Saturday, December 21, 2013

What's in a title.

In previous $ Tips I talked about beneficiaries and how important it is to make sure you keep them up to date.

In your IRA, 401k or 403b and life insurance policies, you name beneficiaries. Those persons are entitled to receive all the money in that particular account.

No matter what your Will might say, the named beneficiaries get whatever is held in that account at your passing. It overrules your will AND it avoids Probate. (meaning your heirs can get the money almost immediately without court reviewing the will.)

All this is building up to the TOD - Transfer on Death.
This is one way to ensure a particular person (or persons) receives the contents of your account at your death. It works similarly to naming a beneficiary. It applies to taxable accounts not tax-deferred (IRA,401k,SEP).

When you open a brokerage account, mutual fund, CD, checking or savings account you may want to open it as a TOD account. Many folks would open a "joint" account so money could pass on to a spouse, son, daughter or friend quickly and easily. But that would also give the spouse, son or daughter, friend access to the money as a "joint" owner. A TOD account gives your beneficiary quick access but only at your passing.

So the same caution is to remember to keep your beneficiaries current.
After a death, a divorce, or birth review your beneficiaries so the right persons get the assets.

Be $ Smart!

Tuesday, December 17, 2013

How are you doing financially?

Report cards, progress reports, etc. all tell us how we are doing in some segment of our lives.

So how are you doing financially? How do you measure your progress?
Have you ever sat down and examined how you stand financially? If not, now would be the perfect time with the close of 2013 just a few weeks away.

Year-end statements will be delivered early in January so get a pen and pad to make two lists: 1) all the things (assets) you own and 2) all the things you owe.

You may own a car, a boat, a house or condo, a 401k, an IRA, some land, gold jewelry, artwork, stocks and bonds. List the value of these items in one column; add it up.

The second list will show all you owe: student loans, mortgage, home equity loan, credit cards, personal loans from friends or family. Tally these values.

Now subtract the amount owed from the amount owned - ta da! there you have your NETWORTH. You have just produced your very own Networth Statement!

That number is just a snap-shot in time - today. The number will constantly change because you are earning and saving, because investment values fluctuate daily, and because you are paying down your debt.

The trick is to track this number consistently - once a year, semiannually or quarterly. Once or twice a year is best. This is how you know if you are making progress - or not. You want the numbers to grow and improve. If that is not happening, figure out why and make some changes.

Numbers don't lie - they provide information - you make the decisions.

Friday, December 6, 2013

Money for...

When I was 12 my father took me to the local bank to open a Christmas Club account. I committed to depositing 50 cents per week, every week to save for next Christmas. 52 times .50 comes to $26 which was a tidy amount of money at that time considering NYC subway tokens sold for 15 cents. Imagine my excitement walking out of the bank 12 months later with all that "money for" Christmas gifts!

"Money for..." is a simple way to accumulate cash for a specific purpose - a new car, a long-deserved vacation, a supersized TV.

"Money for..."the opportunity to say "take this job, etc."

"Money for..."financial independence.

"Money for..."freedom to do as I please.

"Money for..." the relax and enjoy time of my life.

If I were to say to you: "now is the time to save for retirement", you might respond: "I'm never going to retire" or "I'm too young, I have plenty of time!" I can assure you that time flies and whatever your reason may be, now is the time to decide what you want "money for" and open that Christmas Club account.

Saturday, November 16, 2013

$ Tip: 2013 Year-End Tax Planning

At this time of year you will see many articles written about selling losing stock positions against stock gains you have made during the year to reduce your tax bill. That is, if you are fortunate enough to hold stock positions, winning or losing!

One of the easiest ways to lower taxable income is to increase your contributions to your 401k or 403b. For every dollar you contribute, that's a dollar not included on your W-2.

Here's an example:
Kelsey makes $65,000 and contributes $10,000 to a 401k. (That's app. $384 per pay check. But because it's pretax Kelsey's take home pay is only $257 less because $127 was not withheld for taxes). Kelsey contributed $384 twice a month over the year, so the W-2 for 2013 will read "taxable income" $55,000.

Call HR to open a 401k or 403b or to learn when you may increase your contribution to pay less in taxes in 2014.

If you run your own company and want to contribute to a tax-deferred plan like a SEP IRA (simplified employee plan) for 2012, you MUST open that account before Dec. 31, 2013. Don't wait until April, you'll be too late!

If this $ Tip does not apply to you, pass it along to a daughter, son, nephew, cousin, friend who might benefit by paying less in taxes.

Wednesday, November 6, 2013

Having that important talk about money...

Money, like politics, sex and religion, brings up all sorts of emotional reactions.

Why do we shy away from THAT topic? Some reasons might be:
It makes you feel awkward or uncomfortable.
It's a very personal subject.
It's definitely not polite.

How will you know about a partner's money style or credit history if you don't ask?
Many a relationship goes on the rocks as a result of different spending and saving styles. When you marry you take on responsibility for the other's financial decisions - for good (a healthy 401k) or bad (bankruptcy or credit card debt).

How will you know if your parents have enough money to retire if you don't ask?
You may be surprised to discover they have not saved enough and will expect you to "help out" once they run out of money.

How will your child know what colleges to apply to if you don't have an honest conversation about what you can afford?
Setting expectations for a youngster can avoid disappointment and carrying student loans into their future and into your retirement.

In an emergency, how will you know how to pay the bills, manage a portfolio or check your bank account balance if you and your partner never talk about money.
A division of labor is natural and healthy but both spouses should have a basic understanding of family finances. Once or twice a year, plan a specific time to sit down and go over it all.

Put your feelings aside and have that money conversation. It will clear the air and help you plan ahead.

Thursday, October 24, 2013

Out of touch...

Once upon a time at the end of the work week, men and women would stand at the payroll window and receive an envelope of cash as payment for the hours they worked at any given job.

Some would go out and celebrate, some go shopping and some would go home where they would parcel out the cash into a series of envelopes: food, rent, doctor, gas & electric, telephone, emergency, vacation. One wouldn't dare touch the rent money! If there were any money left over, it was spent on fun.

We have lost touch with money.
Direct deposit of paychecks, credit cards, wire transfers, etc. all have removed us from the physical touch of money. We're not sure how much we make nor are we sure of what we spend. Money has become ethereal and elusive.

Try these two exercises to put you more in touch:

The next time you plan to eat out, take only the amount of money you intend to spend that evening. NO CREDIT CARDS - $35, $65, $100. As you order be aware of the cost of each item and factor in the tip. Can you "afford" another glass of wine, a second dessert or a cappuccino? With your credit card you wouldn't have a second thought and often spend more than you intend.

For two weeks track your ATM withdrawals.
On the back of each ATM receipt write down every purchase you make with that withdrawal - to the dollar! You might find you are suddenly aware of how you spend your money.

Once you get back in touch then you can make wise $ decisions.

Thursday, October 17, 2013

"What's this going to cost me? How do you get paid?"

These are two simple questions that should automatically roll off your lips when you are involved in any financial transaction.

We are not afraid to ask the plumber, auto repairman or electrician. Why do we find it so hard to ask our broker, financial advisor or insurance salesperson?

If we go back to last week's Tip: "nobody cares about your money as much as you do" these questions make perfect sense. We need to know the cost - the upfront, visible and the hidden costs of buying anything. It's part of taking care of our money.

Everything has a cost. We can only know if we are "getting a deal" or being "taken" if we know the cost. Then we can seek a comparison.

Before your next encounter with your financial advisor or insurance broker practice asking those two important questions. Say them in the shower. Say them as you drive. Say them while taking a walk. Say them so often they just fall out of your mouth automatically. They show you care about your money.

Thursday, October 10, 2013

Nobody cares about your money more than you do!

Many times folks will tell me: "my financial advisor never calls me" or "my broker only calls when she/he wants me to buy something".

The goal of a broker or financial advisor is to bring in more money. They get credit for "assets under managemennt" (AUM); the more the better. It's like any other relationship, the wining, dining, courtship - then the disillusionment. Once your account has been opened and your money deposited, the broker moves on to find more (new) money.

But like any other relationship, it must be viewed as having two sides. How often do you call your broker or financial advisor? Don't worry about taking up their time. Don't be concerned if you can't think of a reason to call.
YOUR MONEY is the most valid reason!

When you receive your quarterly statement use that as a signal to make the call.
Ask: "How am I doing?"
"Will I have enough to retire?"
"Is this investment strategy working?"
"What could we do differently?"
"What will happen to my investments now that interest rates have started to rise?"

When your broker or FA hears from you on a regular basis it puts them on notice. It tells them you care about your money enough to check in and see what's happening. It makes them work harder.

Wednesday, September 25, 2013

A gift from Uncle Sam - Roth IRA

Open a Roth IRA if you have not done so already.

It is not often we receive a gift from Uncle Sam but this one is a beauty!

1. If you have earned income you may contribute to a Roth. Even children are eligible. You can open a Roth IRA at your local bank or online.

2. It offers liquidity - meaning you can withdraw your contributions if you need the money. (There are restrictions on withdrawing the earnings or growth.)

3. Down the road, in retirement, withdrawals are tax-free. (Your regular IRA or 401k will be taxed as income both state and federal.)

4. The IRS offers a large window for you to make your contribution - 16 months.
e.g from Jan.1 of 2013 through April 15 of 2014.

5. $5500 is the limit for folks under 50. ($6500 for those over 50.)

But be smart about it - set up an automatic payment plan and have $100 deducted each week from your checking account. If you can't afford $100, then deduct $25, $40 or $50. The limit is $5500, you may always contribute less. Contribute something!!

6. To buy your first house, once the Roth has been open for 5 years, you may withdraw all of you contributions and up to $10,000 of your earnings, with no taxes or penalties.

7. Your heirs will receive whatever is left tax-free.

Be aware, if you are single and make over $68,000 (AGI)

or married with a combined income of $112,000 (AGI)

you are not be eligible to contribute to a Roth. (There had to be some catch!)

AGI - adjusted gross income - (taxable income after deductions)

This information is for education purposes only. It is not advice.

Thursday, August 29, 2013

Basic money tips...

I like to help people understand money. I explain financial terms as simply as possible.

I have been sending out a weekly money tip to select clients and friends. Over the next few weeks I will publish those tips in my blog. If you find the tips useful and would like to be added to my mailing list just send an email to

Know your numbers...

With this day and age of digital everything we can lose sight of critical numbers in our lives. No, I do not mean blood pressure, your iphone gigabites or favorite cable channel. I mean how much money you make, take home, and pay in taxes.
Then, how much does it cost you to live each month? We have direct deposit, automatic withdrawal, online banking, ATM - each of which distances us from actually handling our money. The farther away we get the less real it feels, like playing Monopoly.

Try this list of numbers. See how many you know and promise yourself to complete the list by the end of the month:
- what is your annual salary? $_____________
- what is your gross pay per pay period? $__________
- how much is taken out for taxes? $__________
- how much is taken out for FICA, etc.? $_________
- how much do you actually take home or have directly deposited?________

- what is your current tax bracket? ________

- do you have life insurance through work? How much is your coverage? $________
- do you have disability insurance through work? What is your coverage?$_________

- do you have a 401k/403b through work?
- how much will your employer contribute? percentage _____ dollars______
- how much must you contribute to get your employer's match? __________
- how much do you contribute to your 401k/403b? percentage _______ dollars ______

- what are the current mortgage interest rates? ___________
- what is your current mortgage rate? _________

- how many active credit cards do you have? ________
- what are the interest rates on the cards you do not pay in full?________
- how much did you pay in interest on each of those cards last month? $________

Score: 5 or more answers - Brilliant! Congratulations.
5 or fewer answers - Trouble lies ahead!

Knowing your numbers removes the guesswork of personal finance and builds financial stability.

Tuesday, May 7, 2013

I don't know what to say. How can I help?

Life has its ups and downs.  Today I heard a friend's husband suddenly passed away.
My heart goes out to her.  What a shock!  He showed no visible signs.  After dinner he went to his den to read as she washed the dinner dishes.  She heard a thump, ran to him but it was too late.  He succumed to a heart attack (as my husband did several years ago).  There was nothing anyone could do.

She lost her best friend, the father of her children, her dreams for a golden retirement, her golfing buddy and her money manager.

If she's a good friend you want to console her.  You want to ease her pain and be helpful, but how?

First off be sensitive.  Be careful of what you say - "it's for the best", "he's in a better place", does not help.

Acknowledge her loss - "I am sorry for your loss.  We all will miss George."  "Don't be afraid to cry."

Recognize her pain and do not encourage her to keep busy. Say " you must feel this pain will never end."   Be willing to sit, have coffee and reminisce or just be there.  Listen, listen, listen.  Talk only if she wants.  Silence can be golden.

Be specific when you offer to help - "I'll pick up your sister at the airport. What time is her flight";  "I'll go food shopping for you Thursday.  I'll buy the basics to hold you for a few days.; "Let me walk your dog for the next week."  "I can go to the bank (lawyer, court) with you."

Give her plenty of time before expecting her to be/act normal.  Just because she gets up, dresses and looks okay, does not mean she is operating on all cylinders.  Her pain is physical and emotional.  She is in shock.  Her head is stuffed with wool and she is not thinking clearly.  Decisions should be small ones, nothing major.

Grieving is a process, a series of small steps.  Sometimes she will take two steps forward and three back.  It is very individual and there is no time table.

Don't act as if nothing has changed.  A touch, a hand squeeze, a direct look in the eye is better than an empty comment at any time.
Don't avoid her.  This is when she needs a true friend.
We never know when one of us will face the loss of a loved one.

Wednesday, February 27, 2013

That time of year....

With the beginning of March we know that April is not far behind - April 15th specifically.  If  you're like me that little voice starts reminding me to work on my income taxes.  Start it, get it done, get it over, then relax for another year.

But this activity presents a unique opportunity to review our personal finances while we have all these statements spread out on the kitchen table.
I will make a few suggestions.  Pick one and promise yourself to complete it before the end of April:

1. Examine your credit cards.  Choose one to pay off completely.  Preferably the one with the highest interest rate.  Carrying debt on several cards means you are paying for the privilege of owing someone money.  Interest payments buy you that privilege.  You have nothing to show for that money spent.  Make yourself richer, not the credit card company.

2. Review your 401k (403b) and increase your contributions by 1%.
Taken out of your paycheck over 26 paychecks that will be a small pinch in your take-home pay.  For every $100 contributed, you take home app. $65 less because you are not paying taxes on the $100.  Build your retirement fund so you may retire in style.

3.  Go to breakfast.  If you are the primary bill payer, take your partner/spouse out for breakfast one Saturday morning.  Request a booth with privacy and talk about MONEY.  Too often we forget to share and compare money coming in with money going out.  Too often something unexpected happens and one party has no clue how to handle the household finances.  Give your partner confidence in handling this chore.

4.  Call your broker/financial advisor and schedule an Annual Review.  No one cares about your money as much as you do.  Make sure your advisor knows that.  Share any changes in your life, like getting married, a new baby, a career change, an impending move, etc.  All life changes will impact your financial goals.  Your advisor needs to have this information to allocate your investments appropriately.

5.  Boost your Emergency Fund.  Today's news reported J.P. Morgan Chase will be laying off 19,000 employees.  Are you ready for a possible layoff?  Do you have 3-6 months of savings to carry you through a job search?  Call or visit your bank and have $25, $50, or $200 per month deducted from checking and put into a savings account.  Start small if you must, but increase the amount over time.  Having a "rainy day" fund is old fashioned but very satisfying if/when you need it.

Which one did you pick?  Good for you!  You're on the path to financial security.