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My close friend's former husband died unexpectedly this month at the young age of 59. He was a healthy, vibrant active man. He died intestate (without a will) with a dual citizenship. The legacy he left is complicated. I am sure it was not his  intention. If this is your circumstance, read this article and call an attorney today. Ask your financial advisor for a recommendation if you need one.

Any protection strategy that focuses only on insurance can leave you and your family vulnerable to the threat of legal system which doesn’t necessarily share your objectives. Absent specific, court sanctioned directives on your part, your life and the lives of your family members will be subject to the default provisions of the law that guide critical financial, family and health decisions when you are unable due to incapacitation or death.  A sound protection strategy must incorporate legal protections that expand your capacity to ensure that your expectations and intentions control the decisions made on your behalf.  At a minimum, a protection strategy should include a will, a power of attorney, a living will or health care proxy, and a living trust.

When someone dies, their estate becomes subject to probate proceedings. And if a will doesn’t exist, the state becomes the executor. That means the state will decide how your property is to be distributed, who gets paid first, and, they can even establish guardianship for children. It would be hard to imagine a situation in which the state would dispose of your estate in exact accordance with your wishes. After the delay and costs of an “intestate” probate, your family will suffer far more than you have intended.

A will is a fairly simple document, but it forms the foundation of your estate plan and is the key instrument used to ensure that your estate is settled in the manner in which you desire. While there can be more to an estate plan than just a will, it is the presiding document that guides the process of settling your estate. The probate courts won’t take your will lightly, so you shouldn’t either.  Consider all that a will accomplishes for you and your family:

• Specifies the disposition of your assets: Without a will, any asset that does not pass by beneficiary (such as a retirement plan or insurance policy) will be divided equally among your blood relatives, which may not be what you intended. A will specifies your priorities and directs your assets where you want them.

• Names a guardian for your children: You know who would be the best guardian for your children.  But, unless a guardian is named in your will, the state will decide who takes care of your children.

• Names an executor: The executor plays the critical role of ensuring each provision of your will is followed and your estate is settled in accordance with your wishes. Often times a spouse is named as an executor, however, a contingent executor should also be named.

• Accounts for special circumstances: In this day and age, it is not uncommon for family situations to become somewhat convoluted as the needs of blended families have to be considered.

Power of attorney
Planning your estate isn’t only about what happens after you die; it’s also about what happens if you don’t die but are incapacitated and cannot make decisions on your own. Your power of attorney provides explicit instructions to your family and the courts for the management of your legal and financial affairs while you are alive.

Living will, health care proxy
A living will (not to be confused with a will or a living trust because it has nothing to do with the settling of your estate) is a legal document that instructs medical practitioners of your desire or rejection of life-sustaining medical intervention in the event you become incapacitated through a terminal illness. Also referred to as an advance medical directive, it takes medical decisions out of the hands of your doctors and your family.  Most states still only recognize living wills as instruments to be applied after a terminal illness has been diagnosed. So, it would be important to add a health care proxy to your will which guides medical intervention in cases where you are incapacitated but not terminally ill.

Living trust
A living trust is a form of ownership that can hold title to your assets. The primary purpose for doing this is so your assets can be transferred directly to your beneficiaries outside of probate. They are still includable in your estate of tax purposes, but they will be immediately available for your family. Any asset, such as your residence, investment accounts, real estate, a business, and anything asset that doesn’t already pass by beneficiary (i.e. life insurance, retirement plans). You can also establish timelines for the disposition of your assets.

Legal Protections Action Steps:
• Establish your goals: Translate the vision you have for your family’s future into tangible goals. What is it exactly you want to have happen for your family? It’s important to revisit your goals regularly as your circumstances change.
• Take inventory: List all of your property and assets and assign values and your intentions for their ultimate disposition.
• Meet with an estate planning attorney
• Get a will
• Review your beneficiaries: Most people don’t realize the kind of problems that can occur with improper beneficiary designations. If you have dependent children named as beneficiaries, they should be designated as contingent behind a spouse or trust. The best course is to coordinate your beneficiary designations with a living trust which can provide more explicit instructions for the disposition of the proceeds.
• Check you titles: Some assets can pass automatically, outside of probate if they are titled properly (i.e. JTWROS)
• Assign power of attorney
• Establish a living will
• Draft a living trust

It's Not About the Money.....Its About The Mission, What's Your Mission?

The success or failure of a financial plan is driven by a variety of possible influences. Factors like the right rate of savings, good investment selection, and careful risk management are all important and commonly recognized as elements of a high quality plan. Going a step further and incorporating a well thought out estate plan can turn a good plan into a great plan.

But what can sabotage a plan? The obvious answers, like not saving enough or poor diversification of course apply. In spite of these apparent risks, financial planning can be like an iceberg, where much of the danger sits below the waterline. It is the hidden aspects of our own decisions that represent the greatest risk to the success of a financial plan, yet most of us remain unaware of the common flaws in financial decision making that tend to undermine even the best laid plans.

Importance of decision making

When making a financial plan the decisions we make today have consequences that can last for years, decades, or even generations.

Large investment banks and hedge funds are more aware than ever of the importance human behavior has on both short and long term results, and as such are investing in a field of expertise often referred to as “behavioral finance”. While this emerging field of study is broadly accepted as producing some important findings most of us don’t need to spend millions of dollars on the latest research and psychology experts to get positive results. Instead just keep an eye on a few simple decision-making biases and you’ll already be one step closer to making sure you have a sound financial plan that is protected – even from yourself!

Smart decisions vs. instinctive reactions

Economics Nobel Prize winner Daniel Kahneman’s 2011 best seller “Thinking, Fast and Slow” provides a blueprint of these cutting-edge tips for improving your financial decision-making. Here are a few noteworthy examples to consider in your planning process.

• Overconfidence is common and can put your plan at risk. It’s ok to be optimistic, but it’s dangerous to assume the future will look the same as the past and that what worked before will work again. Circumstances change, sometimes unexpectedly, and it can pay to prepare for possibilities - no matter how remote you think they are.

• We feel the sting of losses more than the joy of gains, meaning that short term portfolio volatility can cause reactionary decisions that aren’t good for our long-term goals. Reviewing your accounts on a daily basis, particularly during periods of uncertainty, triggers our natural instinct to make decisions based on fear. If you have a good plan (and a good planner) it makes sense to check accounts infrequently and keep your eye on the long-term.

• Avoid “confirmation” of what you see the world. Limiting planning conversations to people that agree with our own way of thinking about finances makes it less likely that we consider new evidence and make fact-based decisions. Good financial planners will often challenge our preconceived notions around finances and long-term goals, and this in turn can result in better decision-making.

Addressing the human side of the planning equation is a great step toward improving the odds of your financial plan succeeding. Talk to a financial planner today about how lessons learned from behavioral finance can help keep you and your plan on track.

For time immemorial we have known that men are bigger cheaters than women. It seems that men, by their very nature, are more inclined to hide their infidelities and risk their relationships. Now we learn that women can be bigger cheaters than men, but with financial affairs, not romantic affairs. A recent survey conducted by GK Roper revealed that nearly 80 percent of women respondents reported hiding some aspect of their finances from their spouse or significant other compared with an average of only 30 percent of men.  Few would argue that financial infidelity is as devastating as a marital infidelity, but most would agree that deceit is deceit which leads to an evaporation of trust no matter where it comes from.

Therapists and relationship experts all agree that concealing financial issues from one another prior to and during a marriage, is as big a sign of trouble for a relationship as is concealing a marital affair. Couples do recover from infidelity; it’s the lack of trust and respect that are the destructive elements. Most men and women believe that if their spouse is able to deceive in one aspect of their lives, they are more likely to deceive in others.

The study found that women are most likely to conceal credit card accounts from their partner. In most cases, these are accounts established before they entered the relationship, so it might seem harmless that a woman simply forget to tell her partner, or perhaps even choose not to, because it seems like such a small thing.  While that may be true for some, others have experienced major problems especially when it turns out to be not just one account, but several, and they get uses extensively.  At that point, it’s not just the concealment of a credit card account that threatens the relationship, it’s the concealment of spending habits that could ultimately harm the relationship.  The reality is that irresponsible use of credit by one spouse, even if the accounts are held in separate names, can wreak havoc on the credit of both spouses.

Why Do It?
There are a number of reasons why a spouse might conceal financial activities – fear of reproach, hiding a spending addiction, security concerns, fear over loss of financial control. All of these suggest that the relationship is already lacking in trust and open communication, which is more of the root problem than is the concealment. Couples who avoid or refrain from discussing finances including their credit situation and their preferences and priorities, are destined for trouble especially if a problem is left to fester.

There are situations in which leading separate financial lives may be appropriate and even preferable, such as in a second marriage where both spouses are financially independent, or even when one of the spouses is substantially more well off.  Singles who choose to live together, may be better off with separate finances. In these situations, trust may not be a factor in how finances are discussed. However, open communication about all matters including finances, can only strengthen the relationship.

The study also found that women are more likely to hide a checking or savings account from their partner. Considering that the majority of women will, at some point, find themselves either divorced or widowed, this finding isn’t all that surprising. It’s sad commentary on our society that women feel they must take such measures to protect themselves, and it’s made worse when women feel as though they can’t tell their spouse for fear of reprisal. The fact is that men, as a whole, do want to feel as though they are in control, financially.  While these attitudes about finances and control are changing, especially as more women are becoming the primary breadwinner, men can be somewhat unyielding in their attitudes if they feel threatened.

Seeking Financial Harmony
Changing attitudes and shifting trends are leading more couples to join in a more collaborative relationship when it comes to finances. Respect for each other’s dignity and independence is the cornerstone for a relationship that approaches the management of finances as though each had an equal stake regardless of who brings home the bacon. It’s a relationship in which each partner encourages the other to spend and save in their accounts at a level that each agrees to, and there are no questions asked on what is purchased or how much is saved.  When each partner feels more secure about the other’s attitudes and actions with regards to finances, they are more likely to feel more secure in all aspects of their relationships.

While tax deferred annuities have been portrayed as villains in todays media, financial  advisors have consistently maintained that they serve a purpose in retirement income planning. Two well respected retirement researchers suggest in this article two very different but specific strategies in combining annuities and portfolio withdrawals to provide piece of mind in retirement income planning. Personally I have found clients find peace of mind when they know they have an income source they can't outlive.

A conversation that college campuses are having with first year students are ones that we should consider as parents: Read more. 

As a following up on the challenges of planning for our new life expectancy........BlackRock has a positive spin on taking advantage of those additional years titled "Unleashing Human Capital". Give it a read. Read more. 

Most people looking to implement a financial plan are making decisions with the long term in mind. While what long term means tends to vary depending on factors like age, individual and family goals it’s safe to say most planners and their clients would agree that long term is usually measured in years, not months. Whether it’s the young professional first considering a still-distant retirement age or a retiree trying to leave a financial legacy, the idea is the same: plan today for an uncertain future.What often gets lost in this perspective is just how long the long term can be.

Life Expectancy in the 21st Century

It’s probably a reasonable claim that in recent decades each generation in the US was able to live longer than the preceding one.

What’s both amazing and challenging at the same time, at least from a financial planning perspective, is that over half of Americans tend to underrate their own life expectancy.1 This coincides with the fact that life expectancies are rising at a remarkable rate.

Recent research forecasts that an average male of age 65 in the US has a 40% chance of living to age 85. For the average female at age 65 the chance of living to age 85 is a remarkable 53%. Still more astonishing is the fact that a married couple of age 65 has a 72% chance that at least one of them will live to be 85.

How Does This Longevity Information Impact Financial Planning?

Put simply, this means that a couple in their 40’s or early 50’s who are making a financial plan need to define their long term as being at least 40 years. If this same couple also wants to leave an estate for their children and current or future grandchildren this means the financial plan may need to take into account a time horizon of 50 years or more!

What Steps Can I Take Today?

Depending on your individual circumstances and goals it may make sense to treat the possibility of living to an age beyond what you had planned for as a risk that needs to be insured against. This “longevity risk” can be managed with a variety of strategies. Selecting the right age to start taking Social Security, taking advantage of insurance and annuity products, and carefully managing debt are all legitimate ways to approach the risk of longevity.

But what about specifics, like exactly how much longevity insurance is needed? What is the right age to tap Social Security?

A good planner can help answer these and other long term related questions, as there’s no one size fits all answer. This is all the more true when planning for decades, when a lot can happen between the day you first make a plan and all the life events (planned and unplanned) that take place each day after. For this reason it makes sense to work with a professional who can help you take the right steps toward your long, long term goals.

The figures out last year show that the average amount of student loan debt a student graduates with is $18,625. Most graduates are carrying multiple student loans from multiple sources, and the cost and complexity of managing them can become overwhelming, especially if they are unable to secure steady employment with sufficient cash flow to make the payments. One option that has always been available to indebted graduates is a college student loan consolidation which, depending on the number and types of loans held, can consolidate them into one loan, possibly reduce the interest charges, and lower the monthly payment.

Benefits of Loan Consolidation

When you consolidate multiple student loans into one, there are a couple of things that happen that usually result in a lower monthly payment. First, where most student loans are variable, meaning that the interest rate fluctuates with market conditions, a consolidated loan is issued with a fixed rate. Assuming that you have built a solid credit history during your period in school and shortly thereafter, you could be able to qualify for a low fixed rate which can be locked in for a long period of time. You could also have a parent with a solid credit history co-sign for the new loan which can improve your chances of getting a lower fixed rate.

Secondly, the new loan is amortized over a 20 o 30 years which will extend your payment period well beyond the standard 10 year period for federal loans. While this will have the effect of increasing your long term interest costs, it will also reduce your current monthly payment to make it more manageable. As your cash flow improves, you will be able to pay down the principle which will reduce your total interest costs.

The fixed rate on a newly consolidated federal loan is calculated using a method mandated by the federal government which takes the weighted average of the interest rates on all of your federal loans and then rounds it to the nearest 1/8%. Your new fixed rate can never be higher than 8.25%. Private lenders must use this as a guideline, but they can offer lower rates to those who can qualify.

Eligible Loans – Private and Federal

All federal loans are eligible for consolidation, including both unsubsidized and subsidized Stafford Loans, Perkins loans as well as parent’s PLUS loans. Borrowers with older Federal Family Education Loans (FFEL) issued by private lenders can use a private lender for loan consolidation, but those with Direct Federal Loans must work through the U.S. Department of Education and its Loan Origination Center's Consolidation Program ( If you don't know if your loans are FFEL or Federal Direct, you can go to the National Student Loan Data System to look them up.

Keep Private and Federal Loans Separate

If you have both privately funded FFEL loans and federally funded Direct Loans, it is recommended that they be kept separate when consolidating your loans. Generally, you may be able to find better loan terms for your FFEL loans through a private lender. Or, conversely, you may find it more difficult to find private loan rates as low as the interest rate cap on the Direct Loan Consolidation through the government. 

Also, if you try to consolidate your Federal Direct Loans with a private lender, you will be precluded from availing yourselves of their special hardship repayment options, such as deferment and forbearance. The exception to this is if you hold both FFEL and Federal Direct Loans and are eligible for the newly created Special Direct Consolidation Loan program.

The Temporary Special Direct Consolidation Loan

A recent Executive Order by President Obama has opened the way for graduates with both FFEL loans and direct federal loans to consolidate them into a Special Direct Consolidation Loan which only available between January 1, 2012 and June 30, 2012. The advantage is that it will be easier to consolidate different types of loans into one, and you will be eligible of a 0.25% interest rate reduction on the FFEL loans. Plus, if the loan is repaid using the program’s automatic debit system, you can receive another 0.25% rate reduction on the entire loan balance. Your loans must be in good standing and you can’t have already begun a direct loan consolidation process in order to be eligible for this program.

The bonus for graduates who go into public-service or non-profit work with federal direct loans is that they will be eligible for Public Service Loan Forgiveness (PSLF).

Consolidate Loan Repayment Plans

For direct consolidation loans, there are several repayment plans from which to choose, all designed to adapt to varying financial situations.

Standard Repayment Plan
A fixed interest rate, fixed payment plan with a $50 minimum that is paid over 10 to 30 years depending on your total indebtedness.

Graduated Repayment Plan
Your minimum payment starts out low and then increases every two years over a 10 to 30 year period. The lowest minimum payment is the amount of interest that accrues monthly.

Extended Repayment Plan
For direct loans over $30,000 the length of the payment period can be extended to 25 years using either the fixed monthly payment option or the graduated monthly payment option.

Income Contingent Repayment Plan
Monthly payments are extended for up to 25 years and are based on annual income, loan balance and family size.

Income-based Repayment Plan
For borrowers experiencing some financial hardship, the length of the loan can be extended up to 25 years, and the monthly payments are based on annual earned income and family size.

Along with most consumer prices, college tuition costs are heating up again. It seems as though we have become accustomed to college cost increases that have outpaced the rate of inflation; however, recent data shows them rising at an even more alarming rate  into the double digits in many states and as high as 30% in California. At this rate, the cost of a college education could be beyond the reach of most parents in the near future. That is, unless parents take full advantage of the college savings plans that have been created over the years.

The good news is that parents do have several good options available to them, and most of them offer attractive tax incentives to ease the load that they must bear.  Established through federal legislation, qualified college savings plans can enable you to use money that you would have otherwise paid in taxes towards growing your college savings faster.  Some plans even enlist the help of states or college organizations in providing tuition guarantees regardless of how high tuition cost rise.

But all college savings plans are not created alike.  They differ in tax treatment, flexibility, and savings options, so it important to find one that most closely matched your particular needs. Each plan type should be considered with your tax situation, savings ability and your college preferences in mind.  This quick overview can be used as a starting point for narrowing your selection:

Qualified College Savings Plans

Created by Congress to assist parents in targeting college tuition costs, these plans  include tax advantages that encourage systematic savings.  Although contributions are not tax deductible , they do allow for deferred taxation on earnings, and, if certain requirements are met, they are also exempt when withdrawn to pay for college expenses.

529 plans are offered on a state level and also by some universities or college organizations, and they vary somewhat in the way they structured,529 plans are structured in two different ways: as a college savings plan, and as a pre-paid tuition plan. College savings plans are accounts established through qualified providers that allow for savings to accumulate within various investment options. Most are set up as a family of mutual funds so funds can be diversified among different investment options.  As with any mutual fund investment, 529 College Savings Plans should be carefully reviewed for a complete understanding of the costs and risks associated with the investments.

Pre-paid tuition plans are structured differently in that contributions go towards the purchase of credit directly with a college or university. The cumulative credits are then applied to tuition, and where allowed, other college related expenses.  A formula is established up front to determine how many credits need to be accumulated based on a rate of inflation and minimum rate of interest. In some cases, the sponsoring institution will guarantee the tuition coverage even if the costs exceed those established in the formula.

There are some caveats and restrictions that parents need to review before committing to a pre-paid tuition plan. First, the credits can only be applied to schools within the state, or, with a private plan, only to schools participating in the program. In addition, many states are rethinking the guarantees provided in the plan, so it’s possible that your credits may come up short.

Financial Assistance

It is important to understand how financial aid programs work when considering which type of college savings plan to utilize. Generally, financial aid availability is based on the amount of assets that are held in the student’s name. If the assets are held in the parents’ name they are exempt from the eligibility requirements.  Assets held in trust for a child, could affect eligibility for assistance.

Parents have several options for federal grants available through the federal government.  Grants are generally paid to students through the colleges and they don’t require repayments.

Pell Grants: Available for undergraduate students

Federal Supplemental Educational Opportunity (FSEOG): Aid for low-income students pursuing post-graduate education.

National Science & Mathematics Access to Retain Talent Grant (National SMART Grant): A recently funded aid program for college juniors and seniors majoring in math, the sciences or engineering.

Student eligibility is determined at the time of application, but you can plan in advance by using the tools available at

Setting up a college savings plan doesn’t have to be complicated, and any plan can be tailored to your specific needs and budget. If time is still on your side, it is important to take advantage of it because it is valuable and wasting resource.  It is always advisable to seek the guidance of a qualified and trusted financial professional to gain a clear understanding of how these plans work in your situation.

It’s no secret to any parent with aspirations of sending their children to college that the cost of doing so is quickly inching beyond the reach of even the most affluent families. According to the College Board, which surveys college pricing annually, the average cost for an in-state public college in 2013-2104 is $22, 826, and $44,750 for a private college. However, as the recent announcement by the University Of California Board Of Regents to increase tuition costs by 5 percent per year for the next five years indicates, college costs continue to increase at a much faster rate than the rate of inflation.

For the parents of a new born today, the average total cost of a college education at a private education could be as high as $130,428 per year at the current pace of college cost increases. Even a state college will run more than $41,000 a year. That’s an astronomical number for the average American family; however, when you consider all of the costs involved in a college education, it’s easy to see how it adds up:

Tuition and Fees: $30,094 annually for private colleges; $8,893 for public colleges; $22,203 for out-of-state residents attending public colleges.

Room and Board: $9,500 per year for on-campus housing and meals at public schools; $10,830 for private schools

Books and Supplies: $1,207 at public colleges; $1,253 at private colleges

Personal and Transportation Expenses: $2,580 at public schools; $3,228 at private schools

What are Parents to do?
To state the obvious, parents who are serious about securing a quality college education for their children must plan well ahead and start saving as early as possible. However, with college costs increasing at such a torrid pace, parents must not lose sight of other important priorities, such as their retirement. Planning for college expenses must be done in the context of an overall financial plan with the understanding that available resources must be directed towards the very top priorities first. The reality for many families is that they may never be able to save enough to fund a college education.  So where will the funding come from?

Financial Aid
Nearly 60 percent of today’s college students are eligible for financial aid. With proper college education savings planning, even affluent families can qualify for financial aid available through federal grants and from the colleges themselves. Determining financial aid eligibility can be somewhat complicated; however, the general formula considers the assets and income of the child foremost, and then, based on the parent’s financial circumstances, they will determine a “family contribution” portion of aid. Big tip: Start your financial aid planning early – no later than your child’s freshman year in high school.

It’s a myth that only the very brightest or most athletic kids can get scholarships. In fact, scholarships in all forms and sizes are widely available. Although many are “small” - $500 to $2,000 – they can add up if you know where to find them Check with your school counselor and community leaders to learn more about how to find scholarships.

Education Loan
The increase in availability of school loans is a double edged sword for students and their families. Nearly 70 percent of college students graduate with student loan debt. Consequently, student loan defaults are on the rise. Borrowing for college expenses should be a last resort, but, if it’s done right, in the context of a well conceived financial plan, it doesn’t have to create an insurmountable financial burden. Big tip: Steer your student towards fields of study with good prospects for jobs and income. Liberal arts major probably won’t cut it anymore.

Yes, even college administrators will negotiate price, especially if your child is a great student. They want to pull in a higher number of kids with a solid academic record, and if scholarships aren’t available, they will consider lowering their price.

In Marin County investment planning, we view goals as life’s destinations, whether it is where you want to be at the end of the day or at some point in the distant future. But there is a big difference between a clearly stated goal with a plan to achieve it, and a hope or a pipe dream that merely swirls around in your head.  If a goal is not perceived as realistic or achievable, then it‘s nothing more than a hopeful aspiration without any real value. Goals need to be well-defined, quantified, and have real intrinsic value in order to inspire a thoughtfully conceived plan of action. Anything less, and it will remain a hope; and hope is not a strategy.

Generally, people without clearly defined goals, or who view the future with uncertainty, will lack the confidence necessary to adhere to a long-term strategy. Investment plans based on the hope that past performance will prevail in the future don’t engender confidence, nor does the notion of planning toward the accumulation of a capital need using arbitrary or out-dated rules and assumptions.

Time is of the essence with goal setting. The only resource available to us, over which we have some element of control, is time. However, it is a wasting resource if it is not optimally utilized.  Each day that passes, without some contribution of money, either in savings or interest, the cost of your financial goals increases. As time marches on, the obstacles to achieving goals of any time horizon become increasingly insurmountable.

These are the obstacles we all face in trying to achieve our financial goals:

Diminishing Time Value
Most people have heard of the financial axiom, “the time value of money” that describes how the growth of money is primarily a function of the amount of time it is given to work. The less time that money has to work, the more it will cost to attain the goal which is also defined as “the cost of waiting.”

Risk as a Replacement for Time

The more time money has to work, the less it needs to grow.  Given enough time, money will let compounding interest work its exponential magic thereby eliminating the need for higher returns and the greater risks associated with them. When it is necessary to assume greater risks in order to overcome the loss of time, financial goals can be jeopardized.


Inflation is one of time’s worst enemies. The longer the time horizon, the longer inflation can eat away at the true value of money. At a normal inflation rate of 3%, the value of money is cut in half after 23 years.  The cost of financial goals must incorporate the cost of inflation when calculating how much savings will be required to achieve them.


Taxes are the one certainty of life that can obstruct your progress towards reaching your goals.  The good news is that, with the proper planning, and the use of the right tools, they can be minimized to reduce their impact. 

Yes, life happens, and very rarely in the way we anticipate, which is why financial goals must be defined, calculated, measured and reviewed frequently so that the necessary adjustments can be made to keep you on the right road when life throws you a curve.

In investment planning, your goals and objectives become your investment benchmarks, which are an absolute measure of your investment strategy’s performance. This allows you make investment decisions based on where you are in relation to your objectives rather than on market returns which are beyond your control.  More importantly, it will shield you from the irrational behavior of the herd which is often driven by euphoria or panic.

OK so I was in full agreement with Mr. Hardy until I got to number 5......but this is well worth a read and taking action.

Life is busy. It can feel impossible to move toward your dreams. If you have a full-time job and kids, it’s even harder.

How do you move forward? Read more.

These are truly remarkable times in the mortgage industry. Mortgage rates are still at their lowest point in more than 50 years presenting homeowners with a once-in-a lifetime opportunity to lock in rates while they’re at or near the bottom. No one can say for certain whether rates can or will drop even further, but what is certain is that, at some point, they will go up. On the other side of the equation, there are fewer homeowners who can qualify for the lowest rates due to the erosion of home equity or, perhaps, some credit issues that arose during the economic downturn. However, if you have equity in your home and you escaped the recession unscathed, there may be no better time to refinance your mortgage.

Should You Refinance?

Unquestionably, declining interest rates are the primary impetus for refinancing a mortgage, but there are other considerations that go into determining if it will actually make sense for you in the long run. Lower rates don’t always translate into lower overall costs. When you refinance, your loan amortization begins anew, and your new payments will once again be top loaded with interest as oppose to principal. It is important to consider your long term goals and outlook; otherwise you could find yourself increasing your long-term costs. There are really just three sound justifications for refinancing at any time:

1) It will lower your monthly payment: While that may be true, you still need to calculate the long term impact on the total cost of ownership. If the total interest you will be paying on the new mortgage is more than what you would have paid under your existing mortgage, you haven’t improved your situation. While some people need to lower their monthly payment out of necessity, those who can afford their current mortgage payment may be better off because they’re further ahead on the principal portion of their amortization. Also, if you don’t plan on keeping your home for at least ten years, you may not make up the additional cost of loan fees. Generally, if you can’t lower your rate by at least a point, your breakeven will be longer than ten years.

2) It will shorten your loan term: The best way to take advantage of historically low mortgage rates is refinance into a shorter loan.  Shorter term mortgages usually carry mortgage rates a half point below the standard 30 year mortgage. It could be a great opportunity to pay off your mortgage early so you can redeploy your cash flow to savings. It’s important to consider that, because the length of the mortgage is shorter, your monthly payments may be higher due to the acceleration of principal payments. As an alternative, you could apply your excess cash flow to your principle on your existing mortgage and have the similar effect of paying off your mortgage early.

3) You need to cash out some equity: If you are in a solid equity position in your home, a cash-out equity refinance can give you access to the equity if you truly feel you have a better use for it. Generally, a cash-out refinance is done through a home equity loan or line-of-credit. This is risky on two fronts: First, if the market in your area is still somewhat volatile you could risk a decline in your remaining equity.  Second, if you take out a home equity line of credit, your variable rate could increase as interest rates increase. It’s strongly recommended that you be able to maintain at least a 10 percent equity position in your home after the refinance.

Generally, you should consider a refinance when, considering short and long-term costs and savings, you can markedly improve your financial situation.

How to Get the Lowest Rate

Just because a lender is offering the lowest possible rate doesn’t mean they’ll actually give it you. Typically, lenders reserve their best possible rates for the most credit worthy borrowers – those with sterling credit histories, 800-plus scores, low debt-income ratios, etc. So, unless you are in that category you could wind up with a higher rate which could blow your cost/savings calculations out the window. You need to know where you stand before you apply. Your lender should be able to give you an indication of your standing before you get deep into the application process, but you won’t know the exact rate you qualify for until you apply and are approved. To better your chances of obtaining the best rate you will need to:

Work on increasing your credit score. The difference between a score of 780 and 800 could be a half to three-quarters of a point.

Lower your debt-income ratio. You can get approved with a debt-income ratio of 38 percent, but, if you want to attract the lowest rates, get it down below 31 percent. Pay off debt or increase your income.

Make sure your loan-to-value is at least 10 percent after the refinance. This is where you have the least amount of control. If your home values are on the rebound, you may just have to wait. Some banks may be willing to refinance at higher LTV, but they will likely charge higher rates to do so.

Finally, check out the community and regional banks in your area. They are very willing to compete for your business and they are always enthusiastic about beating the big banks. Plus, they are more likely to underwrite your loan locally which means more responsiveness and quicker turnaround time.

Take some time on this succinct,  wonderfully written,  well thought out approach to investing and planning for income in this low interest rate environment. Read more.

Everyone has their own definition of success. For some it is financial, for others it is a collection of all aspects of life. According to my personal definition of success, I have been truly blessed in my life to be surrounded by some extremely successful people. Nothing in this world is more inspiring to me than seeing people from similar backgrounds and situations absolutely flourishing in life. We all have that same potential in us, the difference is how we go about it. There are simple daily rituals that you can add to your life that can be the difference between existing and succeeding.
Read more.

Wherever you go, bring along a small envelope. Put every business card or receipt you receive into this envelope. These items can provide a valuable record of your purchases. If you are ever double charged by your credit card company, you will had the prove needed to get the duplicate charge removed.

Avoid incurring debt for the best personal finances. While you may need to get into debt for mortgages or student loans, try to stay away from things like credit cards. The less you have to borrow, the less hard-earned money you will lose to interest and fees.

Try setting up a savings account that automatically takes the money out of your checking. This is a good way to put money away every month. You can also make use of this plan to save up for major purchases or expenses, such as vacations and weddings.

Cfl Bulbs

Gradually replace all incandescent bulbs throughout your home with CFL bulbs, which are far more efficient. These bulbs will save you money and save the environment at the same time. CFL bulbs should last much longer while using less energy. You will end up purchasing fewer bulbs and therefore saving money.

Every time you get a check, save some money from it immediately. It’s too easy to spend now, and forget to save later. Knowing the money is already unavailable makes budgeting easier and avoids the problem of forgetting to save the money or the huge temptation to find something else to spend it on.

Frequent Flier

A program you can enroll into if you’re traveling by air a lot is a frequent flier mile program. A lot of credit card companies give rewards based on the amount charged. These rewards can be used to get discounted or free air fare. Some hotels will also redeem frequent flier miles. They can be cashed in for discounted stays, or even free lodging.

An emergency savings account that receives regular deposits is a must for those unexpected issues that can arise. You should also put money away for long term spending goals like college tuition, or a relaxing vacation.

Your FICO score is largely affected by credit card balances. The more that you have left to pay off, the worse your score will be. Your score will improve as you pay off debt. Do your best to keep your balance below the maximum credit limit by 20% or less.

By controlling your finance, you will be able to do proper maintenance on any property that you own. Write down your expenses and income so you can have a good grasp on where you stand financially at month’s end. You must have an established property budget.

Want to be a millionaire when you retire. It is exponentially easier when you START EARLY!! Also, try to always contribute at least 10% of your pay, and to follow through on whatever plan you create. More here from Sharon Epperson, CNBC's Senior Personal Finance Correspondent.

Even higher income Americans are struggling to save and instead are living paycheck to paycheck. Do you eat out frequently? Do you feel like you don't have financial discipline? You are not alone. Check out this insight from

Americans are under-saved by up to $14 trillion and it is a problem for women--Sallie Krawcheck. Check out this article from the Washington Post to get a better picture into why as women we are particularly sensitive to reduced retirement savings and how it could hurt us big time as we get older!

Did the recession change how you save? Check out this article to make sure you are not making the same mistakes!

Like losing weight, we all have included in our New Year’s Resolution a goal about our finances.  We were going to save more, spend less, budget or just pay more attention to our finances. But like losing weight, this resolution felt a little like going to the dentist….. while good for us it, unless we were in pain it felt just as good to put it off. When we need to change our financial diet, get out of our routine, it often feels like denial. So the question is, how do we make financial changes feel good? Here are five steps to consider.

Place a Stop Loss Order.

What is one daily habit that, if you avoided, would save you a few dollars and be good for your health? Do you stop for coffee along the way to work, take a bagel break at 10 AM or sneak an afternoon candy bar. What if you just stopped? Would eliminating this habit be good for both your personal and financial health! Consider breaking that habit, contribute those few dollars savings into a Roth IRA monthly, and then take a look in the mirror. Feeling better about your new habit?

Get even smarter!

The first time I changed my eating habits it was to lose weight and feel better. Then I realized I didn’t even need most of what I had eaten before. My new discipline wasn’t about what I couldn’t eat but was about what I could and I felt pretty good! Now that you have eliminated that one spending habit, do you really miss it? If not what more can you do? Try to total and categorize your spending habits. Which of your expenses are healthy and productive and which are poor investments. If the word budget feels restrictive change your point of view. Your budget is your personal business plan.  View it as your wealth plan. And implement it! Work towards saving at least 15% of your income for your independent wealth plan!

You built it, now invest it!

But do it wisely. I encourage you to find a good advisor, one that you can trust. Develop a diversified investment plan with them and spread your money around. Choose high quality, low cost mutual funds or exchange traded funds in four categories: growth and income, growth, aggressive growth and international. And then stick with it.

Now dream! 

Build some “go to hell” flexibility!Now that we are feeling pretty good about ourselves and our personal business plan let’s really dream. Do you love what you do, but also love your hobby? Would you like to turn that hobby into a business? Is there a personal mission or charity where you would like to spend more time?  Why not build a little “go to hell” flexibility in your life. Your personal business plan could be that roadmap. Dream and your dream might be motivation enough to save more!

Build your toolbox.

Today we as individuals are asked to take more and more responsibility for our personal financial independence. And financial tools to create such independence are more readily available than at any other time in history. We just need to take the time to research and understand them. What does your employer offer? A 401K, Roth 401K, SEP, SIMPLE? Find out and then use that tool. Set a fixed amount you can live with, turn it on and forget it. Work towards building that to 15% of your income. The money you never see will be the money you will have when you want to build that dream.

And if you are young, student loans, tough work environment, lower wages? Go back to Step 1. $50 a month is a great start!

If you take action today anywhere along these 5 steps, 10, 15, 20 years from now you will be glad you dug yourself out of that rut!

Did you know $50 per month can have dramatic impact on your retirement! Read more.

Apply business frameworks to your family to create a clear and sustainable wealth management strategy. Using a vision and mission statement that clarifies the purpose of your family's wealth makes things much easier in the face of financial hardship and directs your attention to things that are important for your family Read more.

To those of us starting to think about how to prepare for old age this blog post will give you some basics!

As we age, the odds of incurring an injury or major illness that will prevent us from performing simple daily functions increase substantially. Today, one in three people over the age of 65 will require assisted care of some sort. Past age 75 the odds increase to where one in two will need nursing care. With the average cost of nursing care now surpassing $7000 a month, it’s no wonder that long term care often decimates the savings and assets of the seniors who need it.

While there is a portion of seniors who have amassed the assets to be able to cover long term care, most Americans would use up their savings within a few years.  There is assistance available from the government in the form of Medicare; however, it only provides limited coverage.  When seniors spend all of their assets on long term care, they may qualify for Medicaid, however, it has strict requirements and the quality of care may not be the best.

Long-Term Care Needs
With the odds of needing care so firmly stacked against seniors, long-term care insurance would seem to be a practical solution to protect their assets and ensure that they receive quality care. Seniors who can no longer perform basic daily living functions such as walking, bathing, dressing usually need the assistance of a home health care nurse or a nursing home facility, and the costs can be prohibitive.

Covering Long-Term Care
Seniors may have several options for covering their long-term care expenses.  Reverse mortgages are becoming a popular method of freeing the equity in a home. Some health insurance plans provide some long term care benefits, but they are usually limited. Outside of these possible options, a long-term care insurance policy is probably the most cost-effective solution.

Long-Term Care Insurance Basics

Benefit Payments: Benefits are paid in one of three forms. An indemnity policy pays a specific daily benefit. A reimbursement policy pays the actual cost of care or the benefit amount whichever is lower. And full care coverage plans, will pay the total daily benefit amount regardless of how much care was actually received.

Waiting Period: The insured can select a period of time, between 0 days and 120 days, before which benefits will be paid. If the insured has the ability to pay for care from personal assets, the waiting period can be extended which would lower the premium costs.

Home care option: Most policies provide for nursing coverage, but if home care is preferred, a rider can be added, at a cost, to cover the cost of care at home.

Inflation Protection: Long-term care costs have, historically, risen faster than inflation.  Since the actual need for care might not occur for many years after the purchase of a policy, this protection would ensure that your benefits could cover future costs.

Long-term care insurance policies have proliferated in the last couple of decades.  The vast number of companies that offer an expanding menu of different long term care products can make the task of choosing the right one a daunting one.  Working with a specialist who has access to the long-term care products of several companies will ensure that you receive unbiased guidance and a solid policy.

Hi! Just found this article in Time Magazine following one family and their process of planning for retirement juggling their mortgage, cash assets, personal property, and credit card debt. With some compromise, they were able to plan for early retirement with a sound financial plan!

If you haven’t experienced it personally or through a friend, trust me! You will. I am speaking of that experience where life turns the tables on you from being the cared for to the care giver. It happened recently in my own family with my father’s long-term illness. We learned many things but most of all we learned that it is never too early to build your village. And believe me, you will need one.

My Father had long been the strongest person in my life, a successful executive in a tough industry, a guidepost and adviser long past my early adult life. He was the wisest person I have known and along with my Mother the bulwark of our family. But a terrible car accident and Alzheimer’s changed that and resulted in final years that were an emotional roller coaster for us all. With a family that had a nurse, a financial professional and 2 business consultants we felt we were prepared for most anything. We weren’t.

Fortunately my parent’s had invested long ago into long term care insurance and that was important. Although my father’s care qualified for Medicare initially because his skilled nursing facility followed a hospital stay, Medicare only lasted as long as he could utilize those services. When he became too weak the support stopped. Other facilities refused him for the same reason. Where can you go? What is available? Is it the facility that you want? And how often can your loved one weather a transition?

Go home? Is your other parent strong enough to directly care for their loved one or handle the logistical requirements of hiring care? Remember, they are experiencing the gradual loss of a partner. If not, can you assemble the staff you need? And if you can, can you afford it? Our experience was that a skilled nursing facility was less expensive at $9000 per month than what my dad’s needs would have been at home.

Once you answer the question of where the next is who can help? Oh, you say, the facility is competent or this caregiving service is well recommended. You will find most facilities busy at least, overwhelmed at most and you will have questions. Do you live close by? None of us did and out Mother was overwhelmed. Remember, we are talking about a loved one, a revered but fragile loved one. When you have questions, and you will, is there someone close by who will help you? What do you know about your parent’s doctors? Elder care can feel like a revolving door of names….do you know them?

Do you really know of your parents other advisors? Their financial advisors, attorneys, accountants, or even friends? Anyone who can help. What do you know of their wills, advanced directives, or documents or close friends that can give you guidance when the decisions really get tough? If not, get to know them before you are under duress. Get to know the resources you might need and their availability far in advance.

I think we all hope that the care offered to our parents during their final days will be by loved ones offering reverent attention.  If we build our village, that may not be as distant a dream as we think!

When people decide that they need to eat healthier or lose weight, they know that they have to change their behavior. That’s easier said than done for most, which is why programs like Nutrisystem and Weight Watchers are so popular; because they provide a system for automatically controlling portions and nutrition. More importantly, they provide an easy way to establish weekly goals, track activities and keep score for accountability. Within a few short months, eating behaviors can be transformed and new habits formed that can lead to a healthier lifestyle.

Studies clearly show that our behaviors produce the results we see in our lives. If you don’t like the results, then change the behaviors. Yet, this simple concept seems to elude most people who struggle each day to make the right choices and improve their lives.

Consider for a moment the great quote from renowned life coach, Wayne Dyer, “Our lives are the sum total of the choices we have made.” Think about it. The average adult makes more than 4,000 micro-decisions each day – many unconscious and, perhaps, inconsequential, but in the aggregate, along with all of the bigger decisions we make, they can shape our lives in very profound ways. So, the question you have to ask is “what kind of life are my daily choices creating and, if I don’t like what I see, what can I do to change the results?”

So how does this apply to personal finances and building wealth?

Think of all choices as you would interest compounding over time – each one building on the consequences of all previous decisions. The decision to upgrade to a Lexus from the Toyota Solara; the sudden urge to splurge on the latest flat screen TV; choosing to vacation in the Swiss Alps instead of Lake Tahoe; or simply stopping each day to buy a latte, may all seem innocuous and affordable; however, in the aggregate, and over a long period of time, they can seriously impact your ability to accumulate wealth or impede your spend-down plan in retirement. By reconsidering your choices, you could be saving $1000 every month that can continues to compound at 8 percent, which, over a 25 year period, could add a million dollars to your retirement account.

If you were to track your daily financial choices what would you see?

Do you spend without a budget?
Do you go to the grocery store without a shopping list?
Do you rationalize big or impulse purchases?
Do you constantly monitor your investment accounts, or do you stay focused on your long-term objectives?
Do you adhere to a clearly defined savings plan?

In personal finances, as in life in general, the difference between success and failure is usually in the choices we make each and every day – not some monumental decision that goes bad. Many of the high profile, millionaire athletes who find themselves bankrupt get there, not by making some huge investment mistake (although that is known to happen); rather they arrive there gradually by making bad choices on a daily basis.

Monitor and Measure for Best Results

Everyone likes to keep score.  For most of us, when we keep score, we try to focus on improving the score.  If we incorporate this natural human tendency into a plan to change our behaviors we could see vast improvements in all aspects of our lives, including our health, our relationships and in our personal finances. All it requires is:

Recognize the behavior that needs to be changed

Establish realistic goals (the smaller the better – think baby steps) for the results you want to achieve

Monitor and track your activities (keep a journal; you can also download Smart Phone apps that will help you track spending.

Reward yourself for achieving desired results

Get a financial coach –it’s the most effective way to ensure accountability.

Have you filed for your tax return?

IRS Has Refunds Totaling $1 Billion for People Who Have Not Filed a 2011 Federal Income Tax Return. Read more.

The 5 things I learned from a failed partnership

The saying above is cliché until you go through it, a failed partnership that is. Whether it is a bad romance, marriage, friendship or business partnership, breaking up is hard to do and should be avoided at all costs. Intellectually we all know this and yet most of us at one point or another will probably experience a break up ….so the statistics say. Some of us may experience it more than once and in a few areas of our lives. I have. But with my most recently failed business partnership I realized it was time to put these five things I learned in writing.

1) Don’t become infatuated with the idea of the business relationship. Ask the tough questions, be clear on roles and responsibilities, envision the business 3, 5 years from now and be sure your visions match.

2) Be sure you share important core values. If you are merging a service business, your integrity and clients depend on it. Look at your prospective partners history and their ability to commit to those values.

3) Confirm everything, take nothing in faith. Get good advice, tax and legal and formalize all agreements in fine detail. It will avoid disagreements in the future

4) Spend time on the relationship, not just the business. Commit to regular meetings and be forthright in your feelings of both inequity and appreciation.

5) Don’t sell yourself short. If the structure is one that rewards those who take care of themselves above the partnership, recognize it early and fix it or leave it.

A will is the foundation of your estate plan and it is essential if your financial affairs are to be settled in accordance with your wishes. If you die without a will, or “intestate” as the law refers to it, essentially the state becomes your executor and your property will be distributed according to its laws. Drawing up a will has become so easy, and it is relatively inexpensive, leaving very little reason why everyone shouldn’t have one. The question becomes whether you should have a living trust in addition to your will.

What is a Living Trust?

A living trust, or “inter-vivos” trust, is an estate planning mechanism that enables you to have your property transferred to, and managed by a trust during your lifetime. And, because it is revocable, you can change it at any time depending you’re your circumstance. After your death, the trust becomes irrevocable and all of its provisions must be carried out by a trustee who is designated by you.

The key advantages of a revocable living trust:

Keeps your assets out of probate: The assets owned by your trust are passed directly to your family, thereby avoiding the delays and costs of probate court.

Keeps your affairs private: What goes into your trust stays with your trust, at least as far as your private financial matters. Your will is a matter of public record, but a trust is not.

Keeps things running smoothly: You can arrange for a trustee to manage its assets even after your death in order to maintain the continuity of income from a business or an asset.

Keeps the trust going: In cases, where a trustee in no longer able to perform the duties, your trust can designate successors who can step in immediately.

Revocable Living Trust Basics

Parties to the Trust: A trust includes a grantor (you), a trustee (you, your spouse or anyone you designate), and a beneficiary (typically your surviving family).

Establishing the Trust: A living trust can be set up fairly quickly. It usually requires an attorney to draft and authenticate the trust which is a legal document that specifies all of the grantor’s terms, names a trustee and beneficiary, and then lists all of the trust’s assets. After the grantor and the trustee sign the trust, the title of selected properties and assets can be changed to the trust as owner.

The Life of a Trust

A revocable living trust is a living document that can be changed or revoked by the grantor at any time during his or her life. So, if changes in marital status or other family relationship occur, they can be reflected in the trust. Assets and properties can be added or removed. Trustee designations can be changed.

Your living trust should be reviewed periodically, because after the death of the grantor, it will become irrevocable (if the grantor includes both spouses, it continues as a revocable living trust).

You Still Need a Will

The living trust is the mechanism for distributing your property, however, you still need a will in order to execute the trust. The trust is the primary beneficiary of your will. The added benefit of having a will is that, for any property or assets that might have been excluded from the trust, the will acts as a “catch all” to ensure that all property is distributed according to your wishes.

Additionally, if you need to designate a guardian for dependent relatives, you need a will, because there is no place in a trust to establish guardianship. No matter how large your estate, if you have any concerns with the distribution of your assets, you should consider a revocable living trust. It is recommended that you seek the services of an estate attorney in drafting your trust as well as for periodic reviews.

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