Launch Financial- Teaching Financial Education In The Public School System with Dr. Genevieve Floyd and Maria Tarasuk

Join us on this week’s episode of Launch Financial as we wrap up financial literacy month with Dr. Genevieve Floyd and Maria Tarasuk, both MCPS professionals.

On this week’s episode, Dr. Genevieve Floyd and Maria Tarasuk discuss how Montgomery County Public Schools are instituting financial education in their curriculum and how to better financial literacy across the country as a whole. Financial education is a crucial aspect of child development which is why we wanted to help provide useful resources for you and your family. For access to financial education resources discussed in the episode, click the link here. https://www.montgomeryschoolsmd.org/curriculum/finance-park.aspx.

More about our special guests, Dr. Genevieve Floyd has been an educator for 31 years. She holds degrees in math, in education, and an MBA. She has served as a teacher and college adjunct professor, department and career academy leader, school-based administrator, central office coordinator, special assistant to the deputy superintendent, and currently supervisor of Career and Postsecondary Partnerships for Montgomery County Public Schools. In her current capacity she oversees all the dual enrollment options for the school district as well as 22 Career and Technical Education (CTE) programs. Her work is designed to smooth the transition from high school to college and careers for all students, and to enable them to thrive in their postsecondary pursuits. Furthermore, Maria Tarasuk has been an educator in Montgomery County Public Schools for twenty-nine years as a social studies teacher, curriculum writer, and currently, as the Pre-K through 12 Supervisor of Social Studies.  She oversees the Finance Park Junior Achievement program at all the county middle schools as well as financial literacy instruction as part of the high school government course that is required for graduation.

For more resources and inquiries regarding the episode, please contact us at info@shermanwealth.com .

Check out this episode!

How To Determine Your Debt Tolerance

Debt can be tricky. While on one hand it can help you achieve your goals and build your wealth, it can also be a downfall if you do not know how to use it properly. Sometimes, it seems like taking on debt is a good idea for raising net worth and building credit. However, building up debt can be a slippery slope and quickly turn negative, if you are over-spending and taking on too much. 

We know that finding the right balance can be tricky, so determining your debt tolerance might be an easy way to start tracking it. Today we want to point out a few key factors to consider if you are trying to figure out if you can afford more debt.

Calculate your debt-to-income ratio

Whats a DTI? Lenders use a standardized calculation called debt-to-income ratio (DTI) to decide whether you can take on a loan. DTI is calculated by dividing your monthly expenses by your gross monthly income before taxes. 

Watch out for your credit utilization 

If you are making a big purchase, take a second and think about your credit utilization rate. Buying a big expensive item may seem like a good idea, but it may temporarily drop your credit score and raise your CUR.  However, once you pay the balance off, your score will improve. A typical rule of thumb is to not spend too much over 30% of your CUR. 

Add up at the total cost of the debt

The more money you borrow, the more you’ll have to pay back in interest and other fees. Always do your research on the types of loans you will be applying to before taking it on. Think about using tools such as interest calculators to see how much you are really paying when you take on a loan.  

Putting aside the financials, you also want think about your personal financial situation. Make sure you are comfortable with your debt tolerance and know what you are doing before taking out more and more debt. If you have any questions about your personal situation or about debt, please email us at info@shermanwealth.com or schedule a 30-minute consultation here. 

Launch Financial- Financial Traditions for Young Families with David Pearl

On this week’s episode of Launch Financial, we are joined by a recurring guest, David Pearl. This week, David helps us discuss financial literacy and the importance of establishing or passing down financial traditions to your family. Throughout the episode, Brad, Ashley and David discuss their own personal experiences with these family traditions and ways to communicate about money.

A little about David, he aims to provide a safe and supportive environment to strengthen self-esteem and facilitate more meaningful connections with family, friends, professional colleagues, or teammates.

David obtained his Master’s degree from The Silver School of Social Work at NYU and his Bachelor’s degree in Human Development and Family Studies from the University of Wisconsin-Madison. He is formally trained in Acceptance & Commitment Therapy (ACT), and has certifications in Imago Relationship Therapy and Prepare/Enrich Premarital and Marital Counseling. David is dual licensed in New York and Tennessee, and works with clients on an ongoing basis in both locations.

Prior to founding Music City Psych in Nashville, TN, David provided psychotherapy and performance coaching at Union Square Practice in NYC, counseling to individuals, couples, and families struggling with hematologic cancers at Mount Sinai Hospital, as well as psychodynamically oriented individual and couples counseling at The National Institute for the Psychotherapies (NIP).

Check out this episode!

Estate Planning in Uncertain Times

Although planning for your future is always a necessity, many people tend to wait until they are older to put their legal documents in order in the event something should happen to them. However, the rapid spread of the coronavirus has led to a skyrocketing demand for wills, even for those who aren’t middle aged or older. What once appeared to be a scourge that was primarily affecting the elderly and those with underlying health issues has now been revealed to hospitalize and kill those who are younger, seemingly at an alarming rate. The search term “getting a will” has risen sharply since March 8 and there have been tweets from doctors and nurses in recent days about wanting to get advanced health-care directives—living wills, power of attorney for health-care decisions and do-not-resuscitate orders—because they know their work might expose them to the virus.  Whether or not you are on the front lines of the fight against COVID-19, it is a good idea to make sure you have the following information completed and updated for you and your family should the need arise.

Wills & Beneficiaries

Now is a good time to check your existing beneficiary designations for each of your retirement accounts, annuities, and life insurance policies to make sure they are current and you do not have any lapses. In cases where family situations have changed, possibly because of divorce or birth of children or grandchildren, these designations aren’t often up to date. In the event you do not have a named beneficiary who survives you, your estate will be the beneficiary, which is rarely a good result. With a Will, you can generally leave any type of property to whomever you wish, with some exceptions. Wills can be contested in probate court, but beneficiary designations are legally binding.

Many people haven’t had an opportunity to change or update their beneficiaries since the SECURE Act was implemented.  See (https://www.investopedia.com/what-is-secure-act-how-affect-retirement-4692743) to review how your retirement may be impacted by the SECURE Act).

Durable Power of Attorney

A durable power of attorney is a written document where you designate another person (agent) to act on your behalf. In the event you become physically or mentally incapacitated, it enables your agent to handle your affairs. A person’s ability to name a power of attorney normally terminates upon their incapacity. With an immediate durable power of attorney, you grant your agent the authority effective immediately.

Health Care Proxy

Also called a durable power of attorney for health care, this document appoints a representative to make medical decisions on your behalf. You decide what your representative will have control over  (i.e., selection of health care providers, approval of tests and procedures, etc.). It is important to have an active health care proxy in place in the event you become incapacitated.

If you have adult children, you might want to make sure they also have health care proxies in place. In addition to having a health care proxy, a living will allows you to approve or decline certain types of medical care, such as life support, even if you will die as a result.

Trusts

If you have previously established a living or irrevocable trust, now is a good time to confirm that your trustees and successor trustees are still alive, willing to serve, and that you still want them to serve should the need arise. You should also confirm that all the assets you want to pass through your trust are correctly titled.

While the above topics are often difficult to think about, this also might be a good time to take a look at your financial plan as well. Depending on your circumstances, it might be beneficial to gift highly appreciated assets out of your estate at deep discounts. If you are in a low tax bracket, converting part or all of your Individual Retirement Account (IRA) to a Roth IRA could be an asset to your long-term retirement plans.  

Should you need any referrals for an estate lawyer, we are happy to put you in touch with someone.  If you have any financial questions, please contact us anytime.  We hope you are staying safe and healthy – we are all in this together!

10 Financial Milestones & Goals To Pursue In Yours 20s and 30s 

Establishing goals in your early years is a great way to reach financial milestones and better your financial future. As part of financial literacy month, we have been discussing different techniques to establish smart and achievable goals along with ways to achieve those goals. We know that managing your finances, especially for the first time, can be overwhelming, but the sooner you start making financial goals and plans for yourself, the brighter your future will. Building these habits, especially in your twenties and thirties, is so important for long-term and future success. Here are ten financial milestones to consider pursuing in your twenties and thirties. 

  1. Automate Everything 
  2. Create a Monthly/Quarterly/Yearly Budget Plan
  3. Pay off All of your debt 
  4. Pay your bills on time and establish a good credit score
  5. Start and regularly fund an emergency account 
  6. Contribute to your company 401(K) and take advantage of your match 
  7. Open a Roth or Traditional IRA 
  8. Save for a big purchase such as a car or first home 
  9. Invest outside of a retirement plan 
  10. Protect your life with insurance and a will 

While it is not mandatory to achieve these goals to succeed, hitting these goals in your early years is a great way to set yourself up for success. Savings, budgeting, investing, and protecting your life are essential steps in building a solid foundation and growing your money. Also, starting to education yourself about personal finance will take you much farther than you think. The sooner you start and realize these goals are important and achievable, the better position you will be in in your forties and fifties. If you have any questions about achieving your financial goals or establishing SMART goals personalized to your financial situation, send us an email at info@shermanwealth.com or schedule a complimentary 30-minute consultation here. 

What You Need To Know About NFTs

With NFTs and baseball mania taking over the news, some of you may be wondering: What actually are NFTs? 

Blockchain technology has opened up new markets for investment and consumption. NFTs are one-of-a-kind, authenticated digital files, such as artwork or collectibles. The reason gain and retain such high value is because they are not easily replicated.

The hype around NFTs has been growing rapidly, in the news and especially online. Let’s dive a bit deeper into NFTs to see if this is something you are interested in. At a very high level, most NFTs are part of the Ethereum blockchain. Ethereum is a cryptocurrency, like bitcoin or dogecoin, but its blockchain also supports these NFTs. It is worth noting that other blockchains can implement their own versions of NFTs. 

So what types of companies are selling NFTs? The NBA has NBA Top Shot – a way of selling digital collectibles in the form of trading cards.  There is also Topps, who now wants to do for Major League Baseball (MLB) what Dapper Labs did with NBA Top Shot. And now, even tweets hold value, with Twitter co-founder Jack Dorsey selling off the first-ever tweet for a massive $2,915,835.47. Musicians are also selling the rights and originals of their work, as well as short videos to clips of their music, and you can even buy digital real estate and 3D assets like furniture. 

NFT’s are definitely the craze right now, and may only just be getting started. If you have any questions on what NFTs are or how it may impact your financial planning or tax situation, please email us at info@shermanwealth.com or schedule a complimentary 30-minute consultation here. 

Why Reducing Your Tax Refund is a Good Thing

With tax day fast approaching, many people are counting on receiving a big check back from the Government. While you’re probably looking forward to this windfall, there are reasons why you may wish to minimize your end-of-year refund.

Why Big Refunds are Bad

Taxes are refunded to you when the Government takes too much of your pay each pay period. By overpaying each paycheck, only to get the money returned to you once a year, you are essentially lending the Government money at zero percent interest.

This is money that could have been budgeted for and spent, or invested, throughout the year. Even if you had put the money in a savings account over the year, you still would be better off.

How to Minimize Your Refund

In order to adjust the amount that is withheld for the IRS each pay period you need to fill out/change your W-4 form.

The W-4 allows you to specify allowances or exemptions that you are eligible for.

These can include:

  • Donations to charitable organizations
  • Interest on a home mortgage
  • Interest on student loan debt
  • Contributions to traditional IRAs

The W-4 form estimates the amount that you would receive from a tax refund. This amount is then distributed over the number of weeks remaining in the tax year, lowering the amount withheld from your paycheck each pay period.

You should also look into filling out a new W-4 every time you have experienced a major change in your life. Examples of this include:

  • Switching jobs
  • Marriage
  • Having a child
  • Losing a dependent (They either file their own tax return, or you can no longer claim them)

While trying to lower the amount that is withheld in taxes each pay period generally makes sense, it may be prudent to not list all of the exemptions you are eligible for on your W-4.

Why You May Not Want to Claim all Your Allowances

While having too much in taxes withheld can be compared to lending the Government money at a rate of zero percent interest, the reverse is also true.

If you underpay in taxes each paycheck, you end up owing money to the Government. In theory this is great. You could put the money in a savings account, and then at the end of the year pay back the Government while pocketing the interest that you collected.

In practice however this is not a prudent strategy for most people.

Individuals have a tendency to spend money that they have, and forget about longer-term consequences of their actions. Additionally while receiving a refund at the end of the year is exciting, the opposite is also true.

This is why it may make sense for you to leave a few deductions you are eligible for unlisted on your W-4. This ensures that you receive a tax refund, albeit a smaller one, rather than owing money.

What to Do When You Do Receive a Refund

While this advice can be helpful for next year, chances are this year’s tax season will provide you with a large refund.

If you do receive a large refund there are a series of things you can consider to maximize its value. Here are a few ideas to get you started:

  • Invest in yourself – Sometimes the best investment you can make is in yourself. Consider buying a book or taking a class to help improve your performance in work or at life.
  • Get your will done – this can often cost less than a $1,000 in total but can save your beneficiary’s significantly more both in terms of money as well as headache
  • Put money into a college savings plan
  • Pay down your mortgage
  • Invest in a non-tax-exempt account – if you have already maxed out your IRA
  • Save for a rainy day
  • Open/add to an IRA
  • Pay off student loan debt
  • Pay off credit card debt – if you have any credit card debt, this should be an immediate priority
  • Save the money and increase your 401(k) contributions – put your money in a safe place such as a savings account, and bump up your 401(k) contributions to reflect the fact that you have this money sitting on the side.

Regardless of what you do with your tax refund, it is important that you come up with a plan. A trusted financial planner can help you in the process of creating one.

With over a decade’s worth of experience in the financial services industry Brad Sherman is committed to helping individual investors plan and prepare for retirement.

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The views expressed in this blog post are as of the date of the posting, and are subject to change based on market and other conditions. This blog contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.

Please note that nothing in this blog post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants, or attorneys regarding your individual circumstances and needs. No advice may be rendered by Sherman Wealth unless a client service agreement is in place.

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