What a Year!

Credit: Serge Bertasius Photography at FreeDigitalPhotos.net

This time last year, my wife and I were trying to decide whether to move or not. This time last year, I was just beginning to actually think about being a dad. This time last year, I was a senior financial planner still learning the ropes.

Now, my wife and I’ve sold our first home and bought our second home. Now, I’m not quite “Superdad,” but I can change diapers faster than a locomotive and I’m able to soothe my teething son in a single bound (well most of the time…). Now, I’m a wealth advisor, and finally doing what I’ve always wanted to do, yet I still learn something new almost every day!

2015 has been a year of change, and for the most part, a year of blessings. There have been a lot of peaks, but there have also been some valleys. Overall, I consider myself pretty lucky. What a year!

During the course of this mania, I learned several financial and life lessons first hand:

• The emotions, stress, and time consumption associated with a real estate transaction is insane. It’s a second job! However much you budget for a move, you’re going to be low. There’s a financial advisor joke out there that goes something to the effect of “What do you call downsizing? Half the house for just about as much money!” I used to laugh, but now I don’t. We weren’t downsizing. We were upsizing to our first house big enough for a family with a yard, and moving ended up costing us significantly more than we expected. All I can say is buy less than you think you can handle and maybe have more than one inspector or buy a home warranty!
• Baby furniture, car seats, strollers, clothes, formula, diapers, toys, and doctor visits can really add up! Remember that old game show Supermarket Sweep? Those people grabbing the expensive turkeys were crazy! Give me a cart on the baby formula and diaper aisle next to the greeting cards and I bet I’d be pretty hard to beat! Adding another mouth to feed does not financially benefit many households (despite the tax deduction), but being a parent is more miraculously wonderful and fulfilling than I ever imagined! In happier financial news, the “going out” expenses and vacation expenses do seem to naturally tick down, partially compensating for the costs associated with the mountains of diapers!
• Earlier in 2015 I was promoted from a senior financial planner to a wealth advisor. That meant that the firm I work for was ready to take off my training wheels and entrust me with working with clients on my own. That is a trust from my employer, and the clients I serve, that I do not take lightly. I continue to encounter new situations, I continue adding experiences, and I continue to learn new techniques and strategies to help people grow and preserve their nest eggs, save a little on taxes, give a little more to their favorite charities, and achieve personal goals. This year I got to be the anchored beacon to clients experiencing their first market correction in almost six years, I got to help a number of people who were in emotional and financial pain from suddenly being laid off, and I got to help a number of widows and children walk through the grieving process and the financial distribution and redeployment process of bequeathed and inherited assets. Money should not be anyone’s life, but money is part of everyone’s life. My job is not always easy and it’s not always fun, but being able to help people when they need it most is what motivates me to do what I do.

 

In 2016, my wife and I are going to go on the offensive against our mortgage and pay a little more than we have to so we can be debt-free a little sooner. In 2016, my wife and I are going to contribute a little more to our 401(k)s and continue to make our annual Roth IRA contributions so we can build up a reasonable retirement nest egg as soon as we can. In 2016, we’re going to save week after week and finish furnishing our new home. Those are our financial goals. What are your financial resolutions?

 

If you’re one of my loyal readers, you probably noticed that I didn’t post quite as much as I have in previous years. If you wondered why, now you know (move, baby, job responsibilities, etc.). Still, 28 posts in 2015 isn’t too bad, and I promise you, I have just as much energy and excitement about 2MuchCents as I ever have. Life happens, but I’m going to try to average at least two posts every month. And as always, if you have a question or an issue that you think I could help you with, please reach out to me. I’ll make time for you!

 

2016 posts will include why you should unplug from work, some things you need to consider if you or a loved one are considering a move to a retirement center, how to live in harmony if you and your spouse have very different incomes, some suggestions on what you need to teach children about money, a look at some financial mistakes we all make, and how to make sure you don’t face any tax penalties by hitting a “safe harbor.” I hope you’ll check them out!

 

Merry Christmas to all, and to all, a good 2016!

 

-Tom

2014 in the Books

Credit: Stuart Miles

2014 has flown by. I’m starting to relate more and more to Ferris Bueller’s famous quote: “Life moves pretty fast. If you don't stop and look around once in a while, you could miss it.” That being said, this is not a time to take your foot off the financial planning gas pedal.

As I’ve proposed in years before, I’d strongly advise you to take a few moments during the holidays and look at your financial situation. Don’t just say you’re going to lose weight, take a trip, or volunteer more in 2015, make some financial resolutions, too! My wife and I plan to try to boost our cash savings by 25%, make Roth IRA contributions, and increase what we contribute to our employers’ 401(k) plans by a few percentage points. What are you going to do in 2015 to make progress financially?

2014 was a good year for 2MuchCents as there have now been more than 27,000 unique views! Viewership was up over 200% this year! I thank all of you for your support and continued sharing of my posts. I couldn't do it without your help!

The top five posts for 2014 were:

1. Tips for Buying a Car
2. How to Plan an Affordable Trip
3. Freedom from Student Loans
4. Quit It! (bad financial habits not to do)
5. Summer Jobs, Life Lessons

If you missed any of them, please give them a read now.

 

It’s my plan to keep at it in 2015. I’m already working on a few posts that will cover topics such as buying vs. renting a house, freezing your credit, things to consider if you’re moving, stress-free ways to pay down debt, and why watching your portfolio go down hurts more than watching your portfolio go up feels good. I hope you’ll check them out.

 

Happy holidays. I wish you and your family a happy, healthy, and fulfilling 2015!

 

-Tom

It Happens

Credit: frankie_8

Late last year, my wife and I sat down and discussed some of our financial goals for 2013. Essentially, we agreed to four: to put into our 401(k) plans what was necessary to receive our employers’ maximum matches, to make our annual contributions to our Roth IRAs, to increase our “rainy day fund,” and to lower the amount of principal owed on our mortgage to a specific amount. Well, not to brag, but things were going pretty swimmingly. Well, until it happened…

You see, a couple of months ago, there was this period where our karma, luck, mojo, or whatever you want to call it, was not so good. It started when I had a small medical flare up (don’t worry, I’m all good now) that generated some expenses beyond our insurance coverage. Then, my wife’s car had an unexpected electrical problem. Shortly thereafter, we would find out my car needed major repairs to ensure my ability to steer, our digital camera would break, and my computer would make it known that its days were numbered. A week or two of better luck then mercifully came, but only to be vanquished by our garbage disposal giving up the ghost. Then, there was our dachshund Lucy’s annual checkup that yielded some dog toothpaste so expensive that I’m considering trying it out on my own pearly whites! I know in the larger scheme of things that these are “first world problems,” and I still have a lot to be thankful for, but sheesh! Enough is enough already! Uncle! Make it stop!

I don’t share my rotten luck with you to ask for sympathy or to make you feel sorry for my wife and me. You shouldn’t. Everybody has stuff happen to them, and everyone has unforeseen expenses that rear their ugly heads out of nowhere. I share all of this with you to let you know that it will be okay and to remind you that if you have an adequately established emergency fund, you can often be okay relatively quickly. My medical bills are now paid, our car maintenance is complete, we have a new digital camera, we have a much better garbage disposal, and Lucy’s toothpaste seems to be helping her. I still haven’t replaced my dying computer, but knock on wood, we’ll get there.

My wife and I have been able to overcome most of our unexpected expenses because we had an emergency fund in place. We addressed the medical bills and urgent car problems with that emergency fund, but we handled the other, less “mission critical” inconveniences over a period of time after we had more paychecks roll in and recharged our emergency fund. We also tightened our belts on our discretionary spending just a tad. Most of our ambitious 2013 financial goals are still achievable, but after those expenses, I’m no longer certain we can both increase our “rainy day fund” and lower our mortgage principal to the extent we had hoped without altering our desired lifestyle, but that won’t stop us from trying! I just know that after being reminded of how fast large, unexpected expenses can pile up, increasing our “rainy day fund” will be the priority.

I may have a pretty strong financial background, but I don’t have all the answers. I’m just like you, and not immune to the financial strains that come up in life. As Sugarland so perfectly puts it in their popular song It Happens:

Ain't no rhyme or reason
No complicated meaning
Ain't no need to overthink it
Let go laughing
Life don't go quite like you planned it
We try so hard to understand it
The irrefutable, indisputable fact is
It happens

-Tom

P.S. I kid you not that BOTH of our air conditioning units quit working within 48 hours of my original draft of this post! Argh! It happens.

Year in Review

Credit: Danilo Rizzuti

Assuming the Mayans are wrong, and thankfully we know they are (leap year wasn’t a part of their calculation, so the apocalypse date has already passed), it’s time to start thinking about New Year’s resolutions. I love coming up with resolutions, and frankly, I think it’s important to periodically consider aspects of your life and reflect on how they could, and should, be better.

I have 3 resolutions for 2013:

1. Lose the remaining 14 lbs of my 2012 goal- Hey, I lost 11 lbs. this year, but I didn’t quite make my goal of 25 lbs. Comfort food is so good, and exercising in the cold weather is so hard…
2. Do less- Many of my friends and family often compare me to the Energizer Bunny, but I saw the bottom of my fuel tank a couple of times in 2012. I need to get a little more rest and set aside a little more time to do what’s important with the important people.
3. “Attack” the mortgage- My wife and I are going to still contribute to our retirement plans, but we are going to make a conscientious effort to pay as much extra principal in 2013 as we possibly can. This will strengthen our financial position, give us a guaranteed rate of return (our mortgage interest rate), and allow us to work towards lowering our fixed monthly expenses.

I wouldn’t begin to tell anyone (well, at least most people) what their personal resolutions should be, but I thought I’d take this last 2012 blog post and offer a few financial resolutions that might help you in 2013:

• Attack any long-term debt you may have by making an “extra” payment in 2013. As this example shows, if you make this resolution a habit, you may be able to cut substantial costs and shorten how long you will be in debt by more than you might think. I’m talking like $56,000 and 6 years off a $200,000, 30-year mortgage!
• Save an extra amount from each of your paychecks. Maybe this is $50 a paycheck, maybe it’s $500. The amount does not matter; the action does. Do something as simple as putting this extra money in an envelope or as complicated as setting up an automatic deposit to a different account, but give this a try. If you keep this resolution, you will have a nice, little sum set aside at the end of 2013 that can create or strengthen a “rainy day fund,” be used to fund an IRA contribution, or be used as a “jump-start” towards a major purchase.
• Increase your contributions to your employer’s retirement plan. You are probably having to fill out a lot of 2013 enrollment and benefit election forms anyway, so you might as well adjust your retirement plan contributions and add 1% to whatever you are already contributing. 1% more coming out of your check probably won’t hurt much now, but 1% more invested compounding year after year in a tax-deferred account could end up being a pretty sweet sum when you finally head towards your retirement home on the beach.
• Collect your change. It depends how often you pay with cash, but if you throw all your spare change in an old shoebox, a chic-looking jar, or even a very manly looking piggy bank, you may be surprised what you end up with by the end of 2013. It sure would be nice right about now to have a jar full of change to help buy that perfect Christmas gift for my wife…

I hope you will try one of my suggested resolutions or come up with at least one financial resolution on your own, but before I sign off for 2012, there are a few more things I want to mention:

First, I’d once again like to thank Kenny Wuerstlin for designing my banner and logo, Andrew Davis for helping me edit my content, and my lovely wife, Lindley Presley, for her grammatical editing and blog expertise.

Second, I’m very proud that, in its first year, 2MuchCents.com had a little more than 6,600 page views from 10 different countries. Let me assure you though, we’re just getting started! In 2013, we’ll unravel technical topics like family gifting, long-term care insurance, and the risks of a fixed income portfolio. We’ll also take a look at how rational investors are (or aren’t), why I don’t think you should always let a “tax tail” wag your dog, and how you can spend everything (though I don’t advise trying).

Finally, let me thank you for checking out my weekly ramblings. I appreciate your questions, your ideas, and your encouragement. I hope that at least a little of what I have shared has been interesting, educational, and maybe even helpful. Please continue to let me know how I can use my training and experiences to try to help, please keep telling me what financial topics you are interested in, and pretty, pretty please keep sharing your favorite posts with your family and friends. There’s no telling where 2MuchCents can go in 2013!

I hope you and your family have a healthy, happy, and financially successful 2013!

-Tom