Money: Values, Behaviors, Habits and Change

saving money

Money values, behaviors, habits, and change: Perhaps there is something about middle age, or a pandemic, that creates the urge to examine values, behaviors, habits, and change.

At my 25th college reunion, I had breakfast with a college friend who worked for our alma mater, Davidson College. She had attended lots of reunions.

I asked about her observations of reunion attendees. She said something like, “At the 10-year mark, everyone’s comparing notes – who has how many kids, who has graduate degrees, what they did for vacations, what kind of home they live in, etc.”

In other words, their money values tended to be focused on status.

“By the 25th, nearly everyone has experienced some kind of life event, and they are a lot more mellow. The other stuff must not seem as important.”

So, values shift as life unfolds.

Values drive behaviors, which become habits. When we begin to question the behaviors and habits, we become ready for change. And that’s how growth happens. Eventually this process can work its way into finances.

Beginning to Examine Behaviors – Eating Habits

My own path to behavior change didn’t start with money. It started with eating.

One of my first experiences with behavior change was through Weight Watchers. I was 35 years old, 5’3″ and 15 pounds overweight. I decided that I valued being healthy more than enjoying unhealthy food. I lost 20 pounds and gained 5 back, but kept it off.

How did I do it? Tracking and accountability. Whenever my clothes got tight, I would write down everything I ate. This helped me track and change my eating behaviors permanently.

Ironically, tracking and accountability had come naturally to me with money. I wrote my first budget at age 9, and had tracked my money ever since. This made me a good saver, but later I learned it didn’t necessarily mean I had a good relationship with money.

Conversational Habits

Next I moved to healthier conversation habits.

The values of listening well and feeling heard became more important. I learned that “listening” does not mean, “Wait until the other person is finished talking so I can say what I want to say.”

Listening means to suspend all noise and chatter in my head; and reflect on what I am hearing. To eliminate the noise and chatter, I acquired a rule: Anything that I want to say while someone else is talking, I am not allowed to say.

Like any other habit change, it took conscious effort at first. When I think of something I want to say, I let it go, stay present, and listen. I found that, if I truly wanted to understand someone then what I wanted to say would have gotten in the way of that.

My conversational habits, and relationships, improved.

Money Values, Behavior, Habits and Change

My money habits needed improvement too.

I used to overtrack my spending and worry unnecessarily about it. This led to a habit of denying myself some things that would have been convenient, or just enjoyable. Then, like binge eating, I would splurge on something silly or outrageously expensive. Even though the splurges never exceeded the savings, it created big regret and self-criticism.

This roller coaster of emotions tied to money was one of the hardest habits to break. The shift came indirectly through other personal changes wrought through a divorce. Working structured programs with friends who shared similar struggles helped me identify emotions sooner and do something more constructive with them.

This education helped me write The Mindful Money Mentality: How To Find Balance in Your Financial Future, for people who have difficulty spending their savings in ways that bring joy and happiness.

Examining is Easy; Change is Hard

It is easy to underestimate how difficult behavior change can be.

It’s normal to believe we can simply tell ourselves to act differently. We can “just say no” to cookies after dinner, to quit interrupting, or to quit worrying about financial things we cannot control.

Instead, it helps to have a nudge – a program, a structure, a new discipline, or an accountability partner – to complete the transformation from old habits to new ones.

Before you know it, with new habits, a lot of good physical, relational, mental, and financial growth will happen.

Enough good stuff to share at the next college reunion.

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Floridians: Wait ‘Til July 1 to Buy Kayaks, Grills and Broadway Passes

Floridians, wait until July 1 to buy that kayak, new grill, or Broadway series pass. The state of Florida has a Freedom Week sales tax holiday encouraging us to a) get outside and b) get back to sharing space with strangers.

The holiday lasts from July 1 to July 7, 2022. Depending on the county in which you live, that could mean a 6% to 8% savings.

Two Exemption Categories

The savings cover two main categories: a) outdoor activity supplies and b) events.

“Outdoor activity supplies” include everything from bug spray to gas grills (the first $500 – sorry, gourmet grillers). Reading the list of exempted items makes me want to spend the rest of the summer in the water (many of these do have limits ranging from $500 down to $10):

  • canoes and kayaks
  • water skis and wakeboards
  • paddleboards and surfboards
  • coolers
  • goggles, snorkels, and masks
  • sunglasses and sunscreen
  • rods, reels, bait and tackle

For woodsy type landlubbers, exempt (also with limits) are:

  • binoculars
  • bicycles
  • bug spray
  • camping supplies
  • outdoor gas or charcoal grills

Camping supplies include stoves, tents, collapsible chairs, lanterns, flashlights, and sleeping bags. (Gee, this also reads like my hurricane preparedness list.)

Events and Annual Passes

For even more fun, “events” include tickets to any concert, movie, game, fair, festival, cultural event, or gym with attendance dates through December 31, 2022. Note: You have to buy the ticket between July 1 and July 7 for any event scheduled through the rest of 2022 to get the exemption.

Events also include annual passes to:

  • museums
  • theaters (hello, Broadway series, orchestra, and opera)
  • state parks (which I didn’t know they charged sales tax on in the first place?)

Despite its property-tax-free status (for now), sorry, but Disney does not count as a state park.

No limits on the cost for the passes. So if you’re considering venturing out for the Broadway series, purchasing the pass between July 1 and July 7 might save you enough to cover dinners before the shows.

For a complete description, see the state of Florida’s TIP sheet at: https://floridarevenue.com/taxes/tips/Documents/TIP_22A01-04.pdf

There are other sales tax holidays also going on right now. Read the comprehensive list here and mark your calendar for May of next year to watch this space for 2023: Inflation Relief: Florida 2022 Sales Tax Holidays

How will you take advantage of the Freedom Week sales tax holiday?? Leave a comment below.

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Parents, Aging and Finances

Parents, aging, and finances. Talking about aging with parents can be one of those difficult conversations we want to put off for another day. Like other difficult conversations, though, avoidance usually makes it harder.

Transitions in aging can fall into four broad categories: financial matters; health care decisions; living arrangements; and transportation. This week’s post tackles the topic of finances.

Helping Parents With Finances

The downside of the digital age is that it makes seniors more susceptible to fraud and scams. They can send or spend money anywhere, or divulge sensitive information, with one click. Without being physically present, adult children might not be as quick to catch the warning signs that a parent has become susceptible.

The most common kind of elder financial abuse occurs from people close to the parent. Sometimes it can be a new person in their lives – a girlfriend or boyfriend, a housekeeper, or a companion caregiver. Checking up on new friends and companions might not feel good, but is a necessary step.

Are parents located far away? In her wsj.com article, Veronica Dagher interviews financial advisors and aging experts on how to help parents with finances from a distance.

By volunteering to help with bill paying, the person with the DPOA can begin to get acquainted with the parent’s accounts, particularly what kind of expenses are normal and which are not.

Parents: Start Early, Small and Often

Parents would be wise to communicate early with adult children. While the topic of money is taboo in many households, it will make everyone’s life easier if the parent is open and communicative. It’s helpful to know how many accounts there are, how the accounts are managed, and approximate amounts or a range of amounts in each. Describe how the transition of help with money would go in an ideal world. Other steps:

  • Provide contact information for the financial advisor, investment manager, lawyer, and accountant.
  • Arrange an annual family meeting with any or all of the above.
  • Begin conversations early with small topics first. Allow everyone involved to grow into their roles.
  • Build on that trust to expand financial duties as time goes on.

Adult Children: Start Early, Small, and Often

For the adult children, instead of anticipating one future difficult conversation, experts recommend thinking of each topic as a continuous conversation to be had over a number of months or years. Following are some pointers.

Start the conversation with curiosity.

“Mom/Dad, if you should ever reach the point where you’re unable to (balance your checkbook, drive on the interstate, feel confident about a medical decision, feel comfortable living on your own), what would you like to have happen?”

“What would be an example of something that would indicate the point at which you would like help?”

Listen intently. Even if it is not what you would like, check for understanding by repeating back what you heard. For example, “So what I hear you saying is that, if you have a fall, that’s when you’ll ask for help. Is that true?” Sometimes when we hear things back, we change our minds, or clarify.

Things To Do Now

As noted in Dagher’s article, one of the most important documents is a Durable Power of Attorney (DPOA). If a DPOA is more than a few years old, or there has been a change in health status, have it reviewed by an elder law attorney. The attorney will make sure the powers granted are up to date with current law and broad enough for the parent’s current situation.

Since so much of our financial lives are online, it’s also wise for a parent to share emails, userids, and passwords with the person named as DPOA. Ideally, all of the financial institutions where a parent has accounts would have copies of the DPOA and confirm they recognize it as valid.

By volunteering to help with bill paying, the person with the DPOA can

  • begin to get acquainted with the parent’s accounts
  • become known to the institutions where accounts are held and
  • learn what kind of expenses are normal and which are not.

Additionally, it tends to work better if just one person is named as DPOA. Then name a backup or successor in case they are unavailable. Joint DPOAs can be a headache.

DPOA Does Not Work for Health Care

While the DPOA covers financial and legal matters, it does not address health care decisions. For those, a health care proxy or Designation of Health Care Surrogate is necessary. With Covid-19, family members may not be allowed in the hospital. Should an emergency happen, the health care proxy, as well as any living will, DNR (Do Not Resuscitate), or DNH (Do Not Hospitalize) documents should be provided to paramedics and/or hospital staff.

For a free resource specifically addressing the talk about end-of-life care, see The Conversation Project, at https://theconversationproject.org/starter-kits/. For a primer on the 4 basic estate planning documents needed by everyone, see Part 2 of 2 – The Talk That Only Gets Tougher – 4 Documents.

Simple But Not Easy

These are difficult scenarios to think about or talk about. The most important thing to do now is begin with a single step. Whether you are the parent of adult children, or the adult child of an aging parent, it’s never too early to broach the topic. Rather than waiting until it’s too late, start while it seems too soon. That kind of talk will be a lot easier.

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Estate Planning, Opioids and Addiction

Estate planning, opioids and addiction: Addiction is one of those common issues everyone thinks is uncommon.

But if it was talked about more, more people would realize addiction is a widespread illness, affecting many families. Before Covid-19, the opioid crisis was one of the worst epidemics to affect the U.S. Like Covid-19, there were outbreaks and hotspots. Unlike Covid-19, the opioid epidemic was brought about by unscrupulous doctors and pharmaceutical companies.

Below is an excerpt from a guest blog post by Mike Mastry, Esq. of Mastry Law in St. Petersburg, Florida. In it, he details how opioids and addiction are affecting families and attorneys as they document their estate planning.

Mike Mastry is an estate planning attorney located in St. Petersburg, Florida. Mike’s goal is to simplify the process of estate planning by crafting individualized plans that provide each client with peace of mind. He does this by maintaining a client centered practice that focuses on creating comprehensive estate plans that are tailored to fit each client’s unique circumstances.

Mike’s ideas are relevant for planning involving any kind of addiction – the kinds that are easier to see, like drugs and alcohol, as well as the kinds that aren’t – like gambling, sex, or porn.

All addictions, seen or unseen, hurt the addict and the people who love them. Having a good estate plan in place can’t take away the hurt, but it can hedge against making it worse.

Opioid Epidemic Now Impacting Estate Planning, by Mike Mastry, Esq.

“Estate planning often serves as a reflection of a family’s experiences. In this instance, estate planning is used to protect the family and individuals with substance abuse problems.

Estate planning attorneys hear all kinds of stories about bizarre family dynamics and difficult relatives. However, the national opioid epidemic is relatively new to the estate planning world. Sadly, it is likely here to stay.

The Pittsburgh Tribune-Review’s recent article, “Pittsburgh attorney sets up ‘opioid trusts’ for beneficiaries with addiction issues,” https://archive.triblive.com/local/regional/pittsburgh-attorney-sets-up-opioid-trusts-for-beneficiaries-with-addiction-issues/ reports that the American Family Survey, commissioned annually by the Deseret News, found that 12% of families in 2017 said they had an opioid-addicted relative. Opioid overdoses nationally were the leading cause of death for people younger than 50, according to the Centers for Disease Control and Prevention in 2017.

Attorneys Getting Creative

The opioid epidemic has led some attorneys to get creative and establish what are being called “opioid trusts.” Some folks don’t want to leave anything outright to a child with a dependency issue, because of what can happen to the money.

Estate planning attorneys are regularly asked to create trusts for beneficiaries with intellectual disabilities, who are entitled to public-health benefits through Social Security or Medicaid and receive supplemental trust payments that add to those. However, the so-called opioid trust is somewhat different.

Parents may be paying for the child’s basic support needs. However, is that money going to buy drugs? If so, have they cut him or her off completely?

With an opioid trust, there’s no support to the child. This sounds cruel, but medical experts say it’s to get the child to embrace recovery. The goal is to get him into recovery and, eventually he might be able to stay clean long-term. An opioid trust is created to pay recovery-related expenses, such as rehabilitation bills, therapist payments and treatment bills. Optimally, the child gets a job. It’s this “tough love” that’s the only way this type of trust will work.

The money is never distributed directly to the beneficiary, nor is any property that could be easily converted into drug money. However, you can give them other, in-kind benefits, like the use of a car-but not the title to the car.

Naming a Trustee

Naming a trustee can be challenging in this kind of situation. This is a situation where a professional trustee, rather than a family member, may be a better choice. Achieva, a Pittsburgh-based organization, handles standard trust disbursements and has a team of social workers and counselors who work with trust beneficiaries.

An estate planning attorney will be able to help your family distribute assets through an estate plan that protects the family from the impact of addiction.

Reference: Pittsburgh Tribune-Review(August 21, 2018) “Pittsburgh attorney sets up ‘opioid trusts’ for beneficiaries with addiction issues”https://archive.triblive.com/local/regional/pittsburgh-attorney-sets-up-opioid-trusts-for-beneficiaries-with-addiction-issues/

Other Resources

For families struggling with addiction and alcoholism – www.al-anon.org, www.nar-anon.org

For books addressing family dynamics with money, including enabling behaviors – see our Recommended Books page

Florida addictions counseling – www.kendonaldson.com or search for addictions counseling at the website of Psychology Today.

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The Ideal Retirement Plan: It’s About More Than Money

view from the porch

The ideal retirement plan: it’s about more than money.

I knew a man who couldn’t wait to retire from his government job. With a few decades of hard work and wise money decisions, he was able to call it quits at 55. Thrilled with his newfound financial freedom, he immediately took to cooking, golf, dating, traveling, fishing, and having fun. For the first few years, every time I saw him, I could see the lack of work responsibilities had lightened his step and his heart.

At 65, he moved to a Florida retirement community, the kind with nearly identical roofs, lawns and mailboxes. One of the few ways to stand out was by the cover on your golf cart. To outsiders, everyone looked the same, dressed the same, exercised the same, and seemed to absolutely love their new life in the sunshine.

Happy on the Outside But No One to Talk To

One day on the phone the man said, “Y’know, I really like talking with you. I don’t have anybody to talk to here.”

This was a shock. “What?” I said, “Surely there are some retired CEOs, executives, people that think like you there, that play golf, and that you have a lot in common with.”

“Nah,” he said, “I don’t have that much in common with anybody here.”

I thought that was crazy. He talked like them, dressed like them, shopped like them, and played golf and pickleball with them. He probably was just as well off, financially, as any of them. How could he not have someone to relate to?

Unfortunately at that time, I was unfamiliar with the signs of depression. Five years later, it took his life.

Three Myths About the Ideal Retirement

According to writer Mitch Anthony, there are three myths about the ideal retirement plan.

Myth 1: “This part of my life is going to be about ME.”
Anthony says, “This is a formula for emptiness.”

Myth 2: “I am going to surround myself with people like ME.”
Anthony’s reply: “This is a formula for stagnation.”

Myth 3: “I am going to do nothing but relax.”
Anthony: “This is a formula for boredom.”

Emptiness, stagnation, and boredom. Doesn’t sound much like the ideal retirement. Yet, these three myths form the basis of a lot of retirement plans.

A Mayo Clinic gerontologist told Anthony, “A life of total ease is two steps removed from a life of total disease. The first step is they get bored, the second step is they grow pessimistic, and then they get ill.”

The Dark Side of Retirement Plans

This is what writer Robert Laura termed the “dark side” of retirement. For some who don’t think about how to bring meaning and purpose to their life after work, serious mental health maladies, like depression and addiction, await. Florida retirement communities have some of the highest suicide rates in the country, particularly growing among white males over age 65.

Of course not everyone in retirement communities is depressed. It’s common to have constant fun, be social, and live vibrantly, filling time with volunteering, mentoring, and circles of friends.

Plan For More Than Money

For those like the man above, jumping off the work treadmill onto the retirement scene without a plan can be risky. Instead, South Dakota financial planner Rick Kahler responded to Laura’s article with several wise suggestions for the non-financial part of a retirement plan:


*Ask yourself how much of your identity is tied up in what you do, rather than who you are.
*Start creating a life to retire “to” rather than simply a job or business to retire “from.”
*Consider gradually reducing to part time and taking extended vacations, rather than showing up one day, and having nowhere to go the next.
*In your ideal week, identify how would you spend your time, and with whom?
*Have a diverse social network outside of work.

As one example, writer Douglas Bloch complained his parents’ retirement community had no children, while his retired friends were finding fulfillment in their own neighborhoods mentoring youngsters in math.

The best retirement plans start with a plan for a fulfilling life first, then match up the plan with money decisions. That’s why good planners ask, what’s the money for? For most, it’s not to support boredom, stagnation and decline. If you define what an ideal retirement means first for you, then your retirement plan and your retirement life have far better chances of success.

Dedication to Mental Health Awareness

Following May’s Mental Health Awareness month, every June I republish this story in memory of the man who inspired it. Retirement is a life transition that has an under appreciated impact on mental health.

Resources for Ideal Retirement Plans:

Dori Mintzer, Ph.D. has a weekly live interview series and podcast called “Revolutionize Retirement.” In it, she interviews experts on retirement life.

Mitch Anthony’s book, The New Retirementality.

Holly’s book, The Mindful Money Mentality: How To Find Balance in Your Financial Future

Sign up for our free monthly e-letter, “The View From the Porch.” We never share your email address.

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The ABCs of Behavioral Economics

The ABCs of Behavioral Economics: This article was originally published in NAPFA Advisor magazine.

Behavioral economics, with its long lexicon of “biases,” has enjoyed great popularity for a couple of decades. However, it’s also one area where financial planning students feel the least prepared. Experienced advisors, too, find this relatively new field fascinating, but yearn for practical ways to apply it, especially amid the market volatility of the past couple of years.

Sometimes it’s helpful to boil things down to basics. At the risk of oversimplifying, here are three reminders, A-B-C style, of what behavioral economics is about, how it works, and how advisors can use it.

A—What is behavioral economics about? A: Actors (economic ones) are not always rational.

Economists used to assume that actors (people and companies) always act rationally to increase their profit, wealth, or “utility.” The father of behavioral economics, Daniel Kahneman, won a 2002 Nobel Prize for proving they actually don’t. However, even today, both clients and advisors still tend to assume finance is about facts, not feelings.

Throughout my early banking career, I made this assumption. For example, when the estate tax exemption was $675,000, I reveled in suggesting ways that nearly every client could save on estate taxes. One husband, whom I knew liked to argue, pushed back when I brought this up. “Why do you automatically assume I want to save taxes?” he blurted.

His wife looked at my jaw hanging open. I answered, meekly, “Because nearly everyone I talk to wants to save taxes?”

“Well, maybe I don’t!” he said. “The government has a lot of good programs.”

Before that day, I had never asked how anyone felt about paying taxes (who would ask such a stupid question?), or what the idea of legacy meant to someone (too personal, I might upset them). My job, before that day, was like Sergeant Joe Friday, “Nothin’ but the facts, ma’am.”

Now I know all facts, especially anything with the word “estate” in it, for goodness’ sake, come with feelings. It’s far better to get to the feelings first if we want any chance of rational decision making.

B- Why Does This Happen? B: Brains have powerful primitive parts.

In his 2011 best seller, Thinking: Fast and Slow, Kahneman divides the brain into two systems: System 1 and System 2. To oversimplify, System 1 is the older, primitive part, and it generates emotional responses. System 2 is the newer, intellectual part.

Most of the time we’re quite aware of what’s going on with System 2 (intellectual), and quite unaware of System 1 (emotional). We fail to remember how much more powerful System 1 is than System 2. To make matters worse, System 2 falsely believes it can override System 1 anytime it wants.

For example, have you ever been sitting at a traffic light and suddenly heard a honk from the car behind you? My System 1’s initial thought is, “Who the !@#$ is honking?” as I glare in the rear-view mirror. A fraction of a second later, it occurs to System 2 to, duh, see if the light turned green. System 1’s embarrassment kicks in with a little wave in the mirror, “Sorry!”

One of the signs of a true professional is the ability to override System 1 through experience and practice. Kahneman uses firefighters as an example. After many fires, they learn that fear doesn’t go away. They accept it as part of the job, then, with experience, use it to make split-second but measured decisions.

In the last couple of years, have you not been a little scared, at least once? A study from the Journal of Behavioral Finance showed financial professionals are just as prone to emotional errors as retail investors. Knowing and accepting this should make us even more cautious. Younger advisors know from their training not to act irrationally based on fear. Senior advisors know from experience not to act irrationally after seeing advisors who did.

Our System 2 can try saying, “I won’t be scared the next time the market falls 10%,” but your System 1 will decide that involuntarily, not you.

System 1 beats System 2 to the punch nearly every time because System 2 is wired to conserve energy. So, it allows System 1 to do most of the work, which mainly involves scanning for threats. Fear isn’t wrong. It’s unavoidable. Whether and how we handle it is our hallmark.

C—What can we do about it? C: Curiosity can help.

How do we foster conversations in which System 2 creates a measured response to System 1 impulses? One way is to concentrate on being curious. This means to expect our own emotional response but not react to it. Accept whatever the client brings up. Focus on better understanding the client’s responses.

Here is an example:

Client: “I think we should buy/sell/do something different than what we’ve been doing.”

Advisors’ thoughts under the influence of System 1:
Fear: “Are you leaving?”
Guilt: “I should have called you sooner.”
Contempt: “You stupid idiot!”
Impatience: “No. You are acting irrationally. I don’t have time for this. Here’s my advice. Take it or leave it.”

Advisors under System 2 (with System 1 emotions in the background):
“I understand, and I would like to hear more about what you’re thinking.” (Fear: Yikes! No! You might blame me for this.)

“It sounds like you are really concerned. Tell me more.” (Contempt: After all our meetings, why can’t you just be calm?)

“I’d be happy to talk about that further. Help me understand how you are feeling.” (Impatience: Do I really have to listen to this?)

We can help the client discover their emotions themselves, simply by creating a safe space for it. Upon reaching that point of self-discovery, ironically, they feel more understood by us. Once someone feels understood, only then will System 1 sometimes step aside and make them ready for System 2-based factual advice.

Sometimes Advisors Need to Hold the Advice

In a 2016 article for The Journal of Financial Planning, Brad Klontz wrote,


The secret is this: when we are doing our best work, we are bringing little or nothing new to the exchange. We are asking no questions. We are offering no advice. We are making no recommendations. We are providing no analysis or insights. We are abandoning our goals and agendas and are just bringing ourselves. Sure, we are facilitating a process, but we have learned that our effectiveness grows as our ability to be present grows. In our best moments, we are engaged in exquisite listening, which is the best therapy.

Klontz, Van Sutphen, and Fries, “Financial Planner as Healer: the Role of Financial Health Physician,” Journal of Financial Planning, December 2016

Behavioral economics can feel counterintuitive: Expect irrational responses, and accept that feelings are more powerful than facts. By not immediately reacting with advice, we become the best advisors.

For more on applying behavioral economics principles to real-life financial planning, see The Mindful Money Mentality: How To Find Balance in Your Financial Future.

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Inflation Relief: Florida 2022 Sales Tax Holidays

Inflation relief: Florida 2022 Sales Tax Holidays. In inflationary times, every bit of savings can help. Florida sales tax runs anywhere from 6% to 8%, depending upon the county where you are making the purchase. Several years ago the Florida legislature started sales tax “holidays,” beginning with the back-to-school season.

Flush with a budget surplus this year, the legislature passed several more holidays which begin this summer. Some of them last a week, while others last up to 2 years. For a major purchase you might be considering, it pays to know the timetables.

Disaster Preparedness: May 28 – June 10, 2022

This has been an annual sales tax holiday for a few years now. If you are in or near Florida, and getting low on batteries, bungee cords, coolers, tarps, portable generator(s?), or several other items listed in the link below, you can save the sales tax by waiting until the week of May 28 to stock up.

Of note, the holiday includes all kinds of pet provisions – pet food, pet kennels, pet beds, leashes, and even pet waste disposal bags.

Here is the link to the 2022 list of exempted disaster preparedness items:

https://revenuelaw.floridarevenue.com/LawLibraryDocuments/2020/05/TIP-123007_TIP_20A01-02_FINAL_RLL.pdf

Big Deal – Home Hardening Disaster Preparedness: July 1, 2022 – June 30, 2024

This one is a bigger deal and can save major bucks. Impact-resistant windows, doors, and garage doors will be fully exempt from sales tax for 2 years starting July 1.

So if you are planning a major home improvement, talk to your contractor about placing the order after June 30. On a $5,000 order, in a 7% sales tax county, that’s a $350 savings.

Unlike most of the other holidays, this exemption also applies to commercial orders.

More detail on home hardening exemptions here: https://floridarevenue.com/taxes/tips/Documents/TIP_22A01-07.pdf

Also Big Deal – Appliances: July 1, 2022 – June 30, 2023

Thinking about replacing appliances? Wait until July 1 and you can save the sales tax on Energy Star appliances. High-end appliances are not included, and the definition of “high-end” appears to be about $1500 ($3000 for refrigerators). $1500 x 7% = $105 in possible savings.

More detail on appliance exemptions here: https://floridarevenue.com/taxes/tips/Documents/TIP_22A01-05.pdf

Children’s Books: May 14 – August 14, 2022

Sales tax on any book written for children under 12 is waived all summer. One of my personal favorites: The Four Money Bears by Mac Gardner. This website also has a fun financial literacy game for kids called “Berryville.”

Fun Events, Outdoor Supplies and Annual Passes: July 1 – July 7, 2022

This sales tax holiday began during the pandemic in 2020. Event tickets, camping supplies, paddle boards, kayaks, binoculars, grills, and bicycles are some of the larger ticket items included in the holiday.

Of note also – annual or season passes for museums, theater series, ballet, and state parks.

New for 2022: pool supplies and parts.

The complete list for events and supplies during “Freedom Week” is here: https://floridarevenue.com/taxes/tips/Documents/TIP_22A01-04.pdf

Children’s Diapers, Clothing and Shoes: July 1, 2022 – June 30, 2023

This has been proposed but blocked in the past. Finally parents and guardians of young kids will get a little relief.

But this is one of two holidays (the other being back-to-school) where the state outlines what is excluded, in addition to what is included. And, as I wrote in 2021, the inclusions and exclusions aren’t always easy to guess.

What constitutes “clothing” and “shoes” for this holiday for toddlers and babies? A few head-scratchers:

Snow ski boots – Yes; Fishing boots/waders – No

Snow ski suits – Yes; Skin diving suits – No

Hunting vests – Yes; Life jackets – No

Garden gloves – Yes; Bicycle gloves – No

Click for the complete list of diapers, clothing and shoes: https://floridarevenue.com/taxes/tips/Documents/TIP_22A01-06.pdf

Back-to-School: July 25 – August 7, 2022

New exemptions for 2022 include learning aids like puzzles, flash cards, and games.

See this year’s complete back-to-school list: https://floridarevenue.com/taxes/tips/Documents/TIP_22A01-08.pdf

New Holidays for 2022: Labor Day/Skilled Workers September 3 – September 9, 2022

Larger-ticket items on the “Tool Time” holiday include power tools under $300, power tool batteries, toolboxes, and work boots. It also includes shop lights, plumbing tools, and duffle bags.

More detail on “Tool Time” exemptions here: https://floridarevenue.com/taxes/tips/Documents/TIP_22A01-09.pdf

A Lack of Preparation Story

During Hurricane Irma in 2017, the middle of the spaghetti models 5 days out showed the storm was likely going up Florida’s east coast. This is the opposite coast from where we live. My husband and I got double-busy with clients who wanted to squeeze in appointments before it hit. We got caught up in the work and ignored our own preparations. I didn’t fill up my car, and we didn’t check our stock of Coleman stove propane canisters. By the time the forecast shifted, there was no gas to be found – for the car, for the stove – of any kind, anywhere.

Irma left us without power for 7 days. Cooking on a tiny charcoal grill in the backyard got old quickly. After 3 days, when the charcoal started getting low, the temperature inside climbed to 83 with humidity of 100, and the frozen fish was rotting, we called it quits and found a hotel with electricity that had managed to reopen.

For a Florida native, experienced with hurricanes, whose job title includes the word “planner,” it felt like I should have done better.

Lesson Learned

Next time I will pay attention to all the strings on the spaghetti model, not just the ones in the middle.

The sales tax waiver is a needed nudge for procrastinators like me. Disasters of all different sorts happen. Take advantage of the holidays to prepare yourself, and enjoy a little inflation relief.

Have you found a great deal using a sales tax holiday? Please do share by leaving a comment.

Continue ReadingInflation Relief: Florida 2022 Sales Tax Holidays

Maximizing Donation Tax Advantages

charity walk

Maximizing donation tax advantages: Recently I answered a reader’s question on this topic at Robert Powell’s Retirement Daily website.

The question was, “How do I avoid taxable income with charitable contributions?”

This reader might have experienced deducting charitable contributions in the past (pre-2017) through itemized deductions.

Post-2017 Tax Act: Donation Tax Advantages Reduced

After 2017, the reader might have noticed they were no longer getting that deduction. Although you can still itemize charitable contributions, the standard deduction with the 2017 Tax Act became so large that, for most people, it no longer made sense to itemize. So the tax advantage to donations was reduced or eliminated for all but the highest incomes.

Advantage: 70-somethings and Older

But people who are at least 70 1/2 do retain one donation advantage. They can make a non-taxable distribution directly from their IRA. It’s called a Qualified Charitable Distribution (“QCD”). A QCD is practically the same as getting a deduction.

Further, once you turn 72, you are forced to distribute the money from IRAs. The distributions are called “required minimum distributions” or “RMD”s. These you must pay tax on. However, if you use a QCD for your RMD by distributing directly to an eligible charity, then no tax is owed on that portion. See the link above for more details on accomplishing this properly.

What questions do you have about IRA distributions? Leave a comment here, or schedule a call at this link: https://go.oncehub.com/hollypthomas

Continue ReadingMaximizing Donation Tax Advantages

Why am I getting a Tax Form 5498 in May?

Why am I getting a tax Form 5498 in May?You may be receiving a Form 5498 in May If you have a Health Savings Account, a Roth IRA, or other IRA. 

It might seem like you just got done receiving and compiling all your tax forms and now your financial institution sends another? Hello, isn’t that a little late? Or were they lazy because of the extended deadline this year? Do you have to call your accountant or financial planner, again?

Hold the calls. You may remember reporting to your accountant (or TurboTax) that you made some contributions to these accounts. Perhaps you made them last year, or perhaps you made them before the April 18 deadline and had them “count” for 2021.

What’s a Form 5498 for?

One purpose of the Form 5498 is for the financial institution (called a “custodian”) to verify to the IRS that you did indeed make the contribution that you claim you did on your tax return. It also tells the IRS what your Required Minimum Distribution will be for the current year, if you are over 72.

Since everyone usually has until the tax filing deadline to make contributions, the IRS usually gives custodians until May 31 to send Form 5498.

Check Form 5498 For Errors

Before you file the 5498 away, make sure it’s correct. Mistakes are common. In 2018, my husband and I both had erroneous 5498’s for our Health Savings Accounts. I made my 2017 contribution in February 2018 and he made his on an ongoing quarterly basis. Mine showed $0 contributions for 2017 and his showed 2 years’ worth. So we called the bank where they were held and got corrected ones sent to the IRS for 2018.

If your 5498 differs from what you reported on your 1040, at some point it could get noticed. One fantastic sunny day in the future, as you skip to your mailbox, you may find inside a skinny white envelope with “Internal Revenue Service” in the return address. Fantastic day ruined.

More than likely, all the letter will say is, “Hey, we noticed your 5498 doesn’t match your 1040. What gives?” But still. Save yourself the trouble of having to answer (or pay your accountant to answer for you) and do a quick check now.

It only takes a few minutes. Does your contribution amount for 2021 look correct? Did you take any 2021 HSA or IRA distributions, and if so, do those look correct? (If not, make sure the distributions say $0.) Is your SSN correct? How about your name, including your middle initial?

If anything looks amiss, contact your custodian to get a corrected 5498 issued ASAP.

One More Tax Task

By this time of year, it’s normal to feel sick of tax stuff. The last thing you may want to do is deal with another form, especially an erroneous one. If you don’t want the bother, at least forward it to your financial or tax professional to check it out and help. It’s no bother. Whether it’s May, July, January, or December – we deal with tax stuff all year long.

Continue ReadingWhy am I getting a Tax Form 5498 in May?

Guest Rap Song Post: It Won’t Go To Zero

Guest rap song post: It Won’t Go To Zero. In early 2010, Ken Robinson, JD and Certified Financial Planner in Ohio, produced a funny rap video with a serious educational message: “It Won’t Go to Zero.” Whenever markets start back on their once-in-a-while roller coaster ride, it’s a good time to resurrect Ken’s lyrics and rap-star antics. Thank you Ken!

In 2007, the stock market began falling and didn’t hit bottom until 2009. Although it recovered throughout 2009 and 2010, it took several months to 2 years for the investing public to actually believe it. Who could blame them after the traumatic crash – a 50% drop in the S&P 500 – in the fall of 2008? Ken’s video in early 2010 occurred during a recovery many didn’t yet recognize.

During those couple of years, people and pundits asked, “Is this time different?” “Will it ever come back?” “Is this the New Normal?” “What if it goes to zero?” In times like these, it is usually confusing and difficult to separate reality-based facts from emotional actions.

Get to the Chorus

The chorus of Ken’s song goes,

“The markets are resilient, and although they may bend, they won’t break, the stock downturn will come to an end. I can’t say what might finally make things turn around, but eventually we will get back on solid ground. I’m not here to be some investment hero, I’m just letting you know; the markets won’t go to zero.”

The lyrics are just as relevant today, in a different decade, under a different New Normal. I wouldn’t change a thing he’s saying. In fact, yesterday I had nearly this exact conversation. I just wish I’d had the talent to say it in a rap song.

Check it out: https://www.youtube.com/watch?v=C3GtxtWSZxE

Choose Composure

Ken’s message is to keep our composure. After a recent NBA playoff win over the Memphis Grizzlies, Steph Curry of the Golden State Warriors was asked by the reporter, “You were down 13 points. How did your team come back to win?”

His answer: “Composure.”

Fortunately for the Warriors they did not have pundits on the sidelines screaming, “You’re finished!” “A comeback is impossible!” “This time it’s different!” Unfortunately for the investing public, scary messages are way too available on nearly any media source we choose. And the primitive part of our brains is hard-wired to look for danger, whether or not it might truly exist.

Choose media messages wisely. When things get scary, no matter what you are hearing and reading, choose composure.

For more on the ways our brains mix up our money messages, see chapters 6 and 7 of The Mindful Money Mentality: How to Find Balance in Your Financial Future, or any of the books on our Recommendations page.

Continue ReadingGuest Rap Song Post: It Won’t Go To Zero