In the course of our daily work around here, we not only work with numbers a LOT … but we also get a regular course on how people (our clients, mostly) *think* about those numbers.

Maybe it’s funny to you, but I not only make it my business to pay close attention to the tax code, and all of the political maneuverings around it — but I also like to think long and hard  about personal finance issues.

After all, so much of what we do comes down to the consequences of daily decisions. So, when clients give us the permission to advise them on more than just which tax credits to take, I want to have myself (and my staff) prepared to give them more than just the normal pabulum you find on Suze Orman.

In that spirit, I’ve decided to channel MY inner Suze Orman and deliver some advice which isn’t the "same old, same old" — and can help you think about how you’re handling your finances a little differently.

And, by the way, one of the BEST ways we can do this is to sit down with you to do some real tax planning. Taxes make up a serious chunk of every families’ expenditures — but too often families REACT, instead of pro-actively ACTING. Let us help you fix that…

Martha Echols’
"Real World" Personal Strategy
Hidden Financial Mistakes … And How To Fix Them
You pay your bills on time. You try to save as much as you can. You even follow the advice which you read in books and hear on the radio about how to keep your finances in check.

Marketers are experts at this sort of price-anchoring, and we really should know better … but yet we still fall prey to it. Try not to let outside sources set up the comparison by which you should be considering such large purchases.

Monday morning, we all woke up to a new deficit-reduction plan from the White House: raise taxes.
(Story here: http://www.latimes.com/news/politics/la-pn-obama-deficit-20110918,0,2819262.story )

I’m not here to beat anyone’s political head on the wall, so I’ll restrict my comments to a few key points — for YOU:

1) It’s not a question of *if* the government raises taxes, but by how much and on whom. Clearly, the White House believes that they have political cover to tax the Warren Buffett’s of the world (hence the name for this new proposal: "The Buffett Tax"), but hear me now and believe me later: this will affect you in some fashion. So prepare your tax situation NOW (tax planning, anyone?).
   
2) You need to plan to take the savings where you can, when you can. Business Owners: there is an enormous tax hike coming in 2013 when many deductions and cuts phase out.

Families: The so-called "Bush Tax Cuts" are a prime candidate for being canceled (partly because their moniker being associated with our previous President), and as fiscal reality continues to hit federal and state governments — well, let’s just say that you’ll want someone who can be creative, on your side.

So, are you scared?

Well, don’t be. After all, you happen to have someone on your side (and I’m not referring to Nationwide)!

In that spirit, I’ve put together some quick ideas for you to lower your tax bill this year — don’t let these go to waste!

Martha Echols’
"Real World" Personal Strategy
2011 Tax Deductions To Leverage
Sure, this might seem a bit premature — April is still a good deal away. But there are certain tax deductions and credits which go away in December. And it’s always a good idea to take a good hard look at taking advantage of them while you still have time on your hands.

I’ll have plenty more on to say on these and other subjects as we get closer to the end of the year — but the BEST thing may be to have us sit down with you and take a clear look at your exact situation with you.

Let us help you wade through all the mess; we’re good mess-waders.

We all remember where we were that morning. The world shifted beneath our feet.

And, in the cool light of the next morning’s dawn, it was clear things had to change, somehow. And we’ve been fighting the last ten years over exactly what that change should be.

Outreach programs, wars of necessity or aggression (depending on your perspective), security "upgrades", bureaucratic consolidation — and expansion, and many other changes. Some subtle, some quite intrusive.

But the reality still faces us: we are in a different world than we were 11 years ago. Or maybe we’re not, and we simply have different eyes.

Either way, I’m glad we took Sunday to remember, once again, the dangers of complacency.

Now I don’t think there’s any good way to segue out of such a solemn topic, but I’ll give it a shot: because complacency isn’t just for nations to guard against; it’s for families too.

And, for better or worse, often our children haven’t been "burned" enough by the real world for them to understand how financial complacency can lead to ruin. So this week’s Note is a public service for you families with children starting college — or those with children already there. I put it together because I’ve seen too many kids get underwater, and too many parents complacently enable them.

I hope it helps!

Martha Echols’
"Real World" Personal Strategy
For The College Student In Your Life
Financial independence training is a short-term pain, for a long term gain. Because "untrained" college students are sitting ducks for unscrupulous financial service companies and their own lack of financial sense.

So, with that in mind, here are some off-the-cuff guardrails to consider for your son or daughter entering, or continuing on through college…

1. Make a definite plan to leave college with no consumer debt. And I’m talking a real PLAN. Credit cards, car loans — college kids are ripe for the plucking. Consumer debt is a real killer, simply because it depreciates so much. In a short matter of time, these items lose their value, but the payments and interest continue to inexorably pile up. So set up a clear budget for travel, late-night snacks, and other miscellaneous lifestyle expenses (heck, going through the process might even prompt some lifestyle evaluation!). Tell your child: "You should have an exact answer if I ask about your weekly spending limit." And have them try to earn enough over the summer that they can afford to skip the part-time job during the spring and fall semester.

2. ATM bank fees are killer. Moving to a new city often means the local debit card will likely be charged from $1.50 to $3.00 for every withdrawal from a foreign ATM. Consider an online bank account like Charles Schwab Bank that reimburses all ATM fees or a local bank with easy ATM access.

3. Overdraft fees are as common as hangovers for the college kid — avoid both. A recent Pew Foundation study found that the median overdraft penalty fee is $35; an additional $25 accrues if this overdraft is not repaid in seven business days. The average bank allows up to four of these overdrafts to occur in one day for a total fee of $140 or more per day. However, if you open a savings account in addition to your checking account, you can apply for overdraft transfer protection. You might even set up a situation where the college student controls the checking account — but you control the savings.

4. One cell phone bill gone awry can swamp you. New routines in college will likely mean that calling and texting habits will change. Or just one call to that high school sweetie who is spending the semester abroad might necessitate a different plan. If your child doesn’t have an unlimited plan, have them make it a habit to review the account online in the middle of each billing cycle. By the way, this is a very good expense to NOT pay for as a parent.

5. Avoid gimmicky credit card offers. Often the first credit card is awarded at a football game where so-called "free" T-shirts are being handed out. Again, college kids are ripe targets. Shop online for the best rates and terms and purchase a dozen dress shirts with the money saved by finding a card with less onerous terms for interest rates and late fees. Focusing on the so-called "rewards" which credit card companies give you is a distraction in your financial life. Like a casino, credit card companies win most of the time — which is why they stay in business.

How were those burgers?

Listening to the radio on Monday morning, I heard a story about the labor movement (seems as if there were a ton of those flying around on Monday) — and it did remind me of how far we have come.

"Labor Day" was a political gesture made by Grover Cleveland in a (futile) attempt to cater to the masses after he bungled the Pullman strike in 1884. He thought that by establishing the holiday, he would signal his Democrat Party bona fides. Unfortunately, it didn’t work–William Jennings Bryan got the nomination (and lost).

The labor movement has had some great successes over the years. We can, in fact, thank them for the notion of a 2-day weekend (have you seen that bumper sticker about that?), paid vacations, overtime pay, health benefits, and more. I’m grateful for these advances.

Unfortunately, as the movement has piled up victories, in my opinion, they haven’t recognized victory. Sadly, much of the government debt we now see accruing has come from promises made (not *just* to labor unions, but with their leadership), which seem to have been unrealistic.

We wait to see how that problem will be fixed.

And one of those promises made is Social Security. Much in the news now — but one common problem is for people who are nearing eligibility: when should you take it?

It’s a six figure issue, and I have some advice:

Martha Echols’
"Real World" Personal Strategy
Bungling This Decision Can Cost Six Figures
Social Security benefits can represent a big stack of cash. A typical monthly benefit of $2,200 has a present value of well over $500,000.00! So, despite the fact that it seems like an easy decision, you need to consider all your Social Security options carefully to avoid making a costly mistake.

Social Security planning is crucial for everyone. People with significant assets should carefully consider both the lifetime benefits and tax consequences of Social Security in light of their overall portfolio strategy. For the less well-off, Social Security benefits will dictate their retirement lifestyle. Proper planning could well determine what they can afford to eat.