If you are one of the millions that receive a sizable tax refund every year, why not use the extra money to help out your personal balance sheet.  Here are some ideas for your refund that will be more beneficial than just spending it on whatever…

1. Use the cash to pay down your debt.  Reduce any high-interest credit card debt you may have, or pay down the principal on your mortgage.
2. Contribute to an IRA or a 529 plan for your children.
3. Want to have a vacation, set aside some of your refund for just that.  Setting up a separate account helps for just that.  You could even do this for your holiday shopping!
4. Have some smaller home improvements you want to make, use some of this money to do just that.
5. Have a stock you want to invest a little in, open up a brokerage account and do just that!
6. Do a check on your emergency fund to make sure there is enough in there in case you get laid off or hurt.
7. Maybe it’s time for some additional life insurance?

These and may more tips are available at kiplinger.com

If you are planning on giving all or part of your required minimum distribution from your IRA to a charity this year, you may want to hold off until toward the end of the year as Congress has not reauthorized the law that allows this tax break.  The law that allows people over 70 1/2 to make a tax free transfer of up to $100,000 directly from their IRA to a charity has not been passed for 2012, but Congress typically does not reauthorize tax breaks until toward the end of the year.

If this is something you are interested in, please be aware that the money must be transferred directly from the IRA to the charity.  If you take the cash out now, you will have to add those monies to your gross income.  Keeping it out of your adjusted gross income will help many people stay below the income limit for other tax breaks and avoid the Medicare high-income surcharge. 

For more information about RMD’s see Rules for Required IRA Distributions.

Kiplinger.com

Kiplinger.com has a terrific article on how to chose the right financial planner.  It is so very important to be working with someone you are comfortable with and that you are confident they understand you and your needs. 

Click here to read the article.

Call us today for any financial planning or investment management needs, we are here for you!

Ever wonder why it’s so hard for some people to part with their money while others can’t seem to stop spending? The answer can be summed up in two words: money personality. Everyone has a money personality – that defining attitude that helps us decide how we use our money. While there are many types of money personalities, these can all be grouped into two main categories: savers and spenders.

Where do you fit in? Meet the personalities and see which one reflects your own money attitude.

The Saver

Whether they’re putting away money for retirement or an upcoming trip, savers are patient planners who understand that all those small sums will eventually add up to something substantial. They’re also thoughtful shoppers who can resist the tug of the impulse buy.

Many savers are afraid of risks and are happy to live on a meager budget in exchange for the security of a nest egg. As a result, some savers may go too far and deny themselves the right to enjoy their money. This aversion to risk could also cause savers to lose out on investment opportunities that could actually increase the size of their nest egg.

The Spender

In general, spenders are great optimists who shell out the cash or whip out the credit card confident in the knowledge that they can afford to pay for these purchases. For spenders, money is less about security and more about seeing tangible evidence of their financial success.

While spenders often have enviable lifestyles, their relaxed attitude towards money could put them at risk of spending more than they can actually afford. Many spenders know this and often feel guilty every time they go beyond their budget. Spenders who don’t save at all could also find themselves in deep financial trouble should they get seriously ill or lose their job.

Striking a balance between the two personalities

Regardless of your money personality, its important to strike a balance and find the sweet spot between being a spendthrift and a penny pincher. If you think you’re a saver who could benefit from loosening up a bit, talk to us about how you can increase your savings through investments. Knowing your money is growing is sure to make you feel more confident about spending a bit of it on yourself and on your family.

If you’re a spender, it may be time to look at putting money away on a regular basis. As a first step, look into setting up an automatic deposit into your brokerage account.  Start with small amounts, gradually increasing your savings as you become accustomed to this new habit. Soon you’ll even be budgeting to save – an achievement that should make you feel less guilty the next time you take out your wallet.

September 9th is National 401(k) Day!  This day is an annual celebration to promote the importance of participation in employer-sponsored profit sharing and 401(k) plans.  Ignoring these plans should  not be an option!  Do you stop for a coffee everyday?  Put that money towards your retirement instead!  Would you like to reduce your income taxes?  Participate in the retirement plan and do just that as the contributions are deducted before your taxes are calculated (except for Social Security taxes).  Does your employer offer a match?  If the answer is yes, realize you are throwing free money away by not  participating!  Do you have an old 401(k) from a previous employer?  Most employers allow you to roll your 401(k) balance into their plan and if they do not, you can open an IRA to capture those assets. 

Contact us today to discuss these options or for any assistance you may need!!

Many parents, especially the older ones, assume it is wise to add a child’s name to their house deed in case something should happen to them. On the contrary, it is probably the worst thing that can be done. By doing so, the parent creates a host of problems.

• Gift Tax Issue – For gift tax purposes, adding a child to the title constitutes a taxable gift of the ownership interest in the home to the child. If the value of that gift exceeds the annual gift tax exemption ($13,000 for 2011), then a gift tax return must be filed. No gift tax will probably be due if the total of the current and all former gifts is less than $1,000,000, since that is the current lifetime gift exemption for an individual. (The limit increases to $5,000,000 for 2011 and 2012.) However, the law requires that the return be filed so that the IRS can track all of the gifts in excess of the annual exemption that an individual makes during his or her lifetime.
• Home Sale Gain Exclusion – Current tax law allows homeowners who meet certain ownership and occupancy requirements to exclude from taxable income up to $250,000 ($500,000 for most married couples) of home sale gain. Thus, if a home deeded to a child is subsequently sold, the home gain exclusion will not apply to the child’s portion unless the child lived in the home for two of the prior five years. This can result in a substantial tax liability, depending upon the value of the home and the child’s ownership portion. Should the parent place the entire property in the child’s name, then generally none of the gain would be excludable and even worse, the parent is at the mercy of the child should the child decide to sell the home. There is no guarantee that the child will continue to care for the parent.
• Debt Liability – Since property is subject to the debts of its owners, and if a child is a part owner, a debtor might file a lien on the property for the child’s debts.
• Medicaid – Gifting the home to a child could, under certain circumstances, be considered a gift for Medicaid qualification purposes, making the parent ineligible for Medicaid benefits in the event of a long-term health crisis.

There are additional issues to consider as well, including the tax ramification to the child based upon the home being a gift or ultimately inherited. Please call us at (989) 772-1209 or email us to discuss these issues in detail before placing your home in any of your children’s names.

Starting next year, you’ll no longer be able to buy paper savings bonds at banks and other financial institutions.

Paper savings bonds, which have been around since 1935, will be replaced by electronic bonds come January 1, the Treasury Department’s Bureau of Public Debt said Wednesday.

Treasury said the move will save taxpayers $70 million over the first five years.

“Savings bonds are very much a part of this country’s history and culture, and will remain a part of America’s future — but in electronic form,” Public Debt Commissioner Van Zeck said in a statement. “It’s time for us to take a 1935 model and make it a 21st century investment tool.”

What’s your savings bond worth?

In 2012, you will only be able to buy electronic savings bonds in Series EE and I through TreasuryDirect, a free online bond-buying portal that has been available since 2002.

There will be one exception, however: You’ll still be able to use your tax refund to buy Series I paper savings bonds.

The Treasury announced its “all-electronic initiative” last year, and has already ended the sale of paper bonds through traditional payroll plans. The department estimated that the all-electronic initiative, which eliminates costs associated with printing, mailing, storage, and fees paid to financial institutions for processing savings bond applications, could result in a total savings of $120 million over the next five years.

For those who hold paper savings bonds, don’t put them in the shredder. The bonds can still be redeemed at financial institutions. Paper bonds that have yet to reach their maturity date and have been lost, stolen or destroyed, may also be converted to electronic form.

http://money.cnn.com/2011/07/13/pf/treasury_bonds_electronic/index.htm

New from Schwab Mobile—the app for Android™ and the ability to deposit checks anywhere, anytime. Anyone who is currently using the Schwab iPhone® app already has the advantage of moving money and accessing accounts effortlessly via their smartphones. Now those with Android devices can have the same access.

If you are enrolled in schwaballiance.com, or have a Schwab retail brokerage account, they can use Schwab Mobile via Android or iPhone to:

• Deposit checks by simply taking a picture with an Android or iPhone, and transfer money between accounts with ease
• Manage funds by viewing balances for brokerage, Schwab Bank, and 401(k) accounts
• Keep an eye on the market with real-time quotes, charts, watch lists, news, and more

Keeping You Connected to Your Money
We’re always working on technology that brings you greater flexibility and efficiency when it comes to staying on track with your financial goals. Next up, a new app for iPad.

Help Getting Started with Schwab Mobile Deposit™
After you download the latest Android and iPhone apps, all you need to do is follow these simple steps to apply:

1. Update their smartphone with our latest app and log in.
2. Tap on “Deposit Check.”
3. Follow the prompts on the screen to apply.

Just take a picture of the front and back of a check and tap a few screens. You can  be assured that, once the images are submitted, you will get immediate confirmation on your mobile device that the deposit is being processed. Deposits made before 4 p.m. will be processed the same business day.

1. Anyone can call themselves a planner.

To avoid amateurs, hire a planner who’s earned special credentials (such as a Certified Financial Planner or Personal Financial Specialist designation) by meeting training standards or having a certain level of experience.

2. Planning is more than investing.

Not all planners offer comprehensive services. Some just give investment advice or focus on one aspect of planning, such as insurance or taxes.

3. Expand your choices.

When hiring a planner, interview at least three pros to find the one who can deliver the services you need and who’s compatible with your style.

4. Personal references are a good place to start – but not the last stop.

A reference from a friend or family member is a great way to search for a financial planner. But make sure you’ve got similar needs as the person who’s giving the referral. Go to groups like the Certified Financial Planner Board of Standards and the Financial Planning Association for additional references.

5. Understand how your planner is getting paid.

The three most common set-ups are: Fee-only, fee-based, and commission-based. Fee-only planners don’t get commissions for the products they sell – fees are for the advice they give. Fee-based planners may receive commission on some products they sell, but most of their money comes from a fee you pay them. Commission-based planners are paid by the companies whose products they sell.

6. Check credentials.

Check to see if a planner’s record is tarnished by disciplinary problems or complaints. Groups that award credentials or state agencies keep tabs on planners and can provide help.

7. Get references.

Ask a planner for two or more of his clients – then follow up and call to find out how a planner performs in specific circumstances, such as during a financial crisis.

8. Express yourself.

The quality of a planner’s advice is correlated to how well he or she knows you. Make sure a planner asks questions about your finances, goals, risk tolerance and philosophy. If they don’t ask, they probably aren’t paying adequate attention.

9. Know what they’re selling.

Find out what financial products a planner sells and how much he or his firm earns for making a sale. Be wary of planners who push one product – say, one family of mutual funds or one kind of insurance – as they may not give you the unbiased or comprehensive advice you need.

10. Know yourself.

The best planner will take his cues from you. Before you hire someone, identify the financial goals you want to meet, your assets and liabilities, your risk tolerance, and investment style. Are you self-directed or do you want specialized help?

www.money.cnn.com

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 www.annualcreditreport.com.

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!