Money Matters

In September everyone and their mother came out with their 10 Best High-Yield Savings Account list. I normally just scan the list, because for the past several years my bank has been listed at the top. However, this year I noticed my bank didn't make all the list. Hey, don't judge me. Yes, I'm one of those people who actually do...

I'm no longer a big fan of the monthly financial to do list. This year it's just been too much pressure to keep up. Hey don't judge me.☺ I still however have some notifications that find their way to my inbox. The latest was the FAFSA ® Announcements October 1, 2019 is the Open Date for the new 2020–21 FAFSA form. I know, you're sitting there ...

Do you have that friend or relative that thinks all problems can be solved in 30min. as if life was a sitcom? I truly believe you can have a great financial life, but it's going to require some changes, and lifelong changes takes time. Permanent change takes persistence, and even some trial and error. You don't know which financial tool you like un...

I just completed another class for my CFP (Certified Financial Planning) certificate. The wonderful world of income tax planning. After purchasing the 600 page Income Tax Planning book and the 8 mini books from Kaplan one fact was confirmed. People should hire a competent accountant! 

Did I learn anything else? Yes, I spent 10 weeks looking at tax forms and trying to figure out the consequences of a person’s actions. Example here’s Bob’ and all of his financials now figure out his total income. What is the amount of Robert’s AGI? (Adjusted gross income), allowable itemized deductions. Oh by the way he owns a company and he’s using LIFO. Now calculate his deductible business expenses for federal income tax purposes. Hey did we tell you he sold some property in Question 8 above, for a net return of $140,000, how much Section 1250 recapture would he have? And all of this happened in the first two weeks. But nothing opened my eyes like the section on tax penalties. Question #2 in review - describe the calculations you would use to determine the following penalties. Yikes, can we discuss this? It seems the answer is no. 

Is it time for an accountability partner? Last month, I did a review of my goals and realized there was a particular goal that was almost a year old. It’s not difficult; just a little out of my comfort level. I however had to make a decision if I wanted this opportunity I had to get moving. The fact that I had made no progress in a year told me I was in trouble. So I called a friend and asked for an accountability partner. 

If you feel stuck on your financial goals it may be time for an accountability partner. A budget takes minutes, but if it’s year two and you still don’t have one you need help. An accountability partner should act as your conscious not your mother. Their job is to help you stay on track. Sometimes you need a sounding board and sometimes you need someone to just tell you to get your butt in gear. Your accountability partner will not do the work for you, but they can help you as you navigate your goal. Don’t over think this; keep it simple. 

Okay guys, I just completed another class for the Financial Planning Certificate which leads to the certification. And I came to the conclusion that there’s a language barrier. I struggled a little until I realized the material was in a different language. For me, I had to translate from financial jargon, to common sense every day words. For example they loved the words deferred. Now this is a perfectly good word, however how many of use it in day to day language. So I kept having to translate deferred compensation to delayed or postponed compensation. My other favorite word was nonqualified. You can tell it’s a foreign langue when you discover no one can agree on the spelling. When trying to find the translation for the word I found some groups use Non Qualified, others use Non-Qualified and the text book used nonqualified. When in doubt on financial matters I go with the IRS. I also used the no-nonsense IRS description. 

Keep this in mind the next time you’re chatting with your financial person. The advisor may not be speaking over your head, they’re just speaking a different language. Think of it this way. You’re high school Spanish and they’re advanced or a native speaker. In high school you may use the word "maleta" to describe a suitcase, but perhaps in the advanced class you use the word “velija” which is more descriptive. You may in fact be discussing the same item just in different terms. 

One of my mid-term goals is to complete the Financial Planning Certification work. Today is day one of my first class. When the registration went through my initial thought was “this is going to happen”. It was like a light bulb went on in my head. I mean, now I’m really going to have to do more than wishing and planning. Part of me wanted to drop the class and get a refund. But, I realize for me to get from point A to point B I’ve got to do something. 

Look achieving any goal will take some effort and its okay if you get a little nervous when the plan comes together. The future is exciting and something you’ve never seen before. I suggest you take those butterflies and let them energize you to move forward. So take out those goals. You know the ones with the dust and no time line on them, and start moving forward. 

Rule #1 when creating a budget - MAKE IT SIMPLE. There’s a term accountants use, “substance over form.” Simply put, make sure what you’re doing is meaningful and not just pretty or impressive looking. If you are spending hours on the form of your budget, it’s time wasted. When you complete it, the thought in the back of your mind will be, “Wow! It looks great! But there’s no way I have this much time to maintain such a monstrosity every month.”

It doesn’t matter if you’re a lifelong budget keeper or you’re starting new, you can fall into this trap of over complicating your budget. Here’s my story. Like you, I read the financial advice from the pros and try to apply it. The other month, I spent 2 hours trying to get my financial software to work the way I wanted it to work. It didn’t help that my software was 3 years old. I have friends who love financial software and they do their budgets within minutes. I should be able to this, right? Ah... nope. I spent an hour just fixing or reclassifying the categories. Once I ran the budget, I determined it was showing items I had already accounted for. I couldn’t even remember what payees were in some of the categories. There was no way I could maintain that budget. Don’t get me wrong, I love financial software when it comes to analyzing my debt and balancing my accounts. I love the way it pulls from all of my accounts, but my budget was a disaster.  

Last year was an awesome year. I had the opportunity to teach budgeting and estate planning at my local church. I didn’t tweet, Facebook, or Instagram about it. I just let the minister announce it and let God do the rest. I actually had over 50 people sign up. I’m truly grateful for the opportunity. I pray the students got what they needed, but I also came away with a few questions.

A few people in my class had previous budget knowledge, but from the questions I received, I got the impression they were not working their budget. So I did as I tell everyone to do. I went back into prayer and discovered that the mechanics of doing a budget were missing. I covered it during the class, but for the folks who missed the class, I wanted to do a quick review.