Tag Archives: Get Organized!

Tax Planning

The Chinese economy is beyond our control but you can look ahead to your own tax season. Here is a great tax planning sheet from Morningstar to review now or set aside until March (if that is your routine). Remember that you can still send in estimated taxes-even if you missed doing so on January 15th (the day for 4th quarter 2015 estimated payments).

The Bait

Which method  gets you to work on your taxes – a carrot or a stick?

Small Business Links

Small steps to success will be a big theme for this blog in 2016. What can you do right now to be better prepared to do your taxes for 2015?

cropped-new-dollar-bill-by-reuben-ingber.jpg

It’s that time of year again!

Visit the IRS Small Business & Self Employed Division or the Small Business Administration (SBA) for tools to estimate your taxes.

Have you heard of SCORE? It’s a national organization dedicated to help for small business owners, whether you are just thinking about a business or have had one for several years. They have low cost classes, free webinars and centers all across the country. More information on their tax programs is available here.

 

Leave a comment

Filed under Be Prepared, January Financial Tasks

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.

Rosemary is for Remembrance

Rosemary is for Remembrance. Wikimedia

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.”

It’s going to happen, trust me. Photo credit: http://www.pdpics.com 4211

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.

Online: However, online access may still be a problem. In real life, (IRL) your loved ones do not have the access to your emails, online accounts and photos that spammers or identity thieves do. In the Terms and Conditions of our online accounts, there is usually a line or two which explains this privacy policy. Google has tried to fix this with their Inactive Account Manager, and just last week Facebook offered the opportunity to set up a Legacy Contact after your death is proven. Yahoo Japan launched a service to manage your digital profile after you die. https://ending.yahoo.co.jp/ See if you want to set up one of these contacts.

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.

Love in a box, or a document, or in your will...

Love in a box, or a document, or in your will…

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.)

Related links

http://organdonor.gov/index.html 

http://www.usa.gov/topics/money/personal-finance/wills.shtml

http://www.nlm.nih.gov/medlineplus/advancedirectives.html

http://www.investopedia.com/terms/p/powerofattorney.asp

Leave a comment

Filed under Be Prepared, Everyday Financial Tasks, Life and Death

I have Six Figures of Income…and Debt

The question below on how to handle six figures ($354,000) of debt with an incoming check for $500,000 was answered by me on October 30th at Nerdwallet.com. Since last spring, I’ve been answering questions from real people at Nerdwallet’s Ask An Advisor platform. Those of us on the platform answer real questions from real people without knowing all the relevant information, only what they tell us. Other answers as well as mine can be found here.

Q: I will soon get a check for $500,000. I have $354,000 in student loans. Should I pay those off first?

A: (Dana Twight) Great that you are asking about how to handle this windfall. This is exactly the situation that financial planning is made for – balancing competing priorities and improving your short and longer term financial situation.

5 Points to Consider

1.Other debts: Do you have any other non-mortgage debts? If you do, they may very well have higher interest rates than your student loans. Consider paying those balances down first.

2. Emergency funds: Do you have an emergency fund-are you employed? In addition to the fund portfolio suggested by my colleague, I would consider setting aside a fund with six months income or expenses in it from this check. Or you could set aside the amount of one year’s health insurance premiums and deductibles. This could be the base of that fund-keep it in insured CD’s or accounts.

3. Insurance: This is also a great time to build an umbrella liability insurance policy into your annual budget. This type of policy covers you above other liability limits (say on a residence or a vehicle). Investopedia has a definition which mentions that it also includes libel, slander and invasion of privacy.

4. Tricks: Be careful about how you share this news with others. Resist the opportunity to open new credit accounts. Visit the opt-out website to opt out of new credit card offers https://www.optoutprescreen.com/?rf=t so that you don’t get oceans of new email or regular mail offers. Your financial institution may see your funds deposited and offer to help you invest them-stick to a fee-only planner and get hourly advice instead.

5. Treats: It’s ok to let yourself do something fun with a small part of the money, if you have waited for a vacation or a newer vehicle, or a really cool bike. Also treat yourself to fully funding your 2014 and 2015 retirement plan contributions, if you are still under retirement age.

Last but not least: Do you have your estate documents in order? A will, a durable power of attorney and health care directives as required for your state are a must. Take the time and the nominal percentage of this windfall to make sure that your documents match your intentions, now that you have more assets.

 

oakleaves2Best wishes for your success in your chosen field!

Leave a comment

Filed under Be Prepared, Debts

Hire a Professional: 6 Steps to Prepare

One of the most common questions every financial adviser hears is,”What shall I bring to a meeting?

In order to maximize your time with a professional (visit www.letsmakeaplan.org to find a CFP® ), I suggest six steps to take first:

 

1. Pull a truly free copy of your credit report at www.annualcreditreport.com  (your scores are based on the report information)

2. Pull a copy of your accrued Social Security Benefits ( Yes, you will be able to receive a benefit in the future)

3. Gather up your employee benefits books or intranet site, last year’s tax return (first two pages is a good beginning) and any company retirement plan/bank/credit card/student loan statements.

4. Write down some family lessons that you learned about money (take 5 minutes and see what you come up with). For example, never borrow money, save 10% of everything, always buy on sale, etc. Walking up and down every grocery aisle was one of mine.

5. List your expenses (all of them), and then your income. See how they match up to the 50/30/20 rule. 50% needs/30% wants/20% savings.  (from the book called All Your Worth by Warren and Tyagi)

6. What are your financial hopes and dreams? Retire at 50, travel around the world for one year, start your own business…do share those with your adviser as well.

wikimedia-16_1_go-sign

Now you are more knowledgeable about your financial past and present, so that you can use a professional to discuss your financial future.

PS: You may decide to interview more than one person. Prepare these items and see who asks questions on any of the topics.

Leave a comment

Filed under Be Prepared

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.

Stop and review your spending first.

Stop and check your spending first.

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

Leave a comment

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.
How many of these are in your wallet?

How many of these are in your wallet?

  • 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.)

    Usually looks like this!

    Usually looks like this!

  • 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.

What's in Your Wallet?

What’s in Your Wallet?

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

Leave a comment

Filed under Be Prepared, Everyday Financial Tasks, Learning About Finance

Mending Your #Safety Net

Edwin Harris - Mending The Nets

Edwin Harris – Mending The Nets (Photo credit: Wikipedia)At the end of the season, it’s a good time to mend your nets.

When we reach the financial adult stage (your chronological age may vary); you may wish to mend or create a safety net.

Safety nets are different from person to person; so feel free to select the pieces that match your own situation.

Security Risk management: often solved with insurance products. Car, renter’s, condo, house, flood, fire and theft, cell phone, jewelry, business continuation etc. Can you afford being without [insert category here]?

Savings (also known as cash these days due to barely visible interest). One person’s emergency fund is $500, another’s is $10,000 and I have met someone whose security needs are met by one year’s income in the bank ($65,000). I like to suggest thinking of this fund in terms of months of income or expenses (whichever is greater). There’s a joke in there, sort of.

Residence  Home is where the heart is (and the bills) and your fridge. (see my earlier post called Clean One Refrigerator Shelf at a Time here)

Friends and Family Shoulders to cry on or celebrate with. Who can help you stay accountable to yourself? Who will understand and support your goals? Which of your friends or other loved ones can give you an assist with tangible or intangible help? Do you need to move into someone’s spare bedroom for three months while you save up for XYZ goal? (Tip: set a deadline for being in-residence-the relationship is something you don’t want to lose).

The Future What does your future hold? What’s on your bucket list?

Tools
Education, knowledge or wisdom (not to be confused with advertising, too many data points, endless supply of new products, Squirrel!),
Wisdom comes from mistakes, mistakes come from experience.  Or,

There is only one thing more painful than learning from experience, and that is not learning from experience.  ~Laurence J. Peter

Emotional IQ  Know yourself. Are you a DIY (do it yourself) person? How resilient are you? Can you reframe an experience and move forward?

How do you like to learn new information? Are you a lifelong learner?

I have always enjoyed the opportunities I have had in my career to ask other people about their questions, or to consider what the important questions are for me when making a decision. Getting help with the right questions can be better than only searching for the answers.

Before You Quit Your Job-Five Factors to Consider

1 Comment

Filed under Be Prepared, Family Lessons About Money

Bright Shiny Objects #2 Holiday Traditions or Shoulds?

What are your favorite holiday traditions? Do you go berserk each year trying to decorate or do you gather the family and enjoy a leisurely afternoon installing the decorations of the season? Wherever you land on this continuum, it might be time to check on the “we always do it this way” types of activities. Shoulds are not allowed in Santa’s pack!

Box of glass Christmas ornaments

Box of glass Christmas ornaments (Photo credit: Wikipedia)

From a financial perspective, these traditions are expensive, especially if it turns out nobody is that interested.  One way to tell if a change is needed is if you are the only one getting it all done. When measuring the cost, don’t forget to consider time, talent and treasure (money).

Travel: Do you travel for the holidays? Have you tried some alternative techniques, from taking the train instead of driving to offering to book a nice B and B (or Airbnb) for the visiting family members?

The Tree(s):  How many? Fake or real? Lie down for a nice nap and decorate the rosemary bush instead? Holidaze….

English: Shiny haws in Bulley Lane That remind...

English: Shiny haws in Bulley Lane That reminds me – must start the Christmas shopping. (Photo credit: Wikipedia)

Entertaining: Whether you prefer a bountiful dinner party, an  ‘Open House’ or gathering the clan together after a school concert, make a plan and set a budget in advance.

Gifts: many families organize gift giving around experiences, or gifting locally. Some make things at the do-it-yourself ceramic place, cook together, or offer to take someone else’s  kids out for an afternoon of shopping or the movies. Looking for gifts made just down the street ensures more of the funds stay in your community. Another strategy is to give everyone the same thing, from tickets to the local playhouse to down slippers or cloth napkins you made yourself.

Think about why you do certain things in December, and if they still bring you joy.

Will they bring family and friends together?

Could you have a low-key gathering on Boxing Day instead (12-26)?

Attend the live reading/playing of Handel’s  Messiah at church?

Can it involve recycling such as a ‘white elephant’ exchange or Bill Cosby sweaters?

Donate or do something for others in your community-or make time to do something special for a family, non-profit or school AFTER the New Year has begun.

Whatever your decision, and especially if you have a new household, be intentional about your traditions this year. You will enjoy them more and maybe even save a little ‘green’.

Gift Box

Gift Box (Photo credit: Maeflower72)

1 Comment

Filed under Be Prepared, Family Lessons About Money, History

Clean One Refrigerator Shelf at A Time

English: Self taken pic.

Maybe you can see the connection now. There are a couple of ways to look at the personal finance “refrigerator”, if you will.

Is your fridge full of beer, mustard and party leftovers [from last month]? (Lots of party, no emergency fund)

Is it full of impulse buys like pizza (short-term pleasure) , four types of sauce for chicken (too concentrated), or very few vegetables (not enough diversification), or just not enough real food to make a meal?

Refrigerator

Refrigerator (Photo credit: nickfarr)

Or are you the fussy parent who makes sure that the fridge only has healthy, organic, locavore stuff in it?

Enough with the food analogies-let’s get to work.

Empty Personal Finance Plan? 5 things to do immediately

Check your credit at www.annualcreditreport.com

Get Social Security questions answered here:  http://bit.ly/tTkcoK

Check the status of your emergency fund-how many months of income/expenses are in there?

Add up your debts (yes, all of them) Need a worksheet-check here .

What’s in your retirement plan? How much do you need?

Is your Personal Finance Plan too cluttered, too complex?

Find your old, left behind, retirement plans-assemble statements and account numbers to prepare for transfers

Rebalance portfolio asset classes and match up to your remaining years of work (aggressive, moderate, or conservative funds?)

Time to break up with some financial institutions? http://sm.wsj.com/QD4MwE    or   http://bit.ly/nbNn1W

(Be a financial locavore)

Check your beneficiaries, account titles and make sure that someone else knows where your records are http://bit.ly/tTkcoK

As it said in the blog post that inspired this one:

“Clean off one refrigerator shelf each week so you don’t have to do it all at once.”

2 Comments

Filed under Everyday Financial Tasks, Learning About Finance

In the Mood: Music for your Money “Workout”

What gets you in the mood…for money management?

Money Money Money Mooooney

Money Money Money Mooooney (Photo credit: Ahmed Rabea)

Blues for budgeting?
Polkas for planning?
Rap for retirement funding?

Jason Zweig has a great list here .  My personal list also includes a few titles not on Zweig’s list.

  • For a calm session of financial sorting, filing and shredding, how about “To Everything There is a Season” by The Byrds?   
  • When thinking about the Great Recession, there are many versions of “Brother, Can You Spare a Dime?” I enjoyed the late Daniel Schorr’s impromptu version on NPR, and am also fond of the song as sung by Broadway and TV star Mandy Patinkin. Here’s a link to a  rendition on David Letterman .
  • This lively song “Money, Money, Money” (I prefer the Meryl Streep video) reminds us despite the movies, a rich man may not be the best solution.
  • Last but not least, listen to some classic Aretha
Aretha Live at Fillmore West

Aretha Live at Fillmore West (Photo credit: thejcgerm)

to remind us it is good to:

spend your money in line with your values,

respect the hard work of others

and above all, respect yourself with  your spending.

2 Comments

Filed under Everyday Financial Tasks, Just for Fun