Simple is Not Easy

It may be simple, but that doesn’t mean it is easy. The hard part is the psychology. We often hear tips and recommendations spouted from pundits telling us the simple things to do that will improve our financial lives. I do the same with my clients. It truly is a case of easier said than done for all of us. Myself included.

For example, some financial tips seem simple enough: save a 6-to-9-month emergency fund (9-to-12 if you are single), fully fund your IRA, pay off credit card debt, pay yourself first… These actions are simple, but when you are starting out or trying to turn your financial ship around, they are not so easy.

First, you need to recognize and accept that you truly want to change your financial health. You have to make this decision and accept that change will take time. You must also realize that it will be difficult at first, but that it can be done. You have millions of supporters who have already done it and you can draw inspiration from those who went before you.

Second, start small. Don’t tackle all the areas you need to improve at one time. If you do this and miss a goal, it may derail you from your overall goals.  Pick one goal and break it down into smaller steps to get started.

Let’s look at saving that 6-to-9-month emergency fund. It’s a simple concept; your emergency fund covers your monthly expenses in the event of loss or disruption of income for up to nine months. It’s also there so you don’t have a need to borrow from your retirement accounts, dip into your taxable accounts, or have to rely on incurring credit card debt. It helps you maintain your standard of living during the income disruption. For example, if your total monthly expenses for rent/mortgage, food, insurance, utilities, transportation, entertainment, and any other items total $3,500 per month, your goal is to save in cash between $21,000 and $31,500.  Now, lots of folks recognize that is a daunting task and easier said than done. First, recognize and accept that you need it; second, start small. Break it down, and chip away at the goal week by week, month by month. Make your first step examining your monthly spending and see where you can cut that won’t affect your quality of life. Take some of that savings and start putting it into a cash account. Next, aim for one month’s expenses. When you hit that target, acknowledge and celebrate. Look ahead and continue stashing cash and finding other areas where you can save. You should work with your planner to find the best options for where to hold your cash.

Once you have a goal underway and it is manageable, take a look at your other simple goals and use the same process to get started on the next goal. Before long, it will become easy for you to set financial goals and make progress toward them. You can work on goals concurrently once you get the steps down and decide to make the change.

You should work with a financial planner to help you work through some of your goals. Like with credit card debt, many planners can analyze your debt and help you determine which debts to pay first to get the biggest bang for your buck so you are not spinning your wheels. Stop rounding up payments on each debt and focus that extra money onto a specific debt whether you are using the avalanche or the snowball approach. Both have benefits and value, but the route selected needs to resonate with you and help you reach your goal.

Understand that you are your most important asset and your hard-earned money should go to you first, before others, in the most advantageous manner. Maybe you are already paying yourself first; 401(k) anyone? If you think about it, deducting pre-tax money and sending it to your retirement account is a form of paying yourself first. As is contributing to your cash savings to build your emergency fund, or paying off your debt. There are many simple ways to improve your financial health. Make sure you are taking advantage of each easy opportunity that works for you.

As an independent Certified Financial Planner™, I can help you focus on your finances and build a better financial future. Contact me and let’s get started. #talktometuesday #getstarted #HowIcanHelpYou #GetHelp #Hireaplanner #CFPPro #savemoney #financialhealth

When Should I Claim Social Security?

This is a question that comes up time and again. As advisers, many people think we have the exact age and date that each person should file and claim their Social Security. We don’t. However, sometimes we jokingly respond, tell me when you’re going to die. Claiming your Social Security involves many factors and personal decisions.

Claiming at an age to draw the maximum amount of Social Security is not the only reason, nor the best, to file your claim. When you claim is a combination of factors such as age, relationship status, health, family longevity, and importantly, financial need.

It is true that if you claim before your Full Retirement Age (FRA) you will receive less per month, for life, than if you claim at your FRA. You can boost your benefit approximately 8% per year between your FRA and age 70 in the form of delayed retirement credits. Do not wait beyond age 70 to claim because your benefit no longer grows. Another point to keep in mind is that the government bases your benefit on actuarial tables and is designed with actuarial neutrality in mind. Theoretically, you will draw about the same amount of benefits over your lifetime whether you start drawing your benefit at age 62, or if you wait until your FRA to start drawing your benefit. This is sometimes referred to as the ‘breakeven point’ and generally occurs somewhere between the ages of 77 and 83.  That, however, is looking at your benefit in a vacuum.

So, when should you claim? Here are a few tips to keep in mind. If you want to run estimates, meet with a financial planner to discuss your options.

Your health. Are you in generally good health and sound mind? Consider working a little longer and delaying your claim until at least FRA or later. If you’re not in good health, and struggling to cover expenses, go ahead and claim early.

Family longevity. If your family members have all passed away at an early age, consider claiming earlier rather than later. Conversely, if your family holiday parties look like a centenarian club meeting, consider delaying your claim until age 70.

Are you single, or married? You may need to coordinate benefits if you are married and may want to look at a maximum claiming strategy with your spouse. This way, when your spouse passes away, you’ll be eligible for the maximum benefit possible. Remember, you’ll be drawing one benefit at that point, not both. If you are single, you’ll need to look at your other assets in addition to your health and longevity.

Age. If you are part of a married couple, your ages may be a key factor in when to claim your benefit and which benefit type to claim. It may also be a factor in deciding who claims first especially if there is a big age difference.

Your assets. If you need the income due to an unexpected early retirement, job loss, or lack of savings then claim your Social Security. If you have saved a sufficient amount for retirement and can delay, then do so.

Keep in mind there is no one-size answer when it comes to claiming your Social Security. You need to consider all relevant factors and understand that claiming early could lead to a permanently reduced monthly benefit for life. Claiming at FRA or later will lead to a larger monthly benefit. This is important because it is for life and your cost of living increases will be based on your monthly benefit.

As an independent Certified Financial Planner™, I can help you with your claiming strategy. Contact me and let’s get started. #talktometuesday #getstarted #HowIcanHelpYou #GetHelp #Hireaplanner #claim #socialsecurity #CFPPro

Do You Have 2020 Vision?

Many people wait until the pressure of New Year’s Eve to make their resolution and set goals for the new year. It is tradition, and a good time to do so, but it’s not the optimal time. The optimal time for 2020 vision is now.

During the last three months of the year is the best time to look forward to the new year and set your vision. This coming year is especially fun since you will be creating 2020 vision. Yes, the puns are endless – so have fun.

End of year gives you two opportunities for your planning: review how this current year went, and start thinking about what you want to accomplish next year. Thinking about next year can motivate you to take action for items you fell behind on in the current year. It also makes you think more realistically about next year.

For me, it was the proverbial weight loss goal. I am happy to say that I am down twenty-seven pounds over where I was at the beginning of 2019. I am assessing at this stage and have spoken with my doctor and we both agree I can continue on and lose some more weight. I was also thinking about walking more in 2020 and this motivated me to start now, and not wait until 2020. It’s a good thing I did because my husband and I spent eighteen glorious days in Italy this fall and we walked an average of five miles per day!

How is this related to financial planning? You apply the same thought process and review technique. Look at what your financial goals or your financial planning tasks were at the beginning of 2019. Did you accomplish some of them? All of them? Or, just a few of them? Here is where timing comes into play. For 2019 you still have time to boost savings, make contributions to retirement plans or investment accounts, focus on your budget, or pay down debt.

You should also be using this time to start thinking about your 2019 tax status. Start gathering documents, account statements, and receipts early. Run a late year profit and loss report if you are in business and see how you are doing on your growth goals and what kind of income you are looking at for 2019.

Be sure that if you are implementing any changes with a December 31 calendar year deadline that you start your prep work now. Don’t wait until the last week of December.

Now that you have reviewed your goals and progress for 2019, think about what you would like to do for 2020.  Did you have a goal that fell by the wayside such as paying off a certain amount of debt, or saving for another goal? If so, consider prioritizing this for 2020. If you had a goal that you hit too easily, consider a new target goal that is a little more challenging.

Is 2020 a key date or anniversary year? If you are hitting a milestone like age fifty or sixty-five, consider taking action now that will make it more fun and less stressful. Did you know that some insurance providers raise premiums at key ages? If you are going to trigger one of those dates in 2020 consider shopping for that coverage before you trigger that next age group higher premium.

Maybe you have always been a DIY investor and planner and you are entering a new decade and would like some validation of your hard work and research. Start looking for a financial planner now instead of the beginning of the year. As a Certified Financial Planner™ I can tell you that inquiries spike the first of each year. Better to avoid the rush even if you want to schedule your meeting for first of the year.

The changing of the calendar is a celebratory event in our culture. Every year is full of hope for a brighter time and possibilities seem unlimited. Take some of that energy and apply it to your own 2020 vision and make 2020 your best year ever!

As an independent Certified Financial Planner™, I can help you plan for the new year and be on top of your goals.  Contact me and let’s get started on a savings, retirement, or debt reduction plan or just a hike to talk financial planning here in the East Bay hills. #talktometuesday #education #Hireaplanner #stressfree #newyear #savings #CFPPro

Be Disaster Ready – Have a Grab-N-Go Binder

Time for my annual reminder, keep those key documents together and readily available. This year we are suffering through the Kincade fire and the Tick fire here in California. To compound matters and make the stress even worse, a local public utility has cutoff power to over two million residents. You never know when you will need to grab and go in a hurry. Disasters, natural or otherwise, are stressful enough. You don’t want to be rummaging through file boxes or drawers wasting precious time when you need to evacuate.

My actual binder. All ready to go.

We all need to prepare a special binder or folder for that inevitable day.  I call this my Grab-N-Go binder. If you are of modest means, a nice folder should suffice. If you have more to deal with such as investment accounts, businesses, or real estate, you may wish to have a binder with more sections and something that is sturdy.  You want ALL of your important financial and family documents and records in this binder. You should customize it so that it works for your personal situation. For me, I keep passport copies, auto titles, and important certificates in mine as well as all key financial documents.

The following is just a sampling of the documents to include (your binder may have more sections and documents):

·         Insurance contracts

·         Will and/or Trust

·         Durable Powers of Attorney

·         Medical Directive

·         A password list (online accounts, social media platforms, etc.)

·         Brokerage account information

·         Bank account information

·         Real estate deeds and agreements

·         Cohabitation agreements (for unmarried couples)

·         Family advisor contacts list (attorney, CPA, financial planner, etc.)

·         Letter of instruction (in the event you don’t have final instructions in a will)

Keep the following points in mind regarding your binder. Be sure to review and update your binder documents as needed. It would be a good idea to make sure, for example, that your password list is updated quarterly. Social media platforms and passwords for bank and brokerage accounts change frequently. You may also need to update your will or powers of attorney if you make changes to your decisions or have new members join your family, or if you simply change your mind about your final instructions.  Be sure to let every member of the family know where this binder will be stored and that it should be packed and taken with you when evacuating. One client keeps hers in the family’s disaster go bag. It’s also a good idea to let a close relative or family friend know about your binder and its location or keep a backup copy for you.  If you do not have a family member or friend that you trust, ask your attorney or other close advisor if they would be willing to safeguard your binder copy.

As an independent CERTIFIED FINANCIAL PLANNER™, I can help you. Contact me and let’s get started on creating some peace of mind. #talktometuesday #GrabNGo #binder #documents #CFPPro #documentsyouneed #disaster #fire #earthquake #medicalemergency

Three Things You Can Do to Build Long-term Wealth

When it comes to investing, many of us are more terrified of losses we experience in the short-term, versus the potential gains we can achieve over the long-term. Money is a very sensitive topic for most folks and the idea of any loss is unnerving and frightening. I get that. But there will be ups and downs in the market and these could play to your advantage over time.

First, get a hold of yourself! Try to keep those emotions under control and remember that investing should be for the most part, emotionless. I understand that is easier said than done. Irrational and emotional decisions can lead to catastrophe when it comes to your investments. For starters, turn off the financial news, market pundits, and ignore the annual forecasts if you know these media sources will upset you. Pundits and forecasters are all about having a January alert to apprise investors of the year ahead. But how many times do you pull that forecast up in December to see how right, or wrong, the forecasters got the market?

Second, you need to keep your ultimate goal in mind. Think long term…very long term! Stop worrying about today’s loss or this year’s bad market and definitely stop trying to time the market. Sit down with your adviser and craft a personalized, well-thought-out plan that meets your needs and serves your long-term interest, timeline, and goals. Doing this makes market timing irrelevant because you will have a plan in place for the market of today, tomorrow, and into the future.

Third, remember that markets go up and they go down. These fluctuations for the long-term investor are actually assets. Just like Warren Buffett, you too can avail yourself of the gift of a downturn in the market. Downturns are a great opportunity to load up on investments at lower prices – a sale! If you have an investment plan and are putting away money on a regular basis, these downturns generally work to your benefit because you are buying more investment at a lower price. If you have an adviser, you most likely discussed market volatility, risk, and are better prepared to realize ‘this too shall pass’.

I’ve heard people comment, ‘I am close to retirement, I can’t suffer a downturn’.  This statement encapsulates exactly why they should have been working with an adviser. First, remove the emotion; other than being happy that you are about to retire. Second, remember your ultimate long-term goal. You shouldn’t be market timing. Third, you should have already been working with an adviser even if you are retiring during a downturn; your planning should have you positioned to be ready for retirement regardless of the current market. If this is a fear for you, talk to your adviser. Most likely, your adviser revised your investing allocation long before your retirement date.  

As an independent Certified Financial Planner™, I can help you with a strategy to address retirement and other investing goals. Contact me and let’s get started! #talktometuesday #savings #retirement #emotion #longterm #wealth #goal #warrenbuffett #plan #CFPPro

The Value of an Adviser - Why You Should Hire a Financial Planner

We live in DIY world.  Whether for home repairs or financial planning most folks these days feel they can go it alone. When it comes to your finances and planning your future, is that really the best choice? Sure, you can search the Internet and find a few retirement calculators and even articles on saving, investing and “Top 5” lists, but is that information relevant to your personal situation? How do you know if what you found fits into your financial plan or is even appropriate to your situation? What if you make a move only to learn later that your decision cannot be undone without costly consequences?

AARP seems to have reached the same conclusion. Working with a planner can boost your financial well being. (AARP Bulletin, Oct/Nov 2018)

Hiring a financial planner can help you reap more than just potentially better returns. Planners can help you with a myriad of financial decisions and life changes such as retirement, debt management, marriage, divorce and the birth of a child. All of those key life changes. The help, guidance and advice of a financial planner is well worth their fees charged and studies by Vanguard and by Russell Investments support this position. Vanguard claims working with a financial planner can add “about 3%” over time to your returns and that behavioral coaching is the most valuable benefit an investor receives. Russell Investments claims working with an adviser can help increase returns by “about 4.08%”.  However, these studies point out that a financial planner brings more to the relationship after fees than just a potentially better return. The studies reveal that in addition to a potentially better return, financial planners help clients with difficult decisions, free up clients’ time, can explain complex transactions and provide guidance and an on-going relationship.

When you do have a life change or follow-up question, a call to your planner can be a lot more comforting than going it alone. As an independent Certified Financial Planner™, I can help you create a plan, set a timeline and put that plan into action. I can also be there to talk you through market gyrations and remind you of your goals and timeline. Let’s start planning today.

LINKS BREAK. FOR LOCATING THE STUDIES PLEASE SEARCH THE FOLLOWING IN YOUR SEARCH ENGINE OR CONTACT ME:

Vanguard – The Added Value of Financial Advisors

Russell Investments – 2017 Value of a financial advisor update: More than 4.08%

 As an independent Certified Financial Planner™, I can help you with your finances and long-term planning. Contact me and let’s get started. #talktometuesday #getstarted #HowIcanHelpYou #GetHelp #Hireaplanner #vacation #CFPPro

The 30% Credit Utilization Myth

I was once asked about carrying balances on credit cards. My response, why would you? This seemed to shock the person asking me. When I probed a little more, I found out the person was confusing the idea of not using more than 30% of your available credit limit with thinking you should carry a balance that equals 30% of your available credit limit.

So, what’s the deal with this rule being bantered around the financial services arena. Some consumers seem to have interpreted the old guideline of not using more than 30% of your credit limit with the idea that carrying a balance of 30% of your limit is a good thing. How much credit you use in relation to available credit is your credit utilization ratio.

It couldn’t be further from the truth. In fact, the lower your ratio the better. According to Can Arkali, principal scientist at Fair Isaac Corporation (FICO), “Consumers with FICO scores of 800 use, on average, 7% of their available credit.”

Interpreting this guideline has become confused. But more than that, it seems that it is an excuse for people to carry a balance on their credit cards and not pay them off. I can tell you, paying off your balances monthly will not hurt your credit score. In fact, I pay mine off every month and plan on continuing this practice.

Here are few tips to help you build your score.

Don’t overspend just because you can. Once the debt monster starts to grow, it can be incredibly hard to tame. So, keep that spending under control.

Pay your balances in full each month. This will also help you keep your spending under control and live within your means.

Make sure your minimum payment gets made every month. You can automate this so that you never miss a payment. Most cards offer you the option of paying the balance or paying the minimum payment. If you have the means, pay the balance to avoid interest charges. If you don’t mind paying some interest, at least set your accounts up to autopay the minimum.

Use your credit lines, but see the previous tips. One thing you can do to use your credit line and maintain your FICO is to automate your monthly bills so that they are tied to your credit cards. This may also help you save some money if you have a card that offers cash back or points that are exchangeable for other services. By doing this you improve your payment history and won’t miss payments that can ding your FICO.

Have a good mix of credit accounts. Think mortgage, auto loan, student loan, credit card, etc. Make sure you have a history with at least a few of these types of accounts. But again, don’t go buy something to add to your credit history if you don’t need it. Especially if you are already carrying high balances.

Stop opening new accounts and closing old ones. Term (the longer the better) is an important component to your FICO score so choose your credit accounts wisely and stick with them.

Keep your overall balances low, low, low… The amount of debt you carry also affects your score. The less the better.

You know all of this. If you need a plan of action or a debt analysis to know what to pay first, let me know. As an independent Certified Financial Planner™, I can help you plan for a new FICO and meet your goals.Contact me and let’s get started on a debt reduction and savings plan! #talktometuesday #education #Hireaplanner #credit #FICO #stressfree #savings

Are You Ready for OND?

OND? What is OND? If you are in sales, you know that OND stands for October-November-December; year end, fourth quarter. Yep, it’s already October 1. Clouds of pumpkin spice waft through the air, kids are selecting their Halloween costumes, turkeys get that nervous look in their eye, and Santa starts to pack on weight for his big day.

October-November-December slides by in a flash so you better be ready. This is your last chance to make progress on some of your financial planning goals. So, what can you do during OND from a financial planning perspective? You still have time to accomplish a lot of goals.

Max out your qualified plan contributions. For example, if you have not maxed out your 401(k) plan contributions for 2019, you can increase your payroll withholding to hit the $19,000 pre-tax limit before year end. If you are over age 50, you can add another $6,000 catch-up contribution to that for a total of $24,000. Most companies these days have online access to allow you to increase your contributions.

Max out your IRA contributions. In total you can contribute up to $6,000 for 2019 to your IRA. Also, folks over age 50 can contribute an extra $1,000 catch-up contribution. Remember, this is a cumulative total for all IRAs. So, if you have two or more IRAs, your total contributions across all IRAs cannot exceed the annual maximum contribution limit.

Review RMD distributions. If you have an inherited IRA, or you are over age 70 1/2, and have begun your Required Minimum Distributions, you need to keep an eye on the calendar. You need to take your RMD by December 31. If you are in the situation of taking RMDs, be sure to do this by December 31 to avoid any costly penalties.

Give till it hurts! Are you charitably inclined? Make those charitable contributions by December 31 if you plan to take a tax deduction. Keep in mind that under the 2017 Tax Cut and Jobs Act, making that deduction is more of hurdle for some folks. You need to itemize, and you need to exceed the standard deduction ($12,200 for single filers, $24,400 for married filing joint, 2019) for the contribution to be deductible and have an impact. You can, and should, donate to your favorite charity even if you won’t make the deductibility limit. If you are close to these totals, you might want to consider bunching your contributions or a donor advised fund.

Line up tax preparation now. Whether you are filing on your own, or looking to hire a tax professional, OND is the time to start. A little work on your part now will save you a lot of frustration during tax filing season. Go ahead and prepare receipts, research tax planning software, gather records such as property taxes paid, and create folders for when these documents start to arrive in January. If you need a tax preparer, now is the time to ask friends, family, colleagues, and advisers who they recommend. Get on the preparer’s radar now, before they get overwhelmed.

Set that holiday budget. We’ve got lots of holidays in OND so decide now what you want to spend. If you made a budget at the beginning of the year, revisit that and make sure it’s still going to work for you. Now is the time to revise if not.

Review your 2019 goals. That’s right, take a look at what your 2019 goals were at the beginning of the year and see if you are on-track to meet them. If not, take some time to assess which goals are really important to you and which you still have time to act on. Like funding that 401(k) plan to the max!

As an independent Certified Financial Planner™, I can help you focus on your finances month-to-month and not just at year’s end. Contact me and let’s get started. #talktometuesday #getstarted #HowIcanHelpYou #GetHelp #Hireaplanner #OND #vacation #CFPPro #savemoney

Fee-only vs. Fee-based: Know the Difference When it Comes to Advisers

Terms and titles in the financial services industry can be very misleading and downright confusing. Cue my opportunity to talk about focusing on the term fee-only when it comes to hiring an adviser in comparison to other terms. This is a topic that is dear to me because there are a ton of financial services professionals and we all fill various rolls and needs for clients. While some argue that there are conflicts in every arrangement, clients really need to understand what they are paying for and how they are paying their adviser.

So, is there a difference? You bet there is; and it could cost you more than a few dollars. The financial services industry seems laden with jargon and titles that sound similar, but in reality, have very different meanings. Are you hiring an adviser, a wealth manager, a broker, or being sold insurance under the guise of investment planning? It can be very confusing for clients. When it comes to your adviser, you need to know the terms fee-only and fee-based because it determines how the adviser is compensated.

Generally speaking, fee-only financial planners are usually registered investment advisers and act as a fiduciary in the client's best interest. Fee-only advisers do not accept any compensation based on product sales, i.e., no commissions. Fee-only advisers are viewed as having fewer conflicts of interest and are seen as providing more comprehensive advice. Services generally go far beyond just wealth management.

Conversely, a fee-based adviser may not always have to disclose how they are compensated to a client. Many fee-based advisers do offer hourly fee-for-service but they may also offer commission-based products (insurance, annuities, etc.) to clients. Fee-based advisers may not disclose that they will receive a commission based upon their recommendations. Further, fee-based advisers generally have to work in their firm’s best interest first, and not necessarily the client’s. Conflict of interest, anyone? That being said, many fee-based advisers may offer great service to their clients. Just be very aware of what you are paying for as a client.

Admittedly, I am biased in favor of the fee-only model and run my practice this way. Many fee-only planners have also obtained the Certified Financial Planner™ designation and act as a fiduciary for their client. However, you do not have to be fee-only to be a Certified Financial Planner™.  If you would like to learn more about fee-only planners, you can research the following websites for information and use their Find an Adviser function:  National Association of Personal Financial Advisors (NAPFA), the Garrett Planning Network, the Certified Financial Planner Board of Standards and the XY Planning Network.

For disclosure, I am a member of NAPFA, and a member of the XY Planning Network, but not the Garrett Planning Network at this time. I am however, a fee-only, independent CERTIFIED FINANCIAL PLANNER™.I can help you with financial decisions, budget for debt, save or invest for retirement, investment allocations and much more. Contact me and let’s get started. #talktometuesday #getstarted #HowIcanHelpYou #GetHelp #Hireaplanner #feeonly #feebased #commission #fiduciary #CFPPro

Are You Sure You Want to Own a Vacation Home?

Having a second home has long been a goal for many people. It’s idyllic to think that you can leave your work life behind along with the chores at home and spend time in a gorgeous mountain chalet or beach-side bungalow. The truth is usually not as idyllic.

If you choose a great area that is growing and has rising property values, sure, you may be able to enjoy quite a boost in future home equity. Keep in mind, however that the equity is locked up in your second home until you decide to sell the home. If the area becomes increasingly popular, crowds are sure to follow and your once-quiet nest could become a busy hive of activity.

In addition to equity gains, you could pass the home on to your heirs. Just know that if they don’t have a strong emotional attachment to the home and location, they will likely sell the home.

If you are thinking of buying a second home in a specific area, here are a few tips.

First, spend a lot of time renting in the area before you plunk your money down. This will give you an overview of your desired location. Visit at different times of the year to make sure you really like the weather and the changes that come with the seasons.

You also need to identify the type of property you want. Do you want a single-family residence? A condo? A planned community? An isolated mountain retreat? Will you use the property exclusively or try to rent it out to offset the cost? Does your new community even allow temporary rentals? These decisions need to be investigated and made well in advance.

Meet the neighbors. Be bold and venture out and make friends by attending local events such as the school pancake breakfast, church bazar, fire department social, and any other local event that catches your eye. Mingle with the locals as much as possible to see if you are a good fit into their community. After all, you are joining their community if you buy.

On the finance side, engage in some expense planning. For six months see if you can double all of your current expenses. Remember, in addition to a potential new mortgage you will be paying for water, gas, electric, sewage, garbage, heating & cooling, snow removal, and insurance. You may even have to pay HOA fees or a local management company to help you with the property. Some of these expenses may be considerably higher in your destination of choice than where you currently reside.

Enjoying some quality time with my nephew in a favorite destination near Mammoth Lakes, CA.

Owning a vacation home can bring a lot of joy and possibly add to your wealth over time. It can also be a way to grow and maintain relationships in a second community. It is not without extensive consideration and planning. These days, when you add up the total cost of ownership, it may be cheaper and more flexible in the long run to rent versus buy. In doing so, you can summer in Seattle and winter in Scottsdale. Plus, as a renter you can more easily switch units if you don’t like your location, view, or completely change your destination if you like, and thus avoid the on-going costs of second home ownership.

Buying or building a vacation home is a serious commitment. You should strongly consider all angles and meet with an independent Certified Financial Planner™, prior to your decision. I can help you plan for the purchase or work through whether you should consider a type of rental.Contact me and let’s get started. #talktometuesday #education #Hireaplanner #vacation #vacationhome #secondhome #stressfree #newhome #savings

It’s Time for XYPN Live 2019 in St. Louis

This week’s post is a short update to let you know that I am attending XYPN Live 2019. This is a conference for those of us who are XY Planning Network members. We take time off from working in our business to work on our business.

Me attending XYPN Live 2019.

The XY Planning Network provides consumers access to fee-only advisers who are dedicated to working in your best interest regardless of assets or age. Click XY Planning so you can learn more about the network and the type of work members do.

This financial conference is not your father’s financial conference. You won’t find a sea of older advisers clad in the stereotypical blue blazers, tassel shoes, and Oxford shirts. Here it’s a much younger, hip, diverse, and generally t-shirt and shorts wearing group of advisers. Three years ago, there were just over 500 advisers. This year we have exceeded 1,000 and have members in Australia, Canada, and new this year visitors from Italy deciding if they want to join.

I love this conference because we are forging bonds and sharing our expertise. By sharing we grow, and by growing we are able to provide financial planning services to a much wider segment of society. No longer do you need to have a minimum portfolio size to access quality financial planning services.

Fellow advisers and new friends.

Reach out and let me know when you would like to get started on your financial planning. As an independent Certified Financial Planner™, I can help you with your goals. #talktometuesday #getstarted #HowIcanHelpYou #GetHelp #Hireaplanner #CFPPro #savemoney #goals

Should I Fund My Child’s Education Before My Own Retirement?

It’s a battle that many families face: save for retirement, or fund a child’s education? For a lot of families, education is a very high priority. Many parents struggled to put themselves through school and they simply want to remove that barrier for their child. It’s admirable and shows love. Financially, though, it may not be the best choice.

Let’s face it, higher education has become expensive; prohibitively so for many students. The idea of paying for or greatly defraying that cost by socking away money for your youngster from an early age is very appealing. But it may not be the best financial move you can make.

Ask yourself this: do you want your child to be the one who helps you bathe and go to the toilet in your old age? Most likely not. And your child, even though they love you, most likely doesn’t want to be your caretaker either.

For the vast majority of people, the point is they should save for their own retirement and potential long-term care needs first. Your goal should be to save at least 15% of your income, or more, over the course of your working life. Max out retirement plans and IRAs that you are eligible for, have a cash savings, and even a taxable investment account. Get your financial house in order as a first priority. Hit those targets first and then consider saving for your child’s education.

It may sound cold, but your child can always do what millions before them have done, and that is borrow or work to pay for their education. Don’t forget the myriad scholarships, grants, and other school aid or work programs that may be available to them. Your child will have the rest of their adult life to pay back education. There is also the possibility your child may inherit your residual estate. As for you, you cannot borrow to pay for retirement. And, the last time I checked, no one was handing out retirement grants, scholarships, or work study payments for retirement.

Take care of yourself first. If you do have any extra, then it can go towards your child’s education. But make sure you know if you do have that extra. As an independent Certified Financial Planner™, I can help you plan for retirement and prioritize your goals.Contact me and let’s get started. #talktometuesday #education #Hireaplanner #retirement #stressfree #lifeplan #savings

Who Wins? Put Time on Your Side to Save a Million

Nate, Ashley, and Sohn are all concerned about having some cash in the future. They each have a different approach as to how to save. The one thing that is constant is that they can each earn 8% on their contributions until age 65. Nate is working during high school and wants to save $5,000 per year, every year, starting at age 15 and making his last contribution at age 21. Nate doesn’t think he’ll need to save after that.

Ashley thinks she has the better approach. Ashley wants to save $5,000 per year starting in college at age 21 and save $5,000 per year, every year, until age 30. At that point, she thinks she can stop and not save any money after that.

Sohn wants to enjoy life and doesn’t want to start saving until age 30. Sohn plans to save $5,000 per year starting at age 30 and saving that amount every year through age 65. Sohn feels this will be the best way to approach saving for the future.

Start small, save consistently over time.

So, who has the most at age 65? Nate only put away a total of $35,000 of his own money. Ashley did better and put away a tidy sum of $50,000. Sohn managed to put away a whopping $180,000 by age 65. Have you figured out who has the most at age 65? It’s Nate.

Wait, what? Yes. Even though Nate only put away $35,000, with the miracle of compound interest his total contributions had more time to grow at our hypothetical 8% rate. This is the miracle of compound interest and the time value of money. Nate ended up with just over $1,424,000 at age 65. Ashley and Sohn did alright as well, but they didn’t earn as much as Nate due to not being invested as long. Ashley ended up with just over $1,156,600 and Sohn ended up with just over $1,010,300 (figures have been rounded down).

All three were smart to save, and smart to stick to their savings plan. Nate however, started the earliest, contributed the least, and wound up in the lead at age 65. Nate also contributed less of his lifetime earnings so he ended up with a nice savings balance and the use of his money during his life. Ashley was a close second. However, Sohn had to contribute a very sizeable amount to his savings during his working years.

The moral is to start saving and investing as early as possible. This example assumes a set amount of $5,000 per year and a hypothetical 8% growth rate. Your goal may be different. You may be able to save more, or less, and your growth rate could be very different. Remember, the return is hypothetical for illustrative purposes only and is not a guarantee of any future performance. You should work with a financial planner to set personal goals.

As an independent Certified Financial Planner™, I can help you plan your savings and refine your goals.You may not have fifty years to save, but don’t delay, start today! Contact me and let’s get started on a savings plan. #talktometuesday #education #Hireaplanner #stressfree #savings #saveamillion #startearly

Use Credit Card Features and Outsmart Budgeting

This week’s post is a specific focus on technology. Mainly, the new and expanding features available on most credit card products. Some of these extend to banking debit cards as well. Be sure to check what your card issuer offers whether it’s a credit or debit card.

A huge help in budgeting and keeping your spending in check is the alerts feature on your account. Each provider offers a variety of alerts such as balance, foreign transaction, card not present, and specific limit spent per transaction.

For example, I recently got a new Visa card through a major retailer because it provides zero annual fee, cash-back on every purchase, no foreign transaction fees, identity theft, and fraud alerts. For me, I liked the fact that I can customize the alert features that I want to receive that mean the most to me. You should check your card issuer’s options to see what is available to you and use the alerts that make sense for you.

My favorite is the balance alert. I opt to receive an email at the end of the week that tells me my current balance. This is very useful in budgeting and keeping my spending under control. The added benefit is that if I have a balance that it surprising, I can use the app to review my purchases and make sure they are all mine.

Many card issuers offer these features in various ways. My particular card will allow me to go into the alerts section of my profile and select the alerts I want, and also set various spending thresholds, and whether I want a text or an email. For most alerts, I can also elect to receive that notification daily, weekly, or monthly. You should see what your issuer offers and select what works for you. Sometimes, technology really can be our friend and make budgeting a snap!  

As an independent Certified Financial Planner™, I can help you understand your options and set up a system that works for you.  Contact me and let’s get started. #talktometuesday #education #Hireaplanner #cash #credit #debit #feature #alert #alerts #budget #technology

Cash for Kids – Make it Visible

Last week I wrote about how money is becoming invisible, especially in the age of apps and home delivery services. One reader suggested I follow up with a post about teaching kids about money and that it’s not invisible. Ok, it was my mom. Thanks, mom!

It is true, kids today don’t actually see cash and they need to. I wrote about talking to kids about money back in January in my post Three Ways to Teach Children Good Money Habits. While the three habits outlined in that post are good ways to teach kids about money, don’t forget the actual, physical cash aspect.

If your child receives an allowance or some form of pay, be sure that they receive part of it in physical cash. Start early with children and show them each type of coin and bill and be sure they understand how much it is. This lesson can start with very young children. When I was little, I had a collection of foreign coins and unique coins. It taught me that there are various forms of money and that was a great early lesson.

For older kids and especially teens, it’s more about learning where that cash comes from and being able to manage their own money (both physical cash and invisible cash on cards or in accounts). One important lesson should be that money is not free and that there is always a trade off to earn or receive that money. Children should know the source of their cash and what was exchanged in order for them to have that cash. Whether it’s your time in exchange for an hourly wage, their time in exchange for an hourly wage, or another avenue such as an insurance payout, inheritance, or gift. They need to know the supply and also know that it isn’t endless.

If you give an allowance, make sure part of that allowance is in cash and establish with your child how long that cash amount has to last them (i.e., how many days or weeks). This will help them learn money management skills. If they know they need to stretch their actual cash received over a certain time period, they can learn to budget based on their needs.

Physical cash shouldn’t be alien to kids. Teach them about it, let them see it, tell them what it is and how much value it has, and have them be involved in their own cash management. If you are planning a foreign vacation, currency exchange adds another level to their lesson. Let them be involved and learn these skills early. Make sure that children understand that cash is real and physical, and not just invisible and a vague concept tied to a plastic card they see you using. The card may signal to them that there is an unlimited supply of money.

As an independent Certified Financial Planner™, I can help you plan for these conversations.Contact me and let’s get your children acquainted with cash. #talktometuesday #education #Hireaplanner #tax #stressfree #tip #tipping #savings #cash #cashinhand #kids #teens #teensandmoney

Beware of Invisible Money!

Have you noticed that budgeting is a challenge and you seem to overspend on a regular basis? Feel like you are tipping more due to automation and social pressure? Do you feel that you never actually see your money? You’re not alone and you are not crazy.

Shopping and paying for services we use without touching or seeing our money has never been easier thanks to technology. If it’s 9 p.m. and we want our favorite burger or need to get across town – no problem! There’s an app for that. Whether having food delivered or having ourselves delivered across town, we no longer need cash. Most apps and online accounts require linking to a payment card of some type, usually your debit or credit card, and that can be a problem for budgeting. Through linking, and the desire for ease and convenience, it can be harder to rein in spending when we don’t actually see and handle our cash.

Even when we get takeout these days the merchant generally has a card reader system in place with a convenient screen that recommends a tip amount. For dining in, this can be handy and you should tip based on service. However, for takeout and the casual stop for coffee or baked goods, you may be over tipping by a considerable amount. Especially if there is no option to not tip. With the merchant right in front of us, and folks in line behind us, we have a tendency to over tip on smaller purchases or purchases such as takeout that arguably do not require a tip. (You can read this brief overview on takeout tipping from the Des Moines Register.) Compounding the problem is the fact that this is automatic, so again, we don’t actually see our money!

The proliferation of card readers, delivery apps, rideshare and food delivery services, and even task apps (think dog walking, package pick-up, etc.) has given rise to the gig economy, an increase in tipping, and a lack of actually seeing our money and how much we spend. It’s not uncommon for your rideshare app to start a tip recommendation at 15% and go as high as 20% or even 25%. Historically, taxi drivers got between 10% and 15% and maybe extra for unusual circumstances. Many apps and services require auto-renewal so you forget what you are paying and when.

Courtesy of the Des Moines Register (2015).

Here are some tips on tipping and auto-renewal!

For takeout food that you are picking up, you don’t need to tip, but it is appreciated. A tip of 10% on food you are picking up yourself is considered sufficient but again, not necessary. If the order is particularly large, complex, or troublesome, you do need to tip.

For food delivery, tip at least 10% and more if the weather is foul, or the delivery is particularly large or complicated.

For taxi and/or rideshare drivers, tip 15% unless the driver is unusually helpful, battling horrendous road conditions, or had to help you with your luggage. If the fare is $10 or under, 10% should suffice, but do not give less than $1. For luggage, consider an extra $1 to $2 per bag.

For coffee shops, bakeries, sandwich shops, etc., where you are in a line and it is a casual grab and go type environment, if the staff have a noticeable tip container, tip your order change, or a $1.  Think about it, if your coffee comes to $3 and you tip 60 cents, you are actually leaving a 20% tip!

Always keep in mind that it is best to tip in cash. This way the recipient actually gets the money and their company cannot manipulate the hourly wage to ‘adjust’ the amount paid out by the company. Wage theft, anyone?

Tip on the subtotal, not the total. We are already paying Uncle Sam enough and we don’t need to inflate our tip amounts by including sales taxes in the calculation.

Set calendar reminders when you enroll in a service that requires auto-renewal. Make sure it is about 45 days prior to the subscription ending. That way you have time to decide if you want to renew or how to go about canceling.

If possible, set a spending cap with automatic payments. This will help keep you aware of what you are spending.  

Finally, review your monthly bank and credit card statements. If you need to set spending limits, go back to using cash whenever you can. Make your cash visible again! Try setting alerts on your spending and checking your app, online service, or credit and debit card balances more frequently so you know what you have spent.

It’s your hard-earned money. As an independent Certified Financial Planner™, I can help you plan for annual expenses and set budgets.Contact me and let’s get reacquainted with your cash. #talktometuesday #education #Hireaplanner #tax #stressfree #tip #tipping #savings #cash #cashinhand

Estate Planning is an Act of Love

These days, even dying can be complicated. Proper estate planning can mitigate disastrous transfer taxes, probate expenses, and ensure your assets are transferred to your desired heirs. You cannot assume those who survive you will carry out your wishes. You need to take action in advance, especially here in California where simply owning and transferring a home can be costly if not handled properly. By planning in advance, you take control and personalize the experience of estate planning.

Estate planning involves more than just the disposition and transfer of your assets. It is used to make health care decisions in advance, and select those you want to be involved in making financial and health care decisions for you in the event of your incapacity.  It's very personal.

There are five good reasons to plan. Basically, you are planning for your own peace of mind and your own legacy.

1. You control your property and your legacy. Without estate planning, you are subject to the laws of intestacy and the state determines disposition of your property.

2. You are able to plan for the unexpected in advance! Rarely do we get this type of advantage in life.

3. You avoid probate - the very costly, very public, time consuming disposition of your assets. Estate planning can save your heirs a tremendous amount of money.

4. You can plan for physical or mental incapacity in advance. This way you have a say in who participates in your care.

5. Your estate plan is a guide for your family and loved ones. It's an act of love and a way to show you care.

Here’s a quick overview of the key documents and what they basically do. If you are creating a multigenerational trust, have a business or need to create a special needs trust, you will likely need more than what is listed here.

Will - the most commonly known document. A will allows you to transfer property at your death in a desired manner. Keep in mind that a will alone does not avoid probate.

Living Will - different than a will. A living will makes your wishes known if you are unable to communicate. The living will is where you outline who you want to care for children for example.

Power of Attorney - appoints someone of your choosing to speak and act on your behalf for financial and/or health matters.

Health Care Proxy - or, medical power of attorney, appoints someone to make health care decisions for you if you are unable.

Living Trust - also called a revocable or inter vivos trust, is a legal arrangement that holds your assets during your life, and transfers them to your desired beneficiaries upon death. A living trust is one method used to avoid probate.

Beneficiary Designation - allows you to name an heir to receive certain types of assets thus avoiding probate by contract or operation of law. Think about accounts like your retirement plan, an IRA, or a life insurance policy. You can name an heir and the asset passes directly to the person you name.

Keep in mind that you are allowed to make changes to your plan. Your decisions are not set in stone and your estate planning documents should be reviewed for necessary changes every three to five years, and especially at major life events such as marriage, divorce, or the birth of a new child. Your estate planning complexity may also grow and change over time as your assets grow and your situation changes.

As an independent Certified Financial Planner™, I can help you prepare for meeting with an estate planning attorney. Contact me and let’s get started. #talktometuesday #education #Hireaplanner #estateplanning #estate #legacy #stressfree #taxsavings

Is a Golden Girls Arrangement Right for You?

Housing is a huge financial challenge for many people all over America today. Expensive housing is no longer relegated just to the coasts. The changing dynamic of American society is contributing to some of the angst of finding housing. Today, we have more single seniors, especially women, than ever before. This is leading many people to seek alternative housing solutions.

If you are in this category, are you a candidate for a Golden Girls living arrangement? The Golden Girls was a popular NBC television comedy that ran from 1985 until 1992. The show featured four mature women who became roommates to offset the cost of living and fend off loneliness as they aged. If you’ve never seen the show, check out a few episodes. If you find that you are in the market for this type of living arrangement, keep in mind that there are some tips to keep in mind.

First, you need to understand that shared housing is very different than living on your own. Compromise will be necessary, as will having house rules in writing and enforced. Many people underestimate the need for laying out rules and structure in writing and in advance and making sure that all house members understand and adhere to the rules.

You need to decide how common expenses will be handled. Is there a master tenant who charges a rent sufficient to cover your share of the utilities and maintenance, or will the expenses be shared and divided each month as they are incurred? Whichever method works best is fine, but the expenses and how they are shared and paid should be outlined and agreed to in advance.

Maintenance is a critical component. To avoid squabbling over chores such as house cleaning and lawn work (if needed), consider hiring this done. A cleaning service will relieve each member of having to clean, and avoid conflict over who cleans and the quality of their work. It’s money well spent.

Keep in mind that you are roommates. It doesn’t mean that you are going to become best friends, but having companionship as you age can be beneficial. It can help reduce loneliness and keep you active. If your new living situation is a good match, there is a good chance you will start to grow a friendship.

Don’t assume that your roommates will be your caretaker. That’s not the point of shared housing. Advanced planning for your care and when you should leave the home should be arranged by you in advance and not left to your roommates. If you find you need daily assistance with care it may be time to leave the shared housing situation. Outline this in advance and don’t burden your housemates.

There are a lot of things to consider, but shared housing can be very beneficial, especially for seniors. If you are thinking it is time to partner up, do your homework in advance and consider interviewing friends or family who are already in shared housing. Organizations like AARP and your local senior center may have good resources as well.

I have experience in shared housing. As an independent Certified Financial Planner™, I can help you determine if shared housing is a good fit for you. Contact me and let’s get started! #talktometuesday #Hireaplanner #budget #sharedhousing #roommate #GoldenGirls #CFPPro #housing

Ho Ho Ho, It’s Christmas in July

Christmas 2019 is just 23 weeks away as of this writing. My gift to you is some advice on how to handle that extra expense. Not everyone celebrates Christmas but for a large number of families this is a major holiday and a very big expense. Christmas can be fun, but it puts many folks into a financial tailspin and creates unnecessary stress. So, how do you prepare for the expense in your budget to avoid the tailspin and reduce stress?

First of all, don’t wait until December to “find the money” or worse, default to putting all of your charges on credit you can’t afford. That’s how we get into a financial tailspin. Here are few ways to tackle Christmas saving and spending.

Create a separate sub-category in your annual savings budget and save for Christmas like you would for a larger, long-term goal. Set a goal amount of total spend and break it down by weeks or months until Christmas. The sooner you start in the year the easier it will be on you.

Next, determine an amount per person per category. For example, allocate more money per person for your children, another amount per person for extended family and friends that you buy for, and finally, a lower per person amount for those you have to buy for such as service personnel, co-workers, educators, coaches, etc. Don’t forget to include an amount for extras such as shared meals, travel, donations and other non-gift cash expenses. If you always provide the wine or the goose for a family gathering, you have a historical record of what this cost you so be sure to include that expense.

Open a Christmas Club account and banish the credit cards! These accounts are not as common as they used to be, but lots of credit unions still offer Christmas Club or holiday accounts. Credit unions would be happy to help you start an account so check with your credit union to see what they offer and what the terms are for the account. Use your Christmas Club account funds and put those credit cards on ice!

Shop early. When you see something on sale that is perfect for someone, go ahead and buy it. It’s one less person on your list to shop for and it spreads your shopping and spending out over the next several months. Just keep track of who you have bought for so you don’t overspend.

When it comes to credit cards, use the card that gives something to you. This is either cashback, miles, or points. Whichever is your best card for a bonus or refund, and hopefully lowest interest rate, is the card to use.

Here are a few survival tips:

Set a budget amount and stick to it!

Start early in the year saving weekly or monthly.

Open a Christmas Club account and banish the credit cards.

Avoid Black Friday but shop sales from Labor Day through Christmas.

Take advantage of Cyber Monday for must have items.

Group online items and buy from sites that offer free shipping.

Finally, buy something for yourself!

You can take the stress out of Christmas shopping with a little foresight and planning. As an independent Certified Financial Planner™, I can help you set an appropriate spending goal and layout a plan for Christmas spending that won’t put you into a financial tailspin. Contact me and let’s get started! #talktometuesday#Hireaplanner#Christmas #Christmas2019#budget#ChristmasClub #CFPPro #budget

Mother Nature Reminds Us: You Need Earthquake Insurance!

With the 7.1 earthquake July 5, 2019 in Ridgecrest, California, Mother Nature reminded us yet again that you do indeed need earthquake insurance. The 7.1 quake shook an area that had just the day before been shaken by a 6.4 earthquake on the July 4th. holiday. The result of all of this is that many homeowner’s suffered cracked walls, collapsed foundations, loss of water, power, and in some cases, loss of use of their home.

Let’s clear up some common misconceptions right now. Your standard homeowner’s insurance policy does not cover damage from earthquakes (stated as “earth movement” in many policies). If you are unable to use your residence due to a quake, you are on the hook for repairs and the cost of displacement (paying to stay somewhere else). Your policy may however cover fire after an earthquake. Renters, you are not safe either. Your renter’s policy does not cover earthquakes. Many renters think they are covered by their landlord’s policy. Surprise! Your landlord’s coverage does not cover you! So, don’t think your landlord’s policy will cover replacement of your valuables or for you to stay in an alternate dwelling (displacement) during reconstruction. 

If you don’t believe me, call your insurance company and ask them. Be sure to ask your agent a few different ways: am I covered for earthquakes? does my policy cover displacement due to quakes? does my policy cover repairs if my house slips off of its foundation due to a quake?  Going without earthquake insurance is very risky in places such as California that have frequent quakes. Even small quakes can cause expensive damage to a home’s foundation or infrastructure.

Many folks remember the days when earthquake insurance was unaffordable to most. Times have changed and you can structure a policy to fit your needs through the California Earthquake Authority. You should start by getting a free estimate from CEA. By walking through the CEA estimator, you can craft an affordable policy. Here are ways to make your policy affordable:

Consider a higher deductible and self-insure for a larger amount. Hopefully you have your emergency fund in place and a quake would definitely be an emergency!

Reduce personal property coverage. Really assess what you need and what’s not worth insuring.

Ask CEA about discounts for retro-fitting already done (i.e., shear-walling, anchoring, etc.).

Reduce breakable items coverage unless you have very expensive dishes, glassware, and collectibles.

Renters, your focus will likely be on displacement coverage and personal property replacement given that you are not the dwelling owner. A renter’s earthquake policy is very affordable given that you may need to find a new home.

This brings me to a final point that I wrote about during the firestorms. Make sure you have all of your vital documents ready and available in a grab-n-go binder or folder that is easy to locate and portable. You can read more at Do You Have a Special Grab-N-Go Emergency Binder.

As an independent Certified Financial Planner™, I can help you plan for the unexpected to mitigate risk.Contact me and let’s get started. #talktometuesday #education #Hireaplanner #Ridgecrest #quake #earthquake #risk #insurance #safetyfirst #California #CaliforniaEarthquakeAuthority