Pumpkin Spice Latte Financial Planning

Yes, I am exploiting the PSL (Pumpkin Spice Latte) seasonal bandwagon. I’m not the first in the financial business to do so. One of the weirdest was a link from a credit union offering Pumpkin Spice Loans. In the years since, media outlets are hijacking the seasonal treat to link to their own brands. You can also follow the PSL at Twitter-@TheRealPSL.

Now, we all know that there is just a little pumpkin (used to be none at all) in this drink, so I can use pumpkin photos to spice up this post.

Ingredients in this latte:

Pumpkin: Vegetables and Fiber (Needs)

Dairy/Dairy Substitute: Protein (Infrastructure of the Plan)

Sugar: Energy and Taste (Motivation to Act)

Seasonal Spices: Extra excitement (Yes, you can have Wants!)

Whipped Cream: the initial exposure, getting a fresh credit card in the mail, a new job or a raise or (Treats and Rewards.)

Needs

What are your monthly financial needs? Consider the Maslow hierarchy, in which his original definition consists of “air, food, drink, shelter, clothing, warmth, sex, sleep”.

1. Rent or Mortgage (cost of shelter)
2. Utilities and Communications
3. Groceries and Food (Groceries are needs-meals out are wants)
4. Clothing (jeans, er pants, are a need-a specific brand is a want)
5. Time to rest and sleep (hopefully no double shifts)

Financial Plan Infrastructure

1. Spending Plan
2. Income and Expense Monitoring
3. Revise and Adjust
4. Musts:
   1. Data Security (online banking and credit accounts)
   2. Credit History Report Maintenance and Annual Monitoring
5. Financial family meetings or date nights
   1. A family meeting can be a useful way to involve everyone in planning a summer or winter vacation.
   2. I am a big fan of financial date night. It doesn’t have to be expensive, but it is a terrific way to catch up with your sweetie on monthly goals and progress to date. It is also a way to have a planned conversation about cash flow, credit use, and new expenses. Proactive chats, not reactions are, in my experience, easier on a relationship.  This is especially important if financial tasks are divided between a couple or you handle your own money separately from each other.

Motivation to Act

1. 1. External events: job change or loss, promotion, relationship status change, current events, goals achieved, change in incentives from work or hobbies, marketing convinced you, peers or affinity group, family member asked 
   2. Internal events: ruminating, growth, illness or treatment for same, goals achieved, goals or needs changed (See Maslow)

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Love Means…Check Your Beneficiaries

Love means that you should check your beneficiaries. Establish a regular time of year to do this. Between February 1-14 sounds good to me. Maybe in alternate years, but begin soon, if you don’t already do this.

What documents should you review?

Employment Related Documents

Your current company retirement plan: 401k, 403b, 457, pension, HSA, or company provided life insurance. If self employed, your SEP, Profit Sharing, SIMPLE, solo 401k, IRA, Keogh plan (for older readers), or Defined Contribution or Defined Benefit plan.

Your previous employer’s retirement plans, if not consolidated into a new Rollover account. Reminder: don’t lose track of old retirement plans! Here is one link to try if you have lost track of one.

Which payout did you select for the retirement plan, the joint and survivor or the single life payout? I knew someone whose monthly income dropped 66% after their spouse died, due to the spouse taking ‘single life payout’, on not one but two different pensions. Please schedule a robust conversation with your spouse about this, well ahead of your deadline to choose a survivor benefit. Enter the conversation with good intentions and an ear for the emotions involved as well as the numbers.

Personal Documents

Documents from the last century, related to a previous marriage, or that first IRA you opened up right out of college. (You did that, right?) Life insurance you hold that was purchased for you originally by your parents (when you were single). Life insurance purchased while in your child-rearing years. Or, now that you are single again, dig out the list of things you were going to change after the divorce was final.

Here’s a link with suggestions for finding an old life insurance plan. This article from Consumer Reports also highlights the popular site www.missingmoney.com where.  you can search for reported abandoned property. People I know have found utility deposit refunds, last employer paychecks, old bank accounts, uncashed dividend checks etc.

Transition Related Documents

Did someone else pass away and leave you assets? This could mean changes of your beneficiaries, or changes in your wills. Did you become a parent, or parents for the first time, or for the fifth time? Did you blend two families?

Was there a layoff or period of unemployment? You may wish to redirect your assets closer to home.  Was there a windfall? Did you win the lottery or get a very large bonus? Do you wish to give to charity or become a first time philanthropist?

Love means you are willing to review what would happen to your family when you are gone. Give your beloveds (and you) the gift of a review and doing some homework regularly to ensure your assets are distributed correctly. Remember, it’s great to have your intent known verbally,  but also review your beneficiaries to see that your goals and your documents match.

Old Habits & New Resolutions July Update

July can be a time to review those New Year’s Resolutions. Did you make any for 2018? 

Even if you didn’t,  now is a good time to revisit the subject, as the year still has five months to go!

             Aauugghh!                                   Photo by Pixabay on Pexels.com

 

 

 

Often the calendar can help create structure for you. Bills get paid after payday; retirement plan contributions occur on paydays, etc. If you can itemize on your taxes, you may have dropped off many bags in the last week of December at your local thrift store. In my home town, Macklemore helped us out one year. Parents of college bound students have a date with the revised FAFSA; and by the end of January, you’ll have some thoughts about your past year’s tax return. For a quick read on what you can learn from your 2017 tax return from Morningstar, check here. Also, with that 2017 tax return near your screen, take a few minutes to run through a paycheck “checkup”. The IRS wants to help you with this, so you can withhold more in taxes if you need to, or loosen up those purse strings due to the increase in your standard deduction for 2018.

 

 

As mentioned in a previous post, Fidelity and others generate helpful suggestions for our annual resolutions. One study indicates that financial resolutions are easier to keep than those about food or exercise.

Let’s begin with the one geared for success! Financial tasks and affirmative statements.

In five months you can:

• Make 5 Roth IRA contributions
• Set up and fund an emergency savings account with $500-$1000
• Check all your accounts with beneficiaries- retirement, insurance and banking
• Increase your charitable giving in order to get that company match or set aside funds for a non-profit, instead of the IRS.

What do you want to improve during the balance of 2018?

 

Tax shelter or just an espresso?

 

Old Habits and New Resolutions

January 1-31 is traditionally a time of making [and breaking] New Year’s Resolutions. Is it  crowded at your gym? Apps and online tools abound. Books and blogs on decluttering, tidying and organizing can easily be found in your inbox. It is said by some that a habit takes at least 6 weeks to create and people such as Gretchen Rubin and Beth Dargis have multi-day programs on offer. Behavioral economist Dan Ariely created  a short program in this  blog post.     To see the results of his research, visit this link from WYNC.

by Charles Duhigg

Often the calendar can help create structure for you. Bills get paid after payday; retirement plan contributions occur on paydays, etc. If you can itemize on your taxes, you may have dropped off bags in the last week of December at your local thrift store. In my home town, Macklemore helped us out one year. Parents of college bound students have a date with the revised FAFSA; and by the end of January, you’ll have some thoughts about your 2015 tax return. For a quick set of tax facts and limits from Morningstar, check here.

As mentioned in a previous post, Fidelity and others generate helpful suggestions for our annual resolutions. One study indicates that financial resolutions are easier to keep than those about food or exercise.

So let’s begin with the one geared for success! Financial tasks and affirmative statements. What do you want to improve in 2016?

Where to begin:

Meta Topics: There are meta topics, like what you learned from your family of origin about money, and if money represents the same thing to you and your partner (freedom or security for example).

Or

Nitty-Gritty Topics: There are also the nitty-gritty topics such as how to cut spending on meals out or groceries, am I saving enough for retirement,  and the ever popular  “am I spending too much on fill-in-the-blank ?”(e.g. coffee, furniture, clothing, wedding stuff, organic food, books).

This will be a series on how make the incremental changes which can be permanent, instead of the ‘cold turkey’, ‘all or nothing’ ‘you should do this’ framing which is [mostly] guaranteed to fail. Think of financial wellness, and small successes. Avoid binary thinking, see your progress on a continuum, and remember that like the stock market, it is time, not timing, which makes the difference. Ready, set…

Family Lessons about Money – Layoffs

This post was to align with the America Saves Week (#ASW2015) day for family communication and financial education. Gather the family around the virtual campfire and prepare for the conversation of your life. Now is the time to let go of any family taboos around discussing money.  This is especially true if you have children living at home. You can adjust your talking points, depending on the ages of your children, but you need to be in on this as a team. Before we get to the five things, two suggestions for framing:

Your Family – Working Together!

• Be truthful-mom or dad is going to lose her/his job and we have to prepare for that soon.
• Be reassuring – mom or dad will be getting a new job after that, and we need your help now to get there.

You could also set up the discussion and introduce some crucial concepts like this: “In our family, we have needs and we have wants. Our needs include food for everyone (we won’t forget our pets!), a roof over our heads (explain the difference between rent and a mortgage to older kids, be more abstract with younger ones), paying for the heat, lights, phone and Internet service, child or after school care that allows parents to work outside the home, and transportation to get family members where they need to go. We will keep our health insurance so everyone can stay well and get their teeth cleaned.”

Wants will be different from family to family and be prepared to give examples at the campfire. High-speed Internet may be a legitimate need for business purposes, but several sports channels are going to be in the want column, unless you’re a sportswriter. Adults and kids can make changes in different ways.

As Benjamin Franklin might have said, the following three activities revolve around being healthy, wealthy and wise.  I’m adding two more intangibles: go actively towards the next destination, instead of away from what you’re doing now, and be sure to use your own roadmap.

Health: Know what you’re up against!  Is health insurance part of your severance agreement? Do you have severance? Tip: If your last day of work is early in the month, your group coverage usually extends through that month.  So a last day at work of May 1^st is better than April 30. Post-layoff choices could include COBRA, a group plan through your professional organization or union, a family policy from your state’s exchange (using the Affordable Care Act) or going without coverage. Going without health coverage could derail your family finances in a hurry if an emergency comes up. If a large layoff is rumored or several months out, immediately catch up on any work-related reimbursements for transportation, child care, parking or flexible spending accounts (FSA).

Tip: Make those routine appointments ASAP.

Wealth: Do you have at least nine months of income or expenses set aside? A year or even 15 months of expenses would be better, or a working spouse who can supply the income and benefits to cover you or your family as you move forward. List all loans, debts and upcoming fees and rank by amount and interest rates. Two schools of thought on retirement deferrals: Keep making the minimum contribution to get the company match—the thought being that it might be awhile before you can resume contributions; or cancel your salary deferral in order to boost your emergency fund or pay off debt. Paying off debt will require some serious family discussion. What makes you feel more secure—a larger rainy day fund or less debt?  Can you stop adding to any debts, and reduce credit card use while you prepare? If so, move forward with that. here is a link to a free budgeting tool.

Tip: Automate all minimum payments so that your credit history is not harmed.

Wisdom: How well prepared are you to meet the intellectual and emotional challenges of being laid off and seeking new employment? Who will be on your kitchen cabinet, helping to advise you as you move forward? What about that LinkedIn profile? What about certifications, or continuing education? Can you use a tuition reimbursement benefit? Who will be part of your new work community? (Check out local co-working spaces for some ideas).

Tip: Create a family gratitude list, so you can keep in mind the non-material riches you already have.

Embracing the Hunt What are your strengths? Create a list of what your preferences are in a career, (often harder than the deal breakers) to leverage those in the next position. Do you have a side job that is begging to sit at the grown-ups table? A friend of mine is tired of teaching, but she is a talented quilt designer.  Perhaps that is her next career.

Tip: A good career counselor can save you lots of time.

Roadmap Draw your own! I cannot stress this enough. It’s ok to have a tour guide though-that means you can ask for help. A map made for someone else can be seductive.  But your brother-in-law’s map may not work for you.

Does this map belong to your family?

As George Harrison sang, “If you don’t know where you are going, any road will get you there.”

Your next position has to come from what is best for you, so that when you are stuck at the side of the road, whether in Tacoma, Toronto, or Timbuktu, you have created a map to the best destination for you and your family, after the layoff and beyond.

Note: An earlier version was published on Nerdwallet’s Advisor Voices page.

New Job New State

Here is a response which some found helpful at Nerdwallet.com’s Ask AnAdvisor platform. This question was about accepting a transfer and the salary impact when changing states for your job.
Someone I know changed states recently but not their job title or responsibilities. In this person’s case, there was a new state tax withholding requirement which will impact cash flow until the next tax return is filed.

Some practical points to check before seeking or accepting a locale change:

• What are the taxes in your new town or city? In some large cities there will be three levels of income taxes.
• Is there a local sales tax?
• What are they paying new hires for that job function in that town or city?
• What other factors will impact your cost of living?  Nice neighborhoods, schools, public transit

 

Other considerations for changing jobs include but are not limited to a change in your 401(k) salary deferrals (increase them if you can); the financial impact on your spouse or partner and which costs of living will change in your new place. (Housing, child care, education, transit, and for foodies – availability of organic produce or gluten-free products). Proximity to family could be important for grandparent involvement and vacations.

 

 

At “Finances for Freelancers” on October 2, 2013

Dana teaching in the middle of a Happy Hour at her coworking office – Office Nomads in Seattle

$40 Story-Shortchanging U.S.?

For the math alone, I agree with the extension of the payroll tax cut. It is a great way to place 160 million times $1,000 into the economy, automatically. For most people, the periodic extra $40 will go right back into their neighborhood businesses, or maybe just to their gas stations.

However…

This is a short-term fix for a long-term problem.

What are the long-term losses for the rest of us?

 

• Now both houses of Congress know that the payroll tax (Social Security can be played for political gain.  Is the “third rail” gone? As Senator Harkin said yesterday,

“I never thought I would have to see the day when a Democratic president of the United States and a Democratic vice president would agree to put Social Security in this kind of jeopardy,” exclaimed a visibly agitated Harkin from the Senate floor. “Never did I ever imagine a Democratic president would be the beginning of the unraveling of Social Security.”

• Restoration of these contributions (or payroll taxes) is now positioned as a tax cut on the middle class (as opposed to a contribution to a valuable old age and retirement insurance program).

• If you don’t need the $40 now, are you saving this money for the long-term? Did you increase your contributions to your 401(k) this year?

• How does this cut affect the health of the Social Security program as a whole? According to the White House, it doesn’t.

Alicia Munnell, of the Boston Center for Retirement Research (BCRR) has a sensible suggestion for restoration of the cut here.

As a financial advisor, I can tell you that the retirement age clients I have met with in the last six months are extremely grateful for their Social Security income. If you look at it as a proxy for a pension or annuity, the perceived value in your portfolio goes way up.

When you compare your Social Security income to the downs and ups of the stock market in the last 3-4 years, a staid stable, guaranteed, income for life, for part of your retirement planning begins to look pretty awesome.

Americans are already not saving enough for retirement, and this payroll tax cut doesn’t help us “eat our peas”.