With the turbocharged real estate market, buying a house is not as easy as it once was. We’ve all heard stories of houses getting multiple offers even before they are listed or homes selling well over the asking price. Stories like these have many people thinking about moving. 

Short Video recap: https://youtu.be/0GKbITjE9hg

On this episode of Financial Symmetry, we explore whether or not it is worth the effort to buy a home in a seller’s housing market. You’ll learn the reasons why the housing market is so hot, questions to ask yourself, and alternatives to buying a home. 

Why is the housing market so hot?

If you have talked to your neighbors or seen the news lately, you know how hot the housing market is. Everyone has heard stories about bidding wars and people receiving multiple offers on homes. It is definitely a seller's market, but why? 

There are several reasons that home sales are through the roof. As with any economic force, when demand outstrips supply, then the market becomes one-sided. Since people have been spending more time at home and even working from home, they have had an opportunity to evaluate the pros and cons of their place of residence. Couple this with an influx of cash from higher incomes and injections of cash into the economy, and many people are ready for a change of scenery. 

Steps you should take before you consider a move

But just because the Jones’s are packing up and moving, does that mean that you should too? Before you think of selling your home you should stop and consider a few questions. Since this is such a big financial decision you can take advantage of financial planning to help you analyze this choice. 

After you figure out why you want to move, you need to consider what steps you need to take to prepare. Buying a home is not as easy as it once was, so you’ll need to make sure that you have a preapproval letter in hand before looking at any houses. It’s also important to realize that in a hot housing market, contingency offers are off the table. You won’t be able to compete with cash offers if you are trying to buy a home based on the sale of your own home. So if you must sell your current house to come up with a down payment, then you may need to rent for a while after the sale of your home. 

Know how much you can afford

Your housing costs should be between 28%-36% of your monthly income. Many people know this but they only figure in the mortgage without figuring in the other expenses that come with moving to a new home. It is important to watch out for the lifestyle creep that often comes with moving. You don’t want to end up being house rich and cash poor.

One way to ensure that you don’t get roped into spending too much is by coming up with a maximum number that you can afford and telling the realtor a number that is 20%-30% less. Don’t rely on the bank to decide how much you can afford since they will be happy to lend you more.

Where will your down payment come from?

The next consideration is where will you get your down payment? There are 4 primary ways to come up with a down payment. Many people rely on the sale of their home for a down payment. Others have cash set aside in savings.

Another consideration is to use a 60 day IRA rollover. This will allow you to avoid the taxes that come from withdrawing from your IRA if you repay the money in 60 days. Oftentimes, this allows you to close on the home you are selling and replace the money in the account. However, this could backfire if the sale of your home falls through or gets delayed.

The last way to fund a down payment is to take out a HELOC on your existing home. It is important to do this before you put your home on the market. Listen in to hear some alternatives to buying a new home that you should consider before taking the leap and moving. 

Outline of This Episode

• [1:07] Reasons why the housing market is so hot
• [3:10] What considerations should you be thinking about?
• [11:34] Where will your down payment come from?
• [15:33] What are some alternatives to moving
• [17:10] Today’s progress principle

Resources & People Mentioned

• Rocket Mortgage
• Modern Family
• WSJ article on down payments
• HGTV
• Episode 116 on buying a second home

Connect With Chad and Mike

• https://www.financialsymmetry.com/podcast-archive/ 
• Connect on Twitter @csmithraleigh @TeamFSINC
• Follow Financial Symmetry on Facebook

Subscribe To This Podcast

Apple Podcasts  Stitcher  Google Play

Are you a super saver? If so, you may feel like you are doing a lot of the right things to save for retirement, but you are not sure where to go next.

Check out our Youtube channel for a short video recap: https://www.youtube.com/channel/UCw9vXJ3JyO-pHEcQ1p9O-Lw

In this episode of Financial Symmetry, we explore the different ways to save for retirement outside of your 401K. You’ll learn what each type of account is used for, how you should save in each one, when is the best time to save, and how to withdraw. Let’s explore the various ways that you can save for retirement. 

Retirement investment vehicles

If you have been maxing out your 401K, you are ready to move onto the next step in retirement savings, but with so many different types of accounts to choose from, it can be hard to know which one to choose. All you have to do is learn about them to choose from the different investment vehicles. To make the various types of accounts more memorable, we are equating these investment vehicles to actual vehicles. Listen in to hear how to use the right set of wheels to drive you to retirement. 

The health savings account 

The health savings account can be compared to a Jeep Wrangler. Like the Jeep Wrangler, the health savings account has a specific purpose, but it also has added benefits. The purpose of a health savings account is to be used for medical expenses, however, it also has a triple tax advantage. You must be enrolled in a high deductible health insurance plan to qualify for a health savings account, but if you can use one, this is a fantastic way to save and invest for future healthcare expenses. 

The backdoor Roth 

The backdoor Roth is the Rolls Royce of retirement savings. Like the Rolls Royce, the backdoor Roth is unique and specifically designed for high-income earners. A regular Roth IRA maxes out at $6000 per year. With the Roth and the backdoor Roth, you will save so much in taxes that it will offset any fees that you incur. 

The mega backdoor Roth

The mega backdoor Roth can be compared to the Koenigsegg Gemera. Similar to the Koenigsegg Gemera, you may not have heard of the mega backdoor Roth. You’ll need to buckle up to drive both of these vehicles because the mega backdoor Roth will turbocharge your retirement savings. The mega backdoor Roth allows you to contribute an extra $35,000 in a Roth. You won’t see any tax savings upfront, but you will see it in retirement since this is a tax-deferred account. This account will provide a huge impact on your long-term saving for retirement. If you want to take your savings to the next level, check out the mega backdoor Roth.

The brokerage account

Many people don’t even consider this account a retirement savings account, but like the trusty Honda Accord, a common brokerage account can be just as dependable. You can use a brokerage account like a super-charged savings account. Yes, there are more tax-efficient accounts, but the benefit of a brokerage account is that there are no restrictions which gives you more flexibility. If you feel restricted by the other retirement accounts, you may want to consider saving for retirement in a brokerage account. 

You won’t want to miss our last comparison, the DeLorean. Listen in to hear which type of account we compared to this unique car.

Which investment vehicle sounds right for you? 

Outline of This Episode

• [2:13] The health savings account
• [5:22] Backdoor Roth
• [9:05] Mega backdoor Roth
• [13:45] Brokerage account
• [17:27] The 529 account
• [20:08] The progress principle

Resources & People Mentioned

• Episode 47 - Why Do I Need an HSA?
• Episode 91 - The Mega Backdoor Roth
• Tax Loss Harvesting in Bear Markets
• Cars with suicide doors
• The DeLorean
• Koenigsegg Gemera

Connect With Chad and Mike

• https://www.financialsymmetry.com/podcast-archive/ 
• Connect on Twitter @csmithraleigh @TeamFSINC
• Follow Financial Symmetry on Facebook

Subscribe To This Podcast

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Recent headlines have people thinking more about investing for inflation.

Video Recap: https://youtu.be/50PlOwAM4OM

It's the most recent economic worry, but there's always something to scare or concern investors. Think about the last 16 months. We've had:

• COVID Crash
• 2020 Election
• Reddit/Robinhood/Gamestop
• Crypto Volatility

Now it's inflation. But it's a good reminder that listening to the media can be expensive.

In this week's episode, we are breaking down how to think about and prepare for inflation as it relates to your investment strategy.

How to Think about Inflationary Scenarios

What is inflation?

Increases in prices over time. For example, a gallon of milk cost ~$0.26 in 1926 and has increased to ~$3.00 today. Since 1926, inflation has averaged ~3% per year.

On the other hand, deflation is when prices decline over time. These periods are generally driven by economic downturns such as the depression in the late 1920’s/early 1930’s or a brief period during the financial crisis. While the media can make the threat of inflation sound scary, it is a normal part of time passing.

Hyperinflation, however, can be very damaging. While regular inflation has averaged ~3%/yr, hyperinflation is when prices spike very quickly and at much higher rates. For example, Germany in the early 1920’s and more recently, cases in Venezuela and Zimbabwe.

Hyperinflation it typically driven by two primary causes: Government debt in another currency (Germany after WW1) and supply chain shocks (no access to necessary products).

We are not concerned about hyperinflation today.

Current Situation

The last twelve months ending April 30th, 2021 saw an annualized inflation rate of 4.2% after averaging 1-2% over the last 10 years. This is the largest jump in inflation since September 2008.

It is important to keep in mind, however, that these numbers were coming off March/April 2020 lows where inflation declined due to lack of demand for products and services – driven by the COVID crisis.

The big question most are asking: Are these permanent or transitory increases?

Transitory increases are those that are shorter-term or temporary. These have been driven by stimulus checks and government support from the $1.9 trillion American Rescue Plan passed in March 2021.

Permanent increases on the other hand are those in which prices are expected to increase materially year over year. Today, this can be seen somewhat in the Real estate markets.

It is too early to tell which route it will take, but keep in mind that the Federal Reserve wants some inflation as that is their mandate and is healthy for the market. If inflation begins to rise too quickly, they can always raise interest rates to slow down the economy.

What should you do about it?

Inflation is good for stocks and real estate over the long-term. Companies can raise prices leading to higher gross sales and companies have claims on their real assets (buildings, plant, land, equipment, etc.).

Since 1926, US Large/Small cap stock returns have outpaced inflation by ~7% and 9%, respectively. During that same time period, cash and bonds have barely exceeded inflation.

While cash can feel like a safer option in the short-term, over long periods of time, you can lose purchasing power. For example, if inflation averages 3%/yr while your cash holdings earn 1% or bonds earn 2%, you are losing purchasing power.

Although we can speculate, we don’t know whether we’ll have material or stable inflation over the next decade. Rather than being driven to change strategies based on short term media noise, we recommend sticking to your investment plan and maintain a diversified portfolio constructed based on your capacity and tolerance for risk.

Additional Resources

• Article by Ben Carlson - The Simplest Asset To Hedge Against Inflation

You may have heard a lot on the news about President Biden’s tax plan. Are you worried about how it will affect you and your tax situation? In this episode of Financial Symmetry, Grayson Blazek helps to demystify Biden’s tax proposal. You’ll learn how you may be affected and whether or not you should be worried. Don’t wait until April 15 to start your tax planning! Press play to learn what you can expect next year. 

Short Video Recap: https://youtu.be/wFzuPLnT9qc

When does the new tax law take effect?

Even though you may have heard plenty about Biden’s tax plan, it still isn’t the law--yet. As of May 2021, there has been no bill signed. This much-discussed tax plan still needs to make its way through Congress. There may be changes that take place in the way the plan is structured as part of the negotiation process. Although it hasn’t passed yet, it is still a good idea to learn as much as you can about the proposed tax law so that you can get a jump start on your future tax planning. 

Who benefits from the proposed tax law?

If your annual income level is at or below $400,000 there are many tax planning opportunities that come with the proposed tax law. The most notable change to the current tax plan is in the child tax credit. This tax credit will rise from $2000 per child to $3000. Additionally, for children under the age of 5, the child tax credit will be even higher--$3600. You may even see your tax credit hit your account early starting in July of 2021. Learn what you should be watching out for as Grayson Blazek explains how the new child tax credit will work. 

How will this tax plan affect your retirement accounts?

The proposed tax law could turn retirement planning on its head. Many people use a 401K as their preferred retirement savings vehicle, but with the new proposal, the tax benefits of the 401K may no longer be as attractive for high-income earners. The Roth IRA could become the preferred avenue. When the new tax plan takes effect you may want to change your retirement contribution strategy. Press play to learn why.

Don’t let the tax tail wag the dog!

Even though it is important to plan ahead when it comes to taxes, you don’t want the tax tail to wag the dog. This means that you don’t want your tax planning to decide everything about your financial planning. Taxes are a big part of financial planning, but it is also important to note that they are simply an inevitable side effect of making money. Now that you know a bit more about the future of tax laws you can begin to think forward to next year and beyond to structure any big liquidation events and consider where you stand financially. Download the Biden Tax Plan Decision Tree at FinancialSymmetry.com.

Outline of This Episode

• [2:33] Don’t be in a rush to make any changes to your tax planning--yet
• [7:34] Some benefits of the new tax laws
• [12:35] What to look out for if you make between $400,000-$1M
• [17:45] Retirement account tax planning could change completely
• [23:48] Estate planning considerations
• [28:08] Today’s progress principle

Resources & People Mentioned

• Schitt’s Creek

Connect With Chad and Mike

• https://www.financialsymmetry.com/podcast-archive/ 
• Connect on Twitter @csmithraleigh @TeamFSINC
• Follow Financial Symmetry on Facebook

Subscribe To This Podcast

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A recent survey discovered that millions of Americans 55 or older are in a rush to retire.  The pandemic has many contemplating retiring years earlier than originally imagined after adopting a "life is short" mentality.

Video recap: https://youtu.be/q5r5ZiVw7d4

But before you rush into a decision to retire early you’ll want to consider it carefully. We've listed 6 steps below to analyze if you are ready to retire.

Why retire early?

Since the pandemic has made us all consider how we are spending our time, people have become more and more frustrated with their daily grind. Many people would like to spend more time with their families or pursuing hobbies that they enjoy. 

However, if you are in a position to retire early it is important to think about why you really want to retire beyond the initial urge to leave the work world behind. It is important to consider how you will spend your days. Think about your purpose so that you are retiring to something, rather than simply running away from the 9-5. Have a plan, not just a portfolio.

Use the acronym RETIRE to consider early retirement

Grayson Blazek and I have come up with 6 strategies to consider when thinking about early retirement. We’re using the word RETIRE as an acronym to help keep it easy to remember.

• Risk - Have you considered the sequence of return risks? You may have good returns now but a bear market could ruin that. You don’t want to have to sell low, so make sure your portfolio is allocated with risk in mind. If you want to retire early, you’ll need to have the upcoming 5-7 years of spending available to avoid the risk of having to sell a position when you aren’t ready to. Everyone has their own risk tolerance, so carefully consider yours. In addition to the sequence of return risk, you’ll also need to think about inflation risk. 
• Early retirement account withdrawals - If you are retiring early you won’t want to pull from accounts where there might be a penalty. This means that you’ll have to consider which accounts your income will come from. Be sure to have a diversified mix of accounts to pull from. Give yourself flexibility and make sure you have access to your wealth outside of retirement plans. Have different buckets ready and understand all the tools that you have available.
• Taxes - Take advantage of strategic tax moves. Use Roth conversions to take money from pre-tax accounts and convert it to a Roth IRA. You can take advantage of lower tax rates to fill your buckets with tax-deferred funds. In retirement, you'll want to think about your lifetime tax rate rather than your yearly tax bill.
• Insurance game plan - One of the biggest issues for early retirees is where to get insurance. You’ll need to carefully plan how you will source insurance and how much it will cost. Most early retirees consider 3 choices: COBRA, a spousal healthcare plan, or the Affordable Care Act. You’ll want to ensure that you understand the expenses involved with each of these choices.
• Regular reviews - How will you know if you are on the right track? Have a plan to monitor your situation periodically. Ask yourself these questions: Have your goals changed? Do you want to pivot? Has your financial situation changed? 
• Estate loose ends - Nobody likes thinking about end-of-life decisions, but having your estate documents in place will give you peace of mind. Consider the 3 most important ones: a will, a healthcare power of attorney, and financial power of attorney. 

Download the Pre-Retirement Checklist

The question of whether to retire early is one that should not be taken lightly. You can use these 6 considerations to help you contemplate your retirement readiness, in addition, you can also download our Pre-Retirement Checklist to ensure that you are making the right decision for you and your family.

Outline of This Episode

• [1:46] Questions people have about retiring early
• [3:48] R is for risk
• [8:42] E is for early retirement account withdrawals
• [13:06] T is for taxes
• [17:52] I is for insurance
• [20:56] R is for regular reviews
• [23:02] E is for estate loose ends
• [25:42] The progress principle

Resources & People Mentioned

• Download the Pre-Retirement Checklist
• Episode 136 - 3 Not-So-Obvious Retirement Roadblocks

Connect With Chad and Mike

• https://www.financialsymmetry.com/podcast-archive/ 
• Connect on Twitter @csmithraleigh @TeamFSINC
• Follow Financial Symmetry on Facebook

 

Have you ever been on your way to an epic summer road trip and then all of a sudden you come upon a roadblock? That can ruin the excitement you feel for the upcoming trip. This can happen in retirement as well. In retirement, you may confront roadblocks on your journey and if you don’t know how to maneuver around them it can leave you feeling stuck. 

On this episode of Financial Symmetry, Allison Berger joins me to discuss 3 not so obvious retirement roadblocks that you may encounter along your retirement journey. We want to be your GPS so that if you experience them you can find your way around them without too much hassle. 

Sequence of return risk 

Your first years of retirement are so important when it comes to investment returns. Sequence of return risk is when you have several years of bad returns at the beginning of retirement when you are starting to withdraw your money. There is no way to control your market returns, but there are ways to mitigate this risk. 

To combat sequence of return risk, you’ll need to maintain a balanced portfolio the way you maintain a balanced diet. Use the financial food groups! In retirement, you can no longer subsist solely on financial junk food (stocks). You’ll want to make sure that you have a healthy serving of vegetables (bonds and cash) thrown into the mix. 

After maintaining a growth mindset in the accumulation stage of life by using mainly stocks, you may be hesitant to reduce your risk load in retirement. However, having a balanced portfolio can ensure that you won’t be forced to sell when prices are down. 

Inflation

You want to ensure that your money will be worth something in retirement, but inflation reduces purchasing power over time. We can visualize how inflation works by thinking about what the price of milk was 20 years ago. Inflation not only impacts the prices of goods but also impacts your retirement income. Even with the cost of living adjustments, your Social Security may not have the same buying power in 20 years. 

Inflation is also known as the silent assassin. It is most dangerous for those who are overly cautious. To fight inflation you’ll need to make sure that there is some growth in your portfolio. You’ll need to take on some risk. 

Unforeseen tax bombs 

It is important to understand how different events can impact your taxes. The best way to combat unforeseen tax bombs is through multi-year tax planning. Most people are used to tax planning one year at a time, but retirement offers an opportunity to plan ahead. You can reduce your lifetime tax burden by thoughtful planning.

Create your retirement road map

If you put together a financial plan for retirement you’ll have a road map for the years ahead. In retirement, you’ll want to become flexible and look for opportunities. This is part of what we do with our clients. If you are interested in using us as your GPS to help you through those retirement roadblocks then check out our website and click Learn More.

Outline of This Episode

• [3:07] Sequence of return risk can ruin your retirement
• [9:45] Inflation is the silent killer of retirements
• [14:14] Unforeseen tax bombs can derail your tax strategy
• [20:47] Today’s progress principle

Resources & People Mentioned

• Episode 89 - Sequence of Return Risk
• Kitces article

Connect With Chad and Mike

• https://www.financialsymmetry.com/podcast-archive/ 
• Connect on Twitter @csmithraleigh @TeamFSINC
• Follow Financial Symmetry on Facebook

Subscribe To This Podcast

Apple Podcasts  Stitcher  Google Play

What are you investing for? Many say higher or better returns--but higher or better than what? What do those higher returns make possible for you? 

Video recap: https://www.youtube.com/watch?v=tKC2ulw3cz8

To have a successful investment experience you need to have a plan in place. Mike Eklund joins me once again on this episode of Financial Symmetry to discuss our 3 step investing process. This process creates the guideposts for all Financial Symmetry clients. Listen in to learn why failing to plan means you are planning to fail. 

Why do you need a plan?

Have you ever thought about why you are investing in the first place? Before creating your investment plan you’ll want to set your goals. This way you can understand what kind of returns you need in order to achieve your goals. 

We are all often guilty of the lottery mindset--that mindset that thinks if we could choose that one next big thing then we would be set. All we needed to do was buy Apple in 2000, or Tesla in 2012, or Bitcoin at $1000. But the reality is, successful investing requires a plan. Your investment plan can help you understand when to buy and sell or increase or reduce risk in your portfolio. 

Our 3 step process

At Financial Symmetry, we use a 3 step process to help our clients achieve their financial goals.

1. Determine when you need the money. Will you need it sooner or later? When you need the money determines the amount of risk you can take. The longer you own stock the more the risk diminishes, so as investors, we are short-term pessimists and long-term optimists. 
2. Have a plan in place. Having a plan means that you won’t have to react to market events. This is why the rules-based process is so important. Think about what you can control and implement the plan by using low-cost, high-quality investments. Whether you use index funds or active funds doesn't matter as much as how you plan. 
3. Monitor your investment plan so that you can stay invested. Take advantage of opportunistic rebalancing and buy and sell based on your target percentage. Many people leave out this step but it is just as important as the other two steps. 

5 things you can expect as a Financial Symmetry client

You may be wondering what we at Financial Symmetry offer to our clients. Our clients can expect these 5 things from us.

1. Our focus is to help you achieve your goals. We focus on long-term success over short-term results. 
2. Clients can review their investments on a daily basis in the Client Center. 
3. We know that communication is important, so we make sure to answer your questions. We understand that it's your money we are working with.
4. We provide years of experience and do extensive research on all our investments. 
5. We all invest in the same way as our clients.

We can help you reach your goals

What is your investment plan? Do you have a rules-based process? Investing is a lot like fitness. Everyone wants to start, but it can be hard to keep up. We can be your financial personal trainer and help you stay on track to reach your goals.

We can make investing easier for you. If you don’t have the knowledge, experience, and interest to do this all on your own we can help.

Outline of This Episode

• Why are you investing in the first place? [3:40]
• We follow a rules-based process [6:02]
• Monitor your investment plan [15:32]
• 5 things to expect as a Financial Symmetry client [18:21]
• The progress principle [23:25]

Resources & People Mentioned

• Episode 118 

Connect With Chad and Mike

• https://www.financialsymmetry.com/podcast-archive/ 
• Connect on Twitter @csmithraleigh @TeamFSINC
• Follow Financial Symmetry on Facebook

Subscribe To This Podcast

Apple Podcasts  Stitcher  Google Play

Have you been on the fence about hiring a financial advisor? This indecisiveness can cost you. This episode will help you decide whether hiring a financial advisor is right for you. You’ll learn the 5 C’s that you can expect when hiring a financial advisor. Press play to find out what you should expect from your financial advisor.

Video Recap: https://youtu.be/zuTdjdDkqUI

4 reasons you may be looking for a financial advisor

Have you been considering hiring a financial advisor? If so, then you may be seeking assistance in one of several areas. 

Competence - You are looking for someone who knows more than you and is an expert in their field.

Coaching - You may know quite a bit, but knowing and doing are 2 different things. A financial advisor can be like a personal trainer and give you the push you need to get things done. 

Convenience -A financial advisor can do what you don’t have time for. 

Continuity - You may want someone to help you coordinate with others for family or legacy planning. 

Do any of these reasons seem familiar to you? Keep listening to hear what a financial planner can do to help you.

What to expect from a financial advisor

Collaboration - Your financial advisor will co-create a plan that serves you and helps you reach your financial goals. This should be a collaborative process between the two of you. In your first meeting, you can expect to be asked a lot of questions so that they can learn about you and your goals. You want your financial advisor to lead with a planning focused approach. If you receive a sales pitch instead, this should raise a red flag.

Credentials - Many people are surprised to learn that you don’t have to have any qualifications to be a financial advisor. However, you may see a bit of an alphabet soup after a financial advisor’s name. It is important to understand what these letters mean. Are they real credentials or simply sales designations? Look for the gold standard CFP certification. CFA and CPA are two other certifications that may be relevant to your situation.

Communication - You can expect regular communication from your financial advisor. They may set up a communication calendar with you to help you set expectations in communication. This regular communication will help you stay updated. Your advisor may also reach out to discuss tax opportunities, set goals, and to review progress. Listen in to hear what red flags you should look out for in your advisor communications.

Compounding value - Are you better off after you pay your advisor than you would have been otherwise? This can be hard to quantify and may take a bit of introspection. Look at your return on life as well as the quantitative parts. Consider your investment returns, rebalancing, and tax deferral. If you think that your advisor is providing a free service then make sure to look for the hidden costs in your portfolio. A fee-only financial advisor discloses their costs upfront so that there are no surprises. If you are looking for a fee-only financial advisor you can find out more about our services at FinancialSymmetry.com.

Outline of This Episode

• The 4 reasons you may be looking for a financial advisor [2:57]
• What to expect from a financial advisor [4:19]
• Your financial advisor should communicate with you regularly [14:51] 
• Is your financial advisor adding value to your life? [18:51]
• The progress principle [24:01]

Resources & People Mentioned

• Episode 63 - Financial Acronymology, Decoded
• Episode 108 - What the CARES Act Means for You
• Episode 133 - Tax Planning with the New American Rescue Plan

Connect With Chad and Mike

• https://www.financialsymmetry.com/podcast-archive/ 
• Connect on Twitter @csmithraleigh @TeamFSINC
• Follow Financial Symmetry on Facebook

Subscribe To This Podcast

Apple Podcasts  Stitcher  Google Play

The American Rescue Plan was recently passed, but do you know all the changes it will bring? You probably already know about the stimulus checks, but you may not know how it could affect your taxes and healthcare. This latest economic stimulus package could mean big things for your tax planning. 

Video recap here: https://youtu.be/Vq8Y2CFYS6E

Since the American Rescue Plan has a heavy tax focus, I invited tax planning extraordinaire, Grayson Blazek, to brief us all on the risks and opportunities that we should be looking out for with the newest piece of legislation. He simplifies this complex topic down to 5 key areas. If you are looking for tax planning opportunities or want to know the risks to look out for, then make sure to tune into Grayson Blazek’s breakdown of the American Rescue Plan. 

Who qualifies for the third installment of stimulus checks?

The third round of stimulus checks may be the most widely known part of the American Rescue Plan. These checks are capped at $1400 per person. Although the income range of those who qualify has narrowed, many people who were not previously eligible for stimulus checks will be eligible for round 3. 

The age range for dependents has been expanded to those in college and older high school students, whereas with the previous rounds of stimulus, dependents were limited to ages 16 and under. Listen in to find out how the income bracket for stimulus checks has changed and learn how you could use this stimulus package as an opportunity for careful tax planning.

How has the ARP changed health insurance premiums?

If you were laid off or terminated like many others last year, your company must continue to offer health insurance through COBRA. The drawback with COBRA is that the full cost of the insurance premium was placed solely on the participant without the employer absorbing a share. The American Rescue Plan will now fully subsidize the premiums of COBRA until September of 2021. This means that if you are on COBRA your premiums will be zero.

That wasn’t the only change in health insurance premiums through the ARP. Find out how the thresholds of the Affordable Care Act have changed with the bill as well. Press play to hear how. 

Changes to the child tax credit and the dependent care tax credit may have you rethinking your tax planning strategy

Most people don’t pay attention to their taxes until the time comes for them to file. But maybe after listening to this episode you may want to start getting in front of your taxes and plan the year ahead rather than focus on the previous year. 

If you have children, then this year is an especially good time to consider tax planning. You’ll want to take advantage of the expanded tax credit that went from $2000 to $3000 and $3600 for children under 6 years old. In addition to the child tax credit, the child dependent care tax credit was expanded to max out at $8000 per child.

Changes to unemployment compensation

Lastly, the American Rescue Plan has extended state and federal benefits to unemployment compensation until September 6. Lawmakers also chose to make unemployment compensation tax-free for 2020. 

Listen in to hear all the details so that you can develop a plan to utilize these changes in your tax planning efforts. This may be a good year for you to consult a CPA to help you file your taxes.

Outline of This Episode

• [1:20] Stimulus checks part 3
• [9:10] Health insurance
• [15:54] The new child tax credit
• [23:54] The child dependent care tax credit
• [27:20] Changes in unemployment compensation
• [32:00] You may want to reach out to a CPA this year

Connect With Chad and Mike

• https://www.financialsymmetry.com/podcast-archive/ 
• Connect on Twitter @csmithraleigh @TeamFSINC
• Follow Financial Symmetry on Facebook

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It’s always fun to peek behind the curtain and see the strategies and process people use for their decision making.

Video recap: https://youtu.be/DDp2dBUhrSg

During this conversation, we review some of my core beliefs around:

• importance of tradeoffs - how every financial decision affects others
• being intentional in being a good steward
• Defining the balance between enjoying today while saving for tomorrow
• Structuring your money management around the give, grow, owe and live philosophy

4 Primary Uses of Money

You can use it to live, give, owe or grow. For us, we rank these in the following order: give, grow, live, owe.

Giving is at the top of our budget. Giving first breaks the power of money and releases its hold over people. Therefore, tithing to our church has been at the top of our priority list.

We then focus on the growth aspect. This starts with automating our savings so that we can reach 15% of our income. As for how we invest we focus on various types of accounts from 401K to Roth IRAs to 529s for the kids. We explain in the episode how we've set up a system to where we don't lose sleep over our 90% stock allocation.

With 3 yr old twins, a large part of our spending goes to daycare costs. My spouse and I try to spend our money on the things that create joy, including going to NC State sporting events and going on camping trips.

I've always used debt as a tool for large, low-interest purchases such as his home and car. We only hold one credit card and doesn’t want to open any more accounts than are necessary.

Outline of This Episode

• [4:25] What are Cameron’s money influences?
• [9:07] How does Cameron divide up his resources?
• [15:27] Does he worry about his 90% stock allocation?
• [21:26] How does he see debt?
• [26:30] What was the best money he spent in 2020?
• [31:15] The power of small wins

Resources & People Mentioned

• In and of Itself movie
• Episode 126 - How a Financial Advisor Invests Their Money: Mike Eklund
• BOOK - Happy Money by Elizabeth Dunn

Connect With Cameron

• Cameron's book, Where Family and Finance Meet
• Connect on Twitter @cam_hendricks @TeamFSINC
• Follow Financial Symmetry on Facebook

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