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June 26, 2008

Financial PLanners Find Clients as Jumpy as the Dow

"...... Since advisers are in the business of marking out a path through the confusion, a little turmoil can actually help business. Anyone can feel like a smart investor during a strong market. Not so in a wobbly one.

'What people want to know now is how to go about making decisions,' said adviser Michael Boone, owner of MWBoone and Associates in Bellevue. "The existing clients hopefully have learned that somewhere along the way. But we are experiencing good demand of people coming in saying, 'I just felt like I was recovering from 2002, and here we are all over again.'"

To see more of this Puget Sound Business Journal article, featuring Michael W. Boone, please click on the link below:

http://www.bizjournals.com/seattle/stories/2008/04/28/focus4.html?page=2  

Posted by MWBoone & Associates at 08:33 AM |

June 25, 2008

If You Can’t Sell a Home, Is Renting a Good Idea?

In this increasingly tough economy, people are not only having a tough time selling their homes in slow markets, they’re also having a tough time keeping their jobs. 

That means there are families facing a dangerous squeeze.  For those who have a chance to seek employment in other markets or simply want to move for any reason, they’re facing the prospect of their current home sitting empty while the lender still wants their monthly check.

No wonder why renting seems like a good solution. But before you make that decision, consider the pros and cons.
When homeowners suffer, renters usually catch a break. You’re not the only person who’s had this brilliant idea. As homes and condos sit empty in many markets, renters reap the rewards of supply and demand – landlords desperate for income might lower the prevailing market rent just to see some cash flow. The real estate bubble has stacked the deck against landlords in several ways. First, historically low interest rates and freewheeling mortgage lending that’s all but dried up today turned a lot of potential renters into buyers over the last few years. Second, the remaining renters in troubled housing markets now have more empty homes, condos and apartments to pick through.  Before you make a move, analyze those “for rent” ads in your neighborhood to see if they’re longtime rental properties or housing just like yours that’s being dumped on the rental market because it won’t sell.

Are you prepared to be a landlord? The good news is that good tenants treat your property like gold; the bad news is that good tenants can be hard to find.  Being a landlord is a job – never forget that. You need to freshen up the look of your property to make it attractive to renters, and you’ll need to understand local landlord/tenant law so you can have proper leases drawn up. You’ll need to meet tenants face-to-face and run credit and employment checks. That means time and money on the way in, and additional time, investment and potential headaches after your dream tenant moves in. They can damage your property (making it tough to sell later) or they may violate their lease agreement in a variety of ways including the worst option – delaying or ducking payment of rent. All of these situations are tough to deal with if you’re two blocks away – they’re a lot tougher to handle from another city or state. You might need to hire a property manager to handle tenant emergencies if you’re no longer close enough to do so.

How will it affect your home expenses? You will no longer get a homestead exemption and, as a result, your property will be taxed at a higher rate.  In addition, the cost to insure your property is likely to increase because you’re not occupying the property. You should see your tax professional and possibly a CERTIFIED FINANCIAL PLANNER™ or another professional to get an overview of how such a commitment will affect your overall finances. It’s true that rental property can pay for itself in tax benefits related to expenses and depreciation, but that depends very much on market factors and your financial situation.

 Renting could affect your borrowing power later. Converting a home from a primary residence to a rental property will also affect the new landlord’s ability to obtain mortgage financing to purchase their next primary residence.  Mortgage lenders contribute only 75 percent of the rental income—documented on the lease agreement—to a borrower’s income, leaving the other 25 percent to account for repairs and maintenance.  If the existing mortgage payment (principal and interest), property taxes and insurance exceed 75 percent of the rental income, the landlord’s debt-to-income ratio will be reduced. That will cut the landlord’s borrowing power for purchasing their next residence. 

Don’t forget moving expenses. This may seem obvious, but it will definitely cost you to move out, and you need to check with your tax professional whether you’ll be able to deduct expenses for a job-related move or you’ll have to shoulder this burden yourself. The Internal Revenue Service requires you to meet a "distance test” to relocate to a new job – your new job must be at least 50 miles farther from your old home than your old job location was from your old home. There are other distance, time and employment requirements you should review at www.irs.gov.


2008 — This column is provided by the Financial Planning Association® (FPA®) of, the leadership and advocacy organization connecting those who provide, support and benefit from professional financial planning.  FPA is the community that fosters the value of financial planning and advances the financial planning profession and its members demonstrate and support a professional commitment to education and a client-centered financial planning process. 

Copyright © 2008 MWBoone and Associates All Rights Reserved. MWBoone and Associates is a Registered Investment Advisor Investment Management services are not available through this web site but are described at www.mwboone.com. Securities offered through LPL Financial FINRA/SIPC.

 

Posted by MWBoone & Associates at 07:47 AM |

June 24, 2008

Weekly Economic Commentary

"Last week's batch of economic data was largely ignored by financial market participants, who were preoccupied with oil prices and another leg down in the perceived fortunes of the financial sector. In short, the incoming data continue to paint a picture of an economy that is slow growth mode - but not a recession, with core inflation in check and ongoing weakness in housing and the non-exporting sectors of the manufacturing economy".

For more of John Canally's Weekly Economic Commentary, please click on the link below:

http://www.mwboone.com/blog/LPL_Economic_Commentary_6_24_08.pdf

Posted by MWBoone & Associates at 10:56 AM |

Investor Taxes and the Stock Market

"We have frequently highlighted the investment implications of this year's elections. One of the ways the election impacts the markets is through the candidates' stances on tax policy. The market impact of the investor tax cuts in 2003 that lowered dividend and capital gains tax to 15% was difficult to discern, given the geopolitical and economic environment at the time, and the impact of the reversal of these provisions may be equally difficult to discern separately from their macro context".....

To see the rest of the LPL article, please click on the link below:

http://www.mwboone.com/blog/LPL_Weekly_Commentary_6_24_08.pdf

Posted by MWBoone & Associates at 10:48 AM |

June 19, 2008

Financial Planners: A Guide

"..... By and large most people are paid now as a percentage of assets. If assets drop by 10 percent and you are paid as a percentage of the assets, your income drops by 10 percent," said Michael Boone of MWBoone and Associates in Bellevue."

To see the rest of this Puget Sound Business Journal article featuring Michael W. Boone, please click on the link below:

http://www.bizjournals.com/seattle/stories/2008/04/28/focus5.html 

Posted by MWBoone & Associates at 10:25 AM |

June 18, 2008

Want to Avoid Medical Debt? Take These Preventative Measures

Medical debt is a leading cause of bankruptcy in this country – a fact made even more frightening because it is devastating people who actually have health insurance. According to January statistics from the Commonwealth Fund, a non-profit health care action group, more than one in six Americans—or 17.7 percent of the non-elderly population—lived in families spending more than 10 percent of after-tax income on health care in 2004, up from 15.9 percent in 2001. One of the most damaging aspects of medical debt is that it may occur suddenly and pile up at lightning speed. An overnight hospital stay – depending on tests and treatments – may easily cost several thousand dollars.

The bottom line: Your health is potentially your biggest money issue.
Yet like most financial crises, it’s tough to find solutions when you’re facing an emergency. If you’re currently in good health, first, count your blessings. Then do the following:

See if you can get healthier. The Centers for Disease Control reports that 66.3 percent of non-institutionalized U.S. adults aged 20 or over are overweight or obese.  Getting involved in a personal or group weight loss program and actually cutting pounds will significantly lower your health risk factors. Quitting smoking and limiting alcohol intake are other good moves to make, but consult your primary care physician first to map out a strategy. 

Review your health insurance coverage. If you are insured through an employer or buy your own coverage as a self-employed person, investigate what that coverage actually provides in everything from minor emergency room visits to major catastrophic diseases, such as heart problems or cancer. There’s a good chance those benefits change – and have probably decreased – year-to-year. It’s a good idea to seek help with this process. A trusted insurance agent, a trained financial adviser, such as a CERTIFIED FINANCIAL PLANNER™, or another professional, can review this coverage with you or recommend an expert who can.

Check your disability coverage. If you were sick and unable to work for a lengthy period of time, when would your disability coverage kick in and how long would it pay your living expenses? If you are self-employed or don’t have this benefit at work, you should discuss it with an expert.

Pre-plan a health care spending strategy. Granted, it’s tough to ask how much a hospital’s tests, medications and procedures are going to cost if you’re strapped unconscious to a gurney. But everything in a hospital has a price – everything from tissues to MRIs.

Talk to your primary care physician about ways to save on costs during office visits and prior to any planned hospital stays and also talk about extended payment options if you feel you’ll need one. Talk to a financial planner or health care insurance expert about ways to scrutinize hospital bills so you can refuse unnecessary items during your stay. Once you have these ideas written down, make sure the person you’ve designated as your health care power of attorney has them so they can act in your stead if you’re incapacitated. One more thing – these are particularly important questions to ask if you are moving an elderly relative into a nursing home or assisted-care situation where everything from aspirin to adult diapers carries an inflated price.

Put tax-advantaged savings strategies in place. You may have the option to put money into flexible spending accounts (FSAs) at work and/or set up health savings accounts (HSAs) as part of your enrollment in a qualified high-deductible health plan. Unlike FSAs, HSAs allow balances to be carried forward year-to-year, growing on a tax-free basis as long as they’re used for medical expenses – this way, you can accrue a fairly large nest egg against uncovered expenses while you’re still healthy. Get some advice from an expert on how to best use one or both kinds of accounts if you have those options available to you.

Create a health insurance emergency fund. An emergency fund – separate of your main emergency fund – would be useful to cover the deductibles and co-insurance on your health insurance if you don’t have an HSA in place. Health insurance policies will list a “total out of pocket” amount on the coverage page, which can run thousands of dollars – try to keep this amount in reserve.


May 2008 — This column is provided by the Financial Planning Association® (FPA®) of, the leadership and advocacy organization connecting those who provide, support and benefit from professional financial planning.  FPA is the community that fosters the value of financial planning and advances the financial planning profession and its members demonstrate and support a professional commitment to education and a client-centered financial planning process. 

Copyright © 2008 MWBoone and Associates All Rights Reserved. MWBoone and Associates is a Registered Investment Advisor Investment Management services are not available through this web site but are described at www.mwboone.com. Securities offered through LPL Financial FINRA/SIPC.

Posted by MWBoone & Associates at 10:09 AM |

June 17, 2008

Economic Market and Outlook

To view Lincoln Anderson's most recent Economic Market Outlook, please click on the link below:

www.mwboone.com/blog/Econ_Update_June_16_20081.pdf

Posted by MWBoone & Associates at 09:35 AM |

Perception and Reality Collide on the Economy and Inflation........and Reality Wins

Last week, perception met reality on the economy and inflation....and reality won out on both accounts.

  • The date released on the economy last week suggest that contrary to the perception that the consumer is dead and the economy is in recession, the consumer is alive and well and the growth rate of the economy is likely to have accelerated between Q1 and Q2 2008, due to a booming trade sector and suprisingly strong consumer spending.
  • The pre-dominate concern in the financial markets last week was the fear that runaway inflation in the coming months would lead to draconian Fed rate hikes. The reality - is that there has been no discernable spillover of higher commodity and import prices into core inflation in the U.S.

To see the rest of the article, please click on the link below:

http://www.mwboone.com/blog/LPL_Weekly_Commentary_6_16_08.pdf

 

Posted by MWBoone & Associates at 09:06 AM |

June 12, 2008

Want to Fight I.D. Theft? Be Careful How You Treat Your Information

Foiling I.D. theft is no longer just a matter of buying a document shredder and keeping track of your receipts – though it helps. I.D. theft evolves every day and according to security experts, net-savvy thieves are getting more efficient about blending their illegal activity on the ground and online. Here are some examples from Identity Theft Resource Center (ITRC), a non-profit group focusing on the latest I.D. theft trends and assistance for victims:

·       I.D. thieves are stealing more paper checks being delivered to homes. Why? Because with the credit squeeze, there are fewer people being approved for checking accounts, so physical checks left in mailboxes are being swiped more frequently so the account numbers can be used to open fraudulent accounts under different names.

·       Fraudulent dating, job hunting and social networking Web sites are being used to gather critical data for a host of fraudulent activities.  Be careful what you put online.

·       Thieves are getting younger since young people are the earliest adapters of online skills. The ITRC notes that arrest records show that younger individuals are getting caught with sophisticated forgery equipment or designing sophisticated online scams.

·       Sadly, there are more reports of I.D. theft occurring within families and groups of friends. Individuals are more likely to have their guard down on protection of credit and account data around people they know. Often, such thieves are connected to drugs or other illegal activities being done by their peers.

What can you do? Here are some ideas:

Change your online record-keeping behavior. If you download bank or credit activities to a desktop program like Quicken or Microsoft Money, don’t store passwords on that software. It may slow you down, but take the time to type in that access data, and then log off as soon as you’ve completed your transactions and close the browser too. Never put this data on a wireless-enabled computer – I.D. thieves lurk in coffeehouses and other public places to capture data that’s traveling through the air. Confine these activities to the desktop and secure terrestrial Internet connections.

Put a lock on your mailbox. If you work long hours or are otherwise not available to grab your physical mail as soon as your letter carrier drops it off, either install a high mail slot on a door with a strong lock (so a thief can’t reach in and grab mail that’s fallen on the floor), or install an outdoor mailbox with a key lock on it that only you can open. Also, talk to your bank or check printer about secure ways to receive delivery of printed checks.

Shred or cut up any receipts or credit and account documents. A strong, safe paper shredder really is a good investment. What should be shredded: credit solicitations, receipts you’re not keeping, line of credit checks that come in your monthly credit card bills (which you
shouldn’t be using anyway), and tax-related evidence for prior-year returns your tax advisor says you no longer have to keep.

Guard your Social Security number above all.  Never, ever share this data unless you are dealing with a recognized financial institution that you trust. Never put it on a check or type it into an online form.

Beware the “Phishermen.” Phishing is a process by which scam artists try and get you to divulge your Social Security number, your account numbers, address or other personal information under the guise of a legitimate company you may already be doing business. It’s most common over the Internet, but there’s no reason why a phishing request couldn’t come via direct mail or over the phone. They’ll get your attention by saying there’s a problem with your account you have to address immediately. Online, the scams are so sophisticated that you’ll see e-mails that look exactly like the ones your bank, credit card or even your airline mileage club would send you, right down to the logos and disclaimers. Anytime anyone asks you for personal information, use your own account customer service number (not the one on the mailing) to speak to a live person to verify that the request is real.  If it’s not, save the evidence – it may help put the con artists in jail.

Change your passwords occasionally. If the only username and passwords you can remember are your e-mail address and your dog’s name, you need to develop a schedule for changing those passwords and storing that information in a safe place off your computer. Again, resist storing this information on your computer. 
 
Get each of your credit reports once a year. By law, you’re entitled to free copies of your credit report from each of the three major credit rating agencies – TransUnion, Experian and Equifax. Don’t get them all at once – stagger them a few months apart so you can see if erroneous data appears throughout the year.  Also, if you are on active duty with the military, you can place an active duty alert on your credit reports to help minimize the risk of identity theft while you are deployed. Active duty alerts are in effect on your report for one year – if your deployment lasts longer, you can place another alert on your credit report.  Couples need to check both reports.
 

Think twice about I.D. theft insurance. Some companies offer identity theft insurance that will cover lost pay if you have to straighten out your credit, but realize they will not do the dirty job of restoring your credit – that’s up to you. And since many of the companies selling this insurance are already affiliated with the credit industry, that’s good reason for pause. Also, check your home or renter’s insurance policy to see if they provide I.D. theft coverage.  Most important, be aware that some of the I.D. theft prevention marketers are scams themselves!
 

Stick with a known ATM. Some of those independent ATMs you see in convenience stores, restaurants and bars may be collecting your data for illegal use. Use ATMs only at established banks.

Watch your wallet and cell phone. Yes, it sounds dumb, but the easiest one-stop opportunity for I.D. thieves to fleece you is sitting in your purse or pocket. Keep only a few necessary items in your wallet and regularly clean out receipts and other data that would identify you. And keep in mind that an Internet- and address book-equipped cell phone is a potential gold mine – they’ll not only get your information, but they’ll be able to reach all your contacts as well.
 

What if theft still happens? One of the best resources for a step-by-step guide to fighting identity theft is the Federal Trade Commission and its Web site, www.ftc.gov. The FTC provides a complete listing of contacts and procedures for getting to the bottom of identity theft before the event goes from being serious to devastating.
 

May 2008 — This column is provided by the Financial Planning Association® (FPA®) of, the leadership and advocacy organization connecting those who provide, support and benefit from professional financial planning.  FPA is the community that fosters the value of financial planning and advances the financial planning profession and its members demonstrate and support a professional commitment to education and a client-centered financial planning process.

Copyright © 2008 MWBoone and Associates All Rights Reserved. MWBoone and Associates is a Registered Investment Advisor Investment Management services are not available through this web site but are described at www.mwboone.com. Securities offered through LPL Financial FINRA/SIPC.

Posted by MWBoone & Associates at 01:40 PM |

June 10, 2008

Weekly Economic Commentary

"The much anticipated May jobs report sent mixed signals to the economy. While the small decline in the monthly payroll job count is consistent with a mid cycle slowdown, the sharp 0.5 percentage point gain in the unemployment rate suggests that the economy may be in recession.

The other reports released last week for April and May painted a decidedly more upbeat picture of the economy in Q2 2008:"

To see the remaining of this LPL Financial article by John Canally, please click on the link below:

http://www.mwboone.com/library/articles/LPL_WeeklyCommentary_6_10_08.pdf

 

Posted by MWBoone & Associates at 03:52 PM |

June 05, 2008

How Not To Go Broke If Your Kids Move Back After Graduation

The after-college reality is much different from a generation ago. Two thirds of college graduates owe significant money after graduation. According to the Project on Student Debt, debt levels for graduating seniors with student loans from 1997 to 2007 more than doubled from $9,250 to $19,200 – a 108 percent increase. That’s why it’s now very common for graduating seniors to move back to the family manse for some time after graduation. For those who don’t have ready employment, it’s probably a necessity. For those with jobs, moving back in with the folks is a way to save for a down payment on a car or possibly a home.

It’s absolutely fine to welcome family back home, particularly if it means you really have an opportunity to help your kids. But it’s not a terribly good idea to welcome home what the experts are calling “boomerang kids” if you’ve put your own retirement savings on the back burner and you’re also facing both expense and strain from taking care of elders.

Like all family transitions, this one requires some planning, and it may not be a bad idea to get some advice. MWBoone & Associates, LLC. can give you advice not only how to manage the financial aspects of your relationship with your grown child, but how to make sure the other aspects of your financial life are healthy.
Here are some steps:
  • Promise not to overextend yourself. Don’t let the return of the prodigal son or daughter derail your own retirement or debt repayment plans. Parents may also have some challenging financial problems to solve, and your child should understand that you should be helping each other. 

  • Still your house, still your rules: Granted, your kid’s now an adult, not an 11-year-old. But if your child is moving back in, you need to set specific rules for the way you want him operating under your roof. If you want him to pay rent (it’s probably a good idea), set those terms in writing. Set terms for household expenses if you prefer. And to make sure there are no misunderstandings, make sure you both understand where you stand with non-financial issues – how much of their stuff you’ll want them to move in, overnight guests, checking in when away, etc.

  • Set an endpoint:  If your child needs a year to start paying off credit card bills or tuition debt or is hoping to scrape together enough for a down payment on a condo, discuss it and figure out how long that’s going to take. Deadlines enforce goals.

  • Chores are necessary: You may charge rent or demand payment in kind, but a mixture of both is best. You’re not running a B&B. You might insist that your child handles laundry, makes (not buys) dinner a few times a week or helps with a major home renovation project if they have those skills. 

  • Supervise their financial planning: Some parents bail out their kids entirely. Instead, work with them to build better financial habits. Help them set a budget after you both figure out their net worth – a real eye-opener for many young adults. You might consider, however, matching the amount that they’re putting toward debt or a home down payment each month.
  • Keep records. Even if you never share these with your kid, make sure you keep track of payments, chores and other in-kind efforts made by your “tenant” during the term of his or her stay. It’s a way to look back and see what’s gone on during this phase in your relationship.

  • What about the rent? If you are in a relatively good financial position and you don’t need your child’s rent to pay your own bills, you might consider investing those amounts on behalf of your child to chip in for his or her home down payment or possibly a wedding.

    •  


    2008 — This column is produced by the Financial Planning Association, the membership organization for the financial planning community.

    Copyright © 2008 MWBoone and Associates All Rights Reserved. MWBoone and Associates is a Registered Investment Advisor Investment Management services are not available through this web site but are described at www.mwboone.com. Securities offered through LPL Financial Member FINRA/SIPC.
  

Posted by MWBoone & Associates at 08:07 AM |

June 04, 2008

The Inflation Tipping Point

"The month of May added to the gains of April for stocks as signs of improvement were evident. For the month, Treasury yields rose refelcting better economic growth prospects, credit spreads narrowed as the crisis faded, the dollar strengthened as the U.S. outlook recovers, and the Information Technology sector was the best performer despite soaring oil prices"

To see the rest of this article by Jeff Kleintop, please click on the link below:

http://www.mwboone.com/blog/Market_Update_June_2_08.pdf

Posted by MWBoone & Associates at 07:46 AM |

June 03, 2008

Lincoln Anderson's thoughts on the Economy

In my view, the seemingly unstoppable rise in energy prices is the biggest problem confronting the U.S. economy and financial markets.   Compared to 1999 when oil prices were low, we are now spending an additional $250 billion per year on imported crude oil.  U.S. households bear the brunt of the burden where total energy price increases (petroleum products, gas, electricity, etc.) have added nearly $400 billion in additional annual consumer costs compared to 1999.  Given that consumer spending, in a good year, increases about $500 billion, this added energy burden is very significant and is slowing real consumer spending sharply.  On the other hand, personal income did rise $681 billion last year.

 

It is not clear that real market demand and supply factors are the principal factors driving this price spiral.  U.S. crude oil imports peaked in June of 2005 and are now down about 10%.  Total industrialized nation demand is down, but emerging nation demand (China, India, etc.) is still rising.  All in all, growth in total world oil demand – while still positive – is tapering off.  Meanwhile, the OPEC (Organization of Petroleum Exporting Countries) cartel has cut production while the non-OPEC oil supply is rising.  I think this fall in oil demand and rise in non-OPEC oil supply will likely continue, driven by these extraordinarily high prices.  If so, then hopefully oil prices will fall before serious damage is done to the economy.

 

So, why are prices so high?  Some argue that major increases in speculation in futures markets are the culprit.  Others blame OPEC.  I agree with both assessments.  With energy demand and supply relatively fixed over the short-run, speculators may be able to push prices around, but after a while, folks start to make adjustments – cutting back on driving, taking public transportation, converting heating systems.  And oil and alternative energy supply begins to expand.  Sometimes you see the underlying reality in the small things.  I read last week that a farmer in Indiana had spent $100,000 drilling an oil well and putting in a pump and storage tank.  He is lifting three barrels a day.  At first that sounded silly to me, but after doing the math, I see that if he nets $100 per barrel, he will bring in $109,500 in the first year. Using our jargon, that’s a very good ROI (Return on Investment)!

 

We do have a strong and resilient economy and financial system that is faring remarkably well under tough circumstances.  I continue to believe that we will see a significant drop in energy prices, and I hope and expect that drop will come before it triggers a recession.  Consequently, I am not recommending a “bunker mentality” at this time.  But that day may come if energy prices do not come down.   As always, please call me with any questions or concerns.

 

____________________________________________________________________________________

This article was prepared by LPL Financial Research. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult me prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

Copyright © 2008 MWBoone and Associates All Rights Reserved. MWBoone and Associates is a Registered Investment Advisor Investment Management services are not available through this web site but are described at www.mwboone.com. Securities offered through LPL Financial Member FINRA/SIPC.

Posted by MWBoone & Associates at 08:26 AM |