Artificial Intelligence (AI) is a hot-button topic and has been for many years now. At the 2024 CES (Consumer Electronics Show) in Las Vegas, every vendor had some form of AI on display. Utilizing various forms of machine learning, neural networks, computer vision, natural language processing, and, of course, artificial intelligence. We can spend hours digging into how each is different and their various use cases, but in this article, we’ll focus primarily on understanding how these new technologies are being used in finance and investing to strengthen our understanding of what is next. To be with or without AI: That is the question! Tropicana launched a campaign saying they’re ditching “AI” and are going ‘all natural.’ The ironic piece is that there isn’t anything artificial about their orange juice, and thus, they’ve always been without “AI.” For most of us, having some form of AI in our lives makes our day run a little bit smoother. Some examples of this are an automation script that turns the lights on when I walk into the room, sets a timer to automatically turn off a screen at a specific time (great tip for the kiddos!), or one that even opens your car door as soon as you reach for the handle. This little automation can add up to significant time savings, but more importantly, it allows us to focus on more critical or complex tasks. Source: Tropicana is one company that’s ditching AI | CNN Business Focusing on the Value Add Removing the non-value-added tasks from our work or home lives is not something I would ever complain about. In finance and investing, we see the integration of AI helping remove many menial tasks that limit productivity and impact. Using AI to analyze vast data sets, identifying hidden patterns, and even predictive modeling have all become much easier because of it. Many years ago, large databases were the golden ticket to the market. If you knew how to use a spreadsheet tool to comb the data and manually find the minor correlation, you could have made millions. Now, being able to unlock the power of the data is available to all. Diving deep into these vast data sets, including historical trends and correlations between markets and sectors, can be concluded in minutes. AI and technology have made it much more accessible for all of us to track financial metrics in real-time. Other Areas of AI Integration By far, the most significant and most obvious use of AI is in finance/investment data. However, that is not the only place where AI lives in finance. Algorithmic trading, portfolio optimization, sentiment analysis, and even Robo-advisors are all other points of integration. Algorithmic trading completes trades based on pre-defined parameters, limiting the fear of missed opportunities (finance FOMO). Portfolio optimization allows investors to construct diversified portfolios with their risk tolerances in mind. Rebalancing can also be automated through some platforms. Sentiment analysis uses AI to read articles or social media posts to gauge investor sentiment toward the company or sector. Robo-advisors are AI-powered platforms that provide automated investment advice and portfolio management. What is next for AI and Investing? Mic Drop! Robots are taking over starting next week!  Well, not exactly. Lucky for us, we’re not there yet. I predict that AI will continue to drive innovation and speed in the industry. We’ll see more of these in-depth analyses conducted by AI, some interpreted and some even giving next-step recommendations.  This is where it gets tricky. Almost all foresight (prediction) models take historical trends, seasonality, variability, and various key data point injections into account (new leadership, new technology, new billing…) to compute the projections. History is important, but it doesn’t always repeat, nor can we accurately predict what it will bring. What we do know is that over the long term, investments in the market do well.  Consistent investing with compound interest is key to success as well. This is why we highly recommend a financial advisor who acts as a fiduciary for you and has the heart of a teacher to walk with you. Our team at Whitaker-Myers Wealth Managers focuses on the intangibles and has the analytical power of Robo-advisors with the human touch to provide you with the best experience on your journey. If you don’t have an advisor, please contact anyone on our team, as they are ready to help answer your questions. If you’d like to submit a question for Summit to Answer, please click here.

This week, we continue our journey of navigating financial metrics. Some believe there is a secret sauce to investing, or better yet, they have it. The reality is that investing is a calculated risk. Equipped with the proper knowledge, you can transform from a bewildered wanderer to a confident navigator of the financial markets. You will be equipped with these financial metrics in your toolbelt on this journey. This set of metrics focuses on using a quantitative approach to the company’s financial health, performance, and future growth opportunities. Our team of financial advisors (or financial teachers) Whitaker-Myers Wealth Managers are ready to join your quest and provide additional guidance and tools on your journey. The Metrics Toolbelt Four broad ratios must be reviewed when analyzing a company's or investment's health and outlook. These include profitability ratios, liquidity ratios, solvency ratios, and valuation ratios. Profitability Ratios Profitability ratios look at whether a company is capable of generating a profit and revenue growth. This is one of the most important sets of ratios to look at when analyzing a company. If the organization is not growing (revenue) or profits are down significantly, the stock will likely reflect. Key metrics that focus on profitability are gross profit margin, net profit margin, and return on equity (ROE). Gross Profit Margin Measured by calculated net sales minus the cost of goods sold. This is reported as a percentage of net sales. “Gross profit margin shows the amount of profit made before deducting selling, general, and administrative costs, which is the net profit margin” (Investopedia.com). Net Profit Margin As mentioned in the quote above, the net profit margin considers all expenses. A higher net margin signifies greater profitability. Return on Equity (ROE) This is a measure of how efficient a company is in generating profits. Calculated by dividing a company’s net income by shareholder’s equity. When determining if the ROE is good/bad, evaluate other stocks in the same sector. If the calculated average amongst the selected group is lower than the ROE of the stock you’re looking at, you’re in good shape! Liquidity Ratios “Liquidity is the ability to convert assets into cash quickly and cheaply” (Investopedia.com). Liquidity ratios measure a company’s ability to meet its short-term debt obligations without raising additional capital. These ratios are specifically looking at short-term obligations. Here, we’ll discuss two liquidity ratios: the current ratio and the quick ratio. Quick note: anytime you hear ‘current’ in a financial discussion (current ratio, current asset, current liability…), think of the short term, less than one year. Current Ratio The current ratio measures current assets (cash, accounts receivable, and inventory) divided by current liabilities (any short-term debt obligations). A current ratio of 1 or greater is a good sign. This means the company has enough assets to cover its short-term obligations over the next year. On the other hand, a value of less than 1 would suggest that the company is in a riskier position and may not have all the assets to cover its liabilities over the next year. Quick Ratio The quick ratio has a much more complicated formula. However, the simplest way of understanding the quick ratio is that it excludes inventory from current assets (unlike the current ratio). This ratio measures immediate liquidity by focusing only on available cash and accounts receivables.  A healthy quick ratio is typically above 0.5. Solvency Ratios Unlike current ratios, solvency ratios measure a company’s long-term capability to handle its debt. Organizations with higher solvency ratios tend to be the stronger investments for investors. Prospective lenders also widely use solvency ratios when determining a company’s creditworthiness. Within the category of solvency ratios, we’ll focus on 2 in this article: Debt-to-Equity and Interest coverage. Debt-to-Equity Ratio This compares a company's debt to its shareholder equity. A lower ratio indicates a healthier balance sheet with less reliance on debt. It is measured by dividing total outstanding debt by equity. Interest Coverage Ratio This ratio calculates the company’s ability to meet debt interest obligations in the specified period. This ratio is calculated by dividing EBIT (earnings before interest and tax) by Interest expenses. A ratio greater than 1 signifies sufficient cash flow to cover interest expense. Valuation Ratios Valuation ratios are another category of metrics to keep in your tool belt. These key metrics are widely used to estimate the company’s intrinsic value and future growth opportunities. Commonly, they are also used to evaluate current stock prices. Two of the most common valuation ratios are the Price to Earnings (P/E) and Price-to-book (P/B) ratios. Price-to-Earnings Ratio (P/E Ratio) This metric is calculated by measuring the price of a stock divided by the company earnings. A lower P/E ratio generally indicates undervaluation and opportunity to grow. Price-to-Book Ratio (P/B Ratio) This metric is calculated by measuring the price of a company’s stock divided by the book value per share (BVPS). The book value per share measures all company assets minus liabilities. A lower P/B ratio might imply a bargain buy; values <1 are good to track. Toolbelt Filled, Now What? Remember, when you look at financial metrics, it’s never about one metric or one data point. A complete analysis must be conducted to understand if the investment is right for you. I’ve mentioned this in previous posts, but when discussing any metric, remember that a benchmark also requires a like-to-like measurement. Measuring one valuation metric of a company in the Tech sector vs. a company's valuation in the manufacturing sector is not a good comparison measurement. At the end of the day, financial metrics only tell you a picture at that given moment. Always consider them in context alongside qualitative factors like the company's industry, competitive landscape, and management team. Conduct thorough research, diversify your portfolio, and consult with one of our financial advisors at Whitaker-Myers Wealth Managers for personalized guidance.

What is rule 72(t)? Rule 72(t) refers to a section of the Internal Revenue Code that gives parameters to follow to make early withdrawals from retirement accounts without penalties. The eligible retirement accounts include traditional IRAs, Roth IRAs, 457(b) plans, 403(b) plans, and 401(k) plans. However, Roth IRAs are subject to different rules, meaning you may not need to execute a 72(t) to get funds penalty-free. The exception for an early withdrawal penalty can only be utilized if the taxpayer follows the 72(t) requirement of substantially equal periodic payments (SEPPs). The number of payments needed to fulfill this requirement varies with age. SEPPs refer to making equal periodic withdrawals from your retirement account. These funds must be withdrawn according to a specific IRS schedule, and the IRS has three different methods for calculating how much your withdrawal amount should be. The 72(t)-payment schedule must be five years or until you reach age 59 ½ (whichever comes later), which means your payment schedule will be at least five years. Example: If you are age 50 ½, you would have to make substantial equal payments for nine years until you reach age 59 ½. Rule 72(t) payment calculation Fixed annuitization method This is the most complex method for calculating SEPP. The annual payment is calculated by factoring your total account balance, an annuity factor provided by the IRS, the federal midterm interest rate, and the account owner's life expectancy. This method differs from the other two as the account owner cannot choose between the different life expectancy tables. This causes the fixed annuitization method to only be affected by interest rate because it is restricted to a specific life expectancy table. Fixed amortization method This method calculates the amount to be distributed annually by amortizing the account balance over the single life expectancy, the uniform life expectancy, or the joint life expectancy with the oldest listed beneficiary. The payments remain the same over the withdrawal period, and recalculating is unnecessary. The fixed amortization method is unique because it is affected by both life expectancy and interest rates. Minimum distribution method This method takes a dividing factor from the IRS’s single or joint life expectancy table and divides the retirement account’s balance. This varies significantly from the amortization method as the annual withdrawal payments are likely to vary yearly. The payments from this method are the lowest possible amounts that can be withdrawn. Here is a brief overview of the different life expectancy table options: The Uniform Table Applies to unmarried account holders, married account holders whose spouses are not more than 10 years younger, and married account holders whose spouses aren’t the sole beneficiaries of their accounts The Joint and Last Survivor Expectancy Table Applies to account holders whose spouses are more than 10 years younger and are also the sole beneficiaries of the account. The Single Expectancy Table Applies to beneficiaries Conclusion Executing a 72(t) should be a last resort when there are no longer other options to exercise. Something to keep in mind is that you MUST be very diligent with monitoring your withdrawals.  If you miss a withdrawal or don’t take the proper amount, you will be assessed all your penalties. This should not be used as an emergency fund as it can significantly impact your future financial situation in retirement. If you need money from retirement accounts and want to avoid the 10% penalty on early withdraws, a 72(t) might be something to investigate. Remember that withdrawals that follow the 72(t) criteria are still subject to the account holder’s normal income tax rate. Most 72(t) options are executed for someone retiring from their employer earlier than 59 ½ and looking to replace their income with interest, growth, and principal from their 401(k), IRA, or retirement asset in a consistent and repeatable manner. Just like you would expect a paycheck each month from your employer, a 72(t) option can create that paycheck from your hard-earned savings while avoiding the dreaded 10% penalty that comes with a withdrawal from a retirement account before 59 ½. In our opinion, the IRS is giving the person who has done a tremendous job of saving the option to retire before the standard 59 ½ retirement date. This should not and cannot be used for someone looking for a one-time access to their funds. If you have questions or want to see what a 72(t) looks like for you, contact your financial advisor. They would be able to show more in-depth what the substantially equal periodic payments would look like for your situation and how long you would need to take those. If you don’t have a financial advisor, we have a team ready to help answer questions at Whitaker-Myers Wealth Managers.

In this week’s edition of the Investment Corner, we explore a few key risk metrics. The correlation coefficient and performance formula are two you should be familiar with. Financial metrics are not a heavily guarded secret, but deciphering them can require translation! Mama’s Secret Sauce At dinner with some friends last night, my wife talked about her ‘secret’ homemade pasta sauce. Her recipe isn’t really a secret, but no, I still can’t share it; however, I must say it is delicious! Much like Mama’s sauce recipe, financial metrics are no secret, but knowing what metrics to use and understanding what they mean can significantly impact how/what you invest in. In many ways, finance talk can be a different language for many. Don’t worry; our team at Whitaker-Myers Wealth Managers is full of expert translators ready to help whenever you’re ready. We will explore many more key metrics in the future and translate them for all to understand. However, we’re digging into some key risk metrics in today's post. Ready, Set, Go! Risk Statistics When measuring risk within a profile or between two assets, two important concepts to familiarize yourself with are the correlation coefficient and the performance equation. These widely used statistical measures provide insight into possible similarities, returns, and unpredictable variability. Correlation Coefficient: The correlation coefficient measures how closely two entities or assets are related or the strength of association between the two data sets. It is reported between -1 and +1. The closer the number gets to -1, the less correlated the two entities are, with -1 showing a negative relationship (opposite). On the other hand, as the correlation coefficient reaches +1, the two entities have a similar or positive correlation. Why does it matter? Our team of advisors tracks this metric to create better diversification within your portfolios. This limits the impact that one part of the portfolio can generate a ripple to the rest of the portfolio. In today’s interconnected global society, the individual sectors do not operate in silos. However, the direct impact can be limited when the correlation coefficient is less. Performance Formula If you’ve listened to any financial podcasts or talked to your financial advisor, you’ve likely heard the terms alpha and beta when discussing investments. These two metrics, or variables, are a part of the performance formula. This equation utilizes a linear regression analysis to identify correlations between the variables. The variables include: y = a + bx + u where, y = the performance of the fund/stock/portfolio a = Alpha, excess return compared to the benchmark b = Beta, measures volatility compared to a benchmark x = the performance of the benchmark (commonly the S&P500) u = residual, this variable considers the market's randomness. These are the unexplainable occurrences that happen in which the performance cannot be attributed to alpha or beta metrics. (Investopedia.com) Alpha measures the positive return in your portfolio compared to the benchmark. When you hear a mutual fund manager yell, “I’ve got alpha,” he’s talking about the difference between the returns from his managed portfolio and their selected benchmark. This is exactly where alpha can get tricky. Last week’s article discussed that not all investments are created equal. Thus, measuring an investment against any index may or may not be appropriate. Having a positive alpha is excellent, and a negative alpha indicates underperformance. Finding the right benchmark with similar assets is crucial to understanding how well your investment is performing and if it’s your turn to yell, “I’ve got alpha!”. Beta, on the other hand, measures the volatility of the investment compared to the benchmark. It more specifically quantifies how much an investment’s price fluctuates compared to the market. A Beta value of 1 indicates the investment correlates with the benchmark’s movement. A Beta value >1 indicates higher volatility than the market; thus, much larger swings can occur compared to the benchmark.  A Beta <1 shows lower volatility than the market/benchmark. Take home points: By now, I hope your eyes haven’t glazed over and you’re still following along.  Here are some key takeaway points to prepare you for the next advisor meeting. Remember: ·        Correlation coefficient - depicts how ‘correlated’ two entities are! ·        Alpha and beta are used to compare and predict returns (though no one can accurately predict returns!) ·        Alpha – Measures positive returns against a benchmark (we all want more alpha!) ·        Beta – Measures Volatility/risk ·        High Alpha, high beta = High reward, high risk ·        High Alpha, Low beta = High reward, low risk ·        Low Alpha, high beta = Low reward, high risk Overall, the performance formula helps quantify the relationship between two variables and estimate the value of the dependent variable based on the independent variable. The model's accuracy depends on how well the equation captures the true relationship between the variables and how small the error term is. Talk to your advisor about these variables when reviewing your investments. Align your strategy with your future goals. At Whitaker-Myers Wealth Managers, our advisors all have the heart of a teacher and are fiduciaries here to help.

Money and the Bible The Bible speaks about money in over 2,000 verses, which is more often than it speaks about faith and prayer.  Is there wisdom found in ancient scriptures that can help you with your finances today?  Not only do I believe this is a resounding “Yes!” but I believe that there are at least five life-changing wealth principles that can be found woven throughout the body of the Bible from cover to cover. In this article, I hope to introduce the first and possibly most important one. Prosper as your Soul Prospers The only topic more prevalent in the Bible than finances is the mention of God and the Kingdom of Heaven.  The first wealth principle may be best described from 3 John 1:3: “Beloved, I pray that in all respects you may prosper and be in good health, just as your soul prospers.” (NASB1995) While the word “prosper” does not necessarily mean money and finances, in fact, health is even mentioned in the verse quoted above; it definitely does include financial prosperity as well. What does it mean to “Prosper as your soul prospers,” and how does this help my finances? Jesus lived in a different realm that He called the Kingdom of Heaven.  He introduces and invites all mankind to join Him in this different realm.  One of the most popular sermons of Jesus is called the Sermon on the Mount, found in Matthew chapters 5 & 6, where He explains in many different ways the characteristics of this Kingdom and how to accept His invitation. Matthew 6:25 says, “For this reason, I say to you, do not be worried about your life, as to what you will eat or what you will drink; nor for your body, as to what you will put on. Is not life more than food and the body more than clothing?” (NASB1995) One way we can step into this invitation is to avoid living a life of worry and anxiety. I know this is easier said than done, but Jesus was very clear that that’s not our job. Christ has called us to rely on our Heavenly Father as our source of everything, including food, clothing, and life’s daily necessities.  Jesus adds some instruction in Matthew 6:33, “But seek first His kingdom and His righteousness; all these things will be added to you.” So, what is our job? To seek the money or provisions to acquire these daily needs, or to trust in God to take care of “all these things?”   Jesus has invited us into a life without lack and to see the goodness of His ways and provision over the ways of the world’s economic system.  Making the Kingdom of God a first priority means that the pressure is off on us having all of the answers and wisdom in all of life’s ebbs and flows, but realizing that God is really in charge of everything and He has invited us to an adventure with Him throughout our life. When we leave a life of worry, doubt, and fear, we can become prosperous and grateful for the simplest daily things like food and clothing.  When we realize that God wants to partner with us in His Kingdom, it’s no longer about how much income we have but rather how much impact we can make with our lives.  I genuinely believe that when we flip the script from seeking money to seeking the Kingdom of God first, wealth (not necessarily money) will be attracted to our lives in many ways. When we live a life of scarcity, we focus on what we have or don’t have and tend to be more defensive and exclusive.  When we live a life of abundance, our focus becomes unlimited, and our posture becomes more about bringing value to our world instead of finding ways to get value from it.  This attracts raises and promotions in the workplace when you become more valuable to your company.  In business, this attracts more clients who are looking for the most value for their dollar and employees who are not only motivated by their paycheck but by purpose and the fulfillment of the positive influence their job may have on society, culture, families, and themselves. Personal Testimony Around eight years ago, my wife and I had a great start in promising careers in finance and law.  Unfortunately, we did not learn of Dave Ramsey’s teaching then and made some financial decisions that he certainly would not have approved.  We were not “acting our wage.” We just thought that someday we would get enough raises and promotions to dig our way out of an avalanche of debt on credit cards, two brand new car purchases with the payments to match, student loans, and rising childcare costs due to having two new babies in diapers as well as our older children.  It got so bad that we actually got educated on what bankruptcy options we may have, and thankfully, we realized that this was not a wise option, primarily because of the negative impact it would have on our careers and future earning potential.  So, we decided to make some drastic changes immediately, and we did.  While we did clean out our closets and have multiple garage sales, pack our lunches or skip them altogether, reduce eating out, and plan more meals at home, we could only reduce our expenses by so much. The focus needed to change from saving money to making more money.  Thankfully, at this time, I became introduced more intimately to this principle of prospering as my soul prospers.  My wife and I went to work with a different attitude. We didn’t go and ask for raises and promotions.  We asked how we could be more valuable to our workplace and clients.  Long story short, the value we added to our professions was recognized quickly.  The manager that I was working with and pouring into got promoted.  It wasn’t long after that, as he was building his new team, he invited me to join him, and I was also promoted and given a raise.  My wife had a breakthrough in an area of law that she practiced and found a way to save her clients enormous amounts of legal red tape and costs.  Her clients then began to give her new case after new case, way more than she could handle, so her firm was required to hire more attorneys to help carry her ever-growing caseload.  Other firms took notice as well, and she was eventually recruited by a new firm that recognized and rewarded her success by inviting her to become their youngest female partner ever.  In this promotion, the new law firm learned of our financial struggles and debt and included in the partnership and raise a compensation package that included paying off all of our debt!  I know, right? We didn’t stop there once these experiences radically changed our lives.  We actually sold our house (that we could now afford) and bought one that was even more affordable.  We traded in our vehicles for ones that made more economic sense.  My job was going so well that my boss let me take two days off a week to stay home with my baby girls and still pay my full salary.  This is just a small example of the prosperity we have experienced during this season and for the last eight years, and it is not due to our hard work and grind but entirely due to our mind and spirit change to “Seek first the Kingdom of God” and all of those other things were added to us.  God gave us the ideas of what we could do in the natural, and then He stepped in and provided the supernatural. As one of our core values, Colossians 3:23 states, "In all the work you are doing, work the best you can. Work as if you were doing it for the Lord, not for people.” Whitaker-Myers Wealth Managers has a team of financial advisors who strive to “live it and give it,” working hard to improve every day in life and with business. If you have questions about investing, one of our advisors would happily work with you.

Asset Classes Asset Classes, are they like Pilates at 9 am on Thursday? For those of you who have a background in science, like me, the chart below may look like a funky periodic table or oddly organized Scrabble board at first glance. Today, instead of discussing molecular weight, reactivity, or how to get the best triple-double combo for the most points, we will delve deep into the 4 investment categories that Dave Ramsey recommends investing in. This will include a quick introduction to some subcategories, which we’ll dissect in a future post. A quick note before diving in: Remember the term ‘fund’ is a group of stocks and other assets vs. a single stock, which refers to one publicly traded entity (company, commodity, etc.). Also, Asset classes are a group of investments with similar characteristics and are regulated similarly. Dave’s 4 Categories for Investing Dave Ramsey’s recommended 4 categories for investment include Growth, Growth and Income, Aggressive growth, and International. The goal of these categories is to provide even diversification. His recommendation is to allot 25% to each category. While this strategy may meet your investing needs at a high level, we hope to educate you on the why behind each fund within the designated categories. Understanding the turnover rate, costs associated with the fund, and potential tax implications are all key components to consider when selecting your funds. Investing can be risky, but creating a well-diversified portfolio can hedge the potential risk. Hedging is NOT having the most well-groomed boxwood evergreens in the neighborhood! Hedging (in investing) is “a risk management strategy employed to offset losses in investments by taking an opposite position in a related asset” (Investopedia.com). For example, having assets in cash or international funds could ‘hedge’ against a loss within other categories. The complete or balanced portfolio should align with your risk tolerance and the time horizon you have for your investments and goals.  Let’s dive deeper into the categories and define them a bit better. Growth Funds Fun fact: Growth funds or large-CAP growth funds have no association with how tall your child is or what size baseball hat they wear. However, they can contribute to your children’s future and may enable you to purchase that fancy new baseball hat! Growth funds or large market capitalization (‘large-cap’) funds are companies or groups of companies that have a market capitalization value >$10 Billion. “Market capitalization is calculated by multiplying the number of a company’s shares outstanding by its stock price per share” (Investopedia.com). Growth stocks or funds include many of the largest companies you’re likely familiar with. Companies such as Apple (APPL), Microsoft (MSFT), Amazon (AMZN), Meta (META), Tesla (TLSA), and many others. These companies have been significant drivers of the overall market and have played a significant role in driving not only the U.S. economy but also economies globally. They tend to be relatively stable and would be considered a staple in most portfolios. These growth funds tend to follow the market due to size; however, measuring growth funds against the S&P 500 may lead to inaccurate conclusions. We all want to benchmark to understand if our investment is doing well. To do so, a more accurate representation of a benchmark trend is a measurement against the Russell 1000. The Russell 1000 is a subset of the Russell 3000; however, the Russell 1000 measures compose the largest 1000 growth stocks. Thus, it is a more representative measurement. Even though they’re ‘fruit,’ you can’t measure/eat them the same way! Growth and Income Growth and Income funds are large market capitalization value (‘large-cap value’) stocks/funds that provide a dividend payout that can be realized out or reinvested. If you reinvest those dividends, they can grow along with the portfolio and improve the fund's overall return. Dividend payouts are based on the company's net profit and number of shares in the portfolio. Remember, this is a payout to all shareholders and can come monthly, quarterly, or yearly. Thus, tracking the dividend payout ratio is important. We at Whitaker-Myers Wealth Managers track this metric, which shows us the sustainability of a company’s dividend program. The inherent risk with dividend investing is that if a company does not show a profit, there isn’t a dividend to pay out! Tickers in this category include Coke, Pepsi, Citigroup, and many others. Similar to large-cap funds, benchmarking performance against a market index is most accurately done when comparing the fund to the Russell 1000. However, we must look at the Russell 1000 value index in this case. This index measures the large-cap value funds against each other. As our fearless leader, John-Mark Young, shares in his weekly market update, we can appropriately combine both value and growth funds and use the S&P500 as an appropriate benchmark since the S&P500 includes both categories of funds. Remember, the S&P500 can only be used as a benchmark when both fund types are combined! Tax implications must be considered when a dividend reinvestment or payout strategy is in play. Make sure to talk to your CPA or Financial advisor to understand which is the most appropriate for your situation. Aggressive Growth This category includes both small-market capitalization (small-cap) and mid-market capitalization (mid-cap) funds. Small-cap funds are companies that have a market capitalization of <$2 billion, while mid-cap funds range between $2-10 Billion. The categorization of these funds under ‘aggressive growth’ directly aligns with their volatility. When comparing volatility, small-cap funds tend to be the most volatile, followed by mid-cap and lastly, large-cap. Though these may have higher risks, the upside and earnings potential are also great. When considering this category, consider Amazon starting out early in the 90s or Google in its early stages. Only a few companies make it as large as they did; however, those that do can greatly drive growth in your portfolio. We won’t discuss it this week, but value and growth funds can also be selected within each small-cap and mid-cap asset class. A good market benchmark for Aggressive growth funds is the Russell 2000. International International stock/fund investing has been traditionally used as a hedge against the U.S. economy and a diversification strategy. Though they haven’t performed as well as the other three buckets, we are seeing an emergence of specific international markets driving growth and returns. For example, considering the sociopolitical and economic impact of the local environments of China and India, the OECD (Organization for Economic and Cooperation Development) is projecting India’s 2024 growth of 6.3% compared to China’s 5.2% (Economictimes.com). This would suggest a possible rebalance of the international portfolio or at least tracking the growth of India’s economy to see if this is a good fit for your strategy. We track our international portfolios against the MSCI EAFE at Whitaker-Myers Wealth Managers. This ETF fund (Exchange-Traded Fund) provides an aggregate of small, mid, and large-cap funds, including stocks from Europe, Australasia, and the Far East. Some may debate the need for the international fund in a diversified portfolio since the exposure of many large-cap funds includes their international markets. Discuss with your financial advisor what is best for your portfolio and ask the difficult questions. Ultimately, your investment needs to work how you want it to! Other The elusive ‘other’ category. If you spent some time looking at the periodic table of Scrabble points, you probably noticed we didn’t include many asset classes in this discussion. Don’t worry; we’ll dive deep into those in an upcoming post! These include EM, Fixed Income, Balanced, Commodities and REITS. Summary To SUM(m)-IT all up, yes, a horrible play on words; I hope you walk away with this: Market capitalization plays a significant role and influences your investment risk and returns. Measuring risk small-cap>mid-cap>large-cap also directly correlates to reward/return. Volatility aligns in the same order. While small-cap funds are more volatile, large-cap funds are much more stable. You can find growth or growth and income divisions in each category, which may add another component to your portfolio (with dividend returns). Whatever direction you go, remember to keep diversified, invest intelligently, and talk to your financial advisor about aligning your strategy and long-term financial goals. Investing is never one-size-fits-all. Though I would really like to fit into the jeans I wore 20 years ago, the amount of cake and cookies I’ve eaten over the years doesn’t make that reasonable right now. Investing is similar (minus the cake); your strategies and goals will change as you get older. Remember that our financial coach and advisors are here to walk with you every step of the way, even after 30-40 years when the cake catches up! We’re here to help. Schedule time with our advisors here or submit a question for me to answer here.

Welcome Thank you, and welcome to the first installment of Whitaker-Myers Wealth Manager’s Investment Corner.  We hope you find this section of our newsletter informative and insightful. We intend to highlight various topics based on investing and investment strategies while focusing on our mission and one of our core values: having the heart of a teacher. In this week’s post, we talk about investing strategies and how your past experiences, upbringing, and world events can directly contribute to how and what we invest. The theme of today’s post was inspired by a chapter from Morgan Housel’s book “The Psychology of Money,” where Morgan explores the development of various money habits correlated to geopolitical events and the mindset of future investors. Keep in mind that nobody is crazy! SAVE Whether you invest in gold, equities, ETFs, mutual funds, bonds, Bitcoin, real estate, or businesses, or just prefer to keep your money under your mattress or in a tin can buried deep in your yard, You’re not crazy. Your relationship with money and how you choose to save is deeply seeded in your experiences and nature. Imagine growing up where investing was normalized, taught, and understood. Concepts such as compound interest, dollar cost averaging, and rate of return may come easily. On the other hand, where these concepts are not taught, or the foundation of finance isn’t laid, the investing road ahead may be a bit bumpy. There is, without doubt, a need for this foundation to be laid within the traditional education system. However, to understand one's propensity to save in a particular manner, simply knowing one's understanding of finance and investing is not enough.  Personal finance is only 20% math and 80% behavioral! Cognitive Bias - Familiarity In high school, our economics teacher gave us a project. We could pick our stocks at the beginning of the trimester with an imaginary $10k and buy $10k on margin.  What did I pick? Stocks that were “cool,” Nike (mostly because of Michael Jordan), Coke (I wasn’t allowed to drink as much as I liked, so why not own the company?), and several other ‘tickers’ that I thought sounded ‘cool.’ It wasn’t the best investing strategy, but this assignment taught me valuable lessons I hold on to today. The psychological impact of seeing a daily/weekly uptick or downward trend was more than an emotional feeling; it was physical. The manifestation of these emotional feelings into a physiological sensation can, in part, be explained by the biopsychosocial model of health (https://www.physio-pedia.com/Biopsychosocial_Model). This model suggests that physiological manifestations can be attributed to a combination of biological pathology, psychological factors (fear, stress, and others), and current socio-economic/environmental state. My 14-year-old self still had a strong association with money, although the money was all fictional from the start. I believed it was MY money. At Whitaker-Myers Wealth Managers, we believe this money is not ours, and we are only stewards for God. As fiduciaries, we are responsible to every one of our clients to provide the best management and guidance for our clients, not ours. Thus, our team focuses on doing what is right for our client without any partiality or bias. Bias is a term you’re likely familiar with. However, Cognitive bias may be a bit new. Having a bias is natural and can be an unconscious or automatic process. “(Biases) are designed to make decision-making quick and more efficient. Cognitive biases can be caused by many things, such as heuristics (mental shortcuts), social pressures, and emotions” (Simplypsychology.org). The collective influence of each of these factors plays a crucial role in our ability to process and make decisions (we’ll discuss this much deeper in a future post).  Cognitive bias also takes into account familiarity and relatability. My 14-year-old self chose Nike and Coke because I wanted to ‘Be like Mike’ and be a bit rebellious (without my parents knowing). Luckily for me, this was a school project and didn’t have any long-term real-world consequences. My dartboard strategy may have been very lucky with two of the picks but likely unlucky with the others. Familiarity bias may be a double-edged sword, but not saving can only have one outcome! Nobody is Crazy Playing the lottery is not a winning strategy. Regarding saving, we tend to let our emotions and biases fog our ability to make rational decisions. At the beginning of this post, I mentioned all the ‘crazy’ ways people invest or save their money. None of this was to be judgmental or picking on a tactic. The goal was to highlight that it doesn’t matter what you’re doing; as long as you’re saving, you’re moving in the right direction. You may be in baby step 2, gazelle intense, and don’t have the capability right now to invest. That’s fine; it’s just the season you’re in. The saving and investing will come soon. Remember to invest in yourself, your future, and your family's future.  Saving may be difficult today, but it will get easier. Reaching that first milestone is like the first 1/3 of a race; get past it, and the latter 2/3s will breeze by! Our team at Whitaker-Myers Wealth Managers is here to walk with you on your journey. If you’re looking for guidance and a great coach through baby step 4 or want a further deep dive into your investments and strategy, our team is here to help. We can help develop the most efficient strategies that align with your financial goals. Schedule a meeting with an Advisor today!

My friend Dave Ramsey invests in two things: mutual funds with long track records of success and paid-for real estate. He loves real estate as an investment because it has the ability to do two things: provides consistent income to the investor, especially if it's paid off, and provides you with an asset that appreciates over time. One bonus, even though the asset may depreciate (go down) some of the time, because you don't get a monthly statement and/or you don't have a web portal to check its current value each day, it typically doesn't come with the market gyrations that stocks come with. Of course, the counterargument is your mutual funds or stocks never call you with problems as tenants tend to do, because of toilets (the dreaded T's of real estate investing). Therefore, a common theme within our client base has been those clients that purchase a rental property, hold it for some length of time, and then are ready to liquidate because of frustration with the active management required with rental real estate or just their age no longer allows such an investment. Eight of ten clients holding properties in investment form end up liquidating at some point. Selling an investment property can be a significant financial event that requires careful consideration of taxes and other financial implications. Fortunately, there are options available to help minimize taxes and maximize returns. One such option is using a 1031 exchange into a Delaware Statutory Trust, or DST for short. In my previous life, working for a bank's private bank, we always dealt with Delaware Trusts for asset protection; however, the DST provides unique benefits to real estate investors looking to exit their rental properties. A 1031 exchange, also known as a like-kind exchange, is a tax-deferment strategy that allows property owners to sell their investment property and purchase a similar property while deferring capital gains taxes. The exchange is named after Section 1031 of the Internal Revenue Code, which outlines the rules and requirements for the exchange. A Delaware statutory trust (DST) is a type of legal entity that allows multiple investors to pool their money and invest in real estate. DSTs are created under Delaware law, which has known to be very favorable to investors and those with large amounts of assets and provide a way for investors to diversify their portfolios and invest in large commercial properties they may not be able to afford individually. DSTs are also commonly used in 1031 exchanges because they offer a way to reinvest the proceeds of the sale without triggering capital gains taxes. To take advantage of a 1031 exchange into a DST, the property owner must first identify a replacement property that is of equal or greater value than the property being sold. This can be done with the help of an experienced Financial Planner, like those at Whitaker-Myers Wealth Managers, who have been through this process with other clients before. The owner must then work with a qualified intermediary to facilitate the exchange. The intermediary will hold the proceeds from the sale and use them to purchase the replacement property. Again, while this qualified intermediary is not your Financial Planner, they can probably point you in the right direction. Once the replacement property is identified, and the intermediary is in place, the property owner must sell their investment property and complete the exchange within a set timeframe. The owner must also reinvest all of the proceeds from the sale into the DST to qualify for tax deferral. One of the benefits of using a DST in a 1031 exchange is that the DST is a passive investment, meaning the investors do not have to manage the property themselves. This allows the person that is too old or too busy to keep up with the management of the property to maintain their income from the asset assuming the new property is income-producing. Instead, the DST sponsor manages the property, collects rent, and handles all maintenance and repairs. This makes investing in a DST a convenient and hands-off way to invest in real estate. Another benefit of using a DST in a 1031 exchange is that it provides a way to diversify a portfolio. Because DSTs allow multiple investors to pool their money, they can invest in large commercial properties that may be too expensive for an individual investor to purchase on their own. This diversification can help reduce risk and provide more stable returns over time. Finally, using a 1031 exchange into a DST can help property owners defer capital gains taxes. By reinvesting the proceeds from the sale into a DST, the owner can defer paying taxes on the gain until the DST is sold. At that point, the owner will owe taxes on the gain, but they will have had the benefit of using the proceeds to earn income and potentially increase the value of their investment. In conclusion, using a 1031 exchange into a Delaware statutory trust can be a powerful tax-deferment strategy for property owners looking to sell their investment property. By working with a qualified intermediary and investing in a passive DST, property owners can diversify their portfolio, potentially earn more income, and defer taxes on the gain from the sale of their property. As with any investment strategy, it's important to consult with a Financial Planner and tax professional before making any decisions.

Warren Buffet, chairman and CEO of Berkshire Hathaway, has referred to investing as “simple but not easy.”  What makes it so simple is that the best strategy is making regular contributions to your investment accounts. However, the difficulty comes with following through with that strategy. This is due to outside noise in the investment world and watching the volatility of the market day to day. This market volatility is precisely why it is essential to diversify your investments and make regular contributions. The Reasons The first reason for this difficulty is you do not know what the winning sectors/stocks will be this year or in the coming years. An example would be investing in Global Real Estate stocks (GRE). In 2004, 2005, and 2006, the annual return for investing in GRE stocks was 36.56%, 14.84%, and 40.26%. It was leading all asset classes for returns. However, the following year, after that return of 40.26%, Global Real Estate had an annual return of -7.27% in 2007. When we see it rising, it is a human tendency to want to ‘hop on’ a sector or stock. Having a well-diversified portfolio gets you exposure across many different sectors to reap the benefit of the rising & thriving sectors while limiting the risk with your investments. I say limiting risk because of the fact that if a certain sector of stocks is having a rough year, you are invested in other sectors that may be having a great year. Just as Ecclesiastes 11:2 says, “Divide your portion among seven, or even eight, for you do not know what disaster may come upon your land.” This is why Dave Ramsey recommends investing in the “4 categories” of funds and why that is what you will hear when you meet with an Advisor on our team. The second reason for this difficulty is the market's volatility, which causes many investors to steer away from their investment plans. As I mentioned, consistently contributing to your investments is the most important and effective thing you can do. It sounds almost too simple. What makes it not ‘easy’ is how the stock market gets us our rates of return. This chart is an excellent illustration of the nonlinear path of total returns. The red dot illustrates the lowest the S&P 500 index dropped during that current year, and the blue bar shows the total return for that year. If you look right before the year 2000, you can see that despite the stock market dropping  -19% at a point throughout that year, the total return on the year was still a positive 29%. The year 2020 was a challenging year for a lot of people. In 2020, the stock market had a dip of 34%, but by the year's end, the total return was still a positive 18%. Emotional investors often miss out on potential gains as they want to get out of the market when they start seeing red. The Positives and Negatives – and all the emotions in between The stock market is positive 80% of the years and negative 20% of the years. If you look at the market even closer, each day it is positive about 53% of the time and negative 47%. Talk about an emotional rollercoaster. The variation of peaks and troughs is challenging to see through sometimes. However, stepping back and seeing an aerial view of the data helps give some understanding of the market's erratic behavior and why we must diversify and consistently invest. In conclusion, spreading out your investments to encapsulate many different sectors allows you to minimize the risk that comes with a down market while also benefiting from the gains in multiple sectors. Whitaker-Myers Wealth Managers ensures that our clients are well diversified in smart funds that are run by a strategic process. If you want to schedule a meeting with an advisor to learn more about Whitaker-Myers and how we approach investing, click here. We take pride in having the heart of a teacher and would love to answer any questions you may have.

2023 marked an inflection point for markets with strong gains across both stocks and bonds. The S&P 500, Dow, and Nasdaq generated exceptional returns of 26.3%, 16.2%, and 44.7% with reinvested dividends last year, respectively. The S&P has come full circle and is now only a fraction of a percentage point below the all-time high from exactly two years ago. The U.S. 10-Year Treasury yield climbed as high as 5% in October before falling to end the year around 3.9%, pushing bond prices higher in the process. International stocks also performed well with developed markets returning 18.9% and emerging markets 10.3%. What drove these results and how could they impact investors in 2024? Perhaps the most important lesson of 2023 for everyday investors is that news headlines and economic events don't always impact markets in obvious ways. Last year's positive returns occurred despite historic challenges including the worst banking crisis since 2008, rapid Fed rate hikes, debt ceilings and budget battles in Washington, the ongoing war in Ukraine, the conflict in the Middle East, cracks in China's economy, and many more. If you had shared these headlines with an investor at the start of 2023, they would probably have assumed there would be a worsening bear market or a deep recession. Why isn't this what happened? At the risk of oversimplifying, the key factor driving markets the past few years has been inflation. High inflation affects all parts of the markets and economy, including forcing the Fed to raise interest rates, slowing growth, hurting corporate profits, dampening consumer spending, and acting as a drag on bond returns. This is exactly what occurred in 2022, but many of these effects reversed in 2023 as inflation rates improved. The headline Consumer Price Index, for instance, jumped 9.1% in June 2022 on a year-over-year basis but only grew 3.1% this past November. Unfortunately for consumers and retirees, this does not mean that prices will fall back to pre-pandemic levels - only that they will rise more slowly. For markets, however, what matters is that the rate of change is slowing and that core inflation could gradually approach the Fed's 2% long run target. According to Whitaker-Myers Wealth Managers, Investment Research Analyst, Summit Puri, "As of the last CPI report, you've essentially seen inflation completely defeated with the exception of shelter (housing) and auto's (whether it be auto insurance, purchases or rentals). This provides a baseline case for why we, at Whitaker-Myers Wealth Managers and our research partners, feel very strong about 2024, especially the expectations for the second half of 2024, considering how strong 2023 finished." Thus, the recession that was anticipated by markets a year ago has not yet occurred. While many still expect economic growth to slow this year, it's not unreasonable to suggest that the Fed could achieve a "soft landing" in which inflation stabilizes without causing a recession. This is why both markets and Fed forecasts show that they could begin to cut policy rates by the middle of the year. What does this mean for the year ahead? If 2022 was characterized by the worst inflation shock in 40 years, leading to a bear market in stocks and bonds, 2023 saw many of these factors turn around. These trends could continue if the Fed does begin to ease monetary policy. Of course, much is still uncertain and investors should always expect the unexpected when it comes to market, economic, and geopolitical events. After all, markets never move up in a straight line and even the best years experience several short-term pullbacks. The past year has shown us that it's important to stay invested and diversified across all phases of the market cycle, rather than try to predict exactly what might happen on a daily, weekly, or monthly basis. Below are five key insights into the current market environment that will likely be important in 2024. 1. Many asset classes performed exceptionally well in 2023 Strong economic growth and falling rates propelled many asset classes higher last year. Stocks reversed much of their losses from the previous year with a historically strong gain and bonds bounced back as interest rates fell in the final months of the year. Technology stocks, especially those related to artificial intelligence, helped to drive market returns as well, pushing the Nasdaq to a nearly 45% return. The Nasdaq in our Dave Ramsey vernacular would be most closely related to a growth fund. While the so-called "Magnificent 7" did double in value, other sectors also began to perform better as market conditions improved. Most importantly, there are signs that earnings growth is recovering. Earnings-per-share for the S&P 500 are expected to have been flat in 2023, but Wall Street consensus estimates suggest that they could grow by double digits each of the next two years. While this will depend on the path of economic growth, any earnings increase will help improve valuations and support the stock market. Just on Friday, Fundstrat's Tom Lee was on Closing Bell on CNBC, who sees the S&P 500 rising to 5,100 by the year-end, mentioned that while the market has started slow in 2024, they remain committed to expecting a good year in 2024, because of bottoming PMI numbers, softening inflation and rising earnings estimates on the back half of the year. 2. Bonds have rebounded as interest rates have stabilized Bonds had a much better year with interest rates rising through October then falling on positive inflation data. While bonds have not recovered their 2022 losses after a historic spike in inflation, recent performance shows that bonds are still an important asset classes that can help to balance stocks in diversified portfolios. This is true across many sectors including high yield, investment grade, government bonds, and more. 3. The Fed is expected to cut rates in 2024 Improving inflation coupled with a historically strong job market have helped the Fed to achieve its policy objectives. While it's too early to declare victory, many expect the Fed to begin cutting rates in 2024. The Fed's own projections suggest they could lower rates by 75 basis points by the end of the year. Market-based expectations are much more aggressive and are expecting twice as many cuts. While it's hard to predict exactly what the Fed may do this year, the fact that rates could begin to fall could help to support financial markets and the economy. 4. The economy has been remarkably strong The economy has been stronger than many expected over the past twelve months. GDP grew by 4.9% in the third quarter, one of the fastest rates in recent years. Consumer spending helped as did a rebound in business investment as the interest rate outlook stabilized. Unemployment is still only 3.7%, and while monthly job gains have slowed somewhat, the labor market is still far stronger than economic theory would have predicted, given the sharp increase in interest rates. As of the last reading of GDP Now from the Atlanta Fed, which you can learn more about and hear a weekly update by tuning into my weekly video series, "What We Learned in the Markets This Week", there is an expectation that the 4th quarter of 2023 will have grown by 2.5%, which is a very nice reading for an economy our size, especially after the above mentioned 4.90% (that was technically revised to over 5%). 5. The most important lesson for investors is to stay invested While the past twelve months have been positive for investment portfolios, investors should not become complacent. Volatility in the stock market is both normal and expected with even the best years experiencing short-term swings, as shown in the accompanying chart. Rather than trying to predict exactly when these pullbacks will occur, it's more important for investors to hold diversified portfolios that can withstand unforeseen events. The past few years are a reminder that holding an appropriate portfolio is the best way for investors to achieve their long-term financial goals. Copyright (c) 2024 Clearnomics, Inc. and Whitaker-Myers Wealth Managers, LTD. All rights reserved. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein. The views and the other information provided are subject to change without notice. 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January. The first month of the year. For many, this means new diets and weight loss goals, new habits to form (or break), and ways to better themselves. They take on “New Year, New Me” as their personal mantra. Of course, we will always stand by and support those changes. However, we challenge you to a new one this year. A “No Spend Week”. And we ask, do you think you can do it? What is a No Spend Week It’s as simple as the name. You challenge yourself not to spend ANYTHING for an entire week. Say “no” to eating out, groceries, gasoline, movie purchases, shopping, app purchases, etc. It will be a great way to start the new year, especially if you are coming off a Christmas spending spree. Planning for the No Spend Week Obviously, we don’t want you to be in a situation where you can’t eat because you don’t have groceries or get to work because you are low on gasoline. So, understanding when this no-spend week should logistically happen is key. We realize that if you drive a short commute daily, this is easier said than done compared to someone with a long daily commute. But the concept is there. This means you only drive that week to work and spend on “work gas,” not gas to take you to and from “fun” places if possible. See what is on the calendar regarding personal engagements or kid schedules. Get Creative on the No Spend Week Again, we don’t want you to be hungry this week, but we also don’t want you buying excess the week before to “last you” through the no-spend week. The no-spend week is to help push you out of your comfort zone and get creative. This is a great time to use up things forgotten about in the freezer or buried back in the pantry. This can also go for activities. Many towns do free weekend events, some museums are free entry, and never underestimate the sensory refueling being in nature at the park or a local trail can bring you. Pack sandwiches, snacks, and drinks, and have a fun day. OR make it a double feature no-spend week and do something constructive around the house to occupy any free time. Clean out that pantry or freezer you’re finding dinner from, go through closets, organize the basement, and who knows what you may find down there that you could potentially turn around and make a profit on. Make your “No-Spend Week” turn into “I Just Made Money Week.” Avoid Temptation Remember, this is an exercise in self-discipline and delaying gratification of your “wants.” Don’t tell yourself, “It’s only a few dollars,” or even use a gift card because “it’s not my money I’m spending.” I know I have preached the usefulness of gift cards in previous articles and how it is a great way to spend money without it being money from your bank account, but in this circumstance, it defeats the purpose of the No-Spend Week. See the Benefits Challenge yourself to a week this month. As I’ve said, this week does not mean you spend more the week before or after to make up for it. The idea is to have no spending for a whole week to see how it can impact your budget and bank account. So, again, we pose the question, can you do it? A no-spend week? Can this be your new mantra for 2024? Perhaps this becomes a monthly challenge. And you can say, “New Year, New Me, No-Spend Week.” If you need help staying accountable, finding ways to save money, or being better with money management, speak with our financial coach to help get you on track! If you want to learn more about your finances, one of our advisors will gladly talk to you. We wish you all the luck in your financial endeavors this new year!

Some of us reading this article may have been in debt at some point in our lives. It is a frightful, burdensome, overwhelming feeling that, without proper guidance, would leave you in a world of anxiety and despair. This article is here to help you close out and block out all the noise. Tell that crazy monkey brain to put down his symbols because getting out of debt requires immense focus, discipline, and consistency.  Being all of those things will allow you to accomplish this sometimes, it just takes a little time. Where to Start I will use the average United States citizen for my following example.  The average personal debt, excluding the mortgage, is $21,800. The average American carries a credit card balance of $8000 per month. For those of you who are on the fence about Dave Ramsey, this is why he has become such a powerful figure in the personal finance industry. So, you have roughly $25-$30,000 in debt. Where do you start? Let’s start with your income. You need to make sure that you are working consistently, you have money coming in every month, and, like Dave says you need to take care of the necessities. You must ensure you have shelter, transportation, food, and water.  From there, we need to figure out how much is going to these debt collectors every month. This is because if you are going backward and barely making ends meet, you need to figure out ways to make more money. Whether that’s a side hustle, asking for a raise, or moving jobs, you must find a way to start going into the green each month. From there, we can now take a look at the extra money that you have each month on a consistent basis. After you complete baby step one, which is to secure $1,000 in a savings account, we start to focus with Impala-like intensity to get out from under this burden. The focus must be directly centered on getting out of this debt.  Dave likes to say rice and beans until it’s accomplished, but I like to say just rice. Day by Day This is where the focus, the discipline, and the consistency come in.  All discretionary spending should be at the front of your mind during this period – do I need this?  Additionally, we should consider pausing all retirement contributions, including your 401(k) at work and your “for fun” investment account. The reason for this is opportunity cost, which is something to discuss. Depending on your interest rate, some might argue there will be opportunity costs from investing that money in the market. For example, if you have a 3% interest rate on a car, you could invest that same amount of money in the stock market and potentially make 8%, then your opportunity cost is that potential 5%. However, what this doesn’t consider is that debt equals risk so it is always best to pay off the debt! In general, having debt means investing is not something to focus on because, without this debt, you could be allocating that entire debt payment to the market later on. This will reduce stress in your life and build patterns of discipline, which will translate into taking leaps and strides forward to accumulate more in retirement. That is why this is Baby Step Two. Nothing else should be focused on until that is complete. Typically, the average person could take between one and five years with extreme focus on paying off their debts to get out of debt. Once that is done, it will feel like the greatest weight is off your shoulders, and you should celebrate such an extreme accomplishment that only the determined can do! Now What? The next step is to keep following the plan. You could meet with a trusted financial advisor to implement the rest of Dave’s steps. From now on, through baby step seven, it is rather smooth sailing. Build an excellent team of financial planners, accountants, and estate planning attorneys around you to have the healthiest financial situation possible.  Here at Whitaker Myers Wealth Managers, we can help you do just that. By accomplishing the toughest task of getting out from under the debt, you have built an element of focus and discipline into your life that will catapult you into saving for an emergency fund, which is baby step three, and continuing or starting retirement contributions, which is baby step four.  Your future depends on your attitudes, goals, and willingness to do hard things. So, lean into your challenge and welcome it with sheer grit, passion, and determination. You got this.