“The income is not the issue.”

I recently recalled a conversation I had with a young client about 20 years ago. The client said to me, “If I only had XX $$’s in income, everything would be perfect.” My client felt that if they made “a lot” of income, and then could have a pile of money, everything would be fine. My client was missing the point. The income is not the issue.
No matter how much income you make, and are able to save, how you spend that income and savings is the real point. No one likes to put together a budget as it is time consuming and can often be a slap of reality that many do not want to face. A budget is a good thing. Knowing what you are spending on a required and discretionary expense and being able to control the spending is the real issue.
The advice is simple but not always easy to follow:
Pay yourself first through emergency fund and 401k savings.
Start a slush fund for big ticket purchases
Live below your means
Being a good spender is really the issue.


No, I won’t text you and you cannot text me.

I started in this business in 1983, since then, communication has changed drastically. Back then, if I was not available a pink message slip went into my slot on a message wheel kept by our receptionist. Now, I can take a call or answer an email from anywhere. You would never know if I was in my office or helping you from my gym. Calls can be forwarded to my cell or home phone just as easily as to my desk, and I can reply to an email from anywhere I have secure internet service. But don’t ask for my cell number, try to send me a text, or ask me to text you.
As you might think, my industry is a highly regulated one. There is a clear separation that I keep between my work devices and my personal devices. Here is the reason why:
Our firm’s written Supervisory Procedures (WSPs) prohibit texting, especially from personal devices. Such policies are in place to protect consumer, adviser and firm (and markets) by ensuring that all electronic communications are fully documented and available to discovery procedures in the event of a dispute or legal claim.
So please don’t be offended, I do want to talk to you, just not via text.


“How do they know that Mom died?”

That is the question my sister-in-law asked my husband two weeks after my mother-in-law passed away. The “they” was the appraisal company calling to say they would be at my mother-in-law’s house to appraise the value for the company that holds the reverse mortgage on her house. Reverse mortgage companies, and many other businesses employ rooms of people who do nothing more than scan the obituaries daily to see if their account holders have passed.
When someone has a reverse mortgage on their home and passes away, the heirs have a couple of choices. They can sell the house, or turn the keys back over to the reverse mortgage company and walk away. Which path to walk down may not be an easy choice.
My mother-in-law took her reverse mortgage in 2007 when property values were very high. The reverse mortgage paid her a nice monthly income until she passed, thus, allowing her to use her equity and live comfortably, now we have to make the decision as to how to dispose of the home.
Her reverse mortgage company had an appraiser contact us less than two weeks after her passing so they could determine market value, to get access to that figure, and the balance of the reverse mortgage required submitting legal documents to the mortgage company. What we have to look at as nothing more than cold, hard number is;
How much is owed on the reverse mortgage?
What might realtor fees be?
What might probate cost? Because there was no beneficiary listed on the deed, or joint owner to the house, probate is an issue.
Generally, a home with a reverse mortgage must be disposed of within 90 days. Heirs of the homeowner have the right to petition for a four month extension, three times, adding another 12 months on to the disposal time frame.
The bottom line for us will be: is there enough, if any, equity in the home? If not, we will turn the keys over.
I happen to think that a reverse mortgage can serve a great purpose to many retirees, but each decision to do so requires a lot of consultation and thought.


Father’s Day has past, but their wisdom lasts a lifetime.

Recently, I asked the Facebook world to share with me the financial wisdom they gained from their fathers. Many of the fathers told their kids to pay themselves first, live within your means, and give back to your community. Here are a few more nuggets of financial wisdom from our fathers:
Credit cards were invented to be used instead of cash, not to get ahead on financially or buy things you can’t pay for now.
When you want to buy something, determine if it is a need or a want. If it is a want, do not buy it; if it is a need, make sure you have the cash to pay for it.
Don’t pay anyone to do something you can do for yourself.
One Dad had his kids get a credit card at 18, use it every month and pay it off. This helped them to establish credit.
And last but not least: one Dad said “When I die, I hope the last check I wrote bounces”.


What are you going to do with your time?

We send a lot of time helping our clients plan financially for their retirements. Years in advance we determine how they are living their lives now, what they want to do in retirement, all of the sources of income, planning for health care, and other life cycle events. When someone walks into my office and says they are ready to pull the trigger and retire, I ask “What are you going to do with your time?”
More often than not, my client immediately lists a number of things they have planned. Some are now taking care of their grandkids full time, some have increased their volunteer works, and others get part-time jobs. A few have looked at me blankly and said they have no idea. I generally tells those people they have no business retiring. Here are a few examples of what I have seen happen when someone retires and has no idea what they are going to do.
A retiree going from a scheduled daily life, interacting with a lot of co-workers, always knowing where they have to be and when, is now faced with endless days of nothing specific to do. Sadly, this leads to depression and illness.
I have seen clients go through money like water under a bridge because shopping becomes an activity with no real purpose. I have seen clients gain tremendous amounts of weight doing nothing but eating while watching TV. Sadly, others get divorced because they are not used to being with their spouse 24/7.
When you get ready to retire – you have to know what you will be doing with your time so you can have a long and fruitful retirement.


My Daughter is getting married in less than 1 year!

While a lot of time is spent on picking a venue, the perfect wedding dress, who will stand up for the bride and groom, what to serve, and where does everyone sit, often, not enough time is spent asking some key financial questions before walking down the aisle. Full disclosure here: I didn’t even let my daughter move out until she showed us a detailed monthly budget so these questions were addressed not long after the proposal. Starting off on the right financial footing will save years of stress in the future. Here are some questions to ask:

“What is your credit score?”
A marriage means the blending of credit scores. Ask questions about debts that will be brought into the marriage. Has there been a pattern of late payments? How often do you check your credit and through which service?
“Any trouble with the IRS?”
Both my daughter and my future son-in-law just filed their first tax returns in 2016, but what if this is not a first marriage or you have been in the work force for a number of years? IRS problems can stay with you for many years to come and you want to make sure that everything is taken care of before filing a joint return.

“Should we start saving for a house now?”
A sinking fund, that is dollars saved for a specific purchase, is always a good idea in my opinion. Once you know how much you can comfortably afford in a mortgage payment, you can back into how much house you can buy. I recommend trying to save for a 20% down payment.

I know these discussions are not fun ones, but are necessary. Starting off a new marriage on the same financial page is one of the best vows you can make.


Can you make it to age 93?

While at a graduation party this weekend, I was chatting with a friend I had not seen in a while. Like me, he is self-employed. I asked how his business was going. He was a bit hesitant, finally stated that things had slowed down, but he was ok with that, and he is looking toward retirement. This friend is in his very early 60’s, has worked hard his whole career, and is a bit burned out of his industry. He had done a good job reducing his debt, but was not as comfortable on the saving side. He mentioned that his Dad had lived to 93 and that he was sure he did not have 30 years more of savings. I wondered to my self why then was he thinking of retirement now? He had taken care of one of the items necessary to set him up for a perfect retirement; he got rid of his debt, but there are two more essential items that need to be taken care for a perfect retirement. Here they are:
Save for retirement:
I always like to plan for my clients living 25 – 30 years in retirement. This requires saving in some type of retirement plan from the very first job. I always encourage saving the most that you can comfortably save in your pre-tax retirement plan.

Have an emergency fund:
I feel that having at least 3 months of income in a savings account is a good marker for an emergency account. This should be in a savings or money market account. You will not earn much on the account but the funds will be liquid for any type of emergency you may face.

Once you have gotten rid of your debt, saved for emergencies and your retirement, the only thing left to do is enjoy!


You don’t sound like my grandson.

Last week I received a call from a client asking that I flag his accounts. He thinks someone is trying to scam him and get his funds.
He received a phone call from someone with a foreign accent stating that his grandson was in an accident while on vacation. He asked where his grandson was and could he talk to him. A weak sounding boy got on the phone and said “Hi grandpa, I need your help, I was in an accident and need money to pay the ambulance and for hospital bills.” My client asked “Which grandson is this?’ He expected to hear a name, instead the boy said “Your oldest grandson.” I actually thought that was a clever answer. My client quickly hung up and started making calls to all of his financial institutions to protect his accounts.
With school ending and summer vacations starting, I am sure we will hear of this type of scam more often. Please keep your guard up and do not give out any information to anyone you do not know.


This was a hard decision to make.

Since September my Mother-in-law has only spent about three weeks in her home. The rest of the time she has been bouncing between hospitals and rehab facilities. She finally told my husband over the weekend that she realizes she needs to be in a nursing home. She has worked her whole life, but never earned very much, therefore, has not been able to save much. She was able to take advantage of a reverse mortgage to fund her life over many years. Now that long term care is facing her, what can she do? We have to get her qualified for Medicaid, not the best choice, but sadly, the only choice.
While health care is a hot topic right now preparing for long term care is not. Premiums for long term can be very expensive. Fortunately, the insurance industry is coming out with more options. If you have cash value life insurance by using a 1035 exchange, you may be able to convert your policy to a long term care policy. If you have tax deferred annuities, the 1035 exchange will work also for purchasing long term care.
Look at your family history for what your potential health outlook may be in retirement. The time to plan is while you still have time on your side.