Join Tom for a CE Event on July 25!

On July 25, Financial Planning Advocate, LLC will be hosting a CE event with Tom Tillery as the presenter and will address the subject of Updates in Estate Planning: A Review of 2014 Changes and Their Impact on Clients’ Estate Plans.

Topics to be addressed will be: an overview of the estate planning process: regulatory updates on the DOMA decision and it’s continuing impact on the personal financial planning process; standalone retirement trusts and asset protection; continued use of GRATs; the use of discounts for lack of marketability in estate planning. The Webcast will be held on Friday, July 25, 2014 at 1:30 PM EDT. The course is approved for one hour of CPE and CE. To register for the class, please email us at hello@ttillery.com. Virtual Seating is limited.

Risk Transfer in the Financial Planning Process

No man is worth his salt who is not ready at all times to risk his well-being, to risk his body, to risk his life, in a great cause. —Teddy Roosevelt

I have been looking for an opportunity to use this wonderful quote by Teddy Roosevelt. It is from an article in the New York Times (12/08/1915). The article is a summary of his remarks for the Harvard Advocate in which he promotes the need for military curriculum at schools of higher learning.

The purpose of today’s posting is not to advocate for military curriculum, which I do support, but to discuss risk management in the personal financial planning process. It is human nature to seek security. Security may be defined as the absence of risk. Once the basic needs of food, clothing, and shelter are met, the next need on the list for most of us is a sense of safety/security. [Read more…]

Use credit wisely and build a strong reputation

Establishing credit is a great deal like establishing a reputation. Ben Franklin said “It takes many good deeds to build a good reputation, and only one bad one to lose it.”  Establishing credit, whether a consumer is just beginning, or starting over, can be daunting. However, I have seen that with a little knowledge and a few simple steps a consumer’s credit may be established in short order.

The first step in the consumer’s journey is to check their credit report. The credit report is the reputation that a consumer has built over time by those “many good deeds”: timely payments on credit cards, car loans, mortgages and student loans; payment of rent or utility bills; responsible management of a checking account. These items are all a point of reference for a credit report. [Read more…]

Debt & Moderation

I typically begin a posting with a quote. Today’s posting on the need for, and the responsible use of debt, provided several challenges in the quote department. One challenge is current popular opinion which states that all debt is Biblically and morally wrong. The second challenge, and perhaps very revealing, is that quotes on the responsible use of debt, outside of economic circles, is very limited.

In our practice we use debt with our clients in a variety of ways: asset protection, short term cash flow needs, and as an investment. The ‘true north’ in the application of debt in financial planning is moderation. Moderation as a quotable phrase provided a more substantial harvest. [Read more…]

Where to begin – Personal Financial Ratios Part 2

In my last posting I began a dialogue about personal financial ratios. I used “Habit 2, ‘Begin with the End in Mind’” from Stephen Covey’s book, The Seven Habits of Highly Successful People. I went on to say that like Habit 2, the “personal financial ratios are a goal to strive toward, a goal to be obtained.” The first step in working with personal financial ratios is to create a “spending plan.”

Unlike the term budget, a ‘spending plan’ emphasizes choice in spending decisions. It is a necessary building block for the future. Once the spending plan is completed it should be reviewed in light of the personal financial ratios. Objectively, if we give away 10 percent of gross income, save 10 percent of gross income, and pay taxes of 30 percent of gross income, then we should be creating our spending plans with a goal of living off of 50 percent of our gross income. [Read more…]

Begin with Personal Financial Ratios

In his ground breaking self-help book, The Seven Habits of Highly Successful People, Stephen Covey presents an approach to being effective by attaining goals and aligning oneself to “true north” principles of character. Habit two teaches “Begin with the End in Mind.” Whenever I teach students or clients the importance of personal financial ratios, I always make sure that I share this principle. The personal financial ratios are a goal to strive toward and a goal to be obtained.

The first step in the process is to create what is commonly referred to as a budget. Susan Tillery, CPA / PFS, CFP® has coined the phrase “spending plan.” I find this title to be very empowering: it emphasizes choice in spending decisions. Once the spending plan is completed it should be reviewed in light of the following financial ratios. [Read more…]