Broker Check

A Presidential Election Metaphor (Part 1 of 3)

April 24, 2017

In spirit with the upcoming election, I've arranged a personal finance metaphorical slant to the political issues being discussed and, unlike many politicians, will hopefully provide some real answers that actually mean something to you!  Every two weeks I’ll address three of the issues listed below…just in time for the November 8th election.  While it won’t impact who you vote for, hopefully it impacts your choices with your money.



So let’s start with the first three issues…

Debt reduction

A strong foundation is first needed to support your efforts in reaching goals.  In finance, this is your budget.  Your budget will help you identify where you spend money and make changes to reflect what’s most important to you.  Remember, every decision has an opportunity cost or another way you could have used the money.  Read my Facebook post, Don’t Think About What You Want. Think About What It Would Take to Get It (Sept 15th).  One of your first goals will be to pay down any of your non-mortgage debt.  Yes, this includes your car and student loans.  We can help you develop a payment schedule based on (go ahead and take a wild guess here)….your budget!


National security and defense

Challenges in life happen and usually occur when you’re not expecting them.  That’s why it is prudent to have some money in a savings account to cover these unexpected expenses.  This will ensure you do not incur debt or have to take away from another area of your lifestyle.  The emergency fund should be enough to cover 3-6 months of your monthly expenses that you can’t stop paying in emergency.  You’ll have to pay your mortgage or rent, utilities, buy food, etc, but you could probably temporarily hold off on some of those meals out, clothing purchases or other nice-to-do activities.  Remember, when you can’t defend yourself, then you need to rely on someone else (usually, Mr. & Mrs. Credit Card who are more than happy to come to the rescue to help you themselves out).


Tax reform

Flat tax?  Progressive tax?  Chances are you want the Reduced tax plan.  For many people, taxes are their biggest expense.  What can you do?  First, understand the difference between your marginal and effective tax rate and how that impacts the amount you pay.  Do you know the difference between taxes on ordinary income versus capital gains or taxes on a Roth IRA versus a traditional IRA or 401(k) plan?  Then consider increasing the amount you put into your retirement plans or donate to charities, if you’re using your employers’ health reimbursement plan, such as a HAS plan, and other deductions that you might not be utilizing. 

In some cases, it may be beneficial to setup a joint meeting with the client, their accountant and myself to make sure we are coming up with the most comprehensive plan for your money.

Next week I will review the next three topics: charitable giving and estate planning (social justice), insurance needs to protect your family (gun control), and caring for your elderly family (Social Security reform).