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Advisors Management Group

Be Smart with Your Holiday Jingle
The holidays are upon us, and the pressure is on. There is so much to do to prepare for the holiday season and the holiday bustle can leave you wondering if this is really the most wonderful time of the year. This year, the average American household plans to spend over $1000 this holiday season on gifts, decorations, travel to family and holiday meals. This, on top of normal monthly spending can make November and December some of the most expensive months of the year. Without a plan of attack, December’s holiday magic can easily turn into January’s credit card nightmare. Plan Ahead When it comes to gifts, know who you plan to buy gifts for and how much you intend to spend on them. Stick to the budget. It is easy to get trapped into spending too much especially if you overspend on someone, you may be tempted to buy more for another to make the gift even. If you determine what you are spending, you can determine what you think you’d like to buy to before you enter the store. Use a holiday savings account to save a little bit each month to avoid feeling overwhelmed when the time to shop comes. Keep the store ads with you. Many stores will price match, and this could save you a stop or help you secure an item that you are having difficulty getting at another store. Don’t underestimate how planning your shopping trip ahead can save you both time and money. Plan your route and keep your list handy. By avoiding driving all over town, and potentially backtracking, you can save money on gas and save time. Eating a healthy meal before you head out will put you in a good frame of mind and help you curve the temptation of spending unnecessary money on meals out or stopping for snacks while out and about. Avoid shopping at times that attract crowds like mid-day Saturday and Sunday. By shopping at off times, you can move through your list quickly and with less frustration. Although this one won’t help your pocketbook, time is money and piece of mind is priceless. Shop Online Using a credit card is the most secure way to shop online. It is easier to dispute a fraudulent transaction on a credit card than with a debit card. Remember not to charge anything you cannot pay off when the statement comes. Check multiple websites to make sure that you are getting the best deal. Aim to get free shipping and check for coupon codes. Avoid paying more for something than you should. Items like gaming consoles and other highly desired items are often sold brand new by private parties for a healthy upcharge to parents who are willing to pay anything just to get something that they can’t find in the stores. These items can often be purchased at a fair price after the holidays when the demand drops. Avoid Holiday Scammers and Fraudsters Be mindful of your purse, wallet and credit cards. Watch for skimming devices and be discreet about how you enter you pin number. Track packages and know when they are being delivered. Arrange to have them shipped to your place of employment or to have a neighbor pick them up off your porch. Be wary of vendors selling goods online who ask for gift cards as payment. This is a common internet scam, and it is likely that you will not receive the goods you purchased. Review your credit card statements often. Report and dispute any suspicious transactions right away. By being prepared and organized, you can save time and money so that you can focus on what really matters this holiday season. May your shopping be stress free and may your holiday season be merry and bright!   Rebecca Agamaite, MBA Investment Advisor Representative  Rebecca joined the firm in 2011 as an Investment Advisor Representative. In this role, she works with clients to manage their investment assets and help them obtain their financial objectives. Rebecca brings a great deal of experience to the team having worked for several years at Marshall & IIsley Bank and MetLife.   Advisors Management Group, Inc. is a registered investment adviser whose principal office is located in Wisconsin.   Opinions expressed are those of AMG and are subject to change, not guaranteed, and should not be considered recommendations to buy or sell any security.  Past performance is no guarantee of future returns, and investing involves multiple risks, including, but not limited to, the risk of permanent losses.  Please do not send orders via e-mail as they are not binding and cannot be acted upon.  Please be advised it remains the responsibility of our clients to inform AMG of any changes in their investment objectives and/or financial situation.  This commentary is limited to the dissemination of general information pertaining to AMG’s investment advisory/management services.  Any subsequent, direct communication by AMG  with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides.  A copy of our current written disclosure statement discussing our advisory services and fees continues to remain available for your review upon request.
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28 Feb 2018

Advisors Management Group

5 Times You Don’t Need to Give Your Social Security Number

If you feel like you’re constantly asked to provide your Social Security number, you may be right! Social Security numbers were originally created to track income to determine your Social Security benefits in retirement. But now, a Social Security number has become a near-universal form of identification, and is often sought whenever you give out your personal information. With this increase in use has come a massive increase in the amount of identity theft reported in the United States. In 2016, 15.4 million cases of identity theft were reported, according to the Insurance Information Institute. One way to lessen your risk is to limit where you give out your information. Here are 5 places where you don’t need to give out your Social Security number. 1. Before you’ve been hired for a job Employers may ask for a Social Security number before you’ve been hired, but it’s not mandatory to provide it, according to the Society of Human Resource Management. When you are hired, you will need to provide your Social Security number so your employer can do a background check. But if you’re asked for your SSN on your job application, you may be able to leave it blank, or explain that you don’t feel comfortable providing that information. 2. At the doctor’s office Your doctor may ask for your Social Security number when you fill out patient forms because they want to easily identify you to collect outstanding payments. But your insurance company identifies you by your insurance policy number in order to bill you and submit payments. While your insurance company will need your SSN, your doctor does not need this information for billing purposes. If you have Medicare or other federally sponsored health care, you will need to provide your SSN, according to the IRS. Otherwise, leave this box blank the next time you’re visiting the doctor. 3. To attend schools or colleges According to the US Department of Justice, all children living in the US are entitled to attend public school, and schools cannot require children or their parents to provide a Social Security number in order to enroll. If they ask for proof of identity, provide a birth certificate or passport. Leases or electric bills can also be presented as proof of address. If you’re heading to college, you’re not required to submit your Social Security number. However, if you’re applying for financial aid, loans, or scholarships, this information will be needed to confirm you or your family’s income, as well as to check your credit score. 4. At supermarkets and other retailers You will need to provide your Social Security number when applying for a credit card, because the bank associated with your card will want to track your credit score. But rewards cards at grocery stores, pharmacies, and other retailers don’t have any credit value, and are used just to track your purchases. So don’t give out your SSN when you sign up! 5. When purchasing travel You don’t need to provide your SSN in order to book travel. Depending on where you’re going, you will need to provide your passport number and will need a credit card in order to purchase your tickets. Once you’re ready to take off, bring your driver’s license, passport, or another TSA-approved form of ID. There are situations when you will need to provide your Social Security number, like applying for a credit card; filing your tax returns; when signing up for state and federal benefits like Medicare or food stamps; or when applying for a driver’s licence. Otherwise, if you’re asked for your SSN, the Social Security Administration recommends you ask these questions:   Why do you need it? What will it be used for? What other identification do you accept? What will happen if I don’t provide my number? Keep your Social Security card in a safe place and take steps to protect your identity. Source: Finance.Yahoo.com

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28 Feb 2018

Advisors Management Group

Avoid 3 Common Credit Card Traps

Getting a credit card an easy way to build your credit, but you should still be careful when it comes to spending and swiping. Kimberly Palmer, credit card and banking expert from Nerdwallet, shares some pros and cons of using plastic. PRO: Credit cards can help build your credit history “Credit cards are actually one of the simplest and most straightforward ways to build credit,’ Palmer says. “Building your credit history when you’re young is so important because it can really affect so much of what you do in your financial life.” Showing that you can responsibly handle credit will make it easier for you to take out a loan — for your education, a car, or a new home — down the line. But in order to build a strong credit history, be sure to pay off your bills on time every month. “The lender you’re considering using will always check your credit history to see how you’ve paid off your bills each month,” Palmer says. “It’s such an important thing to build up [your credit history].” CON: Late payments can snowball Palmer cautions credit card users to not see credit cards as “free money.” “It’s really important to understand that if you don’t pay off the balance at the end of every month, then really quickly fees and interest can accrue and you can end up building up a lot of debt,” she says. PRO: Rewards and perks When you sign up for a credit card, Palmer recommends researching all the benefits that come with it. Aside from earning points and getting cash-back deals, there might be other advantages that come with your card. “Some of the perks that come with credit cards are things like renters’ insurance or car insurance. Some cards come with purchase protection, so if you buy something you can get your money back. There’s also things like fraud protection, which can help you avoid worrying about losing money,” Palmer says. CON: Leaving money on the table If you avoid researching the benefits and perks of offered by your card, you could be leaving money on the table, Palmer says. “Credit cards will reward you for spending on different categories and you want to make sure you’re maximizing that,” Palmer says. “Cards are so different from each other so you first have to really think about how you spend the money because you can actually get rewarded based on how you spend,” she says. Look for cards that offer the best benefits for the purchases you make. For example, if you use your card for groceries, find cards that offer a high percentage back on those purchases. Or if you want to travel, find a card that offers travel deals or rewards points you can cash in later. PRO: Using your card as a budgeting tool Palmer says your credit card can be an easy way to organize your finances and see where your money is going each month. “Every time you use it, it gets logged on to your account, so you can look up your statement and review where you spent money,” Palmer says. “You can also organize that spending by category so you can see the percentage you’re spending at restaurants or on travel [for example].” Seeing where you spend can help you determine if you need to cut back. “It’s a really useful way of getting organized with your finances without having to collect receipts,” Palmer says. CON: The temptation to overspend Palmer cautions that if people find themselves overusing their cards to pay with cash instead. “If you really need to exert more self-discipline, and it’s just too tempting to pull out that credit card and spend — even when you know you shouldn’t — that’s a red flag,” Palmer says. Source: Finance.Yahoo.com

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01 Feb 2018

Advisors Management Group

How To Master The Money Decision-Making Process

We’re over 1 month into 2018, a time when many people are still riding the motivation high of their New Year’s resolutions. People resolve to save more and spend less, pay off debt, and accumulate funds for a future purpose. But even if you have those goals firmly placed in your mind, when it comes to the action steps and decisions it takes to reach those goals, many people battle internal thoughts and external stimulus. There are two voices playing in your head. Typically, one voice outshouts the other, making it the winner of your decision-making process. There are several types of conversations that might play out at various times. For example, one voice might be urging you to spend on something fun or frivolous, while the other tells you that it won’t be quite as much fun when the bill comes in next month. It might sound something like this: “Wow, look at that __________! You’ve always wanted it!” “Gee, yeah, I’ve been thinking about buying it. But, I don’t know….” “Come on, you KNOW you want it. You deserve it, you work hard!” “I’ve been working really hard to keep my spending under control…” “Which is one of the reasons why you should have it. You know, a reward for how well you’re doing!” The internal conversation continues until one voice wins — causing you to spend or save. Your inner voices battle, unless one is clearly stronger than the other, and it will lead you to one of two paths: living closer to your values or money misery. The good news is that you know what to do and which voice to heed. The bad news is that sometimes, the cacophony is simply too overbearing to find clarity. It might take a “third party”, so to speak, to help you decide: your gut. The voice that is urging you to go off plan will typically awaken that feeling in your stomach reminding you about that something that might not be aligned with your values. Your gut feelings are worth trusting. You know from your money history whether your decisions have led you towards positive outcomes or frustrating problems. Here are five action steps to making the right financial decisions: 1. Make a list of the last five financial decisions you’ve made. 2. Which voice swayed your decision? 3. If you could go back and do it over, would you make the same decision again? 4. What did you THINK about when making the decision? 5. What did you FEEL when you made the decision? Chances are, you might not even remember what you thought or felt — your decision might have been that quick and decisive. But nonetheless, there was a process. Whether it was deciding on purchasing a bottle of water, a snow blower, or to invest in a particular security, you went through a process of deciding. Be present and aware of your decisions and whether those decisions are being made with your values in mind. Be aware of which voice is speaking and whether it is pulling you away from your goals or supporting your choices to live within your financial boundaries. Check in with your gut and decide whether what you’re “hearing” is genuinely what you want. Your awareness is necessary in order to achieve financial success — there are no magic bullets or potions. There is only you, your values, and your ability and willingness to listen to the right voice. Source: Forbes.com

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01 Feb 2018

Advisors Management Group

How the New Tax Law Affects Retirees and Retirement Planning

Tax lawyers, accountants and financial planners are burning the midnight oil trying to figure out all the ins and outs of the new tax law. The men and women of the IRS, given less than two weeks between the day President Trump signed the law and the time most of the new provisions went into effect January 1, are scrambling, too. When Congress approves the most sweeping changes in the tax law in more than three decades, you can bet you’ll be affected. Here are 17 things you need to know about how the new rules affect retirees and retirement planning. Supersized Standard Deduction The new law nearly doubles the size of the standard deduction – to $12,000 for individuals and $24,000 for married couples who file joint returns in 2018 (up from $6,500 and $13,000). The increase, in conjunction with new limits on some itemized deductions, is expected to lead more than 30 million taxpayers who have itemized in the past to choose the standard deduction instead (because it will reduce their taxable income by more than the total of their deductible expenses). There’s even more incentive for taxpayers age 65 and older to make the switch because their standard deduction will be even bigger. As in the past, those 65 and older or legally blind get to add either $1,300 (married) or $1,600 (single) to the basic amount. For a married couple when both husband and wife are 65 or older, the 2018 standard deduction is $26,500. All the hoopla about doubling the standard deduction is somewhat misleading. As a trade-off, the new law eliminates all personal exemptions. The 2018 exemption was expected to be $4,150, so, for a married couple with no children, the $11,000 hike in the standard deduction comes at a cost of $8,300 in lost exemptions. While this will affect your tax bill, it does not affect the standard deduction/itemizing choice. A Squeeze on State and Local Tax Deductions The new law sets a $10,000 limit on how much you can deduct for state and local income, sales and/or property taxes for any one year. This could be particularly painful for retirees with second homes in the mountains, say, or at the seashore. In the past, property taxes were fully deductible on any number of homes, and there was no dollar limit on write-offs for either state and local income or state and local sales taxes. The new law lumps all so-called SALT (state and local taxes) deductions together and imposes the $10,000 annual limit. This crackdown, along with the increase in the standard deduction, will lead millions of taxpayers to switch from itemizing to claiming the standard deduction. Loss of Deduction for Investment Management Fees Just as one part of government is pushing financial advisers who work with retirement accounts to charge clients set fees rather than commissions, Congress has decided to eliminate the deduction of such investment management fees. In the past, such costs could be deducted as a miscellaneous itemized deduction to the extent all of your qualifying miscellaneous expenses (including fees for tax advice and employee business expenses, for example) exceeded 2% of your adjusted gross income. As part of the tax overhaul, Congress abolished all write-offs subject to the 2% floor. If you’re paying a management fee for a traditional IRA, having it paid from the account itself would effectively allow you to pay it with pre-tax money. 401(k)s Spared A firestorm of criticism blew up last fall when it was learned that the House of Representatives was considering severely limiting the amount or pre-tax salarly retirement savers could contribute to their 401(k) plans. In the end, though, Congress decided to leave 401(k)s alone, at least for now. For 2018, savers under age 50 can contribute up to $18,500 to their 401(k) or similar workplace retirement plan. Older taxpayers can add a $6,000 “catch-up” contribution, bringing their annual limit to $24,500. Stretch IRA Preserved Early on in the tax-reform debate, it appeared that Congress would put an end to the “stretch IRA,” the rule that permits heirs to spread payouts from an inherited IRA over their lifetime. This could allow for years, or even decades, of continued tax-deferred growth inside the tax shelter. One plan that gained traction on Capitol Hill would have forced heirs to clean out inherited IRAs within five years of the original owner’s death. The accelerated payout would have sped up the IRS’s collection of tax on the distributions. Ultimately, though, this plan wound up on the cutting room floor. The stretch IRA is still available as long as the heir properly titles the inherited account and begins distributions, based on his or her life expectancy, by the end of the year following the original owner’s death. Stretch IRA Preserved Early on in the tax-reform debate, it appeared that Congress would put an end to the “stretch IRA,” the rule that permits heirs to spread payouts from an inherited IRA over their lifetime. This could allow for years, or even decades, of continued tax-deferred growth inside the tax shelter. One plan that gained traction on Capitol Hill would have forced heirs to clean out inherited IRAs within five years of the original owner’s death. The accelerated payout would have sped up the IRS’s collection of tax on the distributions. Ultimately, though, this plan wound up on the cutting room floor. The stretch IRA is still available as long as the heir properly titles the inherited account and begins distributions, based on his or her life expectancy, by the end of the year following the original owner’s death. FIFO Gets the Heave-Ho For a while, it looked as if Congress would restrict the flexibility investors have to control the tax bill on their profits. Investors who have purchased stock and mutual fund shares at different times and different prices can choose which shares to sell in order to produce the most favorable tax consequences. You can, for example, direct your broker to sell shares with a high tax basis (basically, what you paid for them) to limit the amount of profit you must report to the IRS or, if the shares have fallen in value, to maximize losses to offset other taxable gains. (Your gain or loss is the difference between your basis and the proceeds of the sale.) This flexibility can be particularly valuable to retirees divesting holdings purchased at different times over decades. The Senate called for eliminating the option to specifically identify shares and instead impose a first-in-first-out (FIFO) rule that would assume the oldest shares were the first to be sold. Because it’s likely that the older shares have a lower tax basis, this change would have triggered the realization of more profit sooner rather than later. In the end, though, this idea fell by the wayside. Investors can continue to specifically identify which shares to sell. As in the past, you need to identify the shares to be sold before the sale and get a written confirmation of your directive from the broker or mutual fund. Do-Overs are Done For The new law will make it riskier to convert a traditional individual retirement account to a Roth. The old rules allowed retirement savers to reverse such a conversion—and eliminate the tax bill—by “recharacterizing” the conversion by October 15 of the following year. That could make sense if, for example, the Roth account lost money. Recharacterizing in such circumstances allowed savers to avoid paying tax on money that had disappeared. Starting in 2018, such do-overs are done for. Conversions are now irreversible. Relief for Some 401(k) Plan Borrowers The new law gives employees who borrow from their 401(k) plans more time to repay the loan if they lose their jobs. Currently, borrowers who leave their jobs are usually required to repay the balance in 60 days to avoid having the outstanding amount treated as a taxable distribution and hit with a 10% penalty if the worker was under age 55. Under the new law, they will have until the due date of their tax return for the year they left the job. End of Home-Equity Loan Interest Deduction Taxpayers who use home-equity lines of credit to get around the law’s general prohibition of deducting interest get bad news from tax reform. The new law puts the kibosh on this deduction . . . immediately. Unlike the restriction of the write-off for home mortgage interest—reducing the maximum amount of debt on which interest is deductible from $1 million to $750,000—which applies only to debt incurred after December 14, 2017, the crackdown on home-equity debt applies to old loans as well as new ones. New Luster for QCDs The new law retains the right of taxpayers age 70 ½ and older to make contributions directly from their IRAs to qualifying charities. These qualified charitable donations count toward the IRA owners’ required minimum distributions, but the payout doesn’t show up in taxable income. As more and more taxpayers claim the standard deduction rather than itemizing, QCDs stand out as a way to continue to get a tax benefit for charitable giving. Taxpayers who qualify and claim the standard deduction may want to increasingly rely on QCDs. Custodial Accounts and the Kiddie Tax If you’re saving for your grandkids, or great grandkids, in custodial accounts, you need to know about changes in the kiddie tax. Under the old law, investment income over a modest amount earned by dependent children under the age of 19 (or 24 if a full-time student) was generally taxed at their parents’ rate, so the tax rate would vary depending on the parents’ income. Starting in 2018, such income will be taxed at the rates that apply to trusts and estates, which are far different than the rates for individuals. The top 37% tax rate in 2018 kicks in at $600,000 for a married couple filing a joint return, for example. That same rate kicks in at $12,500 for trusts and estates . . . and, now, for the kiddie tax, too. But that doesn’t necessarily mean higher taxes for a child’s income. Consider, for example, a situation in which your grandchild has $5,000 of income subject to the kiddie tax and that the parents have taxable income of $150,000. In 2017, applying the parents’ 25% rate to the $5,000 would have cost $1,250. If the old rules still applied, using the parents’ new 22% rate would result in an $1,100 tax on that $5,000 of income. Applying the new trust tax rates produces a kiddie tax bill of $843. The kiddie tax applies to investment income over $2,100 of children under age 19 or, if full-time students, age 24. New Rules for State 529 College Savings Accounts If you’re investing in a college fund for your grandchildren, you need to know about changes in tax-favored 529 plans. The new law expands the use of these savings plans by allowing families to spend up to $10,000 a year to cover the costs of K-12 expenses for a private or religious school. The $10,000 cap applies on a per-pupil basis. Previously, tax-free distributions were limited to college costs. Although 529 contributions are not deductible at the federal level, most states offer residents a break for saving in the accounts. Expanded Medical Expense Deduction While Congress cracked down on a lot of deductions, and the medical expense write-off was once threatened with complete elimination, in the end the lawmakers actually changed the law so that more taxpayers can benefit from this break. Until the new rules became law, unreimbursed medical expenses were deductible only to the extent that they exceeded 10% of adjusted gross income. The high threshold meant that relatively few taxpayers qualified, although retirees with modest incomes and high medical bills frequently did. The new law reduces the threshold to 7.5% of AGI and the more generous rule applies for both 2017 and 2018. In 2019, the threshold goes back to 10%. Tax-Free Income from Consulting Planning to start your own business or do some consulting in the early years of your retirement? If so, one change in the new law could be a real boon. The law slashes the tax rate on regular corporations (sometimes referred to as “C corporations”) from 35% to 21%, starting in 2018. There’s a different kind of relief to individuals who own pass-through entities—such as S corporations, partnerships and LLCs—which pass their income to their owners for tax purposes, as well as sole proprietors who report income on Schedule C of their tax returns. Starting in 2018, many of these taxpayers can deduct 20% of their qualifying income before figuring their tax bill. For a sole proprietor in the 24% bracket, for example, excluding 20% of income from taxation has the same effect of lowering the tax rate to 19.2%. Another way to look at it: If your business qualifies, then 20% of your business income would effectively be tax-free. For many pass-through businesses, the 20% deduction phases out for taxpayers with incomes in excess of $157,500 on an individual return and $315,000 on a joint return. Higher Estate Tax Exemption Congress couldn’t bring itself to completely kill the federal estate tax, but lawmakers doubled the amount you can leave heirs tax-free. That means even fewer Americans will ever have to pay this tax. Starting in 2018, the tax won’t apply until an estate exceeds about $11 million. This means a married couple can leave about $22 million tax-free. These amounts will rise each year to keep up with inflation. The Angel of Death Tax Break That’s what we call the provision that increases the tax basis of inherited assets to the value on the date the previous owner died. When it appeared that the new law would repeal the estate tax, some observers worried that the step-up rule would be changed or eliminated. In the end, the estate tax was retained, as noted in the previous slide. And, the step-up rule survived. If you inherit stocks, mutual funds, real estate or other assets, your tax basis will, in most cases, be the value on the day your benefactor died. Any appreciation prior to that time is tax free. Source: Kiplinger.com

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02 Jan 2018

Advisors Management Group

5 Must-Follow Credit Card Rules

Credit cards are a great tool. They can help you build credit and get paid for purchases you'd have made anyway. Alternatively, credit cards can be a path to financial ruin, leaving you deeply in debt and unable to accomplish financial goals. It all comes down to whether you make credit work for you -- or you become the credit card industry's dream customer. The good news is, mastering credit doesn't have to be hard. Just follow these five steps to make money off credit cards instead of having credit card companies make money off you. 1. Don't let your rewards go to waste Rewards cards are far more popular than cards that don't offer perks, but 31% of credit card users don't claim their rewards. This is a huge mistake akin to throwing out free money. To avoid making it, ensure you're using a card offering rewards that make sense for you. To find the right credit card, the foremost consideration should be whether you'll actually use the rewards, because it doesn't matter how many rewards you earn if they're never claimed. You may also wish to look for a card that rewards the types of purchases you routinely make. You can find cards geared toward many different categories of spending, ranging from travel and online shopping to gas station and grocery store purchases. Just don't be so wooed by the promise of a generous rewards program that you sign up even though you don't actually want the rewards being offered. 2. Don't pay interest No matter how much you earn in credit card rewards, you'll still lose money if you're paying interest. The average interest rate on a credit card is 15.99% for travel cards and 20.90% for cash back cards as of 2017. Interest, especially at these rates, makes it harder to repay your debt and costs you a fortune. If you owed $5,000 on a card with 20.90% interest and paid minimum payments of $137.50 monthly, it would take you 279 months to pay off your debt and you'd spend $8,124.64 in interest. That's a lot of money that could have gone toward retirement or a nice vacation. If you're already in debt and paying interest, make a plan to get out of debt ASAP. If you're committed to repayment and can avoid irresponsible spending in the future, consider transferring the balance of your debt to a balance transfer credit card offering a special introductory 0% rate. Most balance transfer cards charge you a small fee for the transfer -- typically around 3% -- but paying to transfer debt to a 0% interest card can still be a financially sound move since the 0% interest is so much lower than what you were paying before. Whether you opt for a balance transfer or not, make a plan to pay off debt as aggressively as possible. 3. Don't pay late Along with paying interest, paying late is also a financial disaster. A late payment can come with a fee up to $27 for a first late payment and $38 for a second within six months. A payment that is 30 or more days late will also be reported to the credit reporting agencies whose data provides the basis for your credit score. FICO data shows being late by 30 days could cause your credit score to decline as much as 90 to 110 points, if you previously had a score of 780 and no missed payments. If your score was 680 and you'd already been late twice, another late payment could lead to a drop of 60 to 80 points in your credit score. To avoid paying late, consider using auto-pay so at least the minimum payment is deducted from your bank account automatically. You can also set yourself calendar reminders. If you've already got a late payment on your credit report, ask your creditor for a good will adjustment. Often, if you've been a good customer and haven't made a habit of paying late, your creditor will be willing to take the late payment off your record. 4. Don't close old credit cards Old credit cards collecting dust in your wallet may seem useless-- but these cards are doing an important job for you by helping your credit score. Your credit score is calculated based on a number of factors, including payment history and mix of available credit. One of the factors that matters is the average age of your credit. This accounts for around 15% of a FICO score, and older is better because a long history of responsible payments shows lenders they can trust you. If you close old accounts, you'll lower the average age of credit and your score will take a hit. Another key factor essential to a good score is to keep your credit utilization rate low. Your credit utilization rate is worth 30% of your FICO score and it refers to the amount of available credit you've actually used. Ideally, you'll use no more than 30% of available credit to get high marks from lenders who don't like to see maxed-out cards. If you close old credit cards you aren't using, you reduce your available credit and hurt your utilization rate. If you had two credit cards each with $5,000 limits and owed a $3,000 balance on one card, you'd be right at the 30% utilization rate. If you closed your old card and now have just $5,000 in available credit, you'd be using 60% of your available credit -- a major red flag to lenders. 5. Don't open too many new credit cards all at once Opening too many new credit cards at the same time will also damage your credit score. When you apply for credit, an "inquiry" is placed on your credit report. This is true whether you're approved for credit or not. Too many inquiries make creditors nervous you may be about to go on a spending spree. Avoid this by limiting the amount of credit cards you open so you aren't constantly getting new inquiries on your record. Opening a few new credit cards all at once also lowers your average account age, hurting your score again. And, unfortunately, having all that open credit could potentially prompt you to charge more than you should. Don't create a temptation for yourself that could lead you into debt by having a lot of credit cards sitting around. You can master your credit Credit card issuers made $163 billion in 2016 in fees and interest charges. It's up to you if you want to fatten the pocketbooks of card issuers or if you want to have more cash to save for retirement and other financial goals. If you hope to keep more money in your own pocket instead of sending it to creditors, you have the tools to do that. Following these tips will help you keep your credit score as high as possible so you can get favorable interest rates, and you'll be able to avoid late payments or lost rewards. Source: USAToday.com

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02 Jan 2018

Advisors Management Group

How Seniors (& Everyone) can Avoid Cyber Security Threats

Older Americans are increasingly digitally savvy — but they are still a prime target for online scams. Nearly half (42 percent) of adults ages 65 and older now own smartphones, a number that's quadrupled in the last five years, according to a report by Pew Research Center conducted last year. Internet use by seniors has similarly jumped — and for the first time, half of older Americans have broadband at home. But with all that access to technology comes the increased risk of becoming a victim of cybercrime. In fact, internet scammers disproportionately target older Americans because they tend to be wealthier, more trusting and less likely to report fraud, according to the FBI. Another 2015 report estimated that older Americans lose $36.5 billion each year to financial scams and abuse. Davis Park, director of technology outreach program Front Porch Center for Innovation and Wellbeing, offers these tips to seniors – and everyone – for staying safe online: Choose a strong password. Passwords should be 12 to 15 characters long with strategically placed special characters or symbols. You should have different passwords on each of your online accounts. To help keep track of them all, use a password manager, like 1Password, Dashlane or KeePass. Keep your antivirus software up to date. That will help prevent hackers from accessing your computer, laptop and smartphone, as well as alert you to websites and downloads that could be suspicious. Use only trusted Wi-Fi resources. Free Wi-Fi seems convenient, but hackers can also use it to intercept your internet communications. Before joining a network at say, a coffee shop or retailer, confirm that the Wi-Fi connection you want to join belongs to the business you know and trust. When in doubt, use your personal Wi-Fi hotspot, or the network connection on your smartphone. Google it. Research any unfamiliar websites or email solicitations before giving up your information. Often, hackers create a link that may appear, at first glance, to be a legitimate website to trick you into giving up your personal data. Don't give your personal info. Be particularly wary of any request to provide information such as your date of birth, Social Security number or bank account. There are an increasing number of scams perpetrated by professional thieves who target vulnerable seniors, but you can protect yourself by knowing what to watch out for. Source: Cnbc.com

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27 Nov 2017

Advisors Management Group

10 Social Security Terms You Need to Understand

Social Security serves as a key source of income for countless retirees and disabled individuals. It's also an extremely complex program loaded with rules and terminology. If you're attempting to learn about Social Security (which is something you should do, regardless of how old you happen to be), here are a few key terms you'll need to understand. 1. OASDI OASDI stands for old age, survivors, and disability insurance, and in the context of your paycheck, it's the tax used to fund the Social Security program. The current OASDI tax rate is 12.4%. If you work for an outside company, you'll lose half that amount of your earnings up to a certain income limit, while your employer will pay the remaining 6.2%. If you're self-employed, however, you'll pay the full 12.4% up front. 2. SSI SSI stands for supplemental security income, and it's different from OASDI in that it's a program funded by general tax revenues, not Social Security taxes. SSI is designed to help those who are over 65, blind, or disabled with limited financial resources keep up with their basic needs. 3. FICA Tax FICA stands for the Federal Insurance Contributions Act. It's the tax that's withheld from your salary or self-employment income that funds both Social Security and Medicare. For the current year, FICA tax equals 15.3% of earned income up to $127,200 (12.4% for Social Security and 2.9% for Medicare), but those making above $127,200 will continue to pay 2.9% FICA tax on income exceeding that threshold. In 2018, the earnings cap will rise to $128,700. 4. Social Security credits In order to collect Social Security benefits, you must earn enough credits during your working years. In 2017, you'll receive one credit for every $1,300 in earnings, up to a maximum of four credits per year. For 2018, the value of a single credit will rise to $1,320 of earnings. Those born in 1929 or later need 40 credits to qualify for benefits in retirement. 5. AIME AIME stands for average indexed monthly earnings, and it's used to calculate your personal Social Security benefit. The amount you receive from Social Security is based on your highest 35 years of earnings. To arrive at your AIME, your past earnings are adjusted for inflation so that they don't lose value. 6. Full retirement age Your full retirement age, or FRA, is the age at which you're eligible to collect your Social Security benefits in full. FRA is based on your year of birth, and for today's older workers, it's 66, 67, or 66 and a number of months. Though you're allowed to claim benefits prior to reaching FRA (the earliest age is 62), doing so will cause you to collect a reduced benefit amount -- permanently. 7. Delayed retirement credits Though waiting until full retirement age will ensure that you collect your benefits in full, if you hold off on filing for Social Security past FRA, you'll rack up delayed retirement credits that will boost your benefits. Specifically, for each year you wait, you'll get an 8% increase in your payments. Delayed retirement credits stop accruing at age 70, so that's typically considered the latest age to file for Social Security (even though you can technically wait even longer than that). 8. Trust Fund The Social Security Trust Fund was established in the early 1980s to cover any future shortfalls the program might face. If Social Security has a year in which it collects more taxes than it needs to use, that money is placed in the Trust Fund and invested in special Treasury bonds. Once Social Security's incoming tax revenue fails to cover its scheduled benefits, the Trust Fund will be tapped to make up the difference. Come 2034, however, the Trust Fund is expected to run out of money, at which time future recipients might face a reduction in benefits. 9. COLA No, we're not talking about a soft drink. In the context of Social Security, it stands for cost-of-living adjustment, and it's designed to help beneficiaries retain their purchasing power in the face of inflation. Back in the day, those who collected Social Security received the same benefit amount year after year. But beginning in 1975, beneficiaries have been eligible for automatic COLAs based heavily on fluctuations in the Consumer Price Index. COLAs are not guaranteed, however. If consumer prices don't climb in a given year, benefits can remain stagnant. Such was the case as recently as 2016. 10. Survivors benefits Survivors benefits are designed to provide income for your beneficiaries once you pass. Those benefits are based on your earnings records and the age at which you first file for Social Security. Surviving spouses, children, and even parents of deceased workers are eligible for survivors benefits. Clearly, there's a lot to learn about Social Security, but familiarizing yourself with these key terms will help you better understand how the program works. It also pays to read up on ways to maximize your benefits so that you end up getting the best possible payout you're entitled to. Source: USAToday.com

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27 Nov 2017

Advisors Management Group

Tips for Reducing Your Electric Bill

Electric bills are kind of a mystery. You always remember to turn off the lights before you leave, so why is your bill still sky high? The average household spends about $112 a month on energy bills and prices are steadily rising, according to the Energy Information Administration.  The first step to demystifying your electricity bill, and hopefully reducing it, is to take stock of where you use the most energy.  "Cutting energy waste results in energy savings, but it also translates into money savings," said Kateri Callahan, president of the Alliance to Save Energy, a coalition that promotes energy efficiency. You can find a professional energy auditor to help you assess your home's energy use, potentially for free, through your electric company or the Department of Energy’s website. If you follow their efficiency upgrade recommendations, you could shave 5% to 30% off your energy bill.  Free and Easy Lifestyle Changes Can Add Up Heating/Cooling Heating and cooling takes up the largest chunk of your monthly energy bill, but cutting back doesn't have to mean being uncomfortable. Callahan recommends cleaning your heating, ventilation and air conditioning (HVAC) unit every 30 days to keep the system running efficiently. “If you’ve got clogged or dirty filters, you’re just using more energy to push that air through,” she said. Keeping the blinds open in the winter and closed in the summer can also reduce the burden on your HVAC system, she added. Using a ceiling fan instead of your air conditioner can keep temperatures and costs low in the summer.  These three steps combined can save you anywhere from $62 to $118 per year, Energy Impact Illinois estimates. Water heaters Water heaters are typically large energy consumers and Callahan suggests lowering the temperature on your water heater from the standard 140°F to 120°F. This can reduce water heating costs by 4%-22% annually, according to the Department of Energy. Washing your clothes in cold water can cut costs since about 90% of the electricity consumed by washing machines is used to heat the water. The Environmental Protection Agency estimates that can save the average household up to $40 per year. Air drying your clothes can further reduce energy consumption and save you money.  Appliances A typical American home has 40 products that are constantly drawing power, even if they're not in use. This is responsible for 10% of your electricity use, according to the Lawrence Berkeley National Laboratory. Energy vampires, like your phone charger, computer and coffeemaker, can cost the average household $100 a year, according to the Energy Dept., and should always be unplugged when not in use. “An easy way to do this and make sure it all gets done is to have a power strip,” said Callahan. Power strips make it easy to unplug everything at once, and smart power strips automatically cut power to devices that are in standby mode. If you're diligent, you can cut your standby power consumption by 30%, the Lawrence Berkeley National Laboratory reports.  Discounts Although you probably only interact with your utility company when it's time to pay the bill, Dr. Iain Walker, a scientist at the Lawrence Berkeley National Laboratory, recommends checking its website for savings opportunities. Some utility companies offer rebate programs and off-peak rates which can be up to 30% cheaper, Walker said. "There's a lot of good stuff out there," he said. Customers can capitalize on this by "load shifting," or saving energy-intensive activities until the rates are low.  Long term investments: Bigger savings Behavioral changes do add up, but you have to alter your home to really make a difference in energy consumption, Walker said. Long-term savings come from bigger investments, like getting new windows or proper insulation. If you're planning on upgrading your appliances, many companies and states offer rebates that make it cheaper to purchase energy saving technology, like LED bulbs or Energy Star certified appliances.  "The more you spend, the more you save," he said. Heating/cooling Seal leaks, doors and windows. Homeowners should start by buying cheap caulk and weatherstripping, Callahan says. This can reduce energy use by at 15% to 30% on your heating and cooling costs each year, the Department of Energy estimates. "Those cracks and leaks can be the equivalent of a 3 foot by 3 foot window open all the time," Callahan said. Buy a programmable thermostat. For as little as $20, you can automatically set your thermostat back 7°-10°F for 8 hours a day. Doing so can save up to 10% on your heating and cooling costs, according to the Department of Energy. "That’s a great way to make sure that you’re not wasting energy when no one’s home except the goldfish," she said.  Install or add insulation. Insulation can cut your costs but estimated savings varydepending on your location and fuel type. "There are many utility programs out there that will give you a pretty good rebate if you add insulation to your home," Walker said.  Lighting Both experts recommend switching to LED bulbs, which last much longer and are 90% more efficient than traditional bulbs.  Replacing your five most used lights with Energy Star approved LED bulbs can save you $75 per year.  Appliances "Don't throw out good equipment, but if you’re in the market or the systems are getting old, buy the most efficient items," said Callahan. Energy efficient appliances sometimes cost more upfront, but can save you money in the long run. An Energy Star certified refrigerator, for example, could set you back about $800 or more depending on the size, but the you could save $260 in energy costs in five years. Source: USAToday.com

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26 Oct 2017

Advisors Management Group

IRS: Public-Private Crackdown Slashes Identity Theft, Tax Refund Fraud

An IRS-tax industry crackdown is making progress in the battle against identity theft and tax refund fraud, officials said as they announced plans for additional safeguards in 2018. Fewer federal tax returns linked to identity theft entered the tax system in 2016, and the number of taxpayers who said they'd been victimized also dropped, along with the number of fraudulent refunds issued, the officials said. Updating the results from the public-private effort launched in 2015, officials from the IRS, tax preparation firms, tax preparers and other industry leaders also unveiled plans for broader use of a 16-character security code on W-2 form tax forms and additional safeguards for the 2018 tax-filing season. Among the highlights: The IRS stopped 883,000 tax returns with confirmed links to identity theft in 2016, a 37% drop from the year before. The nation's tax agency also stopped 443,000 potential tax refunds linked to identity theft, a 30% year-over-year decline. Financial institutions stopped 124,000 suspect tax refunds in 2016, half the number detected in 2015. The companies have stopped 127,000 suspicious refunds so far this year, reflecting a handful of cases involving several thousand accounts. The number of taxpayers who told the IRS they had fallen victim to identity theft dropped to roughly 376,000 in 2016, a 46% decline from the year before.   "We've seen the number of identity theft-related tax returns fall by about two-thirds since 2015," IRS Commissioner John Koskinen said in a statement announcing the update. "This dramatic decline helped prevent hundreds of thousands of taxpayers from facing the challenges of dealing with identity theft issues." The declines stem in part from the first-of-its-kind partnership between the IRS, state tax agencies, major tax-preparation companies and other tax industry participants. Spurred by continuing spikes in identity theft and tax refund fraud, the agencies have been sharing information and implementing new electronic safeguards and other measures aimed at thwarting identity thieves. For instance, tax industry representatives have shared dozens of key data points from electronically-filed tax returns that have helped the IRS to identify tax scams and block fraudulent refunds. File photo taken in 2014 shows the Internal Revenue Service headquarters building in Washington, D.C. (Photo: J. David Ake, AP) As the crackdown continues in 2018, all official IRS W-2 forms used to file federal tax returns for the first time will include a verification code box. A 16-character code will appear on approximately 66 million W-2 forms, more than half of all forms issued, Koskinen estimated. Taxpayers who prepare their own tax returns and tax preparers will be urged to enter the code in the verification box if their form includes the 16-character entry. If you search the IRS website for tax forms, you'll get over 900 results. Here are the ones you need to know. Walbert Castillo, Ramon Padilla, Karl Gelles, USA TODAY Additionally, the IRS will ask tax professionals to gather more information about clients who file business tax returns.  The data could include the name and Social Security number of the business representative authorized to sign the tax return, as well as details of any estimated tax payments made before the return was filed. Koskinen's IRS term expires in November, so he won't head the agency for the 2018 tax filing season. During a media conference call, he said Treasury Secretary Steven Mnuchin has been focused on "finding a successor." "We know that cybercriminals are planning for the 2018 tax season, just as we are,"  Koskinen said. "This coming filing season, more than ever, we all need to work diligently and together to combat this common enemy." Source: USAToday.com

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22 Oct 2017

Advisors Management Group

How to Create an Early Holiday Shopping Budget

Taking just a little time now (even just an hour) can save you a lot of stress, money and time later on when you'd rather enjoy the holiday season. If that gets your attention, keep reading for a few easy, important tips to get organized now for a successful shopping season later. Dig out last year's shopping list. In today's digital age, "digging out" last year's shopping list is hopefully as easy as opening a saved file on your computer, tablet or smartphone. Take a look at who you shopped for last year and how much you spent. This can refresh your memory, help create a budget for this year and kick-start your new shopping list. Create a budget. Knowing how much you spent on gifts last year is helpful, but you should also survey this year's financial situation to see how much you can afford to spend. If you have a savings account for holiday shopping, check the balance. Also see what expenses are coming up and make sure you have a cushion for emergencies. When creating a budget for the holidays, give yourself a spending limit for gifts and don't forget to account for entertaining and party hosting, decorations and travel costs. For even more control over your budget, you can narrow down a budget per person on your shopping list. If this is sounding like more lists than you know how to manage, you'll want to check out the next tip. Download a holiday planning app. Technology saves the day again: There are several helpful (and free) apps to help you plan, budget and organize the holiday season. Santa's Bag is a popular iOS app that gives you an easy and colorful platform for budgeting, planning and checking off the items on your list. You can create a total budget amount and an amount per person, and the app will automatically update your budgets when you tell it how much you spent. The app allows you to enter everything from your gift ideas to whether an item has been purchased and even wrapped. For Android users, Christmas Gift List is a similar solution with the ability to track all your shopping, keep an overall and per person budget, and even archive lists so you can check back on previous years. Prioritize your shopping. After you start your list, you might notice there are a few gifts that are more specific than others. Your wife might be hoping for a new cashmere sweater, but your daughter has that specific new smartphone in mind – plus, she'd love it in that hard-to-find color. For gifts that will fly off the shelves early, make a priority to get these first. Of course, waiting for the week of Thanksgiving and Cyber Monday will give you the best chance of finding a deal, but you may want to keep an eye out for savings starting now. Note which gifts on your list need early attention and which ones are more generic or flexible that can wait until later. Subscribe to stores and coupon websites. Now is the perfect time to get on the email lists of the stores where you know you'll do most of your shopping. You'll be first to know when they have flash sales or free shipping days. You can also follow the accounts of your favorite shops on social media for exclusive sales and promotions. Subscribe to coupon and cash back websites and sign up for alerts now, and you'll have all the best deals hitting your inbox directly – the perfect solution when you need an idea for the sibling who has everything. See, that wasn't too hard. Now that you spent a little time getting organized for the holidays, you can go back to enjoying fall. Here's one last tip: Stock up on heavily discounted candy the day after Halloween and use it for delicious holiday dessert recipes next month.  Source: Money.USNews.com

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