- Quick and Dirty Tax Planning Check your W4, review your year to date retirement contributions, update year to date business expenses, check for any tax losses in your taxable investment accounts
- Catalysts for Action: Did you welcome a new family member? New job? Second job?
- Speaking of Retirement Contributions: what about planning to Save More TomorrowTM ? This simply means to up your retirement deferral percentage next time you get a raise or COLA. Or you can increase your automatic contributions to savings in a similar manner.
- Catalysts for Action: new job, promotion, COLA, side hustle
- Organize Your Files for yourself, your business, your family. If you are hit by the proverbial bus, where is everything kept? Online in a folder labeled _____, in a home safe, safety deposit box, behind a password vault, under the mattress etc. This means life and death papers, but also the financial minutiae of daily life.
- Catalysts for Action: a broken shredder, new caregiving tasks, becoming self employed, working from home
- Mitigate Risk Did you have a big life event this year? (marriage, divorce, birth or adoption, commitment, new business etc.) Check for proper insurance coverage (s) and confirm that your written beneficiaries match your wishes. Retirement accounts and life insurance policy designated beneficiaries take precedence over a different designation in your will. (meaning they will supercede your written will wishes)
- Catalysts for Action: How old is my will? Do I have a will? Do my children have guardians?
- Check Your Spending [Plan] Winter family holidays can be expensive, as they can involve family obligations (real or perceived), special food and drink, travel, and gifts. What is your spending plan? Experiences, gift cards, or wish list items from an online shopping cart? Practical, homemade, high quality, fast fashion? Do you tithe or make additional charitable donations at the end of the calendar year? Are any of those decisions made by the entire family? Some families involve their children in their charitable choices, which allows for immersion, learning, and connections to the world around them.
- Catalyst for Action: What holidays are celebrated on your family calendar?
Category Archives: Learning About Finance
Financial Checklist Fall 2022
Pass the Turkey and the Aging in Place Planning Please (2021 update)
Grandpa, Mom, please pass the sweet potatoes; pass the turkey; pass the financial/aging planning? Welp-the holidays are upon us. Next up are Hanukkah-begins November 29, school concerts, pantos, Christmas, and other winter holidays. Kwanzaa begins December 26 with Unity day. January brings Epiphany and Orthodox Christmas (6-7) The Super Bowl is February 13, and Chinese New Year is from February 1-15, 2022.
Will you be seeing a lot of family in the next 8-12 weeks? I reckon, so let’s plan for it! Call it Family Sleuthing 101.
Some family members you’ll see once a year; others you see more regularly and then there are the chosen family that ‘pop in’ for a Turkey/Black Eyed Peas/KaleSlaw dinner. Much can change with your parents or other family elders in a year, even six months. Since the pandemic started, it may have even been longer since you’ve seen each other IRL.
Some things to consider:
- 1.If your relatives are asking for some help, or ruminating about how they are having trouble “keeping up with the paperwork” this year, pay attention. Broken things, burned out light bulbs are additional clues.
- Listen carefully to any stories about telephone fundraising for groups you have never heard of. Be patient so you can get the entire story.
- Urge relatives to never give to groups they are not familiar with, or who have called them first, or groups that sound like established non-profits (but aren’t). Do ask them about their favorite charities, and why they are important!
- You can help check groups out here at give.org or at Charity Navigator or another charity evaluator organization.Do share this link from the Federal Trade Commission on avoiding scams.
- if you can, take a look at the mail, the bills, and the online accounts (if you have access.)
- Save and Invest.org has an informative PDF called Fighting Fraud 101 that you may wish to read or share this year.
Another family dinner topic is a family member’s health, or deaths of other loved ones. This can also be a good opportunity for you to ask some hard questions of your elders. (It is often hard for both parties, but you are doing it because you wish to respect their values as much as possible).
- Where is your will located?
- Who is your doctor and do you have a current Health Care Directive (they are different for each state-here is the WA one) or POLST on file? You can upload them to a patient portal.
- Do you have a Long Term Care (LTC) insurance policy and what company is it with? Did you purchase the inflation rider?
- What are your thoughts on “heroic measures”, “ventilators”, quality of life and palliative care?
Please take the time to add a financial planning course to your holiday meals and visits this year.
Your family members will thank you (perhaps not right away!) and it is time well spent.
- POLST – A better way to die (bangordailynews.com)
- Death in the Family-More Transparency Please (this blog)
- Have a Caring Conversation This Holiday Season (nhpco.org)
- I Ate Thanksgiving Dinner With My Identity Thief For 19 Years (ABC.com)
- Book: A Year to Live: How To Live This Year As If It Were Your Last by Stephen Levine
Filed under Be Prepared, Family Lessons About Money, Learning About Finance
Understanding Mutual Funds: More than a roll of the dice
Each month I meet people, including clients, who own mutual funds, but either aren’t sure what they are or what role they can play in their retirement planning. I blame 401(k) and 403(b) retirement funds for this. One opportunity to learn more is via my new class Mutual Funds and Merlot!
What I mean is that very often, companies of all kinds (including employers, financial services reps and the information you receive from your Benefits department leads you towards the decision tree of “We have these 20 funds for our plan – pick one now” – and go! By the way, you have five minutes. Whether it is five minutes or five days, sometimes; indeed many times, the information is not understood by the employee. Despite everyone’s best efforts, employees may not understand the foundation of how mutual funds work. And without wine!
I’ve created an opportunity for you to spend some time with me and a glass of Merlot, in order to better absorb the information about what mutual funds are, (yes, an index fund is a type of mutual fund), how to use them, and why they can lower the risk in your portfolio (retirement or other investment account). Like wine, mutual funds are both simple and complex, full of sin-or part of daily life, global and local, and some are meant for holding a long time in your cellar (or your retirement accounts).
Please join me at my office for an after-work, pre-weekend, informative way to put some fun in mutual funds!
More information and registration is here.
5 Reasons Your Credit Report Matters
5 Reasons Your Credit Report Matters More Than You Think
Think of your credit report as giant file cabinet and the score as a point in time.
The report summarizes a lifetime of using credit and your score is a snapshot of your current situation plus your accumulated use of credit experience.
- The contents could be inaccurate (did you really live in Minnesota?)
- Not all creditors report to all three credit bureaus
What if you have something that is affecting your score, but you don’t know what it is. Pull reports from all three bureaus once a year to see how they are the same and what shows up on only one report.
- Is it really your credit report?
Two situations I’ve seen recently:
- a dad and son with the same first and last names ended up with [unintentionally] shared debt on credit reports
- a mom and daughter are co-signers – what if one person’s credit goes south?
- Inaccuracies/errors and outright falsehoods need to be fixed
Your report has contact information for creditors and the place to make a consumer statement about certain aspects of the report.
- Only looking at your scores, (available through Credit Karma, Discover, USAA to name a few) doesn’t help you improve them as fast. Without pulling the reports, you may not know the reasons your score is depressed, or the reasons your score is excellent. 65% of your score is derived from paying on time, every time and your credit utilization ratio (how much of your available credit are you using).
For example, one client I knew had an item from another state on her credit report, so she ignored it, as she had never visited that state. Turned out it was the billing headquarters for an old medical bill incurred in her home state. She needed to contact that creditor to resolve that item. Another example, you and your spouse agreed to split debt payoffs in your divorce, but one of you has not lived up to that bargain. Make a consumer statement to that effect on your credit report.
Pulling your report is free if you use the legislatively created www.annualcreditreport.com. For the last month I’ve been able to pull credit reports for service members and their families via http://www.saveandinvest.org. These reports include free scores from all three credit bureaus. FINRA established this site which also includes calculators and how to check out a financial advisor.
Bonus: New version of FICO  will be treating old medical debt differently http://bit.ly/YH9cMJ
Related Link: Getting and Changing Your Credit Report from Debt Slapped Grad: http://bit.ly/1JfbLtb
Filed under Be Prepared, Everyday Financial Tasks, Military, New to the Work Force
Employer Retirement Plans: The Power of 1%
Did you fail to grab some cash last year?
Here’s the scoop on how many people left employer matches on the table last year. I read this study from Financial Engines and was astounded at the billions of dollars unclaimed.
What if you can’t set aside even the minimum for the employer match? Then what?
I would not be living up to this blog’s title, if I didn’t address this issue. Here are some reasons I’ve heard for not participating in an employer retirement plan:
- I can do better on my own. Really? Tell me about it then.
- The plan is too complicated. That could be true, but there is no excuse for not asking for guidance in order to figure it out. Sometimes the guidance, advice, information is free. Begin with your company resources, then go outside the company if their resources and/or people cannot help you make sense of it all.
- I don’t have enough money. If you are living in a basement, eating noodles and drinking Mountain Dews [for the calories] , this could be true. However, even 1% in the traditional 401(k) or federal thrift savings plan (TSP) will lower your taxable income and you might not miss it. At $15.00 per hour, or $30,000 per year gross income, let’s see what that looks like over 45 years (67-22) until retirement, with minimum salary increases (1% annually). See chart below:
|Current 401(k) balance||$0|
|Years to invest||45|
|Annual rate of return||7%|
|Expected annual salary increase||1%|
|Percent to contribute||1%|
|Your 401(k) contribution*||$300.00 per year|
|Your employer’s 401(k) match||$0.00 per year
This is a 0% employer match to a maximum of 0% of your annual salary.
|Total you will contribute over 45 years||$17,113.77|
|Total your employer will contribute||$0.00|
|Total at age 67||$100,836|
(chart constructed with Index of Retirement Calculator)
With minimal effort, while not making much money, you could save $100,836 for your future. Note: this example assumes an average annual return of 7%, which would mean not being in a bank account, but at least in a mutual fund composed of a combination of stocks and bonds. (Posted rate for illustration purposes only. Not FDIC insured…)
How Do I Love Thee (Post Valentines Day Edition)
How Do I Love Thee? On Paper, Online and On Time
In life and in death, let me count the ways that I love thee. Let’s review the beneficiaries, the online accounts, and the papers.
To paraphrase Meghan Trainor, modern philosopher:
It’s all about that signature
It’s all about survivorship
It’s all about that heir, no trouble.
When you love someone, you are told you should have “your affairs in order”.
This is much harder to do than say. What affairs, what is order?
When you have a family, you want to look ahead into a future where you may not be in the picture.
“Yikes, this means I have to pretend I am dead; that makes me uncomfortable and I’ll just hope nothing happens.”
This is a common reaction, due to your present, your past or reluctance to look too far into that uncertain future. I have met many people who think that they don’t need to consider these things, because “they don’t have any assets”, “they don’t have any children”, or all they have are the photos on their Facebook and Instagram pages. But you do, you do! You have your organs, your online life and photos, and your entire financial life to care for and secure.
You may have missed the opportunity to send roses or a sentimental card this past weekend, but here are several steps to take in this next week, to say “I love you” to those special people in your life. I’d like to help you move into action!
On paper: Check your retirement plan beneficiaries at work and for your personal retirement accounts. Do the beneficiaries match up with your current sweetie and family? Just sayin’. By the way, for those of you with older pension plans (could be frozen, or discontinued), check those too and keep a copy of the beneficiary page.) You can keep a paper copy, scan or photograph, then store in your cloud somewhere.
Real life story: This just happened to a friend-her husband hadn’t updated his old pension plan documents when he got married. When he passed away suddenly in 2014, his cousins were still his beneficiaries, not his wife. These cousins were sympathetic, but not all relatives would be as thoughtful.
It is important to create, review, or update important documents (will, power of attorney, health care directives) before any major life transitions. This probably also applies to people who take part in extreme sports, marathons, and those races in the mud. If you are in the military, they will place you in a workshop with your significant other to cover many things like this before deployment.
Real life story: http://cnet.co/1Mn3RPO Yahoo denies family access to dead Marine’s email.
On Time: This has to do with matching your documents and decisions to your actions. Wedding coming up? Do you need to alter your current will and property distribution? Would the laws of your state (and your family) allow your loved one to make medical decisions for you and visit you in the hospital?
Real life story: a relative with a terminal illness lived into the last month of his car loan, so his wife didn’t have to worry about that last payment. This relative also hadn’t changed two pieces of property to be jointly owned with his [second] wife, so altering those property deeds occupied some stressful hours of his last days.
PS For those readers who may have several kinds of pensions (military, Social Security, employer plans), it is important to check the pension payouts with your spouse. For example, will you choose a single life or joint and survivor payout? A single life payout goes for one person’s (the retired employee) life. A joint and survivor payout is calculated over the joint life expectancies of the couple. It is usually less than the single life payout, but it provides a lifetime income for the survivor. See definition of joint life payout from Investopedia here.
If this post inspires you to take action, from creating new documents to reviewing existing ones, you will feel better afterwards. It might feel uncomfortable at first, but the relief generated upon accomplishment will feel wonderful. Plus, your family members will thank you for remembering them. Get from To-Do to To-Done! (Shout out to https://transmutable.com for my first To-Done experience.)
Filed under Be Prepared, Everyday Financial Tasks, Life and Death
New Year’s Resolutions-How Are You Doing?
As a nation, we are making fewer New Year’s Resolutions each year. Usual categories are in the areas of smoking (less), eating (less and better), and finances (all the things). Which ones are easier to keep?
According to a study by Fidelity: financial resolutions are easier to keep than the ones about smoking and eating differently!
42% of people surveyed find financial resolutions easier to keep than smoking less or exercising more.
And, the top three financial resolutions continue to be:
- Saving more (55%)
- Paying off debt (20%)
- Spending less (17%)
After six weeks, many of us
give up forget revise our resolutions (you can ask me about my goals for planks!)
Very different from planking! By the way, I would be most likely to be seen planking in a public library.
Filed under Everyday Financial Tasks, Self Awareness
Spending – It’s Handled
How do you handle your spending? Is it an aimless stream of expenses, or do you have a plan for each month and year? Sometimes a budget is hard to follow, especially if it is inspired by a particular event, such as a move, a raise or a layoff. Or, as happened to me once-it was someone else’s idea that I have a budget. First: words matter. I prefer the term spending plan, as I think when you are planning your spending, it implies more forethought and care for yourself. Be proactive!
The hardest part for people is to record all income and spending. No, I am mistaken – the income part is usually easier than the spending. When recording income, include wage income, as well any other sources along the way (rental income, refunds, rebates, gift cards, checks from any side gigs etc.).
Now, you are ready to record your spending (you can use online tools such as mint.com) or check your bank or credit union-they may have a free online solution already integrated into your accounts. Or use a notebook, a napkin or your bank statement. Low tech is better than no tech.
Which expenses are fixed? These may include rent/mortgage, insurance, tuition, commuting costs (tolls, parking, gas), groceries, utilities, loan payments (student loans, car payments, minimum on your credit card bills, if any), tax withholding, child care, pet care or babysitting costs, condo fees.
Which expenses are variable? These may include eating out, any phone/internet/cable costs above the basics, paying extra on any loans or credit card bill, clothing, gifts, personal care, charitable contributions, and entertainment. How do you handle vacation spending?
Next, look at some ratios and categories more closely: Continue reading
Filed under Be Prepared, Everyday Financial Tasks
Getting to know a ‘Bank of Inconvenience’
In a recent article, I suggested a “bank of inconvenience” for one’s emergency fund. I thought I might elaborate a little more on what I meant by that phrase. It’s going “old school” with a part of your money.
In today’s world, the emphasis is on connection and access, 24/7. I’d like you to take a step back and consider having a pot of money that is not linked to anything. No transfers, no apps and no money going out unless you go there in person.
Here is a way to grow and keep your emergency fund in five steps:
- Choose a financial institution (this means bank or credit union) that you may not have a current relationship with. You don’t have to break up with your other bank. This bank might need to be beyond walking distance from your favorite haunts. Hence the term ‘inconvenience’. Note: An online bank would work, if you follow step 3, below.
- Open a savings or money market account. Deposit the least that it takes to open the account, or one month’s rent/mortgage, whichever is possible now. Get your account routing numbers for Step 4.
- Do NOT link this account to any other accounts. Do NOT order checks or a debit card. You may end up collecting $200 this way! Later on…
- Consult your HR or Benefits department about setting up another Direct Deposit account destination. Give them the information from Step 2 and an amount. $5/$50/$500 per pay period is fine to begin with. Sign up! Or if self-employed, argue with yourself and eventually agree to choose a deposit scheme at a different bank. Money only flows one way.
- Watch your funds add up. Not from interest right now-that is not part of the goal. This money is set aside (or sequestered) so that you can have cash on hand for a true emergency (new brakes, trip to a family funeral, stolen cell phone, trip to the ER). It’s ok to use the money, but keep the deposits going. You can get to your own goal for emergency savings ( I usually recommend a minimum of three months income or expenses-whichever is higher, as a first goal). This will also help reduce any reliance on a credit card for this type of expense.
All done and on your way to collecting hundreds, even thousands of dollars for your emergency fund.
Filed under Be Prepared, Everyday Financial Tasks
Credit Card Theft: When the Target is You
Did you get a present of credit card fraud for the holidays, courtesy of Target? This could lead to identity theft. To be fair, this is not the only recent large case. Neiman Marcus Group announced a similar breach on January 22, 2014. We all need to be aware of this possibility. With credit card fraud and identity theft, my first recommendation is to realize what factors are within your control.
First, know what you have:
- “What’s in Your Wallet ?” says Capitol One but really, what’s in your wallet? First, try this exercise-make a list from memory. Did you capture everything? Scan or copy the front and back of everything in your purse or wallet. Save the scan in a secure, encrypted file on a device. Secure the copied card copies in a safe, locked file, or even a safe deposit box if you have one. The backs of credit cards usually have the customer service or theft reporting number on them. (As does your statement.)
- Reduce, reduce, reduce! Many people (men first on this one) are sitting on too full a wallet. This is back for your back and could be bad for your bank accounts. Also, if you are fumbling at a gas tank, or ATM for the correct card, someone watching may decide you are a good target for them. Common mistakes are Social Security card (definite no-no) and Medicare cards (they have the Social Security number on them-black it out or use a copy with the SS# blacked out); too many credit cards. Passport-leave that one at home.
- What credit cards are you using online? Your heirs and family will need this information if something happens to you so may as well do the research! To reduce risk, use only one card for online purchases and don’t link it to any other accounts or financial relationships that you have. If you have already used more than one card online, consider getting a new card just for online use, or eliminating the use of all but one.
Second, what behaviors can you change?
- When you shop online, check for the https in the URL, not http. The added ‘s’ means the site has added security. Look for a lock symbol next to the https or elsewhere on the site. (Norton, Verisign and Symantec are companies that offer this protection to the company you do business with.)
- When shopping in person, be aware of other shoppers being too close while you are finishing your transaction. Shield your PIN when using your debit card. Even if it feels rude or awkward.
- In restaurants or bars, be aware of where your credit card is when paying your bill. Can you see the server ring up your transaction?
- Consider using cash or checks for some transactions. This may be impractical-as carrying around $2000 in cash for that big-screen TV you want for this weekend is not safe.
Third, check your credit report annually by using this tool, authorized by federal legislation: (Fair and Accurate Credit Transactions Act of 2003). It’s time to order the first one for 2014, to spread them out throughout the year. This is the source of your credit score aka FICO®. Verify that all card history is correct, including payment history, your name(s), addresses and employers. Note: There are many imitators for this website (annualcreditreport.com) with large advertising budgets. They will try to up sell you at every turn.
In the next post: If your identity is stolen, five things to do immediately.
Remember, even though you don’t control all factors, the first brick in this wall can be strengthened by you.
Disclosure: I shopped at Target last year and have signed up for the free credit card monitoring, which Experian is running for them.
Related article via NerdWallet.com: http://bit.ly/1iF9sAy