January 28, 2020UncategorizedLife is full of change. In fact, ‘change’ is the only condition that we can be certain of – despite that most of us work pretty hard to keep things the same. Adaptation requires energy.
Change – is essentially the transition from one condition or state to another. Whether any new condition is due to growth, development, tragedy, geography or any other factors that make up our lives is irrelevant. Change has to happen to move us and our families through life.
Living with change is the marathon of existence. Your financial marathon is one of the longest races you will ever run. Most of what we plan now (depending on your family) should be done with a long term perspective, but balanced with immediate relevance. Like a marathon, planning needs to take place sequentially – in time and order. Unlike a marathon, we don’t always begin our financial marathon at the ideal beginning. Fortunately, you can start at the place where you are right now.
Certain points during the lives of families will require concentrated preparation; more planning than others. Those points are the places in time ‘change’ is either about to occur or has already and life will move from one plateau to another and lives necessarily and irreversibly change; marriage, children, education, illness, accidents, career choices, aging parents, retirement and our own advanced age care. Discussion and preparation will be an enormous help.
The first task is ‘Discovery.’ You’ve got to begin. Families should determine exactly what their financial model looks like. There may be an opportunity to ‘fix’ some areas or address others that were neglected or made when life looked quite different. The best financial plans are relevant and efficient. Ultimately, all families will need to work through Financial, Legal, and Estate issues. These issues require coordination to provide the most flexible, efficient and relevant solutions.
Financial concerns; families should consider cash management, cash reserves, financial flexibility, protection, risk assessment, asset coordination, and tax consequences during both the accumulation and distribution phases (before and after retirement). Families with Special Needs members may find more challenges managing income and resources simply because the demands on these can be exponentially higher. Caregivers may curtail work and earning potential in order to provide care (Lukemeyer, et al., 2000). Care for disabled children represents a care cost increase estimated to average $30,000 annually (Baldwin, 2012). Thankfully, new technology and research has enabled the capability to treat many significant disabilities. Unfortunately, the costs associated with the treatments are more likely to inflict a significant financial burden (Hackney, et al., 2016).
Legal Issues: Parents may be required to act on behalf of someone who isn’t capable in matters related to healthcare, housing, lifestyle and legal issues. Choices and intentions should be accurately reflected in documentation including, wills, trusts for traditional children and separate Special Needs Trusts (SNTs) for disabled members. Trust protectors, trustees, guardians, ancillary documents and directives, guardianship, and letters of intent may be required. An attorney who understands your family and wishes will be invaluable. An attorney who specializes in and has practical experience both writing and executing Special Needs Trusts (SNT) is a necessity. It’s not enough to say that they are licensed to write a SNT. The nuances inside the language of a Special Needs Trust are critical to whether or not your child will be properly and appropriately taken care of throughout his or her entire life in the manner you intend.
Estate Planning: Issues like retirement distribution needs, legacies, inheritance and strategies for long term or continued care need to be considered. It is entirely possible to fund and live a very satisfactory retirement AND leave a financial legacy to a person or a community. Avoiding financial products that limit financial flexibility to achieve this type of planning is critical. Many of these options can be explored well before your estate ever needs to access the funds it holds. Again, the sooner the better. For families with Special Needs members, long term financial concerns are compounded. Parents may have to make choices between vacation and treatment or even delay retirement to cover or recoup treatment or care costs. In addition, parents may have to manage the financial life of a child as well as theirs. For dependent adults with jobs, it may be necessary to have a good understanding of which assets are allowable so that benefits are not inadvertently curtailed by growing independence.
Additional planning may be required to address:
Additional transportation costs (wheelchairs, specially equipped vans, etc.)Additional travel costs (re-location and medical specialists)Balancing income and career choice with providing care, nursing care, respite careCosts of long term therapies, medications and additional medical examsEducation and housing costs (specialized curriculum, supervised adult housing)Legal costs (guardianship, attorneys, etc.)
The sooner you start, the better. Don’t worry that you’re starting too soon if your special needs child is still an infant. There is plenty of planning that depends on the parents that can be done now instead of waiting until later – when you’re busier. At this point, the most important type of planning a family can do is that which maintains and enhances financial flexibility and protects the estate against medical bankruptcy as much as possible. This is also a great time to concentrate on some other protection issues your family will rely on should an accident, health crisis or other disability occur to a caregiver.
Financial Planning Milestones for a family with a Special Needs Child:
As soon as possible; begin the Social Security Disability Income (SSDI) application process. While you may be able to provide income that, right now, eliminates the child’s qualification for SSDI income, obtaining the qualification allows you to take advantage of a few other entitlements on behalf of your child. Some of these benefits have waiting lists of 15 years. So, it’s a very good idea to start early. Begin protecting your assets to the extent that you can. The sooner you start, the easier and less expensive it is.
Age 4-15. If your child is high school-aged, it is time to begin your Letter-of-Intent. This document will let others, i.e., guardians, caregivers, extended family, medical professionals and the courts know what your intentions are throughout his or her life. This document can be as lengthy and involved as you like – or as simple, but will be an invaluable source of practical information should anything happen to the caregiver or parent(s).
Age 15. The late teenage years are a critical time of transition and the one that I hear most parents worry about. Our lives are so busy during these years and time seems to race by at an incredible pace. Why 15? Two reasons. Guardianship is a big issue for Special Needs families. Those discussions and plans should begin around age 15 and will commence at the child’s 18th birthday. Some families will need to consider housing and support for their special needs children. In essence, this planning will feel as though two retirements are being planned simultaneously. If you haven’t yet found that financial professional who works specifically with the special needs community. It’s time to begin that search in earnest. For traditional families, this is about the time that college attendance and tuition start to ‘get real.’ There are literally bunches of ways to help pay for college that don’t involve taking on ton of risk or minimizing your own retirement. Find someone who can explain allthe options, not just the ‘savings’ and ‘529’ options.
Age 18. Guardianship for adult children is critical. Did you know that medical facilities don’t have to allow you access to your child or his or her medical information despite that you support them once they reach the age of 18? Guardianship, while it may cost a little at first and is a bit of a nuisance to maintain, is worth every minute and penny you spend on it.
Finally, your retirement, the death of any parent – either yours or one of your children’s – and your own Long-Term Care are points at which all of us will necessarily make financial decisions or need some means of funding the expense. This is critical as parents with a special needs child will have to plan retirement differently. They may have to relocate for care, cut lifestyle expenses or even delay retirement to ensure the needs of their child is met They may also have to allocate funds for residential needs of the child throughout their lifetime.
It’s easy to see why a lifetime of financial planning is a lot like a marathon. There will always be new scenery, challenges, sprints, long-hauls, and energy walls along with easy strides, triumphs, unrealized stamina, success and achievement. But nobody ever finishes a race they never begin.
Bibliography/References Used for this Article
Lukemeyer, A., Meyers, M., and Smeeding, T., (May, 2000). Expensive Children in Poor Families: Out-of-Pocket Expenditures for Disabled and Chronically Ill Children in Welfare Families, Journal of Marriage and the Family, v 62, p 399-415.
Baldwin, S., (Spring, 2012). The Costs of Caring: Families with Disabled Children, The Future of Children, v 22, i 1, p 69-74.
Hackney, D., Friesner, D., and Johnson, E., (6 June, 2016). What is the actual prevalence of medical bankruptcies?, International Journal of Social Economics, v. 43, n, 12. Pp.1284-1299. Retrieved 10 December, 2016 from http://www.emeraldlight.com/0306-8293.htm. [...]
February 6, 2020UncategorizedCan you believe it’s 2018? I can’t. Another brand new year complete with a million and three new opportunities and a maybe the recollection of a lesson or two learned the year before.
One of the first tasks should be to plan a vacation. Begin thinking about your vacation – ‘your’ not ‘a’ – while you still can.
I know . . . we’ve barely concluded one holiday and now I’m suggesting you consider another. Believe me, now is the best time. Knowing there will be a break, will help propel you through the upcoming year, especially if it’s fun and ‘just for you. If you’re like me and have to work at having fun, then . . . start practicing.
Think about the type of vacation you need. Not the one that your family wants. Do not, plan to find time during a family vacation where you spend time caring for all their needs in a different place with less support. That rarely works out in your favor. Plan your break before your calendar becomes so full that you don’t have the opportunity to carve out five minutes for yourself. Has there ever been a year when you regretted not thinking about building in some breaks earlier – when you had time? So, do it now – while you can.
Dare to consider something just for you. If that includes a spouse or a friend, wonderful. If it doesn’t – that’s okay too. My girlfriends are planning something that includes ‘private cabana boys’ in a tropical climate with more books than they could possibly read in two weeks. It sounds lovely, but I never would have thought of it. I’m too pragmatic. I need help when it comes to extravagant (or extensive for that matter) relaxation. I’m not suggesting you dart over to the nearest travel sight and book a package immediately. I’m suggesting that you set yourself as a priority this year. Just start thinking about it.
Don’t be afraid to ask for help constructing your best vacation plan. I know that I don’t normally think up the ideas I like best – except when I’m working. But, work is exactly what we all need a break from; especially if we love what we do. When people love what they do, they tend to immerse themselves in that environment all the time; think about it 24 hours a day; wake up in the night thinking about it; work on weekends and holidays – because they love working at it and it doesn’t feel like work. If this sounds like you then you likely need a vacation as much as any of us. If you work and have a family, my guess is you need several vacations.
I don’t believe this to be a selfish perspective. A very good friend of mine’s mother explained her vacations this way when her children were school-aged:
“Your job is to go to school every day. You get vacations from school over holidays and during the summer. My job is to take care of you. So I take a vacation from that work once in a while, not from you.”
This reasoning made perfect sense and was rarely sulked over again because it was logical. Not only that, this concept let her children know that caring for them was hard work. In return, they had more respect for her efforts on their behalf.
Believe me. You’ll be far more productive when you’re rested and relaxed than you were distracted and stressed. What’s the worst thing that could happen? You take your laptop on vacation and end up with an entire week of solitude to think about and complete all the tasks you’ve been meaning to get done but cannot because you keep getting interrupted?
If your excuse is that you cannot afford it, back up. Yes you can. You may not be able to afford a private cabana boy, but you can afford a few hours solitude somewhere with peace and quiet. Nobody said this had to be expensive. You don’t have to go on a ’round the world adventure. You just need to get away.
You won’t be sorry. [...]
February 6, 2020UncategorizedWhere would we be without rules? Everywhere we look, rules guide us. Social, professional, political, financial . . . rules . . . as far as the eye can see. Why? Because rules create a mechanism for people to measure who wins, who is successful, who fails, how people progress and when they decline. Rules help us draw comparisons. Rules can be exhausting. Fortunately, people can use those same rules to win the game of personal finance – if you know what they are.
Personal finance is a game rife with rules. Each financial institution you deal with has a set and will project those rules on the decisions consumers make. Despite that it sounds like a quagmire of rules, there are only four you need to know.
To help you view them from the right perspective (where you can apply them to achieve YOUR best interests as opposed to theirs)- some review might help.
First, It pays to remember that we live in a capitalistic economy. So, what does that mean for us, the consumers?
cap·i·tal·ismˈkapədlˌizəm/noun
an economic and political system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state. Did you pay special attention to the last half of that sentence?” . . . controlled by private owners for profit”
That’s it. This is what makes the world go ’round – or at least the US. Companies are ALL in business to make money for themselves – Not the consumer. They use the consumer to drive increasing profits. Don’t ever confuse their priority on this matter.
Don’t ever forget that part. None of these players are in business to help a consumer become wealthy. The amount a corporation earns will always be more than a consumer earns. They are conglomerates. Consumers are individuals.
Second. Capitalism demands an influx of cash.
Consumer cash to be exact. They don’t make money unless the people using the economic and political system input their money. You are the person whose contribution of funds literally creates the economy we enjoy. It’s fun to buy and acquire things and we are good at it. Good enough that our government builds our propensity to spend into the national budget.
Finally, take a look at the end result. What is all this ‘business’ for? TO CREATE PROFIT.
And who receives the profit? If you thought, ‘me’; think again. Even the most valuable stockholder receives only a portion of any profits earned. The top executives? No. Board members? No. Typically, it’s the owners who receive the profits. And while they could be a tiny bit concerned about the value a consumer receives or perceives as a result of doing business with them. The amount that any consumer receives is negligible at best. A consumer will almost never make it rich from the earnings or benefits her or she receives from doing business with a corporate owner. There are some cases where, with luck, a person can do well. But they will never do as well as the owner will.
So in the future, here is how I would like you to look at the relationships you construct with financial institutions you choose to do business with. Ask yourself these questions:
How much money would they like?
How often would they like that amount provided?
How long would they like that to last?
How fast will they will give it back when our relationship ends?
Finally: Would you rather own the company or work there?
Exactly!
Next time I will talk about each of the four rules. Make no mistake, they’re still going to make more money than you, but there are certainly steps you can take to lessen how much you lose. [...]
February 6, 2020UncategorizedQuestion Number One:
How many banks and financial institutions do you deal with every day? When you consider all your purchases, insurance carriers, and the assets you manage or have acquired? . . . five? . . . ten? . . . more?
Question Number Two:
Are any of those companies in business to help consumers (you) become wealthy? Likely not. However, what do all of them hope, need, and want consumers to do with their money respective to their company? They may as well place a sign on every building and billboard. Every marketing campaign has identical intent. All of them should simply read, “GIVE US YOUR MONEY.”
Question Number Three:
How long would most companies like to keep your money? Truly! Advertisements disguise products as a path to provide consumers with access to irresistible benefits or entice them make a purchase which will help them immensely. Perhaps it would help to review the exact meaning in context within the economy we live.
cap·i·tal·ismˈkapədlˌizəm/noun
an economic and political system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state.
Did you catch that p-word? ‘profit’?
Modern consumers rely on businesses to provide them with means and tools to sustain activities, growth, well-being and independence each day. Consumers pay organizations money – so they can go earn more money.
Modern companies make it easy! They call, ping, snail mail, cookie blast, network, advertise like crazy … all so consumers can do business the they need and some they never intended – without negotiation, discussion or analysis. Businesses develop new ways to offer services before consumers realize they were without them. They help us to measure our actual circumstances against imaginary deficits that, in turn, create profits for the company – if only every consumer would comply and buy! They offer ‘auto draft’, provide comparative, emotionally charged, information and consumers believe they are being helped.
As consumers, we are trained to make financial decisions quickly, with the smallest amount of very convincing information, and in a micro-economic environment – when actually we live in a macroeconomic world. It’s not fair. Companies depend on consumers who are over-stressed, under informed, inexperienced, and quick to want the closest exit to the uncomfortable world of personal finance – because businesses know consumers don’t know what they don’t know.
As with everything, there are some businesses we simply must deal with. Most of us require a bank account, insurance of some sort, and a means to save for retirement. I would never suggest that ALL financial institutions are evil. In this day and age, doing business is necessary and we accept that there is a cost associated with doing business. What I would suggest is that some are better than others and that, as an industry, the terms are often nebulous, and costs can be excessive.
Find an advisor who can help you navigate the products and services financial institutions offer from an impartial perspective. If you don’t have one, the first rule to be on the lookout for is:
“Give us your money”
Measure all financial decisions you make against this rule. Does it fit? Think ‘auto-draft’, ‘free trial’, ‘cancel anytime’, ‘payroll deduction’, ‘electronic transfer’, ‘service fee’, ‘tax deferred’, etc. If so, proceed with caution. There is more you need to know.
as consumers, we cannot avoid every transaction that resembles this characteristic. However, I suggest that consumers manage every occasion where a financial decision is necessary and attempt to view options from a macroeconomic perspective. In other words, what does that decision mean in real life? Now and later on? When combined with all the other financial decisions? Under the current tax laws? In my tax bracket? Are they coordinated?
Each financial decision WILL be effected by the choices made prior and will impact strategies implemented afterward. Learning to understand the duration, strength, coordination, tax implications, which party will gain benefits and which will be left accepting risk and lost opportunities is the information that you truly need in order to make the best decisions for you and your family.
Let me know if you need help. [...]
February 6, 2020UncategorizedYesterday was ‘Roast Chicken Day’ at my house. . . A normal day until I unwrapped the chicken . . .
Have you ever opened those soggy paper bags that come stuffed inside a whole chicken? Normally I don’t because the contents are just not appealing. I’m not sure what got into me yesterday. Maybe some notion of guilt because my husband actually likes chicken livers and I never make them for him because I think they’re disgusting. Who knows?
In any case, I opened the bag and realized what I thought I knew about ‘the hidden cost of everything’ didn’t go near far enough. Inside the bag in one chicken was; one neck bone, three gizzards, three livers, two hearts and one unidentifiable piece of vitriol. At first I thought, “Cool, my husband, will actually get more than one bite.” Next I thought, “Hey, I’ve been ripped off!” Eventually I thought, ” . . . along with every other chicken buyer in the world.”
You see . . . whole chickens are sold by weight – which I am fine with because it’s usually less per pound than the trimmed options. Yes, they’re a pain-in-the-can because you have to cut them up, but I use the bones and other bits to make broth. Nothing goes to waste – except the soggy bag of guts.
Here is my problem; How much weight/cost was added to my chicken by packing it with so many extra pieces? An ounce or two? So I paid and extra $0.50. So what, right? It’s not much and it was still less expensive than buying trimmed chicken. But how many chickens did that giant chicken house sell last week?, last month?, last year? What a great way to make loads of extra money!
I haven’t figured out how to eliminate this ‘Wealth Eroding Factor.’ WEFs are what I call places in my financial life where costs, fees or expenses (a.k.a. my money) is irrevocably lost. They represent money I never get back, that can never be used to create more wealth. True – some are unavoidable. Water heaters wear out just like car tires and each costs money to replace. I accept that, but it doesn’t mean I like them. You shouldn’t either.
Consumers shouldn’t pay for something they don’t want, didn’t believe they were purchasing or isn’t reasonable. In other words, if that chicken had come with one set of innards, I wouldn’t be writing now. But it did. How long has this been going on? How long have I been a consumer sucker?
Probably shouldn’t answer that last question. I have a feeling I won’t like that either. Yes, it’s a small thing . . . an almost insignificant extra charge. But it annoys me because I’d be willing to bet that there are more I haven’t discovered yet. How much are those costing me? Thankfully, this is a small one. [...]
February 6, 2020UncategorizedDebt can be a good thing . . . Seriously! The problem with debt is that it rarely is – good. Most of the time what began as a means to a better end turns into a source of paralyzing, soul-crushing anxiety that cripples and provides wall-to-wall distraction from every decent minute you have.
So when is debt ever good?
Debt is good only if it’s used to obtain an appreciating asset and the interest is tax deductible. For example, a home (mortgage) or an education (student loan).
Debt is not so good when it’s used to obtain a depreciating pile metal – like a car or something that’s not permanent, like a meal.
The financial industry makes taking on debt incorrectly, randomly or in too large a proportion SO easy. Anyone can borrow far more than they might ever be able to repay. Case-in-point, ‘student loans.’ The penalty for borrowing more than appropriate isn’t that bad. Consumers who overspend simply file Bankruptcy. Only two generations ago a place called ‘Debtors Prison’ existed. My grandmother used to threaten, “They’ll haul you off to the poor house.” Images of Oliver Twist ran through my head like wildfire.
Since nobody wants to go to the poor house or have his or her credit and financial capability hijacked by an electronic corporate agreement with no actual person holding the reins; here are your directions for debt consumption – from a professional.
First, There are two different sorts of debt; Debt for the sake of acquisition, and debt for the sake of building assets. An example of the first is consumer debt, department store credit cards, restaurant meals, things that buy that do not appreciate in value. This includes cars, furniture, clothing, vacations, etc.
Debt for the sake of building assets means debt taken on to acquire an asset that will appreciate. Examples of this are some homes and real estate, education, collectibles like artwork or other classic valuables (not your collection of antique canning jars or your barn full of old motorcycle parts from the 80s). Cars only appreciate if they are the collectible sort (think Jay Leno). Your run-of-the-mill commuter vehicle doesn’t count.
Next, there are more layers to debt than those included in the borrowing contract. Don’t forget to consider inflation when calculating debt. Most consider the effects of inflation on cash accounts or long term holdings, but inflation also effects everything- including debt. It quietly increases the Lost Opportunity Cost of money we allocate to repay debt making the interest rate connected with debt functionally higher than that listed by the lender. Inflation is also part of what creates appreciation. Assets can also depreciate. Be careful not to confuse the two and to assess appreciation correctly.
Third; debt, like any financial strategy, must be carried correctly. One of the best lessons of any debt obligation should be to understand how much debt you can handle. Here is how to figure out your limit.
Gross Annual income – Gross savings amount = Gross spendable Income.Debt should not be more than 25% of your Gross Spendable Income.
100% = income – 15% goes immediately to savings = 85% remaining – which is your gross spendable income.
Example:
$100,000 gross annual income
First we save – 15% or more if possible. That’s $15,000 annually.
$85,000 remains.
25% of the $85,000 can be used to pay off debt. That’s $21,250 annually.
Debt means cumulative debt – both the types that allow you to acquire an asset that appreciates AND the depreciating chunk of metal in the driveway, meals consumed last week, or a trip next summer.
The remaining 75% of your spendable income will fund your lifestyle – including paying taxes, living expenses (both fixed and discretionary), Food, Utilities, transportation, education costs, protection documents (insurance) additional savings or retirement contributions. The sums add up fast so be careful. Taxes will take the largest share, especially if you live in a state where there is a State Tax as well as the Federal. Plan on at least 20%, for taxes alone, probably more depending on your income. Take small, methodical and intentional steps.
Since tax rates can change as incomes increase and laws change, it’s important to work with gross numbers when talking about income, savings and debt. Know that taxes will come out of your lifestyle money. You’ll maintain better control over taxes if you position them in your financial life as an expense that you DO have some control over – at least to the extent that you can implement strategies to minimize them from year to year. [...]
February 6, 2020UncategorizedFor most, April means we file our taxes. Most find filing taxes is not enjoyable – but required. Un-enjoyable doesn’t mean un-enlightening. For example, while completing my family’s taxes, I found money being spent that we really didn’t need to be spending. We were paying for a product that had been replaced, we never recaptured the former expense. So silly to pay for two things that do the same thing when you don’t need to.
The un-enjoyable part of this monthly transaction was that the funds were moving, quietly and systematically, without drawing any attention from either of us – into the coffers of a financial institution somewhere in – well, we don’t know where. We weren’t begrudging the spent money – because we were unaware it was going anywhere. Now that we know, it’s very painful. But, we can do something to correct it.
-Which brings me to Rule Number Two. (Remember Rule Number One? – ‘Give us your money’?) Rule number two has to do with how often companies would like us to give them our money. Was your first thought? “Every minute of every day?” If not, it could be. “As often as possible” also works. Some sort of auto-draft, payroll deduction or EFT transfer is the preferred way to make this income a predictable certainty for financial institutions.
Rule Number Two: Give us your money – often, and systematically
How do they do that? Examples include; auto-draft, EFT (electronic funds transfer), direct draft, dividend reinvestment, income tax refunds, PayPal, gift cards . . . there are literally hundreds of opportunities to give away control of your money in the name of simplifying choices, or providing 24/7 access to a product or service.
‘Electronic Discipline’ takes the decision to pay another entity completely away from the consumer and places it squarely and securely in the hands of the financial institutions. Consumers are rarely required to re-visit spending choices despite that they should. The small transfer of funds that I found amounted to a few hundred dollars a year. No big deal, right? Right. But if we multiply that over all the places in our financial lives that this could take place, and again over the years during which it occurs, Holy Crow! Thousands of dollars in a few years; Tens of thousands over a lifetime; Millions of dollars for young high-earning Millennials. All lost without even realizing it.
How would your life change if you could have that money back? Would $10k help? Would it hurt? It is your money. How about preventing the transfer in the first place?
I know, it’s hard to find time to micromanage a financial life? This is the cost of doing business. Careers, families, children’s activities and just about every other way to occupy time would be more fun. This is one of the best reasons why you want to be working with a financial advisor. One who can keep you financial life coordinated and up to date with respect to changes in tax laws, benefit elections, changes in your family, your goals and your dreams and look for these types of ‘financial leaks’ at least annually.
Don’t misunderstand. I like electronic discipline – when control is retained by the person who decides which money goes where, when and how much, electronic discipline can be a great tool within a person’s financial world, The trick is not to let that tool be applied by some company outside your world.
Electronic Discipline is useful tool when used correctly. How else would so much money ever get into the accounts of all those mutual funds if not for ‘payroll deduction’? Honestly, if I had to write a check each month to my 401(k) plan, far less money would end up in that account than does. Electronic Discipline works. Apply it to your advantage as opposed to a bank’s.
Use electronic discipline to build long term savings, collect dividends, recapture debt, and eliminate fees.
Do not use electronic discipline as an alternative to budgeting.
The fallacy here is in the marketing which shouldn’t surprise anyone. Yes, financial institutions have made loads of progress providing means to allow consumers to manage their personal finances faster, easier and from just about anywhere. The unintended consequence (to consumers) is, we now believe we can manage our financial lives in under five minutes a month – during our commute or while we are at the park with the kids, or in the two minutes before dinner while the rice is in the cooker. The intended consequence (to banks) is that we miss small amounts of money incrementally falling out of our financial lives – and it all happens without anyone noticing.
. . . except the banks. They’re noticing. I promise you.
All those individual financial leaks . . . drops in their bucket.
Pay attention. Literally! Make conscious, deliberate choices. You deserve to spend some time on yourself. This financial life is the only one you have.
Don’t forget that financial institutions are capitalists. Remember what that means? Need a refresher? https://wordpress.com/post/financialcourage.wordpress.com/2340 [...]
February 6, 2020UncategorizedIt’s almost June. School is about to let out for the summer.
Whoo hoo! Vacation . . . . Free time . . . . Long summer nights of relaxation . . . . Spending more time with your family . . . . and then you remember that your child – who is now a young adult – will be leaving in the fall.
College.
And, Bamm! All those ‘Polly-Anna’ day dreams crash into the reality of paying for college. Paying for college can be daunting. In my case, I have two sons in college at the same time so the cost is double (the anxiety is quadruple).
Here is what you need to know:
If you believe college planning isn’t the same as financial planning, you’re wrong. Simple as that. Paying to put a child through college creates a cash demand of between one to five thousand dollars every month for a period of four to six years – per child. College planning IS financial planning. Treat it as such.Calculate your Expected family Contribution (EFC). Know your EFC. This is the amount that the government believes a family (family means; both the parent(s) and the student) should pay toward college tuition- per child. How is it figured out? Take 25% of the parents combined Adjusted Gross Income, and 6% of their combined assets, (a few assets are excluded, but most count), add them up. This is your family EFC as parents. Then figure out the student’s EFC. A Student’s contribution will be 50% of his or her income and a whopping 25% of assets. So it will be important to keep assets out of your child’s name – especially if financial aid is a possibility. Most families with combined incomes of around $150,000 per year will be expected to pay around $40,000 per year, per child in college tuition. If needs are over that, then help may be provided. If not, the family will bear the entire cost. EXTRA INFO – debt load does not matter and won’t affect your EFC.Paying for college will dramatically effect retirement income. How large that effect will be depends on the strategy implemented to save for retirement and fund college tuition – and how many children will attend college.Understand the cost of your college choice. What is the tuition cost? How much will books, fees, room and board, transportation costs (will you have to move them?) Will your child need spending money? Will they work part time? Have they earned any scholarships? Have they received any grants? Know how much money will be needed beforehand. Costs may be well under the EFC – which is both good and bad. Good that the cost is lower, but Bad because your family will likely pay the entire cost.Implement the best strategy to fund this expense.Option A: Pay cash. (Hint: This isn’t the best option – but it’s the most common.)Option B: Develop a strategy that maximizes your flexibility and ability to pay when the time comes and minimizes the risk of retirement fund cannibalization, inflation, taxes, etc. There are several ways to do this, but you will need the help of a professional. Typically, if you can combine savings and retirement dollars, letting retirement dollars help pay for college and vice versa – you’re better off. There are too many options to go into each one here.
Option A. Most families like to save money in a cyclical way. They save for an expense, then pay the expense, then they save money for the next expense – and pay for that. College saving is rarely done differently, What this pattern does is eliminate the potential that money saved over long periods of time ever gain the massive benefits of compound interest.
You’ve seen the compound interest curve before. It looks like this:
You put money in a financial product where you earn interest, leave the principal and the interest there to grow. Over time, the amount grows larger. Some call it compound interest. The true velocity occurs in the later years. However, those gains will never happen if money is withdrawn every few years. Every time money is removed, the compound curve starts from the beginning. The investor is back at “financial zero.” So if the true velocity of growth occurs at the far right side of the curve, and all the money goes in at the beginning, what are we left with? A curve that looks more like a set of steps than a curve. Always returning to the ground floor to begin again.
That means spendable retirement assets will consist of what ever has been earned after just a few years – the average being about 12 years. This strategy essentially cripples all the earning power you had over the entire previous 30 years!!
No rate of return will ever be good enough to overcome the crippling of the compound curve and the continuous return to financial zero.
The power of the compound curve is great. That is why people love it. So, use it to your advantage,
Here is a very typical financial strategy
a. save in a 401(k) plan for 20 years
b. save for college for 8 years
c. then save for retirement for 12 years – because now “income is freed up and we can really sock away some cash.”
After all that . . . a family that was used to earning about $150k annually can look forward to an,
d. estimated retirement income at age 65 is around $45k. You worked how long, how hard, for how much? It hardly seems fair, but hey, your child doesn’t have any student loans and neither do you, right? Too bad, because you may need one to pay your healthcare costs during retirement years.
There is a better way.
Plan B.
Combine your strategies and let college dollars help pay for retirement and retirement dollars pay for college.
If you have at least at least three years before college tuition needs to be paid, you have several options.
The one I like best can be implemented using the same dollars that are being directing toward retirement savings and college savings. Simply combine them and redirect them to a Permanent Life Insurance policy that earns dividends, cash value and increasing death benefits.
With this type of policy in place, you will be able to continue to put money away for retirement as well as take a collateralized loan out of the policy each year to pay tuition costs.
CAUTION: Do not attempt to implement this strategy without the help of a trusted and experienced Financial Planner familiar with this type of strategy. If you try it on your own or through some website on the internet, I am not responsible if your experience goes poorly.
This will eliminate the financial inefficiency that kills the gains created by compound interest curve. Your family will still retain all the gains of saving for college and retirement. The collateralized loan will ensure the power of the compound curve is retained through the beauty and simplicity of life insurance.
Stay in control of your money at all times.
Here are a few more pieces of ‘common sense’ advice.
Choose and In-State School
Have grandparents and others contribute to 529 plans. Not too much though. If you child decides not to go to college, gets a scholarship or joins the military – you may not be able to use all this.
Consider placing money in ABLE accounts
Apply for as many scholarships as are appropriate and available.
Apply for grants
Don’t undervalue a community College for the first two years of higher education. Many community colleges offer classes at a greatly reduced cost. The first two years are fundamentally the same. Get the basics out of the way at discount prices.
Don’t be afraid of Student Loans. If you have to be in debt, this is one of the best reasons for it. The benefits and earning potential gained through higher education are usually worth it.
Good luck! E-mail me with any of your questions and concerns. [...]
February 6, 2020UncategorizedIt may sound crazy to have you child think about an advanced healthcare directive. He or she JUST graduated high school. But, that means they are 18 or 19 – technically an adult.
Now, as fall approaches and your family and student starts to plan, narrow down your students options, go through the application process, take tours, make choices, pay tuition and fees, gather belongings, search for room mates, find housing, make schedules, ready for move-in day and finish up last minute packing . . .
Don’t forget these two very important Legal issues that happened when you weren’t looking and when your student turned 18.
Most states and our government operate on the premise that once a person turns 18, he or she can make ALL decisions for themselves. Even if they clearly cannot. Even if they are Developmentally or Intellectually Disabled – or just plain not ready.
What that means here is; once your child is 18, if they seek medical care, are admitted to a hospital, or require any medical attention. You, the parent (who likely still provides the healthcare coverage), will not be permitted access to those medical records, may not be informed about their condition or consulted regarding their care.
Legal issue number one:
EDUCATIONAL RECORDS: FERPA The Family Educational Rights and Privacy Act
Basically, you are no longer allowed access to your child’s educational records.
The FIX: almost all schools have a form students can fill out giving you permission to view their educational records.
Photo by Pixabay on Pexels.com
Legal issue number two:
HEALTH INFORMATION: HIPAA The Health Insurance Portability and Accountability Act
HIPAA protects health information, but can also prevent colleges and hospitals from contacting parents. These laws require an ’emergency’ or an ‘imminent threat of harm’ before parents may be contacted and health information shared. Many people believe parents would be contacted in a serious situation. However, this is not always true. The interpretation of “emergency” or “imminent threat” varies. In assessing difficult situations, providers often choose to protect themselves and health information.
The only way for health care providers to legally share information without the risk of being sued is when the patient has already established a health care power of attorney and an advance medical directive, specifying whom the provider can legally contact, and the extent of medical care the patient wishes to receive.
The Fix: ALL require your child’s consent and authorization.
Option One – Have an attorney draw up documents and have your child sign them. You will pay the attorney a fee to do this work.Option Two – Locate the documents for the state your child lives in, download them, get your child to sign and have the documents notarized. This is free. But be careful. Fill-able forms not be legal in some states.Additional Option – The new AMD Card – a wallet-sized, notarized, identification card that gives legal permission for providers to call designated family or others during an emergency. There are accompanying electronic PDF versions that can be stored and shared. The cost ranges from $125 to $150 and can be accessed via theAMDcard.com.Keep in mind that to be effective, legal documents must be discoverable and accessible to first responders and providers at the time of the emergency. This is a problem, because often, legal documents are put away for safekeeping once issued. Therefore, in an emergency doctors have no way of knowing these documents exist. An advantage of the AMD card is that your child can keep it with them.I am not recommending The AMD Card over other options. It is an additional option.
When the unthinkable happens – IF one happens – having the right documents in place can be very important. And having them around may even grant some peace of mind at a time when little is to be had. [...]
February 6, 2020UncategorizedWe already know that financial institutions;
Want our moneyWant as much of it as they can get
What else could they possibly want in addition?
RULE NUMBER THREE
3. Give them our money on a regular basis = systematically, without thinking about whether or not it’s a wise decision.
Photo by rawpixel.com on Pexels.com
. . . Ever used one of the newer financial industry favorites called ‘autodraft’‘? Do you suppose that the concept of autodraft really came about to help consumers? Or would it make more sense that the financial industry spent some money on consumer research and discovered that people are less likely to stop paying for something if they first; already chose to purchase once, and second; decided to repeat the purchase one time (signing up for autodraft) as opposed to multiple times (the consumer physically receives and pays an invoice each time).
Let me ask you another question. How many times have you looked at your bank statement only to discover that a company had charged you for something that either wasn’t wanted, or a purchase that had been canceled or should have been cancelled? It may not be that often if you diligently monitor your account. But it happens – a little at a time.
Banks make paying them very easy and attractive. They never mention the time spent trying to correct the errors we find.
Banks love Auto-draft because it removes decision-making from the action of spending.
Banks love direct debit because it allows them to collect interest sooner – no waiting for a check to arrive. Zero processing time.
Photo by Pixabay on Pexels.com
Debit cards – how much easier is it to spend money if you don’t have to go get dollar bills and have them in your hand? All of a sudden, impulse shopping is possible. How much easier is it to live without a budget or spending guideline if you aren’t limited to the bills in your wallet?
Here is my advice. The only time you pay for things by electronic means is when you have already made the decision to do so for a long period of time. An example would be paying your mortgage via electronic draft. You’ve already decided that years of payments (for an appreciating asset) is acceptable and in fact, in your best interest, so make it easy and pay for it electronically.
Then, unless you’ve decided to spend the money, try not to give in to impulse. Think about your purchase a day or two. If you really need ‘fun money’ and ‘impulsivity’ in your financial life, then give yourself a hard cash allowance and spend that whenever and on whatever you decide.
Just because the store is ‘Open’ doesn’t mean you have to go in. Window shopping can be fun too. [...]
February 17, 2020UncategorizedA few weeks ago, I was asked to write a few paragraphs on a topic relevant to families who have members with disabilities. Surprisingly, I found it more difficult than I expected. Not because I had little to say, or because I believed I wasn’t prepared to be the expert in the room. But because so many topics are relevant to the times we live in and the time of year.
We have recovered from the holidays. Tax season and spring are almost here. With them comes Easter, graduations, then summer jobs, and scrambling to find care while we go to work and count the days until school begins again. Before we know it, we will be planning the holiday seasons again while we feel as though we barely had time to get anything done. We tumble in to bed believing there must be a thousand events, and occasions we missed – drowned out by the thundering by of our very busy days.
Financial advice for families with individuals who have special needs is complicated and attempting to assemble the best strategy for the current economic environment can be a daunting task. Who has time to keep up with changes in tax laws, public benefit options, healthcare costs? And how in the world will you ever have enough money to retire? The good news is that there are solutions to all of these as long as you know the rules and understand the current guidelines. The bad news is there are as many solutions as there are families, disabilities, and locations. Each requires a different set of strategies to achieve goals because each family’s resources and responsibilities are different.
Subjects such as; taxation, estate documents, coordinating income with benefits, re-positioning assets to achieve efficiency and greater flexibility, and creating the ability to care for others long after most families are ever expected to do so seem to fall behind the daily decisions about spending on care, mortgage payments and notices concerning rising property taxes. A few topics are more immediately important than others, but all of them will fall into one of two groups; those we can control, and those we must respond to. We must respond to tax changes, inflation rates, economic conditions and the costs of care.
Changes in Federal Tax Law are beyond our control. I expect taxes will go up in an effort to solve a portion of the growing national debt which now sits well into the trillions. In addition, Texas legislators have recently announced that they will remain unable to meet standard requirements affording students free and appropriate educations for all because of funding shortfalls. While the changes in taxation that went into effect last year may have some discernible effect this year, the loss of a child’s education may have a longer lasting effect.
Inflation is a factor of time and economics and will have one of the greatest effects on your ability to plan successfully. We cannot control it, so we have to respond. Neither is it a steady or uniform figure. Housing prices have tripled since the 1990s – far outpacing wage increases. A very small apartment in most big cities (nationally) averages $3000 per month.
We can control savings rates, accumulation, our ability to continue to provide for our family, and the positioning of assets, with more certainty. A family’s ability to save is driven by two factors; income and expenses. Lifestyle choices, medical expenses, geography and work will all affect the outcome.
Asset accumulation is different for every family. Still, most families ask, ‘How much money will I need to save to care for my disabled child?’ The answer is always, “As much as you can manage, after you’ve provided for yourself.” Since there is no way to care for another if you also need care, this seemingly selfish standpoint is important to adopt.
Your ability to earn a paycheck is the most critical pieces of any strategy because all plans require an income stream to fund them. Take every measure possible to protect the income you have. Invest in your health so that you are able to continue to work. Protect your paycheck with an Individual Disability Income Insurance product – but only if it makes sense to you and your life. Do not be fooled by employer plans. They often fall far short should you become disabled (which is a 1 in 4 possibility). And protect your ability to sustain a disabling accident or illness by being a good saver. Six months of accumulated gross income is the rule.
Finally, only you can decide what to do with the money you earn. It matters far less where you put your money than how you place it. No single account can ever be a strategy on its own. If something happens beyond your control that affects the value of that account, your entire plan is ruined. However, the combination of a brokerage account, a Special Needs Trust, a Life Insurance portfolio, an ABLE account, and an exempted accumulation account, can create a solid strategy to fund a lifetime of support and care.
The simple truth is; there is no rubber stamp-able solution, no green pathway on the ground headed by an arrow that leads (without mis-steps) toward guaranteed wealth. Still, very rarely is there never a solution to the issues a family must prepare for. Sometimes, goals are unachievable. However, vast improvement is still possible. Anxiety is prevalent at the beginning because families don’t know what they don’t know. So here is my best and most relevant advice: Begin where you are. You don’t have to know the solutions to begin. Just begin – where you are.
Families can become better off with small changes in positioning, a bit of education, and the benefit of time. I have seen so many families wait until they are forced to make decisions and it rarely ends well. The more time we have, the more options that will be open to you, and your family will have as solutions which allows less dependence on a single strategy and instead enables multiple strategies to share in the responsibility of supporting your family. This is true for almost every family. But for families of the disabled, it’s absolutely critical. Stop feeling as though you need to have all the answers before you can go talk with an advisor. You don’t. That’s the advisors job and if yours isn’t fulfilling that obligation, find a new one. A truly talented financial advisor will have the answers to the questions that keep you up at night. [...]
April 1, 2020UncategorizedWhat happens to special education programs during Covid-19? – With the entire country moving to online classes, the free and appropriate education of our students with special needs who attend school in mainstream classrooms is more at risk than ever. The percentage of students who receive special education support services in mainstream classrooms is close to 13%. Those students spend about 80% of their day in the mainstream classroom and are provided supplemental support in other areas for the remaining 20% of their day. These are averages with some of our kids requiring more accommodations and supports and others less.
Additional supports are provided because they help students do better in class. Speech or language services, managing social relationships, additional academic support in a core subject, or nursing care and feeding for those most affected.
As public-school districts move to online class instruction for the remainder of the year, parents and students who need more supports will have to do without. Parents who now work from home, must also manage the school curriculum of their children including that of their special needs student.
I cannot imagine the stress created for parents who must now add to their tasks the roles of teacher, behavioral therapist or speech therapist. [...]
April 2, 2020UncategorizedThese are extraordinary times. Nobody is isolated from the effects this disease that effect every aspect of our lives, our families, our jobs, our communities, and those who we rely on for support, advice, and friendship.
There will be an ‘after the virus.’ The anxiety we feel because we do not know what that looks like will be gone. Hopefully not to be replaced by something larger. What I know is people’s financial lives will be dramatically different. Added healthcare costs and simultaneous loss of income will permanently affect everyone. If we include the depreciated value of money invested in retirement accounts, the future can look bleak. For those nearing retirement, money once counted on for retirement years is worth far less than it was. There are three options available to counteract those losses; live on less, take on more risk, or work longer.
If you still have time to recover, you may want to consider changing your savings strategy so that you’re better positioned to withstand large swings the economy. Diversify. There are at least ten strategies to create income in retirement. The stock market and a 401(k) plan are just two – and represent some of the riskier methods.
Let me remind you of the first rules of personal finance everyone should follow. They won’t make you financially bullet-proof, but they will help ease your anxiety. They are the same rules that we should live by in times of prosperity. If we stick to them in times of distress, we will be far better off than if we don’t.
If you haven’t been practicing them, it’s not too late to start.
Here they are:
Protect what you have.
Buy as much insurance as you can afford and makes sense to protect ALL your assets. Auto, Home, Excess Liability, Life and Disability Income Insurance. Yes, it’s a costs, but the insurance company’s money is cheaper than yours when an incident occurs. Your goal should be full replacement value. Put this in place for your home, your cars, and yourself.
Save, Save, Save . . . the right amount of money.
I always people save at least 15% of all income – unless earnings are over $200,000 annually. If that is the case, you need to save more – 20%. Save until you have at least six months of income in the bank.
For some families this isn’t possible. There is always more month than money. When this happens, save what you can. Even if it’s only a few dollars out of each paycheck.
If people had six months of income in the bank right now, there would be far less anxiety about the future. I have heard some advisors suggest to those with substantial incomes that keeping too much cash in the bank is foolish – because it doesn’t earn any interest. Trust me, during times like these, what you need is CASH.
Don’t contribute more to your retirement plan than the employer match.
So many times, I see folks investing tons of money into their employer-sponsored retirement plans before they save for that rainy day – before they protect themselves. The problem with this strategy is that you are literally kicking the tax can down the road and setting yourself up to have to borrow when you need cash. You will need cash, I guarantee it. You’re putting your hard-earned money away in a place where the only person benefitting from holding on to it is the bank. Ready cash is safer than invested funds right now. Always build up your own cash savings before you build up any other accounts. So what do you do with all that money? SAVE IT. [...]
May 10, 2020UncategorizedWhat if you had to live on 40% less guaranteed income?
Did you know that many retirees do? When they combine SSI with a pension, the resulting retirement income is often 30% to 50% less than their final salary.
That’s why so many mature investors are choosing annuities. Variable and fixed annuities can give you steady income for years, even for life, and the life of your surviving spouse. The return is more consistent than that of many other investments.
Why live on 40% less? Call me at 214-504-4833, and I’ll show you how annuities can help you create your own personal pension and lock in higher levels of guaranteed income. Or email me at beth@curatefinance.com to discuss your options for building out the rest of your guaranteed retirement income plan. [...]
October 12, 2020UncategorizedOctober is the Financial planning month and a great Performance- Reviewing your fund, stock, and cash time to meet with your financial professional to ask performance during 2020 can help determine a future
questions, review policy and portfolio performance, and make decisions that keep you on track with your goals. Regardless of your age, it would be best of you planned for your financial future.
Reviewing your insurance policies and portfolio during the final quarter of the year is essential for many reasons. Fall tends to be when many people think about next year and what they want to accomplish financially in the future. With the disruptions that 2020 brought
to our lives, there is no better time than now to review, update, and make changes, so you are ready for 2021. Have you checked the following with your financial professional?
Life Insurance Policies:
Beneficiaries- Has anyone in your family married, divorced, or changed their name? Was there a new family member born this year? Update beneficiary names and include social security numbers for each to ensure the death benefit pays quickly to your beneficiaries.
Death Benefit Amount- Have you acquired more debt, retired, or had assets increase in value? Review each policy to ensure it will provide enough death benefits to cover all your beneficiaries’ financial needs. If you have a large estate, ensure the death benefit will offset estate taxes.
Additional Policies- Was there a new family member born or families combine this year? Life Insurance can benefit your new family member in future years. Consult your insurance professional to determine allowable coverage and if there are stipulations if you are not the custodian of the minor child you wish to insure.
Retirement Portfolio:
Allocations- Is your portfolio too heavy in one asset class? With today’s volatility, rebalancing and adding another asset class like annuities may help to balance portfolio allocations to align with your goals. Work with your financial professional to determine if annuities are a suitable investment for you.
Risk Tolerance- Are you taking too much risk or not enough? Changing jobs, being furloughed, or contemplating early retirement can affect your risk tolerance. [...]
October 19, 2020UncategorizedAmericans are starting to see the impact of increasing prices at the supermarket and the start of inflation. Also, clothing at retail stores is depleting as manufacturing has halted, creating demand for products ordinarily accessible.
Today’s economic conditions are much worse than coming out of the Great Depression. During periods economic recovery, the U.S. experienced historical debt and tax levels, paid for by the American people when tax rates were above 40% for over 40 years (1940-1981). Many older Americans recall the high-interest rates, high prices, and people displacing from the weak economy.
While the CARES Act provided a one-time payment to individuals and for business stimulus, it will not solve our country’s future economic problems. Government-funded recovery will likely lead to higher taxes, and the debt will be collected from U.S. taxpayers to decrease the Federal deficit.
What has changed since The Great Depression is the debt the U.S. carries, now close to $24.2 Trillion with a 106% Debt/GDP Ratio (Gross Domestic Product). Our debt to GDP ratio indicates that the U.S. owes more than it produces and consumes domestically, or exports. How do economies recover? By producing and selling more than its expenditures or by raising the prices of their products. How do government coffers improve? Through tax collection. Both create problems for everyone, but especially for those nearing or in retirement.
In any market, investors must always consider the five risks that can sideline their financial future:
Inflation Risk- Investments are not optimally positioned to address the rising costs of goods and services will deplete a portfolio.
Taxes Risk- Increased taxes erode the investment capital; the
investment type and timing are critical.
Longevity Risk- Investment capital is not enough for supporting longer lives and long-term care needs.
Survivorship Risk- Unexpected loss of a life-partner leading to lower investment capital.
Market Risk- Loss of principal value can decrease investment capital.
One solution to addressing inflation risk and tax risk is by increasing the allocation of principal-protected products. The benefits of fixed-indexed annuity products address all five significant dangers:
Inflation Risk- Allocation to these products allow asset allocation strategies to address inflation. Taxes Risk- Leveraging tax-free investment strategies increases investment capital.
Longevity Risk- Utilizing “income for life” features address longevity risk and long-term care risk. Survivorship Risk- “Death Benefits” provide tax-advantaged mitigant against untimely death. Market Risk- Principal protection provides a buffer against stock market fluctuations.
The impact of inflation and taxes due to COVID-19 will continue making it critical that you consider your retirement portfolio’s allocation and prepare for your financial future. If you are nearing retirement, make sure you prepare for higher taxes and discuss tax-saving strategies at our next meeting.
Disclosure: Guarantees are backed by the financial strength and claims paying ability of the issuing company. This article is designed to provide general information on the subjects covered. Pursuant to IRS Circular 230, it is not intended to provide specific legal or tax advice and cannot be used to avoid penalties or to promote, market, or recommend any tax plan or arrangement. You are encouraged to consult your personal tax advisor or attorney.
SWG 1253815-0720b [...]
October 20, 2020UncategorizedWondering how the 2020 Presidential election might impact your portfolio? Here is what we know from a historical perspective:
The Presidential Election Cycle Theory
The Presidential Election Theory, developed by stock market researcher Yale Hirsch and featured in the 1967 Stock Trader’s Almanac, analyzed the stock market
data over several decades over the four-year term of sitting presidents. Hirsch’s theory suggests that stock markets perform weakest during the first two years of a presidential term when the president tends to work on the proposed policy reform that got them elected.
During the second half of their term, presidents shift their focus to improving the economy to get re-elected. As a result, many stock indices gain in value and
have shown consistent performance in the past, (but past performance is no guarantee of future results) regardless of whether the president is Democratic or Republican.
Understanding how presidential elections influence the stock market requires looking at past historical data
and linking the S&P 500 Index returns and the U.S. Presidential election outcomes. Over the last 60 years (1956 to 2016), there were 16 elections, and the S&P had positive returns 14 of these years with an average return of 9.8%. Analyzing this historical information further, the average return was higher during an election year when a Republican was elected, an above- average return of 11.8%. Simultaneously, the index return was only 7.2%, leading to a Democrat winning the race.
Even if you think that the political party that wins the election drives the stock market’s performance, this is not exactly true. What has a significant bearing on the election outcome is the stock market’s performance before the election- the year before and at least six months prior.
An analysis conducted by Charles Schwab in 2016 found that the third year of a presidential cycle tends to have suitable gains:
Average S&P 500 Index returns each year of an election cycle:
Year after the election: +6.5%
Third year: +16.4% Fourth year: +6.6%
However, many things tend to be at play during election years – especially in 2020.
Short-term stock market results can vary depending
on factors, including gridlock in the House and Senate, and whether the election involves an incumbent candidate or a sweeping election victory. Tracking trends like this in the stock market tends to be easier than understanding why they occur.
2020 is turning out to be a year, unlike any other. After an 11-year bull run, we slid into a bear market amid
the COVID-19 pandemic. It is uncertain how long the pandemic may last and how quickly we can recover once a vaccine is available. These variables make it difficult, even with the historical data we have, to determine how the fourth quarter of 2020 may play out.
History has shown there may be statistical evidence when it comes to stock market performance, but past performance does not indicate future results. When it comes to your portfolio, the economic significance is what matters. Remember that interest rates, global economic conditions, and economic expansion and contraction outweigh any President’s agenda.
These reasons are why it is important to remember that time in the market beats timing the market. Stay focused on your long-term financial strategy for stable growth in your portfolio and discuss any concerns you have with your financial professional. [...]
October 27, 2020UncategorizedSocializing is critical for mental health, and people who associate with others live longer. Research also concludes that isolation can often lead to loneliness, depression, and other health problems. Especially now, during COVID-19, our desire to connect with others is heightened. Before the fall season changes to winter and cold weather arrives, get out and enjoy the season- but do so safely. Here is a list of ideas to safely enjoy fall until we experience brighter days ahead in a post-COVID-19 world:
Head Outside- COVID-19 does not mean you need to confine to your home; you can still enjoy the outdoors’ natural beauty. Just remember to practice social distancing while walking, biking, or while attending outdoor fall events. Remember that even a walk around your neighborhood with a friend is a way to get a little sunshine, exercise, and socially distanced socialization.
Be Neighborly- While a cup of coffee or hot cider indoors with your neighbor or at a cafe may not be an option, have it outside while distancing at least 6-8 feet apart. Bringing cider or coffee and blankets to a local park provides an additional canvas for enjoying time with others.
Attend a Fall Farmer’s Market- Farmer’s markets are open in many states and may require ‘masking up,’ washing hands, moving one direction through the market, and socially distancing. You may be limited in handling the product or other items and required to pay with cards versus cash. Check your local area and experience a pumpkin patch for an added outdoor experience.
Fall Football- If fall sports occur in your community, sit on the sidelines out of the grandstands unless the seating is limiting. While outside, limit your exposure by avoiding contact with others.
While we still do not know everything about COVID-19, the CDC has established guidelines to help reduce the virus’s spread that can be found here. Isolation and socially distancing isn’t going to last forever. While it not yet safe to return to the way our lives were before COVID-19, there are ways to safely socialize in person versus through a screen or phone call. [...]
November 11, 2020UncategorizedWelcome to Curate Finance financial fitness. I am Beth Freudenburg, a financial strategist and I’ve been helping families understand how their money works and how to truly enjoy the fruits of their financial lives for years. It’s a pleasure to be here talking about health, fitness and all the ways our personal health is affected.
A large portion of our ability to create and sustain a truly healthy lifestyle includes looking after our personal finances. For years, studies have pointed to personal finance as the area of people’s lives where control is seldom gained, and anxiety is more frequently the result. People feel as though they lack control, organization, and the ability to maintain their best interests amid the constantly changing environment of companies, products, taxes, fees, advisors, and life events.
Our lives are complicated and the financial world we live in feels more complicated.
Achieving true personal health includes managing our financial lives. Becoming a good steward of wealth is easier than you might believe and has to do more with understanding how we make financial decisions and the rules of the financial industry as opposed to where we allocate investments or which broker we choose.
Are you ready to become financially healthy and leave all the stress you carry around money behind – for good?
Over the next year, we will talk a lot about what it means to be a good steward of the wealth you have been given. You’re going to learn what it feels like to look at your wealth from a consumer point-of-view instead of absorbing marketing campaigns designed to teach consumers to purchase financial products that may or may not be good ideas for you. You will look at your finances differently – as a group as opposed to a bunch of one-off choices. You will learn to protect what you have, create a budget that doesn’t cause stress while systematically saving the right amount of money, grow your wealth responsibly while decreasing risk, create the retirement that you want and deserve, and prepare a meaningful legacy – all without jeopardizing your lifestyle.
Preparation is the most important part of any task. If you’re willing to get serious about your money, you believe in something a little bigger than yourself, and you love your family . . . welcome in.
I encourage you to start where you are as opposed to waiting until your finances look more like where you want to be. Doing otherwise is a little like cleaning the house before the maid comes so she won’t see how you actually live. That work will always be based on a false narrative.
I’ve taught hundreds of families the rules of the financial game and the tenets of personal financial economics. They learn how to recapture money they didn’t realize was leaking from their financial bucket and make it available for other things; how to strategically place their assets to lower and recapture taxes; create more privacy; spend less on consumer fees; be better prepared for emergencies; and put in place a plan for whatever comes their way.
I’m Beth, your personal financial trainer. It’s nice to meet you! [...]
November 25, 2020UncategorizedI am Beth Freudenburg, a financial strategist and I’ve been helping families understand how their money works and how to truly enjoy the fruits of their financial lives for years. It is my pleasure to be here talking about financial health and fitness, and to how to find ways to begin the practice of being present in your relationship with money.
If the last year has taught us anything, It Is this; Being present Is more Important than being perfect.
We have collectively learned the lessons of re-prioritizing the actions, people, and experiences that are meaningful to us. Most Important, we have all had to learn how to cultivate calm and patience and find pleasure in smaller spaces. In short, we have learned to be present and appreciate what we have now, as opposed to worrying about what we may have later, what we want next or what we feel we are missing out on. Your personal finances should be no different. They, along with your relationships with those you love, require you to be present. Unfortunately, traditional financial planning strategies represent the antithesis of being present.
When we are present in our financial lives, the ‘what-if’s’ and ‘oh-no’s’ of speculation and goal-setting don’t exist. Instead, we spend time with facts and data – with ‘what is.’ It’s far less stressful, easier to manage and ensures that we are objectively working with what we have as opposed to what we wish we had. We become good stewards because we respect and treasure our work.
“But remember the Lord your God, for it is he who gives you the ability to produce wealth, and so confirms his covenant, which he swore to your ancestors, as it is today.”
Deuteronomy 8:18
Achieving true personal wealth, health, and happiness requires that we be present. Becoming a good steward of wealth is easier than you might believe and has to do more with understanding how we make financial decisions and the rules of the financial industry as opposed to where we allocate investments or which broker we choose.
Over the next year, we will talk about what it means to be present as well as become a good steward of the wealth you create and how to become more present in those conversations. You will learn to look at your finances differently – as a coordinated group instead of one-off responses.
I encourage you to start where you are as opposed to waiting until your finances look more like you where you want them to be. Doing otherwise is a little like cleaning the house before the maid comes so she won’t see how you actually live. That work Is based on a false narrative and is not ‘being present.’
I’ve taught hundreds of families the rules of the financial game and the tenets of personal financial economics. They learn how to recapture money they didn’t realize was leaking from their financial bucket and make it available for other things; how to strategically place their assets to lower and recapture taxes; create more privacy; spend less on consumer fees; be better prepared for emergencies; and put in place a plan for whatever comes their way.
Presence and preparation are the most important parts of any task. If you are willing to get serious about your money, you believe in something a little bigger than yourself, and you love your family . . . welcome in.
I’m Beth, your personal financial trainer. It’s nice to meet you! [...]
April 16, 2021UncategorizedMost families I meet don’t have enough money saved up. They have retirement accounts, but not tax-free cash. I understand why. They don’t want money sitting in accounts that aren’t earning anything. But that’s exactly what you need; Money that you won’t have to pay taxes on.
A good target is always 15% of your gross annual income. Contribute to your retirement account up to the amount your employer matches. The balance should go into your own savings account. If you have trouble saving without spending, consider a brokerage account.
It’s true that pre-tax contributions can help lower your taxable income in the year they are made, but they also create an unknown tax in retirement since we don’t know what your tax rate will be when you’re retired. In most cases, it will go up as you lose deductions or a spouse. [...]
April 27, 2021UncategorizedAs a Woman, I could not be happier with my sex from birth. I LOVE being a girl, acting as a lady, living a full, demanding, and continually interesting life. Yet, despite that I would never trade being a woman for anything, I have to admit there are days I could do without some of the tangles and grievances so many women have to suffer only because we are women as opposed to men.
Have you had days that leave you in some doubt that you are not as valued as your male counterpart? Have you been made to feel the full weight of your lesser social position and maybe even your implicit lack of intelligence – because you’re a girl?
Let’s be clear, it is not the agenda of all men to habitually demoralize the women in their lives, but those who do – well, they seem to make up for those who don’t. Their words sting and bite so viciously when they vividly illustrate women as less capable, less intelligent, or less deserving as I was raised to believe. Sometimes worse are the days spent waiting for the men around me to just catch up with my thoughts, plans or ideas. Why does it seem as though it takes them twice as long to arrive at the same correct conclusions? Why must we play the political game of attempting to enable men to believe our good ideas are theirs so that action might commence?
So yes, women have it rough some days. Aside from any political point of view, educational perspective or corporate achievement scale – we just do. Still, I wouldn’t trade it, because we also have it VERY good!
I believe everyone – regardless of race or gender – has a list of grievances and a similar list of gratitude. They are simultaneously similar and different. Still, in general, I believe women truly do get the short end of most sticks. Sometimes through the intent of others, and sometimes due to our genetics – and other times – it’s just luck.
I grew up during the 1970s. Gloria Steinem and her contemporaries were all over the news as strong women fighting for equality on their battlefields.
That was 1970. Fifty years ago!! Do you know that within those 50 years, the Equal Rights Amendment has still NEVER been ratified? It’s true.
TODAY Women are still not afforded equal standing as citizens according to the Constitution of the United States. It’s hard to believe, isn’t it? There have been a few workarounds; laws around voting eligibility, equal pay, etc., but nothing that provides – equal treatment under the law as a facet of Constitutional Right.
The Equal Rights Amendment was presented to Congress in 1923 and passed by both the House and Senate in 1960. Just this piece took over 40 years to accomplish. From there, the amendment was sent to the states for ratification. 38 States were required to make it law. Congress received ratification from 35 and had until 1977 to gain the remaining THREE states to ratify the amendment into law.
Since then, five states have revoked ratification. Imagine that. They revoked ratification! The deadline has been extended several times. Some states have even ratified it after the deadline creating a legal battle around whether those ratifications are legal or not. In light of the five states that have revoked their ratification – also done after the deadline – well, more confusion in the courts.
Equal Rights Amendment – You can check your state here.
So what now? It seems impossible to pick up this mantel after such an age, with so much changed since the language of the amendment was drafted. But is it less important now? Likely not.
We need it more than ever. But until we get it we will have to cobble together our own protections in our defense. Nowhere is this more necessary than in the world of finance.
For women, the financial inequities that exist in our lives are real and costly.
We make less.
On average, women make $0.85 for every dollar a man earns. That percentage decreases for women of minority. This is not news. On its own, it’s not a financial death sentence. It’s in combination with other inequities where it become dangerous. Women work more hours than men. Jobs typically held by women pay a lesser wage like those in service and retail. Other positions, like teachers and nurses were always considered to be more supportive than integral and have therefore never been appropriately valued. Finally, job categories for women have long been thought of as though they provide additional income to a family as opposed to supportive incomes. Women are paid less because it’s neve been important to pay them a head-of-household wage.
If the goal of our work is to support our families while we earn and prepare for retirement, then we need to work more years than men to reach the same retirement savings goal.
We live longer.
This is a fact. Women tend to outlive their husbands by five years almost 80% of the time! For most of us, this means that the end of our lives will be spent alone. After our spouses die, we alone will face rising healthcare costs, more damaging effects of inflation, a reduced income when our social security vanishes as we move to what our husband had earned and forfeit ours. Finally, we’ll pay tax at a much higher rate, because the single tax rate is higher than the married rate. In short, we will be financially penalized because our husbands have died.
The part nobody talks about is that if we live longer and will spend more years in retirement our savings needs to larger to support that. We will need more money.
Our careers are interrupted more easily and frequently as we build and care for families.
Few men must make the choice between pursuing a career or having a family. However, most women do. When women stop working to have children, two financial impacts occur; they lose career momentum and interrupt wage increases. Both negatively affect earnings over time.
Not only do women pause careers and the income that goes with those to have families in the early years, but they also often make the same choice in later years when aging parents need help. Since out parents are living longer than previous generations, and the cost of care is prohibitive, the option to look after parents on our own dime is sometimes the most economic one.
Women become disabled more frequently.
Have you ever been disabled by an illness or accident? If you haven’t, you’ve been lucky. Typically, 25% of women will become disabled at least once during their working years with the average disability lasting about 2 ½ years. A disability is any condition that makes it impossible to perform the duties of your job on a full-time basis. If you couldn’t work, would you be okay financially? If your paycheck stopped, would it affect your lifestyle? Would it affect your ability to save for retirement? Most women do not own their own disability income protection insurance policy. However, considering that women are already behind the eight-ball from an earnings standpoint, they probably should.
We earn fewer social security benefits because we tend to make less and have career interruptions.
The Social Security Administration has a formula they use to determine everyone’s social security benefit in retirement. That formula is based on the 35 highest earning years of each person’s career. It does not matter if the years are contiguous, or when they occur in someone’s life. The 35 highest earning years will be considered. If there aren’t 35 years during which money was earned, they fill in the missing years with zeros – as long as there were at least ten.
What does all this add up to? Less. Now and in the future women will have less money and less wealth than their male counterparts.
The only way to counteract these statistics and genetic effects is to work longer, live on less. Neither of which sounds like a great strategy.
My grandmother was fantastic! I loved her dearly. She was progressive, feminine, out-spoken, extremely intelligent, and so very wise. At times, I believed her ideas were outlandish, but as I mature, I find her ideas around gender inequity less and less incredible. She was fiercely independent for a girl born in 1917. I remember her comments about those 1970s equal rights protests.
She questioned why so many women worked so hard to break into the world men worked within. As far as she was concerned, having men around when you were trying to get anything done just slowed you down most because of their uncanny ability to get in the way or ask questions you’d already worked out the solution to ages ago.
I’m not sure she was entirely correct in her assessment. Perhaps more accurately, I’m not sure her view of the world translates very well to current conditions. So much has changed for women since she was born. Despite the gains we have achieved, there are still many more to be earned.
If she had had the opportunity to earn a corporate title during her lifetime, it would have been ‘Executive Producer.’ She was the one that made sure that everyone did their work.
During her lifetime she saw a depression, wars, sickness, an industrial age, political unrest, massive changes to technologies which materially changed the way people worked – many of which affected how women worked and how their work was valued.
She was a consistent and strong advocate for women and their right to both earn their own money, achieve their own financial security and remain entirely feminine in the process.
Just like it, only different / Beth Freudenburg, MBA
www.curatefinance.com, beth@curate18finance.com [...]
June 8, 2021UncategorizedHere’s a little brochure explaining everything we do for you! [...]
November 8, 2021UncategorizedYou’ve probably heard people say, “I hope we can afford to send our daughter to college,” or, “I hope I don’t run out of money in retirement,” or, “I hope I can expand my business.” While we all hope for good things in life, the fact is that hope won’t get you there. It takes a well-constructed financial strategy.
Create a strategy unique to you
A financial strategy is critical to give you and your family — or your business — a high level of confidence that you’ll meet your goals in life. But ditch the cookie-cutter approach. Everyone is unique. We all have different situations and needs in life, so one method won’t work for everyone. You deserve a financial strategy of your own, and it’s not as difficult as you might think to create one.
Get started early
Many people think creating a financial strategy is a daunting task, so they procrastinate. In reality, there’s never really a good time to get started, because you can always find a reason not to. But a trusted financial professional can help ease your uncertainty and get you on the right track.
Remember, a financial strategy can have a massive positive impact on your life, so it makes sense to get started early. If you start too late, your opportunities become more limited. One thing we all have in common that we’ll never get back is time. The earlier you get started with your financial strategy, the better it will be for you, your family or your business. The more time you have, the more time works in your favor with saving and investing.
Use a comprehensive approach
Many people take a siloed approach when planning their futures. While it’s good to have a strategy for your child’s education and your retirement, it’s not good if you approach these plans in a siloed or compartmentalized way. The fact is that every single financial decision we make is interrelated to our other financial decisions.
For example, the money you’re putting away to pay for your child’s college education may impact how much you’re saving for retirement. In other words, how are you limiting your individual goals?
This way of planning can lead to what I call “decision-making disorganization.” It’s focusing on specific needs instead of looking at the big picture. A financial professional can help you organize your financial decisions in a way that works best for you in your current situation. The same comprehensive approach should be taken within your marriage and your business. For a typical marriage, it’s better to have one shared financial strategy for the family, with common goals. If you own a business, your business plan must be integrated with your personal financial strategy, because at the end of the day, you’re using your money to build the business.
Think protection first
The best financial strategy can go off the rails quickly if something unforeseen happens. Life doesn’t follow a straight path, so the protection components of your financial strategy must be maximized, or you could be subject to a significant loss. Life insurance, disability insurance and liability insurance are examples of the kind of protection that need to be considered as you begin saving and investing. They should also be monitored and reviewed like other aspects of your financial life.
Life insurance is a foundational piece of any financial strategy. When most people fail with their strategy, it’s not because of a down market or a missed opportunity. It’s because of an unforeseen event, like premature death. We can always have a negative year in the market, typically we can recover from that. The market always comes back. But if you die, you’re not coming back. You need to account for the contingencies in life and have protections in place, so your loved ones or business can go on without you.
Save for rainy and sunny days
After your protection elements are set, you can now begin saving. Saving 15% of your earned income is a good starting point to help you stay ahead of wealth-eroding factors like taxes and inflation. Consider setting 50% of your gross annual income aside in cash. This may seem like a lot, but this liquid emergency fund is a ready reserve for if and when you need it. It’s there for you so you don’t have to withdraw money from your retirement or long-term savings, which can result in penalties and tax consequences.
Having cash on hand before thinking about your investments and long-term savings is very important. I know many people who have a good amount of money in their retirement account, but they’re cash poor in their emergency accounts. In an emergency, they have to tap into their retirement savings, which isn’t designed for short-term purposes. Some people also equate emergency savings with negative events, like a job loss. But these funds can also be used for positive things, like an opportunity you want to take advantage of without going into debt or dipping into your long-term savings. Your emergency savings is money at the ready for you.
Stay the course
Now that your protection and emergency funds are in place, you can confidently build the other components of your financial strategy and know that your financial life will be under control. But the key to long-term success is staying the course. For instance, when the market is up, don’t be greedy. When the market goes down, don’t panic. Balance and consistency are key.
Another great way to stay the course is to maintain your life insurance coverage, even when your children have grown and started families of their own. During your working years, you bought life insurance to protect your family. When you retire, life insurance can be considered “asset insurance”, which can allow you to spend and enjoy your assets that you worked so hard to build. Life insurance can play a critical role in retirement distribution strategies. For example, another way having life insurance in retirement can help is that you can use income tax-free cash value from your permanent life insurance policy during market as a source of income which allows other assets to remain in their accounts, giving them the ability to recover from losses.
Review and review again
Your financial strategy will give you confidence and assurance of your future plans. But don’t be complacent. Life changes. Marriage, babies, new homes and promotions all come into play — and as they do, your financial strategy will need tweaking. A good rule of thumb is to touch base with your financial professional once a year for a review. It doesn’t have to take long, just a quick touchpoint to make sure that changes in your life are reflected in your financial strategy. On the flip side, don’t over-review, because most plans are long-term, maybe 20 to 30 years out. You will need to find a balance that works for you.
Find the right financial professional
You want to start building your financial strategy now, but how do you find the right person to help with this important undertaking? The best way is to talk with your family, friends and trusted peers and ask them who they use. Get several names and do your due diligence on them. Research and interview them so you’ll increase your likelihood of finding the right financial professional for you.
It’s important to choose a financial professional that you have confidence in and are comfortable with because they’ll be acting as the quarterback for your financial team if you need one. They can even find the right attorneys or CPAs if you need them to execute parts of your strategy. Creating the best financial strategy for you starts with the right financial professional. [...]
December 25, 2021UncategorizedWe’re wishing all of y’all a Merry Christmas and hope you have a Happy New Year! [...]
May 27, 2022UncategorizedThank you to all the veterans who have served in the military, past and present! [...]
July 4, 2022UncategorizedHappy Fourth of July! Our office will be closed for the remainder of today to celebrate the holiday. If you served in the military, thank you for your service. [...]
November 8, 2022UncategorizedThe 2020 United States Presidential Election concept. Template for background, banner, card, poster with text inscription. Vector EPS10 illustration [...]
What We Do Best
As an advocate for the care and support of your special needs child, I will work to help protect public benefits and coordinate those with your family’s needs and specific desires now and at every stage of life. Create the largest legacy of care — correctly; position you for a retirement you can count on; and avoid inadvertently jeopardizing public benefits. Ensure that your strategy is carried out in your estate planning documents to minimize taxes, alleviate or drastically reduce Medicaid Payback opportunities, and develop a coordinated care and support strategy while maintaining financial flexibility as many guarantees a possible.
Financial Planning for Special Needs
Retirement Income Strategies
A Womens' Worth
Financial Planning for Special Needs
As an advocate for the care and support of your special needs child, I will work to help you protect the public benefits of your loved one now at every stage of his or her life.
Create the largest legacy correctly and avoid inadvertently jeopardizing public benefits.
Ensure that your strategy is carried out in your estate planning documents to minimize taxes, alleviate or drastically reduce Medicaid Payback opportunities, and develop a coordinated care and support strategy while maintaining financial flexibility and including as many guarantees as possible.
Retirement Income Strategies
One of the most common and anxiety-causing fears people share when considering retirement options and timing is the possibility of outliving the money they’ve worked a lifetime to accumulate.
Build your retirement income strategy, minimize taxes, reduce market risk, maximize social security, coordinate Social Security benefits and Medicare expenses, understand RMDs, and leave the largest legacy possible for those you love most or the charity closest to your heart.
Blend insurance products and re-allocate portfolio assets to create guaranteed income for your life and the life of your spouse regardless of longevity.
Making sure your retirementis properly funded can be more challenging than ever in today’s economic environment – especially given increased the risks and concerns we face. 
A Womens' Worth
Women of Generation X (1965 through 1989) have been brought up to believe that they can have it all. Unfortunately, the financial services industry has not kept pace. Women’s financial planning differs from traditional planning strategies historically designed males because their lives and earnings differ. Women generally paid less, have more unique career tracks including wage gaps, and family medical leave, may pay higher taxes as single heads of households, and so many more issues unique to women.
Are you planning with One-size-fits-all strategies or would you prefer something designed with YOU in mind? Does your financial strategy take all your unique circumstances into account?
