By Karin Grablin, CPA, CFP®
Wealth Advisor at SRQ Wealth
These are unusual and uncertain times, to be sure. We’ve all been inundated news about the Coronavirus, and its impact on our community, our country and the world, both physically and financially. Hopefully, most readers are choosing not to panic in response to these headlines, because panic leads to irrational thinking, and that can lead to poor financial decisions, making matters even worse.
While “social distancing” seems to be working, it’s making many of us a little stir crazy. If that description applies to you, why not take advantage of the extra time you may have right now to do a different set of “exercises” – to get your financial plan in better shape?
Here are some suggestions:
- Revisit Your Budget – Review your spending habits and separate “wants” from “needs.” If you think your income will suffer in the next few months, decide where you can cut expenses and consider putting more into an emergency fund.
- “Disinfect” Your Wallet – Literally, empty your wallet and clean all your credit cards with a disinfectant. Then, before putting them away, decide which ones you really need. Now might be a good time to “downsize” that portfolio. For those credit cards you decide to keep, take a picture of them (front and back) with your phone (or copy machine) and update your Contacts with the number to call if they are lost or stolen. Add the photos to a separate folder in your phone for future reference.
- Take Advantage of Low Interest Rates – First, review your credit report for any inaccuracies and get them corrected. Free credit reports from each bureau are available once every 12 months at AnnualCreditReport.com. Then, with interest rates at historical lows, consider consolidating your debts and/or refinancing your mortgage. Be careful about closing costs! Refinancing only makes sense if you’re planning to stay in your home long enough to save money after your closing costs are accounted for.
- Consider Gifting – If you have the means, consider gifting to others who might be financially hurting right now. Federal gift tax guidelines allow you to give up to $15,000 annually to as many people as you wish without having to report it on a gift tax return. Clearly, if you are charitably inclined, lots of non-profits in our community need your help. Check out the Giving Partner at: https://www.cfsarasota.org/nonprofits/the-giving-partner to find a charity that fits your interests.
- “Harvest” Your Tax Losses – “Don’t Touch Your Face & Don’t Touch Your Portfolio” is advice commonly given to long-term investors right now, which generally makes sense. But if you want to accumulate a “bank” of tax losses to offset future gains, consider selectively selling some securities at a loss right now and re-investing the proceeds in similar investments1 to be positioned for a future market recovery. Talk to your financial planner before considering this move.
- Update Your Estate Plan – Dust off your estate documents and make sure you have the right people named to represent you should something happen to you. This includes your will, your power of attorney, your health care directives and your living will. Make sure the beneficiaries on your IRAs, annuities and life insurance are current, too. And last but not least, make sure those you trust with your affairs know where to find these documents. It helps to document where all your important papers, passwords and accounts are in a final instructions letter.
- Register Your Emergency Contact Information – Take a few minutes to register your emergency contact information on your driver’s license record through Tiff’s Initiative: https://www.toinformfamiliesfirst.org. With any luck, it will never be needed!
In these unprecedented times, no one really knows when this crisis will be over. Give yourself some grace; and find ways to work on what you can control.
Remember, this crisis too shall pass.
1 According to wash-sale rules, when you harvest losses, you cannot repurchase substantially identical investments for 30 days or the capital loss will be disallowed.
Karin is with SRQ Wealth, One North Tuttle Avenue, Sarasota, FL 34237, 941-556-9004. www.srqwealth.com.
Securities offered through Cetera Advisor Networks LLC, a Broker Dealer, Member FINRA/SIPC. Investment advisory services offered through CWM, LLC, an SEC Registered Investment Advisor. Cetera is under separate ownership from any other named entity.
This article is designed to provide accurate and authoritative information on the subjects covered. It is not, however, intended to provide specific legal, tax, or other professional advice. For specific professional assistance, the services of an appropriate professional should be sought.
The charitable entities and/or fundraising opportunities described herein are not endorsed by, or affiliated with, Cetera Advisor Networks LLC, CWM, LLC or their affiliates. Our philanthropic interests are personal to us and are not reviewed, sponsored or approved by Cetera Advisor Networks LLC or CWM, LLC.
A diversified portfolio does not assure a profit or protect against a loss in a declining market.
For a comprehensive review of your personal situation, always consult with a tax or legal advisor.