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| Volume 4 Issue 5 |
February 2008 |
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MAKING HEALTHY FINANCIAL DECISIONS |
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 While we all hope that we never have to deal with a sudden medical crisis caused by the discovery of a life-threatening or life-altering illness the reality is that at some point, many of us will have to face this situation.
As they say, life is a terminal condition. Good health is a gift that is often taken for granted, but when you are healthy is also the very best time to take a few simple steps to insure that you and your family, income and assets would be protected in case the worst would happen.
A stat that "will" surprise you:
Did you know that less than 10% of all adult Americans have a will? Amazing, because it is one of the most important documents you will ever create, especially if you have children. In addition to your will, it is advisable to create Power-of-Attorney's to allow someone you trust to be able to make financial decisions or pay bills on your behalf if you are not able to do so yourself.
Also consider creating a living will, outlining the types of treatments that you would want or not want to have performed. Typically a living will is accompanied by a health care proxy, which is a Power-of-Attorney specifically for making medical decisions.
Emergency fund:
There are dozens of reasons that it is important to build up a nest egg of cash, but one of the most important is to help protect against the loss of income that can occur during a medical crisis. Rarely considered for couples who both work, but worth mentioning, is that during a medical emergency, not only would the ill individual be out of work, but oftentimes the other would also have lowered income due to spending time and energy with the sick partner.
Throw me a line:
A Home Equity Line of Credit (HELOC) can be another great safety net to consider, as it allows you easy and immediate access to a relatively cheap source of money. It is important to remember that your ability to qualify for a new loan may be diminished if you are critically ill, so obtaining a HELOC when you do not need it is a very good idea. And since HELOC's are typically inexpensive to set up, and only require payments if there is a balance owed, this makes it an ideal safety net.
"Insure" your safe future:
Life insurance is rarely considered a popular discussion topic, but it is a very important way to protect your family. Dealing with the loss of a loved one is very difficult and there is no easy way to ease the pain. And the financial problems, although secondary, can be very serious. Loss of home, income, and savings can all be avoided with the right life insurance plan.
Other types of insurance to investigate are disability insurance - which can help provide income if you are unable to work because of an injury or illness - and also long-term care, which can help you preserve your assets from being eaten up by caretakers in the future.
If you need help setting up a Home Equity Line or a referral to a great financial planner or insurance agent, please email or give me a call. I'd be happy to help you make the connections needed to ensure your own healthy financial future.
 That if you wait until you're 45 years old to start investing for retirement, you'll need to save about $24,000 per year just to reach a reasonably comfortable retirement level? But if you start when you're 25, you can reach that same level by saving just $4,000 per year. So starting as early as possible is important - but even if you didn't, you can use the simple tips below to get on track right away.
Give Your Retirement Plan a Raise
The more you make the more you spend...so the next time you get a raise or a bonus, break the cycle! Set aside that extra money and invest it in your future. You will not even notice it now...but you will in the long run.
Make a Big Impact Without Denting Your Budget
If you're about to pay off a car, student loan, or some other monthly expense, you can make a huge impact on your investment plans by simply adding that extra money to your retirement account. You're already used to living without it, so it won't impact your monthly spending money at all.
Out of Sight, Out of Mind Investing
Don't forget to make your investments automatic. It's much easier--and a lot less painful--to have that money simply deducted from your paycheck and electronically deposited. You'll save the same amount every month…and save yourself the trouble of writing that check!
Eliminate High Rates
Want to earn a 17%, 18% or even 19% return right away? It's easy...put together a plan to pay off your credit cards faster, starting with the highest rates. By paying it off quickly--and keeping it paid off--you'll eliminate the high interest charges that drain budgets and often put people into a downward spiral of debt.
Make the Most of Matching Contributions
If you have access to a 401(k) retirement plan, make sure you are using it--especially if you get matching contributions from your employer. See how much you have to contribute to earn the full matching amount from your employer - and if you can't contribute that much right away, start small and steadily increase your contribution over time until you reach it. You'll double your money with the employer's match...and your contributions are generally taken out of your check pre-tax.
It's NOT All or Nothing
Don't feel like you have to jump in with everything you've got. The most important point is to get started right away...not next month or next year, but right now with whatever amount you can. You can always increase the amount you invest...but you can never get back the compounding interest you'll lose by waiting.
And remember, if you have any questions--including how a mortgage can be structured to jumpstart your retirement plan or a recommendation to a great financial planner--please don't hesitate to call!
 It's that time again...time to start gathering all of that dreaded documentation to send to good old Uncle Sam! Recent stats say the IRS audited 1 out of every 97 returns last year, so it pays to be careful. And even though this may seem like a very painful process, taking just a few simple steps right now will make your tax filing far easier and more accurate.
Keep it together.
Make a quick list of all the documents or statements that were needed to complete your return last year--or call your tax planning professional for a checklist. Use this as a checklist to make sure you have a good start on the documents you may need this year. As you receive tax documents in the mail, grab your checklist, and mark the item as received. Then, keep all of the tax documents together in a large file or envelope marked "2007 TAXES."
Do the math.
According to the IRS, the most common mistake on tax returns is bad math--from transposed numbers to downright incorrect data. And with one document leading to the other, those errors can make a huge impact. And even if you use tax software, you're not off the hook--since they only add the info YOU put in. Double-check entries carefully.
Every last cent.
The IRS receives copies of your Form 1099 earnings each tax season. So, they know how much you make in interest and dividend income, and they will use that info to double-check your filing information. Make sure you collect all your earnings statements and document them on your return.
Sign on the line.
It sounds almost silly, but forgetting to sign a return is actually a fairly common oversight. .And the IRS won't process a return that doesn't have a signature. So, make sure you sign to avoid resubmitting your paperwork and possibly paying late-filing fees.
Remember, there isn't a lot of room for error when you're dealing with the IRS. A slight miscalculation could mean the difference between getting a return and writing a check--or worse, paying a penalty. It pays to work with a tax professional. If you need a referral, contact me--I'm happy to help!
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