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!

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.

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.

$ 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.

FYI
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.

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.

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.

"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.