May 07, 2015

Saving Money on Groceries

May 07, 2015/ Planning Within Reach, LLC/ Linda Rogers

Groceries and eating out are a huge part of most people’s budgets. It can also be one of the easiest places to cut. Here are some suggestions I compiled from clients who have had great success saving money on groceries.

Cook from scratch as much as possible. It is healthier for us and better for the environment to reduce the amount of prepared food we buy in elaborate packaging. Our family makes things like pizza sauce and soup in bulk. We freeze it in small containers until needed.
Grow as much as possible in your own garden. Some things are incredibly easy to grow and need very little space. Zucchini is a great example - one or two plants can be more than enough for a family of four. Figs are another example. We planted a fig tree in our front yard and two years later we get enough figs to make fig jam for the entire year.
Find a local CSA. If having a garden is not an option or you can’t grow all the fruits and veggies you need, look at a local farm that has an organic CSA option. In many cases, the fruits and vegetables are harvested more recently than the food in the supermarkets so they tend to last longer.
Plan Ahead. This takes some practice. I hear from families about how they are trying to reduce their dining out costs but without fail, they both come home at 6PM starving. Eating out seems like the only option. I find I can avoid this by planning meals out on the weekend.

What else? Email me with your tips on reducing your grocery budget so I can share it with others. linda@planningwithinreach.com

Linda Rogers, CFP®, EA, MSBA is the owner and founder of Planning Within Reach, LLC (PWR). Originally from New Jersey, Linda services clients throughout San Diego county and nationwide. She leads the design of PWR's investment portfolios which utilize broad, low-cost investments that integrate environmentally, socially, and governance (ESG) factors.

Planning Within Reach, LLC (PWR) is a fee-only and fiduciary wealth management firm offering one-time comprehensive financial planning, ongoing impact-focused investment management and tax preparation services in San Diego and nationwide. PWR is a woman-owned firm that specializes in busy professionals and impact investors. Planning Within Reach, LLC and their advisors do not receive commissions and do not hold any insurance licenses or brokerage relationships.

April 01, 2015

5 Things you are NOT Accounting for in your Budget

April 01, 2015/ Planning Within Reach, LLC/ Linda Rogers

All of PWR’s spending plans account for these 5 items. While every situation is unique, nobody likes to be blindsided with a large expense that was unplanned. Together with our clients, we develop a strategy to plan for expenses that will come up; it is just a matter of when.

(1) Appliance Repairs/Replacement – Our beloved appliances won’t last forever. With kids around, they may not even last their typical life expectancy. I have found socks stuffed in a crayon box, a travel tissue pack in my calculator case, and a mandarin orange in an Easter egg. Given that, it was no surprise when our daughter put coins in the slits of a standing humidifier as if it were a game of Connect Four, prompting a call to our repair person. Having a reserve for new appliances and repairs makes it easier to laugh about the situation rather than stress about the money.

2) Home Repairs/Replacement – If you own your house, don’t skimp on repairs and replacements that need to be done. Protect your investment. When appropriate, use quality materials that last longer. Saving consistently towards this investment makes financial sense. Having the cash when you need it for a roof repair or new windows makes the expense more palatable.

3) Auto Maintenance / Repairs – Since most people commute by car, this is an essential line item that we can’t ignore. Stay on top of your auto maintenance schedule and set aside funds for unexpected repairs. If you get into an accident, your insurance will cover you only after the deductible is met.

4) Medical Expenses - Know the deductible and out-of-pocket max for your insurance coverage. Make sure you are taking advantage of the FSA (flex spending account) or HSA (health savings account), if applicable. Take care of yourself and family by following a healthy lifestyle NOW to try and minimize costs in the future.

5) Pets – I have discussed the topic of pet insurance before since this is another budget buster. At our initial meeting, we discuss current and potential pets with our clients to ensure that we are planning for this cost appropriately. Just like kids, they can be expensive but worth every penny.

September 17, 2014

Why I Decided to Purchase Earthquake Insurance

September 17, 2014/ Planning Within Reach, LLC/ Linda Rogers

The first earthquake I felt in San Diego was on Easter Sunday 2010. While it lasted for just over a minute and didn't cause any major damage in our immediate area, it certainly made me uneasy. It made me aware of how vulnerable we are to the forces of mother nature in our new home. Four years, 2 kids and a dog later, I am reviewing my insurance policies to make sure they are up to date, as I do ever year. Earthquake damage, like flood damage, is not covered through most homeowner's insurance policies. The cost depends on where you live, the type of house you have and the coverage amounts that you select.

We purchased a California Earthquake Authority (CEA) policy through USAA where we also have our Homeowner's Insurance. It costs us a couple hundred dollars per year with a 15% deductible. The deductible is the amount you need to pay out of pocket before getting the money to rebuild. For example, if you are covered for a $400,000 house, you have to pay $60,000 ($400,000 x 15%) out of pocket before the dwelling coverage kicks in.

Since other insurance policies such as home and auto have options for much smaller deductibles (ex. $500 or $1,000), this high deductible may be what makes earthquake insurance unpalatable to some. I think it is yet another good reason to have an emergency cash cushion on hand at all times. The reality is that if we didn't have earthquake insurance, and we experienced earthquake damage, we couldn't afford to rebuild our house without jeopardizing our retirement and children's education. While our house isn't sitting on a fault line as far as we know, we do have faults within close proximity. According to the CEA website, new faults are discovered all the time and no part of California is immune.

In addition to the coverage to rebuild, we are covered for $25,000 (not subject to the 15% deductible) for living expenses while we are displaced and rebuilding. This is essential now that we have children. If school is in session, we can't head back to the east coast to live with family. We can't crash with friends since most of them have at least two kids now and wouldn't have the space to put us up.

I have heard people say they would just walk away from their house if "the big one" came. Even if we were willing to walk away from the equity in our house, which we are not, we couldn't walk away from the mortgage. If we did, it would hurt our credit score and make it hard for us to get another loan in the future.

To get an idea of what earthquake insurance would cost you, check out the CEA website's premium calculator. I also highly recommend reviewing their FAQ page and your own policy disclosures and information to make sure you fully understand it.

September 08, 2014

How Financially Savvy Are You?

September 08, 2014/ Planning Within Reach, LLC/ Linda Rogers

Take our Test and see how you do!

August 04, 2014

Personal Finance For Children

August 04, 2014/ Planning Within Reach, LLC/ Linda Rogers

When it is relevant for a client, PWR financial plans include a section on personal finance for children. We compile information from a few sources including Money as You Grow.

Here are some age appropriate activities I started doing with my 3 1/2 year old.

1) Identify what costs money versus what is free. For example, we pay money when we go to the local pool. We don't pay money when we go to the library, park or the beach. Those are free activities.

2) Explain that people can get money by working. Mommy and Daddy go to work to get money. A couple of neighborhood kids were selling snow cones one day - they were working too!

3) There is a difference between what we need versus what we want. We need to buy fruits and vegetables at the store or farmer's market. We don't need to buy lollipops and cookies. Those are special treats we get every once in a while. We need a place to live and a car to drive, but we don't need an automatic bubble maker (yes - these exist!) or a new scooter. Those things are nice to have, and we may want and enjoy them, but we don't need them.

Use these examples or create your own using the Money as You Grow site as a start.

June 25, 2014

Buying Raw Land

June 25, 2014/ Planning Within Reach, LLC/ Linda Rogers

Purchasing raw land is different than purchasing a property with a house already on it. While it can be appealing to start with a blank slate, it can also come with a lot of frustrations if you are not prepared. Here are some tips:

1) Learn as much about the property as possible.

Look at SunCalc.net to get an idea of the property’s sun exposure throughout different times of the year. Review the USDA soil maps here to understand the type of soil on your land and surrounding properties. Speak with neighbors about the property to get their opinion.

2) Find a friend or real estate agent with a lot of experience.

You need someone who is familiar with the zoning laws, rules and restrictions unique to the area. You also want to make sure there are no easements and nothing preventing you from doing what you want to do with the land (such as build a home or farm).

3) Understand that you have different loan options

While many people put 20% down on their primary residences, land loans may require 30% or more. They also have a higher interest rate than your typical mortgage loan because vacant land is considered riskier.

4) Getting water and utilities can be expensive.

If you are purchasing land in a rural area, you will need to get clear on the logistics of getting water and utilities to your property. For water, you may need to drill a well. The cost associated with this will depend on how deep they have to drill and the type of soil. A "perc test" will determine if a septic system can be installed in an appropriate location.

Purchasing land requires a lot of due diligence to make sure it doesn’t become a money pit. Even with asking all the right questions, there can be surprises. Planning ahead and working with trusted professionals can make the process go smoothly.

June 09, 2014

Evaluating if Pet Insurance is Right for Your Family

June 09, 2014/ Planning Within Reach, LLC/ Linda Rogers

Most of us think of our pets as part of our family. As such, we care for them when they are sick or injured as we would any family member. While we know that the human members of the family should have medical insurance, we may not think about it for our pets. That begs the question, should you obtain insurance for them? Well, it depends. Insurance is just one way to manage risk. Here are some tips for evaluating the decision.

Determine if you can self-insure. We decided to self-insure our dog when we found him 4 ½ years ago. Instead of paying $50 / month ($600 / year) for a comprehensive insurance policy, we put that amount into a separate pet account each month. The money in the account is used only for pet expenses. His bills have averaged $400 / year so I now have a cushion in the account. If something were to happen to him, I still have this savings that I can use towards another pet or unrelated expenses.

Decide if you would be prepared for larger costs. The automatic savings plan works for a fairly healthy pet without major expenses. If our dog had a serious illness or injury, our pet account funds wouldn’t have been sufficient. That is where the emergency fund comes in. An emergency fund is a pot of liquid assets or cash that is set aside for emergencies. These can include a disability or job loss. You could choose to also make this fund available for unexpected pet costs while you are getting started with your pet account. If you don’t have an emergency fund, insurance may be a better option for you while you create one.

Determine what your limits are. If you are willing to pull from savings for unexpected pet expenses, decide what your limit would be. You don’t want to be faced with an emotional decision with an already sick or injured pet. Would you do anything to save your pet even if it meant putting them through a painful, risky treatment that cost $10,000? You may not want to deplete your savings leaving you vulnerable to falling into debt.

Review insurance policy specifications and cost. As with all types of insurance, there are multiple tiers and limits on benefits. If you decide to obtain insurance, review the list of items covered, deductibles, copays, premiums and benefit maximums.

As more and more procedures and medications become available for pets, questions regarding pet insurance will likely increase. Self-insurance has worked for me. What has worked for you? Email me with your experiences: linda@planningwithinreach.com.

April 22, 2014

Tip for Nannies

April 22, 2014/ Planning Within Reach, LLC/ Linda Rogers

I had the pleasure of speaking with the Networking Nannies (@NNSocal) here in San Diego this April. One of the participants had a great question - is it risky for me to use my employer's credit card? What if they don't pay their bill? Does that affect my credit score and can creditors come after me? That led me to do a little research. The reality is that today's nannies do much more for their employers besides childcare. They go grocery shopping, pick up dry cleaning and take the kids on fun outings. They engage in multiple transactions per day so it makes sense that employers want to add their nannies to their card. There are two ways to do this: Authorized User and Joint Account Holder.

Authorized users can use the owner's account but do not share any of the responsibility to pay off the card. Credit is not affected positively or negatively.

Joint Account Holders are equally responsible for the balance of the account and legally liable for the amount due.

Therefore, if you are a Nanny being added to your employer’s card, make sure you are being added as an Authorized User to protect yourself.

April 05, 2014

Are you eligible for the American Opportunity Tax Credit?

April 05, 2014/ Planning Within Reach, LLC/ Linda Rogers

If you paid for higher education costs in 2013, be sure to speak with your tax preparer to see if you may benefit from this credit.

What is it?

The American Opportunity Tax Credit (AOTC) modifies the Hope Tax Credit. It allows you to take a tax credit for qualified higher education costs including tuition, certain fees and course materials. See IRS Publication 970 for a complete list. It does not include room & board.

How much is it?

The credit amount is 100% on the first $2,000 of expenses and 25% of the next $2,000, so $2,500 max per year.

How long can I use it?

For four years! This is better than the Hope credit that could be used only for two years.

What exactly is a tax credit?

A tax credit reduces your tax liability dollar for dollar. It is preferable to a “deduction” which reduces your taxable income.

Can anyone claim it for higher education costs for themselves or a dependent?

If you are filing singly, your modified Adjusted Gross Income (AGI) has to be less than or equal to $80,000. For married folks filing jointly, the number is $160,000. After these income levels, the credit starts to phase out until it is no longer available.

How do I claim the credit?

Complete form 8863 and attach it to the 1040 when you file your tax return.

What if I only used 529 plan money for education expenses?

You can’t double dip. That is why I recommend that my clients use their own funds for the first $4K to make sure they can take advantage of the credit, then 529 funds after that.

Source: http://www.irs.gov/uac/American-Opportunity-Tax-Credit:-Questions-and-Answers

http://www.bankrate.com/finance/college-finance/3-ways-make-529-plan-work-1.aspx

March 02, 2014

Using a 529 Plan to Help a Grandchild Pay for College

March 02, 2014/ Planning Within Reach, LLC/ Linda Rogers

When grandparents want to help pay for a grandchild’s education, they can choose a method that is just as beneficial to them as it is to their grandchild. With smart planning, grandparents can save taxes using a tax-preferred vehicle like a 529 plan. If they choose a 529 plan, it is important to understand the implications of having grandparents as owners instead of the child’s parents. Tax-deferred 529 plans have an account owner and a beneficiary. Typically, a parent is the account owner and a child is the beneficiary. This allows the parent to retain control over the account, preventing the child from making poor decisions with the money, like buying a new car. When determining financial aid eligibility, it is usually better for a parent to be the owner of the 529 account. While this calculation can get complicated, in general, parents are expected to contribute 5.64% of their eligible assets annually towards their child’s tuition. Retirement assets are not counted. The student is expected to contribute 20% of her assets. This is why it is typically recommended to spend down the child’s assets first, if they have any. Grandparents’ assets don’t count at all. So why would you not have the grandparent set up a 529?

The catch is this: If a distribution is taken from a grandparent owned 529, the distribution amount needs to be reported as income on the student’s financial aid form the following year. This can reduce the student’s financial aid amount by up to 50% of the distribution amount. So if $10K was distributed, the aid amount can be reduced by as much as $5K. If financial aid is not a possibility in your situation, this nuance doesn’t matter. If it is a possibility, hold off on taking distributions from a grandparent owned 529 until the last FASFA form is filed, typically the middle of the student’s junior year.

Another way for grandparents to contribute is to simply gift money (within gifting limits) to the parents to be used for college. It will affect the aid amount since it is the parent’s asset as discussed, but not by much. Here are some more pros and cons to having a grandparent owned 529. Be sure to consult with your financial and tax advisor to understand what is best for your specific situation.

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