Plan Well, Retire Well Saving and investing your money Sun, 15 May 2005 13:02:08 -0500 https://web.extension.illinois.edu/cfiv/eb141/rss.xml Estate Planning for the Perpetual Procrastinator https://web.extension.illinois.edu/cfiv/eb141/entry_14011/ Fri, 12 Jul 2019 16:29:00 +0000 https://web.extension.illinois.edu/cfiv/eb141/entry_14011/ We all know that estate planning is important, but for many of us we put it off. We push estate planning off because it deals with the two most uncomfortable topics ever – death and money. For those of us who perpetually procrastinate, hopefully, these simple tips can help you get some of these important financial documents prepared.

Updating Beneficiaries/Payable on Death Accounts

If I could recommend anything to help your loved ones after your death, it's updating beneficiaries and payable on death accounts. Your bank account has an option for paying the sum of the accounts to someone after you pass, update that information.

Your retirement accounts, life insurance, and any other assets that you once put a beneficiary designation on should be checked yearly to see if it needs updates. Marriages, divorces, and death of loved one should also trigger you rechecking and evaluating your beneficiaries.

Get your Documents Done

When I am teaching classes, people always ask me, "Should I get a trust?" I think, if you don't even have a Power of Attorney or a Last Will & Testament done, then the focus should be on getting some of these documents done first.

A few years ago, I taught an estate planning class, and afterward I did a three month follow up. Do you want to know how many of those folks started on their estate plan? None. Zero. Zip.

Set a timeframe with a goal of getting the documents done within six months, a year. Do whatever it takes to get them done, and then review them periodically especially if you have a new child or a recent death in your family. Guardianship is also such an important piece for children under the age of 18 in the event you, and your significant other both pass away.

What Do You Want?

"Why am I doing this? What do I want out of this?"

  • Thinking about your goals, wishes, and who would take care of your underage child if you died may help you get these documents finalized. Does seeing a loved one leave behind a financial mess motivate you? What if you got cancer or terminal diagnosis? Sometimes we wait until we are faced with these life-threatening circumstances. You don't want to be making these types of decisions when you're in a crisis.
  • Ask your parents, friends, or even social media for recommendations of attorneys who specialize in estate planning documents. Interview or talk to at least three different attorneys to find the best fit for you and your family.
  • Don't think of all of this estate planning as tedious. You can create death-positive aspects of your estate plan like create a blue print your future funeral, creating a signature playlist of music, or be cheeky in your will.

Getting your beneficiaries and payable on death accounts updated should be a quick and easy process. Find an attorney you like, trust and who works well with your family to create a power of attorney, will, trust, and more! Life is precious and short -- find your reason WHY and just do it.

We all know that estate planning is important, but for many of us we put it off. We push estate planning off because it deals with the two most uncomfortable topics ever – death and money. For those of us who perpetually procrastinate, hopefully, these simple tips can help you get some of these important financial documents prepared.

Updating Beneficiaries/Payable on Death Accounts

If I could recommend anything to help your loved ones after your death, it's updating beneficiaries and payable on death accounts. Your bank account has an option for paying the sum of the accounts to someone after you pass, update that information.

Your retirement accounts, life insurance, and any other assets that you once put a beneficiary designation on should be checked yearly to see if it needs updates. Marriages, divorces, and death of loved one should also trigger you rechecking and evaluating your beneficiaries.

Get your Documents Done

When I am teaching classes, people always ask me, "Should I get a trust?" I think, if you don't even have a Power of Attorney or a Last Will & Testament done, then the focus should be on getting some of these documents done first.

A few years ago, I taught an estate planning class, and afterward I did a three month follow up. Do you want to know how many of those folks started on their estate plan? None. Zero. Zip.

Set a timeframe with a goal of getting the documents done within six months, a year. Do whatever it takes to get them done, and then review them periodically especially if you have a new child or a recent death in your family. Guardianship is also such an important piece for children under the age of 18 in the event you, and your significant other both pass away.

What Do You Want?

"Why am I doing this? What do I want out of this?"

  • Thinking about your goals, wishes, and who would take care of your underage child if you died may help you get these documents finalized. Does seeing a loved one leave behind a financial mess motivate you? What if you got cancer or terminal diagnosis? Sometimes we wait until we are faced with these life-threatening circumstances. You don't want to be making these types of decisions when you're in a crisis.
  • Ask your parents, friends, or even social media for recommendations of attorneys who specialize in estate planning documents. Interview or talk to at least three different attorneys to find the best fit for you and your family.
  • Don't think of all of this estate planning as tedious. You can create death-positive aspects of your estate plan like create a blue print your future funeral, creating a signature playlist of music, or be cheeky in your will.

Getting your beneficiaries and payable on death accounts updated should be a quick and easy process. Find an attorney you like, trust and who works well with your family to create a power of attorney, will, trust, and more! Life is precious and short -- find your reason WHY and just do it.

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What’s on Your Mind about Money? https://web.extension.illinois.edu/cfiv/eb141/entry_13999/ Thu, 04 Jul 2019 22:03:00 +0000 https://web.extension.illinois.edu/cfiv/eb141/entry_13999/ Financial worries are often on people's minds. Finances can cause conflicts between family members and friends. Research studies even show being worried about finances decreases employees' productivity. One of the things Illinois Extension does is to help people manage their finances and relieve money-related stress.

A nod to this conflict is why colleagues and I titled our new podcast series, Family Financial Feuds. Recent podcasts include:

  • When Grandpa Gets Exploited
  • Should We Get a Pet?
  • Elbow Room: Multi-generational households
  • Money Conversations with Your Kids

We've had some great discussions about financial conflicts in families and other interpersonal relationships. We use research-based evidence during each episode, and we add humor to talk about some difficult topics.

You can find Family Financial Feuds on SoundCloud, iTunes and Google Play. We would love your feedback on the podcast, and feel free to send us topics to cover in the future too.

The other day I was talking with some Money Mentor volunteers, and I shared with them a YouTube video by Zachary Sexton. In the video, Sexton summarizes a book by Michael Bungay Stanier. The mentor volunteers and I had such a great conversation about the video that I thought it worth sharing it with you. The video, "Say Less, Ask More: 7 Powerful Coaching Questions – WBP018," is simple but resonated with me.

Question 1: What's on your mind?

We all have different financial concerns; some of which change as we age. What's your financial concern today? At one stage of my life, I was concerned about having money left at the end of the month. More recently, I have been trying to balance how much to spend on a kitchen remodel versus saving for retirement. Other concerns have been more critical as I worked through personal challenges.

Question 2: What else?

Perhaps something that isn't urgent but something that's been on your mind for a while.

Question 3: What's the real challenge?

Financial challenges could be about available dollars, but other challenges are often real. Is there agreement among partners? Do you have multiple, potentially conflicting goals?

Question 4: What do you want?

Clarifying can be good and insightful.

Question 5: How can I help?

Illinois Extension has a variety of resources. In several Illinois counties, one resource is the Money Mentor program. Amazing community members volunteer their time to help others with money management. Mentors complete 30 hours of training with Illinois Extension Educators. Assistance from a Money Mentor volunteer is free and confidential. Go to http://go.illinois.edu/moneymentors for more information or call 217-333-7672.

Question 6: If yes, what no?

In other words, if you're saying yes to one financial behavior, to what are you saying no? For example, the opportunity cost of my kitchen remodel means less money in my retirement account. On a more daily basis, small regular costs (whether subscriptions, fancy coffee drinks, or something else) could mean not saving for a big goal. What's your, "if yes, then what no?"

Question 7: Which question was most useful to you?

If you share your financial decisions with another person, I invite you to ask each other these seven powerful questions. By talking together, you may be able to clarify your financial values and decrease future stress.

I'd like to know which question was most useful to you. Please add your comments to the Comment Box.

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Why I stopped tracking most of my expenses… https://web.extension.illinois.edu/cfiv/eb141/entry_13994/ Fri, 28 Jun 2019 09:40:00 +0000 https://web.extension.illinois.edu/cfiv/eb141/entry_13994/ If you can believe it, I've been blogging for almost six years now. As a financial educator, writing these words on the internet might mean that I could be banned from the "financial educators club", but the fact of the matter is that for almost a year now I've struggled with tracking ALL my expenses, all the time. Maybe you're like me, tired of tracking every penny on an excel spreadsheet, ever changing phone app or maybe you have never tracked expenses at all, but let's discuss the two things I do track.

Food

No matter what, I always track our food expenses. Groceries in our house always tend to be the same, but expenses like going out to eat, and even fast food tend to rack up faster than any other purchases. While this is usually the most tedious part of my spending plan, tracking it helps me keep our budget in check, and it makes me feel better about our overall spending! Food is typically the second or third largest expenditure for most Americans. We need food to live, but being smart about the financial choices we make with food expenses is important too!

According to some research done by the USDA, "Food Purchase Decisions of Millennial Households Compared to Other Generations" – Of all generations Millennials are spending the least money on food at home and have the largest expenditures for prepared foods, pasta and sugar/sweets. In this study, millennials eat outside the home, approximately 2.8 more meals than Traditionalists (born before 1946). With all this eating out, making sure I track our restaurant and fast food purchases helps keep my budget/spending in check.

Fun

This reminds me of SpongeBob SquarePants' song F.U.N. Doing fun things with my family is anything that I don't do regularly, but costs money, so they go into this "fun" category. Now, if you are slightly obsessive compulsive like me, this "fun" is sorted into multiple categories that I track. Fun, if not kept in check, could blow up my budget. For example, now that my son is getting older, it's been exciting to let him try new experiences. Experiences like going to the movies, driving to the beach, and even bowling! USA Today recently published an article that claims Americans spend $18,000/year on "nonessentials". If these "nonessentials" are tracked and you keep a balanced budget, most of these are generally reasonable expenses.

Fun and Food are the two things in my spending plan that I do track because they fluctuate a lot. In the summer months, it's easier to do "free" fun things than in the winter, plus food costs change depending on what's in/out of season. Also, can we say, farmer's markets!

While I do keep an eye on my other regular monthly expenses, nothing ever really surprises me anymore. For the first time in my life, I don't have a life transition that dramatically changes my expenses. While I still may get kicked out of the "financial educators club" – it's nice not to have to track every penny for a change, at least for the time being.

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Let’s Talk about this more: Students Loan Debt for Adult Students, 60 and over https://web.extension.illinois.edu/cfiv/eb141/entry_13982/ Fri, 21 Jun 2019 10:55:00 +0000 https://web.extension.illinois.edu/cfiv/eb141/entry_13982/ When I was in graduate school, I remember having conversations with my peers about the length of time it would take us to repay our student loans. For some of us, that meant closer to our proposed retirement years. For some older adults (60 and over), the realities of carrying student loan debt continue to increase. A report from the Consumer Financial Protection Bureau (CFPB) indicated that consumers 60 and over were the fastest growing student loan borrowers between 2005 and 2015, and the amount this population owed had doubled over the ten years. Older adults borrow to cover their educational expenses and to serve as co-signers on loans for their children, grandchildren, and other loved ones. The CFPB report also indicated that the majority (approximately 73 percent) of student loan borrowers over 60 years older reported that the debt they carry is for their children and grandchildren.

While student loan debt among all borrowers affects future financial decisions, there are additional effects for older adults. Therefore, whether you become a co-signer on loans or borrow to cover your own educational expenses, it is important to understand the terms and conditions of the loan you are attaching to your credit information.

Co-signer

For some older adults, the main way to support their children/grandchildren's future is to co-sign on their student loans. When you co-sign on loans, you agree to take on the full responsibilities of repaying that loan if the primary borrower defaults on payments. Another important consideration relates to the type of loan (federal versus private). Students can apply for federal student loans from the government. There are needs and non-need based types of loans, but these are distributed on a first-come, first-serve basis. This should always be the first option for your student if they are eligible, as private loans typically require a co-signer. For older adults co-signing on a student loan, think about possible changes in lifestyle and other things that may affect your living situation. For example, retiring early or being on a fixed income during retirement. Co-signing on loans also means that the information will be on your credit report, which affects future loans (e.g., replace a car, taking out a new credit card).

What about me?

Borrowing to cover your educational expenses is a familiar route that many students take to continue their education. For older adults, having a reasonable repayment plan, which includes a time frame, and loan details allow them to plan for the unexpected. Below are some additional considerations:

  • Do not risk or sacrifice your retirement savings, emergency savings, or risk adding multiple equity loans to your home.
  • Make sure that if you are looking into loan options, that you are seeking information from the right sources such as the student loan office/officers at your educational institution.
  • Consider how student loan repayment may affect your social security and other benefits have or will receive.
  • Different health-related concerns can affect your financial life and ability to repay student loans. Planning for emergencies helps protect against financial shock.

In summary, student loan debt among older adults has grown significantly over the past few years. Older adults are taking on debt to pay for their children's education as well as cover the cost of their educational pursuits. As the amount that older adults increases, it is important to consider the long-term implications of having student loan debt into or close to retirement.

This article only provided a brief overview of the impact of student loan debt on older borrowers. To read the full report, please visit the CFPB website here. To read a previous article on student aid, please visit here.

Follow on Twitter at @SaveFearlessly

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How to Choose a Financial Professional https://web.extension.illinois.edu/cfiv/eb141/entry_13941/ Thu, 06 Jun 2019 08:35:00 +0000 https://web.extension.illinois.edu/cfiv/eb141/entry_13941/ We can't be an expert in all topics. That's why we seek help from people who have expertise in areas we don't. Financial professionals can help you explore alternatives and strategies to best manage your finances.

People seek help from financial professionals for a variety of reasons, and you likely will have different reasons over your lifetime.
  • You might not have the expertise you need to do the task; many people use tax accountants to help file their taxes.
  • A change in a person's life (such as approaching retirement age) can trigger a need to use a financial professional as well.
  • And, some people use financial planners because they are too busy to effectively manage their finances.

However, choosing a financial professional is a scary proposition for many people. It can be hard to decide who you want to trust with your money and your future dreams. You can find a financial professional who is qualified by taking time to ask questions. Before deciding who to work with interview two to three people.

Unfortunately, government regulations do not protect the consumer very well in this area. Anyone can call themselves a financial advisor. University of Illinois Extension's website, Choosing a Financial Professional, has an interview guide you can download for free. Interviewing financial professionals allows you to find a good match for you.

While you're talking to the financial professionals, ask about:

  • their experience and education (including required continuing education),
  • how they will be paid,
  • and whether or not they will have a fiduciary relationship with you.

Think about what services you need. Then, identify a financial professional who has experience and education that matches your need. For example, if you are 28 years old and are looking for investment advice, then you may not want to choose someone who specializes in estate planning for 70 year olds. Or, if you need advice about filing taxes for your small business, then you need someone with tax expertise.

Never hesitate to ask how a financial professional will be paid. Typically, financial professionals charge by fee only (dependent on the project or hours worked), by commission (determined by products or investments sold), or a combination of fee and commission. You have the right to know how much financial services will cost and how they will be calculated.

A person who has a fiduciary relationship with you must offer the best choices to you; other financial professionals must offer suitable choices. There are good reasons to work with either type of financial professional but you want to know where they stand on this issue.

At Choosing a Financial Professional website, you'll find links to several online searches that connect to financial professionals in your community. You may also want to ask friends or other acquaintances for suggestions of financial professionals.

Keep in mind that even if someone is the perfect match for your Aunt Fran, it doesn't mean that they are the right financial professional for you. Be sure you're comfortable asking questions and talking to the financial professional. You want someone who can explain things in a way that makes sense to you.

One last, but important, step: once you narrow your choices, check the financial professional's background and references. First, check online at FINRA's BrokerCheck, . Next, check a person's licenses and disciplinary records by calling the Illinois Securities Department, toll-free 1-800-628-7937. If someone is helping you buy or sell investments, you must be sure that they are licensed to do so in Illinois. A recent webinar, Choosing a Financial Professional, is archived and you can listen to it for free.

We all accept the time it takes to shop around for a new car. Take the time needed to shop and compare when you choose a financial professional.

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Yes, college/career readiness is important, but do they have basic money management skills? https://web.extension.illinois.edu/cfiv/eb141/entry_13948/ Thu, 30 May 2019 11:24:00 +0000 https://web.extension.illinois.edu/cfiv/eb141/entry_13948/ My Summit Experience

I recently attended an employer summit that focused on how school districts, school counselors, and employers can collaborate in preparing students for life after high school. Some important highlights of that meeting was providing hands-on, accessible, relevant, and timely education and practical experiences for students. Experiences that are innovative and collaborative and prepare them for adult life. Access to technology and leadership opportunities focus on hard skills that young people need to be resourceful and successful.

The summit also brought attention to the non-university track, career paths. In other words, there were discussions on apprenticeship and career school opportunities for students who do not consider a four-year university as the next step for them. Another layer I would have liked to add to those conversations is the money management expectations of young adults. Lack of concrete, consistent approaches to teaching personal finance in high schools across the country leave many youth and young people ill-prepared for the financial decisions they need to make when they go off on their post-secondary journeys.

Including Personal Finance Topics in Career & Education Discussions for Young People

Education and training options discussions should include important aspects of money management such as borrowing, using credit, finding affordable housing, exploring employer benefits, paying taxes, changing income through education and training, and handling other financial responsibilities. Exposing youth to these post-secondary expenditures allow them to know their choices and explore options.

There has been some needed focus on student loan borrowing and debt associated with borrow to pay for a college education. Minsky (2018) explained that student loan debt is the second-largest type of consumer debt with about one in nine Americans carrying student loan debt. Consequently, there has been less focus on paying for vocation/trade/apprentices programs. Even though many students are planning to continue their education after high school, others may be uncertain about what comes next for them. Whether your teen has decided on a career path or they are weighing their options, exploring opportunities for them to learn more about managing their finances.

Finding Ways to Help Your Youth

There has been individual, organizational, and national efforts to provide quality personal finance information to students. As the struggle continues, there are different steps parents and loved ones can take to help students build their money skills and knowledge:

  • University of Illinois Extension offers youth development programs that help students gain experiences and knowledge in many life skills. The consumer economics programs offer money management opportunities for youth and young people to engage in money management classes. For example, youth financial book clubs, workshops, and presentations. The Consumer Financial Protection Bureau (CFPB) provides a youth financial education curriculum that outlines important techniques for teaching finances.
  • In my extension unit, we also have an annual conference for high school students, and it includes breakout sessions on personal finance topics that are relevant to students as they prepare for their post-secondary adventures. Check with your local extension office for available programs and workshops for your students. Check out some of my previous posts on youth and money
  • Talk with your child's school and ask them about the type of personal finance classes offered or topics covered.
  • The High School Financial Planning Program (HSFPP), which is a part of the efforts of the National Endowment for Financial Education (NEFE) has resources for parents, students, and instructors. The lessons for parents with teens and young adults, including money management, borrowing, financial services, and others.

As we move towards the end of graduation season, which is a time of year that many students and their families celebrate the hard work and sacrifice it took to get to finish high school. Think about your student's current personal finance knowledge and find resources that can help them maintain healthy financial lives as adults.

Resources: Minsky, A. S. (2018). Managing student loans in a changing landscape. Journal of Financial Planning, 22-26.]]>
A Kitchen Remodel: Excitement and Trepidation https://web.extension.illinois.edu/cfiv/eb141/entry_13925/ Mon, 13 May 2019 16:58:00 +0000 https://web.extension.illinois.edu/cfiv/eb141/entry_13925/ This summer, my husband and I are starting a kitchen remodel project -- yikes! Our house is over 60 years old and the kitchen is desperate for an update. In the next few months, I will blog about our journey – hopefully, this will be helpful to others facing remodeling projects.

Home remodeling projects can be scary to start! Since we bought our home, my husband and I have done several significant home remodeling projects and one of the hardest parts is deciding whom to do the work. After a couple of small remodeling projects where we did the work, we know we need to hire other people to do future remodeling work! However, we do want to feel confident that the person we hire will do the work well and within our budget.

Before I started talking to contractors, I did some research on the expected cost of a kitchen remodel. (More about this in the next blog post.) My husband and I also talked about how much we wanted to spend and how we planned to pay for the remodel.

We also talked about the extent of the work we wanted done. About 15 years ago we updated the flooring and lights, and repainted the kitchen. This helped a lot but now we want to remove all the cabinets, etc. back to the studs! A much more extensive project!

I like to write our decisions down. That way I can go back and check on our original expectations. We have the habit of getting excited about "possibilities" during a remodeling job and the project tends to grow! Having a plan that I can check-back with may help us stay on track.

Next, we were ready to start shopping for someone to do our home improvement work. I started asking everyone I know whether they had a good experience with a kitchen remodel project. I posted on Facebook too and then followed up with the responses for more in-depth information. Ultimately, we are working with someone who has done several other projects with people I know well.

The Illinois Attorney General's article, "Home Repair and Construction" suggests the following next steps too.

  • Check contractor complaint records with the Illinois Attorney General and the Better Business Bureau.
  • Get recommendations and references. Talk to friends, family, and other people whom the contractor has done similar work.
  • Get at least three written estimates from contractors who have come to your home to evaluate what needs to be done. Be sure the estimates are based on the same work so that you can make meaningful comparisons.
  • Insist on a complete written contract. Know exactly what work will be done, the quality of the materials that will be used, warranties, timetables, the total price of the job, and the schedule of payments. If someone won't give you a written contract, you likely don't want to work with them.

While you're talking to different contractors, think about what it would be like to work with them.

  • Are you comfortable talking to them?
  • Do they answer your questions well?
  • Will you be comfortable having them (and their co-workers) in your home?

Be sure to ask their references about these questions too. From past remodeling experiences, I know that the construction workers likely will be in and out of my home for several weeks. I want to have a positive relationship with the people working on my kitchen.

Doing your research before hiring someone helps protect you financially too. Here are some warning signs of people you may not want to work with. Be wary of a person who:

  • comes to your home uninvited;
  • tells you that you need to make repairs immediately or your safety may be in danger;
  • pressures you to sign papers today or talks too quickly, attempting to confuse you;
  • offers to drive you to your bank to withdraw funds to pay for his or her work; or
  • asks you to pay for the entire job up front.

How have you found people to do remodeling work at your home? What tips can you share with our blog readers? Please comment below.

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