August 2011 “Making a positive impact on as many lives as I can.” Please contact me if you have friends and family who would enjoy receiving this newsletter!

Ann Zuraw, CFP®, CFA®, CDFA®
Compass Financial Partners, LLC
Wealth Advisor
3623 North Elm Street
Suite 201
Greensboro, NC 27455
336-510-1329
Fax: 336-510-1553
azuraw@compassfp.com
http://www.WomenMoneyand Divorce.com

YOUR FINANCIAL FUTURE

Your Guide to Life Planning

Financial Confidence a Chief Concern for Women

Women seem to be of two minds when it comes to their relationship with money and investing. On the one hand, two-thirds of women polled recently considered themselves to be the “CFOs” of their households — strong, even dominant, managers of family finances.¹ Yet another study found that women are significantly less confident about making their own investment decisions than men.²Whatever the reasons, there are real, tangible reasons why gender plays a critical role in an individual’s long-term financial well-being.The Gender Gap — A Reality CheckHere are the facts. Generally speaking, women earn less than men, live longer than men, and often take time out of the workforce to have children or to care for aging parents. As a result, women are often playing “catch up” when it comes to saving for important life goals, such as funding their own retirement.

Sources: CDC, National Center for Health Statistics, National Vital Statistics Report, August 2009 (based on 2006 and 2007 data); Institute for Women’s Policy Research, September 2010; Employee Benefit Research Institute, “Retirement Annuity and Employment-Based Pension Income, Among Individuals Age 50 and Over: 2008″ September 2010; Employee Benefit Research Institute, “Retirement Annuity and Employment-Based Pension Income, Among Individuals Age 50 and Over: 2008″ (most recent data available).

Beating the Odds

Despite these challenges, all women — whether single, married, or divorced — should make planning for retirement a lifelong endeavor. No matter what your age or situation, it’s important to start planning for your future now. Here’s how to get started.

• Have a clear picture of your current finances. Create a net worth statement that defines your assets minus your liabilities. In order to determine if your net worth is appropriate for your age, income, and personal circumstances, you’ll need to analyze your spending and saving habits and create a workable monthly budget.
• Save as much as you can. For working women, employer-sponsored retirement plans, such as a 401(k) or 403(b), are probably the most important saving and investing tool they will ever use. In 2011, most individuals enrolled in such a plan can put away up to $16,500, plus an extra $5,500 in “catch up” contributions for those aged 50 or older. Traditional and Roth IRAs offer another way to save for retirement, even if you’re married and don’t work outside of your home.
• Be realistic about how much it will cost to live. The costs of health care, housing, and many other basics are rising faster than the overall cost of living, Be sure to factor that reality into your overall financial plan.

¹Source: Women & Co., March 2011.

²Source: MassMutual Retirement Services, March 2011.

© 2011 McGraw-Hill Financial Communications. All rights reserved.

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This year has been a difficult year for a lot of people. If you are one of the many who became unemployed or had to move out of town to find a job, you may qualify for additional deductions for the year as long as your job search remains within your current field.

You don’t have to be completely out of work to have some of your costs qualify as a deductible expense. You can also deduct expenses while looking for a new job in your field when you are temporarily working in another area just to make ends meet.

Here are some job-hunting expense deductions that you may qualify for when filing your 2012 taxes:

• resume writing
• cost of printing your resumes, business cards and any postage
• employment and outplacement agency fees (even if you don’t get the job)
• hotel/motel charges, transportation and meals while away from home
• local mileage (IRS business mileage allowance is 55.5¢ a mile for 2012)
• parking fees
• job search related local and long distance calls
• career counseling
• schooling
• additional childcare costs resulting from going on interviews
• internet services, newspapers, trade magazines, etc., that you use to try and locate a job
• non- reimbursed moving expenses if you have to relocate

It is important that you keep track of what you did each day by writing down everything related to your job-hunt along with what money you spent even if you don’t have an actual receipt in hand. Remember, what you can’t do is deduct expensive that you incurred this year and that are reimbursed by a prospective or future employer.

When it comes to taxes, any bit of savings helps. Remember, you can claim any allowed deductions for job-search expenses even if your search is still on-going and continues into next year.

Take the time to check with a professional and see what deductions you may be entitled to.

Answers from AZ

Our economy today simply doesn’t allow us to spend frivolously on expenses. So how do we negotiate a cable bill when we continue to experience its steady rise in cost?

One remedy would be phone negotiations:

Step 1 – be prepared to negotiated with you cable company. In most cases they will work with you. After all, you are calling to give them a chance to keep you as a paying customer.

Step 2 – do a little research by going to their website to check on new customer promotions. Also check to see what the competition is offering. This information will help you with your negotiations.

Step 3- start your negotiation and don’t give up!  If you reach a customer service representative that is not helpful – hang up and try again.

Step 4 - your goal is to be directed to the Retention Department. Unfortunately, to get there it may be necessary to threaten cancellation. Once there however, you will find that the retention specialist is authorized to negotiate the terms of your deal and work with you to keep you as a customer.

Finally, enjoy knowing that the small amount of time you spent in negotiation has saved you hundreds of dollars off your yearly cable bill.

AZ Answers

Has your banking institution hiked monthly fees, increased the minimum balance requirement and taken away your rewards programs?

Below are some tips to help avoid unnecessary fees when possible:

Monthly maintenance fee – many banks charge monthly fees on checking accounts that are not maintaining a minimum daily balance. This balance varies from bank to bank so shop around for one that meets your needs and provides you with free checking.

Account closure fee – if you open an account and then wish to change banks, check and see what fees may be incurred. To avoid early closure fees, you may simply have to wait 90 to 180 days to avoid this charge completely.

Overdraft fees – this fee can cost you $35 each time you overdraw on your account. You may also have a limited time frame to repay the money before additional penalties are added. Check with your bank for ways to avoid this charge. You may be able to link you checking account to a savings or money market account to transfer funds as needed – the fee charged for this service is usually less than overdraft fees.

ATM Fees – sometimes using an out-of-network ATM is unavoidable, but this can cost you $4 on average. This fee is a strong incentive to avoid using another bank’s ATM. Why not keep the extra cash in your own pocket?

You may also be charged for foreign transaction fees, bank teller fees, paper statement fees, debit card replacement fees, redeeming your reward point’s fees, etc.

If you find yourself taking the leap to another bank, you may want to first consider negotiating with your current bank. They may offer you better terms or waive some fees in order to keep your business.

If you want to reduce your fees, do your homework and shop around for the best banking institution that suits your needs and doesn’t cost you.  After all, you are lending them your money.

AZ Answers

Your main objective while on vacation is to relax and be carefree. So let us plan ahead for any possible setbacks. Some travel surprises are good others are not! Discovering an out-of-the-way exquisite restaurant or finding out that the museum you planned to visit is completely free will ultimately put a smile on your face. However, hidden fees and additional cost — NOT factored into your plans  — could cause you stress. Let’s discuss some of those fees and perhaps even avoid a few when possible.

Visa Fees — these fees are required for U.S. citizens traveling to foreign countries. Each Foreign Country has their own visa fees and they can range in price. It would be wise to go to the consulate’s website to find out how much you are going to have to pay beforehand. It can take a couple of weeks to process visas so be sure to plan ahead or you may find yourself paying even more to expedite the process.

Departure Taxes — if you look closely at your airline ticket you will find a mix of additional charges. A Segment Tax is usually a departure tax for international flights. Many countries charge a departure tax and it is not always included in the airfare. Check with your airline about exit and departure fees so that you may factor this additional fee into your budget.

Resort Fees — this may be one of the most surprising fees among travelers, because most of us assume pool towels, in-room coffee or courtesy newspapers are free. They may or may not be – some resorts charge fees to cover Wi-Fi, newspaper, gym access and local calls even if you have no intention of using any of them. Before booking your room, be sure to read the fine print especially when using a third-party booking site. After all, if you’re being charge $25 per night to cover Wi-Fi and you don’t plan on using it, you may want to consider choosing another resort.

Cruise Gratuities — many cruise lines offer all-inclusive boats where your meals are included in the price. What you may not be aware of are the automatic charges for gratuities. Many major cruise lines automatically bill between $10 and $12 in gratuities per person, for each day of the cruise. These charges may seem mandatory, but if you feel this tip does not reflect the quality of service you receive, you may want to speak with the purser’s office and try to have them adjust this rate.

Baggage Fees — there is a huge variation between airlines when it comes to baggage fees and the rules are constantly changing. So before you book you flight, be sure to compare baggage fees between airlines.

Money exchange — before you head off to your destination, check with your banking institute for the best exchange rate on the US dollar. If you don’t, you may incur a much higher fee at the foreign exchange bureau.

Foreign transaction fees — if you are going to another country look for a credit card that doesn’t charge a percentage on every purchase made. Even though they are typically a small percentage, you may want to explore a credit card that will not charge these fees.

Vacations are meant to help us relax, replenish and to come home feeling well rested and rejuvenated. Doing a small amount of research beforehand may help you avoid some unnecessary charges and stress during your trip.

Happy travels!

AZ Answers

Did you know that a simple three-digit number may stand between you and a car loan or home mortgage? This number is your credit score! Do you know that in the past you weren’t able to view this score? Well today, thanks to pressure from Congress and consumer groups, you can and should review this periodically.

What exactly is a credit score? Your credit histories are chronicled in credit reports. Financial institutions use this score in their evaluation and approval process when you apply for credit.  A credit score – typically called a FICO score, named after the company that develop it, Fair Isaac & Company – is one number between 300 and 850. When you have a high number – chances are lenders will believe you are a good candidate for a loan, based on your history of making payments on time.

How do I get my Credit Score? The Web site www.myfico.com will sell you a comparison of your three credit reports from the three main companies: Experian, Equifax and TransUnion along with your FICO score for $40. For this price you also gain access to a feature on the site that lets you create hypothetical situations, such as paying off a particular debt or paying credit card bills on time, etc. You can then see how these actions might affect your score.

What is a good score? It’s best to have 720 or above as a score. If you do – you are generally put into the same category as those with higher scores and viewed as a safe risk by lenders and be able to receive a loan without a problem and at a lower interest rate. However, if your number is below 700, it’s definitely worth your time to try and pump up your number.

How do I raise my credit score?
Raising your credit score cannot happen overnight, but you can do so in a relatively short period of time.  You see the scoring formula gives more weight to recent activity. Even six months of “good behavior” can have an effect on your score and demonstrate that you are making better financial decisions. Here are some guidelines:

• Pay bills and other payments on time, this will have the largest positive impact.
• Pay down balances, the lower the amount of credit you’re using will allow for more credit available to you. FICO scores reward people who use a small percentage of their available credit.
• Don’t open a lot of new accounts at once – this makes lenders wary – especially if you don’t have a long credit history. Having no more than five credit cards is recommended.
• Rotate and use all of your cards – a dormant credit account will not help your score.
• Should you ever have a late payment, it’s worth a call to the lender to see if they will remove this information from your records in a “goodwill adjustment.” If you choose to dispute the late payment report, the item will stay on your credit report but not factor into your FICO score.

Having a good credit score is essential. Keep in mind that FICO scores do not take your age, income, assets or employment history into account. Certain lenders, though, may pay close attention to income, assets and employment history. Also, FICO scores treat all late payments equally. However, an auto finance company may look at customized scores for their industry.  If you’ve been late on credit card payments but never missed a car payment, they may take this into consideration.

Answers from AZ

Are you looking forward to the day when you can stop working, retire and enjoy life?

Reality check – our world today does not bring us the peace of mind of previous years as far as retirement is concerned. In the past social security, pensions and lifetime healthcare were offered to workers in exchange for a lifetime of service. Today, we must take control of our own plan using discipline, intelligence and an experience financial advisor in order to plan for our retirement and income needs.

Retirement planning means creating a plan and staying with it. This can help you survive and potentially thrive in the New Retirement Reality. The following are some tips when starting this process:

• Always take your companies 401k match. These contributions are tax-deductible and will help your wealth grow.
• Medical coverage is essential! One of the largest causes of financial ruin is a catastrophic health misfortune. Even if you can only afford a policy with a high deductible, your goal is to preserve the wealth you spent years building.
• Do control or eliminate your debt. A simple rule to follow is – if you don’t have the money, don’t buy the item. This rule is essential in your retirement years, when your income has been reduced. Imagine all the excess cash you can have to help you maintain a healthy standard of living.
• Selecting a diversified portfolio with the appropriate asset allocation mix can be very important to your long-term goals. Please consult with an experienced financial advisor who can help guide you through this process.
• Consider reinventing yourself and a second career. If you could generate as little as $10,000 extra income a year during retirement, it could make a big difference in your day to day life style.

My advice is if you haven’t begun to plan for retirement— get started today! Keep in mind the New Reality for Retirement means YOU will need to finance your own retirement. Begin planning today for a financially fit tomorrow — helping to turn your later years into your best years.

Answers from AZ

Consumer spending accounts for about 70% of the U.S. economy according the U.S.  Commerce Department. Our spending is what keeps our economy in either good or poor shape. When spending increases or decreases, it has a major effect on our economy.

 What we buy can be divided into two major categories. The first category would be necessities which would include food, housing and clothing. The second category is referred to as discretionary spending – the purchase of non-essential goods and services.

What effect do your spending habits have on your own personal finances?

Here are a few simple tips to help make sure your spending habits aren’t hurting you financially:

• Each and every time you make a purchase, ask yourself – do I need this item or do I want this item? If it is a need versus a want and your budget allows for it, then by all means go ahead and make this purchase. If it is a want item, spend some time determining whether it will benefit your life. At this point you should decide if this want is really worth over extending your budget.
• Start by using cash only. Leave your credit card in your wallet and take it out to use only in an emergency. If you don’t have the cash and can’t use the credit card, you won’t overspend.
• We’ve all made the mistake of running into a store for just a few items and instead come out with bags of stuff we didn’t intend to purchase. A great way to avoid this common impulse buying mistake is to make a list and stick to it. If you are tempted by something extra, make a mental note and get it next time. By then, you may find living a week or two without this item makes it unnecessary. Just imagine what you could save by following this rule alone.
• Set a future goal, whether it is an exotic vacation, a huge retirement fund or working your way out of debt. Now every time you go to purchase a non-essential item remind yourself of this goal. Take this money and put it towards your goal. Before you know it, you could be relaxing on a tropical island or sitting on a very nice nest egg.
• Make your budget and decide how much money is fun money. Go ahead and enjoy spending this set amount. Just remember when you reach your limit STOP!

Carefully planned spending helps our economy as well as our personal finances. Remember to shop responsibly and keep the state of your financial future always in mind.

Answers from AZ

A  Prenuptial Agreement seems so unromantic or maybe just plain wrong. It also brings about much controversy — I love you dear, but sign this agreement so everything is in order when we divorce.

Some say starting a marriage this way destroys the mutual trust right from the beginning. Others argue that it will help keep emotions out of the divorce, making the process more amicable.

A Prenuptial Agreement is for an individual with income or assets that they want to protect. As marital trends change, so do attitudes. The new generation is waiting longer to marry. When they do decide to settle down, they tend to bring more assets into the relationship.

This holds true for those entering into a second marriage where assets and/or debt have been accrued. A prenuptial agreement is becoming increasingly popular as a financial planning tool among these two groups. According to a survey of 2,323 adults by Harris Interactive (February 2010), nearly one-third of single adults say they would ask a significant other to sign a Prenuptial Agreement.

Most Prenups deal with financial issues such as real estate, division of bank accounts and potential spousal support in the case of divorce, separation or death. This agreement should not be overlooked when planning your financial future, especially if family money is involved or this is your second marriage.

Financial, legal and marriage experts do agree that before getting married, couples should sort through issues such as credit card debt, discrepancies in each person’s wealth and the possibility of future inheritances. Do share your lifelong dreams, but also review each other’s credit reports and deal with any issues immediately.

A Prenuptial Agreement can’t protect you from marital heartbreak, but it can help protect your assets. Talk to your financial advisor and attorney and see if a Prenup is a tool for you to consider before entering into your marriage.

Answers from AZ

The decision to leave your marriage is very serious and can lead to many unforeseen consequences. So before you take this final step, please consider all of your Options.

Try counseling, it may possibly help resolve differences in your present relationship. Throughout our lives, we all experience change in ourselves and our circumstance — it is inevitable! It’s how we handle these changes that can affect the stability of our relationships. Sometimes all it takes is an experienced family and marriage therapist to help you form a new plan and put your relationship back on track.

Many couples experience major conflicts because of financial issues. Another option is to seek a financial advisor to help plan and manage your finances. Knowing exactly where you are financial right now  — where you want to be — and what steps you need to take to help you get there — may eliminate some of the unnecessary stress. Divorce is seldom the answer where finances are concerned — dividing assets and maintaining two households will only create a larger financial burden on both parties. Together with a financial advisor you may learn to work together to better serve your financial future and help eliminate the financial strain in your marriage.

Divorce should be your last resort. So before you file you should exhaust all possible options to help save your marriage.

Answers from AZ