SUCCESS
Your guide to managing money, work and the business of life
Jill on Money
Topics from our featured brands and columnists include:
• Personal Finance
• Professional Women
• Innovation
• Retirement Strategies
• Workplace Issues
• Entrepreneurship
Contact Jill Schlesinger, senior business
analyst for CBS News, at askjill@
moneywatch.com.
Fees and commissions: There is
no standard fee system or scale in the
planning business. Some planners work
only for fees, much like lawyers. Others
operate entirely or almost entirely on
commissions. In between are the larger
number, who depend on a combination
of fees and commissions. In some cases
the planner might partly credit commissions against the fee to encourage the
client to buy insurance or other ﬁnancial
products through the planner’s company.
A planner who feels conﬁdent of being
able to sell a high-commission product
might gamble on a low fee.
PHOTO: CHAGIN/FOTOLIA
How to: Divvy up your paycheck
Use these allocations, which are based on national averages, as your guide to after-tax spending.
35%
15%
SOURCE: Kiplinger Washington Editors
5%
12%
7%
5%
8%
5% 5% 3
CLOTHING
hosted, co-branded website, saving valuable time and resources.
however well-trained, has the encyclopedic knowledge required to deal in depth
with all the problems that can affect an
individual’s ﬁnancial affairs. Instead, a
planner should be able to demonstrate
that he or she consults regularly with
experts in a variety of ﬁelds.
CELL PHONE
& internet
Each week, your staff will receive ready-to-publish pages and a
most of the rest of the changes are inﬂation
adjustments to various thresholds. That’s
because, at the end of 2014, Congress
reauthorized more than 50 tax breaks (the
so-called “extenders” or the Tax Increase
Prevention Act), including:
Q The deduction for state and local sales
taxes: The option to deduct state and local
sales taxes instead of deducting state and
local income taxes could be beneﬁcial to
those who live in no-income-tax states.
Q Above-the-line deduction of up to
$4,000 for higher education expenses.
Q $250 above-the-line deduction for
teachers’ supplies.
Q The deduction for mortgage insurance
premiums.
Q Energy-efﬁcient home improvements
tax credit.
Experience: Your planner should have,
at the very minimum, a few years of
experience in planning or allied ﬁelds,
such as accounting, securities analysis or
trading, or law.
Access to experts: No one person,
ENTERTAINMENT
Including cable bill
With ACA out of the way, the rest of
your taxes should be a breeze, because
Credentials: Certiﬁed Financial Planner (CFP) is probably the best-known
credential. Graduates must take a series
of courses, pass a two-day, 10-part
exam, and complete three years of work
experience to earn the CFP designation.
In addition, the planner must complete
30 hours of continuing education every
two years to keep the credential. The
coursework usually takes a couple of
years or more to complete and covers
virtually all aspects of ﬁnancial planning
for individuals.
Chartered Financial Consultants
(ChFC) have earned the designation
from the American College in Bryn
Mawr, Pa., which also grants an insurance-business certiﬁcation, Chartered
Life Underwriter. The ChFC has successfully completed an eight-course sequence over a period of two to four years
and passed two-hour exams on each.
Master of Sciences in Financial
Services (MSFS) is also conferred by
the American College, after 36 credits
of coursework. Twelve of the credits are
earned by attending two weeks of study
at the college.
OTHER SAVINGS
in both print and digital formats.
You can get names of planners in your
area from the profession’s major membership organizations:
Q For a directory of fee-only practitioners, contact the National Association
of Personal Financial Advisors.
Q Find CPAs who have earned the credential of Personal Financial Specialist
(PFS) through the American Institute
of CPAs.
Q The Financial Planning Association has a registry service you can use
to get names of members in your area.
Do a search on its website, which also
features consumer information related to
ﬁnancial planning.
After you have the names, select at
least three candidates. Visit the ofﬁce
of each and ask for references and a
detailed statement of fees and services.
Your purpose is to compare them on the
following points:
Registered Financial Consultants
(RFC) have met the requirements of the
International Association of Registered
Financial Consultants, which confers
the designation on planners who meet
certain academic and work-experience
guidelines.
These titles do provide some assurance that the planner took the trouble to
take the courses to raise his or her level
of skill and knowledge in the ﬁeld.
DEBT
Loans & credit cards
enables you to deliver useful and captivating financial storytelling
t’s not always easy to take a dispassionate view of your own ﬁnancial situation
and decide on the proper mix of insurance, investments and the like. A good
stockbroker can help. But if you’d like someone to make broader-based
investment recommendations based on extensive knowledge of your ﬁnancial
situation, you may be in the market for a ﬁnancial planner.
RETIREMENT
Excluding matching
brands such as Kiplinger, Inc. and Fast Company. SUCCESS
ﬁnancial planner
I
HEALTH CARE
Insurance & co-pays
turnkey solution offers best-in-class content from acclaimed
new questions to incorporate provisions of
the Affordable Care Act (ACA). According
to the IRS, there are four basic categories
when it comes to the ACA:
1. Covered with qualifying insurance
(employer-provided coverage, Medicare,
Medicaid, CHIP, Cobra): The IRS has said
that the majority of taxpayers — more
than three out of four — will fall into this
category. These people will simply check a
box acknowledging coverage.
2. Qualiﬁes for an exemption: Those
who cannot afford coverage, are not U.S.
citizens, had a gap in coverage for less than
three consecutive months, are a member
of a recognized religious sect with objections to health insurance or are a member
of a federally recognized Indian tribe are
among those who qualify for exemptions.
(Go to IRS.gov to review the full list of
exemptions.) Eligible taxpayers need to
complete the new IRS Form 8965.
3. Will make the Individual Shared
Responsibility Payment: If you don’t have
qualifying coverage and do not qualify for
an exemption, you have to pay the greater
of $95 per uninsured adult in each household, capped at $285 per household, or
1 percent of household income.
4. Will claim Premium Tax Credit:
If you received health care through the
marketplace and qualiﬁed for a tax credit,
you should have received tax form 1095A
by now, which contains details of your
coverage and premium tax credit. If you
don’t receive the form or you misplace
it, the federal and most state exchanges
should make them available online. If you
beneﬁted from advance payments of the
premium tax credit, you may see a different tax refund/liability than you were
expecting.
TRANSPORTATION
Car loan & other
expenses,
insurance &
mass transit
Now, on to the changes for this ﬁling
season! This year’s return will include
multi-platform personal finance feature. This authoritative
FOOD
At home &
eating out
The 2014 tax ﬁling season ofﬁcially
opened on Jan. 20, and you should have
received all of the documents necessary
to attack your taxes four weeks later. For
the technophobes out there, the IRS has a
reminder.
Filing electronically is the most accurate
and fastest way to get a refund. The error
rate for electronically ﬁled returns is less
than 1 percent, compared to 20 percent for
paper returns.
The IRS said that the average tax refund
for the past few years has been about
$3,000, and, like last year, the IRS expects
to issue more than nine out of 10 refunds
within 21 days. Because of IRS budget
cuts, it will likely take an additional week
or more to process paper returns, which
means that the IRS will likely issue those
refunds in seven weeks or more.
And another outcome of the smaller IRS
staff: The agency is unlikely to answer even
half the telephone calls it receives, and
taxpayers who miraculously manage to get
through are expected to wait on hold for
30 minutes on average and considerably
longer at peak times. In other words, try to
use IRS.gov.
How to pick a
Tribune Content Agency is proud to deliver SUCCESS, an all-new,
Jill Schlesinger
What’s new
this year as you
attack your taxes
HOUSING
Rent,
utilities &
insurance
Money, work and the business of life
)LQG\RXU<:&$DWZZZ\ZFDRUJ
2QVRFLDOPHGLDDV<:&$86$
• Markets & Mutual Funds
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TERRY SAVAGE
JILL SCHLESINGER
THE SAVINGS GAME
(Anya Kamenetz & Elliot Raphaelson)
KIDS & MONEY
(Steve Rosen)
SUCCESS means having the flexibility to have it all
Provide your digital audience with
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best content to cover any financial topic.
Tailor SUCCESS to bring your
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By Jennifer Alsever
What’s new
this year as you
attack your taxes
Contact Jill Schlesinger, senior business
analyst for CBS News, at askjill@
moneywatch.com.
t’s not always easy to take a dispassionate view of your own ﬁnancial situation
and decide on the proper mix of insurance, investments and the like. A good
stockbroker can help. But if you’d like someone to make broader-based
investment recommendations based on extensive knowledge of your ﬁnancial
situation, you may be in the market for a ﬁnancial planner.
You can get names of planners in your
area from the profession’s major membership organizations:
Q For a directory of fee-only practitioners, contact the National Association
of Personal Financial Advisors.
Q Find CPAs who have earned the credential of Personal Financial Specialist
(PFS) through the American Institute
of CPAs.
Q The Financial Planning Association has a registry service you can use
to get names of members in your area.
Do a search on its website, which also
features consumer information related to
ﬁnancial planning.
After you have the names, select at
least three candidates. Visit the ofﬁce
of each and ask for references and a
detailed statement of fees and services.
Your purpose is to compare them on the
following points:
Experience: Your planner should have,
at the very minimum, a few years of
experience in planning or allied ﬁelds,
such as accounting, securities analysis or
trading, or law.
Credentials: Certiﬁed Financial Planner (CFP) is probably the best-known
credential. Graduates must take a series
of courses, pass a two-day, 10-part
exam, and complete three years of work
experience to earn the CFP designation.
In addition, the planner must complete
30 hours of continuing education every
two years to keep the credential. The
coursework usually takes a couple of
years or more to complete and covers
virtually all aspects of ﬁnancial planning
for individuals.
Chartered Financial Consultants
(ChFC) have earned the designation
from the American College in Bryn
Mawr, Pa., which also grants an insurance-business certiﬁcation, Chartered
Life Underwriter. The ChFC has successfully completed an eight-course sequence over a period of two to four years
and passed two-hour exams on each.
Master of Sciences in Financial
Services (MSFS) is also conferred by
the American College, after 36 credits
of coursework. Twelve of the credits are
earned by attending two weeks of study
at the college.
Registered Financial Consultants
(RFC) have met the requirements of the
International Association of Registered
Financial Consultants, which confers
the designation on planners who meet
certain academic and work-experience
guidelines.
These titles do provide some assurance that the planner took the trouble to
take the courses to raise his or her level
of skill and knowledge in the ﬁeld.
PHOTO: CHAGIN/FOTOLIA
How to: Divvy up your paycheck
Use these allocations, which are based on national averages, as your guide to after-tax spending.
5%
12%
7%
5%
8%
5% 5% 3
CLOTHING
15%
CELL PHONE
& internet
35%
SOURCE: Kiplinger Washington Editors
“Siblings are your longest relationship in life.
The knowledge they have of each other allows them to poke
each other in the most irritating ways.”
Access to experts: No one person,
however well-trained, has the encyclopedic knowledge required to deal in depth
with all the problems that can affect an
individual’s ﬁnancial affairs. Instead, a
planner should be able to demonstrate
that he or she consults regularly with
experts in a variety of ﬁelds.
Fees and commissions: There is
no standard fee system or scale in the
planning business. Some planners work
only for fees, much like lawyers. Others
operate entirely or almost entirely on
commissions. In between are the larger
number, who depend on a combination
of fees and commissions. In some cases
the planner might partly credit commissions against the fee to encourage the
client to buy insurance or other ﬁnancial
products through the planner’s company.
A planner who feels conﬁdent of being
able to sell a high-commission product
might gamble on a low fee.
OTHER SAVINGS
With ACA out of the way, the rest of
your taxes should be a breeze, because
most of the rest of the changes are inﬂation
adjustments to various thresholds. That’s
because, at the end of 2014, Congress
reauthorized more than 50 tax breaks (the
so-called “extenders” or the Tax Increase
Prevention Act), including:
Q The deduction for state and local sales
taxes: The option to deduct state and local
sales taxes instead of deducting state and
local income taxes could be beneﬁcial to
those who live in no-income-tax states.
Q Above-the-line deduction of up to
$4,000 for higher education expenses.
Q $250 above-the-line deduction for
teachers’ supplies.
Q The deduction for mortgage insurance
premiums.
Q Energy-efﬁcient home improvements
tax credit.
ﬁnancial planner
I
ENTERTAINMENT
Including cable bill
Now, on to the changes for this ﬁling
season! This year’s return will include
new questions to incorporate provisions of
the Affordable Care Act (ACA). According
to the IRS, there are four basic categories
when it comes to the ACA:
1. Covered with qualifying insurance
(employer-provided coverage, Medicare,
Medicaid, CHIP, Cobra): The IRS has said
that the majority of taxpayers — more
than three out of four — will fall into this
category. These people will simply check a
box acknowledging coverage.
2. Qualiﬁes for an exemption: Those
who cannot afford coverage, are not U.S.
citizens, had a gap in coverage for less than
three consecutive months, are a member
of a recognized religious sect with objections to health insurance or are a member
of a federally recognized Indian tribe are
among those who qualify for exemptions.
(Go to IRS.gov to review the full list of
exemptions.) Eligible taxpayers need to
complete the new IRS Form 8965.
3. Will make the Individual Shared
Responsibility Payment: If you don’t have
qualifying coverage and do not qualify for
an exemption, you have to pay the greater
of $95 per uninsured adult in each household, capped at $285 per household, or
1 percent of household income.
4. Will claim Premium Tax Credit:
If you received health care through the
marketplace and qualiﬁed for a tax credit,
you should have received tax form 1095A
by now, which contains details of your
coverage and premium tax credit. If you
don’t receive the form or you misplace
it, the federal and most state exchanges
should make them available online. If you
beneﬁted from advance payments of the
premium tax credit, you may see a different tax refund/liability than you were
expecting.
RETIREMENT
Excluding matching
The 2014 tax ﬁling season ofﬁcially
opened on Jan. 20, and you should have
received all of the documents necessary
to attack your taxes four weeks later. For
the technophobes out there, the IRS has a
reminder.
Filing electronically is the most accurate
and fastest way to get a refund. The error
rate for electronically ﬁled returns is less
than 1 percent, compared to 20 percent for
paper returns.
The IRS said that the average tax refund
for the past few years has been about
$3,000, and, like last year, the IRS expects
to issue more than nine out of 10 refunds
within 21 days. Because of IRS budget
cuts, it will likely take an additional week
or more to process paper returns, which
means that the IRS will likely issue those
refunds in seven weeks or more.
And another outcome of the smaller IRS
staff: The agency is unlikely to answer even
half the telephone calls it receives, and
taxpayers who miraculously manage to get
through are expected to wait on hold for
30 minutes on average and considerably
longer at peak times. In other words, try to
use IRS.gov.
HEALTH CARE
Insurance & co-pays
from, you can rest assured that you have the
Jill on Money
DEBT
Loans & credit cards
of the finest brands and columnists to choose
Jill Schlesinger
TRANSPORTATION
Car loan & other
expenses,
insurance &
mass transit
publish and how much of it. With a wide variety
Starting a company with your brother or sister can work
— but it can also put both your company and your family at risk
HOUSING
Rent,
utilities &
insurance
or print, you can choose which content to
SUCCESS
SUCCESS
A
HOW TO RUN
A SUCCESSFUL
SIBLING STARTUP
How to pick a
SUCCESS can be scaled up or down—in digital
SUCCESS
SUCCESS
Your guide to managing money, work and the business of life
FOOD
At home &
eating out
Get exactly what you need and
deliver what your readers want
— Stephanie Brun de Pontet, family business adviser
dora Cheung had tried starting companies
with co-founders before. But it wasn’t until
2012, while working on her laptop in her
brother’s ﬁlthy apartment, that Cheung both hit on
a great startup idea — Homejoy, an online service
that helps users locate a housecleaner — and found
her ideal partner, her brother Aaron. Today, the
pair jointly run Homejoy, which operates in over 30
markets and has more than 200 employees and $40
million in funding.
Their success is remarkable not only because they
conquered the challenges of building a thriving company. They also overcame a major handicap for many
startups: related founders. Research has shown that
businesses co-founded by family members fail at a
higher rate than all other types of business partnerships.
Sibling co-founders must deal with the strains of a
startup as well as disagreements about ownership or
growth and any lingering bitterness over deep-seated childhood rivalries. These pressures can make
for disastrous partnerships. Even when a business is
a blockbuster success — think Kellogg’s and Warner Bros. — it can destroy family
relationships, as it did in both of
those cases.
“Siblings are your longest
relationship in life,” says Stephanie
Brun de Pontet, a family business
adviser at the Family Business
Consulting Group in Chicago.
“The knowledge they have of each
other allows them to poke each
other in the most irritating ways.”
Not an ideal method of working
with a business partner.
Why have the Cheungs succeeded when so many sibling
co-founders fail?
Adora says it’s because they are
both introverts who grew up in
a goal-oriented, studious family.
They rarely get frazzled under
stress, and each can be blunt without the other’s taking offense. “You
inherently trust your sibling more
than anyone else in the world,”
Adora says. “You know you have
each other’s back.”
The sibling startups that succeed, say experts, tend to have
partners like the Cheungs —people
who share a deep understanding
and built-in trust, and are aligned
on core values and priorities. If you
and your sibling don’t already have
these things going for you, it might
be best to keep your association
purely personal.
So before you decide to move
forward with a sibling partnership,
make sure your relationship is on
solid footing. If you’re not certain,
take a test drive. Adora Cheung
knew brother Aaron was a safe
bet because they had shared an
apartment. They found they got
along despite the close quarters.
“If you have lots of arguments that
cannot be resolved quickly, that’s a
nonstarter,” says Adora.
Begin with well-deﬁned roles
and clear expectations about
goals and ownership. Who will make the
ﬁnal call on tough decisions? How will your
roles change as the company grows? Siblings
Catherine, Geoff, and David Cook discussed a
“declaration of roles” when they launched MyYearbook in 2005. This helped separate sibling issues
from business issues, Catherine says. “It was important not just for handling ﬁghts but for ﬁguring out
priorities,” she says.
Remember that startups have a high failure rate.
But whatever happens, you’re family. “Keeping that
perspective really helps,” says Aaron Cheung.
PRETTYVECTORS
When debt collectors wrongly set their sights on you
crossed the line. ApparNever underestimate the
ently unable to come up
tenacity of debt collectors
with my very public phone
to get their man — even if
number, she tracked down
it’s the wrong one.
I know ﬁrsthand what
one of my children on his
that experience feels like.
cell phone and pressed
Several times in this colhim for information on my
Steve Rosen
umn I’ve written about my
whereabouts and contact
Kids & Money
case of mistaken identity.
information.
Years ago, my home mailing
My son, rightfully,
address and phone number somehow got
refused to cooperate with this stranger
attached to debt collection notices, court
during the dinner-hour phone call. But
records and other documents intended for
he soon alerted me to the conversation
an alleged debtor who had a similar ﬁrst
and passed on the debt collector’s phone
and last name.
number.
As a result, I’ve received countless
The next day, I did what I always do
phone calls from collection agencies at
after receiving a debt notiﬁcation intended
all hours of the day. I’ve been mailed legal
for someone else — except this time with
documents requesting my appearance in
a little more feeling. I called the agency,
court. And, one time, I even had a county
explained my story and requested that my
sheriff perched on my doorstep waiting for contact information be removed from its
me to arrive home from work so he could
ﬁle. The agent apologized and said she’d
serve me with papers over alleged past-due ﬁx it.
alimony payments.
Yet, if past results hold true, this won’t
I’ll never forget the look on my kids’
be my last conversation with a bill collecfaces when I invited the sheriff inside so
tor.
I could verify my identity. After he left, I
My case is a perfect illustration of a
felt the need to explain on the spot to the
problem faced by many others who’ve
young ones that no, I was neither a fugibeen wrongly accused of skipping out on
tive from the law, nor did I have a secret
ﬁnancial obligations.
identity.
The U.S. Consumer Financial Protection
Recently, however, a debt collector
Bureau, in a report released last year about
debt collectors, said complaints about
trying to collect from the wrong person
were the top source of complaints about
the industry in 2013. About one in four
complaints involved mistaken identities,
followed by harassing phone calls, the
federal agency said.
If you receive a debt collection notice,
and it’s a case of mistaken identity, don’t
ignore it.
That means following up immediately
with the collector. Don’t tell the person
you want to dispute the billing account; instead, clearly state this is a complaint about
mistaken identity.
Ask to speak to a supervisor if your initial phone conversation seems unsatisfactory. Take notes of the conversation and get
a name and direct phone number, if possible, in case there are follow-up concerns.
In addition, keep all the paperwork you
receive. That paper trail could be essential
if problems continue.
Maintain a calm demeanor during the
phone conversation. I’ve been through this
enough times to know it doesn’t do any
good to lose your temper. I also try to keep
in mind that debt collection is a tough business and honest mistakes are often made.
I also recommend periodically obtaining
free copies of your credit reports to
make sure your identity has not been
If you receive a debt
collection notice, and it’s
a case of mistaken identity,
don’t ignore it.
compromised.
Collection agencies are regulated by a
number of state and federal laws, so ﬁling
a complaint with the federal Consumer
Protection Bureau may put the business on
notice at the very least.
Kids can learn from these adult situations. As curious as they are, they may pick
up on a phone conversation or see some
mail that will raise questions. That should
be a prompt to you to explain how to
handle these problems — and it also could
lead to a discussion about the perils of truly
falling behind with credit.
After all, your kids will be exposed soon
enough to the world of credit, and they
might need to adapt some strategies to
clear their good name someday.
Questions, comments, column ideas? Send
an e-mail to [email protected] or write
to him at The Kansas City Star, 1729 Grand
Blvd., Kansas City, MO 64108.
The Savage Truth
“Even though I am
more than comfortable
speaking in character
on a crowded movie
set, the idea of standing
up in an auditorium
full of people, in the
glare of the press, and
giving a speech that
shared an important
message — well,
that level of formality
and responsibility
terriﬁed me.”
WALLY SKALIJ/TRIBUNE NEWSPAPERS
FIRST PERSON
Six years ago I was asked to be an ambassador for Avon, a company that does
incredible things for women through
entrepreneurship and philanthropy. Its
foundation is the largest corporate contributor to women’s causes worldwide,
supporting and funding women’s empowerment, breast cancer and domestic
violence initiatives around the globe.
The role required travel and a series of
speaking engagements alongside some
powerful and accomplished women. The
mission could not have been closer to
my heart, and it seemed like an amazing
opportunity.
But instead of leaning in, I found
myself leaning back. Even though I
am more than comfortable speaking in
character on a crowded movie set, the
idea of standing up in an auditorium full
of people, in the glare of the press, and
giving a speech that shared an important
message — well, that level of formality
and responsibility terriﬁed me.
I considered letting the opportunity
pass me by. But a voice inside my head
kept whispering, “Really? You’re going to
let this go? Because you’re afraid?”
I discussed my fears with my family, and they came back to me with the
advice I always give to them, “You can do
anything. Just jump!”
I talked with my team, many of whom
were surprised to learn about the depth
of my anxiety. While it was hard to share
something so vulnerable, I was touched
by how supportive everyone was and
how much they believed in me.
In the end, I listened to my heart. This
was my chance to help create change
in the world and to reach out to other
women in need in a way I never had the
ability to do before. I could continue to
contemplate, ruminate and basically drive
myself crazy with endless questions and
visions of failure and embarrassment, but
deep down, I knew I needed to face my
fears and accept the challenge.
So I jumped.
When I told Avon I was accepting
the position, my approach was brutally
Leave your
travel hassles
behind
Advice on traveling sanely
from FlyerTalk founder
Randy Peterson, who has
ﬂown 20 million miles
By Greg Lindsay
Randy Petersen founded FlyerTalk,
the Web’s largest frequent-ﬂier community, in 1995 and sold it in 2007. He now
runs MilePoint and BoardingArea, two
more sites focusing on the ins and outs
of air travel. His advice comes from hard
experience, so hear him out.
‘Doing
begets
more
doing’
By Reese Witherspoon
LeanIn.org is an online community
created by Sheryl Sandberg, based
around her best-selling book, “Lean In:
Women, Work, and the Will to Lead.”
honest. I walked into the room and said,
“I want you to know, I’m an actress, not a
public speaker.” I explained that it’s one
thing to pretend to be Elle Woods and
another to speak on behalf of huge numbers of women about issues critical to
them and their families. It was going to
be my toughest role yet, because it had to
be entirely, authentically me. If I failed,
there would be no second take.
I can still remember when I gave my
ﬁrst speech — at the U.N. of all places! —
in my role as Avon’s new global ambassador. I was so nervous, I could barely
speak as I walked up to the podium.
My speech was on a piece of paper that
rattled audibly in my hand because I was
shaking so hard. I’m not sure how I made
it to the end, but I can still remember
feeling relieved as I walked away from
the podium and sat back down.
Cue Hollywood ending. Or not! The
truth is, my paper shook for almost two
years before I ﬁnally got used to speaking in front of a crowd. But the trade-off
was worth it. As a global ambassador
for Avon, I was able to lobby against
domestic violence. I got to sit with
Michelle Obama and Hillary Clinton to
discuss important issues. I visited Brazil,
Russia, Poland, Japan and several other
countries, where I spoke about local
programs, awarded grants and promoted
breast cancer screenings.
Often the engagements included addressing gatherings of Avon representatives, and I’d get to spend time with some
of them afterwards. Those moments
were unbelievably rewarding, as they
would give me a hug and tell me that my
words were so important to them. As
time went on, they noticed that I came
back year after year, and made a point
of thanking me for my commitment. It
meant everything to me that they were
so appreciative. I gradually realized they
weren’t focusing on me; they were celebrating the message. And that realization at last allowed me to relax (a little!).
It didn’t matter if I stumbled, or shook,
because what I had to say was truly
meaningful.
Because of this experience, I know
that if I want to do things that matter,
I need to get comfortable with being
uncomfortable. I worked through my
fear because I put myself in a difﬁcult
situation over and over again until my
anxiety subsided. Sure, there were times
when I thought I’d never get past the
next speech. But now I call Avon and ask
for more opportunities.
Doing begets more doing. It sounds
simple, but I’m a ﬁrm believer that action
can solve so many worries, and just powering through, no matter what, can give
you the conﬁdence you need when you
feel like you’ve got nothing to offer. It’s
in those moments that we must dig deep,
ignore the noise and lean in.
Go monochrome. My uniform hasn’t
changed in 20 years; every time I ﬂy,
I’m in Nike, and I’m all in black. I’m the
most comfortable passenger the airline
industry ever invented. I never worry
about someone spilling stuff all over me.
And I never have to take off a belt.
Movies are for kids. Real road warriors
get on the plane and just go to sleep. Don’t
stay up all night watching movies, or waiting for someone to get upset about a Knee
Defender. I’m a big believer in Benadryl. A
little dose and I’m drowsy. The next thing
I know, I’m where I should be.
Treat yourself. I’ve learned that in your
middle years as a traveler, you stop thinking you’re invincible. It’s OK to spoil yourself along the way. Every time I see one of
those half-hour massages at the airport —
here’s my money, get me going. A familiar
environment where I’m not ﬁghting for
power outlets is worth it. Cokes cost eight
bucks in the terminal, anyway.
KTSDESIGN/FOTOLIA
Stop schlepping. I still check bags, at
least internationally, because you’re traveling with more than a backpack. I don’t
like carrying stuff around if I don’t have
to. Frequent ﬂiers like me don’t pay $25
per bag anyway, so I might as well take
advantage. I want to ensure I’m getting
the most out of my beneﬁts.
Arrive hungry. On board, food just
doesn’t interest me. I’ve never seen it executed well on a long-haul ﬂight, anyway.
3 key things
mortgage lenders
are looking for
THE BIG
FUTURE
FOR LITTLE
MACHINES
Terry Savage
Falling gas prices
offer rare savings
opportunity
Pat Mertz Esswein
To qualify you for the best rate, lenders
will see if you pass muster in three main
areas. You may be able to offset weakness
in one category with strength in another.
How tiny computers
will rewire our world
It can’t have escaped your notice that
it costs about half as much to ﬁll your gas
tank as it did a year ago. That’s a huge
beneﬁt for the average American consumer
— an average savings of about $60 a month
for most families, and far more if two family members commute to work by car.
What do you do with those savings?
Some people have very little choice. Any
extra money goes to basic needs — food,
medicine, doctors bills. It’s not considered
“discretionary income.”
For others, the savings on a ﬁll-up at the
gas station is merely a passing awareness.
It means they can drive their gas-guzzling
SUV feeling a bit less bothered about the
cost.
But for many Americans, the drop in
gasoline prices (and in home heating bills)
creates an interesting opportunity: Should
they spend the money, save the money or
pay down debt?
The latest numbers show that for
those who can make this choice, the most
popular option — so far — has been to save
the money or pay down debt. December’s
decline of 0.3 percent in personal spending
reﬂects the lower outlays on gasoline and
home heating, which were not offset by
additional spending in other areas.
Americans seem to have learned a lesson
in the past seven years. The New York Federal Reserve Bank reported that outstanding credit card balances fell signiﬁcantly in
November, by 1.3 percent, or nearly $1 billion, as consumers paid down debt. But the
holiday shopping urge caused us to borrow
again, adding $5.8 billion in credit card
debt, auto loans and student loans. That
was the fastest pace in eight months and
reﬂects an increase in consumer sentiment
about the economy.
In fact, consumer sentiment in January
reached an 11-year high, according to the
University of Michigan monthly survey.
So consumers are feeling more optimistic about job prospects, but despite that
optimistic outlook they are using the extra
money from lower energy prices to save or
pay down debt.
Is that good news or bad news for the
economy? And what should you be doing
now?
The best thing about our free economy
is that individuals have choice. And despite
evidence that appears to show they have
made bad decisions in the past — taking on
mortgages they had no chance of repaying,
taking out student loans for an education
that does not prepare graduates for jobs —
consumers are actually very rational.
But there is one more thing about American consumers: They do learn lessons
from experience, especially if the lessons
are learned the hard way.
It’s an old Savage Truth: The lessons that
cost the most teach the most!
Now the economy is feeling the effects
of a populace that has become scared of
the responsibilities of home ownership and
would prefer to rent instead of owning —
even at incredibly low mortgage rates. It’s
that same expensive lesson that is encouraging people to take their extra money
from a cheaper gas ﬁll-up and put it toward
a credit card balance instead of a vacation.
You really don’t have to be a math genius
to ﬁgure out that paying interest at the current average credit card rate of 15.7 percent
(according to Bankrate.com) is not a very
good deal when your wages are rising at
just 2.9 percent a year — if you’re lucky!
So, if given a choice, the smart consumer
makes the rational decision either to pay
down debt or save the money for a rainy
day. We’ve learned the “rainy day” lesson
after living through an economic storm
system that lasted far too long.
Now only really great deals — whether
on a new television, clothing, a new car,
or a new home — will tempt Americans
to spend that “extra” cash, the energy
dividend.
With business capital investment slowing, weighed down by less demand for
drilling equipment in the energy sector, the
big economic question is whether consumers will pick up the slack in 2015 and keep
economic growth going.
A reminder may be in order: It’s not your
job to boost the economy by spending all of
your paycheck and more. If you make the
sensible decision for your own household,
you’ll be fulﬁlling your highest responsibility to yourself and your family — and to the
economy. That’s the Savage Truth.
Are you a good credit risk? One of the
ﬁrst things lenders do is pull your credit
score. The most common is the FICO
score, which will be based on data from
one of the three major credit bureaus
(Equifax, Experian and TransUnion).
Lenders use the lower of two scores, the
middle of three or the average of all scores.
If you have a co-borrower, they compare
your scores and use the lower of the two
or average them. Your debt-to-income
ratio and your down payment determine
the minimum required credit score for a
mortgage.
By Om Malik
A few weeks ago, while walking around
South Park in San Francisco thinking big thoughts, I ran into Alex Klein,
the 24-year-old co-founder of Kano, a
London-based startup. Kano produces
a kid-friendly kit that makes it as easy to
build a cool computer that connects to
the Internet as it is to create a Minecraft
world. I felt like I’d run into Steve Jobs at
the Homebrew Computer Club in 1975,
and I literally walked into a huge idea.
Kano, along with Raspberry Pi and
Arduino, are tiny computers that are
already inspiring a generation of makers
to learn to code and become the hackers
of tomorrow. But these kits possess the
potential to unshackle us from the past
and usher in a new world of computing.
Our current infrastructure is built on
the decades-old client-server architecture that created the ﬁrst IT revolution.
Whether it’s a PC or one of these Kano
computers on a stick, these clients have
to use the network to fetch the instructions they need to function. This system
worked well in the PC era, and even in
the early days of the commercial Internet.
But PC makers sold around 100 million
machines annually. Compare that to the
billions of phones with PC-like powers
today. According to ABI Research, there
are already more than 16 billion active
wireless-connected devices, and that
number may exceed 40 billion by 2020.
In theory, we could continue to use the
same networking formula for this new
world. We would need to keep layering more and more bandwidth between
clients and servers, allocating more
spectrum, laying more ﬁber, and using
more power to run the servers. Telecom
companies are already complaining
about the money they’d have to spend
to support this future, and the wireless
carriers don’t want to invest in faster
networks unless they can pass along the
RAYMOND
BIESINGER
What we need to do is accept
that all the pieces that once went
inside a beige box will now be
embedded everywhere, and that
we’ll reconnect them in new and
interesting ways.
cost to their customers.
For the longest time, computers have
been associated with work. Mainframes
were for the Army, government agencies
and then large companies. Workstations were for engineers and software
programmers. PCs were initially for
other white-collar jobs. Now we can
take that processing power, shrink it
down and put it in cars, thermostats,
lightbulbs and music systems. People
are using Raspberry Pi and Arduino kits
to make intelligent toys, lamps, alarm
clocks, picture frames and small robots.
Those billions of connected devices will
be nearly invisible low-power computers
whose primary job will be to gather data
from sensors. If we connect them all the
same way we’ve always done it, they are
going to put a hernia-inducing strain on
our wired and wireless networks.
These devices are only going to get
smaller and more powerful.
What we need to do, then, is accept that
all the pieces that once went inside a beige
box will now be embedded everywhere,
and that we’ll reconnect them in new
and interesting ways. It is as if someone
scattered and mixed together a few boxes
of Legos, and the old rules don’t apply. In
this world, is it hard to imagine a server
the size of a deck of cards that plugs into
the back of your Wi-Fi router or TV and
runs your house? The tiny-computerdistributed networking era will present a
whole new set of software challenges and
opportunities, but to folks like Alex Klein
of Kano, it may be a walk in the park.
Om Malik is a partner at True Ventures,
an early-stage investor. He is also founder
of Gigaom, a Silicon Valley-based, techfocused publishing company.
Can you handle the payments? To
measure “capacity,” lenders scrutinize your
(and your spouse’s) job and income history
and prospects, debt-to-income ratios and
savings and assets. Lenders will also look
at your proposed ratio of monthly housing
expenses to income. Housing expenses
include loan principal and interest, real
estate taxes and hazard insurance (PITI),
plus mortgage insurance and homeowners
association dues. Housing expenses generally shouldn’t exceed 25% to 28% of your
gross monthly income.
Lenders also ﬁgure your maximum
debt-to-income ratio (total monthly
debt payments divided by gross monthly
income). That number and your down
payment determine the minimum required
credit score; if it’s 36% or less, Fannie Mae
sets a minimum credit score of 620 with
a down payment of 25% or more, and 680
with less than 25% down. To push the
debt-to-income ratio to 45%, you’ll need
a credit score of at least 640 with a down
payment of 25% or more, and 700 with less
than 25% down.
Does the value of the home justify
the loan you want? Collateral is typically measured as loan-to-value ratio: the
amount of the loan divided by the appraised
value of the home you want to ﬁnance. If
you could borrow all of the money, the LTV
ratio would be 100%. But lenders will demand a down payment of at least 3%. That
way, you have a stake that you stand to lose
if you default on your loan.
Terry Savage is a registered investment
advisor, blogger and the author of four bestselling books. Terry responds to questions on
her blog at TerrySavage.com.
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SUCCESS
Your guide to managing money, work and the business of life
YOUR LOGO
Jill Schlesinger
Jill on Money
Experience: Your planner should have,
at the very minimum, a few years of
experience in planning or allied ﬁelds,
such as accounting, securities analysis or
trading, or law.
Credentials: Certiﬁed Financial Plan-
ner (CFP) is probably the best-known
credential. Graduates must take a series
of courses, pass a two-day, 10-part
exam, and complete three years of work
experience to earn the CFP designation.
In addition, the planner must complete
30 hours of continuing education every
two years to keep the credential. The
coursework usually takes a couple of
years or more to complete and covers
virtually all aspects of ﬁnancial planning
for individuals.
Chartered Financial Consultants
(ChFC) have earned the designation
from the American College in Bryn
Mawr, Pa., which also grants an insurance-business certiﬁcation, Chartered
Life Underwriter. The ChFC has successfully completed an eight-course sequence over a period of two to four years
and passed two-hour exams on each.
Master of Sciences in Financial
Services (MSFS) is also conferred by
the American College, after 36 credits
of coursework. Twelve of the credits are
earned by attending two weeks of study
at the college.
Registered Financial Consultants
(RFC) have met the requirements of the
International Association of Registered
Financial Consultants, which confers
the designation on planners who meet
certain academic and work-experience
guidelines.
These titles do provide some assurance that the planner took the trouble to
take the courses to raise his or her level
of skill and knowledge in the ﬁeld.
Access to experts: No one person,
however well-trained, has the encyclopedic knowledge required to deal in depth
with all the problems that can affect an
individual’s ﬁnancial affairs. Instead, a
planner should be able to demonstrate
that he or she consults regularly with
experts in a variety of ﬁelds.
Fees and commissions: There is
no standard fee system or scale in the
planning business. Some planners work
only for fees, much like lawyers. Others
operate entirely or almost entirely on
commissions. In between are the larger
number, who depend on a combination
of fees and commissions. In some cases
the planner might partly credit commissions against the fee to encourage the
client to buy insurance or other ﬁnancial
products through the planner’s company.
A planner who feels conﬁdent of being
able to sell a high-commission product
might gamble on a low fee.
PHOTO: CHAGIN/FOTOLIA
How to: Divvy up your paycheck
Use these allocations, which are based on national averages, as your guide to after-tax spending.
12%
7%
5%
8%
5% 5% 3
CLOTHING
5%
CELL PHONE
& internet
15%
ENTERTAINMENT
Including cable bill
35%
SOURCE: Kiplinger Washington Editors
OTHER SAVINGS
Contact Jill Schlesinger, senior business
analyst for CBS News, at askjill@
moneywatch.com.
You can get names of planners in your
area from the profession’s major membership organizations:
Q For a directory of fee-only practitioners, contact the National Association
of Personal Financial Advisors.
Q Find CPAs who have earned the credential of Personal Financial Specialist
(PFS) through the American Institute
of CPAs.
Q The Financial Planning Association has a registry service you can use
to get names of members in your area.
Do a search on its website, which also
features consumer information related to
ﬁnancial planning.
After you have the names, select at
least three candidates. Visit the ofﬁce
of each and ask for references and a
detailed statement of fees and services.
Your purpose is to compare them on the
following points:
RETIREMENT
Excluding matching
most of the rest of the changes are inﬂation
adjustments to various thresholds. That’s
because, at the end of 2014, Congress
reauthorized more than 50 tax breaks (the
so-called “extenders” or the Tax Increase
Prevention Act), including:
Q The deduction for state and local sales
taxes: The option to deduct state and local
sales taxes instead of deducting state and
local income taxes could be beneﬁcial to
those who live in no-income-tax states.
Q Above-the-line deduction of up to
$4,000 for higher education expenses.
Q $250 above-the-line deduction for
teachers’ supplies.
Q The deduction for mortgage insurance
premiums.
Q Energy-efﬁcient home improvements
tax credit.
t’s not always easy to take a dispassionate view of your own ﬁnancial situation
and decide on the proper mix of insurance, investments and the like. A good
stockbroker can help. But if you’d like someone to make broader-based
investment recommendations based on extensive knowledge of your ﬁnancial
situation, you may be in the market for a ﬁnancial planner.
DEBT
Loans & credit cards
With ACA out of the way, the rest of
your taxes should be a breeze, because
ﬁnancial planner
I
TRANSPORTATION
Car loan & other
expenses,
insurance &
mass transit
Now, on to the changes for this ﬁling
season! This year’s return will include
new questions to incorporate provisions of
the Affordable Care Act (ACA). According
to the IRS, there are four basic categories
when it comes to the ACA:
1. Covered with qualifying insurance
(employer-provided coverage, Medicare,
Medicaid, CHIP, Cobra): The IRS has said
that the majority of taxpayers — more
than three out of four — will fall into this
category. These people will simply check a
box acknowledging coverage.
2. Qualiﬁes for an exemption: Those
who cannot afford coverage, are not U.S.
citizens, had a gap in coverage for less than
three consecutive months, are a member
of a recognized religious sect with objections to health insurance or are a member
of a federally recognized Indian tribe are
among those who qualify for exemptions.
(Go to IRS.gov to review the full list of
exemptions.) Eligible taxpayers need to
complete the new IRS Form 8965.
3. Will make the Individual Shared
Responsibility Payment: If you don’t have
qualifying coverage and do not qualify for
an exemption, you have to pay the greater
of $95 per uninsured adult in each household, capped at $285 per household, or
1 percent of household income.
4. Will claim Premium Tax Credit:
If you received health care through the
marketplace and qualiﬁed for a tax credit,
you should have received tax form 1095A
by now, which contains details of your
coverage and premium tax credit. If you
don’t receive the form or you misplace
it, the federal and most state exchanges
should make them available online. If you
beneﬁted from advance payments of the
premium tax credit, you may see a different tax refund/liability than you were
expecting.
FOOD
At home &
eating out
and your offerings.
HEALTH CARE
Insurance & co-pays
SUCCESS blends seamlessly with your brand
The 2014 tax ﬁling season ofﬁcially
opened on Jan. 20, and you should have
received all of the documents necessary
to attack your taxes four weeks later. For
the technophobes out there, the IRS has a
reminder.
Filing electronically is the most accurate
and fastest way to get a refund. The error
rate for electronically ﬁled returns is less
than 1 percent, compared to 20 percent for
paper returns.
The IRS said that the average tax refund
for the past few years has been about
$3,000, and, like last year, the IRS expects
to issue more than nine out of 10 refunds
within 21 days. Because of IRS budget
cuts, it will likely take an additional week
or more to process paper returns, which
means that the IRS will likely issue those
refunds in seven weeks or more.
And another outcome of the smaller IRS
staff: The agency is unlikely to answer even
half the telephone calls it receives, and
taxpayers who miraculously manage to get
through are expected to wait on hold for
30 minutes on average and considerably
longer at peak times. In other words, try to
use IRS.gov.
How to pick a
for both the print and digital products, so
What’s new
this year as you
attack your taxes
HOUSING
Rent,
utilities &
insurance
You can set your logo into the masthead
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