Tag Archives: Teach Your Children Well

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.

art birds business card
(Photo by Pixabay on Pexels.com)

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. 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.
  2. Listen carefully to any stories about telephone fundraising for groups you have never heard of. Be patient so you can get the entire story.
  3. 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!
  4. 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.
  5. if you can, take a look at the mail, the bills, and the online accounts (if you have access.)
  6. 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).

  1. Where is your will located?
  2. 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.
  3. Do you have a Long Term Care (LTC) insurance policy and what company is it with? Did you purchase the inflation rider?
  4. 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.

Sun.Valley,Snowflake.Edited.
From the Roundhouse, Mt. Baldy. 2014 photo credit: Dana Twight

1 Comment

Filed under Be Prepared, Family Lessons About Money, Learning About Finance

Do Your Taxes (FAFSA Edition)

This tax post is for FAFSA filers old and new; includes parents of this year’s college seniors and parents of students in college now.

It’s a good day to…”Do Your Taxes”. Or at least generate a decent estimate.

Tax Forms 1040

Who should do an estimate by January 1st?

1. Parents of high school seniors off to college next year
2. Parents of current college students
3. Self employed people
4. Taxpayers with a change in income, plus or minus 20%+ over last year.

This post focuses on FAFSA filers…
Experienced FAFSA (Free Application for Federal Student Aid) filers know the joy of spending a part of the upcoming holiday weekend on personal finance and disclosing your finances to another government agency. I invite you to include your high school senior/college student for part of this exercise so that they understand that they aren’t the only ones who have to fill out forms so that they can go to a post-secondary educational opportunity. Some reasons to do so:

Funding college can feel like this!

Funding college can feel like this!

  1. If the family won’t be eligible for college aid due to the family income or assets, they need to see why.
  2. If the only way they can go to college is due to a lack of resources, they need to understand the forms and their importance.
  3. This is a good time to remind them to seek scholarship applications-many open up January 1st of each year.
  4. Review your in-house rules for having “skin-in-the-game”. For instance, We expect you to earn/contribute $5000/yr towards this cost. Or you need to apply for X number of scholarships.

Note 1: The FAFSA asks for many pieces of financial information and despite the requests for early completion, most people have not even thought about their tax filings on New Year’s Day of any year. For divorced parents, it is good to communicate in advance about the required information.

Note 2: It is always recommended to complete the FAFSA, even if you think your family will not be eligible for any aid. In the coming year, there might be some program that requires the FAFSA, despite no financial aid award now.

Deadlines

Complete the FAFSA as soon as possible-your place in line matters for aid awards. This applies to federal and private sources of funding. A list of deadlines are here.

You can order a PIN to sign the FAFSA now at https://pin.ed.gov/PINWebApp/pinindex.jsp .

Print some tax forms. (for notes and listmaking) Choose an online tax calculator such as http://www.ownersmanualdownload.net/moneychimp-tax-calculator-2014 or http://www.bankrate.com/calculators/tax-planning/1040-form-tax-calculator.aspx. Please note, these are for illustrative purposes only. The idea is to choose one that is easy for you to work with. Please use your favorite search engine to select one for yourself.

 

Get 'er Done!

Get ‘er done!

 

Leave a comment

Filed under Back To School, Be Prepared, Family Lessons About Money

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

Is a Layoff in Your Future? 5 Steps to Take With Your Family

Gather the family around the 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 united on this.

I’ve been answering questions over at www.nerdwallet.com for the last three weeks. This post is from an article by me published in their Advisor Voices section last Friday.

Before we get to the 5 things, two suggestions for framing:

  • 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 service, child or after school care that allows parents to go 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 ready to give examples at the campfire. High-speed Internet may be a legitimate need for business purposes, but several ESPN channels are going to be in the want column, unless you’re a sportswriter. Adults and kids can make changes in different ways.

A New family activity-making the dollar go further

New family activity-making the dollar go further together.

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 1st 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 smallest contribution to get the company match—the thought being that it might be awhile before you can resume contributions; or cancel your salary deferral to boost your emergency fund or pay off debt. Paying off debt will need 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 cut credit card use while you prepare? If so, move forward with that.

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. A map made for someone else is seductive.  But your brother-in-law’s map may not work for you.

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

Your next job 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.

Related Links

Boeing Managers say transfer of engineering jobs damaging talent and morale

 

Leave a comment

Filed under Be Prepared, Debts, Family Lessons About Money

Walden on Wheels #1 : Vanquishing the Debt

Wipe our Debt

Wipe our Debt (Photo credit: Images_of_Money)

$32,000 in debt after 5 years of college. For a certain age group among us, that probably sounds laughable. Not that any debt is a laughing matter; but it could be so much worse. Why – I haven’t met anyone with a “Craftsman house-sized student loan debt” since this morning.

One year’s tuition, room and board borrowing can easily run between $26-$52,000 in the 21st century. The average student is graduating with $35,200 in debt in 2013.

The book Walden on Wheels, is one man’s story of debt freedom. I will divide the story into two posts-how he discharges his undergraduate debt and how the author pays for graduate school. I am not sure most of us could do what he did, as it involves three difficult accomplishments:

  1. Delayed gratification
  2. 99% less spending and embracing isolation to do it
  3. Severe behavior modification

The hero of this story (author Ken Ilgunas), begins in a Puritanical place:

“I didn’t see work-at least my line of work as a virtuous undertaking. Rather I saw it as nothing but a penance for my sins, for the profligate decisions I had made as a clueless eighteen year old…To make the best out of a bad situation seemed like an act of resignation. Instead I embraced my bitterness and hatred and ungratefulness.”

In order to direct his dollars from a new job in Alaska (in Coldfoot), Ken adopts the idea that his debt is “a villain that needed to be vanquished”.

“I bought nothing and kept nothing in the bank. I squealed with pleasure when I tortured it [the debt] with payments, like  a sadist plucking legs from a captured mosquito.”

The Happiness Project, this book is not. Or is it? You tell me.

In various, low wage, isolated jobs, Ken goes about reducing his debt-the book chronicles his success job by job, while contrasting his situation with his good friend Josh, also in debt for his undergraduate education. Josh’s nut is $66,000 however.

Would you give up salon haircuts, all your “electronic gizmos”, new or ‘new to you’ clothes, shopping, the gym and isolate yourself at a minimum wage job in the middle of nowhere to meet your goals? PS he had free ‘room and board’. I think many of us wouldn’t be able to do this, but it is a mesmerizing tale. There might be a technique, or a mind-set, or a tale in this book that will inspire you!

2 Comments

Filed under Be Prepared, Debts

Stupid Marketing Tricks

Recently I received a financial services industry magazine email that really made me mad. Perhaps I should temper my response, but I am very interested in what you think. (By the way, this post will not garner me any product ads popping up alongside either.)

Here is the phrase that really got to me: (brand names withheld)

[Our] …”offering is addressing the needs of other advisors, transitioning middle-market clients to XXXXX so those advisors can focus on their more profitable, high-net-worth clients.”

This is where I part company with some other parts of the financial services business.

In a world where “serious people” debate whether the middle-class/middle market begins at $200,000 annual income or not, I am not surprised at this email’s sentiments , just disappointed.

To be fair, this marketing email came from an industry publication, not another financial planner, or CFP(R) . And also to be fair, I’d say a majority of the people in my business do like to help their clients and have a passion for problem-solving in the financial and personal finance arena.

For me, this business is not about sorting clients to see who is “most profitable”.

It is about sorting through the myriad of choices and “assumption of risk” that we all face every day. Helping people understand the ‘why’, as well as the ‘how’ and the ‘what’ of saving and investing.

In the last 45 years, we have seen the introduction of new ways to save, spend, share and invest. Just because it is new and shiny doesn’t mean you need it. Plus you have simultaneously been asked to assume the risk (oops-I mean the opportunity to exercise more choices on your own) of saving for your own retirement and financial future.

Advice should be available via online services, print and visual materials, and yes, even from live humans like myself to all people. Not only  to people who think a $200,000 annual income is ‘middle-class‘, or that the ‘middle-market’ is unprofitable.

Leave a comment

Filed under Learning About Finance

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

Conversations About Money: Vacations

What kind of vacations did you take while growing up? My family did a lot of hiking, backpacking and skiing. I’m not sure that we ever took ‘normal vacations’, but I look back on them fondly. They were full of variety.

We got to hike and backpack when you could drink the water from the trailside streams and rivers. I had my own Sierra Cup that hooked into my belt. (wish I still had it!) My parents brought eggs to hide one Easter weekend up in the Olympic Mountains and there was always coffee for them. (I did not yet imbibe.) One hike along the beach was a disaster because there was grilled steak for dinner and “someone” [not me], failed to pack the steak knives. So we ate it with our fingers. My brother and I were cool with that.

Costs of these weekend outings were generated by: gas, freeze-dried and real food, paper topographic  maps, a battered copy of Trips and Trails by Bob and Ira Spring, the occasional purchase at REI Co-op (my dad had a very low membership number), and maybe a hamburger at the XXX Root Beer Drive-In on the way back. I was a cheap date (plain hamburger-no condiments). My family didn’t drink soda back then.

The Kendall Katwalk Trail along the stretch of...

The Kendall Katwalk Trail along the stretch of the Pacific Crest Trail in the Alpine Lakes Wilderness. (Photo credit: Wikipedia)

We hiked in the real mountains, on the Pacific Crest Trail, in the Alpine Lakes Wilderness, in Mt. Rainier National Park.

While in high school-I did get to a fake mountain-the Matterhorn.

Disneyland

Disneyland (Photo credit: CAHairyBear)

My high school band director entered my name for the McDonald’s All-American HS Band and I was one of the 100 musicians selected.

The band made two trips to march in parades at Disneyland and in New York City! Cost to me: free, save for the missed homework. (Oops, there was the family investment in the private music lessons-but as a teenager, I wasn’t bearing that cost.)

Like many families with children, we began to travel for athletic events. I distinctly recall the trip we took to a swim meet in Santa Clara. I was the spectator and my mother was the competitive athlete, however. (Masters Swimming!) My brother went to her swim meet in Toronto.

While many of my peers travelled to Hawaii while I was in high school,  I didn’t get there until I was over 30! (Cost of that trip: airfare for two, shared meals and entertainment, thank you gift to the owners of the time-shared condo). Loved visiting a coffee plantation on the Big Island.

big island of Hawaii

big island of Hawaii (Photo credit: Wikipedia)

Eventually I went to Europe when I was older. The 3-week trip was  paid up ahead of time due to our DINK status (Dual Income, No Kids).

In summary, we didn’t take extravagant vacations while growing up, we didn’t know what we were missing,  and I have some adult habits that have served me well. (see them below)

Continue reading

2 Comments

Filed under Family Lessons About Money, History, Just for Fun

Death in the Family-More Transparency, Please

We had two deaths in my family this winter. Even though I didn’t have many official responsibilities, while responding to other family members and friends of those involved, I was struck by the sheer number of things to carry out in a short amount of time.

To quote my friend E. K.:

 …Just suppose, your spouse, your adult child or your best friend gets a big surprise, that is, out of the blue, he or she is to:
The Bedford ~  safe deposit boxes b&w1) Suddenly handle final arrangements, like a funeral? burial? cremation?
2) Figure out a three-foot stack of ‘papers’.
3) Sort out a lifetime of household ‘stuff’.’

I have created a workbook that will help you prepare for this day, which could be tomorrow, or in 25 years.

This book will also help you prepare for:

  • an overseas adventure-especially if someone else will manage your assets/residence for you
  • a sudden accident where your health care trustee needs to step in and get your bills paid, the dog taken care of and renew your prescriptions
  • any unexpected health situation where you will need help afterwards. (sudden back injury/surgery, torn ACL, hip replacement, stroke)
  • you or your parents (attention baby boomers!) prepare for a move or the end of life.

There are sections for completion on everything from household pets, to important documents, to whom to tell at work if you can’t come in the next day. We all know we should do this, but it is hard to set aside the time and create a record from scratch.

  1. For example, who knows about your small business, if something happens to you? Eight years ago, another friend of the family suffered a fatal auto accident. An owner of a test proctoring company, a computer expert had to be found-STAT, to figure out how break into her email. A scheduled test less than 48 hours later meant that someone else had to be found to give the exam. The other household member didn’t know her passwords. This was a hard task to get done while everyone was grieving their sudden loss.

2. Who will take care of and play with your cat?

Pet my tummy pleaseIf you need to “recruit” a personal representative and have this information ready for them, their job will be easier. For folks out there who have helped their parents with their finances, life planning and downsizing, what have you done to make this job easier? I’d love to hear about your successes.

If you are in Seattle, I am teaching a class on May 23rd where you will receive a copy of the workbook and we will discuss the reasoning for each section. View the class description and sign up at Brown Paper Tickets . [Update] next class is October 10th and November 7th, 2012.

1 Comment

Filed under Be Prepared

Student Loan Debt … Debt Sentence?

In the Wisconsin public university system, the average student graduated with 5 times the student loan debt in 2011 than they had in 1982.

Logo of the University of Wisconsin Colleges

The amount went from $5,000 to $27,000 in just under 20 years. Let’s check that number against inflation. Between 1982 and 2011, the buying power of $5000 more than doubled to $11,654.87. Let’s review:

  • Wages increased 2.4x
  • Consumer Price Index: increased 2.3x
  • College Costs: increased 5x

We all have heard that higher education inflation is higher than “regular inflation”. For example, in 2009, the price of higher [public] education increased by an average 6.5%, despite a 2.1% decline in the Consumer Price Index (CPI) during the same time.

In 1981, I graduated from a different UW (University of Washington in Seattle) with that same amount of debt-$5000. At the UW today, the average student debt load is $23,000, $4000 under the other UW.University of Washington Campus & Vicinity

University of Washington Campus & Vicinity (Photo credit: AvgeekJoe)

What happens after the end of the “formal education”? You might have a job, you might be a boomerang child and move back home with your family, or you might get an “internship” that pays $10 an hour for a job that used to be given to a college graduate. That graduate may have made $20,000 in 1982. Last year, a college graduate or a worker of any age needed to make $46,619 to equal that 1982 buying power.

I know people who have $15,000, $25,000 and $50,000 in student loans. Even if they have “good jobs”, as opposed to a paid internship [formerly a permanent a job with benefits], it is hard to pay your bills.

Here’s a website for everyone to check out as their kids graduate from college this spring.  http://www.thecalculator.org/ This one is for Washington State only and illustrates how much they need to make to cover expenses in every Washington county. For information on other state self-sufficiency calculators, please click here.

For an interactive graph on student debt in the entire US, check out this chart at truthdig.org.

Please be careful as you check the cost of higher education for yourself and family members. Bankruptcy is not an option for student loan debt (or medical expenses).  Trick question:

  1. Who will loan you money to retire?

I’m not saying don’t do it, but really dig into the post-graduate numbers to see how much your graduate will need to earn to cover their debts. Ideally, they are by your side as you engage in this process!

Leave a comment

Filed under Be Prepared, Debts