October Cashflow update

Time to refresh your PFS or Personal Financial Statement.

Back in July, I introduced the concept of quarterly financial updates.  If you choose to work with a financial advisor, chances are they will encourage quarterly meetings.  I usually did with my client base.  Although, I found that my clients after a year of these meetings were comfortable with the relationship and chose to forego the quarterly meeting.  This was actually okay, because I was working behind the scenes keeping close watch over my client’s overall financial picture.

Quite honestly, you should keep a close watch on your financial picture too if you’re a “do-it-yourselfer”.   I have no problem with the DIY strategy.  Paying advising fees on top of fund fees can eat into your investment balances, especially if you’re under $500k in investable balances, not including your primary residence.

If this is your case, then keep it simple:

1)  Limit investing to pre-tax accounts, i.e. 401(k)s.

  • Strive to max out the employer match
  • Stick to your chosen asset allocation and re-balance at least annually and perhaps semiannually depending upon market conditions
  • Consider using low cost index funds

2)  Strive to eliminate credit card balances that are not paid off in full each month

3)  Supercharge your emergency fund

  • You never know when you’re going to need it.
  • This is key during unstable job markets and volatile economies
  • Make sure to include all your insurance deductibles and property tax payments in addition to a set number of months of living expenses – shoot for 12 months

4)  Control overspending – NEED I SAY MORE?

5)  Manage your mortgage balance

  • Just because you have a 30 year mortgage does not mean you need to take 30 years to pay it off.
  • Run the numbers for 25 years or better yet 20 or even 15 years.

So it’s now October and time to refresh your PFS for the quarter ending 9-30-2014.

Keep these things in mind when updating your PFS at this time of year:

  1. Did my liabilities go down?
  2. Did my non-investment account assets go up?
  3. How did my investments fare compared to market indices?
  4. Are my savings and investing goals on track for me to reach my goals?
  5. Am I on track to not overspend going into the holiday season?
  6. Am I on track to fund my retirement accounts by year-end as planned?
  7. Am I doing everything to minimize my income tax liabilities for the year?

My excel spreadsheet 9-30-14 tab is empty.  I must get busy.  This quarter is not the time to skip this exercise.  Too much is at stake. This is the time for preparing for holiday spending, minimizing income tax liabilities, planning for 2015 expenditures, and building financial freedom.

Get busy.  Because it’s about life and how you live it!

In the spirit of financial well-being,

Paula Cashflow

Financial Planning is Healthful

My mother is an avid reader and she’s always giving me newspaper clippings, dog-earred magazines, blurbs, etc. penned with ideas she considers to be valuable information that I MUST read, right this minute.

Her intentions are always good and, most of the time, I do read the bag full of clippings that she sends home with me after our visits.

But this week, Viviane (Paula Cashflow’s mom) nailed it!  Continue reading

Borrowing from your 401k

Whether you’re a spender or a saver, most of us will need to borrow money at some future point in our lives.  It’s inevitable.

Back in the late 1990’s when my income was much less, I borrowed money from my 401k.  In the spirit of full disclosure, I am not a fan of borrowing from 401k funds.  Therefore, I think it is necessary to have a healthy conversation about why 401k loans should not be part of a wealth accumulation strategy. Continue reading

Life Insurance 101: Part One

As Open Enrollment season approaches, you might have the option to choose employer provided life insurance. Generally, most companies offer a no-cost group life insurance option limited to one- or two-times your annual salary. Needless to say, this is not an employee benefit option that anyone should pass up.

Here are some things to consider this open enrollment season when evaluating your benefits plan for 2015. If you are in any of the following categories, you MUST consider electing this coverage: Continue reading

Money Lessons I Have Learned

Over the years most of the money lessons I’ve learned have involved money and some combination of family or friends.  This is a sensitive topic.

Money and family can be a toxic combination, but I’m going to attempt to address some events that can transpire and hopefully not offend any of my readers in the process.

As I take a deep breath, here are a few of my toughest money lessons: Continue reading

Fees You Should Start Boycotting Today

When I first started to pay more attention to the expense side of my wealth accumulation strategy, I started taking a harder stand on ALL fees that I was being charged.  You might be thinking, well, what control do I even have over these fees?  Answer:  you have total control.  Businesses are focused on fee revenues to boost overall revenues during periods of low interest rates.  Don’t let fees erode your savings. Continue reading

7 Tips for Buying a Car

7 tips for car buying nirvana. It’s execution time!

I’ve been asked by so many readers, friends and fellow financial gurus to write about my car buying experiences.  There are a gazillion excellent articles on this topic, but we are approaching the time of year when the 2015s are coming out and the 2014s are on sale.  It’s execution time!  How about a refresher? Continue reading