Finance Made Simple

In order to make a living wage today in the U.S., employees are required to have at least a four-year degree. At the same time, the cost of tuition has been on a continuous rise. So for generations X and beyond, student loan debt makes up a large chunk of their total debt. Four short years at college could potentially take decades to pay off if you’re just making minimum payments.

There is hope, however. There are options to pay off debt quickly, get lower interest rates or in some cases, have the debt forgiven. Here are some of your options to chip away at student loan debt so that you can have a little more breathing room in your budget.

We know each generation is unique, and that doesn’t change when it comes to money management. Technology changes, the economy changes and attitudes change. It makes sense, then, that Generation X (ages 35-50) and Millennials (ages 18-34) sometimes think differently about finances. Here are some trends we’ve seen with these two younger generations.

Do you remember the first time you had to balance a checkbook or apply for a credit card? Were you confident in what you were doing, or did you feel like you were setting foot on an alien planet for the first time? In school, the topic of financial literacy is often neglected, even though it is so critical to everyday adult life. Parents can help prepare their children – especially as children near the end of high school and face heading off to college or living on their own for the first time – by giving them an education in financial literacy. Here are some tips parents can use to help prepare their kids for the world of money management that awaits:

Living debt free sounds like a dream come true to most of us. Once upon a time, retirees paid off their mortgages and held mortgage burning rituals upon retirement. But times are changing and pension plans, health insurance for retirees and gold watches are becoming relics of the past.

Retirees today have a much different financial picture. Many retirements are funded by 401k plans with minimal employer contributions, Traditional and Roth IRAs and other self-funded retirement plans. This means planning for retirement looks much different than it did 30 years ago, and the answer to whether or not you should pay off your house upon retirement is not so cut and dry.

Credit is an important part of our financial lives. While it is most important to live within your means and not overextend yourself, some things are necessarily bought over time, such as residences or cars. Other reasons to use credit (wisely) are to take advantage of cash back deals, air miles or other rewards that come with the cards.

By now, most consumers and business owners know that having good credit is key to financial stability. If your score is low, you may have difficulty obtaining credit or pay higher interest rates whenever you need to borrow money for a house or car, or get a loan or credit card. Credit can also affect everything from the ability to rent to job security. Employers, lenders and even auto insurers look at credit reports before they will extend offers. That’s why it’s so important to fully understand what goes into making a credit score, so that you can stay on top of it and ensure you have the highest score possible.

There are several different credit agencies, and they all score slightly differently, but they have a few major factors in common. FICO is the agency most banks turn to. FICO scores range from 300 to 850. Here’s a breakdown of what goes into a FICO credit score.

The cost of long term care is on the rise, and with all the things you have to save money for — college, retirement, buying a home, life insurance, investments, emergency funds and more — it’s a good idea to learn more now about long term care insurance coverage.

Long term care coverage is a type of insurance policy that generally reimburses you for the cost of home healthcare, assisted living or skilled nursing facilities. Unlike Medicare insurance that covers primarily skilled medical care, long term care insurance typically covers unskilled care that provides assistance with basic “activities of daily living.”  There is a wide range of options for coverage, and you often have to go through medical underwriting. This means you want to have coverage in place before you actually need to use it so that you will qualify.

Make sure you do your research and know what you’re paying for when you choose a long term care policy. Carefully read you policy so you know how it operates, what is covered and what isn’t covered.

Scam artists are getting more stealthy and sophisticated with their ploys to get your money and steal your identity, especially when they pose as the IRS. Currently, these scam artists claiming to be IRS representatives are using intimidation as their weapon of choice, a tactic that is, unfortunately, often successful with the more vulnerable. We’re putting this article out not to scare you, but to arm you with information so you can be prepared if you receive one of these phone calls.

How Scam Artists Operate

  • They make unsolicited phone calls. If you receive a call during which someone claims to be from the IRS and demands that you pay a tax bill, beware. Scammers will try to con you into sending them a wire transfer or prepaid debit card. The IRS will never call you to demand an immediate payment. If you genuinely owe taxes, you will receive a bill in the mail first.
  • They try to scare you. Scam artists will try to threaten and intimidate you into giving them money. They may say that they are calling the police to arrest you, deport you or take away your driver’s license. A true IRS agent will never use threats or intimidation or demand you pay a tax bill without you first receiving it in the mail. The IRS will also not threaten you with calling the police or any other government agency.
  • They use software to make their caller ID number look legitimate. Some scammers can alter what your caller ID says to make it look like a real IRS number being called from. They can also use fake badge numbers or IRS titles. They might even have bits of your personal information, like your name, address or the last four digits of your social security number. Don’t be fooled. Go with your gut. If the call sounds suspicious, it probably is a scam. If the caller is legitimately from the IRS, they won’t mind if you disconnect the call and try calling the real number back on your own. The IRS will never ask you for a credit or debit card number over the phone or require that you pay taxes in a certain way (like with a prepaid debit card).
  • They invent new tricks all the time. Some scams will send you an email with a very legitimate looking tax bill. Other scammers are so brazen they even give you a legitimate IRS mailing address. Scam artists are very good at creating fake letterhead for emails and standard mail to make their documents look authentic.
  • They try to take advantage of people who they think will be easily intimidated. Scammers particularly target older people, new immigrants to the U.S. and women. If you’re in one of these groups, be extra vigilant.

What You Can Do

  • If you don’t owe taxes, hang up immediately. Contact the Treasury Inspector General of the Tax Administration (TIGTA) and report the call. Then report it to the Federal Trade Commission (FTC).
  • If you know you owe taxes, call the IRS at 800-829-1040 to discuss.

Please share this information with your loved ones, especially those you think might be more vulnerable to scam artists’ tactics. We at Wood Smith Advisors want your identity and your assets to remain safely in the right person’s hands – your own.

Wood Smith Advisors, a Registered Investment Advisor (RIA), is a fee-only financial services firm that partners with its clients to simplify their financial lives. We focus on women, entrepreneurs and individuals with complex financial situations, providing objective and competent advice, education and services to help them develop and build their businesses and reach their financial goals.

 

Like anything else in life, planning is key to being financially on track. It often is not a focus until a life event triggers a concern or wish, such as a marriage, divorce, birth, death or upcoming retirement. Here are some things to think about to help you identify the holes in your financial plan.

Address Retirement Savings Gaps

As you examine your financial plan, at the end of the day, you want to have enough money to cover all of your needs. If you’re coming up short, here are a few options you can keep in mind:

  • Work longer – If you haven’t saved enough money for retirement, it may be inevitable that you have to delay retiring. While staying in the workforce could be less than ideal, it is still an option to make sure you are set when your time to retire finally arrives.
  • Save more money – There may be circumstances, such as health issues that may prohibit you from being able to delay retirement. Learning to live with less today so that you can be financially set tomorrow is well worth tightening your belt. Track your expenses for a month or two and identify things that you can reduce.  More disciplined spending will allow you to tuck money away for expenses down the road.
  • Earn more on your investments – You may need to address the risk-reward of investing to ensure that you will not outlive your money.  This is best done with the help of a trusted financial advisor.                                                                                          

Make Sure You Are Adequately Insured

If there are gaps in your insurance coverage, you may need to address those to have a healthy financial picture. Getting more insurance coverage relies on the cost, coverage and underwriting.

  • Life insurance – If you need more coverage, you must decide which type of insurance makes sense for you. There are a variety of products, including Term, Universal Life and Whole Life. Whole Life insurance accumulates cash value and pays a benefit upon the insured person’s death. Term life insurance pays a benefit on the insured person’s death during a specified term. Universal Life insurance is a permanent policy, and any excess payments made are credited to the cash value of the policy. Depending on the cost and coverage, you need to decide which makes sense for your budget and gets you the coverage you need. Insurance underwriting  

Welcome to 2016! As I blog, snow is falling and will reach the “epic blizzard” proportion overnight. It brings to mind the topic of preparedness, and certainly fits with financial planning.

Just like having the right tools to weather any storm, being prepared for what may happen is 90% of what brings peace of mind.

PLANNING MEANS PREPARING

Are you the type to prepare early, or do you wait to the last minute? Are you a “belt and suspenders” type of planner, or do you like to fly by the seat of your pants?

 

With the largest portion of our population reaching retirement age – PEW Research states approximately 10,000 people will turn age 65 each day until 2030 – this age group is starting to really pay attention to Social Security.  

Baby boomers’ ages now range from 51 to 69.  And research also suggests that they don’t “feel “old.  So what does Social Security mean to them?  What do they really know about it?  And really, what does Retirement mean to you?  I define retirement as having choices: working if you want, but not necessarily depending on that income.  Rather, working for the fun of it, making a difference.  

There have been strategies suggested over the years for married couples who can take advantage of spousal benefits, filing and suspending, etc., however these don’t work for everyone. In fact, the best use of these strategies was for spouses that were only a few years apart in age. The government has recently closed these “unintended loopholes” effective 2016 for anyone who is age 62 or younger.

 

How do you find a financial advisor that is right for you?

I see many articles talking about how to choose the right professional to work with when it comes to financial matters. Let's face it, this is a very delicate area; one where you will need to feel very comfortable sharing personal information. And how about finding a financial advisor you can trust? You should be able to feel that you can trust the person that you're dealing with to provide you with the best information available according to your needs.

So how do you find this person, and what should you do to make sure he or she is the right advisor to help you reach your financial goals?

FINANCIAL ADVISOR CHARGES

First, let's talk about common terms associated with financial advisors. To start with, how do they charge for their services?

As my inaugural blog post, I am going to introduce myself through a passion that I share with not only many of my clients, but a good percentage of the general population: Golf.

I have been playing the game for more years than I care to admit, having started as a twenty-something, taking time off to raise kids and playing “vacation golf”, to resuming my passion with fervor in the last fifteen years. People who know me know I am a golf nut. And there are many parallels between golf and my just as enthusiastically chosen profession: Financial Advisor and Wealth Counselor. Let me explain.

Golf is a game of character and honesty. You can admit your mistakes, learn from them, and move on. It's really a game for an individual, although teams also play together. But it's you versus "the course." The tools are important also. You will play better and enjoy the experience more with clubs that are fitted to you and your game. Playing with borrowed clubs will create inconsistent results. This relates well to finance and investing. It’s about you, not an average, not your neighbor’s situation.

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Finance Made Simple

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