Debt Management
Rebekah Eason
Holiday Cash for Students

By: Becky Eason, CFP®

The holidays are upon us and although 2020 isn’t a traditional year people are still getting into the holiday spirits. Gifts have become a huge part of the holidays, which we all know can add a lot of additional stress. This year there is the added stress of what is the best way to get gifts to loved ones? Shipping can be expensive and you risk packages getting delayed, lost, or broken so I wouldn’t be surprised to see more monetary gifts be given.


Holiday Cash for Students

Asking for a Friend - Are there stimulus checks again this year? Who qualifies?

September 26, 2022

Question: Some of my friends are talking about stimulus checks again this year.  I haven’t received anything, who qualifies for these?

Answer: There are some States that are offering a stimulus this year as a result of high inflation rates.  Read this article to see if your State is listed: Is Your State Giving Out Inflation Stimulus Checks?

Based on current information, these stimulus checks (similar to prior stimulus checks), will not be taxed at either State or Federal level.

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Asking for a Friend - What’s going on with the stock market and economy?

September 19, 2022

Question: What’s going on with the stock market and economy?

Thank you for asking this question! You’ve prompted us to start a new monthly summary for our readers. For those that want the very high level, we’ve created a 2-minute Summary and for those that want a bit more detail, we’ve created extended version.

Click on the links below for the September report on YouTube and make sure you subscribe to get future notifications!

RPG 2-minute Monthly Report

RPG 10-minute Extended Monthly Report

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Asking for a Friend - Are "Donor Advised Funds" a good solution when making charitable donations?

September 12, 2022

Question:

 As the end of the year approaches, I’m starting to think about making charitable donations and I recently read about something called “Donor Advised Funds,” but I’m still not entirely clear how they work.  Are they a good solution?

Answer:

For those not familiar with Donor Advised Funds (DAFs), it is a special type of account that can be used to donate to qualified charitable organizations.

  • The primary benefit of this type of account is that you can gift securities in kind (meaning you don’t have to sell a security, recognize the gain, then gift the cash) to the DAF account and take the tax deduction as if it was going to a charity.  

  • Some people do this because they want to itemize on their tax return every other year by “cycling” deductions, meaning they make larger charitable contributions every other year so they can itemize on their taxes, but on off years they only take the standard deduction.

  • These accounts can then dish out the donations in future tax years.  

  • So, you make the contribution in one year, but it doesn’t need to be distributed in that same year.

  • The funds can stay in the securities you donated, or you can invest in other strategies.  When they are sold to make the donations, there are no tax consequences.

If you are interested in this type of strategy, the top three providers we recommended are Vanguard, Fidelity and Schwab.  When investigating which one is right for you, ask about management and administrative fees.

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Asking for a Friend - At what point do we start to insert ourselves into our parents' finances?

August 29, 2022

Question:

I’ve noticed recently that my mom's short-term memory is failing and that her anxiety seems to be growing.  We’ve been told not to make too many changes too quickly as that can cause more anxiety.  At what point do we start to insert ourselves in her finances?

Answer:

  • Amy’s take:

    • The first thing I would recommend is to touch base with an Elder Law attorney in your State.  Yes, there is an added expense in doing this, but honestly, I see people spending thousands of dollars unwinding something that could have cost hundreds of dollars if they would have met with the attorney first.

    • The second thing I would recommend is having the “Other Talk” with your parents.  They may want to involve you, but don’t want to burden you; sometimes they won’t ask, but they will let you get involved if you offer.  Note: you can find the book, the “Other Talk” online at Amazon.com 

  • Becky’s take:

    • The earlier the better. Start out by offering to assist with reviewing bills with her but let her continue to feel in control of making the payment. She may just ask you to take over if you show interest in helping.

  • Ann’s take:

    • I also believe the sooner the better. The Alzheimer’s Association has a helpful Legal & Financial Worksheet that you can fill out to understand your mom’s financial picture and make sure bills are being paid.

    • You may also need to reduce her credit card spending limits or even cancel cards to protect your mom from making large purchases.

    • You may also want to look into freezing her credit report and register for fraud alerts through her bank and credit card companies. This will help protect your mom from scams and fraud as unfortunately elderly people can be targets.

  • Kate’s take:

    • I have learned that paperwork becomes very anxiety producing for people in this situation.

      • I would offer to help with organization and sorting of mail and files.

      • This will also be a way to start learning more about her finances and possibly unearth other important details that would be helpful to know now.

Here is a checklist that you might find helpful:

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Asking for a Friend - I've read several of your articles on Credit Monitoring and I've pulled my report to look through it. Is there anything that I should look at that is a "red flag"?

August 22, 2022

Question: I've read several of your articles on Credit Monitoring and I've pulled my report to look through it. Is there anything that I should look at that is a "red flag”?

Answer: EXCELLENT question!  There is a lot of data on the credit report including both open and closed accounts.  A couple of items that we generally focus on include:

  • Are there any open or closed accounts that you don’t recognize?

  • Are there any “late” payments that you don’t agree with?

  • Are there any addresses that do not belong to you?  This one is a biggy in our eyes for two reasons:

    • Because it can be a sign that someone with a name similar to yours (if you are a Jones, Smith, or any other “common” name) somehow accidentally (or on purpose) is connected to your credit report and you should contact the credit reporting agency to fix this.

    • Because it could indicate that someone is staging a possible identity strike.  Meaning they are first creating an address that they will later apply for credit using your name and credit information.  You wouldn’t even know because they would have any information shipped to a different mailing address.  If you see this, then, in our opinion, you need to immediately freeze your credit report, notify the post office, and report it to the credit agencies.

    • We would also encourage you to possibly report it to the police.  That creates a case, should you ever need it. 

  • This has become such an issue that there is now a special section on the Federal Trade Commission website for you to report any type of fraud: ReportFraud.ftc.gov

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Asking for a Friend: I recently began divorce proceedings against my husband and I’ve read that the divorce settlement may not need to be 50/50, is that true?

August 15, 2022

Question: I recently began divorce proceedings against my husband and I’ve read that the divorce settlement may not need to be 50/50, is that true?

Answer: Amy Irvine, who is a CDFA®, on our team provides the following answer to your question:

You didn’t indicate what State you live in, so I first need to explain the difference between community property States (there are 9 - Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin) and equitable property States (all the remaining).

  • Community Property State: each spouse equally owns any assets and debts gained during the marriage and therefore those assets get equally divided during a divorce.  Even if the asset was acquired prior to marriage, the earnings and growth during the marriage would be considered community property.

  • Equitable Property State: Although equal and equitable may sound the same, they are not.  Equitable means the assets are divided based on what is fair, which does not necessarily mean 50/50. In most of the cases I’ve been involved in, the pre-marital assets, and their earnings and growth, are excluded and other factors (such as tax brackets, earning potential, etc.) are taken into consideration.

The Institute for Divorce Analysts (the organization that my designation is through) has some good “get started” resources you may find helpful and that you might want to explore: IDFA Online Learning: U.S. Resources (institutedfa.com)

Divorce is stressful and the right team can give you guidance through this process.  Often, that right team, in our experience, includes an attorney, a financial planner, and a therapist.

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Asking for a Friend - Do I have to apply for public service loan forgiveness by October 31st?

August 8, 2022

Question:

I have student loans and work in public service; I heard that I have to apply for forgiveness by October 31st, is that true?

Answer:

Only if you are applying for the limited waiver program that was announced on October 6, 2021.   Prior to this program, which DOES expire on October 31, 2022, many individuals didn’t meet the “qualifying payments” definition because they were either in the wrong type of loan, the wrong repayment plan, made (or didn’t make) the wrong payment amount, or various other reasons. 

This temporary relief program will take all of those periods of time in consideration, including periods of deferment and even forbearance.

Here is an important alert from the Federal Trade Commission - Consumer Advice: Limited waiver for student loan forgiveness ends October 31 | Consumer Advice (ftc.gov)

We recommend that you DO NOT wait to act until October to apply for this if you believe you are eligible.

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Asking for a Friend - When someone says they want to achieve FIRE, what does that mean?

August 1, 2022

Q: When someone says they want to achieve FIRE, what does that mean?

A: First, let’s start with what the acronym means: FIRE stands for Financial Independence, Retire Early.

  • Everyone has a different vision for what FIRE means to them.

    • Some people truly want to retire the moment they are financially able to do so and never work again

    • Others would like the ability to do what they want, when they want. This could be taking a long sabbatical, working part time, or changing careers to a more fulfilling career even if it involves a pay cut.

  • How do you become financially independent?

    • You have to save a very large portion of your income while you are working. The savings rate we often see with people working to achieve financial independence is upwards of 70% of their income.

    • Some people have side hustles while they are working to create an additional income stream to allow an increased savings rate.

  • When do you know that you are financially independent?

    • This is a tough question because it really comes down to your living expenses and being able to maintain a budget.

    • A general rule of thumb is that you need at least 30 times your annual expenses saved before you can be financially independent.

  • How do I create an income stream if I retire early?

    • You will be living off your savings so you will need to take distributions from your investment accounts and/or savings accounts.

    • To make your money last you will need to monitor your withdrawal rate, which we typically like to keep to 3% - 4% of your balance.

  • What if I thought I achieved financial independence but now my expenses are exceeding my withdrawal rate?

    • You can re-evaluate your expenses to see if you can live off less.

    • Or you can always resume working at any point in time and target the traditional retirement age instead.

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Asking for a Friend: Does Medicare cover home health care?

July 25, 2022

Question: I want to stay in my home as long as possible, but I need some help. Does Medicare cover home health care? 

Answer: Medicare does cover in-home health care services under certain conditions. Keep in mind, Original Medicare may have different coverage than a Medicare Advantage Plan. Under Original Medicare, your doctor will have to certify that you need certain in-home care such as nursing care, physical therapy, medical social services, and certain medical supplies. Your doctor must also certify that you are homebound due to an illness or injury.

Medicare will only cover “intermittent” skilled nursing care - meaning you need care fewer than 7 days a week for less than 8 hours per day for up to 21 days. Coverage may be extended beyond the 21-day limit if your doctor requests it. It typically won’t cover full time care that is needed over an extended period of time. Medicare doesn’t cover 24-hour home care, meal delivery, or services such as shopping or cleaning.

If you have a Medicare Advantage Plan, you’ll need to contact your private insurance company to learn more about your coverage for in-home health care. Medicare Advantage may cover some additional services not covered under Original Medicare such as modifications to your home including a ramp for wheelchair access or a hold bar in the bathroom.

While Medicare & Medicare Advantage Plans do offer some limited benefits for in-home care, they are not a replacement for long term care planning. We work with clients to determine how advanced care costs may impact their financial health and make a plan that helps them feel in control as they age.

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Asking for a Friend - How much money should I have saved for retirement?

July 18, 2022

Question: How much money should I have saved for retirement? I hear there are different numbers you should have saved based on age, but I am not sure which number I should be aiming for.

Answer: For this question we get to use our favorite answer, “it depends”. We realize that every person is unique, so this number is different for every person, and it depends on your situation. The following are things to consider:

  • Determine how much you need. What are your living expenses, or what do you want to be able to spend in retirement?

  • In our experience most people want to maintain their current lifestyle in retirement, and many people actually spend more in the early years of retirement than they do in their working years.

  • What sources of income do you have? If you have a pension, you will need less in additional savings than someone without that ongoing income stream.

  • How long do you plan to work, or do you plan to work a part time job in retirement? The earlier you plan to retire, the larger the sum of money you will need to have saved.  If you plan to pick up a fun hobby like a part time job, that will reduce the amount you need to have saved.

Hopefully you realize that there are many factors that go into this calculation and that there is not one answer to fit everyone. If you are looking to get insight into what your number is, we would recommend speaking to a financial planner who can discuss these items with you.

Do your friends ask you financial questions?
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