Thursday, December 24, 2015

Give Wisely

'Tis the season for giving. I'm sure your mailbox is brimming with catalogs and donation requests. In addition to Black Friday and Cyber Monday we now have Giving Tuesday. Americans have been known for their generosity thus creating the opportunity for fraud.

Here are a few tips to help you give wisely:

- Have a "giving strategy" the same way you have a spending plan and a saving plan. Calculate how much you'd like to spend in charitable giving annually and stick to that number. This way you won't be tempted by every appealing pitch that comes your way.

- Give intentionally - Know what causes are dear to your heart - the poor, the homeless, ill children, abandoned pets, the rain forest, human rights, etc. Give with your heart to support what rings true.
My favorite is Habitat for Humanity, "give a hand not a handout", requiring sweat equity and offering an interest free mortgage.

- Vet the charity - Go online to see how much money actually goes to the stated mission and how much is spent on fund raising and administration.
Use online sites like, or to;
1. confirm their 503(c) status,
2. review executive compensation, and
3. obtain financial records
This information will determine if those charities are worthy of your hard earned dollars.

- Personal fulfillment - Realize how giving makes you feel and acknowledge your ability to make a difference. Don't give out of obligation.

Years ago I had a very wealthy client who lived off her family trust. She diligently gave 10% annually to several charities "because that was what was expected". She had no idea what these charities supported!
I encouraged her to reevaluate her giving. She was an aspiring artist and chose to create a scholarship at a local art school. She gained tremendous satisfaction in supporting a struggling art student.

Be $ Smart - use your head to give with your heart.

Saturday, December 5, 2015

It's Harvest Time - for Tax Losses

2015 has been a volatile year for the stock market. With big dips in the spring and fall you have ridden the roller coaster of investing.

One area taking a huge hit this year was oil and gas. The energy sector was down more than 40% over 2014. Perhaps you have a few energy stocks that show losses - the current value is less than what you paid for them. Or maybe, a "hot tip" from a friend did not pan out well.

This would be the time to review your portfolio and sell any losers. You may write these losses off against any capital gains you've made during 2015, dollar for dollar.

For example - you bought an oil company stock three years back and now it's worth half that amount giving you a $5,000 loss.
Earlier this year you had a winner; you sold a bank stock that doubled going from $5,000 to $10,000 giving you a $5000 capital gain. If you sell the losing oil stock and capture the $5,000 loss you may offset the $5,000 capital gain with the $5,000 capital loss and owe no taxes on the capital gain.

Tax-loss harvesting is a strategy that enables investors to save on their tax return by selling losing securities and using the capital loss to offset their gains. You may take advantage of this strategy in your year-end tax planning.

BUT if you want to buy another oil company stock to replace the one you sold, you should not buy a stock that is "substantially identical” to the one you have sold. The IRS considers this a "wash sale" and will disallow the tax loss. You must replace that oil company stock with an energy company that is substantially different.

Say you realized no capital gains this year, then you may take $3000 of the capital loss against $3,000 of ordinary income. The remaining $2,000 may be carried forward and used against 2016 taxes.

Please call your tax adviser to determine if this strategy is right for you!

Be $ Smart - review your portfolio; sell losing stocks and reduce your taxable income.

Another Risk to Consider - Longevity

Earlier in the year we reviewed the various types of risk you might encounter when investing - inflation, market, credit, currency exchange, default, etc.; we won't review them at this point.

There is one risk that has become more important for up and coming generations than those in the past - the risk of longevity. Living too long - lasting longer than your money - has prompted many financial planners to project to 100+ when determining "if you have enough to retire".

85 is now considered old, not 60 or 70. With exercise, decent diet and medical advances we all can anticipate a long life. The question arises: can we afford to live a LONG life?

Four tips to finance your antiquity:

- Start early - savings compound over time giving you a jump start. This is probably the most important move to make.

- Save more - saving 10% - 15% of your income would cover your retirement provides a good beginning. If you can, increase that number.

- Be more aggressive in your investing - a combination of stocks and bonds will appreciate over time. Increase the stock portion. If you are very nervous and insist on conservative investments, you must save even more!

- Work longer - plan on retiring at 68, 70, 75. Today's seniors are healthy, vibrant and mobile continuing to earn income well into their future. Do you see yourself among them?

Be $ Smart - start NOW to make sure your money lasts as long as you do. Call me for additional ways to save.

Sunday, October 25, 2015

Creative Housing

This topic presents itself to me many times as I meet with clients. Housing can be a huge chunk of our monthly expenses. "Rule of thumb" says housing costs should be about 30% of our income. For someone making $250,000 that's not usually a problem. Those making $35,000, it's a big problem especially if it means they must cut back on food, medicine or fun.

We tend to be a nation of independents - we drive solo instead of carpooling; we live alone rather than communally. With rent and housing costs rising, more and more people, especially single women, feel the financial strain. Also, if we believe what financial companies tell us, many folks have not saved enough for retirement. Where will these retirees live?

If housing cost concern you, here are a few ideas to consider:

- Try house sitting. Snow birds, avid travelers, professors on sabbatical all leave behind empty houses. These vacant homes beg for care, protection from burglaries and leaks.

- Become a live-in nanny. Many two income families could use help with the children after school and doing homework. You could live with the wealthy and get paid for it.

- Become an elderly companion. "Aging in place" is a concept that's taking hold nationwide. Often the elderly would prefer to live (and die) in their own home. You find one person living in large houses and multi-bedroom apartments. They would be happy to exchange a room for companionship and some care,

- Become a vagabond. If you can work from home and your only need is wifi, try wandering in an RV. Part time volunteer work can be found at National Parks, museums and fairs.

- House share. In many parts of the country, single women are buying houses together. They write a contract that covers costs, visitors, kitchen privileges, repairs, etc. Once all the components are put in writing, it's simple to follow the rules.

- Rent a room. Empty Nester's often have one or more bedrooms empty when their kids go off to college or get married. They may be eager to earn a few dollars to help pay for the mortgage or repairs. Such an arrangement might prove mutually beneficial.

Be $ Smart - review your housing costs and entertain ways to live creatively.

An Innovative Way to Buy Stock

A friend called to ask me if I would comment about the Wall Street Journal article on a new way to give stock as a gift. The concept totally surprised me as well as the fact that it has been available for some time!

A few years ago my 10 year old grandson told all his relatives he wanted stock for Christmas. That is not an unusual request knowing Calvin is obsessed with making money, always manages to have money and constantly chides his parents about the cost of things. So we all sent him cash with which his father opened an UGMA brokerage account and built a portfolio.

But NOW there is a simpler way. is a company that offers gift cards (like iTunes, Home Depot, Target, etc.) which enables you to buy a specific dollar amount of hundreds of stocks!

I am not endorsing this company as I have not made any purchases and cannot vouch for the process but I thought it important to make you aware of its existence. Here is what they offer:

- The ability to purchase the stock of hundreds of U.S. and international companies,

- Any amount of the gift - up to $1000. Whatever the amount will buy a certain number of full or fractional shares depending on the share price on the day the card is activated.

- Instant card delivery as they accept most credit cards.

- No cost to the recipient who may buy shares for the full amount of the gift but there is a gifting fee to the giver which pays the credit card fee and commission.

- A gift receipt which allows the receiver to choose a different company,

- A claiming notification to tell you when the gift stock has actually been claimed.

(Minors may own stock with a parent or someone over 18 in a Uniform Gift to Minors Account.)

A gift of stock makes a child curious especially if the stock is in a company he/she knows like Disney, McDonald's or KFC.
It takes the mystery and fear out of investing. It builds interest and confidence.
A gift card saves you from going through the pains of opening an UGMA brokerage account.

It might even make an interesting birthday or wedding gift for your friends!

Be $ Smart - start youngsters early in the stock market. It will pay a lifetime of dividends.

Friday, October 2, 2015

Hemorrhaging from Your Capillaries

Over the past 30 years I have given many presentations about money. As a way to describe massive losses of money from small expenditures I coined the phrase "hemorrhaging from your capillaries". Capillaries are tiny blood vessels and it is hard to imagine how you could bleed to death but it's the image I want to create of losing significant cash through passive, unconscious spending on seemingly insignificant items.

Folks meet with me wanting to save for a house down payment, college education or retirement BUT they are living paycheck to paycheck and cannot find those dollars to put towards their goals. To help, I suggest they practice "conscious spending". For one month to pay close attention to where their money goes.

Here are a few suggestion where you might find hidden savings:

- If you take $200 or $500 from your ATM can you account for how you spent that money? Keep the ATM receipt and record your spending on the back of it. Any surprises?

- How much do you spend on lunch out each week? Brown bag it once or twice. Leftovers usually taste better.

- Add up the cost of your daily Starbucks latte. Maybe go to Starbucks MWF and visit MacDonald's TTh.

- How many magazines come into your home? Do you make time to read them all? Cancel one.

- When you go out to dinner and the cute waitress or waiter suggests appetizers, specials, desserts do you succumb and run up a bill that surprises you? Try using cash instead of your credit card to limit how much you spend.

- Does your bank charge you a monthly fee for a checking account? Maybe you qualify for a simpler one with fewer components and no fee.

- Have you added up what you paid in credit card interest? Paying down those cards could free up hundreds of dollars.

I'm not suggesting you deprive yourself; I am recommending that you PAY ATTENTION. Before you can find those dollars to fund your dreams, you must become aware of how you spend your money to avoid hemorrhaging from your capillaries.

Be $ Smart - track your incidental spending to find money to save. Then take those savings and invest them!

Know Thy Credit Card

I recently shopped at store where the salesperson offered me 15% off my purchase if I opened a charge account with them. Since it was a large purchase I accepted the offer figuring I could save a few dollars.

The bill arrived mid-month after I had paid all my bills and the due date was the first of the month, before I normally pay bills. The bill got lost among piles of paper. I ended up with a $50 late payment fee and interest charged on my purchase!

I promptly called the company, explained that I was a new customer and requested they change my billing date. They also, as a courtesy to a new customer, removed the late fee. The bill now comes at the end of the month with payment due mid-month along with all my other bills.

Credit cards provide great convenience and must be used wisely.
Here are a few credit card tips:

- Establish the same due date - call each company to adjust your billing cycle. This helps keep you current even if you pay all bills online.

- Keep fewer cards - too many cards may have a negative impact on your credit card score.

- Know your Debt to Credit ratio - if you have several cards and your debt balance is low that will influence your score positively. Low balance is key!

- Be aware of Length of Credit History - when you pay off your debt do not rush to close the account. The length of credit history is a positive towards your credit score. It could earn you lower interest on loans.

- Add up the interest - take each credit card bill for the past six months and add up all the late fees and interest you have paid. That can be a shocker!! What could you have done with all that money?

- Read the fine print - when the credit card company mails Terms and Conditions it's telling you something has changed. Make note of new late fees, interest rate, due dates, penalties, etc.; it could save you lots of money.

Be $ Smart - keep more money in your pocket by staying up to date on the terms of your credit cards.

Costs of College

Back to school brings parents a sigh of relief in one sense but it also brings to mind the cost of higher education.

If your student is bright and talented, there is a possibility he/she might qualify for Merit Aid. Be aware that some elite colleges may not offer merit aid to all students. Merit aid might be only offered for certain majors, e.g. engineering or computer science or particular talents, e.g. music, dance, athletics.
Parents need to research those colleges offering merit aid and learn the criteria needed to quality.

Financial Aid (need-based) may be available based on the student's family situation. The formula: cost of attendance - the Expected Family Contribution = need, determines eligibility. The EFC, the result of two formulas from FAFSA and CSS Profile, is the amount a family can afford to pay each year.
Parents need to learn their EFC early and develop a strategy to make their student eligible for aid.

Student loans are both a help and a curse. Over time, the interest can add tens of thousands of dollars to the cost of college. Parents borrow from home equity, retirement plans and Parent Plus loans all adding the interest costs to the college expense.
The key is to borrow the bare minimum, search for the lowest interest rates and pay off everything as soon as possible!

529 Plans are an effective way to plan for college:
- They can be set up as a systematic deposit.
- Depending on your state, they may offer a tax credit.
- The gains are not taxed when used for qualified college expenses.
- They reduce the amount of money taken in loans.

Be $ Smart - do some homework, plan ahead, be aware of the extraneous costs of college and borrow as little as possible.

Wednesday, August 26, 2015

To Co-sign or Not to Co-sign

The fall semester's tuition payment is due this month. Many students must take out student loans to make that payment. Most take advantage of having a co-signer on their loan as it allows them to be approved for the loan or to qualify for a lower interest rate.

You may feel obligated to co-sign or just magnanimous but there are a few risks involved for you as the co-signer:

1. It may limit your access to other forms of credit as this loan increases your debt ratio.

2. You may incur higher interest rates on future borrowing as the student loan is considered part of your debt obligation.

3. It is very difficult to remove a co-signer from the loan.

4. It may change your relationship with this person as now they will feel obligated to you or you may find yourself nagging him/her about payments.

5. Upon graduation, if the student does not find gainful employment or decides to ignore paying, you could be totally responsible for this debt.

These reasons hold true for car loans, boat loans and credit cards.

Be $ Smart - protect your credit worthiness, know the risks before co-signing a loan.

Prepare an LOI

LOI = Letter of Instruction, not laughing out loud or lots of luck.
It goes along with your will and ties together loose ends that have not been addressed through your will or trust.

In an LOI you can mention to whom you would like to leave a piece of jewelry, your favorite tools, a piece of art, an expensive watch, etc. This helps your executor know your wishes and reduces any family friction as to "who gets what"!

You may also state certain requests and preferences in your LOI about funeral arrangements, services, burial or cremation as well as songs, prayers, rituals and family traditions.

If you are young and in good health with no intention of dying you may pose these questions to your parents or grandparents. You certainly want to honor their wishes and encouraging them to put these wishes in writing provides immeasurable relief to those left behind with the job of distributing their estate.

It also opens the door to:
Bring up inheritance issues for discussion.
Decide what "fair" means.
Ask family members what items they would like.
Consider how to deal with family dynamics and conflicts before they arise.

Be $ Smart - make your wishes known by preparing an LOI to ease the task for your loved ones.

Wednesday, July 15, 2015

Strategies for Filing for Social Security

Financial planning is a wonderful profession that allows me to help people plan for the future - homes, education, travel, retirement, etc. Over the past five or more years there has been a growing movement to maximize Social Security benefits by employing little known strategies.

There are provisions that allow a couple to add thousands, tens of thousands of dollars to their future retirement income - when you learn the best time and way of applying for Social Security.

If you are too young to even think about SS, then pass this information along to your parents or aunts and uncles. If you are already receiving SS then pass this along to younger friends and your children. There is nothing illegal; but the folks at SS offices, as knowledgeable as they might be, are not aware of some of these provisions.

For example: File & Suspend
A husband reaching 66 (or 67) may file for SS and then suspend receiving payments. By filing, it then allows his wife to file for spousal benefits, receiving a monthly check for the equivalent of half his benefit. He then waits until 70 before activating his benefit which has grown by 8% each year giving him a higher monthly amount and increasing the survivor benefit for his wife.

Or someone who has been divorced may receive a higher benefit if he/she applies for spousal benefits from the ex-spouse and allows his/her benefit to grow until age 70, It has NO impact on the amount the former spouse receives! But you must have been married 10 years or longer. So for anyone contemplating divorce and nearing the 10 year mark, delay the final divorce decree until you reach 10 years.

Be $ Smart - Find a trusted financial planner who is familiar with Social Security Strategies. You may reap many years of benefits that will far exceed his/her fee!

Words of Wisdom

With graduations just behind us we often think of offering guidance to young people as they embark on life's journey. Here are two thoughts to pass along which I found in a WSJ column.

The path to long-term wealth includes:
- living within your means,
- a commitment to putting away so much money each year,
- allocating those long-term savings wisely among stocks, bonds and cash using low-cost, passively managed mutual funds, index funds and ETF's,
- and keeping costs (fees and taxes) associated with those investments as low as possible.

Be aware of "life-style creep".
As you climb the corporate ladder or wend your way through a career, each pay raise will bring new opportunities and choices.

How you handle those raises can be critical.
Think about spending the new money in ways that will bring enjoyment, but not commit you to an immediate and future higher spending level.

Commit to spending "just" half the raise for enjoyment and allocating the other half to ongoing savings.
Reaching financial independence will get easier and come sooner as well.

Be $ Smart - Over-spending and over-eating have consequences; diets are never fun.

Monday, June 15, 2015

Minimize your taxes

It makes sense to find ways to reduce your taxable income. One place to start is your portfolio. Your investments generate a certain amount of taxable income each year as witnessed by the number of 1099's you receive in the new year.

If you want to reduce the taxes generated by your portfolio, put the big tax generating investments in your tax-deferred retirement accounts - IRA, Roth IRA and 401k. These include real estate investment trusts (REIT's), taxable bonds and actively managed mutual funds (which usually have high, annual portfolio turnover).

Put stocks and stock indexed mutual funds in your taxable accounts where you will be happy holding them for 12 months or longer. After 12 months, they are taxed as long-term capital gains not as ordinary income, a much lower rate. If you pass this account on to your heirs, they could pay virtually no capital gains tax when they sell.

Be careful as you reconfigure your portfolio. Do it slowly and methodically. If you sell too many investments with gains in any given year in your taxable accounts you may increase your tax obligation and push yourself into a higher tax bracket. Best to consult your account first.

Be $ Smart - re-position your investments to minimize your taxes.

Monday, June 8, 2015

Another Type of Diversification

Over the past few weeks we have talked about diversification within your portfolio. We use diversification to reduce potential risk. Another kind, tax diversification, occurs with the types of accounts in which you hold your assets and how withdrawals are taxed.

No matter how you make your money, Uncle Sam is waiting to take his share. You can structure withdrawals to be tax efficient and lower your tax burden. This is especially effective during retirement. For you to have income choices you must build these accounts prior to retirement, while you are young and in the "accumulation" phase of your life.

A well diversified portfolio will hold a mixture of assets - stocks, bonds, cash, real estate, precious metals, etc. Creating a tax-diverse portfolio means you hold assets in taxable, tax-deferred and tax-free accounts.

A trained advisor will scrutinize a retirement plan for tax efficiency. You want to minimize taxes by taking income from specific accounts.
Remember, money held in tax-deferred accounts (traditional IRA, 401k,etc.) is fully taxed as ordinary income on withdrawal paying both state and federal taxes.

If all your assets are tax-deferred, every withdrawal will count as income and could push you into a higher tax bracket. For example, say you need $60,000 a year for income, you must withdraw $72,000 to cover the 20% withholding. Add that to Social Security or pension income, you could bet bumped into the next tax bracket. But, if you could take $40,000 ($48,000 less 20%) from the IRA, $10,000 from your taxable account(paying some capital gains tax) and $10,000 from your Roth (tax-free), you maintain a lower taxable income.

Be $ Smart - build your savings in different types of accounts for tax efficiency.

Be sure to consult your tax advisor for specifics.

RoBo Advisors

In our wonderful hi-tech world you now have the option of having a robot invest for you! We have been invaded by a group of R2D2 automatons who will direct you and your money towards the future.

It is very tempting to have someone else be responsible for investing your money, especially when you don't know whom to trust. But these online automated investment platforms present their own problems. They ask a series of questions to determine your goals, level of investing experience and time horizon (just like any financial adviser would). It is still your responsibility to ask questions and know what you're getting into. Caveat emptor - let the buyer beware!

Here are some things to learn before you commit your hard earned dollars:

1. Terms and conditions? What is the time commitment, required minimum sum to be invested, and what are the fees?

2. Investment choices. From what universe are the investments drawn? May they choose funds from ALL companies or promote only their own?

3. One size fits all. Garbage in, garbage out plays the same role here as it did in early computer programs. The robo adviser will only be able to make pertinent recommendations dependent upon what you tell it. Be as specific as you can to make sure your money is properly allocated.

4. Sensitive information. Keep your personal information protected! Be wary of scams that may trick you into providing confidential financial data.

5. The "In" thing. Know that as cool as hi-tech may seem, this may not be right for you. Before you send your money, check it out with friends and relatives. Read reviews.

R2D2 won't ask how your kids are doing nor talk about the latest sports or movies. You may miss the personal touch of a real-life adviser.

Be $ Smart - before you invest, protect your assets and research Robo Advisers (automated platforms) to learn the rules.

Tuesday, April 14, 2015

Investment Diversification cont'd - Cash

In previous weeks we talked about the various ways to diversify your money among stocks and bonds. A third component of spreading your money is CASH. It is important to keep a percentage of cash on hand for various reasons:

- safety - the value stays reasonably consistent,

- liquidity - it's available with no hassle when you need it,

- opportunity - when a time to enhance your portfolio comes along the money is available to buy more stocks or bonds,

- emergency - with an ample cash cushion you won't run up credit card debt incurring huge interest charges.

Other than stuffing the cash into your mattress or hiding it in a coffee can in your closet here are a few places to keep your cash:

- plain old-fashioned bank savings account (FDIC insured),

- short-term bank CD (certificate of deposit) (also FDIC insured) where you have immediate access if you are willing to incur the penalty and lose the interest but in this low-interest environment, you won't be sacrificing much,

- money market, which is actually a money mutual fund of a variety of very short term investments ( may be FDIC insured if at a bank) and usually pays a higher return than a savings account,

- short-term bond fund, which is a grouping of bonds that mature soon and frequently. These are definitely not FDIC insured and will go up and down as the bond market reacts to various events. Because these funds hold very short-term investments, they are not very volatile, reasonably safe and offer a higher return.

Be $ Smart - find a good home where you earn some interest on your "safe" cash investments.

Investment Diversification cont'd - Bonds

When you talk about diversification you hope to spread your money into a variety of investments. By doing so, you are given the opportunity to create the potential for your money to grow while you reduce the risk.

Last week we addressed stocks. This week we'll review the many facets of bonds.

Bonds come in many varieties - both taxable and tax exempt.
With a bond, you are lending your money; it may be to a corporation, a country or a municipality.

Corporate bonds are issued by companies, of all sizes. High grade corporate bonds from major corporations carry high ratings and the interest earned and distributed is taxable. Most high rated bonds are backed by collateral, e.g. inventory, buildings, property, machinery, etc. Because of their relative safety, they will pay a lower interest rate.

High yield corporate bonds pay a higher return because they may be less safe. The company may be having some financial difficulty and the bonds may be backed by a "promise to pay", not real collateral.

Governments issue bonds for many reasons to run their country. Our own U.S. Treasury offers several types of bonds. Sovereign bonds issued by governments outside the U.S. offer international diversification. Because of the solvency of each country, the risk and yield (return) will vary. You will pay taxes on the interest you earn on these bonds.

Municipalities like cities, states, counties, towns all have the ability to borrow money and issue bonds. Again, the solvency of the region will determine how safe your money may be and the interest each will pay. There are several agencies that rate these bonds. AAA is the highest all the way on down to NR, not rated. The U.S. government does not tax the income from these bonds - they are considered tax-exempt.
A bond issued by New York city would be triple tax-exempt to a resident of NYC. He would pay no city, state or federal tax on that bond.

For diversification you would want some taxable and tax exempt bonds.
You would use bonds of different countries as well as different municipalities.

Be $ Smart - use several different types of bonds when building a portfolio.

Bonds can be quite complex. This is a simplified overview.

Diversification in Investing

In any given day or any given year we have no idea which part of the market will perform well or under perform. The purpose of diversification (not putting all your eggs in one basket) is to have some money in several different areas to take advantage of an upward move and to protect against a downward move.

Asset allocation allows you to divide your money into:
Cash and

And, within each of those categories are several smaller subcategories.
Stocks may include:
- large companies - large cap,
- mid-size companies,
- small companies.

Stocks may be bought in different "sectors" such as:
- Drugs (pharmaceuticals) & health care,
- Transportation,
- Consumer Products,
- Utilities - gas, electricity, telephone,
- Advertising, marketing, social media,
- Financials - banks, brokerage houses,
- Real Estate - office building, malls, apartment buildings.

Stocks may also cover different geographic areas:
- Domestic, meaning only U.S. companies,
- Foreign or international - outside the U.S.,
- Developed countries - in U.S., Europe, South America or Asia,
- Emerging markets, may be found in Africa, Indonesia.

And you may purchase mutual funds that include combinations of all those listed.

A diversified portfolio means holding some of these many choices so you have the exposure to both grow and protect your money. How do you know which ones to buy? It can be quite a challenge! Do the research yourself or find an advisor whom you trust to make the task easier but you still must play an active role of asking questions and reading statements.

Be $ Smart - plan a diversified portfolio for both opportunity and protection.

Monday, February 23, 2015

For Better or For Worse, For Richer or For Poorer...

With all the fuss of Valentine's Day behind us, I thought I'd take a look at love from a financial perspective.

What do you look for in a mate, financially, that is?
There are things you want to find out sooner rather than later. How do you determine your "financial compatibility" early in the relationship.?

Honesty - disclosing all debt: student loans, car loans, credit cards, bankruptcy, etc. Mortgages and student loans are okay; they have positive potential. But credit card debt can be damaging and linger for years.

- spender vs saver? Live for today or save for tomorrow?
Does he spend everything he earns? Does she borrow from her parents? Is shopping her favorite pass time? Must he have a new car every year? Is the latest iPhone a necessity?

Generosity - sharing both the good and the not so good.
Does she expect you to pay for all dates? Does he ask you for gas money when his car is used for trips? Is he/she a big tipper, skimpy tipper or fair tipper? Does he insist on using your car all the time? Does she offer to pay for half or her share?

$ Savvy - shows responsibility about money. Are his bills paid on time or overdue? Does she always request an extension for paying income taxes? Does he have an investment account? Does she know a CD is not just a compact disc? Has she contributed to an IRA or 401K?

Co-mingling assets could prove problematic if you are not willing to learn the financial side of your prospective mate.

Be $ Smart - Protect your heart and your wallet by watching for telltale traits.

And for the ladies, please remember: "A man is not a financial plan!"

Friday, February 13, 2015

Fafsa Tips to Help Pay for College

These are a few notes I took from a recent article Gateway to College Aid by Jerilyn Klein Bier. Please pass this information along to friends and family facing college tuition payments.

The author quotes Mark Kantrowitz, co-author the of book Filing the Fafsa and publisher of, a website focused on planning and paying for college. The book may be downloaded for free in PDF format at

"It is very difficult to predict how much aid a student might get from year to year."
- one big factor is the number of siblings enrolled in college,
- another factor is the price of a particular school.

Make sure assets and income are positioned before the year your student is a Junior in the spring and a senior in the fall. Fafsa works on the calendar year Jan. - Dec. not the academic year.

He urges families to file as soon as possible after January 1 as many states and schools have deadlines in early 2015 and award aid on a first-come, first-served basis.

He encourages families to file the form online because of faster processing, built-in edit checks and the skip-logic functionality. This means respondents are not asked questions that don't apply to them.

One big change for 2015 is there is little differentiation for parent relationships. Parents who live together, married or divorced, or never married are now treated as married and both must report income and assets on the Fafsa.

Grandparent owned 529 plan distributions reported as untaxed income to the beneficiary (the student) can reduce need-based aid eligibility. A parent owned 529 is treated as a parent asset and is assessed, at most, by 5.64%.

If grandparents do hold 529 plans, it's best to hold off on withdrawing assets until the student will no longer be applying for financial aid - like their senior year.

For example, a $10,000 distribution from a grandparent owned plan could reduce aid eligibility by as much as $5000, while $10,000 in a parent-owned plan could reduce eligibility by a maximum of $564.

Parents of younger children should tune in. Understanding what goes into the expected family contribution and how schools consider this can help them position their assets and steer their kids toward institutions that may offer more attractive aid. It can also help families to better balance the triple threat of saving for education, a home and retirement.

No one will give you a loan or scholarship for retirement!

Be $ smart
- plan well in advance to qualify for financial aid.

Tuesday, February 10, 2015

Use Tax Season to Put Your Financial House in Order

My least favorite time of year has arrived - TAX season!
It takes days to gather all the 1099's, W-2's, etc. I take over the dining room table with papers spread over every inch. Fortunately, I also have a kitchen table where I eat my meals.

With everything out in the open, this presents a perfect opportunity to organize your finances.

Try to implement one of these suggestions:
1. Use a 3-ring binder to organize statements. Even if you receive statements online, it may be helpful to print the summary page for each financial institution. Use dividers to separate each. This helps you to compare monthly or quarterly values. Are you making money?

2. Create an annual Net Worth statement. List all the assets you own - house, condo, car, 401k, IRA, etc. and their current value. Add them up. List what you owe (liabilities) - car loan, student loan, mortgage, credit card balances, etc. Add them up. Subtract what you owe from what you own. That number is your Net Worth. Each year compare the bottom line. Are you growing your wealth?

3. Increase your savings amount. Pay yourself first.
Are you on track to buy that car or condo? Set up direct deposit from your checking account to your savings account.
For retirement, increase your contribution to your 401k/403b by 1%.

Be $ Smart - Use tax season to build your financial independence.