The Pan Massachusetts Challenge

A Hero Story

By Steve Davis, CERTIFIED FINANCIAL PLANNER ™

My Hero: 

For the past 14 summers, I have participated in the Pan Mass Challenge.  When I first rode the PMC in 1988, my mom had recently been diagnosed with cancer. Today, mom continues to cheer the Davis family paceline, having courageously beaten cancer three times. She is my hero!

Everyday Heroes:
When I first rode the PMC, one of my lasting memories was riding up a long, steep hill where someone had written on the pavement in chalk the words, "Everyday Heroes!".  The crowds who cheered and willed us up that hill thought the cyclists were the everyday heros, but they were wrong.  The true everyday heros were all those who  fight this dreadful disease and those who contribute funds toward beating it.  Last year 230,000 PMC contributors donated $33 million for cancer research and treatment at the Dana Farber Cancer Institute. And since 1980, the PMC has contributed an amazing $303 million which finances research in its earliest stages. Known as “seed money”, PMC funds enable clinicians and scientists to pursue innovative research that has the potential to achieve the results that will warrant National Institutes of Health (NIH), or other private and government grants. In so many cases, this early support has fostered the development of some of the most important advances made in cancer research over the last two decades.


A Young Hero: 
As I mentioned, I ride each year to honor my mom, a three-time survivor. This year, I will also be riding for Hannah Hughes, a young 7-year-old “Jimmy Fund Pedal Partner”. Hannah has a rare cancer but is doing well after recently undergoing a bone marrow transplant from her sister. Several of my friends and I plan to ride from her home in Ballston Spa, New York to the official start of the PMC in Sturbridge – a 180 mile journey we hope to cover over two additional days of riding. All told, we hope to ride almost 400 miles over four days. We’ll ride from Ballston Spa to West Stockbridge; West Stockbridge to Sturbridge; Sturbridge to Bourne; and Bourne to Provincetown.


You Can Help: 

If you would like to join us in the cause, please visit the Pan Massachusetts Challenge website or see my rider profile page: http://www.pmc.org/profile/SD0039

Financial Independence Day

By Steve Davis, CERTIFIED FINANCIAL PLANNER ™


MANSFIELD, MA:  We recently had a friend from New Zealand staying with us for a few days. One of my sons jokingly asked him, “Andrew, do they have the 4th of July in New Zealand?” He was quick to catch on and replied, “Of course they do, but they don’t celebrate Independence Day.”

Corey Shea Memorial Flagpole, Mansfield, MA

Today, Americans are observing Independence Day. Most of us have been looking forward to this long-weekend because we’re able to enjoy a day off from work and spend our free time with friends and family. And just as we look forward to the 4th of July weekend, most of us look forward to celebrating another type of Independence Day – Financial Independence Day. This, of course, is not a single day free from work, but a period in our lives when we no longer need to work ever again because our expenses are met by unearned income.

While this is a laudable goal, it won’t be achieved by all. Some people work their whole life, while others retire early. Some people retire and live comfortably, while others are dependent on children and friends. Here are three tips to help you achieve financial freedom:

Spend less than you earn.
If you’re looking for a good book to read on the beach during this summer’s vacation, check out the 1996 bestseller, The Millionaire Next Door. While this book is now 15-years old, its message is timeless. Authors Thomas J. Stanley and William D. Danko explain that one of the keys to success is to live within your means. This can be accomplished by earning more – OR – spending less. The theme of the book is that society’s concept of a millionaire is wrong; most actual millionaires live a very simple lifestyle. In general, they are frugal and value achieving financial independence more than displaying high social status. In other words, they don’t try to keep up with the Jones’. After all, the Jones’ may be in debt up to their eyeballs!

Feed your 401k.
One of the most important things you can do to hasten your own Financial Independence Day is to continually save and invest for retirement. Take full advantage of your company’s 401k plan. If your company matches your 401k contributions, be sure to at least contribute the amount they will match; it’s like getting free money! Remember too that the government offers tax advantages to these types of qualified retirement plans. Most contributions are made with pre-tax dollars which means you pay less in taxes. Furthermore, your earnings have the potential to grow on a tax-deferred basis. This means your nest egg may grow quicker because you’re not paying taxes on the account until you begin to take distributions, typically at retirement.

Prepare for emergencies.
If you suddenly discover your home needs a new roof, or if a major appliance or car breaks down, will you have the money available to pay for it? Create an emergency reserve. The amount of your emergency reserve may vary according to the flexibility of your budget and your comfort zone. Bear in mind that this is the money that will see you through financial storms while you maintain a long-term strategy working toward financial independence. Your emergency reserve is not intended to cover all possible risks. For complete protection, get medical insurance, long-term disability insurance and fire protection for your home. Even policies with a large deductible can help if a crisis comes up. You can't avoid emergencies, but living without these types of insurance is an invitation to financial ruin.
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This article was written by Steve Davis and appeared in the column "Talking with Davis about Money Matters" found at http://mansfield-ma.patch.com/articles/financial-independence-day


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Doctor, what do you mean you can't talk to me about my child?

Important considerations for parents of young adults


By Steve Davis, CERTIFIED FINANCIAL PLANNER ™



MANSFIELD, MA:  It was a proud moment for the members of Mansfield’s largest ever graduating class. Each of them walked across the stage of the Comcast Center to receive their diplomas -- and thunderous applause from family and friends. My wife and I were there cheering one of our boys and the conversation we shared with other parents was about times past. “Remember when came here direct from the Little League fields so we could watch the kids perform in the Jordan Jackson band? They were so tiny then.” But here we were a dozen years later watching our “kids” walk off the stage into adulthood. Where did the time go?

For parents of young adults, it may come as a surprise to learn that once our children become legal adults at age 18, they and they alone are responsible for making their own medical and financial decisions. This means that if your son or daughter has an accident or is unable to make decisions about his care, you would be powerless to help – even as parents. While your son may still be your dependent, you are no longer considered his legal guardian. Under the federal HIPAA rules, your teen’s medical records are between him and his doctors. Similarly, no bank officer or college purser will break privacy rules to discuss your child’s financial account status or even grades. And just because you pay the tuition doesn’t override the school’s privacy policy. Your daughter’s finances are as private as yours.

Helping with Health Care Decisions:

It’s every parent’s nightmare. You might be informed that your child had an accident and is in the hospital, but legally, you cannot get any information about your child’s condition or treatment. As a dad, I can’t imagine a situation that would produce stronger feelings of helplessness and frustration.

So, what’s a parent to do? The first step is to have an adult conversation with your adult child. Explain that in the event of a medical emergency you would be unable to help unless you are given prior permission. According to Easton attorney Karen McSherry, “A properly executed health care proxy and durable power of attorney grants a parent authorization to make health care decisions if your child is incapacitated, and grants you access to your child’s medical records so you can have discussions with doctors and insurance companies.” When you speak with your adult child, you should agree in advance how and why such documents would be used. Your son or daughter should also know that they remain in charge of their own affairs since the documents can be revoked at a later date.

Without prior approval, the only other option for parents of an incapacitated adult child is to petition the probate court for guardianship. This is often a long and expensive process that only gives you the ability to help once the court appoints you as guardian.


Helping with Financial Decisions:

Before we know it, the summer will be over and many of these recent high school grads will be heading off to college. Hopefully, we won’t see them on TV at the big game holding a sign that reads, “Hi Dad, send money!” But if your student needs help with banking, financial aid, or has a problem with his credit card while travelling overseas, for example, you’ll be unable to help unless you have a durable power of attorney.

According to McSherry, “Properly drafted documents will give parents peace of mind because they know they’ll be able to help with ordinary transactions, plus deal with financial and medical emergencies.”


Action Steps:

So, while your kids are still living under your roof, take some time to talk with them about these important matters. Before your son or daughter heads off for school and beyond, visit your local attorney to discuss your specific situation. Better safe than sorry.



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This article was written by Steve Davis and appeared in the column "Talking with Davis about Money Matters" found at http://mansfield-ma.patch.com/articles/doctor-what-do-you-mean-you-cant-talk-to-me-about-my-child


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

How to Select a Financial Advisor

By Steve Davis, CERTIFIED FINANCIAL PLANNER ™


You remember what it felt like when your friends were outside playing in the sun and you were stuck inside doing chores for mom and dad, right? Well, if that’s how it feels when you’re sitting down to do your financial plans, it may be time to hire a financial advisor. In part 1 of this series we looked at 3 Reasons to Hire a Financial Advisor. In this column, we’ll explore the process of choosing the best financial advisor for you.

Trust:  The absolute most important step is to find someone you can trust. But selecting an advisor takes more than that; just ask anyone who has listened to their stock-punting uncle and later regretted it. Not only is trustworthiness important, but so too is competence. Integrity without competence is no bargain so here are some tips to help you find a good financial advisor.

Experience: I don’t know about you, but with matters that are important to me, I’m not comfortable letting a rookie practice on my family. An advisor should have an appropriate level of business experience. Would you be comfortable hiring a financial advisor who was partying in his college frat house when the 2008 market crash occurred? Or even the dotcom crash in 2000? Advisors who have not experienced at least two market cycles probably don’t have enough perspective.

Education: Anyone can hang a shingle as a "financial planner" so determine what qualifies that person to offer financial planning advice. A good place to start is to find a professional who holds a recognized financial planning designation such as a CERTIFIED FINANCIAL PLANNER™ (CFP). A CFP has passed a rigorous test administered by the Certified Financial Planner Board of Standards on topics ranging from investments and insurance to tax, estate and retirement planning. CFPs must also commit to continuing education and a code of ethics in order to maintain their designation. The CFP credential is a good sign that a prospective planner will give sound financial advice, but even those who pass the exam may come up short in other areas.

Compensation and Independence: An advisor should clearly tell you how he or she will be paid. This is typically done through commissions and/or fees. If your advisor is exclusively commission based make sure he is not a thinly-designed salesman who is incented for pushing a company’s product. Instead, find an advisor who can help you choose unbiased financial products from many of the nation’s leading investment managers, not just those offered by his employer. If your advisor is compensated by charging fees, ask whether the fee is based on a percentage of the assets he manages for you, or whether he is charging an hourly fee. Beware of the “full financial plan for a flat fee” option. These plans are sometimes long on glossy pages and charts, but short on specific advice for your unique circumstances. Additionally, these flat fee plans often offer no guidance on how to implement the recommendations and often fail to provide ongoing service as your situation evolves over time.

Communication: You can learn about an advisor’s communication skills by interviewing them, checking out their website, attending a seminar they conduct, or by reading the articles they write. A good financial advisor is one who communicates clearly and the best advisors are the ones who are able to make the complicated easy to understand. Sadly, it seems some financial planners try to impress (or intimidate) clients by using technical jargon that isn’t understood. If you can’t explain in your own words what the advisor is recommending, don’t ever proceed!

Background Information: In the wake of the Bernie Madoff scandal, the importance of due diligence has become clearer than ever. Ask prospective advisors if they have ever been subject to disciplinary action. Several government organizations, such as the Financial Industry Regulatory Authority (FINRA) and your state insurance and security departments maintain records on the disciplinary history of financial planners and advisors. This information is in the public record and can easily be checked. If there is anything that makes you uncomfortable, go elsewhere.

Likeability: When you’re done interviewing potential advisors, you should be able to ask yourself one last question – Do I like this person? Hire people you like.



The Benefits of Hiring a Financial Advisor.  Managing your personal finances is ultimately your responsibility but you don’t have to do it alone. If you don’t have the time, interest or inclination to handle your own financial plans, hire a qualified professional, such as a CERTIFIED FINANCIAL PLANNER ™. Together you’ll be able to identify your goals and manage your finances so that you can work toward making the most of your financial resources while also trying to avoid common mistakes. In the end, you want to find a professional that is trustworthy, competent and likeable. In other words, you want to select a financial advisor who is right for you.



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This article was written by Steve Davis and appeared in the column "Talking with Davis about Money Matters" found at http://mansfield-ma.patch.com/articles/how-to-select-a-financial-advisor


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

3 Reasons to Hire a Financial Advisor

By Steve Davis, CERTIFIED FINANCIAL PLANNER ™


Ah, spring has sprung! The flowers and trees are budding, the birds are chirping and the loud, incessant drone of lawnmowers reverberates throughout the neighborhoods of Mansfield.

As a young teenager, I remember the great sense of satisfaction I experienced when my dad taught me how to cut the grass. I pulled the starter cord and got the lawnmower running all by myself. I pushed the mower in straight-lines in such a way that even Joe Mooney -- the long-time groundskeeper at Fenway -- would be proud. What joy and fun! That is, until dad asked me to cut the lawn the following week. Like most boys, I found cutting the lawn was fun the first time. But after that? Not so much. It became a terrible chore.

Today, I still cut my own grass. I have grown to like the activity. I enjoy being outside. I like walking around my yard. And I still get a sense of satisfaction when the job is done and the green carpet of grass looks nicely manicured. Some folks, however hate cutting the lawn and consequently hire someone to do it instead. Why? There are lots of good reasons:

• You’re too busy
• You don’t have the health, skills or tools
• You would prefer to spend your weekends doing something more fun


Interestingly, these are some of the very same reasons why people hire financial advisors. As a CERTIFIED FINANCIAL PLANNER™, I can confidently tell you that financial planning is not brain surgery or rocket science. In fact, I believe that most people are capable of managing their own money. The internet, TV and radio talk-shows offer no shortage of financial tools, calculators, research and education. But if you don’t have the time, interest or inclination to focus on your finances, you should seek professional help.

Here are three warning signs that it is time for you to hire a financial advisor:

1. Procrastination: You know you should fund your IRA, buy that additional life insurance, or open a 529 college plan, but you just never get around to it. Let’s face it, we all have too many other things to do, or at least that’s what we tell ourselves. If you know you should develop a retirement plan, but find yourself rearranging your sock drawer instead, it’s time to hire an advisor. Or, if your daughter is five and you’ve been telling yourself since the day she was born that you’ll open that college savings plan, it’s time. A good financial advisor will call you to make sure you don’t miss the IRA deadline, forget to send in your insurance paperwork, or fund your daughter’s college savings plan.

2. Disinterest: If the money section of your newspaper never gets read or if your eyes roll in the back of your head when the subject of the economy or finance comes up in conversation, then it’s probably time to get help. If you don’t know the difference between a Roth and a Traditional IRA, or if you think a 401k is a very long running race, it’s time. There is so much information floating around that if you’re really not interested in investments, insurance, taxation and the like, you’ll probably struggle educating yourself on these important matters. One of the great values of a financial advisor is having someone to tell you what you need to know.

3. Lack of Time: A famous Greek philosopher once said, “Time is the most valuable thing a man can spend”. (1)  Just like the golfer who prefers to hire a lawn company to cut his grass so he spend his time on the golf course each Saturday, some folks prefer to hire a financial advisor so that when they get home from work they can relax, spend time with their family and know that their finances aren’t being neglected. Many people know they could handle their own finances, but either can’t take the time, or don’t want to take the time to do so. If you’re struggling to balance work and family time and find that your financial and retirement goals are being ignored, it’s time to get help.


Don't Let Your Lawn (or Finances) Go to Seed

It’s one thing to let the lawn go and find it overgrown. It’s another thing all together to let your finances go and discover too late that your financial affairs have suffered as a result.



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This article was written by Steve Davis and appeared in the column "Talking with Davis about Money Matters" found at http://mansfield-ma.patch.com/articles/three-reasons-to-hire-a-financial-advisor 



The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.


(1) Theophrastus: “Father of Botany” and student of Aristotle.

Strapped for Cash?

By Steve Davis, CERTIFIED FINANCIAL PLANNER ™   


At some point in our lives, most of us have felt a little strapped for cash. Perhaps we suffered a job loss or unexpected medical expense. But maybe we just overspent and are afraid to admit how much we really owe on credit cards. Or possibly, we’ve decided it’s high time to replace the ‘89 Ford Aerostar that has 200,000 miles and probably just as many Cheerios stuck between the kid’s seat cushions.

The days of using our homes as a piggy bank to bail us out are all but over. Before approving home equity loans, lenders today require better credit scores, more home equity and higher income than they have in the past. So where are Americans turning to finance college, upgrade their kitchens and get the debt collectors off their backs? Their retirement plans.

Last month a survey released by Bankrate 1 shows that nearly one-fifth of full-time workers have dipped into their retirement accounts to cover a financial emergency in the past 12 months. According to the survey, 19 percent of Americans have either borrowed or withdrawn funds from their retirement savings.

Robbing Your Retirement: Early Withdrawal from your IRA or 401k plan

When times are tough, making early withdrawals from your retirement funds can seem like a quick source of cash. It is. But it can be an extremely expensive source of quick cash and should really only be considered in cases of emergency. Remember, we’re talking about your retirement plan, not your Aruba vacation plan! So before you withdraw money from your retirement account consider the following traps:

Withdrawal Trap 1:Taxes and Penalties. Money inside your deductible IRA or 401k plan has never been taxed. Your contributions were made with pre-tax dollars and you’ve never had to pay taxes on interest, capital gains or dividends either. But, once you take money out of the plan, it will be time to pay the piper. When you withdraw money, you’ll pay taxes based on your current tax bracket – and the withdrawal might even cause you to jump into a higher bracket. If you’re younger than 59 ½ and take a distribution, you may be subject to an additional tax of 10%. Here’s an example highlighting the consequences of withdrawal.

Withdrawal Trap 2: Less Money for Future Growth. Obviously, when you withdraw a dollar, you have one less dollar available at retirement. But more than this, that dollar is no longer earning interest so your account won’t have the opportunity to grow as quickly because your portfolio (and consequently your earnings) will be smaller. You can never replace the missed earning opportunities.

A Better Option: Borrow using a 401k Loan

Sometimes when you’re really strapped for cash and must get money from somewhere, a loan from your 401k plan can be a good idea because it’s a convenient and low-cost source for cash. In general, you can borrow one-half of your plan balance up to $50,000. You’ll have up to 5-years to pay it back and the interest you pay doesn’t go to a bank, but back into your own account. If you do take a loan from your 401k, don’t borrow more than you absolutely need, and be sure to repay the loan as quickly as possible because when you pay the money back over a short period of time, is usually has little impact on your saving progress.

401k Loan Trap: Risk of Termination. Know that if you leave your employer, most plans will require you to pay-off the loan within 60 days. And if you’re unable to do so, the entire outstanding balance will be seen as a withdrawal and you’ll be taxed and penalized, accordingly.


The Best Option: Create an Emergency Fund

Most experts agree that you should keep between three and six months worth of your living expenses set aside in an emergency fund. Not only will this help should you experience a sudden loss of income, but it will also ease the burden of smaller emergencies such as repairing the brakes on your car. If you currently don’t have one, make it a priority. Open a savings account at your bank and set up automatic deposits where you contribute an affordable amount each month. While this approach won’t help you if you’re strapped for cash now, it will give you peace of mind and provide a financial safety net for the future.


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This article was written by Steve Davis and appeared in the column "Talking with Davis about Money Matters" found at http://mansfield-ma.patch.com/articles/strapped-for-cash

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.


1 www.bankrate.com/finance/consumer-index/april-2011-retirement-savings


2 This example assumes all contributions to the account were tax deductible and contributions and earnings grew tax deferred. This example is for illustrative purposes only.

Guest Post: Subtle Signs and Signals

By Sara-Lynn Reynolds

During my kids' hectic teenage years, I often lost sight of my parents' "aging needs."

I wish I had been more available, more observant, more everything, but it just wasn’t possible, since they lived a fair distance from me. Beating yourself up over a lack of parental oversight isn’t productive, so I would like to share some aging signs and tips that might be of help.
Some of these signals may be noticeable to you, though if your parents do not live close, it might be important to contact a friend or two of theirs so that you stay abreast of a possible problem before a crises ensues. Being aware of any changes in the way your parents handle day-to-day chores can provide health clues.

Do you speak to your parents often and actually... (Read the rest of the article here)




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This article was written by Sara-Lynn Reynolds. Sara-Lynn is the Community and Education Liason for Home Instead Senior Care in Attleboro, MA.  For more ideas on starting this type of conversation with your folks, check out this video.
Sara-Lynn is not endorsed by or affiliated with LPL Financial.