When starting a career as a young adult, it can often be challenging to understand the best ways to use your money. It can be overwhelming at times because the decisions you make now can significantly impact your life down the road. Although that might sound scary, following the proven steps detailed in this article will help set you on a path to financial success for years to come.   Where Do I Start? The best place to start is to build out a budget . This will show you what expenses you currently have and how much money you have in excess you can begin to put to work for you. Once your budget is built, working through Dave Ramsey’s Baby Steps  is the best way to start your financial journey. A more in-depth guide to the Baby Steps can be found here , but at a glance, they are as follows: 1.     Save $1,000 for a starter emergency fund 2.     Pay off all debt (excluding a house) using the debt snowball 3.     Save 3-6 months worth of expenses in a fully funded emergency fund 4.     Save 15% of your income towards retirement 5.     Save for your children’s college fund 6.     Pay off your home early 7.     Build wealth and give   Where Do I Put My Emergency Fund? There are many great options for places to keep an emergency fund , such as savings accounts, money market accounts, and more. Most people want their money to do some work for them, even if it is just their emergency fund, so I believe the best option would be a money market fund, which typically has the highest returns of any of the safe options without having your money locked away. From a money market fund, there generally is a waiting period of a few days to access this money, so I also recommend keeping some instantly accessible money, such as cash, on hand for emergencies that cannot wait.   How Do I Save 15% For Retirement? Once your debt is paid off and your baby step 3 emergency fund is established, that’s when the fun begins. First, take a look at your employer’s retirement options. A 401(k) is the most common option, but there are more accounts available, such as 403(b)s, pensions, Sep IRAs, and more, all with different rules associated with them. It is important for all plans to see how much your employer will match and if you are required to contribute to this plan. If there is a match, you should contribute enough to get that match to get the free money from your employer. Anything over the match or the required contribution amount should be contributed to a Roth IRA to get the tax-free growth that a Roth IRA offers. If that still doesn’t get you to the 15%,  then a few options exist, including contributing more to your employer-sponsored plan or a brokerage account.   Following these steps will put you on the right path toward financial freedom, and the earlier you can get started, the better. If you are ready to begin this process and would like some guidance or have any more specific questions, one of our many financial advisors on the Whitaker-Myers Wealth Managers  team would be happy to help!

Introduction Are you a homeowner? Did you install any new systems in your home during the past year (such as a water heater, skylight, a biomass system, new door, etc.)? Do you need to do this in the future? If the answer is yes to either of these questions, you may be able to take a tax credit for up to 30% of your expenses: here’s how.   What is the Residential Clean Energy Tax Credit?  The Residential Clean Energy Tax Credit  is a federal incentive designed to encourage homeowners to invest in energy-efficient improvements. By making these upgrades, not only do you contribute to a greener environment, but you also benefit from significant tax savings. The credit covers 30% of the cost of qualifying energy-efficient systems installed in your home, essentially a “30% off” coupon from Uncle Sam every year you install any energy-efficient system!   Who Can Claim the Credit?  To be eligible for the credit, you must be a homeowner who has installed qualifying energy-efficient systems in your primary residence. The home must be in the United States and used as your main home for most of the year. Unfortunately, landlords and property owners who do not live in the house cannot claim this credit.   How Much Can You Claim?  The credit allows you to claim 30% of the total cost of qualifying energy-efficient improvements, with certain caps. For example, you can claim up to $1,200 per year for energy-efficient property costs and certain home improvements, with specific limits for items like exterior doors ($250 per door, up to $500 total), windows and skylights ($600), and home energy audits ($150). For qualified heat pumps, water heaters, biomass stoves, or biomass boilers, the cap is higher at $2,000 per year. Taxpayers claimed more than $7 billion in credits throughout 2024!   How do I Claim it?  Mention it to your tax preparer - they will file Form 5695  with your 1040 tax return to reduce your tax liability!   Conclusion Taking advantage of the Residential Clean Energy Tax Credit is a smart way to save money while making necessary home improvements. As you prepare your taxes this season, consider whether any recent home improvements might qualify for this valuable credit by asking your accountant if you would qualify. If you are thinking about making home improvements this coming year, be sure to reach out to your accountant before starting to see how planning to do so could qualify. Or what additional items you would need to do to be eligible for this benefit.   For more ways to save money, reduce tax liability, and specific financial advice tailored to your situation, visit the Whitaker Myers Wealth Management  website and book a meeting with a financial advisor today! We also have a tax professional on hand to help answer questions such as these and help you save during tax season.

In previous posts, we’ve discussed how when we look at comparing returns, it is important to make sure that we compare like to like. For example, when I look at my portfolio returns against the S&P 500 returns, both must have similar asset classes  and composition. If not, then we’re comparing apples to broccoli. In our world, we calculate this similarity or measurement of fit as the coefficient of determination, denoted as R² (pronounced "r squared"). This metric is a statistical measure that quantifies the goodness of fit of a statistical model in predicting an outcome. Essentially, telling us whether the benchmark is a good comparison or not. This metric gives our team the data we need to ensure we’re measuring apples to apples and the broccoli is being measured against other broccoli.   How do we calculate it? Calculating R² can be done in several ways, and all require in-depth calculations that I wouldn’t recommend by hand. In most cases, this metric is already calculated within the software we use. Morningstar, Charles Schwab, and Fidelity all have this and other key metrics automatically calculated. However, more complicated methods include linear regression, calculating with built-in formulas in Excel/spreadsheets, or the most complex, which all require large data sets to calculate manually.   How do we interpret it? Interpreting R² involves understanding its implications as an effect size and its limitations. An R² of 0.71, for instance, implies that 71% of the variation in the dependent variable is explained by the independent variable, leaving 29% unexplained. Our internal guidelines are that R² values of 70% or greater are a good representation and fit for the measurement. However, it is important that once we define a good fit, we need to recognize that R² doesn't reveal the direction of the relationship or the presence of confounding variables. Therefore, as I say, with every metric we discuss, never make a decision based on one metric. The holistic picture must come together in order to make an informed decision.   In your portfolio At Whitaker-Myers Wealth Managers , we use various tools and resources to support our clients. As a client, you have access to a long list of experts who work together to provide the best experience, research, and outcomes for all your financial planning needs.  One of these teams, our internal research team, conducts in-depth analyses of our portfolios to stay within the parameters that we’ve defined for success.   If you’d like to meet with any of our team members, don’t hesitate to connect with your financial advisor. If you don’t have an advisor, connect with one of ours today ! Our financial planning and coaching teams have continued to grow, and if you’re looking for an in-depth financial plan or the best advice to get out of debt, connect with our coaching team and planning teams.

Managing the sequence of return risk in your retirement planning process I am not a gambler.  But I have seen it close enough to understand how and why so many people struggle with gambling addictions.  Several years ago, my wife and I joined a few other couples from our church for a two-night stay during the “cheap week” at The Greenbrier Resort  in White Sulpher Springs, WV.  Rooms that were typically hundreds of dollars per night were available for the cost of a stay at a Hampton Inn for just one special promotional week to keep the summertime resort filled in the winter months.  Since nearly all of the outdoor resort activities were offline during February, we had to find some indoor entertainment.  The choices available were to go to a movie in the nearby town or visit the new hotel-casino recently added.  We all agreed that if we went to the hotel-casino, we could all put in $20 (about the cost of movie tickets and snacks) and watch and cheer for one of us to play the roulette table.  For the non-gamblers, the roulette table is the black and red spinning circle.  You can bet chips on the spinner hitting a certain number (lower odds, but higher payoff), or you can simply bet on the color (red or black).  Our game was to see how long our collective group funds would last by simply playing a color.  The goal of our little experiment wasn’t to win a bunch of money; instead, we hoped our “movie-ticket-pot-of-cash” would last for a few hours of entertainment. When it was gone, it was gone, and we were committed not to adding anything more.  Long story short, our money DID last as long as we hoped it would, even though there were many ups and downs throughout the night.  As a non-gambler, I realized that the trick to stretching our funds out for the night was that if we lost early on, we had to double our bet and win to break even on the next play.  If we lost two in a row, we had to double again.  If we hit a long streak of losses, we would be depleted quickly and wish we had opted for the movies!   Und erstanding The Game I think our experience at the roulette table illustrates an important concept in retirement planning known as sequence of return risk, the risk associated with unfavorable sequencing of returns in our retirement portfolios.  Because of the time value of money, unfavorable returns at the early stages of retirement  sting much more than unfavorable returns experienced later in retirement.  For example, If the investor loses 40% in 1 year, to get back to even next year, they need to make 67% If the investor loses 50%, they need 100% 60%, 150% to get back to baseline So much of finance is behavioral.  When we are in the wealth accumulation phase, we work hard and save.  When we are in the wealth decumulation phase, we spend and give.  But what are the right behaviors for the transition period between wealth accumulation and decumulation?  How should we plan for those final years before retirement to manage a successful transition?   Understanding The Stakes The average returns over the life of a retirement portfolio are important.  But, the most important factor is the actual impact of the order of positive and negative returns in the last few years leading up to retirement.  In the financial planning world, this risk is known as sequencing risk, the Red Zone for retirement income planning.  The last 10 years before retirement represent this red zone for portfolio risk.    According to a research paper  compiled by Griffith University authored by Brett Doran, Michael Doran, and Adam Walk, the adverse return to a portfolio during those last years has an enormous potential for negatively impacting a portfolio.  The research study evaluated the effect on a hypothetical retirement portfolio value (accumulated over various saving periods) to a single shock of a  -21.6% return at the retirement date.  The findings were astonishing!  According to Dr. Walk’s research, the result was that in evaluating the same 40-year accumulation period (working years before retirement), subjecting the portfolio to a single negative return of -21.6%  halfway through one’s working life/savings period (20 years into the total 40-year accumulation period) the -21.6% shock reduces the portfolio value by 16%.  But, the same one-off shock sequenced later…at the end of the 40 years of saving, reduced terminal wealth by 24%.  What does this show us about sequencing?   Years into Accumulation Single Negative Shock Impact on Terminal Wealth 5 (Base Year) -21.6% Baseline 10 -21.6% -6.8% 15 -21.6% -12.2% 20 -21.6% -16.0% 25 -21.6% -19.1% 30 -21.6% -21.5% 35 -21.6% -23.4% 40 -21.6% -24.8%   Why does this matter?  As Dave Ramsey  says, the ultimate goal of building wealth is to be able to one day “Live and Give like no one else!”  In other words, the BIG IDEA underlying an evaluation of retirement red zone risk (sequencing return risk) is simple: A secure  and fulfilling  retirement means being able to have confidence that your money won’t run out and that you can live and give generously without succumbing to fears of the unknowns of the stock market.   The tested probability of a retirement portfolio meeting income needs at age 85 showed that: Shock 15 years into retirement resulted in a 33.5% chance of portfolio ruin Shock at retirement resulted in a 50.6% chance of portfolio ruin   Increasing Your Odds So, how should investors think about managing their own sequence of return risk in their retirement asset portfolio?  Investors should consult with a financial advisor regarding potential solutions for managing the sequence of return risk during the Retirement Red Zone . Here are a few potential solutions to consider: Lowering the allocation to equities during the time-period Changing the allocation to equities based on the prices of equities Changing the allocation to equities based on whether plan funding goals have been met Further diversifying portfolios by adding asset classes  (like real estate or private credit), reducing the standard deviation of the portfolio Retiree must be able to tolerate variability of income Income annuities Buffer assets Cash life insurance reverse mortgages Provide Downside Protection Use Derivatives such as Put Options to limit losses Deferred annuity with withdrawal benefit rider Spend conservatively: Lower withdrawal rate. (For more on the safe withdrawal rate, see the Journal of Financial Planning article on   William Bengen’s “Safemax” Portfolio Withdrawal Rate   Don’t gamble with your retirement!  Whether you are entering the Red Zone or just beginning to build your retirement portfolio, you need to find a trusted Financial Advisor   who can help you plan the work and who will then help keep you committed to working that plan together.    At Whitaker-Myers Wealth Managers , our team can assist clients through various aspects of financial management, retirement income planning, and tax advice.  If you are interested in speaking with a financial advisor, schedule a conversation  today.

My wife and I have been following Dave Ramsey and Ramsey Solutions  for 30 years. We married at the age of 20 and found ourselves in a challenging financial situation. Fortunately, we discovered Dave Ramsey on a cassette tape while visiting a bookstore in Indianapolis. We listened to his advice and were captivated; it changed our lives forever. This journey not only transformed our finances and marriage but also redirected my professional career.   Today, I work as a Financial Advisor  and a Ramsey Master Financial Coach for Whitaker-Myers Wealth Managers.  Over the past 15 years, I have had the privilege of helping hundreds of clients with their money management.   Who Should Have a Good Monthly Budget? Many of us possess good incomes, yet we struggle to manage our resources effectively. So, who needs a budget? I believe everyone can benefit from developing solid budgeting skills. For those in Baby Steps 1, 2, and 3 , a solid budget is essential. However, even those in Baby Steps 4, 5, and 6 should maintain a reasonable budget. A budget can be used by ANYONE to help them understand where and how their money is being spent each month.   What is a Budget? A budget is a financial plan for your monthly cash flow. It serves as a roadmap for effective money management, guiding us to plan our finances "on paper, on purpose" before the month begins. A budget is not merely a spending tracker; it allows us to dictate where our money goes, putting us in charge of our money decisions.   Everyone will need to live on a budget at some point in their lives. Whether you are trying to get out of debt or preparing for retirement, understanding how to create a budget, work collaboratively, and live on a fixed income is vital. It is also crucial to know and understand that budgets can change monthly based on what you have going on, and becoming flexible in managing where and how the money distribution is going each month comes with practice and utilizing the budget consistently.   A monthly budget is especially important when planning for retirement . Your financial advisor will likely ask, "What is your monthly budget?" or, put another way, "What are your needs in retirement?" This information is crucial for determining your retirement portfolio requirements and designing your investment strategy.   Would You Like to Create an Effective Budget? Building a budget and helping people understand how to utilize a budget as a tool in your financial journey is a passion of mine. Let's develop a budget strategy tailored to you and your circumstances. Use this LINK  to schedule an introductory meeting, and let’s get started today.

Being in the United States Military has some perks. One of those is Combat Pay. If you are earning or have ever earned money while in a combat zone overseas, you will have received combat pay, otherwise known as Tax-exempt pay. Tax-exempt pay is a bit of a misnomer, however. This is because tax-exempt pay is not taxed at a federal income tax level but is subject to social security and Medicare taxes.  These amounts are 6.2% for Social Security and 1.45% for Medicare, respectively.  This is something to remember if you will earn this money in the future.  Ensure that you are keeping a record of any paystubs received while earning this unique pay.   It is highly recommended to keep physical or digital records of your tax-exempt earnings.  This is especially true if you defer that income towards your government Thrift Savings Plan, aka TSP.  Even though you are not taxed on combat pay funds, you still may have the diligence to save for yourself in retirement by deferring these funds earned in a combat zone. This happens through your TSP account; the contributions can be seen on your combat pay stub for exact numbers.  Keep these.   Contributions to TSP from Combat Pay - Regular or Roth? So, we have combat pay in hand and want to contribute to our TSP—maybe all of it, perhaps some of it. So, what should we do with it?   Traditional funds vs Roth funds .  Many have heard that Roth  is better, but why?  And does it make sense for everybody?  First, let's start with the TSP annual limit.  Like a 401(k), all Roth or Traditional contributions cannot total more than $23,000 in the year 2024 (subject to change in the future - likely to go up), or $30,500 if 50 and over.   For those without combat pay, a Roth makes sense for those individuals in low tax brackets because you contribute to a Roth with “after-tax” dollars.  This means the government withholds a certain percentage of your regular pay that you choose, and they pay you your net income. From the net income, you would contribute an amount that you deem appropriate to the Roth.  Because lower earners are taxed at more favorable rates, the money that will be contributed to the Roth portion of your TSP will be taxed at that lower rate.  This gives a larger percentage of your money the best chance to grow in the future.   A traditional TSP contribution may make a lot of sense for non-combat pay earners who earn quite a bit, putting them in higher tax brackets. This means they can defer their potentially high tax percentage, like a 28 or 32% tax, to a later time when their income isn’t high, like retirement. It never makes sense for combat pay to go into traditional TSP accounts.   It makes the most sense to contribute combat pay to your Roth TSP.  This is because regular non-combat pay Roth TSP contributions generally have federal taxes taken out first, and then contributed with the net amount. At the same time, combat pay has never had federal taxes taken out. This means you are getting tax-free income AND tax-free growth in this account.   One significant aspect of these tax-exempt combat funds is that they do not count toward the contribution limit. So, if you wanted all your combat pay in a given year to go toward retirement, you could make that happen.  For example, let’s say you have a 6-month deployment to a combat zone. During those 6 months, you earn $40,000. However, the other 6 months you worked while back home off-base, you earned $70,000. This means you could contribute all $40,000 of tax-exempt combat pay to your TSP in this situation and still contribute to a separate 401(k) up to $23,000 with your other $70,000 of regular earned income.   Rolling TSP Funds Over TSP can locate combat pay/ Tax-exempt funds.  Typically, you would want to call TSP, especially with a financial representative like those at Whitaker Myers, to ask if they have a record of your tax-exempt funds.  It’s important to realize that the tax-exempt combat pay, once contributed to your TSP, becomes part of the overall balance to which the tax-exempt pay was contributed, whether traditional IRA or Roth IRA rules.   When making a tax-free rollover to a traditional or Roth IRA held with your financial advisor, make sure your financial advisor   is aware of any combat pay before having this call so that they can ensure there is a record being kept of all balances and all contributions made from the income tax-exempt combat source.   You and your financial advisor can call 1-877-968-3778 to speak with a TSP representative to see your current balances and to ensure any combat funds received in the future that are designated for TSP will go to Roth.    Our team can help you identify balances, contribution percentages, and anything else you may have questions about.  Your advisor and TSP can also help you upon service and/or retirement separation.   If you have served, we thank you for your service. And if you have questions about your combat pay, feel free to reach out to one of our financial advisors  to schedule an appointment to discuss today!

Let’s start with a working definition of tax loss harvesting. Investopedia defines it as the timely selling of securities at a loss to offset the amount of capital gains owed from selling profitable assets.           The simple answer to our proposed question is this: You can reduce your tax bill.   Being cognizant of the potential capital gains from your taxable brokerage account can positively impact you. It forces you to pay more attention to your account's performance, regardless of whether that is good or bad. Being proactive with your portfolio can be a significant advantage rather than taking a set-it-and-forget-it approach. Another important fundamental fact in our capital gains discussion is the 2025 capital gains rates listed in the table below.     Tax rate Single Married filing jointly Married filing separately Head of household 0% $0 to $48,350 $0 to $96,700 $0 to $48,350 $0 to $64,750 15% $48,351 to $533,400 $96,701 to $600,050 $48,350 to $300,000 $64,751 to $566,700 20% $533,401 or more $600,051 or more $300,001 or more $566,701 or more   Simplest way to avoid paying capital gains As you can see, not everyone, including most retirees, has to pay capital gains tax . Some may realize gains in the 0% capital gains bracket. According to the Motely Fool, the average retirement income is $75,000. Many married Americans with two incomes earn around $100,000. They assume they will have to pay capital gains on their winning stock if they sell it, when in reality, they may not need to based on their income level.   Remember, the standard deduction reduces your income before determining your capital gains rate. With the standard deduction for a married couple being $30,000 this year, a couple could have a gross income, before any deductions, of $126,700 and still be in the 0$ capital gains bracket. Keep in mind that realizing capital gains may increase your taxable income, which could bump you into the next capital gains tax rate.   For Example Let’s say you bought Nvidia at a good time and had a long-term capital gain (stock owned for at least 12 months) of $10,000 in the stock. If your gross income is $121,700, only realizing a $5,000 gain this year would make sense. This way, you stay in the 0% capital gains bracket. If you wait until the following year to sell the rest of your gain, it is possible not to pay any taxes while realizing all of your gain on your stock.   This strategy should work well if you make sales in December and January because the stock's price is less likely to swing massively from one month to the next. But suppose the first sale is in the first quarter of the year. In that case, the strategy may be less effective because the stock has the potential to move significantly over the year before deferring the second sale of the following calendar year.   This same mindset and strategy of spreading gains out over two calendar years can also apply for investors on the other end of the spectrum: those making around $600,000 would want to avoid the 20% capital gains bracket, if possible.   Nuts and bolts of navigating capital gains Let’s focus on those squarely in the 15% capital gains bracket. A nuance of tax loss harvesting  is that you can only write off $3,000 of long-term capital loss each year. If you happen to get out of the stock that you have a significant loss on, you can eventually use all of the losses, but only $3,000 per year until all of the loss is realized. It is more desirable to realize the full effect of a loss immediately, so having some significant gains is ideal when you want to get out of some losing stocks.   For instance, if you had $13,000 in securities losses and had no gains to offset them, it would take you five years to use up your loss. But if you had at least $10,000 in gains in the same year, you could use all of your losses in just 1 year.   The timing of realizing gains and losses does not matter, only what calendar year they fall in. That is why if it appears that it makes a lot of sense to exit a position early in the year, you don’t need to feel the urgency to make an immediate offsetting move (gain or loss) if you don’t feel like there aren’t any obvious additional moves to make.   The Helping Hand Investing can be confusing at times, but a trusted financial advisor  can help guide you in the right direction. If you have questions about your portfolio or want to get started with investing, contact one of Whitaker-Myers Wealth Manager's Financial Advisors Team  Members and schedule your appointment today.

Life is filled with moments of change — from marriage and the birth of children to purchasing a new home or losing a loved one. Along with these milestones come essential decisions, one of the most significant being determining beneficiaries in your financial and estate planning. Whether for a life insurance policy , retirement accounts, or a will, beneficiaries are the individuals or organizations you choose to receive your assets when you pass away.   However, many people make the mistake of setting these beneficiaries once and forgetting about them. Updating your beneficiaries regularly, especially after key life events, is crucial for ensuring your wishes are fulfilled and your loved ones are protected. Here’s why:   Reflecting Major Life Changes As your life evolves, so do your relationships and responsibilities. Changes such as marriage, divorce, the birth of a child, or the death of a loved one all have an impact on who should inherit your assets. For example: Marriage : If you get married and do not update your beneficiaries, your spouse may not automatically receive the benefits you intended, especially if your prior beneficiaries were someone else, such as an ex-spouse or a parent. Divorce : It’s important to revisit your beneficiary designations after a divorce. In many cases, an ex-spouse will still be listed as the beneficiary of various accounts, even if the marriage has ended. Failure to update this could result in your ex-spouse receiving assets you intended for someone else. Children : The birth of a child or adding dependents means that your existing beneficiaries may no longer reflect your current priorities. It’s crucial to make sure that your children or new family members are properly included in your estate plan. Death : The passing of a loved one could affect your estate planning, especially if they were previously named as a beneficiary. You may wish to redirect those funds to others or update your intentions in light of the loss.   Ensuring Your Wishes Are Honored By failing to update your beneficiaries, you risk unintentionally leaving assets to someone who would not have been your intended recipient. For example, if you named a family member who has since passed away, the assets may go into probate, causing delays and potential complications. This could be avoided simply by reviewing and revising your beneficiary designations after significant life changes.   Avoiding Legal Disputes and Confusion Outdated or conflicting beneficiary designations can lead to confusion and even legal disputes among surviving family members. If there is a discrepancy between the beneficiaries listed in your will  and those on your life insurance policies or retirement accounts, it can create a lengthy and costly legal process. Regularly reviewing and updating your beneficiaries can help avoid this and ensure that your loved ones receive the intended inheritance without unnecessary conflict.   Maximizing the Efficiency of Your Estate Plan Designating beneficiaries is an important part of your estate plan because it can help avoid probate and ensure your assets are transferred quickly and efficiently. Keeping your beneficiaries up to date ensures that your estate plan continues to work as you intended, particularly in terms of minimizing tax burdens and simplifying the distribution process. By aligning your beneficiary designations with your current life circumstances, you can ensure your estate plan remains effective and aligned with your goals.   Adapting to Changes in Tax Laws or Financial Circumstances Tax laws and financial regulations can change over time, impacting how your assets are distributed. A change in tax policy might make it more beneficial to adjust your beneficiaries to take advantage of certain tax exemptions or strategies. Additionally, shifts in your financial status, such as an increase or decrease in wealth, may warrant reevaluating who should receive your assets and how they should be divided.   Protecting Minor Children or Dependents If you have minor children or dependents who rely on you financially, updating your beneficiaries to include them can provide them with financial security. This is especially important if you're the primary income earner for your household. If you pass away, your chosen beneficiaries can ensure the necessary funds are allocated to care for them in your absence. You can even set up a trust within your estate plan to manage these assets until your children reach adulthood.   What Happens When You Don’t Have Beneficiaries When beneficiaries are not listed on accounts, the assets in those accounts may not be distributed according to the account holder’s wishes after their passing. Without designated beneficiaries, the account typically becomes part of the estate and is subject to the probate process, which can be time-consuming and costly. The distribution of the assets may also be determined by state laws, potentially leading to unintended consequences or delays. Additionally, without beneficiaries, the process of transferring assets to heirs can be more complicated, and it may increase the likelihood of legal disputes among family members or other parties. To avoid these challenges, it’s important to designate beneficiaries for all relevant accounts.   Conclusion While updating beneficiaries may not seem like an urgent task, it plays a pivotal role in ensuring that your estate plan functions as intended. Regularly reviewing and adjusting your beneficiaries in response to life changes guarantees that your assets are distributed according to your wishes and that your loved ones are properly cared for when you're gone. If you've recently experienced a major life change, contact our team  today to update your beneficiaries.   Remember: Life changes — and so should your beneficiaries. Keep your plans current to protect what matters most.

Private Mortgage Insurance Saving for a house is a significant milestone that involves many moving parts and key factors to consider throughout the process. One of these factors that should be addressed is Private Mortgage Insurance (PMI).     History of PMI Private Mortgage Insurance (PMI) was introduced in the 1950s to reduce the risk for mortgage lenders and make homeownership more accessible for borrowers who could not afford to put 20% down. This widened the entry point for homeownership, as before PMI, larger downpayments were required to secure a mortgage. This insurance protects the lender if the borrower defaults on the loan, ultimately allowing the lenders to offer loans to a broader range of people.   Types of PMI BPMI The most common type of PMI is borrower-paid PMI or BPMI. This structure includes monthly premiums with your mortgage payment. The lender selects the insurance company; the cost typically ranges from 0.2% to 2% of the loan amount annually. The price is dependent on the borrower's risk factors, such as credit score, loan-to-value ratio, and loan type.   LPMI Lender-paid mortgage insurance (LPMI) is another type of PMI where, unlike BPMI, the lender pays the PMI premium instead of the borrower. However, this typically results in higher interest rates on the mortgage. Since the PMI cost is incorporated into the interest rate, the borrower doesn't make a separate PMI payment. The process for removing LPMI differs significantly from BPMI. To remove LPMI, the borrower would usually need to refinance the loan, as the PMI cost is embedded in the interest rate.   Lump-Sum PMI Single-premium mortgage insurance is a lump-sum PMI paid at closing or financed into the loan balance upfront. This structure covers the entire cost of PMI for the life of the loan. Because this cost is a one-time upfront, it is non-refundable. One thing to be aware of is that if you sell or refinance your home, you will not get a refund for the premium you paid. The lack of flexibility that comes with single-premium mortgage insurance should be assessed when looking at your situation.   Removing PMI Under the Homeowner Protection Act, lenders must automatically cancel PMI when the loan balance reaches 78% of the original home value. You must be current on your mortgage payments to be eligible for the automatic removal. Refinancing into a new loan without PMI may be an option if your home has appreciated and your equity is at least 20%. For individuals who have a second loan (e.g., HELOC or piggyback loan), your ability to remove PMI  can be a bit more complex.   We recommend waiting to buy a house until you have saved up the entire 20% downpayment. As we have seen, PMO is a cost to you and only protects the bank, If you are already in a mortgage, work on paying down your principle and removing the PMI as soon as possible.   Help with understanding Buying a home has a lot of moving pieces and parts. Knowing how ready you are can be tricky, and knowing the best strategy can help save you money. If you are planning to buy a home soon and want to get a clearer understanding of how that will affect your finances, schedule a meeting with one of our Financial Advisors  if you have any questions about your financial situation.

When it comes to financial planning, it's important to recognize what we can and cannot control. We can control our own behavior, make thoughtful financial plans, and adjust our strategies as needed. However, we don't control the economic cycle, market movements, or policy decisions that impact the broader financial landscape. Recognizing this distinction allows us to focus on the aspects of our financial lives where our decisions truly matter.    With some investors now worried about a possible recession and the stock market facing heightened uncertainty, we believe it’s a good time to review the fundamentals of business cycles and how they affect financial planning.  It is also important to note that market corrections are normal and necessary.  Check out this video  by our Chief Financial Planning Officer and CFP, Tim Hilterman,   about navigating choppy markets.   What is the business cycle? Business cycles represent the broader economy’s movement through periods of growth and recession, measured by metrics like GDP, employment, industrial production, and more. While the duration of a business cycle can vary significantly, they tend to occur over long periods, lasting 5-10 years on average.   According to the National Bureau of Economic Research, there have been twelve recessions since World War II. In the last 25 years, we have experienced three: the 2020 pandemic recession, the 2008 global financial crisis, and the 2001 dot-com bust. Of course, there have been many more cases when investors and economists feared there might be a recession.   Business cycles have also grown longer since the “stagflationary” period of the 1970s and early 1980s. The steady growth period until 2008 is often known as “The Great Moderation” - a period when the economy was strong, inflation was moderate, unemployment remained low, and the average cycle length was nearly nine years.   Phases of the business cycle While each business cycle is unique, some patterns have emerged over time. In general, business cycles can be characterized by four distinct phases:   Expansion  - During this phase, the economy grows, unemployment falls, consumer confidence rises, and business activity increases. GDP growth is positive, and companies often invest in new capacity. Peak  - This is the point where growth reaches its maximum. The economy is operating at or near full capacity, inflation may begin to rise, and signs of overheating might appear. Contraction  - During this phase, economic activity slows, companies may reduce hiring or lay off workers, and GDP growth slows or becomes negative. Consumer spending typically decreases during this phase. Trough  - This is the lowest point of the cycle, where economic decline bottoms out before beginning to recover. Unemployment is typically at its highest, and business confidence is low.   Each phase may not be equal in length, and there are both situations where business cycles last longer than some expect and cases where cycles end abruptly.   For example, during the 1990s business cycle, the economy slowed sharply in 1995 without falling into a recession. The Fed was able to achieve a so-called “ soft landing ” by lowering inflation without negatively impacting economic growth.   In contrast, the 2008 global financial crisis resulted in a swift economic decline due to a rapid collapse in the financial sector. The same is true in 2020, when the nationwide shutdown resulted in a sharp decline in economic activity.   Trying to precisely time business cycles is notoriously difficult. This is one reason economics is often referred to as “the dismal science” - it has a poor track record of predicting recessions and often predicts ones that never occur. However, recognizing where we generally are in these cycles can help us make better financial decisions nonetheless.   Distinguishing between business and market cycles Market cycles can be more volatile and occur more frequently than business cycles. The stock market can experience multiple corrections within a single business cycle, including several short-term pullbacks each year, due to investor sentiment, liquidity conditions, and other factors beyond the economy.   This is because the market is anticipating the future, while economic data is often backward-looking. Economic data certainly influences markets, but investors also take news headlines, sentiment, and many other data points into consideration. This means that markets can often overreact to short-term events.   Financial planning through cycles Rather than attempting to time markets, the following approaches can help. The key is to ensure you stay on track with your financial goals throughout business and market cycles:   Maintain a long-term perspective  - Short-term market movements often appear as mere blips when viewed over decades. They can sometimes be inaccurate indicators of the business cycle. For example, the 2022 stock market correction did not accurately predict an economic decline. Portfolio rebalancing  - Regular portfolio rebalancing enforces the discipline to “buy low and sell high” by reducing positions that have appreciated and adding to those that have underperformed. When appropriate, this systematic approach can help navigate market cycles without succumbing to emotional decision-making.  Adjust expectations by cycle phase  - During late-cycle periods when valuations are stretched, future returns may be lower. Consider moderating return expectations during these phases rather than chasing higher yields through excessive risk-taking. Have an emergency fund  - Financial plans should take into account the fact that downturns are inevitable. Emergency funds  covering 6-12 months of expenses provide crucial flexibility during contractionary periods, particularly if job security becomes a concern.  Dave Ramsey has helped millions of people by giving this very advice.  He calls it ‘ Baby Step 3. ’   Portfolio resiliency across all phases of the business cycle Constructing an appropriate portfolio remains the cornerstone of investing across business cycles. Different asset classes  can respond in unique ways to changing economic conditions. For example, stocks typically benefit from economic expansions but struggle during contractions. In contrast, bonds can generate income during expansions and provide portfolio balance during contractions.   The right portfolio differs for each person, balancing these asset classes according to your time horizon, risk tolerance, and financial goals. A well-diversified portfolio might underperform the hottest asset class during any given cycle, but it also avoids the most severe drawdowns that can derail financial plans.   The bottom line? Market and business cycles are natural parts of the investing experience. Rather than trying to predict each turning point, history shows that it’s better to maintain a well-constructed portfolio that can weather all parts of the cycle. As our good friend, Dave Ramsey , always says, “The only people who get hurt are the ones who jump off the roller coaster in the middle of the ride.”   If you have questions about your investments during this choppy market time or want to know more about the market, reach out to your financial advisor . With the heart of a teacher, they are happy to help explain so you feel comfortable and confident with your investments.

March is supposed to bring college acceptance letters and financial aid offers, but instead, we’ve got a bit of a hot mess. First, there was the not-so-smooth rollout of the new Better FAFSA,  and now Congress is talking about cutting more areas of student aid packages. If you’re a parent of a college-bound student, be sure to read this article, as it could help save your hard-earned dollars in your wallet.   So, what’s going on?   If Congress follows through on these cuts, Federal Pell Grants could shrink, and programs like Federal Work-Study and Public Service Loan Forgiveness might be on the chopping block. That means fewer opportunities for students to earn aid and more families forced to take on debt.   Student Loan Changes on the Table Here are just a few of the ways Washington is thinking about “fixing” student loans: Public Service Loan Forgiveness Reform Congress wants to limit who qualifies for this program, making it even harder for borrowers to get relief. Repealing Borrower Defense to Repayment Repeal a Biden administration rule that made it easier for a borrower to discharge loans as a result of a school's misconduct, etc. Eliminating Grad and Parent PLUS Loans by 2028 Not that we encourage taking out loans to cover college, but if you were counting on these loans to cover costs, that may not be the case.   Understanding Your College’s Offer March is when most financial aid packages arrive, and that’s when reality hits parents in the face. “Wait, this is what we have to pay?!” Yep. And to be honest, that letter can be complicated if you’re not familiar with knowing what to look for.   Here’s what to look for: Total Cost of Attendance This should include tuition, room & board, books, and personal expenses. Scholarships & Grants Free money. Take it and run. Loans Most schools automatically offer federal loans, but remember, loans are not aid. Work-Study If offered, great! But it’s not guaranteed, and you’ll have to work for it. Parent PLUS Loans If they list this as “aid,” don’t fall for it—it’s just another way for you to go into debt. Can You Negotiate a Better Deal? Yes, you can! But you need to know who negotiates and who doesn’t. State schools?  Nope. What you see is what you get. Private colleges?  Many will negotiate—especially if they really want your student.   Think of it like buying a car. Savvy shoppers get multiple offers, compare prices, and use one deal to push for a better one. Colleges don’t like the word “negotiate,” but they absolutely do it—they just call it “re-evaluating financial aid.”   If you’ve got a better offer from another school, show them. If your financial situation has changed (job loss, medical bills, etc.), tell them. The worst they can say is no.   Don’t Let College Wreck Your Retirement Here’s the truth: You can borrow for college, but you can’t borrow for retirement. Yet every year, parents wreck their financial future by taking on massive student loan debt.   Before you sign on the dotted line for a Parent PLUS Loan or take out a second mortgage, ask yourself: Can I actually afford this? If the answer is no, it’s time to consider different options. Community college for two years Save a ton of money and transfer later. State schools over private schools It's less fancy but a whole lot cheaper. Scholarships, scholarships, scholarships Your kid should be applying like it’s their part-time job. Get them started on these today.   Final Thoughts Every year, I hear parents say the same thing: “I wish I had known this sooner.” Don’t wait until it’s too late to make a wise decision. The goal isn’t just to get your kid into college—it’s to get them through it without burying yourself in debt.   If you have questions about saving for your kid’s college future and need help with college planning, reach out to your financial advisor to discuss options and hear suggestions during the planning time.

Last week, we took a look at tax loss harvesting  and reviewed how to avoid capital gains, but we also saw examples of how this could benefit you in a specific scenario.   This week, we will look at the investment strategy of tax loss harvesting.   Look at the big picture of your investment strategy Remembering tax rules and strategies, such as tax loss harvesting, can be a hassle. Thankfully, these rules are irrelevant in tax-favored accounts such as traditional IRAs, Roth IRAs, and similar retirement accounts.   Most people should be more aggressive and active inside a retirement account to minimize trading that triggers capital gains. Emergency funds should be composed of guaranteed investments like CDs, money markets, or Treasury Bonds. Taxable brokerage accounts should be set up to buy and hold to minimize realizing gains that could be taxable.   Those with workplace retirements, like 401(k)s, may notice their investment options are limited. If you’d like to be more active in a retirement account, we’d recommend first contributing enough to your retirement plan to get the full match from your employer. Then, additional investments can be shifted to a traditional IRA or Roth IRA. The IRAs will have more investment options, allowing you to be more active with your trading. Remember, Dave Ramsey and his team at Ramsey Solutions  recommends always saving at least 15% of your income into retirement accounts such as 401(k)s and IRAs.   For those who have maxed out their retirement accounts and still haven’t hit their 15% savings rate, we recommend adding funds to a brokerage account . We all hope each of our investments gains value each year, but the market does not go up in a straight line. If you have a brokerage account, you may find yourself with holdings that have lost value. Tax loss harvesting refers to selling these holdings in order to realize losses, which can help offset other gains and save you on taxes.   Seek professional guidance We recommend consulting with financial advisors  and accountants to help navigate the tax loss harvesting minefield. Even if you feel like you have a good grasp of the tax laws, having a second set of eyes and ears to look through and help evaluate and affirm various moves can be very helpful in giving you confidence that you are making both legal (in tax reporting) and fundamentally sound moves. Striking a balance of making good decisions on entering and exiting which positions and minimizing the tax impact of those moves simultaneously can be challenging to get right without the proper understanding, insight, and experience.   Even if you are the rare investor who feels comfortable navigating the tax implications of buying and selling stocks efficiently in a brokerage account, hiring a fee-only advisor would be well worth the small investment to ensure you make the best possible moves in tax loss harvesting each calendar year. A good advisor will keep you from being so hyper-focused on tax loss harvesting that you either make moves that do not make sense or fail to make moves that do make sense within your securities portfolio.   If you have questions and don’t have an advisor, reach out to our team of financial advisors  today!