Economic Crisis

July 4th, our nation’s Independence Day, provide a good opportunity for reflection. Check-in with your self and answer the following questions.  Then ask them to your spouse or significant other. You may find that between the two of you, your definition and goals for when you reach financial independence  (aka retirement) are very similar or the economic crisis has your goals miles apart. The time to refocus is now.

When do you want your Independence Day (Retirement to begin)?

When do you think it will actually happen?

What changes and sacrifices are you willing to make to meet your ideal Independence Day goal?

What is the first step you are going to take to figure out the new plan? (Hint: Who are you going to talk to?)

If you are already retired – Can you afford to stay retired?

These questions will guide the process of figuring out your next steps. Just remember to write them down, so they become tangible items you can deal with vs. thoughts rambling around your head.


Yes, it is ok to look. As the end of the second financial quarter hits Wall Street it is time to see where things are at in your portfolio.  I am frequently asked “Should I even look at my investments, 401k, IRA, 529 savings plan or brokerage account?” In general, my advice has been if you don’t need it tomorrow, don’t obsess and look all the time. Instead take action where you can. This may be cutting back spending, changing investments to adjust for your new risk tolerance or saving more to makeup the gap in your account balances.  Here are my Top 10 Reasons to Sneak a Peak.

10. Admit it, you look everyday so why would today be any different?

9. Your mom told you not to look.

8. Finally you’ve made the appointment with a financial advisor and need to know where your 401(k) and IRAs are to prepare.

7. You can’t move forward with your financial plan unless you know where you are today.

6. How else will you know what to complain or brag about at the next BBQ? (Up or down, everyone is talking about the stock market.)

5. It may be time to rebalance your investment portfolio.

4. Good excuse to open that bottle of tequila or wine that you’ve been eyeing to get through the pain.

3. If your risk tolerance has changed because of the market turmoil your retirement investments need to be adjusted accordingly.

2. Relieve stress by printing out your 401(k) or IRA statements and tying them to a bottlerocket on the 4th.

1. You want to retire, it’s time for a new gameplan. Sneak a peak and start today!

Reading through the Wall Street Journal I found an article that helps keep things in perspective during this time of economic turmoil, career stress and job loss.  I believe a lot of misery poker is happening in these key areas. Check it out and see if you play misery poker. It will help your cultural knowledge as well, turns out it is a common term on college campuses.  (Who knew? I’m behind on these things, just happy I can navigate my iPod and iTunes)

Your 401k match is gone. Now What?
Did you receive a company wide email lately that went something like this:
In these tough economic we are looking to remain as efficient and lean an organization as possible, without elimination of additional positions. The company’s 401(k) matching contribution will be suspended until business improves…
As an employee what are you going to say? Of course you’ll be thankful to have your job vs. 401(k)match.
It is no secret companies are cutting expenses drastically to stay open and keep employees. The 401(k) match is a big target. The wave of reductions and eliminations in matching contributions started as a domino effect. Small companies it has happened more quickly. Once one large company took a swipe at the matching contribution, it was easier for other’s to follow. Shareholders like the message that everyone in the company is making a sacrifice in order to save talented employees and reduce expenses.
While this may seem like a minor change, it should be addressed as part of your financial plan. Questions to ask yourself:
  • Do you need your 401(k) to be your automatic savings mechanism? (Are you a disciplined saver or would you spend it?)
  • If your putting less than $6,000 into your 401(k) is it your best option?
  • What is your tax benefit? Do you need the income tax savings?
  • How close are you to reaching retirement/financial independence?
 First, if you are not a disciplined saver keep the 401(k) so you keep up the automatic saving. To slowly increasing your savings put a reminder on your calendar to increase your contribution 1% on your birthday. (Stop reading now if you are not a good saver.)
If you are putting away less than $6,000 and don’t see this amount increasing much, then a regular IRA may be a better option for several reasons.
  • More investment options. Most 401(k) programs have a set number of funds to which you are limited. An IRA significantly expands your pool of available investments and mutual funds. This provides better access to great money managers, potentially giving you a significant advantage over your 401(k).
  • IRA contributors have 15 1/2 months to make a contribution for the calendar year. For example in 2009, you can make contributions to an IRA from January 1, 2009 – April 15, 2010.
  • You will have the same income tax benefit in your IRA as your 401(k) if you contribute less than $6,000, as your contribution is not taxable income. (Your withdrawals will be taxable.)
Let’s not forget about the Roth IRA. If you are not a fan of taxes and believe that when you retire either your tax bracket will be higher and/or in general taxes will be higher this may be another option. The Roth IRA is paid with after-tax dollars today and all withdrawals are tax free, as you will not be taxed on the growth of the account upon withdrawal.
First check if you qualify for a Roth IRA account in 2009.
Married combined modified adjusted gross income (MAGI) must be below $166,000. This phases out between $166,000 and $176,000. $176,000 or more and you are ineligible.
Individual MAGI must be below $105,000. This phases out between $105,000 and $120,000. More than $120,000 is ineligible.
If your eligible for the Roth IRA you have a few options.
  • Save in your 401(k) or IRA to receive a tax benefit today and fully fund a Roth IRA account for $5,000 (50+ $6,000) for tax free withdrawals later. Win today and in the future with taxes.
  • If you only save $5,000 or less you can decide to save taxes today via your 401(k) or IRA, or pay the taxes today and have not tax worries when it comes time for withdrawing in retirement.
This is a lot to think about. You must take the time to understanding how your 401(k) match being gone can impact your savings mechanisms for retirement and your overall financial plan. One small email from the big boss can change a lot.
Advisory Services offered through Axiom Advisors, LLC. A registered Investment Advisor Securities offered through Cambridge Investment Research, Inc. a Broker/Dealer member FINRA/SIPC Axiom Advisors, LLC and Cambridge Investment Research, Inc. are not affiliated

No one calls the IT guy to say, “My email worked great today!” Only when are you having troubles do you squawk. As an investor it is hard to acknowledge the main fact of the markets. They go up and they go down. It is human nature to focus on the down. This is very difficult for those that had retirement on the horizon and see it slipping away.

We also know that when markets go down in a recession that we do not want to miss the market upswing. Here is a great article to provide perspective on the market recovery in the six-months and five-years after a recession. If retirement is on your horizon you need to develop a new plan of action to recovery from the market. That is where I can help.

Advisory Services offered through Axiom Advisors, LLC. A registered Investment Advisor Securities offered through Cambridge Investment Research, Inc. a Broker/Dealer member FINRA/SIPC Axiom Advisors, LLC and Cambridge Investment Research, Inc. are not affiliated. 

I realized a few weeks ago that I welcomed all the news coverage of the Swine Flu. I know this does not sound right, but it is true! Finally the economy and the economic meltdown were not the lead stories! I didn’t have to see any Project Economy or Economic Crisis logos flash across the screen.

 I have a great way to relieve your anxiety over your portfolio and pending economic doom.

 Turn off the news! Stop talking to everyone about the bad economy. You are just bringing yourself and others down. When engaged in the bad economy conversation tell people your taking a break because being negative about it will not help you move forward.

 CNBC had its best ratings in eight years during the first quarter of this year.* During the start of the downward spiral last fall CNBC also had record ratings.** The evening news programs of the big three networks are improved over the economic crisis. The better the ratings the more the negative coverage will continue.

While it is my great belief that the media needs to take an economy coverage vacation it will not happen because they are prospering during the crisis. Just like an impending snowstorm sends all of us in New England to mob the grocery store in search of bread and milk, money troubles send us to the aficionados of CNBC and Fox Business. The more you are worried the more you tune in. It is a beautiful thing, if you are in the business of selling commercials.

Be brave my friends, break the cycle and turn off the news! Negativity will not help you make the moves necessary for financial independence.

Advisory Services offered through Axiom Advisors, LLC. A registered Investment Advisor Securities offered through Cambridge Investment Research, Inc. a Broker/Dealer member FINRA/SIPC Axiom Advisors, LLC and Cambridge Investment Research, Inc. are not affiliated. 



The spending trend of the country is changing to a saving trend. It is a core reaction to tough economic times. Cutting back is now all the rage.

 A large group of families and individuals do not understand where they spend money. With juggling family responsibilities who has the time? The people that make progress on savings goals and establish wealth, they make the time. 

It is all about choices

When helping clients understand expenses the discussion often starts with “We don’t know where the money goes or where we can find more to save?”  When they really assess how money is spent, opportunities for savings appear.  This enables progress on financial goals or a bridge through a tough financial time.  

 Making better choices  – It is not about giving up everything. Choices are daily decisions and compromises on where to spend money. Changing your language to “making choices” will help change your attitude towards reducing expenses.

Reducing expenses is choosing to keep your morning Dunkin Donuts coffee, but bringing your lunch. It is the choice between keeping snacks in the car or emergency stops at McDonald’s.

  •  Eating out – Make better choices of when and where you eat. Bistros to chain restaurants are offering deals, especially during the week.
  • Google  – Search for coupons codes before online shopping. or
  • Mortgage– If you haven’t taken advantage of low mortgage rates, check out refinancing to save each month and thousands over the life of the mortgage.
  • Cars – Keep your car 1, 2 or 3 more years than planned.
  • Insurance – Shop around for auto, home and umbrella insurance with a broker. Brokers work with multiple companies and are paid to shop around for you.
  • Entertainment, Memberships, Subscriptions & Lessons – These small items add up. Select what your family really enjoys.

Advisory Services offered through Axiom Advisors, LLC. A registered Investment Advisor Securities offered through Cambridge Investment Research, Inc. a Broker/Dealer member FINRA/SIPC Axiom Advisors, LLC and Cambridge Investment Research, Inc. are not affiliated.