Maximize Your
Financial Metabolism

INTRODUCTION

Susan Feitelberg is a nationally-ranked triathlete and vice president at JPMorgan Chase where she teaches The Net Worth Workout seminar to investment advisors and their clients. A marathoner, Feitelberg is all about the long game; she'll quickly convince you of the benefits of trimming your expenses, maximizing your benefits, and using an automatic savings plan. The results of The Net Worth Workout cumulate over time into the kind of fortune that makes dreams come true: home ownership, college for the kids, a secure retirement.

The excerpt, below, provides a good example of Feitelberg's approach. It shows how one middle-aged couple painlessly liberated about $200 from their monthly expenses. When they reach retirement, that savings will likely have grown to almost a million dollars! It's not windfalls that make most people rich -- it's the routine.

Barnes & Noble is offering a free class called Get Your Finances in Shape through their newly-renovated online book clubs. The class is based on the The Net Worth Workout and is taught by financial advisor Susan Feitelberg. The class is self-paced: you can start any time while Barnes & Noble is offering the class. Sign up today before this opportunity goes away at

http://www.barnesandnoble.com/bookclubs/

You'll find more information about the book, The Net Worth Workout and author Susan Feitelberg, following the excerpt. Enjoy!

In the previous section, we looked at your income in terms of its actual dollar amount. Now let's focus on your benefits -- the great untapped gold mine of American wage- earners.

Did you know the typical employer spends an additional 20 percent to 40 percent of an employee's compensation providing them benefits? If you're thinking you'd rather have that amount in cash, you're not alone, but your employer reaps huge tax deductions from funding your benefits.

Most of us face the uncertainty of not knowing how secure our jobs are. Today, it's not unusual for companies to even reduce your income or not give you the typical inflation raise of 3 percent to 5 percent, and that's not very comforting. Worse yet, though it's there for the taking, most employees allow very large percentages of their income to go to waste -- a significantly higher percentage than the 3-to-5 percent bite of inflation -- because they don't use most of their benefits.

At most companies, only 10 percent to 25 percent of employees take advantage of prepaid services like concierge or free legal services, etc. Can you guess why? Many human resources departments are thinly staffed and don't have enough personnel to educate their employees. It's as if you vacationed at a fitness camp where the kitchens were stocked with healthy food, but there was no budget left over to hire nutrition coaches.

Whether or not your employer promotes its "healthiest options," let's start with the must-haves today. The first three benefits I tell my clients to sign up for are the healthcare and child-care spending accounts, transportation spending, and company match. You might be tempted to dismiss these offerings, particularly the last two, because they're not cash. But think of it this way: These three expenses must be paid for one way or another. If you don't take advantage of the break you'll get through your employer, you'll have to surrender some of your hard-earned cash to pay these expenses out of pocket. If you think of your benefits this way, they start to seem like found money!

Let me give you an example. My client, Mark, was making a good income of $65,000 a year. But a young family and a long commute ate through his paycheck in no time. I tried to help him find ways to maximize his income so he would have more left over from each paycheck to invest.

When we looked at Mark's expenses, we learned that every year he and his wife paid at least $1,800 in health-care costs: the $500 deductible on their health insurance, prescriptions that weren't completely covered, contact lenses, and so forth. Then there was the cost of child care for their five-year-old daughter, which totaled more than $600 a month. The train pass to get Mark to work every day cost him $150/month. When we reviewed his benefits, I told him he was wasting thousands of dollars every year. Of course he wanted to know why!

I suggested that he exert a little energy and boost his metabolism by setting up a flexible spending account (FSA), which would allow him to put away money, pre-tax, to pay for healthcare expenses. In fact, Mark's employer would also allow him to use a child care and transportation spending account. These accounts saved him a substantial sum, because he could get all the healthcare, child care, and transportation services he needed cheaper.

Look at it this way: If you could buy an identical item, one costing $100 and another costing $65 -- and there wasn't any difference in quality -- wouldn't you rather pay $65? It was the exact same thing for Mark when he began using these three spending accounts. Mark's annual cost for these services totaled $6100. By paying for these services with pretax dollars, he significantly increased his savings. We saved him $2,135! We helped Mark reduce his taxable income, effectively paying less for the things he had been buying with after-tax dollars.

That's step one. Step two: Turn income into income!

That "found" $2,135 in income can be redirected toward a college fund for his daughter's education or a retirement plan for Mark and his wife. Let's say Mark takes this $2,135 and invests it into a Roth IRA. (A Roth IRA is a retirement savings vehicle. The contributions aren't tax deductible, but assuming all conditions are met, the money withdrawn is completely tax-free. Also, there is not a required minimum distribution after age 70-1/2.)

We'll assume that since Mark is thirty years old, he chooses a Roth IRA that invests in the S&P 500, where the average return has been 10 percent, and he continues to add another $2,135 to his account each year until he retires. When Mark reaches age sixty-seven, that Roth IRA will be worth $847,696. Tax-free!

That means Mark can generate a tax-free income of $33,907 per year for the rest of his life! (This figure assumes he pays out 4 percent and reinvests the rest to hedge against inflation.) This magic all happened by taking advantage of the spending accounts offered through his employer and a total investment of $78,995. That's the secret of income- generating income.

Author Susan Feitelberg brings more than fifteen years of one-on-one financial teaching experience to The Net Worth Workout. As a top advisor at JPMorganChase & Company, she has managed over $200 million on behalf of 2,000 different clients. For the past ten years she has ranked in the top two percent of bank brokers nationally. Her clients run the gamut from parents supporting families on $40,000 a year to young Wall Street traders with assets of over $20 million. She's aware of the concerns and capabilities of a wide range of individuals, and she draws upon a wealth of real- life experiences.

Ms. Feitelberg has enjoyed similar success in sports. As a young teen, she became an All-Scholastic high school runner. In college, she competed on Varsity cross-country and track teams. And while working toward her MBA at Northeastern University, she became one of New England's leading female triathletes. Since then she's endured many challenging athletic events from the Ironman Triathlon to the Boston and New York Marathons.

When she became a financial advisor in 1990, the parallels between physical and financial well-being struck her. Both disciplines depend on behaviors that are rooted in attitudes and learning. Both even use the same words. People "build up" their portfolios, or "strengthen" their holdings.

The market doesn't diminish; it "slumps," "falls," or "collapses." Ms. Feitelberg found that when she drew this parallel for clients, they developed a better understanding of their own financial concerns and were able to maximize their ability to build wealth following her Net Worth Workout program.

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• SPENDING is just like eating and calorie intake. "Junk" spending decreases wealth just as junk food decreases your health. But If you make more "nutritious" spending choices, your financial health will improve.
• SAVING is like weightlifting for your wallet. Saving a sensible amount on a regular basis is easier, more effective, and longer lasting than trying to build financial muscle all at once.
• EARNING is like metabolism. Too many of us think a bigger paycheck will solve all our financial problems. When you use what you earn more efficiently, you're making better use of the "financial calories" coming in now.
• INVESTING is like cardiac fitness. It's the "heart" of lasting financial health, and it helps increase your long- term strength and ensures a robust financial life.

ENDORSEMENTS:

"With an approach based on the physical fitness concepts we all understand, Susan Feitelberg provides a call to action that we can all relate to. The Net Worth Workout will help you get off the couch and on the move toward a healthy financial future."
-- John V. Murphy Chairman, President and CEO, OppenheimerFunds, Inc.

"Now more than ever before, American consumers need to learn the lessons outlined in Susan Feitelberg's book on financial fitness. This book is long overdue and worth a close read."
-- Mark Holowesko, CEO, Templeton Capital Advisors

"The Net Worth Workout addresses the most difficult part of getting prospective investors to start thinking about their commitment to wealth building. Your four quadrants make sense, and the life style log is certainly practical. It is my own belief that discretionary expenses are what destroy most people's savings plans."
-- Richard B. Fisher, Chairman, Federated Securities Corp.

"This is an excellent book. It provides a lucid and clever evaluation of the difficulties people face in building wealth and the steps they can take to overcome these difficulties. The book offers real and workable solutions. This is a 'must' read for anyone who finds it difficult to plan and save for the future."
-- Annamaria Lusardi, Associate Professor of Economics, Dartmouth College

"The Net Worth Workout is a breakthrough book that finally makes it easy to take a responsible approach to managing your money. It will help you develop the emotional muscles you need to take complete charge of your finances and control your future security."
-- Dr. Jane Greer, Psychotherapist and Author of How Could You Do This To Me: Learning to Trust After Betrayal

"Susan Feitelberg successfully uses physical fitness as a metaphor for financial fitness. And it works. Follow Feitelberg's regime and enhance your net worth."
-- Steve H. Hanke, Professor of Applied Economics, The Johns Hopkins University, Baltimore, Maryland

"The Net Worth Workout is a quick-and-easy program that is sure to improve your family's finances. Sue Feitelberg makes getting in financial shape fun, easy, and accessible."
-- Jennifer Openshaw, CEO, Openshaw's Family Financial Network; host, ABC Radio's Winning Advice with Jennifer Openshaw

"I loved this book. Just as a good training program can turn a recreational athlete into an Ironman triathlete, The Net Worth Workout can show a financial neophyte how to become financially fit for life."
-- Karen Smyers, Hawaiian Ironman World Champion, 3-time ITU World Triathlon Champion, and 7-time Triathlon USA National Champion