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Odds Are You're Going to Need This

Odds Are You're Going to Need This

If there’s one thing that could pose a serious threat to your retirement fund – and hard-earned independence during your Golden Years – it’s the need for long-term care.

7 out of 10 Americans over the age of 65 will need long term care at some point.¹ And the US National Median monthly cost of a private room in a nursing home was $9,034 in 2021.² That’s $108,408 a year!

When you factor in the cost of doctor visits, medical procedures, prescriptions, etc., that number is going to keep climbing.

If your need for long-term care comes after you retire, that financial burden could fall onto your loved ones.

The right life insurance coverage has the potential to keep you living well and independently. Long-term care as a part of a tailored life insurance strategy is a great way to protect your retirement funds – and keep your loved ones’ finances protected, too.

I can help. Contact me today, and together we can explore your options for long-term care – and do what we can to help keep those Golden Years golden.

¹ “Life Insurance: Long-Term Care,” Nationwide, https://www.nationwide.com/personal/insurance/life/long-term-care/

² “Cost of Care Survey,” Genworth, 2021, https://www.genworth.com/aging-and-you/finances/cost-of-care.html


Unwinding Yourself Into Stress

Unwinding Yourself Into Stress

Americans carry a stunning amount in credit card debt— $895 billion as of June 2021.¹

You read that right: $895 billion. And that’s after decreasing in 2020 due to the pandemic.

It seems like many have ended up being owned by a tiny piece of plastic rather than the other way around.

How much have you or a loved one contributed to that number? Whether it’s $10 or $10,000, there are a couple simple tricks to get and keep yourself out of credit card debt.

The first step is to be aware of how and when you’re using your credit card. It’s so easy – especially on a night out when you’re trying to unwind – to mindlessly hand over your card to pay the bill. And for most people, paying with credit has become their preferred, if not exclusive, payment option. Dinner, drinks, Ubers, a concert, a movie, a sporting event – it’s going to add up.

And when that credit card bill comes, you could end up feeling more wound up than you did before you tried to unwind.

Paying attention to when, what for, and how often you hand over your credit card is crucial to getting out from under credit card debt.

Here are 2 tips to keep yourself on track on a night out.

1. Consider your budget. You might cringe at the word “budget”, but it’s not an enemy who never wants you to have any fun. Considering your budget doesn’t mean you can never enjoy a night out with friends or coworkers. It simply means that an evening of great food, fun activities, and making memories must be considered in the context of your long-term goals. Start thinking of your budget as a tough-loving friend who’ll be there for you for the long haul.

Before you plan a night out:

  • Know exactly how much you can spend before you leave the house or your office, and keep track of your spending as your evening progresses.
  • Try using an app on your phone or even write your expenses on a napkin or the back of your hand – whatever it takes to keep your spending in check.
  • Once you have reached your limit for the evening – stop.

2. Cash, not plastic (wherever possible). Once you know what your budget for a night out is, get it in cash or use a debit card. When you pay your bill with cash, it’s a concrete transaction. You’re directly involved in the physical exchange of your money for goods and services. In the case that an establishment or service will only take credit, just keep track of it (app, napkin, back of your hand, etc.), and leave the cash equivalent in your wallet.

You can still enjoy a night on the town, get out from under credit card debt, and be better prepared for the future with a carefully planned financial strategy. Contact me today, and together we’ll assess where you are on your financial journey and what steps you can take to get where you want to go – hopefully by happy hour!

¹ “2020 American Household Credit Card Debt Study,” Erin El Issa, Nerdwallet, Jan 12, 2021, https://www.nerdwallet.com/blog/average-credit-card-debt-household/


The Cost Of Smoking Cigarettes

The Cost Of Smoking Cigarettes

Not many people would argue that smoking is bad for you.

It’s linked to lung cancer and heart disease, and is associated with nearly 1 in 5 deaths in the United States.(1) But smoking damages more than your body. It can also seriously hamper your financial health in ways that might surprise you.

The upfront cost of smoking

Cigarettes aren’t cheap. Prices per pack vary from $$6.11 in Missouri to $11.96 in New York, but the national average comes out to around $8.(2, 3) Smoking a pack per day will run you $56 per week, $224 per month, and $2,912 per year. Over 20 years you’ll have spent $58,240 on cigarettes. That’s a lot of money to light up!

Health care costs of smoking

But smoking carries more subtle costs. Hospital bills, medication, and treatment all cost money, and smoking bumps up your chances of needing those at some point in your future. In total, smoking-related illness costs the United States over $300 billion per year.(4) Smokers also have to face higher insurance costs because of the health risks presented by their habit. All told, smoking one pack per day costs around $15,000 a year, or $40 per pack.(5)

The opportunity cost of smoking

What would you do with $15,000? If you’re smoking a pack per day, your answer is to spend it on a highly addictive chemical that feels great in the moment but will damage your health long-term. But what would happen if you put that $15,000 to work? Could that be the cash you need to start building a business? Maybe that could be the foundation of your child’s college fund or inheritance. That nicotine hit might be what you think you need to destress or get out of bed in the morning, but it’s costing you more than short-term cash. It’s denying you the potential to live on your terms and start building your future.

Quitting cigarettes can feel daunting. They’re an easy coping mechanism that you might depend on. Imagining a day without lighting up with your morning coffee could be downright terrifying. But smoking costs you more than just 6 bucks per pack. It costs you more than your future health. The price of a quick nicotine fix could be stopping you from reaching your full potential and stealing life-changing opportunities.

Trying to quit? Check out these resources from the CDC.


¹ “Health Effects of Cigarette Smoking” CDC, https://www.cdc.gov/tobacco/data_statistics/fact_sheets/health_effects/effects_cig_smoking/index.htm

² “Cigarette Prices by State 2022,” World Population Review, https://worldpopulationreview.com/states/cigarette-prices-by-state/

³ “Economic Trends in Tobacco,” CDC, https://www.cdc.gov/tobacco/data_statistics/fact_sheets/economics/econ_facts/index.htm#

⁴ “ Hidden Costs of Smoking,” American Cancer Society, https://www.washington.edu/admin/hr/benefits/events/flyers/tobacco-free/hidden-cost-of-smoking.pdf


Intrinsic vs. Extrinsic Motivation

Intrinsic vs. Extrinsic Motivation

What gets you more motivated—the reward or the process?

That’s the question that divides intrinsic motivation from extrinsic motivation. And learning the difference could salvage your career from disaster.

Why? Because different motivation types are useful in different circumstances.

Intrinsic motivation is process focused. It comes from the sense of satisfaction from a job well done. It’s why you keep coming back to hobbies you love, or why you’re compelled to work on that project even when it’s not required. You do it for the love of the game.

Extrinsic motivation is reward focused. It comes from the anticipation or acquisition of something tangible, like a trophy, a raise, praise, or a bonus. It’s the reason you put up with a high paying job you hate, or why you grind out those extra reps at the gym. You do it for the payoff.

Intrinsic motivation is internal, while extrinsic motivation is external.

Here’s the strategic difference—intrinsic motivation is powerful long-term, extrinsic motivation is powerful short-term.

Think about it. How long can you really tolerate that awful job? Eventually, it’ll wear you down, no matter the pay. It will tax your mental health, your relationships, and your quality of life. Trying to leverage reward motivation over the long-term is a recipe for burnout.

That being said, it’s excellent if you need a burst of energy. “Just a few more months, and then I’ll be debt free. I can make it.” Extrinsic motivation is often what we rely on to push through short-term challenges.

By contrast, intrinsic motivation can provide powerful groundwork for planning long-term goals. What are the hobbies and activities you find inherently rewarding? Are they career oriented? Family focused? That’s where you should focus your long-term energy.


Entrepreneurship Will Change You

Entrepreneurship Will Change You

Starting your own business can be a challenge.

It will test your talents, your mental toughness, and your ability to adapt. And those tests—if you pass them—can spark extraordinary growth.

Here are four ways entrepreneurship will change you.

You’ll develop self reliance. Entrepreneurs need to learn to solve their own problems, or fail. They don’t have a team to handle the daily grind of running a business.

Instead, new entrepreneurs handle everything from product development to accounting. It’s a stressful and high stakes juggling game.

But it can teach you a critical lesson: You’re far more resourceful than you thought. You’ll learn to stop waiting for help and start looking for solutions.

You’ll discover loyal friends. One of the downsides of entrepreneurship is that it may expose toxic people in your circle. They’re the ones who might…

  • Mock your new career
  • Feel threatened by your success
  • Try to one-up you when you share struggles

As you and your business grow, you may need to limit your interactions with them. They might be too draining on your emotional resources to justify long-term relationships.

Rather, your circle should reflect values like positivity, encouragement, and inspiration. Those new friends will support you through the highs and lows of entrepreneurship.

You’ll learn how to manage stress. Late nights, hard deadlines, and high stakes are the realities for entrepreneurs.

To cope, you must build a toolkit of skills that can carry you through the hardest times. Otherwise, you may crack under the pressure and lose any progress you’ve made.

It comes down to one key question: Why do you want to be an entrepreneur?

Are you driven by insecurity? Or by vision?

If you’re trying to prove a point to yourself or others with your business, you may fall apart at the first hint of failure.

If you’re driven by vision, you’ll see failure as part of the process.

Examine your motivations. Over time, you’ll grow more aware of your insecurities. Talk about them with your friends, families, and mentors. As you bring them into the light, you may find they have less and less power.

Entrepreneurship can spark an explosion of professional personal growth. You’ll grow up. You may start with an employee mindset, but you’ll mature into a leader. That’s how entrepreneurship will change you.

P.S. If this seems daunting, start with a side hustle. It can ease you into the role of entrepreneurship without throwing you into the deep end too soon!


The Connection Between Health and Wealth

The Connection Between Health and Wealth

This isn’t news, but money can be a major source of stress and anxiety.

And while it’s true that money problems can cause people a lot of stress, did you know that financial instability can also lead to health problems?

Here’s an alarming statistic: Negative wealth shocks (losing 75% of your wealth or more) increase mortality risk over 20 years by 50%.¹

The impact of money stress grows more pronounced with age. A Yale study tracked older people recovering from heart attacks. They discovered that heart attack survivors with financial problems were 60% more likely to die within 6 months of leaving the hospital.²

Researchers don’t yet understand the causal relationship between finances and mortality, but here are a few educated guesses…

Losing money is stressful. And long-term stress can cause premature death.³

Losing money reduces access to medical care. Quality care slips out of financial reach. Even little things like transportation to appointments can become unaffordable.

Losing money can cause a low-quality diet. A combination of stress and living in low-income areas can make low value food far more convenient and appealing.

The takeaway? Money problems have a big potential to take a toll on your health. That’s why financial stability should be a top priority for everyone. If you’re struggling to make ends meet, don’t despair. There are steps you can take to get your finances in order. And when you do, you could be on your way to better health, too!

¹ “Financial Ruin Can Be Hazardous To Your Health,” Rob Stein, NPR, April 3, 2018, https://www.npr.org/sections/health-shots/2018/04/03/598881797/financial-ruin-can-be-hazardous-to-your-health

² “In Older Adults, Money Problems Linked to Higher Risk of Death Following Heart Attack,” Ashley P. Taylor, Yale School of Medicine, Feb 23, 2022, https://medicine.yale.edu/news-article/in-older-adults-money-problems-linked-to-higher-risk-of-death-following-heart-attack-study/

³ “Stress Can’t Actually Kill You — but How You Deal (or Don’t) Matters,” Lauren Sharkey, Healthline Apr 28, 2020, https://www.healthline.com/health/mental-health/can-stress-kill-you


3 Ways to Shift from Indulgence to Independence

3 Ways to Shift from Indulgence to Independence

On Monday mornings, we’re all faced with a difficult choice.

Get up a few minutes early to brew your own coffee, or sleep a little later and then whip through a drive-thru for your morning pick-me-up?

When that caffeine hits your bloodstream, how you got the coffee may not matter too much. But the next time you go through a drive thru for that cup o’ joe, picture your financial strategy shouting and waving its metaphorical arms to get your attention.

Why? Each and every time you indulge in a “luxury” that has a less expensive alternative, you’re potentially delaying your financial independence. Delay it too long and you might find yourself working when you should be enjoying a comfortable retirement. Sound dramatic? Alarmist? Apocalyptic? But that’s how it happens – one $5 peppermint mocha at a time. This isn’t to say that you can’t enjoy an indulgence every once in a while. You gotta “treat yourself” sometimes, right? Just be sure that you’re sticking with your overall, long-term strategy. Your future self will thank you!

Here are 3 ways to shift from indulgence to independence:

1. Make coffee at home. Reducing your expenses can start as simply as making your morning coffee at home. And you might not even have to get up earlier to do it. Why not invest in a coffee pot with a delay brewing function? It’ll start brewing at the time you preset, and what’s a better alarm clock than the scent of freshly-brewed coffee wafting from the kitchen? Or from your bedside table… (This is a judgment-free zone here – do what you need to do to get up on time in the morning.)

Get started: A quick Google search will yield numerous lists of copycat specialty drinks that you can make at home.

2. Workout at home. A couple of questions to ask yourself:

  1. Will an expensive gym membership fit into your monthly budget?
  2. How often have you gone to the gym in the last few months?

If your answers are somewhere between “No” and “I’d rather not say,” then maybe it’s time to ditch the membership in favor of working out at home. Or perhaps you’re a certified gym rat who faithfully wrings every dollar out of your gym membership each month. Then ask yourself if you really need all the bells and whistles that an expensive gym might offer. Elliptical, dumbbells, and machines with clearly printed how-tos? Yes, of course. But a hot tub, sauna, and an out-of-pocket juice bar? Maybe not. If you can get in a solid workout without a few of those pricey extras, your body and your wallet will thank you.

Get started: Instead of a using a treadmill inside the gym, take a walk or jog around your local park each day – it’s free! If you prefer to work out at a gym, look into month-to-month membership options instead of paying a hefty price for a year-long membership up front.

3. Ditch cable and use a video streaming service instead. Cable may give you access to more channels and more shows than ever before, but let’s be honest. Who has time to watch 80 hours of the greatest moments in sports every week? Asking yourself if you could cut the cable and wait a little longer for your favorite shows to become available on a streaming service might not be a bad idea. Plus, who doesn’t love using a 3-day weekend to binge-watch an entire series every now and then? There’s also the bonus of how easy it is to cancel/reactivate a streaming service. With cable, you may be locked into a multi-year contract, installation can be a hassle (and they may add an extra installation fee), and you can forget about knowing when the cable guy is actually going to show up.

Get started: Plenty of streaming services offer free trial periods. Go ahead and give them a try, but be careful: You may have to enter your credit card number to access the free trial. Don’t forget to cancel before your trial is over, or you will be charged.

Taking time to address the luxuries you can live without (or enjoy less often) has the potential to make a huge impact on your journey to financial independence. Cutting back here and investing in yourself there – it all adds up.

In what areas do you think you can start indulging less?


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Are You Unwinding Yourself Into Debt?

Are You Unwinding Yourself Into Debt?

Americans owe more than $1 trillion in credit card debt.

You read that right: more than $1 trillion.

That number is up 6.2% from 1 year ago. At this rate, it seems like more and more people are going to end up being owned by a tiny piece of plastic rather than the other way around.

How much have you or a loved one contributed to that number? Whether it’s $10 or $10,000, there are a couple simple tricks to get and keep yourself out of credit card debt.

The first step is to be aware of how and when you’re using your credit card. It’s so easy – especially on a night out when you’re trying to unwind – to mindlessly hand over your card to pay the bill. And for most people, paying with credit has become their preferred, if not exclusive, payment option. Dinner, drinks, Ubers, a concert, a movie, a sporting event – it’s going to add up.

And when that credit card bill comes, you could end up feeling more wound up than you did before you tried to unwind.

Paying attention to when, what for, and how often you hand over your credit card is crucial to getting out from under credit card debt.

Here are 2 tips to keep yourself on track on a night out.

1. Consider your budget. You might cringe at the word “budget”, but it’s not an enemy who never wants you to have any fun. Considering your budget doesn’t mean you can never enjoy a night out with friends or coworkers. It simply means that an evening of great food, fun activities, and making memories must be considered in the context of your long-term goals. Start thinking of your budget as a tough-loving friend who’ll be there for you for the long haul.

Before you plan a night out:

  • Know exactly how much you can spend before you leave the house or your office, and keep track of your spending as your evening progresses.
  • Try using an app on your phone or even write your expenses on a napkin or the back of your hand – whatever it takes to keep your spending in check.
  • Once you have reached your limit for the evening – stop.

2. Cash, not plastic (wherever possible). Once you know what your budget for a night out is, get it in cash or use a debit card. When you pay your bill with cash, it’s a concrete transaction. You’re directly involved in the physical exchange of your money for goods and services. In the case that an establishment or service will only take credit, just keep track of it (app, napkin, back of your hand, etc.), and leave the cash equivalent in your wallet.

You can still enjoy a night on the town, get out from under credit card debt, and be better prepared for the future with a carefully planned financial strategy. Contact me today, and together we’ll assess where you are on your financial journey and what steps you can take to get where you want to go – hopefully by happy hour!


Source:
Business Insider: “Credit card debt hits $1 trillion.” 4.12.2017

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Quick Guide: Life Insurance for Stay-at-Home Parents

Quick Guide: Life Insurance for Stay-at-Home Parents

Life insurance is vitally important for any young family just starting out.

Milestones like buying a home, having a baby, and saving for the future can bring brand new challenges. A solid life insurance strategy can help with accommodating the needs of a growing family in a new phase of life.   A life insurance policy’s benefits can:

  • Replace income
  • Pay off debt
  • Cover funeral costs
  • Finance long-term care
  • And even more, depending on the type of policy you have.

And replacing family income doesn’t only mean covering the lost income of one earning parent.

Replacing the loss of income provided by a stay-at-home parent is just as important.   According to Salary.com, if a stay-at-home mom were to be compensated monetarily for performing her duties as a mother, she should receive $143,102 annually. That number factors in important services like childcare, keeping up the household, and providing transportation. Sudden loss of those services can be devastating to the way a family functions as well as expensive to replace.   Stay-at-home parents need life insurance coverage, too.   Contact me today to learn more about getting the life insurance coverage you need for your family and building a financial plan that will provide for your loved ones in case a traumatic life event occurs.


Source:
Salary: “2016 Mother’s Day Infographics.”

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The Black Hole of Checking (Part 2)

The Black Hole of Checking (Part 2)

Previously on “The Black Hole of Checking”…

In Part 1, we learned that any object pulled into a black hole will be stretched into the shape of spaghetti through a process called – wait for it – spaghettification.¹ If you threw your shoe into it, the black hole’s gravity would stretch and compress your footwear into an unimaginably thin leather noodle as it was pulled deeper and deeper into the hole. Your shoe would be unrecognizable by the time gravity had its way.

The same thing can happen to the money in your checking account. Having a child, replacing an old automobile with something newer and more reliable, or taking a last-minute trip to see the grandparents in Florida over the holidays can put a strain on your finances and stretch your reserves farther than you might have anticipated. As new bills create a bigger and bigger hole in your budget, your financial strategy may become something you don’t recognize.

Here in Part 2, let’s talk about how assigning an identity to your money can keep your financial goals on track, and help reduce the stretching of finite resources.

For example, say you keep all of your money in your checking account. Simple is better, right? If you want to go on a family vacation, you’ll just withdraw the funds from your account. Paying in cash to secure a “great” package deal up front? You’re all over that. But what happens if you pick up some souvenirs for Uncle Bob and Aunt Alice? Hmmm…if you get something for them you’ll have to get something for Greg and Susan, too. (You’ll never make that mistake again.) And you just have to try that chic little cafe that you read about – you may never pass this way again. (But how can they get away with charging that much for a mimosa?!) Buy One, Get One all day pass at “The Biggest Miniature Museum in the World”? Let’s do it!

When you’re on vacation – having fun and enjoying yourself – it might be hard to resist taking advantage of unique experiences or grabbing those unusual gifts you didn’t account for. On the other hand, you may have no problem being thrifty when traveling, but what if someone gets sick or injured and needs hospital care on the road, or the car breaks down, or there is unexpected bad weather and you have to stay an extra day or two at the hotel?

After it’s all said and done, when you return home from your fun-filled trip, you may find a gaping hole where you had a pile of cash at the beginning of the month. If you had given your money a specific role before you planned your vacation, you may not have had such a shock when you got home – and you can enjoy your memories knowing you stayed on track with your financial goals.

Give your money identity, purpose, and the potential to grow by separating it into designated accounts. Try these 3 for starters:

1. Emergency Fund. Leaky roof? Flat tire? Trip to the emergency room? Maybe you’re great at resisting impulse buys (like those great shoes you spied the other day), but sometimes things happen that are out of your control. Your emergency fund is for situations like these. Unexpected, unplanned-for expenses can derail a financial strategy very quickly if you’re not prepared.

The most important thing to keep in mind about this account? Do. Not. Touch. It. Unless there’s an emergency, of course. Then replace the money in the account as quickly as possible until it’s fully funded again.

How much should you keep in your emergency fund? A good rule of thumb is to shoot for at least $1,000, then build it to 3-6 months of your annual income. However much you decide suits your financial goals, just make sure you aren’t dipping into it when you don’t have an emergency. (Note: Grabbing a great pair of shoes on sale is not an emergency.)

2. Retirement Account. If you want to retire at some point (and most of us do), this one is a no-brainer. Odds are you’ve already begun to set aside a little something for the day you can trade in your suit and tie for a Hawaiian shirt and a pair of flip-flops, but are you storing your money for retirement in the right place right now? Unlike a day-to-day checking account with a very low or non-existent interest rate, your retirement account should be a separate account that has some power behind it. You’re taking the initiative to put away money for your future – get it working for you! Your goal should be to grow your retirement savings in an account with as high of an interest rate as you can find.

3. Fun Fund. This category may seem frivolous if you’re trying to stick to a well-structured financial plan, but it’s actually an important piece that can help make your budget “work”! Depending on your priorities, you might contribute a little or a lot to this account, but making some room for fun might make it more palatable to save long-term.

You might try setting aside 10% of your paycheck for fun and entertainment and see how that works² – is that too much or not enough? Bonus: this is easy to calculate each month. If you’re bringing in $2,000 per month, put no more than $200 in your Fun Fund.

What you do with your Fun Fund is your choice. Will it be more of a vacation fund or a concert fund? A wardrobe fund or a theme park fund? It’s all up to you. And when the rest of your money has a purpose and is growing for your future, you might feel less guilty about snagging those hot shoes you’ve had your eye on when they finally do get marked down.

Don’t let your goals and your money get lost in a black hole of coulda, woulda, shoulda. What kind of purpose do you want to give your money? I can help you decide!

—–
Sources:
¹ Curiosity Staff. “Black Holes Might Cause Spaghettification.” Curiosity, 8.31.2015, https://curiosity.com/topics/black-holes-might-cause-spaghettification/. ² Ward, Margurite. “Here’s how much you should spend on ‘fun’ each month, according to a financial planner.” CNBC, 1.27.2017, https://www.cnbc.com/2017/01/27/how-much-to-spend-on-fun-each-month-according-to-a-financial-planner.html.

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The Shelf Life of Financial Records

The Shelf Life of Financial Records

When you finally make the commitment to organize that pile of financial documents, where are you supposed to start?

Maybe you’ve tried sorting your documents into this infamous trio: the Coffee Stains Assortment, the Crumpled-Up Masses, and the Definitely Missing a Page or Two Crew.

How has this system been working for you? Is that same stack of disorganized paper just getting shuffled from one corner of your desk to the top of your filing cabinet and back again? Why not give the following method a try instead? Based on the Financial Industry Regulatory Authority (FINRA)’s “Save or Shred” ideas, here’s a list of the shelf life of some key financial records to help you begin whittling that stack down to just what you need to keep. (And remember, when disposing of any financial records, shred them – don’t just toss them into the trash.)

1. Keep These Until They Die: Mortgages, Student Loans, Car Loans, Etc.
These records are the ones to hang on to until you’ve completely paid them off. However, keeping these records indefinitely (to be on the safe side) is a good idea. If any questions or disputes relating to the loan or payment of the loan come up, you’re covered. Label the records clearly, then feel free to put them at the back of your file cabinet. They can be out of sight, but make sure they’re still in your possession if that info needs to come to mind.

2. Seven Years in the Cabinet: Tax-Related Records.
These records include your tax returns and receipts/proof of anything you might claim as a deduction. You’ll need to keep your tax documents – including proof of deductions – for 7 years. Period. Why? In the US, if the IRS thinks you may have underreported your gross income by 25%, they have 6 whole years to challenge your return. Not to mention, they have 3 years to audit you if they think there might be any good faith errors on past returns. (Note: Check with your state tax office to learn how long you should keep your state tax records.) Also important to keep in mind: Some of the items included in your tax returns may also pull from other categories in this list, so be sure to examine your records carefully and hang on to anything you think you might need.

3. The Sixers: Property Records.
This one goes out to you homeowners. While you’re living in your home, keep any and all documents from the purchase of the home to remodeling or additions you make. After you sell the home, keep those documents for at least 6 more years.

4. The Annually Tossed: Brokerage Statements, Paycheck Stubs, Bank Records.
“Annually tossed” is used a bit lightly here, so please proceed with caution. What can be disposed of after an annual review are brokerage statements, paycheck stubs (if not enrolled in direct deposit), and bank records. Hoarding these types of documents may lead to a “keep it all” or “trash it all” attitude. Neither is beneficial. What should be kept is anything of long-term importance (see #2).

5. The Easy One: Rental Documents.
If you rent a property, keep all financial documents and rental agreements until you’ve moved out and gotten your security deposit back from the landlord. Use your deposit to buy a shredder and have at it – it’s easy and fun!

6. The Check-‘Em Againsts: Credit Card Receipts/Statements and Bills.
Check your credit card statement against your physical receipts and bank records from that month. Ideally, this should be done online daily, or at least weekly, to catch anything suspicious as quickly as possible. If everything checks out and there are no red flags, shred away! (Note: Planning to claim anything on your statement as a tax deduction? See #2.) As for bills, you’re in the clear to shred them as soon as your payment clears – with one caveat: Bills for any big-ticket items that you might need to make an insurance claim on later (think expensive sound system, diamond bracelet, all-leather sofa with built-in recliners) should be held on to indefinitely (or at least as long as you own the item).

So even if your kids released their inner Michelangelo on the shoebox of financial papers under your bed, some of them need to be kept – for more than just sentimental value. And it’s vital to keep the above information in mind when you’re considering what to keep and for how long.


Sources:
FINRA: “Save or Shred: How Long You Should Keep Financial Documents.” 1.27.2017
TurboTax: “How far back can the CRA go for Personal Income Taxes?”

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