3 Easy Tips for Making and Keeping a Holiday Budget

3 Easy Tips for Making and Keeping a Holiday Budget

Believe it or not, it’s that time of the year: Christmas is right around the corner! And you know what that means, right? Holiday shopping for friends and loved ones. Today I am going to share with you a very simple but extremely effective way to go about this process that some approach with dread and loathing, while others find the whole exercise therapeutic.

FIRST, understand that a gift is a GIFT. By definition, a gift is something you give freely – with no recompense (i.e., there is no expectation of receiving anything in return). Understanding this will go a long way toward helping you avoid the unnecessary pressure and stress that people often subject themselves to when it comes to holiday gift-giving. Contrary to what some believe, I am of the opinion that the size and/or value of the gifts carried in shopping malls CANNOT and DOES NOT even come close to matching the care and thought that cause people to want to give Christmas gifts – or any other gifts – in the first place.

What I am suggesting is that you avoid getting bogged down by the “hot and trendy today” and “must-have gifts” crowd at the risk of running yourself and your family into financial hell. I don’t know about you, but personally, some of the most precious and memorable gifts I have ever received (and still cherish to this day) actually cost only the price of a sheet of white 8½-by-11 paper and some crayons. The pages contain words – some incorrectly spelled – and images I could not decipher until they were explained by the giver. Take a moment to look back into your own life and ponder whether you have ever received similar treasures.

Don’t get me wrong: it is OK, perfectly fine, even terrific to give your wife a diamond necklace for Christmas. HOWEVER, there is also nothing wrong with giving her a handwritten note telling her how much you love and appreciate her. I’m willing to bet you’d be pleasantly surprised to find that the latter gift ended up earning you more mileage and goodwill than you could ever have imagined. Likewise, it’s great to get your dad a nice watch, but it’s an equally good idea to write him a note thanking him for all he’s done for you and telling him how much you respect and admire him. OK, first point made – a gift is a gift.

SECOND, write down the names of those you intend to give gifts to.

THIRD, next to each name DO NOT write the item you intend to give them. Rather, write down HOW MUCH you intend to spend on each recipient. Then add them all up to find your total potential gift expenditure. I will leave you to determine the rest of the process, as it relates to arriving at the total figure you are willing AND able to spend, because only you can make that decision.

Again, a gift is a gift, so once you have arrived at the total dollar amount you are comfortable with, go ahead and knock yourself out to purchase whatever meets the amount you've allotted for each recipient on your list.

Other people no doubt have their lists, too. But the vast majority of theirs indicate names and items, not names and dollar amounts. The result is that they spend whatever those gift items cost. You can see the difference – and understand why I advocate the exact opposite.

To use my favorite words again, it’s just plain common sense! You have it, so use it. Be safe and have a great time with your holiday shopping!!

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For other smart tips and bits of financial wisdom that will help you make the most of your money, visit our website, or call us for a complimentary consultation at 301-949-4449.

On Thanksgiving, Precocious Fifth Graders, and Pet Rabbits

On Thanksgiving, Precocious Fifth Graders, and Pet Rabbits

It’s Thanksgiving 2009, so please permit me to take a break from the usual financial stuff. As I have always maintained, money is 25 percent of the pie – the other 75 percent involves people; but you cannot go very far with a hole in either of these areas.

Unless you are a turkey, in which case this happens to be one of the worst times of the year, you MUST have something to be thankful for. I understand that given the economic atmosphere we are experiencing as a nation, coupled with the mostly negative news lately, it is very easy to lose sight and get sucked in by the pessimism.

But just take a moment right now and realize that there are so many things to be thankful for. In fact, I am willing to bet that the things in your life you have to appreciate and be thankful for far outweigh the bad stuff. For one thing, has it occurred to you that there are millions – if not tens of millions – of people just like you who wish they had the sight, ability, and strength to read this blog right now, but can’t?

Personally, this Thanksgiving I am thankful for my 10-year-old daughter, Amy Asare. If you have ever entered my office or spoken with me for more than 45 seconds, you know about her. And yes, my life revolves around her, pretty much because I figure she did not ask to be born. Now don’t get me wrong … she’s not spoiled or anything. Well, OK, maybe just a tiny bit.

I am thankful that I can say I am a proud daddy of a wonderful, healthy, happy-go-lucky – oh yeah, waaay happy – fifth grader who thinks that pizza is about the best thing ever and that Miley Cyrus/Hannah Montana is TOE-tally awesome! The transition up until this point has been an amazing, eye-opening experience. Although I have two younger sisters who are now adults but will always be little to me, I have never learned so much since having my daughter. A little advice for the guys reading this: If you want to be really, really happy, you’ve got to learn how to decode statements by listening closely. You know what I’m talking about?

I remember just the other day, Amy was a few months old. Her favorite spot at the time? In front of the TV, waiting for the next commercial so that she could dance to whatever music accompanied it. Then the daycare and kindergarten years, when she was asking questions like, “Daddy, what’s the New Year?” and telling her teachers that her dad was whatever profession they were reading about that day, including an astronaut and a scientist.

One time, we were on the road when she inquired, “Daddy, are you the boss at your office?” My response was something like, “Probably,” because I personally don’t like that term. Amy’s response? “Yeahhh!!!” with her hands up in the air, because her teacher had explained to her class that bosses tell others how to do their work.

Lately, I am dealing with how to get over the fact that conversations between her and her friends go something like: “Oh my God, that’s like so TOE-tally funny, awesome or cool.” If you want to know the real deal about what’s going on in your kids’ lives, you’ve got to observe them around their friends while you pretend you’re not listening in. Chauffeuring them to their endless events is a great time to do this!

Amy’s school recently started a 4H Club, and of course the club would not be complete without her. Her job is taking photos of the club’s activities – as a result of which she just discovered that she TOTALLY loves taking photos, it’s so cool, and therefore she wants a digital camera for Christmas.

This past Wednesday at 4H, they got to pet a bunny. And just in case you didn’t know, “Bunnies are sooo easy to care for. You can put them inside your house. All you have to do is sprinkle water on them and comb their hair. And oh, they have these really cool red eyes, and people eat them, but I won’t eat them. I only eat cow, and since I am in 4H I get to pay O-N-L-Y five bucks, Daddy!” You can imagine how the rest of that conversation went.

The point is, I am thankful. Please write back and tell us some of the many things you are thankful for. That’s what the “So, what do you think?” portion of this blog is for! Peace and Thanksgiving blessings to all!

Samuel

Laser Financial Group, LC

California May Be A Good Example of What’s Coming Down the Pipe

California May Be A Good Example of What’s Coming Down the Pipe

The State of California is facing a $26 billion budget deficit. Basically what that means is that they have $26 billion less tax revenue than they require to handle their expenses. To close that gap, the State has two options: either cut expenses or raise more tax revenues – or, perhaps a third option, which would be a combination of the other two. “Wait a minute,” you may be thinking, “do you mean raise taxes on the people?” If you figured that out, you’re impressively smart and obviously qualify to be a big kahuna budget expert.

Before we continue, let me tell you something that happened the other day. A friend of mine who works for the State of Maryland told me that they are not going to receive their scheduled raises this year because the state is running a budget deficit. She wanted me to explain how the State’s budget issues are related to her raise. She became an expert in that area within about 45 seconds.

So let’s get back to California, now. Here are a few of the deficit-busting strategies California has implemented so far:

• Beginning July 1, State personal income tax rates – GUESS WHAT? – were increased across the board by 0.25 of a percentage point. If the old rate was, say, 5 percent, now it’s 5.25 percent, and so on.
• Effective November 1, California Law AB17 instituted a 10 percent increase in payroll withholding. While technically not a tax increase, you can call it a forced loan to the State, because the state is basically borrowing 10 percent of the people’s take-home pay until they file their taxes and will pay them no interest.

Are you beginning to understand that ANY government quickly resorts to raising taxes to fill its budget shortfalls? I have been saying this for some time now, but the bigger issue doesn’t seem to have hit home yet. Sooner or later, it has to. California’s problem is $26 billion big.

One of My Mom’s Favorite Sayings

 How about the U.S. federal government’s national debt of – GET THIS – $12 trillion, and counting? In fiscal year 2009 alone, the budget deficit was more than a trillion bucks. So my question, simply, is: What do you think will happen to YOUR income taxes? My mom would often say that if you don’t know what a dead person looks like, simply observe someone who is asleep. All of a sudden, I seem to be remembering all these sayings, even though my mom never thought I was listening back then.

Regardless of where you live in the United States, any income tax increases affect you ONLY if you have “taxable” income. Certain folks in California remain unaffected by the increases in the tax rates not because they are broke and have no income, but because their income – regardless of how much it is – is not considered “taxable.” Our clients are more and more grateful by the day as they watch events around them unfold. Plain and simple, if you don’t want to worry about income taxes, don’t put your retirement savings into taxable 401Ks and IRAs. Period!

This is true today, it was true yesterday, and it will be true tomorrow. And yet I continue to witness far too many folks allowing themselves to be fooled by so-called financial advisors who are clueless when it comes to this issue of keeping retirement money tax-free.

Even 4-Legged Creatures Are Feeling the Deep California Cuts

Another tactic California has employed is reducing the number of days animal shelters are required to hold stray animals from 6 days to 3 days. That’s right. Unless they are claimed by their owners or adopted, the state will not prevent these animals from being euthanized after just 3 days.

To be fair, Governor Schwarzenegger’s office says that the state’s animal shelters “may keep the pets as long as they wish.” Isn’t that good news? Why cut the mandatory holding period in half, then? What does cutting the funds for caring for these pets from 6 days to 3 days really mean? We’re cutting your funds and you don’t legally have to keep these pets alive for 6 days anymore, but you’re welcome to do so, if you wish. It’s not really my place to comment because I’m not in charge of how they do things in California, but it seems to me that the explanation being offered about this animal shelter situation is absurd and just goes to show how far governments, both state and federal, will go when pushed to raise revenue.

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For more information about how to keep your retirement income safely tax-free, please visit our website or call us at 301-949-4449.

Would You Rather Be Trendy and Broke, or Atypical ... and Set for Life?

Would You Rather Be Trendy and Broke, or Atypical ... and Set for Life?

If you read this blog or follow any of my media columns on a regular basis, you already know that I strongly believe that only a few are on a truly solid track when it comes to planning for their retirements. Consider this data from July 2008, Social Security Administration’s Publication No. 13-11871: On average, for every 100 Americans reaching ages 65 to 69…

• 27 have died.
• 19 have incomes of less than $7,000 per year.
• 50 have incomes between $7,000 and $45,000.
• 4 have incomes of more than $45,000.

Most of the people I have shared this data with are quite surprised, because it’s difficult to wrap your head around how someone could live on such a low income, especially in those age groups. But my follow-up question is: Why do you think only 4 have incomes of more than $45,000 per year? Of course, numerous reasons may explain this rather troubling statistic.

In my opinion, though, the most interesting issue here is that most people actually do save for retirement.

Hmmm, so most Americans are saving, but only a tiny percentage are retiring with decent incomes. The reason? They simply follow the crowd and conventional assumptions, which for the most part are completely wrong. You see, it’s not possible to follow anything short of factual, realistic principles and end up in a good spot. And as it pertains to retirement savings, it appears that only about 4 percent of the American population – clearly not the majority – is doing OK.

Here’s the Typical Advice Many Follow

“Just sign up for your employer’s 401(k) or 403(b) program. Make sure you have a well-diversified portfolio. Maintain a “long-term” focus, and you won’t have to worry about the short-term brouhahas. In the long term, you’ll be just fine.” Sound familiar to you?

Although the majority may believe this advice (after all, how could so many financial experts, pundits, and my brother-in-law, Joe, be wrong?), could it be that this advice is precisely what people should NOT be doing? If this were truly sound advice, how come only the few who appear NOT to be following it seem to be making financial headway? You may have heard this before, but it’s definitely worth repeating: Beware of one-size-fits-all financial advice.

For instance, when the stock market crashed in September of last year, the MAJORITY of Americans took a beating with their retirement funds. Although some advisors and the media would like you to believe this is “normal” and happened to everyone, that’s just not the case. A minority of investors did not lose a dime.

NO ONE should arrive at their retirement dead broke, but the time to ensure that does not happen to you is TODAY! Call today or visit us on the Web to schedule your free consultation to find out how you can get on the road to a secure retirement. You can follow the trendy crowd and wind up broke, or you can follow proven techniques that really work. The choice is yours.

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One last thing. This is the week we honor our veterans. Everyone here at Laser Financial Group sends out a big, heartfelt “THANK YOU!!” to all our retired and active-duty servicemen and women. America would not be the America we know and cherish so much today without your continued and committed service.

Lower Income DOESN’T Mean You’ll Pay Less Taxes

Lower Income DOESN’T Mean You’ll Pay Less Taxes

Even if your CPA, financial advisor, some author or TV “expert” says otherwise, he or she is not just wrong – they are TERRIBLY WRONG! My fifth-grade daughter would probably put it this way: “That’s like soooo totally wrong!”

Many Americans are following this misguided belief, tending to defer their taxes until retirement when they expect to have lower incomes – as opposed to what they’re earning today – with the thought that they will, therefore, pay lower taxes after retirement. Alas, this occurs only in fantasy land.

Income vs. Taxable Income

I personally know two individuals who I’ll call Mindy and Terry. In 2008, Mindy’s income was about $46,000 and her income tax was approximately $2,400. Terry’s income was $108,000 and her income tax was ZERO. YES, Terry earned more than twice as much as Mindy, and YES, her income tax was N-O-T-H-I-N-G! And both of them filed their taxes legally and correctly – no gimmicks.

SUPRISED? You shouldn’t be. Because under current IRS rules, we are all required to pay taxes on our “taxable” incomes. Which therefore suggests that not all income is taxable! Mindy’s and Terry’s taxable incomes were approximately $20,000 and $0, respectively. Start asking your friends and you’ll be pleasantly or unpleasantly shocked to discover a similar trend – depending, of course, on your friends’ willingness to disclose their financial information to you.

On an almost daily basis, I meet with retirees who are trying to understand why they seem to have a tax problem when they were advised otherwise – that they would pay less taxes after retirement, since their incomes were indeed now lower.

It is possible – and happens quite often – to have a lower income, yet have the same or even a higher taxable income. It all depends on how many allowable deductions and/or exemptions you have, as well as how much of your income is taxable.

The fact is, no financial advisor, CPA, or expert – including myself – has any control whatsoever over marginal tax rates – that is the prerogative of the United States Congress.

Talking tax rates, where do you think they likely are headed, given our nation’s current fiscal climate? Up, of course! Do you therefore see how preposterous this whole idea of tax deferral could be, and why smart retirees are turning to Laser Financial Group for enlightened planning? To put it bluntly, it’s simply ridiculous for you to delay paying taxes until a time you strongly believe tax rates will be higher. Period!

You Can Take Charge

We are all allowed to structure our finances so that we make a little, a lot, or NONE of our incomes taxable. If you have not already received your copy of my book, 5 Mistakes Your Financial Advisor Is Making, I strongly encourage you to please do so now! It’s FREE!

This Saturday, November 7, I will be delivering a workshop to discuss – in detail – how you can have more control over your dollars now, and especially at the time of your retirement. Regardless of where you are in your planning process – or even if you are already retired – you will likely glean some useful, practical, simple strategies that will greatly enhance your financial lifestyle.

Reserve your FREE seats, as space is extremely limited. Those out of state could still benefit from one of our webinar sessions by simply submitting a request.