people to e-file . . . . . . . . . . . . . . . . . . 14 ‘Job Squad’ to help state’s unemployed . . . . . . . . . . . 15

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Morning Star Publications 2011 Personal Finance & Retirement Living

Financial Independence By Bryant Richardson This is the eleventh edition of our annual Personal Finance and Retirement Living edition. Increasingly, the economic turmoil in the United States and in many other parts of the world is making the importance of carefully managing your finances and planning for the future even more critical. Articles from experts in financial planning are offered along with some timeless articles that we repeat each year because of their importance in helping readers reach their financial and personal goals. As I’ve stated every year, the advice in this Personal Finance and Retirement Living edition boils down to a few basic facts: • Everyone living in the United States has the ability to become financially independent. • The path to financial independence requires a plan, some (written) goals and discipline. • The following lifestyle choices play a vital role in helping you to achieve financial independence:

lot more expensive than healthy things such as fruits and vegetables. In years to come, we will pay the price with heart disease, diabetes and stroke. Diabetes is a particularly expensive disease to treat. Spending - The simple, but hard to follow, rule for building financial independence is spend less than you earn and save the difference. If you are already in debt over your ability to pay, start reducing that debt by paying off the smallest amount of debt first. When that is paid off, apply that amount to the second smallest debt and keep on unil the debt becomes manageable, or better yet, eliminated. This technique of attacking the debt problem could be called the reverse snowball effect, as you watch your debt gradually disappear. We hope the information in this special inspires readers to work toward financial independence and to enjoy a better quality of life.

Education - The more you have the greater your earning potential. “An education is the best investment of time and money you can make; it’s an investment that will reap untold rewards,” says Leanne Phillips-Lowe, Marketing and Communications coordinator at Delaware Tech’s Jack F. Owens Campus in Georgetown. Phillips-Lowe says seventy-five percent of all jobs now require education beyond the high school level. Labor statistics also indicate that in addition to helping on the job, the more education a worker has the less likely he/she will be without a job. Health - The better you take care of yourself through proper eating habits and exercise, the less you’ll have to pay out in medical expenses. Dr. Anthony Policastro, who practices Pediatric Developmental Behavioral Health and Pediatrics at Nemours Pediatrics in Seaford, has long been an advocate of teaching the benefits of healthy lifestyles. “The money you are now spending on unhealthy lifestyles will need to be used to pay for your medical care. If you spend your money on bad habits now, you will not have it for later,” he warns. Dr. Policastro says smoking and overeating are particularly bad habits that can be avoided. Smokers spend several dollars per week for cigarettes. At three dollars per day (half a pack) that is $1,095 per year. Over 40 years that comes out to $43,800. Smokers will also have to spend a lot more money on their health care. We eat a lot of high calorie junk food. This food is a

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Morning Star Publications 2011 Personal Finance & Retirement Living

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Education is the key to great success By Leanne Phillips-Lowe

Late night study sessions, final exams, research papers and concerns about paying tuition cause many students to wonder, “Is a college education worth the effort?” The reply from local and national sources is a resounding yes! Although education can be its own reward, on pay day it is all too obvious that the higher your level of education, the greater the salary you can earn. It’s also vital to note that while school is about individual success, life is about team success. You won’t be successful until you learn to work with people, to be part of a team. There are many reasons to attend college, and research reveals some of the most compelling are: • 98 percent of the highest paying jobs require a college degree or higher. • While many jobs in this century may not require a bachelor’s degree, there is a need to educate “thinking people” to fill the highly skilled jobs.

• Vital skills for success in the workplace — oral communication, writing and Internet skills — are basic components of a post-secondary education. • Every career is being significantly affected by the rapid pace of advancing technology. • College graduates are more satisfied with their jobs, themselves and are more creative. Many representatives from business and industry agree educational attainment is the single most important factor when considering a candidate’s qualifications for a job. According to some human resource professionals, an applicant with an associates degree and work experience is as qualified as a person with a bachelor’s degree. It’s also their opinion that employees with a degree usually have a broader base of knowledge and are more experienced with creative problem-solving. Understanding technology and the ability to comprehend its changes is now an asset when seeking employment.

Studies often note that college graduates have experience at performing under pressure and meeting deadlines, are goal-oriented and generally more committed to their careers than high school graduates. Labor statistics also indicate that in addition to helping on the job, the more education a worker has the less likely he/she will be without a job. Faced with the facts and figures, it’s clear that furthering your education greatly increases your potential for financial and personal success. An education is the best investment of time and money you can make; it’s an investment in you, an investment that will reap untold rewards in your future.

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Morning Star Publications 2011 Personal Finance & Retirement Living

Retirement Challenges By Danielle E. Thomas While baby boomers have enjoyed a generally improved quality of life over the past decade, as many as 25 million, or nearly one third, have virtually nothing saved for retirement and face a shaky retirement picture, according to a recent study by the American Association of Retired People (AARP). The 76 million baby boomers who will turn 65 during the next two decades face many retirement challenges, including ballooning health care costs, the rising age for full eligibility for Social Security benefits, (this rising age requirement is based on a person’s birth year) and a recent three-year bear market and lower returns on investments. Two main retirement problems were identified by the recent AARP study. First, the study noted a significant drop in median income last year for the 50 and over crowd. Second, it revealed a heavy reliance by many retirees on Social Security for a large part of their annual income, with nearly half of retirees looking towards Social Security to provide more than half of their annual income. Furthermore, while the number of retired people receiving pensions

increased nearly 10 percent in the last decade rising to nearly 50 percent, more than 50 percent of the retired community remain without pension compensation. What can boomers do to best prepare for and protect their pending retirement? Plan, plan, plan The federal government is encouraging savings with increased contribution limits and even offering catch up contributions for those 50 or older. Create or update your financial plan to take advantage of these opportunities to save. Your financial plan should include an assessment of how much you need to save for retirement and what percentage of pay you should be putting aside to get there. Your plan should include holding assets in many segments of the market. An investment mix for baby boomers should aim to keep the purchasing power of your assets ahead of inflation and provide protection from future market setbacks. In order to outpace inflation, your portfolio may also contain high yielding investments like stock. Consider retirement alternatives Working part-time through part of your retirement or delaying retire-

ment even by a few years can dramatically change your retirement needs. Take for example, a 60-yearold working person with accumulated retirement assets of $411,440. Assume he is saving $24,000 per year with an estimated average investment return of 8 percent. Assuming his retirement income goal is $4,000 per month, with Social Security kicking in at age 65 ($1,640 per month,) this is how he will fare: If he retired at age 62, his assets would be depleted at age 77. If he retired a mere three years later at age 65, he would be covered until age 90. If he retired instead at 67, his assets would not deplete until he was 102 years old. A few additional years of working can make a big difference in providing coverage throughout your lifetime. This illustration is hypothetical and is not meant to represent any specific investment or to imply any guaranteed rate of return. Expect the unexpected A growing number of baby boomers say they’ll retire after 65, but while more than half of current workers plan to work to age 65 or older, and 68 percent plan to work in retirement, the current average retiree actually retired at age 62, according

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2011 Personal Finance & Retirement Living

to a recent study by the Employee Benefit Research Institute. About 37 percent of retirees said they left the workforce earlier than planned, citing health problems or disability as the reason. Polish your skills According to Age Wave, a research firm that focuses on the graying workforce, investing in your education, skills and other “human capital” by returning to school, volunteering and making contacts in your field before you retire can be worth more that what you have in the bank.

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About the Author Danielle E. Thomas, CRPC® is a Financial Advisor with Ameriprise Financial Services This information is provided for informational purposes only. The information is intended to be generic in nature and should not be applied or relied upon in any particular situation without the advice of your tax, legal and/or your financial advisor. Neither Ameriprise Financial nor its advisors or representatives provide tax or legal advice. The views expressed may not be suitable for every situation. Ameriprise Financial Services, Inc., Member NASD, part of Ameriprise Financial, Inc. © 2005-2006 Ameriprise Financial, Inc. All rights reserved.

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Reduce stress and enjoy life more Too much stress can destroy a person’s health. Following are suggestions to reduce stress: • Get to the office 15 minutes earlier. Take the rush out of your morning. • Throw away anything that doesn’t work right. • Take breaks when working on a job that’s repetitive. • Organize your desk before you leave each evening. • Do not sit at your desk and wrestle with a difficult problem. Take a walk while you think. • Tackle important jobs first. • Set up standardized procedures for jobs that you and your staff handle every day. • Living your life with integrity and honesty is the only way to live. Don’t let little problems become big obstacles.

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Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC. Some products and services may not be available in all jurisdictions or to all clients. Diversification helps you spread risk throughout your portfolio, so investments that do poorly may be balanced by others that do relatively better. Diversification and asset allocation do not guarantee overall portfolio profit and do not protect against loss. Consult with your tax advisor regarding specific tax issues. *Ameriprise helped pioneer the financial planning process more than 30 years ago. Our unique Dream > Plan > Track >® approach is about more than just numbers, it’s both science and art. We have more financial planning clients and more Certified finanCial Planner™ professionals than any other company in the U.S. based on data filed at adviserinfo.sec.gov and documented by the CFP Board of Standards, as of Dec. 31, 2008. © 2008 - 2010 Ameriprise Financial, Inc. All rights reserved.

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Morning Star Publications 2011 Personal Finance & Retirement Living

Top 10 reasons not to plan for retirement Provided

John L. Downes

You probably read or hear about some “Top Ten” list nearly every day. But take a moment to read this one. This list is different, and probably not the kind of list you’d expect a Financial Advisor to write. Reason #10: “I’m too busy” I can’t tell you how often I hear this excuse. So many people want to plan for a better retirement, but they don’t have time. They think they’ll take care of it tomorrow, or the day after that … and before they know it, several years have gone by. The best advice I can give you is to stop procrastinating and start planning today. Reason #9: “It’s too soon” I don’t know how this happened, but many people have adopted the notion that you don’t have to start planning for your retirement until you’re almost there. This is totally incorrect. The truth is, the sooner you start planning, the better chance you stand of having the kind of retirement you want. It’s never too soon. Many people start planning in their early twenties! Reason #8: “It’s too late” If you’re already near or past your retirement eligibility date, you may think that whatever you’ve got is what you’re stuck with and it’s too late to do anything about it. Think again. If you’re unsure of what your options are, speak to a professional. Even if you’ve already retired, it’s important to consider how you’re receiving income and how long it will last. It’s never too late to revise your income distribution strategy. Reason #7: “I don’t need to” I’ve heard this excuse many times and it always baffles me. Many people think that because they’ve been diligent about contributing to a savings account, they’re all set. While saving for retirement is good, you also need a plan for income distribution once you enter retirement. Are you certain that what you’re saving will be enough? Have you considered your distribution plan? What about taxes? What about inflation? And are you sure your money will be properly invested? There may be other, better options for you and it may prove worthwhile to look into them. Reason #6: “I don’t have enough money to get started” This excuse seems marginal at first glance, but there is some truth behind it. You need to have money to save or invest money. However, unless your bills are exactly equal to or greater than your net income, you DO have enough to get started. Starting small is better than not starting at all, and if you plan well, you’ll eventually have more to work with.

Reason #5: “My finances are a mess” This is all the more reason to seek out an advisor who can help you sort through and understand your assets. Perhaps you have a 401(k) from a former employer that has not been rolled over, a couple of savings accounts, a trust from a deceased relative, some stocks that your parents bought in your name when you were younger … a circumstance like this can be confusing, but leaving it as it is won’t improve the situation. Consider speaking with an advisor who can look at your complete financial picture, help you to understand it, and help you to develop a plan to make your “financial mess” work for you. Reason #4: “The Government will take care of me” The bottom line is this … there’s a chance Social Security may not be available when you retire, and even presuming it is, it may not be enough to provide your ideal retirement income. If you’re planning to retire on Social Security alone, I would advise you to create a back-up plan at the very least. Est . � 1900

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Morning Star Publications 2011 Personal Finance & Retirement Living

Page 9

Reason #3: “With my savings and 401(k), I’ll be fine” Saving for retirement without an income distribution plan can be a mistake. How will you use that money once you have it? And while you may think you’ll have everything you’re going to need, have you considered inflation? Taxes? And furthermore, some people are living past 90. Will your assets last that long? If you outlive your income, what then? It’s a good idea to look ahead and plan lifelong income. Reason #2: “I don’t want to think about it” Many people procrastinate simply because the thought of discussing financial matters (or growing old) is unappealing. I can certainly understand that. But consider this … if you bite the bullet now and put a firm plan in motion, you may not have to think about it again for quite some time. Reason #1: “I don’t know how” If you knew everything there was to know about financial planning, you’d probably be a financial advisor yourself. While it is possible to do everything on your own, that generally involves a great deal of research and a huge time commitment. If you’re putting off retirement planning because you don’t know how, consider speaking to a professional who does. These are just some of the reasons why people don’t plan for retirement … but these are reasons, and not excuses. If you have retirement goals you want to reach, I would recommend you speak to a qualified Financial Advisor and set up an action plan. The sooner the better. John L. Downes is a financial advisor with IM Financial Services, a division of The Insurance Market, Inc. He is also a representative with Woodbury Financial Services, Inc., and may be reached at (302) 875-8304 or jdownes@ woodburyfinancial.net.

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Morning Star Publications 2011 Personal Finance & Retirement Living

How will the tax laws affect you? By Melinda Tingle and John Rittenhouse Now that the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 is law, you’ll want to familiarize yourself with how this new legislation affects you — both as a wage earner and an investor. Consider these key parts of the new tax laws: • Income tax rates remain the same. Under previous legislation, tax rates were scheduled to rise in 2011, but the new laws will keep all tax brackets the same. • Payroll taxes reduced by two percent. Your share of the Social Security payroll tax will drop from 6.2 percent to 4.2 percent for 2011. Consequently, you should see more take-home pay. You may want to consider investing at least part of this savings in another retirement account, such as an IRA. • Top capital gains and dividend tax rates stay at 15 percent. The question of what would happen to capital gains and dividend taxes has been of great interest to most investors. For the past several years, the highest capital gains and dividend tax rate has been 15 percent. However, this 15 percent rate was scheduled to expire at the end of 2010; after that, dividends were to be taxed at one’s standard income tax rate, while long-term capital gains would be taxed at 20 percent for anyone above the 15 percent income tax bracket. But due to the new legislation, the highest tax rate for both capital gains and dividends will stay at 15 percent for at least 2011 and 2012. • The capital gains and dividend tax provisions can

have significant effects on your investment decisions over the next two years. You now still have a strong incentive to follow a “buyand-hold” investment strategy, under which you’d earn the favorable 15 percent rate on capital gains from selling an appreciated asset, such as a stock, that you’ve held at least one year. And the 15 percent rate on dividend taxes will continue to provide you with good reason to seek out those stocks that regularly pay dividends; besides offering an advantageous tax rate, dividends, when reinvested can help build your ownership stake in the dividend-paying investments. (Keep in mind, though, that companies are not obligated to pay dividends and can reduce or discontinue them at any time.) • Estate tax exemption set at $5 million per person. Under previous tax laws, the estate tax was scheduled to be repealed entirely for 2010 only, and then return in 2011, with an exclusion amount of $1 million and a top tax rate of 55 percent. Under the new legislation, the exclusion amount for 2011 and 2012 is $5 million per person ($10 million for married couples), with a top tax rate of 35 percent. The new law also includes a “portability” provision which can provide increased flexibility in estate planning between married couples to attain full use of the $10 million exemption. You’ll need to see your tax and legal advisors to determine what, if any, changes you’ll want to make to your estate plans for the next couple of years as these laws will sunset at the end of 2012. • Gift tax exemption set at $5 million per per-

son. Under previous tax laws, the gift tax exemption for lifetime gifts was $1 million. The new legislation increases the lifetime gift tax exemption to $5 million per person. You should work with your tax and legal professionals to determine whether the new exemption amount provides opportunities for you to consider during the next two years. As always, changes in tax laws can have a big impact on your financial future — so stay informed and take the steps you need to keep progressing toward your goals.

free review Do you have the right investments in place to help you meet your financial goals? At Edward Jones, our business is to help people find solutions for their long-term financial goals. edward Jones ranked “Highest in investor Satisfaction with full Service Brokerage firms, Two Years in a row,” according to the J.D. Power and Associates 2009 and 2010 U.S. full Service investor Satisfaction StudiesSM. Edward Jones received the highest numerical score among full service brokerage firms in the proprietary J.D. Power and Associates 2009–2010 Full Service Investor Satisfaction StudiesSM. 2010 study based on responses from 4,460 investors measuring 12 investment firms and measures opinions of investors who used full-service investment institutions. Proprietary study results are based on experiences and perceptions of consumers surveyed in May 2010. Your experiences may vary. Visit jdpower.com.

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Morning Star Publications 2011 Personal Finance & Retirement Living

Page 11

Ideas to put your tax refund to work By Melinda Tingle and John Rittenhouse It’s tax refund season again. This year, if you’re going to get a check from your Uncle Sam, why not put it to work to help you meet your financial goals? Last year, the average tax refund was more than $2,700, according to the IRS. The size of your refund, or whether you will get one at all, depends on your individual circumstances. But if you are going to get a refund, plan ahead for what you’ll do with it. Here are a few possibilities: • Pay down some debts. In these difficult economic times, you may be carrying a higher debt load than usual. If so, you may want to use some of your refund to pay down some of these debts. The lower your debt payments, the better your cash flow and the more money you’ll have to invest for the future. • Build an emergency fund. If you don’t already have an emergency fund containing six to 12 months’ worth of living expenses, you could use your tax refund to start one. Without such a fund, you may find yourself constantly dipping into your long-term investments to pay for unexpected costs, such as a new furnace or an expensive car repair. Keep your emergency fund in a liquid account — one that you don’t draw on for your day-to-day expenses. • Help fund your IRA. In 2010, you can put in up to $5,000 to your IRA. Consequently, if you received a $2,700 refund,

you’d have more than half of what you need to fully fund your IRA for the year. (If you’re 50 or older, however, you can contribute up to $6,000 per year.) You might not think that your $2,700 would make much of a difference in the long run. But by investing your refund and giving it many years of growth potential, you could end up with a sizable amount. Consider the following: If you put $2,700 in your IRA, and you earned, on average, seven percent a year for 30 years, you’d end up with about $20,000, even if you never invested another dime. If you put $2,700 every year in that same IRA, again earning an average seven percent annual return, you’d end up with more than $270,000 after 30 years. (These examples are hypothetical illustrations and do not represent any currently available investments.) You’d eventually have to pay taxes on your earnings, typically when you make withdrawals at retirement. And if you qualified for a Roth IRA, you’d never have to pay taxes on your earnings, as long as you had your account for at least five years and didn’t start taking withdrawals until you were at least 591/2. • Contribute to a Section 529 plan. If you have children or grandchildren, you may want to establish Section 529 plans to help them pay for college. You can contribute virtually any amount, and the earnings grow tax-free, provided the money is used for higher

education expenses. (Withdrawals used for expenses other than qualified education expenses may be subject to federal, state and penalty taxes. Contributions are tax-deductible in certain states for residents who participate in their own state’s plan. Please

note that a 529 college savings plan could impact a beneficiary’s ability to qualify for financial aid.) You may be tempted to spend your tax refund on things you want today — but, with a little planning, you can use it for things you need tomorrow.

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Morning Star Publications 2011 Personal Finance & Retirement Living

Become a customer driven leader in your business By Michael A. Aun In my new book “It’s the Customer, Stupid!” (John Wiley & Sons/January 2011), I cite one of the hallmarks of effective leaders. They see their role as one that is constantly unfolding. Customer driven leadership is about helping people make some memories. “If you’re coasting, you’re heading down hill.” One of the big misconceptions about any customer driven leadership position is that you can get to a point where you can coast. Coasting is not even an option for the leader. The efficient leader is always looking for ways to build a better mousetrap. They constantly question the status quo, rather than accepting it as the reality of the situation. Many times we coast at the expense of making a decision. Coasting is about not being able to decide. And a “no decision” is, in fact, a decision. Judge the leader neither by the number of times that they made a bad decision nor the number of times they made a good one. Success or failure should be measured in direct proportion to the number of times you fail and keep trying. Babe Ruth, for many years, was the home run king of major league baseball. He was also the strikeout champion. The great ones never rest on their laurels. If you rest on them, you could rust on them. “Great customer driven leaders are patient for reasons of self preservation.” “If you are patient in one moment of anger, you will escape a hundred

days of sorrow,” according to the old Arabic proverb. Leaders who jump to conclusions may regret their decision 24 hours later. It’s okay to vent your frustrations both verbally or in writing, but do it to yourself in the privacy of your own office. Make sure you give yourself 24 to 48 hours of time to evaluate your choice of words. Revisit the recording or printed document a day or two later to see if you still feel that way about the issue. Evaluating your decision is more objective. You might want to soften it or strengthen it, but at least you can now approach it more objectively. “Customer driven leaders understand that nothing big ever came from something small.” The great achievements in the world always came from a bigger picture. Small-minded leaders think only about the “here and now” and only “themselves.” Adolph Hitler, on the other hand, thought “VERY BIG” in his book Mien Kamph (My Struggle). Unfortunately, he also got a lot of other people to think the same way. Hitler was able to accomplish this principally with his verbal skills. He was a master orator even if his goal was not noble. But in the end, Hitler’s mission was very small and destructive. Nothing big ever comes from anything small. “Customer driven leaders minimize the worst and maximize the best.” Leaders who understand that bad things happen to

good people are keeping their eyes open for ways to minimize the bad and maximize the good in every situation. “Customer driven leadership is a lot like love - you either have two winners or none.” Leaders who love the people they lead are infinitely further along than those who simply tolerate others. Love is more about respect than tolerance. It’s been said that the most important thing a father can do for his children is to love their mother. Perhaps the most important thing a leader can do for his troops is to love the profession of which they are both a part and always

do the right thing. This concept is found in the presence of love. Leaders who make it difficult to do the wrong thing are recognizing their value system and taking a position. “Customer driven leaders don’t just look for the right people, they become the right people.” It’s certainly not fair to expect to give away what you don’t own. If your company sells widgets for a living, as their leader, you should be one of the best widget sales people there are. You don’t have to be the best, but in order to help others learn how to sell your product, you should at least have walked that path. One of my big com-

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Morning Star Publications 2011 Personal Finance & Retirement Living

plaints about the speaking profession is that there are lots of speakers giving book reports. They’ve never sold, yet they speak on selling. They’ve never run a company, yet they want to tell other people how to run theirs. “Customer driven leaders don’t point fingers; they lend a hand.” They love showing people what to do and how to do it and they lend a helping hand. Their value is in their love for others. You can’t motivate people! In my latest book “It’s the Customer, Stupid!” I admit that I don’t believe in motivation. I have had the privilege of speaking to over 2,000 audiences in my nearly four decades on the platform. I am probably the only so-called motivational speaker in America who doesn’t believe that you can motivate someone to do anything. I have learned three things about motivation. 1. You can’t motivate anybody to do anything they don’t want to do. Motivation is an internal thing, not an external thing. 2. The second thing I’ve learned is that all people are motivated. The person that stays in bed in the morning rather than getting up and going to work

is more motivated to stay in bed than to work. They might be negatively motivated, but they are nonetheless motivated. 3. The third thing I have learned is that people do things for their reasons and not for yours. The trick is to find out what their reasons are. The fact of the matter is our clients do business with us for their reasons and not because we have something we need to sell. They keep their business with us for their reasons as well. Our job is to find out what those reasons are. It starts with asking great questions We need to find out what’s on the client’s mind and that starts with asking great questions. They need to be open-ended questions that demand an open-ended response. “Who, What, When, Where, Why, and How” questions are absolutely critical to the success. Avoid “Did, Would, Could, Should, Can, Do and May” questions because they will elicit a yes/ no response. You want your client to expound on what’s bugging them. If you lead with “Did, Would, Could, Should, Can, Do and May” then be prepared to have a follow-up question to draw them out. It al-

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lows the client to vent their concerns about a situation. It’s a lot like paddling a canoe upstream. If you don’t keep paddling, you’ll go backward. You have to work through situations. The person asking the questions in the interview process is the person in control of the interview. When clients start posing questions, it’s your job to respond with nonthreatening informationgathering questions. Regain control of the interview. That’s the only way to find out the client’s motivation. What happens when an irate customer literally lambasts you with a complaint and then refuses to give you an opportunity to respond? How do you deal with it? In simple terms - don’t let them overwhelm you. Reinforce that you are not their enemy

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Michael Aun’s new book, “It’s the Customer, Stupid!” talks about customer driven leadership.

and that you want to help, but if you’re not allowed to engage the disapproving customer, it’s hard to solve their problem. Sometimes you have to fire the irate customer until

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Page 14

Morning Star Publications 2011 Personal Finance & Retirement Living

they can at least give you the space you need to ask questions and help resolve their issues. Sometimes the more irate a customer the more likely it is that they will make unreasonable demands that you can’t possibly fulfill. Try to come to the conclusion as to what will make them whole again. There are several tips to dealing with this kind of an unruly customer: 1. Diagnose the issue. 2. Get the client to define what they consider is the solution. 3. Be prepared to make an offer that will make them whole again. 4. Don’t promise more than you are prepared to deliver. Inevitably, this can sometimes become a negotiation ploy where the customer is expecting far more than they deserve or than you can deliver. You can’t throw in a free computer because a printer is not functioning. The client has to be reasonable and you have show fairness. How do you say no to an unreasonable request? First, you must be well-mannered in your approach. Nobody likes to hear “no.” It’s even more frustrating when it is fu-

eled by emotion. You must adhere to the company’s policies but you have a responsibility to the customer as well. Approach the circumstance with balance. Some problems simply can’t be solved on the spot. What if you don’t have the widget that the client is asking about in stock? The client is quick to ask “Why don’t you have it? You’re supposed to be in the business of selling widgets? I don’t understand!!!” The answer is to step up and admit it. “Mr. Client, we clearly dropped the ball on this one. We’ve always tried to be here for you in the past, but there has been a run on widgets this week. May I express ship you the widget as soon as we get it? Fair enough?” Fair enough? The sweetest words in the English language are “fair enough.” They don’t invite confrontation but rather suggest compromise. They are soothing, transitional words that invite a solution. Michael Aun, FIC, LUTCF, CSP, CPAE Speaker Hall of Fame is a businessman and motivational speaker. He is the author of seven books. To reach Michael, call 1-800-356-0567 or visit www.aunline.com/blog.

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IRS encourages people to e-file IRS e-file, the popular electronic tax return preparation and delivery service used by over 287 thousand Delaware filers last tax season is now available for this tax season. The benefits of electronic filing include: • Faster refunds: Using electronic filing along with direct deposit into a bank account can speed refunds to e-filers in as few as 10 days. • More accurate returns: IRS computers quickly and automatically check for errors or other missing information, making e-filed returns more accurate and reducing the chance of getting an error letter from the IRS. It eliminates most common errors, such as math errors. The error rate with paper returns is about 20 percent compared to about 1 percent with e-filed returns. An error on a tax return can delay the issuance of a tax refund. • Quick receipt acknowledgement: Computer efilers receive an acknowledgment that the IRS has received their returns. Paper filers do not receive any acknowledgement. Also, if the IRS rejects an e-filed return, it will provide more specific explanations of the errors that caused the rejection. This will enable taxpayers to make corrections and quickly resubmit their returns. • Safe & Secure: Over the last 21 years nearly 900 million individual tax returns have been efiled nationwide without a breach of security. • Tax return information is protected through encryption For more information on IRS e-file and Free File, visit www.irs.gov. Why look back on the good old days when you can look forward to new ones.

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2011 Personal Finance & Retirement Living

Page 15

‘Job Squad’ to help state’s unemployed In a recent weekly message, Governor Markell focused on getting people back to work and mobilizing professionals from Delaware’s Department of Labor to help those looking for jobs. Governor Markell calls on businesses to put professionals from Delaware’s Department of Labor to work to help them find their next great hire and help unemployed Delawareans get back to work. “To get people back to work, we need to be one of the best employment offices for talented people across the state still looking for work,” said Governor Jack Markell. “Recently, I joined with businesses across the state to unveil the efforts we’re making to connect potential employers with Delawareans ready to get back to work. We call this effort – the Job Squad.” The Job Squad is a good example of how an agency known largely as an “Unemployment Office” can also function as a top notch employment office, putting a team of people hard at work to identify a company’s needs and help them fill them with Delawareans who are immediately available. “Most people out of work don’t want a check, they want a chance. A chance to show employers how much value they can bring. A chance to get up and go to work each day and demonstrate that they have the time, energy and talent to make a real difference,” said the Governor. “A chance to head home from that job knowing that their hard work is helping provide for their family.” The state wants to make chances more real for more people, which is why Delaware is encouraging businesses across the state to turn to the Job Squad and the Department of Labor’s Business Services Unit for help finding their future workers. If there’s a company with a job to fill, Delaware wants to help fill it and help get a Delawarean back to work.

A priceless personal asset Every day everyone has 86,000 seconds of time to invest. Whatever of this you have failed to invest to good purpose is gone forever. Invest your time so as to get from it the utmost in health, happiness and success. The clock is running! Make the most of today. • To realize the value of ONE DAY, ask the lovers who are waiting to meet. • To realize the value of ONE SECOND, ask a person who has survived an accident. • To realize the value of ONE MILLI-SECOND, ask the person who has won the silver medal in the Olympics. Treasure every moment. Time and life are precious, learn to live it to its fullest and you’ll never have to regret the things you didn’t do!

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MakE a worLd oF dIFFErENcE. To help provide newspapers to area classrooms, please contact karen cherrix today at 629-9788 or mail this coupon with your donation. Your Name/Business: __________________________ ___________________________________________ address: ____________________________________ ____________________________________________ __________________________________________ ___________________________________________ Phone: ______________________ Enclosed is my donation $_______ Mail to: The Star, attn: NIE Program Po Box 1000, Seaford, dE 19973

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Morning Star Publications 2011 Personal Finance & Retirement Living

Mortgage foreclosure program works to keep families in homes A court-ordered change to the state’s Residential Mortgage Foreclosure Mediation Program could help families facing foreclosure stay in their homes, a Newark legislator said recently. The changes to the state’s foreclosure mediation program are now in effect and double the amount of time a homeowner facing foreclosure can enter the mediation program from 15 to 30 days, a change that Rep. John A. Kowalko said might seem simple, but makes a huge difference. “People who are eli-

gible for this program are at their last gasp, holding on to a fraying rope while hanging over a cliff,” said Rep. Kowalko, D-Newark. “Two weeks can go by in the blink of an eye. Doubling the time for a person to enter this mediation program gives people who are on the verge of homelessness a few more precious moments to settle their thoughts, focus and hopefully work out a solution to stay in their homes. It provides stability and will increase the accessibility and effectiveness of the overall program.” An administrative direc-

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Morning Star Publications 2011 Personal Finance & Retirement Living

tive issued on Jan. 20 by Superior Court President Judge James T. Vaughn Jr. made some modifications to the state’s mortgage foreclosure mediation program, which was created in September 2009. The program was designed to provide assistance to homeowners and lenders, via a trained mediator, to help negotiate possible alternatives to foreclosure actions. When a foreclosure action is taken against a homeowner, notification is sent to the homeowner advising them to seek counseling with a Housing and Urban Development-certified counseling agency. Under the former rules, a homeowner had 15 days to seek counseling. A steering committee of attorneys for borrowers and lenders,

bankers, advocates and housing counselors recommended the change, which Judge Vaughn said was the right decision. “The Superior Court continues to fully support the Mortgage Foreclosure Mediation Program,” Judge Vaughn said. “When the program was created, we were aware that changes may be needed to improve it. The changes now recommended by the committee do that and the decision to approve them was an easy one for the Court. The program continues to be committed to give homeowners the opportunity to negotiate an alternative to foreclosure, without affecting substantial rights of lenders.” The new administrative directive also adds an additional mediation day in

New Castle County. According to Community Legal Aid Society, since the program’s inception in September 2009 through June 30, 2010, 100 homeowners have qualified for the mediation program. Seven have worked out agreements to avoid losing their homes, while another 18 have reached an agreement outside the program. Another 31 homeowners have agreed to continue the mediation so the parties can collect and exchange additional information. The parties often exchange the information prior to the next mediation and resolve the matter outside the mediation program. “We very much welcome the actions taken

Page 17

by Judge Vaughn and the Steering Committee which improve the Residential Mortgage Foreclosure Mediation Program and, specifically, increase access to homeowners by changing the application time from 15 to 30 days,” said Delaware State Housing Authority (DSHA) Director Anas Ben Addi. “We strongly encourage anyone facing foreclosure to take full advantage of this program, as well as other innovative foreclosure prevention resources. Governor Markell, DSHA and our many partners continue working hard to expand programs like mediation, housing counseling and DEMAP, and to develop new tools that will create more positive outcomes and keep Delaware families in their homes.”

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Morning Star Publications 2011 Personal Finance & Retirement Living

Patience pays off when saving Start early and with these steps

Almost everyone understands the need to take control of their money, but many don’t understand some of the keys to building financial security. Here are four that will help you achieve your financial goals: • Pay Yourself First — Before anyone else gets a claim to your money, pay yourself by putting a set amount aside in a savings or investment account. A good objective is to save eight to 10 percent of your income. • The Power of Time — When it comes to achieving financial security, time

is the most important tool you have. Combined with two other important elements, rate of return and consistency, the power of time is a key to achieving financial security. • The Power of Compounding—Com pounding is one of the most important keys to wealth you will ever learn. With the power of compound interest at work for you, you’ll be amazed at how quickly a few hundred dollars becomes a thousand. • The Importance of Rate of Return—The impact of rate of return when combined with time is significant. If $1,000 was deposited for a child at 6 percent, the

THE TIME VALUE OF MONEY Age Contribution

18 30 40

$600,000 —

At Age 65

% Gain

$54,746 $527,538 964% $40,768 $200,000 491% $29,120 $85,154 292%

$500,000 — $400,000 — $300,000 — $200,000 —

$100,000 — $0 —

Age 18

Age 30

Age 40

The chart compares the retirement funds accumulated at age 65 for a The chart compares the per retirement age 65 person working 40 hours week at funds $7 peraccumulated hour, saving 8at percent of for atheir person 40 hours per of week at just(pre-tax). $7 per hour, saving 8% pay working with an average return 8 percent

or their pay (pre-tax) with an average return of 8%. The earlier the savings discipline begins, the better the retirement fund.

amount at the end of 65 years would be $44,000. If deposited at 9 percent, the amount at the end of 65 years would be $270,000. The difference: $226,000.

BE SMART YOUR PENNIES

While there are many other “fine points” of money management, these four keys will get you started on the path to financial success.

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