Life and Financial Planning by The Eagle Advertising Department

P L A N N I N G

Importance of Entity Choice

Financial Tips When Untying the Knot

FEBRUARY 2011

Life & Financial Planning â&#x20AC;˘ February 27, 2011

Life&Financial Insurance for Beginners

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10 T IPS to Jump-Start

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Life & Financial Planning • February 27, 2011

Life& Financial

1729 Briarcrest, Bryan, Texas 77802 Publisher, Jim Wilson Director of Sales and Marketing, Ron Lee

P L A N N I N G

Display Advertising Manager, Joanne R. Patranella 979.731.4719 • joanne.patranella@theeagle.com

Letter from the President of the Brazos Valley Chapter TSCPA ...................................... 3

Creative Services Manager, Patrick Danielczyk 979.731.4706 • patrick.danielczyk@theeagle.com

Importance of Entity Choice ............................................. 4 Pop Quiz: Test Your Financial Savvy .................................. 5

Special Projects Coordinator, Dawn Goodall 979.731.4738 • dawn.goodall@theeagle.com

Four Financial Tips When Untying the Knot ...................... 6

Special Projects Editor, Billy Mau 979.731.4704 • billy.mau@theeagle.com

10 Tips to Jump-Start Your Savings .................................. 8 Insurance for Beginners .................................................. 10

www.theeagle.com

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Credit Check .................................................................... 11

Lyn Kuciemba, CPA

nce thought of as just a number cruncher or tax preparer, the CPA, or Certified Public Accountant, is now one of the most widely recognized and highly trusted designations in the business world. I like to tell students considering a career in accounting that CPAs are masters of the business universe. CPAs can boost knowledge of financial literacy, strengthen an investment portfolio, shepherd a business through a down economy, and save tax dollars. They work in the Brazos Valley with all sizes of businesses, government entities, non-profit organizations, and public accounting firms. CPAs distinguish themselves by the four E’s: Education, Examination,

Experience and Ethics. Once a CPA candidate has achieved demanding education requirements, the candidate is approved to sit for the CPA exam. This rigorous exam tests the candidate’s accounting, tax, and business knowledge and skills. Passing the exam is not enough; then the candidate must also complete the stringent accounting work experience requirements. The education and experience do not end with a CPA license. CPAs are committed to lifelong learning and continue to update their skills through 40 hours of continuing education every year. A demanding Code of Ethics governs CPAs and is administered by the Texas State Board of Public Accountancy (TSBPA) and the Texas Society of Certified Public Accountants (TSCPA). The TSBPA is the CPA licensing and oversight body

of the State of Texas while the TSCPA is a professional organization representing CPAs in 20 chapters throughout Texas. The local chapter, The Brazos Valley Chapter of the TSCPA, is comprised of 256 CPAs living and working in the area. The members of the chapter are active in their communities by presenting public service announcements about financial literacy and tax topics, visiting with students to talk about accounting careers and personal finance, and volunteer at local charities providing time and talents. CPAs in the Brazos Valley can offer the area’s residents and businesses a variety of consulting and business services. They have the resources to provide superior tax services and planning for individuals, trusts, non-profits, and businesses including

corporations, S corporations, partnerships, LLCs and sole proprietorships. CPAs are uniquely qualified to provide accurate, practical information about business and personal finance issues such as financial, retirement, and estate planning, investment advice, business strategies, diversification, valuation, and personnel. Audit services, developing effective accounting systems, and preparing financial statements are other services CPAs offer. Before engaging a CPA to service personal or business needs, consider speaking with colleagues or other trusted professionals such as bankers, investment advisors, or attorneys about CPAs they know and trust. Make sure the CPA is licensed in Texas. TSBPA provides a license lookup function on their website, www.tsbpa. state.tx.us. Ask the CPA what

professional organizations the CPA belongs to and how active he or she is in those organizations. Many of these organizations require adherence to technical and professional standards, thereby helping to ensure the quality of the CPA’s services. Following these steps will assure that the CPA is a professional with the essential level of training and experience. Keep in mind that establishing a long-term relationship will allow the CPA to learn your business or personal needs inside and out. This will permit the CPA to provide trusted advice and guidance on major decisions and transactions and perhaps become a master of your business universe.

Life & Financial Planning • February 27, 2011

President, Brazos Valley Chapter TSCPA

Lyn Kuciemba, CPA President, Brazos Valley Chapter TSCPA

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Life & Financial Planning • February 27, 2011 The Eagle | theeagle.com

Importance of Entity Choice

B y J o d i G . J o n e s , C PA M e m b e r, B r a z o s Va l l e y C h a p t e r T S C PA

hoosing a business entity used to be a relatively painless and simple process. If you needed liability protection, you incorporated; otherwise you operated as a sole proprietor or a general partnership. Now you need to understand not only the federal implications of your entity choice but also state issues. Does this choice matter? YES. Your decision has an impact on numerous business and tax consequences, including protection of the owners against outside liabilities, shielding of personal assets from business risk, the ability of the business to obtain financing from commercial lenders, transferability of interests, the ability to qualify for certain tax benefits, the building of value and exit strategies, and the ability to integrate with your estate plan. You need to also consider the cost of formation and maintaining the entity, the ease or difficulty in keeping records in compliance with your entity’s structure, and any trade regulatory requirements imposed. The current choices in the state of Texas are: • sole proprietor • general partnership • limited partnership • limited liability partnership • limited liability company • series limited liability company • S corporation • C corporation. Following is a brief summary of each type of entity. Sole Proprietor – generally receive no liability protection, taxation of income is at the individual level and is subject to self employment tax of 15.3% in addition to the individual federal income tax, relatively easy to maintain, only one

owner, no additional federal or state tax returns. General Partnership – generally all partners are jointly and severally liable, taxation of income is at the individual level and are subject to self employment tax of 15.3% in addition to the individual federal income tax, relatively easy to maintain, 2 or more partners, additional federal business tax return, and generally no state tax return. Limited Partnership – must have one general partner who is liable for all debts, limited partners are not personally liable (provided they do not participate in management), taxation of income is at the individual level and rates depend upon participation in entity (generally, a limited partner is not subject to self employment tax unless they receive a guaranteed payment for services), complex to maintain, 2 or more partners, additional federal and state business tax returns. Limited Liability Partnership – a general partnership with attributes similar to a limited partnership, added liability protection from other partners’ negligence, wrongful acts, or misconduct committed in the course of business. Limited Liability Company – generally provides liability protection to all members, taxation of income and federal return requirement depends upon number of owners (single or multiple), range from easy to complex to maintain, 1 or more members, additional state business tax return. Series Limited Liability Company – similar to a limited liability company with the added ability to partition assets and corresponding debts for additional liability

protection, complex to maintain. S Corporation – generally provides liability protection, taxation of income is at the individual level and is subject to individual tax rates, moderate to maintain, 1-100 shareholders, additional federal and state business tax returns. C Corporation – generally provides liability protection, taxation at entity level, moderate to complex to maintain, one or more stockholders, additional federal and state business tax returns. Each business owner’s situation is unique and the

choice of entity in each situation can only be determined after understanding all of the goals and plans of the particular owner(s). Consultation with your CPA and attorney are imperative in order to make the best decision for your particular facts and circumstances. It is important to discuss these options prior to formation to avoid costly mistakes and maximize the benefits.

Pop Quiz:

Meet Joan and Joyce of Watercrest at Bryan

Test Your Financial Savvy

1. According to actuarial charts, how many years can you expect to live? 2. At what age is a worker born between 1943 and 1954 eligible for full social security benefits? A. 62 B. 64 C. 66 D. 68 3. What percent of a retiree’s income will be spent on healthcare, on average? A. 5 percent B. 10 percent C. 15 percent D. 20 percent 4. True or False: Income taxes go away after a worker retires. 5. How many years, on average, will a U.S. citizen spend in retirement? A. 10 B. 15 C. 20 D. 25 6. What percent of early baby boomers, age 56 to 62, are expected to run out of money to cover basic retirement living expenses? A. 17 percent B. 23 percent C. 42 percent D. 47 percent

7. True or False: If you die without a will, your surviving spouse will be granted all or most of your assets. 8. Insurance is a way of: A. saving for a rainy day B. preventing unplanned events C. handling risk D. all of the above 9. Your credit score is: A. a snapshot of your credit risk B. an objective measurement used by lenders C. available to you on request D. all of the above 10. You can improve your credit rating by A. correcting inaccurate information as soon as possible B. disputing negative information C. correcting only the worst report D. asking that negative information not be included in your credit report © CTW Features

HOW DO YOU RATE? 9 CORRECT: Close... but we are not playing horseshoes! 8 OR LESS CORRECT: It’s time to do some homework!

Where did you live before moving to Watercrest at Bryan? Q Joan: Kenosha, Wisconsin. Whether you come from near or far, Watercrest at

Bryan is the place to be. Joyce: I lived in Bryan at the Briarcrest Country Club. Why did you choose Watercrest at Bryan? Joan: My son lives close and noticed it during the building process. I lived in Wisconsin, but wanted to move closer. As soon as I walked into the lobby, I knew I wanted to move here right away! I t’s beautiful on the inside and out, and it’s a healthy atmosphere. Watercrest feeds my body, soul and mind! Joyce: It’s beautiful and everyone is so friendly. I needed to downsize and once I visited, I didn’t really even need to think about it! The employees are wonderful as well. How was your move-in experience? Joan: I moved in on a weekend. My son and his ﬁancé helped me move in. I came from a long way away; but once I got here, there were no problems! Joyce: The staff had a mover and things went very smoothly. My pictures and stained glass were hung for me. They did anything and everything! What do you like best about living at Watercrest at Bryan? Joan: I love all the people. People in the south are so much friendlier! I love participating in the activities with all the ladies, especially bingo. Everyone is so active and it’s nice to have people with similar interests around you! Joyce: I like the companionship. I am a big bridge player and we have a pretty good group that plays. I love that Watercrest gives me all the opportunities to be as old or young as I want to be! Get to know Joan and Joyce of Watercrest and experience the newest in active adult living. A gated community in the prestigious Park Hudson district, Watercrest at Bryan is a destination for those seeking a spirited,care-free lifestyle featuring luxurious apartment homes;customizable lifestyle service packages; optional meal and housekeeping plans; plus events, trips, dances, and get-togethers. Call about our free moving services. Prices starting at $1,100.

Q Q Q

4. False. Pre-tax money a worker contributed to a retirement plan is subject 3. D: 20 percent 2. C: 66 years old

Call or visit us at: 979-703-7088 www.watercrestbryan.com manager@watercrestbryan.com 3801 East Crest Drive Bryan, Texas 77802 (near the corner of University Drive and Boonville Road)

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10 CORRECT: Warren Buffet is your new best friend!

Q&A with Joan Koski and Joyce Weedon

Life & Financial Planning • February 27, 2011

Procrastination is one of the main ways the average Joe and Jane get in trouble with their finances. Break the bad habit - starting now! Answer these basic questions and see how you rate.

WATERCR E ST

AT B RYA N A C T I V E A D U LT L I V I N G

2010 Best of Brazos Winner — Active Adult Living Community

1. The U.S. Social Security Administration estimates that a man reaching age 65 today can expect to live, on average, until age 83. A woman turning age 65 today can expect to live until age 85. To calculate your expected lifespan, go to: http://www.ssa.gov/planners/ lifeexpectancy.htm

10. A: Correcting inaccurate information as soon as possible 9. D: All of the above 8. C: Handling risk 7. False. Every U.S. state has unique laws governing who will own the property. To calculate the outcome in your state, go to www.mystatewill.com 6. D: 47 percent 5. C: 20 years to income taxes when it’s withdrawn during retirement years.

Life & Financial Planning • February 27, 2011 The Eagle | theeagle.com

Four Financial Tips When Untying the Knot B y Tr a c y B . S te w a r t , C PA, P F S, C FF, C DFA, C FP ®

ew couples begin their marriage setting aside money to pay for their divorce. If you aren’t one of them, here are some tips to get a jump on the financial areas of an impending divorce. 1. Fast, Effective Divorce Divorce methods range from fast & cheap to slow & expensive. The least expensive and quickest way is to strike effective agreements with your spouse and hire an attorney to write it up. Other options vary in speed and cost. A traditional litigated divorce ending in trial is the most

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drawn-out and expensive of options. Collaborative law divorce has been around for several years but is new to Brazos Valley. There are a few factors that affect the velocity of a collaborative divorce. • Communication is the key component to divorce expense. • An imbalance of financial knowledge can slow down the divorce. Working with a financial advisor can speed up that learning curve. • This process stands on the principles of transparency and honesty. The professionals will keep the process honest

even if one spouse is not. • If the property is complex, such as family limited partnerships, family trusts, or a family business, the process will provide flexible solutions that are not available in a traditional litigated divorce. • You won’t be required to attend hearings in court. All progress is made in private meetings that are scheduled to your calendar. For couples with children, an effective divorce considers future parenting questions. Local collaborative law attorney Shane Stibora says, “People

2. Make a List When facing divorce, the first financial thing to do is to create a list of what you own and what you owe --an inventory. Group the list into categories such as real estate, bank accounts, investments, retirement accounts, vehicles, other property and debts. Do not include household and personal items unless they are valuable. Assemble documents that show the values for items on your list. You can find vehicle values at Kelley Blue Book. Real estate property values can be estimated with information from your county appraisal district. The values of most other accounts can be found on the most recent statements. Businesses and pensions are not easily valued. You will need experts to help with those.

4. Alimony vs. Child Support A frequent misconception is that child support is tax deductible. Alimony is tax deductible to the payer and taxable to the recipient. Child support is neither. Determining whether payments are alimony or child support requires more than simply stating this in the divorce papers. You must meet the IRS rules that you can find in IRS Publication 504 “Divorced and Separated Individuals”. If alimony doesn’t comply with these rules, alimony recapture is possible, which triggers income tax on part of the alimony already paid. This is not a do-it-yourself project; consult a CPA to review your proposed settlement. Divorce is a very difficult decision. Choose divorce only after counseling and serious personal reflection of the impact on your family. If it is the most reasonable step for you, immediately begin to educate yourself on your financial issues.

Financial Review New questions. New plans. New opportunities. Your life is constantly changing. At Wells Fargo, we’re with you to help your finances keeppacewithyourfinancialgoals.Wecanoffercustomizedfinancialguidance that’s tailored to where you are now and help you prepare for what’s ahead for you and your family. Our new accounts, special discounts and services can help you save for specific goals or a rainy day. We know it’s important for you to be ready for life’s changes. We’re with you when you hold more than just your financial future in your hands.

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3. Make Another List Your next financial step is to get a reality grip on your living expenses. Understand your family’s current living expenses. Knowing your past expenses helps you move toward your post divorce cash flow. • Don’t guess. Years of experience in this business has taught me that people who estimate or short cut this process end up with a budget

number that is about 50% of their true expenses. Months after your divorce you could be in for a nasty surprise when you realize your budget wasn’t realistic. • Break it Up. Separate your family’s expenses into three budgets: yours, your spouse’s and your children’s expenses. Then adjust the expenses for anticipated postdivorce lifestyles. This is important for cash flow planning and for agreeing on child support. In collaborative law cases, couples look at what the children actually cost and agree on how to divide the responsibility.

Life & Financial Planning • February 27, 2011

traditionally think of a divorce as dividing the marital assets and child support, but these do not encompass the complexities of today’s families. When do kids get a vehicle? Cell phones? Facebook? Twitter? Who pays for college? Grad School? The collaborative process can help the couple find solutions to these parenting concerns.” For more information, go to www.collablawtexas.com.

Life & Financial Planning • February 27, 2011

10 Tips to Jump-Start Your Savings Las t w e c h e c k e d t h e re wa s n o b a i l o u t m o n e y for reg ul a r f o l ks . Are y o u s a v i n g enou g h ? Dawn Klingensmith, CTW features

RULE OF THUMB: Everyone should have six months’ worth of living expenses tucked away in savings. Reality: Few folks do, and the proverbial “rainy day” looms. Remedy: Start setting aside money today. Here are 10 ways to save before you get soaked.

1 The Eagle | theeagle.com

TIP NO.

Set a budget and stick to it. “Budgeting is the No. 1 surefire

way to save money,” says Ethan Ewing, president of Bills.com, San Mateo, Calif. Set specific goals, such as lowering grocery bills, and budget accordingly.

Carry cash. People who count out bills instead of paying with debit or credit tend to spend less and make fewer unplanned purchases.

2 TIP NO.

START EARLY, SAVE MORE SAVED $2,000 PER YEAR Kept money in account until age 65

Optimize your cell phone plan. “I like Billshrink. com, where you can find better credit cards and cell phone plans to suit your individual needs,” says Ramit Sethi, author and founder of iwillteachyoutoberich.com, San Francisco. TIP NO.

4 TIP NO.

Buy a la carte. This seems counterintuitive,

but it may be cheaper to cancel subscriptions and memberships and pay as you go instead. In a study of three fitness clubs, “Two researchers from Stanford and Berkeley showed that people overestimate how much they’ll use their gym membership by over 70 percent,” Sethi says. Members who chose a monthly fee of around $70 attended an average of 4.3 times per month. That comes out to more than $17 per visit,

AMOUNT INVESTED $0

$20K

$40K

$60K

INTEREST EARNED

$80K

$100K

$120K $140K

$160K

FINAL TOTAL

$180K $200K $220K $240K $260K

$107,209

From age 20 to age 65

$251,578 $152,288

From age 30 to age 65 $85,688

From age 40 to age 65 8

Redeem reward points. If your credit card offers them, check your statement to see how many you have and then go to the rewards website to find out if it’s possible to TIP NO.

The longer money is invested, the more time it has to grow, thanks to compound interest. See how a conservative four percent annual rate of return can make a small stash grow big over time: steps to fix any errors you may find. © CTW Features

From age 20 through age 30

From age 50 to age 65

whereas a day pass only cost $10. Likewise, downloading your favorite TV shows off the Internet for a per-episode fee might be cheaper than cable.

$41,015

Source: American Savings Education Council; Employee Benefit Research Institute

convert them into cash or gift cards. Some credit cards double the value of rewards at specific retailers, Ewing says.

Negotiate car insurance. Once a year, compare different providers’ rates. Even if you stay with the same company, you likely can save money by adjusting your deductible; unloading unnecessary services (such as roadside assistance if you’re an AAA member); or asking about repeat-customer, lowmileage and safe-occupation

TIP NO.

8 windfalls.

Sell stuff. Auction off unneeded items on eBay or hold a yard sale. Sock away

When you receive extra cash – such as a tax return, bonus, birthday gift or proceeds from your yard sale – save it rather than indulging in a splurge.

9 TIP NO.

TIP NO.

Eliminate temptation: unsubscribe. Many retailers send special offers via e-mail. If you’re the sort of shopper easily tempted to overspend on an impulse, click on the “unsubscribe” link at the bottom of such e-mails to stop receiving them. TIP NO.

IN OVER YOUR HEAD?

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OFFERING A FULL RANGE OF ACCOUNTING SERVICES Accounting and Auditing Tax Preparation and Planning Accounting Software Consulting Woody Thompson, CPA Ronnie Craig, CPA Dillard Leverkuhn, CPA -------------------------------Peggy Adcock, CPA Sandy Beavers, CPA Alline Briers, CPA

Gay Vick Craig, CPA Emily Hogan, CPA Lyn Kuciemba, CPA James Larkin, CPA M. Neal Lee, CPA Alice Monroe, CPA Jamie Reeves, CPA Marian Rose Varisco, CPA

Life & Financial Planning • February 27, 2011

Ferret out TIP NO. special offers. “Any time you make a purchase from a major retailer – a new computer, flowers, furniture – check out your credit card and car insurance websites for deals,” Sethi says. “My credit card gives me discounts of up to 30 percent off for things I’m going to purchase anyway.”

discounts. Use Sethi’s negotiating script:tinyurl. com/carinsurance1.

from her new book, “Shoo, Jimmy Choo!” (Sterling, 2010).

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Financial journalist Catey Hill, selfdescribed shoe addict and money editor of NYDailyNews.com, says an overspending habit is hard to admit to and even harder to curb, but imperative nonetheless. “Until you control how much you spend, you’re never going to have enough money,” she says. When Hill realized her irresponsible spending habits, she started a “cash-only diet” and wrapped a piece of paper around her credit card that read, “Do I need this?” Here are signs you may be in need of your own spending diet

• You have no concrete plan for a secure financial future. • You have significant debt and no solid plan to get out of it. • Less than 13 percent of your income goes to your retirement savings (or worse, you haven’t even thought of saving for retirement). • You have only a small in-case-ofemergency fund, or none at all. • You pay only the minimum, or a little extra, toward your credit card every month. • You don’t understand the difference between a Roth IRA, a traditional IRA and a 401(k)… • … Nor do you know the best ways to invest in these retirement plans. • You get a huge income tax refund each year. • You don’t have the insurance you need. • You don’t have a clue about where your money goes each month (but it sure goes somewhere).

Barbara Pratt ��

Source: “Shoo, Jimmy Choo: The Modern Girl’s Guide to Spending Less and Saving More,” by Catey Hill (Sterling, 2010)

Life & Financial Planning • February 27, 2011 The Eagle | theeagle.com

Insurance for Beginners G en u in e f i n a n c i a l s e c uri ty o fte n i ncl ud e s a f e w s a f e t y n e t s . H e re ’s an intro to insurance opt ion s t o g e t o n t h e ro a d to fe e l i ng se cure . Marilyn Kennedy Melia, CTW features

t doesn’t matter if every penny is pinched. A calamity can arrive unannounced and wipe out any family’s financial security. The only way to ensure protection is to start paying attention to the invisible risks that could lie ahead. It’s not easy, though, to get a focus on the insurance protection a family really needs – and can afford. Here, experts share tips for those who want to guard their financial security – without wasting a penny: Life Insurance Even the financially unsophisticated have heard about life insurance, an insurance policy that pays a sum to a spouse, or provides for children or other dependents should one suddenly pass away. In fact, that’s the central reason to buy life insurance: to replace the income dependents would need, says James Hunt, a former Vermont insurance commissioner who now analyzes life policies for the Consumer Federation of America. “Term” life policies are the least expensive, which is why it’s often the choice of young adults who have responsibilities, such as kids and a mortgage, but not a lot of extra cash, Hunt says. The premiums for term life insurance only pay out should you die during the specified period. “Permanent” life insurance pegs a portion of each premium payment as savings, which the insured can borrow against – or in some instances, withdraw from – to pay for certain expenses, explains Catherine Theroux, a spokeswoman for LIMRA, an insurance research group. Permanent insurance comes in two main types: whole

and universal. Premiums for whole life policies tend to stay level, while premiums for universal policies allow you to elect to pay certain minimums, with a lesser investment buildup over time. Your Action Plan Contact agents in your area to investigate possible prices and coverage plans. Check with current car or homeowner’s insurance companies to see if they provide life policies as well. Speak to your employer’s human resources department about potential life policies available as part of its group benefits. Disability Income Insurance Death is certain. But none of us know whether an accident or serious illness will prevent us from working for a prolonged period. According to the Insurance Information Institute, 43 percent of workers between ages 40 and 65 will suffer a disability that causes an earnings disruption of at least 90 days. The Social Security system has a disability benefit program, and many lower income workers depend on this, Hunt says. Some employers also offer disability coverage as part of their group benefits. For those who are high earners but do not have an employer-based disability plan, neglecting to purchase private disability coverage could mean a dramatic change in lifestyle should they be injured or unable to work and their paychecks stop, says Jeffrey Shaw, executive director of the Life Insurers Council. Purchasing a plan on your own is similar to buying term life; there are various coverage levels and prices. Your Action Plan Talk to your employer’s

human resources department about what disability policies are available as part of the group benefits. Your state’s insurance department will have names of agencies and companies offering policies in your state; find them at www2. iii.org/stateorganizations/. Visit the Social Security website at www.ssa.gov/ disability/ to learn more about disability programs. Long-Term Care Insurance In our aging society, nearly everyone knows

someone who needs years of nursing care, which can quickly put a drain on life savings. Fortunately, as long-term care needs become more prevalent, insurers are offering more ways to insure against the cost. For instance, many states now participate in a “Partnership for LongTerm Care” program – a cooperative program between state governments and insurers that “is one of the best-kept secrets,” says Jesse Slome, executive director of the American Association for Long-Term Care Insurance. The partnership programs allow more affordable long-term care insurance and provide special asset protection. Private insurance agents sell the partnership plan and traditional longterm care plans. The cost of long-term care plans varies, depending on the amount of coverage and whether home, assistedliving and nursing care are included. Your Action Plan To find out if your state has a LTC partnership, visit http://www.aaltci.org/longerm-care-insurance/.

Blending Health Insurance and Savings Paying for health insurance and saving are two of the biggest financial challenges families face. If you purchase a highdeductible health insurance plan – either on your own or through your employer – you may qualify for a health savings account, paying less for premiums and building savings. Your employer’s benefit manager or a health insurance provider can help with details, but briefly, because deductibles are high – for 2010 and 2011 it’s at least $2,400 for families – monthly premiums are lower. An employee can contribute to a tax-advantaged savings account and tap it to pay the deductible when needed, or keep on saving, perhaps for retirement health expenses, explains Roy Ramthun, a fellow at the Council for Affordable Health Insurance. Your Action Plan Review your health insurance plan and/or speak with your employer’s benefits manager to see if health savings accounts are available as part of your plan.

1470 Copperfield Parkway • College Station, TX 77845 (979)846-8980 • www.ssccpa.com

For better or worse, there’s a number associated with your name. Make sure your credit score is all it can be.

Dawn Klingensmith, CTW features

from now on. “Time is your best friend. Treat your debt obligations responsibly and your score will start to reflect that,” Cunningham says. Although closing unused accounts may seem like a good idea, “That’s shooting yourself in the foot,” Cunningham says. The amount of your total debt relative to your total available credit has a significant impact on your score. Ten thousand dollars in credit card debt looks better if your line of credit is $100,000 vs. $15,000, she says, because you’re not as close to maxing out your accounts. The length of your credit history also affects your score, so don’t close your oldest accounts. Use those cards occasionally to keep the accounts active and avoid cancellation. Borrowers should pay off any overdue bills or old debts they forgot about, and pay down high credit card balances to improve their credit utilization ratio (how much of their available credit line they owe.) Credit card balances in excess of 50 percent of their limits will raise eyebrows, while 30 percent or lower is seen as responsible, says Cunningham. Credit bureaus generally don’t like to see too many inquiries about your credit history because it suggests you are desperate for money. However, the bureaus realize that if you’re shopping around for a major purchase, such as car, you may go to several dealerships in search of the best deal. Each of those places will check your credit to determine the interest rate for which you are qualified. Multiple credit checks from dealerships will be reported as a single inquiry provided the inquiries all occur within a 14-day period. “It’s critical that you have your ducks in a row so you can do your shopping

within that time frame,” Cunningham says. If you end up shopping over a longer period, bring a printout of your credit report and see what dealerships have to say before they check your credit, since each inquiry can decrease your score by five points, says financial planner Joel J. Ohman, founder of CreditCardChaser.com, a credit card comparison site that promotes responsible credit management. Only time and discipline can mend a damaged credit record. “Don’t fall for credit doctoring or credit repair services. Start treating your debt obligations responsibly, and over time, your credit report will improve,” Cunningham says.

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ow more than ever, it pays to have an excellent credit score. The best interest rates on auto loans go to folks with scores of 730 and above. And 60 percent of employers pull credit reports for some or all of their prospective hires, according to the survey by the Society of Human Resource Management. The rationale: people with a pattern of mismanaging their own finances exhibit poor judgment, an indication that they may lack the maturity and sense of responsibility it takes to be a trusted employee. Don’t let a low number hold you back in life. It can take months or even years to boost a low score, but there are steps you can take to gain a few points and perhaps qualify for a lower interest rate. Get your credit history for free from annualcreditreport.com – the only authorized source for the free credit report that’s yours by law. The report does not include your credit score, which costs a few dollars to obtain. What you’re looking for is negative information that could be lowering your score. Correct any errors or inaccuracies, such as accounts that aren’t yours or old information that should no longer have any bearing on your score. Under the Fair Credit Reporting Act, credit bureaus must investigate any disputed items and remove them from your credit report if they cannot be verified. Though there is no quick fix for poor credit, paying down credit card balances can boost your score, says Gail Cunningham, vice president of public relations, National Foundation for Credit Counseling. A history of late payments will hurt you, but you can start to mend your credit by paying every bill on time

Life & Financial Planning • February 27, 2011

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Life & Financial Planning • February 27, 2011

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Foster Ullmann 979.774.1710 foster.ullmann@primevest.com Nan Reichel 979.774.1711 nan.reichel@primevest.com Brad Muchow 979.680.5569 brad.muchow@primevest.com

These days, reaching your financial goals takes a team you can trust, available at a bank that you know. With PrimeVest at First Victoria, you can count on the full array of quality financial services, plus access to long-term investment solutions offered by PrimeVest Financial Services, one of the nation’s leading bank-based broker/dealers. PrimeVest team members Foster Ullmann, Nan Reichel and Brad Muchow work here at First Victoria to help you build the right financial mix for today and tomorrow. Give us a call, and the PrimeVest representative of your choice will meet with you at the Banking Center that is most convenient to you. See how we can improve your financial strategy.

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