Archives: Captivate Podcasts

“Dad, how much money do you make?” “How much did our car cost?” “What did you pay for our house?”

Kids rarely have filters. As uncomfortable as it can be to answer questions about human sexuality, we also feel a degree of that discomfort when it comes to answering their questions about money.

This week, Matt Robison and I tackle this discussion in part I of a two part series on talking to kids about money. There is no one-size-fits-all, as you will hear in our exchange. But you will learn more about such topics as:

• When and how to include numbers in the answers to kids’ inquiries
• What brings your child joy based on how they choose to spend money 
• Family values in spending
• Conveying your financial message without the underscore of fear or guilt

You’ve probably asked – or received, if you didn’t think to ask – your pediatrician for advice regarding talking to kids about their bodies. Gaining some tips from a financial professional as well as fellow parent (i.e. me) will hopefully help you pass on your wisdom in a productive and loving manner.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

Handing your W2’s and 1099’s to your preparer might be the extent of your participation when it comes to income taxes. Having a general understanding of how taxes work can give you a new perspective on just how much of a share is owed to Uncle Sam.

Join Matt Robison and I this week as we discuss the basics of taxes. Get a crash course on:

1. Income: Wages (W2 or other), interest income capital gains and qualified dividends 
2. Adjusted Gross Income (AGI): Wages – above-the-line deductions

What are above-the-line deductions?: Contributions from HSA, contributions to traditional IRA, student loan interest (unless your income is too high), self-Employment costs (such as health insurance, retirement plan contributions, 50% of self-employment taxes), alimony, and certain education expenses 

3. Taxable Income = AGI – standard or itemized deductions

• Standard deduction ($12,950 Single, $25,900 Married, Filing Jointly (MFJ)

Itemized Deductions:

• State, Local, Other Taxes
• Mortgage and Investment Interest Expense
• Charitable Giving
• Medical Expenses (above a limit)
• More….

4. Total Tax = Taxes on Taxable Income

• Taxes: Income tax, capital gains tax, AMT, NIIT, Medicare Surcharge, etc

5. Payment or Refund: Total Tax – Credits – Taxes Paid

• Credits: Child Care Credit, Dependent Care Credit, Lifetime Learning Credit, etc
• Taxes Paid: From your paycheck or estimated tax payments

Well, that’s as simple as I can make it in just 5 steps!

AGI (step 2) is very important because that number gives you your tax bracket. But did you know that we have marginal tax brackets? 

If you’re like a lot of people, you probably think marginal means that if you are MFJ and your AGI is $150,000, you owe 22% in Federal Income Taxes, ($33,000) right? WRONG! 

• The “marginal” means that for the first $20,550, you owe 10% in taxes. [$2,055]
• You then owe 12% on the next $63,000 (the next tax bracket) [$7,560]
• Then, 22% on the next $66,450 (the bracket you are in) [$14,619]
• That’s a total of: $2,055+$7,560+$14,619 = $24,234. Not $30,000 !
• It means a difference of almost $6,000 in your favor

So now you have your tax bill. Using the same example as above, you owe $24,234 in federal taxes. This is your total tax. Now come the credits (hopefully!). Credits differ from deductions in one major way, they are dollar for dollar. Deductions reduce your total tax bill by reducing your Taxable Income. Credits, on the other hand, come straight off your total tax bill. Some credits include the Child Tax Credit, Child & Dependent Care Credit, or the Lifetime Learning or American Opportunity Credit.

Obviously credits are the way to go! Once you’ve deducted your credits, you then subtract any payments you’ve already made (withholdings or direct payments) and this will determine what you owe or are owed in the form of a refund. 

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

The government’s announcement and forthcoming forgiveness of student loan debt is a hot topic right now. Many people have asked me if they qualify, including a regular guest on this podcast, Matt Robison. Join us this week as we discuss the who, what and how’s of student loan forgiveness. 

What will you learn from this episode?

1. Who is eligible: For the 2020 or 2021 tax years, individuals who make less than $125k in income, taxpayers who are married and file jointly and have less than $250k in income and current dependent college students using parents income with the above income eligibility qualify for student loan forgiveness.
2. What is eligible: All federal college loans are eligible as long as they are issued no later than June 30th, 2022 to include Direct Subsidized and Unsubsidized Loans, Direct Grad PLUS Loan, Direct Parent PLUS Loan, Direct Consolidation Loans and Some Federal Family Education Loans (FFEL) are eligible (these loans were discontinued in 2010 but if there is a balance and the loan is not held commercially, it is eligible)
3. How: The Department of Education says it’s going to work “quickly” and “efficiently” to set up a simple application process for borrowers to claim debt relief. As of publication, USA Today says the application will be available early this month. That said, nearly eight million borrowers may be eligible to receive relief without filing an application because their relevant income data is already available in the federal system.
4. What if you have multiple loans? No matter how many types of federal loans that an individual possesses, there will only be one payment for either $10,000 or $20,000 or less if the loan balance is lower.
5. $20,000? How do I qualify for that? Only borrowers with a Pell Grant will have $20k discharged, which represents about 60% of student borrowers. Not sure if that’s you? Sign into studentaid.gov and click “My Aid” to find out.
6. Can I get a refund if I made payments during the time the loans were federally deferred? You bet! Contact your loan servicer and request a refund. Borrowers should obtain proof of loan payments that they made during the pandemic starting from March 13, 2020. Once you’ve got that, request a payment refund from your loan servicer.

Learn all this and more on this week’s podcast. It could save you $10,000 or more off your student loan debt.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

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You’ve surely heard of Warren Buffet, but have you ever heard of Ben Miller? He is a successful investor most known for his portfolio management strategy that beat the S&P 500 for 14 years straight (1991-2005). Miller attributes his achievement to the same concept that made Buffet his billions: its time, not timing.

Join Matt Robison and I on this week’s podcast to learn why your odds of beating the market are slim. In particular, we explore:

1. Market Efficiency – It all balances out in the end meaning there will be winners and losers. If you want to be a winner, there are fees that come with having an active fund manager looking for ways to get you that extra return, which usually leads to a net zero.
2. Differentiation – Still want to try and outperform the market? You have to have a different strategy that is also better than everyone else’s. 

There is a simple strategy to winning – don’t try. Invest in low cost index funds and let the market do its job and make you money. 

Don’t just take my word for it, check out this piece from Howard Marks.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

Tune in to this week’s podcast where I give Matt Robison a quick and dirty lesson on all things HELOC and explain why I just paid mine off.

Home Equity Lines of Credit (HELOC) are popular lending options for homeowners with a decent financial stake in their property. Earlier this year, it was estimated that 17% of Americans currently have a HELOC. And why not? With interest rates in the 2-3% range, a HELOC made a great option for getting cash to fund projects like home improvements. 

Did you spot the past tense? As federal interest rates rise, so do mortgage rates and, you guessed it, HELOC rates. The average HELOC rate for borrowers is currently 6.51%. 

It made sense for me to take a HELOC a few years ago to cover some education expenses and home improvement projects. Rather than pulling money from my portfolio, where it was making roughly 8% in interest (given historical context and what we know about the market), I borrowed against the equity in my home since I was only paying 2% interest. 

Now, however, the interest rate has risen to the point where it no longer makes financial sense for me to keep that balance outstanding. Will I close the line of credit? Absolutely not. Why? Because if the market takes a downturn and I want to buy-in while everything is essentially “on sale,” I can use the HELOC to get cash easily. It can also be used as an emergency fund, should that become necessary.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

Last week’s episode probably got you thinking about saving for education expenses. Starting early can make paying for an Ivy League college for your budding genius a reality. Now that we’ve established the ‘why’ of education savings, this week we talk about the ‘how’ to plan for education expenses. 

The bottom line is to use 529 plans. Sure, you could funnel money into your brokerage accounts and earmark it for education, but then you miss out on the substantial tax benefits that accompany 529 plans (similar to 401K’s and HSA’s). Any contributions you make to a 529 account grow tax-free, meaning that the capital gains interest in dividends you earn from growth is all tax free. Then, when you make withdrawals to spend on qualified education expenses, those are also tax-free. So once you put the money in, it’s all tax free when you use it for qualified education expenses. 

Listen in to hear Matt Robison and I talk all about the in’s and out’s of 529’s. 

1. Beneficiary Flexibility: 529’s offer the option to change beneficiaries at any time. You can set up an account now for an unborn child, grandchild, niece, nephew, etc. If one beneficiary doesn’t need the funds or use the entire balance of the account, you can switch the account holder to another child or to yourself. 
2. Multiple Accounts: While 529’s provide flexibility in beneficiaries, you will still want to establish multiple plans for multiple children as they may overlap in spending plus there are contribution limits per beneficiary, per year.
3. Do Your Homework: Each state offers a different 529 plan with different benefits. Start with your own state and begin by assessing tax deductions. If they aren’t great, look at other states’ plans for things like low cost funds, better investment options, account fees, portfolio management fees, program manager fees, state fees and the fund fees. Spoiler alert: Illinois and Utah have two of my favorite funds.
4. Set-it-and-forget-it: Invest in low cost index funds or age based index funds during your initial set-up so that all future contributions go directly into that fund. 
5. Spending from your 529: Sure, you can spend money from the fund on things like tuition and fees, books, computer technology etc. But did you know you can also use it for Kindergarten through high school? Distributions are capped at $10,000 a year, but you can use the account as a pass through for tax deductions (put money in then take it right back out to pay for education). It can also be used for student loan repayment up to $10,000.
6. Leftovers: There are many ways to spend the money in the 529 but if you find yourself with leftover funds, you can pass that on to related family members, or use it on yourself! Have no one left in your life with qualified education expenses? You can still access that money and use it on non-qualified expenses. You’ll pay a 10% penalty on any of the growth and you’ll have to pay taxes. No one I know has ever complained about extra money leftover.

Hopefully after last week’s episode and this week’s breakdown of 529’s, you are feeling more confident about your education savings plan.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

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$50,000-$80,000 per year is what higher education expenses look like these days. The average cost of tuition at a public, 4-year university increased by 31.4% from 2010 to 2020.

The 2022-2023 academic year tuition and fee rates for some popular (and less popular) schools are as follows:

Boston College: $80,296

UCLA: $68,474

University of Illinois, Chicago: $59,556

Morehouse College in Atlanta, GA: $49,799

Let’s say your precocious 8-year old has her heart set on Boston College. By the time she is ready to attend, you are staring down the barrel of a $107,000+ yearly tuition bill.

Don’t panic. Instead, join Matt Robison and I on this week’s podcast to learn the best strategies for saving for education expenses. We cover such topics as:

• Saving for education vs. retirement – no one will loan you money to retire but they will loan you money for education
• Sticker shock and the reality of what education will actually cost you after discounts
• How to’s:
• Roth IRA’s
• 529’s
• Checking/Saving/Brokerage Accounts

The bottom line is this: saving something is better than saving nothing. Planning for future education, even if that means calculating the scary inflation rates, will help you plan for the worst case scenario before you are hit with the bill.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

Do you have or know a pre-teen or teenager who’d like to be as wealthy as Warren Buffet? It’s easy. Have them begin investing in the market RIGHT NOW.

I’ve talked about this story before…Warren Buffet is worth about $80 billion dollars. $70 million of that was earned after he was eligible for Social Security benefits. The key to his success goes back eight decades. Yes, eighty years. Buffet began investing when he was 10-years old. And all that money he put away 80, 70, 60 years ago began compounding in his later years and led to him being one of the wealthiest men on earth.

Join Matt Robison and I on this week’s podcast for some quick and easy ways to get your teenager invested now in order to secure their future wealth. We discuss these simple steps:

1. Open a Roth IRA and deposit earned income
2. Consider investing in the Total US Stock Market for set-it-and-forget-it fund management
3. Add monetary gifts from grandparents, aunts, uncles, etc to the fund
4. Sit back and watch your 40+ year return of 9.5%-12%

Investing 15-20 years earlier than their peers will pay off significantly in retirement. Learn from Buffet: start investing now for your pre-teen/teenager.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

This week’s podcast is the final installment of the series with Megan Russell from Marotta Wealth Management regarding healthy spending. We began the series by identifying a core values budgeting strategy. Then we moved on to avoiding advertising in order to curb impulse buying. Our episode on waiting a week before making larger purchases really resonated with our audience as a great way to spend less. The last episode centered around buying worth and getting the most from what you’ve already spent. 

Megan’s last theme for us involves some great advice for spending less. In particular, we talk about setting up spending alerts, performing an intentional review of those alerts, becoming conscious of your spending (especially the things that you are paying for automatically and on a regular basis), establishing a price book to make sure that frequent expenditures aren’t costing you more than they should, buying in bulk/wholesale/secondhand and finally returning things that don’t live up to your expectations. Let’s explore each tip in more detail:

Spending Alerts

Set up automatic alerts with your financial institution. This could be your credit card or bank card, whichever you most often use to pay for things. On your settings page, you can choose to be alerted to any purchase that exceeds $1. You read that correctly, one dollar. Worried about your inbox being inundated with spending alert emails? That’s the point. 

Intentional Review

Every spending alert email you receive will have a dollar amount included. Now it’s time to review all of those purchases. Did you realize you have the habit of ordering lunch every Wednesday? Maybe you find that you frequent the local coffee shop multiple times every weekend. You get charged every month for Netflix, Disney+, ESPN and Hulu. Did you even know that your entertainment spending was so high?

Conscious Spending

Now it’s time to think about your core values. Does grabbing a coffee on the weekends bring you joy? If the answer is yes, great. Keep doing that! Is lunch on Wednesdays simply because Tuesday evenings is your carpool night for kids’ basketball? Maybe you can start prepping two lunches on Monday night. Do you really watch programs on all those streaming services? Enough to warrant the $1k price tag for a year’s worth of subscriptions? 

Price Book

Now that you are conscious of your spending, are you sure it is consistent? Have you ever noticed that the same pack of diapers you buy every week is sometimes $12 and other times $18? You would if you kept a price book or use a free service like camelcamelcamel to track prices on Amazon. Next time those diapers are $12, buy more than one pack, which leads us to Megan’s next tip…

Buy in Bulk

This one is a well known way to spend less on items you use all the time that don’t have a short shelf life. Check the unit price on items. A bottle of 200 ibuprofen tablets might cost $15 and the bottle of 500 is $30 and you think “that’s double the price!” But the exact same pills will cost you $.09/each in the small bottle and $.06 in the larger container.

Return

Did you finally buy that headset you had your eye on? You waited a week, you watched the pricing, you did research beyond the ad you saw on social media and now it has arrived but it pinches your ear. Return it. It didn’t meet your expectations. Send it back, get your $75 refund and start over again. Don’t let the $75 collect dust next to your computer.

Spending less is all about awareness. Use these tips to avoid that dreaded question “where did all my money go?”

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

Technology is great. There are so many things people can do for themselves now that weren’t possible in the past. For instance, setting up an investment portfolio used to require a broker. The real-time ticker for stock prices was only available on the trading room floor. Funds required management and careful oversight. Now, however, there are countless apps, websites and tools allowing individuals with little to no financial planning experience to set up a successful portfolio and then forget about it.

“A common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools.” – Douglas Adams, from The Hitchhiker’s Guide to the Galaxy #5

So why hire a financial planner? Maybe you don’t, because the set it and forget it model works perfectly fine for you right now. However, the greatest value a financial planner can provide is helping you with all the things you didn’t know you wanted to know.

What does that mean? Matt Robison and I discuss the value of a financial planner in this week’s podcast. In particular, we explore:

• The difference between Financial Planning and Wealth Management
• Building confidence in your path to financial success
• What is a fiduciary and how will the responsibilities of that title help you with your financial plan?

The bottom line is that a financial planner knows the right questions to ask in order to provide you with the best strategy to fulfill your individual wealth goals. Beginning with goal identification and working through all the steps that you need to build a comprehensive financial portfolio, a financial planner has the knowledge, expertise and network to insure your financial freedom.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.