"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.

Welcome to My Blog!

Hi!  My name is Eileen Hawe.  I’ve been working in financial services and personal finance for almost 30 years.  It’s an industry that’s rife with conflict of interest.  I witnessed it first hand and understand the need for basic, clear, unbiased information. 

Have you ever had to make an important decision, looked for help or direction and didn’t know whom to trust?  Or, while sitting across from a financial adviser heard that little voice in the back of your head wonder “what’s in it for him/her?”

I will answer your questions, even the “dumb” ones, clearly and simply.  I will guide you through the rough times, get you back on your feet and help you realize that personal finance is not rocket science. 

I love what I do.  I have a skill which I am happy to share with you.  It makes me feel good; we both benefit. 

Follow my blog where I will post important financial facts on a regular basis.

For example: are you familiar with The Rule of 72?

Take the interest rate you are earning on an investment (a CD earning 2%).

Divide that number into 72 to show the number of years it will take to double your money.  (72/2=36)  Thirty-six years. An investment with a higher return of 6% would double your money in 12 years.  (72/6=12)  Twelve years. Higher returns may have higher risk.

 Also, IRA Conversion:  did you know that this year might be a good time to convert your regular IRA (individual retirement account) to a Roth IRA? Many portfolios have lost money in the second half of 2011 so the taxes due on the conversion may be less.

If these tips have helped you, contact me to schedule a meeting and I will guide you to financial security.