Improve your financial literacy with Dan Green
When it comes to financial literacy, Dan’s The Man.
Former Kootenai County commissioner, successful business owner, husband and father Dan Green completed a two-part financial course for Press reporters on Thursday. For recap of the first class, see: https://bit.ly/2TU7pVb
The idea was that Green, who offers the same class through North Idaho College, would share research and personal lessons he’s learned, in hopes that newspaper readers might improve their financial literacy IQs a point or two and enjoy the bounties when retirement age arrives.
As you’ll see by reporters’ feedback at the end of this article, Green succeeded.
After the first session focused on financial realities, histories, dos and don’ts from a 30,000-foot view, Green dipped down to 15,000 feet in the second session to make the information more personally relevant to his students. Here are just a few key words and highlights from that class:
INTEREST: You definitely want to be on the side that’s receiving it, not the side that’s doling it out. “Wealthy people earn it,” Green said. “Non-wealthy people pay it.”
COMPOUND INTEREST: Your investments will be much more rewarding when they include compound interest, which starts earning interest on Day 1 of your investment. You earn interest not just on the amount you invested, but on the interest that investment is earning.
RULE OF 72: This is a neat formula to estimate how long it will take an investment to double in value, dividing the number 72 by the annual rate of return. Put another way: When rate x term = 72, your initial investment doubles.
MORE ON INTEREST: Dan provided mortgage charts showing length of loans, the rates of interest and the amount of interest borrowers pay over 15 or 30 years. When you see how much interest you pay on the initial home loan, Green said, “It kind of makes you want to vomit. And you wonder why banks get wealthy?”
His point: For most people, their home is their greatest asset. Get the lowest interest rate possible and pay off the loan as fast as possible.
WHEN YOU BORROW: Never borrow against a depreciating asset, like a car or boat; borrow against appreciating assets, like real estate.
THINK LONG TERM: This common theme from the first class continued through the second. Whether he was talking about purchasing a duplex or triplex, investing in the stock market or tax-free accounts like IRAs and 401(k)s, Dan emphasized letting compound interest do its thing over time.
CREDIT/DEBIT CARDS: In a word, evil. OK, Green acknowledged that credit cards can work for you when you use them to gain air miles or cash back, but only if they’re paid off every single month so you aren’t paying any interest. Debit cards are OK, he said, only if you can’t get or be trusted with credit cards. Even then, they’re dangerous.
BOTTOM LINE: Each of us aspires to be able to live out our later years in relative financial comfort without being a burden to our children or other loved ones. The key to getting there is avoiding debt, saving more than you spend, and letting the magic of compound interest work for you. Be consistent, diversify your investments and let time do the rest.
REPORTER REACTIONS
Kaye Thornbrugh
Last week, after listening to the first part of Dan Green’s financial literacy class, I had one main takeaway: “All of this makes perfect sense — but how can I apply it to my own life?”
I was unsure of the utility of Green’s advice. When going over the traditional methods — investing in stocks or real estate, for example — I felt disconnected from the conversation, largely because I couldn’t picture myself doing any of those things, now or in the near future.
In the second half of his class, however, Green reframed some of his earlier points, illustrating how an investment or savings of $50 or $100 a month can grow over an extended period. I began to see how I could implement some of this advice.
Of course, even the most sensible financial advice isn’t practical for everyone. The reality is that many people simply don’t have an “extra” $100 left at the end of the month to save or invest, or even an “extra” $50.
There’s no “one-size-fits-all” advice, no single set of instructions when it comes to financial planning. The right answer is different for everyone.
Green’s methods make perfect sense. From where I’m standing, it looks like good advice. I’ll consider it the same way I consider most advice — by taking what I can use and leaving the rest.
Craig Northrup
We go to church — or yoga, or Calypsos, or the movies, or wherever — to help fix our souls. We go to Home Depot to buy tools that will help fix our leaky roofs. The former is where we go to find answers. The latter is where we go to build our own.
For the record, I’m more of a soul guy than a Home Depot guy. (If you require proof of this, watch me try to understand a socket wrench, or just ask my wife.) It’s absurdly easy for me to tune out financial planning lectures with nothing more than the self-righteous volume knob of “I’m so glad I’m not rich.” It’s remarkably easy for me to remind myself that we can’t take it with us. It’s childishly easy for me to ask a wealthy man what that money has done to his soul.
But if you go to Dan Green’s financial planning seminars looking for spiritual enlightenment, that’s a ‘you’ problem, not a ‘him’ problem. I was thankfully reminded today that it’s not Green’s responsibility to have all the answers or solve my problems. That’s a two-person job between me and my God. Green is just recognizing the America we all live in, and he’s trying to help people navigate its dangerous seas. He’s trying to warn people there are predators in the water and give us the tools to make it safely to shore.
Banks are profiting from our debt. Car dealerships are profiting from our misfortune. Credit card companies are profiting from our pain. At some point, it’s a ‘me’ problem as much as a ‘them’ problem, a lesson I learned far too late in life. I can pray for healing in their souls, and I can warn when Jesus turns the tables on the money-changers, but what was I really supposed to expect from the world after dismissing a lifetime of financial planning strategies, all the while becoming the most delicious meal in the ocean?
Green didn’t recite my favorite quote from one of my all-time favorite movies, but I spent most of his seminar thinking about that scene in Rounders when all the cardsharks ran into one another at a poker table in Atlantic City:
“It’s like the nature channel,” Matt Damon’s character mused. “You don’t see piranhas eating each other, do you?”
Devin Weeks
Financial literacy is something I really wish I understood better when I was young. If I had attended Dan Green’s class my first semester of college, maybe that credit card with a dangerously high limit might have seemed less tempting and a little more dangerous.
I appreciate Green sharing his expertise with us. I feel motivated to get serious about hacking away at debt and participating in a 401K, which I never feel I can afford to do.
It would have been nice to have $1,000 to invest in property in the 1990s, or to go to college when it was $50 a credit. It would have been nice to have the foresight to look down the road rather than live in the moment (but I don’t regret Mexico!).
I don’t normally measure my wealth in monetary value. However, I don’t think I will be able to retire on happiness alone. Time to tighten the purse strings and make a plan that doesn’t let debt get the best of me.
Jennifer Passaro
Green spoke to the wealth divide in the country right now, where so few have so much of the wealth and so many have so little. He suggested it can feel insurmountable, but that he disagrees. “There is a way out,” Green said. “I want to help people find that way out.” Green offers tangible, attainable advice. He takes the time to explain the big picture and then tailors that picture towards the individual needs and questions of his students. I learned, for example, where to go in our community to access the loan benefits my husband earned as a veteran. I learned how to research investment in sustainable businesses. Green implored me to not take no for an answer when a bank refuses to include tipped income for a home loan. Find another banker. Assert yourself.
Green believes everyone has important questions and everyone’s questions come back to his guiding principle: we all play by the same rules. The same strategies apply to all of us. Diversify your assets. Allow yourself enough time by investing early in life. And consistently play to your comfort zone. He also echoed the wisdom of my dad and grandfathers. Don’t buy a new car. Buy an older model and pay for it outright.
Live within your means. Invest in mutual funds instead of singular stocks (Green upgraded this to include ETFs or Exchange Traded Funds operated by a program trader and accessible to people without the means to pay a financial advisor). Save for the short term and the long term by taking advantage of retirement savings accounts.
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MONEY MATTERS
Like what you’ve been reading? Want more?
Dan Green enjoys providing this public service and is branching out. The Press will promote his free classes in the community as they’re offered.
In the meantime, Green’s next class at NIC’s Workforce Training Center is scheduled from 6-7:30 p.m. April 22 and April 29. Cost is $29, which goes to NIC, not to Green.
Here’s the course description:
Roadmap to Retirement
You’re only in your 20s, so why think about retirement now? This class will help you determine your financial goals and give you the tools to accomplish your goals. Learn about investment strategies and how to avoid pitfalls that could divert you from achieving your financial retirement goals. Bring a guest for no additional fee.