Accessing Retirement Funds Early

/in , ,

Retirement saving and planning: If you have made prudent financial choices that will allow you to retire early (early meaning before age 59 1/2), what sort of plan should you employ for taking advantage of those retirement accounts without losing some of the valuable money you’ve set aside? See below for some well-thought-out perspectives:

  • Read: Mad Fientist has written a lot about the benefits of tax-advantaged accounts and why they are especially beneficial for people planning on retiring early. He’s even created a real-time experiment to prove that utilizing tax-advantaged accounts is the best way to speed up your journey to financial independence. In this post How to Access Retirement Funds Early he writes about all the ways you can access the money in retirement accounts prior to standard retirement age.
  • Listen: Have you ever wanted to invest through an IRA or 401(k) for the purpose of early retirement but found yourself stymied by the thought of paying a 10% penalty tax to gain access to your money? Listen to Joshua Sheats’ approach in this podcast, How You Can Get More Money For Early Retirement.
  • Watch: This article and short video detail how dividends on IRAs are taxed. An IRA is a great option to save for retirement. The key is to know the rules for withdrawals before you invest, so you do not face any tax surprises at retirement.

If you find the information provided valuable, please pass this email along to your family and friends! Better yet, recommend them to subscribe to this monthly newsletter by signing up on our website!

You can click on the links below to access this month’s resources. Thanks for reading, listening, and watching!

Avoiding Financial Mistakes and Reaching your Goals

/in

Happy New Year! Instead of a newsletter highlighting all.the.new.year’s.resolutions, I’d rather like to highlight the following three resources, focused on avoiding bad financial mistakes:

  • Read: NerdWallet co-founder and CEO Tim Chen details The Three Most Common Financial Mistakes Young People Make: 1) Forgetting to rollover your 401(k); 2) Not refinancing loan(s); and 3) Bad budgeting.
  • Listen: In The 10 Best Ways to Ruin Your Financial Future, Dr. Daniel Crosby (a psychologist and behavioral finance expert) discusses in a very tongue-in-cheek way, the ways in which you can ruin your financial future. This 8 minute podcast is worth the listen, especially for #6!
  • Watch: Dr. Crosby makes mention of the movie The Big Short in #7 of ways in which to ruin your future; I highly recommend watching this film (available to rent on Amazon Prime for $2.99). Besides retelling the financial underpinnings to the Great Financial Crisis, the movie highlights the fickleness of a few investors who profited abundantly on the meltdown, shedding light on how difficult it is to stay the course to one’s investment strategy.

If you find the information provided valuable, please pass this email along to your family and friends! Better yet, recommend them to subscribe to this monthly newsletter by signing up on our website!

You can click on the links below to access this month’s resources. Thanks for reading, listening, and watching!

Buying a Car

/in ,

Purchasing a car, buying a house, and funding college are three of life’s great expenses. In this month’s newsletter I want to focus on the financial aspects of your automobile and what you should consider when making that purchase. Enjoy these four resources:

  • Read: A sunk cost is a past cost that you cannot recover. The sunk cost fallacy is convincing you that you can’t give up because of all the time and money you’ve already spent. This fallacy has relevance for vehicular cost, maintenance, and replacement. Read more here in Economics 101: Sunk Cost Fallacy.
    Additional Read: Financial Mentor has a great article and calculating tool to figure out how much your car is actually costing you.
  • Listen: Should you fix the car or buy a new one? In this podcast, White Coat Investor discusses the best responses to your current car situation. For example: if it’s going to cost more to fix it than the car is worth, get whatever you can for it and consider it totaled. 
  • Watch: When is buying a car better than leasing? Almost always! This brief video explains why and includes examples in the written article.

If you find the information provided valuable, please pass this email along to your family and friends! Better yet, recommend them to subscribe to this monthly newsletter by signing up on our website!

You can click on the links below to access this month’s resources. Thanks for reading, listening, and watching!

When Should I Hire a Financial Advisor?

/in , ,

Talking about money and finances can be vulnerable. In a 2017 study, nearly 2/3 of Americans stated they would rather talk about their weight than their finances. But finances and its planning does not have to be hard–working with a financial planner can provide the peace of mind that you doing the right things with the money you make and that you can achieve the goals you have set out for yourself. The following three resources focus on the circumstances in which you may find yourself needing financial advice and where best to find it:

  • Read: James Dahle, MD, serves as a practicing emergency room physician. Midway through residency he taught himself financial literacy to avoid being the target of unethical financial professionals who were ripping him off. The result is White Coat Investor. While he tailors his information to those in the medical field, everyone can benefit from this podcast transcript, when to hire a financial planner.
  • Listen: Daniel Crosby is a psychologist and behavioral finance expert. In this very brief podcast episode, he discusses the 10 questions for your financial advisor, including “Are you a fiduciary?” and “How are you going to help me make smart decisions?”
  • Watch: We had this short video made that highlights Bona Fide Finance as a fee-only, fiduciary, and independent financial planning firm, three of the qualities recommended above!

If you find the information provided valuable, please pass this email along to your family and friends! Better yet, recommend them to subscribe to this monthly newsletter by signing up on our website!

You can click on the links below to access this month’s resources. Thanks for reading, listening, and watching!

Debt Repayment

/in ,

Firstly, thank you everyone for your prayers, patience, and understanding as we navigated the death of my father in June. It was a beautiful time to spend with family as we remembered the life and love of Jerry Martinek.

Secondly, I am focusing on debt repayment for this month’s newsletter. Let’s say you owe $50K and you happen to have $50K in the bank. Should you pay off the debt? That depends on the interest rate: how expensive is it to finance the debt? Many people turn to the total amount paid in interest as their guide, but most of that interest is overly-inflated with future value dollars.

Instead, use a time value of money (TVM) calculation on the future payments to determine what the net present value (NPV) is as a better guide of assessing the expense of financing the debt. I regularly run this calculation for my clients.

In short, the real cost to debt depends on the inflation rate which is an unknown variable. Given the latest interest rates, I consider debt with less than a 5% interest rate to be relatively inexpensive. Anything less than 3% is down right cheap! Debt in excess of 5% should be paid off in earnest.

  • Read: This is something that is not often considered, but is truly the right way to analyze what debt you may have: the time value of money (or TVM). Read more here from Investopedia.
  • Read: This  article from Financial Mentor provides a deeper understanding on net present value (or NPV), as well as an NPV calculator.
  • Watch: While this brief video from Harvard Business Review focuses on the net present value (NPV) for investments, the same principle can be applied for debt repayment.

If you find the information provided valuable, please pass this email along to your family and friends! Better yet, recommend them to subscribe to this monthly newsletter by signing up on our website!

You can click on the links below to access this month’s resources. Thanks for reading, listening, and watching!

Protect Your Assets

/in ,

This month I want to focus on asset protection, the exploitation of the legal system as a means to sue and seize your assets. The following three resources introduce this often-overlooked aspect of your financial plan.

  • Read: Michele Williams, author and Certified Financial Education Instructor, wrote a brief book titled Asset Protection for the Rest of Us, priced at $2.99 for Kindle readers. It is an easy-to-read layman’s guide for any individual, family or small business owner who is interested in protecting their assets from lawsuits. The book introduces the concept of asset protection and was written specifically for those who may not have a net worth in the millions; however, they aspire to keep and protect what they have earned.
  • Listen: In this first of a series of ten podcasts, Joshua Sheats discusses the various ways in which you should consider the term “asset protection planning.” Specifically, he asks two questions: 1) What assets do I have that I care about? and 2) From what risks should I protect those assets? If you think about those questions carefully, you will be able to coach yourself to the right solutions, solutions that may vary considerably. If you broaden the scope of the term “asset” and then apply yourself to imagining the various risks those assets face, you can come up with ways to protect yourself and your assets, no lawyers needed.
    *Note, the content is quite good but the first ten minutes are a ramble of political views that are not necessarily endorsed by us.
  • Watch: An undervalued policy that everyone should have is a Personal Umbrella Policy (PUP). A PUP supplements other forms of insurance with extended coverage limits that start at $1 million. In addition, personal umbrella insurance covers other forms of liability, such as libel and slander, that policies like homeowners or auto insurance do not. Watch here to further your understanding.

If you find the information provided valuable, please pass this email along to your family and friends! Better yet, recommend them to subscribe to this monthly newsletter by signing up on our website!

You can click on the links below to access this month’s resources. Thanks for reading, listening, and watching!

Millenials

/in ,

Millennials (typically defined as those who were born between 1981 and 1997) make up a population of roughly 80 million people in the United States. With that amount of marketing, workforce, and cultural influence, there has been a shift in understanding this most bounteous generation since the Boomers. See the resources below for a few highlights:

  • Read: This recent article from Wallet Hub ranks the Best & Worst States for Millennials based on affordability, education and health, quality of life, economic health, and civic engagement. I am partial to its findings as it ranks the state of North Dakota as 7th best in the nation overall (and 1st for affordability!). There are lots of data present but it is worth it to read the article in its entirety to understand better this generation (of which I belong as well as do 90% of my clients), especially when it comes to their financial savviness versus other generations.
  • Listen: In this podcast (Millennial Money Minutes–podcast tidbits in 5 minutes or less!), Grant Sabatier and Matt Zubricki discuss how it is easy to go out and buy short-term happiness, but long-term happiness needs to be cultivated. As humans, we all essentially seek and require the same things to live a happy life – community, loyalty, love, excitement, curiosity, passion, and peace.
  • Watch: No matter your generation, you will find this TED Talk presentation by Dan Gilbert (Harvard psychologist) enlightening on the topic of happiness. He states our beliefs on what will make us happy are often wrong, a premise he supports with intriguing research and comic relief. 

For those interested, here is the Quarterly Market Review for the first quarter of 2019 from Dimensional. I am also including this Economic and Market Update from J.P. Morgan Asset Management.

If you find the information provided valuable, please pass this email along to your family and friends! Better yet, recommend them to subscribe to this monthly newsletter by signing up on our website!

You can click on the links below to access this month’s resources. Thanks for reading, listening, and watching!

Loss/Grief

/in , ,

We learned in mid-January that our third pregnancy resulted in miscarriage. Since then, we have been navigating the grief of this loss, and thought it poignant to address the topic of loss in general in a newsletter format. This month will be a little heavier on the “read” side of things:

  • Read: In Get it Together: Organize Your Records So Your Family Won’t Have To, Melanie Cullen provides a compassionate guide to end-of-life planning. No one wants to think about their own death or what happens once they’re gone; the same goes for thinking about the death of a loved one. But without proper planning, this grief-filled inevitability can be fraught with frustration, added pain, and legal issues for those left behind. Aside from the emotional weight, thinking through every element of a death and getting everything organized can be overwhelming. Cullen’s clear-eyed guide will help to make the process as smooth as possible.
  • Read: This very brief article from Dave Ramsey places emphasis on creating and maintaining a Legacy Drawer. He recommends having 11 things in said drawer, including a cover letter, funeral instructions, insurance policies, and monthly budget. It is worth noting that current clients have much of what is recommended to have in a Legacy Drawer through your subscription to Right Capital, but not everything is contained there. Take some time to fill in whatever gaps are present.
  • Read: Should you take out a life insurance policy on your child(ren)? I give an emphatic “no!” Read 6 Reasons Why NOT To Buy Life Insurance for Your Children for a series of excellent reasons why purchasing a policy is a bad idea.
  • Read: My wife and I found a lot of solace in reading through Grieving Together: A Couple’s Journey Through Miscarriage by Franco and Laura Fanucci. Not only did this couple experience similar grief as we in the realm of infertility and miscarriage, but they also chronicle the deaths of their identical twin girls at 22 weeks. It is an inspiring book, discussing the impact of grief on the physical, spiritual, and emotional planes of both father and mother.
  • Watch: In this touching tribute to his wife who died from complications of ovarian cancer, Jason Rosenthal offers candid insights on the often excruciating process of moving through and with loss — as well as some quiet wisdom for anyone else experiencing life-changing grief.

One last note: an incredible consolation we received through genetic testing was finding out our little one is a girl; we named her Dorothy Rose Michelle.

If you find the information provided valuable, please pass this email along to your family and friends! Better yet, recommend them to subscribe to this monthly newsletter by signing up on our website!

Financial Resolution

/in ,

Happy New Year! As we welcome the new year, you may find yourself putting together some resolutions in health, career, or finances. As we turn another calendar page, look to these following resources as encouragement–and perhaps inspiration–to meet some new goals:

  • Read: Though this was written four years ago, the concept is as fresh today as it was then. Mr. Money Mustache (Peter Adeney) writes about resolutions to utilize this year to Get Your Brain Back–he discusses the little habits he changed in his life to cut out brain junk food and instead replaced it with things good for mental function. Who couldn’t use that for the new year?
  • Listen: In this podcast, Joshua Sheats shares his complete framework for increasing your income. The show is heavy on strategy–you’ll have to fill in the specific tactics appropriate for your situation. He covers: the only 3 ways to increase your income; which to focus on in the short-term and which to focus on for the long-term; and specific strategies for each of the 3 ways, all to increase your income in the next year. 
  • Watch: Still working on your debt payoff? I recommend the use of YNAB to all clients, friends, family, and sometimes random people on the street. This YNAB Workshop video walks through how you can utilize the software to strategically create a debt pay down plan. Let this be the last year you have any debt!

In other news: We are thrilled to announce that we will be welcoming a new member to the Bona Fide Family–our third child will be born in August!

If you find the information provided valuable, please pass this email along to your family and friends! Better yet, recommend them to subscribe to this monthly newsletter by signing up on our website!

You can click on the links below to access this month’s resources. Thanks for reading, listening, and watching!

Money Perspective

/in , ,

Hello, October! This is my favorite month of the year, and it’s not just because of my wedding anniversary and birthday (the 25th and 28th, if you’re curious!). I love the sights and smells of autumn and feel that the month of October perfectly encapsulates that! 

Onward to this month’s highlights, which focus on the way you look at your money: from reviewing your current financial state, to simple financial planning in six principles, to the value of the money you earn. Enjoy these resources:

  • Read: Today, many people find themselves inundated by a constant stream of financial news from television, radio, and the Internet. Yet, does all this “information age” data really help you manage your finances any better than in the past? The truth often is that the “old-fashioned” practices, such as periodic financial reviews, lead to greater success in the long run.
  • Listen: Simple Financial Planning – The Only 6 Principles You Need to Know is a conversation between Todd Tressider of FinancialMentor.com and Philip Taylor from PTMoney.com. The goal of this episode is to make your financial life that much easier to manage by helping you focus on just the important issues that really matter.
  • Watch: This couple has a series of brief, clever, weekly videos about personal finance for Millennials and Generation Z. In Insta-Everything, Philip and Julia discuss the value of money and time in leveraging your funds versus using them towards luxury. It may give you pause to rethink some of your expenditures! 

Spotlight: I just returned from the annual XYPN LIVE Conference in St. Louis, which was preceded by a seminar on student loans and followed by a seminar with Dimensional Fund Advisors. It was a great opportunity to connect with fellow professionals and deepen my own expertise in the areas of student loans and investments.

Market Commentary: I will be sending out an email later this month with the third quarter market commentary. Stay tuned!

If you find the information provided valuable, please pass this email along to your family and friends! Better yet, recommend them to subscribe to this monthly newsletter by signing up on our website!

You can click on the links below to access this month’s resources. Thanks for reading, listening, and watching!