Tailored Financial

Investments, Insurance, Financial Planning

Nick Thom

10 Tips to Work Toward Financial Freedom

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Financial freedom is a state of being in control of one’s finances, covering expenses easily, and saving for future goals. Financial freedom enables you to choose how you spend or interact with your money and have the choice to decide what to do with it. Financial freedom is essential to being financially secure and meeting your goals. Here are ten tips to help you develop financial freedom.

Tip #1 – Check that your income and spending are in balance. You must be aware of your spending patterns, limit your use of credit, and be mindful of not spending more than you make. Review your online banking, bill payments, and credit card statements to ensure you’re not overspending.

Tip #2 – Develop a monthly budget. A monthly budget helps you track exactly where your money is going so you aren’t living paycheck to paycheck due to overspending. Budgeting can help you save for retirement and create a plan to pay off debt. A budget can also help you learn to live without wants because you can see where your hard-earned dollars are going.

Tip #3 – Save money to cover unforeseen emergencies. Ideally, save three to six months of living expenses in an emergency savings account. Once you reach six months of emergency savings, continue saving in your emergency fund until you reach another milestone, such as one year of living expenses.

Tip #4 – Consistently save for retirement and other goals. Invest in yourself by automating your monthly 401(k), IRA, or Roth IRA retirement savings contributions. Save for different purposes through automatic savings account contributions through payroll or other bank apps into an account set up for a specific financial goal.

Tip #5 – Discuss significant financial decisions with others. Before making financial decisions or purchasing big-ticket items, discuss the pros and cons of your decision with others before spending. Discussion can help determine if the financial decision aligns with your budget and goals.

Tip #6 – Regularly monitor and adjust your financial plan. You should have a written financial plan that aligns with your goals and timeline. Self-monitor your progress toward your goals and adjust your financial plan as necessary as your life changes.

Tip #7 – Educate yourself. It is important to gain an understanding of how to manage your finances and have the knowledge necessary to make financially responsible decisions for your situation. The more you know about personal finance, the more likely you are to make comprehensive financial decisions.

 Tip #8 – Work with a financial professional. Working with a financial professional can help you determine strategies appropriate for your goals, risk, and timeline. They can also help you develop a budget, create a financial plan, save for education, and keep you on track toward your goals.

Tip #9 – Don’t let your emotions impact your financial decisions. Weighing out the pros and cons of financial decisions before making a final decision is essential to financial freedom. When it comes to investing, emotions can be tricky since investors don’t always make rational decisions. Financial decisions require evidence and reasoning to make the most thoughtful choice so that you don’t regret your decisions later.

Tip #10 – Eliminate debt. When you don’t have debt, you may choose what to do with your extra cash since you don’t have payments to make on loans, credit cards, and other debts. Financial freedom can impact your mental and physical health and overall quality of life. By improving your financial situation, you can build wealth for the future.

 

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.

Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal.  Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax.

The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax-free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.

This article was prepared by Fresh Finance.

LPL Tracking #1-05369428

8 Reasons Small Businesses Should Hire Veterans

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Hiring employees is sometimes a difficult task. You may need to find employees who fit the business culture and have the skills to get the job done. The good news for small businesses looking for employees with various skills and a strong work ethic is that many veterans are looking for new jobs. A veteran may be just the type of person you are looking to hire. Here are some reasons small businesses should consider hiring a veteran.

1. Veterans Usually Have a Positive Attitude

Many veterans have a positive attitude in the workplace. Employees who look at their workplace more positively and do not view their work with negative connotations are typically more productive and efficient.1

2. Veterans Are Team-Oriented

Veterans are used to being part of a team and understand that each team member brings valuable skills to the job. They tend to be loyal to their team members and their employer. Veterans are comfortable working with various personalities.1

3. Veterans Are Trained To Be Leaders

Military training includes leadership. So, when you hire a veteran, you may have a new team member who has the ability to take charge and lead when necessary. They handle the stress that comes from leadership and also work with the varying skills levels of team members.2

4. Veterans May Have a Strong Work Ethic

When employed by the military, slacking off for the day or phoning in is unacceptable. Veterans understand that each task they are required to perform is necessary. A work task should be done to the fullest of their ability, no matter how mundane it may seem. Most work hard, are punctual, and are committed to whatever job they tackle.2

5. Veterans Are Eligible For Education Assistance

Veterans are entitled to funds for continuing education. If you have positions that may require ongoing education or the development of additional skills, a veteran may use their education funds for this type of advancement.2

6. Veterans Understand Technology

Technology is a critical component of military training. When you hire a veteran, you may get an employee who understands complicated technological procedures and IT equipment. Their knowledge may help them work with various technology and allow them to provide insight into your current IT systems.2

7. Hiring Veterans May Save You Money

The U.S. government strives to provide its veterans with employment opportunities by giving Special Employer Incentives (SEI). The SEI program allows employers to hire veterans for less. An employer may seek reimbursement for up to half of the veteran’s wages if they require special supplies, equipment, or additional instruction.2

8. Businesses May Be Eligible for Tax Incentives

There are several tax incentives that businesses may take advantage of when hiring veterans. The Work Opportunity Tax Credit, Returning Heroes Tax Credit, and the Wounded Warriors Tax Credit are just a few that may provide incentives up to $9,600 annually.2

Footnotes

1 Considering Hiring a Veteran? Here’s Why You Should, CO,
https://www.uschamber.com/co/run/human-resources/why-small-businesses-should-hire-veterans

2 15 Benefits of Hiring Military Veterans, Small Business Trends,

15 Benefits of Hiring Military Veterans

 

Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by WriterAccess.

LPL Tracking #1-05275467

Take a Swing at Investing Like a Golfer

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Golfing and investing may not seem to share much common ground at first glance. But the more you think about it, a successful golfer and a successful investor share a number of traits such as patience, perseverance, attention to detail, and intellectual curiosity.

Below, we discuss a few areas investing and golf have in common—as well as a couple of tips you can use to make sure your investing game is as successful as your golf game.

One Bad Shot Can Ruin Your Game

Even if you make it to the 16th or 17th hole while staying well under par, just one triple-bogey can put you back at square one. Similarly, one bad investment can wipe out a major chunk of your balance sheet. This is one reason it’s a bad idea to invest in a single stock or asset—diversification is key.

The More Information, the Better

You wouldn’t take a swing while blindfolded—so why would you invest in assets you aren’t familiar with? The more information you can obtain about your investments, the more comfortable you’ll be in making investing decisions. Don’t invest in a new asset without first considering the potential consequences. Remember, every dollar you have invested in one asset is a dollar you can’t invest somewhere else, so choose wisely.

Consider Your Appetite for Risk

Golfing requires a number of risk-assessment decisions—to try to escape a sand trap or take a drop, or to attempt a difficult shot on the off chance you’ll make it. But if you’re consistently playing (or investing) beyond your risk tolerance, you could find yourself disappointed in the results. Instead, consider the risks you’re willing to take and make sure they’re compensated ones—that is, risks that have a reasonable chance of turning out in your favor.

Focus on the Process, Not the Outcome

Even the most experienced golfers have off days—and often, there’s not much you can do to combat them other than playing through and trying again the next round. But by sticking to a consistent process, practicing, and reevaluating when things don’t work out, golfers can increase their chances of a successful day on the links.

In the investment sphere, you can implement this strategy by focusing on the quality of the decisions you’re making, not the way one particular investment is rising or falling. You’ll also want to put measures in place to prevent you from making knee-jerk decisions, like selling an asset while it’s falling or buying into a bubble due to FOMO (Fear of Missing Out.)

While outcomes are important, in a diversified portfolio, the rise or fall of an individual investment shouldn’t be more than a blip on your radar. Because individual investments can be fickle, especially when chosen seemingly at random, creating an investing system and sticking to it can increase your likelihood of positive future outcomes.

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

This article was prepared by WriterAccess.

LPL Tracking Number 1-05367404

Last Minute Considerations for the FAFSA Deadline

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For many, the expenses of college or technical school can be overwhelming. But, with financial aid programs, tuition, room and board, books, and other college-related costs can become more affordable. To determine if your student qualifies for financial aid, you must fill out the Free Application for Federal Student Aid, or FAFSA, by the deadline.

 

You must file your FAFSA earlier to receive your aid before the start of the school year. You only need to complete your FAFSA once for all types of aid you may be eligible to receive. Remember that

FAFSA deadlines vary for federal, state, and institutional financial aid. You need to remember the two most important dates are the open date, usually October 1, and June 30, the closing date.

 

The federal government gives students a deadline of June 30 after the school year in which they need aid. For instance, June 30, 2023, for the 2022-23 school year or June 30, 2024, for the 2023-24 school year to file the FAFSA. Check on state and institution deadlines as they may differ from the federal deadline.

 

Documents you need for the FAFSA- Before applying for the FAFSA, you’ll need information from these documents:

 

  • Your tax returns and W-2 forms
  • Records of untaxed income, such as child support and interest income
  • Records of assets, like savings accounts and investment accounts
  • Social Security numbers of your student and both parents

 

How to Submit the FAFSA– Once you’re ready to apply for the FAFSA, follow these steps:

 

  1. Visit http://www.fafsa.gov
  2. Create a Federal Student IDA or FSA IDA.
  3. Answer each question thoroughly and accurately.
  4. List the colleges, technical schools, or universities your student is considering.

 

Be sure to submit the FAFSA before the deadline, June 30, 2023. However, the earlier you submit your FAFSA, the better your chance of receiving specific financial aid, such as grants.

 

Next steps after the FAFSA is submitted- Once you complete your FAFSA application online, the Department of Education will take 3 to 5 days to process it. Here’s what happens next:

 

  1. A student summary report (SAR) estimates what your family is expected to contribute (expected family contribution or EFC) towards your student’s education.

 

  1. FAFSA shares your SAR report with up to 10 schools.

 

  1. The financial aid office considers the SAR information to calculate your student’s financial aid:

 

  • The Cost of Attendance (COA)- The COA estimates tuition, fees, room and board, books and supplies, etc.
  • Your Expected Family Contribution (EFC)- The EFC is based on a unique formula that involves your family’s taxed and untaxed income, assets, and benefits.
  • The financial aid office will subtract the EFC from the COA to determine the amount of need-based financial aid your student needs and how much they may receive.

 

  1. Your student receives their FAFSA award letter.

 

You can modify FAFSA information– If you receive no aid or see errors, you can correct and resubmit your information. Or, if you need more financial assistance due to a change in your family’s situation, you can update the FAFSA before the corrections deadline.

 

Your financial professional can help- Your financial professional may provide assistance with completing  the FAFSA and answer any questions. They can help you design a strategy for funding your student’s higher education.

 

Important Disclosures:

 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

 

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

 

This article was prepared by Fresh Finance.

 

LPL Tracking # 1-05367581

 

Sources:

https://www.nerdwallet.com/article/loans/student-loans/fafsa-deadline

https://studentaid.gov/help/fafsa

 

 

Tax Benefits of Home Ownership

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In tax lingo, your principal residence is the place where you legally reside. It’s typically the place where you spend most of your time, but several other factors are also relevant in determining your principal residence. Many of the tax benefits associated with home ownership apply mainly to your principal residence — different rules apply to second homes and investment properties.

Here’s what you need to know to make owning a home really pay off at tax time.

Deducting mortgage interest

One of the most important tax benefits that comes with owning a home is the fact that you may be able to deduct any mortgage interest that you pay. If you itemize deductions on Schedule A of your federal income tax return, you can generally deduct the interest that you pay on debt resulting from a loan used to buy, build, or improve your home, provided that the loan is secured by your home. In tax terms, this is referred to as “home acquisition debt.” You’re able to deduct home acquisition debt on a second home as well as your main home (note, however, that when it comes to second homes, special rules apply if you rent the home out for part of the year).

For mortgage debt incurred prior to December 16, 2017, up to $1 million of home acquisition debt ($500,000 if you’re married and file separately) qualifies for the interest deduction. If your mortgage loan exceeds $1 million, some of the interest that you pay on the loan may not be deductible.

For mortgage debt incurred after December 15, 2017, up to $750,000 of home acquisition debt ($375,000 if you’re married and file separately) qualifies for the interest deduction. If your mortgage loan exceeds $750,000, some of the interest that you pay on the loan may not be deductible.

A deduction is no longer allowed for interest on home equity indebtedness. Home equity used to substantially improve your home is not treated as home equity indebtedness and can still qualify for the interest deduction.

For more information, see IRS Publication 936.

Mortgage insurance

You can generally treat amounts you paid during 2021 for qualified mortgage insurance as home mortgage interest, provided that the insurance was associated with home acquisition debt, and was being paid on an insurance contract issued after 2006.

Qualified mortgage insurance is mortgage insurance provided by the Department of Veterans Affairs, the Federal Housing Administration, the Rural Housing Service, and qualified private mortgage insurance (PMI) providers. The deduction is phased out, though, if your adjusted gross income was more than $100,000 ($50,000 if married filing separately).

Starting in 2022, amounts paid for qualified mortgage insurance are generally not deductible.

Deducting real estate property taxes

 

 

If you itemize deductions on Schedule A, you can also generally deduct real estate taxes that you’ve paid on your property in the year that they’re paid to the taxing authority. However, for 2018 to 2025, individuals are able to claim an itemized deduction of up to only $10,000 ($5,000 for married filing separately) for state and local property taxes and state and local income taxes (or sales taxes in lieu of income taxes). Previously, there were no dollar limits.

If you pay your real estate taxes through an escrow account, you can only deduct the real estate taxes actually paid by your lender from the escrow account during the year. Only the legal property owner can deduct real estate taxes. You cannot deduct homeowner association assessments, since they are not imposed by a state or local government.

AMT considerations

If you’re subject to the alternative minimum tax (AMT) in a given year, your ability to deduct real estate taxes may be limited. That’s because, under the AMT calculation, no deduction is allowed for state and local taxes, including real estate tax.

Deducting points and closing costs

Buying a home is confusing enough without wondering how to handle the settlement charges at tax time. When you take out a loan to buy a home, or when you refinance an existing loan on your home, you’ll probably be charged closing costs. These may include points, as well as attorney’s fees, recording fees, title search fees, appraisal fees, and loan or document preparation and processing fees. You’ll need to know whether you can deduct these fees (in part or in full) on your federal income tax return, or whether they’re simply added to the cost basis of your home.

Before we get to that, let’s define one term. Points are certain charges paid when you obtain a home mortgage. They are sometimes called loan origination fees. One point typically equals one percent of the loan amount borrowed. When you buy your main home, you may be able to deduct points in full in the year that you pay them if you itemize deductions and meet certain requirements. You may even be able to deduct points that the seller pays for you. More information about these requirements is available in IRS Publication 936.

Refinanced loans are treated differently. Generally, points that you pay on a refinanced loan are not deductible in full in the year that you pay them. Instead, they’re deducted ratably over the life of the loan. In other words, you can deduct a certain portion of the points each year. If the loan is used to make improvements to your principal residence, however, you may be able to deduct the points in full in the year paid.

What about other settlement fees and closing costs? Generally, you cannot deduct these costs on your tax return. Instead, you must adjust your tax basis (the cost, plus or minus certain factors) in your home. For example, you’d increase your basis to reflect certain closing costs, including:

  • Abstract fees
  • Charges for installing utility services
  • Legal fees
  • Recording fees
  • Surveys
  • Transfer or stamp taxes
  • Owner’s title insurance

For more information, see IRS Publication 530.

Tax treatment of home improvements and repairs

Home improvements and repairs are generally nondeductible. Improvements, though, can increase the tax basis of your home (which in turn can lower your tax bite when you sell your home). Improvements add value to your home, prolong its life, or adapt it to a new use. For example, the installation of a deck, a built-in swimming pool, or a second bathroom would be considered an improvement. In contrast, a repair simply keeps your home in good operating condition. Regular repairs and maintenance (e.g., repainting your house and fixing your gutters) are not considered improvements and are not included in the tax basis of your home. However, if repairs are performed as part of an extensive remodeling of your home, the entire job may be considered an improvement.

Exclusion of capital gain when your house is sold

If you sell your principal residence at a loss, you generally can’t deduct the loss on your tax return. If you sell your principal residence at a gain you may be able to exclude some or all of the gain from federal income tax.

Generally speaking, capital gain (or loss) on the sale of your principal residence equals the sale price of your home less your adjusted basis in the property. Your adjusted basis is the cost of the property (i.e., what you paid for it initially), plus amounts paid for capital improvements, less any depreciation and casualty losses claimed for tax purposes.

 

 

If you meet all requirements, you can exclude from federal income tax up to $250,000 ($500,000 if you’re married and file a joint return) of any capital gain that results from the sale of your principal residence. Anything over those limits is generally subject to tax. In general this exclusion can be used only once every two years. To qualify for the exclusion, you must have owned and used the home as your principal residence for a total of two out of the five years before the sale.

For example, you and your spouse bought your home in 1981 for $200,000. You’ve lived in it ever since and file joint federal income tax returns. You sold the house yesterday for $350,000. Your entire $150,000 gain ($350,000 – $200,000) is excludable. That means that you don’t have to report your home sale on your federal income tax return.

What if you fail to meet the two-out-of-five-year rule? Or what if you used the capital gain exclusion within the past two years with respect to a different principal residence? You may still be able to exclude part of your gain if your home sale was due to a change in place of employment, health reasons, or certain other unforeseen circumstances. In such a case, exclusion of the gain may be prorated.

Additionally, special rules may apply in the following cases:

  • If your principal residence contained a home office or was otherwise used partially for business purposes
  • If you sell vacant land adjacent to your principal residence
  • If your principal residence is owned by a trust
  • If you rented part of your principal residence to tenants, or used it as a vacation or second home
  • If you owned your principal residence jointly with an unmarried individual

Note : Members of the uniformed services, foreign services, and intelligence community, as well as certain Peace Corps volunteers and employees may elect to suspend the running of the two-out-of-five-year requirement during any period of qualified official extended duty up to a maximum of ten years.

Consult a tax professional for details.

 

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal professional.

LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.

This article was prepared by Broadridge.

LPL Tracking #1-940125

 

 

 

 

 

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