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

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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.

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

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

2 + 7 =

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

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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.

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

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

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Why are so many people afraid to ask for a pay raise?

ST. CROIX INSIGHTS

Why are so many people afraid to ask for a pay raise?

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

Here’s the strategy your boss won’t be able to argue with when it comes to asking for a pay raise. In our world today, talking about how one earns is such a private and taboo subject, and it shouldn’t be. As a Certified Financial Planner, I must disclose in writing how much money I make, and it drives Mrs. Anderson nuts when I ask others how much they make off me. You and I provide value/service for our customers/clients and we should be compensated for it accordingly.

One area to focus on is value. It’s not about your hourly rate or salary, but rather about the value you bring to the organization. It isn’t something that’s focused on, but it should be. Once you start thinking about it, putting pen to paper, you’ll never look at how you are compensated the same way.

So, when asking for a raise, how do you calculate your value? It’s easy to calculate compensation for a salesperson, but what about everyone else? Let’s say you’re a marketing professional and your current salary is $100,000 year. When you look at your position, what expertise do you bring? What knowledge, skills or abilities you utilize each day to help the organization reach its goals? Do you directly contribute to additional sales or an increase in customer traffic to your employer? What’s the value each new customer means to the company? How have you not only made the company money, but how have you saved the company money?

Customer Service – how many calls do you make or take on a regular basis? What expertise you bring to the table? Do you take more calls vs others in the company? Do you have a skill set that’s hard to find and you wouldn’t be easily replaced? Is your work above and beyond what’s expected of you each day and have you been documenting how you are adding value to the company?

Receptionist – It’s the front door to the store or business. This person can make or break a business. This person sets the tone on most calls. It’s that tone that can make or break everyone else’s day. Do you build client relationships? Do customers know you by name? Are you able to process calls quickly and have a high satisfaction rate or take on other side projects as needed? This list could go on.

Value comes in all forms to an employer. Most employees would never approach the owner of the company or CEO and tell them I’d like to make you more money and here’s how I can make that happen. If you did, they’d be thrilled and wouldn’t look at you the same way (in a positive way) going forward. Your employers want you to succeed.

It’s not always about the money. But money helps. Understand and demonstrate the value you bring to your employer. Talk about it with your boss. Be confident knowing that you make a difference and that you bring value to your employer.

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

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

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