October 2013
Money Talks, LLC
Susan Hammitt, Financial Life Planning Specialist
Personal Financial Sustainability:
Money Talks - We listen
 
Fall is the most important tax and financial life planning time of the year. As seasons change and we enter the last quarter of one year it's time to dust off the checklist of "Things to Do" in 2013 and prepare for 2014.  Here are things to consider:
  • Evaluate tax withholding and estimated payments for accuracy.
    • Adjust withholding and estimated payments as needed and/or appropriate.
    • Review tax strategies: Modify retirement contributions, charitable giving, and gifting. Business owners: consider employer contributions to retirement accounts, employee bonuses and/or investing in equipment and other tools of the trade, particularly if purchases qualify for favorable Section 179 depreciation.
  • Review financial plans for 2013.
    • Were expectations met? Consider cash flow, savings, investments, and debt.
    • Evaluate income and expenses based on sustainability and quality of life. Use large general categories to evaluate resources and allocations: wages, windfalls, housing, food, entertainment, transportation, child(ren) expenses, long-term savings, and unique value added lifestyle expenses.
    • Audit and consider options to reduce/eliminate expense categories that deplete resources beyond value. 
    • If income was lower than expected - were expenses adjusted accordingly? 
    • Were additional unplanned income and/or windfalls allocated wisely? 
    • Review investment account(s) performance, organization, and management.
    • Identify unplanned financial activity and consider the impact: unplanned spending, pet expenses, relatives and friends requiring financial help, maintenance and repairs. Remember to plan allocations for these expenses or better manage exposure in the future. 
    • Complete and/or review and modify estate documents and advanced directives. 
  • Make Holiday Plans: The last quarter of the year can obliterate otherwise successful financial plans.  Added expenses of holiday travel, celebration, and gifting is best planned in advance. 
    • List all holiday activities that require funding.
    • Set dollar limits and plan activities to maximize value and minimize unsatisfying expenses.
    • Prepare to spend freely and joyfully that which is planned.
  • Make a Plan for 2014:  Next years plan begins now! The most successful annual adjustments flow seamlessly from one year to the next.  Lay the foundation for adjustments and changes beginning immediately.   
    • Plan for foreseeable life changing events: moving, marriage, divorce, career changes, large purchases, retirement.
    • Debt reduction: Plan to pay down debt consistently. Systematic reductions are most reliable, (1) round up all loan payments to accelerate payoff, (2) apply windfalls to debt reduction, (3) do not use credit if debt is uncomfortably high.
    • Savings: Begin with a manageable commitment and increase savings as budget allows. 
    • Retirement and investments: Increase automatic contributions by 10%. 
    • Review, evaluate, and eliminate expenses that do not provide sufficient value. 
      • Start with all payments made automatically through payroll deductions, checking and credit accounts: memberships, entertainment subscriptions, and supplemental insurance coverage.
      • Consider discretionary variable expenses (groceries, clothes, personal grooming, entertainment).
    • Thoughtfully add quality of life priorities that require funding.  
    • Determine what percentage of resources is appropriate to allocate to each major category of spending. Apply an annual dollar value (budget) to each category and plan accordingly. 
    • Review insurance coverage(s) at least once every 2 years.
    • Plan investment strategies, management, and allocations. 
    • Complete and/or update estate documents.
The process of evaluation, planning, and management is an opportunity to take a fresh look at how well financial life plans support basic needs and unique goals and priorities. Evaluate based on what was expected, plan based on what will be expected, then manage with consistency.
Best regards, 
Susan Hammitt 
  
Money Talks, LLC
511 SW 10th Ave., Suite 805 - Portland, Oregon - 503-233-8142