Annual Financial Action Plan

By: Amy Irvine, CFP®, EA, MPAS®, CCFC

Get Financially Organized in 2021

By: Kerrie Beene, CFP®

5 Ways to Get your Financial Life in Order

By: Kerrie Beene, CFP®

Happy New Year!  With 2020 in the rearview mirror, we are hoping for a great 2021.  

January is a great time to think about getting all of your financial paperwork organized.  Organizing will create a calm space, save time in the long run, and help prepare for tax season.  Below are 5 ways to help get your financial life in order.

Organize all your Paperwork and Accounts

• Organize all documents that are kept in physical form.  While we like to think we live in a digital world, often we still have important documents that need to be kept in a file in our home.  Take the time to get these files organized appropriately.  

• Organize all documents stored online.  Some documents can be stored in an online storage system such as google drive.  We recommend creating a secure organized folder system for this as well.  

• Utilize a password app for all of your passwords.  One of the biggest struggles clients have is remembering the password for all of their accounts.  We recommend utilizing a system such as LastPass to create a secure place to store all of your passwords.  Just remember to create a secure password for your password app login.  Once you have your passwords in one place, it is a lot easier to stay organized when you need to login to those accounts.

Create a Financial Snapshot of where you are Today

• Create a list of all of your assets and liabilities. Assets are anything you own and liabilities are anything you owe.  

Assets Liabilities

Checking Accounts             Mortgage

  Savings Accounts             Auto Loans

Retirement Savings         Consumer Debts

Investment Savings              Personal Loans

      Real Estate           Student Loans

Autos

• Calculate your Net Worth.  Net Worth = Assets - Liabilities. 

Track your Expenses

Create a Spending Plan (a.k.a. Budget).  This may be one of those dreaded things but getting control of your spending can be one of the most calming exercises you can do this year.  There are a lot of resources available to assist in creating a spending plan. 

• There are online tools such as mint.com and YNAB. These connect to your accounts and do some of the tracking for you. It will allow you to change how transactions are classified and create an online budget.  This may be a good option for you.  

• We have found the most success with clients who utilize an excel spreadsheet or google sheet.  This allows you to become more aware of your transactions and categorical spending because you are doing the categorizing yourself.  As we enter those expenses, we are rethinking whether the purchase aligns with our goals.

• We are very excited to announce that we have created a very easy to use google sheet called the Mindful Spending Plan.  This is available for our current clients and can be a service by itself as well.  We are also creating a course that includes the google sheet and videos on how to use it that comes out on January 15th.  

Create Savings Goals and a Debt Paydown Strategy

• Savings Goals allow us to have the cash available when needed and not use credit cards for those expenses. Below are a few example savings goals;

  1. Emergency Fund - 3 to 6 Months of Living Expenses in case of an emergency such as a job layoff or temporary disability

  2. Larger Expenses - Prepare for larger expenses such as auto expenses, home repairs, etc.

  3. Holidays/Vacations - Begin saving for holidays and vacations as your priorities allow.  Planning out how much you can save each pay period will allow you to create an appropriate spending plan for these expenses

• Debt Paydown - creating a debt paydown strategy will allow you to focus on getting rid of the unnecessary debt.  This will free up cash flow to fund some of the fun savings goals.  As part of our Mindful Spending Plan, we have included a debt paydown plan.  You can also find resources online to assist in creating a debt paydown strategy such as debt snowball or debt avalanche utilizing this calculator.

Automate, Automate, Automate

• The more you can automate bills, transfers to savings, and debt paydown, the more likely you will accomplish your goals.  

• Most bills can be set up to be automatically taken out of your checking account. Make sure you have prepared your spending plan and the money will be in the account. 

• Transfers can often be set up through your online banking website.  Once you have created your savings plan, calculate how much time until you need the money and create a weekly, bi-weekly, or monthly transfer to meet those goals

Happy New Year and Cheers to 2021!

Reflecting on the Positives in an Unusual Year

By Kate Welker, CFP®

Can we all agree this year has just been weird? As we head into the end of the year and the holidays it is a natural time of reflection and a slower pace and I believe we all need to embrace that, especially this year. Our holiday celebrations look a little different than in the past. Many of our readers will not be able to see their family, may be struggling financially, or may just be overwhelmed with the changes we have seen. Along with all the craziness and negatives that the world is focused on, there have been positive opportunities this year! I want to encourage you to think back on the year and find the positive moments that might not have happened if we hadn’t been in a global pandemic. Regarding your finances I want you to look back at the year, and decide how you want to move forward.

Below are some of positive changes I have seen this year in my life and I have heard others say the same things.

Family Time - Forcing the world to hit pause changed the way the week looks and families interacted. On my side we went from rushing out to door in the morning, rushing home from work, running to dance, cub scouts, softball, board meetings and managing to squeeze dinner and a few moments together in there. When everything went on pause it felt a little like being on a merry go round that suddenly stopped and threw you off (think more the terrifying metal playground merry go round than the gentle amusement park style) and you had to lay there and catch your breath for a minute. Switching everything virtual meant that by evening everyone was tired of their devices and we made meals together, sat at the table to eat, played games and went for walks, so many walks. My yard looked the best it has in years and I also have the strongest Mario Kart game I’ve had since I was 12. As things started to get a little back to “normal” we have really rethought our lifestyle and are being very conscientious of the obligations that will get us back into the rush and run that was exhausting.

Exercise and Nature - I have found the time to get into a great habit of making a workout a part of my day. My husband and I have been able to do this together, it keeps us accountable, and it’s a bonding experience. Sitting as much as I do, it has made me feel so much better to know I’m doing something good for my body to start the day. Watching the increasing numbers of walkers and runners head down my street and the kids out riding bikes I know more people have had a chance to get outdoors to enjoy nature and move more. With the normal entertainment and amusements closed we explored the state finding parks and open areas where we could still maintain safe guidelines and might not have thought to explore before.

Finances - I want to make sure I don’t discount the financial difficulties many people are facing this year as a result of the pandemic and resulting ripples, and we encourage you to reach out for assistance if you need it. For others this year was an opportunity where you may have found yourself bringing in additional money from stimulus sources or staying home more meant you saved more money. We have seen more clients that feel like they have the time now to focus on their finances and their overall financial wellness.

Reflecting on finances is always important and especially important after this year. Set aside a little time for yourself to look back at the decisions you’ve made this year and the progress or backwards steps taken. If there have been some poor decisions, face them and admit to yourself what you did and how you can change that, but don’t continue to beat yourself up about it. Talk about how you can prevent those same poor decisions from happening again and set yourself up for success in the next year. If you had really positive changes talk about why that was and ways you can continue to move that momentum forward.

Enjoy your holiday and set aside a little time for reflection. We’d love to hear any positive changes this year has had on your life or ways you are changing your financial decision making.

Do I Need a Therapist and How Do I Find One?

Over the course of this year, many clients have expressed anxiety, feelings of being stressed out, and lost. So we reached out to a local therapist to get her two-cents on how to hire someone if you feel you need someone to talk to.

Guest Post by: Janice Vitale, LCSW-R

The holidays hold many different feelings for people. For some, the holidays have positive feelings associated with them. For others, the holidays are stressful, or they have complicated feelings including sadness, grief, or loneliness. Whether or not you are a fan of the holidays, they are likely going to be stressful this year due to the pandemic. There is a lot of grief and loneliness as people mourn traditions they aren’t able to participate in this year.

The incidence of anxiety, depression, and drug/alcohol use has increased during the pandemic. If you have noticed that you are having emotional/mental health symptoms that are getting in the way of your work, relationships, family, hobbies, sleep, your health, or any of your normal activities and these symptoms have been happening for at least 2 weeks, it is probably time to get a therapist and/or to talk to your primary care provider. Finding a therapist is a great way to get additional support, have a confidential and judgement free zone to discuss what is on for you, and to develop strategies and coping skills to help you manage your emotions.

 Finding a therapist

Finding a therapist can feel a bit daunting if you’ve never done it before. There are several strategies you can use to find a therapist.

• Psychologytoday.com - They have an easy to use portal where you can search for a therapist who treats your specific symptoms that you’d like help with. Each therapist has a detailed profile telling you about themselves and their practice. This can give you a sense of the person. You can also refine your search to show only therapists who take your insurance.

• Get recommendations from medical professionals, friends, or family,

• You can google “therapists” in your area.

• Contact your insurance company to see which therapists take your insurance.

A note on insurance: there is a growing trend among therapists to have private pay practices and not accept insurance. If you can afford it, I recommend looking at these therapists too. If your insurance policy has “out of network coverage” your therapist can provide a detailed receipt that you can submit to your insurance company for at least partial reimbursement.

With the pandemic, there have been a lot of changes in how therapists provide services. Many therapists are seeing clients using secure video platforms or by phone. The good news about this is you can literally see your therapist from the comfort and privacy of your own home or office. With teletherapy you can also see any therapist in the state in which you reside. Some people are skeptical about online therapy; I was too initially. I’ve been a therapist for 15 years and the work that clients have done with me over the last 8 months on video calls has been just as healing and impactful as when I met with people in person, pre-pandemic.

Most therapists in private practice will offer a 15 to 20-minute free consultation by phone or video call. I think that this step is a very valuable part of the search for a therapist.  During the consult you can find out the following information:

• Are they accepting new clients?

• Are they seeing clients in person or by teletherapy?

• Do they have time slots that meet your needs?

• Did you feel comfortable during the consult? Studies show that having a positive, trusting, therapeutic relationship with your therapist is the most influential factor in successful outcomes in therapy.

• Do they have knowledge in helping people with the symptoms you are experiencing?

• Do they take your insurance and/or what is the fee for a session?

 So, if you have been thinking about therapy, do it. Life is too short to spend it being anxious, depressed, and struggling. Reach out and start moving toward positive change.

 www.Janicevitalecounseling.com

607-414-0640

Finding Ways to Save for College

By  Kate Welker, CFP®

It is again the back to school season. Preschool through college school will look different for students this year, but one thing is the same. The changing of the year, feeling of a fresh start, and thinking about the future year ahead. For older students we are discussing college plans and for those of you with young children you may be thinking about planning for your children's eventual college. With a growing student loan debt load in this country how to pay for college is a concern we like to address. I wanted to share some thoughts on a few unique ways to think about saving for education.

Childcare Expenses- If you are paying for daycare or after school programs this is a large expense you are already budgeting for and handling with your current income. Once your children are old enough to not need that expense, convert it and start putting that same amount into their college savings. Depending on the age of children and area you live most people are paying between $8,000 and $15,000 a year for daycare. As that number decreases and then goes away that is a large amount to be contributing each year. 

Side hustle- I've had a few friends recently start a small business on the side and nickname them "college fund" jobs. They are committing to putting all of the earnings from this new venture into college savings. 

Scholarships- This is a huge opportunity for your student to start earning funds for their education. This takes time and diligence on their part, but starting in their freshman year have them look for these opportunities. Have them search out competitions that focus around their strengths such as writing, debate, or technology.

Saving on College- Combined with saving for college consider ways to save ON college expenses. Being aware in advance of the full expenses of an institution along with the scholarship and aid available should make a major impact on your choice of where to attend. If there are scholarships available for a particular GPA or test score that is a goal to work towards. 

There are many other creative ways to fund that education goal. We enjoy working with our clients to find their solution. Once your child is in high school (9th grade is not too early!) we offer college planning services and in depth analysis that will compare college costs, grants available, and the total net cost. Contact us for a consultation! 

The Pandemic Has Changed How Parents Save for College - Here’s How to Get Back on Track

By: Ann Arceo

As parents, we want what’s best for our kids and education is top of the list for many of us. Of course we had no way of knowing that this year would disrupt and change so many of our plans. From an economic downturn to school closures, 2020 is a year we won’t soon forget. As we’ve scrambled to adjust our family routine to make this school year work, it can be easy to put off planning for a future goal like college that’s years down the road. 

If you can relate to that feeling, you’re not alone. A recent CNBC article highlighted a survey showing “16% of parents saving for college paused their contributions” while 13% reduced contributions and 17% planned to withdraw funds” because of financial concerns due to the pandemic. Worrying about your finances during this time is certainly understandable, but the one rule parents should keep in mind when saving for college or any major financial goal is that time is one of your biggest assets. By starting early, you’ll ultimately need to save less given that your money will have time to grow. So if you’ve started saving and stopped or even if you haven’t started saving at all, the 4 steps below can help you make a plan and get on track. 

Set up a 529 Plan 

A 529 Plan is a college savings account that offers special tax benefits. You contribute to the account with after-tax money. As the account grows, earnings are tax deferred and withdrawals are tax free as long as you use the account to pay for qualified expenses related to education. Each state offers their own 529 plan, but that doesn’t mean you’re limited to your state’s plan. 35 states offer an income tax deduction or tax credit for residents who contribute to the state’s plan. You should consider not only the state income tax deduction but also the fees that the plan charges as high fees can hurt the growth of your savings. 

Most plans make it easy to invest the money you contribute by offering age-based investment options that will automatically become more conservative as your child nears college age. There are several other features that make 529 plans an attractive option such as the fact that there is no age limit for using the money in your account so it could be applied to graduate school if your child continues their education. 

The drawback of a 529 plan is that in order to avoid taxes and penalties the funds must be used for qualified expenses. If your child decides not to go to college you can change the beneficiary on the account making the funds available to a sibling. Also, taxes and penalties will only apply to the growth on your account, not the principle balance. For example, if you contribute $10,000 to a 529 plan and it grows to $12,000 then you have $2,000 in earnings on the account which could be taxed and penalized if the funds are used for something other than qualified college expenses. 

Start Early & Make Saving Automatic

There is no denying that college is expensive, and that doesn’t seem likely to change anytime soon. It can feel overwhelming to think of saving thousands of dollars, but if helping your child pay for school is a goal on your list then starting early and saving consistently can make a big difference. As a mom of a 2 and 4 year old, I get how hectic life with little ones can be. Try to set aside a little time to establish your child’s 529 plan and set up an automatic contribution and investment. For example, you could set up a $50 monthly contribution (more or less depending on your goal and budget) that automatically pulls from your checking account, goes into the 529 plan, and is then invested in the age based investment option. You could increase the contribution amount each year as your income grows. This will make saving easy and automatic and before you know it you’ll be well on your way to funding your child’s education. 

Don’t Let Your College Savings Fund Become Your Emergency Fund 

No parent who has worked hard to establish a college savings fund for their child wants to dip into that fund to pay for an unexpected expense. In order to avoid that scenario, It’s important to prioritize saving for an emergency on top of building a college savings account. Be realistic about your budget and what you can afford to save for college. Paying down high interest debt, building a solid cash cushion, and saving for retirement should also be priorities. 

Set a Goal & Review it Regularly 

Saying that you’d like to pay for your child’s education is a wonderful dream, but if that dream is ever going to come to fruition then you need an actionable plan. There are several online college savings calculators like this one from SavingForCollege.com (https://www.savingforcollege.com/calculators/college-savings-calculator) that can help you set a savings goal and research 529 plans. 

Here at Rooted Planning Group, we also work with clients to help them with college planning from setting up an account, to selecting investments, to determining how much you should save. Whether you’re in the newborn days of parenting or navigating the teenage years, we can help you build a plan that will work for you and your family to make your financial goals a reality. 

About Ann Arceo: Ann Arceo has been working in the financial planning industry for over 10 years. She began her career in financial planning at PartnersInWealth, a wealth management firm based in Houston, Texas, which caters to high net worth clientele. She worked with the firm’s president to develop a new method of training to help advisors learn to deliver technical financial plans in an easy, "plain English" format that clients would understand.

​She then worked for LPL Financial, an independent broker dealer, where she earned her Series 7 & 66 securities licenses. She worked alongside a branch manager creating financial plans, account summaries, and investment performance reports for high net worth clients.

Ann also has a passion for writing, and her financial articles have been featured on Investopedia.com, a website which has 20 million unique visitors per month. She has also written for ReadyForZero.com, BudgetTracker.com, and has been quoted in articles for Forbes and U.S. News & World Report.
 
Ann holds a bachelor’s degree in Business Management from the University of Houston, Victoria. She lives with her husband and two children in Fort Collins, CO. They enjoy spending time with friends, hiking, and of course planning their financial future together.

So Long Summer Slump, School is in Session

By: Rachel Poe

Summertime, a period full of pool floats, travel, and leisure. Summer 2020 still captures these activities…inflatable kiddie pool on the porch, frequent travels to the fridge, and leisure aka quarantine. Regardless of how one spent this extended summer vacation, it is now time for parents and students alike to prepare for the upcoming school year. Those not involved directly with schools, the time is now to refresh horn honking and practice your road rage speeches.

Jokes aside, the next couple weeks is a crucial time to prepare for the upcoming time, mental, and monetary commitments that are approaching with the reintroduction of schools. With the majority of schools having closed for summer early, it is important to start considering the process of transition as we come out of a longer duration of summer vacation. Whether in grade school, college, or continued education, keep reading for some tips to help get back in the swing of things.

Fill the Well

One of the most important things to do when preparing for any type of event change in your life is to fill your cup. Mentally preparing for the change before it comes will aid in transitioning period. Whether this is taking a weekend to relax, reading scripture, diving into a book, connecting with family, or going dark on social media, use this time to connect with yourself. Think of it this way, if your glass is empty, you are not setting yourself up to pour into the glass of your children, spouse, coworkers, etc.

Get Ahead

As financial planners, you may think this comes easy for us. In reality, trying to plan at the last second is stressful and inconvenient. Our “trick”, plan in advance! There are many ways this could be taken: planning out vacation days, finalizing a chore chart, beginning morning/evening routines, deciding snack staples, discussing carpool, library visits, or scoping outfit/supplies selections. Carving out the time associated with your particular school will help transition students into school schedules. Whatever this looks like for you, beginning the steps to answering some of these questions may help relieve some of the stresses associated with “Back to School” festivities.

Make it Fun

While parents may be more excited than children to head back to school, do your best to get them pumped! Specifically with COVID, this may be a time to highlight the ability to see friends, meet new teachers, begin some school activities, etc. One way my mother would help boost school would be through shopping! Although I had uniforms, we would partake in Tax Free - Back To School Holidays as a time to get new supplies and deals for school. Specific states like Alaska, Delaware, Montana, New Hampshire and Oregon don’t charge sales tax statewide. It is important to look into your specific state to see if you are able to take advantage of any back to school events. Get creative - use this time to take some lessons learned during the break to jump start the school year!

Lastly, in a previous blog post, 5 Benefits of Budgeting, I go through some core reasons to begin the budgeting process. With school expenses including supplies, technology, outfits, food, etc. it is never to late to begin getting your expenses in order.

Contact us today to learn more about how to start!

Five Money Moves for Graduates

By  Kate Welker, CFP®

Graduation, the day you’ve worked towards for years. Once you walk across the stage (or should we say proverbial stage this year) and take that diploma a new stage of life begins. There will be many new decisions and actions ahead of you, but here are a few simple moves to take as you enter that next stage of life.

1) Keep your cost of living below your income. As your income increases it will be easy to start spending more. You might feel like you deserve to splurge after those years of living like a “poor student,” but if you try to keep that mentality for a few years you will be able to build a solid financial foundation. Housing is one of the largest expenses you will encounter so look at ways to keep this low. Consider a roommate or even moving back in with your parents for a period of time. This will allow you to spend less each month and put that money towards your financial goals.

2- Make a plan for your student loans. Take the time to research your loans and to find out the details of each. Reach out for help if this is something  that you are struggling to understand. There are resources such as Loan Buddy (https://www.loanbuddy.us/), loan counselors, or financial planners like the team at Rooted Planning Group (don’t miss out on Becky Eason’s monthly blog on this topic) to help you work through these. Making moves early on these will get you on the right payment plan. If you are able to pay more on these early and lower your principal this will lower your interest paid over time. 

3- Start an emergency savings account. Get in the habit of putting away some money from each paycheck. Check with your bank to see if you can set up an automatic transfer into a separate savings account with each deposit. I also encourage people to make this money harder to get to so it is not tempting to spend it. Even a small amount will start to add up over time and will be available in the case of an emergency (so that expense does not go on a credit card) or the start of long term savings goals.

4- Take advantage of retirement plans. If your employer offers a 401(k) enroll as soon as you are able. If your employer offers a match your first goal should be to defer as much as they will match, for example if they match the first 3% defer at least 3%. That is like free money into your retirement plan. If you don’t have an employer plan you can open your own IRA. Set up transfers into your IRA to correspond with each paycheck.

5- Track your expenses. Just tracking where your money is going will be beneficial. It will make it easier to build a budget when you are ready for that step. Getting in the habit of looking at your expenses and seeing where your money goes naturally makes you more aware of your money. There are numerous apps to track this automatically or if you like to be more hands on you can create a spreadsheet or just write it in a notebook.

While it is tempting to start bumping up your standard of living after school, slowing that process down and being disciplined with your money will help build a strong financial foundation to take you into your future. If you find ways to keep your expenses low and work towards saving and paying down debt you will be ahead of your finances, less stressed over money, and develop long term healthy money habits.

How Young People Can Financially Prepare for Living on Their Own

Guest Post by: Christopher Haymon

If you’re about to move out of your parent’s house for the first time, this is essentially the beginning of your life as an adult. You’re about to discover the independence that comes with making your own decisions and living life on your terms. You’re also about to discover a new world of financial responsibility.

Needless to say, the whole experience can be an emotional roller-coaster. But it can also be your most exciting and rewarding experience yet. Here are some financial tips to help you start your new chapter off on the right foot:

Explore life insurance.

One of the first steps to consider as you prepare to move out is getting life insurance, because it would help your family out significantly in the event that you unexpectedly passed away. When you look at policy options, it’s important to choose one that fits your current lifestyle and circumstances. For example, a 20-year plan may be perfect for you if you:

1. Are on a tight budget

2. Have a significant amount of debt

3. Pay a 20-year mortgage, and/or

4. Have children

If you die, the right life insurance policy will leave your family some capital or cover funeral costs and medical bills.

Save now.

If you start saving money before you move out, you will not only establish the habit, you can begin your new chapter with a safety net. First things first: Get (and keep) a job if you don’t already have one. If you’re not paying for things like rent, utilities or groceries, this is the perfect time to put away the money you make. Open a savings account, put a majority of your earnings in that account, and keep the rest in your checking account. That way, you’re taking advantage of having low expenses but can still enjoy the occasional entertainment or dinner out.

Learn how to budget.

Another way to prepare for moving out is to learn how to create a budget. Knowing how to create and stick to a budget is an invaluable skill that you will probably use for the rest of your life. Sit down with your parents and/or a financial mentor or advisor and learn the basics of calculating your expenses and income. Even educating yourself on the most basic forms of budgeting can help you avoid getting in over your head in debt by your early twenties.

Each time you accrue a new expense (or new form of income), be sure to update your budget and make any necessary adjustments so that you’re still saving money. For example, once you move out, you will be responsible for a wide range of new living costs. Understanding how to plan for these costs will save you a lot of trouble and keep you in a position to succeed.

Start your credit.

Finally, it can also help to start building your credit history before you move out. For one thing, it can be difficult to get an apartment without a credit history, and if you want to fully embrace the independence of moving out, you may not want to rely on your parents to cosign the lease. Establishing a credit history is also important if you ever want to purchase a car or get approved for a credit card with a higher limit. If you have a poor credit history, it will likely be difficult to buy a home. Most lenders will require that you have a minimum credit score before loan approval.

Get a secured credit card, make a purchase and immediately pay it off. Then, don’t use the card again until you’re completely confident in your financial responsibility. Another way to start building your credit is to make all your federal student loan payments on time.

When you have a financial plan, you can make the most of the independence and responsibility that comes with moving out. Be sure to check out life insurance policies that can create a safety net for your family. Before you move out, start saving most of your paycheck, learn the ins and outs of budgeting, and begin establishing your credit history. You will have a lot to learn along the way but having an understanding of these essential principles will help put you on a good path.

About Chris

Shortly after I graduated college, I made a lot of financial mistakes. Between a swanky apartment, brand new furniture and tech gadgets to fill it, and a student loan bill I wasn’t prepared for, I found myself in over my head pretty quickly. 

I didn’t mean to be reckless with my money. I just had no idea about the basics of healthy finances, including credit, a debt-to-income ratio, and emergency savings.

That was five years ago, and I’ve learned a lot from my experience. My goal is to help prevent others from finding themselves in a similar situation.

 Photo Credit: Pexels