Getting your financial house in order


Edward Jones - Chad Choate, AAMS

Posted on

Jul 25, 2023


Florida - Sarasota, Bradenton & Charlotte Counties

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Many of us have found that our priorities and perspectives have shifted with recent events. Your financial strategy may need to adjust accordingly, and now may be the perfect opportunity to get your financial house a little more in order, putting you on better footing for whatever the future holds. Here are a few things to consider – pick and choose which apply most to your financial situation.

Build/Adjust your budget

  • Create your budget: Collect a few months' worth of bank and credit card statements so you can understand how much money you have to work with and where it's going.
  • Cancel subscriptions you're not using: These are generally small monthly charges but add up over time.
  • Check for lower insurance rates: Ensure you're getting the best rate without sacrificing coverage.
  • Refinance your mortgage: Your local lender should be able to compare your current terms to the rates available now to determine if you would benefit from refinancing your mortgage.

Tackle your debt

  • Add it all up: Make note of the type of debt (credit card, student loan, auto payment, etc.), the total amount owed, the minimum payment and the interest rate being charged.
  • Check your credit report: Mistakes on credit reports are incredibly common, so make sure everything is accurate and there are no negative errors that could result in you paying more for your debt.
  • Consolidate your debt: This can mean fewer payments with balances being charged lower interest rates. Be aware of any fees that get charged and the potential impact to your credit score.
  • Make a plan to pay it down: Determine how much money you have to reduce debt, and then make a plan for paying it down. This can be a particularly tough step, so don't hesitate to reach out to your financial advisor for help.
  • Read more about tackling your debt.

Safeguard your plan

  • Plan your emergency savings: Emergency savings help protect against an unexpected expense and/or loss of income. Even relatively small amounts of savings can help create financial stability.
  • Do an insurance checkup: Your financial advisor can explain the importance of different types of insurance (life, disability, long-term care, etc.) and determine if you have adequate coverage.
  • Set up a password manager: Having unique and secure passwords for different accounts, especially your financial accounts, creates more security to protect you from online threats.
  • Consider freezing your credit: Placing a freeze on your credit reports restricts access and makes it more difficult for identify thieves to open new accounts without your knowledge.
  • Read more about preparing for the unexpected.

Take advantage of market fluctuations

  • Invest toward future goals: Although past performance is not a guarantee of future results, pull-backs in the market have historically been a great time to invest. Your financial advisor can help you determine how best to put your money to work to help you meet your financial goals.
  • Rebalance: Large market swings can throw off the balance you want among your investments. Revisit your portfolio to ensure your investments are properly aligned to keep you on the right track.
  • Roth conversion: If you have a traditional retirement account, a down market or year in which you have lower income can be an opportune time if you've been wanting to convert it to a Roth retirement account. Talk with your financial advisor and tax professional to determine if this could be beneficial.
  • Tax loss harvesting: If you have taxable investments, selling at a loss can reduce your tax bill. It's best to talk with your financial advisor and tax professional to determine if this is an appropriate strategy.

Ensure your wishes are honored

  • Update beneficiaries: The beneficiaries for your financial accounts (bank, savings, retirement, and investments), as well as your insurance and annuity policies, instruct these institutions on who the funds should go to if something happens to you. Read more about beneficiary designations.
  • Create or update legal documents: Many legal professionals are taking appointments remotely, allowing you to create (or update) important documents like advanced directives, medical or financial power of attorney and a will from home.
  • Organize and share your legal documents: If you've already got your legal documents in place and updated, now is a good time to get them organized and share them with key people.
  • Your financial advisor or legal professional can help you with these important documents.

Start a conversation

  • Talk with your parent(s): Determine how your parents plan on meeting any long-term care needs they might have, who has their financial and medical powers of attorney, and their end-of-life wishes.
  • Teach your young children: Take some time to share money lessons with your children. Being transparent and open now will help them navigate their finances as adults.
  • Share with your adult children – At a minimum your children should understand who has health care and financial decision-making rights for you, as well as your end-of-life wishes.
  • Ask for help – We can help you navigate through the financial to-dos and conversations that can otherwise feel overwhelming. That's what we're here for!
  • Read more about family financial conversations.

Whether it's talking to older parents about their long-term care needs, your young kids about early money lessons or your adult children about your own plans, having those conversations now can help you be better prepared for the future. Not everything will apply to your situation, but taking even one small step today can help ensure your financial house is in order for whatever tomorrow holds.

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Time for tax-loss harvesting?

As you know, the gig economy has been booming over the past several years. If youre thinking of using your skills to take on a side gig, what should you do with the money youll make?Theres no one right answer for everyone, and the decisions you make should be based on your individual situation. And of course, you may simply need the extra income to support your lifestyle and pay the bills. But if you already have your cash flow in good shape, and you have some freedom with your gig money, consider these suggestions: Contribute more to your IRA. If you couldnt afford to contribute the maximum amount to your IRA, you may find it easier to do so when you have additional money coming in from a side gig. For the 2023 tax year, you can put in up to $6,500 to a traditional or Roth IRA, or $7,500 if youre 50 or older. (Starting in 2024, this extra $1,000 catch-up contribution amount may be indexed for inflation.) The amount you can contribute to a Roth IRA is reduced, and eventually eliminated, at certain income levels. Look for new investment opportunities. If youre already maxing out your IRA, you might be able to find other investment possibilities for your side gig money. For example, if you have young children, perhaps you could use some of the money to invest in a 529 education savings plan. A 529 plan offers potential tax advantages and can be used for college, qualified trade school programs, and possibly some K-12 expenses. Please keep in mind that potential tax advantages will vary from state to state. Build an emergency fund. Life is full of unexpected events and some can be quite expensive. What if you needed a major car repair or required a medical procedure that wasnt totally covered by your health insurance? Would you have the cash available to pay these bills? If not, would you be forced to dip into your IRA or 401(k)? This might not be a good move, as it could incur taxes and penalties, and deprive you of resources you might eventually need for retirement. Thats why you might want to use your gig earnings to help fund an emergency fund containing several months worth of living expenses, with the money kept in a liquid, low-risk account. To avoid being tempted to dip into your emergency fund, you may want to keep it separate from your daily spending accounts.   Pay down debts. Most of us will always carry some debts, but we can usually find ways to include the bigger ones mortgage, car payments and so on into our monthly budgets. Its often the smaller debt payments, frequently associated with high-interest-rate credit cards, that cause us the most trouble, in terms of affecting our cash flow. If you can use some of your side gig money to pay down these types of debts, you could possibly ease some of the financial stress you might be feeling. And instead of directing money to pay for things you purchased in the past, you could use the funds to invest for your future.As weve seen, your side gig money could open several promising windows of opportunity so take a look through all of them. Chad Choate III, AAMS828 3rd Avenue WestBradenton, FL This article was written by Edward Jones for use by your local Edward Jones Financial Advisor. Edward Jones, Member SIPC

Time for tax-loss harvesting?

Its been a bumpy year for the financial markets which means that some of your investments may have underperformed or lost value. Can you use these losses to your advantage?Its possible. If you have some investments that have lost value, you could sell them to offset taxable capital gains from other investments. If your losses exceed gains for the year, you could use the remaining losses to offset up to $3,000 of ordinary income. And any amount over $3,000 can be carried forward to offset gains in future years. This tax-loss harvesting can be advantageous if you plan to sell investments that youve held in taxable accounts for years and that have grown significantly in value. And you might receive some gains even if you take no action yourself. For example, when you own mutual funds, the fund manager can decide to sell stocks or other investments within the funds portfolio and then pay you a portion of the proceeds. These payments, known as capital gains distributions, are taxable to you whether you take them as cash or reinvest them back into the fund. Still, despite the possible tax benefits of selling investments whose price has fallen, you need to consider carefully whether such a move is in your best interest. If an investment has a clear place in your holdings, and it offers good business fundamentals and favorable prospects, you might not want to sell it just because its value has dropped. On the other hand, if the investments youre thinking of selling are quite similar to others you own, it might make sense to sell, take the tax loss and then use the proceeds of the sale to purchase new investments that can help fill any gaps in your portfolio. If you do sell an investment and reinvest the funds, youll want to be sure your new investment is different in nature from the one you sold. Otherwise, you could risk triggering the wash sale rule, which states that if you sell an investment at a loss and buy the same or a substantially identical investment within 30 days before or after the sale, the loss is generally disallowed for income tax purposes.Heres one more point to keep in mind about tax-loss harvesting: Youll need to take into account just how long youve held the investments youre considering selling. Thats because long-term losses are first applied against long-term gains, while short-term losses are first applied against short-term gains. (Long-term is defined as more than a year; short-term is one year or less.) If you have excess losses in one category, you can then apply them to gains of either type. Long-term capital gains are taxed at 0%, 15% or 20%, depending on your income, while short-term gains are taxed at your ordinary income tax rate. So, from a tax perspective, taking short-term losses could provide greater benefits if your tax rate is higher than the highest capital gains rate.Youll want to contact your tax advisor to determine whether tax-loss harvesting is appropriate for your situation  and youll need to do it soon because the deadline is Dec. 31. But whether you pursue this technique this year or not, you may want to keep it in mind for the future because youll always have investment tax issues to consider.   Chad Choate III, AAMS828 3rd Avenue WestBradenton, FL  This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.Edward Jones, Member SIPC

Do your investments match your goals?

As you go through life, youll have various financial goals and to achieve them, youll need to invest. But just recognizing the need to invest is not as useful as matching specific types of accounts or investments with specific goals. How can you make these connections?Lets look at some common goals and how they could possibly be met with appropriate accounts and investments: Saving for a down payment on a house  When youre saving for a down payment, you want a certain amount of money available at a certain time so, for this goal, you wont want to take too much risk. Consequently, you might consider investing in certificates of deposit (CDs), which will pay you regular interest payments and return your principal when the CDs mature. CDs are issued in a range of maturities, from one month to 10 years. Other vehicles you might consider are money market accounts or other cash equivalents.   Saving for a childs education  If you have children, and youd like to help them pay for some form of higher education, you may want to consider a 529 education savings plan. Any earnings growth in a 529 plan is federally tax free, provided the withdrawals are used for qualified education expenses, and you may also receive state tax benefits. A 529 plan can be used for college, approved trade school programs, student loan repayments and some K-12 costs. And if the child youve named as a beneficiary chooses not to continue their education, and doesnt need the money in a 529 plan, you can generally switch beneficiaries to another immediate family member.  Saving for retirement  This is the one goal that will remain consistent throughout your working years  after all, you could spend two or even three decades in retirement, so youll need to accumulate as many financial resources as you can to pay for those years. Fortunately, you likely have access to several good retirement-savings vehicles. If you work for a business, you might have a 401(k) plan, which offers you the chance to put away money on a tax-deferred basis. (If you have a Roth option in your 401(k), your withdrawals can be tax free, although, unlike a traditional 401(k), your contributions wont lower your taxable income.) If you work for a public school or a nonprofit organization, you may be able to participate in a 403(b) plan, which is quite similar to a 401(k), and the same is true if you work for a state or local government, where you might have a 457(b) plan. And even if you invest in any of these plans, you can probably also contribute to an IRA, which gives you another chance to invest on a tax-deferred basis (or tax-free basis, if youre eligible for a Roth IRA). Try to take full advantage of whatever retirement plans are available to you.Here's one final point to keep in mind: While some investments and accounts are appropriate for certain goals, they may not necessarily be suitable for your individual situation  so keep all your options in mind and take the steps that are right for you.  Chad Choate III, AAMS828 3rd Avenue WestBradenton, FL This article was written by Edward Jones for use by your local Edward Jones Financial Advisor. Edward Jones, Member SIPC 

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Edward Jones - Chad Choate, AAMS

Financial Advisor 828 3rd Ave. W., Bradenton, Florida, 34205

Experience and Background I am a financial advisor in Bradenton, FL, and began my career with Edward Jones in 2017. As a financial advisor, I want to find out what's important to you and help you build personalized strategies to achieve your goals. As a lifelong Manatee County resident, I graduated from the University of South Florida and was a teacher in Manatee County before joining Edward Jones. My driving force is to change people's lives in a positive way, and what better place than my home to do that. Whether you're planning for retirement, saving for college for children or grandchildren or just trying to protect the financial future of the ones you care for the most, we can work together to develop specific strategies to help you achieve your goals. We will also monitor your progress to help make sure you stay on track or determine if any adjustments need to be made. Throughout it all, we're dedicated to providing you with top-notch client service. But we're not alone. Thousands of people and advanced technology support from our office can help ensure you receive the most current and comprehensive guidance. In addition, we welcome the opportunity to work with your attorney, accountant and other trusted professionals to deliver a comprehensive strategy that leverages everyone's expertise. Working together, we can help you develop a complete, tailored strategy to help you achieve your financial goals. I currently volunteer with the Manatee Hurricane football Broadcast and Booster Club, serve on my church's trustees council and have previously served as a leader in Young Life. I am a member of the Manatee Chamber of Commerce and an alumnus of their Leadership Manatee program. I have been married to my childhood sweetheart, Ashley, for 15 years and we have a son, Wesley, and daughter, Camryn. We enjoy watching our children play their sports and traveling as a family.