How about a Holiday Laugh? Here are some Fun Thanksgiving Quotes!

Thanksgiving Quotes

To give you and me a break from personal finance, I offer my traditional holiday menu of funny Thanksgiving quotes.  Happy Thanksgiving!  I am grateful to everyone who reads my musings.

“Thanksgiving, man.  Not a good day to be my pants”

– Kevin James

“It took me weeks to stuff my Thanksgiving turkey.  I stuffed it through the beak”

– Phyllis Diller

 

“I come from a family where gravy is considered a beverage.”

—Erma Bombeck

“Vegetables are a must on a diet. I suggest carrot cake, zucchini bread, and pumpkin pie.”

—Jim Davis

 

“Last Thanksgiving I shot my own turkey. It was fun. That shotgun going, Blam! Everybody at the supermarket just staring. Why track them when I know where they are?”

—Kenny Rogerson

“You can tell you ate too much for Thanksgiving when you have to let your bathrobe out.”

—Jay Leno

 

Source

 

Don’t Fall for These Stinkers: The 4 Turkeys of Personal Finance

personal finance

One year at Thanksgiving my mom had the flu, so my grandmother and I went out to buy ingredients for Thanksgiving.  This was about 5 days before the big event and we really didn’t know what we were doing (I think I was about 13).  So, Thanksgiving Day rolls around and we opened our turkey and the most horrible smell filled the kitchen.  Turns out we had bought a fresh turkey too early and it had spoiled in the refrigerator.

 

Note to self – buy frozen and thaw yourself.

 

Anyway, these four financial instruments often smell to me the way that spoiled turkey did all those years ago.

 

Whole Life Insurance

 

Okay, this can be useful if you need life insurance for the rest of your life to help offset estate taxes or support beneficiaries, but most people don’t.  Generally, the need for life insurance diminishes as your wealth grows and your kids grow up.  Whole life insurance can cost 5-10 times more in premiums than term life insurance with the same benefit.  Sales people will tout the tax deferred cash value build up, but the returns have historically been horrendous on the cash value and the products are loaded with fees and commissions.  You can invest tax-deferred elsewhere for less cost and better potential growth.

 

Equity Indexed Annuities

 

These insurance products promise to give you stock-market growth with a minimum floor of ever-increasing returns.  Sound too good to be true?  It is!  The growth is not really based on stock market returns, but on options purchased by the insurance company betting on stock market performance.  That results in growth that is really not that close to actual market returns.  Plus, in up years, you only get a percentage of those increases because the insurance company needs to save those earnings for years when stocks or down, but they promised you a minimum return no matter what.  Very high sales commissions and annual fees are a common feature of these products.  Sales people do not have to be securities licensed or act as a fiduciary in their clients’ best interest.

Investment Advisers Who are Not Fiduciaries

 

Speaking of fiduciaries, you want one!  A financial adviser who is a fiduciary is required to put clients’ interest first when giving investment or financial advice.  Seems obvious, right?  Well, many in the industry only must meet what’s called the Suitability Standard.  This is a much lower standard of advice that says if the investment sold was “suitable” it can benefit the adviser as much or more than the client.  Not sure which standard your adviser uses?  Just ask!  “Are you a fiduciary?”  If the answer is a simple yes, great!  Anything else, consider shopping for someone new.

Investment Managers Who Don’t Offer Holistic Financial Plans

 

If a financial adviser immediately presents you his best mutual fund/limited partnership/REIT/insurance product that is a red flag.  Without finding more about your situation and modeling your savings and retirement outcomes, how does the adviser know what product is best for you?  Having a financial plan done first (even if you pay for it out of pocket) is a way for you and the adviser to know how much risk to take with your investments and how to invest for the income you will need in retirement.

 

Well, that’s it for my soapbox today.  I hope I’ve given you some warnings and help when evaluating the investment advice and products that are presented to you!

Getting Through the Holidays with your Health and Wealth Intact!

health

Readers of this blog know I love to draw parallels between personal finance and food.

Example:  Target Date Funds = Crock Pot meals. 

Not gourmet, but consistent, easy, low cost, and usually a decent result at the end.

Imagine my delight when I met Certified Nutritionist Tamara John and she was willing to contribute to my blog.  Here are some strategies to keep your health and wealth on track during the holidays!

Plan to Choose Wisely.

 

Health:  At that holiday shindig, look for ingredients that come from nature such as veggies, eggs, beef, poultry, fish, whole grains, olive oil, real butter, and coconut oil to satisfy you.  At the store, avoid long un-prounceable ingredients and high wheat and sugar. Fructose, mannitol, sorbitol, corn syrup, maltodextrin are highly processed forms of sugar that promote chaos.

 

Wealth:  When shopping, use a list and purchase intentionally.  Online shopping can be helpful because you search exactly what you are looking for and are maybe not as tempted by the end-aisle impulse buys.  Once you have bought that tea kettle cozy for Aunt Delilah, do not buy anything more for her, even if you see the perfect quilting stand later.

Start off Right.

 

Health:  Eat a good breakfast.  Hard boiled eggs, grass fed plain full fat yogurt with a small handful of walnuts or almonds, baked sweet potato with butter, overnight slow cooker steel cut oats and apples with milk (cow, goat, almond, coconut), wild salmon with cream cheese, and seasonal fresh whole fruit are easy choices to fuel you with long burning energy. Avoiding ‘treats’ at the office and gatherings will be easier.  Mood and sleep will improve.

 

Wealth:  Pay yourself first thing.  Treat your savings as they are a bill like rent and do not skip months.  Set your savings on auto-pilot. Many 401(k) plans offer the option to increase your contribution by 1%/year automatically.  If you are in your 20s, you should be paying yourself 10% in savings.  If you are just starting off saving in your 40s, that number jumps to 20% of earnings.

Think Long Term about Your Health.

 

Health:  Support your body.  Be honest about how much sleep you need and get it.  Avoid late night eating.  Giving yourself 12 – 14 hours without food from dinner to breakfast supports digestion and natural detoxification.  Turn off devices at least an hour before bedtime to sleep better. You’ll accomplish more with good sleep.

 

Wealth:  Don’t let the pressure of keeping up with your family and friends’ consumption derail you from your long term financial goals.  Financial security feels so much better than the temporary high of buying something at the store or driving a newer car than Cousin Esther to the Christmas reunion.

 

Practicing these strategies daily will help you and your family feel better now & enjoy the holidays more.

 

Tam JohnTam John is a certified Nutritionist with EatRight-LiveWell  specializing in Personalized Wellness Coaching.  Tam will give you complimentary 15 minutes on the phone to explore the fit for you.  Mention Sullivan Financial Planning and receive 10% off services!

 

 

 

This article is for informational purposes only. It is not intended to treat, diagnose, cure, or prevent disease. This article has not been reviewed by the FDA. Always consult with your primary care Physician or Naturopathic Doctor before making any significant changes to your health and wellness routine.

 

Required Minimum Distribution: Make a tax-savvy charitable donation.

charitable donation

It’s that time of year again.

Year-end is coming up and many of my readers will be moving money out of their Individual Retirement Accounts (IRAs) to satisfy the IRS Required Minimum Distribution (RMD).  Whether you need the money to spend or not, the IRS makes those who are age 70 ½ and older take a portion of IRAs out every year and pay income taxes on the withdrawal.

 

The amount is based on your account balance on December 31st of the prior year divided by the years left of your life expectancy.  Who decides how many years you have left?  That’s right, the IRS!

Here’s an example.

 

Take, for example, Bathsheba, a 78-year-old retired nurse from Kansas City.  Bathsheba had $150,000 in her IRA account on December 13, 2016. According to the IRS, her remaining life expectancy is 20.3 years.  Her RMD is $150,000 divided by 20.3, or $7,389 that must be taken out by December 31, 2017.

 

Bathsheba gives $100/month to her church, or $1,200/year.  She could take a tax write off on these donations, or, even better, direct $1,200 of her RMD directly to the church as a charitable donation.  The IRS allows up to $100,000 in charitable gifts to 501(c)(3) organizations per year direct from RMD distributions.  To clear up confusion, this would not include your chronically unemployed grandson under an approved charity.

 

The advantage to this is the IRA distribution that goes to charity never even hits your taxes as income in the first place.  This is even better than a write-off.

 

The bottom line.

 

If you are over aged 70 ½, consider this strategy as a tax-savvy way to make the most of your charitable donations.  Ask your financial adviser for details on how to process the RMD and direct all or part of the proceeds to your charity.

 

Happy gifting!

Five Funny Quotes About Halloween – and One Sweet Financial Tip

halloween

I learned something the other day. I learned that Jehovah’s Witnesses do not celebrate Halloween. I guess they don’t like strangers going up to their door and annoying them.

              – Bruce Clark

 

If I’m lazy and I can’t come up with a costume, I would just wear a slip and write ‘Freudian’ on it.
                – Julia Stiles

 

Aren’t we clever, making the kids go door to door collecting candy for us?

           – snowjob ‏@canadasandra 

 

The real monsters are the people that give away little boxes of raisins instead of Halloween candy.
            – Mike Raphone

 

I’m going to be “Mom who abandoned her family and fled to Mexico with a new identity” for Halloween. Too bad my kids won’t get to see it.

             –Tara Brown ‏@Faux_Ma

 

And the financial tip

 

The best day of the year to buy candy is November 1st!  Stock up and be ready to pack lunches, be the coolest parent bringing snacks after sports games, satisfy your book club’s chocolate cravings, and so much more.  Take the savings and invest in your retirement account!

 

Source for quotes:  http://www.funny-jokes-quotes-sayings.com/funny-halloween-quotes.html

From Lattes to Private School: Five things that scare me.

scare

Fun fall facts mixed in with a few other things that scare me!

 

I. A 16-ounce Pumpkin Spice Latte from Starbucks has 450 calories and 25 grams of fat.  On the plus side, it also contains 20% of your daily calcium allowance.

 

II. If the candy corn kernels purchased each year were laid end to end, they would stretch around the world 4.25 times.

 

III. A child born today will face a first-year college cost of $41,000 for public in-state tuition.  Want to go private?  That’ll be $92,000 for one year.  That’s assuming a 5% annual inflation rate from today’s prices.

 

IV.  The world’s spider population weighs 29 million tons, as much as 478 Titanics.  Spiders eat about 10% of their body weight each day – about like a 200-pound man eating 20 pounds of meat per day.  Source:  https://www.washingtonpost.com/news/wonk/wp/2017/03/28/spiders-could-theoretically-eat-every-human-on-earth-in-one-year/?utm_term=.1b7896af84f4

 

V.  According to a March 21, 2016 article on Motley Fool, the average American has $63,000 saved for retirement.  Withdraw that at the generally “safe” rate of 4% starting in your sixties, and that gives you $210/month in retirement income plus Social Security.  It makes you envy the spiders – they have less to worry about.

Afraid You are a Bad Investor? You are!

bad investor

What have you done???

 

That’s right, I said it.  You, and you, and you, and you (picture me pointing around a crowded room) are a BAD investor.  And it isn’t your fault.  As Lady Gaga says, “Baby, you were born this way.”

 

There is good news and bad news here.  Our brains are hardwired to buy investments high and sell them low, just the opposite of how you make money.  The culprits are dopamine and the amygdala.

Stick with me.

 

Dopamine is a neurotransmitter that instructs the brain to make us feel good.  Rewards (chocolate, new shoes, investment increases) increase dopamine activity.  This can be a good thing, as dopamine regulates our risk/reward behavior.  However, when it comes to picking investments, dopamine can be blamed for some risky behavior – and some famous investment bubbles.

 

Dopamine acts in two ways.  If an investor puts 10% of his money in an investment and watches that investment rise dramatically, he feels happy.  However, he ALSO feels sad that he didn’t have more of his money in the well-performing investment.  The kids these days call this FOMO or Fear of Missing Out.

 

So, then this investor, to counteract his FOMO and feel more happy dopamine, invests more of his money in the investment that has already gone up.  Maybe all his friends are doing the same.  This influx of new dopamine-fueled money (see NASDAQ in the late 1990s) creates inflated pricing until the bubble bursts.

 

Here, in the land of falling stock prices, we meet our friend the amygdala.  We like to think of ourselves as rational beings, making decisions with our massively sophisticated, available-to-humans-only pre-frontal cortex.  Alas, most of the decisions made by the rational brain are only justifying action on the impulses of our animal brains underneath.

 

The amygdala regulates our fight-or-flight reflex.  It is also the area of the brain that lights up with the most activity when research subjects look at statements where their investments lose money.  Our visceral reaction (that is VERY hard to overcome) is to treat falling investments the same as being confronted by a lion.  Run away!

There is an answer.

 

So, if we are born to sell low and buy high, how can we ever use investments to reach our financial and life goals?  The answer is simply to invest according to a plan, ignore the news, and rebalance to your target asset mix (not panic-sell) when markets have big swings.

 

Don’t have a plan?  Don’t worry.  You can engage with a financial planner to help you, or even turn to some of the new online tools to take the investment decisions out of your hands and use the detached, non-emotional target-date funds for some investments.

 

All is not lost, and your brain is not the enemy.  After all, it told you to read this blog!

 

By the way, the source for this blog is one of my favorite books, How We Decide by Jonah Lehrer. 

It’s October – Time to talk about Fear (and Greed)

greed

It’s October and my theme of the month will be fear.  And maybe a secondary theme of pumpkin spice.  We’ll have to see.

 

An old saying is that fear and greed are the two emotions that drive investing decisions.  However, most investors will tell you they don’t let emotions rule their investment decisions.  Yeah, right.  Let me give you a few examples of language I have heard in relation to investments that shine the light on this phenomenon.

“I’m going to keep my money in cash.  I’m sure a recession will start any day now.”

 

Yes, the person sounds confident in their rationale, but that is only their FEAR of investment losses talking.   Besides, there is always another recession around the corner, but they don’t last forever and almost nobody successfully times their way out of investments at the top and back in at the bottom.  Nobody!

 

“My brother made a killing last year on this real estate (or oil and gas, or clean tech, or drug company) investment.  I’m going to sell all of my holdings and buy that.”

 

This person thinks they are acting on sound advice, but really, their GREED is taking over.  Keeping your diversified investment plan over the long haul will be more successful than any hot stock tip that’s probably cold by the time you hear about it, anyway.

 

“I have never signed up for my retirement plan at work because I don’t know how investments work.”

 

This is FEAR of the unknown or not having enough information to make a good decision.  Hot tip:  Saving money is never a bad idea, losing out on your company match and tax advantages is always a bad idea, and most 401(k) plans now come with a default option that chooses an investment mix for you.  Sign up!

 

“I will be retiring in a year and need to have more money saved.  I am going to invest aggressively to make a higher return before I retire.”

 

This exemplifies GREED by trying to get more at the risk of losing money right before retirement.  It’s also FEAR of not having enough to retire.  Rather than take more investment risk than your time horizon calls for, consider working longer.  The risks are less and the rewards are more predictable.

 

Even though none of these statements uses the words fear or greed, they each show the emotions behind the decisions.  Stay tuned for next week when I explain to you why you are a bad investor.

 

Are You Prepared for an Emergency?

emergency

Are you ready?

This rough hurricane season has brought on a whole host of articles and TV shows about how to prepare in advance for an emergency or natural disaster.  One focus has been on having a ready packed bag to take with you to your roof (or boat, or shelter) in case you need to bail out of your house quickly.

 

I was watching a show recently that had a few ideas for your emergency bag that were new to me:

  • Petroleum Jelly and Cotton Balls – coating a cotton ball with Vaseline and lighting it (because of course an obvious thing to have in your bag is a lighter) can burn for 5 minutes at a time. Handy for light, a tiny bit of warmth or to let someone know where you are.
  • Peanut Butter – It comes in its own waterproof container and is packed with good fats, calories, and protein.
  • Emergency Escape Axe – This example has several built-in tools in addition to the axe function in case you need to cut your way out of a building.

 

A few tips from the South

On a lighter note, my Aunt Marcia has a recipe for Emergency Gumbo that she swears is ready in 30 minutes.  Gumbo makers, you know that is a quick prep time.  Is it called Emergency Gumbo because in a pinch you need to feed 10 or more people and need a quick solution?  Or is it called Emergency Gumbo because when Junior gets his hand bit off by an alligator in the swamp, the first reaction is to make gumbo?

 

Only those from Louisiana can know for sure.

 

And last, my grandmother, Hope, swore by always having Emergency M&Ms on hand.  This is helpful if you are antiquing in Roundtop, Texas or at the mall and have a sudden hunger attack.  The M&Ms allow you to continue with your important shopping without stopping for lunch.

 

Between the axe, the M&Ms and the gumbo, I hope this was a helpful blog on preparing for any emergency that might come your way.

Don’t Fall for It: Financial Scams to Watch Out For

financial scams

Fall is here and while it’s many people’s favorite season, don’t let the cooler weather distract you from protecting your money.  Here are some popular financial scams being perpetrated this year:

 

IRS Scam

Someone from the IRS calls you and claims you owe income tax.  If you don’t pay immediately, you will be arrested or be sued by the IRS.  Why this is a scam:  The IRS will always contact you by mail first.  Also, they will never demand immediate payment, demand a wire transfer, or ask for personal information via e-mail.  I have personally gotten a couple of these phone calls.

 

Fake Charity

This scam takes advantage of a recent tragedy.  If someone calls or comes to your door raising money for say, hurricane victims in Haiti, do not give immediately.  Take the name of the charity and verify it on the National Association of State Charity Officials (http://www.nasconet.org/resources/).  Keep in mind, if you are being pressured to give money on the spot, it is likely a scam.

Obama Student Loan Forgiveness Program

This doesn’t really exist, but is made to sound like the legitimate Public Service Loan Forgiveness Program created by George W. Bush.  You will be offered the opportunity to consolidate student debt for a fee, but this is a service you can access for free by using a student loan repayment plan for federal student loans.

 

False Promises for Work-at-Home

Who doesn’t want to make six figures working from bed?  These scammers offer the potential for big income, but first you have to pay a fee to access the program.  You pay the fee, and there is no program.  Remember, if you have to pay to do it, it’s not a job.

 

National Institute of Health Scam

Scammers tell you that you’ve been selected to receive a $14,000 grant from the National Institute of Health.  To get it, all you have to do is pay a fee through iTunes, Green Dot card, or by giving your bank account number.  News flash: The government doesn’t give grants unless you APPLY for them.

 

Sadly, these are but a few ways thieves are trying to get your money.  Remember, if it sounds too good to be true, it is!

 

Source

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