Inflation is definitely a concern, and the media frenzy around current inflation likely isn’t helping ease your current fears. While you are right to be concerned about inflation, it doesn’t necessarily mean it will threaten your retirement plan, even if today’s inflation lasts longer than we first expected.

| Inflation is surprisingly more dangerous than a market crash. |

| Inflation Vs. Social Security and other ‘Guaranteed’ Income |

| Using Multiple Inflation Rates |

| What Should You Do? |

I am sad you have to deal with this and it’s unfortunately not uncommon for annuity sales representatives to misrepresent the annuity. As for what to do next, you should determine if it would be better to continue the annuity or give up the money you have already put into it and instead invest using a different strategy. Even though the annuity is a bad investment…

Trends have shown student loan debt rising significantly over the years, significantly overtaking credit card debt in total debt owed by Americans. From one perspective, this feeds into the narrative that student loan debt is the biggest problem we are facing and that consumers are going crazy over education debt. I choose to look at it differently (and more positively).

• Student debt isn’t the worst debt

• Credit card debt is down 40%

• Increased degree attainment

• Broader planning reduces / increases the problem

How much to use will depend on the rest of your financial situation, including your monthly income, the size of your emergency fund, whether you are on track for retirement savings, and even the terms of the divorce. While it is important you get a place of your own, take your time with this decision. You don’t want your excitement over buying a new home to overshadow your rational analysis and decision-making.

Also Covered:

• Impacts on monthly cash flow are key

• Don’t overspend, especially in this market

• Don’t unravel the fairness of the divorce settlement with the home purchase

Following ongoing pandemic impacts and a high inflation report markets again were impacted by the shocking invasion and bombing of Ukraine by Russia. Historically, geopolitical events have had short-term impacts on the world economy and investment markets, so the humanitarian impact is likely to be much larger than the economic one. Also covers:

• Historical market reactions to wars and geopolitical events

• How you can help Ukraine

I applaud you for beginning the process of building a property portfolio while you are in college. Generally speaking, you will not be able to get a mortgage without a steady history of income that is both stable and sufficient to pay the mortgage. With a 50% down payment, it is possible to get an asset-based loan, which will be approved primarily based upon the equity in the home, even without a steady personal income. Based on the numbers you have provided, however, I would not recommend going that route.

• Investment real estate requires more cash than just the downpayment

• There are safer and easier real estate investment alternatives

Since you have already saved up the money, it would be best to use the cash to pay for the addition and avoid the home equity line of credit (HELOC). Taking out the HELOC would cost you interest, even if it is a small amount, and there is no reason to pay your bank the interest if you don't have to. The following two scenarios may help.

• Scenario 1: Get the HELOC and Invest

• Scenario 2: Pay Cash

• Scenario 3: Get the HELOC and a mistake

There is a good chance you will pay 0% in taxes on the sale of your home. The tax code has a provision for the sale of your primary residence where you can shield profit from taxation, called the primary residence exclusion. If you have been living in the house for at least the past two years, you can qualify to avoid taxation on the profit from your home, up to a total of $250,000 if you are single or $500,000 if you are married.

• You may not be able to avoid all taxes

• You only pay taxes on profit

• You may owe no taxes

This is a more complex question than it may seem at first. From a simple perspective, you want to analyze what the true expected future rate of return is on the property including all costs such as maintenance, future upgrades, vacancy, taxes and more. Then compare that true rate of return with the other options you have for the money, accounting for differences in risk.

Also Covered:

• High Valuations = Lower Expected Future Returns

• Impact of taxes and transaction costs

• Your desired life trumps the money

How you invest, or even if you should invest, needs to be determined by when you need the money. Based on the details you provided you shouldn’t look at investing it at all for the half you need in the next 2 years. For clients in this situation, I recommend keeping the money needed in two years in a federally-insured savings account. Both the risk and the cost of investing would end up being against your best interest.

When investing, you will want to manage your investments in both your SEP and Roth IRA as one whole portfolio and not as separate entities. This means making sure you are not invested too heavily in a single asset . . . .

Placing your student loans in forbearance would be a mistake. The loans will continue to accrue interest, which will mean less of the money you pay at the end of the year will pay down the debt because you have extra interest payments. I would recommend exploring a few other options first (listed below) and then choosing which is suitable for your goals. You may want to hire a fee-only financial planner to run the numbers on the options and provide some clarity on what each option would mean to your retirement goals, buying a home, and other savings.

• REFINANCE THE LOAN

• CUT BACK ON RETIREMENT SAVINGS

• DELAY HOME PURCHASE OR OTHER SAVINGS GOAL

You seem to be doing well overall with your financial strategy, so the focus will be on optimizing what you are already doing. The following are a few of the most common practices for reducing your income, although I'd need to understand more about your actual situation to be able to guide you in the right direction. I have also included the approximate amount you could reduce your taxable income by with each strategy.

• CONTRIBUTE MORE TO YOUR WORKPLACE PLAN

• SEE IF YOU HAVE A 457 PLAN

• CONTRIBUTE TO HEALTH ACCOUNTS

• SEEK A COMPREHENSIVE FINANCIAL PLANNER

Budgeting shouldn’t be a limiting exercise designed to tell you how to spend your money. At its best budgeting is a tool for organizing your financial resources toward your great life, both now and in the future.

Also Covered:

• A Better Version of Budgeting

• Opportunity Cost

• Changing Costs

• Changing Priorities

I am so sorry this happened to you. Unfortunately, your situation is a common one for people when they retire or change jobs and move their 401(k) account. Handling this rollover on your own creates a lot of tax problems, even if you do everything perfectly. Below are some ideas to help you, but first the answer to your initial tax questions.

ALSO COVERED:

• What Happens to Taxes.

• Doing a 401(k) or IRA Rollover On Your Own.

• Fixing an Indirect Rollover.

• Making Up The Lost Retirement Account Balance.

• Managing Taxable Investments vs. Retirement Investments.

The newest IRS Form W-4 provides a new process to accomplish the same goal as exemptions did in the past. In fact, the new form more clearly connects setting your withholdings with the process you will use in April to fill out Form 1040 and file your taxes.

ALSO COVERED:

• Filling out the form

• Getting to an exact withholding number

• Getting payroll estimates from HR

Severance packages are considered compensation by the IRS and are taxed the same as other income from a job, but this means not all of your severance is subject to taxation. Reviewing the terms of the agreement with your CPA or financial advisor can help you know exactly how it is taxed. If you are still negotiating your severance, you have an opportunity to lower your taxes by changing the terms of the package.

ALSO COVERED:

• The Severance Agreement

• Estimating Tax Withholdings

• Avoiding Taxation — healthcare & fringe benefits

Assuming the withdrawal is going to be spent and not rolled over to another retirement account, a partial withdrawal from your Traditional 401(k) will be treated as taxable income when you file your taxes next year. The amount the 401(k) provider deducts and sends to the IRS will also be counted as a prepayment of your taxes for the year, similar to how withholdings worked while working. . . .

ALSO COVERED:

• May be forgiven vs. Will be forgiven

• Is the interest forgivable?

• What is the interest rate?

The federal government has created the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Eligible business and individuals can borrow 2.5 x prior average payroll (up to $10 million) with no loan payments due for six months. If you maintain your workforce, the SBA will forgive 8 weeks of payroll plus certain other expenses

ALSO COVERED:

• Eligibility and amounts available

• How to get Loan Forgiveness

• Applying for the loan and an advance

Resource are available to help including ways to replace your income and relief programs to help make your mortgage easier to manage. Start by identifying who owns your mortgage to determine the programs available to you.

ALSO COVERED:

• Freddie Mac relief programs

• Fannie Mae relief programs

• How to request help from a bank or credit union

The last couple weeks saw a stock market drop which has many spooked. Here are the 6 things you should do to keep the market downturn from ruining your financial plan.

The IRS provides directions for filing a 1040X on their website, although as with all things IRS they aren't always the easiest to follow. I highly recommend engaging a qualified tax professional, such as a CPA, to assist you with your taxes. Additionally, since you have a significant underpayment of taxes for the prior year, you will want to have professional guidance to minimize penalties (the IRS doesn't generally lower interest charges).

Article Also Covers:

• Hiring a CPA is Cheap

• Volunteer Income Tax Assistance Program

• Minimizing Multi-Decade Taxes

There are two broad ways to leverage equity in real estate or any investment; selling the investment or borrowing against the investment. Beneath these two broad categories are dozens of specific strategies, with varying advantages and disadvantages . Scheduling a call to discuss your situation and desires would be the best way of determining a specific (possibly creative) strategy to accomplish your goal.

Full Article Also Covers:

• Sell Part of the Property

• Replace the HELOC with a HELOC

• Be Wary of Advice to Roll the First into a HELOC

If you keep the mortgage for 30 years it is generally worth it, but almost no one does this for either their home or investment property. If you sell the property in 3 months it doesn’t make sense to pay $10k in points to get a $170 monthly savings. The question is: How long do you need to have the mortgage to make paying that fee (the points) worth it - considering the time-value of money?

Article Also Covers:

• How to calcluate the net present value of the bank’s offers

• How banks calculate their offers

• Estimating how long will you keep the mortgage

• The rate of return on alternative uses for the funds

• Multi-decade tax planning and mortgage points