Financial Planning Weekly Thoughts for October 20, 2018

ACP Conference

My most important professional organization is the Alliance of Comprehensive Planners (ACP).  ACP’s tax-focused model and financial planning philosophies align with my own.   I, very much, look forward to the conference each year.  It has been my pleasure to be part of the conference committee for this National level conference for the past 4 or 5 years.  This year I am excited to be a panel moderator and speaker on technology packages used by three different ACP member firms.  Check out the wonderful sessions I must choose between on the link to the agenda.

2018 No Employee Expense Deduction

Next tax season will be an unpleasant surprise for some folks.   Professionals like those in sales have often written off expenses related to employment on Schedule A of their tax returns.  That is no more with few exceptions.  So, not using these formerly deductible expenses will decrease the total itemized deductions and perhaps force the new higher standard deductions.

What is such an employee to do?  Though not intuitive, the answer might be to go back to the employer and ask for a reduced salary in turn for tax-free reimbursement of the expenses.  Yes, this will make the total pay seem smaller.  It is a gain for the employee and the employer.  The employer was already paying the money, so it is just funneling to the employee an amount but now will have less employment related taxes.  The employee will have a lower income for tax purposes and receive the money used for work tax-free from the employer.  This can truly be a financial planning win-win situation.

Physical De-clutter

Do you have too much stuff?  I am finding as I mature that the adage “The more stuff you have, the more stuff has you” is true for me.  The stuff takes up room and creates visual clutter.  Do really need all the old college notes?  Five or more sets of military uniforms from my service?  What about old tax returns?  Perhaps I have some emotional ties to the items which makes it even harder to get rid of.  My process is not an overnight complete overhaul.  I don’t have the time to do that so I work on my clutter about 2 hours each week.  It is getting  easier to purge items when I start with the easier items and practice.  The harder items have become easier over time. The process I created for myself works for me and love the empty spaces I am creating.

Eating Out

Eating out can be pleasurable and time saving given our busy schedules.  That said, it is frequently it is more expensive than eating at home.  Generally, I eat out once a week with my son as something special.  It gives me a break in the kitchen and him a break from Daddy’s cooking.  I have little junk food in the house so use this as an opportunity for the boy to have something less healthy.  He knows that we eat out once a week.

House Cleaning Service

Sometimes I think having a house cleaner once is month is being lazy.  Then I think more about it, I realize it is helping me a lot.  I am not lazy.  In fact, it helps me with more than just having clean kitchen counters.  I admit it is a chore the day or so before the cleaners come.  Having the service motivates me (holds accountable me) to do more around the house in preparation.  I clean up and de-clutter the household surfaces, my son cleans up his toys and room.  If I did not have the service, I know I would not likely do these pre-cleaning tasks.   There are some added benefits that I love such as they make up the beds with the clean sheets.  For me, the price is worth it.

Juggling Life

Last summer I took a beginner juggling class at my church family camp. While I still can’t juggle, the class taught me about life.  One of the instructors first comments was something along the lines of “Gravity Happens.”  In other words, we would drop balls as we practiced the building blocks of basic juggling skills.  She wanted us to acknowledge it and move through getting upset about letting the balls fall.

In fact, part of the those beginning drills was to practice the tosses and intentionally let the balls drop to the floor.  It was ok to let things drop as we practiced.  I know, intellectually, that in life as I learn other skills in life I will do them imperfectly.  It will be the best I can do in that moment.  That doesn’t mean I stop trying to do them better just that I accept where I am in the moment.  This translates in to my financial life.  I don’t have an ideal anything (like enough money).  I do have many good things in place that when looked at from a holistic or comprehensive view point are much better than average and serve me well.  Thank you juggling for helping me to continue to gain perspective on life that serves me and my financial planning clients well.

Roth IRAs

I believe Roth IRAs are great for financial planning when they hold international and small company equity funds.  Ideally Roth IRAs are long-term accounts.  Roth IRAs contain after tax dollars.  The potential growth of these funds inside of a Roth IRA will be withdrawn tax free.  This is particularly valuable because Roth IRAs are commonly the last investment drawn from in retirement as there is no required minimum distribution during the contributor’s lifetime.  Being last to be used often results in Roth IRAs accounts passing down to the beneficiaries.  This wealth transfer is tax-free to the beneficiaries.



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