I love Roth’s and so should you – Four keys for Roth accounts.

ST. CROIX INSIGHTS

I love Roth’s and so should you – Four keys for Roth accounts.

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

ROTH Account

One of most powerful financial tools that Congress created was the Roth IRA/401(k) Roth accounts. If you had a $1 million in a Traditional IRA and $1 million in a Roth IRA, which one would be worth more?

The answer is the Roth IRA as these accounts are not taxed upon the distribution of the funds if you follow these four keys:

  1. Rules….no one likes them but with each type of retirement account you fund, you make a deal with our government. Yet, I contend the Roth IRA rules are extremely favorable. Favorable doesn’t mean simple. There are tons of rules to comply with to avoid taxes or penalties with Roth accounts.
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  3. Many of you have been told you CAN’T fund a Roth account because your income is too high. In technical terms, your Adjusted Gross Income (AGI) based on your 1040 falls about the funding thresholds. But that’s not the entire story. You can fund a Roth IRA accounts even if your AGI is high. The best strategy is funding a non-deductible IRA and right away do an IRA Conversion to a Roth IRA account. Simple, done. You funded a Roth IRA account. Now it’s a little more complicated if you have IRA accounts with account balances and that’s where we need calculation a tax rate on the conversion.
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  5. Another big misconception is around your employer’s 401(k) Roth option. Many believe if your AGI is too high you still cannot contribute to your employers. Employer 401k plans DO NOT have income limitations around funding a Roth or Traditional account.
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  7. These accounts do not have Required Minimum Distribution (RMD) levels. Yet 401(k) Roth accounts do at age 70 ½ unless you are still working for the company.

Roth accounts are powerful financial tools when you follow the four keys.

St. Croix Advisors, LLC is an investment advisory firm. We seek to help our clients achieve financial simplicity. Before implementing financial ideas, you read, work with a Certified Financial Planner (CFP) or CPA for advice or recommendations that fit your own financial situation. The content is developed from sources believed to be providing accurate information.

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We don’t spend enough time on the exit strategy

ST. CROIX INSIGHTS

We don’t spend enough time on the exit strategy

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

Exit Strategy

The great thing about life is that we can go through so many different seasons. From just starting out to dating – to getting married – to having a family. We are always seeking that day we get to retire and enjoy 365 Saturdays. As a business owner, the journey is usually filled with unknowns, “what if’s” and a whole lot of uncertainty of how to create a smooth path. Most leaders couldn’t just give a two-week notice like our employees. Even business owners need to think about their exit strategy. Oh, the dream of being able to give a two-week notice and being able to walk away…

But for business owners, your work is in your DNA and a lifestyle 365 days a year. Yet, I contend one of the most important decisions you’ll have to make is when to transition into your next season? That next season may not be clear in your mind, but it is clarity you should strive for as you continue your journey.

Planning your exit

Transitions aren’t easy and probably hard to contemplate. They require us to examine our lives and ask a host of questions we probably are not ready to address.

Who am I outside of my business? Will I still be relevant? How will my wife and I get along? Is she ready to have me in charge at home (the answer is no just in case you didn’t know)? Drilling down on these questions isn’t always easy and when you do many more questions will occur.

Over the years, M-O-N –E-Y is usually the most important topic on business owner’s minds. Money from the standpoint that most know or feel they haven’t saved enough outside their business to “walk” away without hitting that magical number. But that requires the owner to build a tip top organization that a buyer can’t shoot holes into during the acquisition process.

My business owner clients, have two or three different buckets of money they are funding with a couple of objectives in mind. One, if they don’t hit the right multiple or EDTIDA number, they have other options. For these owners, more than 75% of their retirement isn’t dependent upon the sale of business. Bam! That’s just down right cool. Even better are the ones who don’t want to even factor the sale into that walk-a-way number.

Remember, preparing your company for sale will take money. Do you have the right management team in place? Are you willing, or need, succession planning? Are you just going to sell it outright and walk away? Do you need to retain a few key people to hit your sales numbers? Again, these are hard questions to answer without some deep soul searching.

This whole business owner transition has become big for consultants as boomers age at and move to the next stage of their life. With so many consultants offering a plethora of services I recommend interviewing a few to determine who fits your needs. Don’t be afraid to investment money in this process. If you need help in selecting a business owner transition consultant, give me a call. I’d be happy to give a you few ideas based on your situation.

St. Croix Advisors, LLC is an investment advisory firm. We seek to help our clients achieve financial simplicity. Before implementing financial ideas you read, work with a Certified Financial Planner (CFP) or CPA for advice or recommendations that fit your own financial situation.

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4 Financial Steps – I want to know where your money goes?

ST. CROIX INSIGHTS

4 Financial Steps – I want to know where your money goes?

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

Financial Steps

Doesn’t that seem to be the $64,000 question when you review your finances? You make good money and it seems to never be enough. Where does your money go? Let’s talk about 4 different financial steps to take.

I’ve opened up my credit card statement for the month and I can’t remember where I spent so much money without looking at the details. But, once I look at the detailed bills, I go oh “Yep, right there. I remember that, I remember that.” I always wonder how the heck did it add up so fast? I can’t be the only one that this has happened to. Have you experienced this?

Does it seem money just disappear in seconds yet it takes so darn long to earn it? Have you ever received a bonus and once you received that bonus within a day or two it’s gone?

Here are four steps easy steps to follow to know where your money goes:

 
1. Make technology your friend
With online financial software, you can not only track your day-to-day spending, establish a budget and see daily where you stand financially. Investing a few hours now will turn into real money overtime in your pocket. Mint.com is a good option and I use Emoney as it ties into comprehensive financial planning software along with budgeting software. You can print all kinds of reports and most importantly track your financial progress.

2. Cash is great but it’s hard to track down the penny
The reason I like cash is I seem to spend less vs. using my Marriott Rewards card. But, I do like all the upgrades and perks that come along with using a credit card and it does make it easy to link my transactions to my financial software. With cash, you must be disciplined about manually entering all your spending into your software.

3. Establish a base-line of spending over 90 to 120 days
It becomes surprising when you start looking month-to-month where all your money goes. This will allow you to make some easy, yet some hard decision about your spending patterns.

4. Financial “leakage” happens everyone
It’s generally not the mortgage or the car payment, but rather just everyday life that really gets us. It all adds up. $5 here. $50 there. $250 here. It all adds up to real money each month. It’s called financial leakage. We all have it yet, some of us are better than others at controlling it.

With knowledge about your money, you become even more powerful and capable of reaching your financial goals. You can make better, informed decisions along with reducing your financial stress and aligning your actions with your values is empowering.

St. Croix Advisors, LLC is an investment advisory firm. We seek to help our clients achieve financial simplicity. Before implementing financial ideas you read, work with a Certified Financial Planner (CFP) or CPA for advice or recommendations that fit your own financial situation.

Sign up for our eNewsletter blog that includes timely financial matters, news, and planning strategies that you can implement today.

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Financial Freedom – what it means to me

ST. CROIX INSIGHTS

Financial Freedom – what it means to me.

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

Everyone’s definition of financial freedom varies based on their background, upbringing and life experiences. It seems today on TV, social media and movies, we have all types of expectations set forth for us to live up to. Yet, what is real life these days? From what I see – most of it isn’t real.

Almost every day, I ask someone what financial freedom means to them. Most reply with a dollar amount so they don’t have to worry about money or expenses and they can financially handle whatever life brings their way.

I’m no different. I believe financial freedom is being debt free and having an asset base provide enough monthly cash to support my lifestyle. That’s it. Basic. What that framework, it’s easy to understand and figure out what your number should be.

There are three steps to help achieve this type of financial freedom:

1. Don’t purchase what you can’t afford. Sounds easy but it’s not. For example, do you purchase a new car at 100,000 miles or do you drive it in the ground? Drive it in the ground. At 100,000 miles you’ve barely went through two sets of tires. And that dream home you desire – “right size” it. Don’t over buy.

2. Pay yourself first. Sounds easy but it’s not. For those in your working years, target 15 – 20 percent of your gross Income. Yes it’s a lot, but that is what’s required to achieve financial freedom. Numbers don’t lie.

3. Pay attention to the tax man. Remember that our money belongs to the government and if we don’t understand the rules, they keep more of it. That’s not ideal if they keep more of your hard earned money.

Financial Freedom doesn’t happen overnight. You and I have to work for it. You know that saying, “Freedom isn’t free.”

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Renting watches, robot lawn mowers to monthly car rental clubs

ST. CROIX INSIGHTS

Renting watches, robot lawn mowers to monthly car rental clubs

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

Photo courtesy ‘Watch Collection Lifestyle’

It’s not often I’m surprised, but this one really caught me off guard. People actually rent watches. Seriously!

Eleven James, an online company based in Detroit, is off to the races. They rent men and women’s watches by the month. When looking at their website it isn’t your Timex watch you’re renting (maybe I’ve just shown my age). Sure they are nice watches but if you can afford to rent a high-end watch, you probably already have a phone, correct? So I wonder how many people check their phones vs. their wrist for the time? I stopped wearing a watches years ago and now wear a Fitbit to track my steps. Yet, these are nice watches.

Robin, a robot lawn cutting service. You can rent an electric mower. Sure it can manicure your lawn each and every day. They just install cable so the robot knows where to go and a home base to recharge. You’ll still have to trim, weed, etc. So it’s not 100% done for yourself.

Car rental clubs. Gone are those two or three-year car leases. Now for the car connoisseur, there are clubs to enjoy a new car each week or month. It’s call Clutch. You pick the car you want to drive each month or each week. They have a fleet of high end vehicles to choose from. Not to mention you can change the cars out if you don’t like it. I leased my Honda for 3 years. Like it or not I’m stuck so I guess I better like it. With Clutch I wouldn’t not stuck.

So all these rental ideas got we wondering……as a society; we’ve changed on how we perceive or look at “stuff”. Our parents and grandparents believed in owing. Owning is powerful and you’ve paid for it vs. having to give it back. Today, it seems our society is shifting and wants the newest and latest models. I blame it on Apple and McDonald’s. We want things now (and waiting for two minutes for “fast” food isn’t acceptable) and you have to have the latest iPhone because the version before just isn’t the same nor does it do the same things. But it does if we are honest with ourselves.

“Watch the pennies and the dollars will take care of themselves.”

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Year-end Financial Challenge

ST. CROIX INSIGHTS

Year-end Financial Challenge

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

Can you do it? Yes you can!

I don’t know about you, but when you look through your monthly expenses doesn’t it surprise you how much it costs to live?

Each year, l look to cut 5% to 10% of my monthly expenses.

For example that darn Comcast bill. They enjoy increasing your monthly payment and now you have to call them to decrease it by threating to cancel it. That’s about a $100 a month each time you call.

Verizon – it’s worth revisiting your overall data usage to see if you can save any money. You can usually find $20-$50 a month.

Car and home insurance – You need to work with an independent agent. If you need a referral, let me know. This is an area we neglect not only in coverage levels but premium creep happens. Shop around every couple of years.

Cars, Cars & Cars – We don’t really think about it but these are depreciating assets that just cost us money each month. To help control the cost of my vehicles I’m a big fan of preventive maintenance. That’s how I get my cars to last so long. Plus, in the winters I wash them 3-4 times a week to keep all that crud off them to help prevent rusting. Just sign up for the unlimited car washes. They can be a great value.

Eating & drinking out – This is an easy one to overlook. It’s extremely expensive to drink out these days. Not to mention eating quality food at a good restaurant and I’m not talking about McDonald’s. Keep a close tab on this one.

Day to day – I didn’t notice I spent it but I did. Have you ever looked at your Visa or American Express bill and you spent $5,000 for the month and can’t remember where all that money went until you look at the details? Head to the bank once a week and use cash. I know I spend more when paying with a credit card and using cash helps control my spending throughout the week. I set a weekly amount to live on.

Your tracking software. Our clients can use our iAdvise software, a financial dashboard so they know where they stand every day. You can monitor everything financial aspect of your life and we build that right into your planning. That’s cool! Another good online system is mint.com.

Take an hour and see where you can save a few dollars.

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