12 Things We Wish We’d Known When We Were 18

College is a great time to start making good financial decisions.  The list below provides wonderful advice for your people – in or out of college!

Steve

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Prepping for freshman year at college typically includes activities like shopping for dorm essentials, reviewing orientation packets, and Googling your new roommate.

Most students don’t spend a lot of time thinking about how they’ll manage their money in this new phase of their lives.

And yet, what you do in those first few years of parental emancipation can affect you for years—or decades—to come. Students graduated last year with an average $35,200 in college-related debt, including federal, state and private loans, as well as debt owed to family and accumulated via credit cards, according to a Fidelity study. Half of those students said they were surprised by just how much debt they’d accumulated.

To make sure the class of 2018 gets off on the right foot, MONEY gathered sage advice from top financial experts about the lessons they wish they, their kids, or their friends had known before starting school.

1. Limit your loans. “Do not take out more in student loans than what you are projected to earn in your first year after college. If you only expect to make $40,000, you better not take out more than $40,000. The chances of you being able to pay it back is close to nil. If you need to take a private loan, you’re going to a college you can’t afford. Remember, going to an expensive school doesn’t guarantee success. The school never makes you, you make the school.” —Suze Orman

read the complete article here: 12 Things We Wish We’d Known When We Were 18 | Money.com.

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Sending Your Kids Off To College Ready or Not

Many of you will be sending you children off to college in the next few years (maybe this year).  And when you do, you will probably be asking yourself the same question Michael Kay mentions in this article:  “Have I given my kids the tools they need to navigate the next chapter of their lives without being under my roof? ”  This is an excellent article that will make you ask yourself some good questions.  I think you will enjoy it.  As always, I appreciate you feedback.

Steve

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Walking through the airport in mid-August, I was surrounded by swarms of families saying their goodbyes as their teenagers embarked for their freshman college experience. Lingering hugs and tears—parents sending kids off to their next chapter, with lots of fears, hopes and unknowns ahead. I could empathize with them been there, done that. It’s a mixture of emotions that leaves you feeling happy, sad, worried and excited all at the same time. You ask yourself—have I given my kids the tools they need to navigate the next chapter of their lives without being under my roof?

And there’s the financial component. One less kid at home means you’ve lost a grocery bill, maybe some costs for gas, but the budget has just expanded exponentially: besides tuition and room and board, the cost of books, room furnishings, clothes, transportation, medical plans and all the extras that go well beyond the bill from the Bursar’s office. It can be a financial pain that keeps on giving, especially if you have younger children in the pipeline.

read the complete article here: Sending Your Kids Off To College Ready or Not.

Estate Planning Lessons from Celebrity Deaths

Roger Wohlner, one of my most-respected financial planners, uses the most recent celebrity deaths to explain some key points of Estate Planning.  This is well worth reading.  Let me know your thoughts.

Steve

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Sadly the world lost two well-loved celebrities this week: comic and actor Robin Williams and actress Lauren Bacall. I’ve already seen a few articles discussing Williams’ financial situation and praising him for trusts he had established for his three children.

In recent years the estate planning moves of actors Phillip Seymour Hoffman and James Gandolfini and others have also made the news for some of the things they did and didn’t do and in some cases the resulting extra costs incurred by their heirs. While some might say these types of articles are an invasion of their privacy, I disagree. Articles of this type bring estate planning to the forefront as something we all need to do. Moreover there are lessons to be learned from the things these celebrities did right and from what they could have done better. Even for the vast majority of us with much more modest estates, there a number of estate planning lessons we can derive.

via Estate Planning Lessons from Celebrity Deaths | The Chicago Financial Planner.

401k Rollover Boom Enriches Brokers at Retirees’ Expense

I have noticed too much of the poor advice that they are talking about in this article.  If you are retiring or are retired and have a 401k that you want to roll over – beware.  Make sure that you get good, unbiased advice – from a NAPFA-Member Fee Only Financial Planner.  Rolling your 401k to an IRA is generally a very good idea – but you need to make sure that you are not being mis-led with bad advice.

Steve

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Former employees at major companies have complained that sales representatives lured them into rolling over their 401k nest eggs into unsuitable IRA investments.

By John Hechinger

Bloomberg News

Kathleen Tarr says AT&T employees looked to her as “their de facto 401k expert.” Visiting their homes and offices, she advised them on their retirement plans as they called up balances on computer screens.

Actually, Tarr worked for Royal Alliance Associates, a brokerage firm owned by insurer American International Group AIG. She encouraged hundreds of departing AT&T employees to roll over their retirement money into the kind of risky high-commission investments that Wall Street’s self-regulatory agency warns against on its website.

Tarr and her business partner reaped hundreds of thousands of dollars a year in commissions and trips to resorts in the Bahamas and Florida. Not all her clients fared as well, and 37 have filed complaints against her, according to Financial Industry Regulatory Authority FINRA records reviewed by Bloomberg News.Tarr and Royal Alliance say the investment choices were appropriate.

via 401k rollover boom enriches brokers at retirees’ expense | Business & Technology | The Seattle Times.

Don’t Save 10% Of Income, Spend (Just) 50% Of Every Raise And Systematically Save More Tomorrow!

For those of you who find it tough to save more, this is a different (and great) approach from fellow financial planner Michael Kitces.  This is a reminder that one key to a successful financial life is to spend less than you earn.

Steve

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The approach of “save a percentage of your income” is a staple of retirement planning. While much debate exists about the exact ideal percentage, the concept is relatively straightforward – have savings to be one of the slices of your income pie, ideally automate the process with an ongoing percentage of your income that always gets saved first, and you’ll be well on your way to retirement.

Yet the reality is that saving something like 10% of your income also implicitly means you’re spending the other 90%, and continuing to do so over time means you’ll also be saving (only) 10% and implicitly increasing your standard of living by 90% of ever raise you receive in the future. As a result, your standard of living rises as fast as your retirement savings, which means the amount needed to reach retirement gets larger and larger given the retirement costs to be supported, and in the end it’s surprisingly difficult to ever reach retirement at all as the goal forever outpaces the savings to reach it!

via Don’t Save 10% Of Income, Spend (Just) 50% Of Every Raise And Systematically Save More Tomorrow! | Kitces.com.

Retirees suffer as 401(k) rollover boom enriches brokers

I have noticed too much of the poor advice that they are talking about in this article.  If you are retiring or are retired and have a 401k that you want to roll over – beware.  Make sure that you get good, unbiased advice – from a NAPFA-Member Fee Only Financial Planner.

Steve

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Kathleen Tarr says AT&T Inc. (T) employees looked to her as “their de facto 401(k) expert.” Visiting their homes and offices, she advised them on their retirement plans as they called up balances on computer screens.

Actually, Ms. Tarr worked for Royal Alliance Associates, a brokerage firm owned by insurer American International Group Inc. (AIG) She encouraged hundreds of departing AT&T employees to roll over their retirement money into the kind of risky high-commission investments that Wall Street’s self-regulatory agency warns against on its website.

Ms. Tarr and her business partner reaped hundreds of thousands of dollars a year in commissions and trips to the Bahamas and Florida resorts. Not all of her clients fared as well, and 37 of them have filed complaints against her, according to Financial Industry Regulatory Authority records reviewed by Bloomberg News. Ms. Tarr and Royal Alliance say the investment choices were appropriate.

via Retirees suffer as 401(k) rollover boom enriches brokers.