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Budgeting

Apr 3, 2020 7:55:17 AM / by The Retirement Group (800) 900-5867 posted in CAM Annuity, Chevron, ERB, ESRO, ExxonMobil, Financial Planning, Hewitt, In Service Withdrawal, Lump Sum, Northrop Grumman, Option 1 Withdrawal, Pension, Pension Options, Retirement, Retirement Planning, Verizon, 401K, 72t, Age Penalties, Benefit Commencement Date, Workshops, TRG

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Budgeting is a process for tracking, planning, and controlling the inflow and outflow of income. It is a process that we all begin soon after we get our first spending money. Relying on our overloaded minds to manage such a complex process has many shortcomings. The solution is to analyze your current situation, determine your goals, and develop a written plan against which you'll measure your progress.

How does the budgeting process work?

The budgeting process begins with gathering the data that makes up your financial history. Next, you use this information to do a cash flow analysis. You will calculate your net cash flow, which tells you whether cash is coming in faster than it's going out, or vice versa. Then you will determine your net worth. Simply stated, this is the sum of everything you currently own less the sum of everything you currently owe. Having a snapshot of your present financial situation, you'll then define your financial objectives and create a spending plan to achieve them. Finally, you will periodically check your progress against the plan and make adjustments as needed.

Analyzing cash flow is little more than adding and subtracting

Add up your income, then your expenses, and subtract the latter from the former. The result is your net cash flow. If it is positive (hopefully), you're earning more than you're spending. If not, then budgeting is not really an optional process. You must do it to avoid losing more ground financially. To the extent that you can make cash flow strongly positive, you will be able to save for upcoming needs and investments.

Is net worth growing or declining?

Your net worth shouldn't be a mystery. To determine what it is, you simply add up the current value of your assets (the things you currently own), and then subtract the total of your liabilities (what you currently owe). The idea, if you haven't guessed it, is that your net worth should grow from year to year, barring unforeseen setbacks.

Know where you stand, turn to the future, and set your goals

You might have one or more major savings needs goals in mind, but now is the time to look at all your anticipated financial needs, including your cash reserve, and determine your goals. Knowing what all of your goals are enables you to create the best plan to achieve those objectives over the long term. While you may not be able to achieve all of your goals simultaneously, having a plan in place will help as you work toward your future goals.

Create a spending plan that fits your resources and objectives

Once you know where you stand financially and the goals you hope to achieve, you are in a position to design a plan that will move you expeditiously in that direction. You will know how aggressive you need to be in order to achieve the objectives you set, and therefore you can design a plan that fits both your resources and objectives.

Just as with a plan that falls short of delivering on your goals, a plan that is overly aggressive relative to your resources is likely to lead to budget frustration. Keeping goals aligned with objectives is a critical part of the process and essential to budgeting successfully.

Remember that it is a plan and that plans change as needed

Flexibility is always an important ingredient in the planning process. As life's circumstances change, as they inevitably will, you will need to adjust your spending plan accordingly. The important point is that the budgeting process keeps you abreast of how these changes are occurring and allows you to make changes as you find them appropriate to your needs and resources.

Budgeting can be a temporary or a permanent habit

It may be that your present financial situation calls for the short-term control that budgeting can provide. Alternatively, you may find that budgeting gives you a level of control over your finances that you'd prefer to maintain over the long term. If the latter is true, you should make it a lifelong habit.

This material was prepared by Broadridge Investor Communication Solutions, Inc., and does not necessarily represent the views of The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.

The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com, access.att.com, ING Retirement, AT&T, Qwest, Chevron, Hughes, Northrop Grumman, Raytheon, ExxonMobil, Glaxosmithkline, Merck, Pfizer, Verizon, Bank of America, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

The Retirement Group is a Registered Investment Advisor not affiliated with FSC Securities and may be reached at www.theretirementgroup.com.
 
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Bankruptcy and Student Loans

Apr 3, 2020 7:48:35 AM / by The Retirement Group (800) 900-5867 posted in CAM Annuity, Chevron, ERB, ESRO, ExxonMobil, Financial Planning, Hewitt, In Service Withdrawal, Lump Sum, Northrop Grumman, Option 1 Withdrawal, Pension, Pension Options, Retirement, Retirement Planning, student loans, Verizon, 401K, 72t, Age Penalties, Benefit Commencement Date, Workshops, TRG

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Introduction

When you can no longer pay your debts, bankruptcy laws generally allow you to resolve your debts by dividing up your assets (if you still have any) among all your creditors. Debts that are not paid off in this process are discharged by order of a federal court. When a debt is discharged, you are no longer obligated to pay it.

Student loan debt receives special treatment under the bankruptcy laws. Generally, student loan debt cannot be discharged in bankruptcy unless the debt imposes an undue hardship on you and your dependents.

The discussion here focuses on student loans and bankruptcy.

There are different types of bankruptcy cases. A Chapter 7 case involves a liquidation of assets. Chapter 13, sometimes called a wage-earner's bankruptcy, allows you to pay off all or some portion of your debt in installments over time. Chapter 12 is for family farmers and (as of October 17, 2005) family commercial fishing operations, and Chapter 11 is typically used in business reorganizations. Your attorney can help you decide which, if any, is appropriate for you.

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Quarterly Market Review: January-March 2020

Apr 2, 2020 7:43:29 AM / by The Retirement Group (800) 900-5867 posted in CAM Annuity, Chevron, ERB, ESRO, ExxonMobil, Financial Planning, Hewitt, In Service Withdrawal, Lump Sum, Northrop Grumman, Option 1 Withdrawal, Pension, Pension Options, Retirement, Retirement Planning, Verizon, 401K, 72t, Age Penalties, Benefit Commencement Date, Workshops, TRG, Market week

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Repaying Student Loans

Apr 2, 2020 7:26:37 AM / by The Retirement Group (800) 900-5867 posted in CAM Annuity, Chevron, ERB, ESRO, ExxonMobil, Financial Planning, Hewitt, In Service Withdrawal, Lump Sum, Northrop Grumman, Option 1 Withdrawal, Pension, Pension Options, Retirement, Retirement Planning, student loans, Verizon, 401K, 72t, Age Penalties, Benefit Commencement Date, Workshops, TRG

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What is it?

When you take out a loan to pay for college or graduate school, you must repay that loan at some future date. If you find yourself in the position of having to budget every month for a student loan payment after graduation, you are not alone. A majority of students now borrow at least some money to help finance their education. Yet excessive student loan debt can have negative ramifications. For example, student loan debt may affect decisions to buy a home, a car, or to have children. Because student debt levels are likely to continue to increase as the cost of college and graduate school continues to outpace inflation, it is important to know how to manage student loan debt.

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CARES Act Provides Relief to Individuals and Businesses

Apr 1, 2020 12:09:36 PM / by The Retirement Group (800) 900-5867 posted in CAM Annuity, Chevron, ERB, ESRO, ExxonMobil, Financial Planning, Hewitt, In Service Withdrawal, Lump Sum, Northrop Grumman, Option 1 Withdrawal, Pension, Pension Options, Retirement, Retirement Planning, Verizon, 401K, 72t, Age Penalties, Benefit Commencement Date, Workshops, TRG, CARES act

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On Friday, March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. This $2 trillion emergency relief package is intended to assist individuals and businesses during the ongoing coronavirus pandemic and accompanying economic crisis. Major relief provisions are summarized here.

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Borrowing Options: Benefits and Dangers of Borrowing

Apr 1, 2020 7:23:08 AM / by The Retirement Group (800) 900-5867 posted in CAM Annuity, Chevron, credit, creditscore, ERB, ESRO, ExxonMobil, Financial Planning, Hewitt, In Service Withdrawal, Lump Sum, Northrop Grumman, Option 1 Withdrawal, Pension, Pension Options, Retirement, Retirement Planning, Verizon, 401K, 72t, Age Penalties, Benefit Commencement Date, Workshops, TRG

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What are the benefits of borrowing money?

Successful borrowing can help you create a positive credit history

Successfully borrowing and paying off your loans as agreed can help you establish a good credit rating and make obtaining additional credit possible. Even if you do not typically use credit often, it is good to have the ability to do so in the event of an emergency.

Leverage can be used to increase the return on your investments

If you can borrow money, you can use leverage to increase the return on your investments. This is possible because you can own and control more property with less of your own money. The following illustrates how you can increase the return on your investment using leverage:

Hal had $50,000 that he wanted to invest in real estate. He found a house that cost $150,000. He convinced Frank and Bob to invest $50,000 each in the same house. They purchased the house and each owned one-third. The value of the house increased to $180,000 and was sold. Frank, Hal, and Bob shared a $30,000 profit. Each realized a $10,000 gain, or a 20 percent return, on their investment.

Hal, decided to invest in more real estate. However, this time he decided to use leverage to increase the return on his investment. He made a $50,000 down payment on a $150,000 house and took out a mortgage for $100,000. By borrowing in this manner, he was able to own and control the entire asset, rather than just one-third. When the house increased in value to $180,000, he sold it, paid off the mortgage, and realized a $30,000 gain, or a 60 percent return, on his investment.

The example is simplified and does not take into consideration taxes, interest, or rental income, but it illustrates the notion that by using leverage, you can control more assets using less of your own money.

The problem with leverage is that it can work both ways. Assume that the two parcels of real estate in the previous example dropped in value to $120,000. In the first transaction, Hal would have lost $10,000, for a 20 percent loss on his investment. In the leveraged transaction, Hal would have lost $30,000, for a 60 percent loss on his investment.

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Debt Management

Apr 1, 2020 7:13:49 AM / by The Retirement Group (800) 900-5867 posted in CAM Annuity, Chevron, debt, ERB, ESRO, ExxonMobil, Financial Planning, Hewitt, In Service Withdrawal, Lump Sum, Northrop Grumman, Option 1 Withdrawal, Pension, Pension Options, Retirement, Retirement Planning, Verizon, 401K, 72t, Age Penalties, Benefit Commencement Date, Workshops, TRG

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What is debt management?

As a modern consumer, you need credit. When you were growing up, you may have heard your parents or grandparents say, "If you can't pay for it with cash, then you can't afford to buy it." That may have been sound advice 40 or even 20 years ago, but such attitudes about credit are outdated and unrealistic for most adults working and living in modern times. The average cost of a car, house, or college education has skyrocketed when compared to the average household income, so typical consumers need to borrow money if they want to buy a home, drive a car, or educate themselves or their children. Throw in a handful of charge accounts and credit cards, and it is no wonder that the average consumer is carrying more debt than ever before. With greater credit needs comes a greater need for debt management.

Good debt management ensures that you will have credit when you need it, make wise borrowing decisions, and avoid disaster if you become overextended. You can ensure that loans are available when you need them by establishing and maintaining a positive credit record. You can benefit from many specialized loan programs if you are aware of your borrowing options. You can save money by taking steps to reduce the cost of debt and save yourself from disaster if you know what to do when you can no longer meet your financial obligations.

Establishing credit

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Coping with Market Volatility: Avoid Rash Decisions

Mar 31, 2020 7:29:17 AM / by The Retirement Group (800) 900-5867 posted in CAM Annuity, Chevron, ERB, ESRO, ExxonMobil, Financial Planning, Hewitt, In Service Withdrawal, Lump Sum, Northrop Grumman, Option 1 Withdrawal, Pension, Pension Options, Retirement, Retirement Planning, Verizon, 401K, 72t, Age Penalties, Benefit Commencement Date, Workshops, TRG, market volatility

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If you've been watching the market lately, perhaps the first question on your mind is, "Should I make a big change in my investments?" In reality, a volatile market isn't the best time to do a complete makeover of your portfolio, especially if you have long-term financial goals you're trying to address. Even if you feel that your portfolio needs adjusting, maintaining a firm grasp on your fundamental investment strategy can help you be more thoughtful about making any changes.

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Establishing a Credit History

Mar 31, 2020 7:21:50 AM / by The Retirement Group (800) 900-5867 posted in CAM Annuity, Chevron, credit, credit score, ERB, ESRO, ExxonMobil, Financial Planning, Hewitt, In Service Withdrawal, Lump Sum, Northrop Grumman, Option 1 Withdrawal, Pension, Pension Options, Retirement, Retirement Planning, Verizon, 401K, 72t, Age Penalties, Benefit Commencement Date, Workshops, TRG

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What is credit?

When you say you want credit, you are probably asking for payment terms on a purchase. You are seeking to purchase goods or services today and forego all or a portion of the payment until a later date. You may or may not be bound by a payment plan. You may or may not be required to pay a percentage of the purchase price up front (down payment). You may or may not pay a fee (interest) in exchange for the privilege of buying now and paying later. In all cases, you are making a purchase and being trusted to make final payment at some time in the future.

Why is credit so important?

Credit provides you with financial flexibility and security

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I Need Money: Can I Take Funds from my IRA?

Mar 30, 2020 7:17:45 AM / by The Retirement Group (800) 900-5867 posted in CAM Annuity, Chevron, ERB, ESRO, ExxonMobil, Financial Planning, Hewitt, In Service Withdrawal, Lump Sum, Northrop Grumman, Option 1 Withdrawal, Pension, Pension Options, Retirement, Retirement Planning, Verizon, 401K, 72t, Age Penalties, Benefit Commencement Date, Workshops, TRG

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Yes, but the taxable portion of your distribution may be subject to a 10% penalty for early withdrawal if you're not yet age 59½. If you are 59½ or older and take money from your traditional IRA, you will not be assessed a penalty, though you may still have to pay income tax on all or part of the distribution. The purpose of the premature distribution tax is to discourage you from exhausting your IRA savings too soon. However, the penalty can be a significant drawback if you need money to meet unexpected expenses.

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