Monday, December 2, 2013

REPOST: Creating a financial plan? Start by asking a question

This article from Forbes lists questions you need to ask yourself when creating your own financial plan so that you can determine your needs and properly execute your ideas.
Although many think the economic recession inspired Americans to become better savers, a 2013 study from Northwestern Mutual on Financial Planning Obstacles shows the reverse is true. Some 6 in 10 Americans say their financial planning needs improvement, the study reports.
While many Americans were forced to cut back during the recession, they don’t necessarily know how to move forward. Many people now find themselves in different income brackets, while others may have used up emergency funds or robbed their retirement accounts to offset financial setbacks.
Those who responded to the study said their biggest barriers to planning for the future are a sense that they just don’t know where to turn or how to begin, or that they feel stymied because they don’t think they have enough time to deal with long-term goals.

Image Source: www.forbes.com

Ask Where You Want to Be
Perhaps the most important question for people to ask is where they want to end up—not what they have to give up. Budgets can empower people to achieve what they want in life, both now and when they retire, says personal financial columnist Liz Weston, author of several books, including There Are No Dumb Questions About Money: Answers and Advice to Help You Make the Most of Your Finances.
“Most people view budgets like a diet,” Weston said. Instead of thinking about what they need to give up, they should ask where their money is going and if they’d rather have it go somewhere else, she advises.

A budget is simply a process of choices, Weston added. “What you’re hoping to do is spend less on the stuff you don’t care about and spend more on the things that you do.”

Look Forward
One of the best ways to get back on track is to look forward instead of back, when incomes might have been higher, said Weston. “One of the most common things I see is people thinking they should be able to have a better lifestyle than they do on the income that they have.”
That belief can lead to overspending, denial, and problems saving money. Part of the solution is a reality check. “You’ve got to do the math for where you are today,” she said. “At some point you’ve got to say, ‘The past is past.’”

Do Some Research

Everyone has questions about money. “No one is born knowing this stuff,” Weston said, adding that even those educated about financial planning by their parents are now dealing with outdated information.

Many of the money rules followed by past generations no longer match today’s financial realities, she said. For example, the old wisdom of stretching to buy a house blew up on many people when the housing bubble burst.

“Obviously the rules that people were operating by during the boom years didn’t work,” Weston added. “People have to be more critical thinkers than they have been in the past.”

That’s why people have to ask plenty of questions along the way, Weston said. “It’s important to take the bull by the horns and realize you have to educate yourself,” she said. To find answers, don’t be afraid to do the research and consult books, trusted websites, or financial advisors, she added.

Know Whom to Trust

Twenty years ago it was difficult for middle-income people to find financial advice. Today, people can feel overloaded with information—most of it contradictory. Don’t assume that because someone has a blog or TV show that they know what they’re talking about, Weston cautioned. Instead, make sure the source has a background in comprehensive financial planning.

If you’re interested in hiring a financial advisor, know your goals and make a short list of recommendations from friends, family, and other trusted sources. Set up face-to interviews with your candidates—to be sure you’re on the same page.

“There are more resources for middle-income people now, including different types of financial advisors to help with different budgets and needs,” Weston said. Options range from comprehensive financial planners, who can offer advice on a wide range of subjects, to fee-only financial planners who charge by the hour. Even die-hard do-it-yourselfers, however, should consider consulting some type of professional planner when they get within 10 years of retirement to make sure they’re on the right track, she added.

Take a First Step
When getting started, keep things simple. “If you can’t explain it to a 10-year-old, you probably shouldn’t be investing in it or doing it,” she says.

For retirement planning, start with a 401k (up to what the employer will match) and an IRA.

Those who don’t put money into a retirement plan can miss the employer match, the tax break for contributing, and a chance to have their returns start earning returns. “Every $1,000 people fail to put into a 401k is at least $10,000 in lost retirement income,” Weston says.

Weston’s most important tip: Don’t give up. “If this isn’t natural, if it doesn’t make sense, hang in there,” she said.

Learning about money is a lot like learning a new language, Weston said. When people first start talking about money,the words may be confusing, she said. “Then gradually you start being able to translate them to yourself, and you figure it out.”
Hi, I’m Dana Ray Reynolds. As a financial planner, I offer my services to private businesses and individuals to help them make informed decisions and achieve financial security. Follow me on Facebook for more helpful tips in financial planning.

Wednesday, October 30, 2013

REPOST: Financial planning for families of children with autism

For families of children with autism, financial planning may be the least of their concerns especially when faced with day-to-day struggles. However, making financial arrangements can benefit families, explains Jennifer Cerbasi in the FoxNews report below.


Image source: foxnews.com
The list of priorities for families of children with autism is long: Doctors' appointments, speech therapy sessions, social skills groups, and Individualized Education Program (IEP) meetings are just a few of the items on the agenda.

Families are often focused on the here and now – what's best for their child's development today. The future is filled with unknowns and these day-to-day struggles often overshadow long-term plans, which may be difficult to think about.

The considerations are many, including basic logistics, such as housing, living expenses, and income, in addition to therapies, social groups, and activities or programs that may improve an individual's overall quality of life.

"As parents, we fight for the best IEP for our child, which leads to the best quality of life. Financial planning serves the same purpose," said Clark Crawford, vice president of sales and new business at Volios Group in New Jersey, and father of a child with an autism spectrum disorder.

For Crawford, the essentials when it comes to planning include a will, which dictates proper guardianship of the surviving children; a special-needs trust, which may fund both the necessities and any extra services; and insurance plans to provide for the family in case of a crisis. A sound plan needs to take unexpected deaths into account, he added.

"We talk about financial and insurance planning for the long term. What about a 6-year-old with autism who is left without parents?"

A family’s current financial situation and dynamics are important factors to consider when planning, but a crucial factor is the independence level of the child with autism. Some children with autism spectrum disorders’ (ASD) academic skills that are at or above their grade level, but exhibit deficits in other areas, including social, emotional, and problem solving skills.

"With just an insurance plan, a check may be issued to a child who is not prepared to manage it," said Crawford.

Bruce Maier, Financial Consultant for AXA Advisors, said when he initially sits with a family, he presents the idea that they are planning for two generations.

"Every family and situation is different. Every child with autism is different. The personalization of the plan is so important,” Maier said. “We talk about 'What keeps you up at night?' Granted, everything will keep you up at night when you have a child with special needs, but that question helps us focus on the priorities."

According to Maier, families of children with special needs are used to working with a team of professionals and should consider a financial planner another member of the team. On the other hand, he understands why people put off meeting with a financial planner or an insurance agent, and in turn, discussing guardianship.

"Parents may not be ready to have that conversation," but, he added, by planning and putting some of the pieces in place, "You can approach the potential guardian and say 'I know this is a difficult thing to assume, but I've made some financial arrangements that may make the situation more comfortable.’"

Though financial planners and insurance agents know their products well, it's the parent of the child with ASD who truly knows the ins and outs of daily life. To that end, Maier suggests that in addition to any legal documents and plans families may put in place, parents write a letter of intent, documenting all the details of caring for their child with special needs, including medications, daily schedules, and favorite toys, movies, or activities.

"For example, if every time Johnny goes to the pediatrician, he gets a red lollipop -- and it has to be red -- that can really make or break a situation," said Maier.

Knowing that many children with autism follow specific schedules or have very unique preferences, a letter of intent, though not a legal document, may ensure vital information is passed on to those now caring for the child.

Douglas O. Baker of Los Angeles, California, is a Special Needs Advisor and, like Crawford, is a father of a child with ASD. Baker said parents should to work with someone they trust, as he has come across his share of professionals who don't necessarily have the child's best interest in mind, or don't listen to the family’s needs.

"Parents have to be wary of agents poaching special needs families, simply trying to sell a product,” said Baker. “Families drop their policy after a year because it didn't make any sense."

Baker said he focuses on helping families create a positive quality of life both parents and their children can enjoy now, as well as planning for the future. In addition to financial planning, he assists families in navigating school and service systems, and likens himself to an air traffic controller or a quarterback, acting as a resource because he knows how overwhelming the decision-making process can be for a family.

"There are a lot of moving parts when it comes to having a child with autism,” said Baker. “You think birth to 21 years old is the hardest part; the longest stretch in your life with a special needs child is adulthood."

All three professionals highlight the importance of creating a plan that attends to the needs of the caregiver, whether it be the parents who are still living, or a guardian who steps in upon their passing.

"Parents are so used to focusing on the child with special needs, but if you do not think about yourself and your goals in the sense of risk protection among your assets, disability insurance, and your ability to maintain income, it becomes a catastrophic situation for a family of children without special needs,” said Maier. “It becomes an almost impossible situation for a family of a child with special needs."

With all of the components of raising and caring for a child with ASD, the financial aspect is one of the most daunting and overwhelming for families already inundated with decisions to be made. By meeting with a professional and evaluating the family's current and future state of affairs, parents of children special needs children may be able to take one thing off their very full plates.


I am Dana Ray Reynolds, a financial planner with more than 10 years of experience in the fields of risk management and tax planning. For more discussions on the various aspects of financial planning, like my Facebook page.

Thursday, October 3, 2013

REPOST: 5 myths about disability insurance

One of the very common flaws in setting aside money for insurance is skewing the priorities of insurance coverage. As this article by Forbes.com’s Ashley Ebeling notes, many fail to put proper importance to accident insurance.

Image source: flickr.com

Shortly after putting out the group’s first pamphlet on how disability insurance can protect your family, Stephen Brobeck, executive director of the Consumer Federation of America, started offering it as a benefit to his employees. “That work [15 years ago] made me aware that I was being an irresponsible employer because we weren’t offering disability insurance,” he says, adding, “We feel pretty strongly that this is an important type of program.”

Brobeck is still trying to get the message out to other employers, and to employees, many of whom don’t even know whether or not they’re offered this benefit at work. Add it to your checklist for this fall’s open enrollment season when you sort through the benefits you’ll sign up for for next calendar year.

This week the Consumer Federation of America and Unum, the leading long-term disability insurance player by market share (16.2%), released a report based on interviews with 407 individuals who put in claims based on their employer group policies through Unum and have been on long-term disability for at least six months—or used to be. “The beneficiaries told us that disability insurance payments played an essential role in protecting their financial and emotional lives,” Brobeck says.

Long-term disability payments don’t replace your salary; they provide a buffer—usually 60% of your salary. That means that most recipients have to adjust their lifestyles and priorities: of those interviewed for the report, 85% cut back or completely stopped saving for retirement, and 58% skipped or delayed some medical, dental or vision care for themselves or family members.

Here are five myths about disability insurance the report debunks:

I doubt I’ll ever need it.

The Social Security Administration estimates that one in four 20-year-olds will become disabled and unable to work before they reach the age of 67. In 2012, more than 650,000 disabled workers received more than $9 billion in long-term disability benefits through employer-sponsored group disability coverage.

Worker’s compensation will cover me.

Worker’s comp replaces lost income if an injury or illness occurs on the job, but fewer than 5% of disabling accidents and illnesses are work-related. Most (90%) of long-term disability claims are for illnesses, not accidents. Vicki Burhenn, a Unum long-term disability recipient, from Lawrence, Indiana, went on disability in 2010 when her chronic obstructive pulmonary disease progressed so that she could no longer work as an office administrator at a mental health facility. “Emotionally, going on disability insurance was a Godsend, knowing I had the money coming in; it’s like going from drowning to taking a deep breath,” she says.

It’s a man’s problem. 60% of the Unum long-term disability recipients over the 2009-2012 time period were women.

I’m too young to worry about it.

41% of Unum long-term disability recipients over the 2009-2012 time period were younger than 50, with a third of those under 40. Dawn-Michelle Wyzard, a single mom in her 30s, from Clarksville, Indiana, counted on two rounds of disability payments when she had back surgery and needed time off from her job as a healthcare data processing administrator. “There is no way I could have survived the surgery financially without disability benefits,” she says, adding, “It helped me to not be stressed because I knew the money would be there.”

I can get coverage on my own.

Individual disability insurance, sold through financial advisors, is considerably more expensive than employer-sponsored coverage. Yet only a third of private industry workers have access to employer-sponsored coverage, according to the Bureau of Labor Statistics. Some employers pay 100% of the premiums; some share the cost with employees; and some offer it as a voluntary employee benefit, requiring the employee to pay 100% of the premium. Before you go on the individual market to try to buy a better policy, check if your employer gives you the option to “buy up” and add additional coverage.

For a policy comparison checklist from the Consumer Federation of America pamphlet, click here. (Note: Unum paid CFA $40,000 for their work in putting together the report; the recipients who were interviewed got $25 stipends.)

I’m Dana Ray Reynolds, a financial planner. Follow me on Twitter for more updates on intelligent money management.

Sunday, September 1, 2013

REPOST: Seven Ways To Pay For Retirement

The golden years ought to be just that, memorable and without financial worry. With growing concerns about the future of retirement, Mitch Tuchman writes about ways people can make their retirement more financially secure. The article can be found at Forbes.com

Image source: Forbes.com

Getting by in retirement should be about more than just “getting by.” Yet lots of people arrive at that moment unsure of just how they will pay for retirement after leaving work behind.

Paying for retirement is no mystery, however. It’s really just a judicious combination of tools you already (mostly) understand. Here are the main ways Americans pay for their retirement years:

1. By working. The number of persons over the age of 65 and working has been rising steadily for years, most recently reaching 7.6 million, according to government data. As the baby boomers hit that mark, expect more and more of them to either stay on the job or seek alternative work, possibly competing with younger people for service jobs.

2. Cash savings. Nobody likes to think about cash in the bank as a reasonable investment. It isn’t when interest rates are so low. But having a few months of income stashed away, even at a low rate of return, can make a big difference in your peace of mind.

3. Social Security. Truthfully, Social Security is going to be a major slice of most people’s retirement income pie. As of 2012, 56.7 million Americans were collecting, of which nearly 40 million were retired workers and dependents. (The rest are survivors or disabled workers and dependents.)

4.Retirement accounts. Participation rates among 401k plans is at about 76%, even though many corporate plans have begun to voluntarily auto-enroll new hires. The hope is that corporate matching plans and other incentives will increase those numbers, but until enrollment is mandatory that may be as good as it gets.

5. Pensions and annuities. Increasingly rare, pension plans (and their private counterparts, annuities) can provide a relatively peaceful retirement, free from the stress of managing investments over the long term. But they have become rare for a reason — corporations don’t want to take on those market risks, either.

6. Home equity. One of the most important things you can do as retirement nears is expunge any and all debts: credit cards, cars and your home mortgage. These are the real retirement derailers. If push comes to shove, you can sell a house and downsize to raise cash or, possibly, find a favorable reverse mortgage plan that pays an income while you stay put.

7. Cut costs. Two can live as cheaply as one, as they say. Part of the reason so many retirees move to distant states later in life is to find a lower cost of living, lower taxes or both. Once you know your retirement income flow, it’s important to consider all of your options.

You can retire, on time, with a minimum of drama. But you have to plan, not hope, when it comes to retirement.

Dana Ray Reynolds here, an independent financial planner. For more of my updates and advice, follow me on Twitter.

Tuesday, July 30, 2013

REPOST: Retirement Living: Dreams are just a plan away

USA Today’s Rodney Brooks notes that "living out your dream retirement takes planning, especially financial planning." In this article, Brooks discusses some of the common financial mistakes people make when planning for their retirement.

Image source: usatoday.com
Tom and Anne Barker had a retirement dream: to travel the world. And to say they have lived that dream would be an understatement. They have been on more than a dozen international trips since they retired in 2005, including Iceland, New Zealand, Morocco, India, Zambia, Tuscany, Argentina and Vietnam. And they aren't done yet.

Van McKellar, 74, of Aurora, Co., had a very different dream. He quit school in the 10th grade. Then there was marriage and supporting his family with hard jobs that never left him enough time to go back for that diploma, or that sometimes paid so little he had to have two jobs. Last year he graduated from the Metropolitan State College of Denver cum laude with a Bachelor of Arts degree in African-American studies and a minor in history.

"It felt good," he says. "But it was more than saying it felt good. I felt something very important had transpired. I had reached a milestone that was more important than other things I achieved in my life."

Then there's Jerry Leener, of Chevy Chase, Md. After 30 years at the accounting firm PricewaterhouseCoopers, he wanted to do something different, and he wanted to give something back to the community. So, at 65 he is a volunteer Montgomery County (Md.) EMS technician and ambulance driver, working with men and women half his age.

"You have to like this kind of crap," he says. "Blood and guts is not for everybody."

Despite surveys showing that many of us have not saved enough money to live comfortably in retirement, there are the many who have done things right, and are living out their dreams. The key, financial planners say, is to have a plan to pay for that dream.

"Today we have Boomers crossing that bridge, and they have different ideas of what retirement looks like," says Jennifer Landon, president of Journey Financial Services in Idaho Falls, Idaho. "We're seeing a lot of people who are doing a lot of different things, and they have different (financial) planning needs."

Leener is a great example. After 30 years at the giant accounting firm, he needed something else. "I got to the point where I really wanted to retire," he said. "I thought there was something more in life."

He didn't know exactly how he wanted to give back. He sought professional help, and his retirement goals went up on a white board: giving back, being outdoors, not wearing a coat and tie, freedom of time, and developing a new community of people.

Still, he wasn't sure until one day a battalion chief from Montgomery County Fire and Rescue ended up doing some work in his neighborhood. The two started talking, and the chief suggested he join the fire department as a volunteer.

That was eight years ago. The training was so grueling he actually quit — twice. But he persevered, and now besides being the only volunteer EMS technician among a group of paid professionals, he's also been trained to drive an ambulance. He's proud of the fact that he doesn't need the help of his much younger colleagues to do the very physical work.

And he's going to do it "as long as I can bench press 190 pounds."

McKellar, meanwhile, paid his tuition with scholarships and grants, and paid his living expenses with his Social Security. "I did not use student loans or have any Veterans assistance," he says. "In essence, I was like a very studious person that only took room and board from his parents."

And what did his four daughters think? "They were more proud than I thought they would be," he says. "It was a big deal to them."

Jeffrey Bastable, a retired hospital and health care executive, found a use for his skills when his wife, Susan, a professor at Le Moyne College in Syracuse, N.Y., was planning to take a dozen of her nursing students to a remote village in Ghana to do hands-on health care. This was not her first foreign trip, but this was the first time he went along to help. The group worked at a 100-bed hospital that served a population of 800,000. Bastable used his experience to help with funding and equipment donations.

"People say you are retired, but I say I am retooling," says Bastable, 66. "I say I no longer work for organizations, I work for myself. I've never felt comfortable with the term retirement when you went home and kicked your feet up. That did not work for me."

"Isn't it wonderful that with the experience we have we can apply to other settings that desperately need it," he says. "There is no pay. The pay is the faces of the people. The value that can accrue to yourself personally by extending yourself in unfamiliar settings can be extraordinary."

Tom and Anne Barker, of Webster, N.Y., are both retired from the Rochester Institute of Technology, where they were both statistics professors. They have done most of their travels through Classic Journeys, which offers vacation packages and tours worldwide, including walking, hiking and adventure tours.

"We did two things when we retired," says Anne Barker, 68. "One was we bought an RV. And two, we went to Iceland before the retirement party. I've always wanted to go to a place like Iceland. That's how it started."

When they got back from Iceland they drove the RV to Alaska. Now they do at least two trips a year, and the trips generally last three weeks to three months.

Tom Barker, 72, credits two things for their ability to travel the world. One was an inheritance. But he gives most of the credit to his wife, who gets all the information and plans out each trip. "Anne has been the best financial planner I've ever run into," he says. "She has managed finances in such a way that we can afford it."

He also says the couple have always had a "slush fund" for travel. That is key, according to financial planners.

Matt Rettick, author of author of All the Rules Have Changed — What You Must Do to Succeed in the New Financial Reality and host of the Internet TV show Checks and Balances TV, says first you must eliminate debt. "To achieve retirement dreams you have to reduce and then eliminate all debt," he says. "We really have to become debt-free as soon as possible — that's number one."

"Number two is a regular savings plan," he says. "I believe you pay yourself first. We need to save 10% to 15% of at least our net, or gross, and put it into savings pockets." Those pockets include an emergency fund with six months' of living expenses; an auto fund, so you don't have a car note in retirement; a travel fund, "so they are not using credit cards to go to Hawaii"; college funds for children; and a retirement fund.

"Once these accounts are funded, I'd like to see the majority go into retirement funds," he says.

People often make a big mistake in planning for their retirement dreams, Landon says: They want to spend too much too early.

"Make sure you are not sacrificing your long-term plan for what you want today," she says. "Do you have enough money? Do you have a well-thought-out plan for inflation and health care? After those things are taken care of, we can look at other things. But don't do it at the expense of a long-term plan."

Financial planner Dana Ray Reynolds helps clients work on their finances and search for the best opportunities in which they can grow their money in the healthiest way possible. For more pointers on financial planning and security, follow this Twitter account.

Friday, July 19, 2013

Investment banking: Why young professionals should take advantage of it


Image source: investingempire.com

Traditionally, every young professional’s mantra on career success is “be a boss and buy properties.” But modern business is far into an evolved state where hard properties such as estates and luxury goods could no longer be the basis for wealth. Young professionals have to be in touch with new principles in the banking and finance industries for modern options on financial stability.

Ideas about finances and wealth creation that are suitable to the complexities of modern banking systems are bred in the professional environments of investment banks. These educate fresh university graduates and young professionals on careers involving raising equity and debt capital. They are coveted training grounds for graduates with high academic achievement, deep involvements in campus leadership positions, outstanding communication skills, and internships at reputable companies or nonprofit organizations.


Image source: infusion.com

Young professionals could be the best players in investment banking for their typical qualities. They are wellacquainted with the world-changing business, consumer, and social trends. They are technology-savvy and possess enviable propensities to learn new things. They could display a solid sense of direction in terms of life goals and career objectives. Relatively uncorrupted by rigid organizational cultures, they can provide credible, fresh, out-of-the-box, and systematic actions to transform corporate culture according to the fast-paced objectives of modern economies.

Greenhorns in the corporate world who have a keen interest in a broad spectrum of learning such as communications, marketing, management, arts, media, and the Internet could be the most suited for investment banking roles, as long as their basic understanding of finance holds up to the demands of the industry. But with genuine passion, young professionals may discover that investment banking as a career opens doors to many opportunities.


Image source: rwbaird.com

I am Dana Ray Reynolds and I work as an independent financial consultant for private individuals, businesses, and other organizations. Follow me on Twitter for more updates on finance and related fields.

Thursday, June 13, 2013

Best payment processors for a range of transactions


Image source: onbile.com

If I were to invent a mobile app that processes transactions, I would name it “Dana Ray Reynolds.” I want to be immortalized in a way that will keep my name a relevant code in every business sphere. But for now, I will let the likes of eBay and Groupon dominate the commerce of mobile payment.

True, mobile payment is one of the most convenient ways to process business transactions. I myself appreciate how such a seemingly simple technology can readily process an array of marketing equations in just a few seconds. However, not every mobile software service may be suitable to all business transactions. A study by NerdWallet suggests that every single payment processor has features that work best on a specific function, such as the type and amount of transaction, total sales volume, and type of card used by customers.


Image source: ientry.com

As per the study’s findings, Breadcrumb by Groupon best works for:

• A large volume of transactions;
• Transactions that amount to more than $400 per item or more than six figures in monthly sales volume;
• Transactions that are valued between $17 and $26, but do not take American Express AXP.

PayPal Here, meanwhile, is most efficient for establishments that:

• Generate less than five figures in sales a month;
• Have a mean transaction value of $17 or less;
• Have an average transaction under $26 and take American Express cards.

Monthly subscription to Square’s plan produces the best results for businesses that:

• Make five to six digits in sales every month;
• Have very few transactions over $400;
• Process very few transactions in general.


Image source: wsj.net

Merchants and customers alike have gained so much from mobile payment services; thanks to their practical and easy application. To know more about other trends in the finance sector, read articles on my blog.