Bring Clarity to Your Finances™

Clarity Financial Planning Services is an advocate for your financial future who takes a holistic approach to your needs and goals.

College Students and Their Families Face Tough Choices

College students face some tough choices as they look to how they will continue their college education that was likely disrupted in some way by the pandemic during this past spring semester. Some classes are all online or partially online and some students can’t fully pursue their courses of study because of the need for people to keep their distance from each other.

Good Housekeeping offers some perspective and advice for families who are weighing their options for the fall semester and beyond. Since no one can really predict what will happen, students and their families have to consider the entire upcoming school year.

College costs will remain the same or rise.

While some colleges offered emergency funds, moving assistance (for those leaving dorms) and in some cases, partial refunds this past spring, students may not see the same for the fall. You may argue that a college that is offering online-only or hybrid course should charge you less but many schools will see budgets shrink because of lower enrollment. Colleges still have campuses that they will need to maintain with smaller amounts of tuition money.

Is it worth it?

Whether they study economics or not, students will need to quickly figure out how to do a cost-benefit analysis with regard to the viability of continuing their studies. You can ask your Fee-Only financial planner for help. If you have already started at a college or university, you will have to decide if continuing there with whatever they are offering will be worthwhile based on your course of study. Students who planned to start their first year of college in the fall also have to decide if what is being offered is good way to launch their journey into higher education.

Gap year?

The article also advises students who are considering a gap year. A student may not benefit from the year off if they do not have a plan for what they will do instead of attending classes. Whatever students do should still put them on the path toward their goals and  while that doesn’t necessarily have to be a job or an internship, the experience gained should be meaningful.

Financial Power of Attorney: Are You Responsible for Covering Debt?

A Live Chat with The Washington Post’s Color of Money columnist Michelle Singletary posed an interesting question about handling a parent’s debt. The person who wrote in to the chat has financial power of attorney and has had to move that parent into an assisted living facility. The parent had $3,000 in credit card debt that the credit card company is pressuring the adult  child to pay off using monthly payments: “While his account had been closed for fraud, I didn’t see anything too suspicious. I called the cc company to discuss options. They offered me a 5 year payment program at 6% which is $62/mo. I know I am not personally liable for his debt, and he is practically judgment proof at this point, but I’m wondering what you would recommend.”

This person is empowered enough to know that having power of attorney does not mean being automatically responsible for someone’s debts. The ins and outs of handling this kind of responsibility can sometimes come as a surprise and many people do not know what to do. If you did not educate yourself ahead of time because you were not anticipating the need to manage someone else’s finances, you can still consult with a Fee-Only financial planner. You do not have to go it alone and try to handle this responsibility without expert advice.

Singletary recommended continuing to negotiate with the credit card company to get a cash settlement (as opposed to monthly payments with interest), adding: “Yes, you have the power of attorney (POA) but you are not obligated to do more than try to manage his affairs and not take on his debts.”

(By the way, this live online chat session also includes advice on getting a password manager, something we’ve mentioned before since password access is a part of estate planning. The person who wrote in about credit card debt had to repeatedly ask the credit card company for information and it took time to get past statements.)

File Federal Income Taxes by July 15

Earlier this year, we mentioned that the federal income tax deadline was extended and that you needed to check your state deadline.

Like many other employers across the country, the IRS also scaled back operations, so they were unable to process tax returns and offer the phone assistance they had previously offered. But with the July 15 income tax deadline approaching, they are preparing to go through any backlog, as well as process new returns that come in this month. If you are hoping that rumors of further extension were true, you need to know that on June 29, the IRS announced there would not offer an additional extension.

If you were one of those people who felt you needed assistance to finish filing your taxes and could not visit a tax preparer because you were being cautious or because your tax preparer’s office was closed, contact local tax preparers to see if they are offering drop-off service. You may be able to confer with someone on the phone if needed rather than sitting across from them in an office

In “July 15 tax return deadline is right around the corner: What to knowMSN Money points out one advantage this year for those who hesitated: you may be getting a refund plus interest since the IRS will pay you interest owed between April 15 and the day your refund is issued.

The article also adds that  you may be able to get another extension: “It is still possible to file IRS Form 4868 on or before July 15 to receive an automatic extension until Oct. 15 to file your tax return. That’s an extension for filing a return, though. If you owe money, you would still need to pay what you owe by July 15 or be subject to penalties and interest. “

We recommend filing your taxes as soon as you can and working with a Fee-Only financial planner to get your finances and paperwork in order so you can be ahead of schedule for next year.

Why Are You Avoiding Estate Planning?

In “Estate Planning in the Time of Corona“, we discussed some of the ways in which estate planning may have changed during the pandemic. While some of the logistics and methods used to execute an estate plan may have changed, the excuses we use to avoid this work may have remained the same—with the added twist that we are also more fearful in general because of the Coronavirus.

Photo by Melinda Gimpel on Unsplash

Some people have been able to spend their time sheltering in place engaging in hobbies and in a more relaxed fashion while others have found an increased pressure to work around the clock. Either way, the importance of having an estate plan remains the same. We can’t break down all of your fears connected to estate planning but we can offer some tips.

In “Three Reasons People Avoid Estate Planning“, a writer for Forbes

“…narrowed it down to these three most common excuses:

Too Busy: I can barely keep up with my life as it is. 

Too Adult: It’s complicated and/or expensive.

Too Superstitious: I don’t want to jinx my life by thinking about death.”

If you are overwhelmed at the thought of doing an entire estate plan on your own, you can get some help from a Fee-Only financial planner

As a beginning step that you can take on your own, you can follow the advice of the Forbes article and either share your passwords or use a password manager to collect your password and find a way to make sure those handling your estate can get the information : “It could be as simple as writing down the location, or the master password, and keeping it with your important papers. Plus, if you ever forget the master password, which happens, you’ll know where to find it.”

As we’ve noted before: password access is a part of estate planning.

Time-Honored Investing Advice Applies During a Pandemic

In calmer, more predictable times some people find it difficult not to panic based on headlines. During a pandemic, the temptation to panic and make impulsive money moves may be even greater. offers advice to nervous investors in “How to Save Yourself from…Yourself.” 

The article says “It is only a loss if you sell it. Markets go up and they go down, but over the long run, they have always gone up.” So, before you panic and decide to sell investments that could still grow over time, consider the long-term consequences to your portfolio.

And instead of selling, you could also consider buying some of the stocks that are going to be on sale during uncertain times. Rather than worrying about what could happen to stocks you have you could boost your portfolio with additional investments. One thing the article suggests for those who want to invest more but are risk-averse is annuities since they are less volatile.

On the other hand, some people are not panicking at all because they have no investments, although now may be a good time to start investing.  The Motley Fool offers tips in “How to Start Investing During a Pandemic.” Two pieces of advice offered are overall financial planning strategies and not strictly tied to investing: have an emergency and reduce your debt as much as possible. According to The Motley Fool, these actions mean you are ready to invest.

If you haven’t invested before you can take your time to learn more about the stock market and consult with a Fee-Only financial planner. The article suggests that if you aren’t ready to just dive in, you can invest a little money at a time to test the waters.

Like, The Motley Fool suggests that you need to give investments time to grow:

“Finally, remember that pandemic or no pandemic, you should never invest in the stock market with any money you will or may need within five (if not 10) years. You don’t want to have to sell stocks after they’ve crashed, and the market’s performance in the short term is unpredictable — but over the long run, it has always gone up.”

Supporting Fathers During a Pandemic

We recently overheard a radio offering a promotion that allowed the winning caller a chance to treat their father to dinner on Father’s Day (this coming Sunday). One lucky family will be able to get a meal at no cost and the restaurant offering this meal got airtime and publicity.

So, while the pandemic had changed many things, people are still looking for ways to celebrate. Parents in general have weathered a lot of change these past few months with fathers and mothers adapting to losing jobs or having to work from home with children at hand  because schools were closed. 

Many people are making their peace with the changes and if they aren’t to making their peace, they are at least finding ways to move forward.

In “Amid the frustrations of being stuck at home, a pink heart is slipped beneath Daddy’s door, “ a writer with the Chicago Sun-Times discusses feeling guilty about locking his home office door to get works done. As the title, indicates, after locking the door, his son still found a way to reach him by slipping a heart underneath the door.

However, the father who was part of a much-discussed article that appeared in The Lily, was not ready to take on more time with his child and as a result, his wife dissolved her tech company to care for their son.

Some of us are finding it easier to cope than others and we would like to continue to make the case for working with a Fee-Only financial planner. It would be wonderful if society was structured in such a way that people could pursue careers and parenting without worrying about how to balance it all. Perhaps in the years to come, things will change to make this a reality. For now, though, we live with certain constraints. And this is where planning for contingencies can help. It may not eliminate all difficulties but sound financial planning can certainly make a difference.

The Pandemic Has Changed the Rules for Retirement

Washington Post columnist Michelle Singletary offered new rules for retirement savings in “Forget what you’ve heard. Here are the new rules for post-pandemic retirement,” and  we are going to discuss two of them that relate to retirement planning.

Old rule: Make retirement savings your No. 1 priority.

New rule: Make paying off debt, especially high-interest debt, a priority.”

Someone who considered making it a priority to pay off debt might have been told that it would be better to concentrate on saving for retirement before the pandemic. However, now Singletary writes that carrying high-interest debt for years or even decades can get the way of your ability to save for retirement. Debt that you need to pay off  to free funds for retirement includes credit cards and even student loan debt  (no it’s no considered “good” debt anymore).

Of course, if your employer offers to match your retirement savings, you should use the highest percentage you possibly can, so that is one instance where you need not hold back on retirement savings.

Old rule: Save at least 10 percent of your income for retirement

New rule: Aim to save 15 percent of your income for retirement.”

The article acknowledges that not everyone is able to put away 15 percent of their income but if you can you should try. Perhaps before when people were advised to save 10 percent, those who could afford to save more didn’t but now they should. And if 15 percent seems out of reach, you can get as close to it as you can, growing your retirement savings as things become more stable.
Your regular expenses are going to increase (not to mention the increased costs of hobbies and leisure activities).

And of course, with any financial planning “rule” old or new, you are not obligated to do what others do if you aren’t sure it will benefit you and Singletary acknowledges this:

“Of course, there are exceptions to every rule so consider your individual situation. Do what works for you. But at least be sure you are intentional and realistic about the projected retirement income you’ll need.”

Did You Know You Can Donate Travel Miles?

Photo by Ross Parmly on Unsplash

When the Finance101 article “Why donating your travel miles is a good idea” was written,  during the holiday season last year,  some of us would have no idea that we would, in a sense, be grounded for months in 2020 due to the Coronavirus pandemic. While we mourn our canceled trips and travel opportunities, we still may be able to do some good with the miles we have already accumulated. Instead of saving them all up for the trips you plan to take as travel becomes more feasible, why not donate them now to charitable causes that could really use the assistance during these difficult times?

The article explains: 

“When you donate your travel miles to charities, they’re going to a place where they’ll do some good. Some charities, for example, use these miles to pay for travel for clients that can’t afford the cost of airfare on their own. Groups like this include veterans’ groups or organizations that provide services to sick people and their families (think Make-a-Wish or St. Jude) or organization that provides volunteers to help in disaster areas around the globe.”

While the process may be a little different for each airline, airlines are generally receptive to the people donating their miles so they try not to make it too difficult. This article provides more details and of course you can contact an airline directly to see if their donation program is still in operation and who benefits from it. 

As good as it feels to donate, there are some benefits for you too since you can document proof of the cash value of the donation and use that as a charitable contribution when you do your taxes the following year. Consult with a fee-only financial planner to be sure that you are getting the documentation that you need for the tax deduction.

← Previous EntriesNext Entries ←