Finance

Nurturing the Entrepreneurial Spirit in the Workplace

Many employees have fantasized about being their own boss.
But, they typically don’t act on it because of the responsibility and/or risk associated
with owning and running a company. This doesn’t mean, however, these employees
don’t harbor the entrepreneurial traits, which if nurtured, could take the
organization to a whole new level of success.

As businesses strive for increased competitiveness, creating
an entrepreneurial culture has become an important advantage.  In today’s business environment, the term
entrepreneurial means more than just the business intelligence required to turn
an idea into an enterprise. It’s a skill or mindset embodying innovation,
creativity, calculated risk-taking and empowerment. It’s the responsibility of leaders
to identify, tap into and cultivate these traits within their organization.

Sometimes referred to as an “intrapreneur” (entrepreneurs
working within a company), these employees can be identified by the following
traits:

  1. Creativity
    – Innovation stems from creativity. This drives the company forward.
    Intrapreneurs change the status quo and notice opportunities.

  • Long-term
    focus
    – A person who is creative and innovative must also be focused,
    otherwise they will fleet from one shiny object…new idea to another. The
    intrapreneur can identify what adds value to the company and what doesn’t.

  • Team
    player
    – Naturally, teamwork is essential in a business. Yet, it’s the
    ability to realize that sometimes others have to take control that makes the
    intrapreneur standout in the company.

  • Risk-taker
    – Playing it safe in today’s world will get you nowhere. Intrapreneurs aren’t risk
    adverse.

  • Results
    oriented
    – The intrapreneur is more concerned about the results than the process.

  • Take
    responsibility
    – The intrapreneur takes ownership of his or her successes
    as well as his or her failures.

  • Adaptable
    – The business landscape is continually changing. The intrapreneur is very
    flexible to change and can quickly adapt, especially in high-pressure
    situations.

  • Planners
    – Intrapreneurs develop a plan and then work the plan.

  • Effective
    – Intrapreneurs are more interested in how effective each task or activity
    is as opposed to concentrating solely on efficiency.

Once a company leader recognizes the intrapreneurs in
his/her organization, he or she must take the next steps to cultivate these
traits.

Create an environment
of empowerment

It’s a business leader’s actions that create an environment
of empowerment. It’s his or her leadership style. Research shows that
leadership based on relationships increases the entrepreneurial spirit of the
company as opposed to task oriented leadership style. An effective leader leads
by example.

Encourage innovation

Innovation keeps a company competitive and growing. In large
companies with layers of management, the innovative spirit can often get lost.
Leaders must welcome, encourage and reward innovative thinking in the
workplace.

Welcome internal
competition

Competition amongst co-workers, if handled correctly, can
spur incentive and innovation. Healthy competition can drive co-workers to push
one another to be more productive and produce better work.

Communicate

Communication is a fundamental function of good leadership.
Leaders often get so caught up in the day-to-day operations of the business
that they forget to tell their staff where they are going – the company’s
vision and direction. Employees want to get the important information. They
also want to know that their concerns and ideas are being heard. Leaders must
continually communicate to their staff that the entrepreneurial approach is
valued, encouraged and rewarded.

When is the Right Time to Retire?

Deciding when to retire is a complex question. Many people base this decision around their birthday. The traditional age of retirement is 65 – the U.S. average is actually 63. However, there are many moving parts in this very important decision, a whole host of factors to consider – financial, physical, as well as psychological.

We’ve all had those days when we’d like to hand our boss our resignation letter and sail off into the sunset, leading the carefree life of a retiree. But, this can be a huge mistake if you’re not prepared.

Financial Considerations

  1. Your bank account: According to investment experts, not taking Social Security into account, you’ll need 25 times your annual expenses (the earlier you retire, the more you’ll need).
  2. The Market: The returns on your investments are critical during the first decade of retirement. No one has a crystal ball when it comes to the market, but if the economy is poised for a downturn, it may be wise to delay retirement. This is also the case if your portfolio has taken significant losses in the years leading up to your set retirement date. If this occurs, it may make sense to delay your retirement until your investments have had a chance to recover.
  3. Social Security Benefits: When people plan to retire in their early 60s, typically, a part of their strategy is taking their Social Security retirement benefit at 62 – the earliest claiming age. However, you must keep in mind that this strategy causes a permanent reduction (almost 30 percent) in your benefits compared to what they would be if you waited. People born after 1943 can expect an eight percent increase for each year they wait to claim benefits after full retirement age, with age 70 resulting in the maximum benefit.

    Suze Orman, American author, financial advisor, motivational speaker and television host, strongly advocates waiting until 70 to retire. “Seventy is the new retirement age – not a month or year before,” she exclaims. However, she also adds that if you have a medical condition that prevents you from working or raises the probability that you won’t live into your 80s or 90s, retiring and claiming Social Security earlier may make sense.

  1. Health Care: Recent studies by Fidelity Investments estimate that a 65-year-old couple retiring today will need between $200,000 and $400,000 to cover their health care costs during retirement – above and beyond what Medicare covers. Having additional savings, private insurance or a Medicare supplement policy is an important consideration when deciding when to retire.

Health Considerations

Working longer may better fit into your plans, especially financially, if you are in excellent health and have longevity in your family. However, this is not so if you or your spouse are in poor health. In this case, postponing retirement could mean your opportunities for doing certain things, like traveling, are gone for good. Take an honest look at your health and life expectancy and factor this into your decision about when to retire.

Psychological Considerations 

Another important factor to consider in deciding when or in some cases if you should retire is the psychological impact. You should ask yourself two important questions: 1. Will I be happier and healthier retired or working? 2. Am I psychologically prepared to retire?

Some people enjoy what they do – their jobs give them a sense of meaning and purpose in their lives – and would be lost without this or an activity or passion to replace it. Yet, other people, especially those who find their jobs stressful or unrewarding, are counting the days until retirement.

The key is preparation. Do you have hobbies or interests to fill your time? Have you realistically considered what your life will look like as a retired person?

Many people have unrealistic expectations or ideas of what their retirement lives will look like. They imagine they will take up hobbies, like golf, tennis or playing an instrument. However, being realistic means evaluating your life now…pre-retirement. What are you passionate about or actively involved in now? The probability of developing a passion for something the day after you retire is small.

Studies show that people who have meaningful, purposeful and productive lives live longer. So, the lesson for anyone contemplating retirement is to have a plan for your post-working lives.

As you can see, deciding when to retire isn’t an easy decision. But, by giving it the time and attention it deserves…having a well-thought-out plan…addressing the financial, physical and psychological considerations…you can help ensure your retirement gets off on the right foot.

File Your Income Taxes Early… Before Someone Else Does It For You

Spring is just around the corner and so is the deadline for filing your 2017 income taxes.

For those of us who haven’t filed our tax return already, this somewhat daunting, annual task is beginning to weigh more heavily on our minds. Many of us are concerned about filing our return correctly, what kind of tax refund or, in some cases, payment we can expect and whether we should do it on our own with an online service or hire an accountant.

But, as we procrastinators begin getting our tax documents together, there’s something else we should keep in mind: tax return fraud.

The IRS launched 1,117 general tax fraud investigations for the fiscal year of 2016. Although this was a decrease from the two prior years, according to IRS, it doesn’t appear that tax scams are ever going away. Unfortunately, with every measure taken by the IRS to prevent this, the schemers/scammers find ways to circumvent it.

Identity theft related tax fraud occurs when an identity thief somehow obtains your name and social security number and uses it to file a fraudulent tax return in your name. This is accomplished in many ways to include phishing emails, snooping through your trash for intact documents containing personal information, hacking into a site/entity that has your personal information, stealing or finding your wallet/purse and public WiFi monitoring.

Once the identity thief has your personal information, they can use this to file fraudulent tax returns with the IRS in order to receive credits or refunds. In most cases, these thieves have the funds distributed via a pre-loaded debit card or direct deposit. This helps them avoid the security measures relating to cashing a paper check.

When this happens, the tax return you file comes under suspicion because it is the second return filed for the same taxpayer. Unfortunately, the burden of proof now lies on you. You will need to send the IRS a Form 14039 (IRS Identity Theft Affidavit). This can be a lengthy process.  If you’re expecting a refund it will not be processed until the IRS confirms your identity, as the actual taxpayer. If you owe taxes, you can be left with resulting collection actions, audits and even aggressive tax collection through the IRS appeals process.

It can become ugly.

But, like many situations in life, an ounce of prevention is worth a pound of cure. Here are several ways to minimize your risk of falling prey to these sinister scams:

  • File Early (okay, this advice is a little late for those of us who haven’t already filed. But, let’s make sure to keep this in mind next year.)

Filing early lowers the chance of someone doing it before you. This turns the tables on the identity thief, as your return will be accepted by the IRS first and their fraudulent return in your name will be denied.

  • Clear Your Email Inbox and Invest in a Shredder

Most identity theft occurs via the trash. All identity thieves need to file a false return is your legal name, date of birth and social security number.  Think of the people you may have mailed or emailed pieces of this information…a W-9 for an employer, a scanned copy of your passport to a travel agency or a completed form to your healthcare provider.

Don’t keep this information in your email in/sent box. In addition, shred any physical/hardcopy documents containing this information.

  • The IRS Will Never Call You…So, Hang Up

Scammers often call under the pretense they are the IRS and you owe money. They may sound totally legitimate, oftentimes giving you a fake badge number and even sharing knowledge that leads you to believe they really know you.

Hang up! The IRS will never call or email you. The IRS only communicates by physical (snail) mail.

  • If Your Credit Card Company or Bank Contacts You, Call Them Back on an Official Number

Identity thieves may pose as representatives from your bank or credit card company. These scammers may be trickier to catch because these types of organizations do sometimes call.

Don’t give out any personal information with inbound requests. Call the organization back using their official customer service number.

  • Don’t Sign a Blank Return 

If a friend asks you to sign a blank return and they will take care of doing your taxes…don’t do it. Sometimes scammers are found in the least expected place…your inner social circle.

  • Beware of Tax Pop-Up Shops

When hiring anyone to do your taxes, especially those “once a year” tax preparation shops, do your homework and make sure they are legitimate.

Although special attention is being given to identity fraud risks during tax season in this article, this should be a year-round concern. Monitoring your credit on a regular basis yourself or through a monitoring service is the best practice to reduce your risk of becoming the victim of an identity thief.

Being Smart with Student Loans

Today, student loans have become an inevitable part of attaining higher education.  However, not being financially savvy when taking this money can come back to haunt you long after you’ve received that coveted college diploma.

According to Forbes, in 2017, student loan debt has swelled into a $1.3 trillion crisis. Forty-four million borrowers are shouldering this financial burden, with the average 2016 graduate owing approximately $37,172.

As many families are preparing for college, excitedly completing applications, they should also be accessing the total cost…especially if they plan to borrow.

One of the most important factors of one’s higher education is becoming debt-smart. Knowing how much the money you borrow today will cost you in the future, not just in terms of the monthly payments, but also in total interest, and how this could affect your standard of living, is crucial to living the life you want.

A recent report by the Global Financial Literacy Excellence Center cited that student loans have the highest delinquency rates of all consumer debt products today. Most of these delinquencies are due to the fact that the graduate hasn’t been able to secure a job that pays enough to cover their basic living expenses and student loan payment.

Borrowing to pay for college isn’t a bad thing. The cost of going to college is an investment in yourself and your future, which can yield big rewards after graduation. However, the key to obtaining that pot of gold at the end of the rainbow, so to speak, is making financially smart decisions today.

Look at the ROI of Your Education

Being debt-smart is about early intervention, examining all the facts prior to filling out the first college application.

One of the first and most important pieces of information to gather is the return on your investment in your education.  You should assess the cost of attending a certain school having a clear picture of what your post-graduation salary could be.

Use common sense. If you’re going to spend $100,000 on a four-year degree that will only earn you $30,000 a year after graduation, it doesn’t make good financial sense.

Target Schools that Offer Grants Over Loans

Many colleges offer all-grant programs, adhering to a loan-free policy. If you meet certain income and asset requirements, you can qualify for these programs and, consequently, won’t be saddled with student loan debt later. There are many websites that offer a list of these colleges and their requirements.

Look at Every Option to Lower the Cost 

Apply for FAFSA, student financial aid, look for scholarships, and, most importantly, talk with a financial aid counselor. Many families underestimate the value of the financial aid office.  They are a wealth of information and have many resources to help make college more affordable. All you have to do is ask.

Get a Part-time Job 

Don’t be afraid to work while going to school. For most students today, having a job isn’t a “nice-to-have,” it’s a must. In addition to generating income to offset the cost of college, a job also provides students with many of the skills employers are looking for when they interview recent graduates. 

If You Need to Borrow, Look at All the Options 

Favor federal loans over private loans. Thoroughly review loan packages, selecting the one that offers the lowest overall (term and interest rate) cost. Make sure you understand the different types of student loans (i.e. fixed and variable rate) and how they are to be repaid.

In addition, know all of the income-based repayment options. With many federal loan programs, you have the ability to lower your repayments if your post-graduate income isn’t adequate.

You should also know how to take advantage of the flexibility of the loan program. With some loan programs, for example, if you enter a public service profession, you can have your remaining loan balance forgiven after a certain amount of time. You should also know if you could consolidate loans to lower your overall interest payments.

Do the Math

There are countless free, college loan repayment calculators out there. So, before you sign on the dotted line, do the math. Determine your monthly repayments and your living expenses where you plan to live. This will give you the big financial picture, keeping you from getting in over your head as well as warding off the possibility of damaging your credit down the road.

In summary, preparation and knowledge is key to financial success. Students who are debt-smart now will be enjoying their wise decisions later.

The Power of Compounding

power of compoundingOne of the most valuable financial concepts…lessons parents can teach their children is the power of compounding.

Albert Einstein is quoted as saying, “The most powerful force in the universe is compound interest.”

So, what exactly is the power of compounding? The power of compounding refers to the fact that money that stays invested grows exponentially over time, as the returns on that money stay invested. Put simply, through the power of compounding, a small amount of money over time can grow into a substantial sum. But, it requires two things: the continual reinvestment of earnings and time.

The power of compounding is truly an investor’s best friend. Over time, as you reinvest your returns, you are continually earning a return on your return – and the longer the time frame, the greater the value. This is why it’s so important to start saving early. The earlier you start saving for retirement, the longer you have the power of compounding working for you.

To demonstrate this, let’s look at an example:

Consider two investors, Sally and Sue, who are the same age. Sally was 25 when she invested $15,000 at an interest rate of 5.5%. For simplification, let’s assume that the interest rate was compounded annually. At 50 years old, Sally will have $57,200.89 saved.

Now, let’s say that Sue invested the same amount of money at the same annually compounded interest rate. However, Sue was 35 years old when she started investing. At 50 years old, Sue will have $33,487.15 saved.

What happened? The power of compounding! By allowing Sally’s investment 10 more years to grow, she earned $23,713.74 more on her money than Sue.

Both investments start to grow slowly and then accelerate over time. However, Sally’s acceleration begins to quickly outpace Sue’s as she nears 50. Sally’s greater acceleration is not just due to the fact that she’s accumulated more interest but also because her accumulated interest is itself accruing more interest.

This amplification increases with time. In 10 more years, Sally will have nearly $100,000 saved, while Sue will only have around $60,000.

One other important fact to know about the power of compounding is that a small increase in the rate of return can produce a huge impact over time.

Example: Let’s say that Sally’s grandparents gave her a gift of $10,000 when she was born and her parents invested it in an account that returned 10% annually. By the time Sally reaches 65 years old, she would have $4.5 million. Now let’s say that the same gift/investment only returned 8% annually. Sally’s portfolio would then only grow to $1.4 million. What if the investment only returned 5%? Sally would only have a mere $227,000 at age 65.  In a nutshell, half the rate of return produces an account that’s less than one-twentieth the size.

At the end of the day…this lesson in numbers, all you need to know is that you must start early. However, if you’ve lost a lot of investing time because you’ve procrastinated, didn’t have the willpower to save, weren’t able to save or just didn’t know what you didn’t know, stop fretting and start saving today. With this said, keep one of my favorite quotes about taking action in mind: The best time to plant a tree is twenty years ago. The second best time is now.

 

 

How Will Rising Interest Rate Projections Affect Consumers?

finance blogAs anyone with a bank account and/or any kind of debt – a car loan, mortgage, credit card balances, etc. – can attest, the interest rates that affect us, the retail financial consumer, are driven by the Federal Reserve’s monetary policy decisions.

A Brief Finance Lesson

Most consumer interest rates are driven by the federal funds rate – the interest rate considered the central interest rate in the U.S. financial markets. This is the interest rate that major banks use when borrowing or lending funds through the central Federal Reserve banks. The fund rate is set by the Federal Open Market Committee (FOMC), the policy-making arm of the Fed.

The St. Louis Federal Reserve, one of the 12 member banks of the Federal Reserve System, apportions the impact of the fed funds rate. This interest rate influences the prime rate – the rate offered to the bank’s customers with the highest credit ratings.

Since 2008, interest rates have remained historically low. For the consumer, this has been a double-edged sword – very attractive borrowing rates coupled with negligible investment rates (e.g. Savings and CD rates).

However, events of the last quarter of 2016 indicate there will be upward pressure on interest rates on the horizon, both short-term and long-term.

In the last quarter, the economy began showing signs of strength. With the election of Donald Trump, businesses seem optimistic over their growth opportunities. In addition, the stock market has soared to record highs and bond yields took their first big fall, the unemployment rate holds steady, and job growth continues as household spending slowly improves. These indicators, and stirring inflation, prompted the FOMC to hike the interest rate on December 14.

Is this the beginning of the end…of historically low interest rates, that is? Financial analysts seem to think so, and expect we will witness creeping interest rates over the coming year.

What Will this Mean for Consumer?

Low rates have been painful for retirees who seek a decent return on their emergency funds and cash investments. Consequently, an increase in the fed funds rate will improve the rate on these investments.  However, most analysts’ projections for these rates are cautious, indicating that consumers shouldn’t expect to get rich on savings account and CD rates in the near future.

The housing market has enjoyed the benefits of mortgage interest rates in the range of 3 to 5 percent since 2010. The forecast for these rates suggests that the rise in the fed funds rate, in addition to the yields on treasury bonds, will prompt higher borrowing costs for consumers. Mortgage rates have already pushed to their highest levels since July 2015.

Even an incremental increase on the interest rate of a large loan balance can cause a significant increase in monthly debt payments. Consequently, with increasing mortgage rates likely on the horizon, now may be a good time to refinance, especially if you have an adjustable rate loan, or buy, if you’re in the market. This suggestion applies to auto loans as well.

Financial analysts are also predicting that consumers will see higher interest rates on credit cards and variable rate loans, such as student loans. Typically, variable rate loans adjust once a year. But, credit card APRs can be increased any time. If you have a variable rate student loan, now may be the time to refinance into a fixed rate. There are many companies who offer fixed rate student loan refinancing and consolidation with terms ranging from 5 to 20 years. If you have credit card debt, you should set a plan in motion to pay down the balances as quickly as possible. If you have the opportunity to transfer to another card that has zero interest balance transfer for 12 months or longer, now would be a good time to accept that offer.

The investor can expect to see stocks and stock funds perform well if the interest rates are rising as a result of a growing economy. However, if inflation becomes a problem, it could have a negative effect on some stocks. Investors who own bonds can expect to see their value decrease as yields increase. But, this shouldn’t present a problem if the investor plans to hold the bond until maturity.

A Sound Strategy

 No one knows where interest rates will land in the future. But, current low rates are unlikely to continue. The FOMC expects that economic conditions will evolve in a manner warranting gradual increases in the federal funds rate.

With this said, savers will benefit from the Fed Funds rate increase and should look to maximize the returns on their cash by securing the best savings rates… as long as the institution is insured by the FDIC or NCUA. Borrowers should maintain strong credit profiles. If you have credit issues, take steps to improve your credit score now to receive the best borrowing rates in the future. And if you’re in the market for credit, act sooner than later.

 

 

 

 

 

 

 

 

 

 

There’s An App for That

cardvaletToday, there’s pretty much an app for anything. There’s an app for turning the lights on in your home before you arrive and turning them off after you leave. There’s an app for measuring your daily physical activity, the calories you’ve burned as well as monitoring your vitals. There’s even an app to make purchases without ever opening your wallet. Apps are developed to entertain, provide added convenience, and even, like the one below, diminish our ever-increasing vulnerability to fraud.

CardValet®.

CardValet, an app recently developed by Fiserv, a technology solutions provider to the financial world, is a debit card management and fraud mitigation tool that enables cardholders to control when, where and how their debit cards are used. A turnkey mobile app, CardValet gives the debit cardholder significant awareness of and control over how and when their card is utilized.

This innovative financial app, increasingly promoted by more and more financial institutions, lets cardholders turn their cards on and off, set spending limits as well as monitor and receive alters on transactions.

CardValet gives debit cardholders the ability to turn their cards off immediately if their card has been lost or stolen or if they detect unauthorized transactions on their card. When the card is turned off, no withdrawals or purchases will be approved. Then, after the fraud threat is eliminated, the cardholder can turn the card back on immediately.

With CardValet, the cardholder also has the option to receive text alerts every time the card is used. These real-time alerts keep the cardholder informed when his or her card is being used or has been declined.

In addition, the app can work with the GPS system in your smartphone and geographic restrictions can be established on your debit card. These transaction controls allow your debit card to work only in specific locations or geographical areas, adding another layer of protection against fraud.

The CardValet can also help you stick to your budget. Let’s face it, the increasing use of plastic over paper has made overspending easy. With this app, you can take control of your finances by setting spending thresholds on your card. You can set spending limits for general use or specify thresholds by merchant types, such as gas, groceries or retail stores. The flexible app lets you change these parameters at anytime…you simply update your transaction controls to fit your spending needs.

The CardValet also allows you to set parental controls on your child’s card. Whether your kids are shopping at the local mall or they’re away at college, you can manage their spending. With the same convenient features that help you stick to your budget, this app lets you decide where, when and how your children can use their debit cards.

For more information concerning this app – how it can help you manage your money with greater ease and confidence than ever before, please stop by and talk with a member of our team. We’ll be happy to answer all of your questions and help you get “the app for that.”

 

The European Union: A History Lesson

british flagOver the last few weeks there has been much discussion concerning the United Kingdom’s decision to separate itself from the European Union, the EU. In the wake of this decision there has also been increasing concern about the long-term ramifications of the separation on the EU, United Kingdom and United States.

To better understand this decision, with 52 percent of United Kingdom’s voters (53.4 percent of England’s voters) opting to leave the EU, and its possible ramifications, a general understanding, history lesson, so to speak, seems appropriate.

The EU was created by the Maastricht Treaty, which officially took effect on November 1, 1993. However, the EU as we know it today represents a series of efforts by several western European countries to integrate Europe following WWII. These founding countries, Belgium, France, Italy, Luxembourg, the Netherlands and West Germany, under the Treaty of Paris in 1951, then called the European Coal and Steel Community (ECSC), sought closer economic, social and political ties to achieve economic growth and military security, and to promote a lasting reconciliation between France and Germany.

Over the next 40 years, a series of further international treaties (two Treaties of Rome, the Brussels Treaty and Lisbon Treaty) and treaty revisions, based largely on the ECSC model, eventually led to the Maastricht Treaty and the creation of the EU.

The Maastricht Treaty consisted of three major components: the European Communities (EC), a common foreign and security policy and enhanced cooperation concerning domestic affairs and justice. The treaty also incorporated a monetary policy into the EC and formalized the planning, which had begun in the late 1980s, to replace national currencies with a common currency, the euro, that would be managed by common monetary institutions.  The euro was introduced for use by the general public on January 1, 2002. (Nine EU members – Bulgaria, Croatia, the Czech Republic, Demark, Hungary, Poland, Romania, Sweden and the United Kingdom – don’t use the euro.)

The treaty’s second component defined and implemented common foreign and security policies. EU members agreed that, where possible, they’d adopt common defense policies. These policies would be implemented through the Western European Union, a security organization that includes many EU members.

The treaty’s final component, the Single Market, eliminated border controls, allowing free movement of goods, services, people and money, within EU’s borders.

Today, the European Union is comprised of 28 European countries – Austria, Belgium, Bulgaria, Croatia, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom. The EU was awarded the Noble Prize for Peace in 2012, recognizing the organization’s efforts to promote peace and democracy in Europe.

Reasons behind Brexit

Those opposed to the EU argued that it has become a “dysfunctional economic entity.” According to these challengers, the EU failed to address the widespread economic problems that have been plaguing Europe (e.g. 20 percent unemployment) since 2008.

The second reason sighted is the rise of nationalism across the world. There’s been a growing distrust of multinational financial, trade and defense organizations that were created following WWII (e.g. EU, IMF and NATO).

Many EU opponents feel these institutions no longer serve a purpose, and take control away from the individual nations. This mistrust and loss of control prompted Brexit as a practical solution.

In addition, similar to the sentiment of many Americans, many EU opponents see immigration as a national issue, affecting the internal life of their country. This sentiment is in direct contrast to some EU leaders, who argue that aiding refugees is a moral obligation of the EU.

Many are convinced that Brexit was a vote against the British elite, the politicians, business leaders and intellectuals that have lost their right over the last several years to control the system.

Interestingly, this is not a new phenomenon or one limited to Great Britain. It appears to be an ideology that is sweeping Europe, China as well as the U.S.

What does Brexit mean for the United Kingdom, the EU and the U.S.?

Great Britain’s referendum result is not legally binding. Parliament still has to pass the laws that will remove Britain from the 28-nation bloc, starting with the repeal of the 1972 European Communities Act, and ratify the withdrawal agreement.

If, however, what appears to be the inevitable happens, the EU will be losing one of its largest and wealthiest members. In addition, the consequences for the British people will be significant. Britain’s economy and legal system have become deeply entrenched in Europe. Unraveling their relationships with the remaining members of the EU is likely, at least at the onset, to be economically and socially unsettling.

Many speculate that Britain’s exit will be initially disruptive for the other EU countries. But, most EU advocates believe the larger threat is that Britain will pave the way for other EU members, and could be the first step towards the disintegration of the EU.

From an American perspective, British exit from the EU is more about geopolitics than economics. Since WII, the U.S. has been deeply devoted to maintaining peace and prosperity in Europe. The U.S. still has thousands of troops stationed in Germany in an attempt to minimize the possibility of conflict.

Only time will tell if Europe will ultimately emerge stronger and more prosperous. But, the likelihood of turmoil in Europe as it muddles through Britain’s departure is cause for concern for the U.S. and the rest of the world.

 

 

Don’t Fall Victim to a Tax Scam

Tax season is looming and, unfortunately, so are the scammers. With a growing number of reports over the last several weeks, from the IRS and police departments across the country, of people falling prey to tax schemes, it’s the perfect time to share some of the most widely used tax scams. Hopefully, this insight will keep you from becoming another statistic.

Phone Scams – This scheme has been occurring with more frequency over the last few weeks. Basically, someone calls you claiming they work for the IRS. These scammers impersonate an IRS agent and typically try to scare/threaten you. They try to intimidate you with supposed penalties, being arrested or deported, etc. if you don’t pay them right now. They even may know all or part of your Social Security number. Don’t panic. The IRS won’t ever just call you out of the blue. They always initiate communication in writing, even if you owe money. They also will never ask for debit or credit card numbers over the phone or threaten you with arrest, etc. for non-payment. If you have any doubts to the authenticity of a call or any correspondence, you can contact them directly (800-829-1040) or visit their website (IRS.gov).

Phishing – This scheme happens throughout the year. This occurs when scammers try to get your personal information by fooling you with fake emails or websites. However, during tax season they lure you in by claiming they have information about your tax refund, etc. You may, for example, get an email that looks like it’s coming from the IRS, inviting you to click on a link for information concerning your tax return or the money that may be due to you. Don’t fall for it. The IRS doesn’t initiate contact via email.

Identity Theft – This one is the worst…the tax scheme of all tax schemes. You arehappily awaiting your tax return, already happily anticipating where you plan to spend it and then you find out that someone else has been using your Social Security number as well as other identifying information, has filed a return in your name and is claiming your refund. Cut this off at the pass by never giving out personal information unless you know who’s asking for it and why, shredding personal and financial documents, knowing your tax preparer (see below) and filing your return early…beating the scammers to the punch.

Tax Return Preparer Fraud – You are inundated with advertisements of people/services that want to prepare and file your return for you. Just remember, like every service and/or person, some are ethical and honest and some are not. A majority of taxpayers today use a preparer. Just do your homework…check them out…get references, etc. In addition, remember that just because someone else prepares your tax return doesn’t release you from the responsibility of its accuracy. You’re the one who is ultimately responsible for the information contained in your return. So, make sure to review it thoroughly before you file it.

False Promises – Always trust your instincts…your common sense. The old saying, “If it sounds too good to be true, it usually is,” can often be the case where refunds are concerned too. Watch for promises of big tax refunds by people who don’t know anything about you or your financial/tax circumstances.

Tax season can be hectic enough without adding undue stressors. So, eliminate the added stress by being aware of these types of scams, using your common sense, dealing with reputable, longstanding tax preparers and thoroughly reviewing your return. And last, but not least…when in doubt, contact the IRS.
Here’s to a stress-free, safe tax season!

Buying Your Teen a Car

It’s hard to believe but your baby, now a teenager, is a licensed driver and wants a car. Yes, the time has finally arrived; your child wants the keys to his or her own car. So, what’s a practical, cautious parent to do…other than have a nervous breakdown, that is?

First and foremost, dispel the notion that every teenager needs a car. Many kids get along just fine without having their own set of wheels. They walk, ride a bike or a skateboard, get rides from you or their friends or take advantage of local public transportation.

However, many teenagers today do have their own cars. All you have to do is peruse your local high school parking lot. It’s filled with students’ cars. But, when contemplating whether you should purchase a car for your son or daughter, you should consider the following:

1. Does your teen want a car because his or her friends are getting one or does he or she want one because they need one to get back and forth to an after school job? If his or her primary reason is to have one because “everyone else has one,” then he or she doesn’t really need a car.

2. Is your teenager responsible enough to have his or her own car?

3. Will getting your teenager a car make life significantly easier for you? For example, if his or her school is 30 minutes from home and you are having to make several round trips a day to take him or her as well as your other children to school each day, another car in the family may be the answer. In other words, if you were spending a good portion of your day as a kid chauffer, this would be a practical reason to get your teen a car, and would take a lot of pressure off you as well.

4. Is it financially viable to buy another car? Even a good used car can be expensive. If purchasing another car is a strain on your finances and your teen can’t help out with the purchase, it would be wise to postpone buying a car until you are in a better financial position or your teen can purchase him or herself.

Okay, if after careful consideration, you’ve decided to get your teen a car, what steps can you take to make sure your son or daughter is a safe as possible on the road?

The conventional wisdom has always been to buy a big car or a road tank. This will provide a thick layer of metal insulation around your child. The truth is, size does matter. It’s basic physics. When two heavy objects collide, the heavier one wins!
Size is a big issue, especially on the freeway. The higher you sit in a car on the freeway, the more the chassis and frame is going to absorb the impact.

The next big question is whether to buy new or used. For most parents, who are already making payments on their own cars, a used car is the only economically feasible option. Another thing to consider when buying new or used is the insurance. The insurance premium on a new car, primarily driven by a young driver, is very expensive.

Experts agree that if parents are going to buy a used car for their teen, they should do their homework. Parents will want to look at the research, specifically government crash testing results (iihs.org or nhtsa.gov), as well as safety options that come with the car they’re considering for their son or daughter. Get as many safety features as possible.

You will also want to check the car over very thoroughly – the tires, the headlights, the turn signals, the brakes, as well as make sure the safety equipment is in good working order. If possible, have a reputable service technician give the car a complete once-over before purchasing it or if you can afford it, look for certified, pre-owned models that are two or three years old, often from an expired lease.
Much to your child’s dismay it’s not about looks, it’s about safety. Parents must rise above what their child wants and focus on what’s in the best interest of their child’s safety. Safety experts highly recommend staying away from the cool, sporty convertibles or cars that come equipped with large engines.

Once you’ve narrowed down the safest choices, find a good deal. Websites such as Edmunds.com, Kelley Blue Book, IntelliChoice.com and Truecar.com can help you determine a fair price given a vehicle’s age, mileage and condition.

Last, but certainly not least, safety experts agree that the most important factor in purchasing a car for your teen is proper training for your teen. If there’s no formal driver’s education program, then it is recommended that parents create their own training program. Driving is a difficult and complicated lengthy learning process. Insurance rates for young people do not come down until age 25. Until then, these drivers are considered “at risk” drivers.

The key to any driving program is parental involvement. There should be a nighttime curfew for beginner drivers, zero tolerance for alcohol and the parent and teen should use a contract or come up with something similar, in writing, that outlines the whens, whereas and with whoms.

Driving is a major milestone in your child’s life. Make it a safe one…one they can remember for a lifetime.

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