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Well, I am currently sitting on my porch but I was supposed to be in Texas right now. If you read last week's email newsletter I told you all about The Brimm Retreat I was going to and I was really excited to learn and connect with new people. I was really excited about it BUT my son's first prom was Saturday and I was going to have to leave on Saturday so I was going to miss prom. The closer the day came, the more my heart hurt at the thought of missing prom. And I did what momma's do, I canceled my trip. When I was laid up about a month ago with my neck and headache issues, I had a lot of time to think and I thought long and hard about what is important to me, what I want to spend my days doing, as well as things I want to do and accomplish. The thing is, my son will be graduating in two short years and right now soaking up every minute of family time is my priority. There are lots of things on my to do list but several of them are going to have to wait for their time. Things always happen for a reason and I am convinced I was laid up so that I would slow down and get my perspective back on track. (Stay tuned for more on all of that in a later blog) Now that the weekend has come to a close, I can promise you that I have no regrets about staying! Instead of spending Friday evening packing, we cooked crab cakes and hung out on the porch. On Saturday morning, I went out to do the pick up at the florist and grabbed breakfast. It was a beautiful day so we had some more coffee on the porch and just did outdoor chores until it was time to get ready for prom. Daddy dug out his nice cuff links and cute pink elephant bow tie and we had him looking all dapper! And I did pretty well tying the bow tie if I do say so myself! He went and picked up some friends and we did pictures at home on the dock. It was sunny and not too windy so the girls didn't get their hair messed up. Then they loaded up and headed out to the Dunes Club over in Atlantic Beach for dinner and dancing! He must have cut quite the rug because he arrived home in ripped pants. I didn't realize that tux was rent to own. LOL He was grateful for that Christmas stocking full of cute boxers! I was thankful to see him and his friends arrive home safely so I could go to bed! Especially since the bad storms started shortly after they walked in the door. I got up the next morning and did what makes my heart so happy: I started cooking. Bacon, chocolate chip pancakes, ham biscuits, fresh strawberries and whipped cream. I was in my favorite place and was so thankful I had stayed home so I didn't miss a minute of this! And guess what? My flight from Charlotte to Austin ended up being majorly delayed due to weather. I definitely would have had major regrets spending my Saturday evening missing prom AND being stuck in an airport. I trusted what my heart was telling me to do and I told my brain that I can go to the next conference but I can't get my baby's first prom back! Family first!

Listen to the podcast HERE The real estate market has been quite interesting the last few years. A lot of people have seen large increases in the value of investment real estate they own. Many have sold to take advantage of those increases and make a big profit! But the downside of profit means taxes. What if there was a way to defer or avoid those taxes? In comes the 1031 Exchange (also called a Like Kind Exchange). You need to know about this BEFORE you sell so that you can plan it all out correctly! First and foremost, the 1031 Exchange does not apply to your primary home (mainly because your primary residence has it's own set of rules for taxes and gains). The 1031 Exchange applies to investment real estate or real property used in a business. The term real property here refers to land and any permanent structures attached to it. So what exactly is a 1031 Exchange? In a nutshell, a 1031 Exchange is a swap of one property for another that allows capital gains taxes to be deferred. The properties must be like-kind meaning they have a similar nature. It doesn't mean they have to be the same size or type though. For example, you could exchange an apartment building for a shopping center. How does the 1031 Exchange work? Let's walk through an example using the apartment building for a shopping center just mentioned. Sally owns an apartment building that rents apartments to tenants. She no longer wants to be involved in this operation and instead wants to own a shopping center that rents to small business tenants. Sally wants to do a 1031 Exchange so she begins making her plan before she even lists the apartment building for sale. It is important to note that you have to do the steps of the 1031 Exchange exactly right or it will be disallowed. In a perfect world, Sally would know someone with a shopping center that also wanted to get rid of it and get an apartment building and they would literally exchange the properties. However, we all know the likelihood of that type of exchange is very slim. Therefore, delayed or three party exchanges are much more common. Basically what happens here is that Sally would sell the apartment building and the money from that sale would be held by a qualified intermediary that acts as a middleman. Then the money that the middleman is holding would be used to buy the new shopping center. Sally can not receive the money and hold it or it would void the 1031 status of the exchange. That sounds pretty simple but there are some very specific timing rules that must be followed. The first one is the 45 day rule. This states that within 45 days of selling the old property, in this case the apartment building, Sally must designate, in writing to the middleman, a replacement property. She can designate up to 3 but must close on one of those three. The second is the 180 day rule. This states that within 180 days of selling the old property (Sally's apartment building) that you must close on the new property, the shopping center. So if Sally sold her apartment building on April 1, she would have to designate the replacement property by May 15 and close on the new shopping center no later than September 28 (which would be 180 days). If Sally sells the apartment building for more than the cost of the new shopping center then that overage is subject to taxes. Generally, people use the 1031 exchange to upgrade to more expensive properties but in the case they go to a less expensive property then there will be some tax involved. There can also be some tax implications if there is a loan on the properties and a decrease in the total loan amount occurs from the old property to the new. That gets more complicated so we are not going to dive into the weeds of that here. Continuing with Sally's example, let's examine how the deferment of the capital gains tax works. Let's say Sally originally purchased her apartment building for $500,000 (we are going to ignore depreciation in an effort to keep this example straightforward). When she decides to sell her apartment building, it is worth $750,000. So, if she sold it in a standard transaction for $750,000 then she would have capital gains of $250,000 to pay tax on. Say the new shopping center she acquires in the 1031 exchange has a purchase price of $750,000. Generally, Sally's basis (essentially her cost) in the shopping center would be the $750,000. However, in the 1031 exchange her basis in the shopping center will be the $500,000; the original basis of the apartment building (remember we are ignoring depreciation to keep this example simple). That is how the capital gains is deferred. Sally could continue doing 1031 exchanges or she could outright sell the shopping center. If she decided to outright sell the shopping center 5 years later and sold it for $1,000,000 then her capital gains would be $500,000 ($1,000,000 sell price less the $500,000 basis from the 1031 exchange). Had she not bought the shopping center in the 1031 exchange and had the $750,000 basis then her capital gains would be $250,000. You may be asking, does this work with a vacation home? The short answer is no, not anymore. There are some technicalities still lingering but generally speaking, that ship has sailed. However, if you have a home that is an Air BnB and generates income then that would most likely qualify. It's important to note that a 1031 exchange doesn't eliminate tax it just defers it until a later sell. However, if you are using 1031 exchanges as an estate planning tool you can even get around that. Let's continue with Sally's example above. Sally had an apartment building with a cost basis of $500,000, she sells it for $750,000 and in a 1031 exchange acquires a shopping center for $750,000. She deferred $250,000 of capital gains in the exchange. Today the shopping center is worth $1,000,000 so if she outright sold it there would be the $500,000 of capital gains that we mentioned above. If Sally dies today and her will leaves the shopping center to her son Ben then Ben will avoid the capital gains. How you may ask? Because Ben will receive what is called a step up in basis when he inherits the shopping center. That means Ben's basis will be the market value at the time of Sally's death, the $1,000,000. If Ben sold it for $1,000,000 then he would have no tax liability on the sale. How about that? That is surely food for thought! With the large increases in market values over the last few years, 1031 exchanges are becoming more of a main stream topic so that people can defer the capital gains or create an estate plan for their heirs around appreciating real estate. If you are considering doing a 1031 exchange, you want your "middleman" to be very qualified to handle the transaction. It would be a very bad day if the IRS decided to disallow your 1031 exchange because a small technicality was missed. Information contained in this post is for educational purposes only and is not considered financial advice.

Nothing quite says cookouts and picnics like a big bowl of potato salad to go along with your burgers and dogs! This recipe is a great make ahead because it's actually even better if it gets to set up in the fridge overnight! Ingredients: 3 pounds Yukon gold potatoes 1 cup mayonnaise 1/2 cup sour cream 1/2 cup sweet pickle relish 1 tbsp yellow mustard 1/2 tbsp dijon mustard 1/2 tbsp apple cider vinegar 1/2 tbsp celery seeds 1/2 tsp paprika 3 hard boiled eggs, peeled and chopped 1-2 stalks celery, diced 1/2 cup sweet onion, diced 1 tbsp fresh dill, chopped 1/2 tbsp salt 3 strips bacon, cooked crisp and crumbled pepper to taste 1. In a large pot, add the potatoes and cover with water to about 1-2 inches above the potatoes. Bring water to a boil and boil for 12-15 minutes, until fork tender. Strain. 2. While the potatoes are hot, peel the skins. The skins will easily peel off at this point. Then cube the peeled potatoes into bite sized chunks. 3. In a large bowl, combine all of the other ingredients and mix thoroughly. 4. Add the potatoes to the creamy mixture and fold them in making sure to evenly coat the potatoes. 5. Cover and refrigerate at least 4-6 hours but preferably overnight.

Listen to the podcast HERE There are a lot of opinions on credit cards and credit scores. Different financial gurus have different perspectives on the needs and use of both. So, before we dive into talking about adding your child to your credit card, I am going to give you an overview of my perspective. Do I think credit cards are good or bad? My answer is that credit cards in themselves aren't either good or bad but our behavior with them is either good or bad, thus creating good or bad results. If you are someone that can't control your spending with a credit card then by all means use cash or a debit card. If you are a disciplined spender and only use your credit card for expenses within your monthly budget and pay the balance in full every month then using a credit card can be a good thing. I personally use the same credit card for almost all of my purchases from gas and groceries to vet bills for our dogs. At the end of each month, I apply any points or rewards directly back to the balance and then payoff the remaining full balance. I never carry a balance that would be subjected to interest charges and putting myself into credit card debt. Plus, it is generally easier to dispute fraudulent charges on a credit card rather than a debit card. And I also prefer a credit card when traveling because, for example, if you check into a hotel with a debit card they generally charge your card for significantly more than your actual charges will be and it is oftentimes up to a week before you have that overage back in your account. But again, if you can't control your spending with a credit card use a debit card or cash. Credit scores have also been called an "I love debt" score and I don't disagree with that statement. Credit scores are often negatively impacted when you pay off debt but we all know that paying off debt is generally a good thing. Credit scores are also negatively impacted when you miss payments so you want to make sure to make payments on time. Having a credit score, specifically a good credit score, makes the approval process of acquiring debt a lot simpler. But credit scores extend to a lot more these days than just acquiring debt. Credit scores are routinely checked for leasing an apartment, setting up utilities, acquiring insurance, and by prospective employers. A poor credit score or not having a credit score or credit history can create a situation of higher deposits, higher premiums, and potentially not getting a certain job. So for these reasons, having some credit history can make a big difference. It's not just for acquiring debt these days. It can be difficult for young adults just starting out when they don't have a credit score or credit history, even if they aren't trying to acquire debt. Back to your child and your credit card. You can add your child to your existing credit card account as an authorized user. Different card types have different age requirements but generally a child 15 or older can be added to your account. When you add your child to your account as an authorized user, the history of that account attaches to your child's credit history and can help your child create a credit history before they turn 18. One thing to think about though is if your account doesn't have a good history then adding your child may actually hurt them so you want to add them to an account with a good history and be sure to maintain good history on the account. This can also be a great time to teach your child about debt and credit and making a spending budget and adhering to it. When I was 14, I went away to boarding school so my parents added me as an authorized user on their account and I had a credit card to pay for my expenses. When I turned 18, I was able to open up an account on my own. I chose an American Express card that required monthly payment in full and did not allow you to carry a balance and put yourself in credit card debt. It was a great option for a college kid and I was mindful about my spending and paying the bill in full each month and on time. I opened that account in 1995 and I still use an American Express today and my card says "account holder since 1995." Needless to say, that is a good bit of account history. My son is 16 and I have added him to my account. He also has his own checking account and debit card that he uses for most of his personal purchases. He earns money, deposits it into his account, then pays for things out of that account with the debit card. He also is an authorized user on my American Express and has a card from that account. He uses that card when he is running errands for me such as picking up some groceries. He is a responsible kid and I trust him not to go on a spending spree with it. LOL This is a win win situation for both of us. He is able to pick up items for me without me needing to reimburse him, the charges reflect on my account when I login so I can easily account for them in my budget, and he is a building credit history from a solid account with a long (and positive) track record. When he is ready to lease an apartment or establish utilities, he will have some history attached to his social security number which will make the process simpler and most likely require smaller deposits. A few years ago I began teaching a high school personal finance class and I can attest to the need for kids to understand how money works. When your child has a credit card it is a great time to teach them how that cycle works, when the balance needs to be paid in full to avoid interest charges, late fees, and going into debt. It is also a great time to teach your child about creating a budget, adhering to it, and tracking their spending. Not every teen is ready to be turned loose with their parent's credit card, after all you are liable for any charges they put on the card. But once you feel your teen is responsible enough to have a card, it can be a great learning tool and a great way to get them started on the right path to a positive credit history. It is important to note that different card issuers have different age requirements and report differently to the credit bureaus so be sure to get the details before adding your child. It sure is nice being able to have my son help with household errands and not have to constantly reimburse him. If your child isn't quite old enough for this yet, don't worry it will be here before you know it!

Listen to the podcast HERE Did you hear the news? The Federal Housing Administration has approved offering 40 year mortgages. Is this a good or bad thing? Well, that depends on who you ask. As with most things, there are differing opinions on the 40 year mortgage. Before we dive into that, let's recap some mortgage basics first. Your monthly mortgage payment amount is determined by 3 main factors: the amount of the mortgage the interest rate the term of the mortgage (the length of time) Mortgages have typically been a term of 15 or 30 years. Mortgages are either fixed rate or variable rate. Fixed rate is the same rate for the life of the mortgage and variable is when the rate changes, usually based on market interest rates. It may have a fixed rate for a few years and then the variable kicks in. Mortgages generally require a down payment with 20% being the standard. If you do a lower down payment then you will most likely have to pay PMI (private mortgage insurance). Mortgages are amortized. This means that at the beginning of the mortgage, the majority of the payment is going towards interest not principal. As you get further into the term of the mortgage the amount towards principal increases and the amount towards interest decreases. So, what are the pros and cons of the shorter term versus the longer term? Pros of a shorter term, such as a 15 year fixed-rate mortgage: lower total interest paid over the life of the mortgage builds equity quicker generally have a lower interest rate than the longer 30 year option and the obvious, the mortgage is paid off quicker Cons of a shorter term, such as a 15 year fixed-rate mortgage: higher monthly payment usually results in the purchase of a less expensive home than the 30 year option meaning you may be giving up location, space, amenities, etc The pros and cons of the longer option, such as the 30 year or even 40 year, are basically the opposite of the shorter term. Pros of a longer term, such as a 30 year fixed-rate mortgage: lower monthly payment usually allows you to purchase a more expensive home Cons of a longer term, such as a 30 year fixed-rate mortgage: more interest paid over the life of the mortgage slower growth in equity generally have a higher interest rate than the shorter 15 year option Extending the loan term out to 40 years exacerbates the cons of the longer term. There is even more interest paid over the life of the mortgage, the equity is growing even slower, and the interest rate will generally be higher. Proponents of the 40 year term argue that it allows for an even lower payment so that more people can afford to purchase homes. But, it can also create a situation where people are buying a more expensive home than they should just because they can afford the payment at the 40 year term. Let's compare the total costs of the same mortgage amount but with differing terms. We will even use the same interest rate for all term lengths, even though the longer terms generally have a higher rate which means even more spent on the interest portion. Take a $200,000 mortgage at a 5% rate (not including taxes or insurance in the payment): 15 year term: Payment is $1582/ month and total interest paid is $84,686 30 year term: Payment is $1074/ month and total interest paid is $186,512 40 year term: Payment is $964/ month and total interest paid is $262,909 As you can see the longer term results in a much lower monthly payment but it also results in a much larger amount of money spent on interest over the life of the loan. While I do agree there is a need for more affordable housing and that real estate prices have gotten to a point that home ownership is out of reach for a lot of Americans, I am still a big proponent of the shorter term, 15 year mortgage. The two main reasons are the equity growth and the lower interest paid over the life of the mortgage. That additional money going to interest in the longer term mortgage could be money being invested! I am going to tell you a quick personal story. Shortly after I graduated from college, I bought my first home. It was a small house but a perfect little starter home. I had some savings for my down payment and I took out a mortgage for the rest. I decided to do a 15 year mortgage even though the larger payment meant less discretionary income in my budget. 3 years after I purchased that home, my plans changed and I moved to another city and sold the home. Because I had chosen the 15 year mortgage, I had already paid down close to 20% of the mortgage amount which gave me a great deal of equity. That meant at selling time, a much larger check coming back to me! If I had chosen the 30 year I would have only paid about 6% of the mortgage amount. That equity made a huge difference in my financial options going forward! Back to my thoughts on the 40 year option. While the longer term does create a lower, more affordable payment so that more people can afford to buy a home, it doesn't mean that is the best long term financial decision for them. Owning your own home is part of the American dream. Owning your own home evokes a sense of pride and security in most people. But owning your own home can come at a huge cost in interest when you take the longer term. A huge cost that could have been saved for retirement. Plus, if you take on that 40 year mortgage at say age 35, then you will still be paying on that mortgage until age 75, most likely well into when you want to be retired. Most people do not figure they will still be making a mortgage payment in retirement. Worse yet, the mortgage payment may push your retirement age much later. Always consider the long term! We live in a world where most want instant gratification but sometimes saving and waiting yields the best outcome! Information contained in this post is for educational purposes only and is not considered financial advice.

Listen to the podcast HERE The old life insurance question! Do I need it? The answer is most likely yes. But what kind of life insurance do I need? There are basically two types of life insurance: whole (also called permanent) and term. There is a different purpose between the two. The type you need depends on your goals with life insurance. First, let's talk about whole life insurance. Whole life insurance is a policy written on a person that lasts until their death and then pays out to a designated beneficiary. Whole life insurance policies can be taken out on a husband and wife together, called a second to die policy, and these policies do not pay out until the second person dies. Premiums for a whole life insurance policy are substantially higher than term because there is the definite payout at death. As premiums are paid, the cash surrender value of the policy increases. The cash surrender value is what you would receive if you chose to surrender or terminate the policy early. This cash surrender value is substantially less than the policy amount, the amount that would be paid to the beneficiary upon death, and the policy ends when that money is taken out. However, you can usually borrow against the cash surrender value without terminating the policy but it lowers the amount paid out at death. Taking out the cash surrender value and terminating the policy is not the goal of a whole life policy. It should not be viewed as a retirement type account. Whole life insurance is not for everyone. It is generally used as an estate planning tool for people with a high net worth or a lot of assets that will be passed on. For example, if someone dies and their estate holds a lot of assets but not a lot of cash, they may have a whole life insurance policy so that the beneficiary has cash to pay any estate taxes. Let's say William has one child, Sally, and William's wife has already passed away. William owns a lot of real estate. William also has a whole life insurance policy of $10,000,000 and Sally is the beneficiary. William owns so much real estate that when he dies, $15,000,000 will be subjected to estate tax. Assuming an estate tax rate of 40%, that would be $6,000,000 due in taxes. We've all heard sad stories about children having to sell the family farm because they needed money to pay the estate taxes. Well, in this example, Sally has $10,000,000 from the whole life insurance policy to pay the $6,000,000 in taxes and still has another $4,000,000 to maintain the properties and pay the annual property taxes. Since the life insurance proceeds are not taxable, it is a great way to get cash to your children (or designated beneficiary) without that amount of money being part of the estate and subject to estate tax. As you can see, not everyone falls into William's category. Whole life insurance is not for everyone but it can be a great estate planning tool if you have a lot of assets or a large estate. Term life insurance works in a different way. Term life insurance is exactly as it's name implies, insurance coverage for a specified term. Term life insurance does not have a guaranteed death benefit. Term life insurance only pays out if the person dies during that specified term. For example, if you have a $1,000,000 term life insurance policy up to age 55 and you die at age 52 then the $1,000,000 benefit will be paid. On the other hand, when you turn 56 the policy will terminate. The main purpose for term life insurance is to financially provide for your family in the event of your premature death. Let's say Maggie and Bill are married with two kids. Both Maggie and Bill work. They each make $100,000 per year. Their budget and their lifestyle is based around income of $200,000 per year. However, if Bill unexpectedly died then there would only be $100,000 of income for Maggie and the two kids to live on. Maggie would not be able to maintain her current lifestyle, and probably her current home, with half the amount of income to live off of. However, if Bill had a term life insurance policy then it would give Maggie the peace of mind of not having to worry about finances as she mourns the loss of her husband and supporting her family going forward. The general rule of thumb is to have term life insurance that is at least ten times your annual income. In our prior example, if Bill had a $1,000,000 term life insurance policy then Maggie would receive that at the time of his death. You may be thinking, that's great she would have 10 years worth of income BUT if Maggie invests that money at say 7% and withdraws $100,000 per year then it will last about 15 years! A premature death is difficult enough to deal with, the last thing needed is financial concerns. It is usually a good idea to obtain term life insurance when you get married but definitely once you have kids. And have a policy on both spouses. Even if one spouse stays home with the kids and technically doesn't have income, if that spouse were to die then the surviving spouse would then have to pay for childcare, etc. You want the term life insurance term to go until a time that you are debt free and have enough in savings to live off of. Term life insurance is relatively cheap. If a 30 year old husband and wife each wanted a $1,000,000 policy with a 20 year term, meaning it terminates when they are 50, the average annual premium would be about $450 for the husband and $400 for the wife. Age, gender, health, etc do affect your rates. While one hopes to never need the term life insurance, it is definitely peace of mind in the event of a premature death. On the other hand, whole life insurance premiums are much more expensive because they have the guaranteed death benefit. The premiums for that $1,000,000 would be more like $4,500-$5,000 a year and would continue until death. Remember, choosing term or whole depends on your goals. Term is a great option for peace of mind for families and whole is a great estate planning tool. Information contained in this post is for educational purposes only and is not considered financial advice.

This bowl packs lots of delicious fresh flavor! The recipe makes 2-4 servings depending on how hungry you are. The lime cilantro flavored rice is key so you will want to try and find that! I purchased the lime salt at a local gourmet shop but you can substitute kosher salt. Ingredients: 1 pound shrimp, peeled and deveined 1/2 tbsp lime salt 1/2 tbsp cilantro 1/4 cup fresh lime juice (about 3 limes) 1/4 cup olive oil 15 ounce can black beans, drained 8.5 ounce packet Seeds of Change Lime Cilantro flavor rice 3 roma tomatoes, diced 1 jalapeno, diced 1/4 cup diced red onion 1/2 tbsp cilantro 1 avocado, chopped 1/2 cup shredded sharp cheddar To Make: Preheat oven to 400 degrees. Grease a rimmed baking sheet. In a bowl, combine the lime juice and olive oil and whisk together. Then add the shrimp. Stir well. Add the shrimp to the baking sheet and sprinkle the lime salt and 1/2 tbsp cilantro over the shrimp. Bake 10-12 minutes. Warm black beans over low heat. Cook the rice packet per instructions. Combine the tomatoes, jalapeño, red onion, and 1/2 tbsp cilantro. Stir well. To serve: split the rice amongst 2-4 bowls, top with the black beans, then the shrimp (pour extra juice on top), then tomato mixture, then cheese and avocado. Serve immediately

To listen to the podcast click HERE April 15 is a date that a lot of people don't associate with positive thoughts and happiness. Nevertheless it is something we all must deal with. Death and taxes, right? On a good note, the deadline is actually April 18 this year since the 15th falls on a Saturday. But what happens if you just don't have everything organized and prepared to file your taxes on time? Well, there is some good news and some bad news. First, the good news. The good news is that you can do an extension. It is a simple form, Form 4868 which is called the Application for Automatic Extension of Time to File. It can be filed electronically or via paper. This extension will get you an additional 6 months to file your return! October 15 is usually the deadline date for extensions but that date can slightly differ if it falls on a weekend. You can file any time within that 6 month extension. Sounds pretty simple, right? You might be asking yourself, why don't I extend every year that sounds awesome! Well, that is where the bad news comes in. Even though you can fairly easily get an extension of time to file your taxes, you don't get an extension of time to pay! So, when you request your extension you have to go ahead and pay as well. The extension form has a line for your Estimate of Total Tax Liability, a line for Payments made, such as withholding or estimated payments made, and then a line for the Balance Due. The Balance Due is the amount you will go ahead and pay with your extension. Oftentimes, people need to extend because they don't have everything together to calculate how much tax they owe. This is where knowing your estimate at the time of extension can be difficult. Some people like to estimate high and others estimate low knowing that they are still most likely going to owe more. This is where some more bad news comes into play. If your estimate is low and the amount you pay with your extension is not enough to cover your total tax liability when you do file, then you will have penalties and interest on top of the tax owed. Interest is calculated beginning on the original deadline date (usually April 15). The interest amount is figured on the amount of tax that was owed by the deadline but not paid. For example, if you had paid $10,000 by April 15 and actually owed $15,000 then your interest would be calculated on the $5,000 shortage from April 15 until the date you filed. You may also be subjected to a Late Payment Penalty. This applies if you did not pay at least 90% of the actual tax due and didn't pay the balance with the extension. In the prior example, the $10,000 paid was not at least 90% of the $15,000 owed so a Late Payment Penalty would apply in that situation. However, if you had paid $9,500 by April 15 and actually owed $10,000 and paid the $500 balance when you filed, then you would not be subjected to the Late Payment Penalty because you had paid 95% of the actual owed. What happens if you still don't file by the extension date of October 15? This is where the Late Filing Penalty comes into play. This penalty is 5% of the tax amount due for every month the return is late and carries a max penalty amount of 25% of the tax amount due. So, you want to make sure to file by your extension date! Filing an extension can be a norm for people with complex returns or people waiting on information from business returns before they can file. Getting the estimate right can be tricky when you are waiting on substantial financial information on April 15. That is where deciding to estimate high and risk over-paying or estimate as accurately as you can (and hope that amount is accurate in the end or at least 90% of what is owed) becomes a personal decision. All in all, extending your taxes is quite simple, especially if you need the extra time to get your paperwork together. Just don't forget to pay that estimate with your extension! Taxes are bad enough, nobody wants penalties and interest too! NOTE: This information is for federal tax purposes. States will vary. Information contained in this post is for educational purposes only and is not considered financial advice.

To listen to the podcast, click HERE This week we are talking about giving the gift of money! Last week we talked about putting your child on the payroll if you have your own business and how it can save you money in taxes and how it can go to your child tax free. If you missed that episode and you have your own business, you will definitely want to go give it a read or a listen HERE! What if you don’t have your own business or your child isn’t ready to work in your business or you just want to transfer money to them? That is where the Annual Gift Tax Exclusion comes in! But before we talk about that, there is one other thing you need to know about and that is the Estate and Gift Tax Exemption, also called the Lifetime Gift Exclusion. The Estate and Gift Tax Exemption is the amount you can transfer during your life or at death without incurring estate or gift tax. For 2023, that amount is $12.92 million per person! That amount is transferable between spouses so a married couple in essence would have $25.84 million in 2023! While most people do not have assets or an estate that would exceed this number, it’s important to note that, unless Congress makes it permanent, that current large amount of $12.92 million and $25.84 million for a married couple is only temporary and is set to revert back to about $6 million beginning in 2026. $6 million is a number that would affect a lot more people’s estates and assets. There has even been political discussion of lowering it even more. That being said, it could greatly affect a lot of people, especially if they don’t plan ahead. Now, that brings us back to the Annual Gift Tax Exclusion. So how does the Annual Gift Tax Exclusion fit into this? The Annual Gift Tax Exclusion is an amount you can gift each year that won’t affect that Estate and Gift Tax Exemption. For 2023, that amount is $17,000 per person per gift. So, a married couple can give $34,000 per recipient. That gift can go to anyone, not just your children, and to as many recipients as you would like. So, in 2023, you can gift $17,000 to as many people as you’d like and there would be no gift tax. However, if you gifted more than $17,000 then the excess would count against your Estate and Gift Tax Exemption. For example, if I gifted $27,000 to a friend this year, then the $10,000 excess would reduce my Estate and Gift Tax Exemption amount. Keep in mind, just because tax isn’t owed at the time of the gift doesn’t mean you don’t need to file a Gift Tax Return though! Why is this Annual Gift Tax Exclusion important? First and foremost, there is the possibility (and likelihood) that the Lifetime Gift Exclusion, that Estate and Gift Tax Exemption amount, could be a much smaller number when you pass away. Considering the gift and estate tax can be as high as 40%, you want to minimize the amount of estate or gift tax you would have to pay. That is why planning at a young age is so important. Waiting until you are retired is often too late for effective planning. One thing that is interesting to note is that when gift tax is owed, it is paid by the giver not the recipient. And the estate tax is paid by the estate. Let’s look at an example. If you are currently 40 and your total estate is worth $2 million then you are probably thinking that this doesn’t really affect you yet but you need to be thinking in the long term. Say you live to be 80. At 80, maybe your estate has grown to $10 million and let’s say the Lifetime Exclusion amount is $6 million at that time. Then $4 million of your estate would be subject to being taxed. By using the Annual Gift Tax Exclusion, you are able to get money out of your estate during your lifetime without it being subject to taxes because it doesn’t count towards your Lifetime Exclusion number at death. You may now be asking, what can I gift? Is it only cash or can I gift other assets? You can gift cash or other assets such as jewelry or real estate. Although real estate is rarely going to be under $17,000. However, it is important to note what assets are ideal to gift and what assets are ideal to wait and leave to loved ones when you pass. The big deciding factor in what to gift now and what to gift later comes down to basis. What do I mean by basis? By basis, I mean the amount the asset is valued at for transactional, and tax, purposes. For the Annual Gift Tax Exclusion, assets transfer at cost basis thus making cash a very ideal asset to gift. What cost basis means is the actual cost paid for the asset. If you bought a diamond ring for $12,000 and gifted it then the recipient would also have a basis of $12,0000. If you bought a piece of land 30 years ago for $15,000 and it is now worth $150,000 and you gifted it then the recipient would also have a basis of $15,000. This is where taxes would come back in. If that recipient sold the gifted land the day after you gave it to them for the market value of $150,000 then they would pay taxes on the gain of $135,000 (the $150,000 market value it was sold for less the $15,000 cost basis of the gift). On the flip side, if you waited to give that piece of land at your death then the recipient would get what is called a step up in basis, meaning that even though you paid $15,000 for that land, since it is now worth $150,000 then the recipient has a basis of $150,000 when they receive it after your death. If the recipient sold that land the next day for $150,000 then there would be no gain and no tax due. You can see why there is definitely some planning and strategy that needs to go into what assets you gift now and what you leave at death. The more assets you have, the better you need to plan. Maybe you want to gift your child some cash now but you are worried they aren’t responsible enough to save it or invest it as wisely as you would intend for them too. You can also create a trust and gift the money into that trust. If you go this route, I would highly recommend consulting an attorney that specializes in this area but this can be a great way to go if you have younger children or ones that are slow to mature. LOL. While it can be a little morbid to think about planning for “death and taxes” when you are younger, it can make a big difference in maximizing the value of your hard work and your assets and minimizing taxes. Since this has been a bit technical, let’s do a recap: Point #1: The Estate and Gift Tax Exemption, also called the Lifetime Exemption, is the amount of money and assets you gift during your lifetime and/ or at death without tax ramifications. While that number is $12.92 million per person in 2023, that number is currently set to decrease significantly. That means you want to get money and assets out of your estate before death. Point #2: The Annual Gift Tax Exclusion allows you to gift money and assets each year while you are living to reduce your total estate. As long as you don’t gift more than the annual exclusion amount, which is $17,000 in 2023, then your Lifetime Exclusion won’t be affected. It is important to note that the Annual Gift Tax Exclusion amount has historically increased each year and will most likely continue to do so. Point #3: Planning which assets to gift while alive and which ones to pass along at death can make a big difference in the recipient’s basis in that asset. Assets that have increased in value versus their original cost are the ones you will most likely want to gift at death so the recipient gets that stepped up basis and minimizes taxable gains on the sale of the asset. You work hard and want to maximize how much you are able to give your children and loved ones rather than Uncle Sam. Making a long term plan is ideal to achieve that goal! NOTE: This information is for federal tax purposes. States will vary. Information contained in this post is for educational purposes only and is not considered financial advice.

This easy pork tenderloin tastes like a fancy meal but is simple enough for a busy weeknight. It pairs well with a sweet potato and green beans. For the seasoning, I use the McCormick brand that you can easily find at most grocery stores. There are also a few other flavors that would work well on this recipe. In case you have trouble finding them, I have linked them HERE as well. If you prefer your tenderloin well done, alter the baking to about 25 minutes, or 155 degrees.

After the passing of our 3 year old boy, Port, from osteosarcoma in October 2021, we were absolutely heartbroken. We weren't sure when we would be ready to welcome another boy into our home. But then this sweet boy was born on our anniversary and we knew that was meant to be. My husband and son made the very long trek to Charleston and back in one day to pick him up. He fit right in immediately! We are fortunate that he is naturally a little bit lazy and has great big sisters to show him the ropes! When he was still a little guy, whenever he went missing, which is usually not a good thing with a lab puppy, he was always cooling off on the tile floor in the bathroom. He is the sweetest boy and he makes our hearts so happy. As with most labs, he has to have something in his mouth all the time. He has grown a lot and is almost 100 pounds so he thinks a king size pillow is a dog toy and stuff like that. Another cute thing he insists on doing is walking up behind you and going between your legs. It gets quite interesting when I have a long dress on. I could go on and on about all the cute things he does. I can't believe he is already 1! The year has flown by but he has brought so much joy to us and helped our hearts heal in so many ways. I sure do love my fur babies and couldn't imagine them not being a part of our lives!

Listen to the podcast HERE It's tax filing season and that means the ads have started for businesses wanting people to spend their tax refunds buying something they probably don't need or weren't planning on buying. These ads make tax refunds sound like they are free or found money. And many people view their tax refund in the same light. Lots of people get their taxes filed as quickly as they can so they can hurry up and see how much their refund is for and how quickly they can get it. The truth is, it's called your tax refund because it is exactly that, a refund. It's a refund of your money that you have basically lent the government, interest free, until you let the government know how much of that money is yours and not theirs. And then they will send it back to you, on their schedule. You would be hard pressed to find a bank that would lend you money for a year, interest free, but that is exactly what a large portion of the population is doing: they are lending the government their money interest fee. If you have a job that withholds taxes from your paycheck you are more likely to be someone that gets a refund. If you are self-employed and pay estimated taxes you may actually owe taxes each year and not get a refund, depending on the accuracy of your estimated payments. When you begin a job you fill out form W4 with your employer and that information instructs your employer how much tax to withhold from your check. Your employer then remits that money to the IRS (and your state) on your behalf. Then, at the end of the year you receive your W2 and it tells you how much tax was withheld and remitted on your behalf for that year. The accuracy of your W4 will drive the accuracy of the tax withheld. If you have been at a job for awhile or had a major change in your circumstances, you may need to do an updated W4. In the past, people would claim allowances on their W4 to reduce the amount of tax withheld from each paycheck but in 2020 a new W4 form was introduced that changed that. The new form allows you to adjust your withholding to take out more or less depending on such things as your number of dependents, other jobs you may have, or itemized deductions you may be eligible for. Getting that W4 as accurate as possible will get your withholding most in line with what your actual tax liability is. The goal is to have enough withheld that you don't owe tax that could also be subjected to penalties and interest but also not to have a large overage withheld that results in a big refund. I generally like to think of a refund in excess of $500 as big enough to justify making changes on your W4 for going forward. If you are self employed then you don't have taxes withheld and remitted on your behalf but you do have to pay estimated taxes throughout the year. These estimates can change as your income changes. The general rule of thumb with estimated taxes is to make the safe harbor payment amount which is 100% or 110% (depending on how much income you make) of your prior year's tax. Then, if your income is growing in the current year you can increase your estimates so that you don't have a big tax bill at the end of the year. We will talk further about taxes for the self employed in another episode. Now, back to the refunds. As you may recall from the episode about standard and itemized deductions, your tax liability is calculated from your taxable income and that is your total income less either the standard or itemized deduction. From that taxable income figure at the bottom of page 1 of your 1040, you move on to the Taxes and Credits section of your 1040 to calculate your tax due. Your rate depends on the amount of income you make. If you are eligible for credits like the Child Tax Credit, you would deduct that from the calculated tax due to find your net total tax due. The next section of form 1040, called the Payments section, is where withholdings (as well as estimated taxes paid) are listed. These are the amounts that you have already paid towards that net total tax due. If your withholdings are more than the total tax due then you have a refund, if they are less then you owe the difference. The Payments section is also where refundable credits are claimed. Non-refundable credits are claimed in the Taxes and Credits section. The credits can be confusing. The first thing to know about credits is that they reduce the actual tax due. Remember the deductions only reduce your taxable income. The second thing to know about credits is that some are refundable and some are not. The non-refundable credits are listed in the Taxes and Credits section because they can only reduce your net total tax due to $0. Even if subtracting the credit from your calculated tax due results in a number lower than $0, you stop there and simply have $0 net total tax due. You don't get a refund for that excess. However, the credits listed in the Payments section are what are called refundable credits. These credits can decrease your tax liability below $0 and that excess is refunded. Some argue that these refundable credits are found money but again if the W4 was tweaked to be more accurate then the refundable credit would still most likely not create a refund solely based on the credit. Let's walk through some examples. We will start with a very basic example. Betty is single and her calculated tax due is $10,000. Her net total tax due is also $10,000 because she doesn't have any adjustments in the Tax and Credits section. Betty had $12,000 withheld by her employer and is not eligible for any refundable credits. Betty's net total tax due of $10,000 less the $12,000 withheld creates a refund of $2,000. Now let's make Betty's scenario a little more complex. Betty is single and has one 8 year old child. Betty's calculated tax due is $10,000. Betty reduces that amount by the $3,000 Child Tax Credit she is eligible for. Her net total tax due is now $7,000. Betty then moves on to the Payments section of her tax return. Because Betty's W4 took her child into account, her withholding was only $6,000. Betty is also eligible for the Earned Income Credit (a refundable credit) and for ease of math we will say that amount is $4,000. So Betty has a net total tax due of $7,000 less the $6,000 that was withheld and then less the $4,000 Earned Income Credit. Her refund is $3,000. In the first example, Betty's net total tax due of $10,000 was also how much she ultimately owed. In the second example, Betty's net total tax due of $7,000 was reduced further down to $3,000 because of the Earned Income Credit. In both examples though, Betty is getting a large refund. Making adjustments to her W4 with her employer could keep that money in her pocket (and her monthly budget) rather than getting a large lump sum back once a year. People are much more likely to use their money with purpose if it is in their monthly budget rather than being in the form of a large refund once a year. The thing to remember is that if you don't make adjustments to your withholding and you continue to get a refund then have a plan for that refund every year. That plan could be putting the full amount towards some debt pay down such as credit cards or student loans, applying it to your child's 529 plan, or adding it to your own retirement savings. All in all, that tax refund is your money so don't blow it on a whim! Be intentional with it and assign that money a purpose whether your having less withheld and putting it back into your monthly budget or still taking that big refund at the end of the year.

Today my husband and I celebrate 19 years of marriage! It truly is amazing how fast time goes by! It has been a blur! In all reality we should be celebrating 21 years on April 27 but we had to cancel our first wedding date due to lack of support from some family. The thing is, it has been instances like enduring that cancellation that have only made us stronger. We only became closer and more of a rock to each other when that happened. We ultimately decided that we would get married even though we did not have the blessing of some family. It is safe to say we have proved the naysayers wrong about our relationship. We put our marriage and our family first. We nurture our relationship daily. Our love and the strength of our relationship have only grown over the years. I am blessed to spend my life with such a wonderful man. He is not only a wonderful husband but the most amazing dad I have ever known. He is family first all the time. Yesterday, we went to early church and then went out to brunch together. We had planned to go to Beaufort Grocery. It is a special place to us and holds lots of wonderful memories. However, they were closed for their annual vacation so we decided to go to 34 North at the new Beaufort Hotel. It was warm enough to sit outside and we enjoyed the beautiful weather and each other's company with a lot of laughs! I tried to just soak it all in. How blessed I am and how wonderful life is. We have not had an easy path in our marriage. We have been through times that would break a lot of people. Just being able to get married was a feat in itself! There have been some times that I wouldn't have made it through without him by my side. My rock. I wish time would slow down but I am looking forward to a lifetime of happiness!

Listen to the podcast HERE Have you heard people mention the FIRE movement but you aren't sure what it is? It stands for Financial Independence, Retire Early and was coined in the 1990's book "Your Money Your Life." It has gained traction in the last decade, especially with millennials. The basics are a very frugal lifestyle and extreme savings. It is a thought process of anti-consumerism; the complete opposite of the "keeping up with the Jones'" mindset. It's definitely not for everyone. It takes a great amount of discipline, sacrifices, and lifestyle adjustment but it also takes enough income to make the concept work, usually 6 figures. You also need a lack of debt like credit cards and student loan payments that eat up a large percentage of your budget. Followers of the movement evaluate every expense in terms of the number of work hours it takes to pay for it and they save 50-75% of their income. The goal is to "retire" in their 40's or maybe even their 30's. The old school train of thought for retirement was saving over a lifetime career and retiring somewhere around 65. But a lot of people ask the question "how many good years will I have to enjoy life and what I love?" Which leads to the next question, why does retirement have to be defined by an age? After all, most retirement accounts don't let you access your money until you reach a certain age (unless you pay penalties). Why isn't retirement defined by a number? A number unique to everyone. A number that generates the amount of income YOU need to live the lifestyle you want to live and spend your days doing what you WANT to do! The thought process is financial independence and a life of flexibility. Retire early doesn't mean you have to completely stop working but the financial independence allows you to do something part time or that pays less but you really enjoy and you still have the income you need to cover your expenses. If you plan to live an elaborate lifestyle in retirement then you will most likely need to work longer, save more, or a combination of both. Followers of the FIRE movement greatly focus on two rules: the rule of 25 and the 4% rule. The rule of 25 states that you want your savings to be at least 25 times your annual expenses. If your annual expenses are $80,000 then you need $2,000,000 in savings (plus a standard emergency fund of 6-12 months expenses). The $2,000,000 is your FIRE number. Once you have attained that number then the 4% rule applies. This rule (from the Trinity study) states that if you withdraw 4% a year (adjusted for inflation) then you will have enough to live off of long term. One thing to note here, if your investment account reaches that $2,000,000 number so your 4% is the needed $80,000 but the market crashes and declines 20% for example, you now have $1,600,000 and a 4% withdrawal is only $64,000. For this to work, you have to have assets that can generate enough income to cover your expenses. These rules have the savings and investments channeled on paper assets. A mix of tax advantaged retirement accounts and regular brokerage accounts. Remember, the retirement accounts can't be accessed until retirement age so if you are retiring early you will need an account that can be accessed at any age. FIRE followers max out their tax advantaged accounts first. If you have a 401k at your job then you want to max it out, especially if your employer has an employee match because that is just free money. The 2023 max contribution to your 401k is $22,500. 2023 max contributions for both Roth and traditional IRA's is $6500 and $15,500 for a SIMPLE. Remember that these contributions may be tax deductible so that's just another win for maxing these accounts out! Once these accounts are maxed out then you save in a traditional brokerage account that is diversified to account for your risk tolerance. Let's look at an example of how many years you need to get to your number based on income and expenses. If your income is $70,000 and your expenses are $60,000 and you are saving $10,000 per year then you will need 44.3 years to retire. Ouch! But what if you pick up a side hustle and increase that income to $85,000 and you cut out all expenses except necessities and get them down to $50,000 so you are saving $35,000 then you are at 20.6 years. If you are 25 when you start this then retiring in your mid 40's is possible. The FIRE movement is heavily focused on paper assets such as stocks, bonds, mutual funds, and ETFs. They are relatively easy to purchase, especially on a monthly basis. However, with the volatility in the markets recently there are FIRE followers turning to rental real estate to generate their retire early income. It can be a great way to achieve the goal. If you max out the retirement accounts like the 401k and IRA for the later years but focus on the rental real estate for the immediate cash flow needs, you have a good chance of achieving "retire early" even earlier than if you followed the rule of 25. You can begin buying the properties when you have the savings to fund a down payment, mortgage the balance, and the rental income pays down the mortgage while also generating some monthly cash flow. Plus, rental properties can create some great tax advantages since taxes are paid on the net rental income after expenses and depreciation and rental income is not subjected to self employment tax. If you are looking to retire early or just generate additional income and cash flow, rental real estate can be a great option. Plus, real estate usually appreciates in value so that is another win. If you are thinking, I can embrace some of this but maybe not all of it, there are some different variations of the FIRE movement. Lean: this is the person living an almost extreme minimalist and frugal lifestyle and completely focused on how much they can save. This person is not going "to live a little" so to speak. Fat: this is the person that isn't as focused on retiring early but is focused on saving more so that they can "live it up" in retirement. This person needs $200,000 a year versus the $50,000 of the Lean person. Barista: this person is focused on working less but not necessarily completely escaping work. They want to live off the "retirement money" and concentrate on more meaningful work that only creates a limited income. Your desired lifestyle in retirement, regardless of your retirement age, heavily dictates the amount of savings you need and the length of time it will take to achieve financial independence. The FIRE movement thought process is not for everyone and like most things, there are risks associated with it such as: having to pay for health insurance when you leave a job that has provided it. This could be a big expense making that annual expense number increase drastically. Medicare doesn't kick in until 65 so you may have decades to cover. as mentioned above, your investments may not perform as planned and the market could crash and take years to recover. while you are in the savings period, you have to earn enough to cover your basic needs and still save 50% or more. If you have a family, child care, and other large expenses, saving 50% may not be feasible. also as mentioned above, if your budget is full of debt payments like credit cards and student loans, saving 50% may not be possible even if the rest of your budget is strictly addressed. All in all, followers of the FIRE movement are people that believe laboring for decades in a job you don't enjoy is not a life well lived. They believe we were not meant to spend 8 hours in an office each day and 2 hours in our car commuting. They are wanting to live a simple life, extravagance is not their style.