You Survived. Now What?

Northern California is just starting the long road to recovery after the devastating firestorm that erupted October 9. Folks in Texas, Florida, and Puerto Rico are a little further along in their recovery from the hurricanes that destroyed or damaged their homes. No matter what stage, recovery is a long, painful process that many share after a common disaster.

Giving tips on handling the rollercoaster emotions that one feels after a disaster is way beyond the scope of this blog. Just know that if you need to talk, someone will listen; so, seek out a friend or professional if needed. However, I can give you a few quick tips on getting back in shape financially.

First, know that you don’t have to handle everything immediately. Recovery is going to take time and patience. You don’t need to snag the first available contractor, or accept the first offer from your insurance company if you’ve lost a home due to fire, flood, or earthquake. It’s not uncommon for the road to recovery to take many years.

Second, be aware of scammers! Yes, even in the worst of times these sleaze balls are out trying to rip people off.  You should not have to pay a fee to have a business or person protect you from foreclosure or expedite your insurance check. Businesses or individuals promising help for a fee that seems too good to be true should be a red flag. Work directly with your lender or insurance agent and ask them what terms can be arranged if you need payment forbearance or an update on your insurance claim.

Photo Credit: Paul Hellstern/The Oklahoman/AP Photo

Third, ask for assistance. Contact FEMA if your neighborhood has been declared a federal emergency disaster area. You may be surprised to find that some assistance is available. Some is better than none so it doesn’t hurt to ask.

Finally, seek out affinity groups for support. For insurance, one such group that may be of assistance is United Policyholders, a non-profit for policyholders of all types of insurance. United Policyholders provides assistance in all 50 states and with many aspects of insurance.

Just know that you are not alone, you don’t have to resolve all of your issues at once, and that recovery could take years. As a disaster survivor, you may feel post-traumatic stress months or even years after the event. We all process stress, loss, and grief in very different ways.

As an independent Certified Financial Planner™, I can help you with assessing your situation, locating possible funds to use, and getting back on track.  Contact me and let’s get started! #talktometuesday #education#Hireaplanner #documentsyouneed #recovery #beprepared #safetyfirst #rebuild

What to Take in a Disaster Dash

San Francisco, California after the Loma Prieta earthquake.  Photo Credit: NBC Bay Area

Did you notice today’s date, October 17? It’s the twenty-eighth anniversary of the 1989 Loma Prieta earthquake that wreaked havoc and cost lives all across Northern California. And, October 19 will be the twenty-sixth anniversary of the 1991 Oakland Hills fire. Yet again we find ourselves with another October tragedy here in Northern California, the Tubbs Fire, which reportedly started in the early hours of October 9, 2017. At this writing, the death toll is just starting to be reported and a full assessment of loss of life and property is not available.

Devastation in the Oakland Hills in the 1991 firestorm.  Photo Credit: MarketWatch

So, what does this have to do with financial planning? In all three of these incidences, people had to evacuate and evacuate fast when authorities gave the order. But what do you take in your mad dash to safety? Personally, I would advise the following: grab your favorite and irreplaceable photos, marriage certificate, and your important documents binder. I previously wrote about what to put in that binder and you can find more tips at my post Do You Have a Special Emergency Binder.

You should consider making duplicates of photos you cherish and important documents and storing them remotely in a bank vault or at least a trusted relative’s house in a different town. As for your important financial documents, at minimum grab your will, trust documents, deed, insurance documents, banking and investment statements, auto titles, and any powers of attorney. Obviously, you will not have time to hunt around for these so have them ready in advance and all in one binder, or fireproof strongbox. Remember, portability is key!

As an independent Certified Financial Planner™, I can help you decide what to select for your binder and where to store it.  Contact me and let’s get started! #talktometuesday #education#Hireaplanner #documentsyouneed #evacuate #beprepared #safetyfirst

Five Simple Things You Can Do to Improve Your Finances

A lot of personal finance advice can become overwhelming. The vocabulary alone can be alienating and confusing for folks. However, here are five very simple things you can do to improve your finances that are not overwhelming, confusing or difficult.

One – create your own an annual financial calendar. We all have apps, Smartphones, tablets, laptops and other devices that we use daily. Pick a calendar that you like on a device that you regularly use and setup a personal finance calendar to remind you to pay bills, check credit card statements, review invoices, transfer money to savings, or meet with your adviser. It’s your calendar so personalize so that it is applicable to your financial life.

Two – get yourself a money buddy. If you are single, pairing up with another person to talk finance can be supportive. If you are married, sometimes having the ear of a friend other than your spouse can be a great asset. Having a money buddy can be a great way to hold yourself accountable for goals, learn new positive habits and expand your financial knowledge.

Small actions can lead to big results!

Three – create a physical or digital financial goals board with pictures. The idea is that this board is somewhere that you will see daily. The board can be physical and placed in your bathroom, bedroom, office, kitchen, etc., or it can be digital and be your laptop’s screensaver. Just make sure you see your goals daily. Have a mix of short-term and long-term goals and celebrate when you succeed.

Four – tackle your debt! Seriously, debt is a major wet towel at your money party. Keep an eye on your monthly spending and try going on an all-cash diet to avoid using credit cards and getting yourself further in debt. To build momentum on paying down debt, knock-out a couple of small debts first. Next, use the payments from those small debts and add it to your highest interest rate debt payment and pay it off next. Follow suit with your second highest interest rate debt, then your third highest, and so on until you are debt free.

Five – save more than you think you need. If you are already a saver, good job! Aim for six months of expenses saved if you are married with two incomes, and nine months if you are single, or self-employed. If you have nothing in savings, get started. You may be able to save only small amounts at first, but get started, make it a habit and save more as you pay down your debt.

On a final note, putting your financial life in order does not have to be overwhelming or time consuming. Start with one or two of the above items and then grow from there. The important thing is to set attainable goals, take action, do it consistently and build on small successes.  As an independent Certified Financial Planner™, I can help you make decisions and layout a plan for getting on the road to a brighter financial future. Contact me and let’s get started! #talktometuesday #education  #Hireaplanner#retirement#income#debt #savings #CFPPro #moneyhabits

Three Things to Consider When Getting a Personal Loan

We’ve all been there, considering whether or not to get a personal loan. Personal loans can come in many flavors and people feel the need to get a personal loan for many reasons. The most common, unfortunately, is for debt consolidation. This can be a smart way to handle debt (especially high interest debt) but only if you have addressed the underlying causes and spending behavior that led to the high debt. Without changing your behavior, it won’t be long before you owe the personal loan amount plus new debts.

The first thing to consider is whether you really need a loan? Seriously, examine your situation and see if you need a loan or if you are taking the easy way out. A financial planner can help you compare the advantages of a loan versus maintaining control over your current debts and restructuring how you are paying those debts. For example, many people top-up monthly payments on multiple debts and this is not a constructive way to pay down your debt. It keeps you on the perpetual hamster wheel of debt.

Second, if you do need a loan, be prepared to get yourself into the best position possible for a good loan. Spend several months working on getting your credit score up as much as you can. A higher score will help you qualify for a better loan. Keep in mind that the best terms for a loan may not be with any of your existing banking relationships. Going online with your improved credit score may very well be your best bet. Just make sure you are dealing with a reputable lender and check them out with the Better Business Bureau and as many review sites as you can. You want to improve your situation, not line the pockets of a scammer. Be very aware of pushy sales tactics, today only rates, no credit check or no documentation requirements, and especially be wary if asked for a cash deposit to secure the loan. These can all be red flags that the lender is not legitimate.

Third, READ the fine print. Educate yourself on loans and their provisions. Make sure you understand APY and APR (hint: go for the lower APR if possible). If you are not sure what those terms mean, you can read more from Investopedia. Once you decide on a lender, make sure you are allowed to review the loan terms and that you understand all the terms of the loan prior to signing on the dotted line. At the very least, you want to know the amount borrowed, the total amount repaid, the term of the loan, the rate and any other conditions such as pre-payment penalties.

A loan can be a useful tool in your financial toolkit. It can also lead you deeper into debt. Be sure that you do indeed need a loan prior to applying for one and know your endgame.  If you have not addressed your spending and financial bleeding that led you to needing a loan, you likely should not apply for one.

As an independent Certified Financial Planner™, I can help you with a debt repayment strategy tailored to your goal, timeline and income. I can also help you compare repayment on your own, repayment assistance plans, or the value of a loan. Contact me and let’s get started! #talktometuesday #savings #loan #personalloan #CFPPro #hireaplanner

Three Things You Can Do to Build Long-term Wealth

When it comes to investing, many of us are more terrified of losses we experience in the short-term, versus the potential gains we can achieve over the long-term. Money is a very sensitive topic for most folks and the idea of any loss is unnerving and frightening. I get that. But there will be ups and downs in the market and these could play to your advantage over time.

First, get a hold of yourself! That’s right, keep those emotions under control and remember that investing should be for the most part, emotionless. Irrational and emotional decisions can lead to catastrophe when it comes to your investments. For starters, turn off the market pundits and ignore the annual forecasts if you know this will upset you. Pundits and forecasters are all about having a January alert to apprise investors of the year ahead. But how many times do you pull that forecast up in December to see how right, or wrong, the forecasters got the market?

Second, you need to keep your ultimate goal in mind. Think long term…very long term! Stop worrying about today’s loss or this year’s bad market and definitely stop trying to time the market. Sit down with your adviser and craft a personalized, well-thought-out plan that meets your needs and serves your long-term interest, timeline and goals. Doing this makes market timing irrelevant because you will have a plan in place for the market of today, tomorrow and into the future.

Third, remember that markets go up and they go down. These fluctuations for the long-term investor are actually assets. Just like Warren Buffett, you too can avail yourself of the gift of a downturn in the market. Downturns are a great opportunity to load up on investments at lower prices – a sale! If you have an investment plan and are putting away money on a regular basis, these downturns can work to your benefit. If you have an adviser, you most likely discussed market volatility, risk and are better prepared to realize ‘this too shall pass’.

I’ve heard people complain, ‘I am close to retirement, I can’t suffer a downturn’.  This statement encapsulates exactly why they should have been working with an adviser. First, remove the emotion, other than being happy that you are about to retire. Second, remember your ultimate long-term goal? You shouldn’t be market timing. And, third, you should have already been working with an adviser even if you are retiring during a downturn; your planning should have you positioned to be ready for retirement regardless of the current market. If this is a fear for you, talk to your adviser. Most likely, your adviser started you on a revised investing allocation long before your retirement date.  

As an independent Certified Financial Planner™, I can help you with a strategy to address retirement and other investing goals. Contact me and let’s get started! #talktometuesday #savings #retirement #emotion #long-term #goal #warrenbuffett #plan #CFPPro

Four Basic Equity Awards You May Receive from an Employer

Many of us are familiar with our 401(k) or 403(b). Some of us even have a TSP (Thrift Savings Plan). However, when employers share a bigger slice of the pie and reward employees with equity, it can get a little more confusing.

Many companies, especially technology companies, give employees a chance to share in the growth and prosperity of the company. Companies do this by offering employees a variety of equity awards. These awards come in various types and have multiple acronyms. The awards also have very different rules when it comes to taxation and how the award can affect your bottom line. Let’s look at the very basics of just four of the most common awards.

ESPP – The Employee Stock Purchase Plan offers employees a chance to defer salary and then purchase company stock at a discounted price. An ESPP can either be a tax-qualified plan or a nonqualified plan. The employee contributes to the plan via payroll deductions for a defined period. At the end of the period, the accumulated payroll deductions are used to purchase shares of company stock at a discount. Every plan is different, but generally the discount can be up to 15%.  One added advantage if the plan is tax-qualified is called a “look back” feature. This means the plan may look back and select the lower share price either on the offering date or the purchase date thus giving the employee an even better benefit. Rules vary for each ESPP and taxation can be tricky whether you ultimately sell your shares in a qualifying disposition, or a disqualifying disposition.

Options – A Stock Option at its core is an agreement between two parties that gives the buyer (optionee) the right, but not the obligation, to buy stock at an agreed upon price within a specific time. Option agreements come in many forms but two common types are ISOs (Incentive Stock Options) and NSOs (Nonqualified Stock Options). One advantage to an ISO is that when exercised you can avoid ordinary income tax and may ultimately pay only capital gains tax. However, ISOs come with a host of requirements to be qualified and are not always the best choice for the optionee as they can generate AMT. An advantage to NSOs is that the company granting the option has greater flexibility in who they may select as an optionee, including granting to outside directors and contractors.  Options have their own lingo, unique rules and complex timing and taxation issues which go far beyond this basic explanation.

The next two award types are frequently confused by recipients; some even use the acronyms interchangeably. They are NOT the same and careful attention should be paid to the type of award you may have received.

RS – Restricted Stock is a grant of stock to executives that is nontransferable and becomes available to the executive pursuant to a graded vesting schedule. It is generally subject to insider trading regulations under SEC Rule 144. Although it can be risky, recipients of RS awards may be able to make a Section 83b election thus reporting the compensation value of the stock when received versus when it vests. This can result in substantial tax savings if the shares appreciate in value. If the shares do not increase in value, or worse, the grantee forfeits the shares, you’ve accelerated the tax payment without receiving a benefit.

RSU – Restricted Stock Units are conceptually similar to Restricted Stock. However, they are granted to employees and the employees must meet a set of underlying criteria outlined in the plan document to receive their actual shares. That is, the RSUs are granted as an unsecured promise until the employee meets the criteria according to the vesting schedule. Another key difference is that RSU recipients cannot make a Section 83b election (there is no actual stock issued at grant).

There are many types of equity awards that companies make available to employees, consultants and directors. Each plan or award type may have different variations. Each award type has its own set of rules to be either qualified or nonqualified, and will have various complex tax regimes. If you have been granted an equity award, hold on to your plan documents and read the details very carefully.

Next, call me to strategize! As an independent Certified Financial Planner™, I can help you with a strategy to address taxation and what to do with the subsequent cash. Contact me and let’s get started! #talktometuesday #savings #equity #espp #sop #rs #rsu

Identity Theft - What Can I Do?

I was recently asked by a client about the major security breach at a large, national credit reporting bureau that exposed 143 million Americans (nearly 40%) to possible fraud and identity theft. The question was about what they could do at this point. In reality, it could be too late since the breach occurred from May through July and the company did not report the breach until September! 

For starters, all consumers should have a credit reporting agency account and check their credit often. I use Credit Karma because it is free and you can check your report regularly. I should disclose that I have no professional relationship with Credit Karma and I receive no compensation from them. I simply like their service. 

Next, you can sign-up for a credit monitoring service. There are several out there, so do your homework and pick the one that fits your needs. Make sure to read the fine print and understand exactly what you are paying for and what services you will receive in the event of identity theft.

A stronger step to take is a credit freeze. Do not consider this step lightly. A credit freeze will lock your credit down and make it fairly hard for hackers and identity thieves to get to your data. It also makes it harder for valid creditors to extend credit to you. A credit freeze does not affect your credit score, and it will not prevent an ID thief or hacker from accessing current accounts. It will not prevent you from applying for new credit, getting a job, or renting or leasing housing. You will have to do some legwork if you are attempting any of these actions as it will be necessary for you to temporarily lift the credit freeze.  For more on a credit freeze, please see Credit Freeze FAQs at the Federal Trade Commission's website. 

Be proactive with protecting your data. As an independent Certified Financial Planner™, I can help you with a strategy and explain your options. Contact me and let’s get started! #talktometuesday #IDtheft #identity #identitytheft #hacker #Hireaplanner 

Saving for a Short-term Goal – like Christmas!

Christmas 2017 is just 15 weeks away as of this writing. I know that not everyone celebrates Christmas but for a large number of families this is a major holiday and a very big expense. It also puts many folks into a financial tailspin and creates unnecessary stress. So, how do you prepare for the expense in your budget to avoid the tailspin and reduce stress?

First of all, don’t wait until December to “find the money”. That’s how we get into a financial tailspin. Create a separate sub-category in your annual savings budget and save for Christmas like you would for a larger, long-term goal. Set a goal amount of total spend and break it down by weeks or months until Christmas. The sooner you start in the year the easier it will be on you.

Next, determine an amount per person per category. For example, allocate more money per person for your children, another amount per person for extended family and friends that you buy for, and finally, a lower per person amount for those you have to buy for such as service personnel, co-workers, educators, coaches, etc. Don’t forget to include an amount for extras such as shared meals, travel, donations and other non-gift cash expenses. If you always provide the wine or the goose for a family gathering, you have a historical record of what this costs you so be sure to include that expense.

Open a Christmas Club account and banish the credit cards! These accounts are not as common as they used to be, but lots of credit unions still offer Christmas Club or holiday accounts. Credit unions would be happy to help you start an account so check with your credit union to see what they offer and what the terms are for the account. Use your Christmas Club account funds and put those credit cards on ice!

Here are a few survival tips:

- Set a budget amount and stick to it!

- Start early in the year saving weekly or monthly.

- Open a Christmas Club account and banish the credit cards.

- Avoid Black Friday and shop sales from Labor Day through Christmas.

- Take advantage of Cyber Monday for must have items.

- Group online items and buy from sites that offer free shipping.

- Finally, buy something for yourself!

You can take the stress out of Christmas shopping with a little foresight and planning. As an independent Certified Financial Planner™, I can help you set an appropriate spending goal and layout a plan for Christmas spending that won’t put you into a financial tailspin. Contact me and let’s get started! #talktometuesday  #Hireaplanner#Christmas #Christmas2017#budget#ChristmasClub

Money in the Bank; But, Can I Afford It?

People confuse having a cash balance in their checking or savings account with being able to afford a desired item. Having cash on hand and being able to afford something is not the same. Financially savvy folks understand this and save strategically to buy what they want. This is why Suze Orman’s Can I Afford It? show segment is so popular.

First, you need to truly understand and separate needs from wants when it comes to managing your money. Something we seem to have forgotten in today’s society. You need to pay your mortgage or rent, your car payment, insurance and utilities. Paying these items provides security and comfort and helps you lead a better life. You may want to buy the latest car model to upgrade, or buy an expensive appliance, but you should ask yourself if you really need it, or just want it. I always ask myself three times or more when I want something if I really need it.  

On Suze Orman’s segment, she denies a caller’s request based on the information she receives from them about their overall financial picture. Often times, people will convince themselves that they need an item when truly it is just a want. Many of us do this even though we know that we have not met our future financial obligations as a kind of escape from reality. For example, we fail to increase our retirement savings through our salary, fund our IRAs, or set aside money for our child’s education.

This doesn’t mean you can’t shop. In fact, spending money should be included in your monthly budget. Working with a financial planner can help you develop strong financial skills such as a weekly, monthly and annual budget to meet your obligations and still have some freedom to spend. Here are some tips.

Create an annual spend amount based on your income minus savings and all other obligations. Break that amount down to a monthly amount.

For a specific item, consider how many work hours the item would actually cost you. A quick and dirty method is to divide the item’s cost by your hourly wage. The result is a rough pre-tax estimate of hours required that may change your mind about wanting the item.

With known future purchases, start now! Divide the cost by the number of pay cycles if you are earning a salary. This will give you an idea of how much extra you need to save per pay period and see if this amount fits into your spending money. If not, you may need to delay the purchase, or consider alternatives to the item, or ways to generate more income.  

Breaking down the amount into smaller goals could save you from blowing your budget or going off the rails and not meeting your obligations.  Getting back to some old school delayed gratification when it comes to saving and spending is not a bad thing. As an independent Certified Financial Planner™, I can help you with a strategy tailored to your goal, timeline and income. Contact me and let’s get started! #talktometuesday #savings #SuzeOrman #Hireaplanner #goals #retirement #spend

Why Women Need Financial Planning

Financial professionals for years viewed women as not really needing financial planning services and focused on male clients. Big mistake! The idea being that the husband would make the decisions and take care of things. Many cultural factors fed this view, but in reality, women need financial planning and women make fantastic clients.

Men and women are different when it comes to financial planning. For one thing, women tend to be more levelheaded than their male counterparts are when it comes to investing and they understand risk differently. Generally, women live longer than men; an average of seven years longer. The Social Security Administration estimates that women receive 24% less from Social Security than their male counterparts. These factors, coupled with potential lower earnings in the workforce, and fewer years spent earning money, can lead to less money in retirement than needed. Therefore, having a sound financial plan is vital for women since they will likely be living longer in retirement than their male counterparts.

The good news is that women are earning more these days and charting successful careers unlike never before. In many instances, women are the key breadwinner in the family. Women also have more options these days for deciding how they wish to live their lives. Therefore, women need financial planning more than ever.

As an independent Certified Financial Planner™, I can help you set goals, establish a plan for retirement and help you implement those plans. #talktometuesday #budget #Hireaplanner  #savings #cash #debt #womenfirst #women #woman

When Should I Take Social Security?

In short – it depends. Like many topics in personal finance, when to take Social Security is kind of a loaded question for advisers. Taking Social Security is a personal decision based upon a variety of factors. That’s why your adviser should be honest and tell you that it depends; because it depends on a host of social and financial factors.

For starters, it’s not just about your age and turning 62 for early eligibility or older for your Full Retirement Age (FRA). Your FRA is different depending upon your year of birth. You also need to consider whether you need the money. Another factor is family longevity. Do people in your family live longer than average? Are you in good health or are you in great health for your age? Do you fear you won’t be able to draw your “fair share”? Will taking it help you sleep better at night?

On the financial side, you need to consider if you should delay taking Social Security until you are older to increase your payment. Generally, you get about an 8% raise per year that you delay taking Social Security beyond your FRA.  This can really maximize your lifetime amount if you are prone to living to an advanced age. You also need to consider if it will be too much income and how it may be taxed if you are still working, or if you have other income. Your adviser can run the scenarios for you so you can get a good idea of what to expect.

These factors put the personal in personal finance. No one should give you an instant answer without probing deeper into your personal situation to help determine the best course of action for you – personally. As an independent Certified Financial Planner™, I can help you with figuring out a course of action and putting that plan into action to get ready for retirement.  #talktometuesday #CFPPro #Hireaplanner #retirement #socialsecurity #goals #savings #cash

Fee-only vs. Fee-based: Is There a Difference?

You bet there is; and it could cost you! The financial services industry seems to be laden with jargon and titles that sound similar, but in reality have very different meanings. It can be very confusing for clients. When it comes to your adviser, you need to know the terms fee-only and fee-based because it determines how the adviser is compensated.

Generally speaking, fee-only financial planners may be registered investment advisers, and should act as a fiduciary in the client's best interest. Fee-only advisers do not accept any fees or compensation based on product sales, i.e., no commissions. Fee-only advisers are viewed as having fewer conflicts of interest, and are seen as providing more comprehensive advice.

Conversely, a fee-based adviser may not always disclose how they are compensated to a client. Many fee-based advisers do offer hourly fee service but they also offer commission-based products (insurance, annuities, etc.) to clients. Fee-based advisers may not disclose that they will receive a commission based upon their recommendations. Further, fee-based advisers generally have to work in their firm’s best interest first, and not necessarily the client’s. Conflict of interest, anyone?

Yes, I am biased in favor of the fee-only model. Many fee-only planners have also obtained the Certified Financial Planner™ designation and act as a fiduciary for their client. However, you do not have to be fee-only to be a Certified Financial Planner™.  If you would like to learn more about fee-only planners, you can research the following websites for information and use their Find an Adviser function:  National Association of Personal Financial Advisors (NAPFA), the Garrett Planning Network, or the Certified Financial Planner Board of Standards.

For disclosure, I am not a member of NAPFA or Garrett Planning Network. I am however, a fee-only, independent CERTIFIED FINANCIAL PLANNER™.  I can help you with financial decisions, budget for debt, save or invest for retirement, investment allocation and more. Contact me and let’s get started. #talktometuesday #getstarted #HowIcanHelpYou #GetHelp #Hireaplanner #feeonly #feebased #commission #fiduciary

I Need to Take a Class on How to Retire

I recently had a client say this to me during our meeting because there is so much to consider. She is in great health, planning to work until at least age 70, if not longer, and not at all interested in slowing down. She is about six years from her goal to stop working. Knowing this, we met to discuss her current retirement plan offerings and the allocations, but we ended up discussing much more than just cash flow, retirement accounts and Social Security projections.

First, I let her know that she is far from alone. As many healthy Americans age, not everyone is eager to leave what he or she does for a living. For some, it’s the security of a monthly paycheck and healthcare coverage. However, for many it’s the fact that they are still vital, active and engaged with their professional lives.

You don't have to figure it out alone.

There are key steps to take several years before you contemplate retirement. If you are working with a financial planner, you should be preparing at least five years before your retirement goal year, if not even further out.  If you are close to retirement, call your financial planner now!

What to consider…

Can you retire? You need to sit down with your financial planner and project what income and expenses you will most likely have in retirement. You need a good understanding of all your income streams from retirement plans, savings, pensions, investment accounts, Social Security, etc. You need to know when and how to tap each source to maximize the benefit so timing and planning are key. For example, my client wants to work until at least age 70 and has no plans to touch her Social Security. She wants to delay taking Social Security to qualify for the maximum benefit amount.

What about health care costs? You need to know when and how to file for Medicare, the costs and whether you will need a supplement plan. If you have other medical insurance coverage, you need to understand how or if the coverage works together. Most importantly, you need to project the costs and account for this expense.

When should you retire? Whether you hate your job or love it, there comes a time for many of us to call it quits. If you know you want to retire, make sure that you coordinate the retirement age with the benefits available to you. You do not want to retire too early and miss key plan contribution dates for your workplace retirement or pension plans. Nor do you want to work longer than needed.  Review any workplace pension rules, retirement plans, and Social Security dates to be sure you are getting the maximum benefit possible. No matter what you do, timing when to leave the workforce in coordination with your benefits and retirement income is very important. For more, see my blog post How to Pick Your Retirement Date. 

How’s your debt load? If you are close to retirement, debt free should be a goal. There is an argument that having a mortgage in retirement may be a benefit, but this is something you should discuss with a financial planner to make sure it is a benefit for you. Otherwise, you should make sure you are entering retirement without consumer debt.

Historically, people would quit their job and never look back. Today, many retirees find that their knowledge is still valuable. Instead of working as a nurse full-time, you retire and find that you can teach part-time. Perhaps you turn a lifelong hobby into a side-hustle that you love. Maybe you decide to volunteer a few hours per week at the local community garden. Knowing what you want to do, how your benefits will work, and when best to retire can make the transition more enjoyable and profitable.   

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

What’s the Fastest Way to Pay Off Debt?

Avalanche or snowball method? Which is the fastest way to pay off debt and what’s the difference between the two? It all depends on whether time saved or maximum money saved motivates YOU as the debtor.

Do you know how long it will take you to be debt free? Do you have a plan?

Using the snowball approach, you can pay off a small debt and then apply that payment amount toward your next smallest debt. You would add the minimum payment amount from the paid off debt to the next minimum payment amount on the next smallest debt you owe.  This can feel very rewarding eliminating debts. For example, let’s say you have three debts: one is $500 with a minimum payment of $25 per month, the next is $750 with a $30 per month minimum payment and the last debt is $1,000 with a $35 per month payment. You would pay off the $500 debt and then add the $25 payment to the $30 payment and pay $55 per month on your $750 debt. You would continue this approach with all debts paying them off in order of the smallest debt first.

With the avalanche approach, you may in the end, pay less in interest and this can translate to some nice savings. You identify your highest interest rate payment and tackle that debt first with any excess monthly cash you can consistently add to the minimum payment while making only the minimum payment on your other debts. Once paid, you add that minimum payment (plus any excess) to the minimum payment of the debt with the next highest interest rate. You are creating an avalanche of payments on your high interest rate debts.

With either approach, you should consider your personal situation, timing, ability to service the debt, and any refinance options that may be available to you to reduce the amount of interest being paid. Knowing your amount of debt and the rate(s) you are paying is the first step.

As an independent CERTIFIED FINANCIAL PLANNER™, I can help you make financial decisions and budget for your debt strategy. I can also show you which method will help you pay off your debt the fastest, or save the most money. Contact me and let’s get started. #talktometuesday #getstarted #HowIcanHelpYou #GetHelp #Hireaplanner #debt #debtfree #snowball #avalanche

Congratulations! You’ve Retired…Now What’s Your Spending Strategy?

You have made it to retirement and are ready to tap the myriad investments you have accumulated over your life. Hopefully, you have been diligent and at least saved money in the three buckets classified as taxable, tax-deferred and tax-free. So, which do you tap first? Is there a general rule of thumb? Could the general rule be different for people in different situations? The answers to the last two questions are ‘yes’ and ‘maybe’.

A general rule of thumb is that investors should first draw from their taxable accounts immediately after retirement if they are in a lower tax bracket year. This could help you somewhat avoid the tax bite.  Next, investors should look to their tax-deferred accounts. These accounts likely have minimum distribution requirements at a certain age (think IRA and 401(k) at age 70 1/2).  Lastly, investors should consider drawing from their tax-free accounts (think Roth). Don’t forget that this timing may very well be impacted by whether you are still working to some degree, already taking Social Security or opting to delay Social Security. Working with your adviser is key to knowing the lay of the land ahead and drawing strategically from your investments. You also need to calculate how much to drawdown and THAT can be a real challenge.

Where do I start....I better call Greg at Engage Advising!

Of course, every situation is different and you should consult with an adviser to figure out the advantages of using the rule of thumb approach or executing a more customized drawdown strategy based on your personal situation and funds needed. If you are not sure why this general rule applies or if it might help you, contact me and we can discuss your situation.

As an independent Certified Financial Planner™, I can help you decide how to start enjoying your retirement savings and in what order.  In addition, I can help you make decisions and layout a plan for spending in retirement. Contact me and let’s get started! #talktometuesday  #education  #Hireaplanner#retirement#income#drawdown #IRA #401k

Putting Together a Financial Plan is a lot Like Cooking!

A good financial plan for your life is a lot like a recipe or preparing a tasty dish. It takes some effort, but in the end it is well worth the time and steps involved. Think about how a recipe is a basic guideline that outlines the tools, ingredients, actions and time necessary to achieve a delicious end result. A financial plan is very much the same.

Think about making a favorite summer salad. Most likely, you know the basics but still need to check your family’s recipe or look up some measurements. 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. Now think of one of the tools as 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 a FREE recipe – Summer Corn Salad!

You need 5 ears of corn (3 ears of Silver Queen, and 2 ears of your favorite yellow corn).  You also need the following:

5 teaspoons of olive oil (divided)

1 tablespoon lime juice

1/4  teaspoon good sea salt

1/4  teaspoon of Crystal Hot Sauce (or Tabasco)

1 1/2  cups of halved cherry tomatoes

1/2  cup of diced cucumber

1/4  cup of diced red onion

1 small bunch of fresh basil

1/4 cup crumbled feta or favorite goat cheese

Make your dressing. Combine 4 teaspoons of olive oil, the salt, lime juice and hot sauce and set aside.

Cook your corn until just tender. Cool, and then remove the corn from the cob. Add the corn, tomatoes, cucumber, red onion, and chop about 2 tablespoons of fresh basil (or to taste).  Drizzle the dressing over the mixture and toss to coat. Taste, and if needed add another teaspoon of olive oil to taste. Just before serving, sprinkle on the feta cheese.

If you need help with this recipe, or more importantly, with your financial life, contact me. 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 #financialplan #FREE

How to Pick Your Retirement Date

Happy 4th of July! It’s around this time every year that many folks retire. A lot of people like the symmetry of June 30th being their last working day or the July 4th holiday being their personal independence day. Milestones are a great way to mark major life changes, but there are some important points to keep in mind when picking your retirement date.

Retirement Plan – Read your retirement plan document six months to one year prior to when you are considering retirement. You want to be aware of any dates that will work to your favor such as when payouts for matching contributions are made, confirm your vesting schedule, and know until which dates you may need to be actively employed to receive plan contributions or benefits. If your company still has a traditional pension plan, your actual retirement date could be very important. It could add money to your monthly payout by working even a day longer. The point – whether it be a pension plan or a defined contribution plan such as a 401(k) plan, check your plan documents carefully.

Equity Compensation – If you retire today, how will your stock benefits be treated? This is important to know because it would be an unpleasant surprise to learn that you are losing out on equity benefits because you selected a holiday weekend to retire versus the end of the fiscal year, a key quarter in the equity plan or possibly calendar year-end. If you have a lot of equity compensation, confirm the treatment of the awards upon separation of service and make sure your last day at the office works in your favor.  You would not want to lose a large award grant or incur a major tax bill over selecting a retirement date that might be too early.

Social Security – Are you retiring early? Will you wait until full retirement age? It will make a huge difference in your benefit. If you retire early, generally age 62, you are not going to receive a full Social Security benefit. You need to review your Social Security statement and determine your personal full retirement age for receiving your full benefit. If you have additional resources such as savings, investments, and maybe a pension or 401(k) plan, you may be comfortable retiring early and taking a reduced benefit at age 62. You may also decide to wait and draw benefits beyond full retirement age that will increase your monthly check! Timing is important as is having a plan and knowing what you’ll be receiving at each age.  

Vacation Days – Companies handle vacation pay in different ways. Some pay it out, others have “use it or lose it” policies. The important thing is to know how your company handles accrued vacation and what is the best possible way for you to not lose out on any accrued benefit.

Health Care – Have you planned for health care? Retire too early and you may not be eligible for Medicare. Make sure you know what you are going to do regarding health care. In some cases, you may be able to extend your company plan or it may be portable. In other cases, you may need to purchase a private plan in the marketplace. If you are Medicare eligible, make sure not to miss the enrollment period.

Retirement as a concept is changing quickly in our society.  Even so, many people look forward to transitioning from a career whether it is to full retirement, partial retirement, or even into a twilight career. All of these decisions are very personal but can affect your benefits. A little advance planning can help smooth the transition and put you in the best possible position.

As an independent Certified Financial Planner™, I can help you create a plan to move forward. Contact me and let’s get started! #talktometuesday #education #Hireaplanner #retirement #aplanforyou #newcareer #socialsecurity #medicare #independence

Are You Missing Out on Your Share of $24 BILLION* Dollars?

Are you one of the many Americans who is not taking full advantage of your 401(k) plan, or worse, not participating at all? On average, Americans leave about $1,336 (per Financial Engines, 2015)* per participant of FREE money with their employer every year. How does this happen?

For starters, you lose out by not taking full advantage of your employer’s matching opportunity via your 401(k) plan. Much worse, those who do not participate at all in their company’s 401(k) plan are missing out on even more free money. Many workers erroneously believe they cannot afford to participate. Not true! You can’t afford not to participate.  Ask your financial planner to show you the post-tax effect on your paycheck versus the annual contribution total.  Let’s take the average amount of $1,336 left on the table by many participants. Just this amount alone contributed annually with an average growth of 5% could be worth $49,930 in 20 years (setting aside inflation). That’s a lot of extra money you could have just for participating in your 401(k) plan at full match.

If you are not sure what the match percentage is and how it works, grab you plan document and give me a call. As an independent Certified Financial Planner™, I can help you. Contact me and we can review your plan document to make sure you are maximizing your benefit in the best possible way.  #talktometuesday #getstarted #HowIcanHelpYou #GetHelp #Hireaplanner #401k #plan

How You Can Save Money on Travel

The summer travel season is in full swing and it can be a challenge to control your spending. June is a very busy month with festivals, concerts, special events, weddings and many people taking time off while the kids are out of school.  A good summer vacation doesn’t have to break the bank and bust your budget.  Consider the following tips to save money.

Airfare is usually a major component of the summer travel budget. The airlines are masters at raising ticket prices close to departure dates so consider booking your ticket well in advance to take advantage of lower prices. Also, consider not checking bags! I know, I am going to hear it on this one. Most carriers allow one roller bag and one carryon bag. If your children are ticketed passengers, that applies to them as well. You can save money on baggage fees and time by not going to baggage claim. Another option, consider using a combination of miles and money if you are a frequent flyer to reduce the ticket cost.

My nephew, Kendall, catching a ride in a gold mining cart at Bodie State Historic Park in California's Eastern Sierra.

You may not need a hotel. We frequently use a private home rental agency to rent a large condo that sleeps eleven people in Mammoth Lakes, CA. By sharing our rental with other friends, we cut the cost per night per couple to much less than the local hotel rates per night. You don’t have to pack the rental with the maximum it will sleep, just find out how many other friends you need to share the cost and make it more affordable than the hotel rate. As a bonus, you’ll be more comfortable, can cook your own meals, and won’t have to deal with hotel room rates, resort charges, parking fees, etc., and everyone can come and go as they please.

Consider camping! If you’re the outdoorsy adventurous type, book a campsite well in advance. Camping is still very economical when compared to hotels, private residence rentals and even hostels in many cases.

Take vacations during the “shoulder season”. The shoulder season is that time of year between major seasons when many rentals, hotels, and campsites have lower prices due to lack of demand. You may find that you like shoulder season better than the prime travel season.

Hiking with Randy at Lulu City, CO in Rocky Mountain National Park.

Avoid the most popular holiday weekends like 4th of July, Memorial Day and Labor Day. Pick weekends that are lower in popularity and enjoy more space to yourself. Nowadays, you can use Google Analytics to look up and research a destination or property and generally Google will tell you the peak times.

Set a budget and research destination activity costs and meal price averages. By knowing these costs in advance you can set a target fund goal for your vacation. In many cases, if you reserve activities in advance and stick to your schedule you can save on the activity price.

So get creative, rethink your travel dates, and share! Many of these tips can save you money and if you combine the tips you can save a lot of cash and maybe some of your sanity.

As an independent CERTIFIED FINANCIAL PLANNER™, I can help you make financial decisions and budget for your summer getaway. Contact me and let’s get started. #talktometuesday #getstarted #HowIcanHelpYou #GetHelp #Hireaplanner #summervacation #vacation

Financial Planning Tips for Dad this Father’s Day

We posted about Mother’s Day now here we are at Father’s Day. We often see articles that included tips learned from dad, but what about financial planning tips for dad?  

My father in his sheriff's uniform.

Just as with mom, you should discuss topics with your father such as retirement savings, Social Security plans, insurance needs, retirement activity goals, and even estate planning and end of life decisions. You don’t need to personally understand all of these areas yourself, but have a frank conversation to get a better understanding of where your father stands financially and what he is planning for his golden years. We often assume that being Dad, he may have all the answers and that’s not a good assumption.  It’s better to be upfront and clear and discuss these issues.

My stepfather in his military uniform.

The important documents binder is also a good gift for dad. It can come in handy in emergencies. Let your dad customize this binder and have him put all of his important documents inside such as his Will, insurance contracts, Durable Power of Attorney, Social Security statement, and even a farewell letter to family and friends. It’s his binder so let him personalize it all he wants, but make sure it contains all of his vital documents. You can read more about what to put into his binder at my blog post Do You Have a Special Emergency Binder.

Again, you don’t have to understand all of these areas but you do need to understand your dad’s goals and plans. Discussing these points should be done open and honestly. Topics that you and your dad do not understand should be noted and both of you should make a plan to get answers and follow through. As an independent Certified Financial Planner™, I can help you with the unfamiliar areas, set a timeline and put that plan into action to help dad get ready for retirement and beyond.

 #talktometuesday #CFPPro #Hireaplanner #retirement #socialsecurity #goals #savings #cash #fathersday #dad #binder