Finance

Rice County

FEBRUARY 2014

financial planning

GUIDE Understanding Reverse Mortgages Life Insurance 101 Vacation For Less

Northfield News Faribault Daily News

PAGE 2

Rice County Financial Guide

Wednesday, February 26, 2014

www.edwardjones.com

Retirement May Be Far Off, But the April 15 Deadline for IRA Contributions Isn’t.

You have only so many years to prepare for retirement. That’s why contributing to your Individual Retirement Account (IRA) is so important.

Fortunately, you still have time to maximize your 2013 IRA contribution before the April 15 deadline.

Retirement May Be Far Off,

Retirement May Be Far Off, But the April 15 Deadline for IRA Contributions Isn’t.

By contributing now, your retirement savings can

You have only so many years to prepare for retirement. That’s why contributing to yourto Individual Retirement have more opportunity grow. Even if you Account already (IRA) is so important. Fortunately, you still have time to maximize your 2013 IRA contribution before the April 15 deadline.

But the April 15 Deadline for IRA Contributions Isn’t.

have an IRA elsewhere, it’s easy to transfer it to an Edward Jonesto IRA begin theanface-to-face By contributing now, your retirement savings can have more opportunity grow.and Even if youreceiving already have IRA guidance you deserve. elsewhere, it’s easy to transfer it to an Edward Jones IRA and begin receiving the face-to-face guidance you deserve.

To learn more about advantages To learn more about the advantages of an Edward Jones IRA, call the or visit today. of an Edward Jones IRA, call or visit today.

Grinney, CFP® Tom Klemer Jake Womeldorf YouCate have many prepare for Financial Advisor only soFinancial Advisor years to Financial Advisor 404 Heritage Place Faribault, MN 55021 507-334-1666

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retirement. That’s why contributing to your Individual Retirement AccountJon(IRA) is so important.

Greg Pierce Chris Lockner Snodgrass, CFP® Financial Advisor

Financial Advisor

Financial Advisor

1250 South Highway 3 Northfield, MN 55057 507-645-0270

509 Division St P.O. Box 664 Northfield, MN 55057 507-663-8809

158 North Water St, Ste 4 Northfield, MN 55057 507-663-0325

www.edwardjones.com Fortunately, you still have time to maximize your

Member SIPC

2013 IRA contribution before the April 15 deadline.

IRT-2046F-A

Wednesday, February 26, 2014

Rice County Financial Guide

PAGE 3

Make Long-Term Care Part of Your Financial Plan

Understanding Reverse Mortgages

By Craig W. Armstrong (AdBuilder)

Most people have a mortgage and understand how traditional mortgages work. They may know little about a reverse mortgage, however. Put simply, a reverse mortgage is a home equity loan that does not have to be paid back until you no longer live in the home.

The most common type of reverse mortgage is a Home Equity Conversion Mortgage (HECM). The Federal Housing Administration created this type of mortgage in 1989. It is intended for people in their retirement years. In fact, one requirement is that you must be 62 years old or older. Other requirements include a substantial amount of equity in your home.

This could mean you own the home outright or have a low mortgage balance that Look for this section on

Faribault.com NorthfieldNews.com Cover Design: Kate Townsend-Noet

could be paid off with proceeds from the reverse mortgage. You must also reside in the home and pay all property taxes and insurance.

No monthly payments are due on the loan; therefore, no income or credit scores are required. The Federal Housing Administration (FHA) requires that all applicants receive independent counseling from a third party. A certificate of completion is required, which is submitted to the lender.

Payments can be made on the loan, but they are not necessary. The reverse mortgage is due when the borrower dies or no longer lives in the residence. The borrower’s heirs pay back the loan and interest. They have 12 months to either sell the house and pay back the loan or refinance.

If the loan is not repaid, the lender can foreclose on the property. If funds from foreclosure are not sufficient

to pay back the loan, government insurance will make up the difference. The purchase of this type of insurance is another requirement of obtaining a reverse mortgage.

After the loan and interest are repaid, any excess funds are dispensed to the heirs.

Reverse mortgages best benefit individuals who need extra income and who plan to stay in their home for a long period of time or for the rest of their lives. Cash received from a reverse mortgage is not considered income and is not taxed. It also does not affect Social Security or Medicare. It may affect eligibility for need-based local or state assistance.

A reverse mortgage is not for everyone. For those who find themselves later in life and need the extra income, it might be beneficial.

If you are interested, do your homework, crunch the numbers and figure out if a reverse mortgage is for you.

A special project of the Northfield News 115 5th Street W, Northfield, MN 55057

A special project of the Faribault Daily News 514 Central Avenue, Faribault, MN 55021

Publisher Sam Gett

Consider your long-term care and housing needs.

Whether for you, your spouse or your parents, thinking through your down-the-road care and housing needs makes both emotional and financial sense.

More than four in ten people between the ages of 45 and 55 have aging parents or in-laws. Do they have a long-term care plan in place? Do you?

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Visit www.northfieldretirement.org or call 507-664-3466 to learn more today.

Publisher STEVE POPE

RICE COUNTY FINANCIAL PLANNING GUIDE, February 2014 is distributed to subscribers and readers of the Northfield News and Faribault Daily News at no additional charge. All advertising contained herein is the responsibility of the advertisers. All rights reserved. ©2014.

Northfield Retirement Community • 900 Cannon Valley Drive

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PAGE 4

Rice County Financial Guide

Wednesday, February 26, 2014

Asking For A Raise

By Craig W. Armstrong (AdBuilder)

Most people work to live, not the other way around.

And while many people enjoy their jobs, everyone works for money. So, if you feel you’re worth more than you’re being paid, how do you ask for a raise?

The first thing to do is learn what you are worth.

That sounds kind of like you are cattle, but if your boss is going to consider your request, you are going to need some facts. Start by determining what kind of salary other people in your field earn. This information can be obtained from different sources.

Do you know people who have a job similar to yours?

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chris.weber@ceterais.com 1605 Heritage Dr. Northfield, MN 55057 Securities and insurance products are offered through Cetera Investment Services LLC member FINRA/SIPC. Advisory services are offered through Cetera Investment Advisers LLC. Neither firm is affiliated with the financial institution where investment services are offered. Investments are: *Not FDIC/NCUSIF insured *May lose value *Not financial institution guaranteed *Not a deposit *Not insured by any federal government agency.

Consider asking them what they make. Just be sure they are not coworkers. You do not want to stir up trouble at work by poking into people’s salaries. Try to find people working for different organizations and ask them for their salary range. This approach is less invasive than asking for a specific number. Some career fields have professional organizations. These organizations may have access to industry pay standards.

Another resource is the Internet. Job posting websites will usually list a salary, along with a job description. You can get a good idea of how much you are worth by figuring in your education and experience.

Timing is everything.

Don’t ask for a raise until you

have done something that has made the company money or made them look good. Pick a time when you have shined and your contribution can be measured.

Prepare your presentation. Know your company’s policies regarding raises. Do you meet all of the requirements? Do you have enough time in the job? Do you meet education standards and have you completed all of your position’s requirements? If you don’t meet the requirements for a raise, it’s an easy way to be shot down before you even present your case.

Put your presentation together using logic and clear examples. You don’t want to ask for a raise just because you think you deserve it. You have to have facts, figures and

examples to back it up. Also, you don’t want to be unrealistic. Make your request reasonable and present your argument with confidence.

Let’s say your presentation is a success, your boss agrees and you get a raise.

Good job, end of story. But, what if you don’t get the raise? How should you react?

The last thing you want to do is sulk or get angry. The best approach is to find out want you need to do to get a raise. A good manager will be able to cite examples and give you a path to follow.

Everyone would like to earn more money and getting compensated for your work is only fair. If you think you deserve a raise, follow the above tips and go for it!

Sandy Flom, CPA, CFP

®

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• Income Tax Preparation • Retirement Income Planning • IRA,ROTH & Rollovers Sandy Flom, CPA CFP® Investment Advisor Representative • Annuity Reviews • Life Insurance 507.333.3973 14 3rd St. NE, Faribault, MN • Quickbooks Sandy@FaribaultCPA.com • Bookkeeping Securties offered through Cambridge Investment Research, Inc., member FINRA/SIPC

Wednesday, February 26, 2014

By Craig W. Armstrong (Ad Builder)

Everyone needs a vacation now and then. It’s a time to recharge and spend important time with family. But if you don’t plan ahead, your vacation could put you in debt. Here are a few tips for saving money while you rest and relax.

First, do the math. Is it cheaper to drive than to fly? If so, there are several ways that

Rice County Financial Guide

Vacation For Less

taking a road trip can save you money. Renting a vehicle could save you gas and wear and tear on your own vehicle.

Some people don’t have the space they need to take the whole tribe on a trip. Some people don’t want to put the mileage on their vehicle. After you figure out your needs and crunch the numbers, determine if renting is the right way to go.

If you are traveling by car, you can bring food with

you and save by eating in. By booking a hotel room with a kitchen, you can save big money. Go grocery shopping like you normally would and take your meals with you. Just be sure that you are keeping cold things cold. A traveler with food poisoning can ruin a trip.

There are many things to consider when booking a hotel. Again, with food costs, does the hotel offer free kids’ meals or breakfasts? This

could result in big savings.

Does it have a pool? Swimming is great entertainment for kids. A day at the pool is cheaper than a day at an amusement park. How about avoiding hotel expenses altogether? Do you have friends or family in the area that wouldn’t mind guests? Some people enjoy having houseguests. Make sure you won’t be an imposition and save on room and board.

If you are headed to the

local attractions, consider buying multi-day passes.

This will increase the fun and save money. Utilize coupons.

Before you embark on your vacation, search the Internet for special coupons or deals for the area you are visiting.

Contact the local chamber of commerce; they may offer specials you never even thought of. A day at an attraction usually means souvenirs.

Avoid budget troubles later by setting a spending limit.

PAGE 5

Give each child a set amount of money to spend and then let them choose. Doing this will make it easier to keep an eye on how much money is being spent.

Enjoy your vacation.

You’ve earned it. Just don’t overspend and stress yourself out before your vacation is over.

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Or To Buy?

By Sam Erickson (Ad Builder) You’ve noticed the historically low interest rates.

You’ve seen home prices come back down to a manageable level. Now you are thinking about buying a home. Moving from the world of renting into the world of homeownership is an integral part of the American dream for most people. Knowing how to buy a house is one thing, but knowing when to buy can make the difference between a successful, long-term purchase and a flash in the pan that will have you back to renting within a couple of years. Follow a few tips and do your research before making this major commitment.

The housing market has changed drastically in the last 10 years. If you are buying, you have to be willing to say put, probably for at least three years, and preferably for much longer. The boom times—where you could buy a home and flip it in a six months or a year for more money—are gone for the foreseeable future.

A lot of your answer to this question has to depend on your local market. While there are broad trends, real estate markets vary considerably depending on where you are buying your home. You’ll have to do a little forecasting to make a good choice.

Are home prices going to rise more than rents? Right now, rents are increasing in most parts of the United States because of a weak economy and the housing collapse. It might make more sense once you do the math to spend as much on your mortgage (if not a little more) as you do on rent.

Money is the most significant factor in such a major purchase, and, these days, you have to have some money to secure the loans you’ll need to finance a house. A few years ago, loans were being given to people without demonstrable assets or income, but that has all changed. Ideally, you must have 20% of the purchase price to put into the home and make plenty of money to make the mortgage, pay your taxes, save some for home repairs and live the rest of your life.

Owning a home can be a solid way to build wealth.

Instead of paying someone else every month with no tangible benefit, you begin to invest and purchase your home. Owning a home does incur additional costs. While you will have additional costs, the federal government and many state governments try to encourage homeownership through liberal tax breaks.

That’s not something you are going to see on the front end of your transaction, but it is something that you will see every year that you own the home, a benefit no renter gets.

There are a lot of complicated factors that should go into your choice to buy a home or continue to rent.

You’ll have to assess your finances, your future plans and the long-term future of the neighborhood where you are looking. While home ownership has disappointed many in the last decade, it can still be a great way to build wealth and achieve part of the American dream.

PAGE 6

Rice County Financial Guide

Wednesday, February 26, 2014

Life insurance 101: The right coverage depends on your personal circumstances Therese Whitesong Agency twhiteso@amfam.com

Understandably, the subject of life insurance can be difficult to discuss. Like developing a will or designating a guardian for our children, it centers on the idea that we are no longer

here to enjoy and care for our loved ones.

No amount of life insurance can replace the emotional support we give the special people in our lives. However, it can provide them an income they can use to continue – and grow – in their lives.

Consum-

ers can select from a variety of life insurance policies and providers. Three common options are term life insurance, whole life insurance and universal life insurance.

Term life insurance can offer coverage from one year to 30 years or longer, and is often purchased to provide funds for financial obligations such as a mortgage or a child’s tuition in the event the policy owner dies. A term policy contains no cash accumulation features. Term life insurance is an excellent option for people who can’t afford permanent life insurance or need life insurance for a limited period of time.

Whole life insurance

Your source for

generally provides coverage throughout a person’s life with level premium payments, as well as a level death benefit. Unlike term insurance, a whole life policy may gradually accumulate a cash value, which you may be able to borrow against while the policy is still active. You can also collect any cash value in full—less any surrender fee and outstanding policy loans—if you decide to end the policy.

Universal life insurance offers more flexibility than whole life insurance. It allows policy owners to increase premium payments, subject to certain limits, which may increase the cash value of the policy. The death benefit may

also be increased subject to continued insurability. Unlike other types of life insurance, a universal life policy offers added flexibility that allows you to adjust your premium payment and death benefit, with certain limitations. As you become more financially secure, you can make additional premium payments that can increase the cash value of the policy.

If your financial situation becomes less stable, you may be able to temporarily lower or stop payments as long as the policy has enough surrender value to pay the monthly insurance deduction, loan interest and policy fees.

Selecting life insurance protection that’s right

for your situation is a deeply personal decision. Your loved ones’ immediate and future expenses, the income that will be lost if you die, and the amount of premium you can afford to pay are several of the factors that need to be considered. Sit down with an agent you trust to determine what is the right product for you and your family.

Therese Whitesong has been an agent for American Family Life Insurance Company since December 2000.

Her office is located at 510 Washington St in downtown Northfield. Whitesong can be contacted at 507-645-5010 or twhiteso@amfam.com to learn more about life insurance.

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Ameriprise Financial Services, Inc. Member FINRA and SIPC. Confident Retirement is not a guarantee of future financial results. © 2013 Ameriprise Financial, Inc. All rights reserved.

Wednesday, February 26, 2014

RICE COUNTY FINANCIAL GUIDE

PAGE 7

BANKRUPTCY 101

By Craig W. Armstrong (AdBuilder)

Times are tough, and most people are looking for ways to make a little extra money. There are several ways to do this, but one way can net you some money and de-clutter your house all at the same time is to have a garage sale. You won’t be able to pay off your credit card debt with the proceeds, but it may give you a little extra cash in your pocket.

Keeping your financial head above water in these tough economic times can be a challenge. Making ends meet is tough enough, but when you throw in job loss, illness, divorce or any number of other life-altering events, sometimes the only way out is bankruptcy.

Each year, millions of people file for bankruptcy, usually as a last resort to their financial problems. According to one study, the average age of someone declaring bankruptcy is 38-44% file as couples, the rest as singles, 30% women and 26% men.

More than half have lost their job or suffered a serious illness.

There are two main types of bankruptcy: Chapter 7 and Chapter 13. In Chapter 7, the individual has exempt and non-exempt assets. Exempt asserts are what they are allowed to keep and usually include a certain amount of equity in their home and car, a small amount of clothing and a small amount of personal items. Any asset considered non-exempt is turned over to the trustee and sold. The prof-

its are then used to pay the individual’s creditors.

Under Chapter 7 proceeding, debts are considered non-dischargeable or secured. Non-dischargeable debts must be paid, even though bankruptcy has been filed. Student loans are one example. Secured debts enable creditors to retain an interest in some of the individual’s property until the debts are paid. Credit card debt is one example and is paid only after the secured debts have been resolved. In some cases, non-secured debts are dismissed due to lack of assets.

Individuals should consider filing for Chapter 7 bankruptcy only if there is no hope of repaying any of their debts, there is no co-signer involved or if legal action from a creditor is imminent.

Chapter 13 bankruptcy is known as a reorganization bankruptcy. Individuals who file for this type of bankruptcy usually want to pay off their debt over a three- to five-year period. One of the motivators in filing for this form of bankruptcy is to keep non-exempt assets. To qualify for Chapter 13, an individual may not exceed $250,000 in unsecured debt and $750,000 in secured debt.

Reasons to consider Chapter 13 vary. Common ones include being behind on a mortgage, owing the IRS, wanting to protect assets that would be liquidated under Chapter 7, obtaining relief from collection proceedings or leaving the option open to file for Chapter 7 at a later date.

Bankruptcy does not

come without downfalls.

Negative consequences include adversely affecting credit scores for 10 years, hindering the ability to get a job or establish a new credit line and difficulty in getting insurance.

Bankruptcy is not the only way to clear debt. Individuals may consider dealing directly with creditors and working out a payment plan.

They may also talk to a credit counselor or debt consolidation company or get a second job. Filing for bankruptcy is a life-changing decision that should be considered from every angle. Individuals should speak to a financial professional before committing to the process.

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PAGE 8

Rice County Financial Guide

Wednesday, February 26, 2014

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