Financial Health 101
July 8, 2008 — Nicole McInerney
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Want To Buy Your First Home But Don’t Know Where To Start?
June 18, 2008 — Nicole McInerney
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Exit Strategy
May 22, 2008 — Nicole McInerney
Who Needs an Estate Plan and Why?
Everyone. A will tells the world exactly where you want your assets distributed when you die.
It’s also the best place to name guardians for your children. In addition to a will, there are plenty of other unpleasantries that make you unable to manage your own affairs for a while — that can go much more smoothly for you and your loved ones if you’ve prepared for them ahead of time.
What Does an Estate Plan Include?
An estate plan has several elements: a will; assignment of power of attorney; and a living will. For some people, a trust may also make sense.
How Much Does an Estate Plan Cost?
Typically a basic will plan costs $300-$2,000.
This includes a will, a living will, a health-care proxy and a power of attorney. More complex plans may include long-term tax planning as well as provisions for a bypass trust to take effect upon first spouse’s death.
So a Will Governs Where All My Money Goes?
Not all of your assets are governed by your will. Things like retirement accounts and life insurance go to the people you name on beneficiary forms. Changing your will or creating a trust won’t automatically change your beneficiaries on these accounts, so make sure you update information on all your accounts.
What is a Living Will and Health Care Proxy?
A living will is a statement of your wishes for the kind of life-sustaining medical intervention you want in the event that you become terminally ill and unable to communicate.
Most states have living will statutes that define when a living will goes into effect. You increase your chances of enforcing your directive when you have a healthcare agent advocating on your behalf.
You can name such an agent by way of a healthcare proxy, or by assigning what’s called a medical power of attorney. You sign a legal document in which you name someone you trust to make medical decisions on your behalf in the event that you can’t do so for yourself.
A healthcare proxy applies to all instances when you’re incapacitated, not just if you’re terminally ill.
Why Should I Assign Power of Attorney?
No one is immune from aging or the loss of mental clarity that may come with it. And you’re never immune to health crises that may leave you unable to handle the business of your life: paying bills, managing investments, or making key financial decisions.
Granting someone you trust the power of attorney allows that person - known as your “agent” or “attorney in fact” - to manage your financial affairs if you are unable to do so.
Your agent is empowered to sign your name and is obligated to be your fiduciary - meaning they must act in your best financial interest at all times and in accordance with your wishes.
There are different kinds of powers of attorney, but in estate planning there are two essential types you should know:
The first is the “springing power of attorney,” which only goes into effect under circumstances that you specify, the most typical being when you become incapacitated.
There is also the “durable power of attorney.” It is effective immediately, and your agent does not need to prove your incapacity in order to sign your name.
An attorney can help you decide which form makes the best sense for your circumstance. In any case, take care in choosing your agent. That person should be competent, trustworthy, willing to take on the burden of your affairs, and financially secure.
Stay On Top of It
A marriage, divorce, or new child or grandchild can change your estate plan. Get the help you need to make appropriate changes and make sure that your wishes never go out of style.
Please contact Dollars & Sense Education to bring our seminars to your company or organization!
Dollars & Sense Education - Raising Your Financial IQ!
www.daseducation.com
nicole@daseducation.com
215-499-3834
Stop Leaving Your Billions Lying Around People!
April 20, 2008 — Nicole McInerneyI recently met two interesting entreprenuers here in Philadelphia, Ben Adams and Armen Karamanian. They founded a company called Fodius. The company is basically a beneficiary notification system. Many people have assets, insurance policies, etc. that because they have not properly updated or kept beneficiaries aware, go unclaimed every year. Fodious makes sure your beneficiaries are promptly notified of their entitled assets.
I think it is a fabulous idea and am anxious to see if it will be adopted by many users! I would be curious to hear people’s thoughts about this company.
Here is the code for 2 months free service when signing up.
BKDM21 (case sensitive)
Please contact Dollars & Sense Education to bring our seminars to your company or organization!
Dollars & Sense Education - Raising Your Financial IQ!
www.daseducation.com
nicole@daseducation.com
215-499-3834
To Rollover or Not To Rollover…That Is The Question
March 25, 2008 — Nicole McInerneyThere are a million and one things to think about when you leave a job for a new one. New office dynamics, tasks and responsibilities, even new lunch options! There is one item that comes with leaving an old job that often gets overlooked. What to do with your previous company retirement account, your 401(k) or 403(b). You have three options: rollover your old account into an IRA account, keep your money in your previous employer’s plan or rollover the old account to your new employer’s plan.
What is one to do? The answer to this question depends on a few things! I present the pros and cons below.
Benefits of an IRA Rollover:
Your Old Plan May Be a Bad Deal - It is truly amazing how many bad plans are out there. Some plans impose atrocious expense rates, wrap charges and other needless costs.
Expand Your Investment Options - Most plans, even the good ones, restrict their participants to a few investment options. Roll your money over into an IRA and you have unlimited options.
Consolidate Your Accounts - By consolidating your old plans into a single IRA you can manage your portfolio in a single account and get complete picture of your investments all in one place. Even more importantly, by rolling out several accounts into one you can sometimes save on expenses.
Avoid the Money Market Trap - In some cases, if your former employer is unable to make contact with you and your previous investment choices in your plan are no longer available, your investments may be placed in some sort of stable principal fund. If you forget to follow up, it may be years before you realize that your hard earned retirement investment is earning 2% a year.
Tracking Your Money - Many plans do not use ticker symbols and are not easily trackable. In many cases this is true for companies whose plans are managed by an insurance company (ING, Hartford etc.) By rolling-over your plan into an IRA you will be able to invest your money in funds for which a public price is posted on a daily basis.
Index Investing - It is amazing that after all this time, most retirement plans offer only minimal index fund investment options.
Benefits of Leaving Your Money in Your Old Plan:
Tax Benefits If You Hold Company Stock - This is beyond the scope of this article but if you have company stock in your company retirement plan, contact a financial advisor before initiating a rollover.
Benefits of Rolling Over Into Your New Employer’s Plan:
Ability to Borrow Penalty Free - This is a highly unadvisable strategy but it is a benefit of an employer plan versus an IRA.
Penalty Free Withdrawals at Age 55 - You must wait until age 59 1/2 to make penalty-free withdrawals from an IRA. To do so, you must terminate your employment no earlier that the year in which you turn age 55.
The decision whether or not to rollover funds is not always cut and dry. Do your research and choose wisely! And remember, a rollover contribution doesn’t count toward annual IRA contribution limits — you can still make your regular contribution. Also, don’t forget to keep investing in your current employer’s retirement plan — at least enough to collect the full amount of your current employer’s matching contributions. Your retired self will thank you.
Please contact Dollars & Sense Education to bring our seminars to your company or organization!
Dollars & Sense Education - Raising Your Financial IQ!
www.daseducation.com
nicole@daseducation.com
215-499-3834
Which Online Travel Site Is Best?
December 31, 2007 — Nicole McInerneyThe Philadelphia Inquirer did a great article today about the big three online travel sites: Expedia, Travelocity and Orbitz.
Expedia emerges as the best.
I summarized the findings below……..
Expedia:
Pros
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Expansive online toolset
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Handles less common foreign routes (including flights within China, India and Africa)
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Some deals available only on Expedia
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No-blackout dates rewards program
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Price guarantee - find a better rate online within 24 hours and they will refund you your ticket + 50 travel voucher
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Lowest booking fees - $5.00 and in some cases free
Cons
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No flexible date fare searches
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Does not include some low cost carriers such as Southwest and Easyjet
Travelocity
Pros
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Farewatcher Plus allows up to 10 city pairs - including packages - and will alert you when prices drop.
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Price guarantee - find a better rate online within 24 hours and they will refund you your ticket + 50 travel voucher
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Flexible Date Searches
Cons
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Less robust international travel options than Expedia
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Higher booking fees than Expedia. $5-$7 for domestic flights; $11 for international
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Does not include some low cost carriers such as Southwest and Easyjet
Orbitz:
Pros
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Great Cutomer Service
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Focused on Domestic Travel
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Flexible Date Search
Cons
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No Price Guarantee
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Does not include some low cost carriers such as Southwest and Easyjet
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Higher booking fees than Expedia. $5-$12 for domestic flights; $25 if booking by telephone
Please contact Dollars & Sense Education to bring our seminars to your company or organization!
Dollars & Sense Education - Raising Your Financial IQ!
www.daseducation.com
nicole@daseducation.com
215-499-3834
A Great Way To Cut Your Tax Bill For Commuters
December 12, 2007 — Nicole McInerneyThe WSJ today had a great article about an increasingly popular employee benefit - tax free commuter benefits. These benefits typically enable employees to reduce their taxable income and cut their commuting costs by an average of 30%. The federal tax code allows employers to provide both subsidized and non-subsidized tax-free transit, vanpool and parking benefits to employees. If you commute to work and your company offers this benefit, by all means - take advantage!
How It Works*
1. Pre-Tax Salary Deduction: Money deducted from a paycheck before taxes are taken out saves employees up to $500 each year on their commute! Here’s how it works. For the tax-free maximum of $115 a month for transit ($1,380 a year) or $220 for parking ($2,640 a year), gross salary will be reduced up to $330 a month, but take-home pay falls by only $200. This equals $130 in taxes saved each month—more than $1,500 annually to use for something else! Normally, the pre-tax salary deduction option also saves employers 8% of the amount used for commuting – often much more.
2. Company Benefit: If an employer chooses to pay for Commuter Check, it’s like free parking or a tax-free raise for the employee. Plus, the employer has no payroll tax on this added benefit. For example, giving salary with the same after-tax value as $1,380 in Commuter Checks would cost over $ 2,640—the difference is what’s saved in taxes!
3. Combination Plan: Any combination of the employee-paid and employer-paid options can be offered, as long as the total does not exceed $1,380 a year for transit or $2,640 a year for parking.
*From Accor Commuter Benefits Website
Please contact Dollars & Sense Education to bring our seminars to your company or organization!
Dollars & Sense Education - Raising Your Financial IQ!
www.daseducation.com
nicole@daseducation.com
215-499-3834
Make Increasing Your Wealth Your 2008 New Year’s Resolution
December 11, 2007 — Nicole McInerney
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Why The Spreads are Getting Wider
November 27, 2007 — Nicole McInerneyOn Friday, the 10 year Treasury note fell to its lowest level since September 2005, 4.01%. Typically 30 year fixed mortgages are tightly associated with the 10 year note. As the 10 year Treasury moves, so does the mortgage rate. But the gap between these two rates have widened substantially in June the difference between the 10 year and 30 year fixed mortgage was 2.22% last week as opposed to just 1.52% in June.
Why Did They Move Together To Begin With?
The reason they move together is because of perceived risk. Treasury Notes are considered very safe investments. The Federal government has never defaulted on its bonds. Investors in mortgage backed securities assumed the same. They thought people basing a security on individuals paying their mortgage in a timely fashion was a very secure investment.
Why Is The Spread Getting Wider?
Uh…well…not so much. With a foreclosure nightmare occurring right now, these mortgage backed securities are nowhere nearly as safe as the 10 year Treasury. As a result the spread has widened siginificantly! Risk = reward.
Please contact Dollars & Sense Education to bring our seminars to your company or organization!
Dollars & Sense Education - Raising Your Financial IQ!
www.daseducation.com
nicole@daseducation.com
215-499-3834
Interview By Nina Smith at BlogHer
November 26, 2007 — Nicole McInerneyNina Smith published a 10 Money Questions Interview with me on Friday at www.blogher.org. Enjoy!
Please contact Dollars & Sense Education to bring our seminars to your company or organization!
Dollars & Sense Education - Raising Your Financial IQ!
www.daseducation.com
nicole@daseducation.com
215-499-3834
Subscribe- Financial Health 101
- Want To Buy Your First Home But Don’t Know Where To Start?
- Exit Strategy
- Stop Leaving Your Billions Lying Around People!
- To Rollover or Not To Rollover…That Is The Question
- Which Online Travel Site Is Best?
- A Great Way To Cut Your Tax Bill For Commuters
- Make Increasing Your Wealth Your 2008 New Year’s Resolution
- Why The Spreads are Getting Wider
- Interview By Nina Smith at BlogHer
