Staying the course…change is just part of it.

ST. CROIX INSIGHTS

Staying the course…change is just part of it.

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

2020 was off to such a great start! Wrapping up the holiday season with friends and family, winter vacation travel in full force, snowbirds enjoying life outside of this cold tundra, the economy roaring—how could it get any better? As we know now, everything went south fast (and not in a good way).
We’ve seen winners and losers during this coronavirus, although I’m not sure that’s the right terminology; maybe it’s slightly inconvenienced vs. dramatically impacted. If you had told me on January 1, 2020, that by August 1, 2020, face masks would be common, international air travel would have come to a halt (and I read last week that it is not expected to return for another three years), RV dealers would hit record sales (up 90%), and businesses would no longer want cash as payment for goods and services, I would have bet my net worth that you were wrong. You could have cleaned me out!  

These changes haven’t been easy for any of us. (OK, maybe the introverts have been enjoying this “social distancing,” but for the extraverts among us, I suspect this hasn’t been easy.) Technology companies have become clear winners, as their services play an even greater role in our ability to see our grandkids, work, and even socialize with friends and family. How many of you are tired of Zoom meetings by now?

I’ve been in business for nineteen years, and I can tell you that owning your own business isn’t as glamorous as you might think. You are the first to turn the light on in the morning and the last to get paid. So many businesses and employees have been impacted in this new reality of decreased sales, revenue, and customers. Businesses can’t survive long without revenue or customers, and workers have been laid off; I suspect we haven’t yet seen how many small businesses will end up closing their doors. It’s not an easy time or journey. Fourth quarter 2020 will be very telling as far as where our economy is heading. It’s enough to make you pause and reflect on where you’ve been and where you want to go.  

Use them if you got them… Each December, I purchase gift cards to our favorite restaurants because of the Christmas specials they offer. I usually buy enough so we can live off them throughout the year. I like saving money when I can, but this one might backfire on me. Early on, we decided to continue to support our favorite restaurants but hold off on using our gift cards until this July: businesses needed revenue, and using our gift cards right away truly wouldn’t have helped them. But today, so many places have experienced financial hardship, and I’ve talked to so many individuals who haven’t been in a restaurant since March and don’t expect to return any time soon. You may want to use up your gift cards ASAP.
 
The stock market has experienced record highs and lows and huge daily swings. Yet to even my surprise, the markets have come close to recovering more rapidly than I would have expected. Throughout this year, I’ve been traveling by air, car, and boat. Hotels are sold out wherever I’ve stayed, restaurants are full (due to fewer tables), and air travel has been almost enjoyable, as airports have been ghost towns and flights have been less than half full. I suspect air travel has changed for years to come, and higher prices will be the new norm. I’m OK paying a little more not to be packed in like sardines on my next flight.  

I never thought we’d see interest rates so low in our lifetimes again, but here we are. If your interest rate is over 3%, now’s the time to do something about it. For those who enjoy the open road, I suspect in two years, you’ll be able to pick up an RV at a great price. Amazon now has RV parks where employees can live for free in their own rigs! I’m a big fan of credit card reward points (I pay them off each month), and cash is no longer the preferred payment method. It’s time to get the rewards you deserve (if you can keep that balance down!).  

Delivery will continue to play a major role in our lives. From groceries to dog food, your UPS delivery professional is really getting to know you and your purchasing habits, along with Amazon and Google. I still enjoy walking down the aisles at my local Costco in search of pricing ending in .97 to find the best deals. Though I must confess, I’m on a first-name basis with the UPS guy now.

All day long, I observe what’s happening around me and how the coming changes could impact my clients, friends, and family. Working our life plan isn’t always easy. As I close this letter out while finishing breakfast at the local diner, I thought you’d enjoy this observation of someone working their plan: I’m watching this guy finish breakfast, and as he’s leaving the restaurant—at 9 a.m.—he’s carrying a dish of ice cream and a spoon out with him (and no, it wasn’t me)! Being that it’s 85 degrees outside already, he’s going to have to eat it fast. He’s working his plan: breakfast followed by desert. That’s staying the course!

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Ask yourself- can my portfolio support my lifestyle in my retirement? 

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Broke Millionaires—It Happens

ST. CROIX INSIGHTS

Broke Millionaires—It Happens

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

I suspect you think I’ve gone off the rails this time. How can someone who makes a million dollars a year be broke? Maybe you’re thinking, “If I had a million dollars, I’d never be broke.” Well, I’m here to tell you this is a more common theme than you might think.
In my professional experience, it’s not the mortgage payments that cause the financial leakage in our checkbooks. It’s the day-to-day spending. It’s the $10, $25, or $100 here and there throughout the month that causes the problem. This type of financial leakage seems so small and innocent, no big deal . . . yet this compounding leakage adds up to real money.

Many people believe that if they just made $5,000, $10,000, or $100,000 more a year, all would be well with their finances. The truth is, no matter what they make, most individuals live life right up to their full income if not beyond by using credit. And credit is so darn easy to obtain. Today, I’m even seeing zero percent auto loans for 80 months. That’s a long time to keep making payments (and no car company is offering a zero percent interest-free loan, by the way).

But—and this is a key life lesson—debt limits our future lifestyle.
We live in a society that says if you buy this, you’ll be happy. If you buy this, it will impress others. Money is not always mathematical; it’s emotional, and that complicates things for some of us. I have two kids, one who will end up with more money than his parents and one whose paychecks are inevitably spent two weeks prior to payday. (Till this day, I have no idea how the heck I raised two kids with such opposite spending habits!)
It’s not about what you make; it’s about what you keep. If you are ready to keep more, you’ll like our down-to-earth strategies to control your money. Let’s schedule a time to discuss how we help our clients reach their financial goals.

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Federal Stimulus Check 2020

ST. CROIX INSIGHTS

2020 Federal Stimulus Cash

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

federal stimulus check

The federal stimulus check raises many questions. With markets whipping between rallies and retreats, it’s natural to ask:
First off, Is it time to buy?
Is it time to sell?
Are we near the bottom?
Or worse, Is the bear market finally over?

Despite the recent market surge, which propelled the Dow 21% higher in just 3 days (technically ending its bear market correction), it’s likely too soon to get overly optimistic.*

What gives? How can markets be rallying when the crisis hasn’t even peaked yet?

When markets have fallen so much and “priced in” so much bad news, it’s common to see short-term surges on good news like the relief bill. However, these “head-fake” rallies can be unsustainable when there’s so much uncertainty.
Bottom line: No one is good enough to call the exact bottom of a market. What’s important is looking through the bear market to the other side and picking up opportunities along the way. 
Whether the bear market is over or not, we’ve been here before and know what to do.

How worried should I be about a recession? 

Cautious, but not panicked. When a $21 trillion economy comes to a screeching halt, there’s going to be an economic contraction. Multiple timely indicators show that we are already experiencing a sharp downturn.**
However, the $2 trillion fiscal rescue act and the Federal Reserve’s new asset-buying program are a double-barreled bazooka aimed at the effects of a serious recession.
Furthermore, we’re monitoring the data rolling in and will know more about how the economy is reacting to the unprecedented aid in the coming weeks and months.

What’s inside the $2 trillion CARES Act? What’s in it for me?

The Coronavirus Aid, Relief, and Economic Security (CARES) Act is designed to provide relief for individuals and businesses who have been hurt by the outbreak. I won’t try to include all 800+ pages in this post, but here are a few key provisions that you should know about:

Federal Stimulus Check: A One-time cash payment. Taxpayers are eligible for a one-time direct deposit of up to $1,200 per adult ($2,400 per couple) plus $500 per child under age 16. Amounts are reduced for those who make more than $75,000 ($150,000 if married). If you have filed your 2019 taxes already, the IRS will use that income to calculate your payment; if not, they’ll use your 2018 tax filing.

Better unemployment benefits. The Act will extend and expand unemployment insurance through Dec. 31. Eligible workers (now including self-employed, independent contractors, and gig economy workers) will receive an extra $600/week for four months, on top of what they receive from state unemployment benefits.

Early withdrawal penalty waiver. The Act waives the standard 10% early withdrawal penalty for eligible coronavirus-related distributions from retirement accounts (retroactive to Jan. 1). You’ll still pay income taxes on withdrawals, but you can spread them over a three-year period or use that time to roll the distribution back over.

2020 RMDs suspended. You won’t have to take a Required Minimum Distribution from your IRA or 401(k) this year, leaving you in control of how much you withdraw. If you already took
your RMD for 2020, you have several choices: keep it and pay taxes on it, return it to your IRA as an indirect rollover, or convert the amount into a Roth IRA (Roth conversions are permanent).
 

Financial advice is a public service in these times, and I’m here to help. If you have questions about how the slew of recent changes could affect you, please call the office at (651) 337-1919 and we’ll find a time to talk.

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Ask yourself- can my portfolio support my lifestyle in my retirement? 

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Which Side of the Check? Life Lesson 37 of 50

ST. CROIX INSIGHTS

Which Side of the Check do you Want to Sign?

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

which side of the check

Photo by Brooke Lark

I recently visited a successful doctor who owns her own dental practice. She’s married and has kids, and she has a host of employees who help keep her office running smoothly. As we were discussing her fees and insurance reimbursements (she was giving me a choice between replacing a filling or getting a crown), I asked her a simple question: “Which side of the check do you want to sign?”

She laughed and said, “I wish someone would have had that conversation with me years ago.”

Most people never give this a second thought, since most of us are employees: we are used to signing the back side of our checks, and we enjoy having the money appear in our account every other week with regularity. But if you own a business, you have to sign the front of the check and take on a heightened level of financial responsibility.

To be a business owner, you already have to be little off. Sure, it’s great to be your own boss, but owning a business isn’t easy:

  • It’s hard work.
  • You don’t always get paid.
  • The time commitment is massive.
  • It’s a big financial risk.

Not everyone is cut out to be a business owner.

There’s just no guarantee that you’ll be able to generate the necessary revenue to pay back the debt you’ve taken out, and that doesn’t sit well with everyone.

Personally, I’d rather just sign the back of the check and have the cash—but that’s just me. Not everyone is cut out to be a business owner like my doctor friend. Which type of person are you?

Before making the decision to own your own business, take a good, hard look at your own strengths, weaknesses, and comfort level when it comes to debt and risk. Then ask yourself: Which side of the check do I really want to sign?

Feel Good Article: Looking for Unconditional Love? Get a Dog

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Debt Sucks: Life Lesson 20 of 50

ST. CROIX INSIGHTS

Debt Sucks

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

debt sucks

I have several beliefs, but two just can’t be disputed: it takes a long time to earn money, and it’s easy to spend it like water flowing out of a faucet. I like to call this “financial leakage.” Many people are affected by financial leakage; for some, the situation is out of control.

Frankly, debt sucks. Debt makes us slaves to our lenders. Debt limits our future lifestyle and choices. But let me be clear. There are two kinds of debt—good debt and bad debt—and it’s bad debt we need to stop.

What are some ways to accumulate bad debt? Credit cards, buying that big dream home, paying for a college degree in a field with no promise of employment, expensive cars or boats…the list goes on.

Good debt, on the other hand, is investing in a business that’s cash flow positive.

A degree that can help you become employed, actually make a living, and pay off your loan within 5 years (not 20 or 30) is an example. There are times where it is good to invest upfront. The payoff can sometimes be much greater in the future.

Debt sucks, but luckily, one of the most effective ways to avoid it is also one of the easiest. Take a breather before doing anything drastic. Pause for a week or two to consider before you make a life-changing decision to take on debt. Give yourself a chance to see that big-ticket vacation. Ponder that spur-of-the-moment change in a clearer light by taking the time you need to think it over.

Getting Married? You’ll Need a Prenup

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Starting a Business: Life Lesson 3 of 50

ST. CROIX INSIGHTS

The real fear of starting a business?

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

starting a business

For many of you, you made the leap of starting your own business and would never go back to work for someone else. Many might say you might be unemployable at this point. Others of you have an idea, passion, or seek to be fulfilled in another way, and you know becoming a business owners would do that. But yet, one major item holds most people from starting their own business and it simple…It’s the lack of a paycheck.

It’s hard for many to start their own business because of the that need, or desire, for a reliable paycheck. That’s the biggest roadblock for most people who want to be entrepreneur – money. Even with the best business plans and hard work, 50 percent of businesses don’t make it five years. The odds are not in your favor.

I’ve been self-employed for 18 years and it wasn’t always an easy road.

Even today, it’s not easy, but the challenges can be easier to overcome. Maybe that’s because of experience, on the job training, my ability to handle stress or that my perspective on life and business have evolved.

If starting a business was easy, everyone one would do it. However, it requires a level of personal and professional commitment like nothing else. Sacrifices will happen including time with your family, friends and your money. If you are looking to start a business, let’s talk on creating a plan that allows you to fulfill your dreams, passions and hopefully make a living at.

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