Do You Save Money With A Purpose?

By Nick Bautista

Saving is a really great thing. Most people have trouble saving their money because it’s delayed gratification. But, if this first step is hard, the second can be equally so; saving for a goal.  Setting the saving goal can also be the worst offense, as we save to save. You know who you are…. You put your money in the bank and never spend it. If you ever do spend it, it will usually be impulsive because you didn’t know what you were saving for.

The point of saving, is to save for a purpose. Let me preface this first, I used to be like this. I was raised to just save money for the sheer comfort that if something I wanted came up I could buy it. Nine out of 10 times it wasn’t something that I intended to buy, because it was an impulse purchase. I would literally search for things to buy because I had money saved up with no purpose.  A very terrible thing in hindsight.

I never thought about saving for a purpose until I was in my twenties. I realized the money I had saved as a kid, which I still had, actually lost value. I put it in a savings account because my money would be safe and grow. Let’s just say inflation won that battle and I now decide with my wife what each penny is being saved for so I can maximize the value in different ways. We sit down and define our goals either by ourselves or with the help of a financial advisor. Sometimes outside perspective give us new ways to look at things and more importantly how to be efficient for what we intend to save for. Once we started saving for a purpose, the goals became real and gave us incentive to be consistent with our savings.

So I urge you, develop a purpose for why you are saving. Is it for a house down payment, a new car or your retirement? It could even be small scale items, a new TV, a new shirt, date nights or whatever it is you enjoy. Without an end goal in mind we lose focus and either stop saving or forget what it was we wanted.
For simplicity sake, think of a goal, save for it and then do it!

Why Buying Life Insurance at A Young Age May Not Be Practical

By Nick Bautista 

You gotta love the insurance industry. Young life insurance agents going out trying to sell life insurance to young professionals. New agents who pass a simple exam giving advice with no prior experience. Sure there are many who need life insurance but at an age (younger than 30) when young professionals are barely making a living there are more practical things that need attention, just a few include; trying to pay off student debt, saving for a house, and building an emergency fund.

Although there are many reasons most young professionals don’t need life insurance there are 3 circumstances where it might make sense for you:

1. A Personal need – Funeral expenses, so others around you don’t suffer to come up the funds in case you were to die. The average cost of a funeral is $7,000 (nfda.org).

2. Family/Our dependents – Living expenses, would be education savings and would be retirement savings/income. How much do they need if something were to happen to you? Could they live comfortably or will your dependents need to work an extra job to cover expenses and have the same lifestyle they were living?

3. Business needs – You can’t leave your partner out of luck if something were to happen to you. Consider setting up a plan for insurance on each other so he can at least get back what he invested in the company.

If you do have any of the above, then you can find some help from an independent agent and look at how much you can afford. This will be a big factor into the types of life insurance products you should purchase. It is not advisable to go to anyone who is paid to sell you one specific product.

If you are young, not married and have no dependents, then investing your money on life insurance may not be appropriate. Instead, you might consider saving your money for more practical things like, retirement or that first house you’ve wanted. Your money may be better spent in other ways.

3 Reasons Why I’m An Insurance Agent Who Dislikes Insurance Agents

By Nick Bautista

I’ve heard the pitch a hundred times and seen firsthand why we can get a bad name. “I can provide the best service along with competitive prices. Not only will I always be there for you but you can count on me, here’s my cell number. It’s guaranteed, or this is the best price around.” These lame attempts share these three things in common:

1. Pushy – Agents constantly press you to buy something you still don’t completely understand. Most agents aren’t independent and can only offer products from their provider. For example, think about if you only went to Verizon to look at your options for a new cell phone contract. Would you look into At&t or Sprint to see your options, compare coverage and price? Or would you just make a blind decision without shopping around and go with Verizon?

What to do: Ask your agent what other options are available. If he continues to pitch one or the same product then find someone else.

2. Ignorant – As an insurance agent I see other agents selling products that make no sense. They are ignorant to the fact that the products they are encouraged to sell (from top management) are not what is best for you, the client. As consumers don’t know any better and are forced to blindly trust the agent is using his/her judgment to recommend a good product it can leave them in a bad position.

What to do: Ask the agent why he is recommending this product. If it sounds confusing find someone else, period. If it sounds too good to be true find someone else. A good insurance agent should be able to explain things in terms you understand.

3. Talkers – My biggest pet peeve are agents who don’t listen to you. They don’t address your concerns or questions. They are really just about the sale and continue to talk over you or never ask if you understand what they are recommending. Once the sale is closed they completely leave you hanging. It’s more about them showing how smart they are rather than listening to your needs or concerns.

What to do: Definitely find someone else. No need to ask anymore questions, if your agent talks over you he will never truly listen to you. You can tell a talker by an agent who doesn’t ask more than 1 follow up question after you are voicing your concerns. (It takes more than 1 question to be active listening)

So remember, insurance can be shopped around and if your agent is any of the above then it’s time to find a replacement.

The FED Taper Talk, What It Means

By Nick Bautista

Last week the FED announced that they would begin to ramp down their bond purchases. Instead of purchasing $85 Billion in Treasury bonds they will now be purchasing just $75 Billion.

What this means is the FED is finally feeling confident enough to let the economy begin to stand on it’s own feet. As the FED meetings have become more popular than the stock market gains themselves, this change was inevitable. We thought it might happen sooner and with the recent events; job unemployment fell to 7% from 7.3%, congress was able to pass a bipartisan budget agreement to fund the government through the next two fiscal years, housing has been constantly building momentum, it appeared to the FED a good time to begin to Taper. Today’s number only solidified this when GDP third quarter number was revised up to 4.1%.

As a result of the taper the market has since soared to new highs. The new highs may have seemed opposite of what should have happened, due to the inevitability of the taper, the markets seemed to already have the announcement priced in. 

Overall it seems to be the right decision from the FED, a decision that could have come earlier in my opinion. The FED hasn’t completely given up control, as the interest rate remains unchanged, the FED still has the ability to help aid the economy if something drastic were to occur. For now though, they are content while they watch for continued improvement in the economy. It is clear the economy has been improving and again it becomes inevitable until the FED begin to taper further ultimately raising interest rates.

5 Simple Ways To Help Save on Your Taxes

Presented by Nick Bautista

As the end of 2013 is quickly approaching, there are several ways to help reduce your taxes before the year-end. I don’t know about you, but I don’t like paying more taxes than I have to. Think about these tips, and ask your CPA or tax professional before the end of year what they think about implementing any of these ideas:

1. Roth contribution – Not so much saving on taxes now, but by saving money into a Roth IRA, (preferable in a low tax bracket) with after tax money which means since you have already paid taxes on the money it will grow tax free and come out tax free in retirement.

2. Roth conversion – Same idea above except if you are in a higher tax bracket and aren’t allowed to contribute to a Roth, or if you have IRA money and you are in a low tax bracket a Roth conversion is a great way to pay taxes now and get tax free withdrawals/growth in retirement. For example if you are normally in a high tax bracket but you had a lower income year, converting an IRA to Roth could be a great move.

3. Realize losses – In a taxable account, (non-retirement account) you can realize losses up to $3,000 each year as an above the line deduction to your gross income. You must realize losses before 2013, and in order to realize a loss, you cannot sell and buy back the same/similar position within 30 days before or after the sale.

4. Max out your company retirement plan – You still have time to adjust your 401k contribution to contribute as much as possible to your employer plan; this will not only lower your taxable income, but it will lead to tax-deferred savings. This can work well for high earners.

5. Adjust your Withholdings via your W4 – By now you should know what your pay looks like for 2013. You can submit a new W4 to your employer if you are projected to over withhold on your taxes. By having less withheld on your paycheck, you can get more income now, instead of getting a refund later when you file your taxes. It also may be a good time to calculate your 2014 withholdings.

There you have it, 5 simple strategies to help save on taxes.

Please Note: All these strategies should be discussed with your CPA , tax professional or financial advisor. This is not advice to do any of the above without speaking to a professional regarding your specific situation.

Year-End Financial Planning

Presented by Mark Phillips

With the end of the year quickly approaching, it is a wonderful time to begin organizing your finances for the New Year. We’ve put together a list of important financial planning topics that warrant consideration.

Flexible spending accounts
Money that you’ve put away in your flexible spending accounts (FSAs) generally must be used by year-end or it will be forfeited. Recently, however, the IRS modified this rule to allow participants to carry over up to $500 of unused funds into the next year. Your employer plan must elect to participate in this option, so be sure to check your plan terms to see if you can take advantage of this new rule.

If your employer has not elected this carry-over option, now is the time to schedule those doctor’s appointments you’ve been meaning to attend to or to stock up on items that are eligible for flexible spending. Doing this as soon as possible may help relieve some last-minute headaches and ensure that you don’t lose your hard-earned dollars.

Additionally, open enrollment begins around this time of year for certain employee benefit plans. So if you’re not using an FSA, take stock of your average expenses that would qualify. This can help you determine whether setting up an FSA for 2014 makes sense for you. If you already use an FSA, assess how much extra you have left in the account or how much of a deficit you ran and use it to calculate your allotment for the New Year.

Medicare enrollment
Open enrollment for Medicare started in October and ends December 7, 2013. For many, this is the only chance to change health and prescription drug coverage for 2014. If you want to make any changes, act now.

Too little or too much withholding.
Also of note is that workers with gross earned income of more than $200,000 may have had too little or too much tax withholding in 2013. Employers may have withheld an additional 0.90-percent tax on incomes over $200,000 without regard to the taxpayer’s withholding status, which would put these taxpayers at a higher threshold. Other taxpayers may have had too little withholding because of other income unknown to the employer due to second jobs. Employees should plan to take a credit on their returns or pay additional taxes.

Consider seeking professional guidance
The above list of financial planning dates is not exhaustive. We are happy to go over deadlines that are most relevant to your personal situation, so you can better prepare for the coming year.
Whatever your planning may entail, we wish you a happy, healthy, and prosperous 2014!

This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.

IRS CIRCULAR 230 DISCLOSURE:
To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.

Since When Does Christmas Come Before Thanksgiving?

By Nick Bautista

As I walked through stores this past weekend, I realized that as a country we have completely forgotten about Thanksgiving. No longer do we think about turkey or giving thanks, instead we worry about where to find the best deals to get our shopping done early for Christmas. Not only do we buy gifts for others they probably don’t need, but we string up Christmas lights and decorations by the second week in November. So what gives?

When as Americans did we get so caught up with the next best thing that we can't stop for one minute to give thanks for the things we already have. I thought we valued humility and working hard for success yet we don’t give thanks when we achieve those things. Instead, we bypass those values to give the most awesome gift ever. Do you even remember the gift you were given last year or better yet the year before? How meaningful was that gift as opposed to spending time with the person who gave it to you?

But forget all that we need those deals!!

I was always taught to be thankful for the things I have, because you never know when you might not have those things again, so I’ll make it simple:

Do you have shelter?

Do you have food?

Do you have a job?

If you answered yes to any of the above you have plenty to be thankful for.

Let’s not forget Thanksgiving, instead let's embrace those things we often forget that are provided to us daily, which is the friends and family who support us.

Happy Thanksgiving!

PS. I love Christmas