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South Hampton Roads Weekly Digest about Money

A weekly digest of the best personal finance blogs from the Chesapeake Bay's south shore. Taxes, estate planning, legal issues, investments, retirement planning, and more - original content from local authors to help you make better financial decisions. 

As much as I enjoy assembling and posting the SHReWD, time constraints have forced me to make some tough choices. One of those choices was to suspend developing and posting the SHReWD. I may try to come back to it at some point, but at the rate my practice is growing it doesn't seem likely.

I hope you've enjoyed the issues I was able to post. Thank you for stopping by.

Shrewd money logo 20171210My bride of 25 years and I sat down yesterday for our annual financial review. That's where we go over our goals, determine our progress, and decide whether we need to make any adjustments. It is essential to ensuring we are 'on the same page'.

I call is an annual meeting, but it was probably a little overdue. Despite being a financial planner I have a difficult time getting Tade to the table for the discussion. Or maybe it is because I am a financial planner. We are pretty good (I think) about having a division of labor in our household, and finance is my department. She is busy enough in her lane without coming over to mine for a day. I am insistent, though. We are a team and her input is required.

It was a good meeting, although there are some unanswered questions that she was OK with leaving unanswered. Christmas preparations are mostly her department in the household division of labor, and she is too occupied with those to pursue answers to all her financial questions at the same time. We agreed to leave a few questions for next time, wrapped the meeting up after 90 minutes, and headed over to watch the Army-Navy game with some friends.

I also want to plug Hurrah Players. We went to see their holiday show called Hurrah for the Holidays, and it was wonderful. In the row in front of us was a young family. The 4-year-old looked very cute in her Christmas dress and the green ribbon in her blonde hair. Near the end of the first act a cast member came out dressed as Elsa from the Disney movie Frozen and that little girl lost her mind she was so excited. Then 'Elsa' (portrayed by Isabella Orosco) bent the song Let It Go to her will and I lost mine. Tade was crying. There's so much talent in this area, and we are fortunate to have Hurrah Players to get it out there for us to enjoy.

Enough about me, let's get to the bloggers!

Elizabeth Boehmcke at Hook Law Center provides us with a timely reminder that there’s no better time than those holiday family gatherings to have some important family discussions... In addition to celebrating the joy of being together, it is important to think about setting aside some quiet time to address serious issues. If it seems clear that aging parents are in need of assistance of some kind, it is important to discuss that issue with them. Assistance needs can run the gamut from needing an extra hand with house and yard work to medication management to meal preparation to 24/7 custodial care and everything in-between. 

Real estate agent Liz Schuyler fired up her keyboard over at Hampton Roads Real Estate Ramblings to write about some of the impacts the proposed tax legislation may have on Homeowners. Every tax situation is unique, but the analysis from realtors is that most homeowners would see a tax increase under the proposals…From headlines to talking heads, the House and Senate tax bills have been garnering much criticism as many items in both bills can be seen as hurtful to home owners.  The NAR (National Association of Realtors), the largest trade association in the United States, calls it  "bad news" and "a tax hike on homeowners."

Korving & Co. used the story of former NFL player Marion Henry to provide a little insight into how having a high income for a few years does not equate to having a lifetime of financial securityPeople often have a false sense of security because they have not really priced out all the expenses that they will incur during retirement, or considered the effects of inflation on the cost of living as they get older.  They also assume that their investments will continue to grow at the same rate as they have in the past.  And few retirees really plan for how they will pay for long-term care if they should develop serious long-term illnesses not covered by Medicare.

Living trusts are gaining popularity, and Elder Law Attorney Angela Manz wants everyone to know that in order for a trust to be valid it needs to have four elementsFirst of all, there must be assets. Secondly, there must be a person who has created the trust, often referred to as the grantor or the trustor. Another person must be named in order for the trust to be legally effective. This person is called the trustee and this individual manages, holds, and distributes the assets. Finally, in order to put together a properly structured trust, the trust must have a purpose and it must be funded.

Most of us only contact a mortgage originator when we need a mortgage. Once we have the mortgage, we think have no further use for the service. Rio Ziegler at OVM Financial explains that might not be as true as you believe…It is helpful to stay in touch regularly after the mortgage closing. Just as it is important to involve financial advisors, accountants, or others for significant decisions or reviews, we would suggest a consistent mortgage review strategy. 

Over on my PIM Tax Services blog I decided to write about one of my favorite topics – the Virginia 529 plans. I am a fanboy of the 529s for college. They provide a decent tax-advantaged way to save for higher education. However, there are some mistakes you can make when you are withdrawing and spending the money that can wipe out the benefits of using the plan…Every once in a while, I’ll find someone who believes you can only use the 529 money on dorm fees and pre-paid meal plans. It just isn’t so. You can use your 529 money for room and board off campus. The limitation is that you cannot claim a greater expense than what it would cost to put them in the dorms and buy the meal plan. 

Bay Capital’s Jim Flinchum is happy with the recently released jobs reportToday's report continued a long string of good reports, with 228 thousand new jobs being created last month, more than the 195 thousand that pundits expected.  The unemployment rate remained unchanged at 4.1%, near a seventeen year low.  Average hourly earnings inched up 0.2% last month and 2.5% over the last year, which is not bad. 

Philip Tull, of Tull Financial Group, compares his recent training for the Savannah Rock n’ Roll Half Marathon to investing…I’m happy to say I pushed through my mental hitches and stuck it out. Eight weeks and one long race later, I not only finished the whole 13.1 miles, but I broke the 2 hour mark! As I basked in my achievement and the challenge, I realized it was reminiscent of our financial investment journey. You often hear that investing for the long-term is not a sprint, but a marathon. I found that the keys to reaching my marathon goals could also apply to reaching investment goals.

Judy Reed of the Judy Reed Real Estate Team lists 10 Benefits of Selling Your Home During the HolidaysThere’s always that question whether or not you should keep your house on the market for the holidays. You figure that potential home buyers will be preoccupied with buying gifts, planning parties, cooking meals, and visiting relatives; the last thing on their mind is searching for and purchasing a new home, right? For this reason, many home sellers choose to temporarily remove their home from listing, then wait until the new year to relist.

My friend Lori Irwin runs the Bank On Program(s) for multiple communities in Hampton Roads. New classes are forming soon, check it out!

BOHR Jan 2018 Classes Norolk Portsmouth Virginia Beach

 

Now go finish your shopping - but don't over extend yourself!

 

 

Shrewd money logo 20171204This week's SHReWD is a day late because I flew to Indianapolis this past weekend to cheer my Ohio State Buckeyes in the Big Ten Championship Game. I love our home here in Virginia, but I was born and raised on Ohio. I attended The Ohio State University, and I bleed Scarlet and Gray! It runs in the family. My youngest brother called me as soon as we were certain OSU was going to be in the conference championship game and we started planning our trip. Then we got the idea to invite Dad, and our step-brother, and...by game time there were 9 of us converging on Indianapolis to supporting our team. Apparently it worked, as The Buckeyes came away with a win. We also had a blast!

The next day we were anxiously awaiting the decision of the College Football Playoff Selection Committee. Going into the game I didn't think the Buckeyes were going to get into the playoffs. I could tell from the previous week's rankings that the selection committee was making Alabama's path back into the top 4 and a semi-final spot easier than Ohio State's. Alabama only fell to 5th after losing to Auburn. It was pretty obvious if any of the teams above them lost another game the Crimson Tide was going to nab one of the four playoff spots. Still, I got caught up in the hype and talking heads' debates on TV and radio. It was a fascinating topic being discussed by supposed experts. I couldn't look away. They made me hope, maybe even expect, OSU was going to get into the playoffs, so I was disappointed when the announcement came and Ohio State's ranking fell one short of the playoffs. 

This is same reason I don't watch CNBC, Bloomberg, or any of the other financial programming on TV or radio. It is charged with hype and talking head debates among supposed experts. All of it is designed to get me excited to watch the programming, but it does nothing to further my understanding of personal finance. I make better decisions by avoiding the hype, doing my own observations and analysis, and by reading the reasoned blog posts of these local experts.

Jim Flinchum at Bay Capital Advisors explains why economic indicators are pointing to a good holiday seasonThe stock market reflects the attitude of the upper income levels, while consumer confidence more closely reflects the attitude of the middle class.  Either way, it looks like it should be a good holiday season for retailers.  

Jim also gives us some timeless wisdom about tempering our expectations about stock market returnsAs a percent of GDP, corporate profits have stopped growing.  That does not mean a recession is close or worrisome.  But, it should temper our expectations for continued growth in the stock market.  Everybody knows the market cannot rise 30% year-after-year.  Unfortunately, if we only grow 10% next year, it will feel lackluster.  It shouldn't!

In part 2 of my post on miscellaneous tax deductions I tackled the ones the IRS calls ‘Certain Miscellaneous Deductions Subject to the 2% Limitation’ – meaning they don’t really count until your deductions in this category exceed 2% of your adjusted gross income…These deductions are nearly all related to the production of income. The tax code our government has implemented would like to generously provide you with a tax break if you are trying to produce additional taxable income. As long as you exceed the 2% of AGI threshold, of course.

OVM Financial had an informative piece this week about the FHA’s decision to increase conforming loan limits, and what that means…Conforming loans, also known as conventional loans, “conform” to Fannie Mae or Freddie Mac guidelines. A conforming loan offers low down payments for primary residence purchases or larger down payments if desired. These loans are typically used to purchase or refinance a primary, secondary, or rental property. With the 2018 conforming loan limits increase, it will allow more buyers in the top loan amount range to have access to affordable financing. 

OVM Financial is also supporting the USMC’s Toys for Tots driveLast year, we were able to donate $5,000 worth of Toys to Marine Toys for Tots Foundation. Let’s fill our donation boxes to the brim, and spread Christmas cheer by breaking last year’s donation record. Here’s a glimpse at some of the fun we had during last year’s drive.

Estate planning Attorney Angela Manz explains that a transfer on death (ToD) deed can be a useful estate planning tool, but cautions they are more complex than a transfer on death bank account clause. If you are considering a transfer on death provision to a real property deed, you should use an attorney… In order for a ToD deed to be effective it must be recorded. It needs to be filed directly with the County Recorder’s Office. For many people, this is one of the primary concerns associated with transfer on death deeds because they are not easy to change. 

Korving & Co. reiterated some good words from economist Brian Wesbury, but took the added step of changing the headline on the article to better illuminate a concept contained within the article they find more compelling…We changed his headline because there is something fundamentally more important in his comments, and it’s this:  consuming doesn’t make people wealthy, producing does.  No one ever got rich by sitting around consuming; people producing stuff is what makes communities, nations and cultures rich.

Attorney Katie Carter at Hofheimer Family Law posted some great advice this week about how to handle a situation where your attorney’s advice doesn’t make sense to youIf you’re working with an attorney, and you’re not confident in the advice you’re being given, get a second opinion! Just like a doctor, if you doubt the opinion of an attorney, talk to another.  Strategically there are a lot of choices to be made, and attorneys aren’t infallible.  If you aren’t sure, you’re certainly entitled to ask questions and make sure you understand.   

Certified Elder Law Attorney Letha Sgritta McDowell at Hook Law Center took on the unenviable tax of trying to digest and explain the tax bill that was recently passed by the House of Representatives. As a tax pro who is following this news, I didn’t find that Letha added anything to my comprehension of the proposed legislation. She did a fantastic job, however, of articulating our general bewilderment with THE PROCESS being used to make changes to the tax code…While many favor simplifying the tax code and its maze of complex rules, the House simplification would have ramifications that require careful thought and analysis.  The current Internal Revenue Code was passed in 1986 and  took more than 3 years to write; the recent House tax bill took just a few weeks and was passed without a single hearing.

That 's all for this week. Go Buckeyes!  Beat USC!

 

 

Shrewd money logo 20171126We enjoyed having many family and friends over for Thanksgiving dinner this past week. One of my uncles works in the front office for an NFL team, and he was here. He always has some interesting stories about players or the state of the NFL. One of the things we talked about over Thanksgiving dinner was his observation that "If the team is winning you can serve warm beer and cold hot dogs at the stadium, and the fans don't care." His point being that when things are going well, people will easily overlook minor issues. The opposite point is also implied. When things are not going well, the fans complain about everything.

After thinking about this for a while I decided the same is true in financial planning. If things are going well people tend to not worry about the fees they are paying or the service they are getting from their financial adviser. With the stock market in a historically long bull run, things are going well for most people. They are less inclined to question the performance of their adviser or the fees they are paying. At some future point that will likely change. The bull market will turn into a bear and people will start to demand more than warm beer and cold hot dogs from their advisers. They may even think about making a change. Reading these local bloggers, I think folks in South Hampton Roads will have lots of good options if they want to make a change.

I hope you all had a great Thanksgiving!

Katie Carter at Hoffheimer Family Law posted this week about the legal protections provided by a state-recognized marriage (as opposed to a common law marriage) -one of which (odd as it may sound) is divorce…In many ways, divorce is a protection.  Even though it can feel like the law is just there to make something difficult much, much harder, it isn’t.  It’s there to protect you, and your interest in the things that were earned during the marriage.  After all, marriage is (legally!) a partnership…

Jim Flinchum at Bay Capital hypothesized about the continued bull run in stocksRight now, there is a shortage of sellers in the stock market.  One reason is that sellers think prices will continue to rise.  Another reason is that they think their capital gains will be taxed at a lower rate next year.  Why sell it today and pay a 20% capital gains tax, when you can ride the increasing value and sell it in January, paying only a 15% tax?

I have long contemplated the idea of a blog post describing the various miscellaneous tax deductions listed on Schedule A of the Form 1040 as ‘Certain’ and ‘Other’ miscellaneous deductions. I finally got around to it with a post on the ‘Other’ miscellaneous deductions…certain miscellaneous deductions must clear a 2% of AGI (adjusted gross income) threshold before they start to make a difference on your tax return. Lines 25-27 are actually for calculating your 2% of AGI threshold and seeing if you have enough cumulative certain miscellaneous deductions in excess of the 2% of AGI threshold. Other miscellaneous deductions do not need to clear a 2% of AGI threshold before they start having an impact on taxes.

OVM Financial has some great advice this week on how to get creative with your financing if you are interested in purchasing a home-away-from-home, second home, or vacation home6 Mortgage Options to Purchase a Second Home, So You Don’t Have to Pay Cash

  1. 10% down payment on a single family home or townhome
  2. 10% down payment on condos
  3. Veterans – Cash-out up to 100% of appraised value on primary residence
  4. Conventional mortgage cash-out up to 80% of value on primary residence
  5. Reverse Mortgage cash-out on primary residence
  6. Combination Reverse Mortgage cash-out on primary + conventional loan on 2nd home

 

Elder Law Attorney Angela Manz put together a bit of a financial checklist for new parents. Life insurance and college funds are on the list, of course, but don’t forget her specialty…Furthermore, you will want to update all of your estate planning documents after welcoming a new loved one into your family. You’ll need to ensure that your will includes stipulations about who should step in in the event that you pass away to care for your minor child. 

Davis Law Group Managing Partner Douglas Davis was inspired by the holidays to give us a wonderful blog post about the importance of passing along more than your money to your heirsYou know there’s much more to you than the wealth you’ve accumulated in your life. Likewise, your estate plan is about more than just your financial worth. After all, what’s passed down from generation to generation amounts to something far greater than numbers on paper.

Korving & Co. took on one of my favorite topics in their blog this week – fees on investment accounts. Many of the big names in the brokerage business have been jacking up their fees lately, and the folks at Korving are calling them out…The latest insult to advisory clients is UBS Wealth Management’s decision to raise their account fees.  Individuals with less than $2 million in their accounts will now pay $175 per account per year, up from $150 previously, and more than double the $75 account fee UBS currently charges for each IRA you have open with them.

 

 

Shrewd money logo 20171119

We didn't do any pre-coordinating, but this week most of the South Hampton Roads money bloggers posted themes relating to houses and homes. Maybe this time of year just brings those thoughts to the surface. They got me thinking about my own house...

Just because I was lucky enough to marry my favorite person does not mean we see eye-to-eye on every issue. One of those issues on which we disagree is the need to keep our current family-sized house. It was great when we still had children at home, but they have all grown and moved on - and as much as I love them, they are not getting an invitation to move back! I think it makes sense for us to down-size, but Tade wants to keep the large house with the extra space.  She believes it makes it more appealing for people to come visit us if we can board them comfortably. Thus far we have 'compromised' on the house issue and done it Tade's way. (Every married man reading this understands that concept.)

As much as it pains me to admit, this Thanksgiving may be vindicating Tade's position on the house matter. My father is coming from Ohio with his wife and my brother. We also have 2 aunts, 2 uncles, and 2 cousins inbound from out of state. We had a dear friend and neighbor move to Georgia while her son was in graduate school at VCU. We've known the young man since he was 8, so he's the same as family and coming down from Richmond. Add Tade, me, and our daughter to the mix and we are 13 for Thanksgiving dinner. That's a house full (and a delight) for a couple of empty nesters, and not something we could pull off in a down-sized home.

I pride myself on being logical, so I'm not one to argue against the relentless rules of humble arithmetic.  This house is too big for two people.  On the other hand, if you won't trade your treasure for memories, why'd you bother having treasure? I might be sold on the idea of keeping this place.

Enough of that - let's get to the bloggers!

It ain’t bragging if you can do it as Hall of Fame pitcher Dizzy Dean used to say, so I’ll give my friends over at OVM Financial a pass for tooting their own horn in this week’s blog post. OVM Financial is growing rapidly and expanding their offices into markets in Texas, Florida, and Tennessee. They’ll need staff for those offices, so if you think you’d be a good fit at OVM you might want to get over to their website and find out more about the company.  Here is a taste… OVM Financial has taken what the mortgage industry has traditionally done and flipped it upside down. We’re taking the focus away from just numbers and directing attention to people and investments. Our Loan Officers share these values and our rich culture of long-term satisfaction.

Hoffheimer Family Law’s Blogger-in-Chief Katie Carter doles out some advice to divorcing spouses about their options when it comes to the houseA house is a big decision, so I always advise my clients to think very carefully about what they want to do with it.  Never make an emotional, knee jerk decision.  Whether you’re able to keep the house is bigger than just whether you can afford to make the mortgage payments.   

With the large military population we are blessed with in Hampton Roads, we also run into a healthy share of divorces where one or both spouses have earned a military pension.  That pension is marital property and will be split between the spouses in accordance with Virginia Law. Still, though, you may have options, as Katie Carter explains… It’s reasonable to be prepared for a counter offer.  And maybe to even think about what kind of counteroffers you might be willing to accept. There’s no doubt that a military pension has pretty significant value, especially if you’re going to receive a sizable chunk of it...  Do you want more money up front, or would you prefer a certain amount of money (especially if you’re not planning to elect to participate in the SBP)?

I unknowingly fit into this week’s theme when I wrote a tax article about Interest Tracing Rules. Interest tracing involves demonstrating how the loans generating the the loan interest deductions from your taxes were actually spent. However, most tax payers are blissfully ignorant that interest tracing matters because they frequently borrow money using their personal residence as collateral.  When that happens it generally doesn’t matter how the loan was spent – within limits, of course… Tax payers can borrow up to $100,000 in a home equity loan using their primary or second residence as collateral, spend it on anything they want, and deduct the interest on Schedule A as a personal deduction.

Maggie over at Siebert Realty blogged this week about an increasing American trend for 3 generations of a family to take a vacation together. It’s a great way for grandparents in the boomer generation to spread some of their wealth and build memories at the same time. If you’re all vacationing together, what better way to stay than in a vacation rental home? …

  • Dining areas that accommodate families
  • Rentals allow for a wider variety of activity planning, since the rental itself is inviting should one choose to relax inside.
  • Pricing is more reasonable
  • The space that bedrooms and suites provide while still fostering a sense of community

Elder Law Attorney Shannon Laymon-Pecoraro at the Hook Law Center blogged this week about Protecting Assets When a Spouse Enters a Nursing Home by debunking several myths about Medicaid. Not least among these myths is that Medicaid is going to take your house away… Medicaid does not take anyone’s home, let alone the primary residence of a community spouse. Instead, the Medicaid considers the primary residence of a community a non-countable, or exempt, resource when determining eligibility.  

Jessica A. Hayes at Hook Law Center gives us a nice piece this week on the pitfalls you might encounter if you try to do your estate planning on-the-cheap onlineIn recent years, I’ve encountered several documents generated online which had serious flaws – for example, a trust that was missing major distribution provisions, a will without the necessary attestation clause, and a power of attorney that was not sufficiently broad enough to permit the agent to assist the client in qualifying financially for Medicaid. 

For many Americans our house is our largest asset, so it can cause some anxious nights if you have it on the market and it isn’t getting much attention at your asking price. The Judy Reed Team blogged this week about 9 Surefire Ways to Boost Your Curb Appealit’s no surprise that a house that makes you want to move right in before you’re even past the mailbox not only commands a higher selling price but also sells faster.

Elder Law Specialist Angela Manz got the jump on me with a list of tax tips for end-of-year tax planning. She put together a good list, though.  Especially as we head into a season where the Congress is fiddling with the tax laws again, and we aren’t sure how things might stand at this time next year. At the top of Angela’s list are …

  •       Deferring income and accelerating deductions if you can.
  •       Using itemized deductions before they disappear.
  •       Leveraging local and state sales tax deductions.
  •       Considering making charitable donations now.

That's it for this week. Happy Thanksgiving, Y'all!

 

 

Shrewd money logo 20171112It seemed like we had a 2-day Veteran's Day holiday this past week. Federal employees had the day off on Friday, but the actual holiday was on Saturday. Friday was also the 242nd birthday of the US Marine Corps. My Facebook feed has been jumping the past few days with well-wishing and gratitude. A welcome break from the normal menu of finger-pointing and complaining I am served there.

I was active duty Navy for 24 years, which certainly makes me a veteran. I always feel a little funny when people thank me for being a veteran, though. Thanking them for thanking me is awkward, as is saying "you're welcome". Plus I am still adjusting to it. Veterans (in my head) are old people, like my grandfather. I didn't invade Europe with Patton's Third Army like he did. It seems peculiar that I would be mentioned in the same breath. It is a role I am still growing into.

Similarly, I am still growing into my role as a blogger and money expert. Fortunately, I have these fine folks to set the example for me to follow:

If reading Elder Law Attorney Sarah Schmidt’s post at the Hook Law Center blog doesn’t fill you with an increased sense of urgency regarding estate planning, I don’t think anything will. Apparently – and I had no idea about this – Virginia (along with 28 other states) has a filial law on the books requiring children with means to support their indigent parentsVirginia Code Section 20-88 was enacted in 1920. It imposes an obligation on persons eighteen years of age or older, to provide for the support and maintenance of his or her mother or father, if: (1) after reasonably providing for his own immediate family, the child is of sufficient earning capacity or income, and (2) the parent is then and there in destitute or necessitous circumstances.

[Makes me want to ensure none of my clients encounter necessitous circumstances.]

Stories of wealthy and eccentric folks leaving their fortunes to their pets are well-known in the popular culture. Douglas W. Davis, managing partner at Davis Law Group, blogged this week about a growing trend among ‘regular’ people to make a bequest for the continued care of a beloved four-legged friend. Douglas gives us 5 mistakes to avoid if you’re thinking about including your pet in your estate plan… Too many pets don’t receive the care their owners intended because they weren’t specific enough in their instructions or because they did not use a trust to make the instructions legally binding. Luckily, a pet trust can clarify your instructions and make them legally valid.

Katie Carter at Hoffheimer Family Law puts her cards on the table when she answers the question Will My New Boyfriend Hurt My Custody Case? In legal terms, his character is fair game in a custody battle, so you’d do well to avoid giving your ex any ammunition… With a new boyfriend, you should definitely tread carefully. There are definitely risks involved there, and you should go into it with your eyes wide open. To run the LEAST risk of hurting your custody case later on down the line, only get involved with men whose history you know well and would be prepared to explain to a judge, and don’t move in together unless and until you’re married. I know it’s old fashioned, and I know it’s annoying, but it’s definitely the best route to take with respect to your current children.

Korving & Co. posted a loving-smack-to-the-back-of-the-head about doing the obvious things in life: take care of your health and plan for your retirement – and how those two things can be integrally related… The average person spends $275,000 on health care expenses in retirement.  So an investment in good health can play a huge role in making one’s retirement numbers work out.

In a related note – Stephen Korving was recently named to the Top 40 Under 40 list. Congratulations!

Elder Law Attorney Angel Manz confirms the bad news most of us already suspected – the cost of long term care continues to increase. Among the reasons why: shorter hospital stays leading to more advanced care in the long-term care facilities, increased demand for home health care, and higher wages in fields competing for long term care professionals. Nationwide… A private room in a nursing home now costs consumers more than $8000 per month or just under $100,000 per year. A semi-private room still carries a price tag of $85,000 per year. 

Over in my tax blog I posted an article about the various tax extensions available to military personal at the federal and Virginia level. I also included North Carolina for good measure… Personnel serving outside the United States (and Puerto Rico) can receive an automatic four-month extension. You simply check the box that says, “Out of the Country” when you file your return. If you don’t pay your North Carolina taxes by the original due date they will accrue interest (but not penalties) through the extension period. If you need more than 4 months, you can request an additional 2 months by specifying your request on form D-410 by August 15.

Bay Capital’s Jim Flinchum dives into some economic data, explaining the Job Openings Labor Turnover Report and the Quit Rate – both of which indicate the economy is on solid ground…. The Quit Rate seems to have stabilized at about 2.2%, which means 2.2% of the labor force quit their jobs last month.  That is the highest since 2007.  Because workers seldom quit without another job waiting for them, a rising Quit Rate means greater confidence among workers and is a good thing. 

Real estate guru Judy Reed posted about sprucing up your porch to add appeal to your home, and then followed it up with multiple examples of how nice a porch can look! Porch Envy Is a Thing!

 

 

Shrewd money logo 20171105We have had a German Shepherd named Gretta for several years now. We picked her up from Virginia German Shepherd Rescue a few years ago right at the end of her prime adult years. She is both beautiful and the smartest dog I have ever owned. Also the most useful. Shortly after she moved in with us I was working in the back yard when I heard the most awful noise. I turned around to see my Gretta killing a fox I hadn't even known was there. It was an awesome display of instinct and law of the jungle. The fox later tested positive for rabies, so Gretta likely saved me a lot of pain.

She is older now, with bad hips. She is not very active and I often accuse her of doing nothing except turning food into hair - which she then sheds all over the house. She is still very smart, but I don't think she gets my sardonic wit. And... as smart as she is she knows nothing about Daylight Savings Time. That is why I had a snout come into my side of the bed at 5:00 this morning to tell me that it was time for breakfast!

Enough of that, let's get to the bloggers:

Amy Pucci at the Tull Financial Group reminds us that it is Medicare Open Enrollment season. They’ve even put together a handy checklist to help you understand the changes and offerings in Medicare this year.

Founder Robert Tull, Jr. recalls his experiences during the market crash in October 1987. He does a nice job  contrasting the market 30 years ago to the market today, but points out that some things have not changed… no one has a crystal ball to predict the future of the stock market. We know there will always be bulls and bears– but we are better prepared to utilize the power of modern technology to adjust asset allocations quickly and almost entirely online.

Digital assets were on the mind of Estate Planning Guru Angela Manz last week. Often overlooked in estate planning, digital assets might include email accounts, bank records, medical records, iTunes accounts, bitcoins, or an online business... Online service providers each have their own unique approach to how they deal with somebody’s account when that person passes away. In many cases if they are informed that someone has passed away, they will all automatically close the account.

Jim Flinchum explains why consumer confidence is so high, and what we ought to be concerned about going forwardThose confident consumers have nearly stopped saving, down to 3.1% of income, which is down from 6% just two years ago.  The national debt continues to rise, credit card usage is up, and corporate bonds are being issued at a rapid rate (to lock-in low rates on money they may need in the future).  Total debt is rising.

Attorney and Blogger Katie Carter steps us through Separation Basics at the Hoffheimer Family Law blog. Like many things, the concept of marital separation is simple, but the devil is in the details…Sometimes, people get separation agreements in place before separation.  Most of the time, though, they wait until after separation.  Really, it doesn’t make much difference, just so long as you have one.  Once you get a separation agreement in place, you’ll be able to move forward with an uncontested, no fault divorce, which is usually (though not always) the best course of action. 

I wrote about the perils of believing something that is too good to be true over at my tax blog. Seems a young man was promised an unusually large tax refund by a tax preparer (who charged him an unusually large fee) and instead of questioning how she was able to procure him such a large refund he simply agreed…The court essentially told him that when Pam Williams promised something too good to be true, it was his duty as a taxpayer to make a sufficient effort to determine his true tax liability – something he never did. That makes him negligent and liable for the 20% penalty.

My friend and colleague Lori Irwin at Bank on Hampton Roads posted an announcement for the Master Financial Education Volunteer Course offered by the Virginia Cooperative Extension. I am a graduate of that course and recommend it for anyone interested in providing financial advice to the 90% of society that has ordinary money problems.

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Elder Law Attorney Elizabeth Boehmcke at the Hook Law Center has observed a rise in clients requesting conservatorships and guardianships for aging loved ones. Establishing a conservatorship or guardianship may be necessary in order to establish legal rights to take over management of someone’s affairs if they become incapable through dementia or injury. The point Elizabeth adroitly makes is this is an expensive route that can usually be avoided through proper estate planning…Court action is expensive, costing thousands of dollars. The durable power of attorney and the advanced medical directive allow you, in most cases, to completely AVOID the need for court action in the event of your incapacity.

That wraps up another week. Remember, it's Veteran's Day this week. If you enjoy your freedom, thank a Veteran!

 

 

Shrewd money logo 20171029I like Halloween. I enjoy seeing the kiddies in their costumes and giving out candy. The first year in our current house we did not get much trick-or-treat traffic, and I was disappointed. We live on a cul-de-sac where the houses are kind of far apart and the trees block much of the street light. A few of my neighbors have children of their own, so they turn off their porch lights when they take their children out trick-or-treating. This adds to our street's lack of appeal for parents herding small children around in the dark.  That first Halloween here I could see many of them look down my street from the corner and do some quick math on how much walking they would have to do for the handful of houses that were passing out candy.  Usually they kept on moving past our street. 

Since then we have worked with our neighbors to get more of the kids to come by on Halloween. Several of us gather near the top of the cul with our lawn chairs and Halloween decorations. It's a short walk to a well-lit area where the kids can get treats from multiple households at one time. Well worth the effort. Rumor has it we may even have liquid treats in paper cups available for cold and weary adults who want to partake. You never know. You should stop by and check it out!

Now...on to the financial news!

I get to start this week’s digest with a reminder from my colleagues at OVM Financial about the things that matter most. They recently held their 4th annual Pick-A-Charity Bash, and had more than 300 attendees donate $15,824 to charities across Hampton Roads. Then, as they always do, OVM Financial made a matching contribution, meaning $31,648 was donated. OVM gave the matching contribution to the American Red Cross to support disaster relief efforts for our brothers and sisters dealing with all the post-hurricane madness in Texas, Florida, and Puerto Rico. Tip of the hat to OVM Financial for caring about the communities where they do business, and Americans in need everywhere!

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Certified Elder Law Attorney Letha McDowell at the Hook Law Center blogged about the generational change in values regarding heirlooms. While many in the older generation want to bequeath certain items of tangible property to specific people, most in the younger generation don’t actually want to inherit them. With that in mind she encourages folks to… have a conversation with loved ones about what items they may like to inherit. If there are specific items that a loved one would choose to inherit, be sure to specifically list that on a tangible personal property list. Be sure to encourage loved ones to be honest with their feelings to avoid anyone feeling “guilted” into taking items they may not want or have room for. For those everyday items which do not have appeal to anyone in particular, begin decluttering early and giving those items to a charity such as Habitat for Humanity or Goodwill which will help ensure they are given to those in need who could use the items.

Katie Carter at Hoffheimer Family Law pushes the stereotyping envelope a bit in her recent blog post about how men and women view rights to marital property differently during the divorce process. As a man I found myself getting a little uncomfortable with her characterization of how things typically go. Maybe that’s not such a bad thing, though. Comfort and comprehension don’t always go hand in hand. I defer to her expertise in the matter, and there’s no doubting that…Marriage is a partnership; spouses are one entity under the law. Whatever one spouse earns is also earned by the other spouse, particularly in the scenario where one spouse stayed at home. She is not entitled to less simply by virtue of the fact that she has worked in the home.

In her blog post about the Costs in Divorce Katie Carter goes ‘open kimono’ transparent on what legal fees you can expect to accrue during your divorce process. She walks us through the gamut of different fee types lawyers charge, reminding us that you typically get what you pay for…generally speaking, hiring an attorney is not a clearance rack kind of proposition. For the most part, attorney fees correspond pretty closely to the experience and reputation of the attorney in question.

Yours truly made a post at the PIM Tax Blog on how suspended passive losses cause more angst among real estate investors than they should. I get the impression most people believe suspended passive losses are useless. I disagree… Note the terminology in use – SUSPENDED passive losses. We don’t call them forfeited passive losses. They are not forfeited, they are suspended. They can come back later. Tom Brady got suspended from the NFL for 4 games. He didn’t get kicked out of the league, he just had to take a time out. Then he came back, went to work, and won the Super Bowl. Your suspended passive losses can also bounce back.

Jim Flinchum of Bay Capital Advisors explains why the recent ‘durables’ report was good news.  Plus, you gotta love a financial advisor that finishes a blog post with a Wayne’s World reference…the one-time impact of the hurricanes has been less than expected and has not yet confused the economic data. More importantly, the underlying data continues to look strong. Party on, Garth!

In A Fake Hatchett Job Jim Flinchum provides a counterpoint to a recent WSJ article that focused on the shortcomings of the Morningstar mutual fund rating system…Morningstar doesn't promise that a five star fund will increase in value. They look at the risk-return relationship of the mutual fund, the level of fees charged in comparison to similar funds, the qualifications of the portfolio manager, the strength of the mutual fund sponsors and other factors.

That wraps up another week. Enjoy Halloween y'all!

 

 

virginia beach shrewd money 20171022Financial planning became my passion back when our family grew to be more than just Tade and me. I don't think its importance can be overstated. Finances impact every aspect of our lives. Yet, most Americans never engage with a professional financial planner. I think there are many reasons for that fact, but one of them stands out in my mind more than the others. It pains me to admit, but this profession - MY profession - has a serious lack of credibility. The worst part is that lack of credibility was well-earned through decades of selling clients financial products that were not the best option to help the clients reach their goals. 

Many of us in the financial planning field are working hard to win back our credibility. We want to professionalize financial planning. Progress on that front is slower than we like, but there is progress. As with all things, change starts from within. That's why I am happy to start this week's SHReWD with a post by the bloggers at Korving & Co. trumpeting Dave Yeske’s recent comments on this topic near and dear to my heart.  In Why is Financial Planning Important?, Dr. Yeske encourages financial planners to take pride in their profession and to behave as if they are doing something extraordinarily important - because we are.... Think about the traditional professions of law and medicine, for example, and now look at financial planning. Vastly more people will suffer a bad financial outcome in their lives than will suffer from a dread disease or a perilous legal situation. We’re the ones who have the power to help people care for aging parents, educate their kids, provide for a comfortable retirement—these are the things that everyone strives for. These are also the biggest potential stress points in people’s lives.

I join with the Korvings in shouting AMEN!

The indefatigable Hoffheimer Family Law blogger Katie Carter let’s women know what to expect when spousal support issues are brought up in a divorce case. In addition to spreading some free knowledge Katie also gives some advice that seems solid: don’t take it personally…Whether you’re a stay at home mom or you’ve worked during the marriage, he’s going to argue that you don’t deserve support. Whether you’re a military wife or a civilian, he’s going to argue that you don’t deserve support. Whether you have kids or not, he’s going to argue that you don’t deserve support. The bottom line? He is going to argue that you don’t deserve support. Put the indignity aside, and get down to business.

In All I Need is an Uncontested Divorce Katie warns not to become complacent. Just because you and your soon-to-be ex-spouse seem to be in agreement about the terms of your divorce, you need to be wary and protect your best interests. I also enjoyed Katie’s parenthetical nature in this article (something I tend to do myself!)… Even if you and your husband have pretty much agreed about everything, and even if you’ve already divided many of the assets to your mutual satisfaction, some sort of writing is going to be necessary—if not for your sake (and I definitely recommend it just for that reason), then also for the court’s. Most courts require that you have a signed separation agreement in order to move forward with an uncontested divorce (and certainly if you don’t have minor children and you’re trying to move forward based on a 6 month separation), and you’ll have a very difficult time moving forward without one. (And, really, I can’t think of why you’d want to – a separation agreement is going to protect you in more ways than one.)

It’s not even Halloween yet and Katie is writing about the holidays to come. It’s not Christmas or Thanksgiving or even the New Year that Katie is writing about, though. Nope. Katie is getting the jump on Veteran’s Day with some well-deserve praise for military members and their spouses and some words of advice for future ex-spouses in the form of a free book offer…Our military divorce book is full to the brim with military specific information, and will help you begin to understand Virginia law and how it operates in military divorces. (Hint: You can’t just go talk to a JAG attorney! And you’ll need to know about how SGLI, BAH, SBP, military pensions, and TriCare are handled in a divorce!)

Next up - picture this scene: the people you love most in this world are in a hospital hallway, filled with shock and grief, and arguing about what they should do next. Elder Law specialist Angela Manz tells us how you can avoid putting your loved ones in that position with some very basic estate planning tools….If you are suddenly incapacitated by a disability caused by something like a car accident, who would be appointed to make medical or financial decisions on your behalf? Do you have a comprehensive plan that looks at the different concerns that your family might be required to address in the immediate aftermath? Far too many families who are already coping with the broad range of changes caused by incapacitation are then asked to sort through a legal mess because someone did not engage in appropriate incapacitation planning. [Paul's note...Hint: that 'someone' is YOU!]

Last, but not least, I wrote an article for my tax blog showing the specifics of how a local couple’s federal income tax bill rose at a much higher rate from 2014-2016 than their income. They thought they were either crazy or preparing their taxes incorrectly. Turns out it was neither…In 2014 the Creases’ AGI was $95,042. By 2016 their AGI had risen to $162,440. That’s a rise of 70.9% - good for them! Now let’s look at the bottom line on my table. That is line 63 from their tax returns, their total federal income tax burden for the year. In 2014 it was $5,391. In 2016 it had risen to $22,501. That’s an increase of 317.4%. (You read that correctly - three hundred seventeen point four percent.) Their income increase of 70.9% resulted in an income tax increase of 317.4%. You’re not crazy, rapid tax increases are really happening!

 

 

virginia beach shrewd money 20171010The local personal finance bloggers – especially the lawyers! – were highly productive this week. Lots of good content on estate planning, special needs planning, taxes on real estate investing, and child support to satisfy your appetite for learning how to take care of your money. Let’s get it started with a piece from the Hook Law Center:

I had the pleasure of seeing Shannon Laymon-Pecoraro give a presentation on financial planning considerations for loved ones with special needs a few months ago, so I was glad to see Hook Law Center continues to make use of her knowledge and talents on their blog. This week she wrote about Protecting Public Benefits from Child Support Payments. Parents of disabled children may be required to pay child support to the child even after they reach adulthood…The Social Security Administration will disregard the first $20 of unearned income, and thereafter reduce an SSI benefit dollar-for-dollar. If SSI is lost, the child will lose his or her automatic entitlement to Medicaid and will need to meet the requirements of the traditional or long-term care Medicaid program…The good news is that the Social Security Administration has determined that when a court requires child support payments into a first party special needs trust, such payments will not be considered income to the child, and will therefore not detrimentally impact that child’s benefits.

Jessica A.Hayes, also from The Hook Law Center, lets us know Medicare will be issuing new cards starting in April 2018 as an identity theft fighting strategy. Your Social Security number will no longer be used as your Medicare number. Jessica warns us that scammers are wily and may try to use this as an opportunity to perpetrate new scams...They [scammers] may contact Medicare beneficiaries and inform them that there is a fee that must be collected before a new card may be issued. Or perhaps they will make beneficiaries believe they will lose their benefits if the scammers’ demands are not met right away. Scammers are creative and convincing, but knowledge up front about the free rollout of new cards is the best defense against the unscrupulous.

Davis Law Group’s managing partner Douglas Davis gave us a post this week on why newlyweds should begin estate planning as soon as they return from the honeymoon. (Not very romantic, but highly practical!) He also logically rebuts 5 excuses as to why a newlywed might want to wait on making their estate plan…We’ll do it when we buy a house or have kids…You can actually plan now for property you don’t even own yet (i.e. a house you may buy some day) and you can even make provisions for future children. Once you have that initial plan in place, you can easily update it as your circumstances and needs change.

Katie Carter continues to crank out droves of high quality information over at the Hoffheimer Family Law blog.

She tackles the always confusing but popular topic of Virginia Child Support Guidelines by walking us through the math…Child support is calculated based on a number of criteria: how much time you have with the child, how much income you and your child’s father earn, how many children are involved (and whether child support is being paid to children from another relationship), how much you pay in health insurance for the benefit of the child, and how much you pay in work-related child care.

Which comes first, the divorce or the custody? Katie answers that question in Should I Handle Custody Before My Divorce? (Hint: she doesn’t think you should.) …from a practical standpoint, it seems like it’s just dragging things out and making everything take a lot longer. Maybe that okay with you, and maybe it isn’t. Maybe you think custody is just one part of a two part process. I don’t really view it that way…

I’m not a big fan of Holiday Season talk in October, but in Handling Holiday Custody and Visitation Katie makes a great point about planning ahead…Whether you choose to work with an attorney to come up with a comprehensive custody and visitation agreement, litigate in court (though if you don’t already have a court date set, you won’t be able to get one before the holidays), or come up with something between yourselves, now is definitely the time to act. By getting something in place now—even if it’s difficult to talk about—you’ll remove some of the uncertainty from the situation, which is often a big part of the reason why people fight.

At some point when your children are young you have to have that talk with them about ‘the birds and the bees’. Estate planning attorney and guru Angela Manz reminded us this week there is a second talk we need to have with our children when they are all older – The Estate Plan Talk. She provides some useful pointers for those who are nervous about having this discussion…A good introduction to a crucial family conversation is about values. This is because it is much easy for people to approach the subject talking about values than money. Relationships matter more than money and more than things and establishing your values gives you preliminary opener to talk about your long-term goals that you hope to achieve.

Korving & Co. celebrated Dr. Richard H. Thaler’s recent (and well-deserved) Nobel Prize in Economics. Dr. Thaler, a pioneer in behavioral finance, integrated psychology into analysis of economic decision-making….It does not take a Nobel Prize to understand that people often make decisions based on emotion. We do it all the time… When markets rise we persuade ourselves to take risks we should not take. When markets decline and our investments go down we allow fear to overcome our judgment and we sell out, afraid that we’ll lose all of our money.


The Korvings also posted an answer to a financial planning question about living off interest and dividend income…A comprehensive plan should include your income sources, such as pensions and social security. … It will also show you the effects of inflation on your expenses, something that shocks many people who are not aware of the effects of inflation over a 30-year retirement span.

I wrote an article for my tax blog about the unique tax strategy and planning needs of real estate investorsThe point I am hoping to make is there are many ways in which the tax code provides for preferential treatment of real estate investing, and taking full advantage of that preferential treatment can make a significant impact on your bottom line as a real estate investor.

We’ll finish this week with Certified Financial Planning Professional Jim Flinchum’s pitch for some Austrian wisdom to invade Washington DCNobody likes to admit the economy is doing just fine. It doesn't need to be jump-started. Trump's cutting of red-tape will do more good for the economy than a tax cut will. When the economy is doing well, you don't cut taxes -- you should repay debt…

 

The information posted to this website is for education purposes and is not intended to be investment advice. 

Registration as an Investment Advisory in the Commonwealth of Virginia does not imply an endorsement by Virginia, nor does it mean the Commonwealth of Virginia certifies or verifies my knowledge, skills, or experience as an investment advisor. 

PIM Financial Partners provides financial planning and investment advice to residents of Virginia. Residents of other jurisdictions are considered on a case basis depending on the laws governing investment advisors where they live.

 

SHReWD Money is a weekly digest of the personal finance blogs written in South Hampton Roads. The intent is to highlight the best original content on topics of personal money management and promote it to reach a larger audience.

SHReWD Money is published on Sundays.  The blog cycle is for the previous week ending on Saturday. For example, a digest posted on Sunday the 15th will cover blog articles released between Sunday the 8th and Saturday the 14th inclusive. 

I'm a one-man show, so mistakes, oversights, and an occasional vacation may happen. Your patience is appreciated.

If you would like to recommend a blog/blogger to be included in SHReWD Money, please drop me a line. Original content only, please.

Questions, comments, or concerns? Let me know!

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