My Older Brother, His Finances, My Help, A Dream

I love my older brother.  I would do anything in the world for him.  I think, care and worry about him all of the time.  No, nothing is wrong, at all.  It’s not that kind of worry, so readers, please don’t, “worry”.  I always think about how great of a person he is and the potential taking on life, in full force, as he has just as much energy as I do.  The one HUGE area he has potential in, is guess what?  His finances.  He’s not completely awful with money, but it’s moreso that he has so much potential to be that much better with money.  When it comes to family, finances is an area that you would kill to make sure that they are taking advantage of every single opportunity that they have.  I want him to be right there with me, if possible, or even have his finances in better order than mine!  That’s what we do as family.  However, it wasn’t looking like that was going to happen and after years of working with, talking to and showing him what can happen, he did one thing.  He finally said, “Lanny, please help me be better”.  That has been the best statement I heard from him all year.  

The Ask

Every few months, when we have a good amount of time to be together, we have plenty of heart to heart conversations, usually very intense, because of how hyped up our conversations become.  The topics could be about money, work, Cleveland sports, relationships, relatives or even WWE (my brothers are AVID fans).  Similarly, it was approximately 3-4 weeks ago and I was over at the house with him, and he showed me, first, that his old 401(k) plan was being terminated with his former employer, due to how long he was inactive/not employed there.  He had left that company 5 years ago, and it looks like they are trying to save money, by purging inactive accounts.  Therefore, that was topic one.

Then, I always bring up his student loans to him, to re-finance and then have two options.  Option one is to either save more money per month or option two, which is making the same payment, just pay them off sooner.  That was big topic number two.

After debate, discussion and seeing the full picture, he asked if I could help him fix this situation and make it better!

The Rollover

Going back to the first topic, it actually goes hand-in-hand with what we did towards mid-April, tax filing season.  He finally was okay with opening a traditional IRA account for him (YES! YES! YES!), in order to reduce his tax liability by an extreme amount (Tax Saving Strategy #3).  Therefore, we took that initial first step. We did not expect him to receive a notice to move his old 401(K).  Therefore, having opened that account, was going to make things very easy.  When he received that notice, he asked what we should do.  This was an easy decision and we simply did the paperwork to transfer or roll his old pre-tax 401(k) into his new traditional IRA account!  That was around May 9th, and let me tell you – it definitely takes a LONG time to get that transfer finished.  Literally, as of this writing on the 24th, the funds have finally settled into the new traditional IRA account.

He knows about my dividend investing passion.  He is finally starting to understand it a little more.  He asked me to help him manage it and buy easy companies that would be around forever.  Heck, he even said that, though he loves WWE stock, that he prefers other companies to have a better yield and even longer growth rate track-record.  This is my kind of guy!  I put together a framework for him, for stocks to consider, hell – there is a reason why I ask – is this a Dividend Investor’s stock market?  What layout did I put together for him, you ask?  Here is the breakdown:

AT&T (T)18%
Disney (DIS)11%
Procter (PG)19%
Dominion (D)19%
Pepsi (PEP)16.50%
Exxon (XOM)16.50%

What do you see above?  Just a few dividend aristocrats in PG, T, PEP and XOM.  What else?  Oh, you know, a few top 5 foundation dividend stocks of course!  I wanted to spread the love around, gather strong yield, consistency in dividend growth and have a basket of companies that have been through thick and thin in this global economy.

Very excited and pumped for him, especially because these are stocks the dividend community is buying, not to mention Bert and myself scooping up a few of these dividend stocks where we can!  The average yield of this portfolio will be approximately 4.35%, not too shabby brother, not too shabby.

The Refinance

Now, it was time to refinance.  He had two sets of loans – one set that is at everyone’s friend – Great Lakes and the other at Navient (NAVI).  The set at NAVI, had a weighted average interest rate of… grab something… 10.30%!!!  Holy crap, I thought.  That was utterly & insanely high, and I just had to put a stop to it.  The loans at Great Lakes were around 5.5-6.00%, so my focus was on package one.  So on May 11th, we submitted everything to be re-financed.  Who did we re-finance with?  The one and only… Earnest!  The process was so easy, simple and all we had to do was submit the loans, two pay stubs and they had access to his bank account.  I highly recommend.

Image result for earnest student loan refinance

So what rate did we get?!  We were able to reduce that weighted average rate of 10.30% down to… drum roll please… 5.22%!!!  That is with an auto-payment enrollment reduction of 0.25%, as well.  The rate is fixed and is set to mature at the same time period of when the loans were set to mature at NAVI.  The big difference here is that he is saving around $50 or so per month!  Also – that’s a referral in the links above for my brother, don’t hesitate to check out your rate and sign up!  I know my brother would appreciate it : )

The Plan

Now, my brother is set to roll full-steam ahead come June, when he will receive his first dividend income check!  Well, technically not a check, but at least an automatic reinvestment into more shares.  The two stocks that have been purchased thus far are Pepsi (PEP) and Exxon Mobil (XOM)!  Those dividends will arrive in June.  Therefore, the dividend reinvestment engine is going to be turned on autopilot going forward, as of right now.

Additionally, he now has $50 of NEW cash flow opened.  We have a few options, and the readers can let me know what you think on them.  We can use that $50 and take advantage of the tax benefits, by automatically setting a $50 deposit into the same traditional IRA account on a monthly basis.  That way, from June until December, that would turn into a nice $350 from that 7 month stretch.  The other option could be to apply that $50 to the student loan balance and generate the guaranteed return of 5.22%, which would be far above the dividend yield on his portfolio.  The other option would be for him just to have extra cash on whatever else he may need.

I would be very curious on what you think on the above items!  What option would you employ with the extra $50 per month?

Conclusion

Lastly, I just want to say that I am so damn happy for my brother.  I love him through thick and thin and am so excited control is going back into his court for his money.  I hope to the Lord above these are just the few steps in a long, fun journey ahead and that there will be much more to come from him, once he sees the fruit from these actions!  There will be more to come in a few months, hopefully, as I will share his progress this year.  Thank you again, everyone, for reading one of the best things that has happened, so far, this year.

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25 thoughts on “My Older Brother, His Finances, My Help, A Dream

  1. Great post. Being a teacher in my second career it resonates with me. Students have to want to learn in order for a good teacher to help them. You have much more history with your brother than I have with my students, but I see similarities in the learning process. I’m not sure which one of you this is (Bert or Lanny), but my comment applies to both. You guys are wise and mature way beyond your years. You are also a couple of my blogging idols. So impressed with what you have built here. Have a great holiday weekend. Tom

    • Tom –

      Thank you so much for the comment. I agree, they have to want to learn. This is Lanny and my brother. Appreciate all of the kind words and man, it feels nice knowing that we can make an impact. Starting to see the impact heavily on my brother, looking forward to continuing it.

      -Lanny

  2. That’s cool! My brother never needed my advice. Like me he is a slightly early retired multimillionaire with a nicely diversified portfolio. Unlike me he doesn’t earn much in retirement but then he doesn’t need to, nor do I. We compare notes often but once you have a sizable nest egg it is hard to mess that up.

    • Steveark –

      Very nice, very nice. I can see why he doesn’t need to earn much if he already has a multi-millionaire portfolio he can draw down if he wants. The egg takes time to build up, and it looks like you two are both taking care of it.

      -Lanny

  3. Nice post – thanks for sharing. As Tom mentioned above, I’m not sure who wrote the post, but well done.

    I’ve found enjoyment when also being able to help others in their personal finances or other areas. My sister was recently the same way, but her husband is probably more of a dork (in a positive, awesome manner) than most of us on this kind of stuff. So she is in good hands.

    For the $50 cash flow, I do like DRIPing but found more recently I like taking the aggregated cash and making a targeted purchase whether new names or additional shares.

    Congrats again with helping your brother out. – Mike

    • Mike –

      Thanks for the comment. I’m trying to see if he is OK with making an automated contribution to his traditional IRA each month for $50 and that once it gets up to $500, to see if there’s a stock that fits his appetite. Would love to see his portfolio not just run by itself, but to see additional capital infusions, to make the snowball heavier, as we all know! I’ll be keeping everyone posted, as time ensues on his journey.

      -Lanny

  4. Great that you are able to help your brother, Lanny. And that he is so receptive to working with you. The changes you’ve implemented are terrific.
    With the new found $50 of cash flow, I’d put it towards an emergency fund first if he isn’t set there. If that’s set, then I’d pay extra on the student loan and take that 5.22% return… Knock out that loan altogether.
    Wonderful post… Thanks for sharing.

    • Engineering –

      Thank you and really nice thought about the $50 towards a savings account/emergency account. I’ll bring that up to him about it. WOULD LOVE to see the damn loan go away, so darn bad, as it’ll help him be free. The payment he is making is $195/month on this, and would love to have that + the $50 to really ramp up his position. I’ll talk with him today when I can. Thank you, thank you!

      -Lanny

  5. I’m glad you could help your brother! I’d probably direct additional money into some kind of index fund within the IRA. There’s nothing wrong with the names in there, but over time it could be nice to have more diversification and decrease the percentage in each individual name.

  6. You get two benefits in one fell swoop. The first (and most important) you helped a family member improve their financial situation as no one wants to see a sibling or parent in financial distress.

    The second benefit is you and your brother now have yet a another thing to bond over. Bonds are what ties a family and to make to them stronger as you get older is awesome,

    • Ken –

      Of course, and wow, you are right, I didn’t even realize the 2nd part. This is very true and it makes me squint a bit, knowing that I share something that I’m so passionate about with him. Thank you again.

      -Lanny

  7. This is such a cool article. I once heard someone saying that helping other people is the most selfish thing to do, because the feeling you get from helping people out is unmatched. I think there’s a deeper meaning to that. We’re all in a hurry, meeting our obligations and busy with our day-to-day activities. We are appreciated, getting a bonus for that and so forth. But if we really make a difference something inside us reveals that to us. Therefor, I think as a human species we are not lost. ☺️

    • Glenn –

      So humbling. I would trade my work in, my entire career (for what it’s even worth), to have the moment again, from helping my brother. I put everything aside, as I know how much it would help him, in so many ways, and how touching it was to me, to see it. Just very humbling and makes you want to do more.

      -Lanny

  8. Nice post. It is awesome to see your brother taking control of his finances. I think I am with Engineering Dividends on the spare $50 a month. I would put that towards an emergency fund, if he does not already have one. If he does, then crank away on that loan until it is gone. After my students loans, I hate loans!
    Jake

    • Jake –

      I sent him a message last night to chat about the $50. I want him to do something positive, over nothing, haha, so the emergency savings is not a bad idea, if he doesn’t have one and then beating the heck out of the loan. Want him to keep doing more, so bad.

      -Lanny

  9. Beautiful post!
    I have siblings who are not in control of their economy, so I can imagine the joy of helping your brother take control.
    As for what to do with the extra $50 I would probably pay extra on the student loan. Om the other hand it could be psycologically good to use the money to increase investments in stock, and/or index funds, to put emphasis on the snowball. Maybe your brother could start enjoying saving and investing when he can see that the dividends increase contionously.
    /GI

    • Griphook –

      Thank you, thank you. I just want the $50, so bad, to go to something positive. Savings, Loan or pre-tax investments, as that’ll be worth 20%+ right there. After helping him, I just want to be able to do so much more. Appreciate the comment, more to come I hope!

      -Lanny

  10. Lanny,
    Its great you can help your brother. I’ve talked with plenty of people about investing and saving, and I no longer do it unless they broach the topic. Usually it is the view that investing is gambling, or something of that nature. Even worse is talking about saving money; someone could be driving a leased Lexus and they explain why it is necessary.
    But when I do get asked, I give total support. Glad to see you do it too. As for the extra $50, I would put it all towards student loans. For some reason, getting rid of those is more soul freeing than other loans from experience.
    – Gremlin

    • Gremlin –

      I could not agree more. Back in the past, I used to preach how anyone could save, invest, pay down debt, etc.. Only to realize, it truly takes them to hit a point in their life, when it makes sense to do just that. If only it could happen sooner than later, as we know – time is a HUGE component to everything!

      And I see the general conensus being the pay down student loan territory. That is what I’ll push for, we’ll see the outcome!

      -Lanny

  11. This is such a nice story! I have the same kinds of conversations with my own brother and hope to start managing a portfolio for him soon aswell! It’s great when you make other people realise how they can take charge of their own future! Great job Lanny!

    DI

  12. I’m glad you could help out your brother and it’s paying “dividends”…..literally! I have a younger brother, who is also in Finance. He’s pretty up there and a lot smarter than me so I think he’s good. He takes bigger risks which is reflected in his investment style too, I’d say (i.e., non-dividend paying investments).

  13. That’s brilliant you’re bro is really making some moves with his finances. Stoked for you both Lanny. My bro and I have pretty intense convo’s about life/finances/relationships too and I’m still hoping he’ll take some action on the money front. We’re both still only in our early 30’s and now is a real opportunity to set things up for our futures!

  14. Thanks for sharing. Destroy that student loan with the extra $50 (and more if he can find it in his budget). Wife and I are ~4 months away from eliminating all debt outside of mortgage. Over past 24 months we’ve dished out $88,048.22 (not that I’m tracking) to pay off student loans and small car loan. Should have anywhere from 40-50k of cash flow annually coming our way to invest and enjoy. We joked that we’re paying for a Great Lakes vacation this summer, just not the one with boats and water. Feels good to free ourselves of the debt burden and just like dividend investing, every little bit helps.

  15. Really like the way you help your brother. You remind me of my elder sister. She is also always there for me, no matter what if there is personal finance or any other personal issue. Thank you for sharing. Great post!

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