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The “Pink Slip” Blues


The “Pink Slip” Blues

The Six Things You Should Know

According to the Bureau of Labor Statistics, the number of unemployed in July was 9.4%.  Since the start of the recession in December of 2007, the number of unemployed people has skyrocketed to 6.7 million.  Most economists believe that the recession is coming to an end.  Despite this good news, economists believe that the unemployment rate will climb through the first half of 2010.  Only then will the employment picture start to improve.

What should you do if you or someone you know is worried about receiving a pink slip?  If you have time, start by paying off high interest consumer debt (credit cards) and avoid future debt.  Do not make any unnecessary purchases.  Hoard your cash.  Make sure your emergency fund equals six months of your expenses.  Focus on upgrading your skills.  Make yourself a more valuable asset to your employer or future employers.

What should you do if you receive that dreaded pink slip?

First – understand that feeling a sense of shock, fear, and even anger are normal human reactions.  But, you must not let that hold you back.  The best weapon against fear is to take action.

Second – review your severance package.  Request a copy of your company’s severance policy before you meet with your boss or the HR Director.  Be prepared to negotiate for the best possible package.  The best time to negotiate a severance package is at the start of your employment.  Live and learn!

Third – file for unemployment benefits.  It will take some time to process your claim so file as soon as possible.  If you were fired with cause or quit, you will not be entitled to unemployment benefits.

Fourth – review your financial situation.  Use a money coach or financial advisor.  They can help you evaluate where you are, and whether you should liquidate some of your assets.  They will also be able to help you prioritize which assets should be liquidated first, while keeping an eye on the tax ramifications.  Your retirement account should be reviewed to determine if you should rollover your 401k assets into your own IRA.

Fifth – continue to develop your skills.  Take classes at the local community college and sign up for your industry’s advanced certifications.  Consider changing your career path to something more akin to your likes and desires.  Consider going it alone.  More businesses are created during difficult economic times than in boom times.

Sixth – review your insurance coverage.  Go over all your options with your money coach or financial advisor.  Look at all types of insurance coverage.  Take a hard look at your health insurance.  You may be able to bargain for the continuation of employer-paid health insurance for a period of time.  A Federal law called COBRA requires that group health plans with 20 or more employees must allow a terminated employee to continue that coverage for 18 months.  You may be able to purchase your own policy at a lower rate, so choose carefully.  Your children may qualify for the State Children’s Health Insurance Program (SCHIP) which provides health insurance to children whose families earn too much for Medicare.  Check your state’s requirements.

September 2, 2009

LTCi Seminar


Circle Financial Planning, Inc

7828 East 88th Street    |   Indianapolis, Indiana 46256

Phone: 317-841-0370   |   Fax 317-841-1471

All Securities through Money Concepts Capital Corp. Member FINRA/SIPC

From the Indiana Partnership Long Term Care website June 22, 2009:

  • Good News – We Are Living Longer
  • Bad News – We Are Living Longer
  • 7 out of 10 individuals will need Home Health Care some time during their lives.
  • Currently, 40% of those using long term care services in the U.S. are between the ages of 18 and 64.
  • Overall, individuals living over the age of 65 will have a 60-70% chance of needing some type of long term care service

The average cost annual for a private room at a nursing home in Indianapolis in 2009 is $78,658 and for a home-health aide $48,048.1 To many people’s surprise, Medicare and Medicaid often do not offer solutions that allow you to keep your assets in tact for your spouse or loved ones.  We have a catered dinner seminar for you and anyone you know who may be interested in learning more on how to develop a long term care strategy and some ideas on how to pay for it.

When: Thursday August 6, 2009 at 6:00PM

Where: In our office at 7828 East 88th Street  Indianapolis, Indiana

What: Long Term Care catered dinner seminar

How: RSVP via our dedicated Registration Line at 317-577-6743

Please leave your name, the best number to return your call for confirmation, and if you wish to have a private appointment or attend the seminar. 

Who: Robert J. Moritz, CFS Vice-President and Money Concepts Indiana Regional LTCi trainer presenting.

Why: Because you have worked too long and hard to leave your assets to someone other than the ones you love.

We know this seminar will be benefit to you or someone you know.



Rebecca C. Müller, CFP™, CFS                           Robert J. Moritz, CFS

President                                                       Vice President


Don’t Let the Things That Matter Least Take Priority Over Things That Matter Most!

1 Genworth 2009 Cost of Care Survey

July 29, 2009

Why is Personal Money Management So Hard?


On June 10, 2009, Fidelity Investments announced the results of their second Couples Retirement Study.  They found that only 15% of couples had confidence in each other’s ability to manage finances.  Why is this so hard?

Successful money management is not easy.  There are four major obstacles to financial success.  First, is a lack of education. Second, is the volatility of the market itself.  Third, is our own human nature and fourth is a system that seems to foster distrust.  Let’s look at each one individually, and see how we can overcome these barriers so that we can enjoy life.

The first problem is a lack of education.  Most Americans went through their entire educational careers without taking a single course on personal money management or investments.  Even the language of finance seems foreign.  It is no wonder that many feel overwhelmed.  While it may be impractical to go out and get a doctorate in finance at this stage of the game, a little knowledge can help make you feel more comfortable when making financial decisions.  You can read books, attend seminars, but the best way to learn is through a mentor or coach.  A money mentor or coach is one who will take the time to fully explain your options so you can make informed decisions.  Moreover, your money coach should continue to work with you in the months and years ahead, providing ongoing advice and counsel.

The second problem is volatility.  The market is extremely volatile in the short run.  This holds true for stocks, bonds, CDs, and money markets.  Change is the only constant.  To make matters worse, the most volatile asset classes in the short term are the ones that have performed the best over the long term.  Let’s take a look at stocks.  According to Jeremy Siegel, Professor at the Wharton School of Business, the total return for stocks from 1809 – 2008 was 6.6% per year after inflation.  That might help to provide consolation to us when the market is down.  Far too often, however, short-term volatility just plain scares us.  While historical performance is no guarantee of future results, we can learn from it.  We must understand both the short-term risks and the long-term potential of the various asset classes when dividing up our assets in our portfolio.

The third problem involves our own human nature.  More often than not, these human traits lead to poor financial decisions.  There are a number of financial mistakes that you should guard yourself against.  One is inertia.  Back in the caveman days, inertia kept us out of trouble.  We would be hesitant to walk into a cave not knowing if there was a predator inside.  Our instincts told us to let someone else go into the cave first.  Today, we are faced with so many investment, retirement and insurance options, many people freeze, like the preverbal deer in the headlights.  Unfortunately, the results are often similar.  Not making a decision is usually a bad decision. 

Another problem is our desire to avoid losses.  Studies show that Americans prefer protection against loss by 2 to 1 over a potential gain.  This desire keeps us from achieving the returns we need to maintain our standard of living in the future.  In a real sense, we are safely managing our money into poverty. 

Some people make the opposite mistake.  These folks too often think overly optimistically.  They will invest in a “sure fire” small business or some wild high-tech investment with dreams of “getting rich quick”.  Usually, these get rich schemes end up with the investor poorer.  Being too conservative or too optimistic is equally bad.

The over reliance of status is another financial mistake.  We tend to believe in something or someone we have heard of.  Big-named companies give us the false sense of security.  Last year’s events proved big is not always better.  Some of the largest companies had the largest problems.  A name, after all, does not provide a service… people do. 

Our desire to maintaining the status quo is another mistake.  Inertia and status quo are different, although related.  Inertia is the fear to do anything, while status quo refers to our tendency to put change off to a more convenient time.  Most of us do this when we choose to eat dessert tonight, but promise ourselves that we will start a diet tomorrow.  With finance, this leads us to keep our current investment allocation, retirement strategy and insurance policies in place, not making changes as the economy or their personal circumstances change.  Every financial strategy should be reviewed at a minimum once a year.

The best way to overcome the negative aspects of our human nature is to have structure.  The best tennis players or golfers hire trainers and coaches.  Trainers and coaches provide them with a structure to do what they know they should, but might not without them.  They also provide invaluable insight from an outside perspective.  An investment advisor or money coach can do the same thing for you.  They can help you select the right financial strategies based on your objectives.  They can help you take appropriate action, now and in the future. 

The fourth problem deals with the current financial system that often leads to distrust.  Getting qualified, financial advice is critical.  But many Americans don’t trust their advisor.  The reason may be caused by the compensation methods the industry uses.  Typically, commissions are paid upfront giving the advisor an incentive to provide service early on, but not later.  Life, however, is an ongoing process.  People often feel abandoned by their broker and understandably become distrustful of the industry.  You deserve more. 

Fortunately, independent financial advice is now more available than ever.  We, at Money Concepts, have been providing independent financial advice for over 30 years.  We are not owned or controlled by an outside financial service or insurance company.  We do not sell any proprietary products.  We are free to give you financial planning advice on an unbiased basis.  Our compensation can come from fees, commissions, or a combination of both.  We will provide you with a full disclosure of all costs, fees, risks, and all other pertinent information so that you can make an informed, thoughtful decision.

Please feel free to pass this on to anyone you feel might benefit.  We appreciate all of your referrals.

July 21, 2009

The End of the Great Recession

image004-300x176This has been one of the longest recessions in over 50 years, but it may end this summer.  This was the finding of BNA’s mid-year survey of 23 well-known economists.  Most Americans won’t recognize the recovery until the middle of 2010.  This delay is due to the fact that the unemployment rate will continue to rise through the end of this year and beginning of next year.


The survey indicates that most economists predict that economic growth will be slow throughout 2010.  They predict a GDP growth rate of just 2% for next year.  At that rate, the economy is unlikely to be able to make any significant gains in employment.  They expect the 10-year Treasury bond rate will rise to 4.33%.  As rates rise, Treasury bond prices fall. 


Other economists disagree.  Brian S. Wesbury, Chief Economist and Robert Stein, Senior Economist at First Trust Advisors in Wheaton, Illinois, see a much more robust recovery.  They are forecasting a GDP growth rate of 3.5% for the second half of 2009, and 4.5% for 2010.  They base their predictions on the following five assumptions.


First – Inventory Levels.  While businesses have been selling off current inventories, manufacturing has slowed to a crawl.  As inventories get reduced, manufacturing will pick up, although it will not be the same as the pre-recessionary level, but it will be significantly higher than its previous lows. 


Second – Trade Deficit.  They project continued declines in the trade deficit.  As the trade gap narrows, exports add to our GDP.


Third – Housing Market.  They expect home building to bottom later this year, and rise in 2010.  Housing starts are now only one-third of the long-term trend.  Any uptick will add to the GDP.


Fourth – Government Spending.  Currently, only about 10% of the $887 billion dollar stimulus package has been spent.  The largest portion is scheduled to be spent in 2010, adding to that year’s GDP.


Fifth – Business Investment.  Plant and equipment upgrades are expected to turn around much faster than previously thought.


Neither Wesbury nor Stein believes that consumer spending will increase dramatically.  They forecast that real consumption will rise only .6% on an annual basis from the end of 2007 to the end of 2010.


Corporate earnings are likely to increase in the next three months, according to the second quarter 2009 Northern Trust Global Advisors survey of investment managers.  Thirty-nine percent of participants think corporate earnings will improve in the next three months, compared to only just one percent who felt that way last quarter.


What the economists believe is far less important than what you do for yourself and your family.  The economic recovery will be meaningless to you if you are not positioned to take advantage of it.  Americans have been shaken by this dramatic downturn.  But, Americans have a long tradition of rising to the occasion in times of trouble.  We recognize what is truly important, i.e., our loved ones, family and friends.  We tighten up our boot straps and move forward.  In the end, the American character will be the driving force that pulls us out of this great recession.


Take the time now to review your situation.  Look at your personal circumstances, debts, investments, and insurance needs.  Determine if you need to make any changes.  Your Money Concepts’ financial advisor stands ready to assist you.  We will be happy to work with you to help insure all your financial pieces of the puzzle are in the right order.


Please feel free to pass this on to anyone you feel might benefit.  We appreciate all of your referrals.

July 16, 2009

Nine Ways to Save

image004-300x176Saving is the key to your personal financial recovery.  Whether you are a retiree looking for ways to stretch your dollar, or a young family just starting out in life, saving is critical.  But what are the best ways to save?  We will examine a number of options you can employ on your road to economic recovery.


  1. Stop Spending Money.  Well, that’s not really practical, but you can substantially reduce your monthly spending by doing one simple thing… leave your credit cards at home.  Multiple studies show that we are far more likely to make purchases on a credit card.  When using a credit card, we are far more likely to make more purchases and be less concerned about the price we pay.  Spending cash hurts.  There is something in our brains that does not want to part with cash.  That something is missing when it comes to credit cards.  Leave the cards at home and your wallet will thank you.
  2. Never Buy Retail.  With today’s economy, there is no reason to pay full retail.  Sales are everywhere.  But, just because some item is on sale does not mean you should buy it.  Make lists before you go shopping.  If an item is not on your list, don’t buy it.  Lists have proven to be one of the best tools to keep your spending in check.  With large ticket items, make a list of what you will buy this year.  Then, wait for deep discount sales.  Avoid add-ons which retailers try to tack on to the sale.
  3. Pay Yourself First.  The single best way to save is by making your monthly savings the first bill you pay every month.  It is not fancy, but it works.  Decide what you are going to save each month, then make that your top priority.  Next, pay your fixed expenses… mortgage/rent, utilities, and food.  Then, you can spend anything you have left or increase your savings.  Start small, and build.  Your goal should be saving 10% to 15% of your salary.  Begin at a level that makes sense, and schedule increases systematically in the future, i.e., every six months.
  4. Use Two Different Types of Savings.  First, set up a “put and take” account.  This is an account where you put money in knowing that you will take it out in the near future.  Every year, expenses come up that are outside of your monthly budget.  Maybe the washer breaks down, or the car needs a new transmission.  These things happen.  So, part of your monthly savings should be set aside for unforeseen expenses.  The second type of savings should be in a “put and keep” account.  This account is not to be touched.  It is to be left alone to grow for your long-term future. 
  5. Set Up an Emergency Account.  You should have at least 6 months of income in a liquid investment for possible emergencies.  The purpose of this fund is to provide for you in the event of disability, job loss, or serious illness.  Bank accounts and money market funds are good choices.
  6. Pay Down Those Credit Cards.  While this may not technically be savings, each dollar of debt you pay off will save you between 18% – 22% interest.  Americans have become credit card addicts.  We typically own more than 10 cards and carry over $8,000 in debt.  This debt adds up to billions of dollars of interest that we are wasting each year.  Many people only pay the minimum balance.  At that rate, they will be paying off their cards for years and years to come.  Set yourself free.  Pay off those cards!  Start by not using them anymore.  Then, pay two, three or four times the minimum payment.  The higher the payments, the quicker you will be out of debt and the more interest you will save.
  7. Use Tax Advantage Savings.  (401ks, 403bs, Company Pension Plans)  If your company offers a defined contribution plan (401k), enroll in it.  If you are already in your company’s plan, look into increasing your contributions.  For 2009, you can contribute up to $16,500 ($22,000 if over age 50).  If your company has a matching program, all the better.  But if it does not, continue anyway.  Every dollar you contribute will lower your taxable wage and, therefore, your tax bill.  Meanwhile, the earnings in the 401k are tax deferred.  Your goal should be to increase your contributions on a scheduled basis until you hit the maximum.  Your retired self will be glad you did.
  8. Look into a Roth IRA.  If you qualify, a Roth IRA offers unique features.  Currently, the annual contribution limit is $5,000 per year ($6,000 if over 50).  Contributions are not deductible, but earnings grow tax free.  After five years, or age 59½ (whichever is later), you can begin tax-free withdrawals for life.  The Roth IRA does not require you to begin withdrawals at age 70 ½ like traditional IRAs.  So, if you so choose, you can keep your money in the Roth, earning tax-free returns for your entire life, leaving a larger legacy to your heirs.
  9. Check Your Insurance Coverage.  We all need insurance.  Whether it is to protect our home, car or other personal possessions.  We also need to protect our families against the financial loss from the death of a breadwinner or the catastrophic cost of long-term care.  While we all need it, we should not be paying more than necessary.  Check all of your insurance coverages.  Is it enough?  Is it too much?  Are the costs reasonable compared to the competition?  Do an insurance review once a year.  It could make a huge difference down the road. 


Please feel free to pass this on to anyone you feel might benefit.  We appreciate all of your referrals.

July 14, 2009