Often clients come to us without much money saved for retirement.

YET, they want to save money for their children’s college education. I applaud their intention but often this is not the correct prioritization.

This is a common example where parents truly do put their children before themselves. They are willing to save for their children but not for their own retirement.

Maybe it is because they have a deadline or known timeline for when their children will go to college and this makes it more real while “retirement” is a vague idea further in the future and people assume they will figure something out?

I am not sure of the reasoning but as a financial planner I often have to tell people they need to worry about themselves and their retiement first. You can get loans and scholarships for college but there are no loans for your retirement.

I believe one of the best gifts you can give your children is to be financially secure in your retirement so you are not a burden on them.

You also have to do a reality check on what is feasible for you. Of course everyone WANTS to pay for their children’s education but that may not be practical and you need to be honest with yourself and your children if that is true.

I don’t believe anyone is “entitled” to a college education paid for by their parents. I know others do not agree with me on that.

One of the easiest decisions for your retirement is if your company matches a certain amount.

This is literally “free” money.

Companies match different amounts and have different rules so each situation is different but you should know
1) if your company matches,
2) how much the match and
3) how it works.

If you don’t contribute to your 401K or 403B, and your company matches, you are losing out on this FREE money.

This is the MINIMUM you should be contributing so you don’t lose out on the matching contribution.

I say you need to understand how it works because we have seen some weird situations especially with 403Bs. I remember one company would only match if you contribute above a certain amount.

Can you imagine how upset you would be if you found out after working somewhere for 5 years and contributing 3% to your 403B that if you had contributed 4% that the company would have matched that 4% but they didn’t match anything because you below their contribution threshold?

If it is not practical for you to contribute the full amount for a match, I recommend that you contribute something and then gradually try to increase that amount so it is not such a shock to you and your finances. Often we can adjust to living at new income levels gradually.

1. Neither has a magic bullet or instantaneous fix. Both take time to see results. (For example, even the magic bullet of winning the lottery has not helped the majority of those that struggled financially and won the lottery. Most all still struggled with money and bankruptcies after the lottery win.)

2. Both require good long term habits and discipline (working out one time or saving money for only one month will NOT get you to where you want to be)

3. If you starve yourself with food or with spending money, most of us eventually splurge or binge.

4. Both are related to knowing what is “enough”

5. They both are easy to procrastinate taking action on

6. Tracking what you eat and tracking what you spend both surprise people with what they truly do. This action alone is very successful for helping keep people on track with weight management or money management.

7. Consistency is key

8. Both are a balancing act – living within your means and not eating more than your body needs or is burning

9. There are multiple ways to accomplish both. You need to find a sustainable system that works for you.

10. Both are helped with some level of knowledge and understanding

11. A consistent extreme of “too much” or “not enough” is not sustainable in the long term
Weight Management
Not Enough-Anorexia (many health issues/death)
Too Much – Obesity (health issues/death)

Money Management
Not Enough – Ultra Saver (doesn’t enjoy the present or using money for things they enjoy and want)
Too Much – Ultra Spender (credit card debt / bankruptcy)

12. Both money management and weight management deserve to be paid attention to.

13. Food and purchases both trigger the same pleasure center of the brain.

14. Both are requirements for living. You cannot live without food or money in some form.

15. Both are key to living a happy enjoyable life. Although being healthy and / or rich do not necessarily buy happiness.

I would love to hear your thougths on the similarities or differences between money management and weight management.

Here is a more eliquent and detailed post about the same topic that I enjoyed.

(I wish they had titled the article “Slow and Steady: More Thoughts on Physical and Fiscal Fitness.”)

No matter what you think about money, the fact remains that money is a requirement in our society. You must deal with it in some form every single day.

This article is about when to seek assistance from a financial planner or financial advisor.

Do you:
•spend too much time worrying about your financial situation?
•feel overwhelmed and unsure of what to do with regards to your savings, taxes, investments etc.?
•not have the time to stay on top of your finances and investments?
•not have the desire to take care of the details with regards to your financial plan?
•continue to procrastinate in dealing with your finances?
•not save enough money nor have a plan for your saving?
•and your spouse fight way too much about money and finances?
•hate talking about and dealing with money?
•have a history of making poor investment decisions on your own (buying at the highs and selling at the lows)?
•want to retire in the next few years but you don’t know if you can or should
•own a small business and are not sure how to maximize your choices and what is legally required by you for your employees?
•not know the state of your finances?

Saying yes to even one of these questions can mean you should seek financial assistance.

Play to your strengths

This means you should do what you are good at and what you enjoy. Yes, we all need to do some things with regards to money to be financially responsible yet having assistance can pay off in so many ways – financial, time, less worrying and emotional well being.

Let the experts be the expert

For example, I hate doing my own taxes. Yes, I am capable of doing it but it is something I don’t enjoy doing for myself. It causes me too much angst and my accountant (hopefully) does a better job than I could. Plus I like knowing I have someone else in my corner if anything on my income taxes is questioned.

Another example of this relates to investments. We here at Main Street Financial Solutions are not big fans of investing in individual stocks. We do not have the time or the resources to research stocks like the experts who do it all day, every day. We believe in diversifying your risk with ETFs and mutual funds. We research and select mutual fund managers who have performed well in the past and that we trust. They are the experts at selecting the investments for their funds.

Here are some of the advantages of having a financial advisor and not doing it yourself:
•They help you see your blind spots
•They are objective and not too emotionally involved
•They help you know the different options so you can make a more informed decision more quickly and easily
•They can help hold you accountable so action is taken
•They are (hopefully) experts who you can trust
•They keep you on the right path and take care of details you don’t have the time or desire to do
•They help you clarify your goals and set up a plan for achieving them
•They help you know the relevant facts. With knowledge comes power.
•They can teach you and answer your questions so you feel more comfortable
•They have access to tools and information that you do not.

The Key Is:
How do you FEEL about your finances and your financial plan?

If you don’t like where you are financially and are having issues taking care of it yourself then I recommend you take some different actions. One option is to call an expert or your current advisor if you already have one.

Most people do not take action until they are so uncomfortable or unhappy that they finally do something about it. You don’t have to wait that long.

Many people don’t work with financial planners or advisors because they are afraid of being taken advantage of, don’t like sharing their situation with others and are afraid of judgment, or they think it is too expensive.

You should be able to find a financial planner or advisor you trust.

Whoever you work with should make you feel comfortable with their knowledge and demeanor. They should answer your questions and listen to you and what you want. Listen to your gut and work with someone you like and trust.

How much would you pay to have someone help you accomplish your goals if you knew that would GREATLY increase your chance of success?

We all waste so much money on things we do not need. Dealing with your finances is something you need to do. It is a wise investment to have a good financial advisor so you know you are taking smart actions and doing the right things. This will pay off in more ways than you can possibly imagine.

It truly is priceless.

I have not been feeling well so here is a quick post of websites I like, recommend and/ or read often. Some are finance related and some are not…

www.getrichslowly.org/blog/
I read this blog every day. Some articles are better than others but I have a similar philosophy and have gotten some good tips.

www.financialliteracymonth.com
This website was mentioned in the Main Street Financial Solutions Newsletter this month. Yes, we missed April being Financial Literacy Month (I assume they chose April because that is when our taxes are due) but this website has a lot of good information for getting your financial house in order.

www.napfa.org/consumer/index.asp
National Association of Personal Financial Advisors (NAPFA) is a great source of information. I believe in fee-only planners since I am one and like the transparency and focus of this organization. This site allows you to search for a NAPFA registered fee-only financial planner in your area.

http://richchicks.org/
I just think this is a super cool site. Fun to read and aligned with my values.

www.tut.com/theclub
I have been a fan of Mike Dooley’s his The Daily Notes from the Universe for years. I love the daily insprirational e mails.

http://www.gravelandrust.blogspot.com/
I read this blog everyday. She is an incredible woman. What she has accomplished and her attitude are amazing and inspiring. I learn a lot from her wonderful words of wisdom and enjoy following her life story.

A reoccuring theme keeps coming up for me:

“Big changes most often occur with lots of little steps.”

I think I have written about this before but it is so true and needs to be emphasized again and again.

As a society we all want the magic bullet or the immediate fix. Things take time. You cannot lose 20 pounds overnight (or in a week) it takes time.

I know for me, I do better when I break a big task or goal down into smaller pieces and commit to doing one action towards that goal everyday. It is important to take consistent action over the long term. Think about Tim Robbins in Shawshank Redemption where he dug his escape tunnel with pockets of dirt every day. Talk about patient.

Everyone says they want more money in their life yet most don’t DO ANYTHING about it.

Having money and being financially responsible is possible and it is something you can and should take action on.

If you don’t know where to start, here are a few ideas for actions you can take to get started on taking control and improving your financial situation:

1) http://www.financialliteracymonth.com/

2) http://www.getrichslowly.org/blog/

3) Read Your Money or Your Life by Vicki Robin and Joe Dominquez

4) Balance your checkbook

5) Start tracking what you spend (really tracking it)

6) Create your net worth statement

7) Meet with a financial planner

8 ) Get your credit score (if you haven’t within the past year)

9) Set a savings goal. Decide how much you want to save and by when. What actions will you take to accomplish this?

10) Talk to your spouse or significant other about money and finances. Where are you and where do you want to be?

I challenge you to decide on a goal and start taking action towards it.

Even if you believe your financial house is in order (I applaud you), I bet there are still somethings you can do to help improve your situation or how you feel about your financial situation. No one is perfect.

Finances are about finding the balance for enjoying the present and planning for the future responsibly.

You control your financial destiny so take some baby steps to changing yours for the better.

As a financial planner I see over and over again people who put off or procrastinate taking care of their finances. Since it is not a fire with a firm deadline like taxes or something most people want to do, they just keep putting it off till another day.

For example I hear, “I will start contributing to my 401k next month” and then years later realize they still have not started contributing to their 401k plan.

(This is why the law changed to make employees automatic be “IN” the plan and you have to take action to not be contributing to the company retirement plan.) The government is try to save us from ourselves and our inertia.

We are all human.

We do the things we WANT to and HAVE to do. Although, even those things that we know we “should” do, like eat healthy, work out or set up a Will often get put off for another day.

We all have seen the charts that show if you put money away at the age of 25 and then start at age 35 or 45 how different the size of the numbers are. These charts are trying to create a sense of urgency. You will be thousands of dollars better off if you start saving when you are younger but I think mentally it still doesn’t feel “urgent.” Or maybe it just doesn’t feel real.

Coaches and financial planners are beneficial because then you have someone else holding you accountable and creating deadlines that force you to take action. Hopefully they also help make the process less overwhelming and painful.

I know from my own experience that having a scheduled meeting with my coach forces me to take action and complete promised work before the meeting or a deadline.

We all need to be financially responsible by taking care of the present requirements and planning for our future.

Most people say they want more money in their life. Why not take some action TODAY that will help make that happen instead of just wishing for it and not thinking it is possible?

What action can you take? What action would you like to take?

How can a financial planner (or anyone) help make this easier or create a sense of urgency so people do take action with regards to their finances?

I would love to hear your comments and ideas.

I saw and liked this post so much I created my own list…

50 Simple Pleasures
1. Feeling the sun on your face
2. Soft luxurious sheets
3. Comfy bed
4. A restful night’s sleep
5. A really good hug
6. Kisses that give you butterflies in your stomach
7. Singing at the top of your lungs
8. A beautiful sunrise
9. The satisfaction of a job well done
10. Trying a new recipe and loving it
11. Reading a book that you don’t want to end
12. A child’s laugh
13. A child’s picture / drawing
14. Snuggling on the couch
15. A great run or walk outside
16. Feeling strong and healthy
17. Being in the zone
18. A back massage
19. Watching a thunderstorm come in
20. Beings silly with a friend
21. Getting a love note
22. Feeling the wind on your face
23. Pictures of loved ones
24. Sleeping in late
25. A lazy morning doing whatever you want
26. Learning something new and interesting
27. A good hair day
28. Admiring the beautiful big sky
29. Clothes that fit perfectly and you feel fabulous in
30. Finding what you want
31. Expressing yourself clearly and confidently
32. Interesting and meaningful conversations
33. Typing super fast
34. Laughing so hard your stomach muscles get sore
35. An answered prayer
36. Autumn leaves
37. Spring flowers
38. My teddy bear
39. Holding hands with a loved one
40. Feeling connected
41. Accomplishing a goal
42. Seeing someone shine with happiness
43. Driving fast on a curvy road
44. A beautifully set table
45. A delicious meal you remember for weeks
46. Easily finding a parking space right in front of where you need to be
47. Peaceful silence
48. Feeling grateful
49. Catching up with an old friend and feeling like not a day has passed (you are so comfortable together)
50. Someone saying exactly what you need to hear

I have been out of touch for quite a while. I apologize. I am getting back on the bandwagon with the intention of posting consistently once per week.

You have my permission (and encouragement) to call me out if I fall down on the job again.

This week’s topic is dealing with the uncertainty in Estate Planning in the US.

There are both federal and state estate taxes. For the majority, Estate Taxes are not an issue. For the wealthy or those with Estates over the Estate Plan limits, good estate planning can save you some serious money (with 2009’s estate tax rate at 45% and 2011’s currently scheduled to go to 55%).

For 2010 there is currently no federal estate tax.
No one can believe that the government has allowed this to happen since it is a significant source of revenue to the government.

There is talk of passing an estate tax law that will retroactively go back to January 1, 2010. I personally wonder if that will hold up in court and do not believe it should be allowed to go back retroactively.

So currently, in 2010 you can pass away with a billion dollars and you will not owe the federal government estate tax on this money. (State Estate Tax is different and separate.)

The Limited Step up in Basis
The kicker is that in 2010 you must designate what assets will get the step up in basis and there is a limit to the amount of assets that will get the step up in basis.

Go here if you are asking “What is a step up in basis?”

You are currently (in 2010) only allowed a step up in basis on $1.3 million if the assets go to a non-spouse or $4.3 million of assets are allowed to get a step up in basis if a spouse is inheriting the assets.

This is a logistical nightmare because many people do not know the basis of their assets. Many older people have stock certificates in safety deposit boxes and have no record for when they bought them.

No one knows exactly how this limited step up in basis will be handled in the future but we are told you must choose and designate which assets get the step up in basis.

Currently, the Estate Tax exemption reverts back to $1 million in 2011 with a 55% tax rate which means LOTS more people will be paying federal Estate Tax. In 2011 you will once again get a an unlimited step up in basis.

In 2009 the Estate Tax exemption was $3.5 million with the top estate tax rate being 45%. (Yes, I am over simplifying many things here and no I am not an estate attorney.)

My point to all of this is to bring your attention to the craziness and uncertainty with the Federal Estate Planning Tax laws.

As a financial planner or Estate Attorney it is impossible to plan when you don’t know what the rules will be. Everyone is waiting to see.

I feel it was grossly negligent for the government not to take care of the Estate Tax issues before 2010.

I understand that the government needs money and this is a great source of funding from the ultra wealthy. Having a $1 million exemption is too low in my opinion and would impact the middle class. I hope that the $1 million exemption will get changed. The rumor is that they expect the limit to go back to $3.5 million.

Yes, it is tax time.
Many of you are going through your papers looking for needed documentation and are upset with your accountant (TurboTax®) or yourself. Why? Because you procrastinated till the last minute and then realized you don’t have the documentation that you need to file your taxes.

We recommend that you create a tax folder each year.

Put all of your tax documents that you need and receive for the designated year in this folder. When each document comes to you, put it in this folder. At year end all of your tax documents will be in one place ready for when you have to prepare your taxes.

We see a common issue with missing cost basis needed to file taxes on investments sold in the past year that were bought possibly many years ago.

I can relate to all of the above.

Even though this is what I do for a living, it is easy to get bogged down with the papers you get.

I am often asked:

* What papers and information do I need to keep?
* How long do I need to keep this information?
* Do you have any recommendations for how to organize my financial information?

There are various kinds of documents that I put in different categories.

1. Important and Permanent Documents

These documents are ultra important and you want to keep them forever. We recommend keeping them in a secure accessible place like a fireproof box or safe.

The documents that fall in this category are:

Birth certificates
Marriage certificates
Separation and divorce agreements
Real estate deeds, vehicle titles and property surveys
Military records
Current passport
Stock certificates (more and more rare)
Citizenship or naturalization papers
Social Security cards (do NOT carry these around in your wallet)
Family health and immunization records
Proof of paid off loans (mortgage, student or auto loans)
Will, Living Will, Health Care Proxy, and Durable Power of Attorney (only keep the newest version, since multiple versions can cause confusion)

Accessibility is important

I know several examples where clients have put their legal documents (especially their living will or durable power of attorney) in a safe deposit box and then when they needed it QUICKLY, the bank was closed for the weekend and they did not have access to these documents when they needed them most.

2. Income Tax Documentation

You should save your previous tax returns and all the supporting data documentation for seven years to be conservatively safe. The IRS has three years to challenge anything but if they think you did not fully report all income they can challenge your returns for the past six years.

Please note there is no time limit on income tax documentation if you fail to file or if the IRS suspects fraud of any kind.

The supporting income tax documentation you should retain depends upon what applies to your situation. This may include but is not limited to:

Charitable contribution documentation
Employee business expense documentation
Health care receipts if you have a health savings account (HSA)
Medical expense records
Utility bills for home office deductions
Year end paystub and W2
Buy and sell trade confirmations for investments sold during that tax year
Non-deductible contributions to employer sponsored plan or IRA
Expense receipts or cancelled checks in support of tax deductions taken

We recommend that you keep supporting documentation with the applicable year’s tax return.

3. Investment Documentation

Buy – Sell Trade Confirmations
You want to keep all “buy” trade confirmations until you sell the investment so you have the investment’s cost basis. This is needed to appropriately report your income taxes after a sale in a taxable account has occurred. Most brokerage firms keep this information for you. Be aware that if you transfer accounts the cost basis may or may not come with the investments when you transfer them.

Investment Account Statements and Retirement Plan Information
Keep your statements and verify the information for trades until you receive or download the annual year end summary statement. Not all firms have an annual summary with the details of the year. If yours does, you can then throw away the other statements at the end of the year.

Non-deductible contributions to a Traditional IRA or Roth IRA Conversion
Be sure to keep the IRS form 8606 for non-deductible deposits or a Roth conversion until you start withdrawing money from your IRA. Then you can easily prove that you paid the taxes on these contributions and / or conversions.

Annuities
We recommend that you keep the Annuity Policy and supporting documentation for future reference. At some point, you may want to know what your choices and investment options are and what the surrender costs may be.

4.Various other Bills and Monthly Statements

To simplify your record keeping, only keep deposit slips and ATM receipts until you verify them on your bank statement, and then shred them.

After verifying and reconciling the information on your bank statements, keep bank statements for one year unless you are planning on applying for a mortgage, home equity loan or car loan. Banks are requesting a lot more documentation for loans these days.

Most online banking will have a six month history of checks and statements. We recommend downloading copies of these for your records since you often have to pay to receive a copy of cancelled checks and statements if they are no longer online.

Credit Card receipts and statements do not need to be saved except for store returns, tax documentation, or to verify large purchases for warranties or home owners/renters insurance.

Utility Bills should be kept for at least a year to verify payments and any billing issues.

It is recommended that you keep paystubs until you can verify your yearend paystub and your W2. After verifying, you can get rid of all paystubs for the year. Keep the last paystub and W2 for tax documentation purposes.

5. Insurance Policies

Property and Casualty Insurance Policies
We recommend that you keep a copy of each current property and casualty insurance policy (home owners, renters, automobile, excess liability insurance policies) in a separate folder and in an easily found and accessible location. These policies can be lengthy and are usually updated each year. Shred previous year policies that have expired, lapsed or been replaced so you only have the current policy.

Life Insurance Policies
Keep the documentation for all life insurance policies until there is no opportunity for reinstatement of the policy. This paperwork should include the policy number, the insured, the owner, the benefit amount and the beneficiaries. You may discard premium receipts (the cancelled check) after verifying that the payment has been reflected on the statement.

Long Term Care Insurance
Keep your long term care policy until no longer applicable, lapsed or expired.

Health Insurance Policies
We recommend that you keep the information for your health insurance policy easily accessible so you know what is covered and the process for specialized care/coverage. Throw away previous health care coverage documentation that has expired, lapsed or been replaced. This documentation generally changes each year.

6. Warranties and User Manuals

Have a file for current valid warranties and a separate one for user manuals.

I have to admit I usually look up user manuals on the internet and find exactly what I need. For those items that you want hard copy manuals (camera, cell phone, dishwasher etc.) keep all of them in one place for your convenience.

In Summary

Many of us keep much more documentation than we truly need and it is not always the right documentation.

The old, outdated and unnecessary documents that you can get rid of should be SHREDDED. Protecting yourself from identity theft is extremely worthwhile. Too many horror stories abound.

Keep separate labeled files for each category and each account for ease of filing and finding information.

I cannot over-emphasize enough-

1. Be sure to keep the important and permanent documents and seven years of tax returns and supporting documentation.

2. Get rid of and shred outdated and non-applicable documents.

Having the documents you need and being able to find them easily saves you time, space and energy. NOT having what you need causes A LOT of frustration and can cost A LOT of time, money and energy so make the time to get your financial documents organized and cleaned out.

I loved this post so much I had to share it.
Thanks Sizzle!

http://sizzlesays.wordpress.com/2010/02/09/birthday-wish-for-you/

“Dear Friend,

Today is your birthday.

If I could give you anything in the entire Universe it would be self-love. Not money. Not a trip to anywhere your heart desires. Not anything materialistic and fleeting. Just love. Just the love you seek outside of yourself that, if you looked, you’d realize is right inside your very own heart.

You are a good person. A warm, generous, loving, forgiving, funny, smart, creative, and sensitive soul. You deserve to be happy. You don’t have to do anything extraordinary or be anything but yourself to deserve it. I see you settle for less over and over again. I see you take the blame, beating yourself up, feeling like a failure. You wallow in that bad place. You try to be everything to everyone but you never feel like enough. I want to tell you: You don’t have to live there, in the darkness and in pain. Where is the light? It is in you. It is yours to shine, my friend. First we have to learn to be enough for ourselves and then we can give from that place to others. If we don’t know how to fill ourselves up, we’ll always feel depleted, running on empty. I wish for you fullness and happiness from a bottomless well inside you.

Look inside.

I wish for you, on your birthday, courage. To love yourself best and to know intrinsically that you are worthy of it. I promise you, it will make all the difference.

Be brave and know you are loved,

Sizz”

I know I have not posted in a while and this is about all I can handle right now so please forgive me. I hope to get back in the groove soon.