Archive for June, 2010

Although I have heard terror stories of people getting their identity stolen and having their credit ruined for years, I am still one of those that somehow believes it will never happen to me. This theory is absolutely false so I set out to identify some ways to keep my identity my own. Not only are thieves stealing just credit card numbers, now with stolen Social Security numbers, they are filing false medical claims, applying for mortgages, and opening lines of credit for false businesses.
Your first step of prevention can be done by checking your monthly statements of your financial accounts. Online accounts are a great way to stay on top of this. Next, order and review your credit reports. TransUnion, Equifax, and Experian are all required by law to provide one free credit report per year. AnnualCreditReport.com has links to all three and is the only place to get them for free. If you look at your information and it is old or inaccurate, make sure to change it or have it removed. Make sure to shred old bank statements, applications for new credit cards, and any other documents that have your information on them. Never carry your social security card with you in case your wallet is lost or stolen. It is also important to have secure online passwords and to change them often.
If identity theft does unfortunately happen to you and you notice something on your bank account or existing accounts, first report it to the company. Most of the credit card companies have strong consumer protections in place so by using a credit card rather than a debit card for purchases, you are protecting yourself. After you have reported the problem it is wise to place an initial fraud alert with one of the three major credit reporting agencies. The alert entitles you to a free credit report. If a fraud has indeed occurred, you should file both a complaint form with the trade commission and an identity theft report with your local police department.

If you have a financial plan one of the biggest mistakes you can make is to not monitor the plan. At a minimum you should meet with your financial planner annually and assess if any of the following changes have occurred:

* FAMILY – birth, death, adoption, divorce, marriage, additional dependents (elderly parents or minor children), or minors no longer being classified as a dependent

* CAREER – increase or decrease in salary or job related expenses, benefit changes

* LIFESTYLE – drastic changes in spending habits or income

* FINANCIAL – purchase, sale, or inheritance of assets

* ECONOMIC – external factors such as swings in the markets, inflation/ deflation, tax law changes, etc. that influence asset value or income

Any of the above changes can affect your goals and/or have had an impact on your planned progress towards meeting your goals.

Often times our clients are surprised to learn just how much they are worth. Calculating your net worth is very easy to do but it just isn’t something that we tend to do on a regular basis so it is easy for it to change and us not be aware of the impact of such changes.

The basic formula to calculate your net worth is:
{ TOTAL ASSETS – TOTAL LIABILITIES = NET WORTH }

For most people their largest asset is usually their home but your total assets also includes cars, boats, furnishings, personal possessions, other real estate interests, financial accounts including retirement and investment accounts, and any interest you may have in a business. Because financial account values and real estate values are volatile right now people assume that the contribution to overall net worth is not significant but that is often not the case. People also just underestimate the total value of their other assets.

For most people their largest liability is their home mortgage but other liabilities include any outstanding balances or financial obligations that you may have such as a loan, family commitments (alimony or child support), or debt or guarantee related to a business. Just as people underestimate their value of their assets, they often underestimate how their liabilities have decreased over time.

June 22nd – today is my birthday! To me, it is a day for reflection of all the wonderful people I have in my life, the things I have experienced, and the things I hope to experience in the future. My life is so different than I imagined it would be but then the little surprises and blessings have made it all better than I could have ever planned!

If I live to the average life expectancy of 80.8 years for a female in the United States (http://en.wikipedia.org/wiki/List_of_countries_by_life_expectancy,) then I will be fortunate enough to live through quite a few more birthdays in my lifetime. As I think about my hopes and goals for the future, it is important for my husband and I to plan for our life expectancies and ensure that our financial plan considers the appropriate number of years and the funds required for the lifestyle we desire throughout our life. And then as it is often the case in life, there is the unexpected. Who knows, we can always live PAST the average too! Just the other day I was talking with a good friend about her parents. Her Dad passed away last year but her Mom is 78 and overall is in good health. She said that her Mom comes from a long line of people living well into their mid 90’s. To me and my financial mind, I instantly calculated the difference between 78 and 95 and the impact that an additional seventeen years can make in a financial plan. My family and the life we have built together is the most important thing to me and I most certainly want to make sure that my financial plan lasts my lifetime!

1) Insure yourself against risk
2) Put 10% of your pre-tax income away for the long-term
3) Amass equity in real estate
4) Build an emergency fund
5) Pay off your consumer debt

For more information refer to: http://www.askmen.com/top_10/entertainment/top-5-financial-goals-all-men-should-make_1p.html

Yesterday I was in a meeting for the Planned Gifts Committee for Athens Regional Medical Center and we were discussing how to get people to think about designating planned gifts for the hospital. One of the biggest hurdles for our group is that many people do not know what a “planned gift” is so it is not very surprising that not many people use this tool. An easier way to describe a planned gift is that it is a “deferred gift” where you use financial planning to maximize the contribution to the organization while you minimize the financial impact on the donor. I will admit that I really did not know much about planned giving until recently either but it really is an effective way to provide financial support to organizations that are important to you.

Of course the easiest way to provide support to organizations is to simply write a check today. However, you can also do things like take out an insurance policy with the organization as the beneficiary, make a bequest in your will by designating the organization as the beneficiary either through a percentage or specific dollar amount, or you can roll-over assets in your IRA accounts to the organization.

Many organizations benefit from planned giving. Athens Regional has received gifts from former patients and families of patients as a thanks for the good care they received. You can also support universities, churches, and other community organizations that are significant to you and your family through planned giving. Seek advice from your financial planner for the best mechanism for your situation and the organization you wish to support.

As many theories and opinions have been tossed around concerning the new health care plan, many people may be confused on what is actually going to change, and when. I will briefly let you know what you can expect in the next couple of years.
First of all, most of the changes do not go into effect until 2014, but there are some provisions that employers must comply with by next year. One of these provisions will extend health insurance coverage to uninsured dependents up to age 26. This will be one of the costlier changes that employees will face.
The health law also requires that all new insurance plans pay 100 percent of preventative care like physicians, cancer screenings, and immunizations. Although this seems great, you may not see these changes quite yet. Old insurance plans have been grandfathered in and do not have to offer such coverage in 2011.
Another provision to the health care plan is that in 2011 employers must eliminate any cap on lifetime or annual coverage. This will help severely ill employees or dependents who may be getting close to limits of their coverage.
Now is the time that doctors and health care providers are negotiating with big insurance companies over fee and rate increases. Coming this fall for open enrollment, make sure to check your insurer’s network directory to make sure your doctors, hospitals, and other health care providers are still members.

1- Financial planners have the expertise and experience that most people do not have the time or interest to obtain on their own. It is our job to be knowledgeable about the latest strategies so that we can help you make the best financial decision for your situation.

2- Financial planners can provide you with clear and objective advice. At Alberty Financial Planning Services, this is one of our top priorities. Since we offer advice only plans we are able to represent a neutral and impartial perspective as we develop a plan that is right for you.

3- Financial planners know the quickest and easiest way to get you on track towards meeting your goals. This saves you from the guess and grunt work, and instead puts you on the easy track to being in control of your finances.

4- Financial planners can provide structure and discipline through a set process to help you develop, implement, and monitor your plan. You can trust that someone is working to keep you on track with meeting your goals.

5- Financial planners have resources that are simply not available to someone trying to develop a financial plan on their own. In addition to our software and data sources, we have a network of professionals that we work with in the development and implementation of your plan.

For many people who are unsure what the new finance bill says or does for you as a consumer, I am here to tell you. Some merchants might start offering more discounts for those paying in cash. You could possibly start to get a free credit score every time a lender or landlord penalizes you with a high interest rate or rejects your application because your score is not high enough. Many mortgage prepayment penalties would go away. And there will be a consumer financial protection agency, even though there has been many efforts to stop this. A Senate addition that could affect you would lower the fees that merchants pay to process many debit card transactions. If banks lose revenue as a result, they could make up for it by adding fees to checking accounts or cutting back on rewards programs. Your small business owner would benefit on this, but you as a consumer would ultimately be paying for it. Another change would be that mortgage lenders would face restrictions on when they can charge borrowers a penalty for paying off their loan before the term of the mortgage is up. They wouldn’t be able to charge prepayment penalties at all for mortgages that have balloon payments or for those that allow people to make payments so low that the mortgage balance rises instead of falls. Some of these changes may happen, while others will stay on the backburner. Stay posted for further announcements.

Last week I wrote about personal financial goals and how they were the foundation for a personal financial plan. Once you develop goals that are specific, quantifiable, reasonable, and attainable the next step is to organize and analyze your current financial data.

Your assets, liabilities, and cash flow should be organized into personal financial statements. The two main documents are a balance sheet and a cash flow statement. These documents make it easy to identify strengths and weaknesses within your current situation and overall assess your ability to meet your goals. It is often times a big surprise to our clients how much they are worth but the balance sheet makes it clear to see how your assets and liabilities stack up. The cash flow statement is usually a revelation to clients as well. Many of us are just not aware of how much money we spend unless we make a conscious effort to continuously monitor our expenses.

Once you are able to clearly see this data you can begin integrating your insurance, retirement planning and assets, estate planning, taxes, or any other situations, such as a business or educational savings, into strategies targeted towards achieving your goals. Within this you should develop some basic assumptions regarding your financial plan such the timeline for your goals, how long until you retire or expect to pay for educational expenses, expected rates of inflation, expected interest rates and rates of returns, expected tax brackets and rates, and changes to your lifestyle so that projections can be made.