“Real World” Personal Strategy Blog

The confusing mess right now

“While we may not be able to control all that happens to us, we can control what happens inside us.”

- Benjamin Franklin

How was your long weekend? Nice to have that kind of family time, eh? And, of course, it’s sobering on this weekend to remember the sacrifice our veterans made. It can be tempting for us to take a look around (oil spills, economic chaos, a mounting debt, etc.), and feel like everything is spinning out of control.

Our veterans have faced much worse–and prevailed.

The “Greatest Generation”, during WWII, had meat on a weekly basis, sugar monthly, and faced a level of sacrifice we haven’t had to even think about. It’s right that we paused to consider the sacrifice of so many men and women who went without so much–so that we could live the lives we have now.

It’s a good reminder, during these turbulent times. Let’s not give up, in the face of our own fights!

Well, moving on, as you may know, Congress hasn’t yet taken any action on a situation. We currently see no estate tax plan in place. It’s a confusing mess…for some professionals.

So, what does that mean for you and your family?

Well, it may not actually mean much–but there are some things which you should always be thinking about, REGARDLESS of the “estate tax” situation. Read on…

“Real World” Personal Strategy

Do More Than “Just” Avoid Taxes

It’s an all-too-common misconception that smart estate planning is all about avoiding the “estate tax”.

And, if that were the case, only the very wealthy would be affected by it–since (until this year, with no current legislation in place) only those with estates carrying over $3.5 million in value weren’t exempt.

You may fall into that category, but even if you DON’T (and if you do), you should be considering the following questions as a family. You see, regardless of what’s happening in Congress, you should focus your attention on what issues you can deal with now:

What are your values and goals?

The key question to ask is, “How do you want your success to affect your children and grandchildren?”

Every family has a different answer to that question, and it’s an extremely important–foundational–component of how we work with our client families. Some planning only takes “money” into consideration. And while that’s certainly an important item to consider, the money is really only there to create a specific destiny, and style-of-life that you’d want to see carried into successive generations.

And it doesn’t require a lot of “it” [money] for you to be able to pass along your most precious values.

I often urge my clients and friends to actually take the time to consider this question, because it may seem obvious on its face…but your answers will often surprise you.

And we’re here to provide any kind of support along the way which you might require. We’re pretty practiced in helping families cut through the clutter of financial statements–and find the hidden gems of core values and relationships.

And THOSE are the only things which really do last forever.

Let’s talk more, if you want to explore these issues. Because regardless of how Congress eventually acts, walking without the right kind of plan can create an even worse mess when the time comes–and it’s not just about the money.

If we can’t help you directly, we’ll put you in touch with the right people who can.

With that, I’ll leave you until next week.

I’m personally dedicated to the success of your family–and to your dreams! Can other tax professionals say that?

President Obama overpayed

The second half of a marriage

“The best and most beautiful things in the world cannot be seen, nor touched … but are felt in the heart.”

- Helen Keller

I’m writing this on Monday, the 17th, and today is Tax Freedom Day!

Wait–didn’t I write that in April? Well…today’s a different kind. Today is the day all of our taxes pay for government spending–INCLUDING the deficit. So, um, it’s a bit later than the other Tax Freedom Day.

Ouch.

Details here: http://www.taxfoundation.org/news/show/26307.html

Moving on from something depressing, into something beautiful, this week I’d like to address something which we sometimes DO have the chance to be pro-active about with our clients–helping you think through finances and passions for the later stages of a marriage and family.

So, this isn’t intended to be marital or direct financial advice, but more as a thinking guide to help you assess your direction.

Feel free to post comments!

“Real World” Personal Strategy

Smart Planning For Empty-Nesters

You’ve probably seen this, as I have: The second half of marriage can either be the best time of life … or it’s the time when a marriage breaks up. The transition can catch unsuspecting couples off guard.

A survey from the book “The Second Half of Marriage” surveyed couples’ responses to the question: “What are the areas that cause the greatest stress in your marriage?” In every decade of life, the number one answer was “finances.” Budgeting, retirement planning, and other money issues can easily ruin what might otherwise be a time of remembering why you got married in the first place.

Times of transition are particularly hard on marriages. As the work of raising a family wanes, couples often look to each other for help in redefining their calling in life. Mothers who have devoted years to caring for children may want to fulfill one of the dreams they postponed decades ago. They may want to go back to school, take on a new career, or be more involved in charitable causes. Husbands, on the other hand, may find they are ready to scale back their careers.

While having a close friendship and spiritual commitment are the most important ingredients of a fulfilling relationship, financial troubles are usually the primary point of contention.

If you and your spouse are approaching this season of transition, take this opportunity to check-up on your retirement money, your marriage, and your mission.

First, get your retirement plan together. A retirement plan, like a spending plan, helps a couple limit their disagreements to only those issues outside the plan.

For most couples, expenses drop significantly after their children finish college. Although saving in the early years of marriage is ideal, when the kids are finally off on their own, couples get one last chance to save for retirement.

These years before retirement are critical in determining whether you have sufficient assets to retire. As your financial planner may tell you, by the first day of retirement, you should plan on having about 23 times your annual income.

Next, reestablish opportunities for communication with your spouse! The period just before the children leave home is often the most difficult on the marriage relationship. After a quarter century, the communication focus of most couples is their children. So create new ways to communicate–outside of the lives of your children.

By the way, know that it’s not your fault. The natural course of relationships is to drift apart. So, don’t be down on yourself if you and your spouse are ‘working’ on your marriage. The fact is, if you aren’t working on your marriage, it is probably headed in the wrong direction.

Finally, find your mission for this new phase of your life. It’s real easy when you are young to think you have all the time in the world for the good things in life. First your job, then the kids (rightfully) occupied much of your time. But, as these responsibilities begin to ease, take another look at the bigger life questions which are so important, even if they aren’t immediately urgent.

There’s a good book you can check out, The Seven Stages of Money Maturity by George Kinder, and in it are three questions to help people see what is really driving them. Perhaps you should take the time to write out some answers honestly and thoughtfully, and then share your thoughts with your spouse:

1. If you knew you would have all the money that you needed, now and in the future, from this moment forward, how would you live your life?

2. If the doctor told you that you would die suddenly and without symptoms in five to ten years, how would you change your life for the time that remains?

3. If the doctor told you that you would be dead within twenty-four hours, what feelings, regrets, longings, and unfulfilled dreams would haunt you?

Let’s be honest: Sometimes the vague answers that we live by are not ultimately satisfying. Reevaluating our purpose can give renewed meaning to our lives and relationships, especially in a season of change.

Again, I welcome your comments…

I’m truly dedicated to the success of your family. Can other tax professionals say that?

Play a bigger game

“So many fail because they don’t get started — they don’t go.  They don’t overcome inertia.  They don’t begin.”

- W. Clement Stone

If it’s not one thing, it’s your mother…

And I hope you did what you could to make her feel special this weekend. Or, if she’s no longer with us–that the other mothers in your life felt blessed.

Look, I normally dislike “Hallmark Holidays”, but there really is something very beautiful and right about honoring mothers (and fathers too). They deserve more than a one-time, greeting-card-fueled day, of course … but at least it’s an excuse for all of us to open our eyes to the vital work of Mommyhood.

Moving on, last week I delivered a bit of a “shot in the arm” for our clients and friends with that video, urging you to get off the mat and keep fighting.

Well, now, I’d like to jump off from that point, and encourage you to think BIGGER about your life…and what you find yourself doing.

“Real World” Personal Strategy

Play a Bigger Game!

Alright, quick confession: I’m not very handy around the house.

In fact, I hardly know how to plug in a hammer. (Ba dum bum, ching!)

But I’ve embraced my all-thumbs ways, and have learned to see why this “deficiency” enables me to think bigger, and grow wealth for my family.

Look, admit that most things you cannot do (with apologies to the very “handy” among us): You probably aren’t going to redo the roof on your house. You likely don’t have a clue how to knock down a wall to open up the downstairs. If the potty stops working and the plunger and Drano don’t work, you’re calling the plumber. Likewise, you pay someone to work on your car because you either don’t know how to or you’d rather have a professional do it.

But one of the common messages which even the wealthiest among us find themselves adhering to is: “Do it yourself to save money.” Don’t hire a maid, don’t go out to eat, don’t pay someone to do your yard. Do it yourself and save money.

Baloney.

I say: “Outsource everything so you can and focus on building your wealth!”

Oh, and it’s not only good for you, it’s good for the world economy. It’s called “comparative advantage” and it’s why you aren’t a landscaper. Or a plumber.

Some people have the time or the motivation to do things other people would outsource. I know plenty of men that just like to change their car’s oil. But I also know people too busy (and productive) to mow their own grass. So you have to decide what aspects of your life are worth outsourcing.

For families & mothers, there’s plenty that you perhaps *shouldn’t* outsource: raising your children, engaging with charities, loving your spouse (!). But there’s likely to be plenty of tasks which sap your energy, drain your productivity (in the home AND in your work pursuits) and can be successfully handled by an hourly earner.

Personally, I hope to make it possible that I’m so productive I have to outsource just about everything. Said differently, I want to just work, help clients and pay people to do just about everything else for me.

What about you? …

I’m truly dedicated to the success of your family. Can other tax professionals say that?

Spring cleaning for your mind

“While we may not be able to control all that happens to us, we can control what happens inside us.” – Benjamin Franklin

May Day! May Day!

Alright–it’s not a distress signal…it’s more like the opportunity to enjoy the shift in seasons…the shift in what’s possible for you. Let the warming weather ENCOURAGE you to remember what’s possible.

And, when (not if–when) you’re feeling like you want to give up … watch this:

http://www.youtube.com/watch?v=Lf5Leeh9JQo

And bookmark it.

Look, I’m not a motivational coach–I’m a tax professional.

But I KNOW that our clients and friends face the same “junk” every season–doubt, fear, worry. And finances can play such a big role there. By the way–this is something that even the wealthiest among our clients *still* deal with.

Don’t believe the hype that having more zeros in your bank balance eliminates all of your problems.

Instead–pick up, pray, do what you need to do to dust off the detritus of fear and doubt…and step into what you were made to do.

Now…onto something a bit more practical (though that may actually be arguable–how much more practical can you get than healing your mind?): This is the time of year (after tax season), where it makes a whole lot of sense for you to clean things up…not just in your mind, but how about your files?

Roger Menden’s

“Real World” Personal Strategy

What To Do With Your Records (& Why)

Now’s the best time to get rid of unnecessary paperwork, as well as to ensure that you (and WE) caught everything for your ‘09 tax return.

In my last email I discussed what you can do if you need to amend, so let me know if you didn’t receive that article. But in the meantime,  here’s a guide for how long to keep your records…

Taxes: Seven years

Reasons Why:

There are three, actually:

1) The IRS has three years from your filing date to audit your return if it suspects good-faith errors.

2)  The three-year deadline also applies if you’d like to make some sort of amendment because you discover a mistake in your return and can claim a refund.

3)  The IRS has six years to challenge your return if it thinks you underreported your gross income.

All this adds up to keeping that info for seven years. Beyond that, there’s no reason–except for posterity.

IRA contribution records: Permanently

Reasons Why: You’ll need to be able to prove that you already paid tax on this money when the time comes to withdraw.

Bank records: Usually just one year

Reasons Why:

Those related to your taxes, business expenses, home improvements and mortgage payments will obviously need to be included for next year’s taxes. But unless there is some sort of emotional or posterity reason, get rid of everything after one year.

Brokerage statements: Until you sell

Reasons Why:

To prove whether or not you have a capital gain or loss for tax purposes; after this point, shred it.

Household Bills: From one year to permanently

Reasons Why:

When the canceled check from a paid bill has been returned, you can shred the bill with a clear conscience. However, bills for big purchases — such as jewelry, rugs, appliances, antiques, cars, collectibles, furniture, computers, etc. — should be kept in an insurance file for proof of their value in the event of loss or damage.

Credit card receipts and statements: 45 days/Seven years

Reasons Why:

Some families don’t even bother to match up their statements, but if you do so, shred the receipts once you’ve verified everything. There’s no reason to keep everyday receipts beyond this point. For tax-related purchases, you need only keep the statements for seven years–after that, shred it, baby!

Paycheck stubs: One year

Reasons Why:

This is to verify that when you receive your annual W-2 form from your employer, the information from your stubs match. If so, shred all of the stubs…if not, request a corrected form, known as a W-2c. After that’s been handled–shred.

House/condominium records: Six years/permanently

Reasons Why:

You’ll want to keep all records documenting the purchase price and the cost of permanent improvements — such as remodeling, additions and installations as well as records of expenses incurred in selling and buying the property, such as legal fees and your real estate agent’s commission, for six years after you sell your home.

Holding on to these records is important because any improvements you make on your house, as well as expenses in selling it, are added to the original purchase price or cost basis. Therefore, you lower your capital gains tax when you sell your house.

I’m truly dedicated to the success of your family. Can other tax professionals say that?