I have been talking to a lot of first time investors that are in their 20’s, which makes me happy. They were in high school during the crash of 2008 and know that things can change quickly. They watched their parents lose jobs and homes. They are also learning that they have to do for themselves. They still have a bit of a hard time when it comes to spending. Often, I tell them to ask themselves if an item is a want or a need before they spend their money. To make it easier for them to decide, I have shared a few tips.
Carry cash. This is almost a foreign concept to this age group. By carrying and spending cash, you have to go through more of an effort to get it out, make sure you have enough for your purchase, and stow the change. Hopefully, this will make you ask if this is a need or a want. I have heard back from this age group that when they spend a week only using cash, they get a better idea of just how much they are spending.
Make it harder to get to your credit card. I’m not talking about freezing your cards, just adding steps to actually get your card out. Wrap your credit card in a small piece of paper, tied with a rubber band. You now have to un-wrap the card to use it. This gives you a smidge more time to think about the need of that purchase.
Hold yourself accountable to someone about your spending. Make an agreement with someone you trust to discuss purchase over a certain amount. Simply discussing the purchase will force you to ask; “Is this a need or a want?” You will become a better consumer.

disclosures:http://www.hechteffect.net/?page_id=31

These tax breaks are still available to you even if you don’t itemize. I believe you should use every legal means possible to lower your tax bill. Look to see if any of these apply to you.
If you are a teacher and spend your own money for supplies for your classroom, you can write off $250.00 of that out-of-pocket expense.
If you have used after tax dollars to fund your health savings account, you can take an above the line deduction.
Divorced & paying alimony? As long as your alimony payments are spelled out in your divorce decree, you can deduct them.
Retirement account deposits to a traditional IRA may be deductible. As long as you contribute within the limits, you can make a 2015 IRA contribution up until 4/18/16.

Don’t pay more than you have to in federal income tax – look to see if any of these deductions apply to you.

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Since 1995, that number of parents that do not split their assets equally among their children has doubled. Is this proof that they really do love Susie more than you? Perhaps. More likely, the un-even split is more practical than any other reason.
In every family, there is the one child that has the lion’s share of responsibility, in a number of families there is a child that is very irresponsible or has substance abuse problems. Sometimes, the un-even split is based on physical or mental disabilities.
Another reason for an un-even split may be that your parents may have helped you more financially during their lifetime than they did your siblings.
So do they really love Susie more? Probably not. Their decision may be based on your lifestyle and/or needs – they love you all the same.

disclosures:http://www.hechteffect.net/?page_id=31

If you read my posts, I am not too happy with the proposals in the 2016 budget our President has put forth. I do not feel that anyone, at any level should be told to stop saving. If you have the ability to save – you should. If you live within your means, you will be able to leave a financial legacy for your family. The last proposal I will write about is capping retirement savings. Currently there are not limits as to how much may be accumulated in retirement accounts. The 2106 budget proposes a limit of account, through growth of value &/or contribution of $3.4 million. Yes, this is a huge limit; most of us will never see our accounts grow that large. The idea of a limit is what bothers me. If you open that door, how far down will that limit go?

disclosures:http://www.hechteffect.net/?page_id=31

The 2016 budget proposed by President Obama is proving to be one that is not friendly to the current retirement tax laws.
Currently, if you are over age 70 and still earing an income, you can contribute up to $6500/yr. to a Roth IRA. It has been proposed to eliminate this provision.
I will never understand an idea that prevents savings of any kind at any age.

• Income limitations apply.

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Q: We thought we were done paying for college. Our child was accepted into a 1 year Post Baccalaureate program. Do we sell some investments or take an equity line to pay for this one year?
A: Look at your investments to see if you can match up some long term losses to long term gains so you can pull from that account with little or no tax. If that does not provide enough, an equity line right now would charge a relatively low rate and the interest may be deductible if you itemize.

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Stretching your IRA, that is. We all can name anyone we wish as a beneficiary to our IRA accounts. Under current law, a beneficiary may stretch mandatory withdrawals from an inherited IRA over their life time, thus, spreading out the tax liability over their lifetime.
In his 2016 budget, President Obama wants to do away with this withdrawal option. What he wants to revert to is the old law that stated a non-spousal beneficiary had to withdraw all assets from the IRA in 5 years or less. This forces the beneficiary to pay a much larger tax over a much shorter time period.

I like stretching; I hope this option stays as it is.

disclosures:http://www.hechteffect.net/?page_id=31

I have a number of clients that want to save every dollar they can for their retirement. I don’t see anything wrong with this. Most of my clients also try to manage their tax bill to the best of what the law allows. These two desires often take the form of Nondeductible IRA contributions that are then converted to a Roth IRA. By combining these two practices, my clients are saving more for their retirement, then picking when they pay tax on those dollars.
When you convert Tradition IRA money, be it deductible or not, you pay tax on the amount you convert in that year. Currently, Roth accounts grow with tax free withdrawals. Along comes the Presidential budget for 2017. The President has proposed that Nondeductible IRA contributions be blocked from conversion to a Roth IRA. This is being called a “loophole closer.” This can be a profitable retirement savings plan, so if you are considering this tactic, do it now.

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Most people I know grew up playing Monopoly. We all learned valuable lessons about money playing that game. We learned how to count, save, and spend wisely. Having those dollars in your hand gave you some respect for the dollar, made the money tangible. No more – the game will now have debit cards.
My contention for a number of years has been that money is becoming less real. My Daughter and her peers do not see that value of having actual cash in their wallets. Money to them is a number on the screen and something that pops out of a magic box attached to a building. The idea of actually having to deposit a pay check is like speaking a foreign language. I am not against technology by any means. I am against the irresponsible behavior that the lack of respect for money brings.
As I beat the drum to teach respect for money, I may just be beating my head against an old game board.

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