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Is Your Heart Making the Decision?

By | 2019, Money Matters, Newsletter | No Comments

Women generally have huge hearts and can sometimes let their hearts lead their financial decisions. Even the most educated and most successful women can let their hearts influence their financial decisions. Here are some examples of how women may be dealing with financial situations:

–    Children ask for money for the latest thing(s), and mothers usually say yes. When mothers spend too much money on their children, they may not be saving enough for retirement.

–    Women who allow their husbands to handle every aspect of financial decisions may find themselves in crisis when a spouse is injured, they are divorced or widowed and discover they are unprepared to manage all facets of their financial life.

–    Single women – those who never marry or who are divorced – are often uncomfortable with finances and may even be bored with financial matters. Still, they are anxious about being financially secure now and in the future.

As women, we need to take control of our financial life and be honest with ourselves and others in our relationships.  We are generous with our love, time and money and we shouldn’t stop being kind, generous people, but we must be sure that our acts of generosity are not depleting our financial future and retirement plans.  We must learn to say “NO” out of love, not out of fear. If you pay for a child’s college education, will it jeopardize your future retirement? This act of generosity could potentially create financial stress for years into the future. Your act of charity should never put you at financial risk.

Women need to set financial limits. Our goal should be to raise financially independent, successful children. While it may seem reasonable to help a family member, continuing to pay expenses for grown children will not help them become financially successful adults. It might feel like tough love, but in the big picture, it truly helps everyone. 

Make financial decisions that support your financial goals and secure your financial future by taking time to think through the situation and process the outcome. Lead with your head, not your heart. Being financially smart will help you secure your goals and achieve financial success.

If you are faced with a decision and need additional information or maybe just a sounding board, reach out to us and let us help you think through your options. Together we can find the right solution for you.

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Tax Law Changes

By | 2019, Money Moxie, Newsletter | No Comments

The first significant tax reform in over three decades was put into action for 2018. Now we get to see the real impact of the Tax Cuts and Jobs Act as people start to file their 2018 tax return.

Whether you are filing your tax return or you want to make sure you give your accountant the best information possible, here are the major changes to which you should pay attention.

Form 1040 significantly shortened and simplified
One of the major goals for this tax reform was to “simplify” taxes. The immediate impact is that the old Form 1040 will be shrunken down to a half page on front and back. Now there will only be 23 lines compared to the daunting 79 lines on the old 1040. There will no longer be a form 1040A or 1040EZ as those were just an attempt to simplify an overly complex 1040. The new 1040 will be accompanied by 6 schedules.

If this shortened version makes you feel like attempting to do your taxes for the first time in a while, you should probably still take them to your accountant as there are so many tax changes that you really need an expert that knows how all of the changes will impact you. If you have been filing your own taxes, they should be easier this year (should being the keyword).

Tax brackets
Tax brackets have been reduced, which should benefit almost all people. Tax brackets are based on your total amount of taxable income, not adjusted gross income.

For example, if a couple’s joint taxable income was $75,000 in 2017, they were in the 15-percent bracket and in 2018 will be in the 12-percent bracket. The 25-percent bracket has been reduced to 22 percent.

Changes to the standard deduction and exemptions
The most significant changes for individuals happened to the standard and itemized deductions. With the changes, it is estimated that 80-90 percent of people will now take the standard deduction. However, don’t throw out your box of medical receipts yet. You still need to make sure itemizing is no longer a benefit for you.

The standard deduction limit has been raised from $6,350 to $12,000 for single filers and from $12,700 to $24,000 for married filers. They also did away with personal exemptions that were $4,050 per person, but offset that loss for families with children by increasing the child tax credit from $1,000 to $2,000 per child. There is also an extra deduction of $1,600 for single filers and $2,600 for married filers if you are over age 65. (For a more complete list, please visit:
smedleyfinancial.com/financial/2019-key-numbers.php.)

Specific changes to itemized deductions
State and local tax deduction has been limited to $10,000. You can still deduct medical expenses that exceed 7.5 percent of your adjusted gross income, and that limit will be going up to 10 percent in 2019.

Mortgage interest can be deducted up to a principal value of $750,000 if the loan originated in 2017 or later. Older loans will be grandfathered in and interest is deductible up to a principal limit of $1,000,000. Mortgage equity loans will only be deductible if the proceeds were used for home improvement. (Say goodbye to consolidating debt into a home equity loan and deducting it.)

This major overhaul to the tax system should simplify taxes and should make it so most people take the standard deduction. Most people should also end up paying a little less in taxes, which is always nice.

Let’s look at an example
In 2017, Jay and Mary filed a joint tax return. They are both age 55 and they don’t have any dependents. They had $18,000 in itemized deductions. Add to this their personal exemption of $4,050 each, totaling $26,100 in deductions. In 2018, they will only get the standard deduction of $24,000 with no personal exemptions and may owe more in taxes. The saving grace for Jay and Mary is that their tax bracket was reduced and may make up for the reduction in deductions.

SFS and its representatives do not provide tax advice; it is important to coordinate with your tax advisor regarding your specific situation.

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Where to Park Cash

By | 2019, Money Moxie, Newsletter | No Comments

Let’s say you received an inheritance, or you sold your home or business, or you earned a big bonus. Where do you park your cash while you decide how to make the best use of it? The best short-term account is the one that best matches your needs. Call us to talk about what would be best in your situation. Here are a few ideas to consider:

Savings accounts, money market accounts, and certificates of deposit are FDIC or NACU insured up to $250,000 and offer a fixed rate of return. Other investments are not insured and their principal and yield may fluctuate with market conditions.

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Preparing 2018 Taxes

By | 2019, Money Moxie, Newsletter | No Comments

Tax reporting documents
While you may be anxious to get your taxes done, you can avoid filing amended returns by assuring you have all final tax documents to provide to your tax preparer.

Most 1099 tax forms will be available between January 27th and February 16th.

If you have an account with National Financial Services, please be aware of the following timelines for receiving your tax documents.

Some securities companies may not deliver National Financial Services with final tax information by the first mailing date. In this case, you will not receive a 1099 until the final information is available. A preliminary tax statement will be available online only. This will not be reported to the IRS and cannot be used for filing purposes.

All 1099s will be available online and mailed no later than March 8th.

If you have signed up to receive electronic documents, you can access the tax documents through your Wealthscape access. If you signed up to receive tax documents electronically only, you will not receive them in the mail.

Qualified Charitable Distributions (QCD)
If you made a qualified charitable distribution from your IRA during 2018, please let your tax preparer know. Your 1099R form should indicate that the taxable amount is undetermined by a checked box in 2b “Taxable amount not determined.”

You will also need to provide documentation from the charity that your donation was received. This should not count as income for tax purposes and should not be an itemized deduction.

Consult your tax advisor for further information regarding the preparation of your taxes. If you have questions regarding the delivery of your tax documents, please contact our office at 801-355-8888.

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Our Passion Is Your Financial Success

By | 2019, Executive Message, Money Moxie, Newsletter | No Comments

At Smedley Financial all of our efforts are focused on one thing: Your Financial Success! Let’s specifically define what those words mean. Financial planning is ultimately about getting you to where you want (and need) to be. It is using what you have to accomplish your goals.

How do we view our role as your financial fiduciary?

Being Your Financial Bodyguards: As your financial bodyguards, we strive to protect you from unscrupulous people. We strive to protect you from those that wish to separate you from your money permanently. At the other extreme, we strive to be your financial bodyguards between well-meaning friends and family. Simply put, few people can afford to lose any money. Loans to loved ones seldom get repaid. This is especially true if you have retired or lost a spouse. Hint: That’s why we need you to call us about any and all requests for money.

Taking the Right Types of Risk: Specifically, we strive to help you take more of the right types of risk and avoid the wrong types of risk. If you are too aggressive (greedy) or too conservative (fearful), you may end up broke. Caution: Being too extreme, either way in your risk-taking, may be dangerous to your wealth.

Protecting and Growing Your Assets: Protecting your assets is imperative for your financial success. The majority of people tell us they don’t want to lose what they have already worked for and accumulated. Hence the adage: First, do no harm.

Growing your assets is crucial going forward. We have had several clients live well into their 90s, and one even made it to 100! Hint: Our job is to strive to manage your personal wealth. Your job is to manage your emotions, never getting too high or too low.

By using Smedley Financial, what does this mean to you? It means we are fully invested in you. We not only put your interests ahead of ours, but we also strive to offer you our best advice, knowing what we know, based on what we would do in your same position. Our passion is your financial success.

Bullish Best Wishes,

Roger M. Smedley, CFP®
Chief Executive Officer

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How Can I Stay Calm When the Market Isn’t?

By | 2018, Money Moxie, Newsletter | No Comments

2018 has been a year of market volatility, and that can be scary at times. When market volatility hits, here are three things that can help you stay calm.

1. Focus on the Long-Term
When we create financial plans, we focus on your long-term goals. When market volatility strikes, think to yourself, “Have my goals changed? Do I want anything different out of my investments than I wanted before?” If your long-term goals haven’t changed, then you are still okay. If your long-term goals have changed, talk to your financial advisor and see what the best course of action is.

Before you make any knee-jerk reactions to market volatility, focus on the long-term. We don’t want to sell out, lock in losses, and not have the opportunity to benefit from the market growth that will come later.

2. Trust Diversification
Investing in a diversified portfolio is even more critical when market volatility is high. We keep our portfolios diversified to help lessen the effects of market volatility. The basic idea of diversification is to spread your investments across many different areas of the market in order to reduce the risk. It usually works when things get rough because you don’t have all of your money in the part of the market that is losing the most.

With your diversified investments, you are likely to still lose in a down market, but you should lose a little less. Most of the time, a diversified portfolio will come out ahead of a non-diversified portfolio after enduring the ups and downs of a market cycle. Remember, diversification works!

3. Volatility = Opportunity
You’ve probably heard this saying your whole life: “Buy low, sell high.” That is the right mindset to have when it comes to investing, and we all know it. However, as humans, our emotions get in the way, and we convince ourselves to do the exact opposite.

Why would we ever be tempted to buy high and sell low? It is common to feel comfortable investing into something that has been going up because we assume it will continue. Again, we believe the trend will continue when the market is falling and is at a low point. As an investor, it is helpful to remember that changing our strategy based on how we feel can often be counter-productive.

Market volatility can create major opportunities to buy in at lower points. Try looking at it this way: if you find a nice coat, you’d be more likely to buy it at 10% off, right? It’s the same way with investing. We want to buy at a “discount” to maximize the value we can get out of an investment. It can be hard to remember this in volatile times, which is why it is essential to have a professional who is experienced and educated in your corner to help you make sound investment
decisions.

 

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Where does all the money go?

By | 2018, Money Matters | No Comments

Why does the word budget feel like a personal judgment? Maybe it’s because creating a budget may uncover the spending we know is happening, but don’t want to address. It brings out some feelings of guilt.

Let’s ditch the word budget and call it a spending plan.  Now we are in control. The truth is following a spending plan provides some freedom. Regardless of our age, we need to have a plan. When starting out, a spending plan allows us to have what we need for today while also planning for future needs. It gives us the green light to spend a predetermined amount on things we want and enjoy. Without a plan, we spend first, then save what’s left over. This is a recipe for financial disaster. Too often there is nothing left over at the end of the month. The result, nothing gets saved for the future.

Later in life, we have some financial flexibility and incorrectly believe we no longer need to worry about a spending plan. This is also a recipe for financial disaster.  At retirement are income sources become limited. Making sure our nest egg is available to provide income for the lifestyle we want, throughout our retirement years, becomes paramount. After all, who wants to reduce their standard of living at the time we should be enjoying the fruits of our labor?

Creating a spending plan will take some thought and time but it doesn’t have to be overwhelming. Here are some tips:

  1. Look over your expenses for the past year to determine where your money is going. If you haven’t been tracking your spending, begin doing so.
  2. Categorize your expenditures by non-discretionary and discretionary.
    a. Non-discretionary includes things you must have; groceries, mortgage, rent, utilities.
    b. Discretionary includes things you like to have; cable, eating out, entertainment.
  3. Determine your goals – saving for retirement, down payment on a home, travel.
  4. Decide how much you need to put aside to reach your goals. Then break it down to a monthly amount.
  5. Review your discretionary spending to determine where you could cut back in if needed.
  6. Follow your spending plan. In the beginning, it will be hard and may require a few tweaks.
  7. Use an app or excel spreadsheet to help track your spending.
  8. Review and adjust regularly.

Now congratulate yourself. You have taken the first step to financial freedom!

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Just for Women – Raising Financially Aware Children

By | 2018, Money Moxie | No Comments

Being financially savvy has a massive impact on our lives, as well as those of our children and grandchildren. Kelly Ness, of American Century Investments, focused on improving our family’s finances.

The principles of financial responsibility are not well taught in schools. According to a recent study, high school children claim 88% of their financial education came from their parents.

Where do children learn money management? Statistically, children are far more likely to be savers than spenders if their parents or grandparents talk to them about money. So, what should we say?

First, we need to understand our own money habits. Which behaviors do we want our children to replicate? Which should they not follow?

Next, we need to open a dialogue. Discuss saving, investing, debt dangers, and charitable gifting. It is also important to be open about household income and budgeting. In this way, they can learn from real and personal experience.

An allowance is a great way for young children to learn. Kids who receive an allowance tend to save more than those who do not. Children should also have financial goals. This can be a great opportunity to teach them about working for income and saving for purchases. When it comes time to buy, they will have an understanding of its worth.

Creating the time to teach your children or grandchildren about financial responsibility will pay dividends. It’s never too early, or too late. Bring your older children or grandchildren to your next appointment at SFS and allow them to ask questions. This will help to reinforce the value of planning, investing, and saving for the future. If you have questions regarding family financial education, please reach out to us. We would love to help you help them.

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Financially Savvy Women

By | 2018, Money Moxie | No Comments

Just Getting Started

You are starting your financial life with a blank canvas. . . you are the artist. You can create a lifetime of financial freedom if you start with a few simple habits and follow them purposefully.

3 Tips to get you headed in the right direction:

1. Get a handle on your spending and keep debt at a minimum. Save for the things you want rather than borrowing. It may take longer but the reward will be that much sweeter.

2. Determine your top three financial goals—build emergency savings, get out of debt, buy a car, save for a down payment for a home, etc.—and create a plan of action.

3. Let compound interest work for you. Contribute to a 401(k), IRA, or Roth IRA and be sure to capture the full company match.

Settling Into Life

Mid-life offers the opportunity to regroup. Your family has a routine, your career is well underway, and you are looking to the future. This is an ideal time to create or refine your financial plan.

You may have up to 20 years before your retirement dream becomes a reality. Focusing on these items will help you reach your goals:

Increase your retirement contribution. If you are falling short, you still have time to make an impact.

Get rid of mortgage debt before you retire. Debt in retirement can reduce your standard of living and prevent you from living the way you had hoped.

Update your financial plan. Make adjustments if needed.

On Your Own

Suddenly single. . . now what? You may find yourself unexpectedly on your own. While the prospects of being on your own may seem overwhelming, we are here to help guide you through this transition.

4 items to focus on first. Taking control of your financial situation will give you confidence and peace of mind:

1. Sources of income. They may include your salary, insurance proceeds, assets from a settlement.

2. Outgoing expenditures. What expenses will you have monthly and annually.

3. Update documents. Insurance and retirement plan beneficiaries.

4. Review portfolio and plan. This includes investment holdings and options. Make sure they still meet your needs.

Reaping Life’s Rewards

You are living the life you’ve dreamed of and enjoying your standard of living. Count on living a long life. Now is the time to get your house in order—so to speak. What’s your financial legacy? Money . . . or financial values.

Top goals. These are the things that should be top on your list:

Review your income plan. Make sure your money lasts as long as you do.

Update your estate planning documents. Do they meet your goals? Determine the best way to pass assets to the next generation.

Have a family meeting. If you want your family to be involved, they need to know what to expect.

Designate a trusted contact who can help you financially.

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When Do You Need a Financial Advisor?

By | 2018, Money Moxie | No Comments

Last week I attended the Silicon Slopes Tech Summit that celebrates the booming Tech sector along the Wasatch Front. As I spoke with vendors and attendees, a consistent theme came up: “When do I need an advisor?”

Here are my thoughts on this and other similar questions I was asked.

Do I really need an advisor? You may not always need an advisor, but you always need a plan. If you don’t have a roadmap, how do you know if you have reached your destination? Many people have vague ideas in their heads of what success looks like. Maybe it’s retiring at the age of 50 and sitting on a beach drinking lemonade. Maybe it’s starting up your own company. Maybe it’s giving back to the community.

It is important to sit down and write out your ideas of success. Then take one more step by defining the path that will take you there. Without creating the stepping stones, your ideas will only remain wishful dreams.

Do you need an advisor to create that plan? No, as long as you are willing to do the research. Nowadays there is so much information available on the internet that you can become an expert in any area…as long as you are willing to do the research. As our CEO Roger Smedley puts it, “You don’t know what you don’t know.” Even more dangerous may be the things you think you know with certainty.

So, if you want to create your own plan, but fear you are missing something, consult with a professional that can identify potential pitfalls and help turn your stepping stones into concrete, actionable ideas.

Don’t advisors cost a lot? At SFS, our initial consultation is free. I love to see young college graduates come in who are ready to conquer the world. I give them some time to help create a plan. I know that if I help guide them in the right direction, they will be more financially secure, and who knows, they may even become one of my top clients in the future.

If a person becomes a client, then there are fees that vary depending on the services provided. Comparing our fees and our in-depth planning, we are a far better value than our competition. I have had people question our cost, but I have never had them question our value.

What you don’t want to do is to get your advice at the water cooler. While good advice may not be cheap, bad advice will always cost you dearly no matter how little you pay for it.

Is it best to talk to an advisor before or after my company goes public? Anytime you are dealing with a potential windfall, you should talk to an advisor. As human beings we constantly overestimate how much something is worth. When I was young, I thought $100,000 for retirement was a lot of money. Now, I know it could disappear in a heartbeat.

So, if you get a windfall, reward yourself by using some of the money to take a trip or do something fun. Just don’t blow it all in one place. The world is full of once-rich people that are now broke.

Make sure your money helps you accomplish your goals according to your plan. And if you don’t get the windfall you were expecting, still talk to an advisor. We can help you reach your goals.

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