Date: Sat, 10 Jan 2004 05:30:25 CST
From: "Brent D. Gardner, ChFC" 
Newsgroups: misc.invest.financial-plan
Subject: Re: PAW
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"Beep Beep"  wrote in message
news:w_GLb.250267$I53.11806456@twister.southeast.rr.com...
> What's the consensus on the fairness of applying this formula to those who
> are at the extreme ends of the age range? I read the book and the sequel
and
> got some really good stuff out of both of them but I thought this formula
> was a bit too general. For those of us who are still in our twenties
> (especially those of us with above-average income), after running that
> formula can create a bit of despair. Saying that the median 22 yo has
> accumulated over two years of income their first year out of college isn't
> realistic.
> At the same time, I think some older folks may run the formula and get a
> false sense of security because they may be considered a PAW but still not
> have enough to meet their personal requirements.
> Overall, I liked the books and the comparison of UAWs and PAWs but I
didn't
> care for the formula. I got the sense that a lot of people who read the
book
> would use it as a guide instead of competent professional help.
>
> I know this thread was simply a request and a provision of the formula,
but
> I just wanted to get this off my chest. :)

Michael,

The first time I did this for myself, I was a UAW, and I was nearly 30. I
changed my behavior, and now I'm well on my way to being a PAW (and its not
easy, because my income keeps growing). The key is to get out from under
revolving credit and pay off notes on depreciating assets. My cars and boat
are paid for now.

I use this with clients all the time, for two reasons.

1. It is a diagnostic tool. UAWs need counseling, and behavior change. They
need to spend less, save more, pay off debts. Median folks need to fine tune
portfolios, protect assets, and make long term goals. PAWs need income and
estate tax planning, asset protection, and advanced planning strategies.

2. It is a motivator. People who see they fall on the UAW side tend to want
to improve their situation. If they don't want to change, they make poor
clients, so I move on. For those who aren't goal oriented, it gives them
something to work for.

Younger people often find themselves under too much debt, but that doesn't
change the fact that they need to change to get ahead. It is pretty rare to
find a PAW under 30, but they do exist. Usually, they are the more frugal
types, who live well within their means, and have already established a
habit of being a net saver. A UAW nearing retirement is in trouble.

Brent D. Gardner, ChFC
Chartered Financial Consultant
http://members.cox.net/brentdgardner1378/

"Be ever questioning. Ignorance is not bliss. It is oblivion. You don't go
to heaven if you die dumb. Become better informed. Learn from other's
mistakes. You could not live long enough to make them all yourself." - Hyman
George Rickover (1900-86), Admiral, US Navy, advocated development of
nuclear subs & ships

The Chartered Life Underwriter (CLU) and Chartered Financial Consultant
(ChFC), designations owned and exclusively offered by The American College,
signify the highest standards of academic study and professional excellence
in the financial services industry.