Printer-friendly format

Growing up, my family’s summer vacation spot was Florida. Before our trip, my folks asked my sister and me to make a list of the things we needed to do or pack before we left. In that spirit, here are 10 things to do this summer to help you be better prepared for the experience of your life.

1.  Write a letter. A neighbor or family member probably has a key that would let them into your home if there were an emergency while you were away. Put together a map to your important financial records and leave it with someone you trust. While you may believe that your documents are accessible, your family or friends will benefit should something unexpected occur.

2.  Organize. Arranging your financial records can reduce stress and streamline decision-making. Separate records by your need to use them (short-term items together/long-term items together) or another way that suits your needs. Whatever system you choose, keep it simple and store everything in one place. If you store records on a computer, make sure someone knows your password. While a safe deposit box is a wonderful place to keep valuables and important papers, make sure that your survivors can access it.

3.  Snowball your debt. I believe in the “snowball method” of debt reduction:  (1) List all your debts from highest interest rate to lowest interest rate. (2) Set aside a specific amount of money to apply to these debts each month. (3) Make the minimum payment on all debts first and use any leftover monies towards the highest interest rate debt. Continue until all your debt is retired.

4.  Consolidate retirement plans. Most healthcare professionals have worked for multiple employers during their career. Normally, money in a 403(b) plan or a 457 plan can be transferred to a 401(k) or vice versa. Your consolidation options include:

• Transfer old plan assets into your current employer’s plan 
• Take a cash distribution (subject to taxation and possibly penalties if  you’re under 59 ½)
• Roll these balances into an IRA. You may want to consult a legal professional knowledgeable about asset protection statutes to help you make the decision.

5. Shop your insurance. Compare the rates you’re paying for insurance as prices can change dramatically from year to year. Nonetheless it can be difficult to make comparisons. Ask your existing agent to help you weigh your options and make an objective decision. Since many companies offer discounts for combining coverage, it can really pay to consolidate. An annual review of your coverage is recommended.

6. Confirm your beneficiary designations. A failure to keep your retirement and insurance policy beneficiary designations updated may result in your assets passing to people you did not intend to benefit or push your estate into probate. Contact your employee benefits officer, your financial advisor, and insurance agent and request a listing of your beneficiaries. If changes are needed, make them.

7.  Establish a college fund. Traditionally, custodial accounts known as UTMA (Uniform Transfers to Minors Act) were used for college savings. Other options now include Coverdell Education Savings Accounts (ESAs) and 529 plans (prepaid tuition plans and college savings plans). Both offer potential tax savings and may provide for tax-free withdrawals for qualified expenditures. Arkansas residents may also benefit from a State income tax deduction on contributions to one of the two state sponsored 529 plans. More information is available online at www.ishares529.com  and www.thegiftplan.com.

8. Update your estate plan. Creating a will allows you to name guardians for your children and name an executor to handle all other asset and tax related issues. You should consider a living will to inform others of your health care preferences and designate someone to make your medical decisions. A durable power of attorney is needed to name someone you trust to handle your financial matters if you become disabled. While do-it-yourself kits are available, these are no substitute for the professional counsel of an attorney.

9. Charitable Gifting. Gifting can be used to reduce the taxable amount of large estates and even provide income tax deductions. Almost everyone can benefit from charitable gifting. Most charities have experienced staff that provide an excellent resource to help explore both living and estate gifts.

10. Check your credit report. Did you know that each person qualifies annually for a FREE credit report from each of the three credit rating agencies?  You may access this information at www.annualcreditreport.com. Mistakes in your credit report can cost you a lot of money.

You’ve probably thought of some other items to add to your list. Tear out this article and keep it with you. I promise you this: If you’ll check off each of these steps, you’ll be the one resting easy this summer vacation. Don’t forget to wear your sunscreen!

 

Chad Carlson is a financial advisor with Delta Trust Investments, Inc. Chad may be reached at ccarlson@delta-trust.com.



July 2008

Tags:

None

Do you know someone else who would like to see this?
Your Email:
Their Email:
Comment:	(Will be included with e-mail)
Secret Code	In the box below, enter the Secret Code exactly as it appears above *