How to Bounce Back from Excessive Holiday Spending

Pockets feeling a little light in the new year? With new year celebrations following close on the heels of both Thanksgiving and Christmas, most of us are starting out the new year with at least a little tinge of financial anxiety. Or a maybe a lot of anxiety.

Back in December, Forbes estimated that Americans would spend over $1 trillion on holiday spending in 2016, which is a 3-4% increase from the previous year.

Right. So now you must devise a plan to financially recover from holiday overspending. Here’s a few pointers on your road to monetary stability:

  • Skimp on unnecessary luxuries: Wait to buy that dress you’ve been eyeing; cook meals at home; skip the theaters and rent a movie. Draw a line between what you want and what you need.
  • Access your holiday swag: Forget the obligation to keep every gift you get. If you’d rather get cash back, do so. Look into return policies and redeem those gift receipts.
  • Search for part-time jobs: Cruise craigslist for openings, post your résumé on job sites; reach out to family and friends. Even working a few extra hours each week will help dwindle those outstanding bills.
  • Get an interest-free credit card: Interest rates can be brutal, especially if your post-holiday balance is already through the roof. Considering transferring that balance onto a new credit card that offers an introductory 0% interest rate.
  • File your 2016 taxes: If you normally receive a chunky tax return, file your taxes now to get that return quicker and help cover lingering holiday costs.
  • Prepare next year’s holiday budget: Calculate what you spent this year on holiday spending and divide that number into manageable monthly amounts. Each month spend that amount, and only that amount, on next year’s holiday season.

How Financial Planners can get High Quality Referrals

While every professional welcomes referrals, a recent study by Charles Schwab found that getting them can have a sizable influence on the growth of your business. Referrals can provide 60% of a firm’s new business.

Charles Paikert, one of Financial Planning’s senior editors, wrote a recent piece on the dos and don’ts of getting high quality referrals.

Financial planners particularly seek people who are “centers of influence,” i.e. professional attorneys, accountants, business leaders, and other planners with different specialties. But how to go about getting such high-quality referrals?

Schwab’s Managing Director of their business consulting services—Nikolee Turner—critiques misperceptions that can hurt your effort to get such referrals:

  • Referrals are not reciprocal
  • Personal relationships do not equal professional relationships
  • Don’t think of lunch as a strategy
  • More relationships is not necessarily better (lack of focus)
  • Your value may not be obvious

Turner proposed ways to develop an effective strategy to land COIs at a breakout session at a Schwab Impact conference. First of all, obtaining such a referral is a long-term undertaking. More than 60% of the high-performing firms surveyed worked with a COI for a year or more before the person provided a referral.

Keep in mind what a COI looks for in an adviser:

  • Being trustworthy and objective
  • Putting clients first
  • Doing good work
  • Being transparent and simple
  • Respecting the gatekeeper

Turner advised finding a professional that you can grow with—and that you should treat them like you do your best clients.

Once you think you have built rapport with someone you perceive as a suitable COI, set up a meeting at their office. Not lunch! Ask questions about their concerns, needs, and business…and listen.

Providing Financial Advice to the Newly Self-Employed

Financial planners can themselves be a valuable asset to the self-employed. This means you can help your clients from the ground up. One of the first things to determine is whether the new business should become a sole proprietor or incorporate. While setting up as a sole proprietor is easier, incorporating offers your clients protection if they may face any sort of liability issues.

If your clients expect to receive 1099-MISC forms, encourage them to obtain an Employer ID (EIN) number, so they do not have to continually give out their Social Security Number. This helps protect against identity theft and provides strong evidence that they are indeed a business.

You can also help your clients navigate the challenge of having an uneven income. Brining in a lot of money one month and not so much the next is a common challenge for the self-employed. One of the key tasks of a financial planner for the self-employed is helping them set up a budget to better manage income fluctuations.

Key advice that you can provide is to recommend the best time to take large business deductions. While this might seem like an obvious way to reduce tax liabilities, taking a large deduction could severely hamper your client’s ability to take out or refinance a mortgage. If he or she has taken a large write-off, it will seem like their income is very low, and the businessperson may not qualify for a mortgage loan.

You can be particularly valuable to your client by helping them save for retirement. With 401(k)s too complicated and expensive for the self-employed, your clients will benefit from your advice about other options like traditional or SIMPLE IRAs.

Financial planners for the self-employed can help bring peace of mind to those navigating the complex waters of independence and help to ensure the success of the newly self-employed.

Free Financial Planning Events Held in Major Cities Throughout October

Not surprisingly, most Americans need or want professional guidance when it comes to long-term financial goals. Yet, most adults and couples never get the professional help they need because they assume that hiring a financial planner is a luxury reserved for the wealthy. And maybe they’re not too far off the mark.

According to AdvisoryHQ News, an online news media provider specializing in research, reviews, and rankings, financial planners typically charge an average hourly fee of between $120 and $300. So what if you can’t dish out that kind of dough?

For the seventh year in a row, The United States Conference of Mayors along with the Foundation of for Financial Planning, the Certified Financial Planner Board of Standards, and the Financial Planning Association are sponsoring “Financial Planning Days” events across major cities throughout October.

Financial Planning Days are provided to offer anyone and everyone the opportunity to meet with certified financial planners to get advice and information completely free of charge. The volunteer financial planners participating in the event don’t even ask for names, sell products, or otherwise attempt to drum up future business. Financial workshop presentations will also be available to interested parties.

Although walk-ins are certainly accepted, you can also pre-register at

To find out if a Financial Planning Day is scheduled in your area, check the schedule below:

  • October 1:
    • Akron, Ohio
    • Miamisburg, Ohio
  • October 5:
    • Columbus, Ohio
  • October 8:
    • Chicago, Illinois
    • Atlanta, Georgia
    • Lubbock, Texas
    • San Antonio, Texas
  • October 9:
    • Cincinnati, Ohio
  • October 15:
    • Huntington Beach, California
    • Oakland, California
    • Indianapolis, Indiana
  • October 22:
    • West Sacramento, California
    • San Francisco, California
    • Lakewood, Colorado
    • Milwaukee, Wisconsin
    • Tempe, Arizona
    • Arlington, Virginia
  • October 23:
    • Rosemead, California
  • October 29:
    • Los Angeles, California
    • San Rafael, California
    • Baltimore, Maryland
    • St. Paul, Minnesota

Financial Planning Association Gears Up for Annual Conference in Baltimore

Looking to gain a competitive edge in the financial planning profession?

Attending professional development conferences is a great way for financial planners to convene with industry leaders and respected colleagues from all over the world in order to learn, network, and ultimately succeed in a fast-expanding field.

The 2016 Financial Planning Association (FPA) Annual Conference is slated to take place from September 14-16 at the Baltimore Convention Center in Maryland. In the past, the event has united more than 2,000 attendees from over 20 countries making it the biggest global assembly of financial planning pros to date.

This year’s conference boasts several impressive keynote speakers, including:

  • Sharon Epperson: CNBC Senior Personal Finance Correspondent
  • Cal Ripken, Jr.: Baseball All-Star MVP
  • Eric Maddox: Corporate Intelligence Systems
  • Brian C. Rogers: Chief Investment Officer of T. Rowe Price Group, Inc.

Attendees will also gain unparalleled access to lectures, roundtable discussions, and research presentations that feature major topics impacting financial planning. For example:

  • Advising clients in difficult situations
  • Estate planning
  • Insurance planning mistakes and solutions
  • Practice management concerns
  • Cybersecurity issues
  • Networking partnership development
  • Global impact of investing
  • Social media strategies
  • Succession planning
  • Changes in the wealth population

The popularity of the FPA Annual Conference is largely attributed to its commitment to fostering financial planners working at every professional level. In fact, attendees can choose a particular conference track to maximize the benefits of their experience. The three main tracks are:

  • Advanced Practitioner Technical Track
  • Practice Management, Marketing, and Technology Track
  • Practitioner of the Future Track

The event is also open to students. In fact, the FPA is offering students hugely discounted registration rates to student attendees. The registration fee schedule is as follows:

  • FPA Members: $799-$1,099
  • Nonmembers: $999-$1,299
  • Students: $199

Students and professionals that can only attend a portion of the conference are able to purchase day passes as well. Registration is still available at

How to Advise Clients About Timeshare Spending

The American Resort Development Association (ARDA) estimates that regardless of potential pitfalls, over nine million consumers invest in vacation timeshares each year.

Yet, buying vacation timeshares has become synonymous with bad financial investment in recent years. In fact, according to a consumer survey conducted by the AARP in 2013, timeshares topped the list of “10 Common Spending Regrets.” Survey respondents cited mounting maintenance fees and difficulties trading or selling their timeshare slots ended up costing them more than they were worth.

Despite this popular opinion, some clients are still interested in buying timeshares. So how can financial planners wisely advise clients about this delicate decision? Regardless of your personal experience with timeshares, it’s important to remember that people buy timeshares for different reasons and not all timeshare deals are the same.

To better navigate a timeshare discussion with clients, Financial Planning offered up the following tips in 2016:

  • Encourage your clients to do their homework by searching out all available timeshares options rather than settling on an initial offer.
  • Warn your clients that timeshare sellers often resort to high-pressure tactics and small incentives in order to seal the deal.
  • Show your clients how timeshare costs could potentially affect their retirement spending plans.
  • Attempt to dissolve any “vacation fantasy” illusions by putting pencil to paper and calculating the advantages of owning a timeshare versus taking traditional vacations.
  • Inform your clients that buying timeshares on the secondary market could be more financially prudent than purchasing one directly from a promoter.
  • Remind your clients that a timeshare’s value doesn’t necessarily appreciate over time.
  • Suggest your clients look at timeshares as lifestyle purchase and not a financial investment.

So rather than advising against them, financial planners should gather as much information about a client’s plans for how they’ll likely use the timeshare, the details of their intended timeshare negotiation, and the possible long-term financial consequences therein.

The Unprecedented Threat of Recession From Low Oil Prices

Many people have a portfolio rich in oil companies stocks, because they viewed them as a safe investment. However, oil prices are now extremely low primarily due to the amount of oil being produced by new extraction techniques such as horizontal drilling and fracking.

These techniques enable the extraction of oil from tar sands that are widespread throughout the world. Smaller companies with less capital can tap into shale, and OPEC is finding it more difficult to control the current oil market.

Many oil companies are currently in trouble due to the remarkably low oil prices. According to the Wall Street Journal, “earnings of the energy sector of the S&P 500 have fallen by 76%.” This trend is taking place worldwide and causing turmoil in the financial markets. Over the past quarter, earnings for companies in all sectors have also been reduced. This is bad news, since such an earnings rollover has preceded every recession in a generation.

Historically, rising oil prices caused three previous recessions: those in 1973-75, 1980-81, and 1990-91. Low oil prices have greatly benefitted the markets in the past. With consumers spending less money on gasoline, they have more purchasing power for other goods.

However, these low oil and gas prices are driving a tightening of lending conditions worldwide. US banks have syndicated leveraged loans for this industry of $276 billion. While 4% were regarded as threatened a year ago, the banking industry considers 15% to be distressed at the moment. A tightening of lending conditions drives recession.

Cutbacks in oil-field expenditures caused a hit to US capital investment, and more cutbacks will come. China’s economy is also suffering from the reduction in oil prices. As oil prices drop, the foreign-exchange value of the US dollar surges. This surge has left China’s currency grossly uncompetitive with the yen and the euro, leading China to devalue its currency. This devaluation creates strains through emerging economies and subsequent deep uncertainty through all global supply chains.

The Wall Street Journal states that perhaps no single one of these stressed would be enough to trigger a global recession. However, the journal points out that recession is often “a death by a thousand cuts, not a single blow” and that the reverse oil-shock made a lot of cuts.

The world’s economy is in unchartered territory, since there has never been a recession due to low oil prices. However, there is cause for optimism, since these low oil prices make the global consumer highly resilient and could buffer the recession’s duration and severity.

Financial Planner Offers Nuanced Mortgage Advice

Mortgage debts, which are among the most common forms of American debt, are frequent topics of discussion between financial planners and their clients. Typically, the advice of financial planners is to wait on paying off a mortgage quickly, since it is the most positive form of debt. Mortgage debt is considered the best form of debt due to the low interest rate and tax benefits that come with it. Sophia Bera, a financial planner interviewed by Business Insider, offers a detailed, nuanced analysis of when mortgages should be paid off.

The first thing that should be considered by those working to have financial health, according to Bera, is to pay off any other debt before thinking about an increased mortgage payment. Most other forms of debt, such as credit card or car payments, typically have a higher interest rate and should be paid off first.

If mortgage debt is the only debt that has yet to be paid, Bera still advises caution. “If your mortgage is the only debt you have left, I would want to know more about your mortgage: Is it a 15-year or a 30-year mortgage? What is the interest rate? When do you want to retire?”

It seems that paying off a mortgage is a bit more complex than merely removing debts across the board. Those who have a 30-year mortgage who want to pay it off quickly should switch to a 15-year, which has a lower interest rate, before upping their payments.

Those who plan to retire in the next ten to twenty years should also consider whether or not spending a large sum of money now to remove debt is wise, considering they will stop working and contributing to their retirement fund soon.

But if there are no incoming debts, impending retirements, or other large expenses on the horizon and no other debt but the mortgage, financial planner Sophia Bera says that those people can freely put larger sums toward their mortgage and enjoy the benefits of their success as financially savvy Americans!

Families with History of Disease More Likely to Seek Financial Advice

Professors at the University of Utah wanted to better understand the full financial cost faced by patients afflicted with Alzheimer’s, both for them and for their families in the aftermath of their disease. Their research has discovered that families with histories of Alzheimer’s and patients suffering from the beginning stages of Alzheimer’s disease are significantly more likely than the average person to seek expert advice from financial planners. They are often more prepared than many would expect for the financial tribulations of managing their illness.

Put simply, cost concerns around paying for years of institutionalized care force at risk individuals to consider their finances. People in the study with family history of Alzheimer’s were 86 percent more likely to have seen a financial planner, and 40 percent less likely to plan to retire before 65 due to the increased cost of treatment.

The burden of that cost should not be underestimated. The average family ends up paying around $56,000 a year according to the study. That is based on five year old data that is expected to change drastically alongside the growing number of Alzheimer’s patients. Some researchers are estimating that by 2050, 13.8 million people will be suffering from Alzheimer’s, triple the current numbers.

A report published in the Journal of Aging Health corroborated those findings in different diseases. It found that people with histories of cancer or cardiovascular disease in their family are similarly pessimistic about retirement and more likely to seek financial advice from an expert.

In the years to come, it will be important for financial planners to consider the importance of planning for retirement around potentially catastrophic diseases. Being able to provide the right tools to clients in needs will not only help them to be prepared but will also help to relieve the potential burden on their families.

No Kids Doesn’t Mean No Financial Planning

Raising kids is expensive, and no matter how you look at it, a certain amount of financial planning need to be done to make sure the kids are being taken care of – from monthly expenses to saving for their college education.

So what about the couples without kids? Are they set for an easier life of financial planning? Not necessarily, according to experts.

For those who have kids, they’re likely to be more diligent with their savings and put more money away each year with the prospect of having to cover the skyrocketing cost of college, and the possibility that some unforeseen emergency could arise that would require some liquid financial resources. Financial advisors encourage clients without children to do the same, saying that they can just as well use the extra income to pay off debt rather than pay for braces or piano lessons.

Jean-Luc Bourdon, a certified public accountant, says that without the pressures of providing for a family many people who don’t have kids have more freedom to make career moves or go back to school again. He describes another benefit as his personal favorite – the freedom to travel.

Couples without children may have more freedom to spend their money how they choose, but this isn’t reason enough to avoid taking charge of their financial futures by paying down debt and building an emergency savings. Hey – if the emergency never comes, the money is still there and so is the freedom to spend it however they like!