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Thursday, April 15, 2021

Miscellaneous Insights From Recent Webinars


As I have mentioned frequently in previous blog posts, I love learning new things and often attend webinars to gain knowledge and/or continuing education credits for my CFP® and AFC® as well as connect virtually with others.


Below, in no particular order and on a wide variety of topics, are eight “nuggets” that I heard at recent webinars:


¨      Memes in Financial Education- Memes (pronounced “meems”) are a piece of media- often humorous- that spreads rapidly through the internet, particularly social media. They are a fun and useful financial education method to spark students’ creativity and recall of topics. As Next Gen Personal Finance noted in a recent webinar, teachers can provide memes, have students write financial captions for them, and debrief the activity.


¨      Professional Brands Take Planning- Professional brands are what people are known for or stand for. If you don’t shape your own personal narrative, someone else will. Successful branding requires paying attention to audiences (e.g., what tasks do they need performed or questions answered?), competitors, and social media profiles, especially LinkedIn. Search engine yourself to see what others are seeing about you.

¨      Financial Education Teaches Decision-Making- A key outcome of personal finance classes is teaching learners to make good choices. This is much more important than memorizing facts or definitions. Students don’t need to have a lot of money to put financial education to use. Rather, educators need to meet people where they are and give them tools to navigate their life. Every small win that “moves the needle” is progress.

¨      Imposter Syndrome is Common- Many people experience feelings that they are “not good enough” or “not qualified enough,” which decreases their self-confidence. Imposter syndrome can be overcome, however. The antidote is embracing the fact that you will not- and cannot-know everything. You do not need to know all the answers about particular topics. Rather, you simply need to know where to look or who to contact to find them.

¨      Working From Home and Taxes- Many employees worked away from their employer’s office in 2020 (at home or another remote location) and may owe income tax in two states. They also incurred expenses to set up an office and purchase supplies. While workers may feel that they are owed a tax break for these cash outlays, a Wall Street Journal webinar repeatedly stressed that there is no home office deduction for 100% employees. Only self-employed workers and those with “side hustles” can take a deduction using Schedule C.

¨      Day Trading and Income Taxes- People who traded stock frequently during 2020 can expect complex tax returns this tax season with multiple short-term capital gains on securities that were held a year or less. Short-term gains are taxed at the same rate as ordinary income. Tax returns also now have a very prominently-located question on Form 1040, which is signed under penalty of perjury, about taxpayers’ use of cryptocurrencies.


¨      Gambling and Personal Finance- Gambling has the highest suicide rate of any addiction according to Dr. Lia Nower from the Center for Gambling Studies at Rutgers University. People can generally hide it longer before they “crash and burn.” Insurance does not pay for gambling addiction unless it is comorbid with something else (e.g., depression). Youth gambling rates are generally twice the general adult population and problems peak at 18-24. Parents should “de-glamorize” gambling (e.g., don’t buy lottery tickets as “stocking stuffer” gifts).

¨      Ticking Time Bomb” Retirement Accounts- Some people funded retirement savings plans for decades and they have grown substantially. However, traditional individual retirement account (IRA) and 401(k) or 403(b) savings is technically not all theirs. They may only really have two-thirds (or less) of what they think they have after required minimum distributions (RMDs) starting at age 72. It may make sense for those with significant savings to pay some tax at an earlier age at lower tax rates. Qualified charitable distributions (QCDs) from traditional IRAs are another tax-saving option. With advance planning, retirees can help control their tax rate.

Thursday, April 8, 2021

“Accidental” Pandemic-Related Financial Planning Opportunities


Financial planning is often pictured in graphic images as an upwardly sloping straight-line path that moves seamlessly from Point A to Point B. People set financial goals, develop a plan, “work the plan” by taking action to reach their goals, and review and revise the plan every so often or when major lifestyle changes occur. 

While this approach can sometimes work well in normal times, the past year has been anything but normal as a result of COVID-19.


Many personal financial plans (e.g., jobs, education, moving, travel, retirement dates) “blew up” amidst layoffs, lockdowns, lost loved ones, and lives fraught with uncertainty. In addition, legislation and the law of supply and demand (e.g., the current U.S. housing market) presented opportunities that nobody could have foreseen, much less planned for. 

A better graphic image for the financial planning process for many people, especially during the past year, is a tangled ball of yarn.


Five examples are presented, below, of “accidental” financial planning opportunities that were not on most people’s radar screens until recently. They could not have been included in personal financial plans previously because they were not feasible, not applicable, or did not exist under previous tax laws. 

All of these strategies have arisen in some way, shape, or form as a result of the pandemic and may be useful to consider during the months ahead, if applicable:


Deploy Tax Savings from Unemployment Tax Leniency

Under the American Rescue Act (ARA), signed into law on March 12, many taxpayers are exempt from income tax on up to $10,200 of unemployment benefits that were received during 2020. Normally, this money would be fully taxable as ordinary income (i.e., at a taxpayer’s regular marginal tax rate, like wages, salaries, and tips) on federal tax returns. This tax break was a last-minute addition to the ARA that few people saw coming and came a month into the 2020 tax filing season.


Most people probably had taxes withheld on their unemployment benefits or sent the IRS quarterly estimated payments in expectation of a future tax liability. As a result of the ARA tax law change, they could now save $1,000 or more on their income taxes (depending on their tax rate and other income sources), resulting in a larger refund or a smaller tax bill. For example, $9,000 in unemployment benefits in the 12% tax bracket  =  $1,080 (9,000 x .12). This is a nice chunk of change to save or repay debt with.


Take Tax Credits Available as a Result of  Reduced Income

Some taxpayers may qualify for income tax breaks in 2020 that they previously earned too much income for. An example is the Earned Income Tax Credit (EITC), which maxes out at $15,280 ($21,710) of adjusted gross income (AGI) for a single taxpayer and married couple filing jointly with no children and $41,756 ($47, 646), $47, 440 ($53,330), and $50,594 ($56,844) with one, two, and three or more children, respectively.

Maximum credit amounts for zero, 1, 2, and 3 or more children are $538, $3,584, $5,920, and $6,660 for 2020 tax returns. A tax credit is a dollar for dollar reduction in tax liability (e.g., $6,000 tentative tax bill minus $3,584 EITC = $2,416 final tax bill). For the first time ever, perhaps, taxpayers who always earned more than the maximum AGI for the EITC may qualify if they lost income as a result of the pandemic. The tax savings could provide funds for an emergency fund or debt repayment.


Use a Big House Profit To Pay Off Accumulated Debt

Some homeowners who lost income and got behind on mortgage payments are cashing out during the current “red hot” housing market. In one case that I know of, a home seller who owes over $18,000 in arrearages on a federally backed FHA mortgage and has no money with which to repay it when the foreclosure moratorium expires on June 30 will make about a $60,000 profit as a result of selling the house in a bidding war. After paying back the mortgage arrearage and home selling expenses, the seller will walk away with about $20,000 after less than two years of homeownership and will “punt back” to apartment living until household finances stabilize.


Use a Big House Profit and Downsizing to Build a Retirement Nest Egg

Similarly, people who planned to move and downsize anyway and lack sufficient retirement savings can benefit from selling their home in the current sellers’ market and moving to something smaller. They essentially become cash buyers who are better able to compete for new housing in the area where they live or elsewhere. In addition, the spread between their old home’s price and the cost of a new one provides income for future living expenses. For example, $300,000 of home sale profit placed in a balanced mutual fund with an 6% average return will throw off about $18,000 of annual income.


Increase Savings and Philanthropy

Some Americans have experienced financial silver linings that they could have not anticipated as a result of COVID-19: increased income due to demand for their industry sector or work skills and/or reduced expenses such as commuting costs, child care, and other expenses. Like home sale profit and income tax breaks, increased cash flow provides an opportunity for increased savings, debt reduction, or both.

There are also new opportunities for philanthropy. On 2020 tax returns, married couples filing jointly or singles who do not itemize can deduct $300 in cash contributions to qualified charities. In 2021, the tax write-off for couples increases to $600. In addition, the 60% of AGI cap on donations made by itemizing taxpayers is suspended in 2021 to encourage philanthropy for coronavirus relief.

Wednesday, March 31, 2021

COVID-19 and Your Finances

 During the past six months, I have presented about a dozen COVID-19 and Your Finances classes and webinars, including this webinar for Cooperative Extension colleagues. I began each presentation by describing similarities between transitions in later life, described in my new book Flipping a Switch, and those experienced by Americans as a result of COVID-19.

Examples of these similar adjustments include managing money  with a changed income, creating a “paycheck” from multiple income sources, keeping busy, too much “togetherness,” and becoming “fraud bait.” People often have more free time for health maintenance activities (e.g., exercise and healthy meal preparation) as a result of not commuting.

In my presentations, I describe three categories of Americans according to financial impacts of COVID-19: 1. Reduced Income and Struggling, 2. Stable Income, But Anxious, and 3. Increased Income with Opportunities. I then describe the following financial tips for all Americans and for those in each of the three impact categories:

All Americans

¨       Get your estate plans in order: will, living will, and durable power of attorney. Over 550,000 COVID-19 victims (and counting) as of 3/31/21 is a major “wake-up” call to not leave any financial “loose ends.”

¨       Prepare a consolidated list of beneficiaries for life insurance policies and retirement savings plans.

¨       Prepare a list of digital assets with user names, PINs, passwords, and other account log-in data.

¨       Determine the impact of COVID-19, the CARES Act, and the American Rescue Act on your income taxes. For example, the charitable donation write-off for non-itemizers and arranging adequate tax withholding.

¨       Create an updated spending plan (budget) to reflect income/expense changes as a result of COVID-19.

¨       Use the Bill Calendar from the Consumer Financial Protection Bureau (CFPB) to summarize expenses.

¨       Identify and act on things that you can control (health practices, saving, spending, gifting, mindset).

¨       Get comfortable making financial and lifestyle plans again after a year of living life in a “holding pattern.”


Group 1: Reduced Income and Struggling

¨       List, and then prioritize, three expense categories: needs (e.g., food, housing, utilities) obligations (e.g., court fees/fines, child support, insurance, taxes, secured and unsecured debts), and wants (everything else).

¨       Reach out for help from government and non-profit agencies. Call 211 or visit to find local services.

¨       Reduce or eliminate subscription services and recurring payments (e.g., gym, satellite radio, streaming TV).

¨       Assess cash flow resources (e.g., emergency fund, cash value life insurance, retirement savings plan).

¨       Access local, state, and federal resources as needed (e.g., unemployment benefits and stimulus payments).

¨       Marshall social capital resources through family and community connections.


Group 2: Stable Income, But Anxious

¨       Prepare for a furlough: multiply daily pay by a number of furlough days to determine potential lost income.

¨       Cut spending to build up an emergency fund and/or accelerate debt repayment using PowerPay as a guide.

¨       Consider making human capital investments (e.g., certification programs, in-service training, short courses).

¨       Start a “side hustle” (freelancing) for additional money to save and to have “fall back” income, if needed.

¨       Consider refinancing your mortgage to take advantage of current low interest rates.


Group 3: Increased Income with Opportunities

¨       Save/invest positive cash flow resulting from increased income and/or reduced expenses.

¨       Make prudent home improvements with a high return on investment (e.g., kitchen and bath remodeling).

¨       Be careful about co-signing, “loans” that become gifts, and/or long-term support of family members. Use this new publication, Tips for Managing Family Lending and Borrowing, from the CFPB to inform financial arrangements.

¨       Consider charitable gifting and serious philanthropic methods (e.g., qualified charitable distributions, donating appreciated securities, and establishing a donor advised fund or charitable trust) to help others.

Every American has been affected by COVID-19 in one or more ways: health, employment, income and assets, education, relationships,  goal-attainment, and more. As noted above, some observers have called COVID-19 lockdowns and layoffs a preview or “dress rehearsal” for transitions in later life. Many are also predicting a disparate “K-shaped” recovery

However COVID-19 has affected your finances, develop an action plan to move forward financially. Your future depends on it!

Wednesday, March 24, 2021

15 Months of Entrepreneurship: Ten More Lessons Learned


Last September, I wrote a blog post with some “Barbservations” about entrepreneurship during a pandemic. In that post, I described five personal learning lessons: be visible on social media, do some pro-bono work, get a video-conferencing license, say “no” to bad fit assignments, and chart a new path.

After decades working in academia, I have now been a full-time financial education entrepreneur for 15 months. Since I have had few role models for how to do this, I have built many bridges as I crossed them. I can count on one hand the number of colleagues I know who left long-time careers and continue to work actively in the field.

In an effort to help other aspiring third-age entrepreneurs, below are 10 additional learning lessons:

1.       Show Up- Fewer people think I am “retired” now than when I first left Rutgers University because I made very conscientious decisions to attend conferences, present webinars and podcasts, respond to media queries, “work out loud,” and share content via social media. I smiled recently when a colleague said “you’re everywhere” because it indicated my strategy was working. Branding, maintaining visibility, and professional development are ongoing processes for all successful entrepreneurs to attend to and are also great antidotes for older adult ageism.

2.       Identify Deliverable Stages and Invoice Accordingly- I did not do this with one large project that extended for six months. There were multiple levels of review that took much more time than either the client that hired me or I ever anticipated. Now I set specific project milestones for clients with a first draft of content being the first deliverable that I invoice for. This strategy evens out cash flow and makes income tax planning easier.

3.       Understand the Client’s Funder- Clients receive external funding to hire me for some of my work projects. Thus, it is key to understand their funder’s requirements and “hot buttons” (e.g. certain topics and/or website links to avoid). Also, accept the fact that projects take longer when more entities are involved and that some funders hold back funding for your client to pay you with until they approve the final project results.

4.       Think Twice About Public Entities- I am very wary now of doing any future work for state governments and public colleges. Their hiring and payment “systems” are simply too onerous and time-consuming for this solo practitioner (e.g., proving my U.S. citizenship, filing an out-of-state business registration, completing elaborate online forms, and undergoing a background check that required unfreezing my credit, which I did not do). My advice: ask plenty of process questions when someone from the public sector wants to hire you.

5.       Get Project Details in Writing- On the other side of the spectrum were clients who did not have any paperwork or hiring process at all. In this case, I provide a simple one-page memorandum of understanding (MOU) that includes a complete description of the deliverable, deliverable milestones (e.g., first draft, first round of revisions, final draft), the project timeline, and the amount that I am charging per hour and in total for the project.

6.       Stick to Your Niche- My niche is writing, speaking, and reviewing personal finance content. Period. I said “no” to requests to conduct research, write grants, and do a curriculum bias review, for which I was not qualified by training or life experience. I also passed on a speaking opportunity because I am not ready to travel by air yet.

7.       “Bookend” Your Day- Much has been written over the past year about “blurred boundaries” with so many people working from home. As a solo entrepreneur, it was quite a change for me from working with others at an office. I exercise before and after work hours to establish boundaries for when my work day starts and ends.

8.       Fill Work Spaces- I have had almost no project down time since January 2020 because I have one ongoing client as an “anchor.” With ad hoc projects, as soon as I finish one, I immediately start another in my queue to create space for new projects that may come along. I fill small time gaps binge-writing blog posts like this one.

9.       Monitor Income Tax Payments- With the exception of the “anchor” client, my first-year income as an entrepreneur was a big unknown at the start of 2020. By December, I had doubled revenue expectations. I used previous tax returns, the IRS tax withholding estimator tool, and the safe harbor rule to avoid under-withholding.

10.   Create Synergies- Several client projects involve creating content for professionals who serve military families. I found that research and learning curves that informed one project also benefitted another. Similarly, I created a number of templates (e.g., for invoices, MOUs, and online quizzes) that can be used across multiple projects.

As I wrote in my recent book, Flipping a Switch, everyone need some “big rocks” (e.g., work, volunteerism, care-giving, socialization) in their day to provide structure and a sense of purpose. Entrepreneurship is one of my “big rocks” and provides fulfillment, an outlet for creativity, and a good income. I hope that my insights are useful.

Thursday, March 18, 2021

Pay Off Debt Quickly and Get to Know Your Credit Card(s)

Are credit card statements containing holiday purchases still arriving? If so, now is a great time to accelerate upcoming debt payments and get to know your credit card’s costs and features better.  

There are many expenses associated with credit cards including annual, late, and over-the-limit fees, and fees for balance transfers. No expense is as costly, however, as the cost of making minimum payments. It can take over a decade, and over $9,000 in interest, to pay off a $10,000 credit card with an 18% annual percentage rate (APR).

There are two ways to avoid the credit card minimum payment trap: 1. “Find” extra money to pay more than the minimum and 2. Pay at least twice the minimum (or more if you can). Below are specific details:

¨      “Find” Money to Pay More Than the Minimum- Action steps will vary from person to person. Author David Bach refers to small expenses that add up over time as “lattes” and everyone has their own. Examples include eating out, buying expensive coffee, and lottery tickets. Fewer or less expensive “lattes” will free up money to pay off debt faster.

¨      Pay at Least Twice the Minimum Payment- Many minimum payments on credit cards are calculated as 3% of the outstanding balance. Double that payment to 6% of the balance (i.e., twice the required minimum payment) and you can save a substantial sum of both interest and repayment time..

Example: Making minimum payments on a credit card with a $1,000 balance and an 18% APR will cost $684 in interest and take 8 years to pay off. Double the minimum payment from 3% of the outstanding balance to 6% of the balance and the interest cost is reduced to $285 (saving $399!) and the debt is repaid in 4 years.

To fully understand features and terms of your credit card(s), carefully read their disclosures (a.k.a., Schumer box) and/or information found on your billing statement. There, you will find information about the following:

¨      Annual Percentage Rate (APR)- Lenders must disclose all types of APRs (interest rates) including introductory “teaser” rates (e.g., 2.9% for six months), standard APRs, and penalty (default) APRs that are charged for specific infractions such as late payments.

¨      Fees- Examples include late fees, over-the-limit fees, and fees for cash advances and balance transfers. These fees are not included in APRs because only some credit card users pay them.

¨      Grace Period- This is the time period, typically 20 to 25 days, between the posting date of a transaction and the payment due date. A grace period is only available to cardholders who paid the previous month’s balance in full and on time.

¨      Balance Calculation Method- Two common methods are “daily balance” and “average daily balance.” New purchases are generally included. With both methods, the sooner in a billing cycle a credit card is paid, the more days with a lower balance and the lower the daily or average daily balance on which interest is charged.

Once you have read some Schumer boxes, make sure that you are using a credit card that’s right for you:

¨      “Convenience users” (i.e., those who always pay their bill in full and do not pay interest) should look for a long grace period, no annual fee, low fees, and a good rewards program.

¨      “Revolvers” who typically carry a balance forward should look for a low interest rate, no annual fee, low fees, and a long “teaser rate” if the balance can be repaid before the introductory rate ends.

Use this worksheet to compare the costs and features of your current credit card(s) and others that might have more favorable terms.

Miscellaneous Insights From Recent Webinars

  As I have mentioned frequently in previous blog posts, I love learning new things and often attend webinars to gain knowledge and/or conti...