Kevin Painter

Kevin Painter

Website URL:

Our Emotions Get in the Way of Decision Making- Here's How

I’m attending my first virtual conference this week.  It’s one of many “firsts” that I’ve participated in this year.  In a session about changing investor behavior, the presenter, Barbara Kay, said something that got my attention.  While discussing how emotions can impact our behavior, she commented that when emotions are ON, reason is OFF. 

It’s easy to point to the dramatic crash in global markets in March and April of this year to illustrate that point.  Investors panicked when the economy shut down and fear drove their investment decisions.  The right decision to make during that market correction was to BUY, not SELL, but some investors couldn’t put their emotions aside when making those choices. Investors now are letting the emotions of the upcoming election drive their investment decisions as we await the results on November 3rd.

This also applies to our everyday lives.  Emotions are strongly at play in how we are responding to the pandemic.  We are making many choices not based on facts, but how we feel.

We get emotional when our pets ignore the weeks’ worth of obedience training we paid for,  we’re upset when we ask our kids for the third time to clean up their rooms,  or are scared and tearful when we receive a diagnosis from our doctor. 

Emotions are part of our human brain, but those emotions must be turned off when we’re making decisions.  It’s not easy to do. In this uncertain year of years, we all have had to adjust and be flexible in our lives.    The next time your faced with an important decision, turn your reasoning on and put your emotions aside. 

Summertime



It’s one of my favorite times of the year.  I enjoy going to the local farmer’s markets in July.  You can find fresh tomatoes, squash, green beans and many other locally grown vegetables.  It brings back great memories of my grandmother and how she could masterfully prepare all of summer’s bounty from the garden.  I eat more vegetables during these months partially because of their availability and my own nostalgia for the food that was on our table in the past.  I’m trying to share some of that love with my own kids as we prepare weekend dinners.

I’m also hearing about friends that are “going keto”, trying intermittent fasting, or joining a new gym.  I’ve learned in my adult years that there is no “magic bullet” when it comes to diet and exercise.  It takes discipline, commitment, and time to see the results that you need to maintain a healthy lifestyle.  The same holds true in your financial life. 

As many prepare to send their kids to college this Fall, those that have saved for this goal didn’t accomplish this overnight.  They began preparing for this time years ago, likely saving money each month to plan for moving into the dorm.  Some have also paid off their mortgage in 2020.  That also wasn’t a goal that they were able to achieve (unless they had a substantial windfall) in a short time.  They likely paid an extra payment each year or added principal to each payment.

Whether saving for college, paying off debt or saving money in a 401(k), there is no method to snap your fingers and make that goal a reality.  It takes discipline to save rather than spend, and sacrifice to give up a temporary reward for long-term gain. 

And just like those that have lost weight, run a 5k or made long lasting health changes in your life, we find that our clients that are financially independent are equally as happy.   It’s never too late to start saving.  The incremental benefits may seem trivial or unimportant, but the long-term effects of those behavior changes will do you a lifetime of good.

Change that Will Do you Good

I am recently married and my wife and I have spent the past few days consolidating our households, realizing that we have 2 of everything in our kitchen, and trying to find the best way to fit two cars and six bikes into our garage. 

We’re also combining our bank accounts, updating our wills and changing the beneficiary information on our retirement accounts and life insurance policies.  The process was fairly simple, but only because we had copies of those statements and contact information for those companies.

Part of my role at LeConte is to help our clients get organized and stay organized.  We provide an online vault for clients to keep their information in a secure cloud format that they can access at any time. 

Just as I have updated my estate planning documents and beneficiary information, perhaps now is the time for you to do the same. 

  • When’s the last time you reviewed those designations on your life insurance policies?
  • Can you easily find the policy number and contact information?
  • Have you had a life event that would cause you to change those?
  • Do you have a will, and if so, when’s the last time you had it updated?

I would recommend creating a folder or online location to store all this information.  Tell your loved ones about it and show them that information. 

Waiting on hold, filling out forms for these changes isn’t how one would choose to spend their Wednesday afternoons, but the peace of mind that comes from planning and preparing for my wife and children easily outweighs that.

Five Little Things

If you’re like me, you’ve reached the point during your time at home where you’ve cleaned out your closets, re-learned the rules to UNO and redefined how long something will stay edible in your freezer.  As you look for something to occupy your time in the coming weeks, here’s a list of five little things that will help your financial and mental health heading into the summer. 


1. Open your mail Walking to the mailbox each day may be a new part of your routine I would encourage you to take this time to read your investment statements, insurance documents and other financial information.   You may remember that you have a 401k from 2 jobs back or some Disney stock that your grandmother gave you.  Take this time to assess what accounts you have and where. You’re likely to find the need to consolidate some of those old accounts and get more organized. 

2. Update your beneficiaries.  Gather all your insurance policies, retirement accounts, even 529 college savings plans, and verify the beneficiaries on those.  They are easily accessible online or by calling the provider.  You may have gotten married or had another child.  Always a good time to update that information if it hasn’t been done in a while. 

3. Develop a monthly budget.  You’ve likely been home for going on 8 weeks now.  Take a glance at your credit card bills and bank accounts for March and April.  The Amazon charges and the grocery bills are likely higher, but what about your other spending?  This may give you some insight on what you spend money on and perhaps how you could save more. 

4. Keep an eye on your tax return.  Many things have changed in 2020 because of COVID-19.  Review last year’s tax return and educate yourself on new deductions, income changes and opportunities because of the pandemic. If you haven’t filed your 2019 return, develop a plan to get that done, and if you owe taxes, see goal number 3 above. 

5. Write down three things that you have enjoyed during this time alone.  It could be time with family, walking your dog, or cooking new food.  Write those things down on a notecard or post-it note and put it on your refrigerator or bathroom mirror.  Remember those positive experiences and think about implementing them into your life permanently going forward. 

The first four of these suggestions can have a significant impact on your financial health both now and in the future.   While the fifth task is personal, it too can transform the way you approach life and relationships with those you care about.    

Waiting is the Hardest Part

Throughout the past few weeks of social distancing and quarantine, the chorus of the Tom Petty song keeps popping into my head:

You take it on faith,

You take it to the heart,

The waiting is the hardest part.

These times have tested our faith, our fears, and our patience as we’ve dealt with all the aspects of this pandemic.  The financial markets have been more volatile than anything we’ve seen in two generations.  We worry about those that have lost jobs, hurt for our small business neighbors that are facing economic difficulties, and pray for our friends in the medical profession that are doing all they can to care for the sick.

We’ve learned more than we ever wanted to about the Tiger King, how hard our kids’ Common Core math homework can be, and that we have more food than we realize in our pantry and freezer to sustain us.

We are troubled by the varying reports we see on TV or read on social media.  We are worried about the non-profits and churches that provide so much help to those in need.    But we are comforted to see companies, individuals, and children working together to provide supplies, and more importantly hope to many around our nation and world.

With financial markets in flux, how have you reacted?  Fear and panic were behaviors that were in favor during many trading days last month.   What feelings did you have when you opened your March investment statement? 

We are also in the last week of Lent, a period of 40 days that Christians use as a season of reflection and preparation for Easter.  It’s also meant to replicate Jesus Christ’s withdrawal and sacrifice into the desert for 40 days. 

We all have given up more than carbonated beverages, sweets or eating meat in the past month.  The sacrifice has been noticeable, and unbearable for many of us.  But as Easter approaches and we observe all the flowers in full bloom here in East Tennessee, we are reminded of what is truly important.   

What happened on Easter Sunday was a disruption that changed the world forever.  Perhaps, what we are experiencing now can have the same effect on our financial and family lives as well.

We've been helping clients with their tax, investment and financial planning questions for a long time. Odds are good we can help you too.

We would like to hear from you. Fill in this contact form and we will reach out to discuss your situation. You have no obligation and we don't sell products do take advantage of our expertise.

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.

 

Ignoring the Problem

A recent study by eMoney advisor revealed that Americans aren’t looking for professional help when it comes to managing their finances. The results show that 63% of respondents have never consulted a financial advisor. The survey also shows that 33% of those same individuals were living paycheck to paycheck.

The results highlighted that while they make reviewing their finances daily, almost half of investors report being embarrassed or confused when talking about money. The study also found that 30% of those individuals that hire a financial advisor admit to hiding information about their spending habits to their advisor.

This study is one of many that highlights the lack of preparedness that many Americans face with their personal finances. If you’re experiencing feelings of fear, despair, embarrassment or disdain, you can ask for help. Our team at LeConte listens to our clients, develops an actionable plan and helps our clients execute those decisions along the way.  

There’s an old saying that if you find yourself in a hole, stop digging.  No matter how close to reaching your planning goals, let us give you a hand to get out of the financial hole and back on track to achieving your dreams.

A New Diagnosis for Health Savings Accounts

With the rise in health insurance premiums over the past decade, many individual and corporate health plans now offer a Health Savings Account option. The premiums are often lower than other traditional policies and the benefits of an HSA make this option worth a second look. Individuals can contribute either lump-sum or periodic contributions (up to $3,500 for an individual or $7,000 for a family in 2019) to an account like an IRA. They receive a tax deduction for those contributions, and then can use those dollars to pay for medical expenses, typically up to their plan deductible. Did you know those H S A dollars can be used for other things?

Unlike the old Flexible Savings Account options in health plans that had to be used in the same calendar year, HSA contributions can be invested and used in the future. They can be used for vision, dental or orthodontic care for your children or banked for future health or even long-term care insurance premiums.

In one specific example, a 55-year-old with family coverage who plans to retire at age 62 contributes $7,000 plus a $1,000 catch-up contribution if they are covered by a high deductible plan. They receive a tax deduction on that contribution and can use those dollars to pay for their annual health care. Let’s say the same individual has a $3,000 deductible which they meet each year for 7 years.

Annual Contribution $7,000
55 + Catch up $1,000
Total $8,000
   
Annual Spent $3,000
Net Savings $5,000

At his retirement, he would have $35,000 ($5,000 x 7 years). Since he retired before age 65, he can use those health savings dollars to purchase COBRA insurance if offered by their employer, or to buy individual health insurance coverage before Medicare kicks in. In the same scenario, if the 55-year-old has a long-term care insurance policy with annual premium of $2,500, he can use the same HSA dollars to pay those premiums in retirement.

Health savings accounts are incredible planning tools for future health care needs especially if you plan to retire early. These accounts allow individuals to defer taxes on contributions during their working years, when their tax rates tend to be higher. They can then use those dollars in retirement to pay for health premiums or expenses, often at a lower rate.

If you currently are covered by a high deductible plan and aren’t contributing the maximum, the above examples may change your mind. If you don’t have an HSA, I’d encourage you to research your options when your annual benefits enrollment or health insurance renewal rolls around. The diagnosis will likely be good for your future.

Take time to Change

I recently attended a financial planning conference and had the privilege to hear James Clear speak to our group. He’s the author of Atomic Habits (great read, btw) and spoke about getting 1% better in your life every day. If you accomplish that, you’ll be 33% better in a year’s time. This can apply to your health, your relationships, your job, your productivity or even your finances. Getting 33% better at anything seems daunting, but I can handle getting 1% better at something.

I’ve begun applying some of his talk into my daily life. I make my bed every morning and intentionally spend some devotional time before I pick up my smartphone. We also began implementing Clear’s system at the office. Small changes can bring big results especially if you chain these small tasks together.

When it comes to your personal finances, small tweaks to your behavior can have seismic results for your future. For example, if you forgo the Venti at Starbucks each day, you’ll save about $1,200 in the next year. If you put $20 a week into a savings account, you’ll have $ 5,200 in five years. Often, financial freedom is a result of what you don’t do, as much as it is what you do. We see that successful retirees developed a mindset early on to save more and spend less. They held off on spending too much on certain things and now live a fulfilled life in retirement.

For many that haven’t saved, retirement seems like an impossible dream. I like to say that you can’t change what happened, but you can control what happens next. You can’t go back and re-do what’s been done in your financial life, but you do have the opportunity to change what the next five years looks like.

Tolstoy wrote “true life is lived when tiny changes occur.” How are you going to get 1% better today?

What keeps you up at night?

Whether it’s been the World Series, election coverage or late night storm alerts, there has been plenty to keep us awake at night during the past few weeks. But just like a clap of thunder that keeps you from slumber, maybe you’ve had a worry about your financial life that has kept you awake.



Perhaps your concerned about the cost of health insurance in 2017. If you had an ACA policy with Blue Cross Blue Shield in TN, you’ve been shopping for other options. Perhaps even eyeing paying the penalty rather than a steep premium.

You could be in the midst of dealing with the loss of a loved one and having deal with probating assets, finding legal documents and paying bills. You might be confused on how and when to begin taking your Social Security benefits. Seminars and web searches can make the matter even more confusing. With the holidays upon us, you may be longing to stop the spending frenzy and make a commitment to get out of debt and allow you to retire sooner rather than later.

Maybe you need encouragement and validation of your decision to retire in 2017, but some uncertainty prevents you from making that decision. You may be worried about your grown children and their inability to act responsibly with their finances. Or maybe you don’t know where to begin. You’ve accumulated assets for the past 25 years, but don’t know what you have, what you spend or what to do. You want to be charitable to your church, but didn’t realize that you could give your RMD from your IRA as a gift.

These are all real problems that we’ve helped our clients solve in the past month. Our role as a wealth management firm is to assist our clients at all times, in all matters. That encompasses all aspects of your financial life, not just the management of your assets or the filing of your taxes. We can work with any investor regardless of the number of assets you have.

The questions that keep you up at night may differ with the seasons, but who you seek counsel to answer them should not. Don’t spend time worrying when you should be living.

Our phone lines are open. Just give us a call.
Subscribe to this RSS feed

Lets Get Started

Help us understand where you are and where you want to be

  

Upload Documents Securely

      

Talk to us

  • 1 865 379-8200