Have You Had Financial Regrets? A Recent Study Says, Yes.

Let’s face it, we have all had financial regrets. But don’t let that stop you from re-engaging with your financial life and reaching your financial goals. I don’t know about you, but the phrase, “I wish I knew then what I know now” definitely applies to me. I chased shiny baubles in my twenties and early thirties but finally got real about retirement savings and investing in my late thirties. Are you still chasing baubles that have no real value?

A recent study indicated that Americans have three top financial regrets: not saving early enough for retirement, not saving enough for an emergency fund, and taking on too much credit card and student loan debt. You can read more about these regrets here.

Consider this, if you start saving $300 a month at age 25, with a hypothetical 5% return, you will have about $450,000 saved by age 65 and you will only have contributed $144,000 into your retirement account. If you wait until age 35 to save the same amount each month, you will contribute $108,000 toward your retirement but only accumulate about $250,000 by age 65. The difference is time and the magic of compounding. Add an employer provided retirement plan to the mix and you can see how your golden years could be truly golden. If you have any of these regrets, put a stop to it now and get started on a new plan.

As an independent Certified Financial Planner™, I can help you establish and maintain better financial habits and help you create a plan to move forward. Contact me and let’s get started! #talktometuesday #education #Hireaplanner #retirement #aplanforyou

Have You Considered a 529 Plan for Education?

We all want the best for the little ones in our life. Why not start early with a 529 plan for college? Investing a few hundred dollars a year for 18 years is a lot easier than waiting until your child is in high school to figure out how to pay for higher education. 

For example, if you start at birth with a $1,000 opening balance, and contribute $100 per month for 18 years, and earn a conservative 5% annual return, you should accumulate $37,853 vs. $34,944 in a taxable savings account. Of course, a higher return, or adding money from friends and family over the years will greatly add to the amount. Get the grandparents on-board for another $100 per month and you could accumulate $73,300 vs. $67,773 in a taxable savings account. This won’t exactly pay for college, but it is an example that shows you can target a needed amount and save for that amount in a strategic manner

Working with a Certified Financial Planner™ you can target a specific college or university and determine a customized savings plan for your child. Your planner can also clear-up misinformation about 529 plans such as the erroneous belief that beneficiaries receive the funds in the account at age of consent. Or, that a 529 plan is a “use it or lose it” investment vehicle. Not true.

As an independent Certified Financial Planner™, I can help you decide how much to set aside for your child’s education.  In addition, I can help you make investment decisions and help you layout a plan for how to pay for higher education.  Contact me and let’s get started! #talktometuesday  #education #Hireaplanner #529plan #savings

A Financial Letter to My Twenty-something Self

Dear Greg,

You are only in your early twenties, the perfect time to receive this letter from your future self. As with most twenty-somethings, you are being pulled in every direction and receiving advice that is difficult to assess and apply at that age because you don’t know the changes that lay ahead for you, and the dramatic turns your life will take. I’ll leave those out of this letter for you to discover on your own. I will however, try to make your life better from a financial standpoint. I hope that this letter across time can save you some financial headaches.

The first thing I want to say is congrats on knowing from an early age that you should participate in whatever retirement plan your employer offers. That will be one of your smart moves! That said, you should tighten the belt at a younger age and save more. By doing so, you will make your mid-life career change easier and more secure.

Your other smart move was paying for your college as you could afford it. Yes, it delayed you from earning your degree along with your peer group, but it freed you from the burden of student debt. Taking your time allowed you the luxury to fully appreciate the sense of accomplishment and pride when you earned first your Associate of Arts degree and later your Bachelor of Arts.

Now, a few warnings to make your financial life better.  Just because you can qualify for a lot of credit cards, doesn’t mean you need to qualify for a lot of credit cards. This is a lesson that you will learn the hard way but it will be invaluable. It seems fun buying all those baubles at first, but really, the newness fades and you’re left struggling to repay. This steals two resources from your future self – time and money.  Buying on credit because you can is just not worth it. Also, when every person, newspaper, magazine, and other media outlet is hyping the glories of real estate – wait! Don’t buy the hype and you’ll be much happier. You’ll learn the meaning of the term ‘bubble’ on a very personal and stressful level.

That’s about it. I want to leave everything else for you to discover along the way. You’ll be amazed at the talents you develop in language, culture, travel and eventually, finance! Yes, you!!!  These early financial faux pas will actually set you on your chosen career path. So remember, save more – lots more, like at minimum 15% (more if you can) of your income from EVERY job you ever have from the time you start working. Avoid credit for credit’s sake and remember to use consumer credit sparingly. Relax when it comes to your education, as you’ll discover that education is lifelong and you’ll be happy that you achieve your goals without all the student loan debt. Skip the real estate bubble; you’ll be wealthier in the long run and have much less stress.  Oh, and you’ll realize being married is the best decision you ever made!

Cheers.

What would your financial letter from your future self to your younger self contain? We may not be able to turn back time, but we can make wiser decisions every day. As an independent Certified Financial Planner™, I can help you create a new plan, work on a course correction and set a timeline and put that plan into action. #talktometuesday #budget #Hireaplanner #spendingmap #savings #cash #debt #retirement #invest

Why You Should Hire a Financial Planner

Face it, we live in DIY world.  Whether for home repairs or financial planning most folks these days feel they can go it alone. When it comes to your finances and planning your future is that really the best choice? Sure, you can search the Internet and find a few retirement calculators and even articles on saving, investing and “Top 5” lists, but is that information relevant to your personal situation? How do you know if what you found fits into your financial life plan? What if you make a move only to learn later that your decision cannot be undone without costly consequences?

Hire a Certified Financial Planner™ and save yourself frustration! 

Hire a Certified Financial Planner™ and save yourself frustration! 

Hiring a financial planner can help you reap more than just potentially better returns. Planners can help you with a myriad of financial decisions and life changes such as retirement, debt management, marriage, divorce and the birth of a child. The help, guidance and advice of a financial planner is well worth their fees charged and studies by Vanguard and by Russell Investments support this position. Vanguard claims working with a financial planner can add “about 3%” over time to your returns and that behavioral coaching is the most valuable benefit an investor receives. Russell Investments claims working with an adviser can help increase returns by “about 3.75%”.  However, these studies point out that a financial planner brings more to the relationship after fees than just a potentially better return. The studies reveal that in addition to a potentially better return, financial planners help clients with difficult decisions, free up clients’ time, can explain complex transactions and provide guidance and an on-going relationship.

When you do have a life change or follow-up question, a call to your planner can be a lot more comforting than going it alone. As an independent Certified Financial Planner™, I can help you create a financial plan, set a timeline and put that plan into action. I can also be there to talk you through market gyrations and remind you of your goals and timeline. Let’s start planning today.

LINKS BREAK. FOR LOCATING THE STUDIES PLEASE SEARCH THE FOLLOWING IN YOUR SEARCH ENGINE:

Vanguard – The Added Value of Financial Advisors

Russell Investments – 2016 Value of a financial advisor update: More than 3.75%

 #talktometuesday #CFPPro #Hireaplanner #retirement #socialsecurity #goals #savings #cash  

Should You Always Rollover Your 401(k) Account to an IRA When You Leave an Employer?

As with most things finance, the answer is that it depends. Mostly, it depends on your age, why you are leaving, and what you plan to do or may need to do with your 401(k) account. Generally speaking, a rollover 401(k) account can be a good option. However, there are times you should seriously consider not rolling over your 401(k) account.

Let’s look at a few times it makes sense to do a rollover of your 401(k) account to an IRA and what those benefits may be for the account holder.

First, rollovers are generally free! Most IRA providers do not charge you a fee to do a direct, trustee-to-trustee rollover from your employer 401(k) to an IRA account. This doesn’t mean that there might not be other fees to consider such as fees for advice, or with mutual funds you may have expense ratios, management fees such as 12b-1 fees, or possible sales charges referred to as “loads”.

A rollover to an IRA could provide you with greater investment options. Frequently, employer 401(k) plans are limited to employer stock (which you likely should not rollover to an IRA, but more on that later) or a selection of funds from which to choose.  With an IRA, you will likely have a vast array of mutual funds to choose from and may be able to include ETFs and individual stocks. This variety provides greater planning opportunities for diversification.

Rolling over your 401(k) to an IRA also gives you consistent rules outlined by the IRS.  Many 401(k) plans have different rules adopted by the employer, but with an IRA the rules are consistent from provider to provider.

Now let’s look at a few times it makes sense not to do a rollover of your 401(k) account to an IRA.

As noted above, if you have company stock in a 401(k) account you likely will not want to rollover the stock to an IRA. If you do, you will lose a tax planning advantage known as NUA (net unrealized appreciation). Basically, you want to move the company stock to a taxable account so that you do not pay ordinary income tax on the stock’s net unrealized appreciation. The goal generally is to pay ordinary income tax on the value of the company stock at the time it was added to your 401(k) account.  How the NUA amount on the stock is taxed at sell depends on when you sell the stock. You may sell immediately and capture the lower capital gains rate, or you can decide to hold the stock. If you decide to hold the stock, you have a new clock ticking and need to wait at least a year on the new gains before selling and taking advantage of the lower capital gains rate. Timing and planning are critical to your goal so consult with your adviser prior to executing any move.

Are you age 55 or older when you separate from service? In this case, the 10% penalty for early withdrawal will not apply to withdrawals from your 401(k). Depending on your individual circumstance, this may be an advantage to not rolling over your 401(k) account to an IRA. Separation from service includes being fired, laid-off, or quitting your job. Keep in mind that it is the separation from service at age 55 or older that is important. The IRS says distributions, “made to a participant after separation from service if the separation occurred during or after the calendar year in which the participant reached age 55,” are not subject to the 10% early withdrawal penalty.  This treatment does not apply to an IRA so if you rollover your 401(k) account you lose this planning option.

Another reason not to rollover your 401(k) account is greater legal protection. 401(k) accounts have stronger federal law protections from creditor liens and judgments than do IRAs which fall under state law protections which vary. This protection does not include IRS tax liens and possibly spousal or child support, so keep that in mind. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, does protect up to around $1.2 million (inflation-adjusted) in traditional or Roth IRA assets against bankruptcy but other types of liens and judgments vary by state. So, depending upon your situation, leaving your 401(k) account intact with your former employer could provide greater safety.

Deciding whether to rollover your 401(k) account to an IRA is a big decision. If you are not sure what to do, spend some time discussing your goals and intent with a financial planner. As an independent Certified Financial Planner™, I can help you decide how to move forward based on your personal situation and goals. Contact me and let’s get started!

 #401k #rollover #talktometuesday  #Hireaplanner  #income  #cash

FREE Resources for Financial Literacy Month

As Financial Literacy Month wraps up, I hope you have decided to engage more with your financial life. If you have, this post is for you! Here are a few FREE resources that you can use to learn more about personal financial planning. I recommend no source more over any other so explore and find the content that you like. These links are provided solely for educational purposes. If the link is broken, please search by name in your browser. If that doesn’t work, contact me and let’s talk. 

For financial terms and concepts, I find Investopedia (http://www.investopedia.com/) to be a great source. You can search terms, concepts, get articles and sign-up for email customized to your area of interest.

Expecting a new baby? Want to find out how much it will cost you? Try BabyCenter.com (https://www.babycenter.com/) for all things baby. Specifically, the site offers a First-Year Baby Costs Calculator that will help you budget for your new baby. You can calculate the cost of items from breastfeeding for free, to childcare, to disposable diapers vs. disposable diaper service vs. cloth diapers you wash yourself! Cloth is the cheapest and can be the greenest way to go, but will you have the time?

Do you suspect elder abuse? If so, the Administration on Ageing (https://aoa.acl.gov/Index.aspx) has lots of information for you and it’s also free. There is a locator that you can use if you suspect elder abuse. If you do, please use the locator to find out who to notify.

What about saving for college? Check out SavingForCollege.com (http://www.savingforcollege.com/). The site is geared specifically to 529 plans, but it has lots of tools, articles, and support if you want to learn about college costs, 529 plans, and other college funding issues.

The above sources are just a light sampling of personal financial sites on the Internet that you can use to boost your financial literacy. For every financial aspect of your life, there are dozens of websites that provide information. As expected, some sites are better than others and most will provide only general information and may not answer your specific question.  When you need more in-depth information and personal service, reach out to me. As an independent Certified Financial Planner™, I can help you establish and maintain better financial habits. Contact me and let’s get started! #talktometuesday #education #Hireaplanner #FinancialLiteracyMonth

Three Financial Literacy Tips for Women

We are in the midst of Financial Literacy Month (FLM). I’ve been writing about it all month, so by now you should have some familiarity with what FLM is and how to get started.  If not, please take a look at my prior two blog posts.

This week, I want to offer three critical tips for women. Usually, most folks view investing, finance and money management as the domain of men. Nothing could be further from the truth! Women make up roughly half the population so it is vital they build their financial literacy.

The first tip – take care of yourself. Many women are mothers, wives, and caretakers who are often responsible for the care of others. Therefore, women should prioritize their own health and wellbeing first. Health and wealth have generally been linked and studies show that if you are healthier, you tend to be wealthier, and vice versa. If you are a woman and you are the major or sole breadwinner for your family, your health is of vital importance so you can continue in this role.  Consider how becoming ill and losing your income would affect you and those for whom you provide. You need to take care of yourself first, from both a health perspective and a financial perspective. Do not skip regular doctor visits; monitor your health and know what’s going on. Find an exercise activity that is just for you such as walking, running, yoga, hiking, etc., and participate regularly.  Meditate, get adequate sleep, and work at lowering stress. It’s good for your physical health and your emotional health. Financially, save and invest for yourself first! Stop underwriting the lives of others until you have provided for yourself.

The second tip – ask questions! Women tend to delegate money management. STOP DELEGATING and engage with your financial life. Women have very different investment needs than men. For one thing, women in general tend to be more realistic and conservative when it comes to investing and planning for the long-term. They have to be, women on average live longer than men. If you are a woman in a same-sex relationship, you are likely planning for two longer lives in retirement. No matter your level of financial literacy, do not be shy about asking questions of your adviser or even your partner if you have delegated the task of money management to them. If you have delegated this task, stop delegating and start engaging with your finances. You don’t have to understand everything, but start by asking more questions more frequently until you are familiar with your financial situation and take back control of your finances.

The third tip – know thy self. Now that you are taking care of yourself, and that you are NO LONGER DELEGATING your financial decisions, you need to know thy self. You may know who you are as a woman; but do you know who you are financially as a woman? If not, you need to know. Hire a financial planner and find out where you stand financially. Your adviser should be able to give you all the basics such as a cashflow snapshot, liquidity analysis, insurance, investment and estate planning overview. Find out where you are now, where you want to be (think, goals), and how to get there. Work with your planner and implement your plan. Remember, your plan should be flexible and grow with you over time as your goals change and your needs shift. As a plus, your financial planner is all yours and you can ask all the questions you need to (see second tip above).

When it comes to investment and financial planning, these three tips just scratch the surface. Women do face very different challenges than men when it comes to planning and investing. Financial Literacy Month is a great time acknowledge these differences and for women to take back control over their financial lives. Take that first step.

As an independent Certified Financial Planner™, I can help you with a new approach to your finances, set a timeline and put that plan into action. I can also be there to answer questions and help you set goals and establish a timeline for implementation. #talktometuesday #budget #Hireaplanner #spendingmap #savings #cash #debt #womenfirst #women

How to Establish Healthy Financial Habits

Last week, I let you know that April is Financial Literacy Month. If you missed that blog post, you can read that here. Now that you know what Financial Literacy Month is, you can get started establishing and maintaining healthy financial habits for yourself. If you are afraid of anything financial and not sure where to start, here are some easy ideas.

Fin Lit 101.jpg

Pick one article or short video per week (or month) that deals with a topic area you want to learn more about. It could be anything from basic budgeting, to savings tips to reach a goal, retirement, Social Security, real estate, charitable giving, personal taxation… you name it. It’s your choice!

Read the article or watch the video and if you don’t understand everything the first time through, no problem! It’s not about grasping all the details the first time, it’s about making the effort to learn more. You can always re-read, look up terms you don’t know, or ask a professional. 

Another idea is to pick a favorite finance app, social media site or blog (like mine), website, magazine or even look for broadcasts on your cable package dealing with personal finance. Find what resonates with you, in a format that you like, with content that is manageable and that you enjoy. Approach the content in small doses so you don’t get overwhelmed.

To recap: make it personal, take it slow and start with a topic of interest to you; commit to learning one new concept at a time and don’t overload yourself; pick an area that is interesting and applicable to you; use technology if that helps, or go old-school and find a magazine, book or newspaper. Put the personal back in personal finance and make it enjoyable.  Once you do, you’ll be on the road to establishing and maintaining better financial habits.

Now that you know what to do, and how to get started, make it a weekly or monthly habit. You can apply this new skill beyond Financial Literacy Month and make it a year round activity. This will really help you build your financial literacy knowledge and put you on the path to establishing and maintaining healthy financial habits.

Remember, you can always reach out and ask a professional. As an independent Certified Financial Planner™, I can help you establish and maintain better financial habits. Contact me and let’s get started! #talktometuesday #education #Hireaplanner #FinancialLiteracyMonth

Three Tips for Using Your Tax Refund

Many folks are about to come into a mini-windfall of cash. After carping about not being able to save, and not being able to fund your IRA, or add to your investments, or pay down debt, this is your opportunity. That mini-windfall is your tax refund. Instead of envisioning all of the lovely, disposable, soon-to-be-forgotten things you could buy with your refund, consider buying some financial peace of mind. Here are three things you can do with this windfall that will financially benefit you.

First, you could use this windfall to pay off debt. Look at your debts and see if the refund you are getting is enough to completely payoff a debt. If it is, do that! Then use the monthly payment amount you were making on that debt to make a larger payment on another debt. Work with your financial planner and pay off the debt that gives you the greatest bang for your buck and you’ll be debt free in no time. Your financial planner can tell you which debts in what order provide the shortest payoff time, and saves you the most in interest.

Second, use your windfall to build your emergency fund. If you are a two-income household, the emergency fund should be the equivalent of three to six months of total expenses. This includes all discretionary and non-discretionary spending. If you are a single-income household, you should really consider having six to nine months of total expenses as an emergency fund. Your tax refund can add nicely to your cash stash.

Third, start or add to your investments. If you have your debt under control, and your emergency fund is sufficient, now is the time to add to your investments. Your tax refund could be just the ticket. Consult your financial planner and decide whether you should be starting, or adding to, an IRA, a taxable fund, or topping up an existing investment account.

A note about tax refunds; if you are receiving an unusually large refund (and tend to do so every year) now is a great time to meet with a financial planner to figure out why. You should be receiving a smallish-to-zero refund. That way, you are enjoying the benefit of your funds all year and not making a free loan to Uncle Sam.

Keep in mind that using your refund for one of the recommended tips does not have to be an “all or nothing” approach. You should use a small amount to reward yourself and do something like a nice dinner, a day retreat, a spa, or take a cooking class with a friend or significant other. Just don’t blow your windfall on things you don’t need and won’t notice in a few weeks.

As an independent Certified Financial Planner™, I can help you decide how to put your windfall to work for you. Contact me and let’s get started! #talktometuesday  #refund #Hireaplanner #bonus #income #cash

Do NOT Wing It When it Comes to Your Retirement Income Needs!

Are you winging it when it comes to planning for retirement? Are you contributing “a little” to your workplace 401(k) or maybe putting “a few dollars” into a traditional or Roth IRA? If so, good for you for being aware that you are going to need money in retirement. But, how much will you really need? Do you have any idea what you want to do with your time when you retire?  Should you pay off the mortgage before retirement, or have a mortgage to generate some tax deduction to offset the taxation of your Social Security? Have you actually sat down with a financial planner and run projections for replacing income considering inflation, acknowledging the roll Social Security will play and estimating healthcare needs? If you have not, you are winging it and will likely be in for a rude shock at retirement. Determining retirement income is both a science and an art and good financial planners address both.

The Internet is full of self-help and general information on planning for retirement. That information is no replacement for looking at your personal situation and actually running the numbers with a financial planner who knows how to do so and who can look beyond numbers to offer you personalized planning advice. The old rules of retirement are seismically shifting and stale advice could do you a great disservice, or worse, cost you potential future income. You do not want to get to your preferred retirement age and find out you’ll need to work longer! You also do not want to find out that you didn’t save enough and won’t have the funds you thought you would have to cover life’s expenses. Maybe it’s the opposite and you do want to work longer because you love what you do and are passionate about remaining socially engaged through your work. Will this affect your Social Security income? What about those pesky RMDs on your IRAs?

Knowing answers to these and other questions can help you chart a course and have a more realistic idea of how you can create a successful retirement. If you are still working, you have time to turn the ship in the direction you want to go and avoid running aground! Are you part of a couple? Consider yourselves an economic unit and start working together to reach your goals. If you have doubts about any of these areas stop winging it and contact me.

As an independent Certified Financial Planner™, I can help you decide how much to set aside for retirement.  In addition, I can help you make investment decisions and help you layout a plan for what to do in retirement. The science and the art are both very important. Contact me and let’s get started! #talktometuesday  #education #Hireaplanner #retirement #income

Do You Really Need a Budget?

I thought I would write this week about not winging it when it comes to saving for retirement, but debt reduction questions took center stage these past weeks from more than a few clients. So, I’ve decided to write about debt. That four-letter word creates havoc, fear and stress in so many different ways for all of us. Some folks ignore their debt and just pretend it is not there, but it eventually catches up with them. Others focus too much on their debt, which paralyzes them and keeps them from moving forward and reaching other financial and personal goals. You don’t have to be in either of those camps.

You know that budgeting is key to keeping your debt under control. Moreover, my guess is that you know there is a difference between good debt (think mortgage), and bad debt (credit cards). Keep in mind, that even too much good debt can be a bad thing if it is causing you stress. The real question is, how do you develop a budget that you will use, and how do you implement the budget without the word budget becoming a negative factor in your life? Some folks are great at using an old-fashioned spreadsheet, plugging in the numbers and sticking within the outputs provided as they earn and spend. Others feel too constrained and need a different approach. Use what works for you whether it is the spreadsheet, a spending map, or a Smartphone app. By the way, there are lots of new apps to help you with your spending if you lean toward the tech side. Checkout this article, 13 Best Budget Apps for 2017 by Gottabemobile. Whether you use the term budget, spending map, money plan, or some other moniker that works for you, keep in mind your goal and the reward, to get used to a budget, managing your money and conquering your debt.

There are some guidelines to keep in mind (here’s the math part).Your debt-to-income ratio (DTI) for total debt should generally be no greater than 36%.  This is calculated as your total monthly debt payments, including housing costs, divided by your total gross monthly income. Once you exceed this number, it becomes harder to budget and more challenging to feel like you are getting ahead. This number will vary slightly depending upon your income situation, housing location and other factors, but generally, this is the number calculated by lenders when considering you for a loan. You should also keep in mind that another measure is your consumer debt ratio. This ratio should be 20% or less. You calculate this ratio by dividing all monthly non-housing debt payments by your monthly net income (different from your DTI). Although some advisers allow the DTI to reach 43%, you should know that the 28% and 36% thresholds are considered the gold standard and will allow you to live comfortably within your means.

So…where to start. First, don’t feel that you are alone or that you cannot do this. You need to get a snapshot of exactly where you are and what your annual cash flow looks like. You can do this by clicking the Engage Now! tab on this site and start your analysis for free. If you need help, reach out and I can walk you through the process. You need to know which debts and in what order to tackle them so you don’t waste time. For some, the snowball approach works best and for others, the avalanche. Second, take a breath and realize it takes time to get on a budget/spending map/plan. Third, use technology and find an app or program that works for you. Just like tracking daily steps on our walking apps for fitness, use a budgeting app to track your progress. Next, stop spending. Plain and simple, you need to get your spending splurges under control. With each and every purchase, ask yourself three times, ‘do I really need this?’ After a while, you’ll realize you likely don’t need the item. Having cash in your bank account does not equal being able to afford a purchase. Fourth, set goals and write them down. Your first goal should be to make it three months on your newly devised plan and at the three-month mark, celebrate that accomplishment! Next, decide how you’ll celebrate the six-month mark. Of course, if you are married, you and your spouse need to be on the same page and willing to budget.

Finally, realize that you do need a budget and that your budget is a guide, a map to a financially healthier future. In the beginning, you may feel it is about constraint and punishment, but it is really about control and freedom. Your eventual goals should be to payoff credit cards monthly, have an emergency fund, and start stashing cash for other goals such as retirement, education, or a home. It’s ok to set your goal as reaching the stars, because if you do and only make it to the moon, you are still on your way.

As an independent Certified Financial Planner™, I can help you decide on a budget approach, set a timeline and put that plan into action. I can also be there to talk you through mishaps and remind you of your goals and timeline. Let’s start planning a budget and debt-free future for you today. #talktometuesday #budget #Hireaplanner #spendingmap #savings #cash #debt

Market Madness Got You All Worked Up?

Market corrections can be unsettling for most investors. You cannot control the ups and downs of the investment markets, but you can do a few things to alleviate the feelings of frustration and helplessness. Start by taking a breath, put your thinking cap on, envision the future, and if you need to, call your financial planner.

First, ignore the media hype – keep in mind that that’s all it is, hype. Wild headlines about market gyrations sell stories and give talking heads something on which to opine. Second, do nothing! That’s right, do nothing. If you have a solid financial plan and have been keeping an eye on your asset allocation, you likely need to do nothing. You and your financial planner should already be monitoring your plan and asset allocation on an on-going basis. If you need reassurance, give your planner a call, send a text or an email and talk to them about how you are feeling. Your financial planner most likely feels what you feel. After all, they are also involved somehow in the investment markets and their own retirement and savings are affected to some degree. Third, check with your financial planner and see if the market downturn is a good time to buy. Chances are it is.  A correction can be a good time to add to your diversification whether you are purchasing individual stocks, mutual funds, or bonds. Do not buy a stock, bond or fund just because it dropped in price; work with your planner to make sure it fits into your overall investment plan and goals. Next, if you are older and approaching retirement, you and your financial planner should have already planned your liquidity position several years before your retirement. You want to make sure you have appropriate cash holdings, fixed-income and equities that match your retirement goal. Finally, relax! If you need reassurance, call me and we can talk it through.

Keep in mind that time and volatility work to your advantage when it comes to long-term financial planning and investing, so stay the course! As mentioned, a downturn may be a great time to add to your holdings. Consider upping your 401(k) contribution, putting more money into your IRA, or even adding to funds you already hold. A considerable run-up in the market may be the perfect opportunity to take some profit and build on your cash position or fixed-income allocation.  Your adviser can hold your hand and walk you through these market changes and be a sounding board for your concerns. ‪A good financial planner will also remind you of your goals and timeline and why the day-to-day changes of the market shouldn’t affect your long-term plan.

As an independent Certified Financial Planner™, I can help you decide on a plan, set a timeline and put that plan into action. I can also be there to talk you through market gyrations and remind you of your goals and timeline. Let’s start planning a calmer future for you today. #talktometuesday #education #Hireaplanner #marketmadness #upsanddowns #gyrations

What Does Your Habit Cost You? Try $112,000.

Have you ever seriously considered how much a habit can cost you? Would you be surprised if I told you that it can cost over $112,000? We’ll get to that later.  I think most of us have a habit we spend money on to some degree without realizing just how much we are actually spending over time. For some of us, it is a daily habit like buying coffee, bagels or juice on our way to work or a daily snack we could easily make at home that would cost much less. For others, that habit may be less healthy and frowned upon by society.  Smoking comes to mind, as does smokeless tobacco products.  No matter what your habit, have you ever seriously calculated the monthly cost? For some habits, like smoking, the cost could in the long run be greater than the actual cash amount spent monthly if you take into consideration the health consequences. Let’s leave that for another discussion and focus on the money.  

A friend of mine, let’s call her Kim, recently decided to quit smoking. Since we are in the age of all things technological, Kim included an app to support her decision.  As it turns out, this is a great idea and a daily visual reminder of your progress and your success. It can reflect when you fall off the wagon as well, which can be demoralizing but it helps you restart and keep making progress toward your goal. When I saw Kim’s progress screen I realized these apps are the new “latte factor” but in a more personalized way.

Many of us claim we don’t have any additional funds to go to our savings and investing accounts. If we realize the cost of a habit, that is not so true. For Kim, she had saved $131 in just 25 days by not smoking! This was amazing to me. The app calculates the cost based on her brand and frequency of purchase and displays this information daily as she successfully stops smoking. It made me think about what she could do with her newfound wealth. She could add to her savings, her investment account, or use that money for debt repayment, or any combination thereof.  

Let’s say for example that Kim goes 30 days and has saved an even $135 (I’ll round not knowing exactly what she would have spent).  Let’s also assume that this $135 is the monthly amount she would have spent on smoking but now she has each and every month to save and invest for the next 30 years. If Kim invests and earns an average of 5% on her money, she’ll have socked away an amazing $112,958 at the end of thirty years. You can check your savings using a simple monthly savings calculator at Bankrate.com or by asking me. I’m happy to help you run personalized calculations. And if you need the app to help you quit, it’s at smokefreeapp.com.  Please note that neither Bankrate nor Smokefreeapp provide any form of support for this blog, or to Engage Advising. The references are provided simply for your convenience.

As an independent Certified Financial Planner™, I can help you decide where and how to invest your new financial gain. As for helping you kick a habit, moral support is provided free of charge, but ultimately, it’s up to you! Contact me and let’s get started! #talktometuesday #education #Hireaplanner #badhabitscost #smokefree

Do You Have a Drawdown Strategy?

Let’s face it, most financial planners and advisers focus a lot on accumulating money for retirement.  News headlines, blogs, tv shows, and the financial press in general are always telling you what you should be doing to save for retirement.  Whether it’s how much to save, determining your “number,” or what type of investments to make, it’s usually focused on saving for retirement and accumulating a certain sum.  That’s all great stuff, but suppose you get that message, save diligently and reach your target. Now what?

Ok, you have made it to retirement, have saved a considerable sum, and are ready to tap the myriad investments you have accumulated over your life. Which do you tap first? Should you take money from your taxable accounts first or should you delay those withdrawals and take money from your tax-deferred accounts first? Oh, and don’t forget, some of you may have a third, tax-free option. It starts to get a little challenging if you have all three types of money to choose from in retirement.

Is there a general rule of thumb to guide you as to what to tap first? Could the general rule be different for people in different situations? The answer is yes, and yes. There is a general rule of thumb which posits that investors should first draw from their taxable accounts, then their tax-deferred accounts, and lastly from their tax-free accounts. Of course, this is a general rule of thumb and every situation is different. The best approach is to get help and not guess. Guessing and winging it can end up being very costly. So, consult with an adviser to help you figure out the advantages of using the rule of thumb approach or executing a more customized drawdown strategy based on your personal situation. If you are not sure why this general rule applies or if it will help you, contact me and we can discuss your personal situation.

Working with a Certified Financial Planner™ you can target which accounts to tap first, and understand why.  Your situation may not fit the rule of thumb approach, or it may be the perfect option for you. However, unless you get some help, run the numbers and understand why you are doing what you are doing, you won’t know for sure. 

As an independent Certified Financial Planner™, I can help you with a drawdown strategy tailored to your goal, timeline and resources. Contact me and let’s get started! #talktometuesday #drawdown #Hireaplanner #RothIRA #IRA #401k #retirement #spend

Pay for Your Child’s Education from Birth to Make it Easier

Are you a new parent with a new baby in your life? If so, congratulations. Obviously, you are well aware of the importance of having a new baby and the reality of the cost.  We all want the best for the little ones in our lives so why not start early with a 529 plan to pay for college?  Many families put off funding for college until the child is in high school and that makes paying for education much more challenging.  Instead, you should start early; like at birth.

Investing a few hundred dollars a year for 18 years is a lot easier than waiting until your child is in high school to figure out how to pay for higher education.  For example, if you start at birth with a $1,000 opening balance, contribute $100 per month for 18 years, and earn a conservative 5% return and you are in the 15% tax bracket, you should accumulate around $37,853 vs. $34,944 in a taxable savings account. Of course, a higher return, or periodically adding money from friends and family over the years will greatly add to the amount. If you get the grandparents on-board for another $100 per month, you could accumulate $73,300 vs. $67,773 in a taxable savings account.  This is just one example.

Working with a Certified Financial Planner™ you can target specific school options and calculate the future anticipated tuition of a specific private school or state school and craft a plan to meet your funding goal. Keep in mind that your decision to fund a child’s education is up to you. As parents, you have the choice of funding 100% of the education or 50% of the education or asking your child to work and pay for part of their own education. Factoring in grants, scholarships, awards, and loans is also part of the equation. The key is to get help early on, have a plan and let time work to your advantage.

Let’s do this! As an independent Certified Financial Planner™, I can help you plan your child’s education tailored to your goal, timeline and resources. Contact me and let’s get started! #talktometuesday #education #Hireaplanner #529 #529plan #collegedream

How Your Financial Life is Like a Recipe (FREE recipe follows).

Often, people tell me that they can’t save money, contribute more to their retirement or pay down their debt. Without a guide and some effort, that is true. However, a good financial plan for your life is a lot like a recipe. Think about how a recipe is a basic guideline that outlines the tools, ingredients, actions and time necessary to achieve an end result. A financial plan is very much the same.

Think about baking a cake. Do you know how to do this from memory? Most likely, you do not. You do know that you need certain tools like a bowl, mixer and measuring cups, and ingredients like flour, eggs, oil and that you need to take certain actions such as mixing together the right ratios of ingredients and that you need to bake your cake for a specific amount of time. Well, engaging with your financial life and improving your overall wealth and financial soundness is just like a recipe. You need tools and ingredients to make your plans come to fruition. Think of one ingredient as being a desire to change and one of the tools being the knowledge a financial planner can impart. The action on your part is to get started – hire the planner! Don’t forget the key element of your plan – time. Time is the one aspect of the planning process that cannot be recovered so starting sooner rather than later is crucial.  

Now, for that FREE recipe. This is a recipe that was shared with me by my niece in Washington. It is a recipe for harissa stewed butternut squash and it is delicious! To me, it isn’t really so much “stew” like, as it is a hearty, tasty squash dish that conjures up comfort and family time. Here’s what you need:

  • 1 butternut squash
  • 4 tablespoons of butter
  • Salt and pepper
  • 1 tablespoon of olive oil
  • 1 medium onion (I use red onion, you use what you like)
  • 5 - 7 cloves of garlic, peeled and sliced
  • 2 tablespoons of rose petal harissa or 1 tablespoon of regular (I use 2, we like spicy)
  • 1 1/2 cups of heavy cream
  • 2/3 cup of fromage blanc, sheep's milk cheese or crème fraiche (optional)

First, cut the squash in half, peel, scoop out the seeds and dice into roughly half-inch pieces.  Next, heat a very large, heavy-duty sauté pan over medium heat and add the butter. Just as the butter begins to brown a bit, add your squash and season with the salt and pepper. Cook the squash without moving until they start to brown. Once they brown on one side, stir to brown the other side. Meanwhile, in a separate skillet, add the olive oil, bring to medium heat, and add the onion, once it starts to become cooked and translucent, add the garlic. Once cooked, add the onion and garlic mixture to the squash.  When you have combined the onion, garlic and squash you then need to add the heavy cream and harissa. Stir and cook until the mixture starts to thicken a bit and the squash are fork tender. They will start to break down a little.  Now, here’s the part where you can adjust the recipe for yourself, just as with your financial plan. Some people like to transfer the mixture to a baking dish and add small dollops of fromage blanc, crème fraiche or sheep’s milk cheese to the top and place the baking dish under the broiler for a short 3 to 4 minutes. If you like it this way, fantastic! Go for it! If not, skip this part and enjoy your butternut squash without the topping.

The consistency of your squash should look somewhat like this. 

The consistency of your squash should look somewhat like this. 

As an independent CERTIFIED FINANCIAL PLANNER™, I can help you make your “financial recipe” specific to your situation. Keep in mind that your recipe for financial success, is much like a cooking recipe in that you can adjust for your taste and preferences. Contact me and let’s get cooking! #talktometuesday #GetCooking #Hireaplanner #freerecipe #harissa

 

Go it Alone? Or, Get Advice?

We live in DIY world for everything from home repairs to financial planning. However, when it comes to your finances and planning your future, is DIY the wisest choice? Sure, you can search the Internet and find a few investment or retirement calculators and even articles on saving, investing and the ever-present “Top” list of actions to take, but is that information relevant to your personal situation? How do you know if what you found fits into your financial life or was written for someone else’s specific situation? What if you make a move only to learn later that your decision cannot be undone without disastrous consequences? 

Hiring a Certified Financial Planner™ can help you reap more than just an increase in investments. Financial planners can help you save for a special goal, for retirement, or your child’s education. Financial planners can also tell you if you are not saving enough (or saving too much) for these goals. Financial planners help with major life changes such as marriage, divorce and the birth of a child. For example, why on earth should you try to navigate the complexities of long-term care or assisted living on your own? What about dealing with a windfall, or needing to pull equity out of your home? Have you considered your overall estate plan? The help, guidance and advice of a financial planner is well worth it and can help you tie all these random aspects of your financial life together. When you do have a major life change or follow-up question, a call to your planner can be a lot more comforting than going it alone and could save you from making a costly mistake. Even if you are on the right path, a call to your financial planner for some peace of mind and sound advice is well worth their fee.  To learn more about the profession, visit http://www.letsmakeaplan.org/.

As an independent CERTIFIED FINANCIAL PLANNER™, I can help you make those difficult financial decisions and you don't have to go it alone. Contact me and let’s get started. #talktometuesday #getstarted #HowIcanHelpYou #GetHelp #Hireaplanner

 

How May I Help You?

As an independent, fee-only financial planner, I can help you with many aspects of your financial life. People often ask me, “what do you do?”  That’s a great question! Here is a short example of what I do, and how I can help you:

  • craft an investment strategy
  • review and strategize for your 401(k) plan (should you roll it over to an IRA?)
  • prepare an asset allocation
  • plan for retirement
  • help with an inheritance
  • analyze insurance needs
  • plan for college
  • real estate decisions
  • analyze and advise on life transitions 

A decision for each of the above financial situations is more than just dollars and cents. Emotion may play a part in the approach you take to resolve your situation.  Injecting your emotion into a decision can be helpful, or it can be a hindrance, and getting an unbiased answer could save you both money and your sanity! I can be that sounding board for your emotions and assist you with taking the best financial approach possible for your situation. 

If a decision affects your prosperity, I can help. As a fee-only financial planner, I am not selling you a product so your best interest comes first. If you are making a transition, struggling with a financial issue, or wanting to get started on a goal that requires decisions affecting your money, give me a call or send me an email.  As an independent CERTIFIED FINANCIAL PLANNER™, I can help you make difficult financial decisions. Contact me and let’s get started. #talktometuesday #getstarted #HowIcanHelpYou