Your Most Important Money Number - Episode 6

03/09/20 • 24 min

Among all the financial data and information that is necessary to build and maintain your financial and retirement planning, there's one number that, in my opinion, is important above all others.
It's your "MDI" or monthly discretionary income.
This is the average number of dollars you have each month after you've paid all your normal bills and supported your lifestyle. This number can be positive (surplus) or negative (deficit).
Having a surplus MDI each month affords you additional financial flexibility and choice which, in my experience, is something most people seem to appreciate.
Figuring out your personal MDI is pretty simple and straightforward.
Get your last 3 months statements from all your spending accounts (checking, credit cards, etc.) or login online and access this same information. Add up your total spending for the last 90 days and divide by 3 and this will give you your average monthly spending.
However be sure not to double-count your credit card transactions if you're paying off your credit card bill every month from another spending account.
Once you have your average monthly spending, simply deduct this number from your monthly take-home pay. This will give you your MDI.
There are some software tools & apps to help you with this process:

There are countless benefits to calculating your personal MDI and reconfirming it every year or so. We cover many of these in this episode.
If you have any questions about your MDI or anything else covered in this episode, please get in touch and let me know.
Thanks for listening.
Visit my website to learn more.

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Previous Episode

Bad News is Highly Infectious - Episode 5

Today, as I record this episode, the Dow Jones Industrial Average is down several hundred points based on more reported cases of the Coronavirus.
Not to make light of a serious situation, this is just the latest crisis du jour.
We have a U.S. Presidential election later this year. Imagine how crazy things might get between now and then.
And in the past we've experienced acts of terrorism, wars, different Presidents, new legislation, and more.
Despite all this, the market has managed to climb to new highs. And I believe that owning a diversified portfolio of stocks and high-quality bonds is still one of the best ways to build wealth for your future.
So, what are we all supposed to do in the face of scary headlines? What do we do when this feels different than anything we've experienced before?
It's simple really... just focus on the things within your control.
Listen to this episode to learn more about why I think this is important. And why it may be the best strategy for coping with news and current events that seem to have everyone freaking out.
Other resources:

Seven Stages of Money Maturity
George Kinder's book covers investor psychology and how emotions can cloud judgment on pages 143-146
The Normal
from Twitter friend and fellow advisor, Preston McSwain
and be sure check out the related reading below his article for more
Gradual Improvements Redux
Includes this great chart with a reminder of all we've dealt with since March 2009
Stock Market on Sale
Is This Different?

Thanks for listening.
Please subscribe and share with your friends, family and coworkers.
Visit my website to learn more.

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Next Episode

6 Retirement Planning Considerations for Women - Episode 7

In today's episode, I cover 6 Retirement Planning Considerations for Women.
They are:

Family is often the primary concern
Women are often caregivers
Women don't always look out for themselves
Women may find themselves alone
Women business owners
Charitable giving

While the list above isn't exhaustive, my hope is it will give you some things to think about as you plan your unique and personal retirement.
If you have any questions or would like to discuss anything covered in this episode, please let me know.
Related reading:

Thanks for listening.
Please subscribe and share with your friends, family, and coworkers.
Visit my website to learn more.

Disclosures