No matter the roadblock—big worries or small assets—Jack Otter has an expert with the right advice to help you find a way through. 

To get started, choose the statement that sounds most like your life:

1. When You Say: "I Have No Idea What I'm Doing!"

The next time you look at your company's 401(k) options and feel overwhelmed, think about Chris Gardner. As a novice stockbroker at Dean Witter, the Pursuit of Happyness author never knew where he and his son would be sleeping at night, but he managed to create asset-allocation plans for hundreds of clients and performed so well that after just a year on the job, he was lured away by Bear Stearns, one of the most venerable firms on Wall Street. If a homeless single father with no financial experience can do a credible Warren Buffett imitation, surely you can separate the winners from the losers in your retirement plan.

"It's no less a responsibility than your health," says Gardner, who now runs his own investment company in Chicago. "When something is your responsibility, you've got to get good at it." He tells people to stop saying "I can't" and start thinking I must. The first step is to educate yourself. You can click on the investor education section of, the Web site of the Securities Industry and Financial Markets Association. Then attend brokerage firm seminars to learn how these companies can help you achieve your goals—but don't commit right away. "Invest your time before you invest your money," says Gardner. "It's your life. Get good at it." 

2. When You Say: "I Can't Ever Seem to Save Anything!"

"Prove it to me." That's what Michelle Singletary, Washington Post financial columnist and author of Your Money and Your Man, tells people when she hears the "I have no money" excuse. "The first thing I do is have them look at their bills." Everyone knows how much they spend on big-ticket items such as rent and car payments, but Singletary says her readers are stunned by their ATM receipts—and all the money they can't account for.

Their problem, she thinks, is that they are unable to distinguish between what they need and what they want. Singletary admits that she tells people this all the time. "When I said it two years ago, people weren't listening," she says, but since the real estate bubble burst, they're suddenly more interested in freeing up some money in their budgets. The key, she says, is to prioritize ruthlessly. "I've talked to people who have no job, and yet they pay for Internet access and ring tones on their cell phone," she says. "They say, 'Don't you have a cell phone?' And I say 'Yes, but I have no debt, and the last car we bought we paid for in cash. If you can't say the same, then you should have a basic cell phone with a bill close to $20 a month.'"

Singletary often sees another, linked problem in people who don't have extra cash: an overdeveloped sense of entitlement. "People say, 'I deserve a vacation because I work hard,'" she explains. "And you do work hard, but you don't deserve a vacation if you don't have money to pay for it." Nor does she buy the excuse "My child deserves better than I had." "Any parent whose kid has a cell phone and no college fund should be ashamed of themselves," she says. "Is it a need or is it a want? Keep that phrase in your head and play it like it's on a broken tape recorder, and you'll find that you don't spend as much."

Singletary is proud to be a varsity cheapskate. She laughs when reminded that she dressed her infant son in his older sister's clothes. "What did he know; he was a baby," she says. "He's not going to be scarred." His family has an emergency fund that will cover a year's worth of living expenses, takes two weeks' vacation each year, and tries to avoid any debt beyond a mortgage. His reward will be growing up in a secure financial environment.

3. When You Say: "I'm Up to My Ears in Debt!"

The next time you hear the mellifluous voice in the MasterCard ad declare, "There are some things money can't buy...," stop and imagine what that man's life might look like. For the sake of this exercise, let's say he's the owner of MasterCard Worldwide and he's got an adorable baby daughter. Now imagine that he's not worried about a college fund for his child, because you'll be paying a chunk of his child's tuition bills. Because in a sense, you are: The average American credit card holder carries a $6,664 balance; at 14 percent over the next 18 years, that's nearly $12,000 in interest to Mr. MasterCard.

"You've made everybody else rich with your debt," says Farrah Gray, author of Get Real, Get Rich. And Gray isn't referring to just credit cards. Interest payments of all kinds are lowering your standard of living while lining the pockets of strangers. "The people who financed your car, those interest payments you make send their children to college," says Gray. By asking his clients to visualize the luxury car they're buying for a credit card executive or the gorgeous tropical beach reserved for guys who finance automobiles, Gray has been able to jolt even die-hard debtors out of their comfort zone. Debt is like any other habit, he says: "We get comfortable in our day-to-day lives and ignore what is truly best for us. Instead, we work, work, work—and pay interest."

Breaking out of the cycle, Gray acknowledges, is not easy. His advice is to find another stream of income to pay off your debt. Whether it's selling stuff on the Internet, baking muffins for a local café, or doing calligraphy for wedding invitations, the sources of income are endless. But what will work for you is intensely personal. "To figure out what you can do, just ask yourself, What comes easily to me and is hard for other people?" Gray says.

He knows what the response to his advice will be: Readers tell him they don't have time to do anything else. "There are weekends, there are days off; we all have lunch breaks," he tells them. "People find the time for things that they really want to do."

4. When You Say: "I Wish I Knew—If Only I Had a Clue What I Wanted to Do for Retirement"

To plan for life after work, you need two things—a spreadsheet and a dream. Because you can't estimate the cost of retirement until you know what you will be doing, financial planner Paula Boyer Kennedy tells her clients to design their ideal week in retirement. She doesn't let them off the hook with the usual "play some golf, visit the grandchildren" generalities. She wants a detailed plan, with every morning, afternoon, and night filled in for seven days straight. "Most people can't get past lunch on Wednesday," says Kennedy, who is coauthor, with Stacey Tisdale, of The True Cost of Happiness: The Real Story Behind Managing Your Money. To help people develop a road map for their retirement, Tisdale and Kennedy lead them through questions developed by George Kinder, a financial planner who is credited with starting the "life planning" movement:

  • If you had all the money you'd ever need, how would you spend your time?
  • If you had only five years to live, how would you live your life?
  • If you found out your life would be over tomorrow, what would your regrets be?

As simple as the questions sound, Kennedy and Tisdale say, people are shocked by their own answers. They are so caught up in their daily lives that they've never focused on long-term priorities. The exercise helps them discover what's important to them and what they really want from later life, paving the way to the next step. "Once they have a clear idea of where they want to go," says Kennedy, then the spreadsheets come into play. By tallying the actual cost of their plans, they not only know how much to save but can ask themselves, as Kennedy says, "Is the dream worth the price?" She recalls one client, a New York City woman in her early 60s, who said she wanted to continue to live in Manhattan when she was done with her career. "Looking at her finances, she realized that she could retire tomorrow if she moved back to her native Mexico and live very nicely there," Kennedy says. "But if she stayed in Manhattan, she could probably never retire." The choice was easy, and she headed south.

For clients who are determined to make their dream happen, Kennedy suggests they give themselves frequent reminders; in her experience, that's what makes people more likely to meet their goals. "You want to go to Australia? I want pictures of Australia in your house," Kennedy says. "I want a picture of that beach in your wallet where your credit card is."

5. When You Say: "Terror! I'm Afraid I'm Going to Make a Tragic Mistake!"

You are not alone. Scientists using brain scans have found that financial decisions spark activity in the limbic system, a part of our brains that deals with risk and reward. Researchers have discovered that people feel the sting of a loss twice as acutely as they feel the pleasure of a gain. So even though all available evidence suggests the stock market will be much higher 20 years from now than it is today, your fear that it will go down tomorrow—which it very well might—prevents you from investing for retirement.

The fear factor is only exacerbated by CNBC. "Many people in the media and the financial services industry present these decisions as winner take all," says Ric Edelman, a financial planner and author of The Lies About Money. "The message is that if you don't make the right decision, you'll lose everything." That paralyzes people.

"Investing is not a horse race," says Edelman. "It's a game of horseshoes, where being close can be good enough to win." For instance, by owning a plain vanilla, low-cost index fund such as the Vanguard 500, which basically tracks the return of the U.S. stock market, an investor will get merely average returns. Since 1926, that average annual return is 10.4 percent. If a 30-year-old were to invest $5,000 in her 401(k) every year, get a $2,500 match from her company, and earn 10.4 percent a year, she would have about a $2 million nest egg at age 65. While that's a simplistic example, it's still instructive: Invest diligently in a low-cost index fund, ignoring market downturns and the latest hot funds, and you'll go a long way toward securing a comfortable retirement.

Once clients have a plan in place, Edelman says, you can see their terror melt away. "They feel not merely more confident about their investments," he says. "They feel more confident about their entire lives. Their marriages get stronger; they are able to make better career decisions because they know that the future is secure."


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