Savi ng money in your budget with your utility bills Many people are looking for ways to save on their budget lately. With increasing numbers at the grocery store, fluctuating gas prices from highs to lower numbers (I won’t say “lows”), and with the cost of goods in general increasing, finding ways to save in your budget can be hard to do. One area you can start to save additional dollars in your budget can be as simple as unplugging a lamp in a room rarely used. That’s right, we’re talking utility bills and ways you can save this year by doing a few habit changes. How does changing my habits affect my utility bills? So, let’s start by saying changing your habits doesn’t directly affect your utilities instantaneously, however over time, the consistent change could end up saving you some money in the end. We have moved to a culture and a society where many things are instantaneous, but delaying the gratification of power at our fingertips for an additional 2 .5 seconds should help your bottom line. And we don’t mean switching from your light bulbs to candles. However, we may encourage you to change the type of light bulb you may be using. Ways to save on utilities by changing a few simple habits Computers Set your computer settings to turn themselves off after a certain amount of time. On average, you’re not using this at-home device somewhere between 8-16 hours a day. This can be an additional 33% of your power consumption that you could potentially save. Another tip if you are on your computer a lot at home (i.e. on work from home days), use the “sleep mode” setting. This doesn’t completely shut down your computer if you have not been using it for the set time, but it turns the screen off and stops running any programs you have open, creating a low-power state. Remember, the more time your screen is on, the more energy you are using. If you aren’t using it, save some change and watch the extra dollars stack up in the end. And bonus, by turning the computer off, you should be improving the longevity of the device by not having it run all the time. Unused appliances/items around the house Again, like computers, if you are not using an item, it’s best to turn it off…. or unplug it. Because even though an item like a coffee maker/pot isn’t being used, it is still pulling a small amount of energy while plugged into an outlet. Most unused appliances/items don’t need to stay plugged in unless they have to be charged. Some examples of these include toasters, Air Fryer, Instantpot, radios (do people still have these?), and lamps/tv sets in rooms rarely used to name a few. And if you really want to get crazy, after you have done charging your phone or battery, unplug the charger or docking station. Dishwashers Try to only run the dishwasher when it is full vs. only half-full loads. It takes a lot of energy to run the dishwasher and takes energy to heat the water to clean the dishes, so is a double hit. Even though those washer pods may not be expensive, the running of the dishwasher is more so. Clothes Dryers Do you remember your mom, aunt, or grandma hanging clothes out on the line on a nice sunny day? It may not hurt to take a trip down memory lane every once in a while if you have the opportunity to hang clothes out on the line. Not only will you get the benefit of air-dried linen to fill your clothes baskets, but it will help you save on your electric bill at the end of the month. Of course, this is all dependent on if you have the time, and live in an area that can allow that. Being from Ohio, we did not hang clothes up during the winter months because let’s be real, our jeans would be stiff from ice, not starch. However, I have vivid memories of my mom hanging our clothes up outside much of the summers growing up, and I do have to say, there is something about putting on an air/sundried shirt that just puts you in a good mood. Hot Water Tank Consider lowering the heat on your hot water tank. By doing this, you are decreasing the amount of energy sent to heat water before use. Now as someone who likes to take long, hot showers, it does mean you have to be more mindful of your time, so it definitely becomes a personal preference with this one! Use the elements to your advantage This may only benefit those who reside in cooler climates, but if you live in an area where temps fall into or below the 30* mark, consider using your garage during winter months as additional storage vs. overrunning your refrigerator. My family always stored additional Christmas cookies in Tupperware containers in the garage, along with pop (or soda for non-Ohioans) during the winter months. Heating and cooling Consider turning your heat down (or AC up depending on the time of year) while you are away from home. Why spend the money to heat or cool your house when you are not there? Especially if you are going to be gone for long periods of time. This would include work days (typically gone from 8-9 hours a day), day trips from the house, weekends away, or vacations. A great way to help you control this is a programable thermostat. We have ours set to go down when we leave the house in the morning, come back up slightly right around the time we get home, then go back down around the time we go to bed because we like our room chilled at night to sleep. Light Bulbs Three letters you should become familiar with when it comes to your lighting…. LED. I’ll admit, these light bulbs are more expensive upfront, however, they have multiple reasons to switch. First, they have a longer lifespan than the average light bulb, needing to be replaced less often. They are also more efficient with energy, in turn costing you less on your electric bill. Put in dimmer switches if you can. These allow you to lower light usage, and help you control how much light is being put out, meaning lower electricity usage. Closing doors and turning off lights “Don’t let out all the bought air!” – Does anyone else remember this line from the movie Sweet Home Alabama? Or has anyone in their family ever said something similar? What does this even mean? Well basically, it means don’t let the cool (or hot) air you are literally paying for, escape out the door. If I heard this once, I’ve heard it a million times from both my husband and my father while growing up. And as much as it pains me to admit both of them are right, they are right. Closing the door and not letting it swing open while you run quickly into the garage or front yard for something, or leaving the fridge open as you stare into it telling yourself “You’re not hungry and don’t need a snack”, to turning off the lights when you walk out of a room, ALL save you money on your utility bills. By closing the doors in and out of the house, and in between grabbing things from the refrigerator while prepping for dinner, you are allowing the house (or fridge) to maintain its normal temperature by not letting the cool (or warm air) out. When you leave the door open, you are making the systems work harder and taking the fridge or house longer to adjust back to the set temperature, thus costing you more money because more energy is being spent. And lastly, turn off the lights when the room is not in use. Again, I am eating crow as I know my husband is reading this. This was a habit even as an adult that I have been working very hard at in trying to save energy and not waste electricity by leaving lights on in rooms after I leave them. Change is hard No one likes change, and making changes means being mindful in a fast-paced world. But by making conscious efforts, and putting forth the effort to make even a few of the suggested habit changes, you could end up saving yourself some wiggle room in your budget at the end of the year. I am not talking thousands of dollars at the end of the year – that would be cutting some of these luxuries out altogether. The savings may be small upfront or at the start of things, but if you consistently get better at them, they will eventually add up to larger numbers that mean savings in the end. Habits take time Maybe you don't want to try them all out at once, but rather challenge yourself each month by taking on a new habit to change. See what works for you, your family, and your lifestyle. If leaving the coffee pot plugged in makes your mornings easier, you can skip that one. But I do suggest trying at least 1-2 of these suggestions out and seeing how putting them into practice for a few months can move the needle.

“Back-to-School Season” is upon us Does anyone remember the “Most Wonderful Time of Year” Staples commercial with the parent happily putting back-to-school supplies in the cart, while their kids miserably trail behind them, all while the “It’s the most wonderful time of year” Christmas song plays in the background? First off, great marketing campaign. Funny, and catchy, with most parents feeling like they could relate. However, with recent inflation costs, school supplies could possibly feel like a parent is spending just as much as they would on items for Christmas. So, in a world of increasing prices, how do you fight inflation costs, along with the back-to-school blues? Below we give our top tips to help you save at the register this Back-to-School Season Tip #1: Take Inventory – Before you even start browsing the aisles, or surfing the web for back-to-school items, make sure you are going through last year’s supplies. Are there folders that were not used? Notebooks with only a few pages used that can be ripped out? Binders that are still in good shape? How about glue, pencils, etc.? Have you gone through closets and dresser drawers? Are there items that still fit and are in nice condition that perhaps you don’t need as many pairs of pants or tops as you once thought you did? Finding out what you already have, could save you from buying repeated, unnecessary items. Tip #2: Make a list and outline a budget – Know what you need to shop for before you start back-to-school shopping. Also, knowing how much you are willing and wanting to spend overall is a good way to set yourself up for success by staying within budget and not overspending. Remember, as Rachel Cruze says, “a budget gives you the freedom to buy without guilt”. If you have your budget laid out, and you find an item you want to splurge on, you can do so without feeling like you are breaking the bank for no reason! Tip #3: Don’t “one-stop shop” – I know it may be easier to just go to one store and buy everything all at once, but you can find better deals if you shop around at several stores over time. Remember, big box stores that accommodate “one-stop shopping” are using target marketing to lure you to their stores right now, which may in the end not have the best deals. Some stores to consider looking at before going to the big box stores: The Family Dollar/Dollar Tree, TJ Maxx/Marshalls, or a local surplus store if you have one in your area. You can usually find back-to-school supplies at a lower cost at the dollar and surplus stores. And at TJ Maxx or Marshalls, you can find name-brand items, without the name-brand costs. Tip #4: Shop quality – I know we just said don’t buy with “name-brand costs”, but we have found over time, that the quality of materials, usually withstands longer periods of time. Which means you don’t have to replace them as often. Things that would fall into this tip include not only clothes, and footwear that get worn often, but your child’s backpack and lunch box that get carried on a daily basis. Not to mention that book bag and lunch box take on the beating of the locker/cubby, bus, and sometimes hallway floor. Having something that can withstand the constant, everyday wear-and-tear is worth the extra dollars in the long run. Tip #5: Shop your Tax-Free Holiday – Every state is different, so make sure you look up your specific state’s weekend and stipulations as some things may be excluded. However, if you go into this back-to-school shopping “holiday” with a plan (*cough cough, tip #2) you can score some real money-saving bargains. For more tips on how to best utilize your state’s tax-free holiday, and if your state does this, check out the article, State Tax-Free Weekends for 2022. Tip #6: Let your kids have an opinion – Getting your kids involved and getting them excited about things will not only help with the ease of actually going back to school, but they will see all the new things they are getting rather than thinking of the things they “didn’t get”. To help them with the overall experience, have a conversation with them before shopping. Discuss the items that are truly needed from your inventory process, ask them what is something they maybe “really want” this year for school, and talk through what it would mean to get that item. If it is an expensive item, they may not be able to get “x, y, and z other items” to offset the costs. In coaching, we call these “opportunity costs”. It helps kids start to learn about money habits, and budgeting in a simple way. And as Dave saves, more is “caught than taught”, so showing them these good money habits now, will help them later on in life. Tip #7: Delay the shopping if you can - As I said in Tip#1, take a look at what you have. Are there things that can be carried over from last year for their back-to-school items this year? Are the kiddos just as excited about their lunch box that is still in good condition you bought last school year (because you took tip #4 into consideration and got a quality item that lasted maybe?) and are fine with using it again? If so, why not save the dollars and reuse those items until you need one later on? Also, the longer you wait, the more time you are giving the stores to put these items on *sale*. That’s right. Eventually, the stores are going to want to start making room for their Fall/Winter and Holiday items and will start putting their back-to-school things on sale to clear the space and inventory for their new items of focus. This goes from clothes and shoes to backpacks and lunch boxes, to even some school supplies. *Bonus Tip – Start a Sinking Fund! * - This may not help you this year when it comes to back-to-school shopping, however, it can help prepare you for next year’s shopping. Not familiar with what a sinking fund is, refer to Whitaker-Myers Wealth Manager’s Website, in their blog section, there is an article explaining the basics of a sinking fund, and how to set one up to help you be proactive with your budgeting for known expenses throughout the year.

Inevitable Estate Planning Certainties We All Do Not Want To Hear: We all will pass away. We cannot take any assets, money, or belongings with us beyond the grave. Death most likely will come at a time we least expect. Someone else will get to enjoy most of our savings and remaining things. The One Thing We Can Control: We can decide (through a good estate plan) the people who can benefit from our savings and remaining things. How we can control this? I have listed out the six choices to choose from when estate planning and explained the reasoning behind each choice. First Choice: The Gift of Assets – Who Receives Them? An important part of building wealth through sacrifice and hard work is choosing a good successor. The decision can come down to your heirs; charity; or the government (through taxes). Through improper planning or dying without an estate plan, you can set up a situation in which you do not get to decide who those people or institutions will be. A good estate plan can ensure the people that benefit from your years of hard work are the people that you have selected. Second Choice: The Amount – How Much? Once you’ve answered the question of who receives your generosity, the next problem is how to distribute your assets to those people. If you have several children, likely, some of them are better equipped to handle wealth than others. Their age or their past choices may determine this. Some might have more genuine needs at particular times in their life. Drafting a good estate plan will tackle all these situations and handle them exactly as you see fit and desire. Third Choice: Timing – When? If you’ve chosen to give your wealth to your children, should you distribute it now, should you distribute it when they are a little older when they may need it the most, or when they are more responsible to handle an inflow of wealth? Good advice may be to start making those gifts while you are still alive so that you can enjoy your generosity and the effect it has on your loved ones. A good estate plan can handle all these situations exactly as you see fit and can set up distributions at certain points in the loved one’s life to fully take advantage of your ability to lessen a need they will have. Fourth Choice: Treasure – What? Do you have those specific treasures that you just know one person loves more than any other or that treasure that holds a memory with another person? Treasures like a wedding dress, a shotgun, a ring, or a baseball card, all need to go to that one person that truly will appreciate what it meant to you. A good estate plan will allow you to specifically give those things to the person or people that you want to. Fifth Choice: Tools and Techniques – How? You need help to guide you through this process to be able to decide on the first four questions and to begin drafting a proper estate plan. Remember, estate planning tools help you accomplish your objectives, but they are not the objective. A good estate lawyer can help you identify a strategy and map out a plan best suited to your personal goals. Sixth Choice: Talk – Hoovler Law Office can explain the Why, Who, How Much, When, What, and How of a good estate plan for you. The target of this step and pointing out the first five choices in estate planning is to get everyone to understand the need to complete a good estate plan. Everyone should be on the same page with no surprises; talk to an estate planning lawyer and take the easy steps to decide on choices one through five.

The Benefits of a Sinking Fund If you've ever been in a meeting with me, we have likely talked about sinking funds. Some may say I'm obsessed with sinking funds and they might be right! But that's because I think there is a lot of power in saving up for big expenses over time so that it isn't a surprise and shock to your budget all at once. When I talk about sinking funds and how many of them I have, a common question is "should my sinking fund be in a savings account, or should it be invested?" I will answer that question today in case you have wondered the same thing! Before we get started with that if you aren't sure what a sinking fund is, check out this article from our awesome Financial Coach, Lindsey Curry. What type of account should my sinking fund be in? This depends on what the goal of the money is and how long you have before you are going to need to use the money. If it is a short-term goal (less than 3-5 years), the best place for that money would likely be a savings account at your bank. I understand this means you will not be earning a lot on that money but the trade-off for that is the value will not fluctuate either. We know that the key to investing is time. That is why for retirement we always say "the sooner you can start saving, the better." Because time will be on your side. When your time horizon is a short window of time before you will need the money, you don't have time to let the market recover if you need the money while the market is in a downturn. Even though bank savings accounts don't pay much, I do recommend looking for a bank that is paying a higher interest rate. This usually means looking at some of the local banks or credit unions. Those types of banks typically pay better rates than some of the larger banks. Or maybe you would prefer one of the online banks that have a high-yield savings account. No matter what bank you decide to use, make sure you understand their rules for savings accounts. What is the minimum balance to open the account? What's the minimum you have to keep in there every month to avoid a fee? Will there be a monthly maintenance fee? It would be best to find a bank/account that does not charge a fee. For instance, the bank I use is a local bank and they pay higher interest rates but the minimum to avoid a fee is $100 in the savings account - so $100 is basically $0 in my mind. Meaning, that when the account gets to $100, I treat it as though we don't have money left in that specific sinking fund account. If you include my Emergency fund, I have 9 sinking funds that are in a savings account at the bank because the time horizon on them is short. To give you an idea of what I mean, here are a few examples of my sinking funds: vacation, pets, new vehicle/car repair, home repairs, and taxes. I have separate accounts for them (so that I don't have to keep a spreadsheet of what amount is for each goal) and then I have them nicknamed accordingly on my online banking so it is really quick and easy to know how much we have set aside for each expense/goal. Update 2/7/2023: We are in a really unique time where your Whitaker-Myers Wealth Managers Financial Advisor can help you with saving into the Schwab Money Market which has a current yield of 4.41% as of 2/6/2023. Be sure to reach out to your advisor to discuss this for your sinking fund money. When would it make sense to invest my sinking fund? If your sinking fund is for a goal that is in 5 years or more from now, then it might make sense for you to open a brokerage account and invest that money. If your goal is sooner than that but you are willing to ride the ups and downs of the market, it might be okay for you to invest it. Everyone's goals and tolerance to risk are different so if you have questions about your specific situation, please don't hesitate to reach out to one of the Financial Advisors here at Whitaker-Myers Wealth Managers. Saving for a down payment on a house, purchasing land, large home repairs, and purchasing vehicles are all examples of goals you might be saving for now but will not need to use the money for several years down the road. Living the Debt-Free Lifestyle I always say the "hard part" of living a debt-free life is making sure you plan ahead to pay cash for large expenses. I put "hard part" in quotes because that is certainly a lot better than having debt and payments that haunt you every month! If, like me, you have decided that debt is not a tool you would like to use then hopefully I have made you obsessed with sinking funds too!

Dave Ramsey has a rule at his office. The rule is simple: No gossip! If you’re caught gossiping once, it’s your free warning and pass, but get caught again, and you’re on the unemployment lines. Why does he create this rule? He knows humans; we tend to complain about processes, people, and programs! Humans can just let us down sometimes, right? Today my mind has gone to our friends who never let us down, gossip about us behind our back, and seem happy all the time: dogs! Isn’t it amazing how every time you come home from work, school, or just a trip to the grocery, your dog is waiting there, ready to give you a big hug by jumping on your leg? Our dogs give us unconditional love, a gift given to them by our Creator! Ok, I’m getting a little sappy here because my dog, Poco, passed away this morning. I went home to grab him around 10:30 am because we knew he wasn’t feeling himself, and by the time I got home, he had passed away, right by the side door, presumably, I’d like to think, waiting for me to come home and greet him! Ouch! The rest of the day, I worked through meetings, my mind not 100% present (sorry if I met with you yesterday!) and I was rethinking the weekly article I needed to pen. Whatever I was going to write about seemed distant and unimportant because it felt as if God was pushing me towards another message. Death is hard… it’s ultimately harder if you haven’t done the proper planning! In the grand scheme of things losing a dog is emotionally hard but not financially difficult. But losing a spouse, child, sibling, or parent can be and thus we should have our I’s dotted and T’s crossed in regards to ensuring we’ve done proper planning. Below are a couple of must-do’s you should ensure you’ve wrapped up today because tomorrow is just as guaranteed as the stock market returns. Term Life Insurance This is the first step to ensuring your death doesn’t throw your entire family unit into chaos if something happens to you. I’m always surprised by the stats discussing how many families don’t have life insurance. Some people probably don’t have life insurance because the payday lending life insurance agent quoted them whole life insurance. The person probably thought, “my life insurance shouldn’t cost as much as my house payment,” or if the whole life agent was an intelligent salesperson and offered a lower death benefit to keep the premium affordable, I could understand the thought process around, “why pay $30 a month for $50,000 worth of coverage, that will hardly bury me?” However, term life insurance does exist, it’s very inexpensive for large amounts of life insurance, and it usually only takes about thirty days to put in place. If you work for an employer that provides life insurance or your government pension provides lifetime income benefits to your spouse and children, that’s great, however, you should still supplement that with term life insurance. At some point, you should be self-insured. You should have saved enough money that if you were to pass away, your family would not have the financial burden of missing you but rather just the emotional burden. Your Financial Planner can help you determine at what point they think you’ll be self-insured to help come up with the correct term policy for you. Even when you become self-insured, you may still want to keep a little term insurance around because of the SWI factor. You’re probably wondering what the SWI factor is. Dave Ramsey still has life insurance today, even though he is self-insured 100X (my guess I have no inside information) because his wife Sharon wants it (SWI). You may decide to keep term life insurance even after your self insured because it’s cheap and it makes your spouse more comfortable having it. Will or Trust Same stat – so many people die intestate, which means without a will. Ramsey Solutions did an excellent article on what it means to die without a will which can be seen by clicking here. If you’re a client of Whitaker-Myers Wealth Managers, we have an attorney on staff to help guide you through the estate planning process, so there is even less of a reason not to have this wrapped up. The state will determine who receives your assets if you die without a will. These may or may not be the same individuals you would have picked but let’s consider your children, if you still have young children in the house. Don’t you want to ensure their caregiver is the person you’d wish to be raising them and not take the chance that your crazy in-laws may be their primary caretakers? What about if you’re a grandparent, don’t you want to ensure that some of your hard-earned estate, if you and your spouse were to pass away early, would not only go to your kids, but some would be put into a trust for the future benefit of your grandkids? What a way to bless them years and years after you have left this earth. Through our partnership with national estate planning firm EncorEstate Planning, we can help clients coordinate their estate plans in every state except North Carolina, ensuring that your financial plan is holistic in its approach. A lot of good being such a great planner would have been if you never touched on what if the unexpected happened. What gives me chills is how many people are the “perfect planners” and don’t button up their estate plans. Their children and beneficiaries are left with the last memory of them being a “poor planner,” when in reality they were anything but that, they just made one oversight. It’s time to have this conversation today! PODs / TODs This one is so easy! Do you have a bank account? Checking account? Savings Account? Money Market Account? Call the bank today and ask them to add a POD, which stands for payable on death, or TOD, which stands for transfer on death. This allows your bank account to avoid the entire estate planning process and pass right to whomever you add as the payable on death. Most banks will enable you to do this right online now. For example, my bank allowed me to go online and add my three kids as 1/3 beneficiaries to our checking account and savings account (emergency fund). Then I have a Schwab One Brokerage Account (Bridge Account in Dave Ramsey language), and I was also able to add a TOD on this for my three kids. Now, if something were to happen to my wife or I, those dollars would be available on day 1 (after my death) for my children. They wouldn’t go very long if they needed cash. The POD / TOD process can be added to car titles to ensure those pass smoothly along with many other assets. Call your bank today and get this done! Make a Password List When my dad passed away, I can’t tell you how easy this made things for us. Not only did we know how to log in to certain websites, but we knew which websites to even look for stuff at. We were even able to get things like some of his credit card points (my pops was not a Dave Ramsey guy but he still did a fantastic job over his life building wealth with my mom) because of this list. In today’s world, passwords may change over time, so perhaps you don’t update it every month, as that may be unrealistic, but maybe make a goal to try and correct that list once every year. One idea to make this very easy is to use a password management software, like we make all our employees use. This makes passwords after you’re gone even easier because you can give them one password to your password management software, and they’ll have access to every website to help consolidate and track down your assets. Write an “I Love You” Letter I can’t think of a more fantastic gift to have been given than a letter from someone I deeply care about after they pass. There are so many things we never say or don’t say enough. A letter is a perfect way to express yourself and give your family comfort, well after you are gone. Tell them how proud you are of them, tell them what they meant to you, tell them what you’d like them to do with some of the money and items they inherit from you, and tell your daughter ghosts still have shotguns, so her boyfriend better watch out. While nothing in the letter would be legally binding, it can help cure the emotional scars some folks will have when you’re gone, especially if that’s premature. Sometimes this might be an “I love You” gesture. I knew of one amazing man, who I respected very much, that sent his wife a rose every month, for a year after he died which was an, “I love you from heaven” from this sweet guy to his wife! Thank You Poco Hopefully, these are helpful reminders of what we should do today to ensure our tomorrow is prepared. I didn’t expect to have to deal with losing my little buddy today, and I’ll sure miss him for many years to come, but I hope that his passing will encourage you to wrap up some loose ends with your estate planning that you may be neglecting. And if you need any help with those items, please reach out to your Whitaker-Myers Wealth Managers Financial Planner.

As a Christian, Should I Incorporate Tithing into My Budget? What is Tithing? Let’s start with “what is tithing?” The word "tithe" comes from an Old English root meaning "one-tenth." The tithe was an offering of one's income to the Lord as an expression of thanks and dedication. The funds were used in the Old Testament as a means of taking care of the priests, the Levites, the stranger, the fatherless, and the widows (Numbers 14:28-29). Today, it is common for the church to use these funds to take care of their pastoral staff, programs at the church such as nursery and outreach programs, missions, and providing help to those that need it, both inside and outside the church. Should I Tithe and How Much? So, do I have to tithe as a Christian? The short answer is probably, which is likely not the definite answer you were looking for. Like anything, this is more of a heart issue than a letter of the Law. 2 Corinthians 9:6-7 (NIV) states, “Remember this: Whoever sows sparingly will also reap sparingly, and whoever sows generously will also reap generously. Each of you should give what you have decided in your heart to give, not reluctantly or under compulsion, for God loves a cheerful giver.” As the passage states, how much to give is what the Holy Spirit impresses on your heart to give. As mentioned before, Tithe means one-tenth in Old English. So, 10% is the typical amount. Where Does Your Tithe Go? We have already covered what your tithing is used for normally, but how do you know what your funds are actually being used for? Every church is different in terms of how to handle and distribute the funds. PLEASE, PLEASE, PLEASE make sure there are checks and balances at your church. Just because we are being led to give does not mean to give vicariously. If we are being negligent with our offerings, we give way to fraud and corruption within the body of Christ. There are multiple ways to gather more information when giving to prevent this. Make sure more than one person is handling the finances As an example, at my church we have a person that pays the bills and payroll, multiple people that count the donations, distribute them to different departments or deposit the funds and a treasurer that oversees the budget and expenses but does not personally engage in transactions in either field previously mentioned. Ask Questions Where does my money go to? Can I make sure this specifically goes to a field I want it to go to? If it is a generic giving, how are the funds used? Make sure to attend a budget meeting when your church has one This meeting should be annually and go over the expenses and budget report. It is the result of the previous year and what the next year’s proposal will be. If your church does not have one, maybe it is time to bring this up. We need to hold each other accountable. Personal Benefits to Tithing Although your motivation to give should not be “how will this benefit me”, you do get tax deductions if your church operates solely for religious and educational purposes. The donations you make to your church throughout the year can be deducted from your taxes only if you itemize your expenses on Schedule A when you file your personal tax return. To use Schedule A, your total itemized deductions must exceed the standard deduction for your filing status. If the standard deduction provides a greater tax benefit, your church donations won't offer any additional tax savings. However, you can deduct those donations in the next five tax years that you choose to itemize deductions. Summary Jesus Christ left this to his Disciples, “Therefore, go and make disciples of all nations, baptizing them in the name of the Father and of the Son and of the Holy Spirit, and teaching them to obey everything I have commanded you. And surely, I am with you always, to the very end of the age” (Matthew 28:19-20 NIV). Going, telling, baptizing, and teaching takes money—money God provides by giving you and me the talents and abilities to earn money to care for our families and His church. If you are a Dave Ramsey follower, you know that in Baby Step 4 you are to save 15% in retirement. If you add 10% tithe on top, your budget already has 25% allocated. Some people simply cannot afford that. 10% is not the hard law, but you should give what you can afford to give. Think of the widow that gave her last copper coins to God. “Jesus sat down opposite the place where the offerings were put and watched the crowd putting their money into the temple treasury. Many rich people threw in large amounts. But a poor widow came and put in two very small copper coins, worth only a few cents. Calling his disciples to him, Jesus said, “Truly I tell you; this poor widow has put more into the treasury than all the others. They all gave out of their wealth; but she, out of her poverty, put in everything—all she had to live on” (Mark 12:41-44).

Every year my family, including my siblings' families and my mom, take a week and head down to the beaches of South Carolina (Hilton Head, to be exact) and spend a week swimming, beaching, dining, exploring, and doing all the things that make a wonderful family vacation. One thing I enjoy is the relaxation of sitting in the pool, floating around, and reading a book I've wanted to get into but didn't hit the "must read" list during the year. This week, I went through a book titled, What The Happiest Retirees Know by Financial Advisor and author Wes Moss. Before you go out and buy this book, read to the end of this article for my summary of some of the most critical points and learn how you could receive a free copy from Whitaker-Myers Wealth Managers. Retirement is something most people aspire to do. Even those who love their work and have a passion for what they do would enjoy chasing other core pursuits at some point in their life. I get great satisfaction from helping teach people about investing, retirement, and creating a plan to blend all of those. However, there will be a day where I'll enjoy playing with grandkids, joining a pickleball team, traveling with my beautiful bride, volunteering with my church, or the myriad of other things that one's brain would go to when their career is over. Just as Dave Ramsey tells us, doesn't that mean we owe it to ourselves to learn the best practices of what successful and, more importantly, happy retirees know? This article and Wes's book will give you an excellent glimpse into some of the best practices of a happy retiree. Below are the top five things I learned from his article from the 2,000 retirees Wes Moss interviewed in this study. Live Within 2 Hours of at Least Half Your Children What I most enjoyed about this book is it looked at the financial and non-financial traits of those that quantify their retirement as enjoyable or happy. This was one trait that stuck out to me. The average happy retiree had 2.5 children and lived within 2 hours of at least half of them. Think about the rationale here. You live in Ohio, and your children (and just as essential grandchildren) live in Florida. Those first steps, the kindergarten graduation, the dinners on the weekend together, and on and on. These are irreplaceable memories, and while no single trait was a single determinate that you were or weren't going to be happy in retirement, this particular trait struck me. Retirees struggled with the thought of packing up their life and moving to be closer to their kids. They felt they'd intrude on their children's lives, but the exact opposite was true. In many cases, your children would welcome your retirement years being closer to them, to the extent it doesn't create unnecessary financial burdens on your retirement. As a result of this information, count your blessings if at least half your children live close and if they don't, perhaps count on the cost of creating a little less separation between your families. Have at least $500,000 in Liquid Retirement Savings I know what some of you say: "John-Mark, I don't need that much, or I need so much more than that." Yes, both statements can be accurate based on your unique situation, but on average, this amount of retirement assets provided the highest level of satisfaction. Interestingly, when Wes did his study, as your assets went higher than $500,000, there was a diminishing level of happiness happening, which means he didn't find having $750,000 or $1,000,000 makes someone any happier than the retiree that has $500,000. Consider why this could be the case if you have $500,000 in retirement assets that would, on average, generate about $2,000 in income each month without touching the principal. Again, this is an average because, as we all know, from 2022, the stock market also has negative years. $2,000 from your portfolio each month, maybe $2,000 from one spouse's Social Security and $1,000 from another spouse's Social Security, and you're staring down the barrel of $5,000 in monthly income. If you live the Dave Ramsey lifestyle and have no payments to anyone in the world, this can usually provide a baseline lifestyle that is pretty enjoyable. Of course, some people want and need more income, and those people would need to save more, but on average, the highest level of happiness in the study in terms of retirement assets was $500,000. Speaking of not having any payments in the world, as we live the Dave Ramsey lifestyle….. Have Paid Off Their Mortgage or Will Soon My favorite retirement line is that "it's a pretty basic equation; it's all about making your income (Social Security Retirement, investments, pension) equaling your expenses (living expenses, debt, taxes, etc.). The less expense you have, the less stress you put on the asset (income) side of the equation. Therefore, we should eliminate as many expenses as possible before retirement. You could eliminate lifestyle expenses such as your gym membership, vacation sinking fund, or something similar, but who wants to do that before retirement? Let's instead stop giving the bank our hard-earning money in retirement or as soon as possible. The mortgage is your single largest monthly expense, and removing it from your life should be a major priority and "must do" before retirement. If you're wondering about how to ensure you have your mortgage paid off before you retire, talk to your Financial Advisor at Whitaker-Myers Wealth Managers, who can run a rapid mortgage payoff calculation, telling you the exact amount of extra dollars you should allocate towards the mortgage each month to ensure it's paid off before you enter the green pastures of retirement. As Dave says, when you pay off the mortgage, the grass will feel different in the backyard! Have at least 3.6 Core Pursuits The Wall Street Journal did an article a few years ago that made the case that retirement is killing you. What!?!!?!? The reality is if you cut off all your social networks and remove any semblance of exercise and daily movement, then you probably are setting yourself up for a risky health situation. However, the happiest retirees had at least 3.6 core pursuits that they transitioned into when they retired. Wes explains these core pursuits as the "ings." Walking, biking, traveling, volunteering, and boating, they could also be things like starting a band, leatherwork, hunting, and animal adoption. The list is endless. However, the key is retirement should be called REFOCUS, not retirement. You're just starting a time in your life where the thing you spent the last 30 – 40 years doing and perfecting is over, and now you're getting to start over and refocus on a few other passions. The additional side benefit of having at least 3.6 core pursuits is they typically open up your social networks, and the last habit I'll share is ….. Have at least 3.6 Close Connections (AKA Friends) Every topic that Wes studied had, at some point, had a diminishing return. Just as I mentioned in regards to retirement assets, the happiest people had around $500,000. Have less than $500,000 or more than $500,000, you are more likely to be less happy. Having more or less than 3.6 core pursuits, you are likely to be less happy. However, close personal connections or friendships were the one data set that never saw diminishing returns. The more personal connections someone had, the more likely they were to be happy. Even those that are introverts still need people in their life to share life with. It's one reason churches are so focused in today's world on a small group outside of corporate worship. Living life with a group of close connections makes life better, and that includes retirement. If you struggle with creating close personal connections, one idea is to use your core pursuits to develop those connections. If I love to walk, find a local walking group. If I love to play tennis, find a local tennis club. Finding close personal connections with people that enjoy the same things you want will undoubtedly create relationships that are meaningful and impactful. We Are Missional In the book, Wes talks about his goal of helping at least 1 million people retire one year earlier. We want to join him on this mission, which is why we are willing to give you a free copy of this book if you're 50 or older, a client of Whitaker-Myers Wealth Managers (or would like to be) and think you'd benefit from hearing about the habits of a happy retiree. We want your retirement years to be your best, not stressful, tedious, or without meaning. Contact your Financial Advisor today to get your free copy.

Common Budget Set-up Questions As a financial coach, I hear some common questions when it comes to setting up a budget, even if someone has been budgeting for years. “I want to start budgeting but besides my monthly housing payment, I am not sure what else I should include. What other things should I include or where do I even start to create my budget items?” “I currently budget for housing, groceries, gas, and utilities. What else do I need to budget for?” “Yeah, I budget every month. I set aside a certain amount for the various items I know I spend on each month. Now, am I supposed to track how much I spend on them then?” So how do you know where to start if you are creating your budget on your own? If you aren’t working with a financial coach, the best place to start is a tool you probably aren’t utilizing properly. Your bank account. How can my bank account help me create my budget? This works best if you aren’t using cash only to pay for things. But every time you use your debit card or credit card (note we suggest and prefer using your debit card over a credit card), your bank account tracks that transaction and logs it for you in your bank statement. It also tracks any payments that you have auto withdrawn each month automatically (which you may or may not have forgotten about). When creating your budget, we suggest reviewing your current bank statement, and the month prior statement to get a full view of what expenses you have either auto withdrawn, written a check for, or charged to a card. This should give you a pretty good picture, but if you want to take it a step further, you can even pull two months prior and review that as well. We call this a “statement autopsy”. This means you are going line item by line item and categorizing them into potential budget line items. Examples not only include gas, groceries, housing, and utilities which are all pretty standard. But you will find spending tendencies you were unaware of or expenses you forgot you were being charged for monthly. Knowledge is power Now that you have a good idea of what you spend every month on things, put that data to work for you. Include all your monthly non-negotiable payments: housing, utilities, student loans, etc. Some of these items will be fixed numbers that don’t change from month to month, but items such as gas and groceries fluctuate monthly. Reviewing the previous months will give you a good idea of how much you are spending on average, and give you a good starting number to insert into your budget for that category item. Next, include any type of subscriptions, eating out, clothing purchases, outdoor expenses, entertainment items, or expenses that seem to be more lifestyle or “fun” things. Follow the same steps as above by adding these as line items to your budget and seeing on average every month how much you are spending in these areas to plan a budgeted amount to keep you accountable for your spending in the following weeks. Again, some of these items, such as subscriptions, may be set in monthly dollar amounts, but reviewing your statement may surprise you on how several of those subscriptions can add up, and quickly to a high dollar amount without you even realizing it. Or you may be getting charged for something monthly that you completely forgot about and no longer use/need. Perhaps the end number you are seeing on how much you spend on eating out monthly makes you want to toss cookies. These could be dollars going toward other items or savings that you didn’t even know about had you not done this exercise. How you set up your budget matters too Remember, it’s not just what you put into your budget, but also how you set it up that is going to make you successful. We always suggest creating a Zero-Based Budget. This means you are taking all of your monthly income (or income for that pay period) and assigning every dollar to a line item leaving you with “0” in the bottom line. This does not mean that you no longer have any money left in the bank or going to savings (because in the savings line, you are hopefully contributing here!), it just means that you have assigned every dollar in your income a “job” for the month. The dollars are either going to savings, housing, utilities, groceries, car payment, eating out, movie nights, etc., etc. Next, you need to TRACK YOUR EXPENSES. I can not stress this step enough. Yes, doing the homework (statement autopsy) and planning your budget column is important, but all that work means nothing if you are not seeing how much you are truly spending in these areas each month. You could be “putting aside” $800 a month towards groceries, but what if you are spending $1000? Or what if you are budgeting for certain amounts each month, but then go over five budgeted amounts (line items) by about $50. That’s $250 you are not accounting for coming out of your income, consistently. This in the end will affect your savings, or how much you can put towards debt. I always tell coaching clients, that there’s no reason to meal plan if you don’t meal prep, and cook the meal you are scheduled to make that night. You have to do all of it to be successful and see results (plan, prep, and then cook the meal). By setting up your budget to include a planned column, and a tracked expenses column, you can set up the third column to calculate if you are over or under your planned amount. This will allow you the ability to go into your budget and adjust amounts accordingly so you don’t go over your monthly income total. Budgets are not cookie cutter Not only is every person’s budget going to be different, but every month’s budget will also change. Just like every month in your life brings something new (birthdays, holidays, vacations, special events, etc.) your monthly budget will have new items added or taken out of it that you will need to adjust for these changes. The foundation of your budget will not change, but you will have fluctuation some months more so in other areas. Being diligent and aware of these upcoming expenses makes you more responsible when planning, which in turn makes you more successful to achieve your goals.

1 Timothy 6: 6-7: “But god liness with contentment is great gain. For we brought nothing into the world, and we can take nothing out of it.” Over the past 3 years, contentment has been a hard objective to obtain. If you listen to the news, they would have you believe the world is literally coming to an end. The media continually streams negativity with the constant reminder of the death toll associated with Covid-19, the war between Ukraine and Russia, record inflation, uncontrolled crime, unprecedented climate change, impending recession woes, and the list could continue indefinitely. The objective for Dave Ramsey’s “Real Estate Reality Check” live stream on 7/14/2022, was to inject the American people with some hope in a world immersed in constant negativity and fear. The “Reality Check” started with the facts: 2020 real estate values were up 29%, 2021 real estate values were up 18%, and now in 2022 real estate values are up 8%. Dave Ramsey and many economists remain optimistic for real estate values for 2023, predicting a 3-4% increase for the upcoming year. During the presentation, Dave Ramsey presented information that supported several decades of a steady 3-4% increase in real estate value. Yes, there were some years that exceeded these percentages, and others that did worse (2008), but on average, across the United States, there was always a steady incline. It is important to note that there are certain microeconomic pockets across the U.S.A. where the property values exceed the average yearly percentage increase due to desirable cost of living, favorable politics, and/or fewer Covid restrictions. Conversely, there are small microeconomic pockets throughout the U.S.A. where property values continually decline due to increases in crime and higher costs of living. This information was presented with the desire to paint an overall picture of the housing market facts during a time when the Fed is raising interest rates at a very quick pace. It also addressed that there is rising fear, in so many Americans, that the increased interest rates and inflation will lead to “another 2008.” The message continually injected into the presentation by Dave Ramsey was “We are not going to go through another real estate value decline that was seen 2008.” In history, there has never been positive correlation between increased interest rates leading to an overall decline in real estate values. A graph was presented from the 1970s when interest rates were 17% and still, the real estate values continued to steadily increase. 2008 vs. 2022 Dave Ramsey highlighted several key differences between the 2008 housing value crisis and recession opposed to the current situation facing America. 2008: New housing starts- 2.07 million 3.7 million homes for sale Almost 600,000 homes in foreclosure Less demand for houses due to fewer buyers 55 million gen X in mid 30s Now: New housing starts- 1.38 million Approximately 800,000 homes for sale Less than 100,000 homes in foreclosure Institutional Investors are buying over 25% of the homes in America (closer to 28%) Higher demand for houses due to more buyers 66 million millennials in their mid-30s 12 million more households than 2008 When comparing the information, speculation was offered that what we may see in the housing market is not necessarily a devalue in real estate but a price adjustment. This brings up 2 important terms to define: Value vs. Price. Value is what an appraisal will tell you a piece of real estate is worth. Price is what someone is willing to pay for that particular piece of real estate. With the white-hot housing market over the past 2-years, people have been paying tens of thousands of dollars above the value of a piece of real estate due to the high demand. To reiterate, in 2008 there were 3.7 million homes for sale on the market, now there is an estimated 800,000 homes for sale with millions more buyers wanting to get that dream house. Again, in 2008, more homes for sale, fewer buyers. Today, we have fewer homes on the current market but more buyers. Remaining optimistic for the near future of the real estate market, Dave Ramsey says that he expects the prices to start accurately reflecting the true value of the properties being sold. One possible reason for the price adjustment is the increase in interest rates. On 7/14/2022, when the presentation was given, the 30-year fixed mortgage interest rate was at 5.5%, and 15-year fixed mortgage interest rate was at 4.75%. Dave Ramsey also speculated that the weakened economy and possible pending recession also may bring prices paid for real estate closer to the true appraisal value of the property being purchased. All-in-all Dave Ramsey wants people to relax and not over think the current situation. He concluded the “Real Estate Reality Check” presentation with the following words of advice: If you are in a position to sell, then now is a good time to sell. If you are in a position to buy, then now is a good time to buy. George Kamell concluded with encouraging people to try JOMO (Joy of missing out) instead of basing decision off of FOMO (Fear of missing out). Reviewing Ramsey’s recommendations for buying a home: Debt free with a 3-6-month emergency fund Payments no more than 25% of income 15-year fixed mortgage 10-20% down payment No FHA or VA loans, as they normally have higher fees If you would want to watch the replay of the livestream or see the charts used, visit the Ramsey Solutions Replay Link Here If you would like to discuss how the real estate market may effect your individual situation, please contact one of our Financial Advisors or Financial Coaches today! In addition, if you would like to learn about how to invest in real estate, check out this article by our Chief Investment Officer, John-Mark Young on REITS by clicking here.

How the “little things” can impact your budget Are you really good at not going overboard on the big stuff, and making outrageous purchases when not needed? Or did you hunt around trying to find the cheapest rent and have to forgo on some of the other luxuries maybe another apartment complex was offering to save on the bottom line? What about your car? Are you driving a used car with low monthly payments? Or maybe you already have it paid off? If you can answer yes to any or all of these, that’s great. You are focusing on the big picture, and how big expensive items can alter your overall budget. Now answer me these questions, do you go out once or more a week for lunch and or dinner? Do you have daily coffee runs and purchase a coffee that could range from $3-$8 dollars? What about your impulse buys? Do you find yourself saying you “need” that shirt you saw online because you saw it was on sale? Or did you go down too many aisles at Target and now have a cart full of things you have no idea how they got there now that you are at the register? If you can answer yes to any or all of these, it’s time to take a pause and reevaluate your spending habits. Because maybe you are doing really good at the BIG things, but maybe you are doing REALLY BAD at the little things. And even though they are little, they are the things that could be impacting your budget the most without you even knowing it. Can the little things really be impacting you that much? 100% yes. If you truly start putting numbers to these small items, you can watch them gradually build upon each other over time. Because $5 here doesn’t seem like a lot, but when you over spend $5 here, and $5 there, eventually you will start to end up with things like $50 over your budget in just one week. And if this becomes an unnoticed habit, within a months’ time span, $5 here and $5 there, could potentially be upwards to $200 over budget, again, without you even knowing it. Without putting real numbers to things, I understand how it can all seem like speculation. So that is why we suggest start tracking your spending to see really how much you are spending on these “little things” here and there. Let’s do some loose math, with some hypothetical situations… You get a coffee to treat yourself every Friday. Not just a black, gas station coffee. A nice, fancy coffee with syrups and a fancy name coffee that on average costs you $5.00. Then you go out and grab fast food once a week for lunch for your “cheat day”. On average this could range you from $7-13 depending on what you get. Let’s split the difference and say $10.00. So, in a week’s time span, those two items could be costing your roughly $15.00. On average there’s 4 weeks in a month, meaning you’ve now spent $60 in those “quick treats” for the month. You do that every month for the whole year, and you are looking at $720 in just coffee and lunch once a week. Depending on what you drive or where you live, that could easily be a monthly car payment, or half of a monthly mortgage payment. Not all “little things” add up to be bad things…. sometimes they can be good things Ever head the saying “every little bit helps”? Well that applies to right here. The inverse to spending $5-15 weekly on frivolous things, and saving that money weekly can increase your budget over time. For example, I was talking to a co-worker a few weeks ago, and she mentioned how she is coming to the end of her Invisalign treatment. This was an $83 amount monthly cost. She and her husband are trying to pay off their mortgage and decided to throw that $83 a month onto the monthly mortgage payment. She said, “it’s not like we are accounting for it in our monthly budget to go to food, gas, or other expenses. And it’s not like we feel like we are missing out on something each month by not having it in our budget, so why not?!” Now, I know upfront, $83 doesn’t seem like a huge deal (I’m not saying it’s not something to forget about either), but if you add up the $83 over a year’s time span, that equals out to be $996. Basically $1,000 extra for the year they are now able to put towards their mortgage by not even having to change their lifestyle or budget. It’s all about Opportunity Costs I talk about this a lot in my coaching meetings. Asking yourself, do I want to spend, or put my money towards this item, or do I put it towards this expense or savings? You have to weigh the pros and cons for each expense to what your end goal is. If you’re on Baby Step 2 – your end goal is getting out of debt so that weekly $5 coffee may not feel worth it when it comes time to pay the bills. As a previous supervisor once told me, “You can have one cookie now, or two cookies later”. It’s all how you look at things and how your want to prioritize your outcomes. Being aware is being responsible I’m not saying you can’t treat yourself once in a while, and have the expensive coffee or grab a lunch out, because we all need to live a little and enjoy life. But just be aware of how easily these items can stack up to decrease your cash if you are not being diligent with keeping track. By being aware, you can make smarter impulse purchases.

As a public-school teacher in the great state of Texas, you are aware of the TRS (Teachers’ Retirement System) of Texas. What may not be well know, without research, is the intricacies in terms of planning for retirement. This article will give insight as to what to expect when you reach retirement. In the words of Alice Cooper, “School’s out forever!” The first thing we will look at is the contribution rate per paycheck. The current rate at 7.7% of an individual’s paycheck goes directly to the TRS. So, if your salary is at $55k a year, $4,235 goes to the TRS. If you are a Dave Ramsey follower, you are already half way to your “Baby Step Four” of a 15% towards retirement. How much will you receive as a pension in retirement? Depending on your age and how many years of service, will provide you with an estimate. All of the below calculations are based on a retirement age of 60. This chart looks at the projections based on the a 30 year old. Right now, the average salary for a public-school teacher is $55,000 per year. Therefore, if you are 30 years old and you plan on working 30 years, your pension would be approx. $70,380 per year in retirement. But what if you only work 25 years. Based on starting age of 30, your pension will be $51,750 annually. The pension is calculated by “years of service” x “2.3%” x “Average 5 year salary before retirement.” This chart examines the numbers from the viewpoint of a 40 year old that would retire at age 60. So if you are a 40 year old and are planning on working 30 years in the TRS, you will work 20 more years. The column 25 years of service, assumes you retire at age 60, already had 5 years of service and thus would end with 25 years of service. The column 20 years of service looks at a 40 year with no previous years of service and working until age 60. The column 15 years of service, looks at a teacher with no years of service and only planning working 15 years, until age 60. Notice that 5 years difference in service equals around $9k difference in pension. This chart is the viewpoint of a 50 year old. Same assumptions as above. The age 60 chart is a little different. Because we are looking at age 60 as the retirement year, all of the “Years of Service” is past tensed. That is why the average salary are all the same. Remember, the TRS takes into account the past 5 years salaries and averages them out. So if you make $55k now, you probably averaged $52k in the last 5 years. An important factor is Social Security. According to TRS of Texas, each school district determines whether or not their employees will get social security on top of their pension. So your cash inflow at retirement could be a lot more depending on if this benefit applies to you. Please contact your school district if you are unsure if you have this benefit or not. A benefit that gets overlooked is healthcare after retirement. Your age will determine what your monthly premiums look like and you must have achieved at least 10 years of service. As of today (2022), if you are under age 65, your premium will be $200 a month, or $2,400 annually. If you are over age 65, your premium will be $135 a month, or $1,620 annually. To give you an idea, private health insurance costs almost $9,000 annually (on average). Medicare groups A, B, And J costs, on average, $3,600 a year. Talk about a huge cost savings!

Starting my career in 2007 had its many blessings and challenges. I remember as we headed in the Great Financial Recession (“GFC”), I would be sitting in meetings with the experienced Financial Advisor I was teamed up with, and watching him handle a lot of hard conversations. Two things became clear to me throughout those hard first years: (1) My life verse as a Financial Advisor should be (Matthew 6:34) Therefore don’t be anxious about tomorrow, for tomorrow will be anxious for itself. Sufficient for the day is its own trouble” and (2) a good Financial Advisor (as was my experienced Financial Advisor at the time) will find opportunities during bad stock market events. One thing, that you should be considering today, if you have any non-retirement investments is a strategy called Tax Loss Harvesting. What Is Tax Loss Harvesting? Tax loss harvesting is the idea that within a portfolio you have some assets that have traded at a gain since their initial investments and some that have traded at a loss (hopefully not many). If you haven’t had the money invested very long and you run into a bear market, then you’re more than likely going to be dealing with many of your funds that are trading at a loss, because they just haven’t had the time to accumulate any gains. To tax loss harvest an account, you would sell the funds at a loss and realize those losses against my income (up to the $3,000 annual limit) or against any other gains I have realized in my portfolio (unlimited). You also have an unlimited carry forward on capital losses that are realized, meaning if I sold investments that had $6,000 worth of losses and no gains to report in a year, I could realize $3,000 in losses in this year and $3,000 in losses in the following tax year. According to Whitaker-Myers Tax Advisors CPA Kage Rush, “Tax Loss Harvesting is an optimal strategy during periods of market declines and can reduce your tax liability or increase your refund, while keeping your money still invested for the eventual market recovery. With a firm like Whitaker-Myers, where we can incorporate tax planning, financial planning and investment management, these types of opportunities can be uncovered and executed.” Won’t I Miss the Eventual Stock Market Recovery? Warren Buffet said it best, “Buy low and sell high”. Data suggests that most investors, “buy high and sell low”. Ouch! When we describe a scenario like the one above, where an investor sells their investment to realize a loss and generate tax benefits for themselves, doesn’t that mean that I, the investor, miss the eventual recovery? The answer to that question (at least within Whitaker-Myers) is NO! The reason being is when an investment is sold to create the tax loss, we then simultaneously buy a similar type of investment, to ensure the portfolio is still optimally built around the risk tolerance of the client and to avoid the most common investor mistake: Buy high, sell low. Effectively, what you’re doing is selling low, to create the tax benefit, while also buying low, to ensure you don’t miss the eventual bounce. Wash-Sale Rule One thing that needs to be understood and planned around is the IRS Rule around wash-sales. The IRS doesn’t want you selling an investment and then buying a “substantially identical” stock or security within thirty days. If your transaction is deemed by the IRS to be a wash-sale then the losses could be made null and void (in terms of offsetting income or gains) and if severe enough the IRS could restrict trading and/or place fines on your account. This is why the tax loss harvesting should be done with the help of your Financial Planner. Client Example To help your understanding of how tax loss harvesting works, let’s use a hypothetical client example: Suzie Jones starts investing with her Financial Advisor on 1/1/2022 and we can see from this chart here, that the S&P 500 is now down 21% YTD (7/14/2022). That means if she invested $100,000, her current balance would be approx. $79,000 (she has a 21,000 unrealized loss). Let’s examine how Suzie would realize these losses while still staying invested Suzie sells her S&P 500 fund to realize the loss Suzie with her Financial Advisor simultaneously buys another security that doesn’t trigger wash sale rules. Suzie has another investment that has a short-term gain of $6,000 which is offset by this sale, meaning she no longer has to pay tax on this gain, thereby saving her income taxes on the gain. This leaves Suzie with a net loss of $15,000. She is only able to realize $3,000 per year against her income with unlimited carry forward. Suzie should be able to reduce her income by $3,000 in 2022, 2023, 2024, 2025 and 2026. If Suzie were in the 22% Federal Tax Bracket the tax loss harvesting has saved $660 in taxes each year and $1,100 against her short-term gain mentioned above, providing a total tax savings of $4,400. When the market recovers and Suzie’s account is net positive again she would still be receiving tax benefits from when the market fell – win, win, win! Talk to your Financial Planner and Tax ELP Every situation is unique and the information provided in this article is for educational purposes only, however if you have a Schwab One Brokerage (Dave Ramsey calls these Bridge Accounts) than it is entirely possible this strategy is worth looking into. If you’re in Baby Step 7 and you haven’t set up your brokerage account yet, to start paying your house payment to yourself, now may be the perfect time to do so, allowing you to participate in this strategy in the future. Please contact our Tax Endorsed Local Provider on staff by clicking here or your Financial Planner by clicking here.