February 01, 2016

Just married! Should we combine finances?

February 01, 2016/ Planning Within Reach, LLC/ Linda Rogers

I asked Cinda Jones, a Certified Divorce Financial Analyst (CDFA) and owner of Divorce Financial Solutions, to help me answer this complicated question. Please note that these answers are general in nature. For answers to any specific questions, it is always wise to consult an attorney in your state.

Retirement Assets (401k's, IRA's, 403b's, etc): Contributions and benefit accrual during marriage are community property and will be divided in the settlement agreement upon divorce. Even if only one spouse is contributing to a plan during marriage, the other spouse is still entitled to half of the value accumulated during the marriage.

Non-Retirement Assets (Brokerage Accounts, Individual Stocks, etc.): Cinda recommends keeping these separate and keeping all records. She says to never throw away mortgage purchase or refi documents, bank statements, investment statements and tax returns. During a divorce, the burden of proof falls to the person who wants to make a separate claim or ask for reimbursement. Surprisingly (at least to me in this digital age), she has found it may be impossible to obtain historical records from financial institutions or even the IRS.

Other situations I see fairly frequently: Gifting from parents to help with a house down payment, an inheritance used to help remodel the joint home and rental properties or businesses that were established before marriage. Cinda cautions that it is very hard to generalize in these situations and the rules may vary by state. Regardless, even if there is a valid separate property claim, the burden of proof falls on the person making the claim so you need to have supporting documents.

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.

January 07, 2016

A Meaningful Resolution - Find Happiness Now

January 07, 2016/ Planning Within Reach, LLC/ Linda Rogers

For most of us, the start of a new year is the signal of a new beginning and an opportunity to start fresh in different areas of our lives. I heard someone on NPR say that it is not just the new year, but also at the start of a new month, a new week and even on days off that we take the opportunity to reflect on our lives and set goals for the future. My resolution has been the same for the past few years: to slow down and remember to appreciate every day. We really have no idea what the future holds, so it is important to find that balance between preparing for the future and living for today. Here are some cases I saw in 2015 which re-inforce this:

I met a woman in her 60's. She told me how her mother said there was no need to save when she was younger because she planned on leaving her a sizable inheritance. The mother is now in her 90's and has paid an astronomical amount on end of life care (medical needs, home aids, etc). There is no inheritance to speak of and the daughter is not able to retire anytime soon.

An otherwise healthy person in their 60's died of a heart attack. She was a meticulous planner and saver and expected to have another 30 years ahead of her.

A man in his 50's was laid off and unable to find a job, essentially pushing him into early retirement which his portfolio cannot sustain. He is working to develop new skills and / or to start a business that can help offset some of his expenses. It is not where he planned to be, but he is having fun with the new challenge.

One couple tried for baby #3 and ended up with twins! They are very thankful and feel blessed, but they are now dealing with the reality of how 4 children is different financially than 3. Priorities are shifting and they are taking one day at a time.

A young woman developed symptoms of a chronic condition that will be putting her on disability. Thankfully, she has insurance, but her income obviously won't be as much as her full-time salary.

December 01, 2015

Year-End Checklist

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

December is too hectic a month to survive without a checklist. Here is a personal finance-themed year-end checklist: ☐ Spend down your flex spending account (FSA) if you have one with a balance.

☐ Donate old or rarely used clothing, toys or other items you have around the house. It will make room for holiday decorations and give you a tax deduction if you itemize and meet the IRS requirements.

☐ Check that you are on track with your retirement account contributions.

☐ Review your year-to-date spending. Pay particular attention to monthly subscriptions that are on auto-renewal. Consider any lifestyle changes that will save you money (for example, we dropped cable last year around this time).

☐ Review your financial affairs with a spouse or loved one. Create a digital inventory if you don't have one to make for easy updating next year.

☐ Google yourself and family members. I am starting to do this for clients at their Annual Review. The point is to see if there is any info out there on the web that you do not want publicly available (ex. your home address).

☐ Clean out the paper filing cabinet, if you still have one. Scan and organize files that can be moved to cloud storage.

October 30, 2015

How I use Mint.com - updated for Mint shutting down

October 30, 2015/ Planning Within Reach, LLC/ Linda Rogers

Update 1/11/2024 Mint is gone! Intuit shut it down 1/1/2024. Check out the PWR Cash Flow System instead.

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I use Mint.com to track expenses. While it is not the only automated system available, it is one of the most widely used and the price is right (free). That being said, I have a bit of a love / hate relationship with the program. I don't like being bombarded with advertisements and irrelevant recommendations, but it captures all of my monthly transactions across multiple accounts and provides clarity on our household spending versus our budget. Here is how I use it: Weekly: I log into Mint and let the accounts update (this takes a few minutes). Once they are updated, I go to "Transactions". View recent transactions and confirm they are categorized correctly.

Monthly: I go to "Budgets" and see how we did with our spending in various categories versus the budget. I focus on discretionary items like eating out and shopping since our mortgage, car payment and utilities don't really change month to month.

Monthly: I go back to "Overview" which is the homepage. Scroll down to the lower left-hand corner to view the Net Income chart. Make sure you are earning more than you are spending. If your goal is to have $1,000 / month surplus, the net income should consistently show around that amount.

Do not upload business accounts to Mint. Keep them separate for accounting and cash flow purposes. I use Quickbooks Online for business accounts and find it easy and effective once it is set up.

Other solutions I have heard of: You Need a Budget (YNAB), Toshl and Mvelopes. What system do you use? Email me at linda@planningwithinreach.com.

October 02, 2015

Open Enrollment Season

October 02, 2015/ Planning Within Reach, LLC/ Linda Rogers

October & November are open enrollment months for health benefits. If you are employed at a company with benefits, this is the time to make any needed changes. Typically, you cannot change your benefits during other months of the year unless you have a qualifying event such as a new baby or a change in marital status. Review your most recent financial plan and see if there are any recommendations regarding your benefits. You may need to obtain additional life insurance or start utilizing a flex spending account (FSA). If you have coverage or are looking for coverage through Covered California, this page has everything you need with regards to open enrollment (start date is November 1 for 2016). Open enrollment for Medicare starts on October 15 for 2016 (here is more information). Enrollment for Medi-Cal is year-round.

August 04, 2015

Tax Basics: Employed vs Self-Employed

August 04, 2015/ Planning Within Reach, LLC/ Linda Rogers

As more and more clients are starting businesses, picking up side consulting gigs or selling crafts online, this post focuses on the tax differences between being an employee vs being self-employed.

1) You are in charge of tracking your income and expenses when you are self-employed.

All income is taxable, absent a specific exclusion in the IRS code. You don't need to track your income when you are an employee because you receive a W-2 from your employer summarizing your taxable income.

When you are self-employed, you are responsible for tracking your income and expenses. I recommend using an accounting software like Quickbooks Online, but some people choose to just use an Excel spreadsheet. Depending on what goods & services you are selling, you may get a summary of income earned at the end of the year. For example, if you are providing consulting services, your clients need to send you a 1099-MISC form at the end of the year if they paid you $600 or more. If you earned less than $600 from a given client, and don't receive a 1099-MISC, you still need to report the income. The annual tax forms you are required to file depend on the type of entity you choose for your business. The majority of my clients are sole proprietors or single-member LLC's which requires them to complete the Form Schedule C for federal tax purposes. I recommend touching base with an accountant, at least in the beginning, to make sure you choose the best entity for your situation and get set up correctly.

2) You need to pay taxes as you go, regardless of how you get paid.

The IRS requires us to pay a certain amount of tax throughout the year rather than everything at once at tax time. This is very easy to do as an employee because you can have your employer withhold taxes from your wages with each paycheck.

The self-employed, on the other hand, likely need to pay quarterly estimated tax payments. If you also have a job as an employee, in addition to your self-employment earnings, you can choose to withhold additional taxes to cover your required amount due for the self-employment income. Likewise, if you are married and filing jointly with a spouse who is an employee, you can withhold more taxes from your spouse's earnings. An accountant can help you figure out how much you are on track to owe and make sure you are doing it correctly.

3) Now may be the time to pay for a professional tax preparer.

If you don't already have a tax preparer, consider getting one if you are starting to earn self-employment income. My experience has been that the tax preparer can help save you time and money by doing it right the first time. Tax preparers deal with the tax code everyday, know the ins and outs on what you can deduct, and have survived IRS audits. I am always trying to meet new tax preparers in San Diego to use as referrals for my clients. If you have a tax preparer you love who is taking new clients, please share their info! linda@planningwithinreach.com

This article is for general informational purposes and shouldn't be taken as a substitute for tax advice.

July 07, 2015

Living to 100

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

At a national financial planning conference this year, I heard a speaker who is a Medical Doctor turned Financial Planner. She has all new clients go to Livingto100.com and complete the online questionnaire with her. The questionnaire gauges probable life expectancy and enables the planner to estimate a possible end date (end of life) for the client's financial plan. This is helpful not only for the retirement plan, but also to help clients understand the factors that insurance companies look at when calculating insurance premiums. For example, did you know premiums are much cheaper for people with BMI's (body mass index) lower than 28? Living to 100 asks for an email address at the end of the 15 minute questionnaire. I answered the questions and it came up with an estimated life expectancy of age 97. It also gives you feedback. For example, I was told if I cut my caffeine consumption I could add a 1/2 year to my life. That is not really enough to motivate me to change but you may find something that compels you to adjust current habits.

What do you think? Is this too personal? Or is there a benefit to adding something like this to the financial planning process? Share your thoughts with me by emailing linda@planningwithinreach.com.

June 01, 2015

Identity Theft Prevention Tips

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

PWR's Comprehensive Financial Plan includes a list of tips to prevent identity theft. At a national financial planning conference last month, I gathered some additional items to add to that list.

1. Use a VPN when appropriate - A Virtual Private Network (VPN) can protect you when using public networks such as at hotels, airports and coffee shops. A VPN service encrypts your data from the source (your device). The service I use and pay for is Cloak VPN but there are others out there.

2. Google your Name (and Maiden Name) - Look for your information on pages like mylife.com and whitepages.com. I was shocked to not only find my current home address on whitepages.com, but all of my previous addresses from the last 10 years. To remove your info, you need to claim your listing (free) and delete all the information. Services like reputation.com will remove the information for you and continue to monitor the web as new sites pop up.

3. Use a Password Tool - Password tools make it easier for you to have a challenging, unique password for all of your sites. I use 1Password for Mac but there are others. This page answers the most common questions I hear with regards to security concerns.

4. 2-Step Verification - While I have been recommending this for years for Gmail and Dropbox accounts, more and more sites are giving you this option. Periodically review your most sensitive accounts and see if they are offering this additional layer of protection. 2-Step verification requires you enter the correct username and password AND enter a pin that was sent to your phone via text message.

What am I missing? Email me so I can share it with others. linda@planningwithinreach.com.

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

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.

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