The Debt Free Guys: 5 Money Practices for Each Tax Season

By John R. Schneider, III & David Auten

Like diets and birthday cakes, there are some things we should do annually. Whether for fun, fitness or our finances, we’re better for them. It helps to have firm, recurring dates to exercise these habits. Now that we’re in another tax season, here are five practices to start this year and perform every year.

Investment Portfolio Allocations

For buy and hold investors, tax season is a perfect reminder to rebalance their portfolios. The various markets, like large cap and small cap, don’t move in tandem. Therefore, buy and hold investors should adjust their portfolio allocations to stay in line with pre-established risk tolerances, time horizons, and investment objectives and goals.

Beneficiaries

Confirm the beneficiaries on your investment accounts annually. Beneficiary designations supersede instructions in wills. This technicality catches many by surprise.

Power of Attorney

Confirm the agents of your financial and medical powers of attorneys. A financial power of attorney designates an agent to manage your financial matters. A medical power of attorney appoints someone to manage your medical needs. Because such agent powers carry heavy responsibilities, confirm the appropriateness of each agent each year when you file your taxes.

Check Your Credit Report

Review all your credit card, debit card, bank, and investment account statements regularly to confirm nothing untoward happens from month-to-month. If you see negative or inaccurate transactions, contact your financial services firm immediately.

An added layer of protection for your credit score and credit report is to review your credit report annually. Reviewing your credit report is an opportunity to contest or clean up incorrect items on your credit report.

Consumers are entitled to one free credit report a year from each of the three credit rating agencies, Equifax, Experian, and TransUnion. Rather than contacting all three credit rating agencies yearly, only go to AnnualCreditReport.com to request your free credit report from each institution all at once when you file your taxes. 

Emergency Contact Information

Update your list of important contacts with contact information every year when you file your taxes. Your contact list should include, but not be limited to:

•             Attorneys

•             Accountants

•             Financial Advisors

•             Doctors

•             Executors

•             Power of attorneys

•             Spouse

•             Children

•             Parents

•             Siblings

•             Heirs

Docubank and Carbonite for Home let you electronically store this and other legal documents, such as healthcare directives and emergency medical information, so they’re in a safe and accessible location.

It can sometimes be hard to maintain important aspects of our finances without having systems in place. By implementing a system to address some of the more important aspects of your finances every tax season, you’ll keep your fiscal house in order.

The Debt Free Guys: How Can I Attract More Money?

 

Ever wonder how you can attract more money into your life? If you found out would you be willing to follow through? The Debt Free Guys can show you how!

Debt Free Guys: Why We Must Change from Spenders to Savers

By John R. Schneider, III

If you’re queer, there’s a good chance you’re a spender. Per Prudential’s 2016-2017 LGBT Financial Experience research report, more than 48 percent of the queer community identify as “spenders,” compared to 32 percent of the general population.

Consider these statistics:

· The purchasing power of the queer community is close to $1 trillion.
· Same-sex couples on average earn at least $7,200 more than our straight peers.
· Only 20 percent of same-sex couples have children.
· The cost to raise a child to 18, not including college, is $245,000.

Despite our higher incomes, stronger purchasing power, and fewer responsibilities, we only have $6,000 more in savings compared to our straight peers and our median household consumer debt is $28,000.

Equality Rights

Many in the queer community are concerned about how the Trump Administration. We don’t yet know the full effects of the new administration. This is why queer spenders need to become queer savers.

A pillar of a strong queer community is financially strong queer individuals. Financial strength gives us both the money and time to continue to fight for equality. We must fund the organizations and causes fighting for equality. We must donate our time and presence to these causes.

We can’t be distracted by student loans or mortgages for the sake of our financial independence and civil rights. The financially stronger we are as individuals, the stronger we are as a community and the better equipped we are to fight for equality.  

State-Level Risks

Many state-level still have outdated language and rely on old precedence. Many still discriminate against queer people, such as preventing trans people from officially using the gender with which they identify.   

28 states lack non-discrimination employment protections for gays and lesbians. Only 14 of those states include trans protections. While we can legally marry in all 50 states, we can be fired in 28 without recourse for putting pictures of our spouses on our desks.

Because of these risks, we must become savers and adequately fund emergency savings accounts. Traditionally we should save between three to six months’ worth of living expenses in this account. Queer people who live in states with fewer protections should save at least three months’ worth.

Long-Term Care Concerns

Long-term care (LTC) includes professional help at home with basic needs, retirement villages for more enhanced care, and assisted living for physical assistance.

Many facilities don’t offer training on caring for LGBT people. With the average annual cost for a basic nursing home being $80,000, we may lose our autonomy as we lose our health. Consequently, many queer people go back in the closet to avoid discrimination and abuse.

Therefore, we need adequate retirement savings. We need long-term care and life insurance. We need durable power of attorneys and living wills.

It’s imperative that the queer community not spend all our higher than average annual incomes. We must use our disposable incomes to fight for equality and to protect ourselves.

Debt Free Guys: Further Protecting Your Same-Sex Marriage

By John R. Schneider, III & David Auten

Many in our community are concerned about the future of same-sex marriage and our civil rights. If this is you, let’s do something about it. Take the following steps to legally and financially protect your relationship as much as possible.

Joint Tenants with Rights of Survivorship

Put your assets in a Joint Tenancy with Rights of Survivorship. Joint tenancy means that when one of you passes away, the other automatically and fully owns of all your assets. This protects against others’ claims to your assets.

Wills

Each of you should draw up a will that spells out the owner of your assets when you pass away. Unless you come to another agreement, inherit your assets to each other. In the unfortunate event that you both pass away at or about the same time, include a per stirpes clause to outline the sequence of inheritors.

Designate an executor, likely each other, to oversee the division of your estates. If you have children, designate non-biological parents as their guardian.

Beneficiaries

Update all the beneficiaries on all accounts to be in line with your will, unless you and your spouse agree otherwise. This technicality catches many by surprise, but beneficiary designations supersede wills. For this reason, update your beneficiaries annually when you file your taxes.

Second-Parent Adoptions

If you have or will have children, non-biological parents should legally adopt and be listed on their birth certificates as second-parents. This will be hard in some states, as some state constitutions have outdated language that prohibit two people of the same gender on the same birth certificate.

Powers of Attorney

Designate each other as both financial and medical powers of attorney. Financial powers of attorney designate an agent to handle financial needs. Medical powers of attorney designate someone to handle medical needs.   

Choose a durable power or springing power of attorney. Durable powers of attorney authorize an agent to immediately act on your behalf, including if you become temporarily or permanently incompetent or incapacitated. The authorization ceases when you pass away.  

Springing powers of attorney authorize an agent to act on your behalf and only goes into effect if you become permanently incapacitated, as authorized by a medical doctor. This, too, ceases when you pass away.

Living Wills

Living wills outline medical and end-of-life wishes, if you cannot speak for yourself. Specify DNR (do not resuscitate), the use of feeding tubes, respirators, dialysis and blood transfusions instructions.

Contact Information

Document important contacts, such as doctors, accountants and attorneys, and their contact information should you become incompetent or incapacitated.

Archiving

Store important documents and information electronically. DocuBank electronically stores legal documents and information on an easily accessible card the size of a credit card. This is helpful when you must access information on the fly, such as when medical professionals question your rights to visit your spouse in the hospital.

Even if some of these steps are redundant, they provide added protection in case the legality of our marriages are questioned.

Debt Free Guys: The Most Important Question for Same-Sex Spouses to Ask Before Filing Taxes

By John R. Schneider, III

Since same-sex marriage was legalized, the number of same-sex couples who play Tax Loophole Twister like our straight peers has increased.

We’re heading into tax season and getting a hold of your accountant may be harder than the 2016 election. Here’s the most important question same-sex spouses should ask before filing taxes: Should we file “married and jointly” or “married and separately”?

For most same-sex spouses, this question is new, the difference is considerable and the decision consequential. Here’s what you should know.

Pros & Cons of Filing Jointly
Considering the tax incentives offered to married couples, the government wants people married. (Up until recently, it just wanted the right people to be married.)

First, there’s the marriage bonus. The marriage bonus happens when there’s income disparity between spouses. If it applies, the marriage bonus puts the average income of the couple in a lower tax bracket because of the lower income earner.

Being married and filing jointly offers tax credits that may not apply if you’re married and filing separately. These credits include, but aren’t limited to Credit for Child and Dependent Care, Earned Income Tax Credits and education credits, such as American Opportunity and Lifetime Learning Education Credits. Joint filers also have higher income thresholds for deductions, which means they can qualify for incentives while making more money.

Credits and deductions lower the net total in taxes couples pay. Qualifying for them keeps more of your hard-earned money as income.

Married life and taxes aren’t all roses, though. The con with married and filing jointly is the marriage penalty. Married couples without income disparity can be bumped into a higher tax bracket than when they filed as individuals or if they filed separately.

Filing jointly poses a risk if your spouse has tax problems. If your spouse has tax liens or owes the government money, you may become responsible for their burdens. If you file separately, you’re shielded from such risks.

Pros & Cons of Filing Separately  
Certain deductions that require a percentage of your Adjusted Gross Income (AGI) are more easily achieved with the lower AGI from filing separately rather than jointly. For example:

Miscellaneous expenses that are more than 2% of your AGI may be deducted
Emergency expenses over 10% of AGI may be deducted
One of you may qualify to contribute the max for a Roth IRA, whereas jointly neither of you might qualify

However, you’re off the hook for tax liabilities your spouse may have if you file separately. Doing so might shield certain assets from the government.

Going solo isn’t a bed of roses, either. Filing separately lowers deductions for Traditional Individual Retirement Account (IRA) contributions. While it’s good to invest in an IRA regardless, this reduces immediate benefits.

Along with the other tax deductions and credits afforded to couples who file jointly, you can’t take the student loan interest or tuition deduction if you file separately.

If this all sound confusing, that might be the point. Therefore, consult your tax professional.

Debt Free Guys: 4 Things That Are More Expensive Because You’re Queer and What to Do about Them

By John R. Schneider, III

The road of progress is never straight. The queer community has made much progress over the last few years. Even with as much progress as we have made, there are still 28 states in which sexual orientation and gender identity can be grounds for termination without recourse.

Add that some states are making it legal to deny their queer citizens basic services based on religious principles. While the argument has been dumbed down, it is about more than cakes and pizza.

Here are four things more expensive for the queer community and what we can do about them.

1. Having a Family  
According to the Human Rights Campaign, private agency adoptions can cost between $5,000 and $40,000. Many same-sex couples must pay for second adoptions, which costs an additional $2,000 and $3,000.

For queer couples who want biological children, the costs are higher, especially if they cannot bear children. Surrogacy can cost between $70,000 to $150,000 per child.

Be clear about what you want. Budget appropriately for expenses and add a 10 percent cushion. Find out if your employer and your health insurance will help cover you chosen option.

2. Long-Term Care
For many older queer people today, a family was not Plan A. Thus they must rely on themselves. The average annual cost for a basic nursing home is about $80,000, according to Genworth's 2015 Cost of Care Survey. This cost can eat up a lifetime of savings fast.

Because the Equality Act is still making its way through Congress, many long-term care facilities do not currently offer sexual orientation and gender identity protections. This limits the number of facilities to which queer people can go for our unique needs.

Ensure your long-term care facility of choice includes policies and training that meet your unique needs.

3. Career Advancement
While open discrimination wanes, soft discrimination remains. Someone who's not part of the "boys’ club" doesn't get the same time and attention of their boss as someone who is.

Neuroscientist and data analyst Vivienne Min did a study that showed gay white men in the U.K. must spend about $54,000 gaining more degrees and experience to keep up with their straight white male peers.

Look for anti-discrimination policies, LGBT ERGs and leadership diversity of companies to which you seek employment.

4. Housing
In some states, queer people can be refused housing because of our sexual orientation or gender identity. Living in more accepting places gives some of us a higher sense of security but usually at a cost.

With the risks of being refused housing, evicted or physically harmed, queer people in these states need larger emergency savings accounts.

It is incumbent for queer people to assess our situation and plan accordingly. Starting a family, choosing a career, planning for retirement and deciding where to live affects everyone. For queer people, such costs are higher and may be prohibitive to our wants and wishes.

Debt Free Guys: Why All LGBT People Should Consider Getting Life Insurance

By John R. Schneider, III

When I was young, single and fit as a fiddle I got life insurance. By all accounts I didn’t need life insurance. I wanted it to leave a legacy, as my plans of being a pop diva never fully materialized.

I have three nieces. If I passed away, I had nothing to leave to them or anyone. In an instant, poof, there would be nothing left of me. An inheritance to my nieces to pay for college, buy their first home or travel the world (my choice) would be a great legacy.

We often think of life insurance when we start families. The risk of leaving a spouse and children to fend for themselves is a noble concern. However, today’s life insurance does more, even if yours isn’t the typical family.

Protect Your Family
Many queer people getting married now are above the average age of our straight peers for first marriages and because having children for same-sex couples is never a surprise, it can take years to start families. If queer people wait to buy life insurance, we could lose the financial benefits of purchasing less expensive life insurance when we’re younger.

Protect Against Creditors 
Debts don’t disappear when we do. Depending on the type of debt you have and your financial situation, your loved ones may have to repay your loans. Don’t expose them to this nightmare. Consider getting life insurance to pay off your debts after you pass.

Leave an Inheritance
If there are one or more people you’d like to leave a parting gift to, life insurance can fund an inheritance. In addition to family members, you can leave an inheritance to any relation such as friends, former partners and foster children.

You may leave this inheritance as a gift for the recipient to spend as they wish or outline provisions on how this inheritance should be used. If Leona Helmsley can leave $2 million to her dog for grooming, maintenance and security, you know the restrictions can be plentiful – and fun.

Give to Charity
You may leave donations to charities, as outlined by your trust, when you’ve passed to ensure those organizations continue. Assign a trustee to your estate to oversee that your donations are distributed appropriately and not a la Evita.

Medical Care
Healthcare can take as much as 30% of one’s retirement savings. Those in the queer community who haven’t saved appropriately need alternatives.

Life insurance can include provisions, such as an accelerated death benefit, that allow for tax-free payments to cover medical care in certain “critical” circumstances. This prevents you from leaving your family with hospital expenses after you pass.

Protect Your Business
If you want to ensure your business continues after you do, list your business or business partner(s) as beneficiaries on your life insurance, especially if your business or business partner(s) rely heavily on you.

The most memorable shows end with great encores. Make yours one.