Holly P. Donaldson

Florida’s 2023 Sales Tax Holidays

Florida’s 2023 Sales Tax Holidays. 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 again this year, the legislature passed several more holidays which begin in May. 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.

Because the legislature waited until May 5 to pass this year’s changes, the Department of Revenue has not yet published all of the changes. Below are a few of the immediate changes as we know it from the bill passed 5 days ago.

Disaster Preparedness: May 27 – June 9 and August 26 – September 8

There has been an annual sales tax holiday for disaster preparedness 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 the holiday to stock up.

In 2023, a second week has been added in late August, right before the busiest part of hurricane season.

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

Also new for 2023, consumable household goods like paper goods, soap, hand sanitizer, and trash bags.

Here is the link to the 2022 list of exempted disaster preparedness items: (as of post time the updated list of 2023 items had not yet been published)

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 until June 2024.

So if you are planning a major home improvement, talk to your contractor about placing the order. 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? The tax exemption was scheduled to expire in June. With this exemption 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

Fun Events, Outdoor Supplies and Annual Passes: Usually the week of July 4

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. Stay tuned for 2023 changes

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 got a little relief in 2022.

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: Usually late July – early August

See 2022’s complete back-to-school list: https://floridarevenue.com/taxes/tips/Documents/TIP_22A01-08.pdf

Labor Day/Skilled Workers

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 from 2022 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

For Ian in 2023, I paid more attention to all the strings on the spaghetti model, not just the ones in the middle. We stocked up, and I evacuated to a location outside of the projected storm surge zone. Although we ended up safe from storm surge, it was nice to feel better prepared this time around.

The sales tax waiver was a nice 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 share by leaving a comment.

Continue ReadingFlorida’s 2023 Sales Tax Holidays

What’s that IRS Form 5498 arriving in May?

Tax calendar

What’s that IRS Form 5498 arriving in May? You might receive a Form 5498 if you have a Health Savings Account, a Roth IRA, or other IRA. 

Now, you might have just filed after compiling all your forms and statements, but now your financial institution sends another form? Hello, isn’t that a little late? 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 an HSA or IRA. Perhaps you made them last year, or perhaps you made them before the April 18 deadline and had them count for 2022. Or, you took money out of these accounts or are getting ready to start your required minimum distributions (RMDs). These are reasons why you are receiving the form.

What’s Form 5498 for?

One purpose of the Form 5498 is for the financial institution that holds your account (called a “custodian”) to verify to the IRS that you did indeed make the contribution that you claim you did on your tax return.

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

Another is to verify distributions. If you are over the age for required minimum distributions (RMDs), Form 5498 also tells the IRS what your RMD will be for the current year. The RMD is determined by the account balance on the final day of the previous year (December 31, 2022 for 2023).

So all you need to do with it is check that it matches up with what actually happened and what you actually reported on your return.

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 received erroneous 5498’s for our Health Savings Accounts (HSAs). Mine showed $0 contributions for 2017 and his showed 2 years’ worth. What the….? So we called the bank, got the records straight, and had them send corrected 5498s to the IRS.

Why go to the trouble? If your 5498 contribution or distribution 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, essentially, is, “Hey, we noticed your 5498 doesn’t match your 1040. What gives?” But still. It will be in IRS-Speak and look and sound and feel serious, with a deadline for giving them an answer. 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 2022 look correct?
  • Did you take any 2022 HSA or IRA distributions, and if so, do those look correct?
  • (If not, make sure the distributions say $0.)
  • Does the reported year-end account balance look accurate?
  • 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. We deal with tax stuff all year long. Even in May.

If it feels like you could be paying less in taxes, start by subscribing to our award-winning monthly e-letter, “The View From the Porch” for monthly tax tips sprinkled with fun and reader-only event offerings.

Continue ReadingWhat’s that IRS Form 5498 arriving in May?

Financial Anorexia? Stuck like Scrooge

blank stare or self-doubt emoji

Financial anorexia: Stuck like Scrooge. 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 bank statement. For those 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 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 is deadly serious and can be fatal, financial anorexia can be dangerous in other ways – to mental health, friendships, and family relationships. Financial anorexics can seem to be more engaged in extreme deprivation than in enjoying life’s simple pleasures. Family members are most often affected by the wealthy relative whose reluctance, reclusiveness or reticence are, at a minimum, puzzling, but more often, hurtful.

Where Does Financial Anorexia Come From?

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

Another root cause can be fear. What are anorexics often afraid of? Stated fears might include:

  • a catastrophic world event;
  • a very expensive health issue;
  • hyper-inflation; or
  • “spoiling” family members or friends.

Certainly some of these things can and do happen. Yet our societal messages, and brains wired to look out for danger, emphasize catastrophic scenarios like these past the point of their actual probability.

Yet, other fears might be at work that aren’t as overt. Unstated fears might include loss of self-worth or security.

Anorexia is also fueled by our cultural norms. Western society 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, like Scrooge, typically amass abundant resources. However, their wealth does not come from a healthy relationship with money. They might be “too rich” for their actual needs. Further, the more they have, the more they have to fear losing. The hoarding-like behavior only gets worse the more successful they are at it.

What Can Be Done About It?

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.

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. All of this exposure also helps break the distorted perceptions brought about by isolation.

Sometimes the new information has to come from, unfortunately, a painful life-altering event. How did Scrooge turn around? The Ghosts of Christmas Past, Present and Future showed him more to be afraid of – and how his isolation and withholding were harming others – than the fears he made up for himself.

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

  • What have all the years of saving been for?
  • How much is too much to spend on seeing family or friends? 
  • 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 you have been dreaming about for so many years?
  • How much is too much to spend on self-care like massage, therapy sessions, or a manicure?
  • What if the thing you are afraid of is completely unknowable? What if it wouldn’t be solved with money anyway?

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 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-letter, schedule a call, or check out  The Mindful Money Mentality: How To Find Balance in Your Financial Future.​

Continue ReadingFinancial Anorexia? Stuck like Scrooge

Digital Assets: How To Document

Digital Assets

Digital assets: How to document. Imagine you have a nearly $1 billion empire of digital assets – music, movies, and royalties. Sound good?

Now imagine you have no will, aren’t in a committed relationship, and have no children. What happens to those digital assets if something happens to you? Prince’s untimely death in 2016, and his lack of estate planning, brought to mind that the more we have, especially digital assets, the more we have to plan.

Celebrities have a team of advisors who try to keep up with constant changes to their clients’ property, especially when it comes to protecting intellectual property. The longer a celebrity waits to address an ever-growing empire, the harder the decisions are to make for everyone involved. Their advisors find it’s better to address changes as they happen, even if it means more frequent revisions.

Back in the Real World

So what does this have to do with non-celebrities? While you may not feel as though you have a digital empire, your online life might be more complicated than you think. It’s estimated the average American has between 30 and 80 online accounts with passwords.

For example, an attorney had a father-in-law who ran three businesses from his digital devices. When he died suddenly in 2011, she was shocked at how difficult it was to access his emails, accounts, and online life. Every online provider had different requirements. Many of them would not honor court documents asserting her authority over his affairs. This was her introduction to the concept of the “digital asset,” and, as a result, she became an expert in that niche.

Keeping track of digital assets can be overwhelming, but you can begin by thinking about them in four main types – personal, financial, business, and social.

Personal Digital Assets

Photos, movies, books, e-books, music, and podcasts. Unlike your Simon and Garfunkel records, Michael Jackson CD’s, or Rocky DVDs that the kids will get whether they want them or not, there are some e-libraries you can’t leave to anyone. For example, access to Kindle and iTunes libraries die with their owners. Upon notice of death, all content in an iCloud account is deleted. Therefore, for photos and videos stored in the cloud, make sure you have a backup, especially if it’s iCloud. Leave instructions somewhere on how to get into iCloud, and how to get to the backup.

Financial Digital Assets

Bank, brokerage, PayPal, Venmo, frequent flyer, crypto, and Treasury Direct accounts. Did you sign up for paperless statements? Then there will be no paper trail. Make sure you have documented somewhere that online accounts exist. Email is one of the most critical items for heirs to access. If no one can get into your email, and you haven’t kept good notes somewhere, they may not know you even have a crypto, Venmo, Treasury Direct or I-bonds account.

Business Digital Assets

Blogs, e-books, audiobooks, e-commerce sites. Intellectual property is often housed digitally. Have you inventoried any copyrighted works and addressed them in your estate planning documents? Can someone get to them in a way that will continue to produce revenue or royalties? This one is a definite issue to discuss with an estate planning attorney.

Social Digital Accounts

Facebook, Twitter, Instagram, TikTok, Pinterest, LinkedIn.  An elderly friend passed away in 2009 but his face and profile still popped up occasionally as someone “I might know” on Facebook and LinkedIn. I am guessing his family either weren’t involved with social media, or simply were not able to log in and post a nice memorial tribute to a wonderful man. What do you want your online presence to look like, if at all, and for how long, once you’re gone? Many of the social media sites now have ways to transition your account should you die or become incapacitated.

Digital Assets Executors

With many assets and accounts, you might need a digital asset executor. It turns out there are such roles now, and 47 states, including Florida, have ratified them through passage of the Revised Uniform Fiduciary Access to Digital Assets Act (UFADAA). (You can read all about it here: https://my.uniformlaws.org/committees/community-home/librarydocuments?communitykey=f7237fc4-74c2-4728-81c6-b39a91ecdf22&tab=librarydocuments). With the act, you can name a digital executor – someone you trust to access your email, text messages, and social media accounts, in your will or trust. Through UFADAA the online companies now must honor your wishes, if they are documented properly.

Two Steps to Begin

Take a few minutes to consider how easy, or not, it would be for someone to take over your digital life. A first step can be to list all financial and business accounts on one page. If you have a comprehensive financial plan, ask your advisor to compile a one-page net worth report listing all of your accounts and assets. Keep the report/listing somewhere safe, but also let the important people in your life know how to find it.

Once you have the listing, next is providing all the credentials. It’s tough to know the safest way to store these. Should you handwrite them next to the accounts on a paper version of the list, or save them in yet another digital format? What will be the easiest way for the right someone to find them, but not too easy for wrong someones?

Further, it can be challenging to keep all the credentials up to date. One solution is to use a digital password manager, such as DashLane. Knowing one master password is all that’s required to access credentials to any and all accounts stored there.

Taking this inventory is a good beginning to leaving a bread crumb trail for the important people in your life who may need to pick up where you left off. Further, spring is a good time of year, while you have all of your year-end statements together for tax preparation, to dive in.

If getting financially organized is a challenge for you, schedule a call and tell us what’s on your mind. https://bit.ly/3GWZNrc.

Continue ReadingDigital Assets: How To Document

As a Child-Free Elder, Who Will Be On Your Team?

“Who will take care of you when you’re old?” someone once asked me when I told her I had no children.

It seemed like an old-fashioned kind of question. Nevertheless, it caused a mini panic attack.

Knowing the statistics, I had made the vague assumption that I would need to make arrangements for care, but something about her question made that statistical probability more real.

About 14 percent of 40- to 44-year-old women had no children in 2018 – up from about 10 percent in 1980, U.S. Census data shows. This is and will be an issue for millions of Americans.

As anyone who has served as a caregiver knows, there are four main questions to ask from the beginning. Answering these can lead to the formation of an elder care support team. The team members may come from two areas – friends and family, professionals, or both.

  • Where will I live?
  • Who will make medical decisions for me?
  • Who will handle my finances?
  • How will I get transportation?

Team Member 1: Where will I live?

The first part of figuring out the team is to know where you will be living. The vast majority of Americans want to age in their homes. For some people that home might be the place they have lived for several decades. If so, then the team member will likely be a home health care company.

For others, home might be a place they move to – with a supportive community, but not a facility (perhaps at first). If that’s you, building a network of friends and professionals in the community can be one of the best ways to reinforce your support team.

Although it’s not in many people’s plans, sometimes aging at home isn’t an option. For people aging without children, it’s more important to get to know assisted living and continuing care facilities, and figure out how you would pay for them. (For myself, I purchased a traditional long-term care policy. But that doesn’t mean that is the right solution for everyone.)

Team Member 2: Who will make medical decisions for me if I can’t?

Preferably someone close by. Ideally this person could be available at a moment’s notice and will not have to travel far to attend appointments with you.

Having a strong primary care physician relationship is also highly beneficial. Some doctors, especially those who specialize in concierge medicine, can and will serve as your legal health care surrogate.

Team Member 3: Who will handle my financial affairs?

Many attorneys recommend having a different person named for financial matters than for health care decisions. As aging progresses, it’s a lot to ask of one person to handle bill paying, money management, and doctor appointments (as anyone who has served as a sole caregiver can attest).

Money management involves several duties. To name a few,

  • Paying bills and making renewal decisions (such as memberships, subscriptions, and/or insurance policies)
  • Making gifts
  • Making transfers between accounts, such as taking IRA withdrawals
  • Managing investments

Your financial team might involve two members – someone who does the day-to-day management, plus a professional investment manager. Most professional investment managers do not provide billpaying and cash flow management. Professional investment managers may charge a fee that is a percentage of the amount they manager, or a flat fee. If a friend or family member is taking over the day-to-day, it’s important to pay that person a fair fee, too.

Or you can find a fiduciary who will cover it all. Trust companies are one example of fiduciaries who will handle all financial duties if they are named as trustee or co-trustee on your documents.

My choice for now is an independent fiduciary. She happens to have a law degree and serves in this capacity full-time. Her services won’t begin unless I’m alone and losing the ability to handle things myself. Hopefully that’s a very long time from now, if ever.

Team Member 4: How will I get transportation?

If you move to a community with many transportation alternatives, you might not need a separate team member for transportation. This is my goal – a walkable community with good public transportation alternatives. The EPA even publishes a National Walkability Index.

But if you are staying in a home or community without many alternatives to your own car, and you don’t want to use ridesharing with strangers like Uber or Lyft, you could assemble a network of friends and acquaintances on whom to rely. So together they will be your transportation team member.

How can I make my affairs easier to manage for the team?

Consolidate and simplify with one financial institution. It will be far easier for your financial surrogate, and the institution may even show you some extra appreciation. Some people are concerned that this is not being “diversified.” Nowadays, most institutions can hold a diversity of cash and investments all under the same roof. Just make sure to keep under the FDIC limit in any bank accounts.

Use the health apps provided by your healthcare providers to give easy access to your electronic medical records.

Have all of your digital passwords in one digital password manager. Most people don’t realize they have on average over 200 accounts with passwords. See “Document Your Digital Assets.”

How do I make it all legal?

Once you have decided who you would like to name as your surrogates, have either a durable power of attorney (DPOA) or living trust drafted by a board-certified estate planning attorney. (See “Do I need a trust?” for more on the topic of trusts.) The same attorney will often also draft your living will and healthcare power of attorney, too. For qualified attorney recommendations, check for your local chapter members of the National Association of Estate Planning Councils.

For more information on planning for aging, check out the e-book, How Does Your Money Flow? A Guide to Common Saving, Spending, and Sharing Decisions (Porchview Publishing, $3.99, available in e-reader-friendly formats). Or, join the list for our free award-winning monthly e-letter, “The View From the Porch.”

Continue ReadingAs a Child-Free Elder, Who Will Be On Your Team?

How To Let Go of Money Self-Doubt

blank stare or self-doubt emoji

How to let go of money self-doubt:

What is money self-doubt

Money self-doubt is an inner belief that one cannot trust themselves with a decision about money.

Sometimes these beliefs 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?

Money self-doubt beliefs often sound like critical messages:

  • “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?”

Money Self-Doubt Origins

Where does money self-doubt come from? 

It could be a single traumatic event or a repetition of harmful moments that lead to flawed beliefs about our financial capabilities. One time being taken by a scammer, or many times being told by an abuser we aren’t capable.

Without counterbalancing mantras like,

  • “You’re still OK.”
  • “You just made a mistake.”
  • “You can do this.”

the self-doubt can take hold.

Society and media also don’t help, offering a choice of money self-image as either, “good with money,” or not. Individual instruction is rarely given in school, or in families, much to our society’s detriment. While financial professionals are often proficient in finance, many are not good educators. A few even try to make money more complex than it is, to keep clients feeling less than sure about themselves.

Case Study: 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. When she went to talk with a financial advisor, he threw so much jargon at her that she was too uncomfortable to admit she didn’t understand what he was talking about.

Money Self-Doubt Results

Without realizing these beliefs exist, we can allow them to influence what actions we take or fail to take. Self-doubt 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 over-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.

How To Let Go of Money Self-Doubt

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 4 suggestions:

1) Be aware of body messages. Self-doubt, sometimes manifesting as shame, has a feeling to it. It might be tightness in the chest, throat construction, shortness of breath, nausea or butterflies. Instead of trying to get rid of the feeling, breathe through it and name it: “I am feeling shame/doubt about a money issue.” Redirect your thoughts to positive truths: You are smart. You are capable. You know how to ask for help. This is something you can handle.

2) Ask yourself a simple question: “Is this true?”

For example if you have a belief that “I’ll never be good with money,” and you had to prove that in a court of law, what evidence do you have? Sometimes asking this question can be one way to help our brain separate facts from fictional beliefs.

3) Call someone supportive to talk about your feelings. (But make sure they truly are supportive.) If you’d like professional help specifically about money psychology, check out the Financial Therapy Association.

4) Become aware of those in your life 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 walk alongside you, not put themselves ahead or above you.

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 gained the courage to 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.

Continue ReadingHow To Let Go of Money Self-Doubt
Read more about the article 6 Top Books For Booklovers – 2022 Edition

6 Top Books For Booklovers – 2022 Edition

books

6 top books for booklovers: What books made an impact on you in 2022?

Every March this blog publishes a few selections from the prior year’s reading. For 2022, below are 6 favorites from finance, fiction, and self-help.

(For past recommended books, check the Resources page or enter “books” in the blog search.)

Psychology of Money

The top book recommendation this year is The Secret Meaning of Money: How To Prevent Financial Problems from Destroying Our Most Intimate Relationships, by Cloé Madanes. Ms. Madanes is a family therapist, not a financial adviser. But she gets to the heart of what ails so many couples and families – money behaviors and beliefs. Although published in 1994, there’s nothing outdated about her observations and advice. She covers common money mistakes in the lifecycle of a couple, from younger years, through children, divorce, second marriages and stepchildren, long-time marriages, and end of life.

Understanding the impact of one’s upbringing on behaviors and beliefs goes a long way toward beginning to break patterns that no longer serve us. Poverty, eviction, and even great wealth all have childhood impacts that can be seen in adult relationships. The book concludes with chapters on using money in positive ways, and a list of common irrational behaviors rooted in money and power family dynamics.

Fiction

On the fun side, here were my 2 picks for fiction, out of about 20 total.

First is The Storied Life of AJ Fikry, by Gabrielle Zevin. In one word, it’s sweet. AJ Fikry is a recently-widowed, lonely, angry, snobbish owner of a bookstore on Block Island, Rhode Island. He gets entangled in a community problem. There are financial issues at stake. A new young book wholesaler from Boston enters and things get more complicated. Of course it’s heartwarming to read about love emerging between two people, but even moreso to read about a bigger sort of love emerging within a community that found itself divided.

I also appreciated that finances, so often left out of both fiction and non-fiction, were a front-and-center concern. How will AJ manage to keep the mortgage payments going when no one is coming to his store? How could his love interest possibly afford to leave her job in Boston and move to Block Island? Zevin tied everything up at the end with a slight twist that left me smiling.

The second novel, Bring Me Back, by B.A. Paris, is a psychological thriller. It kept me guessing the. whole. time. The constant twists and turns reminded me of an old movie, “Death Trap,” with Christopher Reeve. You’re never sure who’s the good guy, who’s the bad guy, or perhaps they’re both playing bad-guy cat and mouse with each other? What do you mean they’re not dead after all? The appearance of creepy emails felt like a new tool for psychological suspense. This one had a resolution that was both surprising and satisfying.

Life Improvement: (also known as “self-help”)

Two psychology books made the list this year: The Illustrated Happiness Trap: How to Stop Struggling and Start Living, by Russ Harris and Bev Aisbett and The Body Keeps the Score: Brain, Mind, and Body in the Healing of Trauma, by Bessel van der Kolk.

The Happiness Trap Illustrated is a short collection of cartoons illustrating feelings and stories that we make up as part of modern life.

The cartoons begin by depicting common myths about happiness, such as

  • “Happiness is the natural state for human beings.”
  • “If you’re not happy, you’re defective.”
  • “You should be able to control what you think and feel.”

Importantly, the cartoons allow a quick grasp of sometimes heavy emotions. Because they are cartoons and not stock photos, they are relatable by just about anyone. Part of the balm in the book is the message that lots of people in today’s world are challenged by similar issues. Exercises throughout the book help to focus on one issue at a time and practice working through it. This is a good book to just open up to any page anytime and get a little worthwhile advice, delivered in a lighthearted way through cartoons.

The Body Keeps the Score, by Bessel van der Kolk, is focused on trauma. Van der Kolk’s work stemmed from the idea that our bodies store traumatic experiences physically in our tissues. Without proper attention and treatment, the trauma eventually shows up as a medical crisis. Indeed, van der Kolk’s research worked with war veterans and domestic violence survivors. Some of the cases are hard to read.

Trauma doesn’t apply only to physically violent encounters. Therefore, someone who has experienced verbal abuse, neglect, betrayal, or abandonment may also have stored trauma. Van der Kolk walks through ways to treat even long-ago experienced traumas with common therapeutic methods that deliver long-lasting relief. A big takeaway is that trauma survivors often downplay physical symptoms. So paying more attention to pain and discomfort now might save someone from a more serious medical event down the road.

What books were life-changing, or just entertaining, for you in 2022? Leave a comment below.

Continue Reading6 Top Books For Booklovers – 2022 Edition

A CFP® Who Bounced Her IRS Check

A CFP® who bounced her IRS check. That would be me.

Yes, I wrote a bad check to the IRS.

Accidentally, of course, but still. Behind my name are the initials “CFP,” for Certified Financial Planner™, so supposedly I’m some kind of financial expert. And yet, I did a very un-expert thing that even most financial un-experts do not do.

Brain Fog

The bad check was written in April 2014. The tax year in question was 2013, which was the same year I got an unexpected biopsy (which came out clean after several weeks), an unexpected audit by state regulators (which came out clean after several weeks), and an unexpected divorce (which came out after several weeks and much of it wasn’t clean). All of these – the biopsy, the audit, and the unexpected divorce – happened between August and November.

If you’ve ever been through one or more of the above, perhaps you can relate to the feeling of going through the rollercoaster of life, trying to act like a rational person, but getting hijacked by emotions. Wishing you could concentrate better, focus like you used to, but the brain just won’t cooperate. I wasn’t aware I was in that much of a fog. I thought I was keeping it all together pretty well, considering.

Until the IRS notice showed up.

“Check Payment Not Accepted By Bank: The bank did not accept the enclosed check for the following reason: INSUFFICIENT FUNDS. Please return the bottom portion of this form with a certified check…The PENALTY amount is…The current Interest Charge is...”

Shock and Shame

“Wut?” I thought.

My first reaction was to get mad at the bank. It only took a few minutes, though, to research there was no mistake. Shock, embarrassment, humiliation, shame. My jaw and knees dropped to the floor simultaneously.

I bounced a check to the IRS?!?

That’s when it dawned on me that the events of 2013 were still affecting me or I wouldn’t have written a check on one of my new post-divorce checking accounts without putting any money in it first.

So, the next paragraph caught my eye.

“You can request penalty relief by explaining why you believed the bank would accept the Check and by providing any supporting evidence.”

My backbone straightened up. Although it was not the bank’s error, I needed to plead my case to keep my sanity.

Making the Case for Penalty Relief

It turns out the IRS will seriously consider applications for relief, although that doesn’t mean they will blanketly grant them.

First, I immediately deposited more money in the account and had the cashier’s check, including the penalty and interest, sent.

Then, I sat down to write to the human being who would be reading my request. I crossed my fingers that it would be a 40- or 50-something who had been jilted in a 20+ year marriage. There are quite a few of us out there, and maybe even a few who work for the IRS. I fell on my sword, admitting the mistake, and explaining temporary loss of rational thinking.

The bottom line is that I got a partial waiver.

The main point, however, is that I refused to let the IRS add to my stress. The notice was a wake-up call that I was under more stress than I knew, and I made a conscious decision not to add to it.

Correspondending with the IRS

My letter was dated May 22, 2014:

“I am writing for penalty relief….the bank did not make a mistake. I made the mistake. At the end of 2013 I was suddenly divorced after a 26 year marriage. Perhaps if the person reading this has ever been through such an experience, you might understand that in getting situated with my new life, including my finances, I have made a few absent-minded mistakes I would not normally make. In this case I forgot to fund my new checking account.

As requested by your notice of April 29, 2014, I have sent a cashier’s check for the entire amount due including penalties and interest.. I hope the IRS will examine my history of prompt payment for 30+ years and consider this in your determination for relief.”

On May 26, 2014 I received a notice which said:

“You have unpaid taxes for 2013” which showed the amount due, plus the following:

“Failure to pay proper estimated tax penalty – $58.00

Dishonored payment penalty – $65.54

Failure-to-pay penalty – $32.19

Interest charges – $10.87“

Because they had cashed my cashier’s check by then, I decided to wait. Maybe they hadn’t read my letter yet.

On June 12, 2014:

“Thank you for your inquiry dated May 22. We have accepted your explanation of why the bank didn’t accept your check…and we removed the penalty.”

Whew, ok. Sigh of relief. Will they actually refund the penalties, or what? Again I decided to wait.

On July 2, 2014:

“We received one of the following items from you on May 27, 2014…We’re working on your account…we need an additional 45 days to let you know what action we are taking… You don’t need to take any further action now…“

Wut? What did this mean? I thought I was ok, and now they are thinking about it? Again, because I excel at going down worry rabbit holes, I put it aside.

On July 18, 2014:

“Thank you for your recent letter dated May 22 that asked us to remove the penalty for failure to pay…We are pleased to inform you that your request to remove the penalty.. has been granted. However, this action has been taken based solely on the fact that you have a good history of timely filing and timely paying. This type of penalty removal is a one-time consideration….”

The final notice, on August 4

“Changes to your 2013 Form 1040: Decrease in failure-to-pay penalty. You are due a refund of $32.19.”

So, I didn’t get all the other fees/penalties waived. No sympathy for the divorce part, but appreciation for the 30+ years of paying on time.

Well, by then it didn’t matter anymore. I had advocated for myself and received a compromise. It wasn’t worth another minute of worry or effort. Heck, I was just glad I hadn’t bounced checks to anyone else that year.

The Bottom Line

Nearly all of us will have a time in our lives when our brains get discombobulated – divorce, death, health issue, job loss, new baby, relocating, and/or retirement. When we mess up, it’s important to let our minds rest, go easy on ourselves, and be strong enough to ask for help and forgiveness. Even financial “experts” make head-slapping mistakes.

And sometimes, even the IRS respects that.

For more mistakes I made so you don’t have to, subscribe to the award-winning monthly e-letter, “The View from the Porch,” or see the book, The Mindful Money Mentality: How to Find Balance in your Financial Future.

Continue ReadingA CFP® Who Bounced Her IRS Check

Honey, Ain’t Money Funny? 4 Conversation Ideas

Couples and money honey ain't money funny

Honey, ain’t money funny? Sometimes, not so much.

As Valentine’s Day came and went, a couple struggled with questions about consumerism, the meaning behind gifts, and how money affected their relationship. Whether it was financial inequality, overspending, or miserliness (a la Scrooge), humor was hard to find at a time when they were surrounded by hearts-and-happiness messages.

What can couples do to have a better relationship with money? Following are 4 ideas.

As you try each one, it’s a good idea to plan a special fun reward or celebration at the end. The more you practice at these, the easier the conversations will get. You may find your differences become predictable, manageable, and even laughable.

Idea 1: Monthly Money Date

For monthly money dates, quickies are best. These are for checking the dashboard indicators in your household finances. Agree to limit the conversations to about 15 minutes.

Build in fun and humor by focusing on your progress, positive wins, and gratitude for what you’ve got so far. For big ideas and thorny issues, make a separate date to discuss those using one of the following 3 formats. Then move on to the “real” date part!

A 2 1/2 minute video on 3-Part Money Dates can be found here: https://www.youtube.com/watch?v=7TWFKfF0vRQ.

Idea 2: 48-Hour Relationship Conference

No you don’t have to talk about money for 2 days. What a buzzkill!

Instead, in a Relationship Conference, each partner takes a turn being a pure listener to the other partner’s issues. Being the listener in a relationship conference means saying nothing while your partner talks. You can decide on the timeframe, but make it somewhere between 15 and 45 minutes. You can take notes.

After the first partner shares, take a break from anything money-related for 24 to 48 hours. Allow thoughts and feelings to arise to reflect on what you heard. Then reverse roles. This is the first partner’s turn to simply listen. Then wait again for whatever timeframe you decide – 24 to 48 hours.

Finally, take turns to summarize what feelings and issues came up. Make sure you give space for listening to each partner’s perspective, checking in to make sure you heard them well.

Remember to have an activity planned in advance to celebrate your ability to tackle tough stuff.

Idea 3: Take Turns Active Listening

Another option is to take turns all in one setting being the active listener. Active listening means being fully present to your partner’s issues and emotions without bringing up your own responses or emotions. (Tip: This is really hard for most people who have never done it before.)

You do this by

  1. repeating back what you heard,
  2. checking in to make sure you got it all (“Did I get it all?”), and
  3. asking to hear more about the emotions underlying each statement (“You said you felt excluded. Tell me more about that.”) Once your partner agrees they feel completely heard and understood, then it’s your turn.
  4. Again, remember to have something planned in advance to celebrate and give yourselves credit for your progress with active listening about money.

Idea 4: Ask For PracticeHelp

Are there some money issues in your relationship that seem too difficult to talk about on your own?

Sometimes each of these exercises work best if practiced with a counselor first. And that’s ok. Sometimes we need training wheels before we’re ready to ride the conversation bicycle on our own. Give yourselves the gift of an enhanced relationship by getting some professional tips on how to have a healthy conversation about money.

Finally Feel Free

Remember when you learned to let go of the bike’s handlebars? Imagine feeling that free in your relationship with money and each other. One’s Scrooge to the other’s spending might actually be something you learn to laugh about for years to come.

You know you’ve arrived when you find yourselves saying, “Honey, ain’t money funny?”

For more tips on the psychology of money, subscribe to our award-winning monthly e-letter, “The View From the Porch,” at https://bit.ly/3t2uwfn.

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

Continue ReadingHoney, Ain’t Money Funny? 4 Conversation Ideas

When She’s Better Off Than He Is

when she's better off

When she’s better off than he is: Some couples find finances difficult to discuss when she makes or has more money than he does.

In the July/August 2019 issue of Psychology Today, Esther Perel, a New York psychotherapist, said that women’s liberation has freed them from dependence on men. “But it hasn’t prepared women for men’s dependence on them. Women often have a lot of resentment when they find themselves responsible in the way men have for generations.”

In his blog post, “Why Wealthy Divorced Women Don’t Remarry and Men Do” dating coach Evan Marc Katz wondered whether women might rethink their expectations for the man’s financial contribution to the relationship. This makes sense especially when all other aspects of the relationship are equal. After all, many wealthy men remarry to women who are not as financially well off, and why? Companionship, compatibility, and physical attraction.

If a wealthy man is happy to pick up the tab for trips and dinners, why aren’t wealthy women?

Case Studies Where She’s Better Off

Here are a couple of cases to illustrate the dynamic. I asked Licensed Mental Health Counselor Ken Donaldson for his thoughts on some fictional case studies.

Alan and Donna: Donna is a 53-year-old professor who became disabled after an accident. Her disability is not evident to most people, but at any moment she could be hospitalized. She received a large settlement from the accident. She is making a new life for herself and wants to live well while she can. Alan, her 55-year-old boyfriend, is a painter. He is handsome, romantic and kind to her. Alan does not know Donna’s financial situation. He does know he cannot always afford the restaurants where Donna wants to eat, though. Much of the time she picks up the tab. They both feel awkward about it.

Janet and Harold: Janet is a 52-year-old retired author. Her books have sold enough copies that she can live comfortably without working. Her boyfriend, 58-year-old Harold, had an IT career before he was downsized. Since then he has not found a new job or career that seems to be a good fit. Janet loves Harold’s athleticism, his sense of humor and tenderness. They connect on many levels. The problem is, she wants to travel with him to places like Australia, Alaska, and Europe. Neither Harold nor Janet like the idea of Janet paying for the whole trip. Harold does not know Janet’s financial situation, but he does know she is better off than he is.

Q & A With Relationship Counselor Ken Donaldson, LMHC

Q: How does avoidance of the activities that both couples want to do affect their relationship?

A: This would only add to distance in the relationships. Although both people will benefit from doing separate activities that they enjoy, there is much to be lost by leaving the other out when it is motivated by fear and/or avoidance.

Q: How could each couple stay together in a healthy way?

A: Every healthy, harmonious and lasting relationship is built on the HOW factor: Honest, Open and Willing. Those are the cornerstones that prevent the termites of deceit, deception, distance and breakdown. I believe these cases both require a lot of extended processing and perhaps the assistance from both a marriage counselor and a financial expert would be extremely helpful.

Q: What kind of paradigm shift might they try, and how could such a shift be brought about through seeing a professional?

A: As mentioned above, a qualified marriage counselor, especially one who had experience with these types of cases, can only help. Openness, although not rocket science, is always the best policy in cases like this. If either or both can’t handle “the truth” it says something about the foundation of the relationship, which signals that it needs to be strengthened. Harville Hendrix, author of Getting the Love You Want, has some great dialoguing tools I use often with in couples counseling and in all conflict resolution and intimacy-building situations.

Q: What is your opinion about the line between sharing financial information and keeping financial secrets?

A: It is a fine line at times, but it is also based on trust. Trust is probably the cornerstone of all cornerstones. It’s like poker: Sometimes you have to hold your cards for a long time before you show them (or fold them). But, when the time is right, right action is the only move.

Avoidance leads to more avoidance, and openness leads to more openness. However, it is all based on the level of relationship they want. If they only want a level “7” then maybe total transparency is not needed. But if they want a “10” then, again, nothing will be better than open, honest and willing.

Questions to Ask

Are there aspects of your financial relationship that you would rather keep at a “7” than a “10”?

How have you handled the transition from cards-folded to open-hand in your finances with a significant other?

What would you advise others in similar situations? Leave a comment here to help the reader community.

And if you’d like monthly tips on the psychology of money, subscribe to our award-winning e-letter, “The View From the Porch.”

Continue ReadingWhen She’s Better Off Than He Is