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Leaving the Castle, Joining the Hustle

What do NASCAR, British Royals and gender pronouns have in common?

In the past few years we’ve read stories about non-gender pronouns moving through our culture. The trend has led to confusion and strong emotional responses. Regardless of where you stand on this topic, I’ll wager a decent sum that few of you would be eager to ditch “Prince” if that was your birthright pronoun.

The former Duke and Duchess of Sussex, Harry and Megan made big news this week by deciding to step away from their royal trappings and chart a different future for themselves and their children. Leaving the arc and wealth of a royal family may elicit concerns for their decision-making skills but it will give them a myriad of opportunities to capitalize on their popularity. Estimates of their combined net worth (from Megan’s acting career and Harry’s inheritance from Princess Diana) hover around 35 million dollars so they aren’t exactly starting from the bottom and working their way up from nothing. Let’s help this young couple brainstorm some opportunities to find success.

Harry could do a joint venture with another famous Brit, retired footballer David Beckham who is successfully promoting fragrances and men’s fashion. This would render something like Harry and David’s mens' underwear. That could be huge! Outright endorsements would be easy and even fun for Harry and Megan. Imagine your favorite NASCAR driver doing a post-race interview, “ I’ll tell ya! That Harry and Megan Crown Vic #8 car was the queen of Daytona today!” Don’t laugh it could happen!

Joking aside, I wish them all the best and I hope they have fun with the choices they make. This fact remains, they have the freedom to find a new hustle. Their own unique hustle. To be successful, they need to understand their own personal strengths and weaknesses. We know Megan can act. She was excellent in Suits. What about Harry? What is he capable of achieving? Now free from the confines of royal liturgies, he gets to reveal to the world who he is and what he’s good at.

What about you? When was the last time you assessed your emotional, relational, spiritual, financial and vocational fitness? Imagine, like Harry and Megan that you are stepping out of a pre-determined destination and grabbing the wheel to chart a new course. What could you do to change your future? Would you be happier, less stressed, more fulfilled? Write your thoughts down, talk to those closest to you and take a bold step! You probably won’t have your name on a car at Talladega but you’ll still enjoy the ride!


New Year’s Revolution

While sitting at dinner last week, my 8-year-old son asked me if I had made any New Year’s “revolutions”.  My daughter chuckled at his vocabulary, but knowing he meant to say resolutions, I said that I wanted to eat better, read more and spend less time on my smartphone (all actual resolutions). 

This is the time of year that we read the Top Ten lists of news stories, songs and movies and hear all of the things and products we can buy to make our lives easier and better for the next 365 days.

Having watched numerous commercials during the football bowl season, there are many that espouse that a new car, 0% financing on that new sleeper sofa, or a Peloton, will undoubtedly make us all better in 2020. According to U.S. News and World Report, 80% of resolutions made on January 1 will fail by mid-February.  If you don’t believe me, check the parking lot at your health club this week and then look again after Valentine’s Day. You may say that you are going to finally lose ten pounds, clean out the garage or start getting serious about retirement savings, but chances are slim that you’ll follow through with it. If you must make the same resolution every year, what’s the point?

Some problems don’t require resolve, they require a revolt. This is not intended to be a political or controversial take on current events, but one on our own financial lives.

Revolution is defined as a dramatic and wide-reaching change in the way something works or is organized, or in people's ideas about it. According to the US Government Accountability Office, 48% of Americans 55 and older had put nothing away in a 401(k) or individual retirement account. The 2019 survey also states that Social Security provides most of the income for half of the households 65 and older.


Whoa! Those are some staggering numbers. If you fall into the above category, we need to talk.

If you track the findings of the Employee Benefit Research Institute, which estimated that 41% of U.S. households headed by someone age 35 to 64 are likely to run out of money in retirement, that’s a cause for a retirement revolution.

Can you live off Social Security alone in retirement? 

Will your health allow you to work until you're 70? 

How much money do I need to retire and more importantly, how long will it last?

All these questions can be answered and planned for. But, it takes a wide-reaching change of approach and not one of dismissal with a lack of follow through. Sometimes major problems can’t be addressed with minor changes to your behavior. This year why not resolve to be more revolutionary with your financial choices?  Hiring a fiduciary advisor to help you plan this revolution will prepare you for the future. 

Even though it provided a comedic moment, my son’s question was quite prophetic. What are we going to do this year to revolutionize our lives in 2020?

And when the Earth completes its revolution around the Sun in a year’s time, perhaps you’ll celebrate the anniversary of your own.



SECURE ACT Final Update - Highlights

The SECURE Act, or (S)etting (E)very (C)ommunity (U)p for (R)etirement (E)nhancement, proposed to tackle the dismal retirement participation rate was signed by the President on December 20th. So, what does this mean for you and the rest of Americans?

  • Elimination of the ‘Stretch’ Provisions (In short, inherited retirement accounts must be distributed in full by the end of the 10th year following the year of inheritance.) **Although there are exceptions
  • Easier for small businesses to set up a retirement plan (Businesses to get tax credit for establishing a retirement plan)
  • Required Minimum Distribution (RMD) age pushed back from 70.5 to 72
  • 529 Plan funds can be used to pay back qualified student loans (up to $10k annually)
  • 10% early distribution penalty waived for a qualified birth or child adoption up to $5k per-child (If married, both spouses can withdraw up to $5k per-child)
  • Traditional IRAs no longer have a contribution age limit (Use to be at age 70.5)
  • Annuities to enter into employer retirement plans (Is this a good thing? Click for more insight)
  • Part-time employee 401(k) participation available
  • Increased max contribution percentages for employees who are automatically enrolled into a 401(k) plan (was 10% cap, but increased to 15%)
  • Kiddie-Tax TCJA revisions reversed (back to the child’s parents’ marginal tax rate)
  • Disaster relief distributions up to $100k
  • For students – stipend and fellowship payments are treated as compensation for IRA purposes (enables students to make IRA contributions)
  • No more 401(k) credit card loans


Final thoughts:

After surveying thoughts across the financial industry, there are still mixed feelings on the SECURE Act. Many are asking the question; does it really promote security for Americans, or does it just increase exposure to salesmen? I think both, but of course with every new law comes pros and cons. In my opinion, it is the plan participator that must educate themselves on what they are putting their hard-earned money in. With the new landscape set, I’d encourage everyone to read up on your retirement plan and dig into the investments (specifically focusing on the expense portion). For the full implications of the SECURE Act, we will have to wait and see.


Last Minute: Year-End 2019

What can I do last minute to save taxes?

This is a question I hear repeatedly this time of year. I’ve had several people call and drop in the office asking about requirements and options to complete before year-end. Fortunately, the IRS allows us up until December 31st, and in some cases until October 2020, to initiate a transaction to save taxes on your 2019 tax return. 

One of the most important things you can do for the future is to save for retirement. The most common option for most employees is their company 401(k) plan. Contributions to these plans reduce your W-2 wages.  Therefore, you defer taxes on the contribution amount, but they must be deferred from pay before year-end. For those that don’t have a company 401(k), an IRA or SEP IRA could be a good option.  The IRS is generous when it comes to IRAs, and they allow you to make the contributions after the year-end.

We received a call just today asking about harvesting losses. Many of you are probably asking what that is. In years where you have other capital gains, it might be a time to sell something that will result in a loss. You’ll then be able to net the existing gains with these harvested losses to have a smaller net gain to pay tax on.

I’m sure you’ve been receiving charitable mailings for the last several weeks. That’s because a significant amount of charities’ income is given around the holidays and before year-end. With the new standard deduction amount of $24,000 increased for inflation, charitable contributions have become a tax question mark for many people. However, if you still itemize, charitable contributions can be a significant avenue for tax savings.

At the end of every year we spend significant amounts of time helping our clients plan around and take their qualified retirement distributions. That would be distributions from 401Ks, IRAs, SEPs, etc. At 70 1/2, you are forced to start taking out income from these accounts, but should you start taking distributions earlier?  This is an important tax planning conversation that we have with many clients from 59 ½ to 70, so we often have a decade to make good tax decisions before RMDs start.

Are you doing everything you can to save taxes for 2019? If not, let us know how we can assist.  The same considerations will need to be made for 2020, so let’s get started early on those calculations.


The Santa Raid

Have you made a list and checked it twice? Chances are, you haven’t… 

The National Retail Federation estimates that consumers’ will spend upwards of $730 billion this holiday season. Perhaps this is due to a well performing stock marketlow unemployment and wage increases. Each of which has helped put extra cash in consumer pockets.  

Though, this time of year there is one question that every consumer must answer for themselves - Are you going to allow Santa to slide down the chimney and raid your bank account?  

Amid the many distractions that occupy your attention throughout the holiday season, lays a decision that you must make. Will you try to keep up with your friends? How about your kids friends parents? Or, will you say no to Santa and spend modestly? 

Whatever you decide for yourself and your family is the choice you must live with. It might be too late for some of you to light a fire to keep Santa from sliding into your bank account, but for those of you who are not quite done shopping or still haven’t hit the malls; slow down and take a minute to think through the true meaning of Christmas, what you want to spend, and what your financial situation allows you to spend.  

Here’s a short list of things to think about and focus on financially throughout the Christmas season: 

  • Ask yourself what Christmas means to you. Don’t adopt your neighbors view. 
  • Check your bank account balances 
  • Make a list to keep you from window shopping
  • Compare prices (Add the Honey extension for online shopping) 
  • Create a budget for each person/group you buy for 
  • Save your receipts to compare to your budget 
  • Check your list twice 
  • Ask yourself if debt is worth it 
  • Wait for after Christmas sales (Usually the best day is the 26th of December) 
  • Track spending compared to the budget 
  • Remember you have to pay the credit card bill next month
  • Give group gifts to family members 

Challenges, Choices, Consequences

How do you treat the things in life that you value the most? Your family, health, faith, or finances? As I pondered this question recently, I decided that the question starts a bit higher in the order of things. We don’t change our behavior or impression about something or someone until we let it marinate around in our head.

The best Christmas gift I can offer you is a word of encouragement: your mind and the thoughts that permeate it have incredible power. Your thinking can change your future. Conversely, a sedentary mind leaves a wasted existence. This Christmas find some quiet time away from the noise that competes for your attention.

Invest in a solitary moment to reflect on the question above. What do you think are most important in your life? How much thought have you given to this list? What is the result of your thoughts and decisions this year? What choices can you exert control over and what differences can you expect to make if you change your thinking about the things you value most?  

Superficially, this has nothing to do with money and yet everything to do with it. A significant investment in clear-headed thinking will produce more life change than any stock or bond investment. The Good Book states it this way in Romans 12:2, "Don’t copy the behavior and customs of this world, but let God transform you into a new person by changing the way you think." Stephen Covey called this exercise, “Begin with the end in mind.”  I think it’s a good way to end the year too.


Procrastination: Help me get started!

As I’m coming off the October 15th deadline, I’ve given a lot of thought to why so many of us procrastinate. The October 15th deadline is the extended due date for personal tax returns that were originally due April 15th, so at this point we are 9 ½ months into the next year. When the process is delayed and the deadline approaches, the unnecessary stress caused to tax preparers and clients is visible, but it is avoidable. This stress doesn’t even take into account the actual dollars it costs to file and pay your returns late with accumulated interest and penalties.

If we can’t find ways to not procrastinate when there are direct financial penalties from government agencies, how are we going to avoid procrastinating on important decisions and moves in our lives that have no deadlines?

One example I love to reference comes from Dave Ramsey’s Financial Peace class and highlights the negative long-term impact of procrastinating and starting to save later in the game rather than now. Dave’s example references, Jack, a person that starts early and invests $200 a month for 9 years and stops. Jack’s friend, Blake, doesn’t start investing until Jack has stopped. Since he waited, he decides to invest the same $200 a month, but he contributes $200 a month until retirement. Even though Blake invests for 38 years versus Jack’s 9 years, he has accumulated significantly less money than Jack at retirement. The power of time and compounding is too much to overcome.

If we know that we shouldn’t procrastinate, and most of us don’t mean to push off the inevitable to the last minute, how do we avoid it? One of my favorite authors and speakers, James Clear, has an article on the methods to avoid procrastination. Mr. Clear's book Atomic Habits has ideas that helped me put daily steps in place so that I accomplish important tasks on time. Mr. Clear outlines four easy steps to help you avoid procrastination:

  1. Make the Rewards of Taking Action More Immediate
  2. Make the Consequences of Procrastination More Immediate
  3. Design Your Future Actions
  4. Make the Task More Achievable 

One of my favorite points in the article is to use a method called temptation bundling. The basic concept is: 


In the self-employed, small business owner world, a good example would be to:

Only pay yourself for the month while doing the bookkeeping and bank reconciliation.

After a short period of time you associate your reward (“thing you love”) with the required action, and you have a habit that is difficult to break. Ultimately, you’ll have to complete the undesirable task anyway, so why not get rid of the stress of procrastination? 

Procrastination can derail many of your immediate and long-term goals, so contact us when you are ready to move forward with your important financial plans.

Are You Ready for Winter?

My daughter came home from college to visit with us for a few days. After a long hot summer in East Tennessee, temperatures have finally started to feel like Autumn here. We took advantage of her visit by trekking to Dollywood for their Great Pumpkin Luminights event.

The next morning as we loaded my daughter's car for her 2 1/2 hour drive to Nashville, she explained that her portable tire inflator was broken. Back story - a few years ago, I found a great deal (aka cheap!) on some easy to use, portable tire inflators on Amazon and I bought them for everyone in my family. When they opened them on Christmas morning, I got plenty of puzzled looks. Since then, my family members have learned to appreciate the convenience and utility of the devices. 

The big drop in temperatures caused a tire on my daughter's car to deflate.


She noticed it and tried to hook up her inflator to fix it. Her dad was proud for a couple of reasons:

  1. She took the initiative to fix the problem
  2. She used the tool that I provided to her
  3. When that didn't work she asked for help 
Fathers are problem solvers and when we see our kids learn to solve their own problems, it's satisfying. It is even more so when they rely on tools (physical, spiritual, emotional, intellectual) that you equipped them with. Since mom had the same unit in her car, I gave that one to her so she could inflate the tire and hit the road. As she drove away, I was reassured from this incident that my daughter was becoming very responsible.

Seasonal changes can insert unexpected events into our life. Some things, like a low tire you can prepare for. Others, like an unseasonal snowstorm, you may only be able to react to. 

The global economy is heading into the holiday period where things are normally strong. Unfortunately, there are signs of "unseasonal" weakness that investors should prepare for. The Federal Reserve is conducting open market operations in the bank funding repo market to inject liquidity into the banking system. This was unexpected when the need arose at the end of summer. The problem is worse now and the Fed was forced to ramp up their intervention. 

This is a serious problem percolating in the banking system at a time of year when we normally don't worry about such things. Despite their assurances that this action isn't QE, the market is behaving like it is. 

It may be a bit early, but maybe stock investors should get their winter tire chains ready now. If you're within 6 years of retirement, think about paring back your risk exposure until we see signs that consumers aren't spooked.

Happy Halloween.

But I don’t want to live on a budget!

Why do budgets have such a negative connotation?  It seems like any time you start to talk about budgets, people put up the defenses and fight to avoid it. 


I’ve had several different scenarios lately where the client needed a budget to dig out of a financial hole from a job change or needed a retirement budget to allow for making the final projections on their ability to retire.  Yet, it always seems that starting a budget is a monumental mental hurdle for people regardless of how important it is to solve the problem or finalize a retirement picture. 

But a budget is not designed to be something feared and loathed, but a tool that allows you to manage your finances.  I also like to think of a budget as a spending plan instead of some cruel device that controls me and doesn’t allow me to spend money.  I’m currently facilitating Dave Ramsey’s Financial Peace class as a Wednesday night study through my church.  This is an awesome class that teaches some important financial skills that many people have never been taught and wouldn’t be taught without this class, but its teachings revolve around a budget.  Why is that so important?  Dave’s opinion is that you have to give every dollar a name and purpose.  Without every dollar being dedicated to a purpose, money seems to disappear and not accomplish the goals you desire and work so hard to achieve.  

The skill of budgeting is not something that you learn over night, so it will take time.  I feel it takes at least 3 months to get your monthly budget under control and probably a full year to build out a reliable budget.  It takes a year to capture all the annual expenses that people forget about like vacations, Christmas, annual insurance premiums, birthday presents, etc.  While individually, some of these items don’t seem too big, collectively they can be 10% of an annual budget.  That’s enough to derail anyone’s plan.  

Most people want to retire as soon as they are financially secure enough to retire.  How do you know if you will be financially secure without a spending plan?  That requires us to project your annual budget out into retirement.  A small miss or overspending can be amplified over an average 18-year retirement that is only getting longer with increases in medical treatments and healthier living.  I was recently approached to help a young client plan to semi-retire at an extremely early age.  In his case, we will have to project his retirement for probably close to 50 years.  If we don’t have a good conservative budget for his yearly spending, how can we be sure he’s saved enough to make it that far while living the lifestyle he is accustomed to?

My advice is to start now and use technology to help you take back the control of your money.  We provide our clients with an easy budgeting tool.  It’s amazing how simple the process can be.  You set your initial budget and connect your spending sources (bank accounts, credit cards, etc.)  With some time and learning, the system starts assigning transactions to the budget categories.  You can then monitor monthly spending and have a reference for spending over time.  With this knowledge, you have the power to make needed changes and live with the assurance that your money is going towards its intended goal. 


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