Transcription:

Mid-Year Check-In

12:18

Announcer:

This is Blue Money, a finance podcast made for cops by cops with us, you know your money’s safe. Lieutenant Jim Donnelly of the Ben Salem Police Department and co-host Kevin McGarry of Valley Financial Group, come together to help protect and serve your financial needs. This is Blue money.

Jim :
I want to welcome everyone back to the Blue Money podcast. This is your host, Jim Donnelly. I’m here with my co-host, Kevin McGarry.

Jim:
Hey, Kevin. There’s tons of topics that we can discuss right now, a lot of important topics. But since we’re halfway through the mid-year, I thought it was really important to get the clients focused on what their goals were, how the market’s doing, and have a little checklist of what they should check to make sure they’re on their own path. So what have you been seeing, Kevin?

Kevin:
I think you’re right. It’s just getting people in, get them back on the path to feeling comfortable with what’s going on in the market because right now there’s a lot of headline risk out there. You’re hearing a ton about the debt ceiling. You still got inflation out there. You have cash on the sidelines. You have people nervous. So there’s a lot of risk out there, headline risk, that can make clients and investors behave poorly. So just getting them in and reviewing their financial plan I think is really important right now.

Jim:
I think one thing they can look at right instantly, Kevin, number one, is we always talk about having that emergency pot of gold in case something happens, they lose a job, they need house repairs, car repair. We always say it should be about six months nugget of them holding on. So it’s a good time to look at your account, what’s your savings look like, what’s that pot of gold look like for you right now? Did you have to tap into it? Do you have to reparish it? Do you have to build it back up? What do you need to do? Look at it. What do you think? That’s the six months that we’re looking at.

Kevin:
I think it’s really important. I mean, if you’re concerned we’re going into recession, if you’re concerned you’re possibly the Fed raised rates a bunch of times to slow down the economy, you’re concerned about your job, what is the amount of income you live off per month? Do you need to survive? How much do you have on the sidelines to take care of you and your family if you unfortunately do lose your income.

Jim:
Yeah, one thing, Kevin, that they also can look at is, I remember we talked about this January 1st, we want people to bump up their retirement plan contributions. It’s something important this year. I mean, for a 401k, it’s Jim:Jim:,000. You know, it’s just important that they can max it out. If you’re over 50, obviously it’s Kevin:0,000 this year, but there’s just numbers that you really should try to maximize. And if you didn’t jump it up in January, maybe you’re looking now and you have some extra money, it’s gonna help you down the line with taxes. So start trying to max that out. I mean, any advice for that, Ken?

Kevin:
I think you’re right. I think it’s important like, hey, when you sit down to mid-year and say, all right, where am I? You know, how am I invested? What’s my financial goals, right? What’s my short-term goals for the year and review your long-term goals because they’re constantly changing. But I think key and the king of everything here is cash flow. In what you were just speaking about, Jim, increasing contributions to your retirement account, how’s cash flow? Review your budget. Review your spending. Make sure you have enough money that you’re comfortable to continue to live. But also, hey, can I increase my savings to my retirement account?

Jim:
Yeah, another thing, Kevin, that people definitely have to look at is manage and prioritize their debt. And what I mean by a lot of that is credit cards. How your credit cards doing? Did you spend a lot around Christmas? You never paid them off, and now we’re in June, you’re still paying. So look at it. A lot of these credit cards, you’re paying 19%, Jim:0%. And there’s different things that they can pay it off, Snowball, Avalanche, there’s different approaches they can take, which we hit upon in an earlier podcast. But one thing I think is really important for them to look at where their debt is. We talked about the budget, their savings, but one thing with those high interest rates, you got to have a plan to get rid of them.

Kevin:
They’re crippling, especially with the increases in the rates. I mean, look at the Kevin:0-year mortgage. It’s approximately, give or take, depending on the day right now, around 7%. A year ago, we were close to 3%. You’re going to buy a new home, new home buyer, you’re getting 3% off a loan. You know a year ago now it’s seven, that’s doubled, more than doubled. Think about that on your credit card. You know that interest rate, they got you in at 7, 8% and now you’re at Jim:6, Jim:8%. That can be really impactful to your cash flow and impact your quality of life but also your savings. So it’s really important, Jim, to definitely look at your credit score and try to keep that and debt services down.

Jim:
I think it’s also important, Kev, really to break down the portfolio and see how it’s performed this year, see what they’re invested in. Like we told a couple of earlier podcasts, we don’t want someone checking their portfolio every day and beating themselves up. They can’t change it. But we talk about the importance of quarterly, especially mid-year, really break down that portfolio, call a financial advisor if you have any questions or if it’s your work account, call whoever is overseeing that for some advice if you have any questions. But it’s really important to take a look at, especially mid-year, you got to look at how your assets are performing, look at the portfolio, make sure maybe it needs to be rebalanced, maybe something needs to be changed, but you should definitely take a close look at that. Yeah, diversification is key, especially in the environment we’re in today. We’re getting a lot of volatility out there, highs and lows in the market. And the way we know how to navigate this volatility is to be diversified amongst asset classes. So make sure you’re not over-weighted in like one sector like energy or technology where

Kevin:
you can have some drag to the portfolio if those sectors kind of get hit.

Jim:
Another thing on the checklist, Kev, that you should definitely look for is make sure all your insurances are getting covered, your life insurance, health insurance, disability income, home insurance. It’s a good time to review half the year. A lot of the time, these policies don’t go from January 1st to December Kevin:1st. A lot of these policies are picked up in April or May and they can be running out through July to July. So it’s important to take the time. I know a lot of people don’t. People are busy with other things, but it’s really important. You don’t want that elapsed in healthcare or car insurance or anything like that. So it’s important. It might take you 15, Jim:0 minutes. You can probably just pull it up online. Just call to your agent, your advisor to figure out what’s going on, but you’ve got to stay on top of that.

Kevin:
I just called my agent. Our premium on car insurance went up over $500. I’m like, nobody got in an accident here, unless my wife didn’t tell me. And he explained why. So it was the ability to shop and reduce the cost. So it’s a good time to evaluate mid-year on that. Also even your life insurance, see where rates are in old policy versus new policy. I think it’s really, really important.

Jim:
And one thing I definitely want people to check is for their estate planning documents. I want to be able to look for your beneficiaries. You should do that at least once a year. Anything changed, did you just get married, did you just get divorced, did anything happen to your beneficiary that would have ruined it that you might need to change it. So it takes a couple of minutes. If you didn’t do that come January 1st, then definitely do it mid-year. You should stay on top of that because we see too many times here, Kev, where people get divorced and the beneficiary is the ex-wife and they end up dying and the ex-wife is really entitled to the money.

It’s ugly.

Jim:
We see it all the time. I couldn’t tell you how many times it happens where they don’t even know who their beneficiary is. They haven’t changed it since they got hired at their agency. So it happens more than you would think.

Kevin:
No, it definitely does. I mean, I think it’s really important once a year, review those beneficiaries, review your will, make sure to, you know, the people that you want your wealth to be transferred to, that they’re gonna receive those assets. But it’s also really important, you know, if you have a family, your wife understands the plan, understands where the assets are, because a lot of people don’t know, right, when they come in. They don’t know what their husband or what their wife has. They don’t know where to find it. And you want to make sure that your family can keep on running and living if something unfortunately happens to you.

Jim:
And the last thing I want to talk about on the checklist, Kev, is definitely you got to start planning for your taxes even though it’s only a mid-year, but maybe last year when you got your taxes, you had to pay, or maybe you got a large sum back and you really didn’t want that much. So it’s a good time to take a look and maybe increase your withholding amount at work if you don’t want to pay or you want to get more back, but take a look at it. See where you’re on pay split, see where you are salary to date, see where you are last year, and see if your taxes are adding up.

Kevin:
That’s it. I mean, I think it’s, you know, again, looking at it, see, hey, how can we reduce the tax bill, make sure we’re not giving the IRS any gifts, and, you know, there’s multiple ways to do that, like I said, increase your withholdings or increase your contributions to your retirement plans, and make sure, speak to a CPA, say, is there any new changes or new laws or rules moving forward in the upcoming tax year?

Jim:
Yeah, I just thought it was important to really have a checklist for our audience to go through. I mean, people probably are going to do every single one, but if we can get a couple of listeners to do three or four of the ones that we discussed as a home run, it’s going to help out for them.

Kevin:
I think it’s the most important thing here is, hey, listen, the markets aren’t going straight up. There’s been a lot of volatility. There’s a lot of uncertainty. You know, you have the debt ceiling. That’s a new thing. You have an election coming up next year, so there will be a lot of headline risk there as well. But if you review the plan, review your financial goals, and it takes maybe a half hour if you’re doing it once, twice a year, it will give you the confidence to get through difficult markets.

Yeah, no, it’s true, Kevin.

Jim:
I mean, look at it. I mean, without regular maintenance, financial plans tend to fall apart. It’s like, look at your car. You’ve got to get your car inspected yearly. You’ve got to stay on top of it, and people just neglect their financial plans. They worry about it next year or I’m not retiring for 5, 10, 15, Jim:0 years. But one statement we always hear, Kevin, from everyone is, I wish I would have started earlier. I wish I would have known this advice 15, Jim:0 years ago, not three years before I’m about to retire. We hear that all the time. So, that’s really what we try to preach is start early. Start early because it’s a marathon, especially investing. So, it’s so much better now to lay the groundwork than wait for the last couple of years before

Kevin:
you retire. Now, listen, man, you can go to many financial advisors. You can go to listen to many podcasts or read some blogs. And they’re pretty much going to give you the same content and tell you what to do. But the onus is on you to go do it. All this, what we went over today, Jim, is a plan that’s going to take some time. It’s just going to cost you time to get through it and maybe an hour a year, maybe two hours a year. And to you, to make sure your savings are right, you’re meeting your goals, your family is protected, and you’re not overspending and giving gifts to the IRS. I think two hours is definitely worth it.

Jim:
Be an aspirator voice, Kevin. For the audience, that’s going to wrap up the Blue Money Podcast for today. If anyone has any questions, just please don’t hesitate to reach out to me and Kev. We’ll try to help you out. Set up a financial plan. Go over his checklist with you and make sure you’re getting squared away towards retirement. Even if you’re just starting on the job, it’s never too early to start, or really not. So thank you for listening. Be safe out there.

Be safe out there.

Announcer:

Thanks for listening to Blue Money. To learn more about Jim and Kevin or for a free financial assessment, visit valley financial.com or click on the link in the podcast description or show notes. Until next time, safe investing. This material is intended to be educational in nature and not as a recommendation for any particular strategy, approach, product or concept for any particular advisor or client. These materials are not intended for any form of substitute or individualized investment advice. This discussion is general in nature and therefore not intended to recommend or endorse any asset, class, security, or technical aspect of any security for the purpose of allowing a reader to use the approach on their own Before participating in any investment program or making any investment clients, as well as all other readers are encouraged to consult with their own professional advisors, including investment advisors and tax advisors, valley Financial can assist in determining a suitable investment approach for a given individual, which may or may not closely resemble the strategies outlined herein.