Articles tagged with: Cornerstone Financial Group Iowa

Health Care Costs Are Cutting into Retirement Preparations

This is happening in subtle and not-so-subtle ways.

You may have seen this statistic before or one resembling it: the average 65-year-old retiring couple can now expect to pay more than $250,000 in health care expenses during the rest of their lives.

In fact, Fidelity Investments now projects this cost at $285,000. The effort to prepare for these potential expenses is changing the big picture of retirement planning.1  

Individual retirement savings strategies have been altered. How many people retire with a dedicated account or lump sum meant to address future health costs? Very few. Most retirees end up winging it, paying their out-of-pocket costs out of income, Social Security benefits, and savings.

While couples can save together, individuals also have considerable health care costs as well. Fidelity estimates the costs as $150,000 for women and $135,000 for men. The costs can potentially take up a considerable amount of a retiree’s income – 9 to 14%, according to Fidelity. Per year, out-of-pocket costs, including dental and vision, could run into $3,000 to $8,000 in an average year.2,3

While households have begun adjusting their retirement expectations considering projected health care expenses, businesses have also quietly made some changes. If you can take advantage of employer matching contributions, take advantage of that benefit.

There is no easy answer for retirees preparing to address future health care costs. Staying active and fit may lead to health care savings over the long run, but some baby boomers and Gen Xers already have physical ailments. Barring some sort of unusual economic phenomenon or public policy shift, the question of how to pay for hundreds of thousands of dollars of medical and drug expenses after 65 will confound many of us.


Mike Moffitt may be reached at ph# 641-782-5577 or email:  mikem@cfgiowa.com

Website:  www.cfgiowa.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Securities and Registered Investment Advisory Services offered through Silver Oak Securities, Inc., Member FINRA/SIPC. Silver Oak Securities, Inc. and Cornerstone Financial Group are separate entities.    

Citations.

1 – fool.com/investing/2019/12/07/these-5-factors-will-tell-you-how-much-you-really.aspx [12/7/2019]

2 – plansponsor.com/estimates-health-care-costs-retirement-continue-rise/ [4/2/2019]

2019 IRA Deadlines Are Approaching

Here us what you need to know.

Financially, many of us associate April with taxes – but we should also associate April with important IRA deadlines.

April 1, 2020 is the deadline to take your Required Minimum Distribution (RMD) from certain individual retirement accounts.

April 15, 2020 is the deadline for making annual contributions to a traditional IRA, Roth IRA, and certain other retirement accounts.1

Keep in mind that withdrawals from traditional, SIMPLE, and SEP-IRAs are taxed as ordinary income, and if taken before age 59½, may be subject to a 10% federal income tax penalty. Generally, once you reach age 70½, you must begin taking required minimum distributions.

To qualify for the tax-free and penalty-free withdrawal of earnings, Roth IRA distributions must meet a five-year holding requirement and occur after age 59½. Tax-free and penalty-free withdrawals can also be taken under certain other circumstances, such as a result of the owner’s death. The original Roth IRA owner is not required to take minimum annual withdrawals.

The earlier you make your annual IRA contribution, the better. You can make a yearly IRA contribution any time between January 1 of the current year and April 15 of the next year. So, the contribution window for 2019 started on January 1, 2019 and ends on April 15, 2020. Accordingly, you can make your IRA contribution for 2020 any time from January 1, 2020 to April 15, 2021.2

You may help manage your income tax bill if you are eligible to contribute to a traditional IRA. To get the full tax deduction for your 2019 traditional IRA contribution, you have to meet one or more of these financial conditions:

*You aren’t eligible to participate in a workplace retirement plan.

*You are eligible to participate in a workplace retirement plan, but you are a single filer or head of household with Modified Adjusted Gross Income (MAGI) of $64,000 or less. (Or if you file jointly with your spouse, your combined MAGI is $103,000 or less.)3

*You aren’t eligible to participate in a workplace retirement plan, but your spouse is eligible and your combined 2019 gross income is $193,000 or less.4

If you are the original owner of a traditional IRA, you are no longer able to contribute to it starting in the year you turn 70½. If you are the original owner of a Roth IRA, you can contribute to it as long as you live, provided you have taxable compensation and MAGI below a certain level (see below).1,3

If you are making a 2019 IRA contribution in early 2020, be aware of this fact. You must tell the investment company hosting the IRA account which year the contribution is for. If you fail to indicate the tax year that the contribution applies to, the custodian firm may make a default assumption that the contribution is for the current year (and note exactly that to the I.R.S.).4

So, write “2020 IRA contribution” or “2019 IRA contribution,” as applicable, in the memo area of your check, plainly and simply. Be sure to write your account number on the check. Should you make your contribution electronically, double-check that these details are communicated.

How much can you put into an IRA this year? You can contribute up to $6,000 to a Roth or traditional IRA for the 2020 tax year; $7,000, if you will be 50 or older this year. (The same applies for the 2019 tax year). Should you make an IRA contribution exceeding these limits, you have until the following April 15 to correct the contribution with the help of an I.R.S. form. If you don’t, the amount of the excess contribution will be taxed at 6% each year the correction is avoided.1,4

The maximum contribution to a Roth IRA may be reduced because of Modified Adjusted Gross Income phaseouts, which kick in as follows.

2019 Tax Year4

Single/head of household: $122,000 – $137,000

Married filing jointly: $193,000 – $203,000

 

2020 Tax Year5

Single/head of household: $124,000 – $139,000

Married filing jointly: $196,000 – $206,000

The I.R.S. has other rules for other income brackets. If your MAGI falls within the applicable phase-out range, you may be eligible to make a partial contribution.3

A last-chance RMD deadline rolls around on April 1. If you turned 70½ in 2019, the I.R.S. has two ways for you to take your first RMD: you could a) take your first Required Minimum Distribution from your traditional IRA before December 31, 2019 or b) postpone it until as late as April 1, 2020.6

If you chose b), you will have to take two RMDs next year – one by April 1, 2020 and another by December 31, 2020. For subsequent years, your annual RMD deadline will be December 31. The investment firm that is the custodian of hosting your IRA should have already notified you of this consequence as well as the RMD amount(s) – in fact, they have probably calculated the RMD(s) for you.6

Mike Moffitt may be reached at ph# 641-782-5577 or email:  mikem@cfgiowa.com

Website:  www.cfgiowa.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Securities and Registered Investment Advisory Services offered through Silver Oak Securities, Inc., Member FINRA/SIPC. Silver Oak Securities, Inc. and Cornerstone Financial Group are separate entities.

Citations.

1 – irs.gov/retirement-plans/ira-year-end-reminders [11/08/2019]

2 – irs.gov/retirement-plans/traditional-and-roth-iras [12/04/2019]

3 – irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits [12/04/2019]

4 – irs.gov/retirement-plans/amount-of-roth-ira-contributions-that-you-can-make-for-2019 [11/18/2019]

5 – irs.gov/retirement-plans/plan-participant-employee/amount-of-roth-ira-contributions-that-you-can-make-for-2020 [11/08/2019]

6 – irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds [10/25/2019]

The Secure Act

Long established retirement account rules change.

The Setting Every Community Up for Retirement Enhancement (SECURE) Act is now law. With it, comes some of the biggest changes to retirement savings law in recent years. While the new rules don’t appear to amount to a massive upheaval, the SECURE Act will require a change in strategy for many Americans. For others, it may reveal new opportunities.

Limits on Stretch IRAs. The legislation “modifies” the required minimum distribution rules in regard to defined contribution plans and Individual Retirement Account (IRA) balances upon the death of the account owner. Under the new rules, distributions to non-spouse beneficiaries are generally required to be distributed by the end of the 10th calendar year following the year of the account owner’s death.1

It’s important to highlight that the new rule does not require the non-spouse beneficiary to take withdrawals during the 10-year period. But all the money must be withdrawn by the end of the 10th calendar year following the inheritance.

A surviving spouse of the IRA owner, disabled or chronically ill individuals, individuals who are not more than 10 years younger than the IRA owner, and child of the IRA owner who has not reached the age of majority may have other minimum distribution requirements.

Let’s say that a person has a hypothetical $1 million IRA. Under the new law, your non-spouse beneficiary may want to consider taking at least $100,000 a year for 10 years regardless of their age. For example, say you are leaving your IRA to a 50-year-old child. They must take all the money from the IRA by the time they reach age 61. Prior to the rule change, a 50-year-old child could “stretch” the money over their expected lifetime, or roughly 30 more years.

IRA Contributions and Distributions. Another major change is the removal of the age limit for traditional IRA contributions. Before the SECURE Act, you were required to stop making contributions at age 70½. Now, you can continue to make contributions as long as you meet the earned-income requirement.2

Also, as part of the Act, you are mandated to begin taking required minimum distributions (RMDs) from a traditional IRA at age 72, an increase from the prior 70½. Allowing money to remain in a tax-deferred account for an additional 18 months (before needing to take an RMD) may alter some previous projections of your retirement income.2

The SECURE Act’s rule change for RMDs only affects Americans turning 70½ in 2020. For these taxpayers, RMDs will become mandatory at age 72. If you meet this criterion, your first RMD won’t be necessary until April 1 of the year after you reach 72.2

Multiple Employer Retirement Plans for Small Business. In terms of wide-ranging potential, the SECURE Act may offer its biggest change in the realm of multi-employer retirement plans. Previously, multiple employer plans were only open to employers within the same field or sharing some other “common characteristics.” Now, small businesses have the opportunity to buy into larger plans alongside other small businesses, without the prior limitations. This opens small businesses to a much wider field of options.1

Another big change for small business employer plans comes for part-time employees. Before the SECURE Act, these retirement plans were not offered to employees who worked fewer than 1,000 hours in a year. Now, the door is open for employees who have either worked 1,000 hours in the space of one full year or to those who have worked at least 500 hours per year for three consecutive years.2

While the SECURE Act represents some of the most significant changes we have seen to the laws governing financial saving for retirement, it’s important to remember that these changes have been anticipated for a while now. If you have questions or concerns, reach out to your trusted financial professional.

Mike Moffitt may be reached at ph# 641-782-5577 or email: mikem@cfgiowa.com

Website:  www.cfgiowa.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Securities and Registered Investment Advisory Services offered through Silver Oak Securities, Inc., Member FINRA/SIPC. Silver Oak Securities, Inc. and Cornerstone Financial Group are separate entities.

Citations.

1 – waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/documents/SECURE%20Act%20section%20by%20section.pdf  [12/25/19]
2 – marketwatch.com/story/with-president-trumps-signature-the-secure-act-is-passed-here-are-the-most-important-things-to-know-2019-12-21 [12/25/19]

 

Ringing In the New Year!

It is almost time to ring in the New Year! As December makes way for January, you may be excited thinking about new possibilities. Perhaps you want to take a moment to “refresh and reset” or make a resolution or two. Or perhaps, you just want to spend time in great company, among the friends and family members you cherish. Enjoy the holiday, and as the saying goes. May you be happy, wealthy, and wise in the year ahead.
We wish you a wonderful, successful, and memorable 2020.

Mike & Judy Moffitt and Staff

Season’s Greetings

‘Tis the season – not only to give gifts but to rejoice in the gift of God’s love. As the year ends, we celebrate the birth of the pure and gentle Christ, the savior who offers us the greatest gift of all and the greatest love of all. As we wait in long lines, hunt for parking spots, and try and find that special something online or on the shelf, it is worth remembering that the best gift in life is free.

May the peace and joy of Christ fill your home this Christmas. We hope you have a wonderful holiday season and a happy and blessed new year.

Sincerely,

Mike & Judy Moffitt & Staff

Can You Put Your IRA into a Trust?

What you should know about naming an IRA beneficiary.

Can your IRA be put directly into a trust? In short, no. Individual retirement accounts (IRAs) cannot be put directly into a trust. What you can do, however, is name a trust as the beneficiary of your IRA. The trust would inherit the IRA upon your passing, and your beneficiaries would then have access to the funds, according to the terms of the trust.1

Can you control what happens to your IRA assets after your death? Yes. Whoever was named the beneficiary will inherit the IRA. But you also can name a trust as the IRA beneficiary. In other words, your chosen heir is a trust. When you have a trust in place, you control not only to whom your assets will be disbursed, but also how those assets will be paid out.2

Using a trust involves a complex set of tax rules and regulations. Before moving forward with a trust, consider working with a professional who is familiar with the rules and regulations.

The trust can dictate the how, what, and when of income distribution. A trust will allow you to specify an amount your heir may receive. Or, you could include language that requires your heir to take monthly or annual distributions. You can even stipulate what the money should be spent on and how it should be spent.2

Why would I use a Trust instead of a Will? There are a couple reasons. The biggest is that a will always passes through probate. That means a court oversees the administration of your will and ensures that the bequeathed assets are correctly distributed. One thing to keep in mind, though, is that this may lead to an expensive, slower process. A living trust, on the other hand, can help certain assets avoid probate. This may save your estate and heirs both time and money. Finally, for those who would like to keep their arrangements discreet, a trust can remain private whereas a will is a matter of public record.2

That sounds complicated. If decisions about your IRA are complicated, it may be best to review your choices with a trusted financial professional who can explain the pros and cons of naming a beneficiary to your account.3

Mike Moffitt may be reached at ph# 641-782-5577 or email: mikem@cfgiowa.com

Website:  www.cfgiowa.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Securities and Registered Investment Advisory Services offered through Silver Oak Securities, Inc., Member FINRA/SIPC. Silver Oak Securities, Inc. and Cornerstone Financial Group are separate entities.

Citations.

1 -irs.gov/retirement-plans/plan-participant-employee/retirement-topics-beneficiary [10/17/19]

2-elderlawanswers.com/understanding-the-differences-between-a-will-and-a-trust-7888#:~:targetText=Both%20are%20useful%20estate%20planning,soon%20as%20you%20create%20it. [9/19/19]

3 -bankrate.com/investing/what-is-a-trust/ [6/4/19]

Cash Flow Management

An underappreciated fundamental in financial planning.

You’ve probably heard the saying that “cash is king,” and that truth applies whether you own a business or not. Most discussions of business and personal “financial planning” involve tomorrow’s goals, but those goals may not be realized without attention to cash flow, today.

Management of available cash flow is a key in any kind of financial strategy. Ignore it, and you may inadvertently sabotage your efforts to grow your company or even build personal wealth.  

Cash flow statements (CFS) are important for any business. They can reveal so much to the owner(s) and/or CFO, because as they track inflows and outflows, they bring expenditures to light. They denote your sources and uses of cash, per month and per year. Income statements and P&L statements may provide inadequate clues about that, even though they help you forecast cash flow trends.

Cash flow statements can tell you what P&L statements won’t. Are you profitable, but cash poor? If your company is growing by leaps and bounds, that can happen. Are you personally taking too much cash out of the business? That may inadvertently transform your growth company into a lifestyle company. Are your receivables getting out of hand? Is inventory growth a concern? If you’ve arranged a loan, how much is your principal payment each month and to what degree is that eating up cash in your business? How much money are you spending on capital equipment?

A good CFS tracks your operating, investing, and financing activities. Hopefully, the sum of these activities results in a positive number at the bottom of the CFS. If not, the business may need to change.

In what ways can a small business improve cash flow management? There are some fairly simple ways to do it, and your CFS can typically identify the factors that may be sapping your cash flow. You may find that your suppliers or vendors are too costly; maybe you can negotiate (or even barter) with them. Like many companies, you may find your cash flow surges during some quarters or seasons of the year and wanes during others. Maybe you could take steps to improve it outside of the peak season or quarter.

What kind of recurring, predictable sales can your business generate? You might want to work on the art of continuity sales – turning your customers into something like subscribers to your services. Perhaps price points need adjusting. As for lingering receivables, swiftly preparing and delivering invoices tends to speed up cash collection. Another way to get clients to pay faster: offering a slight discount if they pay up, say, within a week (and/or a slight penalty to those who don’t). Before you go to work for a client or customer, think about asking for some cash up front (if you don’t do this already).

Relatively few small business owners look to home equity as a source of a business loan or a line of credit. Only 7%, in fact, according to the Federal Reserve. Meanwhile, only 6% explore a mortgage refinancing. But why are there so few? It could be that the repayment terms might be intimidating as well as the inherent risk of placing your home on the line. That said, it may be a suitable option for some seeking to start a small business.1

Be that as it may, there is a temptation for an owner of a new venture to get a high-limit business credit card. It might be better to shop for one with cash back possibilities or business rewards in mind. If your business somehow isn’t set up to receive credit card payments, think about how the potential for added cash flow could render the processing fees utterly trivial.1

How can a household better its cash flow? One quick way to do it is to lessen or reduce your fixed expenses, specifically loan and rent payments. Another step is to impose a ceiling on your variable expenses (ranging from food to entertainment), and you may also save some money in separating some or all those expenses from credit card use. Refinancing – if you can do it – and downsizing can certainly help. There are many free cash flow statement tools online where you can track family inflows and outflows. (Your outflows may include items like long-term service contracts and installment payment plans.) Selling things you don’t want could make you money in the short term; converting a hobby into an income source or business venture might help in the long term.

Better cash flow boosts your potential to reach your financial goals. A positive cash flow can contribute to investment, compounding, savings – all the good things that tend to happen when you pay yourself first.


Mike Moffitt may be reached at ph# 641-782-5577 or email: mikem@cfgiowa.com

Website:  www.cfgiowa.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Securities and Registered Investment Advisory Services offered through Silver Oak Securities, Inc., Member FINRA/SIPC. Silver Oak Securities, Inc. and Cornerstone Financial Group are separate entities.

Citations.

1 – entrepreneur.com/article/336037 [7/1/19]

 

Cybersecurity

Protecting yourself from potential calamity.

Cybercrime affects both large corporations and private individuals. You’ve likely read about the large data breaches in the business world. These crimes are both expensive and on the rise. The U.S. Identity Theft Resource Center says that these corporate data breaches reached a peak of 1,632 in 2017. The response to the growing need for data protection has been swift and powerful; venture capitalists have invested $5.3 billion into cybersecurity firms.1

That’s good news for the big companies, but what about for the individual at home? What can you do to protect data breaches to your personal accounts?

For most private individuals, the key idea is to both:

* Know what to do if you’ve had a data breach.

* Know what you can do that might help prevent a data breach.

Total cybersecurity for your financial matters isn’t something that can be strategized in a single short article like this one, but I would like to offer you two suggestions that can help you get started. Both can be done from home and represent reactive and preventative measures.

Credit Freeze. By reactive, I mean that a step that you can take after the fact. In many cases, a credit freeze might be a reaction to identity theft or a data breach. What it specifically does is restrict access to your credit report, which has information that could be used to open new lines of credit in your name. The freeze prevents this, but it will not prevent a criminal from, for instance, using an active credit card number, if they’ve discovered it. For that reason, you still have to monitor for unauthorized transactions during the freeze.2

While the freeze is in place, you can still get your free annual credit report. You also won’t have issues with credit background searches for job or renter’s applications or when you buy insurance – the freeze doesn’t affect those areas of your credit history. You can even apply for a new line of credit during a credit freeze, though that requires a temporary or permanent elimination of the freeze during the process. This can be done through either a call to the big three credit reporting agencies (Equifax, Experian, and Transunion) or a visit to their respective websites.2

Password Manager. This is a preventative measure. Yes, we all know the poor soul who uses “Password” as their password. While you are probably not that far gone, the truth is that there are many tricks that cybercrooks use to learn or intuit our passwords. In fact, 20% of Internet consumers have experienced some sort of account compromise. That comes at a time when about 70% of consumers operate 10 or more accounts. A few, against best practice, will use the same password across each of those accounts. A good security measure against that is password manager software – applications that allow us to keep all our numerous passwords encrypted in a vault and drop them into our browsers when requested. While yes, there are options to save these passwords, encrypted on most browsers, these security measures are limited. Password managers are focused solely on security and are more frequently updated than the browser security features might be. That attention might be difference between a criminal obtaining access to your sensitive personal information or being blocked in the attempt.3,4

While this is a very basic pair of tips, they are worth thinking about and may prove to be helpful in your efforts to prevent identity theft. There are, however, additional, more-advanced choices for you to explore. Talk with your trusted financial professional about other cybersecurity best practices that you might consider.

Mike Moffitt may be reached at ph# 641-782-5577 or email: mikem@cfgiowa.com

Website:  www.cfgiowa.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Securities and Registered Investment Advisory Services offered through Silver Oak Securities, Inc., Member FINRA/SIPC. Silver Oak Securities, Inc. and Cornerstone Financial Group are separate entities.

Citations.

1 – forbes.com/sites/forbestechcouncil/2019/10/09/the-need-for-a-breakthrough-in-cybersecurity/ [10/9/19]

2 – consumer.ftc.gov/articles/0497-credit-freeze-faqs [9/2019]
3 – wired.com/story/best-password-managers/ [9/25/19]

4 – digitalguardian.com/blog/uncovering-password-habits-are-users-password-security-habits-improving-infographic [12/18/18]

 

Spotting Credit Trouble

How to check for problems.

Americans aged 45 to 54, who have credit card balances, carry an average debt of $9,096 per individual.1

The wise use of credit is a critical skill in today’s world. Used unwisely, however, credit can rapidly turn from a useful tool to a crippling burden. There are several warning signs that you may be approaching credit problems:

Have you used one credit card to pay off another?

Have you used credit card advances to pay bills?

Do you regularly use a charge card because you are short on cash?

Do you charge items you might not buy if you were paying cash?

Do you need to use your credit card to buy groceries?

Are you reluctant to open monthly statements from creditors?

Do you regularly charge more each month than you pay off?

Do you write checks today on funds to be deposited tomorrow?

Do you apply for new credit cards, so you can increase borrowing?

Are you receiving late and over-limit credit card charges?

It is important to recognize the warning signs of potential credit problems. The quicker corrective action is taken the better. Procrastinating is almost a sure way to guarantee that you may face financial difficulty down the road.

The lowdown on those free credit scores.  Did you know the credit score provided to you may be different from the one provided to lenders?

The first thing you should know is that you have a right to see your credit report once annually without cost. To receive your free credit report you can visit www.AnnualCreditReport.com.

This report will contain important information that may affect your credit score.

While your credit report can be obtained for free, your credit score will cost you money, except if you have been denied a loan based on your credit score, in which case you may obtain your credit score for free.

Your credit score is a numerical representation of your creditworthiness, which considers past and current credit activities, including any late payments, judgments, liens, bankruptcies, and foreclosures.

When you see an offer for getting your free credit score, it may be a marketing-driven incentive to get you to sign up for a fee-based credit monitoring service. The score may be only available at no cost if you agree to sign up for a trial subscription and don’t cancel prior to the end of that trial period.

The dirty little secret of credit scores. Before you purchase your credit score, understand that the methodology used to calculate the score you buy is different from that used to determine the credit score lenders receive.

There are hundreds of methods for calculating an individual’s credit score, and many lenders use private models with proprietary outcomes. While knowing your credit score may be important, it may be more vital to review your credit report to correct any errors that may be hurting your score and take the necessary steps to improve your credit profile.


Mike Moffitt may be reached at ph# 641-782-5577 or email: mikem@cfgiowa.com.

Website:  www.cfgiowa.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Securities and Registered Investment Advisory Services offered through Silver Oak Securities, Inc., Member FINRA/SIPC. Silver Oak Securities, Inc. and Cornerstone Financial Group are separate entities. 

Citations.

1 – thestreet.com/personal-finance/credit-cards/average-credit-card-debt-14863601 [2/14/19]

 

Making Room for Ourselves

Why do we hold onto things we haven’t used in years and find it hard to let go of what our friends and neighbors might simply call “useless stuff”? It relates to our happiness. We may become even happier, though, with less of it.

Seemingly everyone has heard the decluttering mantra popularized by author Marie Kondo: if an item does not “spark joy,” then get rid of it. Realistically, though, it is hard for many of us to ruthlessly purge our attics, basements, spare bedrooms, or garages because so many items we keep relate to happy memories and even our identity.

We buy certain things because we know they will make us happy or make others happy. The tipping point arrives when our happiness and self-worth link strongly to our possessions rather than our relationships and our role at work or in our community. As Matt Paxton (of Hoarders) reflected in a recent TED talk, people lose “time, money, space, relationships, and opportunities every day because they’re holding onto their stuff.” When that opportunity cost is evident, then it becomes time to jettison the excess. Paxson suggests decluttering one square foot at a time, donating as much as you can, and throwing out items that have no real appeal or value. The space you free up may be mental as well as physical, and tackling the job today has merit. The heirs of those who never thin out household clutter often end up squabbling, but not over who should inherit it rather who should deal with it.1

Mike Moffitt may be reached at ph# 641-782-5577 or email:  mikem@cfgiowa.com

Website:  www.cfgiowa.com

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Citations.

1 – ideas.ted.com/many-of-us-have-a-little-bit-of-hoarder-inside-us-heres-what-to-do/ [9/3/19]