Imagine you’re a skilled health professional, well-versed in the intricacies of patient care, yet finding yourself a bit overwhelmed by the complexities of managing personal finances. Navigating your financial health, much like treating a patient, requires a detailed understanding of the problem, a strategic approach, and ongoing adjustments to ensure the best outcomes. In this case, understanding your debt structure is like having a detailed medical chart – it's crucial for diagnosing the situation and planning the right course of action. In this journey towards financial stability, you’ll encounter different types of debt: mortgages, student loans, and credit card debt, each playing a vital role in shaping your financial well-being. So, how do you effectively manage these financial obligations? Let's delve into some practical strategies crafted to help you manage debt and achieve financial freedom, much like following a well-planned treatment protocol.

Assessing Your Debt Structure: The Initial Diagnosis

Just as you would assess a patient's overall health before deciding on a treatment plan, begin by taking stock of your current debt scenario. Your debt structure comprises various financial obligations such as mortgages, car payments, student loans, and credit card debt. List them all out, noting the interest rates and repayment terms for each. This assessment is your diagnostic tool, akin to a comprehensive medical chart that guides the formulation of a treatment plan. By understanding the specifics of your debt – the interest rates, repayment terms, and total amounts owed – you can craft a strategic debt management plan tailored to your situation.

Prioritize Your Financial Goals: Setting Treatment Priorities

Think of your financial goals as treatment priorities. Just as in medicine, where certain conditions must be addressed before others, your financial goals should be prioritized. Establish clear objectives – whether it’s building an emergency fund, saving for retirement, or funding your children’s education. These goals will direct your debt repayment efforts and wealth accumulation strategies. Aligning your debt management with these priorities ensures you stay focused and motivated, much like following a treatment plan designed to address the most critical health issues first.

“Once your financial priorities are funded, you can use the remaining income for discretionary spending, similar to how you might manage a patient’s treatment around essential and non-essential interventions.”

— Ivan havrylyan

Creating a Budgetary Blueprint: Your Financial Treatment Plan

A well-defined budget is like a detailed treatment plan, guiding your financial decisions and ensuring you allocate resources efficiently. Adopt a top-down approach to budgeting, where you first allocate funds toward your financial priorities.

For example, if your goal is to save $30,000 annually for retirement and emergency funds, earmark a specific amount each month towards these objectives. Once your financial priorities are funded, you can use the remaining income for discretionary spending, similar to how you might manage a patient’s treatment around essential and non-essential interventions.

Tracking Your Progress: Regular Check-Ups

Consistent monitoring is crucial in both medicine and finance. Regularly review your budget, spending patterns, and debt repayment milestones. This is akin to scheduling regular check-ups to ensure the treatment is working and to make necessary adjustments. By tracking your financial progress, you can identify deviations from your plan early and take corrective action. This proactive approach helps you stay on course toward your financial goals, much like adjusting a treatment plan based on patient response.

Addressing Roadblocks and Challenges: Overcoming Financial Ailments

Just as patients may encounter complications, you may face financial roadblocks. These could be unexpected expenses, fluctuating interest rates, or lifestyle creep. It’s essential to anticipate and address these hurdles proactively.

Evaluate your spending habits, identify areas where you can cut back, and reassess your financial priorities if necessary. Adopting a flexible approach, much like adjusting a treatment protocol to better suit a patient’s changing needs, will help you overcome obstacles and stay on track towards your goals.

Seeking Professional Guidance: Consulting Financial Specialists

Navigating debt management can be daunting, much like diagnosing a complex medical condition. Seeking guidance from financial professionals – be it a financial planner, debt counselor, or investment advisor – can provide you with the expertise and personalized advice you need. Just as you would consult a specialist for a complicated health issue, leveraging professional expertise can streamline your journey towards financial stability. They can offer tailored solutions and strategies to manage your debt effectively, ensuring you’re making informed decisions.

“Remember, the path to financial freedom begins with informed decision-making and disciplined financial habits. ”

— ivan havrylyan

Conclusion: Achieving Financial Wellness

Mastering debt management is essential for financial success, empowering you to take control of your financial future and achieve lasting prosperity. By assessing your debt structure, prioritizing your financial goals, creating a budgetary blueprint, tracking your progress, addressing challenges, and seeking professional guidance, you can navigate through the complexities of debt management with confidence. Remember, the path to financial freedom begins with informed decision-making and disciplined financial habits. Start your journey today with the financial guidance of Outside The Box Financial Planning, much like a well-planned treatment regimen, and pave the way towards a brighter financial future.

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Partnering with Outside The Box Financial Planning (OTBFP) offers numerous benefits for individuals seeking college planning, retirement planning, small business support, wealth management, and beyond.  As a fee-only fiduciary with a comprehensive approach, unbiased advice,  and transparent fee structure, OTBFP acts as a trusted advisor who prioritizes your best interests. Click here to schedule a complimentary “Fit” meeting to determine if we would make a good mutual fit.

Remember, financial decisions have long-lasting implications, and working with a professional like the financial professionals of Outside The Box Financial Planning can provide the expertise and guidance necessary to make informed choices that align with your financial aspirations.

In the grand scheme of personal finance, your 401(k) is like a hidden treasure chest waiting to be discovered. It's not just a retirement account; it's your key to financial freedom and security. While you may have heard the term "401(k)" thrown around in conversations about the future, have you ever really dug deep to understand what it's all about?

Let’s unravel the mysteries of the 401(k) mysteries and unveil the top five things you need to know to make the most of this powerful tool. Whether you're a nurse at Advocate Lutheran General Hospital looking to maximize your 401k contributions or a seasoned professional nearing retirement looking for tax-efficient savings strategies, understanding your 401(k) is the roadmap to a more secure and prosperous retirement.

First, let's clarify what a 401(k) is. Simply put, a 401(k) is a tax-advantaged retirement account offered by many employers, allowing you to set aside a portion of your income for the golden years.

1. Types of 401(k) Plans and Their Tax Benefits:

There are two basic types of 401(k) plans that exist: a Traditional 401(k) and a Roth 401(k). These two options have different tax implications - that impact you both now and in the future. Both have their advantages and disadvantages. Whether you choose a traditional 401(k) or Roth 401(k) plan, both have annual contribution limits that are set by the IRS. For 2023, the limit is $22,500 for individuals under 50, with an additional $7,500 catch-up contribution allowed for those 50 and older. 

With a Traditional 401(k), your contributions are made from pre-tax income and lower your current year’s taxable income, potentially even putting you in a lower tax bracket, thereby saving you money. This reduces your taxes today and allows your 401k to grow without worrying about paying the taxes as you go. However, when you withdraw the money in retirement, you will be taxed on a larger total sum of money as you take distributions, assuming your investments have performed well.

In contrast, a Roth 401(k) is funded with after-tax income, meaning you won't get a tax break today, but your withdrawals in retirement are tax-free.

The choice between the two depends on your current and future financial situation and tax expectations. Because of the trade-offs between these two options, it’s crucial to analyze your own personal situation to determine which will be optimal for you. If you’re having trouble calculating which is best for you, you should consult a Certified Financial Planner, like Outside the Box Financial Planning, to help you understand how to maximize your retirement accounts.

2. Matching Contributions from your Employer:

Many employers offer a valuable benefit – the 401(k) match. This means that your employer contributes a certain percentage, usually 3%, of your total salary to your 401(k) account. Some employers may offer more than 3%, which can be a huge perk since that obviously means more money will be matched to your contributions.

It's essentially “free money” contributions made to your retirement savings account that you’ll want to make sure you do not miss out on. Make sure you fully understand your employer's matching policy and strive to contribute at least the same percentage that your employer offers to maximize their match. It's one of the easiest ways to boost your retirement savings.

3. An Automated Savings Mechanism:

By its very nature, a 401(k) is an automated savings mechanism, and its power lies in its seamless, set-it-and-forget-it approach. It’s deducted from your salary before it ever reaches your bank account, making it easy and hassle-free. It's deducted automatically from your paycheck before you ever have a chance to spend it!

This is a lifesaver for many people, as it helps them establish good savings habits. The automated nature of this savings mechanism simplifies your journey toward a comfortable retirement, making it easy to save and invest for the future, even with a busy life. So, embrace your 401(k) as your diligent financial partner, and let it work its magic in the background, growing your wealth while you focus on the present. Your future self will thank you for it.

4. Investment Options:

Your 401(k) typically offers a menu of 20 or so investment options, typically in the form of mutual funds, exchange-traded funds (ETFs), and other investment vehicles. Most of these are the standard options that have to be suitable for all of the participants but, as a result, may not be optimal for you. This is why working with a finance professional to build a comprehensive investment strategy incorporating all your accounts and using strategies to mitigate the 401k limited options risk is essential to a sound investment portfolio.

At Outside The Box Financial Planning, we offer Comprehensive Financial Planning and Wealth Management services and work closely with our clients to coordinate all of their investments, custom tailoring their portfolios to meet their retirement goals and objectives.

5. Early Withdrawal Penalties, Vesting and Leaving Your Job:

While your 401(k) is designed for retirement savings, emergencies can sometimes lead to you needing to withdraw some of the funds in your 401k prior to retirement. However, early withdrawals before the age of 59½ are fully taxable and subject to an additional 10% early withdrawal penalty. There are some exceptions to te rule; however, understanding the rules and potential consequences is vital to making an informed financial decision.

If you change jobs or retire, you may have an option of either keeping your 401k with your former employer or transferring it either to your new employer or into an Individual Retirement Account (IRA). Each option can have its own advantages and disadvantages.

Vesting is a critical concept in 401(k) plans. It refers to your ownership of employer-contributed funds over time. If you leave your job before you're fully vested, you may forfeit a portion of your employer's contributions. Each 401k plan has its own vesting schedule; understanding yours is crucial to making sure you don’t forfeit any contributions. When switching jobs, it may be a good idea to review your vesting schedule to make sure you make the right decision.

In conclusion, your 401(k) is an invaluable tool for securing your financial future. Understanding its ins and outs is crucial for making the most of this retirement savings vehicle. From the automated savings mechanism it offers to the nuances of contribution limits, tax implications, and the impact of legislation like the SECURE Act 2.0, there are numerous factors to consider.

Working with a fee-only, Certified Financial Planner can result in personalized guidance and custom-tailored financial plan to your unique goals.

Your 401(k) is a significant part of your financial picture, and making informed decisions about it will set you up for a comfortable and prosperous retirement. Remember, your future self will thank you for the diligence and care you put into understanding and managing your 401(k).

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Partnering with Outside The Box Financial Planning offers numerous benefits for individuals seeking college planning, retirement planning, small business support, wealth management, and beyond.  As a fee-only fiduciary with a comprehensive approach, unbiased advice, and transparent fee structure, OTBFP acts as a trusted advisor who prioritizes your best interests. Click here to schedule a complimentary “Fit” meeting to determine if we would make a good mutual fit.

Remember, financial decisions have long-lasting implications, and working with a professional can provide the expertise and guidance necessary to make informed choices that align with your financial aspirations. However, if you would like to take a shot at building a financial plan on your own, we offer our financial planning software, RightCapital, free of charge. Click here to get started.

Markets Have Rotten Third Quarter

Global equity markets had a rotten third quarter – especially the smaller-cap and tech names. And the month of September was especially difficult, as volatility increased, oil jumped and the S&P 500 closed out September with 4 consecutive losing weeks.

For the third quarter of 2023:

• The DJIA retreated 2.6%;

• The S&P 500 lost 3.7%;

• NASDAQ declined 4.3%; and

• The Russell 2000 dropped 5.9%.

While there was not a lot to celebrate when the third quarter closed, investors are still somewhat encouraged by the YTD numbers as the major equity markets are still in positive territory, albeit barely for the smaller-caps and the mega-caps as:

• The DJIA up 1.1% YTD%;

• The S&P 500 up 11.7% YTD;

• NASDAQ up 26.3% YTD; and

• The Russell 2000 up 1.4% YTD.

The themes that drove market performance in the third quarter continued to center around inflation, the Fed, the housing market, and the labor market, as recent numbers suggested that inflation is easing as the Fed paused its rate-hiking trend (at least for now). There was also a lot of encouraging economic data received this quarter as well, including hopeful GDP numbers and consumer sentiment levels.

Further, we saw that:

• Volatility, as measured by the VIX, trended up this quarter, beginning the quarter at 13.5 and ending at 17.5, with most of the increase beginning at the end of September.

• West Texas Intermediate crude trended up significantly for the third quarter, jumping over $20/barrel from about $70 to over $90, peaking at $93.68/barrel and stoking inflation.

Market Performance Around the World

Investors were unhappy with the quarterly performance around the world too, as all 36 developed markets tracked by MSCI were negative for the third quarter of 2023, with 18 losing more than 6%. And for the 40 developing markets tracked by MSCI, only 4 of those were positive, with a great many losing more than 5%.

Sector Performance Rotated in 3Q2023

The overall performance for sector performance for the third quarter was poor. In fact, only two sectors advanced as the other 9 sectors declined markedly. Contrast that with the overall performance for sector performance for the second quarter of 2023, which was very good, as 9 of the 11 sectors advanced, with 3 jumping more than 15% .

And interestingly, with the exception of the Energy sector, the other 10 sectors saw relative performance decline from the second quarter to the third quarter, with a few sizable declines – like Information Technology going from +20% to -6% in just a quarter.

Here are the sector returns for the third and second quarters of 2023:

Reviewing the sector returns for just the 3rd quarter of 2023, we saw that:

• 9 of the 11 sectors were painted red, with the Energy sector making a big leap, driven by rising oil prices;

• The defensive-sectors (think Utilities and Real Estate) really struggled during the quarter;

• Information Technology saw an especially huge swing and half of the sectors lost more than 5%; and

• The differences between the best (+12%) performing and worst (-9%) performing sectors in the first quarter was massive.

2Q2023 GDP Up 2.1%

The Bureau of Economic Analysis Real reported that Gross Domestic Product increased at an annual rate of 2.1% in the second quarter of 2023. In the first quarter, real GDP increased 2.2%.

“The increase in real GDP reflected increases in nonresidential fixed investment, consumer spending, and state and local government spending that were partly offset by a decrease in exports. Imports decreased.

Compared to the first quarter, the deceleration in real GDP in the second quarter primarily reflected a deceleration in consumer spending, a downturn in exports, and a deceleration in federal government spending that were partly offset by an upturn in private inventory investment, an acceleration in nonresidential fixed investment, and a smaller decrease in residential investment. Imports turned down.”

Fed Holds Rates Steady – For Now

Wall Street and Main Street toggled between hope that the Fed might be done with its rate-hiking and worry from the Fed’s recent and very hawkish comments from its last meeting. And as expected, the big news on the quarter was that the Fed decided to leave its fed funds rate (its short-term lending benchmark) at a target range of 5.25% to 5.50%, the same level established at its July meeting.

But confounding Wall Street was the Fed’s updated Summary of Economic Predictions where another rate hike this year was very much on the table. In addition, the Fed surprised many with an outlook for rates next year that were notably higher than expected as were their 2025 rate predictions.

Inflation Still High

The Consumer Price Index for All Urban Consumers rose 0.6% in August on a seasonally adjusted basis, after increasing 0.2% in July, the U.S. Bureau of Labor Statistics reported. Over the last 12 months, the all items index increased 3.7% before seasonal adjustment.

• The index for gasoline was the largest contributor to the monthly all items increase, accounting for over half of the increase.

• Also contributing to the August monthly increase was continued advancement in the shelter index, which rose for the 40th consecutive month.

• The energy index rose 5.6% in August as all the major energy component indexes increased.

• The food index increased 0.2% in August, as it did in July.

• The index for food at home increased 0.2% over the month while the index for food away from home rose 0.3% in August.

• The index for all items less food and energy rose 0.3% in August, following a 0.2% increase in July.

• Indexes which increased in August include rent, owners’ equivalent rent, motor vehicle insurance, medical care, and personal care.

• The indexes for lodging away from home, used cars and trucks, and recreation were among those that decreased over the month.

• The all items index increased 3.7% for the 12 months ending August, a larger increase than the 3.2% increase for the 12 months ending in July.

• The all items less food and energy index rose 4.3% over the last 12 months.

The energy index decreased 3.6% for the 12 months ending August, and the food index increased 4.3% over the last year.

Consumer Confidence Declines Again

The Conference Board Consumer Confidence Index declined again in September to 103.0 (1985=100), down from an upwardly revised 108.7 in August. In addition:

• The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – rose slightly to 147.1 (1985=100) from 146.7.

• The Expectations Index – based on consumers’ short-term outlook for income, business, and labor market conditions – declined to 73.7 (1985=100) in September, after falling to 83.3 in August.

• Expectations fell back below 80 – the level that historically signals a recession within the next year. Consumer fears of an impending recession also ticked back up, consistent with the short and shallow economic contraction we anticipate for the first half of 2024.

“Consumer confidence fell again in September 2023, marking two consecutive months of decline. September’s disappointing headline number reflected another decline in the Expectations Index, as the Present Situation Index was little changed. Write-in responses showed that consumers continued to be preoccupied with rising prices in general, and for groceries and gasoline in particular. Consumers also expressed concerns about the political situation and higher interest rates. The decline in consumer confidence was evident across all age groups, and notably among consumers with household incomes of $50,000 or more.”

Assessment of Family’s Current Finances

Consumers’ assessment of their Family’s Current Financial Situation turned more negative in September.

Existing Home Sales Drop

“NAR released a summary of existing-home sales data showing that housing market activity this August declined 0.7% from July 2023. August’s existing-home sales reached a 4.04 million seasonally adjusted annual rate. August’s sales of existing homes weakened by 15.3% from August 2022.

The national median existing-home price for all housing types reached $407,100 in August, up 3.9% from a year ago.

Regionally, all four regions showed price growth from a year ago in August. The Midwest had the most significant gain of 6.8%, followed by the Northeast with an increase of 5.8%. The South increased 3.2%, while the West region rose 1.0%.

August’s inventory of unsold listings as of the end of the month was down 0.9% from last month, standing at 1,100,000 homes for sale. Compared with August of 2022, inventory levels were down 14.1%. It will take 3.3 months to move the current inventory level at the current sales pace, well below the desired pace of 6 months. Inventory conditions continue to be a challenge for potential home buyers.  

It takes approximately 20 days for a home to go from listing to a contract in the current housing market. A year ago, it took 16 days.

From a year ago, all four regions had double-digit declines in sales in August. The Northeast had the most significant dip of 22.6%, followed by the Midwest, which fell 16.4%. The West decreased 15.7%, followed by the South, down 12.4%.   

Compared to July 2023, two of the four regions showed declines in sales. Only the Midwest had an incline of 1.0%. The West region had the biggest drop in sales of 2.6%, followed by the South with a dip of 1.1%. The Northeast region was flat from last month.  

The South led all regions in percentage of national sales, accounting for 45.5% of the total, while the

In August, single-family sales decreased 1.4%, and condominium sales were down 4.8% compared to last month. Single-family home sales were down 15.3%, while condominium sales fell 15.4% compared to a year ago. The median sales price of single-family homes rose 3.7% to $413,500 from August 2022, while the median sales price of condominiums increased by 6.2% to $333,900.”

Builder Confidence Wanes

This is on the heels of the National Association of Home Builders reporting that: “builder confidence in the market for newly built single-family homes in September fell five points to 45, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index. This follows a six-point drop in August.

From the NAHB release: “As mortgage rates stayed above 7% over the last month, more builders are reducing home prices again to bolster sales. In September, 32% of builders reported cutting home prices, compared to 25% in August. That’s the largest share of builders cutting prices since December 2022 (35%). The average price discount remains at 6%. Meanwhile, 59% of builders provided sales incentives of all forms in September, more than any month since April 2023.”

Durable Goods Orders Up

New Orders New orders for manufactured durable goods in August, up five of the last six months, increased $0.5 billion or 0.2 percent to $284.7 billion, the U.S. Census Bureau announced. This followed a 5.6 percent July decrease.

• Excluding transportation, new orders increased 0.4 percent.

• Excluding defense, new orders decreased 0.7 percent.

• Machinery, up four of the last five months, led the increase, $0.2 billion or 0.5 percent to $37.8 billion.

Investor Confidence Index Inches Up

State Street Global Markets released the results of the State Street Investor Confidence Index for September 2023.

“The Global Investor Confidence Index increased to 108.7, up 0.9 points from August’s revised reading of 107.8. The increase in Investor confidence was driven by a 11.0 point jump in Asian ICI to 112.6, and, to a lesser extent, a 0.8 point rise in North American ICI to 104.7. European ICI, meanwhile, declined 6.2 points to 97.5.”

Sources: conference-board.org; nar.realtor; census.gov; bls.gov; nahb.org; statestreet.com; msci.com;  fidelity.com;  nasdaq.com; wsj.com; morningstar.com; census.gov

Copyright © 2023 Financial Media Exchange LLC. All rights reserved.

Distributed by Financial Media Exchange.

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In today's fast-paced world, where financial stability and security are paramount, your job isn't just a source of income; it's a treasure chest filled with valuable benefits waiting to be discovered. 

Of course the main thing we all look for in a job is a good salary, but a salary with minimal benefits is not worth too much when you consider the additional costs you’ll have for things like health insurance, life insurance, retirement, etc. Those costs will really start to add up, and your salary doesn’t stretch as far as you’d hope. That’s why it’s imperative to choose an employer that can offer benefits that help to save you money in the long run. 

As you navigate the intricacies of your career, it's essential to understand and harness the top five benefits commonly offered by your employer: health insurance, 401k plans, life insurance, flexible spending accounts (FSA) and health savings accounts (HSA), and miscellaneous perks like commute reimbursement and education funding. 

These benefits can be your secret weapons for a more secure and prosperous future. Join us on a journey to uncover the hidden gems in your employment package and discover why collaborating with a certified financial planner is the key to unlocking their full potential.

1. Comparing and Contrasting Health Benefits

When it comes to health insurance, vision, and dental insurance, the choices you make can significantly impact your financial well-being. Comparing and contrasting health insurance plans offered by your employer and your spouse's employer is a smart first step. 

Take a closer look at the coverage, premiums and deductibles, and out-of-pocket expenses. When deciding which plan to choose, consider factors like the size of the network, the quality of care provided, whether an HMO or PPO plan is offered, and any additional perks or wellness programs. Not to mention, you always want to consider how much of the premiums are covered by the employer. In some cases, it might be more advantageous to choose one employer's plan over the other, or you may find that combining coverage from both plans offers the best solution for your family's needs. 

Alternatively, if you are single and don’t have any dependents and your employer offers several health insurance plans to choose from, it's a good idea to weigh all the options before making your selection final. Remember, your health insurance isn't just about medical expenses; it's a vital financial tool that can safeguard your savings in times of need.

2. 401k: What it is and Why You Should Have One

Your 401k plan is the cornerstone of your retirement strategy, and understanding how it works can make a world of difference. Aside from working with a Certified Financial Planner, like Outside The Box Financial Planning where we offer Comprehensive Retirement Planning, it is crucial to understand and take advantage of the retirement benefits that are offered by your employer. 

One of the most significant advantages offered by employers is company matching. When your employer matches your contributions, it's like getting free money for your retirement. It's essential to contribute enough to maximize this benefit. 

Additionally, you'll need to decide between a Roth 401k and a traditional 401k. The key difference lies in when you pay taxes: Roth contributions are made with after-tax dollars, while traditional contributions are made with pre-tax dollars. Your financial planner can help you weigh the tax implications and make an informed decision that aligns with your long-term goals. Building your nest egg has never been more accessible.

3. Life Insurance: A Safety Net That Saves You Money

Life insurance is often overlooked as an employee benefit, but it can provide significant value. Many employers offer group life insurance policies, which can be more cost-effective than purchasing a policy on your own. 

While the coverage amount may be modest, it can be a crucial safety net for your loved ones, offering 2x your yearly salary, or even more. Even if you already have a personal life insurance policy, the employer-sponsored one can serve as an additional layer of protection. 

The premiums for group policies are typically lower, and some plans allow you to take the coverage with you if you leave the company. It's a financial win-win that shouldn't be missed.

4. FSA vs. HSA: The Power of Tax-Advantaged Savings

Flexible spending accounts (FSA) and health savings accounts (HSA) are powerful tools for managing healthcare expenses and saving on taxes. FSAs allow you to set aside pre-tax dollars to cover eligible medical expenses, reducing your taxable income. However, the funds are usually "use it or lose it" at the end of the year. 

In contrast, HSAs offer a triple tax advantage—contributions are pre-tax, earnings grow tax-free, and withdrawals for qualified medical expenses are tax-free. HSAs also roll over from year to year, making them an attractive long-term savings option. Your financial planner can help you assess your healthcare needs and determine which account aligns best with your financial goals. To better understand how to take advantage of your HSA benefits, check out this blog post!

5. The Miscellaneous Employee Benefits

Beyond the core benefits, many employers offer miscellaneous perks that can have a significant impact on your financial well-being. Reimbursing any expenses incurred for your commute to work, for instance, can help you save on transportation costs, reduce your taxable income, and contribute to a more sustainable lifestyle if you opt for public transportation, like taking the train to work. 

Another benefit that some employers offer that can be a huge perk - funding further education, whether through tuition assistance or professional development programs. This can open doors to career advancement and increased earning potential. 

These benefits are more than just workplace conveniences—they are financial opportunities that can boost your overall quality of life. These are benefits that you should absolutely take advantage of, whether or not you are planning on going back to school for another degree, or simply if you want to learn more about the field that you’re in - one is never done learning! 

The Power of Partnership: Your Certified Financial Planner

In conclusion, your employee benefits package is a goldmine of opportunities waiting to be explored. Maximizing these benefits requires a comprehensive understanding of your options and a strategic approach to align them with your financial goals. 

This is where a certified financial planner becomes your greatest ally. With their expertise, you can make informed decisions about health insurance, optimize your 401k contributions, leverage life insurance policies, navigate the complexities of FSAs and HSAs, and harness the full potential of miscellaneous benefits. 

Together, you can unlock the hidden value of your employment package and build a more secure and prosperous future. Don't leave your financial success to chance—partner with a certified financial planner today and embark on a journey to financial wellness and peace of mind. Your future self will thank you for it.

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Partnering with Outside The Box Financial Planning offers numerous benefits for individuals seeking college planning, retirement planning, small business support, wealth management, and beyond.  As a fee-only fiduciary with a comprehensive approach, unbiased advice, and transparent fee structure, OTBFP acts as a trusted advisor who prioritizes your best interests. Click here to schedule a complimentary “Fit” meeting to determine if we would make a good mutual fit.

Remember, financial decisions have long-lasting implications, and working with a professional can provide the expertise and guidance necessary to make informed choices that align with your financial aspirations. However, if you would like to take a shot at building a financial plan on your own, we offer our financial planning software, RightCapital, free of charge. Click here to get started.

The rising costs of college tuition have become a major concern for students and their families over the past few decades. Since 1980, tuition fees have skyrocketed, increasing by about 153% over the last 40 years to attend a four-year college. This almost makes it a necessity for families to explore alternative ways to pay for higher education. Unlike in 1980, when one may have been able to pay for college just by working and setting aside some money to pay for their education, these days, it's rarely that simple. 

In our last blog post, The Soaring Costs of College Education, we talked about the rising costs of college overall, why it is happening, and some ways to minimize those costs. In this blog post, we'll delve into various strategies for financing college tuition and expenses while minimizing the burden of student loans. While student loans can be a valuable resource, minimizing their impact on your financial future is crucial. 

From government assistance programs to personal savings and investments, let's go through the many options available to help you make informed choices.

Exploring Different Ways to Save and Pay for College

The good news is there are a lot of resources out there that can help alleviate the financial burden of paying college tuition and all of the other expenses that are bound to come with it. Government assistance programs play a pivotal role in financing education. There are several Federally backed programs that help support students and families, and based on the state you live in, you may also have access to some state-specific funding. 

State-specific programs often cater to more local needs and may provide unique benefits. Federal programs, on the other hand, offer broader, more standardized assistance options that are accessible nationwide. Illinois residents, for example, can rely on the Illinois Student Assistance Commission (ISAC) as a valuable resource (https://www.isac.org/).

Here are some of the various programs and resources that can help you, whether you are a new parent planning for your child's future, a parent of college-aged children, or a prospective student looking to further your education. These can help to alleviate some financial stress during the school years that already tend to be quite stressful. 

529 Savings Plan

A 529 Savings Plan is a state-sponsored tax-advantaged savings account designed specifically for education expenses. These plans offer various investment options, and withdrawals for qualified education expenses are tax-free. Consult with your Certified Financial Planner at Outside the Box Financial Planning on how to get your 529 Account started. 

Scholarships

Scholarships for college offer crucial relief from financial stress for students and their families. These awards, based on merit, need, or specific criteria, provide funding that doesn't require repayment, distinguishing them from loans. 

By covering tuition, fees, or even some living expenses, scholarships ease the financial burden and allow students to focus on their education without accumulating debt. They make higher education accessible to a wider range of individuals, leveling the playing field and fostering inclusivity. Scholarships are available from various sources, including colleges, universities, private organizations, corporations, community groups, federal agencies, and foundations.

Grants & Work Study

Grants, often based on financial need or specific areas of study, provide students with financial assistance that doesn't require repayment, effectively reducing the overall cost of education. 

Work-study programs allow students to earn money while attending college, helping them cover living expenses and reducing reliance on loans. These programs not only make higher education more affordable but also promote valuable work experience, time management skills, and a sense of financial independence. 

Financial Aid/FAFSA

The Free Application for Federal Student Aid (FAFSA) is a crucial tool for accessing federal financial aid, including grants, work-study, and federal student loans. FAFSA serves as a gateway to various federal, state, and institutional aid opportunities. 

By evaluating your family's financial circumstances, it determines your eligibility for grants, work-study programs, and federal student loans. This aid not only assists in covering tuition and related expenses but also offers flexible repayment options. FAFSA and financial aid reduce the financial burden on students and their families, making higher education more accessible and affordable while paving the way for future success.

Some forms of FAFSA Aid, like subsidized and unsubsidized loans, will need to be paid back, while FAFSA in the form of grants and scholarships do not need to be repaid.

Federal Student Loans

Federal student loans offer competitive interest rates, favorable terms, and flexible repayment options. Subsidized loans, in particular, stand out as they don't accrue interest while students are in school. 

Unsubsidized loans, though they do accrue interest, still come with lower rates compared to private loans. Federal student loans can bridge the financial gap, covering tuition, fees, and living expenses, allowing students to pursue their education without immediate financial strain. Their borrower-friendly features ease the burden and enable countless individuals to invest in their future through higher education.

Personal and Private Funding 

We’ve established that there are a multitude of resources available to help pay for college, but it is still important to think about and plan for the remainder of the bill that these scholarships, loans, etc., might not cover.

Even if your student is one of the talented and lucky few who gets a full-ride scholarship, there are still likely going to be some expenses left over. Think meal plans, transportation or commuting, school supplies, and more. Let’s go through some of the ways that you can fund your college savings with your own income and savvy investments.

Personal Income, Savings, and Investments

Personal income and savings can significantly contribute to college expenses. By diligently saving and budgeting, students and their families can accumulate resources to cover tuition, textbooks, and living expenses. 

You can work with a Certified Financial Planner to create a comprehensive savings plan and start planning for your children’s future. This proactive approach reduces reliance on loans and minimizes the long-term financial burden. Harnessing personal income and savings empowers individuals to take control of their financial future, making higher education more attainable and manageable.

Investments

Strategic investments can yield returns that assist with college costs. Consult a financial advisor, like Outside The Box Financial Planning, to explore investment opportunities tailored to your personal goals.

Private Student Loans

Private student loans can be an option for bridging the financial gap, but they typically come with higher interest rates and fewer benefits than federal loans. However, they offer flexibility in terms of loan amounts and repayment plans, allowing students to customize their borrowing to their needs. 

Conclusion

In an era of soaring tuition costs, finding the right mix of funding sources is crucial. By leveraging government assistance programs, smart savings strategies, and investments, you can minimize the reliance on student loans and pave a smoother path toward higher education.

Remember that planning ahead and seeking expert guidance can make all the difference in securing your child's future without the crushing burden of debt. Collaborating with a certified financial planner can help you create a customized savings plan that aligns with your financial goals and ensures a secure future for your children's education.

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Partnering with Outside The Box Financial Planning offers numerous benefits for individuals seeking college planning, retirement planning, small business support, wealth management, and beyond.  As a fee-only fiduciary with a comprehensive approach, unbiased advice, and transparent fee structure, OTBFP acts as a trusted advisor who prioritizes your best interests. Click here to schedule a complimentary “Fit” meeting to determine if we would make a good mutual fit.

Remember, financial decisions have long-lasting implications, and working with a professional can provide the expertise and guidance necessary to make informed choices that align with your financial aspirations. However, if you would like to take a shot at building a financial plan on your own, we offer our financial planning software, RightCapital, free of charge. Click here to get started.

In recent decades, the cost of college education in the United States has been on an upward trajectory that shows no signs of slowing down. From 1970 to the present day, the increase in college expenses has been nothing short of shocking. 

Let's dive into the details of this concerning trend and explore the factors driving the rising costs of college tuition.

The Alarming Escalation of College Costs

The numbers are startling: according to data from the National Center for Education Statistics, the average cost of tuition, fees, and room and board for a four-year institution in 1970 was roughly $9,500 (adjusted for inflation). Fast forward to today, and the cost of a student living on campus at a four-year in-state university has ballooned to an average of over $26,000. 

When you consider private or out-of-state institutions, the disparity is even more shocking, with average costs skyrocketing from around $13,000 in 1970 to approximately $50,000 today.

Decoding the Factors Behind the Surge

Several factors contribute to the escalating costs of college education:

1. Administrative Bloat: Over the years, universities have expanded their administrative departments, leading to a substantial increase in non-teaching staff. This has driven up overhead expenses, which are ultimately borne by students through higher tuition fees.

2. Inflation in Salaries and Benefits: Faculty and staff salaries, along with employee benefits, have risen steadily. While the aim is to attract top talent, these escalating costs have a direct impact on tuition fees.

3. Technological Advancements: While technology can enhance the learning experience, integrating and maintaining cutting-edge tools and systems can be expensive. Institutions often pass these costs onto students.

4. Decreased State Funding: Many state governments have reduced funding for higher education, forcing colleges to rely more heavily on tuition as a primary revenue source.

5. Infrastructure Investments: Expanding and maintaining campus infrastructure, including state-of-the-art facilities and amenities, requires substantial investment, which contributes to the overall cost.

6. Regulatory Compliance: Compliance with federal regulations, especially in areas such as financial aid administration and campus security, demands additional resources that can drive up costs.

7. Rising Demand for Services: Student services such as career counseling, mental health support, and extracurricular activities have expanded significantly. While valuable, these services can strain institutional budgets.

Understanding All the Costs

It is obvious that attending college most often comes with a hefty price tag for tuition, but sometimes when planning for college, we often forget about or overlook all the other costs that are associated with pursuing higher education. It’s always a good idea to know what to expect before even starting a college fund or figuring out where to start with saving for college. Let's dive into the multifaceted landscape of college expenses to understand the various potential costs you might encounter along the way and figure out the best ways to save up for these future expense.

• Tuition And Fees: Tuition and fees form the cornerstone of college expenses. These costs encompass the instructional resources, faculty expertise, and the infrastructure provided by the institution. Tuition can vary significantly depending on whether you choose a public or private institution, as well as whether you're an in-state or out-of-state student. Fees often cover services such as technology, health, and recreational facilities.

• Room and Board: If you're living on campus, room and board expenses come into play. These costs encapsulate the price of accommodation, including dormitory or apartment-style living, as well as meal plans. Room and board expenses can vary depending on the type of housing you choose and the meal plan you opt for. Of course, there is always the option of commuting from home if possible, which would save

• Textbooks and Supplies: Outside of tuition and living expenses, textbooks and school supplies are obvious essentials that could be a huge expense. It’s no secret that textbooks are wildly expensive, and while there isn’t really any way to avoid these costs, there are ways to reduce them. Instead of buying brand new text books for each class, it is wise to explore the options of used textbooks, e-books, or rentals as cost-saving alternatives that could potentially save thousands of dollars of the course of 4 years.

• Transportation: Transportation costs cover your travel to and from campus, whether you're commuting from home or navigating around the campus itself. These expenses may include gas, parking permits, public transportation fees, or even the cost of maintaining a vehicle.

• Personal Costs/Comforts & Necessities: Personal expenses encompass a wide range of costs, including day-to-day necessities like toiletries, clothing, and personal care items. It's also worth considering entertainment, social activities, and maintaining a healthy work-life balance to give students a break from their schoolwork.

• Health Insurance: Many colleges require students to have health insurance, either through a school-sponsored plan or your existing family coverage. This ensures that you have access to medical services and protects you from unexpected medical bills. Sometimes this cost is included in the tuition and fees, but if your student is already covered with a pre-existing insurance plan, then this fee can be waived, helping you to avoid paying twice for healthcare.

• Technology & Connectivity: In today's digital age, technology and connectivity are integral to the learning experience. Not to mention, many classes require homework assignments to me completed and submitted through online programs, and can’t forget about papers and essays that will need to be typed up. Costs associated with laptops, software, and high-speed internet are essential investments for staying engaged in coursework and research.

• Extracurricular Activities: Participating in extracurricular activities, clubs, and organizations like fraternities or sororities can enhance your college experience. However, these activities often come with membership fees and dues, event costs, and expenses for uniforms or equipment.

• Thinking ahead… Loan Interest & Repayment: While not a direct cost during your college years, the repayment of student loans comes into play after graduation. It's crucial to understand the interest rates and repayment terms associated with any loans you take out to fund your education.

Navigating the Financial Landscape

Higher education comes with a multitude of opportunities for success, but it also comes with a hefty price tag, so students and families face the challenge of managing college costs while securing a brighter future. To ensure a more financially sound journey through academia, it's imperative to adopt proactive strategies that not only minimize expenses but also maximize the value of your educational investment.

Start Early: The power of compounding can work wonders for your financial health. Starting to save for college as soon as possible can give you a considerable head start. Investment accounts like 529 plans, designed specifically for education funding, allow your contributions to grow tax-free over time.

Research Financial Aid: Take the time to familiarize yourself with the diverse options available when it comes to financial aid. Scholarships, grants, and federal student loans are tools that can significantly alleviate the financial burden of college. Scholarships and grants, often awarded based on academic merit or financial need, can provide substantial financial assistance. Exploring federal student loans, which typically offer lower interest rates and more flexible repayment terms compared to private loans, can be an integral part of your financial aid strategy.

Consider Community College: For many students, starting their academic journey at a community college for the first 2 years before transferring to a university offers a range of financial benefits that can shape a more secure future. Not only are tuition fees significantly lower, but you can also complete general education requirements and foundational courses without the cost associated with a university. This strategic pathway allows you to minimize expenses while ensuring a seamless transition to a university for specialized coursework.

Evaluate In-State Options: Many state institutions offer reduced tuition rates for in-state residents. Choosing an in-state university can be a cost-effective choice, as it opens the door to quality education without the added expense of out-of-state tuition. Alternatively, if your child falls in love with an out-of-state school, you can still reap the benefits of in-state tuition after some time if your student lives on campus long enough to earn residency in that state.

Explore Online Education: Online courses and degree programs can provide flexibility and potentially reduce costs associated with room and board.

The staggering increase in college costs from the 70s through today demands attention and understanding. Factors such as administrative growth, inflation, technology adoption, reduced state funding, infrastructure needs, regulatory compliance, and rising service demands all contribute to this upward trajectory. At Outside the Box Financial Planning, we work with students and families to create a comprehensive financial plan and encourage them to navigate this landscape strategically, seeking ways to mitigate the financial strain and secure a brighter future through higher education.

While the thought of paying for college and all of its associated costs might seem stressful and overwhelming, there are so many programs, loans, and other ways that you can help to alleviate that financial burden, simply by thinking ahead, and especially if you work with a Certified Financial Planner, like Outside The Box Financial Planning to plan ahead for the future of your children’s education. Stay tuned for our next blog that will dive deeper into all the different types of college assistance programs that exist and how to take advantage of them!

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Partnering with Outside The Box Financial Planning offers numerous benefits for individuals seeking retirement planning, small business support, wealth management, and beyond.  With their fiduciary duty, comprehensive approach, unbiased advice, transparent fee structure, and ongoing support, OTBFP act as a trusted advisor who prioritizes your best interests. Click here to schedule a complimentary “Fit” meeting to determine if we would make a good mutual fit.

Remember, financial decisions have long-lasting implications, and working with a professional can provide the expertise and guidance necessary to make informed choices that align with your financial aspirations. 

However, if you would like to take a shot at building a financial plan on your own, we offer our financial planning software, RightCapital, free of charge. Click here to get started.

As a Certified Financial Planner™️ (CFP), my mission is to guide individuals, families, and business owners towards financial security and prosperity. One essential pillar of any robust financial plan is the establishment of an emergency fund. 

Life is unpredictable, and unexpected events can potentially lead to financial stress and setbacks - especially if you don’t have a back up plan. In this blog post, we will delve into the significance of having an emergency fund, its benefits, and practical steps to build and maintain it. Let's explore how this prudent financial cushion can be your lifeline during challenging times.

Understanding the Emergency Fund

You might be picturing a cliche wrinkled paper bag hidden away deep in a closet, or cash stashed under your mattress, but a true emergency fund goes far beyond this. An emergency fund is a savings pool designated to cover unforeseen expenses, such as medical emergencies, car repairs, job loss, death in the family, or other urgent needs. It acts as a financial buffer, providing peace of mind and protecting you from resorting to high-interest debt during difficult situations. A well-funded emergency fund can prevent long-term financial consequences and ensure you stay on track with your short and long-term financial goals.

The Benefits of an Emergency Fund

While the benefits of having an emergency fund might be obvious, we sometimes overlook the importance of having one. No one wants to think that they will be faced with any kind of emergency, but as they say, it's better to be safe than sorry. And if you ever are faced with an emergency, you’ll be able to ease some of the stress by knowing you have your emergency fund to fall back on, rather than taking a huge financial hit. Let’s go through some of the top benefits of having an emergency fund to fall back on: 

Financial Security and Peace of Mind

Having an emergency fund provides a sense of financial security. Knowing that you have a safety net to fall back on in case of unexpected events can alleviate stress and anxiety. This psychological benefit enhances overall well-being and allows you to focus on long-term financial objectives. 

It’s no secret that any kind of emergency, regardless of how mild or severe, can be a stressful situation. When you work with a fee-only CFP, we have a fiduciary duty to do what is in your best interest, so you can rest assured that at OTBFP, we will work together to set up an emergency fund that is realistic and still keep you on track with your long-term financial goals. 

Avoiding Debt Traps

Without an emergency fund, many people turn to credit cards or high-interest loans when faced with emergencies. These debt traps can quickly accumulate and lead to a vicious cycle of debt. On the contrary, a well-funded emergency fund helps you manage unexpected expenses without relying on credit or loans. 

Preserving Long-term Investments

Having an emergency fund allows you to protect your long-term investments, such as retirement accounts or other financial portfolios. But cashing out investments to cover emergencies can be like robbing Peter to pay Paul—it disrupts your financial plan.

Instead of liquidating these investments prematurely, you can use your emergency fund to handle immediate needs. This can also help you to avoid additional financial stress by bypassing any penalties or taxes that often come from withdrawing funds from these investments. 

Building Your Emergency Fund

It can be overwhelming thinking about where to start with building your Emergency Fund. The best thing that you can do for yourself and for your loved ones is to create a backup plan or a safety net to fall back on in case times get tough. 

Working with a fee-only CFP, like Outside the Box Financial Planning, can help you to set realistic goals and an action plan that can help you get started with building your financial safety net. 

Pay Yourself First!

First things first - you have to pay yourself first! "Pay yourself first" means that you should prioritize your savings by setting aside a portion of your income before spending on other expenses, like rent or mortgage, car payments, and other living expenses. This habit ensures consistent saving, strengthens financial discipline, and fosters long-term growth through compounding. By making saving a non-negotiable expense, this strategy accelerates progress toward financial goals.

Set Clear Goals

Start by defining your emergency fund goal. Assess your monthly expenses, including housing, utilities, groceries, insurance, and any loan payments. Based on this estimate, determine the amount you need to save to reach your target emergency fund size. 

Most importantly, you want to make realistic goals that won’t put a strain on your financial well-being. An emergency fund is something that is there to help alleviate some stress in times of need, so it shouldn’t be something that causes you stress on a day-to-day basis. 

Determining the Ideal Emergency Fund Size

The size of your emergency fund depends on various factors, including your monthly expenses, job stability, and risk tolerance. As a rule of thumb, aim to have at least three to six months' worth of living expenses in your emergency fund. For those with irregular incomes, less stable employment, and/or self-employed, a larger emergency fund, up to nine months' worth of expenses, can be appropriate.

Create a Budget

Developing a budget is crucial to free up extra funds for your emergency fund. Identify areas where you can cut back on discretionary spending and redirect those savings toward your emergency fund. Every dollar counts, so be diligent in your efforts to save.

Something as simple as temporarily skipping that cup of coffee at Starbucks and brewing some at home can help you achieve your emergency fund goal. 

Automate Savings

Automating your savings is an effective way to ensure regular contributions to your emergency fund. Your emergency fund isn't a one-time deposit—it's an ongoing commitment. Set up automatic transfers from your paycheck to your emergency fund. This habit makes saving a breeze, ensuring your fund grows consistently.

Consider Windfalls and Bonuses

Take advantage of any windfalls or bonuses you receive, such as tax refunds, work bonuses, or monetary gifts. Allocating a portion of these unexpected funds to your emergency fund can significantly boost your progress.

Where to Keep Your Emergency Fund

When it comes to storing your emergency fund, accessibility and safety are paramount. Consider these options:
High-yield Savings Account

A high-yield savings account offers a higher interest rate compared to traditional savings accounts. It allows your emergency fund to grow while remaining easily accessible when needed.

Money Market Account

Similar to a high-yield savings account, a money market account offers competitive interest rates and easy access to your funds.

Replenishing Your Emergency Fund

Life events, such as medical emergencies or unexpected job loss, may deplete your emergency fund. In such cases, prioritize replenishing your fund as soon as possible. Review your budget and adjust your savings contributions accordingly until your emergency fund is back to its desired level.

Tax refunds, work bonuses, or unexpected cash windfalls are golden opportunities to supercharge your emergency fund. You can work with your fee-only CFP to use a portion of these windfalls to boost your fund's power.

Long-Term Financial Planning

While building and maintaining an emergency fund is crucial, it is only one part of a comprehensive financial plan. As a CFP, I emphasize the importance of working with a professional to create a personalized financial roadmap. A robust plan should encompass budgeting, retirement planning, investment strategies, and risk management.

It’s also important to check-in on your emergency fund from time to time. Life evolves, and so do your financial needs. Your fee-only CFP can help you review your emergency fund periodically. Life events like marriage, a new baby, or changing jobs may call for adjustments.

Conclusion

Whether you're dreaming of a cozy retirement, a new home, or giving your kids the best education, an emergency fund is your guardian angel for these aspirations. Without it, a surprise expense can drain your savings, delaying your dreams. 

Having an emergency fund is not a luxury; it is a necessity for financial security and peace of mind. As a Certified Financial Planner™️, I have witnessed countless individuals and families experience the benefits of a well-funded emergency fund during times of crisis. 

By setting clear goals, creating a budget, and automating your savings, you can gradually build a financial cushion that will safeguard you from life's uncertainties. Remember, investing in your emergency fund today is an investment in your financial well-being and future prosperity. Start building your emergency fund now, and rest assured that you are taking a vital step towards a more secure financial future.

Partnering with Outside The Box Financial Planning offers numerous benefits for individuals seeking retirement planning, small business support, wealth management, and beyond.  With their fiduciary duty, comprehensive approach, unbiased advice, transparent fee structure, and ongoing support, OTBFP act as a trusted advisor who prioritizes your best interests. Click here to schedule a complimentary “Fit” meeting to determine if we would make a good mutual fit.

Remember, financial decisions have long-lasting implications, and working with a professional can provide the expertise and guidance necessary to make informed choices that align with your financial aspirations. 

However, if you would like to take a shot at building a financial plan on your own, we offer our financial planning software, RightCapital, free of charge. Click here to get started.

In today's complex financial landscape, planning for retirement, managing wealth, or navigating the intricacies of running a small business can be challenging. It's crucial to have a trusted advisor who can guide you through these financial decisions, ensuring your best interests are always prioritized. 

This is where a fee-only Certified Financial Planner (CFP) becomes invaluable. Let’s explore the benefits of working with a fee-only CFP and how they can help you achieve your financial goals with confidence.

1. Fiduciary Duty and Putting Clients First 

Firstly, it is important to understand exactly what fiduciary duty means, and why it is a benefit to working with a fee-only CFP. Fiduciary duty refers to the legal and ethical obligation for someone like a CFP to prioritize their client’s best interest above their own. The CFP should act with integrity, and exercise skill and care in their recommendations. 

One of the primary advantages of working with a fee-only CFP is their fiduciary duty to their clients. Unlike commission-based advisors, fee-only CFPs are legally obligated to act in their clients' best interests at all times. 

This means they must provide unbiased advice, recommend suitable strategies, and disclose any potential conflicts of interest. By working with a fee-only CFP, you can be confident that their recommendations are aligned with your goals, not driven by commissions or sales incentives.

Ultimately, the fiduciary duty ensures that the customer can trust that the CFP is acting in their best interests and providing advice that is suitable and beneficial for their financial well-being.

2. Comprehensive Financial Planning 

A fee-only CFP takes a holistic approach to financial planning. They consider all aspects of your financial life, including retirement planning, small business needs, and wealth management - all of which are areas of specialty offered at Outside the Box Financial Planning. 

By analyzing your current financial situation, understanding your long-term goals, and evaluating potential risks, they can create a personalized financial roadmap tailored to your unique circumstances.

There is never a bad time to start planning for your financial future. At Outside the Box Financial Planning, we work with you and your individual circumstances to create a comprehensive plan - whether you are starting a family and wanting to protect your nest egg, getting ready to send your kids off to college, thinking about starting a small business, and everything in between - we are here to help you make the best financial decisions to ensure your success in all of your endeavors.

So whether you are planning for retirement, starting a small business, or seeking to grow your wealth, a fee-only CFP can help you develop a comprehensive plan. They will assist you in establishing realistic goals, identifying tax-efficient strategies, and ensuring your investments are diversified to manage risk effectively.

3. Objective and Unbiased Advice 

Outside of their fiduciary duty, since fee-only CFPs don't earn commissions or sales-based compensation, their advice remains objective and unbiased. 

They focus solely on providing you with the most suitable recommendations based on your financial objectives and risk tolerance. This eliminates potential conflicts of interest and ensures that the advice you receive is aligned with your best interests and will help you to reach your financial goals. 

By working with a fee-only CFP, you gain access to their expertise, knowledge, and experience. They can analyze complex financial products and market trends, helping you make informed decisions. 

Additionally, they can provide guidance on optimizing your investment portfolio, managing debt, and minimizing taxes, enabling you to achieve long-term financial success. At OTBFP, our main goal is to help you to maximize your wealth with little effort on your part. 

4. Transparent and Understandable Fee Structure 

Fee-only CFPs are transparent about their compensation structure, which typically involves a flat fee, hourly rate, or a percentage of assets under management. 

This transparent fee structure allows you to understand the cost of their services upfront, without any hidden charges or commissions. Furthermore, it aligns their interests with yours, as their compensation is not tied to specific products or transactions.

Working with a fee-only CFP ensures that you receive value for your money. They prioritize building long-term relationships with clients and focus on providing ongoing support and guidance. This commitment to transparency fosters trust, allowing you to have open discussions about your financial goals and concerns.

At OTBFP, we offer flat rate pricing for our services with absolutely zero hidden fees or charges. Because our job is to help you manage your finances responsibly, we want you to get the most bang for your buck! 

5. Ongoing Monitoring and Adjustments

Financial planning is not a one-time event; it's an ongoing process that requires periodic review and adjustments. Fee-only CFPs recognize this and provide ongoing monitoring and support to help you stay on track.

If you’re not quite sure where to start in assessing your finances, Outside the Box Financial Planning offers to develop a one-time Comprehensive Financial Plan for yourself and your family. We will work with you for 8-12 weeks, depending on your needs to cover all the major topics. 

Oftentimes, after the development of the Comprehensive Financial Plan, many clients choose to retain our services for the implementation of every aspect of the plan, as well as for ongoing support and revisions. The truth is, your finances can be an ever-changing area of life and OTBFP is there to offer support at any time. 

As your life circumstances change, your financial plan may need to be adjusted. A fee-only CFP can help you navigate major life events such as marriage, a child entering college, or the sale of a business. They will reassess your goals, update your financial plan, and ensure that it remains aligned with your evolving needs.

Conclusion 

In summary, partnering with Outside The Box Financial Planning offers numerous benefits for individuals seeking retirement planning, small business support, wealth management, and beyond.  With their fiduciary duty, comprehensive approach, unbiased advice, transparent fee structure, and ongoing support, OTBFP act as a trusted advisor who prioritizes your best interests. Click here to schedule a complimentary “Fit” meeting to determine if we would make a good mutual fit.

Remember, financial decisions have long-lasting implications, and working with a professional can provide the expertise and guidance necessary to make informed choices that align with your financial aspirations. 

However, if you would like to take a shot at building a financial plan on your own, we offer our financial planning software, RightCatital, free of charge. Click here to get started.

Markets Have Fantastic Second Quarter

Global equity markets had a fantastic second quarter – especially the tech names. But toward the end of the quarter, the rally really started to broaden out, as underscored by the large-cap S&P 500 recording its biggest quarterly gain since late 2021.

For the second quarter of 2023:

• The DJIA advanced 3.4%;

• The S&P 500 gained 8.3%;

• NASDAQ jumped 13.1%; and

• The Russell 2000 added 4.8%.

Besides there being a lot to celebrate when the quarter closed, investors were also paying attention to the year’s mid-way point as:

• The S&P 500 is up more than 16% YTD and turned in its best first half since 2019;

• NASDAQ is up an astonishing 31%+ YTD on its way to its best half since 1983; and

• The DJIA turned in a much more modest 3.9% YTD gain.

The themes that drove market performance in the second quarter continued to center around inflation, the Fed, and the labor market, as recent numbers suggested that inflation is easing as the Fed paused its rate-hiking trend (at least for now). There was also a lot of encouraging economic data received this quarter as well, including a revised GDP number.

Further, we saw that:

• Volatility, as measured by the VIX, trended down this quarter, beginning the quarter at 18.70 and ending at 13.59, never breaching its beginning-of-the-quarter high.

• West Texas Intermediate crude also trended down for the quarter, starting at just over $75.57/barrel and ending the quarter at $70.45, with a brief spike early in the quarter to more than $83/barrel.

Market Performance Around the World

Investors were happy with the quarterly performance around the world, as all 32 of the 36 developed markets tracked by MSCI were positive for the second quarter of 2023, with 13 jumping more than 6%. And for the 40 developing markets tracked by MSCI, only 23 of those were positive, although 2 leapt more than 15% (MSCI Eastern Europe and MSCI Eastern Europe ex-Russia).

Source: MSCI. Past performance cannot guarantee future results

Sector Performance Rotated in 2Q2023

The overall performance for sector performance for the second quarter of 2023 was very good, as 9 of the 11 sectors advanced, with 3 jumping more than 15% . Compared to last quarter’s performance, this quarter was much better, as last quarter saw only 7 painted green.

And interestingly, this past quarter was eerily similar to the 4th quarter of last year, which also saw 9 advance, including 6 of those jumping by double-digits. Here are the sector returns for the second and first quarters of 2023:

Source: FMR

Reviewing the sector returns for just the 2nd quarter of 2023, we saw that:

• 9 of the 11 sectors were painted green, with the Information Technology and Consumer Discretionary sectors making big leaps;

• The defensive-sectors (think Utilities and Energy) struggled during the quarter;

• Financials rebounded on the heels of last quarter’s struggles which were driven by two significant bank failures; and

• The differences between the best (+20%) performing and worst (-2%) performing sectors in the first quarter was massive.

1Q2023 GDP Revised Up

As the quarter came to a close, the Bureau of Economic Analysis reported that real gross domestic product (GDP) increased at an annual rate of 2.0% in the first quarter of 2023. In the fourth quarter, real GDP increased 2.6%.

Here is one of the more interesting – and surprising – revelations from the BEA’s press release:

“The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the increase in real GDP was 1.3%. The updated estimates primarily reflected upward revisions to exports and consumer spending that were partly offset by downward revisions to nonresidential fixed investment and federal government spending. Imports, which are a subtraction in the calculation of GDP, were revised down.”

Further:

“The increase in real GDP in the first quarter reflected increases in consumer spending, exports, state and local government spending, federal government spending, and nonresidential fixed investment that were partly offset by decreases in private inventory investment and residential fixed investment. Imports increased.

Compared to the fourth quarter, the deceleration in real GDP in the first quarter primarily reflected a downturn in private inventory investment and a slowdown in nonresidential fixed investment that were partly offset by an acceleration in consumer spending, an upturn in exports, and a smaller decrease in residential fixed investment. Imports turned up.

• Current-dollar GDP increased 6.1% at an annual rate, or $391.8 billion, in the first quarter to a level of $26.53 trillion, an upward revision of $43.5 billion from the previous estimate.

• The price index for gross domestic purchases increased 3.8% in the first quarter, the same as the previous estimate.

• The personal consumption expenditures (PCE) price index increased 4.1%, revised down 0.1%. The PCE price index excluding food and energy prices increased 4.9%, a downward revision of 0.1%.

  Personal Income

• Current-dollar personal income increased $278.0 billion in the first quarter, an upward revision of $26.7 billion from the previous estimate. The increase primarily reflected increases in compensation (led by private wages and salaries) and personal current transfer receipts (led by government social benefits).

• Disposable personal income increased $587.9 billion, or 12.9 percent, in the first quarter, an upward revision of $26.4 billion from the previous estimate. Real disposable personal income increased 8.5%, an upward revision of 0.7%.

• Personal saving was $840.9 billion in the first quarter, an upward revision of $11.6 billion from the previous estimate.

• The personal saving rate – personal saving as a percentage of disposable personal income – was 4.3% in the first quarter, an upward revision of 0.1%.”

Source: Bloomberg, Atlanta Fed GDPNow Estimates

Fed Keeps Rates Steady

Late in the quarter, the Federal Reserve announced that they would hold the official federal funds target rate to the 5.00% to 5.25% range, the first pause after 10 hikes in 14 months. But Wall Street is still betting on two more rate hikes before the year is over.

Fed Chair Jerome Powell then said multiple times that the policy committee had not made any decision about raising rates and that “any further moves would depend on incoming growth and inflation data.” This statement was interpreted as more dovish.

Then Powell said: “We've moved much closer to our destination, which is that sufficiently restrictive rate, and I think that means by almost by definition that the risks of sort of overdoing it and…underdoing it are getting closer to being in balance.”

Inflation Slows, But Core-Inflation a Worry

The U.S. Bureau of Labor Statistics reported that the Consumer Price Index for All Urban Consumers rose 0.1% in May on a seasonally adjusted basis, after increasing 0.4% in April. Over the last 12 months, the all items index increased 4.0% before seasonal adjustment.

“The index for shelter was the largest contributor to the monthly all items increase, followed by an increase in the index for used cars and trucks. The food index increased 0.2 percent in May after being unchanged in the previous 2 months. The index for food at home rose 0.1 percent over the month while the index for food away from home rose 0.5 percent. The energy index, in contrast, declined 3.6 percent in May as the major energy component indexes fell.

The index for all items less food and energy rose 0.4 percent in May, as it did in April and March. Indexes which increased in May include shelter, used cars and trucks, motor vehicle insurance, apparel, and personal care. The index for household furnishings and operations and the index for airline fares were among those that decreased over the month.

The all items index increased 4.0 percent for the 12 months ending May; this was the smallest 12-month increase since the period ending March 2021. The all items less food and energy index rose 5.3 percent over the last 12 months. The energy index decreased 11.7 percent for the 12 months ending May, and the food index increased 6.7 percent over the last year.”

Then two days later, the Labor Department delivered more good news when it reported that the Producer Price Index dropped 0.3% in May.

Consumer Sentiment Jumps

“Consumer sentiment lifted 8% in June, reaching its highest level in four months, reflecting greater optimism as inflation eased and policymakers resolved the debt ceiling crisis. The outlook over the economy surged 28% over the short run and 14% over the long run. Sentiment is now 28% above the historic low from a year ago and may be resuming its upward trajectory since then. As it stands, though, sentiment remains low by historical standards as income expectations softened. A majority of consumers still expect difficult times in the economy over the next year.

Year-ahead inflation expectations receded for the second consecutive month, falling to 3.3% in June from 4.2% in May. The current reading is the lowest since March 2021. In contrast, long-run inflation expectations were little changed from May at 3.0%, again staying within the narrow 2.9-3.1% range for 22 of the last 23 months. Long-run inflation expectations remained elevated relative to the 2.2-2.6% range seen in the two years pre-pandemic.”

Global Investor Confidence Index Up Again

State Street Global Markets released the results of the State Street Investor Confidence Index for June 2023 and announced the following:

“The Global Investor Confidence Index increased to 95.8, up 6.1 points from May’s revised reading of 89.7. The increase in Investor confidence was led by a 4.9 point rise in North American ICI to 90.0 as well as a 5.0 point rise in European ICI to 104.9. Asian ICI, meanwhile, dropped 4.3 points to 96.7”

Global Investor Confidence Index

“Investor confidence was once again stronger in June, with the Global ICI improving for the 6th consecutive month, a streak that has only been replicated once (in 2009) in the 25 years since the creation of the index. While confidence has rallied smartly since the start of the year, it remains below neutral, signaling a continued defensiveness towards overall risk allocations. The North America ICI reading continued to improve as the resolution of the debt ceiling debate removed a significant market risk from the radar. The Europe ICI was also stronger on the month, returning to risk seeking territory as it records the highest reading amongst the regions we track. Finally, Asia investor confidence deteriorated back below neutral as China continues to experience a bumpy post Covid recovery.”

Small Businesses Feeling Optimistic

The National Federation of Independent Businesses reported that “the NFIB Small Business Optimism Index increased 0.4 points in May to 89.4, which is the 17th consecutive month below the 49-year average of 98. The last time the Index was at or above the average was in December 2021. Small business owners expecting better business conditions over the next six months declined one point from April to a net negative 50%. Twenty-five percent of owners reported that inflation was their single most important problem in operating their business, up two points from last month and followed by labor quality at 24%. Key findings include:

• Forty-four percent of owners reported job openings that were hard to fill, down one point from April and remaining historically very high.

• The net percent of owners raising average selling prices decreased one point to a net 32% (seasonally adjusted), still an inflationary level but trending down.

• The net percent of owners who expect real sales to be higher deteriorated two points from April to a net negative 21%.”

Job Openings Still Hard to Fill

Further, as reported in the NFIB’s monthly jobs report:

• Owners’ plans to fill open positions remain elevated, with a seasonally adjusted net 19% planning to create new jobs in the next three months.

• Overall, 63% of owners reported hiring or trying to hire in May, up three points from April.

• Of those hiring or trying to hire, 89% of owners reported few or no qualified applicants for their open positions.

In addition:

• A net 41% of owners reported raising compensation, up one point from April.

• A net 22% plan to raise compensation in the next three months, up one point.

• Ten percent of owners cited labor costs as their top business problem.

• 24% said that labor quality was their top business problem.

Leading Indicators Decline Again

The Conference Board announced that its Leading Economic Index (LEI) for the U.S. declined by 0.7% in May 2023 to 106.7 (2016=100), following a decline of 0.6% in April. The LEI is down 4.3% over the sixmonth period between November 2022 and May 2023 – a steeper rate of decline than its 3.8% contraction over the previous six months from May to November 2022.

Directly from the release: “the US LEI continued to fall in May as a result of deterioration in the gauges of consumer expectations for business conditions, ISM New Orders Index, a negative yield spread, and worsening credit conditions. The US Leading Index has declined in each of the last fourteen months and continues to point to weaker economic activity ahead. Rising interest rates paired with persistent inflation will continue to further dampen economic activity.

While we revised our Q2 GDP forecast from negative to slight growth, we project that the US economy will contract over the Q3 2023 to Q1 2024 period. The recession likely will be due to continued tightness in monetary policy and lower government spending.”

Further, the Conference Board Coincident Economic Index (CEI) for the U.S. increased by 0.2% in May 2023 to 110.2 (2016=100), after rising by 0.3% in April. The CEI is now up 0.8% over the six-month period between November 2022 and May 2023— down slightly from the 0.9% growth it recorded over the previous six months. The CEI’s component indicators—payroll employment, personal income less transfer payments, manufacturing trade and sales, and industrial production—are included among the data used to determine recessions in the US. While recent data for industrial production have contributed negatively to coincident index, sales, employment, and income growth remained positive.

Finally, the Conference Board Lagging Economic Index (LAG) for the U.S. increased by 0.1% in May 2023 to 118.4 (2016 = 100), reversing a decline of 0.1% in April. The LAG is up 0.6% over the six-month period from November 2022 to April 2023, much slower than its growth rate of 3.3% over the previous six months.

The annual growth rate of the US LEI remained negative, continuing to signal weakening growth prospects

Negative contributions to the LEI were widespread among both financial and non-financial components

Source: The Conference Board

*Inverted series: a negative change in this component makes a positive contribution

**Statistical imputation

LEI change is not equal sum of its contributions due to application of trend adjustment factor

The US LEI continues to signal a recession within the next 12 months

Housing Showing Signs of Momentum

The U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly announced the following new residential construction statistics for May 2023:

Building Permits

• Privately‐owned housing units authorized by building permits in May were at a seasonally adjusted annual rate of 1,491,000.

• This is 5.2% above the revised April rate of 1,417,000.

• This is 12.7% below the May 2022 rate of 1,708,000.

• Single‐family authorizations in May were at a rate of 897,000.

• This is 4.8% above the revised April figure of 856,000.

• Authorizations of units in buildings with five units or more were at a rate of 542,000 in May.

Housing Starts

• Privately‐owned housing starts in May were at a seasonally adjusted annual rate of 1,631,000.

• This is 21.7% above the revised April estimate of 1,340,000.

• This is 5.7% above the May 2022 rate of 1,543,000.

• Single‐family housing starts in May were at a rate of 997,000

• This is 18.5% above the revised April figure of 841,000.

• The May rate for units in buildings with five units or more was 624,000.

Housing Completions

• Privately‐owned housing completions in May were at a seasonally adjusted annual rate of 1,518,000.

• This is 9.5% above the revised April estimate of 1,386,000.

• This is 5.0% above the May 2022 rate of 1,446,000.

• Single‐family housing completions in May were at a rate of 1,009,000; this is 3.9% above the revised April rate of 971,000.

• The May rate for units in buildings with five units or more was 493,000.

Manufactured Durable Goods Up in May

The U.S. Census Bureau announced the May advance report on durable goods manufacturers’ shipments, inventories and orders:

New Orders

New orders for manufactured durable goods in May, up three consecutive months, increased $4.9 billion or 1.7% to $288.2 billion.

• This followed a 1.2% April increase.

• Excluding transportation, new orders increased 0.6%.

• Excluding defense, new orders increased 3.0%.

• Transportation equipment, also up three consecutive months, led the increase, $3.9 billion or 3.9% to $102.6 billion.

New Orders Over the Past 12 Months

Shipments

Shipments of manufactured durable goods in May, up two of the last three months, increased $4.8 billion or 1.7% to $282.7 billion. This followed a 0.6% April decrease. Transportation equipment, also up two of the last three months, led the increase, $4.0 billion or 4.6% to $91.8 billion.

Unfilled Orders

Unfilled orders for manufactured durable goods in May, up five of the last six months, increased $10.6 billion or 0.8% to $1,302.0 billion. This followed a 0.8% April increase. Transportation equipment, also up five of the last six months, drove the increase, $10.8 billion or 1.4% to $803.9 billion.

Inventories

Inventories of manufactured durable goods in May, up five of the last six months, increased $1.2 billion or 0.2% to $522.9 billion. This followed a 1.0% April increase. Machinery, up thirty-one consecutive months, led the increase, $0.5 billion or 0.5% to $94.4 billion.

Capital Goods

Non-defense new orders for capital goods in May increased $5.7 billion or 6.7% to $91.0 billion. Shipments increased $2.7 billion or 3.4% to $82.9 billion. Unfilled orders increased $8.1 billion or 1.1% to $748.7 billion. Inventories increased $0.1 billion or 0.1% to $225.5 billion. Defense new orders for capital goods in May decreased $2.7 billion or 14.7% to $15.9 billion. Shipments decreased $0.2 billion or 1.2% to $13.2 billion. Unfilled orders increased $2.7 billion or 1.3% to $213.6 billion. Inventories increased $0.1 billion or 0.2% to $24.2 billion.