On Track for Success in Finances
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About this ebook
Money, finances and all the things associated with those two words may scare you, may intimidate you or they simply may be unimportant to you. One thing I do know is that those two words should be important to you and the success you want in your life. "Green" may not make the world go around, but it sure cushions the ride. This book is finances made simple so that it does not intimidate you. Once you understand something, it has less power over you but because knowledge is power. Starting with organizing the income that your household generates into a workable budget scheme should take priority. This book gives ideas and some direction to do just that.
This is the first of 3 books about various aspects of financial planning so that your life works better for you. On Track for Success in Finances is an introductory in nature to concepts that will be discussed in more detail in the other 2 books. So consider this a series that should be a permanent fixture in your library.
Sharon O'Maley
Sharon Finch O’Maley was born in Xenia, Ohio to a preacher and his wife, Ralph and Ruth Finch. She moved with her parents and older sister, Marilyn, to Indiana, New Jersey, Colorado, and back to Ohio and to Nebraska through her childhood. She graduated from college with a degree in Elementary Education. She taught school for the following seven years. Her dream of being a missionary in a Spanish-speaking country came true in 1982 when she went to Costa Rica for five months. In 1986, she was assigned to go to the Dominican Republic for three years. Many of the stories in “At the Break Of Dawn” are her experiences with the people she loved so much. Sharon is presently living in Austin, Texas and is the mother of a daughter, Ruth who attended University of Texas in Austin, Texas and is now married to her high school sweetheart, Steve Largaespada and has two young sons. Sharon has been published in various magazines, newspapers, and daily devotional books. She is a daily blogger on Dr. Strains CBD.
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On Track for Success in Finances - Sharon O'Maley
Royal Tech Writers & Translators and the editors who have been involved with the production of this manual have produced this book as an educational tool for individuals or professionals in the most accurate and current manner possible. It is not written, however, for the purpose of giving legal advice to the reader or sold to render legal, accounting or any other professional service.
Information may change over a period of time, so RTW&T disclaim responsibility for any omission or inaccuracies in this particular text. RTW&T, consequently, does not accept liability for any actual or perceived loss resulting from the information in this book.
Page
Chapter I
Getting on Track With
Evaluating Life
FINANCIAL PLANNING During Life’s Tough Times
Individuals and their families deal with a wide range of issues when a chronic illness surfaces. Planning ahead requires anticipating negative situations – dependency, lack of funds, disability, incapacity and death – and exploring solutions to these uncertain, hard-to-face problems.
If someone or a family member is seriously ill, but is concerned that they will have insufficient funds, what does one do? Sell everything? Borrow money? Sell a home? Sell a life insurance policy? For starters, remain calm, NAPFA advises. There’s undoubtedly enough stress on the individual and their family right now, so avoid any sudden moves. Instead, use the following tips from NAPFA to make educated financial decisions:
Review The Financial Situation—The most important thing one can do is take a deep breath and look at the overall view of the current financial situation – from assets to liabilities to borrowing sources.
Liquidate Cash—After reviewing a situation in detail, begin liquidating cash assets first. There is no tax cost to doing this, and there are no commissions involved.
Liquidate Low Earning Assets—If one has assets that are not earning a tremendous rate of return – money market funds, certificates of deposit, bonds or bond funds – consider selling them. Because an individual is not giving up a lot of return, there probably will not be any major tax penalties for selling.
Sell Stocks and Mutual Funds—Consider selling other assets that might be sold without incurring a heavy commission, such as stocks and mutual funds. Be aware that there will be tax implications with this move. However, when an individual is severely ill and not earning an income, the tax on the gains may not be significant.
Borrow On Margin—In some instances, one might consider borrowing on margin or borrowing against specific stocks held at a brokerage firm. While this could be advantageous, be aware that if the stock price drops an individual could be forced to sell the stock in order to cover the margin at its low. For this reason, such borrowing should be handled with caution.
Treat Retirement Accounts Carefully—Avoid the temptation to cash in all of the retirement accounts. Not only does one risk taking out more money than is really needed but will also have to pay taxes on all withdrawals. While taking money out due to a disability will not be subject to a tax penalty, it will still be subject to ordinary tax. Borrowing against a 401(k) account is another option that incurs less taxes and no penalties, but it’s best to avoid closing out a very large account in one fell swoop unless it’s absolutely necessary.
Use Home Equity Lines Of Credit—Home equity lines of credit are not only relatively inexpensive but are often tax-deductible ways of borrowing. If, prior to an illness, there was a home equity line of credit established, it might be a good idea to draw on it. Unfortunately, setting up a new line might be difficult since banks insist that one has earnings, which may be difficult to prove during a chronic illness. As a result, this option is most viable prior to illness, although it may be available only under certain circumstances.
Utilize Life Insurance Policies—An individual can do this either by taking out a loan against a personal policy, or – if available – by using what are known as living benefits
or accelerated benefits,
in which the insured can draw down on the value of the policy during a terminal illness. If living benefits exist in a policy, they should be carefully reviewed as a viable alternative. Those with policies that feature relatively low borrowing interest rates may wish to borrow on the cash value of their policy or take the cash value of the policy. However, cashing it in is not advisable because doing so will take away a policy that’s probably worth more now than it has ever been.
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