Six Keys To A Wealthy Mind

I’ve often talked about living in HarMoney™, and usually wind up with feedback along the lines of, “I’m stuck in this terrible job and can’t ever get ahead. I’ll never achieve true success.” Or, “If it isn’t one thing, it’s another. Just when I think I’ve moved ahead a few steps, something knocks me back even further!” Or, “I’m riddled with pain, suffering, and disease, and I’ll never be able to make anything of myself because of my disability.” I know all of those statements personally and quite intimately, frankly. So I can honestly say, I’ve been there. BUT… to change your course, you have to believe something is different for you. Click here to discover the SIX keys to a wealthy mind.

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Mad as Hell and Not Going to Take It Anymore!!!

Living in HarMoneyTM is what I’m all about. I’ve tried to put the word out there that if you don’t know how to manage your own money, you need to seek out advice. Well, today my stomach is churning with disgust! Here’s the story and subsequent advice.

I got a call today from an associate I know from one of the associations I belong to; we’ve been acquainted for several years. We both use the same business attorney, and it is through our attorney that we became connected today. Her story is heart wrenching, so please read on, keep this article with its links for further reference, and don’t forget about it when you’re ready to work with an advisor.

A few years ago, when she lost her husband, he had left her an amount of money that was intended to keep her comfortable after his passing. She did her best to look for an advisor turning to a friend for a referral. It was this friend who recommended her son as an advisor. Trusting her friend, she moved ahead and signed a financial planning agreement and other documents to get the ball rolling to invest her nest egg.

She reportedly received dividend checks on a routine basis. But she was concerned with the fact that she was never told what she was invested in. She never received a statement of confirmation that her monies had been invested or even received. Periodically, the “advisor” would call to update her on the status of her funds, but would never directly answer any of her questions. Instead, he would respond with questions to her such as, “don’t you trust me?” and “what are you afraid of? You’re getting your dividend payments, right?”

After more than two years of evasion, she finally lost her temper with him and started to leave regular voice mails demanding answers. He finally called her back. Do you think she got answers? No! He tried to make her feel guilty for questioning him. He refused to give her an accounting of her monies nor would he give her a clue as to what she was invested in. She finally turned to her attorney to see what recourse she had. As I mentioned earlier, the attorney referred her to me.

Once she told me her story, I asked how the relationship was formed. She told me that she initially had signed a “financial planning agreement,” a “promissory note,” and gave him permission to access $40,000 for something she still wasn’t clear about, but that was a percentage of the total amount she invested with him. My heart sank. There are so many things wrong with this story, I wanted to scream!

Knowing how investment advisors work, I knew this stunk to high heaven of dead fish. Once we were able to check out this person, it was apparent she was in a relationship with a criminal as we discovered he wasn’t licensed to do any of what he promised he would at the time she entered the agreement with him. He has a record of complaints, non-compliance with the regulatory agency, and ultimately had his license suspended. She’s taking steps to do what she needs to do to stop him from hurting others, hopefully recoup any monies she may be able to get returned (if any), and preparing herself for the battle ahead.

Here is what you need to do to make sure to the best of your abilities that you’re working with a legitimate professional:

If your intention is to work with an insurance agent, check their licensing and reputation at the Department of Insurance (this is the State of California’s link). You’ll need either their name or their license number. Once there, you can check to see what types of insurance they’re licensed to sell. Not every license permits sales of any insurance; a license is specific to coverage. Be sure your agent is actually licensed to sell what it is you’re looking for.

If investing is what you need help with, there are two places to check-and you should check both. One is the FINRA Broker Check site. You can enter the name of the broker to see if they’re properly registered with a Dealer Firm. The second place you should check is the IARD Advisor site. Investment Advisors need to register with the IARD to legitimately charge a fee for their advice.

Lastly, I cannot stress how important it is to use a CERTIFIED FINANCIAL PLANNERTM Professional as your advisor. They bear the letters, CFP(r), behind they’re names. They have studied several subjects including insurance (all types), investments, tax planning, retirement planning, employee benefits, college planning, and estate planning. The key here, again, is to make sure you’re working with a CFP(r) who’s in good standing. Go to www.cfp.net and enter the location of where your advisor is located to see if they are indeed a CFP(r) and in good standing.

Additionally, any designation behind the name of your prospective advisor should be verified and substantiated. My associate may have lost her entire investment portfolio because she trusted her friend, the advisor’s mother-who probably didn’t realize her son was a crook. But if my associate checked out either of the securities broker or advisor checks, she would have known that he wasn’t licensed. If she would have printed out the full report on this individual, she would have known he was, at the minimum, unethical, and that his hiring firm had paid out well over $1 million dollars in damages.

All I can do is beg you to take your personal financial matters seriously and every step possible to make sure you’re working with a true, honest and ethical advisor. If you need help, I’m here for you.

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HarMoneyeous Investing in a ROTH IRA

I’ve talked about retirement savings before, but not in real specifics. Today that changes. We need to have a serious conversation about it. So, are you saving for retirement? (No blame or shame, just asking.) If you are, Congratulations!! I’m really proud of you! If you’re not, you need to get on the stick …now!In our country, we have a lot to celebrate. Freedom of speech, freedoms to be business owners, and freedoms to work for whomever we choose (we’re the ones filing an application to be considered for employment). We are free to do whatever we choose, really, as long as we abide by the rules. Not many countries have these freedoms, so let’s take a moment to be grateful for what we DO have.

For years, retirement was certain; if you worked for a company for 30, 40, 50 years, they granted you a gold watch and a pension enabling you to transition into living “golden years.” But that has changed, without a doubt, and defined-benefit pensions are becoming a thing of the past. For many future retirees, they’ve watched their pensions go up in smoke with the bankruptcy of the company, or worse, the mismanagement of the pension funds themselves.

More companies, nowadays, offer defined-contribution retirement programs, meaning they only contribute a certain amount. In many cases, they don’t even contribute to your account unless you enroll into the program and invest your own money. At that point, the company will “match” your contribution up to a certain amount, usually between 1% and 4%. Government agencies, educational systems, and municipalities will often contribute more.

The burden of securing your “golden years” of retirement now lies with you. You need to make the decision to put savings toward it. Social Security is not intended to be enough for you to live on. In most cases, Social Security is a fund that you must pay into in order to qualify for that income stream later in life. You can draw on it as early as age 62 with a 25% payment reduction, or wait until your full retirement age, 65 or older.

A ROTH IRA is something most every employee can do (unless they make too much money) with a little bit of effort. The money invested in this account is money you have earned from your paycheck–it is your “take-home” pay, specifically, money you have already paid income tax on. (If your spouse doesn’t work, check out a Spousal IRA.)

The beauty of this?? Your investments can grow without having to pay taxes on them! AND, after the account exists for five years and when you reach the age of 59 1/2 or over, you can withdraw the money from the account and not have to pay income on it. AWESOMENESS! (Required minimum distributions (RMDs) must start at age 70 ½.)

There are rules, however, and they can be found here. But to make it easy for you, I’ve listed the majority of them below. Make sure of the following:

  • Your earnings are less that the limits of $141,000 for individuals and $181,000 for married filing joint. Above these amounts, “phase-outs” begin, meaning you can still make contributions, but not up to the full limit. Consult your tax professional if this is you (the penalty for going OVER your allotted amount is severe, so don’t plead ignorance-it won’t work.)
  • You DO NOT WITHDRAW the funds until reaching the age of 59 ½, (unless you become disabled). If you do, you’ll have to pay a 10% penalty. Another exception is you can withdraw up to $10,000 if you are a first-time home buyer, but these exceptions require the proper filing of forms by your tax professional to make sure you don’t pay the penalty for early withdrawals.
  • Do not invest more than $5,500 if your under 50 years of age and $6,500 if your over.
  • And lastly, you cannot contribute more than $5,500 or $6,500 based on your age for BOTH a Roth IRA and a traditional IRA. You can make contributions to both, but they cannot total more than the investment limit. Again, the penalty for investing too much is severe-more than 10%–so just don’t do it.

If one should pass away and have IRA funds remaining, they will go to the named beneficiary (or beneficiaries) on the account. However, the tax structure changes significantly, as do the rules.

Make sure you consult a tax professional to make sure you’re doing what Uncle Sam expects of you if you stray from the rules or plan on utilizing an exemption. Otherwise the tax consequences are significant.

Now that you’re been warned of the missteps, focus on the benefits. Start a tax-deferred traditional IRA or tax-free ROTH IRA as soon as you can. The sooner you do, your potential for golden years actually becoming golden increases.

You can do this! I believe in you!

Winning Mindsets Attract More Cash & HarMoney™

Are you growing weary of trying to cut back on expenses when there’s nothing left to cut back? In this brief video, I’ll share a couple “out-of-the-box” ways to save and more tips on bringing in more cash. Believing that you’ll have success is the key to actually achieving it. Don’t be discouraged. Be ENCOURAGED!

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Is a Reverse Mortgage the Answer to HarMoney?

One of my dearest friends in the entire world has been in total agony over the outcome of her father’s estate. It is at her request that I’m writing this blog.

Unbeknownst to her sister and herself, her father got a reverse mortgage. Now, I don’t know all the details, but what I do know is that my friend was never salivating or scheming to get her father’s home …but it was the family home-the one she grew up in, an estate really, on a ranch that was worth quite a bit of money. She had always adored her father and he adored her. She was daddy’s little girl. (I remember seeing the pictures of them both together, embracing each other, she in her worn-out, cowgirl boots, and Daddy beaming.)

She had been led to believe that she would eventually inherit his estate, along with her sister. In the back of her mind, her plan had been to care for her mother (long divorced from dad) and possibly even buying her own home, her first home, if there was enough left over after mom’s care.

At the time of his eventual death, the mortgage company demanded the sale of the home, took it before they knew what was happening, and in the blink of an eye, what they thought they were inheriting was gone …just like that. They never saw it coming …or quite literally, going.

Apparently, the way her dad’s reverse mortgage was written was to benefit the mortgage company. I’m sure he didn’t realize that. He probably never wanted to “bother” his kids with his lack of cash flow and believed that the estate would be intact after his “loan” was paid off. But sadly, it was anything but a good thing for them.

I work in a community full of retired educators whose retirements were based on annuities that last for a specific period of time and not for life. Many retirees have found they’re outliving their retirement income. Many were literally cash poor and house rich (I reside in California where housing values are generally higher). Many of these retired folks were a “young” 70+ age and couldn’t see calling their kids to ask for financial help as they felt completely capable of maintaining their independence, nor did they want to leave their homes of 20, 30 or even 50 years. For them, a reverse mortgage made sense, but only if the numbers worked out.

For others, it was a much better deal to sell the beloved home and downsize into something they could more afford. But the heartache of moving, getting rid of life-long belongings due to a lack of space, or losing their identity as in my girlfriend’s case (daddy was a rancher), nearly broke them.

Working with a seasoned, ethical, reverse-mortgage expert is the key to discovering if this is a good move for you and your family.
There is a pre-counseling appointment, performed by an individual who is not involved with the mortgage company and is unbiased. They help educate the potential clients of benefits and pitfalls. Be prepared with any and ALL your questions. (No question is stupid when discussing the outcome of one of your largest, if not THE largest asset you own.)

As an advisor, I’ve made it my business to KNOW ethical, reverse-mortgage specialists. These folks do ethical presentations and disclose the pros and cons to the potential clients. How do I know this? Because I’m there at the presentation with them-I don’t leave my clients alone. I also advise my clients to tell their children what they’re doing and why, often with myself as the mediator, especially when the children cannot possibly attend the presentation due to geographic constraints.

The benefits of a reverse are quite simple, cash flow is accessible where before there was none. Reverse mortgage “takers” remain independent and not dependent on their children. It’s freedom for both generations.

However, the pitfalls are numerous. They are costly. They are confusing. They do put a lien on the home. And depending on when the reverse was entered into, they could deny the beneficiaries an inheritance.

Mortgage companies are entities, not people. They are like a machine. Once the trigger is pulled that allows the mortgage company to reclaim its monies, in this case, the death of the home owner, it is going to do that. (Another trigger is when the home owner moves out of the home and into a facility for an extended period of time-check the paperwork to see what that time limit is before you sign anything!) And in this climate, mortgage companies aren’t exactly friendly. They can foreclose very quickly if the beneficiaries of the home aren’t prepared and ready to do what is necessary to keep the home by buying it back, often at a discounted rate.

If I have any advice, it would be:

  1. MOST IMPORTANTLY… Let your kids know what you’re intending and why. It can be scary finding out your kids are planning on getting the family home. But knowing that information and then making a decision with them in-the-know is always a better option.
  2. Have EVERYONE attend the pre-counseling meeting so questions are asked from all points of view.
  3. Read everything, and I mean EVERYTHING!
  4. Run the numbers so you have the best idea possible of what this is actually costing you over the projected length of time. Not all reverse mortgages cost the same.
  5. Talk to more than one or two reverse mortgage specialists. Verify their credentials, how long they’re been working with reverse mortgages, and if there are any complaints against them with the regulating agency providing their license to sell.
  6. Explore other options, like down-sizing, assisted-living communities, and whatever else is available at the time.
  7. Don’t be afraid to seek out help from your own trusted advisors.
  8. If you choose to move ahead, take the monthly income option as opposed to a lump sum! The lump sum costs more and can actually run out rather quickly if someone isn’t very good at managing a pot of money.
  9. And lastly, if it doesn’t feel right, follow your gut. Don’t allow yourself to be talked into something you don’t understand or want.

I have a saying, “Every product has a purpose, find the product to fit YOUR purpose.” Don’t get scammed or leave your family in shock and/or pain. If your family is contentious, hire a third-party to act as a mediator. It will be so worth it when everyone is on the same page.