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Ask Questions Before Merging Finances

Is there overlap between psychology and financial planning? Perhaps. While your Fee-only financial planner is not qualified to diagnose psychological issues and a psychologist will not be able to manage your finances, both experts may suggest that you have a talk with a romantic partner before you combine finances.

In “3 Questions to Ask Before Joining Finances with Your Partner,” Psychology Today outlines topics that couples can discuss before the merge their money, noting that your “financial philosophies don’t have to perfectly align”  but that you do need to reach “compassionate compromise.”

Talk about how you experienced money growing up. It helps to understand the role money played in a person’s upbringing and the money management style that person observed in their caregivers.

Talk about long-term financial goals. If you are going to go the distance with someone, you need to know what the finish line looks like for them. If you don’t have the same end in mind, that it okay. You can find ways to work on that and combine your visions. There are many couples how don’t discuss this until one or both of them retire and that is when their different ideas of post-career lifestyles surface.

Talk about the areas where you want to spend the most. Beyond the typical saver vs. spender split, you need to know just what your sweetheart is willing to spend money on. Even the most scrupulous savers spend a little money on something. And while someone may think a spending buys everything in sight, they may not be interested in spending much on certain things. Some people would rather travel and spend less money at home and on renting/buying a home. Someone else prefers to spend money on dining out while spending very little on local transportation, getting around in an inexpensive car or a scooter. 

When you both know what the other is willing to splurge on and invest in, you can work on finding harmony in your financial planning and in your relationship.

Your Financial State of the Union

Tonight, the President of the United States will deliver a State of the Union address. This practice was first referenced in the Constitution, which states that the President will inform Congress “from time to time”. Over the years, the format has changed: our first two presidents addressed congress personally; Thomas Jefferson sent written messages and the presidents after him did the same until Woodrow Wilson. And as technology has advanced, the public has had the opportunity to participate, via radio, then television, and now webcast. (

No matter where you stand politically, you can see the practicality of periodic reflection. And whether you are a household of one or ten, sometimes you have to take stock of where you are, where you’ve come from, and where you hope to go.

Different presidents chose different ways to address Congress (and the public) during their State of the Union addresses. They also chose different areas of emphasis and differing levels of details. If you have young children, you may not choose to get into all of the details but you may choose to share a broad overview with them. Parents of older kids and teens may also choose just how much to share. Keep in mind that giving your children even a broad overview can be wonderful for their financial education. And when they ask for things, you can refer back to the family’s financial state of the union. For example, if saving for a family vacation is a goal, you can remind them of that when they ask you to spend money in the moment.

When you area household of one or two, it is helpful to figure out where you are financially: even if you think you already know, examination and reflection are useful. You don’t have to stand at a podium or speak to anyone but you do need know what you are earning, how much savings you have, and outline some financial goals.

If the thought of taking stock of your finances bring on anxiety, consult with a Fee-Only financial planner who can help you see the bigger picture and work on strategies to help you manage your resources better.

Arm Yourself with Information to Stop Tax Identity Theft

Next week (February 3-7, 2020)  is Tax Identity Theft Awareness Week and you need to know that you can fall prey to scammers whether they contact you directly or find some behind-the-scenes way to operate.

A scammer can obtain your Social Security number illegally and file a tax return without your knowledge, The thieves will make off with your tax return and there is a good chance you will only realize what has happened once you file. If a fake return has been filed, the IRS won’t accept yours. You will need to wait for the IRS to complete its investigation and in the meantime, your Social Security number has been compromised and you are vulnerable to other scams.

Other scammers contact possible victims to get them to unknowingly cooperate in the scam. For example, they may call someone pretending to be from the IRS, telling that person money is owed and threaten them in some way unless they send money right away or turn over banking information. 

Education is the best defense. Even if you think you or your loved ones are too smart to be victimized by scammers, the more you know the better. The Federal Trade Commission’s YouTube channel (FTCVideos) offers short, informative videos about possible scams involving tax identity theft. You can also learn more by visiting

Please know that it is IRS practice to contact people by mail first. It is not standard IRS practice to call, text , e-mail, or use social media to initiate contact with someone regarding their taxes. offers these tips for preventing tat identity theft:

  • Protect your SSN throughout the year. Don’t give it out unless there’s a good reason and you’re sure who you’re giving it to.
  • File your tax return as early in the tax season as you can.
  • Use a secure internet connection if you file electronically, or mail your tax return directly from the post office.
  • Research a tax preparer thoroughly before you hand over personal information.
  • Check your credit report at least once a year for free at Make sure no one has opened a new account in your name.

The Secure Act May Alter Your Retirement and Estate Planning

Recent changes signed into law at the end of 2019 through the Secure Act regarding 401(k) and IRA distributions may not only affect your retirement planning, these changes may create a need to review your estate planning as well. Barron’s (New Rules for Stretch IRAs and RMDs Have Raised Many Questions. Barron’s’ Found Answers) and The Cleveland Jewish News (How will IRA and 401K changes impact estate planning?) offered details on these changes.

Retirement Planning: You can now add deductible contributions to an IRA at any age (from wages or earnings) because the age limit on these contributions has been lifted.

Previously, you had to start taking minimum distributions from traditional IRAs and 401(k)s once you reached the age of 701/2 (and if you reached that age in in 2019 or before, you are still subject to that rule). With the new law, the age for required minimum distributions has increased to 72.

Estate Planning: With the changes to the law, distributions from an IRA or 401(k) must to paid out within 10 years and this 10-year period begins the year after you die. As The Cleveland Jewish News points out this is major change since: 

“Under the old law if a child or grandchild inherited your IRA, they could take minimum annual distributions based upon their life expectancy rather than yours. This allowed decades of income tax-deferred (or income tax free if a Roth) distributions from the IRA.” Hence the term Stretch IRA.

Barron’s notes that this advantage wasn’t just for descendants, “The new rules also upend a strategy surrounding inherited IRAs. Old rules allowed beneficiaries to stretch out RMDs over their lifetime, providing them with years to reap tax-advantaged gains.” And while there are exceptions (including the underage children of the deceased) it is quite a change if someone was expecting to take RMDs (required minimum distributions) over many years.

We should add: “The good news is that people who were already taking distributions from an inherited IRA may continue to do so under a stretch IRA strategy. The new rules apply for people who would inherit an IRA from someone who isn’t their spouse and are not subject to other exemptions.”

If these new rules will alter your estate planning, consult with a Fee-Only financial planner who can help you strategize ways make the most of your resources.

People Wonder if They Can Afford to Invest…We Say Can You Afford Not to Invest

The Motley Fool tries to answer a question many people may have in “Am I Too Broke to Invest?” If you are employed and have an emergency fund, you are in a position to invest. And investing doesn’t mean throwing tons of money into the stock market. If you are not ready to get into the stock market, you can invest in an employer-sponsored retirement plan.

What may be getting in the way of investing?

Fear: You can learn and ask questions about investing. Either on your own or with the help of a Fee-Only financial advisor, find time to learn and grow in confidence about investing and stocks.

And if you worry that you will lose money in the stock market, The Motley Fool reassures readers that it makes sense to worry over potential losses, adding that losing money is part of the process. It is sticking with it over time that will allow you to make up for any losses. It is also important to not invest money that you think you may need in the near future. 

(Perceived) Lack of resources: The idea of not investing money you might need in the near future prevents many people from investing because as far as they can see they are going to need all of their money now and in the near future. This is where a little sacrifice comes into play. The article includes a chart showing what happens when you invest $10 a week in an IRA. If you can find a small amount to put aside, you can invest.

The article also examines “imposter syndrome” with regards to investing: some of us don’t want to invest because we think investing is for “rich” people and we don’t consider ourselves rich. People at all income levels invest. Even a saving account that earns interest is a kind of investment.

The Motley Fool offers this encouragement:
“You’ll probably never feel like you have enough money to invest. There’s always going to be somewhere else to use that money…stick your toe in the investment water and get ready to swim. Once you realize how much your investments can help you meet your financial goals, you’ll wonder why you ever waited.”

Yes, You Can Practice Being Retired

The practice of offering consumers the chance to take a vehicle they might buy on a test-drive has been in place for a long time. And a few years ago, realtors got into letting people “test-drive” homes by spending the night in them. And in “Test-Drive Your Retirement,” suggests that instead of just outlining your retirement goals on paper, you actually take those goals for a test-drive to see if the retirement life you are planning will really work for you.

Location, Location, Location: You would expect to be advised to try for an extended stay in an area where you hope to retire because visiting for a weekend may not be enough time to really know if the new locale will work for you. But what about a test-drive of staying in your own area, in your own home? Both can be useful.

Finding a short-term rental in a new city will help inform your decision making as one couple interviewed for the article learned: they moved to retirement community a desert city without realizing just how the high temperatures would affect their way of life. 

And even if you think you know your home and hometown, spending a week or so there on vacation will give you practice in learning to structure your days (this is a bigger issue for retirees than many imagine.)

Financial Fast: As the article notes, many couples try to live on one salary before retirement to save money and get a sense of what their expenses will be. Doing this before retirement can offer a reality check. also interviewed a freelancer who decided slow down on work projects, take some trips, and find work that was more flexible and did not require her to attend client meetings. This woman had worked on her own for decades and had been diligent about saving. It was not easy for her to get used to the idea of earning less and using her retirement savings.

Don’t Let Holiday Spending Guilt Trip You Up

Are you feeling a little remorse about the money you spent over the holidays? 

There is an online meme where a parent  jokes about taking all of the holiday presents back because the children are behaving. Isn’t that how it is with the things we buy sometimes? They don’t produce the expected result or function quite as we would like and we want to go back in time. We were full of hope when we bought these things and it is only later that the regret sets in.

We like to believe that the new year brings a fresh start and wipes the slate clean but we all know that if we have debt and poor money management skills, then those will carry over with us into the new year.

Once the optimism of it being a new year fades, some people will face the reality that they overdid it during the holidays. But there is no need to be sad about this.

The good news is that even if the old debt, unwise payment plans, or questionable purchases still exist in the new year, we have a chance to start fresh, treating ourselves and our resources differently. It may be hard to believe but there can be a sense of accomplishment and even joy in buckling down and really working towards financial freedom.

Can you commit to one new money management habit per week? That will look different for different people so here are some ideas:

  • Check your account balances once a week
    Bring your lunch to work (at least) once a week.
  • Leave a potential online purchase in the virtual shopping cart overnight and reevaluate in the morning.
  • Plan errands so you make fewer trips and use less money for gas/mass transit/car services.

Think about making an appointment with a Fee-Only financial planner who will take a holistic approach to helping you map out your financial goals and offer strategies to reach those goals.

Amy’s Will: Estate Planning in Little Women

A new movie version of the classic novel Little Women will be in theaters during the holiday season. The book’s author, Louisa May Alcott, wrote a book about young women that was suitable enough to sell but also included some of her own unconventional ideas in the text however she could and offered various illustrations of womanhood. She shows how wealth and financial planning can alter a woman’s life for the better.

Aunt March is not the woman who is most admired by the sisters in the book, she is one who influenced them and acted in ways that changed their lives. Aunt March is wealthy and has a sharp tongue but at the same time she tried to look out for her nieces.

While staying with Aunt March, Amy March learns about some of the contents of Aunt March’s will from a maid who signed the will as a witness. Being told of a possible inheritance influences Amy to attempt to improve her behavior. One of her acts of goodness was creating her own will: 

“In her first effort at being very, very good, she decided to make her will, as Aunt March had done, so that if she did fall ill and die, her possessions might be justly and generously divided. It cost her a pang even to think of giving up the little treasures which in her eyes were as precious as the old lady’s jewels.”

Young Amy wants to have a say in how her treasures are divided and she takes this responsibility seriously. Many adults want to avoid anything that reminds them of the possibility of death and so they avoid estate planning. Amy stayed with Aunt March because she needed to be quarantined while her sister Beth was ill. Amy creates her will after learning about Aunt March’s will, unaware that the ailing Beth has already divided her few possessions among the family.

For her part, Aunt March, who had no children, modeled estate planning for Amy. If you’ve read Little Women, then you know that Amy became a favorite of Aunt March and in some ways replaced  her sister Jo, who had been Aunt March’s companion. Even though Aunt March did not approve of Jo’s behavior and threatened to leave her nothing, in the end, Aunt March leaves property to Jo and this gives Jo a way to start a home-based business.

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