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Financial Resolutions

December is winding down, and that means it’s time to think about resolutions for the upcoming year. After a year like 2020, financial resolutions are probably top of mind.

The beginning of the year is the prime time to focus on what’s going on with your money. With the right plan in place, you can stick to your financial resolutions and end the coming year in a better place than you started it.

To help you get started,  Jeff Powell, CIO, Managing Partner & Founder of Polaris Wealth & Jeremy Witbeck, Partner at Polaris Wealth, review some resolutions to set, along with expert tips on how to keep them.

Jeff Powell

Jeff Powell

Jeremy Witbeck

Jeremy Witbeck

Jeremy Witbeck – {0:04}

Welcome to our weekly podcast. So I am Jeremy Witbeck. And we have Jeff Powell with us, who is our managing partner and Chief Investment Officer. Jeff, good morning to you. Good morning, Jeremy. So, Jeff, this is one of my favorite times a year, just with the holidays, of course, and set some resolutions and items that I want to improve upon for the next year. And given that theme that tends to take place for everyone at this time of year, that’d be a fun podcast for us to look at some financial, New Year’s resolutions, if you will, that we should all be thinking about and things that our listeners can think about to create a better 2021. And so, in that spirit, just if you were to name out and one of the more important new year’s resolutions from a financial perspective, what would that be? 

Jeff Powell – {1:01}

Well, it’s  like you said, it’s a fun time of year it’s it’s a turning a chapter and, you know, one of the hardest things I think that for for most people, and it can be a little overwhelming. But what we talked about is if you don’t know where you are, how can you possibly think about where you’re going to head? So probably, to me, the probably the most important financial New Year’s resolution that someone can undertake early in the next year is really getting an understanding of you know, where all your stuff is, so to speak, you know, get a list of old 401k plans that you have, what bank accounts do you have? What do you have outside investments, like real estate or stock options, whatever else that you have, you got to get a clear understanding of exactly you know, where you are, before you can ever think about anything else with regard to your investing, because, you know, without that you really don’t have a clear understanding of where to go, so to speak? So that would be my first resolution, Jeremy would be to take, you know, get a grip on where all your assets are, where they’re located, should they be consolidated? What’s going on?

Jeremy Witbeck –  {2:12}

Jeff, that’s a great point. In fact, it’s kind of funny that, like, for example, with an old 401k plan, you work so hard, you sock away, and then time fades to your memory of that, and then it kind of sits there dormant for a while. So that’s a really great one to understand where there are, and then more on that same notes is to make sure that they’re also working in the same manner as the other assets that you have a better understanding or tracking of, on that note, just something that I would throw into the mix is either creating a financial plan if you don’t already have one, or updating and revisiting it. And it kind of ties into understanding where your assets are. But with the financial plan, it really gives you something to hold yourself accountable to that’s. The one thing that’s really tough with financial goals is that oftentimes their multi-year plans, it’s hard to know if you’re actually making progress in the manner that you want. And that’s where I think a financial plan can be invaluable is to really give yourself a measuring stick to see if you’re reaching those goals. Anything that you’d add on on that front with the financial planning?

Jeff Powell – {3:19}

Or Yeah, I mean, I mean, so what we talked about what the first part is understanding where you are, the next part is, where do you want to be? I mean, so to your exact point, it’s hard sometimes to get a full understanding of where you are along that guided path. So if you are revisiting and we recommend every 12 to 18 months to have your plan revised, if you don’t have one, you know, we talked about being successful on purpose. Think about, you know, a business that you work for, or you know that you run yourself, you need to have a business plan in order for that business to be run successfully. Same thing with your own personal finances, it’s it’s not that it’s going to make a measurable difference day in day out. But it does hold you accountable, it is going to be something that you can track, you can understand if you’re ahead of schedule, behind schedule, you know how to allocate your money, all that stuff is all within a financial plan. Very, very, very important aspect of being a you know, being successful, financially long term. So I love the idea of that journey. And it actually kind of drags me into my second financial New Year’s resolution that I would throw on Celeste. So we’ve got to total but my second one would be then take your financial plan and look at what cash you have sitting out there. One of the things that we constantly are talking about is really having your money work hard for you. We already know right now that we’re in a low interest rate environment, we know that you know that cash is basically guaranteeing losing your money. So you got to get that cash working for you. So a lot of people you know, will talk to people and they’re like, Oh, yeah, you know, my portfolio did really well. They’ll be looking at their investment part of it, they’re not looking at the overall allocation that they have. So let’s say that they’ve got, I don’t know, let’s just say that they’ve got a million dollars, and they were sitting on $300,000 worth of cash. They might be saying, well, maybe it’s a lots of little different pockets, because I didn’t do my first one, which is knowing where everything is. So they’ve got a few different bank accounts. And when they total it all up, they’re surprised that, wow, I’ve got 300 grand sitting in cash. But they’re only looking at their $700,000 portfolio and saying, hey, that did really well. Well, it did. But you got to look at the million that you have not the 700 to really understand what happened with your overall net worth. And how do you how did you improve it. So if you’ve got a bunch of cash sitting on hand, we would say get that working for you. A lot of people, you know, we talk also about how markets climb a wall of worry, people are worried about, Hey, you know, is this the end, we had a big run up in the markets, you know, we’ve overcome COVID, and the markets are up on the year with a pandemic going on. Take a deep breath and realize that, you know, markets climb a wall of worry, there’s always gonna be a reason for you not to invest this cash. And this year, it’s pretty evident. But there’s all sorts of reasons to be worried about it in years to come. Get your money working for you. That’s that would be my my second and highest priority out of it from my side of things was get your cash working for, you know, lazy assets.

Jeremy Witbeck – {6:28}

That’s a great point. And it’s interesting having these conversations, because I remember having it five years ago, thinking rates can go much lower. And then here we are in 2020, with rates at rock bottom. So absolutely, make sure to get those assets deployed and working for you where appropriate. On that same thing, I would actually look at the other side too, with these low interest rates. And as smart investors as people looking at our financial plans and financial assets, we can also leverage those lower rates. And so I would say taking advantage of lower interest rates where appropriate. So if you have a mortgage that you’ve taken out and haven’t refinance recently, it probably makes sense to do that we’ve seen 30 year mortgages now dip into the 2% range. If you have credit card debt or anything like that, get that paid out, paid off. And if you don’t have the funds to do it, maybe look at a HELOC or some other low interest rate vehicle to get those interest rates. But we really are fortunate on the side of we can borrow this money at historical lows and really use that to leverage our financial assets and, and make further progress on our goals. So just any other kind of last goal that you’d have for everyone or financial resolution, if you will.

Jeff Powell – {7:48}

Yeah, I mean, let me actually say one quick thing. Also, on the low interest rate side of things, I mean, the one thing that we also have to be looking out there as your asset allocation, with low rates, and being able to take advantage of, you know, being taking advantage of mortgages and the lending side of it, you have to remember that when you’re investing in fixed income, you’re the lender now. So when we were talking about how you should be taking advantage of it refinancing, consolidating debt, and so the lower interest rate that you know, things that you’ve got write offs with, with where you don’t, yeah, you’ve also want to think about how to extend that. So a, you know, look to refinance A, B, potentially push your, your rates out as far as you possibly can to lock this in for an extended time period. But then think about it also within your portfolios. So when we’re looking at it from that kind of context, you know, do you want to be a lender with rates as low as they are? And you know, most people are, again, trying to leverage themselves more take out equity out of their home through a HELOC or refinancing. And they’re doing it because hey, rates are really, really low. Do you want to be the lender they’re so rethink your asset allocation, you may want to be less in fixed income than you would from a historical standpoint, because you’re really not able to get much. We talked about losing buying power, even if you’re out buying a 10 year Treasury right now, you’re getting less than 1% on it, you’ve got inflation at 1.7%. So basically, what you’re saying there is that you’re willing to guarantee a loss of purchasing power over the next decade by going out and buying certain types of fixed income in this market. So I would take advantage of that also with what we’re talking about with this overall. But the last of my my resolutions, if I was going to kind of round out the conversation is really think about you know that you’re qualified retirement plans. So if you work for an employer, if you’re wondering yourself, how are you going to increase your savings each year? One of the easiest ways of doing it is to take whatever raise you got and If you’re not already maxing out your retirement account, just take that raise, and slap it in your 401k plan 403 B, whatever you have out there, super easy, you won’t miss it. So if you got, I don’t know, three $4,000, raise $5,000, raise $10,000, raise whatever, take that money instead of the side and realize even if your company’s not matching the government basically as so depending on what your tax bracket is, let’s just say that you’re in the 25% tax bracket to make it really simple. You normally we get for every dollar, you get 75 cents back, not including looking at your state income taxes and so on. If you’re putting that money into a 401k, plan the full dollars going on. So you can get a look at it as I’m putting in 75 cents, the government’s putting in 25 cents. And yes, eventually they’re going to tax you on it. But you’ve got that full ball are working for you for years I had on a compounding basis. So the government’s doing it. So take whatever you can Max, whatever you can out, forget about the Joneses. We talk about that all the time of trying to keep up with the Joneses, you really want to try to increase your savings rate, hopefully in a qualified plan. And then if you’ve maxed that out, then you need to start thinking about strategies of how to continue to put money aside either in non qualified retirement accounts, or what you’re going to do with your taxable savings and get that money working for you as well.

Jeremy Witbeck – {11:18}

Yeah, Jeff, that’s a that’s great advice. So that saying where you want to pay yourself first, and in working with clients over the years, I’d say that one behavior is what makes it separates people from just being okay to extremely well off is that they learned the discipline early on in their life of saving and getting their money working for them on their future goals.

Jeff Powell – {11:38}

You know, if you look at a lot of our clients, the one thing that they have in common because I mean, again, if you think about the client, so we have 1100 clients, 46 states, you know, a vast range of ages, education, employment, everything else. The one thing that they all have in common is they were very good savers. They were you know, not worried about you know, their lifestyle today, they were putting things in proper perspective, living within their means saving good money, and then pushing it out to, hopefully the next generation as part of their own legacy.

Jeremy Witbeck – {12:18}

So Jeff, I’m gonna cheat here, I’m gonna do one last one, but I’m gonna take a turn, or turn away from the financial theme, if you will. And just the last one to share with everyone is just make sure to focus on your own health and well being. All these other things that we talked about as important as they are, they’re not going to mean much if you don’t have the health or the mental capacity to enjoy it and take advantage of it. And so 2020, I think is a great year to really reflect on the things that we’re doing individually to see if we’re leading the kind of lifestyle that will give us the health that we want. Both now and also in future years and so on with, especially states like California having the pandemic really surged out of control, we have our emergency rooms overflowing right now, really, I can’t stress enough to everyone, just be safe, do things that you know, will keep me keep you away from potentially getting sick or infected. But also make sure to take time for yourself, make sure to carve out time to yourself physically fit. I mean, eat right, do the things that our moms all taught us to do when we’re little. And that way when these goals do come to fruition, when you do achieve the financial dreams that you set out that you’ll be able to actually enjoy it, you’ll be able to enjoy that. That hard work with your friends loved ones, or however you choose to celebrate that time. Jeff, any closing remarks?

Jeff Powell – {13:41}

Well, no, I couldn’t agree with you more. I mean, obviously, you know, having the first five new year’s resolutions, I mean, really what we’re talking about is, is eventually being able to use that money later on in your life for retirement if you’re not in it right now. But also to have a long retirement if you already are in one. So this has been a and again a very overused word, but an unprecedented time period that we’ve dealt with. And really what we’re dealing with here is especially the mental health side of it, we are seeing a strain on systems there were people needed systems were so mean do something that you know brings you bless you know, when it comes to actually COVID itself. Let us worry about the investment elements of it. There’s still going to be even though we’ve got vaccines, we’re dealing with distribution. We’re dealing with a number of things that are going to be again, first time ever since 2021. That’s why you’ve hired us let us worry about the impacts. Let us worry about the the ebb and flow of the markets. That’s what we do a proficiently and at a level that very few firms do with regard to being a tactical investment management firm. Let us handle that you worry about yourself and, and the thing that I would throw out is, again, with a spread with another wave of this. And as as big as the second wave has been, it has had a lot more direct impact on at least our Polaris wealth advisory group family, not only directly within employees and so on, but their families and also our clients. And so we’ve seen a lot of this directly. This is very real. This is putting very healthy people in their 20s and 30s. You know, it’s rocking them a lot alone, if you’re in your 50s 60s or 70s, maybe even the 80s listening to this. It’s it’s a real thing. And it’s it’s obviously at a point right now, where the United States had a one in 1000 death rate for our population with having over 300,000, almost up to 340,000 people have died from this pandemic so far in just the last nine months. So we really do need to take this very seriously. Yes, there looks like there’s a little bit of a light at the end of the tunnel. But we shouldn’t let down our guard too soon. With regard to it. We do need herd immunity, which again, we’ve talked about days past, which is, you know, at least having a 70% part of our population being immunized. So as we’re going through winter, as we’re going through the darkest days of our year. Yes, check your mental health, check in with your friends, check in with your family, find the blessed that you need. You know, eating right, exercising, right creates endorphins in your body that will make you feel better, you won’t be as panicked about what’s going on from a news standpoint, and so on. So there is a really good reason to be looking inward, and being almost a little selfish for yourself and what you need. And, you know, obviously with the the notion that you can’t be helping others if you’re not healthy yourself. And so the biggest one that I would throw out there, as you’re saying it’s an excellent resolution is to just take baby steps to get there, you can’t change your life overnight. If you’re not eating as well as you’d like to or not doing the bliss things then start small, build it out, and then make it more of your daily life so that you get to enjoy it a whole lot more. So love that idea. Jeremy, it’s a kind of a great way of kind of finishing off the conversation. But you know, again, take care of yourself, be smart, be healthy, be happy as much as you can. We’re still in a quarantine situation. But you got to take advantage of it and find the good out of it that you possibly can.

Jeremy Witbeck – {17:46}

Absolutely just great advice. Let me just say to everyone, I hope you have a wonderful new year. So as you watch the minutes tick by just take this list, think about things that you can be doing better yourself. And if there are items that you find that you’re falling short, please leverage myself Jeff or your wealth advisor. We’d love to help you in reaching these goals. One of the things that I’ve found is that there’s a lot of power in holding yourself accountable to something. And so let us be the person that holds you accountable to these things. We’d love to talk about these items with you and find ways that we can ensure that you’re going to be successful. With that Jeff, happy new years and as always be safe, be happy, be healthy.


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