Monthly Archives: August 2014

Don’t Make These Mistakes

With all of the financial and tax laws, changes to the laws, and life changes it is almost impossible to stay on top of everything. We have to constantly assess our situation all of the time. Here are a few things to consider:

Wills, Beneficiaries and Estate Matters: Did you recently get married, have children, or get divorced? If so, then you need to make sure that your will is up to date, along with your beneficiaries of life insurance, retirement, and other financial accounts.

Required Minimum Distributions: Once you turn age 70 ½, you need to start taking distributions from your IRA’s the following year; the first one by April 1st and the next by December 31st. If you don’t do this then you may be subject to a 50% excise tax on the amount that should have been withdrawn.

Retirement Accounts: Are you contributing to your retirement accounts at work or through your business? If not, then what are you waiting for? You may be losing out on employer matches and also tax savings. The simplest way to start is to contribute a small amount, such as 1% of your income and then increase the percentage over time. If you are already contributing to a retirement account, then try to increase your contributions.

Social Security: The biggest mistake with social security is the temptation to start receiving your benefits at age 62. Unless you have known health issues, the biggest risk is actually living too long and receiving a small benefit for the rest of your life. Let us know if you need us to talk you out of this!

No Action: This applies to absolutely everything and not just financial matters. By far, the largest mistake is not taking any action to help your financial situation. Don’t let this happen to you!

The College Alternative

There is a big push from parents and society to have their children attend four years of college. College is not for everyone, which is probably why only 56% of college students complete four-year degrees within six years, according to a Harvard Graduate School of Education study. There are alternatives to the traditional four-year college route such as:

Trade/Technical School: This can include training to become a plumber, electrician, HVAC tech, welder, auto tech, web developer, hygienist, hair stylist, and many more. Many of these jobs are in high demand and offer good salaries.

Community College: Community college is extremely cost-effective when compared to four-year colleges. A good strategy is to attend community college for two years and then transfer to a four-year college. Many schools, especially state schools, will accept either most or all of your credits.

Entrepreneur: Starting your own business can be very challenging, but very rewarding. Not everyone has the mindset and discipline to be a successful business owner, which is why you need to plan ahead. Although, if you give it a chance while you are 18 years old, you most likely have less obligations, such as family and a mortgage, which takes away a large chunk of risk. If you have experience in your trade, you can also start your own business and perhaps become more successful than if you were to remain an employee.

Sales Career: Selling can be a very lucrative career if you are selling the right products and services. There are sales people for cars, home improvement, software, real estate, and just about everything else. A good sales person can do very well for themselves and most likely does not need a college degree.

These are just a few alternatives to a traditional four-year college degree. With the high cost of college these options should be discussed with your children.