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February 2015 E-newsletter

10 Simple Steps to Financial Security Before 30
Being financially secure enough to enjoy your life in retirement is the last thing on the minds of those under 30. After all, with the stress of all the expensive "firsts" that often come about during this period, like purchasing a car, buying a house, and starting a family, it's hard to even think about saving for the future. However, working toward financial security shouldn’t be an exercise in self-deprivation, as many people assume. Attaining this goal even has some immediate benefits, as financial insecurity can become a serious source of stress. Here are 10 tips to achieve long-term financial security without sacrificing your short-term goals.

1. Have Fun
Living a successful, enjoyable, and happy life is about achieving a proper balance between time with family and friends and between work and leisure time. Striking a proper balance between your life today and your future is also important. Financially, we can't live as if today was our last day. We have to decide between what we spend today versus what we spend in the future. Finding the correct balance is an important first step toward achieving financial security.

2. Recognize Your Most Important Financial Asset: Yourself
Your skills, knowledge, and experience are the biggest assets that you have. The value of your future earnings will dwarf any savings or investments you might have for most of your career. Your job and future career is the most important factor in achieving financial independence and security. For those just entering the work force, future career opportunities are as bright as they've ever been. The large number of retiring baby boomers is expected to create labor shortages. There will be room for advancement as companies scramble to fill the positions held by these aging baby boomers.

Look at yourself as a financial asset. Investing in yourself will pay off in the future. Increase your value through hard work, continual upgrading of skills and knowledge, and making smart career choices. Efforts to improve your career can have a far bigger impact on your financial security than tightening your belt and trying to save more.

3. Become a Planner, Not a Saver
Successful people are goal-oriented: They set goals and develop a plan to achieve them. For example, if you set a goal to pay off your student loans in two years, you'll have a better chance of achieving this goal than you would if you merely said you wanted to pay off your student loans, but failed to set a timetable. Set goals and develop an action plan to reach them. Even the process of writing down some goals will help you to achieve them. Being goal oriented and following a plan means taking control of your life. It is an important step toward improving your financial independence and security.

4. Set Short-Term Goals; Long-Term Goals Will Take Care of Themselves
Life holds many uncertainties, and a lot can change between now and 30 years into the future. As such, the prospect of planning far into the future is a daunting task and in many ways, it's often an exercise in futility for young investors.

Rather than setting long-term goals, set a series of small short-term goals. These goals could be a simple as trying to pay off credit card debt or student loans in a matter of months. Maybe your goal is to contribute to your company's pension plan with a set salary reduction contribution each month. Setting short-term goals that will help you to advance in your career is important in helping you get ahead. Remember, these short-term goals should be measurable and precise. You can't win a race if there's no finish line.

5. Planning For Retirement
Retirement may be the last thing on your mind when you’re just starting out in the workplace. However, if you take a few steps now to start saving, like setting up automatic monthly contributions to a retirement plan like an employer-sponsored 401(k) or your own Roth IRA, compounding will work in your favor, which makes reaching your goal much easier.

If you implement this pay yourself first ideal, you won't have to worry about how much you're contributing; the most important thing is to develop the habit of saving. The rest will take care of itself. You can increase your contributions when your income rises or when you've achieved more of your short-term financial goals. 

6. Make Sure Your Lifestyle Costs Lag Your Income Growth
Many new graduates find that in the first couple years of working they have excess cash flow. Rather than using excess income to buy new toys and live a more luxurious lifestyle, this excess could be put toward reducing debt or adding to savings. As you advance in your career and attain greater responsibility, your salary should increase. If the cost of your lifestyle lags your income growth, you will always have excess cash flow that can be put toward paying down debt, making investments, saving for a home, or achieving any other financial goals you may have.

7. Become Financially Literate
Making money is one thing; saving it and making it grow is another. Financial management and investing are lifelong endeavors. Making sound financial and investment decisions is important for achieving your financial goals. The more knowledgeable and experienced you are in financial matters, the fewer mistakes you will make. Research has shown that people who are financially literate end up with more wealth than those who are not. There is a strong monetary incentive for becoming financially sophisticated. Taking the time and effort to become knowledgeable in the areas of personal finance and investing will pay off throughout your life.

8. Seize the Opportunities: Take Calculated Risks
Taking calculated risks when you are young can be a prudent decision in the long run. You might make mistakes along the way, but remember, mistakes are the lessons of wisdom. You often learn more from your mistakes than from your successes. Also, when you are young, you can recover faster from financial mistakes, and you have many years to recover. 

Examples of calculated risks might include moving to a new city with more job opportunities, going back to school for additional training, or taking a new job at a different company for less pay but more upside potential. Taking calculated risks when you can afford to do so is necessary to get ahead financially. Playing it safe might be the bigger mistake in the long run.

9. Borrow Money For Investments; Never to Finance a Lifestyle
You should never borrow to finance a lifestyle you cannot afford. Using credit for a life you feel entitled to is a losing proposition when it comes to building wealth. The constant borrowing will assure that there is no money available for investing, and the added interest expense of borrowing further increases the cost of the lifestyle. 

Borrowing money should be used for investing; where your gain will outrun your borrowing costs. This might mean investing in the literal sense (for stocks, bonds, etc.) or it might mean investing in yourself for your education, extra training, to start a business, or to buy a house. In these cases, borrowing can provide the leverage you need to a reach your financial goals faster. Borrowing to meet short-term desires is counterproductive.

10. Take Advantage of Financial Freebies
Not many things in life are free. If you belong to a company pension plan, take the free money it offers and make sure that you contribute at least up to the maximum of what your company will match.

You can also look for (legal) ways to take advantage of tax laws. For example, contributing to an individual retirement account (IRA) will result in a tax savings. In effect, the government is giving you free money to provide an incentive to contribute. There is also an incentive to invest in stocks because of favorable tax treatment on capital gains and dividend income.

Achieving financial independence is a goal most people strive for. It is not necessarily easy, but it is achievable if you understand your priorities, set achievable goals, and take the proper steps toward reaching them.


Cleaning House: Finance Edition
It may seem too early for spring cleaning, but it's a perfect time to dust off and organize your financial house. It can be difficult to determine what you need to keep and what you can get rid of, however. If organizing your home office is on your list of New Year's Resolutions, here are some tips to help you decide what should stay and what can go.

Save: Tax Returns
Always save your tax return documents for at least three years; you'll need them if you're ever audited. If your taxes are more complex, for example if you own your own business or employ domestic help (such as a nanny or full-time housekeeper), you should keep your tax returns for longer. If you suspect you may have underreported your income in recent tax years, keep those documents for six years.

Save: Investment Records
Hang on to investment records, especially if you don't receive digital copies, for at least as long as you own the investment. Until you sell the stock, bond or other security, maintain the original record. This will help you accurately determine the loss or gain upon sale, which will ultimately determine the tax ramifications. If you want to clear your office of unnecessary paper, check to see if your brokerage firm allows you to access those documents electronically. If so, feel free to shred the paper copies.

Shred: Most Receipts
Most receipts can be tossed in the trash (rather than shredded) after about a month. Hang on to any bank account, ATM, and credit card transaction receipts until the account is reconciled (balanced or paid off) and then shred. One exception to this rule is for major purchases, where receipts should be saved for as long as you own the item. The general rule of thumb: If you purchased something valuable enough to have insurance, like a wedding ring or new appliance, keep the receipt in a file. Another type of receipt you should keep indefinitely is receipts for home improvement projects. Not only do they often include warranty information, but they could help you sell your home one day.

Shred: Bills
For most households, bills can be shredded as soon as they're paid. However, if you run a home-based business, you might need to refer to paid bills for tax purposes, so it's best to keep them until after you receive your return. It's important to shred paper copies of bills, rather than throwing them out, because unlike small purchase receipts, they have enough information printed on them for a criminal to use to steal your identity.


Security Tip: Shop Wisely for Your Valentine
One of the easiest ways to go about finding that perfect something for your loved one this Valentine's Day is by avoiding the crowded malls and shopping online. Although there isn't a mad rush at the stores during this time of year like there is during the Christmas holiday season, you still have a small window of time to order that bouquet of roses, fine jewelry, or box of chocolates before the 14th. Luckily, you can place an order from the comfort of your office desk or your home computer and, in most cases, rest assured that your gift will arrive at your loved one's doorstep safely and on time.

Whenever you shop online, however, you have to be careful that you aren't setting yourself up for identity theft or making the person you are shopping for vulnerable to a scam. If you input information such as your bank account or credit card number online, you want to be sure that the site you are using is secure.

Distinguish a Secure Website from a Non-Secure One
Check to make sure that any online form that asks for an account number, your name, or your address has a green lock present in the browser screen, as well as “https” in the site’s URL. This means that the site isn't being viewed by an outside party, who could be taking down your information and using it to drain your bank account, use your line of credit, or open up new accounts in your name.

If You Aren't Wary, You Could Be Setting up Your Loved One for Theft
Be especially careful when you are inputting not only your address, but that of the loved one you are having the gift delivered to. Identity thieves can commit the crime with information as basic as a home address. For instance, they could potentially steal your mail if the thief is in the area or, again, use the address to open up new accounts in your name.

Only Trust Names that you Know
For the safety of you and your Valentine, only shop online at websites that are affiliated with stores you know or name brands that you recognize. Since most online retailers are affiliated with a brick-and-mortar establishment, verify that the website you are ordering from is the official one.

Perhaps, the best Valentine's Day gift you can get for yourself and suggest to someone you love is credit monitoring, which works as an extra set of eyes in helping to keep track of your financial activity. If the service detects certain changes in your accounts, the credit monitoring service will promptly notify you with an alert so that you can take steps to help you stay safe from potential damage to your credit score. Learn more about our full suite of Identity Theft Protection services here.


How Long to Keep Financial Records  
If paper decluttering was one of your New Year's goals, you may be wondering which financial documents you can safely shred. While some documents need only be kept for a few months, others should be kept for several years, or in some cases indefinitely.

The length of time varies according to the reasons you might need the documents in the future. You might need older W2 forms to answer a tax question from the Internal Revenue Service or Wisconsin Department of Revenue. Documentation of home or property maintenance costs might be useful when you decide to sell your property, and utility records might be helpful when deciding to upgrade your furnace.

The IRS has three years to audit your tax return, and you have three years to file an amended return. Still, the IRS can challenge your return for up to six years, so it's a good idea to keep these records for seven years:

  • W-2 and 1099 income forms
  • Year-end bank and brokerage statements
  • Receipts or cancelled checks for deducted expenses
  • Home purchase or closing statements, insurance records, and receipts for improvements

Home ownership is a special case and homeowners should keep these records for six years after selling their home. They should also retain records of legal fees and commissions related to selling their home. These expenses are added to the original purchase price or cost basis and can lower their capital gains tax.

On the other hand, some documents need to be kept for only a few months. There's no need to hold onto most canceled checks (or their electronic copies) or debit and credit card receipts for more than three months after you've reconciled them with your statements. If, however, the purchase will be reported as an itemized deduction on your income tax return, keep this documentation for seven years.

And there's no need to keep monthly loan statements once you have received a year-end summary, but always keep final payoff notices in case the loan mistakenly goes into collection and you need proof.

Still, there's no getting around it: some records should be kept indefinitely, for example:

  • Records of IRA contributions (particularly nondeductible contributions)
  • Annual summaries of retirement/savings plan statements
  • Copies of your tax returns
  • Receipts for big purchases - jewelry, rugs, appliances, antiques, cars, collectibles, furniture, computers - as proof of their value in the event of loss

To reduce paper clutter, you can scan your records and save them as PDF files. (Be sure to back them up!) Before tossing any document that contains a Social Security number or bank account number, shred it to deter identity theft.

Additional resources:


Saving Money after New Years
If you’re like most Americans, you are still feeling the financial effect of the hectic holiday season that has come and gone. It's important to pay off holiday debt as quickly as possible, so here are some tips for helping your finances recover now that the New Year is in full swing:

Pay off your Credit Cards
Many families rely on credit cards to cover increased expenses during November and December. However, those miniature loans come with high interest rates that make your total bill go up fast. The most important strategy to keep your balance in check is making more than the minimum payment on your card each month. For example, that $300 television you bought on Black Friday will end up costing $379 if you only pay your $10 minimum payment (assuming the national average interest rate of 16%). Plus, it will take you 38 months to pay it off! If you used credit cards to cover expenses during the holidays, make the largest payments you can afford until your balance is $0.

Switch Gyms
If you have multiple gyms in your area, consider switching now to take advantage of steep discounts designed to encourage New Year's Resolution memberships. Be sure to read the fine print though; you need to make sure you won't be locked into a long-term contract if the rates will rise sharply in a few months.

Return Unwanted Gifts
Gift receipts are handy for duplicate or unwanted gifts, but if you can get cash instead of store credit for those receipts, be sure to save it. Even if the receipt is only good for store credit, don't spend it right away. Wait until you need something from that particular retailer and then redeem the gift card or credit receipt. Be sure to read the fine print on any gift cards, too. Some have expiration dates or carry reduced value after a specified amount of time.

Stick to your Budget
Most importantly, stick to your budget until the holiday bills are paid off. Simple switches like eating in (versus dining out), renting movies (versus going to the theater), and brewing your own coffee in the morning (versus a stop at the coffee shop) can save you upwards of $100 in just one month. Overspending is common during the holidays, but it doesn't have to ruin your New Year.


Business Corner: The Five Pillars of a Secure Business
Research from the U.S. Small Business Administration found that the average small business owner allocates between $10,000 and $80,000 toward startup costs. And that's just cash. Other considerable resources such as physical space, digital assets, and inventory go into a startup. Add it together and that's a pretty compelling case for the need for a good security protocol.

Selecting the right security protocol can certainly be overwhelming, but doing so helps lend stabilization to a risky and ever-changing office environment, regardless of the industry. Being proactive is the first step. Here are the “Five P’s” of a secure business.

1P: Priorities
As you do with any other business decision, you must first identify your security objectives before you can implement any actions. To do this, ask yourself questions that will identify the most important areas to your particular business, including:

  • What are you most concerned about securing (e.g. inventory, client information or data)?
  • Is the ability to remotely check in on your business important to you?
  • What kind of work environment and relationship with employees do you want to have? (You want your workplace to be secure, but not have employees feel like Big Brother is watching.)

2P: Policy
Once you know your priorities, you can craft an all-encompassing security policy. You'll likely include everything from what sort of background check you do before hiring, to how you will monitor inventory, to your response to workplace violence. Other factors you'll want to cover are changes based on the time of year (such as the holiday season, which is often the busiest season for retailers) and emergency preparedness.

Remember to assess each step against that list of priorities you made. Do the pieces of the policy support your objectives? If not, get rid of them. Once you have those policy details ironed out, put them in writing and create a handbook for your employees. But don't just hand it out. Every employee should sign a document to show that they received and read it. Keep an additional copy in a communal place. 

3P: Place
To secure both your physical and digital environments, you'll want to work with an expert. As you evaluate your workplace with your security expert, you'll determine what security and automation solutions are needed. For example, a retail business should take precautions against shoplifters. However, a medical clinic must secure sensitive patient information and medications.

It is also important to consider both the internal and external spaces. You'll want good lighting, security signs and stickers, fences or other barriers and, of course, good deadbolts in addition to an alarm system. When installing interior security cameras, think about positioning them in a way that helps identify individuals as they enter a given area.

Automation can be particularly helpful, especially for small businesses without the budget for a 24-hour security guard. Tools like key cards can monitor comings and goings and allow remote access to authorized people when you are not in the office. You can even set up e-mail or text alerts to notify you when the business has been opened or a delivery has been made, without ever interrupting the flow of business.

Digital "places" need to be secured as much as physical ones, as cyberattacks have real bottom-line impact. One Cyber Security Alliance survey found that 20 percent of small businesses surveyed experience a cyberattack annually, and 60 percent of businesses that were the victims of such attacks close within six months of the incident. Your protocols must include details to prevent these attacks when possible and recover from them if they happen. This includes procedures for using and changing passwords, downloading virus protection, erasing old hard drives, and locking laptops and tablets when not in use.

4P: People
Your employees are your first line of defense in creating a truly secure workplace. The more time you spend on the outset — hiring people you trust and training them so that they know the security policy — the better equipped they will be to help you deal with problems as they arise. Educate your staff, not just about your policies and expectations, but also about how theft and loss can affect them personally. Explaining how lower profits due to theft can result in fewer opportunities for raises and company expansion can help employees work to prevent theft for the common good.

Finally, employees should know what to do if they spot suspicious behavior. They need to know what the protocol is for reporting it, how the information will be used and how they will be protected during the process.

5P: Performance
A system is only good if it works. You need to evaluate the performance of your security systems on an ongoing basis and make adjustments as needed. To do this, use a cloud-based or DVR video storage option to analyze any security threats that took place over the past month.

Reviewing your video footage and security history can help identify any weaknesses or problem areas, in addition to providing insights into areas such as staffing levels and foot traffic analytics. Once you have identified areas of concern, make necessary changes to your protocol and set up automated alerts to help you closely monitor those areas. 

Try to revisit this entire process once in a while, even if only once a year, to help keep you, your employees and your many investments secure.


Coulee Investment Center: 2015 New Year Checklist 
Shari-with-title.pngThe dust has settled from the holidays and we are moving into our second month of the New Year already. Have you taken some time to take stock of your personal and financial life? Before another year flies by, make sure you and your family are prepared for the future.

Here’s an important checklist to follow to get you on the right track.
  1. Review and rebalance your retirement and non-retirement accounts with a financial advisor.
  2. Compare your current life insurance death benefit to your current need. Did you have a child or get married last year? If so, you probably need more life insurance. Or maybe, you have too much life insurance if you are out of debt and retired. Talk to a financial advisor if you need help determining your insurance need.
  3. Do you have children or grandchildren that you would like to help with their college expenses? Start a Wisconsin Tomorrow’s Scholar 529 plan before April 15, 2015 and you will reduce your Wisconsin taxable income – up to $3050.
  4. Increase your 401(k) or 403(b) contribution to maximize (or get closer to maximizing) the new 2015 limit $18,000 under 50 and $24,000 age 50 and over.
  5. Contribute to a Traditional IRA or Roth IRA for yourself and your spouse. The limits are $5,500 under 50 and $6,500 age 50 and over. Everyone is eligible to contribute to a Traditional IRA. The Roth IRA has income limits.
  6. Set a couple of goals for yourself personally and professionally to propel you forward. Write them down. You will be more likely to follow through.
  7. Review your mortgage interest rate. Owner occupied rates are still low so evaluate if you should refinance.
  8. Review the beneficiaries listed on your workplace retirement account, IRAs, life insurance, annuities and non-retirement accounts. List beneficiaries on all your accounts, if possible. It is especially important for retirement accounts and life insurance.
  9. Read your will and update it if you have had any major life changes – marriage, divorce, children, new assets, etc. Get a will created soon if you don’t have one!!
  10.  Finally, be sure you have health care directives, financial and health care Power of Attorney documents completed – it doesn’t matter your age. It is important!

Complete your checklist and you will be set until next year; or until life changes again! If you have questions, please call me at 608-784-3904 for a free consultation.

Securities offered through LPL Financial, Member FINRA/SIPC.  Insurance products offered through LPL or its licensed affiliates.  Coulee Bank or Coulee Investment Center are not registered broker/dealers and are not affiliated with LPL.
Not FDIC Insured Not Bank Guaranteed May Lose Value
Not Insured by any Federal  Government Agency Not a Bank Deposit


Love on a Shoestring Budget: Ideas for a Money-Smart Valentine's Day
Valentine's Day is right around the corner, and many couples have already planned their romantic night out. On average, the 54 percent of Americans who celebrated Valentine's Day in 2014 spent over $130 on candy, cards, dinner and gifts. In total, Americans spent nearly $17 billion last year celebrating the most romantic holiday. If you're hoping to keep your Valentine's Day spending in check this year, consider the following romantic ideas in place of more expensive gifts and treats.

Make Your Plans in Advance
Nothing costs more on Valentine's Day than trying to do everything last minute. Flowers, traditional gifts, restaurant reservations, etc. are all more expensive the week before the holiday. Make your Valentine's Day plans well in advance to allow you to take advantage of better pricing options. It's also important to plan so that both parties have the same expectations. Going frugal for the holiday is a great way to save money, but it will backfire if your partner still has bank-breaking expectations. 

Cook Your Romantic Dinner Together
Swap out a fancy (and expensive) restaurant reservation for a home-cooked meal. Many couples find cooking together to be romantic. Cook a long-time favorite or try something new; whichever fits your relationship better. Either way, you'll get to spend quality time together at a fraction of the cost of going out - a high-end dinner out can cost hundreds of dollars, including drinks, but a home-cooked meal will only be as expensive as the ingredients you pick out. Remember to decorate the table, too! Use a tablecloth, flowers and/or candles. Be sure to use the nice dishes, and get dressed up if you can to really create that romantic restaurant atmosphere.

Compose Mini-Love Letters
Instead of buying a card for your significant other (which can be $5 - $10 and will be thrown away by the end of the month), write words or phrases on post-it notes describing what you love about your significant other and place them all around the house. Imagine opening the cabinet to grab some cereal and seeing "I love your smile." You'll both spend the day finding messages unique to your relationship, not a cliché saying found in any generic card from the store. As a bonus, these little notes make great keepsakes! Whether you put them in a scrapbook or a shoebox, you can pull them out whenever you need a little relationship pick-me-up.

Recreate the Past
If possible, recreate a romantic event from your past. Did you sightsee when you first moved to your current city? Take a stroll through downtown to recapture the moment. Where did your first kiss happen? Set the stage and relive the moment. Often, these activities are the most romantic thing you can do on Valentine's Day because they are unique and significant to your relationship; they're often less expensive than traditional activities, too! 

Use these ideas to celebrate a romantic, budget-friendly Valentine's Day this year. Put the money you don't spend toward one of your long-term financial goals, such as buying or renovating a house, or saving up for a vacation.