Key Tax Cuts and Jobs Act Updates for 2018

While folks are still digesting the effects of the 2017 Tax Cuts and Jobs Act (TCJA), there are a few key updates you should know about for 2018. You should note that there will be many more updates announced over time as we learn more about the application of the TCJA. For now, keep the following few in mind.

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401(k), 403(b), 457, and SARSEP elective deferrals have increased for 2018.  You can now defer up to $18,500, if eligible. This is a $500 increase over 2017. However, the catch-up contribution for those age 50 and over remains the same at $6,000.  So, if you are age 50 or over, your maximum contribution total is $24,500.

For Roth IRA or IRA participants, the contribution limits remain unchanged. You can still contribute $5,500 to your IRA or Roth IRA, and for those age 50 and over the catch-up contribution remains $1,000. Remember, even though it’s possible to contribute simultaneously to a Roth IRA and a traditional IRA, if eligible, you can only contribute a combined total of $5,500, or $6,500, if you are over age 50.

Do you have a dependent child under age 17? If so, you’re in luck! The Child Tax Credit (CTC) is doubled from $1,000 to $2,000. Better yet, if you are married the CTC doesn’t begin to phaseout until your income is $400,000 ($200,000 for single filers). The first $1,400 of the CTC is refundable.

529 Plans also get an upgrade. Previously, 529 accounts could only be used to pay for post-secondary qualified education expenses to avoid the 10% penalty. Now, 529 accounts can be used for K-thru-12 education and homeschooling expenses, up to $10,000.

The Social Security wage base has been increased. The current wage base for 2018 is now $128,400. That’s a $1,200 increase over 2017. It should also be noted that the Social Security cost-of-living adjustment for 2018 is 2%.

If you are not sure how these changes will impact your finances, talk to a qualified tax advisor. If you would like to work on incorporating these changes into your financial life, contact me. As an independent Certified Financial Planner™, I can help you plan for 2018.  Contact me and let’s get started. #talktometuesday #education #Hireaplanner #tax #taxfiling #stressfree #newyear #savings #taxchanges #2017TCJA #taxcuts #taxcutsjobsact #529plan #IRA #RothIRA #socialsecurity

New Year, New You! Three Ways to Improve Wealth and Health

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Happy New Year! Yes, it’s only a date on the calendar but it is a great way to refresh, renew and revitalize your personal life and your financial life. We can use this holiday to not only mark the changing of the year, but to mark a starting point for changes to our personal lives. Most people pick a resolution related to physical fitness or financial fitness. Why not do both?

This is week one of the new year and you can get started on some financial fitness by challenging yourself to save $1,000 by year-end. You only need to save $1 to get started! If you need to save in envelopes, a jar, a sewing box, a tackle box or even a new savings account for yourself, do what works for you. You can also aim for a higher amount whether it’s $2,000 or $5,000 or $10,000 and adjust your weekly amount accordingly. Look for another post soon about reaching a savings goal.

With the new Tax Cuts and Jobs Act, it’s a good idea to look at your individual tax situation. Popular items such as state and local tax deductions, mortgage interest, and even education savings offerings have changed or been eliminated. Take some time to review these changes and how they affect you.  

Combine wealth and health by adding some physical exercise to the mix. You need not go overboard or set a drastic, hard-to-reach goal, but do set a goal. Challenge yourself to start with something easy like taking the stairs more often, parking farther away from the entrance of stores, shops and buildings, pick one or two days per week and add a health walk to your day. If you’re lonely or bored, consider inviting a friend. You can improve your health and your friendship at the same time. Walking or riding a bicycle to a destination can save your money and improve your health. Improved health can lead to lower healthcare costs so it is a win-win. 

As an independent Certified Financial Planner™, I can help you plan for the new year and be on top of your goals.  Contact me and let’s get started on a savings plan or a walk! #talktometuesday #education #Hireaplanner #tax #taxfiling #stressfree #newyear #savings

Last-minute Tips to Reduce Taxes for 2017

After today there are only three business days left in 2017. You have very little time to sell losing investments, make charitable contributions, or finalize tax payments for the year. Here are three tips to consider if you are looking to reduce your taxes.

Photo via Pexels.com. 

As noted last week, one move you can make is to sell losing investments. Investors often cling to favored stocks for emotional reasons, not rational reasons. For example, the stock was acquired while working for a favored company or inherited from a family member.  However, if that stock is a loser, SELL IT and use the loss to offset gains. Remember, you can take up to $3,000 in losses and carryover additional losses to offset gains in following profitable years until the loss is used up.

Charitable contributions count in the year made. You still have some time to make contributions but you need to plan carefully. Checks dated and postmarked on or before December 31, and credit card transactions dated on or before December 31 count as contributions for the current year. If you are considering other methods, such as via a donor advised fund, check with your provider to see if there is still time to make the contribution and finalize the transfer.

You may wish to make additional property tax payments before December 31. If you accelerate your tax payment into the current year, you can increase your deduction. Given the changes in tax legislation, this may be a good idea depending on your total income for the year. Talk to your tax consultant about your specific situation but do it fast!

Time is running out for many tax planning techniques to reduce your 2017 tax bill. However, you could still employ these last-minute tips and shave off some of your tax burden. As an independent Certified Financial Planner™, I can help you plan for next year and be on top of these taxing issues.  Contact me and let’s get started! #talktometuesday #education #Hireaplanner #tax #taxfiling #stress #stressfree #endofyear #taxtips

Year-end Tax Tips to Help You Prepare for Filing

It’s that time of year to cast an eye toward…tax prep! Most of us don’t like taking care of preparations for tax filing, so do everything you can to make it easier on yourself. Here are a few ideas for you.

Start gathering your documents. If you have a box of receipts spend some time going through them and organizing and totaling the receipts by category. You should do this prior to giving your information to your accountant. It will save them time, and you money!

Work on your tax prep a little each week and it won’t be overwhelming. Create a specific space to organize your documents and work on your filing. If you start preparing now, the April deadline won’t be so stressful.

Sell stocks or funds that have lost value by December 31 if you need a loss. You can apply this loss against gains to help reduce your overall tax burden.

Consider finalizing cash gifts to charities. Cash gifts to qualified charities are deductible in the year made.

Did you gift money to anyone? If you as an individual gifted over $14,000 to any one person you likely will not owe gift tax, but you will have to file an additional form with the IRS (Gift Tax Form 709). Each individual has a lifetime exemption of $5.49 million (2017). If you are married, you can each gift $14,000 per person for a total gift of $28,000 to any one person. If you gifted, talk to your tax preparer about any documents you may need for substantiation.

Hire a financial planner! Your financial planner may not be able to help you with a lot of tax prep for 2017 at this time of the year, but getting you in financial shape in 2018 is something a financial planner can help you with. Set some goals and get started.

As an independent Certified Financial Planner™, I can help you get organized and create a plan for a less stressful filing season.  Better yet, we can start working on your 2018 goals.  Contact me and let’s get started! #talktometuesday #education #Hireaplanner #tax #taxfiling #stress #stressfree

Three Tips to Keep Christmas Spending in Check!

Christmas spending can leave you with a financial hangover! Many people struggle with budgeting this time of year and tend to go overboard feeling the need to give to everyone. Keep your goals in mind and your cash flow in check by following Santa’s age-old advice of making a list and checking it twice.

Don’t overspend on office gag gifts, Secret Santa and don’t feel compelled to buy gifts for everyone in your circle. Definitely heed Santa’s advice about that list!

Don’t feel pressured to give beyond your means. Generosity is a great thing and should be encouraged. However, you should know in advance to which charities you want to send a monetary donation.

Do set a spending amount in advance. The amount you plan to spend and donate this holiday season should be already accounted for in your annual budget.

Year-end giving and spending really begins in January, so December shouldn’t come as a surprise since it happens every year. Start in January saving monthly for the additional expenditures you have this time of year. Make those charity donations monthly or quarterly; after all, they need the money year around, not just in December.

Being proactive and setting aside smaller cash amounts monthly can help your budget and be a reminder to carry the good cheer of the holidays with you daily and not just at year-end. It can also keep you from having a financial hangover after the holidays.

If you need budgeting help, or a debt reduction plan, call me! As an independent Certified Financial Planner™, I can help you make decisions and layout a plan for year-end giving and holiday spending. Contact me and let’s get started! #talktometuesday #education  #Hireaplanner  #holidayspending  #income  #debt #savings #CFPPro #moneyhabits #giving #charity

Gift Cards for Teens and Tweens

Remember when your grandma would drop some cash in a birthday card? I remember the feeling of getting a card from my grandmother (we called her mammaw) and wondering how much cash I would have to spend. I think mammaw was ahead of her time. Flash-forward to today and you know what to give that hard-to-buy-for teen or tween in your life.

Gift cards and electronic deposits of cash into online accounts and apps are today’s equivalent of cash in a card from mammaw. Keep in mind that not all are designed the same. Here are just a few tips to make your gifting work.

Teens and tweens have different needs. Check with their parents if you are not sure what their favorite store or eatery is and then proceed with a gift card purchase targeted to their need.

Parents may want a tween to shop only at a specific store so you may need to acquire a gift card for that store.  Teens might have more freedom so a pre-loaded, credit branded gift card may work better for them if the fees are pre-paid or if the card has no fee.

What about those fees? Some credit card branded gift cards come with heavy fees. These are best avoided by purchasing the actual store gift card versus the store branded credit gift card. Branded gift cards such as Target, Kohl’s, Macy’s, Chipotle, the Habit, In-N-Out, iTunes, Apple, Android, etc., usually do not have activation or usage/non-usage fees. READ the back of the gift card carefully to confirm.

It's still money! Teens and tweens understand that their gift card has value. Let them enjoy the gift this holiday but make a mental note to discuss money with them later. Kids don’t see actual cash as much these days so it’s always good to discuss with them the value of money, where it comes from and how to manage it.

As an independent Certified Financial Planner™, I can help you make decisions and layout a plan for holiday spending. Contact me and let’s get started! #talktometuesday #education  #Hireaplanner  #holidayspending  #income  #debt #savings #CFPPro #moneyhabits

Today is #GivingTuesday

#GivingTuesday is a day to give back! Whether it is part of your charitable plan, or if you just want to make a donation and feel good, today is the day to do it. Giving back can help us all feel good about ourselves.  One thing to keep in mind, it doesn’t have to be just one day.

Although today is designated as #GivingTuesday, you can enjoy this feeling all year long. Talk to your adviser if you are charitably inclined and develop an annual giving plan. This could help you reduce taxes owed on income by taking a deduction for your contributions to charity.

If you can only give one day per year or make one contribution per year, #GivingTuesday is a global day to take action. If you would like to learn more, please visit GivingTuesday.org. You can give in many ways and cash is only one option. Consider donating a service, your time, or even a gently used item. It feels good to give back!

As an independent Certified Financial Planner™, I can help you develop a charitable giving plan. Contact me and let’s get started! #talktometuesday #education #Hireaplanner #GivingTuesday #startnow #justgive

As an Investor, be Thankful for Time!

It’s that time of year when people acknowledge “things” for which they are thankful. Things can be replaced or reacquired if necessary. There is however, one thing that investors should be thankful for that can never be replaced and that is time!

Time works in your favor as an investor if you start early in life; however, it’s not so favorable if you start investing late in life. If for example, you invest $5,000 per year from age 25 until age 35 and stop, assuming a 7% return, your invested savings of only $50,000 could grow to over $602,000. On the other hand, if you invest that same $5,000 per year from age 35 to age 65 you will have invested $150,000 and your savings will only grow to just over $540,000. The earlier you start and the more compounding time your money has to grow, the less you need to front for your investment which makes saving for retirement, education, or any goal, much easier!

Let time be on your side. Moreover, if you are getting a later start in life, don’t sweat it, just get started and put time on your side. So be thankful for your health, for your family, for friends and for the creature comforts you love. But as an investor, add time to your list of things for which you are thankful.

As an independent Certified Financial Planner™, I can help you set a savings goal and chart a timeline.  Contact me and let’s get started! #talktometuesday #education  #Hireaplanner #thankful #Thanksgiving #compounding #time

5 Tips to Stress-free Holiday Shopping

Ah, it’s the most wonderful time of the year – if you like to buy gifts! Shopping for some is a competitive sport, for others it’s just fun, and for some, it’s a nuisance. Fortunately, the Internet has made shopping and gift delivery much easier! Here are five tips to keep in mind this shopping season.

Tip 1 – Use technology. Don’t be shy about shopping online and having your gifts delivered. It’s a great way to comparison shop, avoid crowds, save time, save fuel and make things easier. Do follow a couple of rules: buy from reputable online sellers, and always use a credit card instead of a debit card. Also, be sure to include a gift message with your purchase for the recipient.

Tip 2 – When shopping at brick and mortar locations, try to go midweek if you can, and avoid the weekends. From now until Christmas, the weekends will be very congested. Have your Smartphone handy and ask for price matching if you are in a store and find the item online at a competitor’s site. It never hurts to ask, but be fair about it and make sure the item is an exact match for make and model number.

Tip 3 – Make a list. Write down everyone that you have to buy for and everyone that you want to buy for. Assign each a gift value and keep this list with you. Shop sporadically over time so it doesn’t have to be done all in one day.

Tip 4 – Skip Black Friday and Cyber Monday. Seriously, skip the hype. These are usually loss-leader items for retailers and not always the deal you think you are getting.

Tip 5 – Stick to your budget. Don’t be tempted to overspend just because it’s the holidays. Consider cutting the excessive gift giving (especially to children) and reinforce the value of why we gift. You might want to teach children, and adults, it’s ok to gift small items throughout the year and not just at the holidays.

As an independent Certified Financial Planner™, I can help you set a budget, create a plan of attack and make holiday shopping less stressful.  Contact me and let’s get started! #talktometuesday #education  #Hireaplanner #Christmas #BlackFriday #CyberMonday #stress #shopsmart #holidayshopping #holidays #avoidthemadness

The Importance of an Emergency Fund

This month has been bad for a lot of folks. Clean up continues from the hurricanes in Texas, Florida and especially Puerto Rico. Here in California we are starting the long road to recovery from the devastating fires. And, on a personal note, my siblings and I laid our father to rest.

I heard recently that we can expect as many as four emergencies in the course of a year. Given that many Americans now live paycheck-to-paycheck, that is not welcome news. But there is something you can do and that is to build an emergency fund. I had to dip into my emergency fund this month for several unexpected items: last-minute airfare, food, long-term parking, tips for service providers (it was news to me that some religious officiates expect tips), accommodation and miscellaneous expenses that are not part of your normal budget.

People have lots of excuses for not prioritizing their emergency fund. And that’s the thing, it’s your fund for you! Starting an emergency fund does not have to be overwhelming and add stress to your limited resources. Here are a few tips to make it easier:

Start small. Even if you can only put away $20 per week, get started. That $20 per week equals $1,040 by year’s end. If not $20 per week, how about at least $20 every payday.

Drop the habit. My cousin stopped smoking and has saved over $480 in a very short time.  Look at your daily habits and see what you can cut out. Smoking is a big one and fairreporters.net claims that the average cost of a pack of cigarettes is $5.51 and as high as $12.81 in New York. If you drop one pack per week, you are saving over $286. What’s your habit that is costing you too much money?

Make it automatic. Electronically deposit a fixed amount or fixed percentage of each paycheck into a designated savings account. If possible, make this an account not tied to your checking account. The idea is that this savings should be harder to access.

Pocket change adds up. Create a family change jar and have everyone drop their pocket change into the jar at the end of each day. You’ll be amazed at the end of the year when you count the change! Deposit this into your savings account.

Designate found money for savings. If you get a tax refund, a work bonus, or another type of windfall, put this into your emergency fund.

Setup an account with an online retailer. Sell stuff you are no longer using. Of course, these have to be items that are in good condition, work properly and that people want. Consider books, textbooks, collectibles, electronics, nice clothes, games, toys, etc. Just anything you are tired of seeing around the house that someone else might be willing to pay for.

Having an emergency fund saved me this month. It took me a long time to create the fund and I used a combination of saving from earned income, selling items, and side gigs. Ultimately, it proved its importance and made a stressful time much less stressful.

As an independent Certified Financial Planner™, I can help you decide where and how to save. Contact me and let’s get started! #talktometuesday #education #Hireaplanner #badhabitscost #smokefree #savings #emergencyfund #startnow #juststart #stressfreesavings

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