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…]

A Voice for Moderation

“In life,” said he, “these were so squint of mind

  As in the handling of their wealth to use

No moderation – none, in either kind.

—The Comedy of Dante Alighieri, L’Inferno,

In his tour of Hell, Dante confronts those who have been condemned for the sin of greed; and in particular, greed with regards to wealth. He describes the greedy as being closed minded and having no moderation. It does seem that wealth has that effect on many.

One of the basics of personal financial planning is moderation on both the planner and the client’s part. Some synonyms for moderation are: self-restraint, self-discipline and self-control. In recent years, as I have reviewed the work of other personal financial planners, I have seen a lack of moderation. [Read more…]

Social Security Benefits for Same-sex Couples – Officially, still un-official

The bureaucracy continues to move slowly in regards to Social Security benefits for same-sex couples. The various government agencies and departments continue in a state of chaos as they try to understand the implications of the Supreme Court’s ruling on the Defense of Marriage Act (DOMA). Presently, the Social Security Administration is studying the ruling in light of applicable law with the Justice Department.

The Social Security Administration’s response to the DOMA decision falls into two broad categories. Category A individuals are same-sex couples, who were married in a jurisdiction which recognizes same-sex marriage. The jurisdiction may be in another country, like Canada, or in one of the 13 states which recognize same-sex marriage.  Additionally, Category A individuals must also reside in one of the 13 states which recognize same-sex marriage.  If both of these criteria are met, than the spouse is eligible for Social Security survivor and retirement benefits.

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DOMA Update & The Department of Defense

I have selected to review the Department of Defense (DoD) and the Department of Veterans Affairs (DoVA) response to the Supreme Court’s (SCOTUS) ruling (June 26, 2013) on the Defense of Marriage Act (DOMA) first, because the DoD was an early riser and was the first department with a response to the DOMA ruling. As a matter of fact, it was on February 11, 2013, that the then Secretary Defense, Leon E. Panetta, first issued a memorandum on extending benefits to same-sex domestic partners of military members—predating the SCOTUS ruling.

The memorandum reviewed 20 programs available to military members in which they could designate benefits to someone other than a spouse. These programs cover education, survivor, travel and transportation benefits. The memorandum then identified additional benefits that would be provided “to same-sex domestic partners of Military Service members and their children through changes in Department of Defense policies and regulations.” The memorandum ended with a list of benefits which could not be made available to same-sex spouses because of statute. Health care and housing allowances are examples of two of those benefits.

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Smoke and Mirrors: Life Expectancy and Financial Planning

In writing a financial plan there are many factors to consider. Key factors to be considered are: inflation rate— CPI, CPI-U: rate of return on investments— historic and projected; income needs and life expectancy. Lately, I have become convinced that life expectancy is the most critical of all the variables and the one most likely to derail a financial plan.

Recently, I spoke at a major financial planning conference. The attendees of the conference were the brightest and the best in the financial planning field. My topic for the conference was how to model health care expenses for retirees in a financial plan. When I shared with the audience that our firm models all of our plans to age 100 the ‘Twitter-verse’ erupted.

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A Wise Choice

One of the questions that I often receive has to do with dividend reinvestment plans (DRIP). Recently, a lady wrote to me asking, “Now that I have the paperwork I need to complete the name change on the account from my maiden name to my revocable living trust. I have a quick question for you. With this change, I have to send my certificated stocks, which are in my maiden name to my financial advisor. I have been told that I have the option to have the certificated stocks retitled and sent back to me or to have them hold the certificates. Do you have a preference?

There is more to this question then most consumers are aware. The bottom line is to have them hold the certificates. The process to replace a stock certificate is a difficult and expensive task for an individual investor and here is why. There are three ways in which a security may be held: physical certificate, “Street Name” registration and “Direct” registration.

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