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What Happens to You and Your Stuff if You Don’t Make It Back from Spring Break?

What Happens to You and Your Stuff if You Don’t Make It Back from Spring Break?

What Happens to You and Your Stuff if You Don’t Make It Back from Spring Break?

By Claire Carter Bailey of the Law Offices of Bailey & Poarch

Morbid? Maybe, but Benjamin Franklin was right, “In this world nothing can be said to be certain, except death and taxes.” Yes, you too will die. And most likely, before then, you’ll be incapacitated for some period of time.

So, who will make your medical decisions? What factors will impact that person emotionally, financially, and relationally during that time? Who will live in your house? Who will pay the bills? What will happen to your family? Does anyone know the location of the courthouse? How much is all this going to cost?

What you think will happen:

You may have considered these questions and have a plan in mind. However, absent proper legal documents, your wishes may not come to fruition. A common misconception is that your property will pass automatically to your loved ones or that they will be able act on your behalf.

What will actually happen:

If you haven’t considered these and other issues in awhile, someone else has on your behalf—the Oklahoma legislature. And with the help of a judge, many months, and thousands of dollars, all these decisions will be made without your consultation.

Not what you had mind? Yeah, me either.

Now that we’ve gotten the bad news out of the way and before you panic, imagine that instead of worrying about it or passing your problems on to your loved ones and your decisions on to someone you’ve never met, you have an instruction manual, often called an estate plan, with everything needed to handle your legal and personal affairs. One of the best gifts you can give your loved ones during an already difficult time is the space to grieve free from difficult decisions, fights, and a costly drawn out process. By preparing an estate plan, you protect your health, home, assets, and family.

The tools in the toolbox:

An estate plan is nothing more than a collection of documents that address the specific medical and financial issues of the person for whom they are prepared. It is a way to opt out of Uncle Sam’s one-size-fits-all approach.

Determining which documents belong in each estate plan and what those documents say is like selecting and using the correct tools and materials to build a house. A house must be built with the occupants in mind. A ruler is sufficient to build a dollhouse but is too small to build a

doghouse; a handsaw works for a birdhouse but is inadequate to build a house for people. (Although I recommend saving the hassle of building your own house and calling your boy Grady!)

Estate planning is not a one-size-fits-all process. Some estate planning tools are universal like durable powers of attorney which give others the authority to act on your behalf in the event you are unable to handle your own affairs, wills which set out your wishes for the court to direct absent a fully funded trust, and payable on death designations which transfer funds in your bank accounts. Other tools, like specialty trusts, are used in cases with unique needs such as large estates with generation skipping gifts or special needs children who rely on government aid.

The swiss army knife of estate planning:

The revocable living trust is a basic trust that transcends death and has complex features that address both financial and medical issues. It can be changed or revoked, hold assets, direct that funds be dispersed to a beneficiary on a specified schedule, allow for a trustee to step in during times of incapacity, save money through avoiding a guardianship and probate, protect your privacy by preventing your affairs from being published in public online records, and so much more.

There was a day in which trusts were primarily used as tax avoidance tools for the wealthy. But trusts are no longer only for the rich and famous. In fact, for most people, they are a means of saving money.

Setting up an estate plan is a phone call away:

Determining your specific needs and seeing around the corner to what you’ll need in the future requires more than a google search. We have an estate planning toolbox and know how to use each tool. Let us explain your options and provide a custom instruction manual for your loved ones with everything they will need to address the legal and logistical issues to your specifications.

We provide COMPLIMENTARY CONSULTATIONS and charge flat fees so that you’ll know exactly what you’re getting and how much it will cost. Give us a call today at (405) 329-6600, or email me at clairebailey@baileyandpoarch.com.

At the One Year Mark, Tariffs Still Bite – Steven Rattner

At the One Year Mark, Tariffs Still Bite – Steven Rattner

With a large number of people expecting an economic downturn sometime in the next year it’s important that we keep an eye on global markets. Places like Oklahoma won’t be affect as severely when crashes happen, but we will be affected. There are people who would disagree with Mr. Rattner, but I tend to agree with him, and I think it’s worth sharing this information to my clients/friends. Rattner was the Car Czar during the auto-bailout, and he’s been in the trenches. I happen to appreciate him a little extra due to his focus on trimming the debt – he’s very involved with the group Fix The Debt, and if you are interested in geo/national economics that is one corner of the ring that would be worth keeping an eye on. I hope you get something out of this article.

-Grady

 

Steven Rattner’s Morning Joe Charts: At the One Year Mark, Tariffs Still Bite

On MSNBC’s Morning Joe today, Steven Rattner presented charts showing the failure of Trump’s tariffs to shrink the trade deficit with China while at the same time inflicting substantial pain on American farmers and other targeted sectors.

President Trump is pushing hard for a trade deal with China and it’s not hard to see why: his trade war is not going well. Last week, the government reported that the United States’ trade deficit (in goods) hit a record $891 billion last year, as imports grew faster than exports.

To date, the tariffs that Mr. Trump has imposed on imports from China have had no significant impact. Since Mr. Trump began imposing his tariffs, imports from China have risen by $19 billion to a record $540 billion as Americans kept purchasing cellphones, computers, clothing and the many other items that China makes better and cheaper than we do (or used to do). All told, imports from China amount to 22% of what comes into the United States from foreign countries each year.

With imports rising and American exports to China falling, our trade deficit (in goods) with China rose last year to $419 billion, 24% above where it was just a year earlier.

Contrary to what Mr. Trump says, his tariffs are not paid by China; they are paid by American companies and consumers in the form of higher prices.

Part of the rising trade deficit results from retaliatory tariffs that China has imposed on exports from the United States. Indeed, Chinese exports from the United States declined 7.4% last year. China has been extremely clever about targeting its own tariffs to items that are disproportionately exported from “red states” that Mr. Trump carried in 2016. Texas faces tariffs on its exports of propane, sorghum and cotton. For Michigan, Alabama and South Carolina, the issue is autos. (Smaller retaliatory tariffs have been imposed by Mexico, Canada and the European Union).

China has also taken aim at American exports of soybeans; before it imposed a 25% tariff on imports from us, China purchased about one-third of our entire soybean crop. As this chart shows, soybean prices collapsed last spring as rumors of the Chinese action began to circulate and the country began to dramatically scale back its purchases. Perhaps not surprisingly, Mr. Trump won eight of the 10 states that are the biggest producers of soybeans. Another way to look at it: soybean-producing counties went for Mr. Trump by a margin of more than 12 percentage points.

While soybean prices have recovered somewhat from their lows, even if China resumes its purchases, it may be a good while before prices fully recover; soybean stockpiles in the United States are currently about twice their historic average.

“Stormwater: Why Does It Matter?” – Why Norman Residents Are Going To Start Paying A New Utility

“Stormwater: Why Does It Matter?” – Why Norman Residents Are Going To Start Paying A New Utility

For many years Norman has been needing and working towards a plan to better manage stormwater runoff. This is not something that people talk about a lot in comparison to other items with a similar price tag, but this is a big deal. On April 2nd Norman is going to take a vote on how we move forward, so it’s important that you learn something about this before it feels like a surprise. Our citizens will start paying a new utility fee to help manage the issues related to stormwater, so before you get too upset about that you might want to look into how this is all going to work.

-Grady

*For more information visit the Vision For Norman website by clicking here.

 

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Proposition 1
Transportation Bond

The proposed $72 million transportation bond leverages City and federal funds to undertake 19 projects for a total investment of about $139 million in Norman’s transportation infrastructure.  If approved, this proposition would provide funding for the City to address issues with the existing transportation infrastructure, including, but not limited to, construction of a new Traffic Management Center, widening and reconstruction of roads, installation of new traffic signals, improvements to stormwater drainage systems, and the addition of sidewalks and multi-modal paths.

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Proposition 2
Stormwater Bond

The proposed $60 million stormwater bond would fund 33 stormwater infrastructure projects with the aim of reducing flooding in Norman and replacing aging, undersized drainage structures.  These projects were selected from a list of 60 projects identified in the City’s 2009 Storm Water Master Plan as critical to addressing flooding and water pollution issues in Norman. If approved, this would be the first stormwater bond in the City of Norman and would provide funding for large infrastructure project needs where state and federal funding is not currently available.

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Proposition 3
Stormwater Utility

If approved, this stormwater utility would provide approximately $4.2 million a year combined with $3.2 million from the General Fund to fund critical stormwater maintenance needs including, but not limited to, increased infrastructure maintenance crews, Stormwater Compliance Inspectors, a Neighborhood Assistance Program, and necessary equipment such as street sweepers and a camera truck to inventory the state of stormwater infrastructure.  This utility would be established in an enterprise fund, which is a dedicated source of funding for stormwater services only.

Oklahoma Bill Will Help Home Buyers!!! – SB 961 Home Buyer Savings Account

Oklahoma Bill Will Help Home Buyers!!! – SB 961 Home Buyer Savings Account

A lot of people scroll right by when they hear they see links about legislation, but if you or someone you care about is thinking about buying a house this could be a big deal! A huge part of my motivation for being a Realtor is helping people make a plan that will change their life in the long term, well this is a little slice of good new. I happen to believe in paying taxes, but incentivizing this process for people is a good idea, in my opinion. Now, it’s just up to people to buy within their means. Watch this space.

Grady

 

Senator Jason Smalley and Oklahoma Association of REALTORS® are leading the way to homeownership with the introduction of Senate Bill 961. Learn more about what this bill could mean for home buyers in Oklahoma ⬇️”

How Much Should You Save Every Month?

How Much Should You Save Every Month?

Millenials get a bad rap on a regular basis, and I’m definitely happy to be a defender of my generation in a few ways. Without slinging mud about our cohorts financial future I find it vital to talk about the very real metrics that we face in terms of federal entitlements being less reliable, not to mention the cost of living continually being on the rise. Life can be hard to plan when your adjusted wages and cost of living combine to squeeze you, and your probable student debt is so unreasonably burdensome. I would love to sit down and hash out all sorts of thoughts that I hold on these issues, but the fact is that you have to figure out a way to plan ahead. Saving money is not always easy, but this article below has a great narrative for opening your mind to what it could look like.

I personally plan to save a lot of my money to by investment properties, in part because that is what I know, but also because of the rate of return in the right investment properties (you are literally letting other people buy you a house…). All of that sade, this post is no sales pitch, it is a call to action for those who can relate to my own experience, and will experience the same future that I will, one way or another. So please enjoy this article, understand that it is maybe a little bit extreme, and that saving something is better than nothing – don’t let the perfect be the enemy of the good. If all you can save one month is $10 you should do it. If you don’t make a plan it’s not happening. And feel free to share or comment, I’d honestly love to discuss it further.

-Grady

 

How Much Should You Save Every Month?

More than income or investment returns, your personal saving rate is the biggest factor in building financial security. But how much should you save? $50 per month? 50 percent of your paycheck? Nothing until you’re out of debt or can start earning more money?

 

How much should you save every month?

Many sources recommend saving 20 percent of your income every month.

According to the popular 50/30/20 rule, you should reserve 50 percent of your budget for essentials like rent and food, 30 percent for discretionary spending, and at least 20 percent for savings. (Credit for the 50/30/20 rule goes to Senator Elizabeth Warren, who reportedly used to teach it when she was a bankruptcy professor.)

We agree with the recommendation to save 20 percent of your monthly income. But it’s not always that simple to suggest the right percentage of income for YOU to save.

If, for example, you’re a high earner, you’d be wise to keep your expenses low and save a much larger percentage of your income.

On the other hand, if saving 20 percent of your income seems implausible, or even impossible at the moment, we don’t want you to get frustrated. Saving something is better than nothing.

But if you want a shot at being secure through old age—and having some extra cash for things you want—the numbers suggest that 20 percent is the number you’ll want to reach or exceed.

 

Where should you save?

Opening an online savings account is a great way to start saving.  You’ll find some of the best rates online (vs. brick and mortar) and accessing your funds can be done from anywhere in the world.  Our favorite online bank is CIT, which has launched a Savings Builder Account with an APY of 2.45%.

In order to qualify for the 2.45% APY, you must either make a deposit of $100 per month (initial deposit to open is $100 as well) or have an ongoing daily balance of $25,000 or more.  CIT is trying to promote savings health, which is why to receive the very high APY, you must be willing to commit to saving money every month.

Ready to start saving? Compare today’s top saving account rates and open one today!

 

Why 20 percent?

According to our analysis, assuming you’re in your 20s or 30s and can earn an average investment return of five percent a year, you’ll need to save about 20 percent of your income to have a shot at achieving financial independence before you’re too old to enjoy it.

Here’s the thing: If you want to work like a dog every day until you die, maybe you don’t need to save all that much. Sure, you’ll still want an occasional vacation and something in an emergency fund in case your car coughs up a radiator.

Beyond that, however, we save so that one day we no longer have to work for the money. For most of us, that day won’t come for many decades, but there are regular working people who reach it as young as 40 or even 35.

What are you saving for?

True financial independence means that you can sustain your chosen lifestyle entirely from your investments’ interest and dividends.

How much money do you need to save to do that?

Good question. The simple answer: It all depends. It depends on whether you’re willing to live at the poverty line, need two homes and a sailboat, or fall somewhere in between. It also depends on how well your investments perform. If you can earn an average annual return of seven percent on your money, you can stop working with a lot less than if you only earn three percent.

For simplicity’s sake, we’ll use the common “four percent rule,” which states that, theoretically, you could withdraw four percent of your principal balance every year and live on this indefinitely. That means that you’ll need to save 25 times your annual expenses to become financially independent. (If the math doesn’t shake out for you, remember 25 x 4 is 100, and 100 percent = your total balance.)

There are problems with the four percent rule, of course. For one, there are no risk-free investments that yield anywhere close to four percent today. Sudden inflation could also become a problem. To account for this, and for simplicity’s sake, we’ll base how much you need to save based on your gross (before tax) income not your expenses.

In our example, we assume that you want to save 25 times your annual income, rather than your annual expenses. By default, you’ll actually be saving more than you need (because once you’re financially independent you could stop saving). But when discussing your source of income for the rest of your life, it’s best to be conservative.

 

How long will it take?

The chart below shows how long it will take you to amass 25 times your income based upon the percentage of your income you save. (We assume a five percent average annual return to account for a more aggressive asset allocation while you’re saving.)

How Much Should You Be Saving?
Percentage of Income Saved Time Required To Save 25x Annual Income
1 percent 100 years
2 percent 86 years
5 percent 67 years
10 percent 54 years
15 percent 46 years
20 percent 41 years
25 percent 37 years
50 percent 26 years
75 percent 21 years
90 percent 19 years

As you can see, by saving 20 percent of your income you’ll hit 25 times your annual income in just over 40 years. That means a 30-year-old who starts saving today (assuming no prior savings) will hit this target by 71. If you save less than 20 percent, it will simply take too long for your money to grow to a point where it will allow you to live off just interest.

It’s not that scary, we promise!

Remember that you only need 25 times your annual expenses, not your income, to become financially independent. The lower you keep your expenses, the sooner you’ll achieve your personal savings goal. Also, our savings chart doesn’t take taxes into account.

 

Tax-advantaged accounts can help

For simplicity, our chart looks at before-tax money going in, assuming that you’ll pay taxes on the money coming out. But tax-sheltered retirement accounts like 401(k)s and IRAs change that equation for the better.

If you take advantage of these accounts, you can get away with saving 20 percent of your net, or after tax, income.

If you qualify for a Roth IRA, use it! Money you contribute to a Roth IRA now comes back to you tax-free when you’re older, so the more you save in a Roth, the less you’ll need to save in total because you won’t have to pay taxes on the Roth withdrawals in retirement.

Contributions to a 401(k) will also help ease the pain of reaching a 20 percent savings rate, according to a TIAA-CREF blog focused on millennials.

TIAA-CREF assumes you can take advantage of at least a 5 percent match from your employer when you put money into a 401(k). This means you’ll really only need to save 15 percent of your paycheck.

Plus, if you are putting money into a 401(k), this money will be deducted from your paycheck before taxes which means that each dollar you deduct will save you some after-tax cash.

 

Getting to 20 percent—an example

Let’s say you make $1,200 every two weeks. After taxes, it’s $1,000. Your savings goal should be 20 percent of net (after-tax) income, or $200 from every paycheck.

If you make a pretax contribution to a 401(k) of five percent of your paycheck and it’s matched by your employer, that means you put aside $60 from your check before taxes (and your employer kicks in another $60). That’s $120 into your retirement account every month, and your after-tax paycheck is only reduced to $969.

You still owe yourself $80. You could put half into a Roth IRA for additional retirement savings and the other half to build up an emergency fund. What you do with it doesn’t matter as much as the fact that you saved it at all.

This means, after all that saving, your take-home income is still $889 every two weeks, which is only about 11 percent less than your previous paycheck of $1,000. By taking advantage of your employer match and pre-tax deductions, you managed to almost double your savings rate. Talk about bang for your buck!

Between pretax savings and employer matching, saving 20 percent of your paycheck gets a bit easier.

 

What if I just can’t save that much?

Don’t stress. Saving something is better than nothing.

I can already hear the shouts from the comments: “How ridiculous! I spend almost everything I earn, and on rent, food, and transport! This website is out of touch with its audience!”

Okay, okay. If the 20 percent scenario I just sketched out doesn’t fit your situation (which is going to be unique to you), then please don’t think that I’m saying you’re a failure or a chump. Like I said, we believe everyone should aim for 20 percent, not that everyone should hit that target on their first try.

Start small. Start with 1 percent. When that doesn’t sting so bad, go up to two, or even three. Maybe you hit 5 percent, and that feels pretty good. Maybe you take a crazy leap for 10 percent, and that leaves you stressed and strapped, so you scale back. It’s a process, a literal give and take.

Through it all, keep that 20 percent goal in mind. It’ll keep you from getting complacent. Whenever you get a raise, raise your saving rate! You were doing fine without that money before, and you shouldn’t miss it if you never get used to having it.

Finally, if you’re in debt, you might already be saving more than you think. That’s because paying down debt is essentially saving in reverse.

Think of it this way: One day, you’re debt-free. But you’ve been making big monthly payments to your debts for years. If you suddenly begin to save that money, what would your saving rate be?

Also, try investing

If you can’t save a good chunk of your paycheck every month, investing once (for right now) can help you start saving over the long run.

To get your started, our favorite investing platform is Betterment.

Betterment claims they’re the “simplest, smartest way to invest,” and we agree that they are. With Betterment your money will be automatically invested in index funds. But first, Betterment will ask you a series of questions to help determine your goals and risk tolerance.

You’re probably wondering: How much do I have to pay for all this? Actually, not as much as you might think. Betterment’s fee is simple—0.25 percent of your total portfolio. Compared to traditional brokerage firms, this is a whole lot less.

To get a better understanding of all that Betterment has to offer, here’s our full review.

 

I hit 20 percent—what’s next?

Keep going! As long as you’re not depriving yourself today, it’s difficult to save “too much”.

Take the same advice we gave to those who are struggling to hit 20 percent: Test your limits, and try to increase them. Building up strength (either physical or financial) takes discipline and consistency, as well as a willingness to listen to your body (or your bank account) when it tells you your current regimen is just too intense.

But saving more is definitely a good idea. Retirement experts say that the traditional recommendation of 15 percent of income is honestly too low to guarantee a comfortable retirement, and that 25 or 30 percent is a safer bet.

Also, keep in mind that if your goal is to retire early or someday leave a well-paying but high-stress job, your savings rate will likely need to be 50 percent or more. This may seem impossible, but it might give you pause when making major financial decisions like deciding how much house you can afford or what kind of car to buy.

The most important thing is to start saving. How much will vary from person to person, as well as from year to year. The best savings philosophy, in keeping with our sports metaphors, comes from Nike: Just do it.