One of the best parts of my job is giving clients permission to spend. A typical situation is a retired client (or couple) who has spent a lifetime accumulating wealth. First, they followed the fundamental equation for reaching financial independence: They paid attention to the outgoing dollars. Maybe they looked for sales. Maybe they always drove used cars. Maybe they took modest vacations. Maybe they did all of these things and more. They didn’t really feel deprived and they weren’t concerned with keeping up with the Joneses. For decades they saved and invested -- often in employer retirement plans. At some point it was time to retire – sometimes …
Good News For Most Families With Children, Your Tax Bill Is Going Down!
The American Rescue Plan, signed into law March 2021 includes a temporary one year enhancement to the Child Tax Credit for 2021. In 2020 the Child Tax Credit was $2000 per eligible child under age 17. Look on line 19 of your 2020 Form 1040 to see if you received this credit: This client has two children, ages 12 and 9: For 2021 the Child Tax Credit is increased to: $3,000 for children ages 6 to 17previously 17 year olds were not eligible, this year they are$3,600 for children age 5 and underThese amounts are based on the child’s age on 12/31/21 Also new for 2021 -- 50% of the credit will be paid in advance in 6 monthly installments from July 2021-December …
What Can a Ship Stuck in a Canal Teach Us About Personal Finance?
Like much of the world, I was riveted by the mammoth container ship that was stuck in the Suez Canal for 6 days, 3 hours and 38 minutes. The ship, one of the world’s largest container ships named Ever Given is about as long as the Empire State Building is tall! The jam backed up hundreds of ships at both ends of the canal waiting to get through. About 20 of these ships are carrying livestock. The delays, by one estimate, cost the global economy $400 million perhour. It’s spawned some great memes. The ship was finally set free on March 29th, helped in part by Mother Nature – the moon and the tides. So what does this have to do with personal finance? Life, like giant …
Everybody loves a tax refund but….
Like many taxpayers, you might get a refund each year when you file your taxes. Last year ≈74% of individual tax returns resulted in refunds. The average refund was $2,476. It’s no secret that taxpayers use the tax withholding system as a form of savings. Too much tax is withheld from your paycheck throughout the year and then refunded back to you after you file your return. It seems like a windfall, but of course it isn’t. It’s really YOUR money the government has been holding for you. One argument against getting a refund -- you are giving an interest free loan to the government. However in today’s interest rate environment that’s not much of an …
What can we learn from the stock market in 2020?
We just finished one of the most tumultuous years in modern history. A global pandemic. Widespread civil unrest tied to policing and racial justice. A disputed presidential election marked by hyper-partisanship. Despite these challenges, the year demonstrated resilience of people, institutions, and financial markets. The 2020 global stock market with selected headlines*. (Click the graph to enlarge)Investors saw sharp swings in the stock market. The decline early in the year was sharp and swift. But despite a sequence of epic events and continued concerns over the pandemic, global stock market returns in 2020 were above their historical norm.What are some …
