July 25, 2013


Credit: M - Pics
One of my most loyal readers recently sent me a Forbes article that made me stop dead in my tracks. According to the article, it seems that Aston Martin has been selling a car known as the Cygnet for around $45,000. The twist is that the Cygnet is actually a Toyota model in disguise and can be purchased for around $17,000! The cars may be nearly identical, minus some small, interior differences, but the prices sure aren’t very similar! To my horror and chagrin, I’ve now learned that Aston Martin is not the only global auto maker engaged in the practice of putting their signature brand distinctions on other car companies’ models, or so-called “badge engineering,” but this article also got me thinking… An Aston Martin is my dream car, but surely I wouldn’t pay $28,000 extra for essentially a hood ornament, would I?

Well, when it comes to ketchup, I guess I’m a snob. Only Heinz is ketchup. When it comes to soda, I’m strictly a Coca-Cola guy with a rare Dr. Pepper mixed in. When it comes to everyday, outdoor boots, I only buy Timberland.

But I’m not always so brand-driven. When it comes to sunglasses, I don’t care. Whatever feels good, looks cool, and is under $20 is fine with me. When it comes to bottled water, I really don’t care whose plastic packaging I’m using. When it comes to toothpaste, whatever is on sale and doesn’t have baking soda in it is probably what’s going to be on my toothbrush.

I’m sure if you were to think about it, there are items that you “have to have” from a certain brand and other items you couldn’t care less about. You may be different from me and really value your limited edition sunglasses that I’d probably store in my safety deposit box, and that’s just fine. The point I’m trying to make is that everyone, including me, would probably have a little more money in the bank if they paused for just a moment and made sure they weren’t buying a “Toyota” at an “Aston Martin’s” price.

Take men’s golf shirts, for example. I love golf shirts. They’re my torso cover of choice! I like mediums and larges depending on their size (and mine, too) that are solid or have a few stripes. I like reds, blues, grays, greens, yellows, blacks, browns, and burgundies. As long as their color doesn’t resemble a highlighter or an Easter egg, we’re good. As you can see, I’m fairly particular, and over the years I have amassed quite an arsenal, including all sorts of brands from all sorts of stores. And to be completely honest, a lion’s share of my golf shirts have probably been purchased at a store like Kohl’s during a sale and have probably run me around $20 or so. Now if you wouldn’t be caught dead in a store like Kohl’s or wearing a golf shirt that cost $20, I’m not judging you, because I don’t want you judging me for my Timberland boots. However, I would encourage you to think about just how much that crocodile (Lacoste), guy on a horse with a mallet (Polo), or red and white rectangles (Tommy Hilfiger) on the left side of your chest are really worth to you. I mean a golf shirt is a golf shirt to some degree, isn’t it?

So my female readers out there can relate, let’s talk shoes. I’m somewhat “branded” in the sense that my tennis shoes will be Nike or New Balance, but I usually buy my shoes at a store like Sports Authority when they are trying to get rid of last year’s styles. Now I learned a long time ago not to judge women by their shoes (and certainly not by how many they have), but I would encourage you to think about just how much having the soles of your high heels being “Louboutin red” is really worth to you. A shoe is a shoe to some degree, isn’t it?

Let me once again emphasize that I’m not trying to step on any toes today. If you want an “Aston Martin” and can afford an “Aston Martin Toyota,” be my guest. But, if you are like me, and are trying to save a little bit more, I encourage you to take a few minutes and think about what items you may be a little bit “branded” by, and consider whether or not buying a “Toyota” at a “Toyota’s” price may be a better idea.


July 16, 2013

Wag the Dog

Credit: Maggie Smith
Wag the Dog is a 1997 comedy featuring Robert De Niro and Dustin Hoffman in which a “spin-doctor” publicist and a Hollywood producer work together to cover up a presidential scandal. I won’t ruin the movie for you if you haven’t seen it, but the gist of it is that the publicist and producer help create a fake war against Albania to take the American people's attention away from the inappropriate actions of the president. While it’s quite a humorous movie (and I must confess that it makes me wonder how often “significant” events have been cooked up in the past to give our leaders a little breathing room), allowing something to divert one’s attention away from what it should be on (letting something “wag the dog”) isn’t funny at all.

As I’ve said before, it’s my job to try to help people and to make strategic financial suggestions to the clients I serve, but I never tell people what to do. Sadly, in spite of my best efforts and persistent explanations, I’ve had several experiences as a CPA and a financial planner where the clients I serve have been unable to focus on their overall financial situation because of their obsession with a specific portion of their financial situation - usually this has to do with their taxes. That’s why I want to focus on a few tax-related issues that I have seen “wag” my clients from doing what I truly believe is in their best interest.
  • Capital Gains
    • I’m convinced there is nothing that gets CPAs and investment advisors yelled at more than capital gains. If clients have capital gains, they are usually mad because they owe taxes, but if clients have capital losses, they are usually mad because they have lost money. Either way, in terms of recognizing capital gains, selling out of a stock position that has gone up a considerable amount often makes sense because you are taking your gain off the table and giving yourself the opportunity to buy a different stock position that has more potential for future, additional growth. Yes, you’ll have to pay taxes on the amount the stock position went up or appreciated, but isn’t that better than the alternatives? If you wait for the stock price to go back down before you sell, you probably won’t owe any taxes, but you also won’t have any gain, and if you’re not willing to sell the stock during your lifetime, what good is the stock to you in the first place (unless you plan on charitably gifting it or specifically bequeathing it)? No matter the stock or investment, there comes a time when it makes sense to sell your position, take your gain, and run. Please don’t let capital gain taxes solely wag you from considering taking that gain.
  • Income Timing
    • Some people have jobs with steady incomes, and their tax picture is about the same every year. Some people have jobs with fluctuating incomes; some years they will be in lower tax brackets, and some years they will be in higher tax brackets. Whether still actively working or retired, by taking a multiple-year view towards your income stream, you can attempt to manage unusual “bursts” of income, such as stock options, lump sum pension payments, deferred compensation payouts, IRA distributions, and annuity distributions, in a tax-efficient manner. The problem is that some people want all of their money at once and give Uncle Sam a massive portion of their income, as opposed to cumulatively giving the government less if income is more evenly spread out. There are also people who want to pay as little in taxes as possible every year and keep putting off stock option exercises, distributions, and payouts until they back themselves into a year when they have no choice but to give Uncle Sam a massive portion of their income. As usual, there is often a sweet spot in the middle where by prudently spreading out your income you can have long-term tax savings. Please don’t let a complete disregard for income tax implications or a blind focus on minimizing current year income taxes wag you from potential tax savings.
  • Having a CPA
    • It concerns me how many people choose not to have a CPA prepare their taxes. I know tax preparation fees can be high, but having someone who knows the latest in federal and state tax laws, gift tax laws, and estate tax laws is invaluable. Having the ability to point your finger towards someone else should there be an issue and the IRS comes calling is nice, too! If you don’t have a CPA, I would strongly encourage you to consider finding one unless you know all about the Georgia Retirement Income Exclusion, the changing AGI threshold for itemized medical deductions, and how to plan on utilizing the portability of your now inflation-adjusted estate tax exemption. I know, TurboTax and its brothers are great, but accidentally misusing tax software does not excuse you from any errors or penalties that may be related to those mistakes. As the Tax Court said in a case back in 2000, “Tax preparation software is only as good as the information one inputs into it.” Please don’t let the fees of having a CPA prepare your taxes (which are likely tax deductible) wag you from having your taxes done as correctly and as efficiently as possible.   
Taxes are the main “dog-wagger” I see, but there are others. Trying to save too much money too fast by shortchanging your quality of life is letting your savings goal wag the dog. Trying to pay down debt too fast by jeopardizing your emergency fund is letting your debt reduction plan wag the dog. Trying to max out your 401(k) contributions by cutting your ability to comfortably pay monthly expenses is letting your investing strategy wag the dog. I could go on and on.
Get some popcorn, watch the movie, and try to remember that just as a dog should wag its tail, your overall financial situation should drive your specific financial decision making.   

July 02, 2013


Credit: renjith krishnan
If you were hoping for some investment ideas, budgeting principles, or the latest in tax-saving techniques today, I’m going to disappoint you. However, I believe I can offer you something that may be more valuable to you than all of the above – my thoughts on juggling.

Juggling is an impressive skill that is also a very good exercise for your mind and body. Juggling is something I had to learn how to do to pass 12th grade physics. Juggling is the image I think of every day when I evaluate the priorities in my life.

A couple of years ago, a good friend of mine shared an article with me about a speech given by Bryan Dyson, a former CEO of Coca-Cola Enterprises, in which Mr. Dyson described life as juggling. Essentially you are juggling 5 balls: your health, your happiness, your faith, your family and friends, and your job. The premise is that if you drop any of the 5 balls (or fail to keep them high enough in the air), you will have a big problem. The thing is, the health, happiness, faith, and family and friends balls are glass – if they shatter you are sick or dead, unhappy, lost, or lonely. If you drop the job ball, it’s more like rubber. You may get reprimanded, you could get demoted, and it’s possible you might even get fired, but it is just a job. Even in the recent economic environment, you will eventually be able to find another job even if it’s different, doesn’t pay as well, or isn’t as fulfilling as your current one.

Look, this whole juggling act with the 5 balls of life is not my original idea, but it has become a part of my personal creed. I’m well aware that people need a job to provide for their families and to achieve their life goals, but I’m also cognizant of the fact that you can’t buy health, you can’t purchase happiness, faith is worth more than gold, and loyal family members and close friends are priceless. As a personal financial planner, it is sometimes part of my job to not only help people accumulate and preserve wealth, but also to encourage them to experience and enjoy life fully.

I juggle better some days than others, and I encourage you to keep trying to juggle the 5 balls of life in the best way you can. Just try to recognize if that smartphone, those never-ending emails and voicemails, and the constant stress and demands of your job are causing you to come close to dropping one of the balls of life. If so, you may need to drop the job ball to save the others. Remember, it’s just rubber.