Category Archives: Opinion
By Jason Alderman
Money Management for the “Boomerang” Household
Due to recent economic realities, multi-generational living has been on the rise for many families.
A 2014 Pew Research Center analysis (http://www.pewsocialtrends.org/2014/07/17/in-post-recession-era-young-adults-drive-continuing-rise-in-multi-generational-living/) showed that a record 57 million Americans, equal to a little over 18 percent of the U.S. population, lived in multi-generational family households in 2012 – double the number in 1980. The major driver was young adults aged 25-34. According to Pew, nearly 24 percent of these older millennials lived in multi-generational households, increased from nearly 19 percent in 2007 and 11 percent in 1980.
It’s possible the “boomerang” family trend will remain in place for some time to come. For homeowner parents who may also be juggling the “sandwich” responsibilities of caring for older relatives, paying attention to the financial and behavioral details of taking in family is critical. Here are some suggestions to consider:
Your finances come first. Operating a full house means higher utility and food costs and additional wear and tear on the property. Taking in family also shouldn’t derail a parent’s career goals or retirement planning, nor should it diminish other necessary financial objectives like maximizing savings or eliminating debt. That’s why dual- or single-parent households might begin with a complete financial assessment before welcoming kids or elders back home. A discussion with qualified financial and tax advisors might be worthwhile to determine how much expense you can take on. For arrangements that go beyond free lodging to direct cash support of family members, gift tax issues should be explored.
Make a real agreement. A home is stability and therefore something of significant value. That is why it is appropriate to consider rent or request in-kind services in exchange for room and board. Young adults – particularly those who were fully under parental support in college – need to learn this important lesson even if they are moving home to save money to pay off loans, to buy a car or put a down payment on a home. Ask trusted advisors about what makes sense in your situation. If you decide to accept rent, know there are potential tax issues (http://www.irs.gov/taxtopics/tc415.html) based on the structure, timeframe and expenses related to such an agreement. Legal paperwork may be required, but there also may be rental expenses you can deduct.
Establish timelines. In the real world, financial arrangements are rarely open-ended. Depending on the financial, tax and legal advice you receive as well as local tenant law and personal preferences, you may be signing an official lease for your family member’s stay with a specific timeline of months or years. Whatever the requirements, make sure you have an effective framework that sets specific financial and behavioral rules you want met.
Start with a family meeting. Before moving trucks arrive, family members should meet for a discussion about the impending move. Start by letting your child or family member talk through why they want to move in, whether they have financial goals tied to the living arrangement and how long they plan to stay. Share the structure you envision, including the payment details you would consider. No matter how agreement is struck, it should begin with a full discussion of needs, preferences, financial terms, and most of all, ways to make the arrangement successful and smooth. Once the move happens, regular conversations should continue about the living arrangement. After all, boomerang families have unique, ongoing financial issues that will require discussion.
Prepare to track expenses. Once agreed, retrofit your household budget to keep track of higher food, utility and related expenses for cost-sharing and potential tax purposes. Having people you love living with you will hopefully have many rewards that go beyond simple dollars, but always know what the arrangement is costing you.
Bottom line: Opening your home to returning family members is a real financial commitment. Think through money, tax and household issues before you say yes.
By Jason Alderman
Your Midyear Financial Checkup
Setting a few hours aside for a midyear financial checkup in June or July can help you review how you’re doing with savings, investing, spending and debt. It can give you the opportunity to spot irregularities and adjust your budget well in advance of year-end.
If you already work with a qualified financial or tax advisor, consider discussing this review process with them so they can guide you to any specific money issues you should be tracking.
Start by requesting at least one of your three credit reports. The idea is to make sure your credit balances are accurate and to check closely for any irregularities that might signal identity theft. Federal law requires that each of the major credit agencies – Experian, Equifax and TransUnion – give you your most recent credit reports for free (https://www.annualcreditreport.com/index.action) once a year.
If you discover unusual charges or accounts you didn’t open, alert your advisors, take any steps they recommend and otherwise follow the U.S. Federal Trade Commission’s step-by-step identity theft guide (http://www.consumer.ftc.gov/features/feature-0014-identity-theft) to help you take action. Remember to stagger receipt of each of your credit reports throughout the year so you have the opportunity to catch potential irregularities every few months.
Next, turn to your budget or start one if you’ve never made one before. The midyear review should focus on whether adjustments can be made to save or invest more or pay off more debt if more money is coming in from a raise or other resources. If spending is up by midyear, it’s always important to know why and whether funds can be reallocated to better purpose.
Review your retirement and whether you’re maximizing your contributions at work or in your own personal retirement accounts. Those who reach age 50 by the end of the calendar year will be able to take advantage of additional catch-up contribution allowances to beef up their balances as they approach retirement.
Midyear is also a good time to check the adequacy of one’s emergency fund (www.practicalmoneyskills.com/calculators/emergency). Emergency funds help keep you from tapping your credit or savings balances in a sudden cash emergency. The amount of money you keep in your emergency fund should fit your needs, but consider a balance of four to seven months of everyday expenses in case there’s a short-term job loss or an emergency repair. Consider keeping a year-round list of potential home, car or personal expenses and decide whether your emergency fund is adequate or you might need to set up other savings accounts to address bigger needs.
Make sure your tax withholding levels are correct. This is particularly important if your income has changed during the first six months of the year and you might be closing in on a higher or lower tax bracket. Consult your tax advisor for assistance, and the IRS features its own withholding calculator (www.irs.gov/Individuals/IRS-Withholding-Calculator) to help you decide.
Finally, make sure all your recordkeeping is up to date. Midyear is a good time to look over all your spending, saving and investment records to make sure all the numbers add up and underlying paperwork is in order. Also consider online banking, investing and bill payment as a way to save more time and money.
Bottom line: Taking a midyear break to review your finances gives you a thoughtful opportunity to spot errors, adjust your budget and save on taxes.
Editor’s Note: On June 4, members of the RAGBRAI Pre-Inspection Team rolled into La Porte City on their bicycles as part of a comprehensive review of the ride’s 2015 route. While in town, they sampled some of the best food La Porte City has to offer, including donuts from La Porte City Bakery, Etc. and specialty pizzas at Pizza Palace. Along with a stop at City Hall, some of the team members visited Kramer Sausage Co. while others enjoyed brief tours of the FFA Historical & Ag Museum. As part of the pre-ride publicity the Des Moines Register will publish in July, the following community summary of La Porte City that was submitted at the request of RAGBRAI officials. -MW
By Mike Whittlesey
La Porte City has a rich heritage dating back to the mid 1800s, when Dr. Jesse Wasson, the city’s founder, bought a large tract of land on the south side of Wolf Creek. Sixteen years after the town was first platted, La Porte City was duly incorporated on February 11, 1871.
Dr. Wasson is a prominent figure in La Porte City’s history. In addition to founding the city in 1855, Wasson was the city’s first Postmaster and second mayor, as well as owner of one of the city’s first newspapers. According to W.L. Fox, it was Dr. Wasson’s ingenuity and force of will that was at least partially responsible for bringing the first state road built between Cedar Falls and Cedar Rapids through La Porte City. Legend has it that after befriending the survey crew and discovering their fondness for whiskey, Wasson used strategically placed jugs of the liquor along the route, now known as U.S. Highway 218, to help guide the surveyors into town. One can only imagine how dramatically different the 2015 RAGBRAI route would be without Dr. Wasson’s influence.
Thankfully, when cyclists along this year’s RAGBRAI route make the right turn onto Main Street to enjoy the amenities La Porte City has to offer, they will be greeted by a bronze bust of Dr. Wasson in front of City Hall, sporting, of course, his familiar top hat. One of the first things riders will notice as they roll into the RAGBRAI staging area downtown are the signature brick streets that have been in La Porte City since… perhaps the days of Dr. Wasson.
Downtown La Porte City is home to some of the tastiest treats you can find in Iowa. On the northwest corner at the stoplight, Tootsie’s Ice Cream & More has all the frosty treats that taste oh so good on a hot, summer day. Crossing the street into the 300 block, diners can snack on confectionary treats at La Porte City Bakery, Etc., which features glazed donuts declared by some to be the best in the state. Across the street, Kramer Sausage Co., home of the turkey leg served at the Iowa State Fair, offers a selection of smoked meats second to none. More culinary goodness can be found in the next block, where the Pizza Palace invites you, after trying the rest, to enjoy the best- pizza that is.
La Porte City is home to the state’s first FFA Museum. Recent renovations to the historic jail and firehouse have contributed to an impressive downtown museum district that, along with Hawkins Memorial Library, provide services that preserve and transmit culture, in addition to promoting the community. The FFA’s active presence in town can also be seen in the community orchard and raised bed gardens that will continue to grow and bear fruit for area residents to enjoy in the future.
It is fitting that La Porte City serves as a pass through community on the fifth day of RAGBRAI, which begins in Cedar Falls and ends in Hiawatha. This route mirrors the 46 mile long Cedar Valley Nature Trail, with the ride into La Porte City from the north completely paved. Along the trail, the La Porte City Lions Club gazebo serves as a welcome respite. All trails do indeed, lead to La Porte City.
By Jason Alderman
Looking for Work? Plan a Money-Smart Job Search
A successful job search goes well beyond snagging the title and the paycheck. From the day you start looking until the day you’re hired, there are strategic and financial issues to consider that may be more valuable to you in the long run.
To start, job seekers should always begin with a plan to promote themselves both in person and online, and some aspects of that process may be tax deductible. Keep in mind that if you are already employed, you may want to consider certain timing and legal issues that will define how and when you search. And finally, taking the job requires a close look at benefits.
It makes sense to discuss any potential job search with a qualified financial advisor who can evaluate your current financial circumstances as well as offer tips on how to strengthen your preparations for retirement and other goals.
Start with market research and improving your public profile. A recent Jobvite study notes that Facebook, Twitter and LinkedIn profiles are the ranking social media options reaching employers and for industry hiring and pay projections, the U.S. Bureau of Labor Statistics’ (BLS) Occupational Outlook Handbook (www.bls.gov/ooh/) is a wide-ranging and constantly updated online resource for that data.
Check your credit reports. Remember that many employers screen applicants’ creditworthiness as part of their candidate review. Go to AnnualCreditReport.com (https://www.annualcreditreport.com/index.action) for free access to reports from the three major credit agencies – Experian, TransUnion and Equifax – to check for potential errors or credit negatives you need to repair.
Evaluating search expenses and potential tax savings come next. Here are a few of the current rules listed by the IRS (www.irs.gov/uac/Newsroom/Job-Hunting-Expenses). Make note that your current job status will affect how the rules apply to you:
Expenses may qualify as deductions only for a job search in your current line of work. You won’t be able to deduct expenses for a job search in a new occupation.
You can’t deduct job search expenses if you’re looking for a job for the first time or if there’s been what the IRS calls a “long break” between your last job and beginning your search for a new one.
If you travel to look for a job in a qualified job search, you may be able to deduct the costs of all or part of the trip.
A job search is always a good time to revisit current budgeting and savings goals. For example, you might want to do more specialized budgeting (www.practicalmoneyskills.com/calculators/budgetgoals) as you aim for a particular salary offer.
You’ll also want to consider the timing of your search to exhaust benefits you’ve earned at your current employer. You will see many employees schedule a job search after annual bonuses are paid or after they’re able to spend out in tax-advantaged Health or Flexible Spending accounts (HSAs or FSAs) for qualified health care, dependent care or other approved benefits. Also, before you start applying, it might be worthwhile to review confidentiality or non-compete agreements you signed at the time your current employer hired you in case those agreements might restrict any element of your search.
Sometimes job offers distract workers from taking a thorough look at the value of potential benefits (www.practicalmoneyskills.com/employerbenefits). You may not get all the details until your actual starting date, but see whether your future employer’s human resources department can share details of the health, retirement or tax-advantaged benefits programs they offer. Above all, find out how soon you’ll be eligible to sign up for your new employer’s 401(k) retirement plan.
Finally, touch base again with your financial advisor before you accept to make sure you’ve got all the information you need. You will need to do parallel retirement planning if you are to retire successfully, and qualified advisors can also assist with transferring previous-employer retirement assets and suggestions on ways to use other work-related benefits efficiently.
Bottom line: When searching for a new job, go beyond the paycheck issues to research tax and benefit issues that can make a good job a great one.
Vitamins are the essential nutrients that your body needs to thrive and function. By eating a well-balanced diet, rich in fruits and vegetables, you’ll take in most of the vitamins you need. But, sometimes, we fall short. Certain illnesses and conditions can also keep us from getting the proper levels of nutrients. So, how do you know if a multivitamin supplement is right for you?
When to use a multivitamin — and how to choose one
While a balanced, nutrient-rich diet is the best way to get vitamins and minerals, people with dietary restrictions or food allergies might fill in the gaps with a multivitamin. Because the recommended daily intake for nutrients varies by age, gender, and health condition, talk to your doctor about what you should look for in a vitamin supplement.
Those who should consider using a multivitamin:
•Women who are pregnant or trying to get pregnant. Consume adequate amounts of folic acid (found in fortified breads, cereals, pastas and other grains, and in supplement form) to prevent spina bifida and other birth defects.
•Premenopausal women, vegetarians and vegans. Monitor iron intake (red meat, beans, lentils and spinach contain iron), as many people fall short of this nutrient.
•Vegans and adults over the age of 50. You might be deficient in vitamin B-12. That nutrient comes from dairy, eggs, seafood and poultry, which vegans avoid, and some older adults don’t easily absorb the vitamin from food.
•Older adults and people not exposed to enough sunlight. You may need supplemental vitamin D. The body’s ability to get the vitamin from the sun’s rays decreases with age.
•Individuals who have conditions affecting how the body digest food (such as food allergies, gastrointestinal diseases or lactose intolerance). Those who have had gastric bypass surgery for weight loss, may need to enhance their diets with supplements.
When considering multivitamins, watch out for potential interactions with medications and lifestyle habits. Too much iron, for instance, builds up in the body and can damage organs and tissue. Extra folic acid might boost cancer risk. Supplements containing vitamin K can lower the effectiveness of blood-thinning medications like Warfarin (including Coumadin and other brand names). Research also links multivitamins containing large amounts of beta-carotene and vitamin A to increased lung cancer risk among smokers and former smokers.
To avoid taking in too much of certain nutrients, consider multivitamin formulas created for specific ages and genders. Multivitamins for older adults tend to include extra vitamin D and calcium, for example, while men’s formulas tend to contain lower levels of iron.