Personal Finance - Charlotte Financial Planning & Advice

How to make the most of life’s most important $$ lessons

What’s the first big lesson you learned about money?

How did you learn it?

Many of us start learning about finance as kids.¹

We watch those around us, and we learn by trial and error.²

That can teach us some important basics about finance. And it can open the door to learning some of life’s major lessons about money.

What are those lessons and when’s the best time to learn them?

When it comes to life’s lessons about money, you can’t always expect to learn them in school — and the sooner you know them, the better.

Those life-changing finance lessons are the focus of this month’s Visual Insights Newsletter.

Click here to see it!

The lessons we pick up about money can influence our choices, and they can stick with us for life.

No matter when you learn them, it’s never too late to find better ways to leverage them.

Go ahead and click here to check out the 5 powerful money lessons you’ll wish you knew sooner.

1 – https://www.businessinsider.com/personal-finance/why-we-need-to-teach-kids-about-money-2021-10
2 – https://youth.gov/youth-topics/financial-capability-literacy/facts

How do you select the ultimate gift?

Let’s face it. Buying meaningful gifts for our family and friends is really, really hard.

If you want to give something that has a larger impact long after the holiday season has passed, why not give the gift of financial knowledge and wisdom for living a fulfilled life?

Given the academic background of our firm, we know the following is going to be a big shocker:We really love reading books and giving books as gifts!

Below you’ll find our 2021 Guide to Gifts That Pay Off.

It’s full of our 23 favorite money-related and living-big gift recommendations for those ages 4 to 94!

Let us highlight a couple of our new recommendations this year:

The Total Money Makeover (Dave Ramsey)
A proven plan for financial fitness
We love giving this book out to our clients for their adult children. And we like to give these out as graduation and wedding gifts with a $100 bill tucked inside. About 80% of this book is really good, but we (and history) may not agree with perhaps the other 20% (e.g., unrealistic investment return assumptions; over-reliance on growth investments; unsustainably high withdrawal rates in retirement). Nonetheless, Mr. Ramsey does a great job of teaching the basics of money.

The Price You Pay for College (Ron Lieber)
An entirely new road map for the biggest financial decision your family will ever make
One of our savvy clients in Washington, D.C. brought this 2021 book to our attention and it’s excellent! This book discusses why college costs so much, digs into the allure of elite schools, uncovers hacks that may not really be hacks, and talks about how to plan and pay for college.

Knocking on Heaven’s Door (Katy Butler)
The path to a better way of death
While it can be very difficult, having tough conversations about end-of-life care well in advance can help our dying loved ones cope later on. We have the ability to cultivate a “good death.” Give this book to your parents if they are still living and discuss it with them. And depending on your age, give it to your spouse and discuss it with them.

Retirement Heaven or Hell (Michael Drak et al.)
9 principles for designing your ideal post-career lifestyle
Don’t be fooled, the transition to retirement is a very difficult transition for many. To retire well you need enough purpose to wake up in the morning and enough money to sleep at night. Taking the time to read this book, reflect, explore, and be intentional will mean the difference between ending up in “retirement heaven” and “retirement hell.”

So what is the ultimate gift of 2021?

Life-changing wisdom about managing your money and living your best life that you can give to those that you truly care about!

Happy gifting,
The NorthStar Team

2021 NorthStar Guide To Gifts That Pay Off

Children

Money Ninja: A Children’s Book About Saving, Investing, and Donating
Young readers learn how money can work for them instead of spending it.

Money Savvy Pig
The piggy bank for the 21st century!
Finance 101 for Kids: Money Lessons Children Cannot Afford to Miss
Informative and entertaining book to help children get on the right path to making smart personal financial decisions.

Teenagers

O.M.G. Official Money Guide for Teenagers
How to turn pocket money into power and freedom

Cash Cache
The award-winning personal finance organizer for teens!

What Color Is Your Parachute for Teens
Career guide for teens to help zero in on their favorite skills and find their perfect major or career

College Students

Why Didn’t They Teach Me This in School?
99 personal money management principles to live by

Adulting 101: #Wisdom4Life
A complete guide on life planning, responsibility and goal setting

They Don’t Teach Corporate in College
A twenty-something’s guide to the business world

Young Professionals

Generation Earn
Young professional’s guide to spending, investing, and giving back

The Total Money Makeover
A proven plan for financial fitness

Jumpstart Your Marriage & Your Money
Guide to help couples stop worrying about money and start building wealth together.

Parents with Children at Home

Raising Financially Fit Kids
Help prepare your children for a lifetime of smart money decisions

The Opposite of Spoiled
Raising kids who are grounded, generous, and smart about money

The Price You Pay for College
An entirely new road map for the biggest financial decision your family will ever make

Adults

Happy Money
Are you getting the biggest happiness bang for your buck?

5 Book
Where will you be five years from today?

Life Reimagined
The science, art, and opportunity of midlife

Retirement Heaven or Hell
9 principles for designing your ideal post-career lifestyle

I’ve Decided to Live 120 Years: The Ancient Secret to Longevity, Vitality, and Life Transformation
Ignite the true spirit of what it means to live fully

Caregivers & Golden Agers

Being Mortal
Medicine and what matters in the end

On Living
An uplifting meditation on how important it is to make peace and meaning of our lives while we still have them

Knocking on Heaven’s Door
The path to a better way of death

Rescue bill (what’s inside)

So, the next (final?) round of stimulus was signed into law by President Biden.

Let’s dive in.

The $1.9 trillion bill called the American Rescue Plan Act of 2021 includes stimulus checks, child tax credits, jobless help, vaccine-distribution money, healthcare subsidies, and aid for struggling restaurants. What’s not inside? A higher minimum wage.

Here’s a quick visual of how it compares to prior rounds of stimulus.

Here are some immediate takeaways:

More stimulus checks are coming: $1,400 checks could be hitting bank accounts and mailboxes this month, going out to adults, children, and adult dependents such as college students and elders. These adult dependents did not qualify for previous payments, so that’s good news for many.¹

Who gets paid? Individual filers who earn as much as $75,000 (or joint filers making $150,000), plus their household members, qualify for the full $1,400 per person.¹

Folks filing as a head of household can earn up to $112,500 and still qualify for the full payment. Phaseouts kick in quickly this round, and an individual with an income of $80,000 or a couple earning $160,000 get nothing.¹

Not sure if you qualify? The Washington Post put out a handy calculator to help you figure it out. (Accuracy not assured, etc., etc.)

If you’ve filed your 2020 taxes, your check would be based on that income. If not, it would be based on your 2019 tax filing. If you’re waiting for a missed payment, individual tax returns have an extra line called “recovery rebate credit” to claim your stimulus payment.

Enhanced unemployment benefits are extended through Sept. 6: Folks claiming jobless benefits will receive $300/week on top of what they already get from their state through the fall.²

Some unemployment income is now tax-free: Individuals who earned less than $150,000 in 2020 can shield up to $10,200 in unemployment benefits from taxes. For married couples filing jointly who both received unemployment, the tax-free amount goes up to $20,400, but the $150,000 income cap still applies. Unfortunately, if you earn over $150,000, it currently appears that all of the unemployment benefits become taxable with no phaseout.³

If this applies to you or someone you love, my advice is to wait to file or update your tax return until the IRS issues guidance on what to do.

The child tax credit is larger: The bill increases the child tax credit for one year to $3,600 for kids under 6, and $3,000 for kids between 6 and 17 (the current credit is a flat $2,000 per child under 17). 50% of the credit would be available as advance monthly payments that the IRS will start sending to families in July 2021.⁴

Unfortunately, not all families will qualify. Phaseouts begin at $75,000 for single filers, $112,500 for heads of households, and $150,000 for joint filers. However, families who earn less than $200,000 ($400,000 for joint filers) could still claim the regular $2,000 credit.⁴

Health insurance costs could drop on health exchanges/marketplaces: The bill removes the income cap on insurance premium tax credits for folks who purchase insurance on the federal health exchange or state marketplace (for two years). That means the amount you would pay for health insurance would be limited to 8.5% of your income as calculated by the exchange.⁵

Final thoughts

A lot of rules have changed in the last year, throwing an already complex tax season into a bit of confusion.

Could there be more stimulus passed this year? It seems unlikely if the U.S. economy continues to expand.

According to a fresh estimate, our economy will expand nearly twice as fast as originally expected, growing at an estimated 6.5% in 2021 versus the 3.2% projected in December.⁶

Obviously, these projections rest on a lot of assumptions about vaccination rates, reopening, and consumer spending.

Let’s hope we stay on track.

That was a lot of information to absorb. Have questions?

I’m here for them. Email me (chrismullis@nstarcapital.com) or give me a call at (704) 350-5028.

Until next time,
Chris

Chris Mullis, Ph.D., CDFA®
Founding Partner & Financial Planner

Reduce Taxes. Invest Smarter. Optimize Income

AskNorthStar.com (704) 350-5028

P.S. Markets have hit new highs as fears of out-of-control inflation faded and hopes about the recovery surged. The usual caveats apply: we’re in a roaring bull market and any time stocks reach new highs, pullbacks and corrections are possible. Keep calm, cool, and focused. I’m here for questions.⁷

P.S.S. The last day to contribute to an IRA for 2020 is April 15, 2021.

¹_{https://www.washingtonpost.com/business/how-can-i-qualify-for-that-1400-stimulus-check/2021/03/10/419fa7bc-81e2-11eb-be22-32d331d87530_story.html}

²_{https://www.cnet.com/personal-finance/weekly-300-unemployment-benefits-what-happens-now-with-new-stimulus-bill/}

³_{https://www.cnbc.com/2021/03/09/covid-bill-waives-taxes-on-20400-of-unemployment-pay-for-couples.html}

⁴_{https://www.kiplinger.com/taxes/602378/congress-passes-3000-child-tax-credit-for-2021}

⁵_{https://www.cnbc.com/2021/03/10/health-insurance-costs-to-drop-for-millions-under-covid-relief-bill.html}

⁶_{https://www.nytimes.com/2021/03/09/business/oecd-doubles-us-growth-forecast.html}

⁷_{https://www.cnbc.com/2021/03/10/stock-market-open-to-close-news.html}

Chart source: https://www.wsj.com/articles/whats-new-in-the-third-covid-19-stimulus-bill-11615285802

Biden’s pen (what’s in it for you)

After months of election uncertainty, Joe Biden was inaugurated as our 46th president, bringing the peaceful transfer of executive power that defines us as a democracy. President Biden’s pen has been busy, busy, busy so let’s dive into some new policies that could impact you in this short video that we prepared.

You can watch it here.

Video transcription

Hello, I’m Dr. Chris Mullis with NorthStar Capital Advisors.

After months of election uncertainty, Joe Biden was inaugurated as our 46th president, bringing the peaceful transfer of executive power that defines us as a democracy.

President Biden’s pen has been busy, busy, busy so let’s dive into some new policies that could impact you.

Student loan freeze:
The Department of Education extended the suspension of federal student loan payments through September 30, 2021, giving borrowers some extra breathing room this year. No interest will accrue during that period, and each month will count toward public service loan forgiveness as well as student loan rehabilitation. Unfortunately, private loans are again excluded from the freeze.

Foreclosure and eviction moratoriums:
The CDC extended the federal eviction moratorium through March 31, 2021, preventing renters from being evicted for non-payment of rent. Fannie Mae and Freddie Mac also extended foreclosure and eviction moratoriums until February 28, 2021.

Rental assistance:
Under a program passed in December, states will begin disbursing $25 billion in rent assistance to help tenants pay rent and utilities. Funds can be accessed locally through housing groups, 211/311 information lines, and local representatives.

Will Americans receive more stimulus checks?
I think that’s likely, but it’s not yet clear who will get them or how much they’ll be. The new $1.9 trillion stimulus program Biden has proposed offers $1,400 stimulus checks, enhanced unemployment benefits, a $15 minimum wage, aid for states and local governments, money for COVID-19 vaccines and testing, as well as help for parents and schools.

What will the final bill look like once Congress finishes negotiating?
Unknown. Opinions and criticism abound. Some think the proposal is too big, too costly, and risks overheating the economy. Some believe it doesn’t do enough to address the real pain many Americans are experiencing. Others think that getting it done (and done quickly) is more
important than getting it perfect. What do you think? Shoot me an email and let me know.

Tax season starts later this year, but the filing deadline is still April 15 (for now).
The IRS has pushed back the start of tax season by several weeks, delaying the acceptance and processing of tax returns until February 12. Currently, the tax filing deadline is still April 15, but that could also change.

I’ve had some questions about how the 2020 stimulus payments could affect taxes, so I’ll answer a few right here:

Do I owe taxes on my stimulus money?
No, the IRS does not consider stimulus payments to be income.

I didn’t receive my money (or the correct amount of money).
Since stimulus payments were based on prior year tax returns, you’ll receive any money you’re owed when you file your 2020 return. If you think you may have received too much based on your income, you’re in luck. It doesn’t look like you’ll have to pay any back.

So that’s a lot of information to digest. And more will be coming as the new administration settles in and starts working on what’s promising to be a big agenda for the first 100 days.

If you have questions or need help figuring out assistance for yourself or someone you love, please reach out. It’s what I’m here for.

Finally, let’s address one last question.

Will all the political back and forth trigger a big correction?
With markets at highs, a pullback is always possible. As long as progress is made toward getting control of the pandemic and supporting the economy, a serious correction seems unlikely. However, setbacks or a sudden loss of investor optimism could definitely cause a sudden drop.

Let’s be prepared for volatility.

That’s all for now.

As always, stay safe and stay in touch

Lessons from 2020 to make 2021 stronger (3-minute video)

We’ve made it through a hard, tumultuous year. And we’re still dealing with a pandemic and an uncertain economy.

While we may not feel the usual sense of a “fresh start” this New Year, we can use the transition as an opportunity to consider some valuable lessons that can help us navigate the next set of challenges.

We made a short video reflecting on three lessons we learned in 2020 that we think can make us stronger in 2021.

You can watch it here.

Transcription:

Hello, I’m Dr. Chris Mullis with NorthStar Capital Advisors. 2020 was a challenging year for me. Was it challenging for you as well?

Every December, I like to take time to reflect on the past year and think about what I learned. I think that’s more important than ever this year, and I wanted to share my thoughts with you. I hope they’re useful to you as you take stock of 2020 and plan for the new year.

Though 2020 was immensely challenging for me personally and professionally, the difficulties held valuable lessons for me. Here are three lessons I’m planning to keep in mind as we head into the new year.

Lesson #1: Expect the unexpected.

I know, it’s easier said than done, but it’s so true. I can’t count the number of plans I had to change, reschedule, or even cancel this year. You know one of the things that I missed the most is the joy of seeing my children’s musical performances.

In my work, I’ve learned to help clients build contingencies and backup plans. Now, I’ve incorporated that into my personal life so that I can switch gears whenever circumstances change. And the more I “go with the flow,” the more creative I’m becoming at finding solutions when new roadblocks pop up.

Lesson #2: Appreciate what you have.

We’ve all experienced losses this year, and some of those losses were profound. And yet we’re still here. That, in itself, is a gift. In 2021, I’m going to take more time to recognize the blessings in my life, especially when I’m feeling anxious or under stress. Personally, I’m grateful for my family, good health, and good neighbors. And I’m especially thankful for folks like you.

Lesson #3: Ask for help.

We’re none of us an island, especially during challenging times. Asking for help and support from the people around you is a sign of strength and courage. During this past year I’ve leaned on the strength and wisdom of fellow advisors to adapt, improve and grow professionally. And I’m going to keep doing that.

In 2021, I hope we can both recognize when we’re not at our best and reach out for support when we need it. Now I’d like to hear from you. What did you learn from 2020, and what are you taking with you into 2021?

Will you please drop me a note to let me know?

As a financial planner, I’m used to being someone in the know, but I also learn so much from my clients and my friends. Can you teach me a lesson from your own experiences this year?

Are you still feeling shell-shocked by 2020 or thinking about financial goals for the new year? Just me drop a note to let me know. I’ll reach out.

Thank you for being on this incredible journey with me. I’m so honored by your trust and I look forward to learning many new lessons together in the year to come.

Stimulus bill (what’s inside)

Here’s a quick note about the new economic relief package that Congress passed just yesterday. The Consolidated Appropriations Act, 2021 comes in at over 5,000 pages and the NorthStar Team has been totally nerding out on it!

What’s in the box?
The rescue package includes:¹

$600 direct payments to adults and dependent children
An extra $300/week in unemployment benefits through at least mid-March 2021
$325 billion in small business aid
Vaccine distribution funding
Food assistance for low-income households
Emergency rental relief

Who is eligible for the stimulus payments?
It appears that lawmakers are following slightly different income limits than they used for the CARES Act. Individuals who earned less than $75,000 in 2019, heads of household earning less than $112,500, and couples earning less than $150,000 are eligible for the full $600/person payment. The payment starts phasing out after $75,000 and disappears entirely for individuals earning more than $87,000 (or couples earning over $174,000).²

While dependent children under 17 will also receive $600 each, it doesn’t appear that adult dependents like college students or elders qualify for the payments.

If your family added dependents in 2020 or you earned too much in 2019 to qualify (but would qualify in 2020), you may not receive full payments immediately but can request additional money once you file your 2020 taxes. If you qualified based on your 2019 income but your 2020 income would have reduced your payment, you won’t have to pay it back; nor will it count as taxable income.

How do I claim a stimulus payment?
Like the CARES Act payments earlier this year, the stimulus payment should end up in your bank account or arrive in the mail. If you’ve moved or changed bank accounts since you filed your taxes, you can update your address with the IRS here. It appears that you can’t update direct deposit information due to fraud risks.

While the IRS hasn’t released a timeline for sending out payments, it’s possible electronic payments could start before the end of the year. When the last round of stimulus passed, the IRS began distributing payments two weeks later; however, plenty of eligible folks still haven’t received them many months later.³

What else do I need to know?

Small business relief: Congress included another round of relief for small business owners by extending the Paycheck Protection Program with another $284 billion in forgivable loans. Some of the funds will be set aside for very small businesses, and the PPP is now available to nonprofits and local media outlets.⁴

An extra $20 billion has also been appropriated for Economic Injury Disaster Loans for businesses in low-income communities, and $15 billion more is earmarked for live venues, movie theaters, and cultural institutions that have been financially damaged by the pandemic.

The deal also clarifies that PPP borrowers will be able to deduct expenses paid for with forgiven loans, clearing up a potentially nasty tax issue.

Unemployment benefits: The package also extends unemployment benefits of $300/week for another 11 weeks, beginning as early as December 27 and lasting at least until March 14, 2021. A benefits program specifically for contract and gig workers that was slated to expire at the end of the year is also extended through March.

What should I do with my payment?
If you’re one of the millions of Americans struggling to stay afloat right now, please use the stimulus payment to pay for your three basics: food, shelter, and medicine. If you’re in a better place, we’d recommend paying down any high-interest debt you’ve accumulated or beefing up your emergency savings.

If you’re among the very fortunate who don’t need to shore up your finances, we’d recommend putting it toward your retirement savings, other financial goals, or investing it in yourself through a course or hobby. Or even better, donate it to your favorite charity.

That’s it for now. We hope you and your loved ones are safe, warm, and well.

Questions? We’re here. Reach out at (704) 350-5028.

Happy Holidays and Warmest Wishes!
The NorthStar Team

P.S. Wherever there’s money, there are scammers after it. Please be on alert for “official-looking” emails asking you to open an attachment or click a link—they may contain malware. If you get a suspicious email, check the sender’s name and email address to make sure they’re not fake. When in doubt, delete the email. The IRS or Treasury department will not require you to follow emailed instructions to receive a stimulus check.

P.P.S. Some great news to share: 556,208 folks were vaccinated against COVID-19 in the first week! That’s the power of human ingenuity and collective effort. We’re so grateful to be seeing some light at the end of this dark tunnel!⁵

¹_{https://www.washingtonpost.com/business/2020/12/20/stimulus-package-details/}

_{https://www.wsj.com/articles/what-is-in-the-900-billion-covid-19-aid-bill-11608557531}

²_{https://www.wsj.com/articles/stimulus-checks-round-2-when-will-they-arrive-how-much-will-they-be-11608561726}

³_{https://www.wcvb.com/article/when-will-you-get-a-second-stimulus-check/35025504}

⁴_{https://www.cbsnews.com/news/stimulus-check-600-dollars-eligibility-2020-12-21/}

⁵_{https://www.bloomberg.com/news/articles/2020-12-20/u-s-has-administered-556-208-vaccine-shots-in-first-week}

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific situation with a qualified tax professional.

Our Warmest Wishes!

As this crazy, eventful year comes to a close, we’d like to offer a heartfelt “thank you” for being part of the NorthStar Capital Advisors universe.

We are so deeply grateful for you allowing us to be part of your journey to a stronger financial future and we’re sending you our warmest wishes.

2020 was a year of immense uncertainty, global shocks, and worry. It was also a year where the indomitable human spirit shined.

We don’t yet know what 2021 will bring for us, the markets, or the economy. We have a new president who might bring big changes (including increasing taxes on some folks). New vaccines and treatments will help whittle away the pandemic’s threat. Life will go on.

There’s a lot we can’t control about the future, but we can control a few things.

As we usher in a new year with great expectations, can we commit to a few things together?

Harnessing Our Dreams Amid Uncertainty
A lot of dreams were deferred this year. But let’s move forward and recommit to them even if they look a little different in our new world. Our job together is to help you grow and protect your wealth so you can use it to reach your aspirations, retire in comfort, create change in the world, and leave a legacy of love.

Building Up Ourselves (And Our Behaviors)
With so much out of our control (the markets, the economy, pandemics, and other shocks), it’s so important to focus on ourselves, our hopes, our goals, and our dreams. Identifying the choices in our control isn’t just a good financial lesson, it’s a great life lesson. There’s a quote we like from the Stoic philosopher Epictetus, who said:

“The chief task in life is simply this: to identify and separate matters so that I can say clearly to myself which are externals not under my control, and which have to do with the choices I actually control.”

Increasing Our Kindness And Patience
In a time of political polarization and increasing social chasms, let’s commit to treating each other with kindness, patience, love, and respect. We’re not sure who originated this quote, but we try to keep it in mind when we talk to folks we disagree with:

“Be kind, for everyone you meet is fighting a hard battle.”

Focusing on Time in the Market, Not Timing the Market
Timing the market is impossible to do consistently and well. Even for the pros who spend their lives watching six monitors at a time. The best day to invest in the market is the day after you get paid. The most potent factor you have as an investor is time. Markets are unpredictable, and those who jump in and out based on emotion or “gut feelings” about tops and bottoms typically do worst of all.

What else should we commit to together?

In closing, please accept our gratitude, our good wishes, and our thoughts for the year ahead. May you and yours enjoy warmth, love, and success in 2021.

Warmest Wishes,
The NorthStar Team

20 Gifts That Last a Lifetime

Let’s face it. Buying meaningful gifts for our family and friends is really, really hard.

If you want to give something that has a larger impact long after the holiday season has passed, why not give the gift of financial education and wisdom for living a fulfilled life?

Given the academic background of our firm (“PhDs with passion”), I know the following is going to be a big shocker.

We love reading books and we love giving books as gifts!

Below you’ll find our revised & expanded 2020 NorthStar Guide to Gifts That Pay Off. It’s full of our favorite book and money-related gift recommendations for those ages 4 to 94!

So what’s the most valuable holiday gift of 2020? A fun lesson in financial literacy and living your best life!

Happy shopping!

2020 NORTHSTAR GUIDE TO GIFTS THAT PAY OFF

Ages 4 to 10

Money Ninja: A Children’s Book About Saving, Investing, and Donating
Young readers learn how money can work for them instead of spending it.
https://www.amazon.com/Money-Ninja-Childrens-Investing-Donating/dp/1953399592

Money Savvy Pig
The piggy bank for the 21st century!
http://www.moneysavvy.com/assembled/money_savvy_pig.html

Ages 8-12

Finance 101 for Kids: Money Lessons Children Cannot Afford to Miss
Informative and entertaining book to help children get on the right path to making smart personal financial decisions.
https://www.amazon.com/Finance-101-Kids-Lessons-Children/dp/1634139437/ref=pd_bxgy_img_2/147-5920064-0475525

Ages 11-16

Cash Cache
The award-winning personal finance organizer for teens!
http://www.moneysavvy.com/assembled/cash_cache.html

Ages 13-18

O.M.G. Official Money Guide for Teenagers
How to turn pocket money into power and freedom
http://www.moneysavvy.com/assembled/omgt.html

What Color Is Your Parachute for Teens
Career guide for teens to help zero in on their favorite skills and find their perfect major or career
https://www.parachute4teens.com/

High School Graduates (plus Recent Retirees and New Entrepreneurs)

5 Book
Where will you be five years from today?
https://www.live-inspired.com/catalog/product/books-by-kobi-yamada/5-where-will-you-be-five-years-from-today/

College Students

O.M.G. Official Money Guide for College Students
Don’t send your student off to college without first tucking this essential reading into their book bag!
http://www.moneysavvy.com/assembled/omgc.html

They Don’t Teach Corporate in College
A twenty-something’s guide to the business world
https://www.barnesandnoble.com/w/they-dont-teach-corporate-in-college-alexandra-levit/1130470904

College Graduates

Generation Earn
Young professional’s guide to spending, investing, and giving back
http://www.kimberly-palmer.com/

Newlyweds

Jumpstart Your Marriage & Your Money
Guide to help couples stop worrying about money and start building wealth together.
https://www.amazon.com/Jumpstart-Your-Marriage-Money-Building/dp/0998805157

Parents with Young Children

Raising Financially Fit Kids
Help prepare your children for a lifetime of smart money decisions
https://www.amazon.com/Raising-Financially-Fit-Kids-Revised/dp/1607744082

The Opposite of Spoiled
Raising kids who are grounded, generous, and smart about money
https://ronlieber.com/books/the-opposite-of-spoiled/

Adults

Happy Money
Are you getting the biggest happiness bang for your buck?
https://www.amazon.com/Happy-Money-Science-Happier-Spending/dp/1451665075

The One-Page Financial Plan
A simple way to be smart about your money
https://www.amazon.com/One-Page-Financial-Plan-Simple-Smart/dp/1591847559

50+ Adults

Life Reimagined
The science, art, and opportunity of midlife
http://www.barbarabradleyhagerty.com/life-reimagined

The Charles Schwab Guide to Finances After Fifty
Answers to your most important money questions
https://content.schwab.com/web/retail/public/book/

I’ve Decided to Live 120 Years: The Ancient Secret to Longevity, Vitality, and Life Transformation
Ignite the true spirit of what it means to live fully
https://www.amazon.com/Ive-Decided-Live-Years-Transformation/dp/1935127993

Caregivers

Being Mortal
Medicine and what matters in the end
http://atulgawande.com/book/being-mortal/

On Living
An uplifting meditation on how important it is to make peace and meaning of our lives while we still have them
https://www.amazon.com/Living-Kerry-Egan/dp/1594634823

What Issues Should You Consider Before the End of the Year?

The end of the year provides a number of financial planning opportunities and issues. These include tax planning issues, issues surrounding investment and retirement accounts, charitable giving, cash flow & savings, and insurance & estate planning issues.

We use the checklist below to proactively scan for many actionables to help serve our clients. In this checklist, we cover a number of planning issues that you need to consider prior to year-end to ensure you stay on track, including:

Various issues surrounding your investment and retirement accounts including matching capital gains against any investment losses in taxable investment accounts and ensuring that all Required Minimum Distributions (RMDs) are taken.
Tax planning issues including moves dependent upon your prospects for higher or lower income in the future. You will also want to review where you sit relative to your tax bracket as this is a good time to make moves to fill out your tax bracket for the current year that also might prove beneficial down the road.
For those who are charitably inclined there are several strategies that will also help reduce your tax liability that can be considered based upon your situation.
For those who own a business, tax reform has created some opportunities surrounding pass-through income from your business to your personal return. Accelerating or deferring business expenses presents another solid planning opportunity.
It’s wise to review your cash flow situation as you near year-end to see if you can fund a 529 plan for children or grandchildren or to see if you can save more in an HSA or employer-sponsored retirement plan like a 401(k).

This is a comprehensive checklist of the types of year-end planning issues that you should be discussing with your financial advisor to ensure you maximize cash flow and tax opportunities in the current year and beyond.

Issues You Should Consider Before the End of YearASSET & DEBT ISSUES

Do you have unrealized investment losses?
If so, consider realizing losses to offset any gains and/or write off $3,000 against ordinary income.

Do you have investments in taxable accounts that are subject to end-of-year capital gain distributions?
If so, consider strategies to minimize tax liability.

Did you reach your Required Beginning Date, or are you taking an RMD from an inherited IRA?
If so, under the CARES Act, RMDs are waived for 2020.

TAX PLANNING ISSUES

Do you expect your income to increase in the future?
If so, consider the following strategies to minimize your future tax liability:
– Make Roth IRA and Roth 401(k) contributions and Roth IRA conversions.
– If offered by your employer plan, consider after-tax 401k contributions.
– If over age 59.5, consider accelerating IRA withdrawals to fill up lower tax brackets.

Do you expect your income to decrease in the future?
If so, consider strategies to minimize your tax liability now, such as Traditional IRA and 401(k) contributions instead of contributions to Roth accounts.

Do you have any losses for this year or carryforwards from prior years?
If so, consider the following:
– There may be tax-loss harvesting opportunities.
– You may be able to take the loss or use the carryforward to reduce taxable income by up to $3,000.

Are you on the threshold of a tax bracket?
If so, consider strategies to defer income or accelerate deductions and strategies to manage capital gains and losses to keep you in the lower bracket. Consider the following important tax thresholds:
– If taxable income is below $163,300 ($326,600 if Married Filing Jointly [MFJ]), you are in the 24% percent marginal tax bracket. Taxable income above this bracket will be taxed at 32%.
– If taxable income is above $441,450 ($496,600 if MFJ), any capital gains will be taxed at the higher 20% rate.
– If your modified adjusted gross income (MAGI) is over $200,000 ($250,000 if MFJ), you may be subject to the 3.8% Medicare surtax on the lesser of net investment income or the excess of MAGI over $200,000 ($250,000 if MFJ).
– If you are on Medicare, consider the impact of Medicare’s Income-Related Monthly Adjusted Amount (IRMAA) surcharges.

Are you charitably inclined and want to reduce taxes?
If so, consider the following:
– For 2020, the CARES Act created a $300 above-the-line deduction for contributions to certain qualifying charities. This can help reduce AGI for taxpayers claiming the standard deduction.
– If you expect to take the standard deduction ($12,400 if single, $24,800 if MFJ), consider bunching your charitable contributions (or contributing to a donor-advised fund) every few years which may allow itemization in specific years.

Will you be receiving any significant windfalls that could impact your tax liability (inheritance, Restricted Stock Units vesting, stock options, bonus)?
If so, review your tax withholdings to determine if estimated-payments may be required.

Do you own a business?
If so, consider the following:
– If you own a pass-through business, consider the Qualified Business Income Deduction eligibility rules.
– Consider the use of a Roth vs. Traditional Retirement plan and its potential impact on taxable income and Qualified Business Income.
– If you have business expenses, consider if it makes sense to defer or accelerate the costs to reduce overall tax liability.
– Some retirement plans, such as a Solo 401(k), must be opened before year-end.

Have there been any changes to your marital status?
If so, consider how your tax liability may be impacted based on your marital status as of December 31st.

CASH FLOW ISSUES

Are you able to save more?
If so, consider the following:
– If you have an HSA, you may be able to save $3,550 ($7,100 for a family) and an additional $1,000 If you are over the age of 55.
– If you have an employer retirement plan, such as a 401(k), you may be able to save more but must consult with the plan provider as the rules vary as to when you can make changes.
– For 2020 the maximum salary deferral contribution is $19,500, plus the catch-up contribution if over the age of 50 of $6,500 per year.

Do you have a 529 plan? If so, consider the following:
– You can contribute up to $15,000 ($30,000 if a joint gift is made) each year without filing a gift tax return.
– Alternatively, you can elect the Five Year Accelerated Gift of $75,000.

INSURANCE PLANNING ISSUES

Will you have a balance in your FSA before the end of the year?
If so, consider the following options your employer may offer:
– Some companies allow you to roll up to $550 in your FSA account over the previous year.
– Some companies offer a grace period up until March 15th to spend the unused FSA funds.
– Many companies offer you 90 days to submit receipts from the previous year.
– If you have a Dependent Care FSA, check the deadlines for unused funds as well.

Did you meet your health insurance plan’s annual deductible?
If so, consider incurring any additional medical expenses before the end of the year at which point your annual deductible will reset.

ESTATE PLANNING ISSUES

Have there been any changes to your family, heirs, or have you bought/sold any assets this year?
If so, consider reviewing your estate plan.

Are there any gifts that still need to be made this year?
If so, you can make gifts up to $15,000 ($30,000 if a joint gift is made) per year to an individual without filing a gift tax return.

OTHER ISSUES

Do you have children in high school or younger who plan to attend college?
If so, consider financial aid planning strategies, such as reducing income in specific years to increase financial aid packages.

4 Tips for Rocking Your Personal Finances in College

Heading off to college is an exciting life transition and a major growth opportunity. For many young people, it’s their first chance to manage their own finances. Parents and students who invest a little time, planning, and partnership up front will reap profound benefits for life. Follow these four tips to ensure that you have a great financial launch!

Open a checking account
Often the university credit union or local counterpart is a trustworthy, low-cost option. Download the bank’s mobile app to make easy deposits and to check account balances. Set automatic alerts to provide low-balance notifications or other helpful information. Parents will likely find it convenient to link their bank account to their child’s to provide monthly allowances, etc.

Build a budget
Discuss sources of money and allowances. Know what money is coming in and going out by tracking it. Sign up for Mint.com. Draft a simple spending plan and follow it. Don’t overspend. Don’t forget to budget for an occasional indulgence (within reason!). Resist temptations and impulse purchases. Learn to differentiate between wants versus needs. Expect to iterate a few times on your budget as parents and students adaptively learn the reasonable costs of college life.

Get a credit card
Credit cards are for the convenience and security of not having to carry large sums of cash. Credit cards are NOT for spending money you don’t already have. If you can’t pay off the entire credit card balance each month, you are OVERspending. Avoid on-campus promotions that covertly proffer high-interest-rate cards via enticements of free t-shirts, tumblers, or other trinkets. Again, the university credit union is often a safe space. It’s ideal to have a checking and credit card at the same bank to make payments and management easier. Set alerts (e.g., purchases > $100) to flag transactions above normal spending patterns and protect against fraud.

Start Saving and Investing NOW
I know it’s hard, but having the foresight and the discipline, as a college student, to save and invest will be LIFE CHANGING. No one ever told us this and it is our greatest financial regret. Committing to saving even a small amount each month will add up quickly over time and instill a good habit of saving. Compounding growth is magical — save $20 per month starting at age 18, invest it to grow at 8% per year, and keep doing this for 40 years. You will have contributed $9,600, but your account will have grown to $64,422 thanks to compounded growth. This is your “army of dollar bills” working and growing for you. To get started, open a Roth IRA at a low-cost provider (e.g., Vanguard or Fidelity) and invest your earned income in an S&P 500 index fund. Long-term success is predicated on time in the market, not timing the market.

The budgeting, spending, and savings habits that students form in the coming months and years in college will likely establish their money management persona for life. By cultivating this money-centric parent-student learning partnership, you’re making an investment in your long-term security and happiness.

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