Author: Holly Donaldson

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5 Top Books Read in 2023

5 top books read in 2023: What books made an impact on you last year? Each year a few selections from the prior year's reading are highlighted here. For 2023, below are 5 favorites (actually, 4 books and 1 app) from finance and retirement, self-help, and fiction. Finance and Retirement The finance and retirement book recommendation this year is Get What's Yours: The Secrets to Maxing Out Your Social Security, by Lawrence Kotlikoff, Paul Solomon, and Philip Moeller. Although published in 2016 it's been updated for current changes to the claiming rules. Do you really need to read a book about Social Security? Isn't filing pretty straightforward? Maybe, maybe not. It's easier to say who would not necessarily benefit from the book than who would. The book might not be for you if: you already filed for Social Security more than 12 months ago (because, did you know everyone gets a one-time filing do-over in the first 12 months?); or you are not yet 62 and you and your spouse have never been divorced, disabled, widowed, or worked for an employer who opted out of participating in Social Security (generally this would be certain railroad companies or municipal governments). These rule out a few million people, but for the other tens of millions, there is probably something useful inside this book that could save anywhere from a few thousand to a few hundred thousand dollars over the rest of their lives. Life Improvement: (also known as "self-help") Fierce Self-Compassion: How Women Can Harness Kindness to Speak Up, Claim Their Power, and Thrive by Kristen Neff, Ph.D.. Neff's specialty reminds me of Brene' Brown's - a narrow niche of psychological research for which she has chosen to become a deep expert. In Brown's case it's empathy while in Neff's case it's self-compassion. I didn't even know what self-compassion meant when I began reading and studying Neff's work about three years ago. Lest it be confused with becoming a tender-hearted wuss, Neff makes clear that self-compassion requires a ferociousness that is societally frowned upon in women. How to act on that feeling while also expressing self-compassion is the balancing act which she skillfully examines and explains. Not a book, but an app: Insight Timer. I keep this one in my Mental Health folder on the first screen of my phone. It's my go-to app first thing in the morning for a guided meditation or simple calming wake-up music (try for example, "A New Day," by Wakes/Ada and Nathan). Later I consult it again when I need to get to (or get back to) sleep. The teachers are well-vetted by IT and then rated by worldwide listeners. Guided practices span the gamut of spiritual and religious traditions. There are musicians in varied stress-relieving genres to choose from (calming piano - try Chris Collins; cello - try The Wong Janice; recorded nature sounds - Insight Timer Earth). Currently IT claims 28 million listeners. Fiction On the fun side, here were 2 picks for fiction.…

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When Money-Opposites Attract

When money-opposites attract: One's a saver. One's a spender. One would rather be at the mall. The other is into investments. While they love their differences overall, they struggle with disagreements about money. Money is the third most frequent topic of marital arguments, after chores and children. Ironing out the wrinkles in money beliefs, behaviors and decisions can go a long way toward reaching financial goals with peace and harmony - whether those goals be at the mall, or in the savings account. How can couples handle mixed money messages? Try three steps. Step 1: Money Script Awareness Sometimes we don't realize the underlying money beliefs that drive our own and our partner's decisions. These are often called money "scripts." (You can find yours using an online test developed by Dr. Brad Klontz here.) Share with each other the money messages you grew up with. Examples might include "Money doesn't grow on trees," or "You only live once." The goal in sharing is to begin to reach an understanding of the other's background. Share who influenced you when it came to handling money. Money script influences can come from various authority figures - parents, grandparents, teachers, coaches, or spiritual leaders. Share what you believe is the most important value that money provides to you. Values derived from money can include security, achievement, sharing, and spontaneity/having fun. Even a general rejection of money (think 1960s hippie culture) can be a money value. Step 2: Concentrate on conversation Now that the money differences are on the table, how do conversations about it go? It's important to communicate about how you communicate. The goal is for each partner to feel heard and understood. If one or both are falling short on feeling heard and understood, "active listening" is one tool to try. In an abbreviated form of active listening, each partner takes a turn being the sharer and the listener. The sharer tells their story or shares their statement about a topic. The listener then completes three steps. mirror back what they thought they heard, check for understanding, and empathize if appropriate. For example, say the sharer talks about feeling discounted or ignored with important money decisions. The listening partner listens without comment. The listening partner's three steps might begin like this: "So what I heard you say was..." (repeat back, even if it's verbatim, what you heard) "Did I get it all?" (If yes, go to next step. If no, listen to what was missed, and go back to mirroring what you heard.) "I can see how that would be difficult/challenging/etc. for you." Or, if it's true, "If I were in your shoes I would feel the same." This empathetic statement is not necessarily an agreement (although it's nice), but at a minimum an acknowledgement of understanding. All three of these must be completed before it's time to switch roles. Step 3: Respectful Negotiation With enhanced understanding, a couple is better equipped to come to a mutually agreeable solution. Several years ago…

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New Year: What’s In Your Notebook?

It's a new year: what's in your notebook? You know, that one with all of your passwords, account numbers, doctor names, and that very important song that must be played at your funeral. Yeah, that notebook. Where is it? It might reside digitally on your computer or in the cloud, or it might be a pile of papers in a file cabinet, or it might be in an old-fashioned 3-ring binder. The new year is a good time to ask: how easily can someone who needs it find it? Who Might Need the Notebook and When? Everyone needs a someone in mind for the notebook. Your someone (Kate Hufnagel, the Digital Wrangler, calls this Your Person) is who will step in for you and help to handle things when you can't. If an immediate someone does not spring to mind, consider asking a professional to be that someone - an attorney, accountant, or professional fiduciary, for example. When will someone step in? At a time when you need the notebook, but can't get to it. We can imagine all kinds of accidents and tragedies that might bring about a need for the notebook. Rather than dwell on those, let's imagine that you are suddenly swept away on an all-expenses paid trip out of the country to a remote island with spotty cell coverage. While you are whale-watching and snorkeling the reefs for an indefinite period, things still need to be handled back home. Bills to be paid. Taxes to be filed. Gifts to be given. People to be notified of your absence and introduced to Your Person who is handling things. What Goes in the Notebook? In essence, the Notebook is a central place you keep information that your someone will need in case something happens to you. Common and essential items in the Notebook include: Your five basic estate planning documents: original will (drafted by an attorney in the state where you reside), living will, health care power of attorney, durable power of attorney, and HIPAA designations. Advanced estate planning documents: trusts, partnership agreements, business buy/sell agreements, shareholder agreements, etc. Insurance policies. ALL of them: life, long term care, health, property, car, boat, liability, and any others. Contact information for professional advisers: attorneys, bankers, accountants, investment advisers, insurance agents, and (of course) your CERTIFIED FINANCIAL PLANNER™. Also, if your adviser has an assistant or paraprofessional who knows you and your situation, write down their contact information and a little note to that effect. (“Sharon is the assistant and she runs the whole place.”). All of your health care providers – doctors, dentist, optometrist, veterinarian (who is going to take care of Fluffy?). Put similar information by each one – what they helped you with and if any office or nursing staff know you and your history. Important to remember also, anything handled online: digital password manager, online user ids and passwords, bank statements, investment accounts, real estate deeds and mortgages. So much of our financial lives nowadays keys off…

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Challenges and CoastFire: My Story

My story: The following is an updated excerpt from the introduction to my book, The Mindful Money Mentality: How To Find Balance in Your Financial Future (Porchview Publishing, $20). As a behavioral economist (in a field that studies the psychology of personal economic decisions), I have a keen interest in our relationships with money. I care about maximizing its usefulness as a tool rather than elevating its status as an end. But for much of my life, I had those two reversed. I did my own financial planning backwards. I put the pursuit of money first, life second, and myself last. In other words, I floated in a fog about my attachment to money, swept along by society’s encouragement and my own beliefs. My money mentality was not aware, awake, or intentional. It was unconscious. It was anything but mindful.  Ironically, I was one of those successful savers. Starting when I was a teenager, I kept track of every penny I spent. I could not wait until my 21st birthday so I could start contributing to the 401(k) at work.  Money as the Main Goal In my 20s and 30s, I focused on money as an end, determined to define my success as a person by the amount of money I made. As a result, I made some choices that caused me, and those around me, to suffer unnecessarily. I fretted over how much essential things cost. It hurt me to spend on myself for anything nice, much less on anybody else. I now realize that having money was a way to feel good about myself. In my mind, my earnings defined my success as a person. This is the area where I was most imbalanced, and I regret some of the decisions I made then.  After college, I joined a Miami bank training program. I saw that most of the trainees chose to live in a new suburban complex requiring a Metro commute. I chose to live in cheaper North Miami, only ten minutes from downtown, proud that I was saving on rent, gas, and Metro fares. The building was newly renovated but occupied mostly by taxi drivers who kept odd hours, and the crime rate was higher in my neighborhood. My car was broken into in the parking garage. I did not get much exercise because, as a 5-foot-3-inch 20-year-old, I didn’t feel safe going outside.  Further, while my coworkers were discussing the fun evenings they had had at south Miami neighborhood restaurants, I thought, “Bah, humbug!” I was proud not to “waste” my money on frivolities. I ate mostly sauteed vegetables and microwave popcorn in my apartment. Over the seven-month training program, I not only did not exercise enough, I unconsciously distanced myself from the camaraderie of the other trainees. While I eventually fixed the exercise deficiency later in life, the friendships I might have made and enjoyed today are absent.  A Vicious Cycle It was not easy for me to accept that what you have is…

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Roth: To Convert Or Not To Convert

Roth: to convert or not to convert. Converting to a Roth IRA might be worth consideration if you have been saving for retirement in a traditional IRA (TIRA) As you may know, when it's time to take the money out of your TIRA, you will owe tax on the amount you withdraw (called a "distribution"). So when you think of the balance in your TIRAs, give that number a haircut of 10% - 40% (using current tax rates) that will be sent to Uncle Sam. Further, when you reach age 73 or 75 (depending on your birth year) whether you need money or not, you will be required to take an IRS-calculated required minimum distribution (RMD). The RMD income can push you into the next tax bracket or, more commonly, into a higher bracket for Medicare premium surcharges. Surcharges mean you could pay up to several hundred dollars more per month for Medicare. Finally, if you are married and leave TIRAs to your spouse, he or she must eventually take RMDs. When they start filing as single the year after you die, there is a greater likelihood the RMD will push them into the higher income tax or Medicare surcharge brackets. Review of Roth Advantages Roth's have several advantages over traditional retirement accounts (TRAs). 1) When you think of the balance in a Roth IRA, there is no tax haircut. Money in a Roth grows tax-free forever. That's a bigger balance to spend on world cruises, grandchildren, or a Winnebago. 2) Your heirs will have to withdraw the Roth money if you don't, but they won't owe tax then, either. 3) Roths have no RMDs. So that might save you from Medicare surcharges and other additional taxes such as the Net Investment Income tax (NIIT). 4) If you are married and die before your spouse, your spouse will not have to take RMDs from them. 5) If you have a trust, it may be much more beneficial to leave a Roth to the trust than a TIRA. Ask your CPA or tax attorney about this one. What's the Catch with Roths? What's the catch? The amount of TIRA that you convert to a Roth gets taxed in the year you make the conversion. If you convert $100,000 this year, that's $100,000 added to your income. So if you are still working, and you convert some or all of your retirement money to a Roth, you will be paying tax on the converted amount at today's tax rates, hoping/betting that the growth in the Roth will make the extra tax bite today worthwhile later. For the hope/bet to have the best chance to work, a few things help: - You expect to be in a the same or higher tax bracket after you quit working. Otherwise you could wait and pay less tax on the conversion at a lower tax bracket later. - You don't expect to need the money in the Roth for many years. To reap the biggest benefit,…

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Get a Go-Bag: Lesson from the Hospital

Get a go-bag: lesson from the hospital. A 73-year-old client recently had an unplanned hospital stay and gave permission to share her story. She originally had an outpatient foot surgery. Subsequently it developed an infection missed by her physicians. Once her foot swelled up and was bursting with pain, only then did they send her immediately to the ER. As you might expect, it was an ordeal of mixed experiences. Once she got a (semi-private) room, the nursing staff was wonderful. The cleaning staff - not so much. Evidently they had missed cleaning her room's bathroom after the last patients left. Before getting a room, she spent 15 hours parked on a gurney in the ER hallway. Doctors would walk by, see her foot, stop and simply say, "Wow, that looks painful." Then keep going. In case you're wondering, she has a the "Cadillac" Medicare Plan F (no longer available to new enrollees) with supplemental coverage. She spent three days there, which was long enough for this astute patient to think of all the things she would do differently next time before coming. She had her toothbrush, but not her eye mask for sleeping. She had socks, but shower shoes would have been nice. She didn't have her face soap, so for three days she used the "industrial" hospital hand soap. Minimalists might think this is minor stuff. But when you are in a most uncomfortable situation and place, isn't that when comforts are needed the most? Lesson Learned She wanted to ask her partner to bring some of these things, but she realized he really wouldn't know what all the stuff in her medicine cabinet was. It seemed like a big ask. He had already held ice packs on her feet for 4 hours straight. How could she describe which of her many bottles to bring? If it had been me, once I got home, I would have been relieved to be out of the hospital, get on with my life and try to forget it ever happened. Not this lady. She immediately shopped for everything she wanted to have but missed. Then she assembled everything in two go-bags. Now, if she is unable to grab them herself, she has told her partner about them, written down on the medicine cabinet where to find them, and what needs to be added at the last minute. All he has to do is bring them along. Comfort and Dignity When my grandmother, a tall, beautiful, always put-together woman, was in the hospital, dying, she asked for someone to make up her face every morning. At that time I was a teenager. I didn't understand this request. It seemed so unimportant in the scheme of things. Several decades later, when my mother-in-law was in a similar state, I read on a Hospice brochure how rubbing the feet is one of the best things you can do. Hospice is the authority on being comfortable and retaining dignity at a time of greatest discomfort…

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5 Myths about 401(K) Rollovers: What’s the Rush?

5 myths about 401(K) rollovers: Should 401Ks (or 403bs, 457s, or TSPs) always be rolled over? Often, soon-to-be retirees are led to believe their impending retirement forces a deadline or urgency to “do something” about their retirement plan account.  Several understandable myths surround the mystery of what actually happens to your money when leaving your employer. Below are five of them. Myth 1: When you separate from your employer, you must take your retirement plan account (401K/403B/457/TSP) with you. Actually very few employer plans require employees to leave the plan upon retirement. You have a choice to leave the account right where it is.  This includes if you are widowed and your spouse was the employee. More than likely, you can stay with the retirement plan if you want to. The rules for your employer can be verified by checking with your human resources department, or obtaining a copy of your plan’s complete document, usually available at your account’s website. Myth 2: When you separate from your employer, it’s always best to take your retirement plan account with you. Some people might not have the greatest level of fondness for their employer and want to sever ties with anything having to do with the company. While understandable, it’s important to separate facts from feelings about your money.  Due to tighter ERISA and Department of Labor regulations, it’s very unwise for employers to have their employees’ retirement plan limited to only high-fee, high-risk, or self-serving fund options. Chances are that what’s available there is worth taking a more in-depth look. On the question of where you are best served with your retirement funds, here is where you will get a wide range of answers. You can ask friends, family, the internet, co-workers, and even ChatGPT and go in circles. Whether rolling over your retirement plan account is in your best interest depends on a few different factors. Keep reading to myths 3, 4, and 5 to find out more. Myth 3: Retirement plan accounts have no impact on the ability to do a Roth conversion. False. This particularly applies to people who have IRAs outside of their employer retirement plan. If you are considering converting part of an IRA you already own outside of a retirement plan to a Roth, the amount you can convert is subject to an arcane concept called the “pro-rata rule.”  In general, under this rule, the amount you can convert is subject to a ratio that includes all IRAs, but does not include monies in employer retirement plans. Therefore, if you roll over your retirement plan before doing a Roth conversion, you will likely limit the amount of outside IRAs you can convert. For many people retiring in their 60s and delaying Social Security, Roth conversion opportunities abound. It might very well make sense to wait to roll over at least until age 70 so that you can leave the Roth conversion option more open. Conversely, if all of your retirement money is in the employer…

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How To Make Worry Melt

How to make worry melt: As an expert worrier, I often wonder why I worry, even when I know the answer: Worry gives me a (false) sense that I will be prepared and in control. It's my fallback when I feel out of my league. Take this example. One of my biggest worrying times happens before I head to the airport. What am I so worried about? Unlike many, it's not the actual flight. It's about missing the plane. It feels silly to even write this. And yet, Butterflies in my stomach. Little waves of nausea. Tight chest. It happens nearly every time. And I have coping mechanisms: I tell myself things like, "Breathe.“ "Calm down.” “It’s going to be ok.” I even have a special spirit animal - a deer - that I think about to help me feel better. Additionally, as a result of this predictable worry, I have an irrational need to leave home at least two hours ahead, get to the gate an hour before the flight, and, when I get there, to sit where I can see the gate agent and the boarding door. Then there is this acute physical transformation. Once I can see the gate and hear the agent, my entire nervous system relaxes. It feels like the worry just melts. Expected and Unexpected Worries How silly this feels. And yet, it seems I am not the only one to worry about expected and routine things like a departing plane. It's expected and routine, yet a source of great worry, that teenage children will start driving, and that 90-year-old parents should probably stop. In working with money, it's a source of great worry, yet expected and routine, that stockmarkets, interest rates, and gas prices will rise and fall repeatedly. Upcoming retirement is expected and routine, yet a source of great worry (and excitement). Understandably, it's a big step into an unknown future. That can especially bring on the jitters. Adding to everyday events are unexpected random ones, like pandemics. Further, sudden market meltdowns, tsunamis, cancer, dementia, layoffs, election surprises, terrorists, and hacker attacks are all things we know aren't probable, but are possible. Just checking in - how's your heart rate now? Butterflies? Tight chest? Although we might prepare as best we can, worry on top of preparation helps some feel as though we are doing something about the problem. But what toll does worry take? Does it help us to prepare that much better? As a result of worry, I'm quite sure I have shortened telomeres and life expectancy. That's a pretty high cost. How To Melt the Worry Away When I get to the gate and see the agent, I feel the worry melt away. But it's strange - I don't think too many airline employees worry about the same thing I worry about. There's something about having exposure every day to systems and knowledge that produces confidence. Aviation is now one of the safest modes of travel in the world.…

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You Might Want a Trust If….

You might want a trust if.... “Do I need a trust?” Although it's a legal question, it's frequently asked of financial advisors. What do they say?  “Hey, I’m not an attorney,” is one possible—but maybe not the most helpful—answer.  “Hey, I’m not an attorney, but I can play one,” may be polite, but inadvisable.  “That’s interesting you bring that up. I’m curious how you heard about trusts.” This reply seems a little better. It keeps the focus on the questioner, and it’s pretty safe legally.  Pros and Cons of Trusts  Answers people may give for curiosity about trusts range from, “I dunno," to citations of articles, websites, conversations with friends, family members, or even an estate planning attorney. All of the mixed messages about them can get pretty confusing.  For some people, trusts are a mysterious-yet-evil domain of the ultra-rich. This belief isn’t surprising. When was the last time you saw positive media coverage of a trust? It typically pops up when a billionaire’s “trust fund baby” is arrested.  There are dozens of kinds of trusts. For this post, “trust” means a revocable living trust. They tend to be the most common and relevant.  Trusts aren’t for everyone. They are costly to set up. Some people have difficulty implementing and maintaining them. They are powerful. Scary powerful, sometimes. Rather than answering, “Do I need a trust?” directly, I prefer to channel comedian Jeff Foxworthy’s famous phrase, “You might be a redneck if …” (anyone under 40 may have to look him up). It seems to help people discover for themselves whether a trust might be useful. 7 Reasons You Might Want a Trust 1. If you own property in more than one state or country, you might want a trust. Trusts avoid probate—if drafted, executed, and implemented properly. Property in two states/countries means probate in two states/countries. In many states, probate attorneys charge a percentage of the probated asset value. Dollars spent now on a trust could seem small compared to the dollars spent on lawyers and court fees in two places later. 2. If you are concerned about a grown child’s ability to handle money, you might want a trust. A child gets the money with no strings attached if left through a joint account, will, payable-on-death (POD) designation, or beneficiary designation. Trusts let you build strings. One common example is to pay one-third of principal at age 30, one-third at age 35, and the remainder at age 40. As your family ages and changes, you can revise trust provisions like these. Revocable living trusts are amendable. 3. If you have a concern about a child’s current marriage, you might want a trust. Trusts can be written so that inherited assets can be protected in a divorce. Assets inherited other ways, especially if commingled with other marital assets, can be harder to protect. 4. If you have a concern about a child’s future marriage, you might want a trust. Trust provisions can be written for future spouses, too. 5.…

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What Does Qualify for Florida’s Back to School Sales Tax Holiday?

What does qualify for Florida's Back to School Sales Tax Holiday this year? The sales-tax-free dates run from Monday, July 24 to Sunday, August 6. The list of items you can save on is long; more than simple pencils and paper. Before you think you know what qualifies, though, check twice. Here is the general description of items that qualify:- "clothing, footwear, and accessories selling for $100 or less";- "certain school supplies selling for $50 or less";- "and the first $1500 of personal computers and computer-related accessories." Read The Fine Print Before shopping, you may want to know what actually counts, and what doesn't, under the three general categories. You can find all the details in Tax Information Publication #23A01-06, issued 6/15/23: https://floridarevenue.com/taxes/tips/Documents/TIP_23A01-06.pdf Following are a few examples. What counts as "clothing"? Lingerie - yes. Athletic pads - no. "School supplies"? Backpacks - yes. Briefcases - no. "Computers"? Tablet - yes. Smartphone - no. How about payment terms? Layaway - yes. Rain checks and gift cards - no. All of the above probably make some sense. Yet, other qualifiers/non-starters might make shoppers scratch their heads: Kindle- Yes. Books- No.Hunting vests - Yep. Life jackets - Nope.Snow ski suits - Yeah. Scuba suits - Nah.Youth bicycle helmet - Uh-huh. Youth motorcycle helmet - Uh-uh.Rain poncho - Check. Umbrella - Not.Garden gloves - You got it. Athletic gloves - Not a chance.Receiving blankets - Yep. Crib blankets - Nope.Notebook paper - For sure. Computer paper - Not.Scotch tape - Si si. Masking tape - No no.Computer batteries - Yes. All other batteries - No.Blank CD - Ok. Recorded CD - Not ok.All-in-one printer - Yep. Copy machine - Nope. Fax machine - Nope.Docking station - Yes. Surge protector - No.Monitor - You're in. Television - Sorry.Bowling shoes, purchased - Strike. Bowling shoes, rented - Gutter ball.Lab coat - Of course. Hard hat - Are you kidding?Book bag - Yep. Computer bag - Nope.Cleats - Score. Skates - Robbed.Hat - Oui. Wig - No.Karate gi - Ha! Shin guards - Ouch! And really,Bowties - Yes. Masks - No. How Did They Derive This List? A sales tax holiday is a nice way to give families a break and provide economic stimulus. One wonders, though, how these qualifying decisions were made. "Let's make it necessities only." Clearly that wasn't it. "Only things Florida schools can use." Snow suits rule that one out. Got any ideas? Leave them in the comments below. Nevertheless, make your list, save up until July 24 and go to town to save 6% - 7%. Or maybe don't go to town. Maybe work your list from your favorite special shopping chair or couch and wait for the boxes to show up. And leave something nice for the delivery driver, like, I don't know, a lab coat. Or a sales-tax-free snow suit.

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