How young people can use life insurance

December 10, 2018

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Luis Puente

Luis Puente

Educator and District Leader

2711 LBJ Freeway Suite 300

Farmers Branch, TX 75234

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December 3, 2018

First time home buyer? Beware hidden expenses.

First time home buyer? Beware hidden expenses.

If you’re getting into the home buying game, chances are you’re feeling a little overwhelmed.

Purchasing a home for the first time is exciting but it can also be very stressful! Anyone who’s been through that process could probably share a story about a surprise hidden expense that came along with their dream home.

Read on to help prepare yourself for some common costs that can pop up unexpectedly when you’re purchasing a home.

Emergency fund
Before we get into the hidden costs of homeownership, let’s talk a little about how to help handle them if and when they do arise. If you’re getting ready to buy a home but don’t have an emergency fund, you may want to strongly consider holding off that purchase, if at all possible, until you do have an emergency fund established. It’s recommended to put aside at least $1,000, but preferably you should save 3-6 months of your expenses, including mortgage payments. An emergency fund is the most fundamental personal finance tool you can have in your toolkit. It’s like the toolbox itself that holds all your other financial tools together. So, before you start home shopping, build your emergency fund.

Homeowners associations
If your dream house happens to be in a neighborhood with a homeowners association (HOA), be prepared to pony up HOA fees each month (some HOA’s may charge these fees every quarter, or even annually). HOA fees may cover costs to maintain neighborhood common areas, such as pools or parks. They may also cover maintenance to your front lawn, and/or snow removal from driveways, etc. Typically, a homeowners association will have a board that enforces any agreed-upon property standards, such as having you remove ivy from your home exterior, or making sure your sidewalk is pressure washed regularly.

If you purchase a home with an HOA, be prepared for the added cost in fees as well as adhering to the rules. You may incur a fine for such things as your grass not being mowed properly, or parking your boat or camper in your yard.

Private Mortgage Insurance (PMI)
PMI comes into play if you can’t make at least a 20% down payment on your new home. If that’s the case, your mortgage lender charges PMI which would kick in to protect them if you default on the loan. It can cost 0.3 to 1.5% of your mortgage. However, once you have 20% equity in the home, you don’t have to pay it anymore. (Note: You may have to proactively call your mortgage company and tell them to remove it.)

Maintenance costs
If you’ve been living the maintenance-free life in an apartment or rental home, the cost of maintaining a house that you own may come as a shock. Even new homes require maintenance – lawn care, pressure washing, clearing rain gutters, painting, etc. There’s always going to be something to upgrade or repair on a home, and many first-time home buyers aren’t prepared for the expense.

A good rule of thumb is to budget about 10 percent of the value of your home for maintenance per year. So, if you buy a $250,000 home, you should prepare for $2,500 a year in maintenance costs.

Home insurance
Be prepared for some sticker shock when purchasing your homeowners’ insurance. Homeowners insurance is typically significantly more expensive than purchasing a renter’s policy. If you live in an area prone to natural disasters, be prepared to pay top rates for homeowners’ insurance. If you live near a body of water, you may also need flood insurance.

Life insurance
Many first-time homebuyers may not give life insurance a thought, but it’s an important factor that can help protect your investment. You probably need life insurance if anyone is depending on your income. Especially if your income helps pay your mortgage every month, you should strongly consider a life insurance policy in case something were to happen to you. This will help ensure that your spouse or significant other can continue to live in your home.

Homebuying is exciting and part of the American dream. But don’t neglect to come back to reality – at least when making financial decisions – so you can budget properly and anticipate any hidden costs. This will help ensure that your first-time home buying experience is a happy one.

November 26, 2018

Dig yourself out of debt

Dig yourself out of debt

I hate to break it to you, but no matter what generation you are – Baby Boomer, Generation X, or Millennial – you’re probably in debt.

If you’re not – good on you! Keep doing what you’re doing.

But if you are in debt, you’re not alone. A study[i] by the financial organization, Comet, found:

  • 80.9 percent of Baby Boomers are in debt
  • 79.9 percent of Generation X is in debt
  • 81.5 percent of Millennials are in debt

There are some folks whose goal is to eliminate all debt – and if that’s yours, great! But one thing to keep in mind while you’re working towards that finish line is that not all debt is created equal. Carrying a mortgage, for example, may be considered a “healthy” debt. Student loan debt may feel like an encumbrance, but hopefully, your education has given you more earning power in the workforce. A car loan may even be considered a healthy debt. So, there are some types of debt that may offer you advantages.

Any credit card debt you have, however, should be dealt with asap. Credit card debt can cost money every month in the form of interest, and it gives you nothing in return – no equity, no education, no increase in earning potential. It’s like throwing money down the drain.

So, let’s get to work and look at some of the best tips for paying down credit card debt.

1. Get to know your debt
Make a commitment to be honest with yourself. If you’re in denial, it’s going to be hard to make positive changes. So take a good, hard look at your debt. Examine your credit card statements and note balances, interest rates, minimum monthly payment amounts, and due dates. Once you have this information down in black and white you can start to create a repayment strategy.

2. Get motivated
Taking on your debt isn’t easy. Most of us would rather not confront it. We may make half-hearted attempts to pay it off but never truly get anywhere. Need a little motivation? Getting rid of your credit card debt may make you happier. The Comet study asked respondents to rate their happiness on a scale of one to seven.[ii] It turns out that those who selected the lowest rating also carried the highest amounts of credit card debt. Want to be happier? It seems like paying off your credit card debt may help!

3. Develop your strategy
There are many strategies for paying off your credit card debt. Once you understand all your debt and have found your motivation, it’s time to pick a strategy. There are two main strategies for debt repayment. One focuses on knocking out the highest interest debt first, and the other method begins with tackling the smallest principal balances first. Here’s how they work:

  • Start with the highest interest rate: One of the items you should have noted when you did your debt overview is the interest rate for each account. With this method, you’ll throw the largest payment you can at your highest interest rate debt every month, while paying the minimum payments on your other debts. Utilizing this method may help you pay less interest over time.

  • Start with the smallest balance: As opposed to comparing interest rates, this method requires you to look at your balances. With this strategy, you’ll begin paying the smallest balance off first. Continue to make the minimum payments on your other accounts and put as much money as you can towards the smallest balance. Once you have that one paid off, combine the amount you were paying on that balance with the minimum you were paying on your next smallest balance, and so on. This strategy can help keep you motivated and encouraged since you should start to see some results right away.

Either strategy can work well. Pick the one that seems best for you, execute, and most importantly – don’t give up!

4. Live by a budget
As you begin chipping away at your credit card debt, it’s important to watch your spending. If you continue to charge purchases, you won’t see the progress you’re making, so watch your spending closely. If you don’t have a budget already, now would be a good time to create one.

5. Think extra payments
Once you are committed to paying off your debt and have developed your strategy, keep it top of mind. Make it your number one financial priority. So when you come across “found” money – like work bonuses or gifts – see it as an opportunity to make an extra credit card payment. The more of those little extra payments you make, the better. Make them while the cash is in hand, so you aren’t tempted to spend it on something else.

6. Celebrate your victories
Living on a budget and paying off debt can feel tedious. Paying off debt takes time. Don’t forget to take pride in what you’re trying to accomplish. Celebrate your milestones. Do something special when you get that first small balance paid off, but try to make the occasion free or at least cheap! The point is to reward yourself for your hard financial work. (Hint: Try putting up a chart or calendar in your kitchen and marking off your progress as you go!)

Reward yourself with a debt-free life Getting out of debt is a great reward in and of itself. It takes discipline, persistence, and patience, but it can be done. Come to terms with your debt, formulate a strategy, and stick to it. Your financial future will thank you!


[i] & [ii] https://www.cometfi.com/details-of-debt

October 29, 2018

Understanding life insurance living benefits

Understanding life insurance living benefits

Most of us think of life insurance as something that only pays off once you die.

Once upon a time, that’s all life insurance did – the basics. However, today’s life insurance policies can be simple (if that’s what you’re looking for), or feature-packed and customized to your needs. Life insurance policies now can even pay living benefits. Yes, that means what you think it means: A policy can pay benefits even if you are still alive.

Term life insurance living benefits
Usually, a term life policy is among the most basic of policies, providing a fixed death benefit. It can provide coverage for a limited time at a guaranteed rate. But many companies are now offering a rider (that is, an add-on feature) that can provide living benefits with your term policy.

Living benefits can allow you to access the value of your policy under certain conditions:

  • Critical illness
  • Chronic illness
  • Terminal illness

Terminal illness is a commonly offered living benefit as an accelerated death benefit. Any amount withdrawn from the policy would be deducted from the policy’s face value. For example, if your term policy provides coverage for $250,000 but $100,000 is paid as an accelerated death benefit, your policy would still provide $150,000 as a death benefit to your beneficiaries.

Living benefits may also provide access to money from your policy in the case of chronic illness or critical illness.

Chronic illness can be a little confusing. Insurers usually look at the six activities of daily living (ADL): eating, bathing, transferring (walking), dressing, toileting, and continence. If your chronic illness prevents you from performing these activities, you may be eligible to receive a portion of your death benefit in advance.

Critical illness such as a heart attack, stroke, cancer, and some other illnesses may also make you eligible for an advance payment of your death benefit.

Not all term policies offer living benefits for chronic illness or critical illness, but an increasing number are offering this option as a rider, and a handful are offering this expanded coverage as a built-in benefit of the policy.

As always, speak with me or your financial professional about what living benefit policy options may be right for you and your family.

October 22, 2018

Are you stressed about saving for retirement?

Are you stressed about saving for retirement?

Most of us might feel at least a little anxiety when the subject of preparing for retirement comes up.

Many Americans feel like they haven’t saved enough. In fact, 79% of American workers plan on working longer to make up for what they haven’t saved.[i]

But anticipating staying in the workforce may not be the best strategy when it comes to funding your golden years. Why? Because there are many unforeseen events that can affect your ability (or desire) to work – health problems, caretaking, loss of opportunity in your field… or just wanting to spend time with your grandkids or travel with your partner.

With so much uncertainty, it’s no wonder many Americans feel stressed, burdened, and unprepared when it comes to saving for retirement.

But don’t let retirement worries steal your joy. When it comes to saving for retirement there are a lot of choices you can make to help you prepare. Read on for some principles and tips that may help lessen your stress about the future.

Small changes add up
Retirement saving may seem like an insurmountable task when faced with the high cost of daily life. It’s easy to think we can’t afford to save for retirement and get stuck in a pattern of defeat. But small changes over time can add up to big results.

Shake off despair by implementing small strategies. Consistent saving adds up over time, and it can help build your finance muscle. Read on for some more easy tips.

Direct deposit
Set up a portion of your direct deposit to go straight into a savings account. This is a “set it and forget it” savings strategy, and you’ll be amazed how quickly it can build.

Save found money
Found money is extra cash that comes your way outside of your normal income. It can be from bonuses, gifts, or even a side gig. You weren’t planning on receiving that money anyway, so throw it right into your savings.

Practice frugality
Instead of becoming stressed out and hyper-focused on saving every possible penny, practice frugality. Frugal living can put your energy into something positive – creating a new habit and lifestyle. Also, frugal habits may help prepare you for living on a fixed income during retirement. Try these tips for starters:

Consider downsizing your home
Cut back or eliminate “extras” such as dining out, movies, and concerts When making a purchase, use any available coupons or discount codes Seek sources of free entertainment such as community festivals or neighborhood gatherings

Hire a financial professional
If no matter what you do you still can’t help feeling unprepared and stressed about your retirement, consider hiring a financial professional.

A financial professional may be able to help you change your perspective on preparing for retirement and help empower you with strategies custom made for you.

Remember, financial professionals work with people of all income levels, so don’t hesitate if you need help to get a handle on your retirement. They may assist with:

  • Creating a budget
  • Setting up savings accounts
  • Clarifying your retirement goals
  • Strategies for eliminating debt

Change your perspective on preparing for retirement
If you’re anxious about having enough money for your retirement, try changing your perspective. Focus on small goals and lifestyle habits. Frugality, consistent savings, and solid financial strategies may help take the stress out of retirement planning.

Consistency over time is the name of the game with retirement savings. So implement a few strategies that you can live with now.


[i] https://www.washingtonpost.com/news/get-there/wp/2018/03/19/no-retirement-savings-thinking-youll-just-work-longer-think-again/?utm_term=.bd1f94eea6e3

October 8, 2018

Personal Finance: Hire a Professional or DIY?

Personal Finance: Hire a Professional or DIY?

Contrary to popular belief, professional financial planning can potentially benefit people of all income levels.

So the question you may want to ask is not if you make enough money to need professional help, but rather, is your money working to create the life you want?

If your answer is “I don’t know” – no worries. There’s help!

A professional financial planner is, well, a professional
It’s true that personal finance is personal, but for many of us, it can be complicated too. Plus, it’s not something we usually learn about in school. So for many – even for those on the lower end of the income scale – a financial planner may have a lot to offer.

Even though there are some people who do just fine with financial planning on their own, many of us need help to connect the dots. Having a solid financial strategy often isn’t just coming up with a monthly budget and sticking to it. Many Americans don’t seem to have a grip on how personal finance intersects with their lives. In fact, about half of Americans don’t have a financial plan at all.[i] (Are you one of them?)

Maybe you know exactly what you want – let’s say to retire by 60. But you don’t know how to get there. This is where a financial planner may help.

Maybe you don’t know what you want, even though you’re already a disciplined budgeter. You may still need a good financial planner who can help you imagine and create a strategy for the future of your dreams.

A financial planner can foster accountability
One of the most difficult things about creating and living by a financial strategy is accountability. Let’s be real. It can be difficult to find the discipline to consistently stick to a budget, save for retirement, and live within our means.

If you’re coming up short in the discipline department, hiring a financial planner may help create some accountability for you. This isn’t to say they’re going to wag their finger if you splurge on a spontaneous girls’ weekend in Cozumel, but they may help create a sense of accountability by checking in with you regularly to see if you’re on the right track. You might decide that girls’ weekend could be planned a little closer to home instead…

A financial planner offers expertise at every life stage
A financial strategy isn’t something you create and then forget about. A wise financial strategy changes as your life changes, so it must be revisited. A good time to take a fresh look at your financial strategy is during life events such as:

  • Getting a new job
  • Making a major purchase, such as a home
  • Starting a business
  • Getting married
  • Having a child

Every one of these milestones signals a time to revisit your finances. A professional financial advisor can help ease these transitions by taking the pulse of your financial health at every life change.

What a financial planner can’t do
If you’re not ready to deal with your personal finances, a financial planner won’t be much help to you. In other words, they can’t make you take initiative when it comes to your financial life. But if you’re ready to explore the world of personal finance, they may help make the difference between a dream and a reality!


[i] https://www.fool.com/investing/2018/06/10/half-of-americans-lack-a-long-term-financial-plan.aspx

October 1, 2018

What Millennials can learn from Generation Z

What Millennials can learn from Generation Z

Millennials have been praised for having good financial habits despite facing some difficult economic challenges.

Extremely high housing prices, massive student loan debt, and stagnant wages are just a few of the financial hurdles Millennials have had to overcome.

GenZ, on the other hand – the generation right behind Millennials – exist in a different financial picture. Born between 1995 and 2015, they’re the first generation to grow up with mobile technology, and they’ve lived most of their lives under the shadow of the Great Recession. They have an air of self-reliance and frugality. They display financial grace, and they can deliver some valuable financial lessons for their Millennial predecessors.

Minimizing Student Loan Debt
Student loan debt is the elephant in the Millennial living room. Becoming saddled with massive student loan debt practically became a given if you were born a Millennial. The flipside is that Millennials are more educated than any previous generation.

Looking to learn from those who came before them, GenZ is much warier of incurring student loan debt. According to a study by the Center for Generational Kinetics[i], GenZ students may be more apt to try lower-cost options for higher education, such as community college or in-state university systems. And many are working their way through college, paying tuition as they go.

Finding ways to minimize student loan debt could help those Millennials who are still continuing their education.

Retirement Planning
With GenZ’s aversion to student loan debt, it’s not surprising this post-Millennial generation is very concerned with saving for retirement. They’re open to retirement planning and follow a “save now, spend later” principle when it comes to their finances.

This devotion to saving is something every generation can learn from.

Frugality: Effects of the Great Recession
Generation Z is a frugal bunch. They’re often compared to the Greatest Generation – those born approximately between 1910 and 1924 – in that they have a penchant for beginning to save as soon as they enter the workforce and start earning their own money.

Statistics show that 64 percent of GenZ have a savings account compared to 54 percent of older generations.[ii] They’re also bargain hunters. Whereas the Millennial generation was more inclined to pay top price for a brand they love, GenZ-ers know how to look for a deal.

The Financial Mark of a New Generation
It can be said the Millennial generation has been marked by their massive spending power. GenZ, on the other hand, is taking on a reputation for their saving power. A more conservative, old-school aura of frugality and personal responsibility defines this generation’s financial attitudes.

Turns out GenZ has a lot to teach all the generations about personal financial health. If you have a teenager in your life, you might want to take a closer look at how they’re thinking about their financial futures and seeing what you might learn!


[i] & [ii] https://mic.com/articles/178973/does-gen-z-think-about-money-differently-than-millennials-heres-what-research-shows#.66B2xibb6

September 24, 2018

Inflation Over Time and What it Means for Retirement

Inflation Over Time and What it Means for Retirement

You may have thought that inflation is always bad, but did you know that sometimes it can be good?

Inflation is simply the difference in prices from one year to the next over time. It’s calculated as a percentage and it goes through cycles:

  • Two percent inflation is actually seen as economic growth and is considered “healthy” inflation.
  • As inflation expands beyond three percent it creates a peak and financial bubbles can form.
  • If the percentage falls below two percent, inflation may be seen as negative and recessions can develop.
  • Finally, there is a trough preceding another cycle expansion.

(If you want to geek out about inflation rates, check out a history from 1929 to 2020 at https://www.thebalance.com/u-s-inflation-rate-history-by-year-and-forecast-3306093.)

Good or bad, inflation should be a concern for everyone in the United States. The economy affects us all, but it can be particularly troubling for seniors living in retirement, or who are about to enter retirement. This is because retirement is usually based on a fixed income budget. Inflation can decrease the purchasing power of retirees, especially for goods and services that increase with inflation.

Here are some tips to protect your retirement income from the effects of inflation over time:

Maximize Your Social Security
Social security benefits have a cost of living/inflation increase built into the disbursement. So, as inflation goes up and the cost of living rises, so too does your social security.

This can be beneficial while you’re on a fixed retirement income. Because this is the only retirement investment with this feature, try to maximize your social security earnings by working until age 70 if you can.

Select Investments that May Grow When Inflation Rises
While living expenses such as gas, groceries, and utilities might rise with inflation, some investments may offer better returns as inflation rises. This is another reason a diverse retirement portfolio might be beneficial.

Minimize Expenses to Combat Rising Inflation
While none of us can affect the inflation rate itself, we can all work to minimize our expenses during our retirement years. Maximizing your income and minimizing your expenses is the name of the game when you’re living on a fixed budget.

Minimizing housing costs is a strategy to deal with inflation and rising prices. Downsize your home if possible. Perhaps investing in a renewable energy source may help save money on energy expenses. A simple kitchen garden can save you money on groceries – a budget item that can take a big hit from inflation.

The Ebb and Flow of Inflation Over Time
Over time, inflation waxes and wanes. A little planning, diversified investments, and consistent frugality may help you sail through inflation increases during your retirement years.

This article is for informational purposes only and is not intended to promote any certain products, plans, or strategies for saving and/or investing that may be available to you. Market performance is based on many factors and cannot be predicted. Before investing, talk with a financial professional to discuss your options.

September 24, 2018

Can you actually retire?

Can you actually retire?

Retirement is as much a part of the American Dream as owning a home, owning a small business, or just owning your time.

It’s built into the American psyche.

Many while away their working lives dreaming of the day they won’t have to wake up to a jarring alarm clock, fight rush hour traffic, and spend their days trapped behind a desk.

No matter your retirement dream – endless golf, exciting travel, or just hanging out with the grandkids – will you actually be able to pull it off? Will you actually be able to retire?

Sadly, about 25 percent of Americans say no, according to a survey[i] by TD Ameritrade.

It turns out there are some reliable indicators that you may not be ready for retirement. It’s time for a reality check (and some tough love). So roll up your sleeves and let’s get honest. If you regularly practice any of the following financial habits, you may not be able to retire.

You spend without a budget: Do you have a budget? Are you spending indiscriminately on anything that tickles your fancy? Living day to day without a budget – especially if you are approaching your middle years or later – can wreck your chances of retirement. Commit to creating a budget and stick to it. Overspending now can turn your retirement daydream into a nightmare.

You’re not dealing with your credit card debt: If you struggle with credit card debt, you must have a plan to attack it. Credit card debt can cost you money in interest payments that could be funding your retirement instead. If you’re carrying credit card debt, get rid of it as soon as possible. Stick to a payment plan, be patient, and remain diligent. With time you’ll knock out that debt and start funding your retirement.

You’re not creating passive income: Being able to retire depends on whether you can generate income for yourself during your retirement years. You should be setting up your passive income streams now. Your financial advisor can inform you about options you might have, such as retirement investment accounts, real estate assets, stocks, or even life insurance and annuities. Make it a goal to formulate a strategy about how you can generate income later or you might not be able to retire.

You’re pipe dreaming: Ouch. Here’s some really tough love. If your retirement plan includes so-called “get rich quick” scenarios such as investment fads, lottery winnings, or pyramid schemes, your retirement could be in jeopardy. The way to retirement is through tried and true financial planning and implementing solid strategies over time. Try putting the 20 dollars you might spend each week on lottery tickets toward your retirement strategy instead.

A great retirement life isn’t guaranteed to anyone. It takes planning, sacrifice, and discipline. If you’re coming up short, make some changes now so you’ll be ready for your retirement life.

This article is for informational purposes only and is not intended to promote any certain products, plans, or strategies for saving and/or investing that may be available to you. Market performance is based on many factors and cannot be predicted. Before investing, talk with a financial professional to discuss your options.


[i] https://www.fool.com/retirement/2017/10/22/25-of-americans-say-theyll-never-be-able-to-retire.aspx

September 3, 2018

Retiring Boomers: Can You Afford the Long Life You’ve Been Hoping For?

Retiring Boomers: Can You Afford the Long Life You’ve Been Hoping For?

As Baby Boomers retire or prepare to retire, there’s good news and bad news. The good news is Baby Boomers are living much longer – into their 80s. The bad news is that many aren’t financially prepared to handle the gift of a long life.

Can You Afford the Long Life You’ve Been Hoping For?
In 1900 the average lifespan was 47 years – nowadays, that’s just about midlife. The average life expectancy in 2018 is about 80. This means if you’re planning on retiring at 65, you may have another two decades to go. And that means you must have another two decades of income.

A long life is a blessing, but a long life without enough money? That might be a curse.

Baby Boomer Retirement by the Numbers
According to a study by the Insured Retirement Institute – a trade association for the retirement income industry – surprisingly, many Boomers are not financially prepared for retirement.

  • 24 percent of Boomers have no retirement savings
  • 55 percent have some retirement savings
  • 42 percent of those with some retirement savings have less than $100,000

There are a few reasons Baby Boomers are coming up short on retirement savings. Many were heavily invested during the 2008 crash and never fully recovered. Boomers were also the first generation to be tasked with saving for retirement largely on their own. Company pensions were already declining, and the rise of the 401(k) plan was underway.

Also, wages have stagnated, and interest rates have declined. Add to this a relaxed approach to retirement savings and it’s no wonder Baby Boomers are struggling with their retirement funds.

Creative Ways Boomers are Boosting Retirement Savings
Baby Boomers are nothing if not self-reliant, and many are handling their retirement dilemma in some creative ways…

  • Staying in the workforce: Some Boomers keep working for the extra income, while others enjoy their work and aren’t ready to give it up entirely.
  • Side gigs: Boomers are taking on the gig economy – earning extra cash by working part-time or through contract.
  • Alternative lifestyles: Some Boomers have decided to stretch their retirement dollars by living in another country where the dollar goes further. Others are forgoing the expense of homeownership for full-time RV travel or living on a sailboat.

Good Planning Gives You Good Options
Whatever you decide to do during your retirement years, the better prepared you are the more choices you’ll have. Whether you’re a young Boomer still in the workforce, or if you’re already living off your retirement savings, financial planning is key.

Contact a professional today to make sure you’re getting the most out of your retirement.

July 30, 2018

The Shelf Life of Financial Records

The Shelf Life of Financial Records

When you finally make the commitment to organize that pile of financial documents, where are you supposed to start?

Maybe you’ve tried sorting your documents into this infamous trio: the Coffee Stains Assortment, the Crumpled-Up Masses, and the Definitely Missing a Page or Two Crew.

How has this system been working for you? Is that same stack of disorganized paper just getting shuffled from one corner of your desk to the top of your filing cabinet and back again? Why not give the following method a try instead? Based on the Financial Industry Regulatory Authority (FINRA)’s “Save or Shred” ideas, here’s a list of the shelf life of some key financial records to help you begin whittling that stack down to just what you need to keep. (And remember, when disposing of any financial records, shred them – don’t just toss them into the trash.)

1. Keep These Until They Die: Mortgages, Student Loans, Car Loans, Etc.
These records are the ones to hang on to until you’ve completely paid them off. However, keeping these records indefinitely (to be on the safe side) is a good idea. If any questions or disputes relating to the loan or payment of the loan come up, you’re covered. Label the records clearly, then feel free to put them at the back of your file cabinet. They can be out of sight, but make sure they’re still in your possession if that info needs to come to mind.

2. Seven Years in the Cabinet: Tax-Related Records.
These records include your tax returns and receipts/proof of anything you might claim as a deduction. You’ll need to keep your tax documents – including proof of deductions – for 7 years. Period. Why? In the US, if the IRS thinks you may have underreported your gross income by 25%, they have 6 whole years to challenge your return. Not to mention, they have 3 years to audit you if they think there might be any good faith errors on past returns. (Note: Check with your state tax office to learn how long you should keep your state tax records.) Also important to keep in mind: Some of the items included in your tax returns may also pull from other categories in this list, so be sure to examine your records carefully and hang on to anything you think you might need.

3. The Sixers: Property Records.
This one goes out to you homeowners. While you’re living in your home, keep any and all documents from the purchase of the home to remodeling or additions you make. After you sell the home, keep those documents for at least 6 more years.

4. The Annually Tossed: Brokerage Statements, Paycheck Stubs, Bank Records.
“Annually tossed” is used a bit lightly here, so please proceed with caution. What can be disposed of after an annual review are brokerage statements, paycheck stubs (if not enrolled in direct deposit), and bank records. Hoarding these types of documents may lead to a “keep it all” or “trash it all” attitude. Neither is beneficial. What should be kept is anything of long-term importance (see #2).

5. The Easy One: Rental Documents.
If you rent a property, keep all financial documents and rental agreements until you’ve moved out and gotten your security deposit back from the landlord. Use your deposit to buy a shredder and have at it – it’s easy and fun!

6. The Check-‘Em Againsts: Credit Card Receipts/Statements and Bills.
Check your credit card statement against your physical receipts and bank records from that month. Ideally, this should be done online daily, or at least weekly, to catch anything suspicious as quickly as possible. If everything checks out and there are no red flags, shred away! (Note: Planning to claim anything on your statement as a tax deduction? See #2.) As for bills, you’re in the clear to shred them as soon as your payment clears – with one caveat: Bills for any big-ticket items that you might need to make an insurance claim on later (think expensive sound system, diamond bracelet, all-leather sofa with built-in recliners) should be held on to indefinitely (or at least as long as you own the item).

So even if your kids released their inner Michelangelo on the shoebox of financial papers under your bed, some of them need to be kept – for more than just sentimental value. And it’s vital to keep the above information in mind when you’re considering what to keep and for how long.


June 25, 2018

A Lotto Bad Ideas

A Lotto Bad Ideas

A full third of Americans believe that winning the lottery is the only way they can retire.

What? Playing a game of chance is the only way they can retire? Do you ever wonder if winning a game – where your odds are 1 in 175,000,000 – is the only way you’ll get to make Hawaiian shirts and flip-flops your everyday uniform?

Do you feel like you might be gambling with your retirement?

If you do, that’s not a good sign. But believing you may need to win the lottery to retire is somewhat understandable when the financial struggle facing a majority of North Americans is considered: 78% of American full-time workers are living paycheck-to-paycheck, and 71% of all American workers are currently in debt.

When you’re in a financial hole, saving for your future may feel like a gamble in the present. But believing that “it’s impossible to save for retirement” is just one of many bad money ideas floating around. Following are a few other common ones. Do any of these feel true to you?

Bad Idea #1: I shouldn’t save for retirement until I’m debt free.
False! Even as you’re working to get out from under debt, it’s important to continue saving for your retirement. Time is going to be one of the most important factors when it comes to your money and your retirement, which leads right into the next Bad Idea…

Bad Idea #2: It’s fine to wait until you’re older to save.
The truth is, the earlier you start saving, the better. Even 10 years can make a huge difference. In this hypothetical scenario, let’s see what happens with two 55-year-old friends, Baxter and Will.

  • Baxter started saving when he was 25. Over the next 10 years, Baxter put away $3,000 a year for a total of $30,000 in an account with an 8% rate of return. He stopped contributing but let it keep growing for the next 20 years.
  • Will started saving 10 years later at age 35. Will also put away $3,000 a year into an account with an 8% rate of return, but he contributed for 20 years (for a total of $60,000).

Even though Will put away twice as much as Baxter, he wasn’t able to enjoy the same account growth:

  • Baxter would achieve account growth to $218,769.
  • Will’s account growth would only be to $148,269 at the same rate of return.

Is that a little mind-bending? Do we need to check our math? (We always do.) Here’s why Baxter ended up with more in the long run: Even though he set aside less than Will did, Baxter’s money had more time to compound than Will’s, which, as you can see, really added up over the additional time. So what did Will get out of this? Unfortunately, he discovered the high cost of waiting.

Keep in mind: All figures are for illustrative purposes only and do not reflect an actual investment in any product. Additionally, they do not reflect the performance risks, taxes, expenses, or charges associated with any actual investment, which would lower performance. This illustration is not an indication or guarantee of future performance. Contributions are made at the end of the period. Total accumulation figures are rounded to the nearest dollar.

Bad Idea #3: I don’t need life insurance.
Negative! Financing a well-tailored life insurance policy is an important part of your financial strategy. Insurance benefits can cover final expenses and loss of income for your loved ones.

Bad Idea #4: I don’t need an emergency fund.
Yes, you do! An emergency fund is necessary now and after you retire. Unexpected costs have the potential to cut into retirement funds and derail savings strategies in a big way, and after you’ve given your last two-weeks-notice ever, the cost of new tires or patching a hole in the roof might become harder to cover without a little financial cushion.

Are you taking a gamble on your retirement with any of these bad ideas?


May 28, 2018

3 Advantages to Being the Early Bird

3 Advantages to Being the Early Bird

Extra-large-blonde-roast-with-a-double-shot-of-espresso, anyone?

As the old saying goes, “The early bird catches the worm.” But not everyone is an early riser, and getting up earlier than usual can throw off a night owl’s whole day.

But there are a couple of things that, if started early in life (and with copious amounts of caffeine, if you’re starting early in the day, too), could benefit you greatly later in life. For example, learning a second language.

The optimal age range for learning a second language is still up for debate among experts, but the consensus seems to be “the younger you start, the better.” It’s a good idea to start early – giving your brain an ample amount of time to develop the many agreed upon benefits of being bilingual that don’t show up until later in life:

  • Postponed onset of dementia and Alzheimer’s (by 4.5 years)
  • Much more efficient brain activity – more like a young adult’s brain
  • Greater cognitive reserve and ability to cope with disease

Imagine combining that increased brain power with a comfortable retirement – an important goal to start working towards early in life!

Here are 3 big advantages to starting your retirement savings early:

1. Less to put away each month.
Let’s say you’re 40 years old with little to no savings for retirement, but you’d like to have $1,000,000 when you retire at age 65. Twenty-five years may seem like plenty of time to achieve this goal, so how much would you need to put away each month to make that happen?

If you were stuffing money into your mattress (i.e., saving with no interest rate or rate of return), you would need to cram at least $3,333.33 in between the layers of memory foam every month. How about if you waited until you were 50 to start? Then you’d need to tuck no less than $5,555.55 around the coils. Every. Single. Month.

A savings plan that aggressive is simply not feasible for a majority of North Americans. Nearly half of Canadians are just getting by, living paycheck-to-paycheck. So it makes sense that the earlier you start saving for retirement, the less you’ll need to put away each month. And the less you need to put away each month, the less stress will be put on your monthly budget – and the higher your potential to have a well-funded retirement when the time comes.

But what if you could start saving earlier and apply an interest rate? This is where the second advantage comes in…

2. Power of compounding.
The earlier you start saving for retirement, the longer amount of time your money has to grow and build on itself. A useful shortcut to figuring out how long it would take your money to double is the Rule of 72.

Never heard of it? Here’s how it works: Take the number 72 and divide it by your annual interest rate. The answer is approximately how many years it will take for money in an account to double.

For example, applying the Rule of 72 to $10,000 in an account at a 4% interest rate would look like this:

72 ÷ 4 = 18

That means it would take approximately 18 years for $10,000 to grow to $20,000 ($20,258 to be exact).

Using this formula reveals that the higher the interest rate, the less time it’s going to take your money to double, so be on the lookout for the highest interest rate you can find!

Getting a higher interest rate and combining it with the third advantage below? You’d be on a roll…

3. Lower life insurance premiums.
A well-tailored life insurance policy may help protect retirement savings. This is particularly important if you’re outlived by your spouse as he or she approaches their retirement years.

End-of-life costs can deal a serious blow to retirement savings. If you don’t have a strategy in place to help cover funeral expenses and the loss of income, the money your spouse might need may have to come out of your retirement savings.

One reason many people don’t consider life insurance as a method of protecting their retirement is that they think a policy would cost too much.

How much do you think a $250,000 term life insurance policy would cost for a healthy 30-year-old?

Less than $14 per month. That’s a cost that would easily fit into most budgets!

You may still need a little caffeine for the extra kick to get an early start on powering up your brain (or your retirement savings), but sacrificing a few brand-name cups of coffee per month could finance a well-tailored life insurance policy that has the potential to protect your retirement savings.

Contact me today, and together we can work on your financial strategy for retirement, including what kind of life insurance policy would best fit you and your needs. As for your journey to the brain-boosting benefits of being bilingual – just like with retirement, it’s never too late to start. And I’ll be here to cheer you on every step of the way!


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