Ah, greenbacks, lettuce, clams, or Benjamins – no matter what we call it,  cash is still king!  There are few places in the world that will not take the American dollar as payment.  I fact, I can only think of two:  inflight on American Airlines, and Uber.   

Any Reasons NOT to Use Cash?

Here’s a valid reason NOT to use cash:  if some young socialist decides to knock you over the head to redistribute your wealth, those dollars are gone and cannot be replaced.  Had the young socialist only reaped your credit cards, you can get on the phone and stop those cards, and you have only a maximum $50 liability per card, if even that. 

Another reason not to use cash is airline miles and hotel points.  This is my personal practice.  We run as much as possible through the American Airlines cards and the Marriott Visa, and the points (and benefits) really add up!  But if you’re going to do this, you must have the...

Here’s a question for you, ladies.  You’re out on a first date at a restaurant with someone new.  You’re interested . . . not sure, but interested.  It’s just a date . . . let’s see how the evening goes, you think to yourself.  When it comes time to pay the check, he:

1. Pays with a gold card
2. Flashes a thick wad of greenbacks and pays cash.
3. Tells you how much your half is.

If it is #3, dump him right then and there and block his phone number. 

But between #1 and #2, which impresses you the most?

Credit was for Losers

Way back when I was a young man people paid cash for most everything.  In fact, it was a mark of pride to do so.  Credit was for people who couldn’t afford to pay cash – losers, in other words.  But now!  After working with many clients on cash flow organization, I can tell you that most people simply use a card to purchase everything, and most millennials don’t even carry cash.

by Glenn J. Downing, MBA, CFP®

Everyone at some time or another needs some cash - and quickly!  The question is, have you anticipated this need and saved into it?  Or do you need to scramble?  What follows is a list of ten helpful suggestions.  

Here are 10 places to consider, in descending order.  

1. Your emergency fund.  But if you’re reading this, I’m guessing you haven’t established and funded your emergency fund.  So when this particular cash shortfall hump is over, you know what you need to do!
2. Tap a relative. Be sure to repay promptly along with a suitable gift, i.e. a gift card, nice bottle of wine, etc.
3. A 401K loan. In this case you’re borrowing money from yourself.  There will be an interest charge, but you’d be paying the interest back into your own account.  Typically, you can borrow out the account value up to $50,000, and you replay the loan through payroll withdrawal. ...

 By Glenn J. Downing, MBA, CFP®

What follows is one of my all-time favorite quotations, from Alice’s Adventures In Wonderland.  The background is that Alice has come to a fork in the road and wonders out loud which way to turn.  The Cheshire Cat materializes, and the following conversation ensures:

Alice asked the Cheshire Cat, who was sitting in a tree, “What road do I take?” The cat asked, “Where do you want to go?” “I don’t know,” Alice answered. “Then,” said the cat, “it really doesn’t matter, does it?”

The Heart of Financial Planning

This gets to the very heart of financial planning.  How are your invested assets to be used?  What is the purpose for these dollars?  What do you want to accomplish? 

Our point is that investment accounts don’t (or shouldn’t) exist in a vacuum.  Purpose and time horizon inform the ultimate investment choices. ...

 By Glenn J. Downing, MBA, CFP®

My industry – financial planning and investment management – unwittingly puts a lot of pressure on people to retire.  We all have retirement accounts and look forward to the day when we no longer set the alarm clock.  Planning for retirement is a big deal - sort of like planning for a wedding.  We anticipate the date and hope all goes well.  But the years after the retirement – after the wedding – are also of great importance.    

Some People Love What They Do

Some people – like me – love what they do and look forward to each new day and its challenges and possibilities.  To these folks I say:  You know, you don’t have to retire.  Just keep working! 

What’s the source of all this retirement pressure?  Probably Medicare and Social Security.  Medicare becomes available at age 65, so that is sort of the turning point age.  The...

 By Glenn J. Downing, MBA, CFP®

I can now pay for a Tesla with Bitcoin.  And the Mayor of Miami wants to pay City employees in Bitcoin and allow tax payments in the same cryptocurrency.  Honestly, until I can go into Bloomingdale's and buy a shirt with Bitcoin, it doesn't much matter to me.  

And neither should it to you, if you’re in the process of getting your financial house in order.  In my world of financial planning and investment management, the basics are still the pathway to financial freedom and prosperity:  spend less than what you earn and invest the rest. 

No One Uses Cash Anymore

The rub is that many people don’t know what they spend because no one uses cash anymore.  It used to be that if a man wanted to impress a lady, he’d flash a bankroll when paying the restaurant check.  Now, she’d probably flee the table at such Neanderthal behavior:  it is the gold or platinum cards that...

by Glenn J. Downing, MBA, CFP®

With mortgage rates so low, we’ve been looking at mortgage refinancing for a few of our clients lately, to see if it might be in their best interests.  Here’s what we know: 

• For those with strong credit, 30-year rates are just below 3%, and 15-year rates are in the 2.6% range. This makes sense in that the lender takes on less risk in loaning out mortgage funds for just 15 years, as opposed to 30 years.  Consequently, there is a better rate on offer.  The rate difference we see here, about 0.4%, won’t be enough to compensate for lopping 15 years off the payment period.  It’ll help some, but the 15-year mortgage will definitely carry a higher payment. 
• It costs money to initiate a new mortgage – as much as 3% to 5% of the mortgage itself. There are lots of costs and taxes involved, including application fee, title search, title insurance, appraisal, transfer taxes, etc.  Typically...

Although I usually blog about financial topics. Now and then I like to switch it up and get personal.  That's the case here - a few observances of the absurdities in modern life.  I hope you are amused!

--GJD

I Got Carded! 

While on vacation recently I stopped at a store to pick up a bottle of wine – we’d been invited to someone’s home for dinner.  The young woman at the checkout asked for my driver’s license.  I asked why, as I had cash ready in my hand to pay for my purchase.  She replied, “You’re buying alcohol.  We need to verify your age.”  To which I replied, incredulously, and probably a bit too loudly  – “Honey – just look at me!”  At that point another clerk came over and explained that the store’s policy is to card everyone who is purchasing an alcoholic beverage with no exceptions, and that retaining her job is more important than this particular...

Don't Move Employer Stock into Your IRA!*

*That is, don’t do it without reading this first. 

If you have employer stock in your company retirement plan, there are some special tax benefits that you’ll lose if you put that stock into an IRA.

Generally, when you leave your employer you’ll roll your retirement account out to an IRA.  Once you’ve passed age 59½ you can take distributions from the IRA with no tax penalty, but all distributions are taxable at ordinary income rates.  In current brackets these will typically be from 22% to 37%. 

Net Unrealized Appreciation

But there’s a special provision for employer stock.  You can distribute the stock from your retirement plan in kind, moving it to a non-tax qualified account.  Your taxable event will be only the stock’s basis.  Then when you sell the stock you’ll be taxed only on the gain over the basis, and at the more favorable long-term capital gains...

By Glenn J. Downing, MBA, CFP®

This piece is the third in a Social Security trilogy.  The first is Social Security Benefits, and the second is Taxation of Social Security. 

A common question I’m asked in a financial planning engagement is this:  Glenn, should I plan on receiving Social Security?  Will it even be there for me?  I’ll say yes – plan on it.  Social Security is the third rail of politics, and it is my belief that it will always be there in some form or another.  For those of you who’ve never lived in a city with a subway, the third rail is an electrified rail that runs along the tracks.  There is a foot from the rail car that rides along the third rail, thus powering the car with electricity.  Pretty much instant electrocution if you touch it.

Throughout its history Congress has bought itself votes by increasing the benefit, but they haven’t always raised revenue, i.e. taxes, in a...