Amending Returns for My Parents' Estate

As an executor of my parents' estate, one of my tasks has been to amend previous year state tax returns due to errors on state tax withholding documents.   One amended tax return was filed just within the three year time period allowed.  Unfortunately, the second amendment was outside of the three year time period and may be denied.

The only change in the amendment was to increase the amount of estimated tax paid to the correct amount.  Since my parents received a 100% refund, they should receive the additional amount.   Typcially, states will automatically correct for errors in estimated tax paid and send the correct refund amount.  But in this case, no correction is made.

I've asked the state to consider the specfics of this situation and grant the additional refund requested in the ammendments.   We'll learn of their decision in the next month.

For more on Crossing Generations, check back every Thursday for a new segment.

This is not financial or tax  advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

Updating Wills and Living Trusts

In 1999, we created our first set of estate planning documents:  wills, revocable living trusts, health care power of attorney, and living wills.  The catalyst for doing these was a transfer to another country by my company.  We were advised that it was important to document our estate transfer wishes; otherwise, the transfer would follow the laws of the country in which we resided.  At the time, we were in our late 30s and early 40s and  married with no children.

Over the past 13+ years, there have been a few changes that may affect the documents from 1999.   First, the estate tax exemption amount has increased from $650,000 to $5.25 million.   Second, we have an eight year old daughter.  Third, my parents have both passed away.

Although some of these changes, e.g. having children and changes to the estate tax exemption, were accounted for in the general terms of our documents, it will be worthwhile to review our documents in the context of the specific changes that have happened.  

I expect that we will be making some slight modifications to the documents to reflect our current situation.  Also, I expect that how assets are transferred to our heirs will be executed differently based on the higher estate tax exemption.
.
For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

This is not financial or estate planning advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

The Wealth Builder Carnival #111

Welcome to the one hundred eleventh edition of The Wealth Builder Carnival. The purpose of this carnival is to collect articles from the blogosphere on building, preserving and keeping enough wealth for a comfortable retirement. For reference, I have tried to keep the carnival content tightly focused on wealth building and did not include submissions that were off topic. For reading convenience, the posts are listed with a brief summary or comment by the submitter and organized into seven categories: Earning, Insuring and Protecting, Investing, Living Frugally, Retiring, Saving and Taxes.

And now on to the Carnival.

Earning

Susan Wowe presents Make Money Online | A Free $10 Today posted at Online Business - Make Money Online, saying, "Every penny counts, especially if it is from a passive income. Spend little time to receive this $10 in your account all free today."

Insuring and Protecting

Bryan presents Compare Car Insurance posted at My Best Car Insurance 101, saying, "Liability car insurance is required by law in most states, but what about comprehensive, collision, gap, and under or uninsured motorist coverage? Do you know about all the coverage options available and how you should go about comparing policies, companies, and rates to lower your costs? This article is to help you maneuver the industry and buy the best and cheapest insurance coverage."

Super Saver presents The Value of Health Insurance posted at My Wealth Builder, saying, "In 2013, our medical insurance premium will more than pay for itself. I expect the billed amount for my medical treatments to exceed 50% of our annual living expenses. My out-of-pocket costs will only be a few hundred dollars."

Investing

Bryan presents Vanguard vs Fidelity posted at Gajizmo, saying, "Early on, investors learn they can't time the markets, so why should passive investors try to? Chances are, you have retirement funds in Vanguard or Fidelity mutual funds, so why not determine which company is the best for the rest of your investments. We compare the pros and cons of each company for your benefit."

My Money Design presents P2P Investing Denied! What Should be My Next Passive Income Ambition? posted at My Money Design, saying, "The tires on my P2P investing efforts quickly went flat last week when I discovered some very important information - Michigan doesn't allow it!"

Dividends4Life presents 12 Dividend Stocks Growing Their Yield posted at Dividend Growth Stocks, saying, "Investing in dividend growth stocks is a long-term proposition. One of the beauties of following a dividend growth strategy is that you don't have to watch your portfolio or the market on a daily basis. For the most part, daily, monthly and yearly movements are just noise in the system. Here are my income portfolio's top and bottom 5 performers for the year, through December 31, 2012..."

John Schmoll presents How to Take the Emotion Out of Investing posted at Frugal Rules, saying, "The stock market is driven largely by emotion, some say upwards of 90%. If you have a solid investment plan though you can easily separate the emotions from the day to day activity of your investments."

Living Frugally

Jon Rhodes presents How To Save Money AND Improve Your Life posted at Affiliate Help!, saying, "Being able to save money AND improve your life just requires the correct mind set. Read on..."

MFIJ presents Frugality is Just a Tool – Nothing More posted at My Journey to Financial Independence, saying, "Presenting a view on frugality from someone who is neither forced into it nor idolizes it as the path to happiness."

joneshailey presents 30 Blogs with Tips to Actually Cut Your Grocery Bill posted at Nanny Websites, saying, "Feeding your family on a tight budget, especially when money doesn’t seem to go as far as it used to, can be a frustrating and even downright frightening proposition."

Super Saver presents Colleges with Free Tuition posted at My Wealth Builder, saying, "Free is a great cost for college tuitoin.

Saving

Emily presents Upcoming Transition and a Potential Financial Overhaul posted at Evolving Personal Finance, saying, "My husband is moving out in a few months, and we are taking the opportunity to whip our finances into shape."

Taxes

Bill Smith presents Bipartisan Changes Needed To Reduce Debt posted at 2013 Taxes, saying, "Spending cuts and reforms to government entitlement programs are very necessary, according to an interview with House Minority Leader Nancy Pelosi on National Public Radio."

Bill Smith presents Tips to Settle Your Tax Debt on Your Own posted at 2014 Taxes, saying, "Want to settle your tax debt on your own? Here are few tips for you."

Jason presents FreeTaxUSA – Review and Analysis by a Tax Accountant posted at WorkSaveLive, saying, "FreeTaxUSA is a tax software used to prepare and e file your federal return for free and your state return for just 9 99! It is an original member of the IRS’ Free File Alliance, which is comprised of a group of tax software providers that allow individuals with an Adjusted Gross Income of 57,000 or less to file federal returns at no charge"

Michael presents Why Did My FICA-OASDI Taxes Increase in 2013? posted at FinancialRamblings.com, saying, "Wondering why your FICA taxes increased? Click through to find out."


That concludes this edition. Submit your blog article to the next edition of The Wealth Builder Carnival using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

Technorati tags: the wealth builder carnival, blog carnival.  

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial, earning, insuring, investing, living, retiring, saving, tax, or wealth building advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

Taking Profit

For positions that I bought in 2012,  I'm taking profit on 40-60% of the position.   Psychologically, this enables me to have a win/win/win situation.   The first win is I have a profitable trade.  The second win is I continue to make money if the stock goes up.  The third win is I can buy back my sold position if the stock price falls.

I'm using this strategy for stocks that have been in a price trading ranges for six months or more.  I will sell part of the position near the top of the channel, and buy back near the bottom of the channel.  In many cases, I will be correct to assume the trading channel will continue.  However, for the few that breakout above the top line (resistance) of the channel, I will participate in the further gain with about 50% of the position.

For more on Strategies and Plans, check back every Monday  for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

A Bullish Argument for U.S. Stocks

The Bullish Case of U.S. Stocks in 2013 makes the case that U.S. stocks are undervalued based on historical measures and that returning historic averages would lift the stocks significantly.   In addition, the current bull market is only the 9th longest since 1928 and sentiment indicators are still 10% below historical norms.  Simply, if the market simply returns to the average historical valuation, 2013 will be a very good year for the market.

To me, this  argument is based on the principle of regression to the mean.  Specifically, over long periods of time, the individual values will tend to move towards the long term average.  This principle doesn't exclude that there will be significant deviation from the mean in the short term.

So the bet is whether stocks will move back towards long term averages in 2013, or whether stocks will continue to deviate.   Based on equity mutual fund inflows and a sampling of financial bloggers' 2012 positive investment results, I believe that stocks will gravitate towards the historical averages in 2013 and sideline money is reinvested in stocks.  Of course, a significant event, e.g. sovereign debt default in Europe, could create a significant deviation again

For more on Reflections and Musings, check back every Saturday for a new segment.


This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

Low Cost Portfolio Management

Finding Investment Advice for More Modest Retirement Investments reports on new services being offered to create ETF portfolios which are then periodically adjusted.  The costs range from $150 for self-service to 0.25% to 1.0% of assets for a managed account.

The article shares three companies:

1. Rebalance IRA
2. Wealthfront
3. Betterment

Although I haven't looked into these investment options in much detail, the lower costs ($150 or 0.25%) for the service provided make them very attractive.    For now, I will continue to consider building my own portfolio with commission free ETFs.  In addition, I may put money with a managed account that uses a wider range of ETFs than I can access through commission free trades.

Disclosure: No compensation was received for writing this article.

For more on Reaping the Rewards, check back every Friday for a new segment.

This is not financial, retirement or investment  advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

From Invincible to Vincible

Many young people feel they are invincible.  Why not?  They have their youth, health and future potential.  I was no different.  In high school, I bounced back from a ruptured appendix and returned to a normal senior year, including playing on all my previous sports teams.  Although I graduated during the 1980 recession, I didn't worry about getting a job, and ended up with 5 offers.   When I was 33, I decided to run a marathon, trained for 4 months, and ran my first ( and only marathon) in a little over 4 hours.

However, since entering my fifties, I've started to feel much more vincible.   Before retiring, I worked on but never worried about the sustainability of retirement savings.   After retiring at 49, I became much more aware of the possibility of our retirement savings running out during our lifetimes.  The Great Recession of 08-09 was the event that made me realize that we were only one or two catastrophic events away from having a failed retirement.  Thus, I needed to be more vigilant in managing our retirement saving.

My recent diagnosis of my health condition has added to my feelings of vincibility.   In my younger days, I only saw my doctor for injuries, which were the result of my sports activities.  Now that I'm older, I need to pay more attention to my health, by monitoring it regularly and taking necessary actions.  The change in my health situation has made me more aware of my mortality, and contributed to eliminating the feelings of invincibility.

Acknowledging that I'm vincible has been positive. It has enabled me to take appropriate actions to strengthen our retirement finances and improve my health, which I probably wouldn't have done if I still felt invincible.

For more on Crossing Generations, check back every Thursday for a new segment.

This is not financial, health or saving advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

The Value of Health Insurance

I've always had health insurance as an adult, even in times where I did not use it much.  In my younger days, I would go for a year or more without seeing a doctor, to the extent that my family doctor had assumed I was no longer a patient.  However, when I first started working, there were no health insurance premiums, only an out-of-pocket maximum before my insurance would take over. In my last year of working, the cost was about 0.8% of my salary.

As a retiree, I pay a seven times more for our family health insurance, approximately 12% of our annual expenses.  Even so, I haven't considered forgoing health insurance because I believe it is one of the important insurances I need to have.

Recently, I had several medical procedures, including surgery, which demonstrated the value of our health insurance.   One of the diagnostic procedures, prior to surgery, was billed as a cost slightly greater than the insurance premium for the entire year.   The bill was discounted about 50% and the balance was paid by our health care insurance.  My cost was less that $200   I still haven't received the bill for the surgery yet, but I expect it will be about double the cost of the diagnostic procedure.  Again my cost will probably be in the $200 range.

If I didn't have insurance, the medical cost would likely have been over 50% of our annual living expenses.   Therefore, I am very glad to have a health care insurance, even though we don't use it much in a typical year.
For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

This is not financial, health care or insurance advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

The Wealth Builder Carnival #110

Welcome to the one hundred tenth edition of The Wealth Builder Carnival. The purpose of this carnival is to collect articles from the blogosphere on building, preserving and keeping enough wealth for a comfortable retirement. For reference, I have tried to keep the carnival content tightly focused on wealth building and did not include submissions that were off topic. For reading convenience, the posts are listed with a brief summary or comment by the submitter and organized into seven categories: Earning, Insuring and Protecting, Investing, Living Frugally, Retiring, Saving and Taxes.

And now on to the Carnival.

Earning

Theresa Torres presents 6 Tips for Negotiating Your Salary and Benefits During a Job Interview posted at Hispanic Today, saying, "It can be a bit scary for interviewees to raise the question of salaries and benefits during a job interview although they would very much like to know. If you are preparing for your next interview, here are some tips to help you convey your salary expectations better."

Vytas presents Day trading tips posted at Trend, saying, "There are things that you should have in mind before jumping on any day trade. There are other things that you should have in mind when you are on a day trade. I like going over those before I open a trade and also when the trade is actually open. Let me share those tips with you."

Investing

John Schmoll presents Reader Question: Should I Invest in Mutual Funds or ETFs? posted at Frugal Rules, saying, "There are various similarities as well as differences between mutual funds and etfs. If you do some simple homework you can determine which funds are better for you while also keeping down the costs associated with investing."

Dividends4Life presents Ford (F) Doubles Its Dividend, And 3 Other Increases posted at Dividend Growth Stocks, saying, "Ford Motor Company (F) is the second-largest U.S.-based automaker and the fifth-largest in the world. January 10th the company increased its dividend 100% to $0.10 per quarter. Below are several other companies that have recently increased their cash dividends to shareholders..."

Living Frugally

Jason presents How to Get Your Family On Board When Paying Off Debt posted at WorkSaveLive, saying, "For many just embarking on their debt payoff journey, it's likely that your family may not be on board with your excitement to cut back on your lifestyle and eliminate debt. You may be dealing with a spouse or kids who are reluctant to change their lifestyle, and honestly, who can blame them?"

Peter Rudin-Burgess presents Compare Holiday MoneyForeign Currency - Three Top Tips posted at Compare Holiday Money, saying, "This is a post about getting the best value for money when you need to buy travel money but is UK based."

Jenny presents Eating out? Find a BYO restaurant and save a fortune posted at Money saving tips & advice from Discount Coder, saying, "Finding restaurants that allow you to bring your own drink can be a fantastic way to save money on eating out. This fabulous article discusses the best way to find these hidden gems!"

Charles presents FHA Requirements posted at Wallet Hub, saying, "Federal Housing Administration loans enjoy a fine reputation as a way for families of modest financial means to buy a home. In the aftermath of the home mortgage crisis, the FHA has tightened up some of its rules, but for many homebuyers, FHA loans are still an attractive option."

Denise Young presents 30 Blogs for Frugal Moms posted at Au Pair Care, saying, "Saving money becomes even more important in a struggling economic climate than in less troubling times, and managing the expenses of running a household while making sure that everyone has everything they need can be a major challenge, even for thrifty moms."

William presents Make Credit Card Spending Part of Your Budget posted at Card Guys Blog, saying, "It seems counterintuitive at first, but bringing in credit card spending as part of your budget can go a long way toward improving your finances — and keeping you out of credit card debt."

Retiring

Super Saver presents Social Security - Earlier or Later? posted at My Wealth Builder, saying, "I've estimated my break even age to be 78, i.e. I will get more money taking benefits at 62 if I die before 78 and more money taking benefits at 70-1/2 if I die after 78. My decision will be based on whether I estimate I will live past 78"

Saving

Bryan presents Credit Unions vs. Banks posted at Gajizmo, saying, "Not all banks are created equal. Determining whether you should open an account at a credit union versus a bank depends on your financial goals and needs. For different services, we recommend having an account at both, and here's why!"

Taxes

Bill Smith presents Eliminating State Income Taxes Could Spur Economic Growth posted at 2012 Taxes - Free Tax Filing Options, saying, "While Washington continues to struggle with attempts at major changes to the federal tax system, individual states have no such problem."


That concludes this edition. Submit your blog article to the next edition of The Wealth Builder Carnival using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

Technorati tags: the wealth builder carnival, blog carnival.  

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial, earning, insuring, investing, living, retiring, saving, tax, or wealth building advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC

Trickling Funds Back In and Selling Into the Rally

The current "unloved" bull market is causing me to have a Dr. Jekyll/Mr. Hyde attitude about the stock market.  Part of me wants to be in the market and take advantage of the upward trend since companies are positioned well to take advantage of an upturn  Part of me wants to take profits by selling into the rally since there are still a number of unresolved economic issues.

For now, I'm won't be deciding one way or the other and plan invest both ways.  

First, I will be purchasing stocks with upward trends in sectors I believe will do well.  The first sector I've chose is health care, with emphasis on small cap biotech stocks.  I have identified about 15 stocks,which I am slowly accumulating  The second area I'm investigating is the housing recovery, which includes sectors such as construction, building materials and consumer discretionary.  I am still researching this area and have not started buying.

Second, I am also selling certain stocks which I currently own, especially those near the high of a trading channel or having difficulty breaking to new highs.  These include my company stock options, some conservative stocks paying good dividends,  some speculative stocks that were bought on a dip, and a few stocks that I inherited from my parents.

At this point, I am cautiously optimistic and therefore, am comfortable with slightly increasing the amount of funds in equities.

For more on Strategies and Plans Ideas, check back every Monday  for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2013 Achievement Catalyst, LLC