Personal stories...

We never know how our lives may be impacted.  Right now I am awaiting the arrival of Sandy and wondering what havoc the storm will wreak.   I also feel powerless with my daughter, 8 1/2 months pregnant, over 200 miles away wondering how she will fare with the storm's low pressure and a full moon!
Life sometimes throws us lemons; it's up to us to make lemonade.

Please read the personal stories of a few people whose lives I have been privileged to guide:
One wintry, snow filled night Louise R. and her husband, Stan were returning from a friend's home in the next town.  The roads were icy and Stan could not control the car.  Stan did not survive the accident and Louise was hospitalized for two months.  No sooner was she home than the insurance agent arrived with the check for the life insurance policy on her late husband.  Before he left, he had sold Louise an annuity using the insurance  proceeds.  Fortunately, Louise had a good friend who called me for assistance.  I was able to review the annuity, determine it was not appropriate for Louise and had her money returned to her.  Louise understood she was grieving the loss of her husband and was not able to make important decisions at this time.  She hired me to assist her with all financial decisions for one year.

Margaret L. came to me devastated on learning that her doctor husband of 28 years had been diagnosed with terminal cancer and had less than a year to live.  Margaret was an artist and never bothered with money leaving all the decisions and bill-paying to Hal.  Over the next six months Margaret met with me for one hour a week learning financial terms and taking  money-tasks home to perform.   She arrived for her appointment one day very excited about a visit to their estate attorney the previous day; she actually understood what the attorney had presented!

Cathy C.  had  a trust fund left to her by her grandparents.  She gave me a call to learn if she should refinance her mortgage.  After reviewing Cathy's substantial portfolio we were able to determine she had more than enough assets to pay off the loan  and live mortgage-free.   We also reviewed the charities to which she contributed 10% annually based on her family tradition.   We found new organizations that spoke to those things about which Cathy felt strongly.

Larry T. had suffered an injury while working as a carpenter apprentice for which he received a  reasonable  settlement.  We reviewed Larry's job prospects and financial goals.   Larry opened a savings account and paid off his credit cards and medical bills.  Once those items were satisfied Larry had enough money to put a downpayment on a small wood-working shop of his own.

Sally P. had been a nurse for almost 30 years.  She was single and frugal.  Toying with the idea of retiring in a few years, Sally wanted to start enjoying the fruits of her labors while she was still physically able.  Her dream was to take one BIG trip a year until she retired.  On reviewing Sally's savings, pension and social security we determined Sally would certainly have sufficient money to satisfy her wanderlust without jeopardizing her future.

"I'm a very smart person; why can't I understand this?"

Working for many years at TIAA-CREF, I heard this question multiple times. The clients I counseled were all academics, some world renowned.  These truly were very smart people at colleges and universities throughout New York and Connecticut (my territory at that time.)  They would preface our meeting with "I'm a very smart person,.. etc."  alerting me to the fact they were embarrassed at not being able to decipher their monthly statements. Money evokes heavy emotional reactions.  Some people cannot handle the basic needs of daily living, or spend uncontrolably because of the underlying emotions of money.  Others hold onto money tightly denying themselves pleasures money might bring because they feel they don't deserve it or hold fear of another "great depression".  Because personal finance and investing use a different language, we find it difficult to comprehend.  Financial service salespersons use this lack of understanding to their advantage.  They talk fast, they use technical terms, they make us feel as if we should understand in order to emphasize their importance.  As with anything else (doctors, car mechanics, appliance repair) we can submit or we can take the time to learn the terms, search the internet, ask many questions, and get a second opinion before we lay down our hard earned cash. You are a very smart person - it just takes time and a little effort. Allow me to teach you the "language of money".

All or nothing mentality....

This is the time of year when we receive reminders from our bank or brokerage house about funding an IRA.  Most folks ignore the message saying they just don't have the money. 
One of the best gifts Congress has given the American public is the Roth IRA.
It allows us to contribute after-tax dollars (money on which we have already paid taxes) to an account that will grow tax-deferred (does not issue a 1099 annually) and have that money grow over time and come out TAX-FREE.

Once we turn 59 1/2 we may take distributions from the Roth IRA paying NO taxes on all those years of growth.  And  when we die, our heirs pay no taxes on that money either.   That is one good deal!

All or nothing mentality comes into play when folks think they do not have the $5000 (or $6000 if you are over 50) to contribute to the account. How about contributing $500 or $1200 or any amount less than the maximum?  If you can't contribute the maximum, contribute some amount, any amount!

Right now you may contribute for 2011 up to April 17th; for 2012 any time up until April 15 of 2013.  But a smart and painless method would be to have a set amount deducted monthly from your checking account throughout the year and deposited directly into your Roth.
Congress doesn't give us many gifts.  Please take advantage of this one.

Be aware, there are income limits (if your income is over a certain level) for Roth contributions so ask your tax advisor the amount you are eligible to contribute.

Local TV show - Money and Health

Recently I was invited to join my good friend and chiropractor, Dr. Louis Bisigoni on his TV show Healthy Horizons at White Plains Community Media.  Dr. Bisigoni and I discussed the many ways money affects your health - for good and for bad.

I thought you would appreciate viewing the topics we discussed:

http://wpcommunitymedia.org/#!mm-7255

Do yourself a favor....

I have been in the Financial Services for almost 30 years.  One of the best gifts I have seen people give themselves (men and women alike) is to rollover their 401k to an IRA when they change jobs.
Often, it's a small amount,  a few hundred or a few thousand dollars. They realize it takes some effort to open a new IRA rollover account; they convince themselves it will make a difference in the future; AND, they fight off every temptation to cash out and spend that money now!

On the road to retirement those small amounts, when added together, compound and grow over time.
That money has the wonderful benefit of tax deferral.  What that means is you will not receive a 1099 to add the dividends and interest to your annual tax bill..  The dividends and interest build the value of your account  and tax deferral, without taking a bite to pay taxes each year, allows it to grow even faster.

FACTS:  when you cash out a tax deferred account you pay full taxes (state and federal) on the account value.  On $10,000 with 25% federal and 6.5% NYState, plus a 10% penalty if you are under 59 1/2 you will pay $4150 in taxes leaving only $5850! You'll pay even more taxes if you are in a higher bracket.

Take good care; do yourself a favor; open an IRA Rollover and let your tax deferred money build for your future.

It's not rocket science!

Many years ago after I left teaching and was a stay-at-home mom raising my children, my husband shouted to me, as he ran out the door to catch his morning train,  “Call the bank and tell them to rollover the CD that matures today.”

“Okay”, I shouted back.

Bank? rollover? mature? CD? – I knew he was speaking English but I wasn’t sure what he had asked me to do!  (and this definitely was long before compact disc’s were available!)

So as a dutiful wife I called the bank.  I was somewhat embarrassed, but I asked the person to translate for me.  I was told that we (my husband and I) held a joint account at the bank.  Six months ago we (he) had put $10,000 into a Certificate of Deposit that would earn 8% interest (return) that would come due (mature) on February 14^th.

The CD held a fixed amount of money - $10,000 that would never go down,

it had a fixed rate of return – 8% that would not go up or down during the period and

a fixed amount to time – 6 months.  If I wanted my money sooner I would forfeit the interest but if I waited to the day, six months later, I could have my money.

I had the choice of going to the bank and withdrawing my $10,000 plus interest or I could “roll” or redeposit the money (principal and interest) into a new CD for another six or 12 months.

That was easy!

Different language, new experience – it’s not rocket science!

If we take the time to learn the terms; if we are willing to ask simple questions and understand simple answers, and do some reading - we too can feel a level of comfort in the world of money and investments over time. 

If I could do it, so can you!

Update your beneficiaries.

There are so many things to remember as you transition in life.  If you have been recently widowed or divorced it is critical to change the beneficiaries on your regular IRA, your Roth IRA, your 401k or 403b, and your insurance policies.  Too often folks forget to make these changes and money goes to to an ex-spouse or other unintended person.  
Call your bank, your HR department or your brokerage adviser and make that change today.