Money Worries

With all of the news about spiraling federal debt, it’s natural that Americans are taking a hard look at their own situation, and it sometimes leads to worry–even for those who are relatively secure.

Interestingly, my clients who have MORE cash in the bank often worry more! Funny, right? But it’s normal human nature….

You see, under all guidelines and measures, my finances are very solid. I’ve got a thriving business which is more secure than most people’s jobs. I work with numbers and am very good at taming balance sheets.

Yet, I still sometimes worry about money.

After a lengthy time of thinking, discussion and some more thoughts into the matter, below are a  few techniques I’ve settled on which can help us ALL reduce our worries over money.

1. Realize that It’s Exaggerated – Worry is a funny feeling – it seems to exaggerate any problem. While there are certainly many people who actually run out of money, those are usually not the people that tend to worry.

2. Spend the Same Time Making Money Instead – If you are going to spend time worrying about money, why not use that time and get a side job instead? Maybe start a website (or two, or three). I know it’s easier said than done, but the more you work at it, the easier it gets.  I have some clients who have set up a side job being their own boss and looking for partners, maybe you should connect with them? Contact me if you want out to find out more about these opportunities!

3. Confidence – Part of the reason why we worry about money is because of the lack of confidence in our own abilities to earn an income. How can we boost our confidence you ask? Confidence comes from success, and success starts from taking action. So try a few low-risk entrepreneurial ventures. If they bomb, see it as a laboratory: learn from it and try again.

But never (never) allow it to touch your identity as a person.

4. The workplace plays a big role in worry. Are your colleagues encouraging? Is your boss supportive? If not, then do something about it. Don’t get into the thinking of “I can’t find another job”. Yes you can — especially if you HAVE a job right now. If you got this job, you can get another one!

5. Worrying is Actually Good – A little, measured worrying is actually healthy for us. It’s what drives us to be better. It’s what turns our energy switch to the “On” position. The right way to deal with it is to channel it into your work ethic, and your desire to be better.

Of course, what I listed above is just the tip of the iceberg. How do you deal with worrying about the lack of money? Or do you? What has worked for you? I’d be interested to hear.

Lastly–ELIMINATE worry by calling us for advice! You do NOT have to walk this financial road alone…

Until then…

Howard

Three Most Important Family Preparedness Steps

When I think about what frightens parents, seeing their children in a vulnerable position pretty much tops the list–whether it’s at home, at the pool, or any other place in public.

What exacerbates this is knowing the fear which children themselves feel when they are surrounded by people they don’t know, and when they can’t fully understand just how much love their parents have for them.

Put these steps into place…and you’ll eliminate at least some of these dangers…

#1: Identify a Clear Plan for the Care of your Children.
Did you know that 74% of parents have not named guardians? Worse, of the 26% who have, most have made 1 of 6 common mistakes that leave their kids at risk.

When you name short AND long-term guardians for the care of your children, you must give clear guidance to your caregiver and everyone you’ve named to care for your children, in written form. Just by naming these guardians (both short and long-term), your children never have to be put in a situation in which they would be taken out of your home and into the hands of strangers if something happens to you.

An even better step, if your children are old enough for this discussion, is to tell them this plan. Don’t make a big deal of it…you don’t want to frighten your kids at the prospect of your loss. But they’ll feel better knowing that you’ve selected people they can trust and love to care for them well.

#2: Properly Document Your Decisions
Parents often have discussed and agreed upon a guardian for their children and have even made their wishes known to their families; however, not documenting these decisions can result in your wishes not being followed when it really is too late.

You see, if you don’t communicate your wishes in a legally-binding document, you are placing your children in a “free for all”. Without clear, legal guidance, every family member has equal priority of guardianship and the decision about the care of your children will be left in the hands of a broken-down court system and some judge who doesn’t know you or your kids.

This legal documentation is particularly important if you intend for a friend to care for your children as courts will almost always choose a family member over a friend.

Also, don’t forget to be sure to leave behind specific guidance about how you want your children raised.  Education decisions, healthcare decisions, discipline decisions … these are all things you care a lot about and would want made consistent with your opinions for how your kids are raised.

#3: Don’t Neglect Their Financial Future
Sure; there are different schools of thought on this issue. Some parents don’t want to overwhelm their children with too much in their bank accounts at once, which is understandable.

But, regardless of how you structure this provision, providing sufficient financial resources for your children’s care is your responsibility. And, as a responsible parent, you must take steps to protect what your children will receive … whether it’s through life insurance, savings or some other means.

To do so, establish a living trust to receive any life insurance benefits your children would receive so that they don’t get access to your assets at the age of 18, and make sure your living trust holds on to the title to any assets that would go through probate in the event of your death. And, if your estate is large enough, you will want to plan to avoid estate taxes as well.

Many of these issues can be handled by an estate-planning attorney, and we’d be happy to put you in touch with somebody good. Or, there are online options as well. Either way…let us know how we can help! Visit our site www.savemoretaxes.com to obtain your free report on saving more taxes.

How Warren Buffett did it!

Warren Buffett‘s Financial Wisdom
Billionaires aren’t hatched overnight.

But there will be another generation of such men and women in the next few decades — and chances are, they will tread the same path as those who have come before.

So let’s look at Warren Buffett’s path as an example, shall we?

1) Start with a meat and potatoes small business — and be your own boss.
Buffett made his fortune by doing things his way, not by following the crowd. In high school, Buffett and a pal bought a pinball machine to put inside a barbershop. With the money they earned, they bought more machines until they had eight different shops running their machines. When they sold the venture, Buffett used the proceeds to buy stock and start another small business. By age 26, he’d become his own boss and amassed $174,000 — or $1.4 million in today’s money.

LESSON: Don’t fall for the temptations of a huge, immediate windfall business. Cut your teeth on the side, with something basic, reliable and small.

2) Mind the foxes who steal from the vineyard: small expenses.
In the famous book, The Millionaire Next Door, authors Stanley and Danko report that millionaires live well below their means. They budget, plan investments, and allocate their time, energy, and money into building wealth instead of displaying high social status.

Warren Buffett’s companies are known for watching out for small expenses. Exercising vigilance over every expense can make your profits and your paycheck go much further.

LESSON: The next time you spot a sale or online deal, check in with yourself to see if that $50 is better saved or invested than spent. It might seem like you’re spending a relatively small amount of money, but it all adds up.

3) Debt kills.
Warren Buffett advises his people to limit what they borrow. Living on credit cards and loans won’t make you rich. Buffett never borrowed a significant amount of money, not even for investments or mortgages.

The Millionaire Next Door reports that millionaires’ parents did not provide “economic outpatient care”, and their own adult children are economically self-sufficient as well.

LESSON: If you do give your teenager a credit card, make sure to set firm limits and specify use ahead of time. If they abuse the privilege, they lose the card. Do the same for yourself.

4) Leap forward.
Very often those who supply the affluent become wealthy themselves.  In fact, one of the best ways to make money is to sell products or services to those who already have money. Many people don’t see these opportunities because they’re far too busy seeking money and security in the short term only.

Well, when Buffett began managing money in 1956 with $100,000 cobbled together from a handful of investors, he was dubbed an oddball. But he didn’t allow others’ opinions to keep him from leaping into a profitable venture. Over and above, I might add, others with greater private means.

Lastly, I will suggest this: Get professional advice on new ventures and ideas. We are here for far more than “just” tax planning. I and my team would love the opportunity to sit with you, and help you evaluate the direction of your financial life … and point you in a new direction, should it be necessary. Take advantage of our free report by clicking on the link to your right to help you save more taxes!

What to do if you have not received your tax refund!

It has been several weeks since you filed your return and you have not received your refund. What should you do? Here are some  steps you can take.

Your Refund Status: Make sure you have a copy of your tax return on hand or know your “filing status“, SSN and the exact dollar amount of the anticipated refund.
* Online: Go to IRS.gov and click on “Where’s My Refund”. (http://www.irs.gov/individuals/article/0,,id=96596,00.html?portlet=4)
* Automated Phone: Call 24 hours a day, 7 days a week for automated refund information.
* In-Person Phone: Call during the hours shown in your IRS form instructions.

“Do I need to keep a copy of my return?”
Yes, for a *minimum* of three years. There’s all kinds of contexts where it’s useful. We do keep one on file, on your behalf, but it’s just smart and safe for you to keep one in a secure place at home. (I’ll soon have a Note about Amended Returns, and you will need a copy for that process, as well.)

As for the supporting documents from your return, anything that relates to a home purchase or sale, stock transactions, retirement, business or rental property, should be kept much longer than the three years.

We will have more ideas for you to consider so that this year you will save more taxes.  Watch our blog for upcoming postings. Any questions, send us a note.

How To Raise Financially-Savvy Children

We do love children around here. So much of what we do, in the tax preparation process, influences families, children, and their futures — well, it’s simply a huge part of our clients’ lives, and we take it very seriously.

However … I’ve been around the block, once or twice, with families whose children have gotten themselves in financial hot water, and it’s not always an easy task to get them out.

So, this time, I’m taking some time to offer you some lessons “from the trenches” on helping your children launch into the real financial world with a firm foundation.

So now, to raising your children’s financial future …

I’ll spare you the stories, but needless to say: I’ve seen so many otherwise-loving and wise parents somehow forget to ready their children for the financial realities of adult life. Instead, they simply hand them credit cards, pack up their cars and head to school.

I’ll go out on a limb here, but I believe that it is this deficiency in financial education which has led, in part, to an adult population that spends beyond its means, engages in unsafe borrowing practices, and accumulates record amounts of  debt.

Still, if we decide to instruct our kids how to responsibly manage their money — much as we teach them how to read, tie their shoes, and ride bikes — then perhaps they might avoid a Great Recession-like event in their own adult lives.

Sure, that all sounds good in theory, but how do you go about instilling proper financial values into your children?

1) Tackle the task as if you are once again teaching your kids to ride bikes. You first need to let them get comfortable on training wheels, and prepaid cards are the training wheels of personal finance. So co-sign for prepaid cards, load a certain amount of money biweekly and allow your children to spend freely. This will force them to learn how to budget and, since most prepaid cards allow online account management, you will be able to review their purchases with them.

By the way, I did some online searching, and these are some good choices for pre-paid cards for teenagers, etc.

Visa UPside: http://www.upsidevisa.com
MasterCard Facecard: http://www.facecard.com
American Express Pass: http://bit.ly/heWJRS (shortened link)
Visa Buxx: http://usa.visa.com/personal/cards/prepaid/visa_buxx.html

2) Once you are confident that your kids have exhibited responsible prepaid card use for at least a year, you can graduate to monthly cash allowances. This progression, which is tantamount to taking one training wheel off their bikes, will provide them with greater financial independence (given that you cannot monitor their spending with cash). It will also more thoroughly test their responsibility because the odds of losing money or exhausting too quickly are heightened with a monthly cash allowance.

3) If your kids demonstrate the requisite discipline after a year of cash allowances, you can take the other training wheel off. Do so by co-signing for and opening checking accounts in their names and depositing slightly higher monthly amounts while requiring them to pay for more of their own expenses.

With checking accounts, children will garner much needed experience writing checks and purchasing with debit cards. They’ll learn how to avoid overdrawing their accounts and bouncing checks –  and if they can’t learn these lessons quickly enough, you can screw that training wheel back on and regress to cash spending. After all, when you took that last training wheel off, you didn’t let go of the bike completely! You still had a grip on the handlebars and were providing assistance as needed.

4) If your kids’ financial balance seems solid after 6-9 months, you can release the handlebars and either co-sign for student credit cards or give them small lines of credit as authorized users on your credit card accounts. Doing so will help teach them the principles of responsible credit use, such as spending within one’s means and paying bills in full each month. Remember though that you are simply taking your hands off to see if your kids can ride. If they wobble, catch them.

This financial education progression will instill within your children various skill sets that will surely serve them well when they leave the nest. It’s important to employ such a practical approach because it lets kids learn and inevitably falter while the stakes are low. Additionally, you can ensure that your children know how to handle their money before becoming independent, providing yourself with the kind of peace of mind that is valuable to any parent.

So before sending your kids out into the world, make sure they are ready for the financial implications of that independence!
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To your family’s financial and emotional peace

Warmly,

Howard

P.S.   If you like to know more about this and other financial topics, please click on the link to the right to our Twitter page.  Please let me know if you liked this article and give us your comments below.

So what will the new tax changes do for me!

First of all, the new tax changes will give some stability in tax planning.  The 2010 Tax Relief Act extends the Bush-era individual and capital gains/dividend tax cuts for all taxpayers for 2011 and 2012. But be careful,  the provisions are temporary and the new law places the ultimate fate of the Bush-era tax cuts to 2012, a presidential year.

Here are some details:

Individual income tax rates that are presently in place will be extended for 2011 and 2012 with the maximum tax rate at 35% versus 39.6%. In addition, the amount withheld  from paychecks for social security will drop to 4.2% from the present 6.2%. This is only for the 2011 year. What that means is that an individual earning $50,000 in 2011 will see an approximate tax savings of $1,890 in combined income tax and payroll tax rate reductions. This information courtesy of   Commerce Clearing House, publisher of tax resources.

Other individual income tax areas will stay the same. For example,  capital gains/dividends will still be taxes at 15%.  There will be relief in the itemized deduction limitation, marriage penalty , child tax credit, earned income tax credit, adoption credit, dependent care credit, mortgage insurance premiums, educational assistance exclusion, student loan interest deduction,  and the alternative minimum tax.

Estate Tax

The estate tax is reinstated in 2011 but at a much higher rate. Basically with some estate planning, up to $10 million can be excluded by a husband and wife. $5 million for an individual.  There are some options for those who died in 2010.

Business

Business has been given some tax incentives over the next two years.  100 Percent Bonus depreciation is available for certain periods over the next two years along Section 179 expensing.  Research Tax Credits, Small Business Stock incentives and other credits.

Bottom Line

We have only scratched the surface of this new tax changes. You need to sit down with a tax professional to see how this impacts you. There is only a two year period to take advantage of these opportunities. I am sure that in two years,  the tone of the political  and economic environment will be different and the opportunities we have before us will be gone.

We offer free first time consultations to review your situation. Check us out. You have nothing to lose.

Related articles

• What does the tax deal mean to you? (usatoday.com)
• So, what does this tax bill stuff really mean for you? (capitolhillblue.com)

All I can say is WOW

Ok… this is one of the coolest “projects” I’ve ever seen…

It’s pretty obvious that the big-shot bankers on Wall Street have been getting richer and richer during this economic crisis, while your friends and family members haven’t.

Well if you’re interested in cracking open the “black-box investing strategies” of the rich, so you can see how they’re doing it, you’ve gotta check out this video Mike Dillard just posted…

Despite the fact that he’s not an investor, trader, or financial guru of any kind, he’s made a 280% return since 2008, while the rest of the world has lost 30-40% of their portfolio.

How?

Get this… He found a “map” back in 2007 that’s allowed him to basically predict the future.
Like I said… VERY COOL…

Check out this video he just posted and you’ll see how he’s doing it…

http://www.theelevationgroup.info/click.track?CID=142138&AFID=156393&ADID=411870&SID=

Let me know what you think.

Howard