Q and A with Denisa - Tips and Miscellaneous :: Certified Financial Planner : Colorado Springs, CO

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Q and A with Denisa - Tips and Miscellaneous

13. Tips and Miscellaneous

Today, I want to go back to my very first broadcast, a year ago, and talk about where we have been and the many lessons we’ve learned. It was then when Lehman Brothers went into bankruptcy and the government saved Freddie Mac and Fannie Mae. We saw the collapse of Washington Mutual, Wachovia Bank, and AIG was on the brink of failure until the Treasury stepped in. We were in the middle of the biggest financial panic in 80 years.

Today, there are still things to worry about. The unemployment rate is high and people can’t spend until they have their paychecks back, and so consumer spending will rise very slowly. The economic recovery may not be nearly as robust as some would like.

On the positive note, we have significantly rebuilt the financial landscape and there are signs of beginning optimism again.

Housing has been one of the causes of this crisis. While there may still be weakness in some of the most over-priced areas, overall the real estate bear market appears to be winding down.

We’ve just witnessed one of the shortest and steepest recoveries in the market ever. Of course markets don’t deliver their returns evenly year after year and yes there are bound to be setbacks along the way but bear markets are simply part of the investing cycle.

What about you? What are the lessons you have learned and the changes you have made to your financial lifestyle as a result of all this?

Here is a part I of another 2-part series: Year-end Financial Tips.

The end of the year is around the corner; so let’s do a rundown of financial tips before the year ends.

First, let’s talk about your investments and retirement plans.

I suspect your investments have been on a roller coaster ride this year, haven’t they. Some of your investments have done better, some worse and I am willing to bet that some are out of balance from where they began earlier in the year. So, if your goals have not changed, it is important that you restore them to their original allocation. It’s called rebalancing your portfolio and you should do it at least once a year with your financial advisor.

This is also the time to look at your budget for 2010. Adjust your monthly numbers to reflect the reality of your spending this past year. Don’t forget to include the odd stuff like car registration, gifts or school photos – things that don’t come up each month. This will give you a good projection moving forward into the new year with some control.

Finally, if you had to tap into your 401K to cover any shortfall in your budget or if you had any debt forgiven by your credit card company, talk to your financial advisor to get a quick estimate of any taxes or penalties that you may owe next year.

Tune in next week for another year-end tip around health savings accounts. This is going to be an important segment. Don’t miss it.

Year-End Tips - Part II

Thank you for joining me for the 2nd part of our year-end tips

The healthcare is on all of our minds these days, so let’s stay on this topic and talk about the different ways you can pay for your medical expenses.

The two popular savings vehicles are Health Savings Account and Flexible Spending Account. They both allow you to save money with pre-tax dollars and as long you use the funds for ‘qualified medical expenses’, the money spent is tax-free. Another really neat thing is that you can use these accounts to pay for expenses that may not even be covered by your health insurance, like your over-the-counter medicines.

Before we take a look at how this topic fits into your year-end planning, let’s highlight a couple of main differences between these two accounts.

Health Savings Account is owned and controlled by you. It means that if you do not use the money in this account by the year-end, any unused balance will just roll over into the next year. Also, if you are collecting unemployment benefits, you can use these dollars to pay your health insurance premiums.

Flexible Spending Account on the other hand, is considered "use it or lose it" account because the money in this account will be lost if you don’t use it by the year-end or if you lose your job.

So the bottom line is - if you have a Flexible Spending Account and you have putting off any medical or dental work, you may want get it done before the year ends!

Holiday gift ideas for employees on a budget

These have been undoubtedly turbulent financial times for both of you employers and employees. While a lot of you are still feeling the financial crunch, holidays present an opportunity to acknowledge those personal financial sacrifices and to give thanks.

For those of you who would like to reward your employees but just can’t afford to throw the big holiday party, here are some tips to gift on a budget:

As a token of appreciation, how about inviting your employees to your home for a modest holiday gathering with a gift exchange. As for feeding your hungry crowd, you can get pizzas, 6 ft subs or deli trays from your local grocer.

If you prefer to keep it outside of your home, places like bowling alleys or other inexpensive eateries could be appropriate venues for some holiday fun.

Of course Cash bonuses or Gift Cards are also great options. You can buy a gift card for anything from coffee shops, restaurants, department stores to online shopping vendors like Amazon.com.

Food baskets are another tried and true gift idea. The entire family can snack on the delicious treats during the busy holiday season.

Or simply giving your employee some paid time off over the holidays will go a long way.

The holiday season is now in full swing. Tonight let me share with you a few creative gift-giving ideas from some of our viewers.

Two families have decided to exchange their services instead of gifts. This involves, cooking a meal, changing the oil and washing and waxing the car, giving a manicure, performing maintenance on a computer, painting a room, and even including the kids to pet sit and baby sit.

Here is another great idea. There are many struggling families out there. One family has decided that instead of spending money to buy gifts for each other, they would sponsor a family in need for the holiday season. You can do the same by donating food, clothing and gifts to a designated family through a charitable organization.

Another viewer wrote that he would invite a military family over for a holiday meal. What a great way to say thanks to our military for their service to our country.

Finally, instead of exchanging gifts, how about making a donation to your favorite charities in each other’s names?

On a different note, let me tell you about how you can participate in an exciting contest. Beginning in January, write me an email about your personal financial struggle and the financial resolutions that you laid out for yourself for 2010. At the end of January, we will select two viewers whom I will work with to develop financial recommendations to put these resolutions into action.

To wrap up 2009, let’s do a recap of highlights from some of my segments.

We talked a lot about investing and how critical it is to always stay diversified and to have a long-term perspective. Many of you have learned the hard way this year that in order to be prepared for changing circumstances you have to live within your means and have an emergency fund set aside.

A couple of things to remember when it comes to protecting your investments against scam artists. Choose your advisors carefully, ask a lot of questions, and be realistic about expected market returns.

We also talked about your debt. The good news is that the new Credit Card Act, which is coming to effect on Feb 22, will put limits on interest rate increases. However, the reality is that despite more stable interest rates, your debt will still be there unless you choose to get your spending under control with a sensible budget.

Along the same lines - there has been a lot of buzz around the first time homebuyer tax credit. Don’t get sucked into it if you can’t afford the house. If you have a sky-high debt, have a plan to clean it up first before you buy a home.

Tonight, I am excited to report the results of our financial make over contest and announce our two winners! I have received over 70 emails from you and I want to thank all of you for sharing your stories. Let me make a few comments about your responses.

The number 1 goal for our participants was to get out of debt and to start building a healthy financial future. Let me tell you that finances are mostly about behavior and very little about knowledge. As an example, let’s say that you decide to create a new spending plan and cut back on your grocery bill. Unless you actually walk into the grocery store with only the budgeted amount of cash in your pocket – your plan was a waste of time. Do you see – the key to your personal financial recovery is YOU and only YOU.

You may have good intentions to change but ultimately you will need some sort of accountability. Consider teaming up with a friend to hold each other accountable and share the progress of your financial plans. Trust me there is nothing embarrassing about wanting to have a healthy financial future.

Now, let me stop preaching and announce our two winners. The first winner is a couple Ron and Meg Goad and our second winner is Ms. Jaina Morris. Congratulations to you all! As for the rest of our participants, I promise that I will personally respond to every one of you.

Many of you emailed me that you wanted to start this year with a clean slate and get your financial household in good shape. To get on the right financial track, you have to make it a priority and you will need a written plan.

The first step to financial freedom is building good habits. This starts with good record keeping, like getting in a habit of filing away your statements immediately and knowing what to keep and for how long. So, here is the rundown:

These are items you want to keep forever: Your Wills and Power of Attorneys, birth certificates, marriage license, military records, passports, divorce decree, stock certificates, life insurance policies, and property titles. You may want to invest in a small fire proof safe to store these important documents.

For at least 7 years, you want to hold on to your income tax returns, annual payroll check stubs, canceled checks, annual bank and investment statements, and titles for your vehicles.

Keep for 3 years papers that confirm buying or selling your stocks and your credit card statements.

And if you prefer to store your financial documents on your computer, make sure to BACKUP your files. News Radio’s "Drive Home" with Dan Cochell and Greg Neft. So make sure to tune in every Thursday and call in with your questions. I will answer them on air.

Over the course of past year, I touched up on many financial issues and I stressed out how important financial planning was. Many of you write to me daily sharing with me about your financial hardship and asking for advice. With the constantly changing financial landscape and your life circumstances, I recognize how confusing finances can be. That is why I decided to launch a financial educational mini-series, where each week I will break down a single financial topic for you.

For example, I will teach you:

how to put together a budget that works
how to prepare a debt repayment plan and clean up your credit
the basics of successful investing and how to prepare yourself for retirement
about important tax benefits and much more