Simple Will only refers to the flow of assets, a Simple Will doesn’t mean you can just scribble it down on a napkin and hope it is accepted by the Court.  Many States don’t allow hand written Wills to be allowed for probate.

I will go through this post without even mentioning the estate tax which compounds the problems presented below. So even if you aren’t in that top echelon which will have to pay those taxes, you still may want to consider an upgrade.

Why a Simple Will Works in Most Cases

A Simple Will works in most cases because it is natural, that is it follows most people’s testamentary intent.  There is something comforting about providing everything for the surviving spouse, and then if there is anything leftover your children should enjoy it outright.  This is generally the type of Will you see pushed by attorneys who have no idea what they are doing in this arena or by online will providers.

I am not a huge fan of simple wills because there are a few relatively easy upgrades which can be made that fit most situations.

Simple Will “Upgrades”

There are situations which require a more advanced Last Will and Testament.  Some can be built into every will some should only be used in appropriate situations.  Regardless every reader who is able to contemplate death should understand these provisions/trusts.

Do you Trust your Children?

Most States provide for Spendthrift protection, so assets held in a trust are not eligible to satisfy a judgment for creditors.   When your inheritance is given outright and it hits that child’s bank account at 18 or 21 (depends on your State) that is it…control is gone, and that child can go grab some cristal and pour it on their favorite stripper.

Do you Like your Child’s Spouse?

Let us get real for a second, half of all marriages end in divorce, and depending on the State you live in marital property is chopped in half upon divorce.  However, in most States property held in Trust is not considered marital property for equitable distribution.

Do you have or is it Possible One of your Eventual Heirs May have Special Needs?

This is one of those trusts that should be built into every single Will.  Planning for a Child with Special Needs is a complicated and sensitive topic, however, it must be addressed.  If a child was receiving government benefits and you left him or her assets, outright, it is likely you would be doing them a disservice.  If you left anything above low five digits they would lose most government services.

There is a relatively simple fix through the use of a Third Party Special Needs Trust.

Are You on Your Second Marriage?

Once you leave assets to that Surviving Spouse, outright, he or she is free to leave it however and to whomever they want.  My law school professor used to say this was the “pool boy dilemma.”

Luckily, our boys in congress were afraid of the pool boy dilemma also.  They came up with a Qualified Terminable Interest Property Trust (commonly referred to as a QTIP).  A QTIP essentially allows you to leave your property to a trust which must pay your spouse income but upon his or her death you control where those assets go from beyond the grave.

A must in every second marriage. It prevents a surviving spouse from disinheriting the predeceased spouse’s children.

Are you Leaving Behind Fido?

Many states allow for Pet Trusts to provide a bucket of cash for whoever is lucky enough to also get your pet.

Is a Simple Will Wrong? Absolutely not.  I really believe everyone needs a Will so something is better than nothing.  Oh and just because you have a revocable living trust doesn’t mean these upgrades are built in.

When is the last time you reviewed your Last Will and Testament? Have I inspired you to do so?

What is a Structured Settlement? 

According to JG Went Worth,

A structured settlement is a financial package that allows court-awarded compensation to be paid in regular installments rather than in one lump sum. These installments may be paid over a fixed period or over the recipient’s lifetime. Because each is tailor-made for the individual case, the structure may also include some immediate payment. Structured settlements are commonly used in settling personal injury or malpractice suits. However, structured settlements can vary widely; for instance, some are set up as retirement plans, while others provide payments on specific birthdays.

After talking to a buddy of mine who is a plaintiff trial attorney he broke it down for me.  When you tell an insurance-defendant that they don’t have to pay everything upfront, they become more willing to negotiate.  But nothing can guarantee that years down the line you will still want that stream of income versus a lump sum payout. 

Since I have never been involved in obtaining a structured settlement nevertheless selling one, I asked Jason from JGWentworth to provide some insight into the topic.

6 Savvy Ideas When Selling Your Structured Settlement

Like stocks or property, a structured settlement is an asset – just a lot more flexible and yielding to your financial needs. Yet decisions both big and small concerning your inheritance must have your best interests in mind. How will a lump-sum payment work best for your plans and budget? What impact will it have on your financial life? Structured settlement owners have a bevy of ideas to consider when selling this significant asset. Here are five important ones:

Enter a relationship with a reputable secondary buyer

Selling your structured settlement should be a smooth and easy process. The traits of a strong company assure a variety of selling choices such as using your settlement for a loan. A reputable company explains the fine print, answers all questions in entirely and empowers the decision-making process.

Sell what you can afford to live without

Structured settlements are used as a source of income for many. This doesn’t have to change. Understand you have the flexibility to sell a portion of your settlement –and only when you feel comfortable selling it. This can better help you decide how to get a precise lump-sum amount for a down payment on a home and still use your structured settlement to pay the monthly bills.

Zero in on the exact amount needed

Perhaps you want to use your lump-sum settlement money to start a business or get an advanced educational degree. Researching education or start-up costs give you a much clearer idea of how much of your structured settlement you will need to sell to make these new dreams come to fruition.

Consider the length of the process

A reputable structured settlement company will walk you through the process, explaining exactly when your settlement will be liquidated into cash. That means you there is a light at the end of the tunnel if you are looking to use your payout to pay off those medical bills or other debts that might have accrued due an accident.

Prepare for the unexpected

Tuition increases. So does inflation. Housing bubbles pop and the market takes a nose dive. Smart structured settlement selling takes any unforeseen economic crisis into consideration and  budgets appropriately for life’s little road bumps.

Review other sources of funding

A structured settlement might not be your only form of income. Perhaps you also have a regular paycheck or rental property to depend on. This equates to more freedom when imaging what you can do with a lump-sum structured settlement payout.

Have you ever received a structured settlement? Ever subsequently sell one? How was the process

 Whenever people start telling me their business ideas I start going into over drive almost feeding off their excitement and intensity.  Talking about starting a business or building an idea gets me pumped.  I start spouting off pros, cons, asking a ton of questions and am generally happy for that person and their breakthrough idea.  Start up Business costs are always part of the discussion.

The September 2010 Fortune Magazine had a great chart comparing starting a business today and 10 years ago.  The example was for an electric bike store and included five categories:

1. Incorporation – Then was $1,500 now is a couple hundred bucks online
2. Branding – Then was $20,00 now is $7,000 with the use of freelancers and open source software (almost EVERY single blog you read is built on free software)
3. Marketing – Then was $75,000 now is $1,000 with the use of social media and google AdWords
4. Employee Costs – Then was $792,000 now is under $20,000 with the use of freelance writers and paypal
5. Rent – Then was $175,000 is Manhattan Retail Space now is under $10,000 with the use of a P.O. Box.

To be honest the “now” numbers actually seem high.   I really believe for most small business ideas you need a lot less than the $40,000 in the  “now”example. 

Creating my Next Small Business Venture

I like creating small little ventures to complete my multiple streams of income.  I just don’t believe in these small ideas enough to think they will replace my day job, but they will increase my ability to do exactly what I want with that day job. 

A couple months ago I was out with a couple which were pregnant (they subsequently had their child on July 11th) when the idea of way came to to create an online baby pool website for them.   I made a non-automatic pool site where people would come and make their guess as to when the baby would be born.  As the guess came in I would get an email and then add it to the calendar for all to see.  It was a lot of fun, but I figured if I could create this initial site in 10 mins over a couple beers, why couldn’t I create a site where everything was automatic.  It turns out it was a lot harder than expected!

However, I really believed in the profitability of this site and thus created a game plan to launch the site (if there is an interest I can go through the details).  The point of this post was to share with you, that you don’t need tens of thousands of dollars to get your next idea of the ground.  The internet has changed all that!  I was able to create that site for under $500 (granted it isn’t ready to go live yet, but I am proud of it so far).  Will the site be a huge success? I don’t know but I do know that it felt great stepping up to the plate and actually swinging rather than just talking about it.

Money Does Buy Happiness Theory

It is only a theory because I can’t prove it, although I am sure someone much smarter than I can prove it.  I was having a glass of whiskey in a co-worker/buddy’s office after we both had particularly rough days when a 3rd co-worker came to join us.

This particular co-worker, is a very nice woman but clueless to an annoying fault. I can’t guess how old she is (has to be mid to upper 30s) but still lives at home with mommy and daddy in a ridiculous house, and goes with them to “The Club” for dinner every weekend.  I once argued with her that her car was amazing (she was driving in an X5 BMW), and it was only after I proved to her that the MSRP on her car was more than 60% of her fellow American’s yearly income that she finally got where I was coming from.  Ms. Co-Worker does health insurance and not really financial planning.

Maybe it is because I work in a financial planning office with a lot of high net worth clients  but the conversation quickly turned to money, and I don’t know where it came from but Ms. Co-worker stated matter-a-fact that “Money Doesn’t buy Happiness.” I don’t know where it came from, but without thinking I shot back, “It is because you never had to worry about it.”

As we discussed the topic and drank more whiskey I came up with a theory on the dry erase board in my buddy’s office.   I can’t possibly be the first one to think of this theory, but I didn’t really research it before writing this post (maybe one of my smart readers can point me to further reading on the topic).  I should mention when describing theories or estate planning ideas, I like to draw pictures and flow charts.  The Wife hates it.

Money Brings Happiness in Diminishing Returns

If you hand someone $50,000 who has nothing – you tell me that money didn’t just bring them happiness!   That being said go hand Bill Gates $1,000,000 I don’t think it would change his life much.

Why Do I Believe that Money Buys Happiness?

Girl with Red Balloon replied to my Question “Does Money Buy Happiness” and I found her reply really interesting:

My immediate reaction, was doesn’t she mean Yes then – Money can buy those experiences and things that make us happy.  Unless she meant the more abstract as to whether the paper itself brings joy, in which case I can’t say that I agree with her either, knowing that I have that paper to buy stuff/experiences/food does bring me happiness.  (Side Note: She is really active on Twitter you should check her out).

I think it has to do with the fact that money is the only tool for financial freedom in our modern world.  I can’t hunt, don’t like to fish, I am fond of my home, would like to pay my hosting bill so you can read me getting bashed when I talk about teachers.  I need cash to survive, and yes, without it I’d be pretty sad.

If you were wondering how the conversation ended with Ms. Co-Worker, she dismissed my awesome drawing and continued the conversation about how she didn’t care about money with the sentence, “When I was in the Hamptons last weekend…” It was at that point I put my glass down and said I was out!

Thoughts? Does Money Buy Happiness?

According to Alexa, I seem to have a lot of Generation Y readers, so I figured I’d bring my thoughts to everyone.  The article provides some interesting quotes stereotyping the generation:

…Gen Y’s view on wealth is different from that of their parents and grandparents: “Their value proposition has shifted from the single bottom line of profit to the new bottom line of ‘planet, people, and profit,’

Gen Y clients are also actively seeking financial advice, she says, yet advisors and institutions have not really caught on to this and the space remains grossly underserved.

First and foremost, advisors must understand the importance of the Three Ps—planet, people, and profit, Nickles says. She says that most members of Gen Y won’t take jobs simply because they want to make money, for example, and they would readily shun companies that are not socially or environmentally responsible for their actions, she says. The same applies for the investments a Gen Y person would want to make with her money, so “any advisory or investment program must take into account that the motivation is not money alone and must be constructed around the idea of social responsibility.”

Finally, and perhaps most importantly, advisors and institutions must pay attention to the idea of branding. “This is a quick-shifting generation and if you haven’t connected with them on a brand level by the time they are 30, they will leave your brand,” Nickles says.

I actually don’t agree with the plant and profit part of it.  I understand that stereotypes don’t apply across the board, so I went searching for a different article generalizing people born in 25 year bands.  I found a recent Huffington Post article that had some “great” generalities that I do agree with (and I usually don’t agree with Huffington)

Unlike other generations, Gen Y never really rebelled. Many of its members listen to their parents’ music, love the movies their folks grew up on and use the same products.

Its members may communicate differently – through social media and texting instead of phone calls and email – but they want to be spoken to as adults not “young people.” Old world values matter to them.

One major area in which Generation Y differs from its parents is its focus on experiences as opposed to material things.

These seem to fit me better.  I love Billy Joel, I go bananas when someone talks down to me, and I care less about rocking out a house in the right town as compared to my parents do.

Which stereotype article is more your speed?

For those not in the generation do you think these all apply to “us” people?

These list type articles rarely provide any new wisdom, but either provide me with a refresher of what I could be doing better or annoy me because I don’t agree with everything or think it is way too simplistic.

This recent list of ‘guaranteed’ investments provide a perfect example of what I am talking about:

Max out the 401(k)

Give up the Vacation Home

Max out IRA or Roth IRA

Pay off Credit Card Debt

Fire your Banker

Get your Tax Refund Early

Buy Inflation Protected Bonds

Buy A Bread Machine

Play Hardball with your Insurance Company

Get a Freebie from a Bank

None are financial unicorns, and some don’t even make sense in terms of guaranteed investments to pay off. 

Those Guaranteed Safe Investments that Make Sense

Paying off debt and getting your tax refund early seem to be the only ones on here that will work for everyone.   As the article succinctly points out,

You’re probably paying at least 15% interest. You may be paying a lot more. You’d have to earn maybe 17% before tax on an investment just to keep pace. Boring? Nobody’s making 17% these days. So pay off your credit-card debt and brag to all your friends that you just beat Wall Street.

While I generally believe receiving a large tax return isn’t the worst thing in the world, I agree that regardless of the size the government shouldn’t hold on to it longer than necessary. 

The inflation protected bonds, also probably belongs in this category, at least for now. 

Those Safe Investments that are Questionable

While maxing out retirement accounts would be good for me, is it a sure investment?  I would venture to say anytime you are talking about the market there are no sure things in the short run.  Similarly, fighting/switching insurance companies and banking institutions, could make sense, but much more information would be necessary.  

I haven’t been able to optimize the credit card rewards system just yet, but that is what the WSJ meant when it said get a freebie from a bank. 

Weird Choices to Fill In

Then there are just filler ones – Give up the vacation home? Really?! How could that possibly be in the same list as the other sure investments? Buying a bread machine? Fire your bank?

Since the basics of personal of finance are easy main stream media sites need to fill up content. 

What do you think about the list? Do you usually read lists like these?

What is a Payday Loan?

According to The Payday Place, a pay day advance is,

a loan that can get you a sum of money (usually a few hundred dollars) to tide you over until your next pay date.

Seems reasonable…who hasn’t been low on cash a few days before a payday?  Payday Loans usually come with very little, to no, underwriting.  The Federal Trade Commission states that it is simply “… secured by a personal check or paid by electronic transfer.”

If there is no basic underwriting the lenders are taking a huge risk, and as with anything in a capitalistic society, if there is a huge risk there will be massive costs.  Payday Loans come with huge costs.

What does a Payday Loan Cost?

It doesn’t matter if you are doing a payday loan comparison using multiple lenders the costs associated with these types of loans are usurious at best and egregious at worst.  The Missouri Attorney General’s Office provides us with a very useful calculator:

So on a $400 loan for 7 days with $15.50 of upfront free you will be paying 806% effective APR.  JEBUS!  If you are in need of cash, there has got to be some alternatives!

Any experiences with payday loans?

My Current Dividend Portfolio

I took a four step approach to create my dividend portfolio.

1. First I listed all the Dividend Aristocrats.
2. Then I cut all those stocks whose P/E ration was either in line, equal or worse as compared to the industry standard.
3. Next I looked at yield and
4. Lastly, I looked at Price to Book.

I ended up with 4 stocks that I wanted to pursue,

• LLY – Lilly (Eli) & Co
• CTL – Centurytel Inc
• CB – Chubb Corp
• SWK – Stanley Black and Decker

I also picked up the Index-ETF just so I could have a small piece of all 44 Dividend Aristocrats.  So my plan is to repeat those four steps.  I will drop/add as necessary but I am going to keep investing in either 4 or 5 stocks (plus the etf).  Even if I decide not to continue investing in a certain stock, I won’t be selling my position.

Stocks on the Dividend Aristocrat List

S&P provides us with the S&P Dividend Aristocrats Index.

The S&P 500® Dividend Aristocrats index measures the performance of large cap, blue chip companies within the S&P 500 that have followed a policy of increasing dividends every year for at least 25 consecutive years.

This first step narrowed the thousands of stocks to 43.

Price to Earnings for Dividend Aristocrat List

Next I looked into comparing P/Es

Right off the bat, I eliminated those stocks in Red.  They were eliminated because I didn’t like their P/E and/or their operating margin is too small as compared to its peers.

The non-highlighted ones, didn’t grab my attention and considering I have enough ones that do, I figured I would move forward.  Speaking of those that caught my attention, they are highlighted in Blue and MUST be further researched.  If you notice their P/Es are substantially lower then their industry standard or they have an operating margin which is higher than its peers.

As you can see 3 of my 4 previous picks are still blue!  But one is red! I will stop investing in SWK.

Comparing Dividend Yield

Next up is comparing the dividend yield of all my choices which are left.  While I am not chasing yields, per se, it would be nice if the yield matched or exceeded those choices which are left.

This only eliminates one stock, BCR, with a yield less than 1%.

Price to Book

Price to Book should be near one.

This metric allowed me to eliminate 3 more choices.

My Current Dividend Producing Portfolio

• CTL
• CB
• LEG
• LLY
• PBI
• SDY (The ETF)

Whatcha think?

The Wall Street Journal had an article about different ETF Funds suing each other because their names are similar and may be confusing to some investors, and it got me to thinking what funny stock market symbols are out there?

I always liked BUD for Budweiser’s parent company, Anheuser Busch but they were sold to inBev.

WSJ highlights some funny ETFs,

• BIL (Treasury bills),
• MUNI (municipal bonds),
• CORN (grain),
• KOL (fossil fuel),
• GAZ and OIL (energy),
• WOOD and CUT (forestry stocks),
• GRID (utilities),
• JO (coffee),
• HEDJ (a currency-hedged stock fund) or
• FAN and TAN (wind-energy and solar stocks)

Funny Stock Symbols

I had to go searching for funny stock symbols

• YUM for parent company of KFC, Pizza Hut, etc.
• BID for Sotheby’s
• MOO is an Agricultural Fund (Thanks Darwin’s Finance – an ETF)
• DNA for Genetech, a Biotech Firm…recently bought out (Thanks Joe Taxpayer)
• EAT for the parent company of Chilis and On the Border
• LUV for SouthWest Airlines
• GRR for an Asian Tigers Fund

Which Ones am I missing?

Research conducted by Moneysupermarket.com found that over half of Britain’s credit card users (58%) chose their credit cards due to the incentives offered by their respective providers. With this in mind, if you are planning a trip overseas any time soon then an overseas credit card could be the perfect companion for you.

Many people when travelling abroad don’t consider charges they will be issued when using their credit cards, but you should. Using your cards abroad without realising can result in a nasty shock when your return home. However, using an overseas credit card that incurs no nasty charges means you can feel safe and secure that there will be no long list of fees when you return from your journey.

Specialist overseas credit cards don’t carry the fees that normal credit cards do; foreign transaction fees are often at 0%, meaning you can use your card with no charge anywhere in the world. Also, when overseas, balance transfers and cash withdrawals can also incur massive charges, sometimes as high as 3%; overseas cards again don’t have these charges making them a much better option for use abroad. 

If you are looking to travel on holiday or on a business venture anytime soon then consider an overseas credit card, it may save you a lot of money.

 Do you travel a lot? Then use your credit card to reward yourself

 Kevin Mountford, head of banking at moneysupermarket.com, said, 

With each scheme offering its customers something unique, consumers need to work out what sort of rewards suit their personal circumstances and shop around for the best deal. For a shopaholic this might be a product that offers them money off their next purchase, whereas a jetsetter might be better off with a card that allows them to accrue air miles.

Overseas credit cards are perfect if you venturing on the odd trip abroad, however if you are a frequent jetsetter, an airline credit card may also be to your liking. Airline credit cards are a great way to reward yourself if you are often on the move by building up your air miles.

Build air miles whenever you use your card without even noticing, then when it comes to the time you need to fly away, you may have enough to cover your journey. Per £1 spent in the UK, many airline credit card providers offer 1 or even 1.5 miles when flying with the respected carrier. Other airline credit card providers offer initial incentives to get you started, for example spending £250 on card purchases within 90 days of receiving your card would reward you with 20,000 air miles to use at your leisure.

Research from moneysupermarket.com has found that almost 5m UK adults admit to regularly using their credit card to pay household bills. If this is the same in your case and you are a regular flyer, you could be missing out on thousands of free air miles every year.

This article was written by Andreas Nicolaides, Andreas was a frequent jetsetter before settling down in the UK as a financial writer for moneysupermarket.com.