January 29, 2015   Check your free credit rating with one or more of the following organizations (each has a slightly different reporting format and may have differing information) at least once a year. By regularly reviewing the information contained in the reports, you can better protect yourself from identity theft, make sure you qualify for that home or auto loan you need…

I could talk for quite a while about why planning ahead for our health care is so very important for ourselves and our loved ones…and why setting up savings and possibly insurance solutions are key to maintaining our choices, independence, and dignity.  But for today’s post, I’ll focus on sharing five top misconceptions about long term care to offer some food for thought for the week.

1)  Long term care issues are for older seniors only.  Actually, over one-half of those people needing long term care attention are under the age of 50 – due to unexpected illness, accidents, and early onset of diseases.  We pay for home and auto insurance, for example, and hope we don’t need to go through the experience of using it – but yet health issues may also sideline us at any time too…and it’s a prudent part of planning to protect that very valuable asset too.

2)  Long term care equates to nursing home care.  Most people who need long term care will benefit most from home care and assisted living – and that’s where most people would prefer to stay to enhance their comfort and quality of life.  It’s definitely not a choice between no care and a skilled nursing home/hospital setting.

3)  You should wait until your 60’s before looking at long term care planning.   You may need long term care at any age (see point #1) and if you are thinking about using long term care insurance as some form of risk sharing, then waiting until age 60 and over could well be too late – as insurance gets progressively more expensive later in life and there’s also a much higher chance that you will have developed some health problem(s) before then that could adversely affect policy underwriting. So it may well make sense both financially and personally to be insured at a much younger age.

4)  Long term care insurance is too expensive so I’m not even going to look at it.  It’s true that many of the original insurance policy premiums written 10-20 years ago have increased quite a bit due to the current low interest rates, low lapse trends, and top end features.  However, there are plenty of newer solutions available to provide flexible coverage – often with state tax benefits, pooled benefits for couples, and custom riders – so it’s a smart move to meet with an experienced professional to get the real scoop.

5)  Medicare will cover long term care if I need it.  All publicly funded programs are under immense financial pressures and this situation will only increase in coming years with a larger population.  So, first, any current benefits such as for home hospice care and skilled nursing will likely be further constrained going forward.  Secondly, under such general programs, there is very limited personal choice and flexibility for care options – rather a “take it or leave it” last resort scenario as these types of programs were originally intended as a final safety net only.  And even when people do meet the health care criteria for coverage, income and assets must be greatly reduced before Medicare begins payment.

 

 

 

I hear from a lot of people that they feel embarrassed to admit they don’t know much about their finances, or their investments, or haven’t really given anything much thought at all in this area.  They fear being seen as silly, uncoordinated, or clumsy.  And it’s often more difficult as we get a bit older, as we’re then accustomed to being an expert in our business lives and other activities that we’ve done for a while, and the prospect of learning new skills can seem daunting.

Believe me, I can fully relate to these feelings as I think about my second Tae Kwon Do lesson yesterday.  After the long hard winter I decided that I needed to try a new activity to stretch my body and channel physical energy in a focused way.  Good intentions, but it took some reminders to myself to go with the flow and keep an open mind during this lesson as I was asked to hop on one foot along the ladder exercise (haven’t done anything like that since I was six) and go along the length of the mats in the forward stance while staying balanced with weight on the appropriate foot (wait, this left or the other left…what do you mean pivot my knee first).  Sigh.  I’m very proficient as a singer and pianist, pretty coordinated with my horse riding and driving, manage outside chores and fixes well, and have expertise in my business – so going back to square one in a new venture is a different ball game and I was tempted to just label myself clearly as silly, uncoordinated, and clumsy too.

However, instead of focusing on those limiting labels I really tried substituting words like let’s give this a try, making progress, better than last week, still upright, and whatever else popped into my head at the time.  So while I’m not sure I’m really even entitled to wear the white belt yet that I was given, I am sure that I will be going back next week and listening to the instructor and getting more movements done than I did yesterday.  And I’m quite sure that if I (as a not particularly athletic person) can make incremental progress with this dedicated martial arts instructor, then you all have an even better chance to succeed in expanding your knowledge base to understand and own your personal finances.  Start today and keep going onward and upwards!

 

 

Over the past few weeks I’ve been talking with a family who is trying to figure out the timing for transitioning both the husband’s work and a new home reflecting a different lifestyle for everyone.  The husband’s family business has become an increasingly emotional and draining burden and he wants to find a new endeavor that will be more satisfying and still support the family finances as well.  The change in housing also reflects this desire and a plan to downsize somewhat to save more money toward the upcoming college educations.  So, what factors do you need to consider for each of these – and how do you try to balance and intertwine both together?

For any voluntary career change, you need to start doing your homework and plan out a transition time and process.  Making sure you have some savings set aside for reserves and interim cash flow is a big consideration.  Lining up appropriate health, life and disability insurances is also key.  But networking and ‘reality testing’ your business plan is probably the most important factor…it’s fun to dream about a new venture but making sure you are taking a calculated risk and are stacking the deck in your favor is the way to give yourself the best chance at real success.

On the housing front, you’ll need to take some time to run your own numbers and see exactly how much you would be saving if you downsized – don’t forget about selling costs, realtor fees, moving costs, new escrow accounts, etc.  If you dive in too early, you may find on the back end that you really haven’t saved very much on a monthly basis, and in fact may have also significantly decreased your cash reserves by the time the cash outlays settle.  You’ll also need to make sure that the career change provides adequately for a mortgage application or other financing arrangement (income and earnings track record) for purchasing the new place.  And planning out a packing and moving schedule on a calendar with assigned responsibilities for everyone can be a big help for using your time and energies as effectively and realistically as possible – all necessary to maintaining your sanity and perspective!

The overarching issue we talked about right up front, though, is to jointly articulate your top goals for both the family and each respective choice on the table.  For example, stating that you all want to place family health and communications at the top of the list will help keep the numerous details in perspective and greatly lessen that chance that differences about house style or configuration, for example, will expand into personal arguments and judgments.  And being able to identify a couple of top key factors (such as school district or travel distance of the new business from the new house) will help keep you focused on the must have’s, and minimize either ‘analysis paralysis’ or making choices on the fly out of tiredness or frustration.

Large transition decisions can be draining, so tend to your health and time frames on a regular basis.  Periodic reassessments and tweaks will be more useful than either trying to set situations in stone or simply winging it.  This is a prime time to reach out and get support from all your resources:  colleagues, family members, professional advisors, and whomever else you need to tap.  A well considered plan can lead to great results and rewards!

 

At a family dinner yesterday my brother mentioned that he had heard a radio program with a well known financial individual who advised a caller that starting to save $100 per month in a ROTH IRA as a young person in her twenties starting out would be a really good idea because she could ultimately end up with over a million dollars at retirement age.  I was asked if this was indeed a good idea and should he pass along this advice to a younger family member as well.

I’m all for starting to save funds as early as possible and it’s a great habit that will help develop flexibility and priority setting for a lifetime.  However, dubious math calculations and investment choices aside in this case, I am very uncomfortable with professionals offering sound bites of advice that promise great results without having the time to ask other relevant questions and see if other tools are being used appropriately first.  Americans seem to have become enamored with quick answers and relying on others to gauge the validity of someone’s advice.  The particular financial individual has been on Oprah (who I do admire!) and so folks figure that’s good enough for them.  But there’s no way anyone can instantaneously review and assess someone’s best interests in a 60 second blurb, and by taking a quick response as gospel you may well be sailing over other options and considerations that would really be important to you.

There are many good tools for investing and implementing other areas of your financial plan.  But please, for your own true benefit, take some time to become educated on your finances, get a second or third qualified opinion, and make sure you really understand why you are making a particular decision that will affect both your money and your life outcomes.  Sound bites may be fun and easy….but ultimately you get what you pay for.

 

 

While I was on Twitter yesterday I came across a GREAT website called Math for Grownups (www.MathForGrownups.com) written by Laura Laing.  I’ve heard so many clients say during our planning discussions that they are ‘hopeless’ with math so they are sure they either won’t make the right decision or will never understand financial planning.  My basic premise has always been that financial planning isn’t about math to begin with, but also that any numerical decisions that need to be made are perfectly manageable by anyone – male or female.  Now I’ve found a wonderful resource to help everyone gain confidence and knowledge in this area.  Check out her ‘Manifesto’ (copied here) and PLEASE visit the site directly!

The Math for Grownups Manifesto

1. The “math gene” does not exist.

2. Everyone does math, every day. (Math is not just for scientists or mathematicians.)

3. Girls are great at math. (Boys, too!)

4. There’s more than one way to skin a math problem.

5. Math anxiety is real and detrimental—but it can be overcome.

6. Kids learn math best when they are allowed to discover their own approaches—and fail.

7. Math is not a competition.

8. Estimation is one of the most powerful math tools.

9. Math is about concepts, not right answers.

10. You can do math, promise.

 

It seems in our society that being “overbooked” has become synonymous with being an important, valued individual.  So we rush from children to work to errands to housework to volunteer time to renovations to social time with hardly a chance to breathe or think.  If we can’t return phone calls or emails or respond fully to customers, then it’s just another sign that we’re really handling the other more important stuff in life – other people will just HAVE to understand.

 While there’s no doubt that some days are quite hectic or turned upside down by real emergencies, maybe we’re really fooling ourselves about the important parts of life if we’re always focusing on our “TO DO List” instead of our “WE VALUE List”? 

 When we take the time to figure out what our values are, how we want to contribute to the world, what principles are most important to us, and how we want to tap into our best strengths, then we have our own platform available to help us make choices about what we do each day and how we do it.

 For example, you want to take your kids to their extra-curricular activity because you think it will be fun for them and/or help them learn new skills.  But, because you’re still fuming over a colleague’s response at work, you’re also now upset at having to drive in afternoon traffic and end up arguing with the kids all the way to the activity and then all the way through dinner and the evening afterwards.

 What if we had decided it’s a critical part of our lives to be more “in the moment” and we then focus on how great it is the kids are healthy enough to participate and we really want to use the time together to build more family memories?

 Or, while you’re working on a project deadline that is rapidly approaching you decide it’s also imperative to answer the phone anyway when it rings.  On the other end is a friend who is getting back to you about getting together the following day.  You are so stressed and upset about the project that you bluntly tell them that you’re stuck in this important project and you don’t have time to deal with them today.

 Unfortunately, what you’ve now accomplished is putting a major dent in your friendship and making it clear that your friend’s time is less valuable than yours.  What if we had already decided that our friends and family were top priorities for us, and so instead reacted by either 1) NOT answering the phone unless we were prepared to respond with civility to the caller, or 2) taking the 30 seconds necessary to thank our friend for calling, make some plans, or set a time to talk later in the evening?

 Because it takes some upfront time (and some ongoing reminders) to think about what we really need in life and what we think our purpose is, it often seems much easier to just “go with the flow” or “wing it” with whatever comes at us.

 But, if we’re usually being reactive, doesn’t that mean we’re also not making conscious choices and taking control over how our life turns out? 

 And if we feel out of control and stressed, how can this be good for the long term happiness and success we say we want?