Money Rules Don't Rule

Talking about money is hard!  In the early stages of a relationship, talking about money and your habits and expectations around it can be as helpful in deciding compatibility with someone as your shared interests.  In the middle stages, figuring out who manages daily finances can be a solo or shared task, while at end of life, knowing where the money is or having someone who can help you navigate that when a spouse dies can be immensely helpful.  In short, money is a part of our relationships, all of our days!

Tune in to find out what our current household money conversations are about, and tricks we've learned to help us roll with the waves.

Lifestyle Creep is sneaky! It’s natural to increase your spending as your income rises. After all, we work hard to buy and do the things we love in life. However, when higher spending happens mindlessly, rather than intentionally, it becomes problematic.

Lifestyle creep easily shows up in large purchases, like a home or nicer car, but it also materializes with smaller price tags, like eating out, buying more expensive clothing, or subscription services. It doesn’t happen overnight, so lifestyle creep can really "creep" up on you if you’re not intentionally keeping an eye out for it. To limit subscription spending, TrueBill is an example of a resource to help mange this.

We also explore how, "living paycheck to paycheck" means something different to everyone.

An entrepreneur is someone who undertakes a project, typically one that requires effort. Most people have thought about being an entrepreneur at some time or another. In fact, nearly 71% of Americans said they'd rather be self-employed than be an employee (yet only 7% are self-employed!).

There's no right way to be an entrepreneur, but if you have an idea, are willing to take a risk, and put in the work to usher it through to the end, then you can be an entrepreneur. 

Sources include:

https://20somethingfinance.com/self-employment-poll/

Humans are naturally wired to be terrible investors. Think about it…more often than not, our brain tells us to seek comfort and to avoid pain. While that tendency has helped us survive since the Stone Age, it's also a vital reason why we inevitably struggle to consistently make sound investment decisions.

Understanding how our mind can help or hinder our chances of investment success is critically important for every investor.

Ryan Rourke is your host's younger brother, and in today's episode they talk about what they learned about money while growing up in the same household, how to manage the adult-dynamic with siblings when money is involved, and how siblings can come together to help get their parents through their end of life.  In short: it's tricky!

Ryan is a retired professional athlete with a degree in economics from Cornell University and a law degree from Seattle University.  He advises clients in wealth management at The Smith Richards Group in Seattle, Washington.

'Tis the season to give, so why not think about a gift that keeps on giving and provides a long-term benefit? 

In this podcast, we discuss five ideas to give the gift of money and financial well-being this Holiday season.

Dr. Marie Rice, PhD, CFE, CIA is an Assistant Professor at Siena College with nearly 20 years of experience as an anti-fraud and audit professional. Join us as we push through less than ideal audio conditions and explore fraud and the reasons why it happens. We also identify resources that both employers and individuals can lean on for support through difficult times (particularly, Employee Assistance Programs). Fraud has far reaching consequences that perpetrators don't always realize, often including the loss of their most precious relationships.    

Dr. Rice can be reached at mrice@siena.edu

While saving is important to take care of your present needs and desires, investing is important for your future choices and goals. And with time being a limited resource, compounding is the secret to success. Join us as we talk about the difference between saving and investing, why it's critical to conduct your due diligence when making any investment, and why there's never been an easier time to invest than now.

A listener wanted to know if the value and benefit of partnering with a financial advisor would exceed their fees. If they decide to hire an advisor, what should they be looking for? Copious research shows people struggle to objectively manage their personal finances. As a result, substantial amounts of money are left on the table each year due to the absence of professional help. How are the best financial advisors adding value to their clients?

A listener wanted to know when self-preparing their tax return was no longer adequate, and how to know when it's time to hire an accountant. And when they're ready to hire one, what should they be looking for? Take a look at the three-legged stool of time, interest, and expertise.

Today's guest is Dennis Mikelonis, the VP of Commercial Banking Team Lead at Idaho Trust Bank which is headquartered in Boise, Idaho. Dennis shares with us money's journey through a bank, how commercial loans differ from personal loans, and why loyalty is an asset to your financial health. Dennis invites your questions at djm@idahotrust.com or you can reach him directly at (208) 985-5545. 

And thanks, Dennis, for your willingness to sit in the hotseat!

Why is the cost of an education so expensive? Tune in as we look back 100 years on the origin of higher education and what an education is today. We explore the expectations we place on 18 year olds to make decisions about debt loads that will burden them for the rest of their lives, and the basics of supply and demand as it relates to education. How does society win or lose when education is all work and no play? This episode offers more questions than answers, but we're starting the conversation.

Some of the resources mentioned include:

https://www.educatetocareer.org/

https://studentaid.gov/loan-simulator

There’s a popular misconception that because you don’t work, you can’t contribute to a retirement account. However, the spousal IRA contribution is one of the tax code loopholes that gets around this general rule and is a great way to save for retirement, in addition to building assets in the non-working spouse's name.  

What does it mean to retire, not just financially but personally?  Retirement can bring a lot of transitions into a person's life, and it can also be a time of heavy grief and loss.  Some retirees have a hard time spending money after decades of saving.  But when you have a plan for your money and how you'll spend your time in retirement, it's a lot easier to adjust to the big transitions in your life while ensuring that you're focusing on what matters most to you.

Inheritances are complicated because they can trigger the trifecta of emotional issues: money, family, and death. If you have assets, make a plan for transferring them so that there are no surprises when it's time to do so. If you don't have a plan, then the state can determine how to disburse your assets and it's often not how you intended. Have conversations with everyone involved in your estate (trustees, executors, heirs) so they each know their role and expectations. Try having these conversations sooner than later when you're not in the middle of a crisis. Let us know your experience with this and any suggestions you have to share! Email us at leah@entrustedaccounting.com or matt@inspirewealthpartners.com

The Megabackoor Roth strategy allows some retirement savers to contribute significant sums of money on a Roth (after tax) basis. I'll explain why it's called the Megabackdoor Roth and who this rule applies to.  To participate in this strategy, your 401k plan must allow for after-tax contributions, as well as either in-plan Roth conversions OR in-service withdrawals.  If you're eligible, you may be able to get more than 4x the annual contribution limit of a Roth IRA growing tax-free!

The tax returns of wealthy individuals were leaked to the press, and articles about them were written on June 8, 2021 by The Washington Post, ProPublica, and others. Basically, the articles claimed to have assessed the individuals' total wealth and estimated a "true tax" of 3.4% that the individuals pay. But tax returns only assess Income Tax so any "true tax" paid is a misnomer when it includes non-taxable items. Plus, a person's wealth is a constantly moving target as it's tied to the Fair Market Value of what someone else would pay for those assets in an arm's length transaction. Wealth on paper is not the same as wealth in hand.

In this short-ish episode, Leah monologues what the public reaction to these articles tells us about ourselves and our views about money, what are some of the money rules that wealthy individuals leverage, and steps we can take to keep the needle pointed at ourselves instead of gossiping about others. 

Life is constantly changing and our financial lives are no different. But are there any aspects of our financial life that we can control? In this episode, we'll first talk about the financial things we cannot control - interest rates, elections - and the stress it causes when we let ourselves be yanked around by the things we can't control. We'll then explore things we can control - saving, spending, fees & expenses - and finding a financial plan that can weather the highest highs and the lowest lows.  

What is wealth?  Formally, it's the money you don't spend, that you amass and acquire, to afford opportunities.  But really, it's a moving target that is constantly changing as the Fair Market Value of assets and investments change.  We can't see wealth, so when and why do we hide it?  Tune in as we explore why talking about wealth makes us uncomfortable, how wealth is calculated, and when words matter when talking about wealth.

Donor Advised Funds are an efficient way to turbocharge your charitable giving while maximizing the tax benefits of doing so. You receive a charitable deduction on your tax return in the year you contribute money to the account, and then as you're ready you can allocate any amount of money in the account to a variety of 501(c)3 charities. Your recordkeeping is minimized as you don't need gift receipts from the charities receiving allocations, and the tax-free growth is a way to benefit your favorite non-profit organizations.

Get to know your hosts! In this episode, we each take the hot seat and answer thoughtful questions about our individual financial perspective, experiences, hard lessons, and more.

The Child Tax Credit increases in 2021, and eligible taxpayers can receive an advance of this credit instead of waiting until they file their 2021 return in 2022.

All taxpayers with children age 17 and under qualify for $2,000 per child if their income is under $400,000 (MFJ) and under $200,000 (S). But taxpayers are eligible for an additional $1,000 or $1,600 per child if their MFJ income is below $150,000 or Single under $75,000. The advance is for up to 50% of the total credit and you don't have to sign up anywhere to receive it. Just file your 2020 return as soon as possible. The IRS is expected to set up a portal on their website by July 1st where taxpayers can add dependents born in 2021, make changes to their expected income, update their filing status, etc.

Budgeting....ugh!  We know this is not a favorite topic, but they can be useful in helping to drive our behavior so we can get to where we want to go. Budgets are only as helpful if we stay disciplined to them. Budget forward, or in reverse, but don't forget to grow your revenues so that you can release some of your budgeting constraints. Budgeting is another way to help us live our priorities.

A Health Savings Account, or HSA, is more than what its name implies.  It is a little-known retirement asset with big upside.  Certified Financial Planner (CFP®), Matt Cooley tells us that it is the only Triple-Tax-Free investment vehicle that is a must-have if the following "rules" apply to you:

1) You have a high deductible health insurance plan (check with your insurance to determine this)

2) You pay for your OOP (out of pocket) health costs with your every-day cash

3) You, or your employer, fund your HSA account

4) You save your OOP health care receipts

That's it!  Then let your investment grow (instead of the sub-optimal savings account bank rates) and you can reimburse yourself down-the-road for those OOP costs in 5 years or 20 years, tax free.

It's triple-tax-free because you'll get a tax deduction for funding your HSA account, the earnings will grow tax-free, and as long as you can support your reimbursed OOP amount, the principle returns to you tax free as well.

What do we mean, Money Rules?  And why don't they rule?  

Money rules are just that: the rules of a game.  And like all games, the rules can be manipulated, stretched, and creatively applied, depending on your unique situation, preferences, and priorities. What you learned about money from your parents can affect how you think about money today. Know Thyself is an often overlooked "rule" of money, and one that we have the most influence over.  There are a lot of reasons to make a decision, and the financial impact is just one of them.  When someone tells you how you "should" manage/save/or spend money, watch out for their own incentives underlying that advice.  Some rules of money you may be familiar with are:  save more than you spend, when you retire, have 60% of your investments in stocks and 40% in bonds, payoff all debt, never finance a vehicle, draw-down your retirement portfolio at 4% per year.  But variables like interest rates, risk tolerance, accumulated savings, and personal preferences aren't factored into these rules: you have the choice to decide what works best for the ROYL (return on your life).

We believe that money rules are guidelines and that when we live intentionally, the money-rules can bend and flex to meet our needs, instead of the other way around.  We find examples for whether money buys happiness, and we encourage listeners to take financial advice with a healthy dose of skepticism.  Send use your questions and examples to leah@entrustedaccounting.com or matt@insprirewealthpartners.com and we'd love to hear what you're thinking.

Introductory episode to the brand-new podcast that explores the underbelly of everything that's NOT talked about money.  Your hosts, Leah Haight, CPA and Matt Cooley, CFP® are industry colleagues located in Boise, Idaho USA.  Tune-in for an intentional conversation about money, wealth, and the unspoken aspects of these concepts in our lives: what is it, who has it, and why it's important to focus on the Return On Your Life (ROYL), and not just the Return On Investment (ROI).