R U Ready for 2011? “Retool” Presentation Notes from BA Lead$ Summit

Written by Kevin Jacobs on January 27, 2011 in broken arrow, Enrolled Agent, Tax Planning - No Comments

Below are my notes and questions I used for the Lead$ Summit today at the Broken Arrow Chamber of Commerce.  Use these notes to help you “retool” for the New Year!  Feel free to leave comments below.

Retool

 Presented by:  Kevin Jacobs, CFP®, EA

Owner of Step By Step Tax and Financial Planning, LLC

 Definition of Character

  • “The ability to meet the demands of reality.”
    • Dr. Henry Cloud, Integrity, pg. 24

Aspects of Character

  • “The ability to connect authentically (which leads to trust).”
  • “The ability to be oriented toward the truth (which leads to finding and operating in reality).”
  • The ability to work in a way that gets results and finishes well (which leads to reaching goals, profits or the mission).”
  • The ability to embrace, engage, and deal with the negative (which leads to ending problems, resolving them or transforming them).”
  • The ability to be oriented toward growth (which leads to increase).”
  • The ability to be transcendent (which leads to enlargement of the bigger picture and oneself).”
    • Dr. Henry Cloud, Integrity, pg. 35

http://www.drcloud.com/index-5.html

 With knowing the definition of character, now we can progress at evaluating our life and retooling for the future.

General

  • Are there things you want to do that you haven’t done yet?
  • What is not working in your life?
  • Is your life in balance? 
  • Do you have enough leisure time, vacations, travel, hobbies, and fun in your life?
  • What is your “top ten” list and what are you doing do achieve them?
  • What are 10 things you most love doing?
  • Are there any big adventures you want to have?

 Physical

  • How’s your health?  Are there changes you want to make?
  • Do you want to reduce stress or increase your level of fitness?

 Educational

  • Are there areas of personal growth that you would like to pursue?
  • Is there a degree or professional designation you want to receive?  What steps are you taking to achieve it?

 Social

  • Are you as involved as you would like in your community?
  • Are your friendships what you would like them to be, in terms of both quality and quantity?

 Vocational / Business

  • Are you happy in your current career or profession?
  • Is it rewarding for you?
  • Do you want to increase your income?
  • Is your business profitable?
  • Do you want to start a business?
  • Are there planning or marketing ideas you would like to pursue for your business?
  • Are you working a reasonable number of hours?
  • Have you set your 2011 business activity and income goals?

 Financial

  • What priority does money take in your life? 
  • What are you building wealth for?
  • How much do you need?
  • Are there changes you would like to make in your income, expenses, cash flow, debt, savings, reserves, emergency funds, investing, taxes, or net worth, for example?
  • Are you making the progress toward your retirement / financial independence that you would like?
  • Are there any impending financial decisions that you need to plan for?
  • Is college education funding for your children / grandchildren satisfactory?
  • Are there any changes or improvements you need to make to your home?
  • Is your estate planning up to date?  Are you on track to leave the end-of-life gifts you want to make?
  • Have you reviewed your insurances recently?

 Family

  • Are there family goals you have – trips, more time together, for instance?
  • How is your relationship with your spouse?
  • How are your relationships with your children?
  • How are your relationships with other family members – siblings, parents, confidants?
  • Are your family members taken care of for the future?
  • Do the important people in your life know how much you love and care for them? 

 Philanthropy/ Charitable Giving

  • Do you want to volunteer more – or differently?
  • Are your charitable contributions at the level you would like?
  • Are you satisfied with the legacy you plan on leaving?

 Spiritual

  • Are there things you want to simplify or consolidate in your life?
  • How is your spiritual / religious life?  What can you do to improve it?
  • Are there any spiritual growth activities you want to participate in?

Useful Excel Budgeting Spreadsheets

Written by Kevin Jacobs on October 30, 2010 in Financial Education, Uncategorized - No Comments

The website link below contains a wide variety of spreadsheets useful for monthly and annual personal budgeting.  There is something for everyone. I hope it helps!

Free Monthly Budget Spreadsheet

Important Information Regarding Roth IRA Conversions

Written by Kevin Jacobs on October 26, 2010 in Financial Planning, Investing, Tax Planning, Uncategorized - No Comments

Below you will find a blog entry from Bert Whitehead, a mentor of mine, with the Alliance of Cambridge Advisors.  This is important information to read and to do something about sooner then later.   I use this information with permission from the author.

Roths Now Make the Tax Code Your Friend!

Bert Whitehead, M.B.A., J.D.©

Starting in 2010, the Tax Code opens up vast opportunities to increase Roth IRA participation for many taxpayers. As I will explain, you will need to consider at least 11 issues or possible strategies to make the most of this and determine the final formula that will reduce your long-term income tax bill and address other financial goals. But I caution you from the outset…Roth conversions are a hot topic with brokers and investment advisors who want to use this as an asset gathering gimmick or earn commissions from transactions. It is a complicated opportunity, and demonstrates how a comprehensive Financial Advisor who handles your taxes, investments, and estate planning is able to add value.

Here’s a review of some Roth IRA basics.

You probably know that if you work and your overall income is low enough, you can contribute to a Roth IRA as one of your annual IRA contribution choices. Your contribution is taxable (that is, you cannot deduct it on your tax return) when it is made. Age 70 ½ distributions are not required and, if taken, withdrawals in later years are totally free from income tax. Depending on your circumstances, this can be a huge advantage. A Roth IRA contribution of $5,000 can grow to $80,000 if invested at 7% over your working career, and you would save taxes on $75,000!

The only way to fund a Roth IRA other than an annual contribution based on earned income is to “convert” an existing IRA (or similar pre-tax retirement account) to a Roth IRA and pay tax on the current IRA distribution now rather than at age 70 ½. . In the past, your total adjusted gross income (AGI) had to be under $100,000 to avail yourself of this option. This is the big change this year.

Starting in 2010, you can convert any of your IRA’s to a Roth IRA no matter how high your income. While you do have to pay the income taxes now, remember that future withdrawals from your Roth IRA are tax-free! The reason why 2010 is a big year is two-fold; 1) there is special relief when paying the income taxes that result from any 2010 Roth conversion and 2) we are all facing the threat of rising income tax rates.

Here are some points to ponder and strategies to consider. Again, these can be complicated so you should expect to discuss whether these apply to you during the year when you do tax planning with your ACA advisor (i.e. a member of the Alliance of Cambridge Advisors).

Read more…

Dateline NBC Exposing the Sale of Equity Indexed Annuities

Written by Kevin Jacobs on August 7, 2010 in Annuities, broken arrow, fee only, financial adviser, financial advisor, Financial Education, financial planner, Financial Planning, Investing, Tulsa, Uncategorized - No Comments

 

Visit msnbc.com for breaking news, world news, and news about the economy

Visit msnbc.com for breaking news, world news, and news about the economy

Visit msnbc.com for breaking news, world news, and news about the economy

Visit msnbc.com for breaking news, world news, and news about the economy

Visit msnbc.com for breaking news, world news, and news about the economy

Visit msnbc.com for breaking news, world news, and news about the economy

Visit msnbc.com for breaking news, world news, and news about the economy

What makes a “fee-only advisor” different?

Written by Kevin Jacobs on May 31, 2010 in Annuities, broken arrow, Economics, fee based, fee only, Financial Education, financial planner, Financial Planning, Investing, Oklahoma, Security, Tulsa - No Comments

I am frequently asked:  what is a “fee-only advisor” and why should I work with one?  First, a fee-only advisor’s compensation comes directly from the client.  The advisor does not receive any commissions or referral fees from selling financial products (such as annuities, insurance or investments).  A fee-only advisor may receive compensation from assets under management, retainer fees or an hourly rate.  I focus the majority of my business on retainer fees.

In contrast, a “fee-based” advisor receives compensation from both charging a fee for completing a financial plan and from commissions on the products recommended as part of the “implementation strategy.”  Many times the financial plan is offered at severe discount.  Their real profit comes from selling you the products they recommend.  Their belief is that by charging you a fee for their “objective” advice you are more likely to “implement” the strategies they recommend.

A commission-only advisor makes his compensation strictly from selling you financial products that have a “load” or commission attached to them.  In my humble opinion, I tend to trust “commission-only” advisors more then “fee-based” advisors because you know they are only getting paid from what you buy from them and they do not have any ulterior motive in offering you a “plan.”

I personally believe each of these advisors has a place in the financial service industry.  However, the main thing I ask from each one of them is to disclose to the client how they are going to get paid.  The main reason why you should work with a fee-only advisor is they can give you objective, unbiased financial advice free from the potential conflict of interest inherent in product sales.  Yes, the fee-only advisor is still selling to you, although the “product” he is selling is an education and trustworthy advice.

When it comes to your money follow this common sense rule:  “When you know how your advisor is getting paid you will know who he is really working for!”

You may find this article from Money Magazine interesting:  http://money.cnn.com/2007/09/27/pf/planner_advice.moneymag/index.htm

Avoiding the Extremes

Written by Kevin Jacobs on April 18, 2010 in Uncategorized - No Comments

I believe one of my greatest responsibilities is to help my clients avoid extremes.  It seems like there is a lot of “extreme” talk right now.  I hear it everywhere.  Regarding politics, this is either the worst time in American history (if you are a conservative) or this is the beginning of a new era of Enlightenment (if you are liberal).  I hear it with sports as well.  How many people said the last Super Bowl between the Saints and Colts was the best Super Bowl ever?  How many times did you hear reporters ask Coach K if he thought this year’s Duke team was the best ever?  How many people are already comparing LeBron James to the all-time greats of NBA history?  On the other hand, how many people would watch “Makeover:  Home Edition?”

The reason why I say this is to show you how all this “extreme” talk effects people’s view of their finances.  When people believe the investments they own will either go to one extreme or the other, then they will make an irrational decision not based on the facts, but based on fear or foolishness.  It is my job and the job of any Financial Advisor worth the fee you pay him to help you avoid the “extremes” regarding your financial life and financial decisions.  It is okay to be concerned about the future of the economy and to invest more conservatively or to feel a need to invest more aggressively because you think the market will go up.  However, it is not okay to go extreme!  The saying is true:  Do not put all your eggs in one basket.  The basket is your emotions and it is important to know the facts and to make decisions based on facts, not the latest idea conjured up by the talking head on TV or the “guru” you read about in the paper.

If you are looking for financial guidance, I encourage you to seek out a Financial Advisor that can help keep you from making “extreme” decisions about your money.  You do not want a “yes-man” who is only looking out for themselves but rather, you need to look for an advisor that will keep you and your emotions in mind, so you do not make inappropriate long-term financial decisions.

Revisiting Financial Security

Written by Kevin Jacobs on April 5, 2010 in Economics, Financial Education, Investing, Motivational, Security, Tax Planning - No Comments

When I first started this blog, I wrote an entry about defining and achieving financial security.  As I talk to more and more people about their experiences over the last 18 months during what the popular culture has called the “Great Recession,” I am witnessing some common themes of concern:

1.  The stock market is up considerably since its low in March of 2009, but how do we know it won’t “crash” again tomorrow? We don’t know! It used to be common knowledge and belief that you knew you would have some ups and downs in your investments, but in the long run you would achieve profits by investing in market.  From the conversations I have had with many people, it seems like there is this general sense they are waiting for the “next shoe to drop.”  It reminds me of the weeks and months after 9-11 where I was glued to the cable news networks waiting to hear about the next terrorist attack.  I sense an underlying fear in most individuals and business owners.  They are waiting to see how everything works itself out.  The danger of this view is that you become a market timer and try to “guess” what your latest stock holdings and the economy as a whole will do.  The danger is you get so consumed with things you can’t do anything about and fail to make a difference in your life and the lives of those you care about the most.

2.  What will higher taxes do to my future plans? I have been hearing this one especially since the passing of the health reform bill.  There is a general confusion of what is and what is not in the legislation and I think people are skeptical of what may happen to their individual tax situation in the future.  For the clients I work with, I tell them there is one thing for sure:  their taxes will go up!  How much their taxes will go up we do not know yet.  I tell them it is important we continue to plan and make the best tax and financial planning decisions we can at the time with the information available to us.

3.  How do I know I have reached financial security? I hear this quite often.  An individual may also say, “how do I know I will not run out of money?”  These are important questions to address no matter what the economy and the stock market are doing.  Where many people fail in their quest to achieve financial security is they fail to define what financial security is for themselves and instead they allow the “talking-heads” on TV or the magazine covers to define it for them.  Until you define what is most important to you and lay out a plan to achieve it, you will never reach financial security.

So these are some of the concerns people have right now is these difficult times, however, with all the chaos it is important to remember you are in control of your situation more then you believe.  You need to control the things you can, such as how much you save, how much you spend and what you invest in and let everything else take care of itself.

Cash is King!

Written by Kevin Jacobs on January 20, 2010 in Financial Education, Investing, Security - No Comments

One of the greatest risks that I see in a lot of people’s financial portfolios is that they do not have enough cash.  My business serves a wide range of individuals and families and I get to review their financial life from an objective perspective.  I have found some couples, who even after the market downturn in the fall of 2008, still have not learned the value of having “ready cash” and “emergency cash.”  I think some people believe that an “emergency” will not happen to them so why should they keep so much in cash.  My job as a financial planner is to recommend to them what I believe is in their best interest.

I am not against investing and taking risk.  However, I am against investing and taking risk before you are ready.  I do not care how young you are; if you do not have proper cash set aside in the event of an emergency you should not be investing in the stock market.

In my recommendations to clients, I follow a few basic principles that I learned from Bert Whitehead, the founder of the Alliance of Cambridge Advisors.  First, if you are a W-2 employee, you should keep a minimum of 10% of your income in a interest-bearing savings account.  I call this the “ready cash” account.  If you are self-employed or retired you will want to keep a larger percentage of your income in “ready cash.”  Next, I recommend you keep 2 times your “ready cash” inside of your 401k or Traditional IRA* invested inside of a money market or government-backed fund.  However, if 20% of your mortgage balance is higher then 2 times your “ready cash” then you will want to set aside that amount instead.  I know this may seem like a lot of cash but the best feeling your financial plan can offer you is security and if you know you have proper amounts of cash in your portfolio then you have the freedom to take appropriate risk in other areas of your investment portfolio.

*I can hear it already.   You might be asking why I recommend to keep emergency cash inside of a 401k or Traditional IRA.  Well, let’s just save the answer to that question for a later blog entry.

Control the Things You Can

Written by Kevin Jacobs on January 18, 2010 in Financial Education, Security - No Comments

“Control the Things You Can” was written by Tedd Oyler, a member of the Alliance of Cambridge Advisors who practices in Saugatuck, Michigan.  This article was originally published as the second part of a series on how to do a financial check-up.

The lament of the powerless goes something like this: “It doesn’t matter how hard I work–the bills just keep piling up; the stock market and the cost of living are killing me; the politicians are ruining everything.”  You may have had these, or similar, thoughts before.  This is sad, for it is unnecessary to feel like you have no control over your financial future.

Our information culture offers a range of financial data and “advice,” ostensibly to help you take control of your financial life.  Perhaps you listen to daily (or even hourly) market reports.
Perhaps you are concerned that the Fed is changing interest rates.
Perhaps you care about the pundits’ predictions as to what the economy will do over the next quarter, or year, as if what they think matters.  Perhaps you even read books on investing, and there are certainly enough of those.  If we take seriously the notion that we can do something about our financial health, and if we acknowledge that money is but a tool that we can learn to master, then we are ready to look at what things we CAN control in our financial lives.

Read more…

IRS Tax Tips

Written by Kevin Jacobs on January 11, 2010 in Uncategorized - No Comments

If you are looking for some tax tips directly from the IRS, you can check out the website below.  I find these “tips” to be very helfpul.

http://www.irs.gov/newsroom/content/0,,id=104608,00.html

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