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What Does “Pay Yourself First” Mean?

June 29, 2020

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Paul Bonomo

Paul Bonomo

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What Does “Pay Yourself First” Mean?

What Does “Pay Yourself First” Mean?
June 29, 2020

Bills, bills, mortgage payment, another bill, maybe some coupons for things you never buy, and of course, more bills.

There seems to be an endless stream of envelopes from companies all demanding payment for their products and services. It feels like you have a choice of what you want to do with your money ONLY after all the bills have been paid – if there’s anything left over, that is.

More times than not it might seem like there’s more ‘month’ than ‘dollar.’
Not to rub salt in the wound, but may I ask how much you’re saving each month? $100? $50? Nothing? You may have made a plan and come up with a rock-solid budget in the past, but let’s get real. One month’s expenditures can be very different than another’s. Birthdays, holidays, last-minute things the kids need for school, a spontaneous weekend getaway, replacing that 12-year-old dishwasher that doesn’t sound exactly right, etc., can make saving a fixed amount each month a challenge. Some months you may actually be able to save something, and some months you can’t. The result is that setting funds aside each month becomes an uncertainty.

Although this situation might appear at first benign (i.e. it’s just the way things are), the impact of this uncertainty can have far-reaching negative consequences.

Here’s why: If you don’t know how much you can save each month, then you don’t know how much you can save each year. If you don’t know how much you can save each year, then you don’t know how much you’ll have put away 2, 5, 10, or 20 years from now. Will you have enough saved for retirement?

If you have a goal in mind like buying a home in 10 years or retiring at 65, then you also need a realistic plan that will help you get there. Truth is, most of us don’t have a wealthy relative who might unexpectedly leave us an inheritance we never knew existed!

But you might be surprised by much you can save if you put your mind to it. And you might want to do that… but how do you do that?

The secret is to “pay yourself first.” The first “bill” you pay each month is to yourself. Shifting your focus each month to a “pay yourself first” mentality is subtle, but it can potentially be life changing. Let’s say for example you make $3,000 per month after taxes. You would put aside $300 (10%) right off the bat, leaving you $2,700 for the rest of your bills. This tactic makes saving $300 per month a certainty. The answer to how much you would be saving each month would always be: “At least $300.” If you stash this in an interest-bearing account, imagine how high this can grow over time if you continue to contribute that $300.

That’s exciting! But at this point you might be thinking, “I can’t afford to save 10% of my income every month because the leftovers aren’t enough for me to live my lifestyle.” If that’s the case, rather than reducing the amount you save, it might be worthwhile to consider if it’s the lifestyle you can’t afford.

Ultimately, paying yourself first means you’re making your future financial goals a priority, and that’s a bill worth paying.

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This material is intended for education purposes only and is not intended to be, nor should it be construed as, an offer or solicitation for the purchase or sales of any specific securities, financial services or other non-specified item. Please consult your Financial/Investment Advisor for advice and guidance on your particular situation. Neither Transamerica Agency Network nor its agents or representatives may provide tax or legal advice. Anyone to whom this material is promoted, marketed, or recommended should consult with and rely on their own independent tax and legal advisors regarding their particular situation and the concepts presented herein.

Transamerica Agency Network is a marketing group with Transamerica. Insurance products are sold through United Financial Services, Inc. and affiliated Transamerica companies.


TAN259756-07.20

Putting a Wrap On the Sandwich Generation

Putting a Wrap On the Sandwich Generation
June 19, 2020

Ever heard of the “Sandwich Generation”?

Unfortunately, it’s not a group of financially secure, middle-aged foodies whose most important mission is hanging out in the kitchens of their paid-off homes, brainstorming ideas about how to make the perfect sandwich. The Sandwich Generation refers to adults who find themselves in the position of financially supporting their grown children and their own parents, all while trying to save for their futures. They’re “sandwiched” between caring for both the older generation and the younger generation.

Can you relate to this? Do you feel like a PB&J that was forgotten at the bottom of a 2nd grader’s backpack?

If you feel like a sandwich, here are 3 tips to help put a wrap on that:

1. Have a plan. In an airplane, the flight attendants instruct us to put on our own oxygen mask before helping someone else put on theirs – this means before anyone, even your children or your elderly parents. Put your own mask on first. This practice is designed to help keep you and everyone else safe. Imagine if half the plane passed out from lack of oxygen because everyone neglected themselves while trying to help other people. When it comes to potentially having to support your kids and your parents, a tailored financial strategy that includes life insurance and contributing to a retirement fund will help you get your own affairs in order first, so that you can help care for your loved ones next.

2. Increase your income. For that sandwich, does it feel like there’s never enough mayonnaise? You’re always trying to scrape that last little bit from the jar. Increasing your income would help stock your pantry (figuratively, and also literally) with an extra jar or two. Options for a 2nd career are everywhere, and many entrepreneurial opportunities let you set your own hours and pace. Working part-time as your own boss while helping to get out of the proverbial panini press? Go for it!

3. Start dreaming again. You may have been in survival mode for so long that you’ve forgotten you once had dreams. What would you love to do for yourself or your family when you have the time and money? Take that vacation to Europe? Build that addition on to the house? Own that luxury car you’ve always wanted? Maybe you’d like to have enough leftover to help others pursue their goals.

And remember: It’s not too late to start feeling less like baloney and more like a Monte Cristo.

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This material is intended for education purposes only and is not intended to be, nor should it be construed as, an offer or solicitation for the purchase or sales of any specific securities, financial services or other non-specified item. Please consult your Financial/Investment Advisor for advice and guidance on your particular situation. Neither Transamerica Agency Network nor its agents or representatives may provide tax or legal advice. Anyone to whom this material is promoted, marketed, or recommended should consult with and rely on their own independent tax and legal advisors regarding their particular situation and the concepts presented herein.

Transamerica Agency Network is a marketing group with Transamerica. Insurance products are sold through United Financial Services, Inc. and affiliated Transamerica companies.


TAN131528-0919

How To Save For A Big Purchase

How To Save For A Big Purchase

It’s no secret that life is full of surprises. Surprises that can cost money.

Sometimes, a lot of money. They have the potential to throw a monkey wrench into your savings strategy, especially if you have to resort to using credit to get through an emergency. In many households, a budget covers everyday spending, including clothes, eating out, groceries, utilities, electronics, online games, and a myriad of odds and ends we need.

Sometimes, though, there may be something on the horizon that you want to purchase (like that all-inclusive trip to Cancun for your second honeymoon), or something you may need to purchase (like that 10-years-overdue bathroom remodel).

How do you get there if you have a budget for the everyday things you need, you’re setting aside money in your emergency fund, and you’re saving for retirement?

Make a goal
The way to get there is to make a plan. Let’s say you’ve got a teenager who’s going to be driving soon. Maybe you’d like to purchase a new (to him) car for his 16th birthday. You’ve done the math and decided you can put $3,000 towards the best vehicle you can find for the price (at least it will get him to his job and around town, right?). You have 1 year to save but the planning starts now.

There are 52 weeks in a year, which makes the math simple. As an estimate, you’ll need to put aside about $60 per week. (The actual number is $57.69 – $3,000 divided by 52). If you get paid weekly, put this amount aside before you buy that $6 latte or spend the $10 for extra lives in that new phone game. The last thing you want to do is create debt with small things piling up, while you’re trying to save for something bigger.

Make your savings goal realistic
You might surprise yourself by how much you can save when you have a goal in mind. Saving isn’t a magic trick, however, it’s based on discipline and math. There may be goals that seem out of reach – at least in the short-term – so you may have to adjust your goal. Let’s say you decide you want to spend a little more on the car, maybe $4,000, since your son has been working hard and making good grades. You’ve crunched the numbers but all you can really spare is the original $60 per week. You’d need to find only another $17 per week to make the more expensive car happen. If you don’t want to add to your debt, you might need to put that purchase off unless you can find a way to raise more money, like having a garage sale or picking up some overtime hours.

Hide the money from yourself
It might sound silly but it works. Money “saved” in your regular savings or checking account may be in harm’s way. Unless you’re extremely careful, it’s almost guaranteed to disappear – but not like what happens in a magic show, where the magician can always bring the volunteer back. Instead, find a safe place for your savings – a place where it can’t be spent “accidentally”, whether it’s a cookie jar or a special savings account you open specifically to fund your goal.

Pay yourself first When you get paid, fund your savings account set up for your goal purchase first. After you’ve put this money aside, go ahead and pay some bills and buy yourself that latte if you really want to, although you may have to get by with a small rather than an extra large.

Saving up instead of piling on more credit card debt may be a much less costly way (by avoiding credit card interest) to enjoy the things you want, even if it means you’ll have to wait a bit.

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This material is intended for education purposes only and is not intended to be, nor should it be construed as, an offer or solicitation for the purchase or sales of any specific securities, financial services or other non-specified item. Please consult your Financial/Investment Advisor for advice and guidance on your particular situation. Neither Transamerica Agency Network nor its agents or representatives may provide tax or legal advice. Anyone to whom this material is promoted, marketed, or recommended should consult with and rely on their own independent tax and legal advisors regarding their particular situation and the concepts presented herein.

Transamerica Agency Network is a marketing group with Transamerica. Insurance products are sold through United Financial Services, Inc. and affiliated Transamerica companies.


TAN258470-06.20

Why You Should Pay Off High-Interest Debt First

Why You Should Pay Off High-Interest Debt First

Credit card debt can be sneaky.

Often, we may not even realize how much that borrowed money is costing us. High interest debt (like credit cards) can slowly suck the life out of your budget.

But paying down high-interest debt can free up cash flow in a big way. It might take time to produce a meaningful return. Your “earnings” will seem low at first. They’ll seem low because they are low. Hang in there. Over time, as the balances go down and more cash is available every month, the benefit will become more apparent.

High Interest vs. Low Balance
We all want to pay off debt, even if we aren’t always vigilant about it. Debt irks us. We know someone is in our pockets. It’s tempting to pay off the small balances first because it’ll be faster to knock them out.

Granted, paying off small balances feels good – especially when it comes to making the last payment. However, the math favors going after the big fish first, the hungry plastic shark that is eating through your wallet, bank account, retirement savings, vacation plans, and everything else. In time, paying off high interest debt first will free up the money to pay off the small balances, too.

Summing It Up
High interest debt, usually credit cards, can cost you hundreds of dollars per year in interest – and that’s assuming you don’t buy anything else while you pay it off. Paying off your high interest debt first has the potential to save all of that money you’d end up paying in interest. And imagine how much better it might feel to pay off other debts or bolster your financial strategy with the money you save!

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TAN258320-06.20

Ways to pay off your mortgage faster

Ways to pay off your mortgage faster

It’s paradoxical how owning a home might make you feel more secure.

But it may also be a constant source of worry, particularly if you still have a hefty mortgage payment each month. For some, having a mortgage is simply a part of life. But for others, it can be an encumbrance, especially once you realize that your interest expense might cost as much as the home itself over the course of a 30-year loan.

Whether your goal is becoming mortgage-free or you just don’t want to pay interest to your lender for any longer than necessary, there are some effective ways you can pay off your mortgage faster.

Make bi-weekly payments instead of monthly payments
Many of us get paid weekly or bi-weekly (meaning every two weeks). A standard mortgage has twelve monthly payments. While we tend to think of a month as having four weeks, there are actually around 4.25 weeks in a month. This seemingly small discrepancy in time can work to your advantage, if you switch to making bi-weekly mortgage payments instead of monthly mortgage payments. At the end of the year, you’ll find that you’ve made thirteen mortgage payments instead of just twelve.

Over the course of a 30-year mortgage, switching to bi-weekly mortgage payments may shave some time off the length of your mortgage, depending on your mortgage balance and interest rate. You may potentially save thousands of dollars in interest expense as well.[i]

Make an extra payment each year
Some lenders may charge extra fees for customized payment plans or may not provide an easy way to make biweekly payments. In this case, you can simply make one extra payment each year by putting aside money in a dedicated account. If your mortgage payment is $2,000, you could fund your account with $40 per week, or $80 every two weeks, to save for an extra payment each year. If you use this method, your savings won’t be as dramatic as the savings you might see by making bi-weekly payments because the extra payments don’t reach your mortgage balance as frequently. If you have any spare cash, you might consider raising the amount that you save each week.

Round up your payments
Mortgage payments are almost never round numbers. Yours might look like $2,147.63, for example. Consider rounding up your payment to $2,175, $2,200, or even $2.500. Choose an amount that won’t break the bank but can put a dent in the balance over time. Depending on how much you round up your payment, this method may shave some time off your mortgage and potentially save you money in interest expense.

The key is consistency. Making one extra mortgage payment and then never making any extra payments again won’t make much difference, but sending a little extra with every payment may help make you mortgage-free a little faster.

Pro tip: Before you make any drastic moves to pay off your mortgage, first be sure that your emergency fund is well established, that your high-interest credit cards are paid off, and that you’re contributing enough toward your retirement accounts. The average rate of return on some types of accounts may be higher than the savings you might realize on mortgage interest. It’s possible that any extra money is more wisely put away elsewhere.

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This material is intended for education purposes only and is not intended to be, nor should it be construed as, an offer or solicitation for the purchase or sales of any specific securities, financial services or other non-specified item.Please consult your Financial/Investment Advisor for advice and guidance on your particular situation. Neither Transamerica Agency Network nor its agents or representatives may provide tax or legal advice. Anyone to whom this material is promoted, marketed, or recommended should consult with and rely on their own independent tax and legal advisors regarding their particular situation and the concepts presented herein.

Transamerica Agency Network is a marketing group with Transamerica. Insurance products are sold through United Financial Services, Inc. and affiliated Transamerica companies.


[i] https://www.mortgagecalculator.org/calculators/standard-vs-bi-weekly-calculator.php#top

111543

3 Ways to Shift from Indulgence into Independence

3 Ways to Shift from Indulgence into Independence
May 20, 2020

On Monday mornings, we’re all faced with a difficult choice.

Get up a few minutes early to brew your own coffee, or sleep a little later and then whip through a drive-thru for your morning pick-me-up?

When that caffeine hits your bloodstream, how you got the coffee may not matter too much. But the next time you go through a drive thru for that cup o’ joe, picture your financial strategy shouting and waving its metaphorical arms to get your attention.

Why? Each and every time you indulge in a “luxury” that has a less expensive alternative, you’re potentially delaying your financial independence. Delay it too long and you might find yourself working when you should be enjoying a comfortable retirement. Sound dramatic? Alarmist? Apocalyptic? But that’s how it happens – one $5 peppermint mocha at a time. This isn’t to say that you can’t enjoy an indulgence every once in a while. You gotta “treat yourself” sometimes, right? Just be sure that you’re sticking with your overall, long-term strategy. Your future self will thank you!

Here are 3 ways to shift from indulgence to independence:

1. Make coffee at home. Reducing your expenses can start as simply as making your morning coffee at home. And you might not even have to get up earlier to do it. Why not invest in a coffee pot with a delay brewing function? It’ll start brewing at the time you preset, and what’s a better alarm clock than the scent of freshly-brewed coffee wafting from the kitchen? Or from your bedside table… (This is a judgment-free zone here – do what you need to do to get up on time in the morning.)

Get started: A quick Google search will yield numerous lists of copycat specialty drinks that you can make at home.

2. Workout at home. A couple of questions to ask yourself:

1) Will an expensive gym membership fit into your monthly budget? 2) How often have you gone to the gym in the last few months?

If your answers are somewhere between “No” and “I’d rather not say,” then maybe it’s time to ditch the membership in favor of working out at home. Or perhaps you’re a certified gym rat who faithfully wrings every dollar out of your gym membership each month. Then ask yourself if you really need all the bells and whistles that an expensive gym might offer. Elliptical, dumbbells, and machines with clearly printed how-tos? Yes, of course. But a hot tub, sauna, and an out-of-pocket juice bar? Maybe not. If you can get in a solid workout without a few of those pricey extras, your body and your wallet will thank you.

Get started: Instead of a using a treadmill inside the gym, take a walk or jog around your local park each day – it’s free! If you prefer to work out at a gym, look into month-to-month membership options instead of paying a hefty price for a year-long membership up front.

3. Ditch cable and use a video streaming service instead. Cable may give you access to more channels and more shows than ever before, but let’s be honest. Who has time to watch 80 hours of the greatest moments in sports every week? Asking yourself if you could cut the cable and wait a little longer for your favorite shows to become available on a streaming service might not be a bad idea. Plus, who doesn’t love using a 3-day weekend to binge-watch an entire series every now and then? There’s also the bonus of how easy it is to cancel/reactivate a streaming service. With cable, you may be locked into a multi-year contract, installation can be a hassle (and they may add an extra installation fee), and you can forget about knowing when the cable guy is actually going to show up.

Get started: Plenty of streaming services offer free trial periods. Go ahead and give them a try, but be careful: You may have to enter your credit card number to access the free trial. Don’t forget to cancel before your trial is over, or you will be charged.

Taking time to address the luxuries you can live without (or enjoy less often) has the potential to make a huge impact on your journey to financial independence. Cutting back here and investing in yourself there – it all adds up.

In what areas do you think you can start indulging less?

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TAN131527-0919

So You've Graduated... Now What?

So You've Graduated... Now What?

Graduating from college is a big deal.

It represents a transition from student to adult for millions of people. But leaving university and joining the workforce can be intimidating. Looking for a job, paying bills, commuting, and living independently are often uncharted territory for recent grads.

Here are a few tips for fresh graduates trying to get on their feet financially.

Figure out what you want
It’s one thing to leave college with an idea of what career you want to pursue. It’s something else entirely to ask yourself what kind of life you want. It’s one of those big issues that can be difficult even to wrap your head around!

However, it’s something that’s important to grapple with. It will help you answer questions like “What kind of lifestyle do I want to live” and “how much will it cost to do the things I want?” You might even find that you don’t really need some of the things that you thought were necessities, and that happiness comes from places you might not have expected.

Come up with a budget
Let’s say you’ve got a ballpark idea of your financial and lifestyle goals. It’s time to come up with a strategy. There are plenty of resources on starting a budget on this blog and the internet on the whole, but the barebones of budgeting are pretty simple. First, figure out how much you make, how much you have to spend, how much you actually spend, then subtract your total spending from how much you make. Get a positive number? Awesome! Use that leftover cash to start saving for retirement (it’s never too early!) or build up an emergency fund. Negative number? Look for places in your unnecessary spending to cut back and maybe consider a side hustle to make more money.

Looking at your spending habits can be difficult. But owning up to mistakes you might be making and coming up with a solid strategy can be far easier than the agony that spending blindly may bring. That’s why starting a budget is a post-graduation must!

Meet with a financial professional
Find a qualified and licensed financial professional and schedule an appointment. Don’t let the idea of meeting with a professional intimidate you. Afterall, you trust your health, car, and legal representation to properly trained experts. Why wouldn’t you do the same with your financial future?

Being scared of starting a new chapter of life is natural. There are a lot of new experiences and unknowns to deal with that come along with leaving the familiarity of college. But the best way to overcome fear is to face it head on. These tips are a great way to start taking control of your future!

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This material is intended for education purposes only and is not intended to be, nor should it be construed as, an offer or solicitation for the purchase or sales of any specific securities, financial services or other non-specified item. Please consult your Financial/Investment Advisor for advice and guidance on your particular situation. Neither Transamerica Agency Network nor its agents or representatives may provide tax or legal advice. Anyone to whom this material is promoted, marketed, or recommended should consult with and rely on their own independent tax and legal advisors regarding their particular situation and the concepts presented herein.

Transamerica Agency Network is a marketing group with Transamerica. Insurance products are sold through United Financial Services, Inc. and affiliated Transamerica companies.


TAN255949-04.20

5 Financial Strategy Tips for Couples

5 Financial Strategy Tips for Couples
April 29, 2020

Talking to your spouse about money can be tricky.

Different spending habits and conflicting money management values are sometimes sources of tension between partners. Finances are the number one cause of arguments within relationships. In fact, it’s one of the most common reasons for divorce (1).

With bills to pay, emergency expenses, and a child’s college tuition and retirement on the horizon, many couples find their finances are stretched as they seek solutions to cover the cost of everyday life. The following 5 tips may help you and your spouse gain control of your finances.

1. Set Goals
The goal-setting phase allows a couple to talk openly about their financial history, current obligations, and future objectives. Gauging your spouse’s retirement preferences can often be a challenging obstacle before establishing a financial strategy.

2. Identify Risky Spending
Overspending and making frivolous purchases may damage your financial future. Discussing mistakes respectfully on both sides of the relationship can help prevent poor decisions in the future. If an expense proves to be a blunder, own up to the fact and move on.

Review the household “record of accounts” (that is, your budget) and your current financial landscape before adjusting your strategy. This may help protect your family from further problems that might delay the timeframe you want to retire.

3. Pay off Bills
Be fair. If—or when—your spouse admits to overspending, try not to blow up. We live in a consumerist society designed to push our buttons and trick us into spending. Even worse, it’s a pattern that can be difficult to break because it’s a very socially acceptable addiction.

Instead of exploding, ask them open-ended questions about their spending habits. The key here is working towards a compromise in a way that doesn’t villainize your partner but also protects your financial future together.

4. Periodic Review
Due to the dynamics of financial decision-making between spouses, it’s clear that periodic review has a benefit. Changes in income, lifestyle, and family or business obligations can alter a couple’s financial goals for retirement. Try to meet at least once a month (maybe over a cup of coffee) to review your finances and update your budget.

5. Don’t forget to have some fun!
The goal of getting in control of your finances is not to make life miserable. Sure, you might need to cut back on frivolous spending in the present to have more in the future, but that doesn’t mean you can’t enjoy life. Set aside a little each month for a movie night or dinner with friends. You actually might discover that things like budgeting free up cash!

Building a financially sound relationship takes time. It takes a willingness to listen, to compromise, to take responsibility, and to prepare. Sometimes it might take some experience as well. Contact a qualified and licensed financial professional to help you and your loved one come up with a strategy to build your future together.

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(1) Natalia Lusinski, “9 signs your spouse is spending more money than you think” Business Insider (28 June 2019)

This material is intended for education purposes only and is not intended to be, nor should it be construed as, an offer or solicitation for the purchase or sales of any specific securities, financial services or other non-specified item. Please consult your Financial/Investment Advisor for advice and guidance on your particular situation. Neither Transamerica Agency Network nor its agents or representatives may provide tax or legal advice. Anyone to whom this material is promoted, marketed, or recommended should consult with and rely on their own independent tax and legal advisors regarding their particular situation and the concepts presented herein.

Transamerica Agency Network is a marketing group with Transamerica. Insurance products are sold through United Financial Services, Inc. and affiliated Transamerica companies.


TAN255834-04.20

Financial Strategy - The Importance of Having One

Financial Strategy - The Importance of Having One
April 27, 2020

A financial strategy is many things.

It’s not just a budget. In fact, a solid financial strategy is not entirely based on numbers at all. Rather, it’s a roadmap for your family’s financial future. It’s a journey on which you’ll need to consider daily needs as well as big-picture items. Having a strategy makes it possible to set aside money now for future goals, and help ensure your family is both comfortable in the present and prepared in the future.

Financial Strategy, Big Picture
A good financial strategy covers pretty much everything related to your family’s finances. In addition to a snapshot of your current income, assets, and debt, a strategy should include your savings and goals, a time frame for paying down debt, retirement savings targets, ways to cover taxes and insurance, and in all likelihood some form of end-of-life preparations. How much of your strategy is devoted to each will depend on your age, marital or family status, whether you own your home, and other factors.

Financial Preparation, Financial Independence
How do these items factor into your daily budget? Well, having a financial strategy doesn’t necessarily mean sticking to an oppressive budget. In fact, it may actually provide you with more “freedom” to spend. If you’re allocating the right amount of money each month toward both regular and retirement savings, and staying aware of how much you have to spend in any given time frame, you may find you have less daily stress over your dollars and feel better about buying the things you need (and some of the things you want).

Remember Your Goals
It can also be helpful to keep the purpose of your hard-earned money in mind. For example, a basic financial strategy may include the amount of savings you need each month to retire at a certain age, but with your family’s lifestyle and circumstances in mind. It might be a little easier to skip dinner out and cook at home instead when you know the reward may eventually be a dinner out in Paris!

Always Meet with a Financial Professional
There are many schools of thought as to the best ways to save and invest. Some financial professionals may recommend paying off all debt (except your home mortgage) before saving anything. Others recommend that clients pay off debt while simultaneously saving for retirement, devoting a certain percentage of income to each until the debt is gone and retirement savings can be increased. If you’re just getting started, meet with a qualified and licensed financial professional who can help you figure out which option is for you.

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This material is intended for education purposes only and is not intended to be, nor should it be construed as, an offer or solicitation for the purchase or sales of any specific securities, financial services or other non-specified item. Please consult your Financial/Investment Advisor for advice and guidance on your particular situation. Neither Transamerica Agency Network nor its agents or representatives may provide tax or legal advice. Anyone to whom this material is promoted, marketed, or recommended should consult with and rely on their own independent tax and legal advisors regarding their particular situation and the concepts presented herein.

Transamerica Agency Network is a marketing group with Transamerica. Insurance products are sold through United Financial Services, Inc. and affiliated Transamerica companies.


TAN255755-04.20

Big Financial Rocks First

Big Financial Rocks First
April 13, 2020

A teacher walked into her classroom with a clear jar, a bag of rocks, a bucket of sand, and a glass of water.

She placed all the large rocks carefully into the jar. “Who thinks this jar is full?” she asked. Almost half of her students raised their hands. Next, she began to pour sand from the bucket into the jar full of large rocks, emptying the entire bucket into the jar.

“Who thinks this jar is full now?” she asked again. Almost all of her students now had their hands up. To her students’ surprise, she emptied the glass of water into the seemingly full jar of rocks and sand.

“What do you think I’m trying to show you?” She inquired.

One eager student answered: “That things may appear full, but there is always room left to put more stuff in.”

The teacher smiled and shook her head.

“Good try, but the point of this illustration is that if I didn’t put in the large rocks first, I would not be able to fit them in afterwards.”

This concept can be applied to the idea of a constant struggle between priorities that are urgent versus those that are important. When you have limited resources, priorities must be in place since there isn’t enough to go around. Take your money, for example. Unless you have an unlimited amount of funds (we’re still trying to find that source), you can’t have an unlimited amount of important financial goals.

Back to the teacher’s illustration. Let’s say the big rocks are your important goals. Things like buying a home, helping your children pay for college, retirement at 60, etc. They’re all important – but not urgent. These things may happen 10, 20, or 30 years from now.

Urgent things are the sand and water. A monthly payment like your mortgage payment or your monthly utility and internet bills. The urgent things must be paid – and paid on time. If you don’t pay your mortgage on time… Well, you might end up retiring homeless.

Even though these monthly obligations might be in mind more often than your retirement or your toddler’s freshman year in college, if all you focus on are urgent things, then the important goals fall by the wayside. And in some cases, they stay there long after they can realistically be rescued. Saving up for a down payment for a home, funding a college education, or having enough to retire on is nearly impossible to come up with overnight (still looking for that source of unlimited funds!). In most cases, it takes time and discipline to save up and plan well to achieve these important goals.

What are the big rocks in your life? If you’ve never considered them, spend some time thinking about it. When you have a few in mind, place them in the priority queue of your life. Otherwise, if those important goals are ignored for too long, they might become one of the urgent goals – and perhaps ultimately unrealized if they weren’t put in your plan early on.

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TAN131529-0919

The Birds Have Flown the Coop!

The Birds Have Flown the Coop!
February 5, 2020

The kids (finally) moved out!

Now you can plan those vacations for just the two of you, delve into new hobbies you’ve always wanted to explore… and decide whether or not you should keep your life insurance as empty nesters.

The answer is YES!

Why? Even though you and your spouse are empty nesters now, life insurance still has real benefits for both of you. One of the biggest benefits is your life insurance policy’s death benefit. Should either you or your spouse pass away, the death benefit can pay for final expenses and replace the loss of income, both of which can keep you or your spouse on track for retirement in the case of an unexpected tragedy.

What’s another reason to keep your life insurance policy? Some life insurance policies have cash value. Now that the kids have moved out and are financially stable on their own, the cash value of certain life insurance policies can be used for retirement or an emergency fund. If your retirement savings took a hit while you helped your children finance their college educations, your life insurance policy might have you covered. Utilizing the cash value has multiple factors you should be aware of before making any decision.*

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*Loans and withdrawals will reduce the policy value and death benefit dollar for dollar. Withdrawals are subject to partial surrender charges if theyoccur during a surrender charge period. Loans are made at interest. Loans may also result in the need to add additional premium into the policy toavoid a lapse of the policy. In the event that the policy lapses, all policy surrenders and loans are considered distributions and, to the extent that the distributions exceed the premiums paid (cost basis), they are subject to taxation as ordinary income. Lastly, all references to loans assume that the contract remains in force, qualifies as life insurance and is not a modified endowment contract (MEC). Loans from a MEC will generally be taxable and, if taken prior to age 59 1/2, may be subject to a 10% tax penalty. 

TAN132971-10.19

When should you start planning for retirement?

When should you start planning for retirement?
January 27, 2020

Depending on where you are in life’s journey, retirement may seem like a far away dream or it may be closing in faster than expected.

You might think that deciding when to start planning for retirement requires complicated algorithms. Yes, there may be some math involved – but the simple answer is – if you haven’t started planning yet, the time to start is right now!

The 80% rule
Many financial planners recommend saving enough to provide 80% of your pre-retirement income in your retirement years so you can maintain your standard of living. Following this rule isn’t an exact science though, because expense structures for each household can differ greatly. It is, however, a good place to start. How do we get to 80%? Living expenses typically decrease in retirement because costly commutes, investing in business clothing, and eating lunch out 5 days a week are reduced or eliminated. The other big expense that often changes is housing. At retirement, it’s common to trade in your 3, 4, or 5-bedroom home for something smaller, easier, and less expensive to maintain.

Retirement planning when you’re young
When you’re younger, planning for retirement may be a fairly simple process. Two considerations are life insurance and savings. This can’t be overstated: Now is the time to buy life insurance. If you’re young and healthy, life insurance rates are much more likely to be low. This also can’t be overstated: Now is the time to start saving. Every penny you put away now can get you closer to your goal. As anyone who’s older can tell you, life is full of surprises that end up costing money, and these instances have the potential to interfere with your savings strategy.

Longevity considerations
Another consideration is that we’re living longer. In the U.S. in 1960, life expectancy for men was 67 years. By 2016, life expectancy had increased to over 76 – with even longer life expectancy likely in following years – as medicine advances and as we become more aware of behaviors that affect our health.[i] Women tend to live even longer, with an average life expectancy of about 81 years by 2016.[ii] Life expectancy rates are essentially averages, with low and high numbers in the mix. If you’re fortunate enough to beat the average life expectancy, your retirement savings may become slim pickings in your later years, a time when you might not be able to generate supplementary income.

Manage your expenses
Whether you’re young or getting on in years, the time to start saving is now. But if you’re nearing retirement age, it’s also time to take an honest look at your expenses. Part of the trick to stretching retirement savings is to eliminate unnecessary costs. If you’re considering moving to a smaller home to cut costs – and you’re feeling adventurous – you might want to consider moving to a different state with a lower tax rate to enjoy your golden years. If you’re younger, it’s still a great time to assess your budget and eliminate any and all unnecessary spending that you can.

For younger people, time is your ally when it comes to saving for retirement, but waiting to start saving might leave you with less than you’d hoped for later in life. If you’re closer to retirement age, there’s still time to build your nest egg and examine your projected expenses. Talk to your financial professional today about options that may be available for you!

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Now’s the Time for Future Planning

Now’s the Time for Future Planning
January 20, 2020

What happened to the days of the $10 lawn mowing job or the $7-an-hour babysitting gig every Saturday night?

Not a penny withheld. No taxes to file. No stress about saving a “million dollars” for retirement. As a kid, doing household chores or helping out your friends and neighbors for a little spending money was vastly different from your grown up reality – writing checks for all those bills, paying your taxes, and buying all the things that children seem to need these days, all while trying to save as much as you can for your retirement. When you were a kid, did those concepts feel so far away that they might as well have been camped out on Easter Island?

What happened to the carefree attitude surrounding our finances? It’s simple: we got older. More opportunities. More responsibilities. More choices. As the years go by, finances get more complicated. So knowing where your money is going and whether or not it’s working for you when it gets there is something you need to determine sooner rather than later – even before your source of income switches from mowing lawns and babysitting to your first internship at that marketing firm downtown.

A great way to get a better idea of where your money is going and what it’s doing when it gets there? A financial strategy.

No message in a bottle sent from a more-prepared version of your future self is going to drift your way from Easter Island. A sound strategy for your money is essential, starting as soon as possible is better than waiting, and talking to a financial professional is a solid way to get going.

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TAN131530-0919

Getting Your Reindeer In a Row

Getting Your Reindeer In a Row

Dasher. Dancer. Prancer. Vixen.

Comet. Cupid. Donner. Blitzen. (And Rudolph too, of course.)

This is a holiday roll-call that’s instantly recognizable: the reindeer that pull Santa’s magical sleigh. But what if things got so hectic at the North Pole (not a stretch when you’re in charge of delivering presents to every child on Earth), that when it was time to hitch up the reindeer on Christmas Eve, they were all out of order?

Prancer. Cupid. Dasher. Comet. Dancer. Vixen. Blitzen. Donner.

Hmmm, someone’s missing… what happened to Rudolph? (Looks like he got left behind at the North Pole. In all the hubbub one of Santa’s elves forgot to review the pre-flight checklist.)

Since so much can change during the year from one crazy “Happy Holidays!” to the next, your ducks – or reindeer, that is – may not even be in a row at this point. They could be frolicking unattended in a field somewhere! And who knows where your Rudolph even is.

You know what can help with that? An annual review of your financial strategy. This review is key to keeping you on track for your unique goals. Lots of things can change over the course of a year, and your strategy could need some reorganizing. I mean, did you hear about everything that changed for Prancer? (What do you call a baby reindeer, anyway?)

Here are some important questions to consider at least once each year (or even more often):

1. Are you on track to meet your savings goals? A well-prepared retirement is a worthy goal. An annual review with a financial professional helps you make sure that nothing drove you too far off track this year, and if it did, you two can explore what can be done to get you back on the right path.

2. Do you have the potential for new savings? Did your health improve this year? Did that black mark on your driving record expire? Changes like these have the potential to positively impact your life insurance rate, but digging into your policy is important for discovering what kinds of savings might be in store for you.

3. Have your coverage needs increased? Marriage, having a child, or buying a home are all instances in which your life insurance coverage probably should be increased. Have any of these occurred for you over the last year? Have you added the new family member as a beneficiary?

If you haven’t had a chance to review your strategy this year, you can fit one in before Santa shimmies down the chimney. Which of your reindeer do you need to wrangle back into the ranks before the New Year gets going?

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Transamerica Agency Network is a marketing group with Transamerica. Insurance products are sold through United Financial Services, Inc. and affiliated Transamerica companies.

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Are you sure about this?

Are you sure about this?
September 23, 2019

Nearly every working adult dreams of a comfortable retirement, to finally be free to enjoy life.

If you’re approaching retirement age, it’s important to check on your numbers to be sure you’ve considered all the factors. If you’re younger, it might be difficult to know exactly how much to save. Think of it this way: strive to put away as much as you can.

What age do you want to retire?
Social Security can play a big role in retirement income, and the difference on a monthly basis between taking a benefit at age 62, 65, or waiting until age 70 to begin drawing benefits can be substantial.[i] If you choose to wait until 70 to take benefits, the total amount paid is comparable for all three options. However, from a cash-flow perspective, the bump in pay could be valuable when the monthly bills arrive in the mail.

How long will your money last?
One rule of thumb for knowing how much to take out of your retirement account each year is the “4% rule”.[ii] As its name suggests, you would withdraw 4% of your retirement savings each year. If you have a larger amount saved, your “income” from your retirement savings will be higher. The 4% rule is designed to prepare for 30 years of income after retirement. Of course, if your expenses are higher than your income, the money has to come from somewhere, potentially drawing your savings down faster – and that’s where many people get into trouble. Save as much as you can now.

Are you prepared for your health care needs?
The cost of health care for a couple retiring at age 65 varies, with estimates ranging between $197,000 and $265,000.[iii] This is the expense that often catches retirees by surprise. It’s relatively easy to budget for housing, food, utilities, and other essentials but medical care costs can vary widely and your actual expenses can be much higher or lower than average estimates.

By building a strategy for income from multiple sources, you’ll be much better prepared for retirement. Taking the time to prepare now is essential. Once you leave the workforce there might be less room for mistakes and fewer ways to earn additional income. When it’s time to retire, you’ll find that there’s no such thing as too much when it comes to retirement savings.

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What to do first if you receive an inheritance

What to do first if you receive an inheritance
July 31, 2019

In many households, nearly every penny is already accounted for even before it’s earned.

The typical household budget that covers the cost of raising a family, making loan payments, and saving for retirement usually doesn’t leave much room for spending on daydream items. However, if you’re fortunate, you might be the recipient of some unexpected cash – your family might come into an inheritance, you could receive a bonus at work, or you might benefit from some other sort of windfall.

If you ever inherit a chunk of money or receive a large payout, it may be tempting to splurge on that red convertible you’ve been drooling over or book that dream trip to Hawaii. Unfortunately for many though, newly-found money has the potential to disappear with nothing to show for it, if there is no strategy in place ahead of time to handle it wisely.

If you do receive some sort of unexpected bonus – before you call your travel agent – take a deep breath and consider these situations first.

Taxes or Other Expenses
If a large sum of money comes your way unexpectedly, your knee-jerk reaction might be to pull out your bucket list and see what you’d like to check off first. But before you start making plans, the reality is you may need to put aside some money for taxes. You may want to check with an expert – an accountant or tax advisor may have some ideas on how to reduce your liability.

If you suddenly become the owner of a new house or car as part of an inheritance, one thing to consider is how much it might cost to hang on to it. If you want to keep that house or car (or any other asset that’s worth a lot of money), make sure you can cover maintenance, insurance, and any loan payments if that item isn’t paid off yet.

Pay Down Debt\ If you have any debt, you’d have a hard time finding a better place to put your money once you’ve set aside some for taxes or other expenses that might be involved with an inheritance. It may be helpful to target debt in this order:

  1. Credit card debt: This is often the highest interest rate debt and usually doesn’t have any tax benefit. Pay your credit cards off first.
  2. Personal loans: Pay these next. You and your friend/family member will be glad you knocked these out!
  3. Auto loans: Interest rates on auto loans are lower than credit cards, but cars depreciate rapidly (very rapidly). Rule of thumb: If you can avoid it, you don’t want to pay interest on a rapidly depreciating asset. Pay off the car as quickly as possible.
  4. College loans: College loans often have tax-deductible interest, but there is no physical asset with intrinsic value attached to them. Pay these off as fast as possible.
  5. Home loans: Most home loan interest is also tax-deductible. But since your home value is likely appreciating over time, you may be better off putting your money elsewhere if necessary, rather than paying off your home loan early.

Fund Your Emergency Account\ Before you buy that red convertible, make sure you’ve set aside some money for a rainy day. Saving at least 3-6 months of expenses is a good goal. This could be liquid funds – like a separate savings account.

Save for Retirement
Once the taxes are covered, you’ve paid down your debt, and funded your emergency account, now is the time to put some money away towards retirement. Work with your financial professional to help create the best strategy for you and your family.

Fund That College Fund
If you have kids and haven’t had a chance to put away all you’d like towards their education, setting aside some money for this comes next. Again, your financial professional can recommend the best strategy for this scenario.

Treat Yourself!
NOW you’re ready to go bury your toes in the sand and enjoy some new experiences! Maybe you and the family have always wanted to visit a themed resort park or vacation on a tropical island. If you’ve taken care of business responsibly with the items above and still have some cash left over – go ahead! Treat yourself!

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Money Woes Hurt More than Your Bank Account

Money Woes Hurt More than Your Bank Account

How do you handle job stress?

Sticking to a solid workflow? Meditation? A stress ball in each hand?

Whichever way you choose to lessen the stress (that 80% of American workers experience), there’s another stress-relieving tactic that could make a huge difference:

Relieving financial stress.

Studies have found that money woes can cost workers over 2 weeks in productivity a year! And this time can be lost even when you’re still showing up for work.

This phenomenon is called ‘presenteeism’: you’re physically present at a job, but you’re working while ill or mentally disengaged from tasks. Presenteeism can be caused by stress, worry, or other issues – which, as you can imagine, may deal a significant blow to work productivity.

So what’s the good news?

If you’re constantly worried and stressed about how your family would cope if the income you bring in suddenly stopped due to an untimely passing, there’s a life insurance policy that could help you. Financing unexpected life events, saving for retirement for your spouse, or funding a college education for your children – these are just a few ways the death benefit of a well-tailored life insurance policy could be used to help provide for your loved ones in the event of a sudden tragedy.

A life insurance policy that’s tailored for you can provide coverage for those unknowns that keep you stressed and unproductive. Most people don’t plan to fail. They simply fail to plan. Think of a well-thought out insurance strategy as a stress ball for your bank account!

Contact me today, and together we’ll work on an insurance strategy that fits you and your dreams – and can help you get back to work with significantly less financial stress.

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Savings Rates Need Some Serious Saving

Savings Rates Need Some Serious Saving
May 8, 2019

Ever hear the old story of the 7 years of plenty followed by 7 years of famine?

In the years when there was an abundance of crops, it was wise to store up as much as possible in preparation for the years of famine. However, if instead of saving you ate it all up during the 7 years of abundance, the result would be starvation for you and your family during the 7 lean years. This might be an extreme example in our modern, First World society, but are you “eating it all up” now and not storing enough away for your retirement?

The definition of retirement we’ll be using is: “An indefinite period in which one is no longer actively producing income but rather relies on income generated from pensions and/or personal savings.”

According to this definition, the “years of plenty” would be the years that you are still working and generating income. While you still have regular income, you can set aside a portion of it to save for retirement. This amount is called the “Personal Savings Rate.”

In 2017, the personal savings rate for Americans was approximately 2.4% annually. If you compare that with the average during the 1970’s of a 12.9% annual savings rate, you’ll see it has decreased significantly. This should set off some alarms concerning the impact on your retirement savings.

Suppose you want to retire at 65. Looking at the 10-year window from age 65 to 75, even if you’re planning to live on only half of the income that you were making prior to retirement, you would need to save up 5 years worth of income to last for the full 10 years – not to mention what you’d need after that. But if you’re currently saving only 2.5% of your income per year, it would take 200 years to save up 5 years of income replacement!

So unless someone discovers the elixir of everlasting life, we’re all going to need to do some serious “saving” of the personal savings rate.

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Why you need an insurance review

Why you need an insurance review
February 27, 2019

Insurance is intended to protect your assets and to help cover certain risks.

Policies may have standardized language, but each insurance policy should be tailored to your needs at the time the policy is purchased.

A lot can change in a short amount of time – so an annual insurance review is a good habit to develop to help ensure your coverage still addresses your needs.

Life changes, and then changes again, and again
There are some obvious reasons to review your life insurance coverage, like if you’re getting married or having a baby – but there are also some less obvious reasons that may change your coverage requirements, like changing jobs or experiencing a significant change in income.

Here are some of the reasons you might consider adjusting your coverage:

  • You got married
  • You got divorced
  • You started a family
  • Your income changed
  • Your health improved
  • You lost weight or quit smoking
  • You bought a house
  • You paid off your house
  • You started a business
  • You borrowed money
  • You retired

Depending on what has changed, it may be time to increase or decrease your coverage, change to a different type of life insurance, reallocate assets, or update your retirement strategy.

Have you updated your beneficiaries?
Did you get married or divorced? Did you start a family? It’s time to update your beneficiaries. Life can change quickly. One thing that can happen is that policyholders may forget to update the beneficiaries for their policies. A beneficiary is the person or persons who will receive the death benefit from your life insurance policy. If there is a life insurance claim, the insurance company must follow the instructions you give when you assign beneficiaries – even if your intent may have been that someone else should be the beneficiary now. Fortunately, this can be remedied.

How long has it been since you purchased your life insurance policy? How long has it been since your last insurance review? What has changed in your life since the last time you reviewed your policies?

Your insurance needs may have changed, so now is the time to make sure you have the coverage you need.

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10 ways to save more this year

10 ways to save more this year
February 25, 2019

If you’re still writing “2018” on your checks, then it’s not too late to commit to a few New Year’s resolutions for 2019!

Here are some ideas for financial changes you can put in place today that can help get you closer to your saving and retirement goals.

1) Start a budget
There are few things that can paint your future financial picture as clearly as starting a household budget. In the process, you’ll track your spending – both in the past and in the future – and you’ll identify wasteful expenses as well as establish your priorities.

2) Start couponing
Once upon a time, clipping coupons could be quite a chore. Now, mobile apps make finding coupons for popular stores effortless, and there are online websites that provide promotional codes for all sorts of brands. If someone gave you money for buying something you were going to buy anyway, you’d take it, right?

3) Target home energy costs
Is your thermostat programmable? You can adjust your home temperature while you’re at work. Do you need to fix the insulation in the attic or that gap under the front door? Get to it as soon as you can! The longer you let those things go equates to money you might be saving on your energy costs.

4) Buy “pre-owned” items
When we think “pre-owned” we tend to think of cars. But the truth is that almost all consumer items depreciate. How much might you save by buying a refurbished phone instead of a new phone? Used laptops may cost a fraction of what you’d pay for a brand new computer. When it’s time to replace household items, consider buying used.

5) Use the 30 Day Rule to keep impulse spending in check
If you’ve got money burning a hole in your pocket, just wait. It won’t really burn you. By waiting 30 days before making a purchase, you’ll have time to decide if you really need the item or if it was just an impulse buy.

6) Use a shopping list
Want a way to stay focused when shopping and avoid wasteful spending? It might seem obvious, but get in the habit of using a shopping list. Before you head to the store, take a few minutes and write out a list (on paper or your phone), and include only the items you need. Stick to the list!

7) Quit smoking
Smoking seems to be less common these days, but for many households it’s still a costly expense that literally goes up in smoke. Think about how much you could put towards your retirement instead if you kicked the habit. (As a bonus, your health will probably improve.)

8) Stop using credit cards
Credit cards are the most expensive type of debt in many households. If you make a plan to pay off credit card debt and to save credit for (real) emergencies, you’ll probably wish you had given up your credit card habit sooner.

9) Cancel unused memberships and subscriptions
Memberships and subscriptions have a way of becoming forgotten – that is, until they automatically renew. Ouch. Keep the ones you want or need, cancel the others.

10) Cut the cord
Cable TV has become a norm but is your family really using it? Try to find less expensive ways to watch shows or movies online. Major broadcast networks can be picked up for free with an HD antenna.

Bonus ideas: Get a strategy in place to start building an emergency fund. Check your insurance policies to make sure you have the coverage you need. Research some ways in your community to have free (or nearly free) fun with your family.

It might take a little extra effort, but putting any of these ideas in place this year will help you and your family save more of your hard earned money and help get you closer to your retirement goals.

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