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Archive for June, 2011

Congratulations to all the new college graduates!  Now it is time to jump into the next stage of life and here is some good advice on how to get started on the right track to success!

Repaying Student Loans

According to the College Board’s Trends in Student Aid 2010 study, almost all students who earn four-year degrees from for-profit institutions graduate with debt. Most federal loans offer grace periods before repayment must begin, but many private loans do not. If a graduate anticipates repayment difficulties, he or she should contact the lender immediately to take advantage of possible consolidation options or to work out an agreement to defer payments.

Set Up a Budget

Now is the time to put a realistic budget in place. It should include:

  • Creating an emergency fund. In these challenging economic times, the often-recommended three-month safety net may not be enough; a six-month safety net is more appropriate. A nice emergency fund can bridge the gap between unexpected job loss and a new position, as well as pay for those unanticipated car repairs or even moving expenses.
  • Building a nest egg. Although it may seem impossible to squeeze retirement savings out of a new graduate’s budget, the message is simple: start saving soon. One easy way is to contribute to an employer-sponsored 401(k), especially if there is a company match.
  • Making sure that social activities don’t break the bank. Social life cannot be eliminated entirely in an effort to save money, but it’s not a good idea to spend lots of extra cash on happy hours, dining out, or concerts. We recommend finding a budget-friendly, happy medium.

Cleaning up the Digital Footprint

Every graduate should google him- or herself. New graduates can avoid conveying a poor image on social websites like Facebook by untagging or deleting compromising photos and managing privacy settings. On the other hand, graduates should look into promoting a good image online by registering on sites that are geared to professional networking, like LinkedIn and Google Profiles.

Keeping Credit in Good Shape

The best advice is to keep credit under control by making payments on time and paying more than the minimum, if possible. Graduates should also check their credit once a year at each of the three major credit reporting agencies—Equifax, Transunion, and Experian—to ensure that they haven’t fallen victim to identity theft. Start by visiting

Develop a Plan, but be Flexible

Tell your grad to dream big when building a life plan but to expect obstacles from time to time. It is important to be flexible along the way—we never know what may be around the corner!

Contact us today to assist with getting started in the right financial path!

If the recession has taught us anything, it’s that we can make it on less. We may not want to, but we can.

Even if your job is secure and your investments have rebounded, the economy remains shaky, and there are lots of reasons to stick with your new frugal money habits — just as those who lived through the Great Depression never forgot the lessons they learned.

Here are six lessons from the recession worth incorporating into your financial life to get you through both good and bad times.

1. Use cash and borrow less
Americans have racked up $2.43 trillion in consumer debt as of March 2011. As the recession deepened, credit cards supplemented unemployment benefits for many people out of work. Many consumers maxed out their cards and scraped to make minimum payments, and the result has been catastrophic to credit scores.

Even if you’re working now, don’t return to the credit crutch. Instead, pay cash whenever you can so you don’t accumulate any new debt. Then, make a concerted effort to pay off what you owe.

“You almost never ‘have to’ use a credit card to get by,” says Sally Herigstad, a certified public accountant and columnist for “To test yourself about whether you absolutely must use a credit card for something you can’t afford to pay cash for, ask ‘What would I do if I didn’t have this card?’ You would survive, wouldn’t you?”

Herigstad says that should stand for most purchases, except for maybe a car breakdown far from home. “You can’t go wrong by using only the green stuff you already have,” she says.

If you like the convenience of plastic, trade in your high-interest credit card for a debit card that works like a credit card but is linked to your checking account. (Make sure it has a Visa or MasterCard logo for greater protection.) This puts you on a money diet: You’ll only be able to spend if you have the money in your account.

As financial guru and author Dave Ramsey says, “A sure way not to fall victim to unexpected credit card fees is to stop using them! If you are serious about getting out of debt, cut up the card, pay off the card as quickly as possible, and close the account!”

2. Make sure you build an emergency fund
Unexpected expenses come up even during good economic times, but if you’re struggling to pay the bills each month, a sudden large expense can upset the most well-planned budget. That’s where an emergency fund comes in.

Financial advisors recommend you keep between three and six months’ worth of expenses set aside in a cash account.

These funds should be used for emergencies only, such as if you lose a job, your car breaks down or you must repair something essential in your home. Having money set aside from your checking account will help you stay solvent without building new debt or digging into retirement accounts prematurely.

If you don’t have an emergency fund, start small. Instruct your bank to automatically transfer a set dollar amount each week or month to a savings account. In a year, you’ll accumulate $1,300 if you save just $25 per week.

3. Setting priorities is critical
Before the recession, many Americans blurred the line between their needs and wants.

Families splurged on 400 cable television channels, dinners at pricey restaurants and brand new cars every few years. But as budgets got tight, more people cooked at home, clipped coupons, shut off electronics that weren’t in use and pared back on cable and other extras.

People also are holding on to their cars longer, according to surveys by Kelley Blue Book, a new and used car information service. That’s a smart choice. Once you’ve paid off a $400 per month car loan, there’s no need to race out and buy a new vehicle. If you wait and set aside the $400 a month you had been paying, you’ll have saved $4,800 in a year. In two years, you’ll have $9,600.

Maybe there’s something you need more than a new car, such as a second home for retirement, a bigger retirement fund or seed money for a business.

Make a priority list of what’s most important to your family’s future, and if your funding isn’t up to par in some areas, consider where you can cut back or what purchases you can delay. Try some of these money-saving strategies to help save $5,000 a year.

4. Budget is not a dirty word
A lack of job security, pay cuts, furloughs and investment losses pushed many families to take hard looks at their budgets. A recent poll by USAA Bank found nearly half of consumers said keeping a budget is a bigger priority than it was before the recession.

Even if your personal finances are rebounding, you need to stick to your budget and should add any extra income to your emergency fund or retirement accounts. Living on less means you can save more for the future.

5. Being a penny-pincher makes you smart, not cheap
Deals abound as retailers and venues continue to compete for precious consumer dollars. Be aggressive about searching for discounts, and don’t pay full price if you can help it.

Coupon redemption spiked by 30 percent last year, and you can find coupons for just about any products you need. Check sites such as and

When shopping, ask for a price break even if none is posted. Department store cashiers, physicians and mechanics may be able to offer a discount — if you ask. Also check with your human resources department to see if your company has discount deals with any merchants. My husband’s company, for example, made deals so employees get discounts with a popular computer company, a car insurance company and other businesses. Call your college alumni association or any trade groups to which you belong to see what offers they may have. Groups I belong to offer discounted insurance, tax preparation services and other goodies.

6. Stay in charge of your investments
Portfolios tanked during the recession, and many investors were surprised to see how far their account balances fell.

Don’t allow yourself to be surprised again. Monitor your investments, check your accounts twice a year and make sure you understand where you money is. If something doesn’t seem right, ask your investment company or a trusted advisor for help.

Keep tabs on the changing economy, but also be sure to keep your eye on your long-term financial goals.

“I wouldn’t let every market gyration change your goals,” says Andrew Samalin, a Chappaqua, N.Y.-based certified financial planner. “Don’t let short-term factors derail your long-term vision.”

Karin Price Mueller – Second Act

Although there are some immutable concepts in the realm of money and investing, such as “buy low and sell high” and “start early,” the best vehicles for achieving various financial goals tend to ebb and flow over time. That’s definitely true when it comes to saving for children. While U.S. savings bonds might have been the de rigueur gift from grandma and grandpa 30 years ago, settling for their currently meager interest rates seems like a questionable bet right now. And even though UGMA/UTMA–Uniform Gift to Minors Act/Uniform Transfers to Minors Act–custodial accounts might have been one of the best options for college savings a few decades ago, the emergence of 529 plans makes these “kiddie trust” accounts much less compelling now.

If you’re saving on behalf of a child, the following options may not add up.

Life Insurance

     Buying life insurance for kids fails the sniff test on a couple of separate counts. First, the main reason anyone needs life insurance is to replace lost income–for example, new parents should buy such coverage to provide a financial safety net for their children in case anything should happen to them. But unless your child has a budding career as a model or actor, it’s unlikely that he or she is generating a meaningful level of income that you’d need to replace if something happened to your child. Moreover, while whole (or cash-value) life insurance policies are often pitched as savings vehicles, their long-term rates of return will pale alongside investment vehicles that aren’t as larded with commissions and expenses, such as 529 plans or mutual funds and ETFs.

UGMA/UTMA Accounts

     In the scheme of things, UGMA/UTMA accounts aren’t a disaster: It’s better to save for kids’ future than not do so, and these accounts give you the ability to save on behalf of a child without the cost and bother of setting up a trust. UGMA/UTMA accounts also give you wide discretion over the specific investments that you hold. However, if your aim is to build up a child’s college fund, these accounts can backfire for a couple of different reasons.
     First, your child will have discretion over any assets in a UGMA/UTMA account when he or she reaches the age of majority (18 or 21, depending on the state). Most parents assume that their children will do the right thing and use the money to pay for college as you intended them to, but you’re definitely ceding a level of control with these accounts. In addition, because the assets in a UGMA/UTMA account legally belong to the child, that can work against your child when it comes time to apply for financial aid.
     You can circumvent both the loss of control and financial-aid problems by saving for college within the confines of a 529 plan; the person who sets up the account retains control of the assets, and 529s are treated more favorably in financial-aid calculations than are UGMA/UTMA accounts. (If your child already has UGMA/UTMA assets, it’s possible to fund a 529 plan with that money, thereby obtaining more favorable treatment in financial-aid formulas. This article details the ins and outs of doing so.)

Savings Bonds
     For people who value safety, using U.S. savings bonds to save for college might appear to be an attractive option. The bonds are backed by the full faith and credit of the U.S. government (hold the political comments, please). In addition, interest on Series EE and I-bonds might be entirely or partially free of federal tax if the money is used to fund qualified college expenses at an eligible institution, provided your income falls below certain thresholds.
     The trouble is that yields are about as low as they can go–currently 0.60% for Series EE bonds and 0.74% for I-bonds, according to True, I-bonds’ yields are inflation-adjusted, and higher-yielding bonds may eventually become available, making I-bonds and EE bonds a more viable option for college savings. But for now, given that the inflation rate in college costs (roughly 8% per year currently) is far outstripping the general inflation rate, the math just doesn’t add up for these bonds as a viable college-savings vehicle.

Balanced Funds

     Using balanced funds to invest for your kids isn’t a disaster, particularly if you expect to tap the assets within the next five to 10 years to pay for college or some other expense. There’s something to be said for the “set it and forget it” appeal of funds that mix both stocks and bonds together, and recent Morningstar research shows that investors exhibit better timing decisions with balanced funds than they do stock funds. Moreover, there will certainly be times when bonds outperform stocks–the past decade is a prime case in point.
     But when saving for very young children for whom college may be 12 or 17 years in the future, it makes sense to take advantage of that very long time horizon by investing primarily in stocks at the outset, then gradually transitioning to heavier weightings in safe assets such as cash and bonds. If you don’t want to do the heavy lifting of asset allocation, nearly all 529 plans offer age-based options that gradually become more conservative as college draws near.

Source: Chrstine Benz

Growing up is hard to do.  Your twenties are like no other point in time in your life where you are better able to set yourself up for financial success, but you can also turn the other way to financial failure if you are not careful.  This article by G.E. Miller will help you determine what to really focus on.  This is a must read for all early investors and their parents to get your adult life off on the right foot!  Click here to continue.

Worried about Social Security and Medicare cuts?  So are thousands of people.  With our current economy and a climbing deficit, it leaves us wondering just how long these programs will last as is before going dry.  It also has many people taking Social Security at age 62 instead of waiting until 66 (which will give them an 8% boost in their check). 

An article by William Barrett in Forbes Magazine gives you a complete picture of what is happening.  Click here to read on…

If you have recently changed jobs, it is a good idea to take a look at your qualified retirement plan with your former employer.  Rolling this over into your own individual retirement account will give you more control and choice over investments while continuing to defer taxes. 

An article by Bill Bischoff discusses a few things to consider when wanting a tax-free IRA rollover.  Click here to read entire article.

So you set up your retirement plan say ten or 15 years ago, it’s time for a checkup!  The sooner you can make adjustments the better, especially if you are going to have to make some big changes in your plan.  One important factor is we are living longer.  Twenty years ago statistics said the average male could expect to live to age 80 and the average female to age 85.  In recent studies, these numbers are age 88 for males and 90 for females.  Now these are just averages, a good source which allows you to enter personal variables is  One you have a better idea of your life expectancy, you can calulate how long your savings might last and determine if you will fall short. 

If there is a shortfall, then a thorough look at your portfolio is in order next.  Maybe your being too conservative for your portfolio to last the additional time.  That being said, we are not encouraging our clients to run out and load up on risky investments, but rather take a pro-active approach and find the right funds for your needs.  If it looks as if you are going to be extremely short of your needs, you may have to consider downsizing to a smaller home or taking a reverse mortgage to compensate for the shortfall.

Another item to look at is your spending habits.  You may have set up a budget at the beginning of your retirement, but ten or 15 years later, you have a much better idea of how much money you need.  It is a good reality check for people to keep tabs on what they are spending their money on.  Many people do not realize the money that is being spent on ATM fees and small items such as coffee or entertainment.

If things become tight and keeping up with your premiums for long-term-care insurance or any other insurance for that matter is becoming a problem, you may want to ask your children to help out.  It would be more economical for your children to help you pay the premiums than to allow the coverage to lapse.

Contact us today if it is time for a review of your retirement plan.

As we all know, men and women carry themselves differently. Their investment strategies vary as well. Men tend to be more confident in their ability to invest their money while women tend to be a bit more timid and less risky. Karen Blumenthal has written a wonderful article regarding this topic. One step she mentions is:

Start planning the kind of retirement you want to have. “Women aren’t thinking about this,” says MP Dunleavey, editor-in-chief of, which sends personal-finance and investing emails geared to women. “They aren’t letting themselves think or dream or daydream” about retirement. But, she says, if you can envision how you want to spend your time after you stop working, you might find it easier to develop more interest and knowledge in how to get to that goal.

Click here to read the entire article by Karen Blumenthal.