This week’s Inside the Economy with SH&J highlights an update on the global economy. Germany appears to be a bright spot within the European Union with a budget surplus in 2015 despite global trade trending down, particularly in China. After recording a trade deficit with China for 2015, Germany is now seeking to make the United States their primary trading partner. Japan is also seeing a downturn in output and could be in recession by this summer. Listen in to hear more on the ECB’s continued quantitative easing, the flood of refugees into Germany, and comments on Emerging Market debt.
Author: sharkeyhowesandjaver
A Look at Tax Rates By State: Where Does Colorado Rank?
With tax day quickly approaching, it’s interesting to look at where Colorado tax rates fall in comparison to the rest of the United States. WalletHub* recently performed an interesting analysis of each state’s tax rates.
They found that Colorado falls into the bottom 25% of all fifty states with a median tax rate of 9.41%, compared to the highest taxed state, Illinois, with a 14.54% tax rate. According to their findings, living in Colorado could save the average family $700 a year in taxes. Continue reading
How to Responsibly Handle Your Tax Refund
It’s tax season and for almost 80% of Americans, (source) a refund check may be in the mail. It’s easy to view a tax refund as free or easy money, but remember you worked hard to earn that money. Using your tax refund responsibly now can assist in reaching your financial goals in the future.
Here are 8 suggestions for using your tax refund responsibly:
Top Off Your Emergency Fund
An emergency fund is an important part of any smart budget. If your emergency fund has been depleted recently, think about using your tax refund to top it off. Depending on the circumstances, we typically recommend having an emergency fund that covers three to six months of basic living expenses.
Build Your Investment Portfolio
Consider using your tax refund to add to your investment portfolio. Talk to your Certified Financial Planner® about how to allocate your tax refund dollars amongst your investments. Continue reading
Inside the Economy with SH&J: March 28, 2016
This week’s Inside the Economy with SH&J continues the discussion on oil and the challenges hindering the much anticipated boost in production from Iran. Meanwhile, Europe’s banking system is under pressure to keep its zero-interest and negative-interest rate policies in place for the foreseeable future. Listen in for commentary on the aftermath of the Brussels and Paris attacks and how it is affecting tourism and putting further pressure on the European banking system. We discuss how the first quarter is wrapping up and the outlook for the remainder of 2016.
Should I Live for Today or Save for Tomorrow?
There seems to be conflicting advice in modern media. On one hand, there are plenty of articles stating the importance of saving money. On the other hand, there is an emergence of articles encouraging living for today and letting the money “work itself out later”. This leaves the audience confused and internally conflicted. Should I live for today or save for tomorrow?
The answer can be deeply personal, and while your family or advisor may offer advice, ultimately the decision is yours. It is no secret that life can be short and there is no guarantee of tomorrow. Embracing and living every day to the fullest can be vitally important for your emotional and mental health. Spending your hard-earned money to travel, further your education, pursue a hobby, support a loved one, or explore your creative mind may provide much more personal fulfillment now than building a savings/investment account for your future. Continue reading
You Purchased a Timeshare, Now How Do You Get Rid of It?
If you have ever traveled to a resort associated with a timeshare, it’s likely you have been approached with a presentation about timeshare ownership. You’ve enjoyed the amenities and accommodations throughout the week and daydream about how nice it would be take a similar vacation every year. Timeshares give you the ability to return and relive your travel experiences or, for an additional fee, you may opt to exchange for a different resort location expanding your vacation options. You are able to enjoy home-like accommodations and your long-term savings over hotels may even outweigh the upfront purchase price. Many are drawn to the appeal of owning a timeshare; however, once purchased, you own an asset that could become more of a hassle than you originally planned for.
Over time, your situation may change and you may find that you are unable to use your timeshare as much as you would like. At that time, you may want to sell it or simply walk away. Or perhaps you have enjoyed your timeshare for many years and have no plans to sell, but start to wonder, “What will happen when I pass away?” Continue reading
Inside the Economy with SH&J: March 14, 2016
This week’s Inside the Economy with SH&J includes explanation of how the price of oil has largely contributed to the recent S&P 500 recovery, yet earnings will likely be the primary factor influencing S&P 500 growth in the near future. The U.S. is seeing the start of a manufacturing rebound as well as the beginning signs of full employment. Inventory buildup is decreasing as consumption picks up and the labor participation rate is on the rise. Core inflation has slowly increased and appears to be sustainable, giving the Fed rationale for a rate increase this year. Listen in to hear more on these issues as well as commentary on nuclear energy worldwide and the Federal Budget.
10 Tips to Boost Your Travel Smarts
Traveling is fun, exciting and sometimes stressful. Break-ins, identity theft, pickpocketing, and other traveling mishaps can not only ruin a vacation, they can have a tremendous impact on your life. Learning a few travel lessons before hitting the road can help eliminate many travel misfortunes and free up your vacation for more fun!
1. Leave Home Lived In
Whether you are gone for a long weekend or a trip overseas, it’s important to leave your home looking lived in. Consider putting a light or two on a timer, ask a neighbor to bring in mail, and put a stop on daily newspaper delivery while you are away. Lock up valuables you aren’t taking with you such as jewelry, social security cards, and family heirlooms.
2. Freeze Your Credit
If you plan to be gone for an extended period, consider freezing your credit. A credit freeze blocks access to using your credit so no one can open a credit card or apply for a loan while you are away. Continue reading
The Value of Objective Financial Planning
Outside of a portfolio’s rate of return, it’s often easy to overlook the value that objective, client-focused financial planning brings. Although many financial professionals offer “free” services, do you stop and ask yourself “Hmmm, I wonder how he/she is paid if it’s not by me?” (source).
As objective financial planners, we fully support the “you get what you pay for” belief. Below is a list of just a few of the values we believe objective planning offers. Please feel free to let us know your thoughts on any of the following.
1. An independent financial planner helps protect you from financial salespeople.
According to Bob Veres, “…the Wall Street firms that pretend to offer financial planning guidance are seldom (if ever) looking out for the best interests of their customers.” Unfortunately, as a consumer in our industry, it’s not always easy to recognize when there’s an underlying motive or incentive behind the financial advice you receive.
Brokers might have business cards with the title of “Financial Advisor,” but in reality are often simply salespeople who are paid by their company to sell you as many products as possible. Unless they are a fiduciary, they are expected to do what is in the company’s best interest, not what is in your best interest. They are rewarded when they meet sales targets, and bonuses are often based on the clients they sign (source). Continue reading
Avoid Being “House Rich, Cash Poor”
Recently, a client was trying to understand how much home he could afford in the current Denver real estate market. Over the course of his home search, his maximum price point grew from $500,000 to $700,000 as he discovered how much it would take to purchase a home that fit within his criteria. The lender had approved him for the higher amount, so he assumed it was something he could comfortably afford. In addition, he had used several online “Home Affordability Calculators” that justified his inflated price point.
Thankfully he came to us before any of his offers were accepted. We calculated his new expected housing costs relative to his gross annual income, taxes, savings goals, and monthly obligations. In the end, he opted for the lower mortgage price point we proposed and was relieved that it would allow him to continue supporting his family and saving for long-term goals, many of which he would have had to forego had he chosen the higher priced home.
After our meeting, we reviewed several of the online “Home Affordability Calculators” by plugging in our own information and the results were breathtaking. The suggested home price points we received were also dramatically inflated.
Therefore, when you are shopping for your next home, we suggest taking a look at the difference between the approved home loan amount and the home loan amount that is appropriate for your own personal financial situation. Oftentimes, the two numbers are vastly different.
Why might this be the case? Although monthly obligations (debt, child support, etc.) and long-term savings are often considered in the mortgage lender’s calculation, the assumed savings (for retirement, education, etc.) are typically insufficient to reach your goals.
The term “house rich, cash poor” is a common term for being in the predicament where you’ve got lots of home, but not a lot of cash to meet your other needs. In order to avoid this destiny, we suggest working with a Certified Financial Planner™ to find the appropriate price point when purchasing a new home. If you are interested in a complimentary consultation or meeting with your current advisor, please do not hesitate to call us at 303-639-5100.
Sharkey, Howes & Javer Blog 