New Year: Where’s Your Notebook?

Keep important data in a Notebook

It’s a new year: where’s 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 be a digital file folder on your computer or in the cloud, or it might be a pile of papers in a file cabinet, or it might be nice and neat 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?

Notebook Update for Tax Season

Right after New Year’s season comes tax season. The end of January brings tax notices from bank accounts, investment accounts, mortgage statements, health insurance, employers, IRA providers, and more. Many take this opportunity to pull together scattered pieces of their financial life. While you’re at it, consider collecting everything not only for the accountant, but also for your family. The Notebook is a vital reference for your loved ones, just in case you’re not around, or not able, to do it yourself. If you already have a Notebook, now is a good time to review it.

One way to keep the notebook updated is to check each tax statement and match it up with a corresponding account in the notebook. Perhaps you forgot about those I-bonds you bought back in December on Treasury Direct. Better add that account to the Notebook. All those deductions for insurance from your employer – would someone know how to access the insurance companies if needed? That contact info is a good update for the notebook too.

What Goes in the Notebook?

In essence, the Notebook is a central place you keep stuff in case something happens to you. Many people have some kind of a notebook or desk drawer, but often have a few items missing.

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 surrogate, 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, directions on how to find your financial stuff: digital password manager, online user ids and passwords, bank statements, investment accounts, real estate deeds and mortgages.

Extra Items for the Notebook

In addition, not-as-essential items some people include are:

  • An “ethical will” outlining your values. This often gives family members guidance when they are unsure what you would want. Writer Susan Turnbull’s book, The Wealth of Your Life, can help guide you through this process.
  • An end-of-life health care management booklet, like Five Wishes.
  • An Aging Plan – describing your wishes for the potential time of life when you may need assistance with activities of daily living, transportation, and housing transitions.

Think of your Notebook as a bread crumb trail helping your loved ones work backward in your footsteps. A little extra investment of time at tax season will be worth the effort.

Got a Notebook already? Comment below on what makes it uniquely yours. Share your best ideas.

For more on this topic, see The Mindful Money Mentality: How To Find Balance in Your Financial Future. Or to schedule a call to talk about Notebooks and staying organized, schedule a call.

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What Is Financial Anorexia?

What is financial anorexia? Financial anorexia is a type of spending disorder. People who suffer from the eating disorder of anorexia may obsess about food and the number on the scale. People who suffer from the financial disorder may obsess about money and the number on their statement(s). For those suffering – and it is indeed suffering – from financial anorexia, they never believe they have enough to enjoy what they’ve got.

According to Ken Donaldson, LMHC, a licensed mental health counselor in Seminole, Florida, “Anorexia is characterized by a distortion of perception.” Someone suffering from the eating disorder believes they still need to lose a few extra pounds, when to everyone else it’s clear they are harming themselves. Someone suffering from the financial one believes they still need more money, when it’s clear they are depriving themselves.

While the eating disorder of anorexia can be fatal, financial anorexia can be dangerous to mental health, friendships, and family relationships. Think about how it feels to be with someone engaged more in extreme deprivation than in enjoying life’s simple pleasures.

Where Does Financial Anorexia Come From?

Anorexia is fueled by isolation – the more the sufferer depends upon their own distorted perception, the worse their condition becomes. For example, Ebenezer Scrooge (in the beginning of Dickens’ tale), is an isolated penny-pincher and money hoarder. He is the stereotype of the financial anorexic.

Additionally, our culture still worships conspicuous wealth and Twiggy-like figures. “You can’t be too rich or too thin,” sums it up.

Most people understand the “too thin” part, but “too rich”? Is it possible to be “too rich”? Financial anorexics typically accumulate an abundance of resources. Their wealth does not come from a healthy relationship with money. Rather, fear is at its root. They might be “too rich” for their actual needs. Further, the more they have, the more they have to lose, or fear losing.

What are they afraid of? Fears might include:

  • that it will disappear tomorrow in a catastrophic world event;
  • a very expensive health issue;
  • hyper-inflation;
  • becoming dependent upon adult children;
  • “spoiling” family members; or
  • that self-worth will fall in lockstep with net worth.

Certainly some of these things can and do happen. Yet our societal messages, and brains wired to look out for danger, emphasize catastrophic scenarios past the point of their actual probability. At some point in life, many financial anorexics realize, to their immense regret, that they worried more about what might happen, and didn’t, than enjoyed what they actually had.

What Can Be Done About It?

Exposure to new information sources is one method of help. According to Donaldson, “New information will disrupt the pattern.” Support groups, a counselor, and therapy can provide external points of view. For financial anorexia, a visit with an understanding financial professional, who can provide concrete reassurance, often is a good first step.

Sometimes the new information has to come from, unfortunately, from a painful life-altering event. How did Scrooge turn around? By exposure to his past, present, and future if he continued on his course. The Ghosts of Christmas Past, Present and Future showed him more to be afraid of than the fears he made up for himself.

At some point, it makes sense to ask a few questions:

What were all those years of saving for?

How much is too much to spend on seeing family or friends one more time per year? 

How soon is too soon to leave a stressful, unhappy job if it’s taking years off of your life?

What is it truly worth to take the trip (safely, of course) you have been dreaming about for so many years?

How much is too much to spend on self-care like a massage, therapy sessions, or a manicure?

What if the thing to be afraid of is completely unknowable right now and wouldn’t be solved with money anyway? What would change?

Working With an Understanding Professional

A 2017 study sponsored by the CFP Board supported the psychological benefits of working with a financial professional. The study concluded, based upon a survey of over 800 consumers, that, “Working with a CFP® professional ultimately removes the negativity consumers experience relating to their finances and instead elicits feelings of confidence, optimism, ease, and security.”

Confidence, optimism, ease, and security. Those sound a lot better than catastrophes, worry, and fear.

How do you want to feel about your financial future? Share your thoughts below.

Want more information about financial psychology? Sign up for our monthly e-letterschedule a call, or check out Chapters 1 – 3 of The Mindful Money Mentality: How To Find Balance in Your Financial Future.​

Continue ReadingWhat Is Financial Anorexia?

Eyes On I-Bonds

Eyes on I-bonds: As described in the extensive post (link below) from Michael Kitces’ Nerd’s Eye View blog, I-bonds are bonds issued by the U.S. Treasury that pay an interest rate partially pegged to inflation. The rate resets every 6 months, on November 1 and May 1. They are primarily purchased electronically using an online treasury account.

Nerds Eye View post on I-bonds:

TreasuryDirect site to purchase I bonds:

I-Bonds Historic High Rate

For November 1, 2021 – May 1, 2022 I-bonds will pay a whopping 7.12% annualized rate (so 3.56% for six months). This is the highest rate since May 2000. Read below and more above at the Kitces and Treasury links for the tradeoffs, risks, disclosures, and caveats. If you’re ok with those, a $10,000 investment might net at a minimum, a few extra hundred dollars above what you’re earning in a high-yield savings or money market account until May 1, 2022, from bonds backed by the US.

Doubling Up in December/January

As described further in the article, individuals are limited to $10,000 in electronic I-bond purchases per calendar year. Therefore, you could max out your limit by December 31, 2021, then do it again on January 2, 2022, for a total investment of $20,000 per person.

Doubling Up Or More By Household Members

The limit is per person. So two family members could each purchase $10,000 in separate Treasury Direct accounts. The same goes for children. Read the Kitces article for examples of calculating this using jointly-owned accounts and naming “primary owners.”

Buying Additional Paper I-Bonds

Another $5,000 in paper I-bonds on top of the $10,000 annual limit on electronic I-bonds can be purchased via an income tax refund. To take advantage of this, if you have paid in or withheld taxes for 2021 exactly equalling what you will owe, then you could send in a $5,000 estimated payment for January 15. The $5,000 will be calculated as a refund when you file your 2021 taxes. Instead of a refund, you can use the $5,000 to have paper I-bonds sent to you. Then you can convert them to electronic bonds. Bear in mind that, by this time, the 7.12% annualized rate will be about to change on May 1. So this may or may not be worth the effort.

Holding Periods for I-Bonds

You cannot sell (called “redeeming”) the I-bonds for the first 12 months after purchase. So in a worst case scenario, you will earn the annualized rate only until May 1, 2022, inflation goes away, and the rate drops to 0%. You would earn no interest for the rest of 2022 (or 12 months since your purchase) until you could redeem the bonds.

If you redeem the I-bonds between the 1st and 5th year after purchase, you lose the last 3 months of interest. (So if the worst case scenario above occurs, you would lose 0 interest because the rate was 0%).

After the 5th year there is no cost of redemption.

Short-Term Pain for Short-Term Gain

When you add up what you could gain over the next 12 months by holding I-bonds and compare to the effort involved to purchase the I-bonds, the short-term pain may not be worth the gain. But for those who enjoy an opportunity to make a few hundred extra dollars, it just might be.

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What’s a Holiday Spending Style?

what's a holiday spending style

What’s a holiday spending style? It’s the approach you take to spending money on others.

How do you decide what to spend at the holidays, and on whom? In her program, Money Habitudes, Dr. Syble Solomon breaks down our money habits and attitudes into several different styles. Here are how a few of those styles might apply to holiday spending.

Spending Style: Status

After earning my first real money at 15, I made a list and a budget for each person on it. A few years later, at age 20, I looked at the list of names, each with a dollar sign beside them, and thought “Yikes!” It could appear as if each person had a price tag.

At the time, I didn’t know it, but I was operating under one of Dr. Solomon’s six spending styles, the one involving “status.” In other words, I was too concerned what other people would think about my spending decisions, and as a result, I spent too much.

So next,  I made a “total” budget, and tried to keep track as I went along on how I was doing. Yet that didn’t work very well, since I could always find an excuse to break the budget on something to keep it “fair.”

Spending Style: Security

If you spend very little on others, and on yourself, because you are concerned you may need it for an emergency, you might have the “security” spending style. You might do the bare minimum necessary to get invited back to next year’s turkey dinner. Or you might find ways to celebrate other than spending money.

Spending Style: Idealist

Idealist – If you reject the materialism of the holidays, then you might give everyone something home-made, like cookies, or your own artistic creation. You have the hardest time of all styles making a spending plan, because you despise handling money matters.

Spending Style: Spontaneous

This style can’t wait to see what great ideas are presented each year by retailers. Perhaps you make a spending plan, but you have a tough time sticking to it because of all the fun temptations and opportunities to purchase the perfect gifts presented to you right before checking out.

Spending Style: Caretaker

Caretakers see gift-giving as a way to show how much you care about people. Your spending plan might be more generous than other spending styles (but hopefully not more generous than is financially wise).

Spending Style: Goal-Oriented

Your most important concern is staying within your spending plan. It may take you longer to get your shopping done in order to find the right gift-cost combinations.

What’s Your Style?

If you exhibit more than one holiday spending style, that is a good thing. The key is not to take any one style to an extreme. If you can make a spending plan that is wise for your situation, shows your love and affection for others, and still allows for some guilt-free spontaneity, you have probably found the combination that will bring you, and those you care about, lots of joy this holiday season.

For more on the psychology of money, see The Mindful Money Mentality: How to Find Balance in Your Financial Future.

Or to schedule a call to talk about money matters on your mind, click here.

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Decision Fatigue and Shopping

retail shopping fatigue

Decision fatigue is a real thing. I discovered this poignantly on a recent shopping trip. The mission was simple: Buy a spice rack. I figured the best shot was at Bed Bath Beyond (BBB); a store I had not entered in over a year, much less at the holidays. I had a specific size and type in mind, so there was no doubt BBB would provide all the choices I needed. Little did I know that trip would be the beginning of the end of my day’s productivity.

Upon entering, I scanned quickly, bypassing a cart to stay focused on the single item I wanted. Smugly, I glided past the holiday specials to the kitchen department. Lo and behold, there were spice racks. And all kinds of other racks. An embarrassment of choices.

Because I like choices (or thought I did until this day), before long, I was nose to nose with shelves and shelves of plastic, rubber, wood, aluminum, and chrome gadgets, and doodads for kitchen storage problems I didn’t even know I had. It was an assault on my single-mindedness. More than once, something other than a spice rack caught my eye. At first, I had the mental wherewithal to ignore them.

Decision Fatigue Begins

As the minutes wore on, my brain was presented with dozens of items for which a decision had to be made. Does it look like what I came for? If yes, is it the right size and type? If no, move to next item. As this process continued, some strangely gleeful part of my brain, a la Martha Stewart, said, “It’s not the spice rack, but….is it something I COULD use? Hmmmm…it looks very handy. And sleek, too! After all….maybe it could make even more room in the cabinet?” The cabinet, of course, had nothing to do with the spice rack.

“STOP IT,” another Jean-Chatzky-part of my brain, said. “You are here to get the spice rack. Move on.”

Next doodad. Does this look like the spice rack? No, not quite. Yet, the label showed the entire matching doodad set in a fantasy-organized kitchen. Then that Martha Stewart voice again, “Oh, wouldn’t it be cool if my whole kitchen looked like this doodad’s label?”

“STOP IT,” Jean intervened. “You would have to buy every doodad like it in here, which is a) exactly what you did not come here to do and b) doesn’t even include a spice rack. Next item!”

And so it went….back and forth over a dozen items for fifteen minutes. My mental wherewithal was waning.

Finally, I found exactly what I was looking for and grabbed it.

Decision Fatigue Leads to Aimless Shopping

By then, Martha and Jean had gone 144 rounds. I felt drained. So why did I feel like, oh, taking a look around? Just to see if there was something I couldn’t live without? I got to the bath side and wondered what got into me.

To check out, I had to walk the gauntlet of holiday specials again. I actually pondered chocolates. That’s how beaten-down my willpower was.

When I left the store only $8.35 poorer, I felt like Rocky – beat up, but victorious.

I needed a nap.

Emptying the Decisionmaking Fuel Tank

Dr. Moira Somers, a decision fatigue expert, talks about the mental energy required to make decisions, particularly ones avoiding temptation. It seems we wake up each day with a finite amount of mental decisionmaking energy, like a full tank of fuel. After exhausting our tank, it’s free-for-all shopping, chocolate, smoking, sleeping, nagging, drinking, or whatever your personal favorite fallback behavior happens to be. That devilish irrational voice, (“it’s ok to have it this time” “I won’t do it again” “I can make it up later”) is most powerful when we’re depleted.

To make it more challenging, now we have online shopping. Savvy retailers are perfecting the presentation of temptations on our phones as well as they do in stores. It’s devilishly easy (and I confess, enjoyable) to click and shop.

Finally, stress of any kind (had a little bit of that the last 2 years?) burns fuel in the tank too. When we worry, we erode the ability to resist spontaneous decisions we later regret.

How To Keep the Tank Full

Some solutions? Plenty of sleep. Meditation and mindfulness. Frequent rest breaks. Having someone with whom you can share your struggles.

Also, put fewer decisions into every day by asking whether they can be:

  • automated
  • delegated
  • eliminated or
  • date-activated (meaning putting it on the calendar so it doesn’t take up space in your head).

For more on decision fatigue, see Dr. Somers’ work at, or Chapter 6 of The Mindful Money Mentality: How To Find Balance in Your Financial Future.

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How To Avoid Holiday Spending Hangovers

holiday hangovers

How to avoid holiday spending hangovers: How do you get through the season without one type of hangover or another? Halloween is now the second biggest holiday for consumer spending after Christmas. What used to be a couple hours of candy collection with a homemade costume and a paper grocery bag is now practically a national holiday. More candy is consumed. More costumes are purchased. Yard decorations have grown to need extension cords with extensions. When it’s all over, where does all the stuff go? In the attic, the garage, the storage unit, or the garbage? Thus, the Halloween spending hangover starts with stuff.

Next comes Thanksgiving, where we stuff ourselves with, literally, stuffing. We stuff our brains with football and TV. Some families stuff all of the important conversations for the past year into a few hours at the table. The air is stuffed with emotions. Thus, several types of Thanksgiving hangovers start with stuffing.

And finally, Christmas, the king of holiday stuff. Decorations, trees, food, family, parties, gifts, more candy, cake, and alcohol can all lead to some kind of hangover. When it’s over, depleted bank statements and depleted emotions can cause the same headache as chips and eggnog. Christmas – king of stuffed hangovers.

What do overdrinking, weight gain, TV watching, family dynamics, and overspending have in common? Unaware, we are stuffed in over our heads before we know it, leading to regret later. How can it be caught before it goes too far?

Have an Awareness Strategy

To avoid regret later, it helps to have an awareness strategy to keep track along the way. For example, I joined Weight Watchers in December 2000. The best tool of the program for me was the daily journal. Logging what I ate every day had more impact on my diet decisionmaking than any other single factor. It brought the awareness to what I was eating. I lost 20 pounds by the next Christmas.

Similarly, when a group of experimental homeowners were given an electric meter next to their thermostat, they used 7% to 19% less electricity than those with outside meters. Another proof that awareness works.

Ideas For Building Spending Awareness

The holiday season often leads to a spending hangover. The most effective, and for some, drastic method is to use cash. But it’s not the most Covid-friendly method. Here’s how it can go:

Decide on the holiday spending maximum.
Take that amount of cash out of the ATM.
Go shopping at physical stores that will take cash.
When it’s gone, you’re done shopping.
Voila’, no hangover.

Some people even keep a separate envelope for each person on their list (kind of crude, but effective). [And my grandmother would have wanted me to add that it’s physically risky to carry around a bunch of cash, especially at the holidays, so be aware of your surroundings while using this method, too.]

What About Online Shopping

Increasingly, though, holiday shopping is being done online. You could use the same concept, but use a pre-paid debit card. This is almost like watching the cash deplete in your wallet or envelopes, but not quite the same psychological impact.

Credit Cards and Overspending

Using credit cards is like having the electric meter on the outside of the house. You never get to compare what you have spent to a predetermined budget, or to the amount available on your prepaid card. Psychological studies show that when used in stores, as the credit card is handed back to us it reduces the feeling that we have spent anything. Our wallet looks the same afterward. No awareness.

To build spending awareness and still use credit cards, sign up for a daily or weekly reminder of your charges and the current balance. (Not all companies will do this, tragically.) Then, transfer your charges for that period from your bank account. At the extreme, you might make 30 payments on your credit card over the holidays, but so what? It’s helping you avoid the hangover.

So if you are concerned about how you will get through the holidays without financial regret, plan in advance how to stay aware.

And a final Public Service Announcement: if you’re concerned about hangovers of a different kind, you’re not alone. There is help. helps with all kinds of addiction. is for friends and families of alcoholics or addicts. Or, call a local Certified Addiction Professional for more one-on-one advice.

See our Resources page for recommended books on the psychology of money.

Imagine getting through January with no hangovers! You’ll be glad you did.

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Letting Go of Money Self-Doubt

Letting go of money self-doubt is one of the best gifts you can give yourself. Sometimes these messages operate in the background, quietly driving decisions when we don’t realize it. Other times they’re front and center.

What does money self-doubt sound like? “I knew I’d screw it up.” “I’ll never be good with money.” “If I can’t manage my own finances, I’m a failure.”  “Why am I so stupid with money?”

Painful statements, these are. While sometimes spoken out loud, they are spoken silently far more often.

Money Self-Doubt Origins

Where does money self-doubt come from?  It could be one traumatic event or a repetition of harmful moments that lead to flawed beliefs about our financial capabilities. Without counterbalancing mantras like, “You’re still good. You just made a mistake,” or “You can do this,” the message delivered can be, “You’re a screwup. You’re a failure. You will never get it.”

Sondra (not her real name) is a highly educated and accomplished professional. Her parents came from Depression-era families where money was tight in their younger years. Money was never talked about in Sondra’s home, although she was given everything she needed. She grew up with the belief that her parents didn’t discuss it with her because they believed money was something she was not capable of handling.

Money Self-Doubt Results

Without realizing these beliefs exist, we allow th to influence what actions we take or fail to take. It can affect who we allow into our lives, and who we don’t. It can affect our choice of career. Or how we spend, or choose not to, on our own needs, wants, and wishes. Ironically, money self-doubt can lead to overspending with some people, and deprivation with others.

Sondra chose a career where she was assured a salary and the chance of a bonus if she worked hard enough. She worked longer hours than she wanted to. She lived minimally, foregoing many comforts and rewards of her hard work. Her dreams of having more work-life balance were put on hold because she never felt financially secure. In her personal life, she chose friends and partners who also didn’t talk about money, leaving a gap in her closest relationships.

Letting Go of the Messages

If you’ve been operating under flawed assumptions, and now you know it, you’ve taken the first step to reset your relationship with money.

What else can you do? Here are two suggestions to start:

1) Be aware of those who are too willing to reinforce doubt-based messages – family members, partners, friends, or even (especially) financial professionals. Instead, seek the company of those who say, “I am confident you can handle this,” and will work alongside you, not put themselves ahead or above you.

2) Be aware of body messages. Self-doubt, sometimes manifesting as shame, has a feeling to it – it might be tightness in the chest, nausea or butterflies. Breathe through the feeling and redirect your thoughts to positive truths. You are smart. This is something you can do. You got this, even if you have to ask for help to get started. Call someone supportive to talk about it.

After talking with a friend, Sondra decided to educate herself about money. She began to read books that explained things simply, and take online courses that took a simple approach. Patiently, she interviewed many financial professionals. The more she talked about money, the more confident she became. In the end, she found someone who prioritized her financial education and independence. She began to feel more secure, and consider a daring career move.

The Gift of Letting Go

Letting go of money self-doubt can be one of the greatest gifts we give ourselves to reach peace and security about our financial future.

For more on unspoken money messages see Chapters 2 and 3 of The Mindful Money Mentality: How to Find Balance in Your Financial Future, or this 5-minute video with mental health counselor Ken Donaldson on Money Shame.

For a short online course on how to speak “finance” about retirement readiness, see Simple Finance Retirement Readiness:

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Magic Tax Numbers for 2021

Magic tax numbers for 2021: As 2021 comes to a close, it’s a good time to think about magic numbers that could affect your taxes in April. Before December 31, there might be adjustments you could make. Below are just 5 examples, but there are many more. They might be worth discussing with your CFP, CPA, or run through a tax calculator. Ask what you can do to get your income down to these magic numbers. You could save hundreds or thousands of dollars.

Magic Number 1: Income Bracket Jump

There are 7 different ordinary income brackets, but two levels that make the biggest jumps – from 12% to 22% and from 24% to 32%. For Married Filing Jointly (MFJ) those jumps occur at $81,050 and $172,750 and Single (S) at $40,525 and $86,375. An additional $1000 over these amounts means you pay either $100 or $80 in additional tax. Every additional $1000 after that incurs the same additional tax until you reach the next bracket.

Magic Number 2: Standard Deduction

The figures above are for taxable income – so, unless you itemize, you could add the standard deduction (MFJ – $25,100 or S – $12,550) on top to reach your target magic income number to avoid the big jump brackets: (MFJ – $81,050 + $25,100 = $106,150 and $172,750 + $25,100 = $197,850 or S – $40,525 + $12,550 = $53,075 and $86,375 + $12,550 = $98,925). That’s a better number to manage.

Magic Number 3: Capital Gains Bracket Jump

There are only 3 brackets for capital gains income – 0%, 15%, and 20%. The 15% bracket is really wide – (MFJ) $80,801 to $501,600 (MFJ) and (S) $40,401 to $445,850. Say you have a really low income year. Maybe you just retired but haven’t claimed Social Security yet, or for a health or economic reason you earned so much less that you are actually close to the bottom of the 15% capital gains bracket. AND you own something that has a capital gain – perhaps something you bought or inherited a long time ago. You could pay NO capital gains taxes by selling it in the year in which you have the low income. This is definitely one to run by your CPA or financial professional before making that sale, though, to make sure.

Magic Number 4: For Business Owners – QBI/199A Deduction

It’s too complex for here, but the magic numbers to keep in mind are (MFJ) – $329,800 and (S) – $164,900. If you can stay below these numbers, you might get a special extra deduction. Definitely worth it to run by a CPA to see what you can do before year-end to get this bonus.

Magic Number 5: Medicare Surcharges (Age 63 and over. Yes. 63.)

Medicare premiums have 6 brackets. Your Medicare premium for 2023 is based on your 2021 income, because Medicare looks at your tax return from 2 years prior (unless you appeal due to a life event such as retirement – more info here: If you turned 63 in 2021 and do not retire or have another life event by 2023, this year’s income will be what Medicare uses to assess surcharges, or not.

You pay a surcharge of $89.10/month, or $1069/year for each income bracket. In other words, going $1000 over the income bracket can cost you an extra $1069 per year.

Here are the Medicare Part B magic numbers for 2021 (at each income level you pay another $1069/year):

MFJ – $176,000; $222,000; $276,000; $330,000; and $750,000

S – $88,000; $111,000; $138,000; $165,000; and $500,000

Part D (prescription drug coverage) also has surcharges, though not as high as Part B. Avoiding the Part B brackets will also avoid the Part D surcharges.

For an excellent explanation of Medicare brackets, see Mary Beth Franklin’s article in InvestmentNews:

Now is the Time to Think About Taxes

These are just 5 magic tax numbers for 2021 to watch – other examples include optimal itemizing numbers; alternative minimum taxes; qualifying for ACA subsidies; and phaseouts for Roth IRA contributions.

Some people wait until February or March to think about taxes, when income for the prior year is already set. Instead, before the year is over, see if you can manage to hit a magic number and save a few bucks.

Schedule a 30-minute call to talk more about taxes or other money topics:

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Year-End Tax Questions

Tax calendar

Year-end tax questions are those questions to ask yourself, your accountant, or your Certified Financial Planner™ this time of year. Asking the questions in early November provides time to make year-end decisions before it’s too late. Some decisions can wait until Christmas week, but several are best done with a few weeks to spare.

Generally, they fall into 3 categories:
Year to date income?
Year to date deductions? and
What to do now?

Year to Date Income?

First, figure out your year to date income. How much have you made year to date? What does it look like you will make for this year? Common items that are forgotten:

Year to Date Deductions?

Next, look at year to date deductions. Everyone gets a 2021 standard deduction of $12,550 Single/$18,800 Head of Household/$25,100 Married Filing Jointly. Other deductions to consider, or if you itemize:

What To Do Now?

Finally, the goal with tax planning is to avoid reporting taxable income that’s barely over some kind of threshold or bracket. For example, though a bit extreme: A couple in their 60s with one spouse still working and one over 65 on Medicare reports $177,000 in 2021 taxable income. This is $1,000 over the threshold of $176,000 for the first (of 6) Medicare income brackets. The additional $1,000 in income costs the couple $713 in Medicare premium surcharges in 2023. That’s a marginal tax rate of 71.3%!

If your taxable income is on a critical tax threshold, you can strategize. A few easy examples:

  • Make sure you have maxed out your retirement account contributions for the year.
  • Or, turned 50? You get an extra catchup contribution to your retirement account.
  • Turned 55? You get an extra catchup contribution on a Health Savings Account (HSA). (More info here: Why an HSA Beats an IRA Any Day)
  • If you show business income, can you defer income or accelerate expenses between December and January?
  • If you believe you are in a lower tax bracket now than you will be in retirement, and additional income won’t bump you up against any of the other thresholds, consider a Roth conversion. But do it soon. It can take several weeks to accomplish, depending upon which company holds your accounts. And year-end gets busy for these.

Charitable Giving Options

Have a Year-end Tax Planning Meeting

Consequently, meeting with your accountant or Certified Financial Planner™ now might help you discover whether you are on the border of one of the many confusing tax code thresholds. Then you can decide what to do about it before it’s too late.

Schedule a 30-minute call to talk more about tax planning or money topics:

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Who Wants to Play Halloween Scrooge?


Who wants to play Halloween Scrooge with me? Let’s visit with the Ghosts of Halloween Past, Future, and Present.

The Ghost of Halloween Past shows us a grocery store on October 15. In the back are a couple of aisles with bags of candy, plastic pumpkins, and a few witch and ghost costumes that smell like fresh polyester. No blowup yard characters. Or 50-foot extension cords. No flashing orange and black house lights. Or pet costumes. No assaulting of all senses at the store entrance.

The Ghost of Halloween Future shows us entire neighborhoods festooned with wireless flashing lights. Competitions for tallest and scariest yard holograms, many of which resemble politicians. Entrance fees to trick or treat in your own backyard. (Automatically deducted from your watch when you walk up to the first house.)

The Ghost of Halloween Present, or Halloween Spirit, intervenes and reminds us that of all holidays, Halloween comes with the least sense of obligation. Although the origins may be macabre, it’s a pretty harmless, purely letting-off-steam celebration. What’s wrong with going over the top with no pressures once a year?

Scrooge or Spirit?

Surveying the temptations, Halloween Scrooge says, “Money is better saved than spent, especially on wasteful things like bags of 100 Snickers and plastic witches.”

“But,” says Halloween Spirit, “So what if we gorge ourselves on corn-syrup candy and outlandish pet costumes? We need some FUN!”

Which is it in these tough times – irresponsible spending or mentally necessary diversion?

Spontaneous Spending Strategies

The answer is different for everyone. Do you ever have spending “hangovers”?

If so, you may want to try tracking your spending, real-time. There are apps for that (such as Mint, YNAB, or M1). Or an old fashioned little notebook works too.

Some people have a play-money amount, or even a separate account, set aside just for spontaneous spending. That’s more like serious spontaneous spending.

Scrooges Just Want to Have Fun

Financial planners may be the most notorious bunch for Scroogeness – failing to appreciate money as a tool for necessary entertainment. We don’t want to be Scrooge to anyone – not our clients, nor our families. Yet our analytical nature can sometimes come across that way. Spending with healthy enjoyment is one of the greatest balancing acts we can all learn.

Whether you plan your shopping ahead of time, or spend with abandon, make your Halloween hangover-free. And Scrooge would say, save some leftover candy for Christmas stockings.

To show financial planners can have a little fun, enjoy this flashback Halloween Scrooge video:

Continue ReadingWho Wants to Play Halloween Scrooge?