Monday, September 2, 2019

Watch Out For Equifax Settlement Scams


Pathways Advisory Group, Inc.
Evon Mendrin, CFP®

In 2017, Equifax - one of the three major credit bureaus - experienced a data breach affecting at least 143 million people. Now, there is a class action lawsuit settlement awarding those affected free credit monitoring and a potential cash payment. Of course, internet fraudsters are using this settlement as an opportunity to create new scams.

Internet bad guys are now trying to trick you into filing an Equifax claim and get a $125 payment because your personal data was in the Equifax data breach. They are sending phishing attacks that look like they come from Equifax. When you click on the links, you wind up on a fake website that looks like it's Equifax but will try to steal your personal information. Don't fall for it.

If you want to file a claim, go the legit FTC website and click on the blue "File a Claim" button. The website will check your eligibility for that claim, as not everyone's information was compromised. Here is the link to the FTC site: https://www.ftc.gov/enforcement/cases-proceedings/refunds/equifax-data-breach-settlement   
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Thursday, August 22, 2019

Jeff’s Guide to The Financial Media

Pathways Advisory Group, Inc.
Jeff Karst, CFP®













Often times when I read the headlines, I get a chuckle.  Of course, their intention is to grab your attention.  The more people that “click” on their article, the more advertising they can sell.  It’s not about education for them.  With a bit of volatility to end 2018, it was prime time for the media. We’ve seen the same within the last few weeks. Here is my (not so) definitive guide to interpreting the headlines.

“Stocks Clawed Back to Positive Territory” 


Basically, stocks should be going down and the only way they were able to make it positive for the day was through sheer grit.  Much the same way a zombie climbs out of the grave.

“Stock Sell-Off Intensifies” 


You can replace “Intensifies” with any word you like (to make the headline more attention grabbing).  The media always uses the phrase “sell-off”.  As if, by some miracle, stocks are sold and no one buys them.

For any stock to be sold, there must be a buyer on the other end of the transaction.  If there were no buyer, the stock could not be sold. For every seller that believes now is the time to sell, there’s a willing buyer that believes now is the time to buy. “It takes two,” as they say.

“Markets in Turmoil amid _________ fears”


This usually means that one of the major stock indices have dipped slightly in value, often by 2-3%. It’s often coupled with some impending doom for the economy, stocks, or both. Based on this headline alone, you’d guess markets are down 35% for the year. What’s often missed is that – although they dipped for the day – stocks might actually have strong positive performance for the whole year.

This is the case in 2019. The S&P 500 (+16.73%), Russell 2000 (+11.7%), and all but a few international indices are positive year-to-date despite the recent “turmoil”. Beyond one year, these dips tend to be short-lived compared to the overall long-term growth of stocks around the world.

We have no clue how the year will end. But as Evon wrote in his blog post, Perspective During “Turmoil”, “It’s amazing what perspective can do when faced with one day’s dramatic event. Taking a step back gives us the opportunity to evaluate what’s really going on and not overreact.”

 “XYZ Company Earnings Missed Expectations”


How does the company miss expectations?  Wouldn’t they want to always exceed expectations to, you know, make more money?  Perhaps the real answer is, the analysts were wrong.  The media doesn’t want to say that.  That would mean that the prognosticators aren’t actually able to see the future.

“It’s tough to make predictions, especially about the future.” – Yogi Berra

Focus on Your Goals


It’s hard to ignore these headlines given what we experienced in the 4th quarter of 2018 or in the past few weeks. It’s human nature to be affected by the short-term news flashes. We must remember what the long-term trend of stocks has been. If your goals are long-term, then your focus should be too.

Lastly, focus on the things that are within your control. We can’t control the ups and downs of the markets, let alone guess where they’re heading next. We also can’t control what the news writes about it. Instead, focus on the amount you invest, the amount of each type of asset you hold (stocks, bonds, and real estate), the expenses you pay, and the taxes you owe. Therein lie the keys to your success!

Note: All returns data are as of writing, 08/19/2019. The data very well may have changed by the time you read this

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Monday, July 1, 2019

Office Closed this Friday for 4th of July Holiday














Our office will be closed this Friday, July 5th, as part of our observance of the 4th of July holiday. In case of an emergency, please contact Schwab directly at 1(800) 435-4000.

We wish you a Happy 4th of July!

The Pathways Team


Friday, June 7, 2019

Summer Jobs

Pathways Advisory Group. Inc.
Michelle Carter, CFP®













If you're a parent, you may have mixed feelings about summer vacation.  


Video Courtesy of Kids Are The Worst

Look familiar?

Each year, as the weather becomes hotter and the days become longer, I begin to think about my goals for those 10 weeks.  It's a break from traditional school work, but since children are always learning, what do I want to teach them this summer?

This year, I want them to learn the feeling of accomplishment from earning their own money.  My kids are ages 4-7 and don't receive an allowance.  They are expected to help around the house, mostly in their own rooms, with some regular chores added in (clear the table, feed the cat, etc).  I wanted to take it up a notch, and summer seemed like a great time to do this.

I am creating a "Work for Hire" board.  You can find multiple examples of this online.  Here is one:


Photo Courtesy of The Chic Site


The basic premise is to post a chore to be done and attach the payment.  With younger kids, you can use pictures (a dusting rag or a broom) and pay with quarters.  With older kids, you can use tougher chores for higher pay.  It's a flexible way to teach children hard work and money management.  

At the end of the week (or month) you can take them to spend some of their hard earned money, or you can save all summer for a bigger reward just before school starts.  I have even seen it done with Monopoly money, complete with a "mom store" for spending hard earned "money" on small treasures.

We are going to give this a try this summer in the Carter household.  I'm sure we will learn what works best for us as we go.  It will be a fun experiment, and I look forward to reporting back this fall on how it went!

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Friday, May 31, 2019

It's a Boy!

Pathways Advisory Group. Inc.
Evon Mendrin, CFP®













We are proud to announce the birth of Isaac - born to Evon Mendrin and his wife, Natasha. He was born 9 lbs 1 oz, 22 inches long, and seems to already be pondering life's greatest mysteries. Both mother and Isaac are doing great, and the family couldn't be happier. Congratulations to Evon and Natasha on the first addition to their family! 

Friday, May 24, 2019

Tax Form 5498

Have you received a tax form in the mail recently? If you just received a 2018 IRS Tax Form 5498, don't panic. Form 5498 is generated by investment custodians every May for Traditional IRAs, Roth IRAs or Educational Savings Accounts with activity during the previous tax year and usually does not lead to an amended tax filing.

Tax Form 5498 is informational. The IRS reconciles this activity with your Tax Return. If you received this form, ask yourself: Did I contribute to a Roth or Traditional IRA last year? Did I roll money into an IRA last year? Did I contribute or initiate activity out of an Educational Savings Account last year? Did I convert IRA money to a Roth IRA last year? If any of this activity applies to you, you received Form 5498.

Contribution information is typically requested on an accountant's questionnaire. IRA rollovers and conversions generate a 1099-R. Either way, your accountant should already be aware of the activity. Then what should I do with my copy? In most cases, simply add it to your freshly started tax folder for 2019. As your accountant reviews next year's tax file, he or she can confirm that the activity was addressed.

The above explanation is summarized and generic. Please consult your tax professional with any specific questions.

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Thursday, May 2, 2019

What’s Your Motivation?


Pathways Advisory Group, Inc.
Evon Mendrin, CFP®













What motivates you to make good financial decisions? What motivates you to save, invest, or buy insurance? To spend time and energy thinking about goals, money, life, and death? These aren’t easy topics to think about, but you do them anyway – what’s your motivation?

Is it your family? Your spouse and children? Is it that beach house you’ve always wanted? The thought of free time and financial independence? Or is it simply the thought of having piles of money and huge account balances?

Financial planning is all about trade-offs – do you spend or do you save? Do you pay down debt or do you invest? Happiness today vs. security tomorrow. It’s easy to focus on the things you want today. They’re always enticing you, always calling out. What motivates you to find that balance, rather than spend for your pleasure today?

Whatever that motivation is, research shows that consistently keeping that motivation in front of you might be the key you need to reach your financial security.  

A 2011 study (Soman and Cheema), searching for a way to help families save more money, tracked 146 low-income households in India. The study found that there were two key ideas – certain key actions – that helped the families greatly save more.

The first idea was segregating and earmarking money into different “buckets.” The study used separate paper envelopes, but aren’t you doing a bit of that already? You’re likely already peeling off portions of your income and diverting them into different investment accounts – IRAs, 401(k)s, regular brokerage accounts, etc.

With help from the tax code (tax-deferred growth!), you’re already earmarking certain pots of money for your future self. The same can be done with bank accounts. You might have checking, savings, and even separate savings accounts for buying a house, paying off debt, or for emergencies.

The second idea was found to be even more impactful – enhancing all the other methods. They placed a picture of their children on the “savings” envelopes.

Why?

For these families, the main goal was to make sure there were resources for their children. Their children were their primary motivation. That’s why the parents worked so hard. This simple action had a substantial impact on their savings rates and helped them not to dip into their savings when tempted with spending.

The two actions combined nearly doubled their savings rates, even with very low income. It’s simple, yet effective – and it’s not hard to imagine why. Visual reminders keep us on track in so many other areas of our lives.

It’s no fun to exercise simply for the sake of exercising. But if we keep a “before” photo in front of us, or pictures of the figure/athlete we want to become, we find ourselves much more motivated to get moving.

It’s also no fun to skip the new car purchase or a few meals at your favorite restaurant. It’s no fun to fill up your emergency savings when that island getaway is waiting.

But just imagine – you’re about to use this month’s savings on a night out on the town when you’re confronted by a picture of you and your spouse smiling. Imagine pulling out your wallet to pay for that all-inclusive stay, when in front of your credit card you see a picture of your children.
Just a gentle reminder of why you’re doing what you’re doing – planning your future, setting goals, making healthy financial decisions.

The struggle is real, and we’re often our own enemies (I know I am) – but the tools to help us can be simple.

What shall we do?

Find your motivation. What’s important to you? Where do you see yourself in the future? Why is that important to you? This should be at the forefront of all your financial planning. Make your personal finance…well…personal!

Sanctify your savings. That is, set aside your saving into separate, sacred pots of money.

Most importantly, keep your motivation in front of you. Put pictures on the fridge, in your wallet, in your financial planning binder. Have them on your computer screen, your phone, and your tablet. Keep them in your car and at your work.

What’s your motivation?

If you know it well, it just might help you reach the financial future you’re planning for.

Special thanks to Dr. Daniel Crosby and his book, The Laws of Wealth, for directing me to the research!


Source - Soman, Dilip and Cheema, Amar, Earmarking and Partitioning: Increasing Saving by Low-Income Households (December 30, 2010). Journal of Marketing Research, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1732709

-Written by Evon Mendrin from our June 2018 Client Newsletter Article.