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.


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:

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