“Real World” Personal Strategy Blog
A Story You Should Read
July 25, 2011 by Birmingham Tax Professional, Martha Echols, CPA
Act as if what you do makes a difference. It does.
- William James
This might offend you, though I’m not trying to ruffle feathers — however, I will be a bit bold here: Could you be focusing too much attention on your family?
Now, far be it from me to suggest that your family isn’t the BEST possible investment you could ever make … but are there other young people, causes, ideas which you should be giving thought to supporting?
You see, I was recently told a story about Carol Burnett, and I’ve done my best to faithfully reproduce it here, today, for you — because I think it’s a powerful lesson for those of us with means and abilities which we can pass along. And, by the way — that may be you, even if you don’t have a bunch of zeroes in your bank account.
You’ll see what I mean when you read this story.
Martha Echols’
"Real World" Personal Strategy
Giving When It Counts, Outside Our Circle
When Carol Burnett was graduating from UCLA’s theater department, the center of the comedy and musical world was New York City. But the grinding poverty she’d known since childhood prevented her from leaving California for the bright lights of Broadway and left her at odds with her career goals.
One night, Burnett and some fellow students were asked to perform a comedy skit at a professor’s party. After the performance, an older man and his wife approached her and asked her what she wanted to do with her life.
She told them about her dream of acting on Broadway, and they asked why she wasn’t doing it already. Burnett explained that she first had to save enough money to get there and establish herself. The man told her to come see him the following week in his office.
Burnett showed up–guarded and skeptical about why the man wanted to see her. He wrote her a check for $1,000 with these stipulations: She must always keep his identity a secret; she must move to New York to give herself the best chance for success; she had to pay the loan back in five years; and finally that she would help others get their start once she became successful.
Burnett accepted the conditions and moved to New York, where her career in musical comedy took off. After five years passed, Burnett sent a check for $1,000 to her benefactor on the exact
anniversary of the loan, and though she had kept all of her promises thus far, she never heard back from him.
However, years later (and after Burnett had now become a household name), she met the couple for lunch and asked whether the gentleman had received her check.
The man answered yes, but didn’t say much else. After lunch, the man’s wife took Burnett aside and told her that her husband was very proud of what Burnett had done, but was too shy and embarrassed to say so.
The wife also said that in all the years that had gone by, her husband had never told one person of his loan to Burnett. He didn’t want anyone to think he was trying to take credit for her success, the wife explained.
Moved, Burnett took the opportunity to kiss her benefactor good-bye and thank him for giving her that all-important start.
Not long after that lunch meeting, she learned that her benefactor passed away. But Burnett continued his largesse by developing young talent on her variety show. And to this day, though she has often recounted this fairy tale-ish turn of events, Burnett has never revealed the identity of the man who launched her career–and her sense of philanthropy.
Now, who will be your next Carol Burnett? Perhaps it’s time we all expand our radar, and find such deserving young people.
Is there any better investment?
And, if you’d like to sit down with me to discuss how to include this sort of giving in your tax planning strategy (after all, why not mix just a little bit of selfishness into your benevolence), I can give you some nice ideas. And, if you want to include this in an estate plan — we’ll also point you in the right direction.
I’m right here: (205) 715-0088
To You and Your Family’s Peace of Mind!
In A Sandwich?
July 18, 2011 by Birmingham Tax Professional, Martha Echols, CPA
"Do not wait; the time will never be ‘just right.’ Start where you stand, and work with whatever tools you may have at your command, and better tools will be found as you go along."
- George Herbert
If you take a broad view of our culture over the last 50 years (and you do it objectively), you can see some major changes, not all of them bad.
Time was, families used to be dealing with elderly parents, young children … and everything in between, all in one house! This is less common now, and as a result, many families are actually unprepared for how to handle it — simply because models are so much less plentiful.
But I have put together some guidance on this for you. The reason I highlight it now, is that we can help. You might know somebody in this situation — or you could be dealing with it yourself. Go ahead and send this email to them … and let them know that we can be part of their *solution*, and help to give them peace of mind.
They’ll thank you. Whether it’s simply by having some authoritative "help" on their side — or to point them in the right direction, we all need to come together in these kinds of situations.
After all, I’m pretty sure our grandparents’ generation didn’t worry about their Twitter feed. So things do change…
Martha Echols’
"Real World" Personal Strategy
Caring For The Elderly–While Taking Care of Kids
Depending on your perspective, this can feel like a double-whammy.
Certainly, as with children, it’s always a better idea to focus on the benefits of more time with your parents, etc … but yes, I’ve seen many times how this can put a major drain on a family.
From what I’ve observed of adults thrust into the role of caring for their parents, the biggest struggle often comes from trying to keep their dual responsibilities segregated. They try to ensure that the needs of the aging parent don’t impact what’s going on in their children’s lives.
As an example, the adult children feel like they have to choose between making sure that Mom takes a walk for exercise and attending a child’s piano recital. No matter what the adult parent chooses, he or she often feels like a failure at everything.
What you need to realize is that this process is not something that you can keep separated in your life. You’ll do your family a great service by viewing it as an experience to be shared with everyone in the family, and maybe even with some members of the outside community.
If you find yourself in this situation here are 3 practical tips I can offer:
1) Get the Actual Facts. You may have avoided talking with your parents about finances in the past. Whether you were taught that those things are private or "it just never came up," now is not the time for surprises. You need to know how your parents are doing financially and whether they’ve made any provisions in case they become ill or suffer a long-term disability.
2) Ensure the Estate is Set Up Right. At this stage of your parent’s life it’s important to make sure that your parent’s legal house is in order. No matter where you get it done, your parents absolutely need to have a financial power of attorney, advance health care directive (a health care power of attorney plus a living will), and a simple will.
All this may not constitute the fullest estate plan for your parents. It might not be proper Medicaid planning. However, it is the bare minimum you will need to help care for your parents.
3) Insure Against the Future. Now is the time to examine long-term-care insurance or assess whether savings will cover an extended nursing home stay, assisted-living facility costs or extended home-care services. You may be tempted to begin to liquidate your holdings or stop saving for your own benefit to help pay for the cost of your parent’s care. Big mistake.
Remember that there aren’t nearly the same kind of government programs or lending scenarios that will help you pay for your kids, or their college, or to fund your retirement — as there are to help support aging parents. It’s vital that you continue to save for your retirement.
If you’d like help, please let us know…(205) 715-0088
To You and Your Family’s Peace of Mind!
It’s About Halftime
July 11, 2011 by Birmingham Tax Professional, Martha Echols, CPA
"Time is free, but it’s priceless. You can’t own it, but you can use it. You can’t keep it, but you can spend it. Once you’ve lost it you can never get it back."
– Harvey Mackay
I have an action item for you in a moment, but before I get there, allow me to explain…
You see, one of the projects toward which I devote my time during the summer, is expanding my financial intelligence. I’m not referring here to learning more technical moves, or adding more letters after my name.
I mean I want to learn how money works.
So, I’ve been going through this book: "How Rich People Think" by Steve Siebold, and it’s right on the money (yuk, yuk). For example, here are some traits his book identifies among the rich, as opposed to the middle class:
* Rich people focus on earning, not saving
* They understand that leverage creates wealth, not hard work
* See that they are in control of their wealth, not luck or fate
* Know that money is earned from focused thought, not hard labor
* Don’t see money with emotion, but with logic
* Are Action-Takers (as opposed to having a lottery mindset)
So why do I emphasize that last one? Simple — I’m suggesting you take an action now, which could have a big difference on your 2011 bottom line…
Martha Echols’
"Real World" Personal Strategy
Halftime Adjustments
You know how good coaches are usually famous for making adjustments during halftime of big games? Well, here I am — acting as your financial coach in matters tax-related, and we’ve just about hit halftime for 2011.
You have six months of financial info to use for some quick math about your year as a whole, and to prepare for a pleasant upcoming tax season.
To begin, all you have to do is take your cash flow for the first half of the year, and multiply by two. Add up your wages, dividends, interest, and any other income, and then–if this represents approximately what you’re expecting for the second half of the year–double the sum.
Once you have your estimated 2011 income, give us a call (or send me an email), and we’ll help you determine the appropriate tax rate and deductions to apply. Because once you’re armed with this info, we can help you determine the amount of taxes you might expect to owe for 2011.
By then comparing this against your projected withholding, you can adjust the withholding on your paycheck in advance as needed, and ensure a happy visit to our office in the early winter.
This can also be a good time to organize your financial records and/or get started with some financial software. (Quicken, Microsoft Money, or the free online utility www.Mint.com are some popularly available options for this.) Getting organized now can make gathering a report of all those deductions a breeze come tax time!
Give us a call today!
What if King George Had Said ‘Alright…’
July 4, 2011 by Birmingham Tax Professional, Martha Echols, CPA
"Wealthy people get wealthy by not losing money."
-Warren Buffett
Truly, have you ever considered how history shifts on small decisions?
What we celebrate on the 4th was the bravery of men who said [Martha Echols paraphrase] : "If you’re going to tax me, I need a representative. And, since you won’t give me THAT … well, we’re free anyway. Government doesn’t give us our rights; our Creator does. So, we declare that we are, in fact, independent."
Imagine if, before this point, the King of England had said: "Alright, I’ll allow a representative from each colony a seat in the Parliament." I mean really — it’s not like we wouldn’t have been taxed up the wazoo with representation … the votes would have been something like 250-13 to tax the colonies to high hell!
But at least there would have been representation! [Historians point out that Washington, Adams, Franklin and others, at first, wanted only the same rights as other British subjects. Only until the British remained stubborn did they opt for full independence.]
Instead, the British lack of imagination helped birth the greatest experiment in freedom the world has seen over the last two+ centuries (IMHO).
Now to you … it may just be that you need to have your own little declaration of independence. Here’s what I mean…
Martha Echols’
"Real World" Personal Strategy
True Freedom … From The IRS
Well, the dream of freedom, birthed on the 4th , does still live. But let’s face it–our government (especially the IRS) is poised to become a deeper, larger influence in our lives.
And it’s ironic, this month of Independence, to see how much power the IRS now has as probably one of the most powerful organizations in the USA. Solely responsible for collecting
Federal taxes and imposing related penalties, the IRS poses one of the biggest financial threats to individuals and business owners.
They have unique information resources, legal standing, and roles as a law enforcement agency. On top of all this, the IRS has the authority to issue legislation and the freedom to make mistakes without consequences (they’re protected from penalties for false tax accusations)!
So what can we do to protect ourselves from the IRS’ power and potential for financial wrath??? … Well, if there were a concrete answer for that, the IRS wouldn’t be the intimidating and widely-feared agency it is today. But there is one thing each of us can do to keep them off our back: Keep Records! (I know, a bit lame … but it’s true!)
Our best defense against audits and false accusations is keeping accurate, detailed records of the flow of all money into and out of our lives.
Now, depending on your situation, this can be complicated and time-consuming! Where do you begin?
A great place to start is by calling our office; we can help you determine where to focus your record-keeping efforts, and help you develop a strong wall of defense around the "castle" of your finances. Generally, the better and more accurate your records, the better your chances are for surviving an All-Out IRS Battle!
Give us a call today!
To You and Your Family’s Peace of Mind!
