The stock and bond markets have been getting all the attention recently. So this weekend, let’s take some time to refocus on a number of financial planning matters. The actions I’ll discuss below have every bit as much impact, and more, on your financial success as ruminating over the stock market does — with the added benefit that you are in control of these!

As I’m writing this, the House passed the $2 trillion relief bill. So we’ll have some analysis ready soon so you know how it impacts you.

If Roth conversions are one of the strategies we’ve developed for you, either because of your proximity to retirement or because you’ve been loading your IRA and 401(k) with after-tax dollars over the past few years, now is likely the time to get it done. The client recommendations we write on this topic include the language “at a time based in-part on opportunities created by market downturns.” This qualifies. I did my own Roth conversion yesterday (Thank you for the help, Stacy!), and suggest you contact me or Patrick to inquire if yours should be done as well.

Determine Tax Strategies for 2020-2025

The currently reduced tax rates expire in 2025, so figuring out how to take the greatest advantage of them is a top priority. The process starts when you send us your 2019 tax return. We’ll review the return, send you our analysis, then have a conversation about strategies you can use to save taxes — like the Roth conversion strategy above.

Another one of those strategies is taking advantage of the current market downturn to do tax-loss harvesting. If I’m managing your individual, joint, or trust accounts, I’ll be taking care of that for you. The basic idea is that you sell one investment, realize a tax loss so the IRS covers part of the loss for you, then immediately repurchase a substantially similar investment. The net result is no change in your portfolio strategy, but the IRS just reduced your market losses by the amount of the tax savings. Nice!

Estate Planning — Particularly Health Care Documents

Now is a perfect time to dust off your estate planning binder (or the executive summary we wrote for you) and see if you need to update your health care and disability decision-making documents, or any other part of your estate plan. And help your parents do the same. Every attorney and estate planner I know is taking cases and working remotely, and all of these documents can be completed at home. I’m happy to brief you on the process, give you a few names, and coordinate things for you.

Refinance Your Mortgage

Rates are hovering around 2.65% on a 15-year fixed mortgage, and 3.0% on a 30-year (these rates are from IMCU’s website). If you plan on staying in your home for a while and have a mortgage rate over 3.75% or so, let’s explore the possible savings and reducing the timeline to debt free living. 

Revisit Spending, Savings, and Budgets

The past couple of weeks, I’ve been pounding the table urging clients to ramp up automatic monthly investments. Many have, and are able to because they have adequate cash reserves, created margin, and knew exactly where to reduce spending to free up cash flow. If that’s not you, let’s get you there. Living with margin is so freeing, even in good times! 

If you’re in the stage of life where money is coming out of your investments to fund retirement, there is incredible power in having a “good times” budget and a “tighter times” budget. That enables you to easily reduce income during down markets, thereby improving your portfolio, strengthening your lifetime cash flow, and giving you the ability to do all the things you want for as many years as possible.

Quicken, Mint.com, Tillerhq.com, youneedabudget.com, or an old fashioned sheet of paper are all great tools to budget. If you want to share it with us for guidance, using Tiller and Google Sheets is the most flexible option.

Revisit The Question “Am I On Track?”

Most current clients don’t need to do this — your plan already accounted for the modest declines we’ve experienced in our accounts. But if the question is weighing heavily on your mind, then let’s ask the question anyway! With our in-depth knowledge of your total financial picture, it doesn’t take long for me or Patrick to walk you through where you stand today, and the actions you can take to make the most of the opportunities being created in this market.

Emergency Reserve Status

Okay, so this is a little on the negative side. But, hey, what if you lose your job or something else bad happens to your family during this crisis? Have you already established a right-sized reserve? What would your next steps be if your emergency reserve ran out because the crisis lasted longer than the cash reserve? Personally, I find it comforting to address these hard questions head-on and answer them. I typically walk away from the exercise with A) a plan, and B) a general sense of “you know, life would still be okay.” The same exercise can be used for other aspects of your financial plan, like retirement, and it’s an important part of financial planning. We’ll help.

I hope you have a truly blessed weekend as you continue to hunker-down with your family. Stay well, and please call me if you need anything as we navigate this together.