I have several interesting articles to report on this month, so you get a mix of information to digest. First, the May 18th Wall Street Journal had some advice for new graduates that might be timely. Their lead paragraph suggests that if you learn to manage a paycheck, spend less than you earn and stash away some money for later, you can put your education to good use no matter what you choose to do in life. Then, be nice to your parents. You may have to stay with them until you find a job; plus, you may be able to piggy back on their health insurance through age 25. Even if you have found a job, it may take up to 3 months to qualify for your employer’s plan, so be aware of the possibilities. Don’t forego getting coverage. One unexpected accident can put you in a financial hole that could be difficult to climb out of. Next on the agenda would be a debt reduction plan. The average debt load for a college grad is $27,000. If you have a similar debt load, paying extra on the monthly payment can significantly reduce the term of the loan and the related interest costs. Buying a used car instead of a new one, taking lunch to work and getting a roommate to share housing costs are several ways to generate the additional funding for the debt. Also, consider making a budget. There are several online apps that will help you in this task. A budget is only a guideline for personal spending and saving, but it will give you a benchmark to work from.
In the June 8th-9th, Wall Street Journal, an article discussed the tax cost of getting married, especially in two-earner families. The underlying reason is that while society has changed, the tax system is designed for a world in which one partner works and the other stays home. Except for the lowest brackets, the tax tables aren’t twice the ones for singles. For example, at the 28% bracket, the income threshold for a single is $87,850; for married filing jointly, $146,400. If the single threshold were doubled, married would be $175,700. To make it worse, many credits and deductions phase out for those with higher incomes and help trigger higher tax bills for two-earner married couples. Ideas to reduce the marriage penalty include reducing reported income by deductible contributions to tax favored retirement plans and pretax dollars used to pay for health coverage, a health savings account or a flexible spending account for health care or child care expenses. It’s not all bad news. The first $500,000 of gain on the sale of a residence is tax free, and the purchase price and improvements are excluded from the gain. For a $300,000 house with $150,000 in renovations over time, the owners could sell the house for $950,000 with no tax consequence.
With the natural and man-made disasters this spring, there are multiple opportunities to make monetary and “physical” contributions. These can benefit you and your family as much as the recipient. These gifts allow you and your children to learn different skills, work as a team and gain exposure to new experiences and people. Northwestern Mutual had an online guide: “Gifts that Last: 6 Strategies to Bring Values to Life”. Number one was to build a tradition of charity. Find an activity that you can do as a family and make it part of your lifestyle. Establish habits early. Teach children early about helping others. Explain the “4-bank” system, which includes a spending bank, a savings bank, an investing bank and a giving bank. Make decisions as a family, involving your children in the process. Be a good role model, schedule time for service and share your legacy with proper planning.
I was looking for a smile and found it in this passage from one of T.D. Jakes books: “Are you ready for the word of the Lord that was spoken over you to come to pass? Get ready! Put on your shouting shoes. When the news that is in your spirit gets in your mind, tears of joy will wet the runway for your takeoff. Don’t ever read about anyone else and wish you were him. Don’t ever wish that you live at any other time. You were created for this moment and this moment was created for you. Laugh to yourself and praise your God. Do you know what time it is? It’s your time”. From collect of a monastic: “O God, by whose light thy servant, enkindled with the fire of your love, became a burning and a shining light in your church, grant that we also may be aflame with the spirit of love and discipline and may ever walk before thee as children of light”.
Securities, insurance and investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment advisor 3416 North Blvd, Alexandria, LA 71301, (318) 448-3201. The views expressed are not necessarily the opinion of FSC Securities Corporation.