Do I need a living trust?

Most people do not think about estate planning for numerous reason, not enough assets, no time, do not care, and so on. I am here to tell you EVERYONE needs to think about estate planning. One way to take care of the majority of your estate planning is by setting up a Living Trust. I have listed below the reasons why you need to have a Living Trust .


1. Avoid Probate: Do you want the courts telling you how to divide up your assets or who will take care of your children? Well that is exactly what will happen if you die and do not have aLiving Trust in place.

2. Avoiding Estate Taxes: You can set up certain trusts to avoid estate taxes at the time of death.

3. Confidentiality: When you die and have no will or trust in place. your estate will go into probate. In probate your assets are public record for everyone to see what you owned. If you are like me I do not want any lawyers knowing what I own.

4. Conservatorship: With a Living Trust you can name who you want to take care of you when you become incapacitated. Without one the courts will appoint one for you.

5. No recordkeeping: Some people think it takes a lot of time to maintain a Living Trust. Once you transfer your assets into one that is it. You do not have to do anything more.

Here a few reasons why you need to set up a Living Trust today. You owe it to yourself and and your love ones.

Guest Blog - The Market's Message Is 'Beware Inflation' - CNBC

Guest Blog - The Market's Message Is 'Beware Inflation' - CNBC

Should I invest in an annuity?

I hate getting asked this question. The reason why is usually someone has been speaking to the family insurance person. These products get pushed so hard by the insurance industry and they are a completely flawed product. the only person annuities benefit are, you guessed it, the insurance industry. Let's go over why these are wrong for you:

1.   Commissions: You will be paying a hefty commission to the agents. This may upwards to 12%. Now you know why they push these so hard.

2.   Surrender Fee: So you get suckered by a smooth talking salesperson and you want out.  Not so fast, you will have to pay a fee to close the annuity.

3.   Early Withdrawal Penalty: If you are younger than 59 1/2 and want to make a withdrawal you will have to pay a 10% penalty.

4    Loads:  You will have to pay a load to invest in their mutual funds.

5.   Taxes: Gains on your investments are taxed as ordinary income which is higher than capital gains rates

6.   Estate Planning: here's no getting around the income tax due on annuities. In fact, if you die with money remaining in your annuity, your beneficiary will inherit all the taxes that you have deferred. Compare this to a mutual fund or ETF, whose basis is stepped-up at death. In that case, your beneficiary would owe no taxes on the gains. Both types of accounts — annuities and mutual funds — are liable for federal estate taxes on anything over the federal estate tax exemption.


Do yourself a favor and next time a salesperson recommends an annuity, RUN!!!!  

Is this mutual fund any good?

When I hear my clients ask me this question I do not think they realize they are actually asking two separate questions. One, is the mutual fund they are asking about a good sound investment? Two, is this mutual fund right for me? You need to remember this when researching mutual funds for your portfolio. Let's examine a little closer:


1. Is this mutual fund a good sound investment? There are thousands of books and articles that can show you how to answer this question. I am not going into here. But you NEED to do your own due diligence on whether the mutual fund is a good investment or not. Only when you have convinced yourself that it is truly a good investment can you ask yourself the second question.

2. Does this mutual fund fit in your portfolio? The first thing you must do is figure out your portfolio allocation. How much do you have in large caps, small caps, growth, value, international? You get the picture. Now, by adding this investment will it overweight you in a particular category? If so, can you sell another mutual fund in the same category to make room for this one? Will this mutual fund bring too much risk into your portfolio? If so, this mutual fund may not be right for you. You need to be sure that the new mutual fund "fits" in your allocation.


With these two simple questions, you can decide for yourself if a mutual fund is good for you.


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Here is another reason you need to freeze your credit

I stumbled on this article how this guy got identity stolen. Please I have repeated before do the extra effort and freeze all 3 credit reports. You can also sign up for Life Lock.

Link to article

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How do I chose a tax preparer

I get this question all the time. How do I chose a tax preparer? Well, who best to go to get the answer? The IRS of course. Here is the link to the website where they give points to keep in mind when choosing a preparer. Of course, i have to out in a shameless plug and you can always use me. You can contact me by clicking on the button on the left.

What is new with the 2010 tax code?

There have been some significant changes to the tax code this year. Smartmoney has put them together in an article below:

_____________________________________________________
 By now, some of you may already have your 2010 W-2 and 1099s in hand. If not, it won't be long. So it's not too soon to think about starting your 2010 Form 1040. Before you begin, there are some key changes to note. Here's what you need to know.

Read more: Here

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How do I protect my privacy?

It seems the older I get the more paranoid I get about my privacy. It is with good reasoning. Have you looked at the world today? Credit fraud, identity theft, stalkers, home invasions. This does not even factor in the amount of privacy we are handing over to the government all in the name of security. Our credit is one of the most important things we have in the achieving financial independence. I have listed below some things you can do to protect yourself and your privacy. Some are a little extreme but are worth it in the end. You may also think I am being paranoid. I can give a few examples where people wished they had done these things because now they have individuals stalking them or have had their identities stolen.  


 Mailing address: This is the most important one. If you are going to one of these items it would be this one. Repeat after me, never associate your name with your personal residence. Have all your mail forwarded to a mailbox facility close to your home like a Mailbox Etc. or a UPS store. Do not use a PO Box because most places do not accept a PO Box as a mailing address nor do they accept UPS or FEDEX packages. A person can easily find where you live by getting one of your personal records. You need to change all records, utilities, credit cards, banks, doctors, mailing lists, relatives, brokerages, insurance companies. All of them!!!

Social websites: Do not put yourself on these websites. I am talking about Facebook, Myspace, Twitter, Linkedin period. If you must keep up with Aunt Sally set yourself up and set very strong privacy settings. Also, do not play games like Farmville or Mafia Wars. If you want to do this , set up a false account not under your name. This is your chance to be the person you always wanted to be!!!

Photos: There is a little known fact than some cameras and mostly all mobile phones record a small bit of information of each photo. This bit of information can tell anyone where the photo was taken. You can imagine all those photos you upload to all your social web sites can be traced back to where they were taken. Those photos can lead back to your exact location.

Credit: If you have a credit card and use it with any regularity odds are you have had it comprised. In addition, identity theft is running rampant. The best way to stop it is by taking away what the thieves want. YOUR CREDIT. The easiest way is go to each of the three credit reporting agencies, Experian, Equifax, Transunion. Each of them offers the service of freezing your credit where no one can apply for credit without you unfreezing your credit. Freezing and unfreezing your credit is very easy. You can do it online or by phone. An easier method you can sign up with a company that does it for you, e.g. LifeLock.

Mobile Phones: Here comes the paranoid part.With the proliferation of apps, also comes the giving away of your privacy. Phones can not only give away your location and your personal information but everyone’s information in your contact list. One way to stop this in its track is not to use a prepaid mobile that is paid for in cash. This means the actual purchase and the monthly charge. Also, store nothing on the phone and take the battery out of it when you are not using it.


These are just a few methods you can use to protect your privacy in today’s environment.








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Why You Should Buy That Home Now

Why You Should Buy That Home Now

Should I take out a 401k loan?

Dear Financial Handyman: I see rates on 401k loans are lower than my mortgage rates. Should I take a 401k loan to pay off my mortgage? John


John, I can understand how these lower rates look attractive but rates are not the whole story. There are reasons why taking out a loan on your 401k should be your LAST resort for funds. I have assembled a list of reasons below:

Borrowing on your Retirement: Those funds are there for only one reason. Your retirement. If you dip into it for purchases or paying off debt you are just transferring that debt until you are older.  

Fees:  Most 401k plans charge fees to initiate the loan and possible charge a annual fee to keep up with the record keeping

Employment Status: Did you know that if you lose your job or leave your job for another one you will have to pay that loan back in full before the end of the year. If you do not it will be considered a distribution and subject to taxes and penalties. How that lower interest rate look now?

Taxes: Those funds your employer is deducting to repay that loan is after-tax. You lose the tax deduction plus you have to pay taxes on the loan payment. 

Golden rule: You are breaking the golden rule: Pay yourself first!!!!!

Living beyond your means: If you need to dip into your retirement savings, this may be a sign you are living beyond your means. You may want to look at your entire financial picture to see where you are going wrong. You may want to post a question to me, your Financial Handyman.

There are extreme circumstances in life where you need to tap your 401k plan, but it needs to be your last resort.

The king of home equity fraud: Full version

I had to repost this article to show you how easy it is to get information on anyone for a few dollars. You must protect yourself. I will be writing an article later on the steps to protect yourself and your personal information in the coming weeks.


The king of home equity fraud: Full version

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How do I extend the life of my car?

One of the largest expenditures of our life is a purchase of a car. As you all know I am a large advocate of driving your car until it dies.  I found this article over at Bible Money Matter. You can find it here.

5 Financial Miscues in the Name of Love

Are you in love? Great! Now get your head straight. I found this article about 5 things you may want to do with your significant other, but think twice. 

                      True love means never having to say you're sorry. Or, alternately: "I'm taking you to court because you've ruined me financially."When a couple is in love (or at least think they are part of something destined for "happily ever after"), the temptation is to share and share alike. What's mine is yours -- "mi dinero, su dinero." More

What tax deductions do I get for being unemployed?

Dear Financial Handyman: I have been unemployed for over 8 months. I was wondering what tax deductions are available for me?  Chris


Well Chris, first I am sorry to here about your unemployment. There are a few tax deductions for job hunters like yourself. I have listed a few below:

1. Employment agency fees: If in a later year your new employer repays your agency fees, you must include the amount in your income up to the amount of the deduction you claimed earlier. If your employer pays fees directly to the agency, you don't have to include them in your income.
2. Resume preparation: typing and printing, postage, long-distance charges, advertising, and photographs required for your resume.
3. Travel: airfare, mileage (some automobile expenses have been approved), meals (based on either actual expenses or standard federal per diem rates) and lodging (actual expenses only).

What should I ask my future partner about money

Valentine's Day is right around the corner. Are you thinking about popping the questions? Is you boyfriend going to ask you to marry him? Well, it is best to get a few questions answered before you walk down the aisle. Money Magazine has put together a few questions to ask each to make sure you are both on the same page financially. You can find it here

How to live a longer, happier life?

OK, so you are asking, Tom what does this have to do with personal finance? Well, my friends, if you are six feet under who cares how much money you have in life. I found this article from the man who brought the Blue Zones. The Blue Zones are 5 places in the world where people live the longest. He has written this article on the common traits all these these people have. You can view them here

What should you do in a car accident?

The blizzard of 2011 as made its mark on me. I was driving this morning to the gym and I got into an accident. No one was hurt, but I thought it would be appropriate to post what you should do in case you find yourself in an accident. This list comes from State Farm

Prepare the trunk of your car for a possible accident as well by making sure you have a set of cones, warning triangles or emergency flares. Make sure you also have:

• A pen
• A card with relevant medical information for you and your family.

What to do after an auto accident:

1. Stay as calm as possible.
2. Check for injuries. Life and health are more important than damage to vehicles. When in doubt, call an ambulance.
3. If the accident is minor and there are no serious injuries, move cars to a safe place, rather than risk being in moving traffic.
4. Turn on hazard lights. If warranted, and possible, use cones, warning triangles or flares for safety.
5. Call the police, even if the car accident is minor.
6. Notify your insurance agent about the accident immediately.
7. Don't sign any document unless it is for the police or your insurance agent
8. Make immediate notes about the accident including the specific damages to all vehicles involved. Use the form below as a guide. If the name on the auto registration and/or insurance policy is different from the name of the driver, establish the relationship and jot it down. Get witness information, if possible, as well.
9. Be polite, but don't tell the other drivers or the police that the accident was your fault, even if you think it was. Likewise, do not accuse the other drivers of being at fault at this time. Everyone is usually shaken up immediately after an accident, and it is wise to state only the facts. Limit your discussion of the car accident to the insurance agent and the police. Even if the facts are embarrassing or detrimental to you, be truthful.
10. If you have a camera handy, and it is safe to do so, it may be helpful to photograph the accident scene.
11. If possible, do not leave the accident scene before the police officers and other drivers do.
12. Finally, remember that while getting the facts is very important, investigating the accident should be left to the police officers and the insurance companies.

Please drive safe but in case please follow these steps.

How do you get interest paid to you

I came across this article on how to get interest to start flowing to you rather than away from you.

Many of us bemoan the evils of interest. This is because most of us are paying it. And, of course, when you are paying interest, it means that your money is making someone else rich with interest working for them instead of you. The key to making interest your ally is setting things up so that you are that someone else. Here’s how to do it:
More

What can I do with the payroll tax holiday?

The White House and Congress past some key legislature last year.  The piece was passed during the lame duck session of Congress included a provision to provide a payroll tax cut for 2% on the amount that normally is allocated to the Social Security program. Previously, both employees and employers contributed 6.2%. This year that level is going down to 4.2% for workers, while the employer contribution remains the same. So what are you going to do with it? You could go out to your local electronics store and buy a brand new Ipad and put it on your credit card. Why not you can make payments? Well I have three other options:




    Pay down debt: Take that extra money and apply it to highest interest card card.


    Save It: You can place the extra money and place it in a saving account. An even better idea if you have direct deposit, automatically have it withdrawn. You will never know you had it.


    401k: Keeping withe saving theme. Why not take that extra money and place it in your company's 401k plan. No 401k plan? How about adding or opening a Roth IRA and put it in there




You can use this temporary pay increase and have fun with it or help you achieve your goals of financial independence.

Should I get a reverse mortgage to use as a line of credit?

(Money Magazine) -- My wife and I are 62 and just starting to take Social Security. We're thinking about taking out a reverse mortgage and using it as a line of credit. The extra money could come in handy. What do you think? -- S.W., Red Oak, Texas

via money.cnn.com

What can I do with my 401k?

Q: I have started a new job with a great company which offers a 401k. Unfortunately, I am not eligibile to particiapte until I am employed for 6 months. My previous employers has informed me I need to move 401k funds I have with them immediately. What can I do with it?

A: I have to commend you on starting and funding an employer 401k plan. Most employers want to remove terminated employees out of their plans as they have to pay administrative fees for these accounts. You can see how these costs can add up. So, what can you do withe these funds.

       Keep it where it its: Your previous employer more than likely had a financial service     company adminstrating their plan, e.g. Charles Schwab, Fidelity, Merrill Lynch. These companies would be more than happy to help rollover your account into a rollover IRA. A rollover IRA is nothing more than a regular IRA with a fancy name.

       Transfer It: As in the previous, you can transfer the account to any brokerage company or bank. Just contact any one of them and they have rollover kits that will help you facilitate the transfer.

      Cash out: I hesitate to list this as an option, but technically it is. You can ask the administrator to send you a check for the amount in your account. With this said, you need to keep in mind you will have to pay income tax on the amount and in most cases a 10% penalty. I do not recommend this option and should be used as a last resort.