Member Blogs

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  • As your child heads off to college, set some time aside to help your kid understand the financial implications their first step into freedom and independence will likely have.
  • Kiplinger.com offers suggestions for ways to spend a windfall of at least $1000. Should you find yourself with extra money you can pause and think about how to use it. These are uneasy times and one impulse would be to spend it on something fun. That is not a bad impulse because taking care of [] ©Bring Clarity to Your Finances™. Thoughtful Ways to Spend a Windfall is a post from Bring Clarity to Your Finances™
  • Today we are going to talk about Blueprints and Fingerprints – How Your Past Experiences with Money Impact Your Financial Well-Being. Blueprints is how you think about money. Fingerprints is your attitude toward money. Much of what we form as money habits, our attitude toward financial issues and our patterns are started early in life by the examples we viewed and the personal decisions we made around money. We learned important lessons about money by the way we grew up. We addresses parent’s habits and perspectives around money and the impact of their parent’s perspectives as well. Our attitudes and habits toward saving, investing, debt, and giving are also formed and informed early in life. http://returnonlife.masteringyourmoney.com/ Joining us for this Blueprints and Fingerprints discussion is Markeith Gentry who is the WNCU’s Production Assistant and makes sure Mastering Your Money is available to our listeners. Welcome back to Mastering Your Money, Markeith Gentry
  • If you’re reading this article, you might be wondering why you’re paying more in Medicare premiums than you used to. The reason for that would be IRMAA—Income-related monthly adjustment amount. We previously wrote a shorter article on IRMAA, and we’ve discussed how a life-changing event might allow you to lower your Medicare premiums. (Feed generated with FetchRSS )
  • Our economy has been turned around by the coronavirus- even down to the way we pay. Here's how COVID-19 has changed our spending methods.
  • Many of our clients at Step by Step prioritize their spiritual health. Remaining active in religious communities has been difficult with the ever-evolving government restrictions and in-person risks brought on by the coronavirus. But there is a surprising way you can support your religious views: with faith-based investing. When you think about investing, saving money, compound interest, and balancing risk often comes to mind. But investing is so much more than building wealth. People have expanded their view of the dollar to include their values and preferences. They don’t just want their money to grow; they want it to promote companies and organizations that share their value-system. This weight on value has led to a growing trend: impact-based investing. You can see this strategy popping up all over the place from socially responsible to value to faith and more. Faith-based investing allows people to financially assist businesses that uphold the tenets of their faith, bringing more meaning and intention to their financial life. What is faith-based investing, and is it right for you? Let’s find out. What is faith-based investing?Faith-based investing is a form of impact investing. It promotes the financial support of institutions and businesses that align with your views. This niche has gained popularity with the rise of socially responsible investing or investing in companies that operate in humane, community-conscious ways. This type of investing brings more control to how your money is used. It asks critical questions like, Is your money helping companies that have a mission you believe in?Are the corporations you support acting in ethical, legal ways?Do these businesses invest in industries aligned with your values like community outreach, environmental care, and more?Faith-based investing can fuse your moral compass with your financial decisions. Many people who assume this approach avoid companies that are associated with things like tobacco, guns, and gambling, to instead focus on those that invest in areas like fair employment, clean energy, and other positive impacts. These examples will change based on your unique value-set and beliefs. Everyone holds different views, which makes this investment approach specific and tailored to you. For so many people, giving back to the community is important whether through volunteering, tithing, or other charitable contributions . Why not ensure your investments coordinate with that altruistic behavior? Now that you have a good idea of what faith-based investing is, it’s time to see how it functions. How does it work?No, you can’t buy stock in your church. Churches are non-profit organizations, so you won’t find them on the stock exchange. Even though you can’t buy stock in a religious organization, there are several stock and bond funds with a religious slant like Eventide Gilead, Timothy Plan, Ava Maria Funds, and Guidestone. These funds are examples of Christian-based investments, but there are mutual funds and ETFs that align with a broad range of religious beliefs. You can find several vehicles that promote financial care of your religious affiliation. Let’s look at a few ways you can apply faith-based investing to your portfolio. Research and hand-pick investments that fit the bill.Use an online screening tool to weed out companies that won’t work for you.Apply filters or presets to your search.Work with companies that screen faith-based investments.Invest in funds that allow shareholder engagement and activism.It’s no doubt that impact-investing requires a more hands-on approach. But for some investors, that added effort is worth it. It is all about finding the right balance that works for you. Will it make you money?Investing based on your beliefs shouldn’t just help you sleep better at night, it should also be profitable. According to U.S News , the composite returns over 5 years from the Christian Investment Forum, outperformed the industry average by 77 points. But, as with any investment strategy, this approach works best in the long-run. Faith-based investing has two main goals. Financially enabling companies that promote your values/beliefs.Earning money.These two ideas aren’t necessarily mutually exclusive, but they can butt-heads every now and then. You need your investments to work for you to support your future. If you find that this investment strategy hinders your ability to move forward financially, it might be time to pause and take a step back. Let’s take a closer look at the general pros and cons of faith-based investing. Pros: It enables you to invest with your heart.Your values can take top priority.When you believe in something, you are often more willing to stick with it long-term, which could have a positive impact on your net returns. Cons: Be siphoning off part of the market, that limits some diversification efforts.Faith-based investing can see high fees. Watch out for the load and expense ratio on religious-focused mutual funds.It is more complex to manage and rebalance as investment options are limited.Your investment philosophy has to be about what is most important to you and finding a balance between your values and your finances. How to find the right balanceAs with everything in life, you need to find the right balance. Faith-based investing has the power to enrich your financial life by combining your values and your money, but being difficult to maintain, can also result in fluctuating returns. Remember, your money is a tool to help you live a satisfying and fulfilling life. Where, how, and why you invest your money can play a significant role in that conversation, but you need to make sure your money is used to support your goals both now and in the future. Ready to see how faith-based investing could work in your portfolio? Schedule a call with our team to learn more today.
  • Do you have to pay taxes if you give somebody money? Probably not.
  • In Intrafamily Loans: The Good, the Bad and the Ugly, Kiplinger.com offers advice on sensible ways to loan money to family members. These are loans for significant amounts with payment plans and interest. The article notes that because the gift tax exemption as now increased to $11.58 million for an individual and $23.16 million for a couple, [] ©Bring Clarity to Your Finances™. Intrafamily Loans: Keeping it in the Family is a post from Bring Clarity to Your Finances™
  • With the election, Covid pandemic, and the president’s health converging, the cacophony makes it easy to miss important signs that the economy is doing fine. The pace of the recovery has slowed from the breakneck rate after CARES Act federal aid created a surge in consumer income, spending and savings in April, May and June. But the latest data indicate the U.,S. economy could return to its record run-rate earlier than expected. Here are the facts.
  • Do you really need to put 20% down to buy a house? We've got the answer to this common question plus everything you need to know about mortgages as you begin your house hunt.
  • Regardless of the reason for selling your home, a common question is how much capital gains tax will be due on the sale.
  • Fulbright Financial Consulting, PA in Durham, NC, clients some times have a challenge finding a hobby especially in retirement. No one loves every single thing about their workday. But once you no longer need to worry about earning money, it is possible to love every second of your new retirement schedule. You just need to be intentional about spending your time doing things that interest you with the people you care about the most.
  • At Fulbright Financial Consulting, PA in Durham, NC, this is a good sign for the economy but we would love for it to be lower. Progress is like watching paint dry: It happens so slowly and in such unpredictable streaks that you can easily miss what’s going on right before your eyes! So it goes with the newly released annual report on poverty in the United States from the U.S. Census Bureau. At a time when the world seems like it’s changing faster than ever, and not always for the best, the poverty rate dropped again in 2019, to a new all-time low.
  • Covid-19 has created a lot of financial worries, which can wreak havoc for entrepreneurs — from business decisions to personal relationships. PPP loans may be a lifeline, but only if there’s plan in place to ensure everything’s done by the rules and the documentation to prove it — or business owners may miss out on loan forgiveness.
  • Divorcing at any age is not easy, even when the split is amicable. For people who are nearing or already in retirement, there are special considerations for “Gray Divorce”. Or, if you want a term with more bling try “Silver Splitters” or “Diamond Divorcees”.  But often bling or lack thereof is an issue for people [] ©Bring Clarity to Your Finances™. Gray Divorce Doesnt Have to Be a Shadow Over Your Golden Years is a post from Bring Clarity to Your Finances™
  • Retirement accounts can also be used to support charitable causes. Beginning at age 70 ½, anyone with a traditional IRA can donate up to $100,000 per year to a qualified charity. This is known as a qualified charitable distribution (QCD). A married couple can contribute $100,000 per year, per person. The benefit of doing this is that any QCD is made tax-free. (Feed generated with FetchRSS )
  • Does the upcoming election mean it's time to reassess your portfolio? A historical look at presidential elections & the stock market can help you decide.
  • What comes to mind when you hear the word legacy? You might think about a piece of family history like property, an heirloom, recipe, or story. Or maybe something less concrete like a person’s character, values, or presence. It could even be a charity, foundation, or organization. Most of these descriptions, while significant, ascribe a legacy to a traditional lens, something confined to a future you can’t see. But your legacy as a couple stretches far beyond this measure of time. Legacy reaches past a singular moment to encapsulate a feeling, action, and way of life. Your legacy as a couple is intimately connected to your life and actions now. Today, we would like to expand your ideas of what a legacy is and the many possibilities for what yours can become. With the right planning and a mindset to match, you can look at your legacy in a new way . Live Your LegacyA legacy isn’t only something you leave behind. It lives, breathes, and evolves with you. How is that the case? Because it’s in you. Your legacy can start to take shape in unexpected, even ordinary places. It can be found in the gentle smile you share with your spouse at the breakfast table; the giggles from grandchildren the second you walk through the door; the deep, thought-proving conversations with friends that expand your world-view; the quiet stillness of evening prayer. Each of these moments leaves room for meaning, intention, and reflection. Leaning into these moments is where you develop the building blocks of your legacy. The smaller pieces add up to a fuller, more complete picture. Act With IntentionBuilding your legacy starts by making the most of the gifts you have to improve your life and the lives of others around you. Start by using your time and talents to serve yourself and others. If you want your legacy to have a charitable-focus , for example, make charitable giving a tradition. Volunteer with your family and friends, use your skills to better the community, and give generously to organizations you are passionate about. These actions demonstrate your legacy and continue to build it every day. Your legacy is also defined by how you live your life and the choices you make. As a married couple, it’s essential to make those choices and live them out together. Be sure to play on each other’s strengths and engage in activities that let both of your talents’ shine. While you both might be involved in your local church, for example, you could serve in different ways that suit your strengths. For you it might be music ministry, for your spouse, it could be fundraising efforts. There are so many meaningful ways to be involved. When you apply your unique skills and passions, you will flourish. These actions help you say yes at the moment and live the legacy you want to develop. Determine What’s ImportantWhen you think about your legacy as a couple, you need to create a plan that suits both of you, just like you have done throughout your marriage. One piece of that conversation is deciding the role your finances play in creating and sustaining your legacy. How can your finances support your dreams for the future? Below are a few things to consider. Support your favorite charity/organizationPass down your love for charitable givingHelp fund your grandchild’s educationInvest in your new business or passion projectFinance your dreams There is no right or wrong answer here. It is all about what matters most to you and your family. When you know what you want, you can then use your finances to support those bigger goals. That’s why our team is so passionate about goal-setting . Goals are the benchmark for the rest of your financial plan . Your goals inspire your saving, spending, giving, and other financial habits. Make A Plan To Support Your VisionYou have a general idea of the legacy you want and goals to help keep it in place, now what? The next step is to include these wonderful ideas into your financial plan. Ask yourself the following questions. How can your financial resources help you build the legacy you want?What intentional financial moves can you make today?How can your estate plan best reflect these wishes? Aligning your financial goals with your personal goals can help you think more deeply about your legacy. If there is one thing you take away from this article, let it be this: live out the legacy you want to leave behind. A legacy is more than the future. It is right now. What can you do to further your legacy today? The beautiful (and scary) thing is that it’s up to you. Our team at Step by Step works with couples to help them align their finances with their goals and values. We are passionate about helping married couples build a financial plan that serves them for years to come. If you would like to learn more, schedule a time to talk with us today.
  • Do you want to know how much youve spent on Amazon last year? Ha! Dont you wish. Amazon recently removed the ability to download your order history. So I dont have a quick trick to give you. Instead, I have a few ideas for how to get the most benefit and the least harm out [] The post Tricks to limit spending on Amazon appeared first on ProsperiTea Planning - Wendy Marsden, CPA, CFP® - Greenfield, MA .
  • What happens to black health care professionals in the new economy, where work is insecure and organizational resources are scarce? Today we will discuss how hospitals, clinics, and other institutions participate in “racial outsourcing,” relying heavily on black doctors, nurses, technicians, and physician assistants to do “equity work" extra labor that makes organizations and their services more accessible to communities of color. These organizations become more profit driven, they come to depend on black health care professionals to perform equity work to serve increasingly diverse constituencies. Yet black workers often do this labor without recognition, compensation, or support. Operating at the intersection of work, race, gender, and class, We will the challenges that black employees must overcome and reveals the complicated issues of inequality in today’s workplaces and communities. Joining us for our discussion on Race and Money is Adia Harvey Wingfield who is on the phone from her St. Louis Mo office. Adia Harvey Wingfield is a Professor of Sociology and a Faculty Fellow in the Office of the Provost. Adia’s research focuses on the processes that maintain racial and gender inequality in professional workplaces. She has lectured internationally on her research this area, and has published her work in numerous peer reviewed journals including Gender & Society, Social Problems, and American Behavioral Scientist. Adia is also the author of several books. In addition to serving as a Faculty Fellow, she is also President of Sociologists for Women in Society, a professional organization devoted to advancing gender equality in sociology. Her latest book is Flatlining: Race, Work, and Health Care in the New Economy Welcome to Mastering Your Money, Adia Harvey Wingfield .
  • One effect of the coronavirus pandemic is that more people have been thinking about living in the moment and taking advantage of opportunities in a carpe diem sort of way. There is nothing wrong with this, especially with so much uncertainty. However, it would not do to forget that you can still make some long-term [] ©Bring Clarity to Your Finances™. Invest in Long-Term Care Insurance is a post from Bring Clarity to Your Finances™
  • At the beginning of the series, I wrote that most of us give little thought to where we are going in life and how we will get there. We let others around us set our goals for us, because that is how life starts out in childhood. With the coming of adulthood, we are supposedly The post Simplicity - part 5 of a series first appeared on Michael Garber Financial Planning .
  • The first Presidential election I can remember was 1972. McGovern vs. Nixon. I was in first grade at Lincoln Elementary School in Aberdeen, South Dakota. The day before the election, my teacher Mrs. Dutt told us we would all vote the next day. That evening I excitedly told my parents I was going to vote []
  • A kid will set you back around $233,000. Is it better to make that financial commitment now or later?
  • Has working from home given you a new perspective on the work you do? Some of our clients are starting to think about how their careers will evolve after the pandemic, and many of them enjoy the flexibility of the work-from-home arrangement, to the point where they are considering becoming consultants, switching to part-time work, or even starting their own businesses.
  • You can take Social Security as early as 62 but this could result in a reduction of up to 30% in benefits.
  • Articles and lectures inform us while stories speak to us in a way that these more straightforward sources cannot. It is interesting to see financial planning in pop culture because a narrative can get somepeople to think and take action when a seminar may not. Between July 27 and August 1 of this year the [] ©Bring Clarity to Your Finances™. A Comic Strip Looks at Estate Planning is a post from Bring Clarity to Your Finances™
  • What is tax efficiency? Generally speaking, tax efficiency is being able to pay the lowest amount in taxes. Since most people think of taxes as an annual engagement, it might make sense to think tax efficiency means simply paying as little as possible year over year. (Feed generated with FetchRSS )
  • The best balance transfer credit cards have long 0% intro periods, low (or no) transfer fees and reasonable regular APRs. That’s a recipe for savings if you’re in debt and paying interest at a high rate. In fact, when used responsibly, the best balance transfer credit cards can save you hundreds of dollars in finance charges while helping you get out of debt much faster.
  • Healthcare is among the most expensive (and vulnerable) parts of a retiree’s spending plan. The most recent study by Fidelity found that a healthy couple retiring today would spend an average of $295,000 on medical costs alone in retirement. If this number doesn’t make you sit up straight in your seat, this next part surely will. While that number takes into account premiums, co-pays, deductibles, and other expenses related to Medicare, it doesn’t take into account other out of pocket expenses like over-the-counter medication and most critically, long-term care. Genworth estimates that nearly 70% of people aged 65 and older will require some type of long-term care, which can add up easily. With the average cost of nursing care climbing to over $90,000, just one year of long-term care could quickly eat into your savings. How can pre-retirees better prepare for the rising cost of healthcare in retirement? An important savings tool we are going to talk about today is a health savings account (HSA). What is an HSA, and how can it impact your savings journey? Let’s find out. What is an HSA?A Health Savings Account is a tax-advantaged savings vehicle designed specifically for medical expenses. It helps people save up money for health-related costs. HSAs differ from other savings channels in one crucial way: taxes. HSAs offer premium tax benefits that are helpful both in the short and long term. There are three key tax benefits this account provides: Contributions are pre-tax.Gains grow in the account tax-free.Qualified distributions are tax-free. When you make regular payroll contributions, you actively lower your taxable income every year you contribute. This strategy helps implement consistent and proactive tax planning strategies into your financial plan . By not having to pay taxes upon distribution, you can withdraw funds for surgery, dental procedure, or medical deductible without worrying about an additional tax burden. There isn’t another account quite like this. With tax benefits from beginning to end, you can start to see the appeal of investing in an HSA. Keep in mind that for distributions to remain tax-free, they must be qualified. Qualified distributions range from prescriptions to surgeries to deductibles to medical equipment and more. But things like healthcare premiums, cosmetic surgeries, and over the counter medication aren’t qualified. Should you use funds from your HSA for an un-qualified medical expense, the IRS will issue a 20% penalty, and you will be responsible for paying regular income tax on the total distribution. So let’s say you used $1,000 for a non-qualified expense, you would have to pay a $200 penalty plus ordinary income tax. The bottom line: be sure your distributions are qualified. If you aren’t sure whether something is considered qualified or not, check in with your specific plan. How do you qualify?To enroll in an HSA, you must be younger than 65, not claimed as a dependent on someone else's tax return, and enrolled in a high deductible health plan (HDHP). The IRS has rules for the type of health plan that can be considered a high deductible, and it looks at two elements: the minimum deductible and the out of pocket expense limit. For 2020, an HDHP must have a deductible of at least $1,400 for self coverage and $2,800 for family coverage and out of pocket expenses could be as high as $6,900 for self coverage and $13,800 for family coverage. These high thresholds tend to steer people away from them in favor of other health plans. But for healthy people, HDHPs are often quite affordable since they come with lower premiums. These plans do cover some preventative care services before you meet your deductibles like flu shots and annual exams. But for someone who knows their medical expenses will be high, like if you have a chronic medical condition, an HDHP might not be the best option for you. It is vital to understand your health, current savings, and investment measures, as well as your budget to determine if an HDHP will work for you and your family. Why use an HSA for retirement?This year, you can contribute up to $3,550 for self coverage and $7,100 for family coverage in your HSA. Depending on the type of plan you have, your employer may also add some funds into your account, but keep in mind their contributions count toward the annual limit. If you are over 55, you can also take advantage of catch-up contributions, which allow you to add an extra $1,000 into your account. Unlike another popular health savings tool, the flexible spending account funds in your HSA rollover year to year, allowing you to take advantage of long-term growth. Also, there are no required minimum distribution rules for HSAs, meaning you could hold the money in your account until you need it. Even though these are incredible benefits, many people aren’t maximizing their HSA. The Employee Benefit Research Institute found that the average HSA balance was below $3,000, which is surprising given that the annual limit is far above that. These numbers go to show that people with HSAs aren’t actively funding them as part of a long-term plan. In addition, only 6% of HSAs maximized the investment potential in these accounts. By taking regular distributions before retirement, many people aren’t taking advantage of the tax benefits an HSA provides. You can contribute to an HSA until you turn 65, at which point the funds can remain in the account until you need to access them. Thinking about an HSA as a long-term investment can help boost retirement savings while also implementing tax-efficiency strategies into your retirement plan. Taxes play such an essential role in your cash flow and income plan in retirement. Anything that you can do to make the most of the benefits available to you, our team would like to help you accomplish it. Be sure that you work with a professional who can help you invest your money in a way that aligns with your goals, time horizon, and risk tolerance. An HSA and COVID-19The novel coronavirus is a significant public health concern and has changed nearly every facet of our lives. It has brought new awareness and attention to our healthcare systems and needs as a nation. Where do HSAs fit into this? With the current health and economic climate, the IRS has made some changes (loosening regulations) to HSAs. Most health plans, even high deductible ones, are covering the costs (copays) of medical expenses related to COVID-19. Even if your plan covers expenses before you meet your deductible, you can still contribute to your HSA. Under normal circumstances, this wouldn’t be the case. Providing non-preventative healthcare without a deductible, or below the minimum would make an HDHP lose its status, therefore jeopardizing HSA contributions. The IRS is temporarily eliminating this rule to expedite testing and care for COVID-19. The rules have relaxed concerning what you can use your HSA funds for to include over-the-counter medications and feminine hygiene products. Invest in your healthHealthcare is an integral part of your retirement plan. With the cost of healthcare steadily increasing, it is crucial to have a firm plan in place that helps you prepare. Our team at Step by Step is committed to helping you prepare for every aspect of your retirement plan, and healthcare is a big part of that discussion. Are you ready to learn more about how we can help you save for medical costs in retirement? Give us a call today .
  • This past Sunday (September 13) was National Positive Thinking Day. With all that is happening in the world, it can be difficult to continue to think positive but it is important to do so. There are a lot of people who are suffering and a lot of people who do not have enough. If you [] ©Bring Clarity to Your Finances™. Stay Positive While Adjusting Your Financial Planning is a post from Bring Clarity to Your Finances™
  • COVID-19 has brought about an era of remote work. If you're debating keeping your work remote, these are 5 financial advantages you can expect.
  • As part of a Roth conversion strategy, you might consider not just keeping your taxes low for the current year, but for the period of time that you’re doing Roth conversions. Usually, a goal would be to determine what the ‘ideal tax bracket’ might be for your situation, then to use that as a target for planning your annual Roth conversion amounts. (Feed generated with FetchRSS )
  • I want to take a minute to speak to something that’s often misunderstood about the financial planning and advisory business: yes, it is a business, and must be treated like one. Businesses have expenses, and need both revenue and profits to maintain themselves, or else no one benefits, not the owner, and certainly not the clients. It might be funny, sad, or even ironic - if I’m using Alonis’ broad definition, but I have chosen one of the few professions where, along with my wife’s, people feel a constant desire to question why they should even pay for it. (Yes, my wife is a doctor. No, we won’t get into that here.) Now, to be honest, I myself question the level of many advisory fees charged under the assets under management (AUM) model. In fact, I structured Verbatim as a flat fee advisor because I don’t believe an advisor can have a truly fiduciary relationship with a client while charging fees based on a percentage of their clients’ assets. So let’s get into it. How do I make money? My business currently has two “products,” a stand alone financial plan, and ongoing advisory. The one time financial plan has a one time fee, and ongoing advisory has an ongoing, but fixed annual fee. So, if I want to make any money, I need to either add permanent clients or sell financial plans. At first glance, the “formula” appears simple - add a whole bunch of advisory clients who pay their fee annually, and you’re all set. At its most basic level, that’s completely logical. Of course, the other thing you could do is sell financial plans like they’re going out of style. This actually makes sense as a strategy as well, since more people might acknowledge the need for a plan than evidence the desire for a long term relationship with an advisor, and every plan you sell is money in your pocket. You could even develop a pretty good template to use to churn plans out one after the other. It’s been suggested to me that I look into that option. The devil, however, is in the details. Beginning with stand alone plan option… Every client I work with gets a comprehensive financial plan. There’s simply no other way I know how to do my best work for people without one. All plans are tailored for each client, because although it might sound like marketing-speak or touchy-feely, we are all different. Our histories are different. Our family situations are different. Health issues, life goals, etc. Most people might have a desire to “retire,” but the definition and timing of “retirement” can look significantly different among even a seemingly homogenous group of folks. The other important thing about plans, designed to be “comprehensive” in the way that I do them, is that they are a lot of work. They’re also stressful - not for my clients, but for me. I genuinely worry about each client, and I take a meaningful amount of time to think about every person involved, to learn as much as I can about them, and to create a plan that has the best chance to set them up for whatever “success” looks like to them. Because of the level of detail and depth of relationship that I feel is necessary, stand alone plans especially stress me out. Why? Because I might feel like a client’s plan is only beginning to get truly tuned in after a full year, and gets better and better over time. The nature of a one time plan, on the other hand, demands a quicker turnaround, which, while still extremely helpful and “comprehensive,” is in my mind always going to be suboptimal, which again stresses me out. And then, advisory… Advisory, I fully enjoy. From a career standpoint, you could say I live for it. In fact, I don’t ever plan on retiring from my advisory business because I enjoy it so much. Are there stresses? Of course. Any good professional should experience some stress as he or she tries to deliver the best possible service to their clients, but it’s an empowering stress. The “problem” with the advisory side of the business is that it is naturally slow growth. The process of bringing on new clients is time consuming, including the full financial planning process, as well as cumbersome account opening and asset transfer paperwork. For a sole practitioner such as myself, adding more than two clients per month is unrealistic, even setting aside the marketing aspect. So, back to the old P&L… When I look at how Verbatim Financial will thrive, along with my clients, it will not be because I churn out financial plans like a human Xerox machine, no matter how much more quickly I could generate revenue for the firm with them. Not because I couldn’t, but because I’d rather not. And to the extent that there is commonality within plans which I feel is beneficial to everyone, I’m more than happy to share that through my blog, podcast, or on various social media platforms. Will I do financial plans? For the foreseeable future, yes, because if someone is willing to go through the process, I’m happy to do it with them, and I know it will help. Could I envision a time when I develop a different product, such as a semi-custom financial plan, which could be delivered more quickly to a larger customer base? Possibly, but at this point in time, I’m focusing on providing outstanding service to the clients who choose to work with me, on a schedule that makes the most sense for all of us. What to look for if you’re in the market for a plan or advisor… The most important thing to do first, before making any calls or even opening the google box to rummage around for, “financial advisors near me,” is to decide what you really want. As I’ve mentioned many times before, it’s incredibly important for everyone to have a financial plan - even if rudimentary. Maybe you’ve gotten to the point in your life where you feel the need for a comprehensive plan. Maybe, on the other hand, you have “enough” of a plan, but you feel you need help with investment asset allocation. Or maybe you’re open to ongoing advisory. What makes your task difficult is that all of those things are often provided by professionals (and too many times, amateurs) with the title, “financial advisor.” Either way, you will most easily find your match by limiting your search to what you’re actually looking for. Logically, you can imagine that a financial advisor who bills him or herself as an “asset manager” is not actively looking to do financial planning. And if all you need is an analysis of your investments, I can point you to some fantastic hourly advisors who specialize in that. Finally, if you do wish to begin a relationship with an advisor for both planning and advice, aside from interpersonal fit and philosophy, it’s best to find someone who really wants to do that kind of work. So… 1) Figure out what you want first, not what an advisor says you “need” 2) Find the right person or firm to work with, who wants your business, not just your money 3) Work with someone who charges clear and sensible fees, which don’t rise with the value of your investment portfolio
  • What If Everyone Just Did Their Jobs? Would We Be Better Off? The answer should be, “yes,” and in most cases, it is – simple as that. In financial services, unfortunately, the answer is, more often than not, “no.” Misunderstanding that situation played a large part in precipitating the last decade’s financial crisis, and the Great Recession which followed, but more on that later. On the most basic level, markets of all nature operate when buyers and sellers unite. The seller provides a good or a service, and the buyer desires one or both. Business occurs when money is exchanged for those goods or services (setting aside barter for simplicity). The better the job (product or service) a seller does, the greater the demand will be for their product. If all operates as it should, sellers who do the best jobs should have the greatest success selling their products, and everyone should be happy – buyers and sellers alike. Price needn’t enter into the equation. The best inexpensive paint job for your house should be, on a relative basis, as pleasing to the buyer as the best expensive paint job is to a different buyer. Simple, right? No so fast. For markets to work properly, both the buyers and the sellers have a, “job” to do. The seller’s job needs to be this: to consistently sell the most product possible at the greatest possible profit; AND, the buyer’s job must be this: to educate themselves in order to purchase the best possible product, at the most reasonable cost. If both buyers and sellers do those jobs well, everything will be ok. Change any one element in the above requirements, and the result is suboptimal. Let’s continue with the house painting example, because it conveniently includes the sale of both a good (the paint) and a service (the painting). What should the seller’s job be? If he views his job correctly, to consistently sell his product (both the paint and the painting) at the greatest profit, then we would hope he would find the best possible paint, at the cheapest cost, to use on the job. This is clearly in the best interest of the customer. Could he use a paint that offers him the opportunity to increase his profit by marking up the price, or whose manufacturer offers him a financial incentive? Of course, but that would not be in the customer’s best interest, and, over time, educated customers (buyers) would discover the price discrepancies, stop using that painter, and the seller would fail the, “consistency test.” The same thing would happen if the painter attempted to increase profits by overcharging for his labor, the painting. He could maximize his profit on a limited number of jobs, but would soon find demand for his product falling, perhaps to the point where his business fails. We also mentioned the educated customer, or buyer, above. The customer has a job as well, and that’s mainly to make sure that the seller is doing his job. This is, perhaps surprisingly, the more difficult task, mainly because the customer needs not only to determine whether the seller is doing his job well, but also, more importantly, what the seller’s job actually is. Continuing with house painting, if a potential customer wants her house painted, and meets with a representative of the painting company, she first needs to figure out in what capacity that painting company representative is acting in. What are his goals? How is he compensated? Is he a salesman whose job is to sign up as many customers as possible, without regard for their long term satisfaction? Does he have a financial incentive to recommend one paint over others? If either of those things are true, he might be doing a fantastic job, “at his job,” but not for the customer. In fact, if any of those things are true, it would be very difficult for a customer to determine whether it’s even possible for her to gain the benefit of an efficient market, which is the best product at the best price. Then on top of that we need to layer the question of the charge for the actual painting. Her chances of being able to make a decision that she’s fully comfortable with is quite small, if not impossible. House painting? Financial Crisis? Great Recession? What? – We’ll get there. You know those people who walk around wearing rose colored glasses all the time? Glass is always half full? Trusts everyone? Well, that was me. I mean, I don’t want to make it sound like I’m Captain America or something, but (and it’s hurt me, financially, in the past) I have never been driven to act only in my best interest. I’ve always thought of the other person – the counterparty, if you will (and that was well before I’d ever heard the word, counterparty). So, fast forward through bond trading, graduate school, consulting, investment banking, etc., and I’m managing several billion dollars of subprime mortgage backed securities for a large insurance company. Naturally, I think I’m pretty big stuff. Sometime in the early 2000’s, my partner and I want to increase our investment in a particularly risky, therefore profitable, security. We feel we have done the analysis, understand the risk, and are comfortable with it. We make a lengthy presentation to our boss to get approval for the investment. We feel we hit all the right points. We answer any number of questions about the bonds, their structure, the collateral, the companies involved, etc. We feel good. Then he says, “What if there’s massive fraud?” My partner and I looked at each other. I’m pretty sure we laughed. But our boss was serious. “What kind of fraud?” we asked. He really meant it, soup to nuts, fraud up and down the whole mortgage loan production line. We responded by saying we’d conducted appropriate due diligence, visiting lenders, servicers, banking units, etc., and that we’d only invest with those who were doing their job correctly. In the end, we made the investments for a while, and our firm profited greatly, until we eventually became uncomfortable with overall mortgage related risk and stopped investing in those products. We made the right decision, but not for the right reasons. We looked at the overall economy, consumer debt, etc. – all the things you think a good investment manager should take into account - but what we didn’t consider at all was whether the people who were creating and selling the products we were investing in were doing their jobs. And if we did, we didn’t ask what their jobs really were. If we had, we might have gotten a lot more nervous, a lot sooner. Turns out there was massive fraud. Or was there? Webster defines, “fraud” as, “deceit, trickery, specifically : intentional perversion of truth in order to induce another to part with something of value or to surrender a legal right. Was there fraud in the mortgage & real estate market leading up to the crash? Of course, but not enough to crash the U.S. housing market. Was there fraud on Wall Street? Sure, but far less than people would like to believe, and certainly not enough to blow up the global economy. But there were, however, thousands and thousands of people doing jobs which didn’t require them to act in their customer’s best interest. In fact, in many cases, doing their jobs well (and getting paid well) basically required them to act against their customer’s best interest. It wasn’t illegal. It wasn’t fraudulent. But it wasn’t right either. You may have heard the term, Collateralized Debt Obligation, or “CDO.” You may know it’s some kind of bond. You may have heard that their failures had something big to do with starting the financial crisis. You may not know any of that. You don’t need to. The question is, if everyone was doing their jobs, without, “massive fraud,” how did we end up with enough bad investments to tank the economy? To make a CDO, Wall Street bankers needed mortgage loans, and lots of them. They got packaged up and sold to investors the world over. Their structures are complex and the math requires computers, but at the heart of it, as long as home buyers make their mortgage payments, everything works. The problem turned out to be that the human chain was very long, and there were a ton of opportunities for bad outcomes to compound. The players in this game: Home buyers and sellers, Property appraisers, Real estate agents, Mortgage lenders, Wall Street banks, Investors, Rating agency analysts, etc. Opportunities for Trouble: Infinite At each step, with again, hundreds or even thousands of individuals involved, each looking out for only his or her best interest, not their customers’, there was an opportunity to layer in some form of counterparty risk. By the time we got to the end, and created CDOs, which were then carbon copied & placed within the entire global banking sector in one form or another, the risk was increased exponentially, hence, the global financial crisis that was so “unexpected.” The lesson I took away from this experience is to always ask of any counterparty: How are you paid? And then to determine on my own whether they are in it for the long haul, or just a short term reward? Ask those questions, and you’ll be a lot better off in your own life, financial and otherwise. Hedge Fund Manager’s Office, circa 2009 “There will be no more coal burned in this office today, is that quite clear, Mr. Cratchit?”
  • According to a recent survey, medical expenses cost young adults $2,000 a year on average - and more than quadruple that by retirement. Should you consider using a HSA or HRA to help offset these costs?
  • Generally, the happiest retirees are debt free with no credit card debt, a paid off mortgage and no car payments. They also have several sources of income such as Social Security, a pension, income from investments, rental income, royalties, or a part-time job.
  • Perhaps it is time to re-think how you manage your finances. If you are fortunate enough to have steady employment, you do not have to spend as much money you did before. And if you do spend, you can change the way you spend and allocate your money. This is an opportunity to decide what [] ©Bring Clarity to Your Finances™. Use This Time to Reevaluate Financial Priorities is a post from Bring Clarity to Your Finances™
  • A Roth conversion strategy might take years to actually implement, particularly for people who have large IRAs they’re trying to convert. During this time, a lot of changes might happen which might impact the way you implement your strategy—or at least things might happen which might cause you to ask yourself, “Am I still doing the right thing here?” (Feed generated with FetchRSS )
  • Choosing an insurance policy that works best for you and your family is very important. When you shop around and find the correct one, it can not only benefit your health but save you money.
  • Financial planning is a diverse field, one that touches many different sectors. From communication to psychology to economics to human behavior and more, financial planning sits at an intersection of these ideas, combining them to help you achieve your goals. There are several ways to approach financial planning. Our approach centers around you and your unique goals. We work with you to devise a strategy that maximizes your financial resources and your lifestyle aspirations. But how can we do that? How can we take this comprehensive view of your financial life and bring it to fruition? For us, that means exemplifying the CFP Board’s Code of Ethics 7 Step Financial Planning Process. What is this process, and why is it essential for you? Let’s find out! Why establish a planning process?Our primary objective is to serve you to the best of our ability. We want to provide you with comprehensive, holistic services and help you align your finances with your values and lifestyle goals. The best way to do that is to engage with a proven system that challenges us and elevates our service offerings. To us, this means obtaining our CERTIFIED FINANCIAL PLANNER™ certification. As a CFP® professional, we undergo extensive training in critical financial planning areas as well as a rigorous ethics requirement ensuring that we act as a fiduciary or trusted agent with our clients throughout every phase of the planning process. The bottom line is that we want to serve you well, and this added certification helps us do that. The CFP Board created a 7 Step Comprehensive Financial Planning Process to guide CFP® professionals and their clients in a process that is honest, transparent, and comprehensive. Let’s take a look at each of these phases and how they impact you. 1. Understand your personal and financial circumstancesMoney and lifestyle: you can’t have one without the other. This intersection is why we are passionate about combining your financial and lifestyle goals to create a cohesive, long-term plan. What does this mean in practice? We look at both your qualitative information like health, family life, life expectancy, and goals, and also the quantitative side like income, investments, and expenses. This information helps us get to know you and your partner together. We can start to answer questions like, How do you and your spouse live?Are you comfortable with your current financial landscape, or are there some strategic changes we can make?How are your finances and lifestyle currently working together, and in what ways can that interaction improve?We take this information and analyze it as we begin to build your financial plan. 2. Identify and select goalsWe love goal-setting at Step by Step. Hearing what matters most to you will be the catalyst for your financial habits, decisions, and long-term planning. Here are some questions to get you thinking about your retirement goals: How do you picture your retirement?What does a fulfilling, meaningful life look like to you?What are your critical financial milestones? (retirement dream house, putting grandkid through college, etc.)What roadblocks currently stand in your way, and how can you overcome them?Goal-setting is an extensive but exciting process. If your goal is to downsize to a smaller house close to family, we will need to set up your finances in a way that supports that vision. Building off of step one, we can help you select and prioritize what those goals will look like. 3. Analyze your current course of actionSo much of financial planning is checking in and adjusting based on shifting goals and priorities. We want to make sure that you are heading in the right direction to achieve those goals we created together, which enhances both your financial and personal life. Likely there will be some areas in your plan that need adjusting. Perhaps you need to take better advantage of catch-up contributions to your 401(k) and IRA, or maybe you need to start planning for Medicare and health planning, or you might need to create a more robust tax planning strategy . The whole idea here is to maximize your potential to meet your goals. Our team will present you with a couple of different options so you can choose a plan that feels right for you. 4. Select the right recommendationsThe step above allows us to work together and devise a strategy that will propel you forward. This stage is when we get to make that decision. Before selecting the right course of action for you, we look at a few specific elements: The assumptions and estimates used to create the planThe basis or the “why” of the recommendationThe timing and priority of the recommendationWhether the recommendation is independent or needs to be implemented with another set of plansThis rigorous process helps lay out a detailed reason and explanation for each recommendation we move forward with. By engaging in this level of planning, we ensure that your financial plan fits in the context of your life and goals. 5. Present the plan to youThis is the fun part! It is where we get to communicate with each other about your ideal recommendations and why we believe it will help you move in the right direction. In this stage, we walk you through our entire planning process, so you can see how we came to our conclusion and why we are passionate about pursuing certain recommendations. This step is collaborative and provides space where you can ask us questions, and we can start to piece together the particulars of your plan. In this stage, we might present the route we believe will be best for you to hit your retirement savings goal or a course of action for proactive tax planning or revamping your charitable giving. 6. Implement your planIt’s time to put your foot on the gas because this is the stage where things start to happen. Here, we work to implement the ideas that we discussed and your personalized recommendations for reaching your goals. We will talk about the specific recommendations we are implementing along with any corresponding responsibilities. That includes what our team will do, what we will need you to do, and also any third party. Before you leave this meeting, you will have clear expectations for what is to come. When our team is part of the implementation process, we will take further action to help you select and create a path forward that best aligns with your plan. 7. Monitoring and updatingThe 21st century is big on monitoring. There doesn’t seem to be any place that isn’t camera-secure from your house to a store to a restaurant, at least some sort of monitoring is taking place. You can think about this step like a home alarm system. We are watching out for your plans’ health and safety and will be ready to make any changes as your needs, goals, and priorities change. We work to monitor your progress toward your financial goals and recommend any changes should that need to happen. This way, we are up-to-date on your financial progress and can make proactive decisions to keep you on the right track. Why this process matters to youThe CFP Board’s 7 Step Financial Planning process brings excellence to the planning process. As a CFP® professional, we know what it means to offer distinguished above and beyond service to our clients, and this planning process helps us do that. Are you ready to see the difference that this financial planning process can have on your situation? Schedule a call with our team today!
  • One of the best ways to avoid the holiday spending regret that sometimes hits us in January when we realize that we have overspent in the months before, is to have a game plan. During this year when many have had so many changes, adjustments, and disappointments, you can save yourself even more anguish by [] ©Bring Clarity to Your Finances™. Feeling Deprived by the Pandemic? Dont Overdo the Holiday Spending is a post from Bring Clarity to Your Finances™
  • COVID Cash Flow

    There is no doubt that the Coronavirus pandemic has had a profound effect on Americans. The year started off great with the stock market hitting record highs in February and the unemployment rate near record lows. However, with the global spread of the virus, 23 million Americans lost their jobs in April and unemployment rates soared to the highest they’ve been since the Great Depression.
  • Success is when you are owed what can be repaid.  Significance is when you are owed what cannot be repaid.  Everyone can choose to aim for significance in some aspects of their lives. Everyone who comes to my financial planning practice has reached some level of success. They have enough money that they now feel The post Success to Significance - Part 4 of a Series first appeared on Michael Garber Financial Planning .
  • It’s a presidential election year in the US, but you probably knew that already. A perennial issue each election is taxes. We are subject to many different tax levies.Today we are going to talk about Federal income taxes. The 16th amendment to the Constitution was ratified in 1913, allowing Congress to levy an income tax and []