BE FINANCIALLY INDEPENDENT

Posted on March 19, 2013 by Pedro Palicio, MBA, Ph.D.

According to Wikipedia, and in the narrow sense of the word, you can be financially independent if you have sufficient personal wealth to live indefinitely without having to work actively for basic necessities.
It is a well-documented fact that the typical American family spends 34.5 cents of every dollar of disposable income (after-tax income) in interest payments to banks, credit card companies and other financial institutions. This type of individuals amounts to 80 to 85% of the population and they are always leveraging their future income to pay for the items they need now. They are always in debt and not saving any money for their future. If they could redirect those 34.5 cents of every disposable dollar towards them instead of away from them, wouldn’t they be closer to be financially independent?
There is other type of individuals that amounts to 10 to 15% of the population that have more discipline and save to be able to pay cash for most mayor purchases. Although these types of individuals do not pay interest to others, once they purchase something, they lose forever the compound interest that they may be earning on the money used for the purchase, the so-called lost opportunity cost. The fact is that we all finance everything we buy, either by paying interest to others or by losing interest in the money we use to pay cash for our purchases.
Is there a better way to get closer to be financially independent? Yes, there is, and unfortunately, it is practiced by less than 5% of the population. What about if you could find a financial instrument that grows the money you deposit in it in a contractually guaranteed and consistent manner, allows flexibility in the amount of money you can contribute to, guarantees access to credit, provides tax benefits and a tax-free legacy? Well, it exists, and it is a custom-designed participating whole life insurance policy.
By using a custom-designed participating whole life insurance policy to pay for mayor purchases, you borrow the money from the insurance company using the cash value of your policy as collateral for the simple-interest loan, and although that cash value serves as collateral, it continues to earn compound interest and dividends at the same time. By paying the loan to the insurance company in terms dictated by you and not the insurance company, you are recycling your money for additional future purchases, and if you pay your loan to the insurance company at a rate higher than what they are charging you, the excess payments go to increase the cash value, which is continually compounding.
What about if you are medically uninsurable or highly rated insurance wise? No problem as long as you are the owner of the policy and you have an insurable interest on the life of the insured. As the owner of the policy, you control the cash value and all the financial benefits described above.
With enough patience and discipline, you too can get a step closer to be financially independent.

Written by: Pedro A. Palicio, MBA, Ph.D.
E: pedro.palicio@BeFinanciallyIndependent.net
T: 305-665-4508
www.BeFinanciallyIndependent.net

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21st century grandparents

Posted on February 28, 2013 by Pedro Palicio, MBA, Ph.D.

Forget about white hair and rocking chairs. The idea that all grandparents are “elderly” is as old-fashioned as rotary phones. However, the idea that grandparents spoil their grandchildren has stood the test of time.
Some things never change
During in-depth interviews,* most grandparents age 50+ surveyed by AARP said being a grandparent was a “joy.” Many mentioned that grandparenting is like parenting, only better since they don’t have to take primary responsibility for providing care — or discipline. Citing the benefit of age and maturity, survey participants said they’re better able to appreciate their grandchildren.

That’s not to say the grandparents surveyed are only in it for the good times. Many said they feel a responsibility to help shape their grandchildren’s lives by counseling them, passing on values, providing moral guidance and establishing intergenerational family ties.

Spending and spoiling
Has the recent recession put a damper on how much money today’s grandparents are spending on their grandchildren? More than half of those surveyed said the recession didn’t change anything. However, a similar number said they’ve made financial cuts in other areas so they can afford to keep spending on their grandkids.

Gifts that keep on giving
Instead of showering grandkids with more and more presents, some grandparents are giving gifts that make a difference, such as money for college or contributions to a savings (or investment) account. For older grandchildren who have earned income, funding a Roth individual retirement arrangement (IRA) is another gift that can provide long-term benefits. A Roth IRA’s potential for tax-deferred earnings and eventual tax-free distributions** can be very attractive.

A life insurance policy is another gift with lifelong benefits. If you have grandchildren, talk to your financial professional about how you can spoil them — in a financially sound way.

Checkout the rest of the articles from our newsletter, Lets talk Money, in our website www.uwmanagers.com or call us if you have any questions 305-665-4508.

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Exchange Notification to Employees Delayed

Posted on February 14, 2013 by Isis-Palicio

The deadline for employers to notify employees of the availability of Health Benefit Exchanges has been delayed from March 1, 2013, to late summer or fall of 2013.
The Department of Labor is considering providing model, generic language that could be used to satisfy the notice requirement. Future guidance on complying with the notice requirement under the Fair Labor Standards Act (FLSA) section 18B is expected to provide flexibility and adequate time to comply. Here is an excerpt from the new notice released Jan. 24, 2013:

The Department of Labor has concluded that the notice requirement under FLSA section 18B will not take effect on March 1, 2013 for several reasons.

First, this notice should be coordinated with HHS’s educational efforts and Internal Revenue Service (IRS) guidance on minimum value.

Second, we are committed to a smooth implementation process including providing employers with sufficient time to comply and selecting an applicability date that ensures that employees receive the information at a meaningful time.

The Department of Labor expects that the timing for distribution of notices will be the late summer or fall of 2013, which will coordinate with the open enrollment period for Exchanges.

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Great way to start the New Year

Posted on January 31, 2013 by Pedro Palicio, MBA, Ph.D.

Are your finances suffering from holiday fatigue? Did you go overboard on spending? Are you worried about having too much debt? If the answer is yes, then it’s a good time to make some changes. Start the year off right by creating a spending plan.

A spending plan can help you get your finances in order. If you routinely run out of money before your next paycheck arrives or simply would like to invest more for your future, a spending plan may be just what you need.

Follow the money
Where does your money go? Find out by tracking your spending — from your rent or mortgage payments right down to the smallest purchase — for a month or two. Group expenses into categories and tally them up. Then, compare how much you spent with your monthly income. Don’t forget about expenses you pay semi¬annually or annually instead of monthly (such as property and other taxes and insurance premiums).

Balance spending and income
Next step: Project how much your future monthly expenses will be. If your projected expenses exceed your income, look for expenditures you can reduce (or eliminate) and lower your spending projections in those categories.

Include “saving and investing” as a monthly spending category so you can build up a rainy day fund for unexpected expenses and invest for your financial goals. If you have the money automatically deposited into an account every payday, you may not even miss it.

Treat yourself
Chances are you won’t stick to a spending plan that deprives you of all the things you enjoy. Give your¬self a reasonable amount for discretionary expenses. Just don’t go over budget.

Protect yourself
Even the best spending plan won’t help you much if you suddenly lose your income due to disability. That’s where having the right insurance can help. Contact your financial professional for a review.

A reasonable spending plan puts you in control of your money. After living with your plan for a while, spending wisely will become a way of life.

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What your children should know about your finances

Posted on January 3, 2013 by Isis-Palicio

Talking to adult children about your personal finances and estate strategy may not be easy, but it is important. You don’t have to disclose exact facts and figures. But generally discussing your finances with your grown children and introducing them to your financial professional can better prepare the whole family for the future.

Assets and debts
Sharing information about assets, income, expenses and debts may be especially difficult. If you’re reluctant to give specifics, consider writing a letter of instruction as part of your estate planning strategy. The letter can include your financial and retirement account numbers and locations, along with PINs and passwords for online accounts. Keep the letter with your will.

Insurance
Your personal representative (executor) needs to know the policy number(s) and location of any insurance policies on your life. Make sure you store policies somewhere safe and easily accessible. You don’t want your family to go without needed funds because they can’t locate your insurance policy. Also go over any other insurance coverage you may have — health and disability income, for instance.

Estate documents
Discuss your general estate planning strategy with your adult children, making sure they understand your wishes and the purpose of the various documents. Give them your estate attorney’s contact information.

Have you named an adult child as the personal representative (executor) for your estate? You and your attorney should go over the responsibilities of the job with that family member. It’s possible the child might not want to serve and you’ll need to choose someone else. Similarly, if you’ve chosen an adult child as a trustee or co-trustee of a trust that’s part of your estate strategy, discuss the terms of the trust with that child.

Copies of health care directives, such as a health care proxy, should be given to the person you’re authorizing to make health care decisions on your behalf if you’re unable to do so yourself.

For more articles like this go to www.uwmanagers.com and subscribe to our newsletter.

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When retirement is near and resources are flagging

Posted on October 30, 2012 by Pedro Palicio, MBA, Ph.D.

If you’re closing in on retirement and your retirement funds are coming up short, you have other options for beefing up those resources and stretching them to last longer.

Keep working awhile: Working the couple of years or so until you reach your full retirement age or older can help in two ways: You’ll be able to invest more in your retirement plan and your retirement assets will need to last fewer years.

Postpone Social Security benefits: Also, every year you put off taking your Social Security benefits, up to age 70, will increase the benefit you’ll receive by about 8% if you were born in 1943 or later, not including any Social Security cost-of-living adjustments. The benefit increase no longer applies after age 70.

Consider an annuity: Contributing to an annuity is another option that can help make your retirement resources last. An annuity can provide an income that you can’t outlive or payments for a set period. You can also choose to have the annuity make payments to you for your lifetime and then to your surviving spouse for his or her lifetime.*

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Get the most out of Social Security benefit

Posted on October 10, 2012 by Pedro Palicio, MBA, Ph.D.

What you don’t know can cost you. But by digging deep into the small print of the Social Security rules, you can find ways to get the most out of the retirement benefits you’re entitled to receive. Here are two potential strategies.

Wait longer to claim

The longer you wait to receive your retirement benefits, the bigger the benefit payment will be (up to age 70). In fact, you’ll receive an additional 8% in benefits for every year you delay collecting benefits beyond your official (“full”) retirement age. If you wait until age 70 to start collecting benefits, your monthly check would be 32% greater than if you started collecting at age 66, or 24% greater than if you started at age 67.

Capitalize on your married status

Let’s say you and your spouse earn similar incomes and have reached full retirement age (age 66 for those born from 1943 through 1954). Your spouse wants to retire, but you want to keep working. Your spouse can retire and claim benefits, and you can go ahead and claim spousal benefits on his or her record. This strategy lets you wait until you reach age 70 to claim your own Social Security retirement benefits, when you’ll be eligible for the maximum benefit payout.

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Good news on the higher education front

Posted on September 16, 2012 by Pedro Palicio, MBA, Ph.D.

Parents with college students, take heart. The average family spent 9% less on college expenses for the last school year than for the prior year — despite rising tuition and other college costs — according to a study by Ipsos for Sallie Mae, a financial services company specializing in education.*

How families cut costs:
What contributed to the cost savings? A variety of factors:
1) More students lived at home; 2) More students began their college careers at two-year public colleges; 3) More families filed the Free Application for Federal Student Aid (FAFSA), with middle and higher income families making up most of the increase; 4) A higher percentage of families received grants and scholarships. Middle and higher income families accounted for most of the growth.
* How America Pays for College 2011
Check out www.uwmanagers.com for more information on ways to plan for college.

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Is your buy-sell in agreement?

Posted on July 31, 2012 by Pedro Palicio, MBA, Ph.D.

Your buy-sell agreement lays the groundwork for the business to continue should you (or another owner) die or become incapacitated. Since the agreement establishes a way to determine a sale price for your share of the business, it’s not unusual for an annual valuation to be required. If this isn’t being done, serious problems could result if a later valuation is unexpectedly high or low.

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I Finally Found a Great Web Designer/Engineer.

Posted on July 19, 2012 by Pedro Palicio, MBA, Ph.D.

I started working with Internet Market Consulting in June 2012, after several years of terrible and expensive experiences with various other web designers. I will not revisit my horror stories, but at one point I had to hire a lawyer to get my domain name back from a designer that was holding it hostage and kept asking for more and more money.
Needless to say, I was skeptical about doing business with yet another web designer and thousands of miles away. I am happy to tell you that it has been the best experience of my life.
Within Internet Market Consulting, I work with Ms. Wendy Sherwood and the first thing that Wendy said to me was, we are not just web designers, we are engineers. We don’t just look at how good your website looks, but we make sure it is functional. She also impressed me by telling me that I did not have to go through the expense of starting over with a new website; it would be less expensive for me to fix the website I already had. Everyone else told me otherwise.
To make a very long story shorter, Wendy started fixing all the problems and over the past four to five weeks, she debugged our website, fixed the text problems and taught me how to use our CMS (another thing she cleaned up for us).
I am extremely pleased with the work that Internet Market Consultants and Wendy Sherwood have done for us. I look forward to a long-lasting relationship and I highly recommend them to anyone who needs any type of web services.
Check them out at www.internetmarketconsulting.com

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