Two-thirds of LGBT seniors live alone. Fifty percent of nursing care employees say their co-workers would be uncomfortable assisting LGBT residents. These are just two of the problems facing LGBT seniors that the movie Gen Silent hopes to bring more public awareness to.

There was recently a screening of Gen Silent hosted by the Greater San Diego Business Association (GSDBA), Scripps Hillcrest and Lifeline. It’s about LGBT seniors dealing with aging in a health care system that’s not always embracing of them. Several seniors told their stories as they aged. Heartbreaking experiences were revealed as they faced aging alone or cared for by their aging partners without help.

As LGBT seniors age and require care, many go back into the closet as they reach out for access from the health care system. Or even worse, they are too fearful to seek any help at all.

It may be hard to understand why someone feels they need to hide who they are or be fearful of being LGBT in a time when our community is making so much progress in terms of both legal recognition and public acceptance.

However, Gen Silent does an amazing job of taking us back in time when these seniors were young. They grew up in a very hostile environment. Gay was considered a mental health disorder. Police were raiding gay bars and publicly outing them in newspapers. The seniors of today that did come out 30 years ago were mostly estranged from their families.

As a result of that history, LGBT seniors created a safe home as protection to live fulfilling lives in private. This also caused isolation from a crucial network of family and public services that typically care for seniors as they age.

Now that they are aging and need help, LGBT seniors have no other option but to allow elder care workers into their safe zone. This is a good thing because they are asking for help. However, a majority of elder care facilities and case workers are not being trained to work with the LGBT community. They don’t know to ask about sexual orientation or understand why it would be relevant to know if a patient is LGBT or not.

LGBT seniors respond by hiding pictures of deceased spouses and “de-gaying” their homes so that elder care workers won’t be tipped off that they are LGBT. Some LGBT seniors don’t want their friends to visit them in living facilities because they fear being outed and will be ostracized by other residents.

It’s an enormous effort to identify and help our LGBT seniors.

One of the key takeaways I took from the movie is that LGBT seniors need relationships. These relationships can be from a weekly senior luncheon, volunteers visiting them at home, or case workers trained to work with LGBT seniors. Any kind of outreach to LGBT seniors is the starting point.

One of the LGBT seniors in Gen Silent said in her last video diary before she passed away alone and suffering “Don’t ever let this happen to anyone you know.” Let’s all make an effort to educate ourselves on the issues facing LGBT seniors so it doesn’t happen any longer. They did so much for the LGBT community to live with dignity and pride. Now it’s our turn to help “gen silent” do the same.

Steve Doster is a Certified Financial Planner™ professional providing commission-free financial advice for do-it-yourself investors. You can reach Steve at Doster Financial Planning by phone 619-688-1192 or email steve@dosterfinancialplanning.com. You can also follow Steve on Facebook, Linked In, Twitter, or blog to get more personal finance advice and tips.

It’s doubtful you are as nerdy as me and watch PBS Frontline. However, I encourage everyone to watch the program titled The Retirement Gamble that aired April 23 (it’s easy to find online). This show is one of the best I’ve seen that exposes many of the hidden shenanigans the financial industry pulls over middle-class America to earn a profit.

The Frontline program is organized into three general topics which can be described as:

1) Retirement planning is confusing.

2) Employer savings plans are full of fees.

3) There is no standard regulation for financial advisers.

Retirement planning is confusing

Planning for retirement has fallen solely on each individual. Without pensions, people need to determine how much to save, where to invest, and how to properly withdraw those funds in retirement. The vast majority of Americans are ignoring this responsibility because it is simply too overwhelming.

Employer savings plans are full of fees

This is the middle part of the show and it is shocking. Frontline investigates how 401(k) plans have many hidden fees. There are mutual fund expense ratios, management fees, admin. fees, trading fees and kickbacks to brokers.

Assume all of these fees total 2 percent of your account balance. That doesn’t seem like much. However, a 2 percent fee will eat away 66 percent of your account balance during 50 years!

Most of the 401(k) fees can be found in the mutual fund expense ratio. Actively-managed mutual funds try to beat the market and have high fees. Index mutual funds match the market return and have low fees. The program explains there is no research showing an actively-managed fund outperforms the less expensive index fund. Re-read that sentence to fully understand its impact.

No standard regulation for financial advisers

Anyone can call themselves a financial adviser, wealth manager or any kind of important sounding title. There is no regulation to it. There are a few methods, or “standards”, that financial professionals operate under.

The more common method is called the “suitability standard.” The suitability standard does not require the client’s best interest come first. Or another way of saying it, the adviser can make recommendations that will earn him the largest commission, rather than make the recommendation that is best for the client.

The less common method is the “fiduciary standard,” which only 15 percent of financial advisers follow. The fiduciary standard legally obligates the financial adviser to only make recommendations that are in the client’s best interest. Which standard would you like your financial adviser to operate under?

Solutions for all

The program does not have a typical Hollywood feel-good ending. That’s my one complaint about The Retirement Gamble. I like happy endings! Here are my suggestions to take control of your retirement plan:

1) Start saving at least 10 percent of your pay, and try to save 15 percent to 20 percent if possible.

2) In your 401(k), try to choose index funds with low expense ratios (below 0.50 percent is good).

3) Check your employer plan rating at BrightScope.com and use BrightScope’s tools to become an activist to get your employer to lower 401(k) fees.

4) Ask your financial adviser if they are a fiduciary acting in your best interests at all times. If not, then find a fiduciary financial planner at NAPFA.org.

Steve Doster is a Certified Financial Planner™ professional providing commission-free financial advice for do-it-yourself investors. You can reach Steve at Doster Financial Planning by phone 619-688-1192 or email steve@dosterfinancialplanning.com. You can also follow Steve on Facebook, Linked In, Twitter, or blog to get more personal finance advice and tips.

The LGBT community is extremely thoughtful and generous in donating to charitable organizations. We give our money and time to issues that personally matter to us. It’s easy to understand which organizations are helping HIV+ people, counseling LGBT youth or fighting for marriage equality. You know that your efforts are going toward important personal beliefs. But when it comes to investing your retirement money, it’s much more difficult to figure out if your investments are gay-friendly.

The first place to begin is with HRC’s Corporate Equality Index. Every year, HRC analyzes publicly-traded companies using several criteria. A company will earn more points for achieving different criteria like an equal employment policy that includes sexual orientation and gender identity, providing same-sex partner benefits and demonstrating a public commitment to the LGBT community.

The maximum score is 100 points. For 2013, more than 20 percent of Fortune 500 companies tallied a perfect score. And many more of these large companies, although not perfect, scored very high. However, there are some not-so-friendly companies out there. For instance, Exxon Mobil scores a -25 points (the only company with a negative rating) and Berkshire Hathaway scores a zero (the famous investor Warren Buffett owns most of this company). The Corporate Equality Index is a great place to identify stocks in your portfolio that are gay-friendly or not.

Ideally, there would be a mutual fund that had a gay-friendly focus. Unfortunately, that doesn’t exist. I did recently discover a gay-friendly portfolio on a Web site called motifinvesting.com. This company creates portfolios based on ideas. For example, there is a portfolio called Democratic Donors that consists of companies that donate to the Democratic Party. It’s up 34 percent for the last year, which is double the 17 percent return of the Republican Donors portfolio. Hmm, bet that’s interesting to all the politicos out there.

Motifinvesting also has a gay-friendly portfolio that is based on HRC’s Corporate Equality Index. This portfolio, which is less than a year old, consists of 25 gay-friendly companies that scored a perfect 100 by HRC. The neat thing is you can buy these 25 stocks in one trade for a $9.95 commission. The alternative is to buy each individual stock paying a $5-$10 commission for each trade. This idea is worth a look if you’d like to own gay-friendly companies such as Apple, Google, Disney and Chevron.

Another way to keep your investments and beliefs in alignment is to seek out SRI mutual funds. SRI can stand for either Socially Responsible Investing or Sustainable and Responsible Investing. Whatever people like to call it, many SRI mutual funds include sexual orientation in their key screening criteria when choosing stocks to buy. Two mutual fund companies to check out in this space are Domini Social Investments and Calvert Investments.

Deciding if your investments should be in alignment with your personal beliefs is an individual choice. But if you do decide to invest this way, you now have some resources to help achieve that goal.

Steve Doster is a Certified Financial Planner™ professional providing commission-free financial advice for do-it-yourself investors. You can reach Steve at Doster Financial Planning by phone 619-688-1192 or email steve@dosterfinancialplanning.com. You can also follow Steve on Facebook, Linked In, Twitter, or blog to get more personal finance advice and tips.

Pretty much everyone is using at least one of the social network sites like Facebook, LinkedIn, Twitter, Pinterest or Instagram. We connect with friends, family and colleagues using these sites. Some connections we haven’t even met in person. What if these connections were used to determine our credit scores? It’s not happening on a large scale yet, but it’s starting to happen in a few places.

Every adult has a credit score, whether they know it or not. FICO is the most well known credit score with scores rating from 300 to 850. A person with a FICO score above 750 is considered excellent and will receive the lowest interest rates when applying for car loans, mortgages and credit cards. A FICO score below 600 is in the poor credit category. These folks will pay the highest interest rates if approved for credit.

For younger adults, it’s always been difficult to start building a credit history when no one will lend to them because they don’t have a credit history. It’s definitely a catch-22. It’s also an area in the lending industry a few new companies are focusing to serve. And they plan to use data from social network sites to determine a person’s creditworthiness.

One company called Neo Finance Inc. offers car loans to people without long credit histories. They use income and social data to determine to lend or not. For instance, Neo analyzes a person’s LinkedIn profile for employment history, the number and quality of connections and the job titles of those connections.

Another company called Affirm Inc. allows people to use their smartphones to pay for online purchases and avoid typing in credit card information. Consumers pay back Affirm within 30 days without being charged fees or interest. Affirm uses your Gmail or Facebook account to verify your identity. From there, they can use publicly available data to determine your creditworthiness.

Lenddo is a microfinance company that lends to people in Colombia and the Philippines with aspirations to grow into other countries. They analyze data from a borrower’s social networking profiles such as education, job history, who they are friends with and how many followers they have.

A potential borrower improves their creditworthiness by having other Lenddo users, called Trusted Connections, vouch for them. If you default on your loan, then your Trusted Connections will have their score negatively impacted as well. That’s peer-pressure to pay your bills on time!

This is still a very new concept to use social network information to determine a person’s creditworthiness and nothing to be concerned about right now. However, it’s interesting to be aware of it. In the meantime, be sure to know the people you connect with on social networks. Those connections, friends and followers might someday help determine if you get a loan or not.

Steve Doster is a Certified Financial Planner™ professional providing commission-free financial advice for do-it-yourself investors. You can reach Steve at Doster Financial Planning by phone 619-688-1192 or email steve@dosterfinancialplanning.com. You can also follow Steve on Facebook, Linked In, Twitter, or blog to get more personal finance advice and tips.

Health Savings Accounts, or HSAs, are available to people that have a high-deductible health insurance plan. The HSA is used for medical expenses such as your deductible, co-payments, medications, prescription glasses and dental care. The cash deposited into an HSA is pre-tax money. And money withdrawn from the HSA is also tax-free if used for the qualified medical expenses just mentioned.

Think of HSA contributions as being similar to 401(k) contributions, but in an account that’s accessible for medical expenses. You can deposit up to $3,250 for a single person or $6,450 per family for 2013. If you are 55 or older, then you can deposit up to $4,250 for a single person or $7,450 for a family.

Many people may already be aware of this great tax-free benefit by contributing to an HSA. Still not convinced to contribute to an HSA? Then please read on.

The money put into an HSA doesn’t have to be used each year. Any unused money can be used the following year or in 20 years! There is no time limit to use the money and HSAs are not “use-it-or-lose-it” accounts like their inferior cousin called flexible spending accounts (FSAs). The ability to accumulate a balance in your HSA is one of the key factors that make it such a great deal.

The other key factor is that the money saved up in an HSA can be invested in mutual funds. This allows your money to grow tax-deferred until you need it for future medical expenses. And what might be some of these future medical expenses? Glad you asked because now we get into the cool stuff.

Younger people far from retirement probably don’t know this, but Medicare isn’t free. Medicare has a monthly premium of $105 per month, deductibles, co-pays and prescription drug costs. We all have plenty of future medical expenses to look forward to.

This is where the power of an HSA really starts to pay off. Accumulating an HSA balance is just like saving for retirement, but this money is specifically set aside for your future Medicare costs in retirement. And don’t forget that it’s all tax-free money!

So let’s use an example to show how this might work. Joe is a 35-year-old guy that diligently contributes $3,250 per year to his HSA for 30-years until he’s 65 years old. He used about a third of each year’s contribution for medical expenses, but allowed the other two-thirds to accumulate in his HSA. Joe chose low-cost mutual funds to invest his growing HSA balance and was able to earn an average annual return of 5 percent.

What is Joe’s balance in his HSA when he retires at age 65? If you guessed $144,000 then you would be correct. Imagine having that much money saved up to pay for future Medicare costs! All of Joe’s friends will be paying their Medicare with after-tax money while Joe pays his with tax-free money.

Joe is one smart dude. His HSA was good for his health and even better for his wallet. Next time you select health insurance, be sure to take a look at a high deductible plan. If it’s right for you, then be sure to open an HSA to take full advantage of this great benefit.

Steve Doster is a Certified Financial Planner™ professional providing commission-free financial advice for do-it-yourself investors. You can reach Steve at Doster Financial Planning by phone 619-688-1192 or email steve@dosterfinancialplanning.com. You can also follow Steve on Facebook, Linked In, Twitter, or blog to get more personal finance advice and tips.

Remember September 2007? That’s when the stock market was at an all-time high. Within 18-months it dropped by almost 50 percent. Just last week, after four long years, the market finally made it back to that September 2007 high point. It has been a tough time for everyone in the world, but we learned some valuable lessons.

The first lesson is that the stock market will have ups and downs. We can’t predict when they will happen or how big those fluctuations will be. But one thing we can count on is a market rebound. The key is to maintain a long-term view with your investments. The worst thing to do is sell stocks after a big decline. Unfortunately, most investors did sell during this last downturn.

Admittedly, things were pretty bad. Forgive yourself if you did get out of the market. Take solace in the fact that you had lots of company. What’s most important is to learn a lesson from this experience. That’s what life is all about anyway. We make mistakes, learn from them, and hopefully don’t repeat the same mistake twice.

We will all get another chance to prove we learned our lesson. There will be many more downturns in the stock market during our lifetimes. When this inevitably happens, you’ll remember the experience of the last five years and know that the best option is to hold tight until the storm passes.

A second lesson to learn from the 2008 recession is to have the right mix of stocks and bonds that fits your risk tolerance and age. Stocks will drop a lot more than bonds during a recession. The more you have in stocks, the bigger your portfolio will decrease. Only invest an amount in stocks that you are comfortable enough to stick with them through the market cycle.

What is the right amount to hold in stocks? It’s different for everyone. There are tons of books and Web sites that help you figure out the right mix of stocks and bonds for you. Also check out your employer retirement plan Web site for a tool to determine an asset allocation. If you sold stocks during the last downturn, that means you had too much in stocks to begin with. Make sure to hold fewer stocks this time around so you are prepared for the next recession.

If you are retired or near retirement, there is one extra step to take. Make sure to hold enough of your investments in cash and CDs to get through a 3-year market downturn. For example, let’s say you live on $50,000 per year. Social Security and pensions (if you have one) cover $30,000 of your living expenses. That leaves $20,000 per year that comes from your investment portfolio. A retiree would want to keep $60,000 (3-years x $20,000) in cash or CDs. This cash cushion allows you to not sell investments during a market decline until it recovers.

Remember, keep a long-term view of your investments and hold the right amount in stocks and bonds. This will prepare you to stay on course no matter what’s happening with the economy.

Steve Doster is a Certified Financial Planner™ professional providing commission-free financial advice for do-it-yourself investors. You can reach Steve at Doster Financial Planning by phone 619-688-1192 or email steve@dosterfinancialplanning.com. You can also follow Steve on Facebook, Linked In, Twitter, or blog to get more personal finance advice and tips.

Many years ago, the federal government did something amazing – they created the Roth IRA. The reason it’s so amazing is because you never pay tax on money after it’s deposited into a Roth IRA. Many people already know how great Roth IRAs are for retirement savings. However, there are important things most people don’t know about Roth IRAs. Here are my top five secrets about these accounts.

Secret No. 1: Some younger people may think they don’t want to invest in a Roth IRA because they won’t be able to access the money until retirement. Well, that’s not a concern because you can withdraw Roth IRA contributions at any time without penalty or taxes. Take note that it’s only the “contributions” that can be withdrawn without penalty. You have to leave any investment earnings in the Roth IRA until age 591⁄2.

Secret No. 2: Another reason younger folks don’t save for retirement is because they are saving for that first home. A Roth IRA is a great place to save for a down payment. In addition to withdrawing contributions, first-time homebuyers can withdraw up to $10,000 of investment earnings without penalty or taxes if the money is used to buy that first home. The one important rule is that the Roth IRA has to be open for at least 5-years for the $10,000 to be tax-free. Also, the IRS considers a “first-time home buyer” as anyone who hasn’t owned a home in the last two years.

Secret No. 3: You can only make the maximum Roth IRA contribution if your adjusted gross income (AGI) is less than $112,000 if single and $178,000 if married (these are 2013 limits). You can make a partial contribution if your AGI is less than $127,000 if single and $188,000 if married. People that make more than these limits cannot contribute to a Roth IRA. However, if you don’t have an IRA then you can do what’s called a “backdoor Roth strategy.” Make a non-deductible contribution to a traditional IRA. Wait at least 30 days and then do a Roth conversion. This only works if you don’t already have an IRA!

Secret No. 4: You can earn a tax credit of up to $1,000 for contributing $2,000 to a Roth IRA. It’s called the “saver’s credit” and it’s for low- and moderate-income workers. This credit phases out completely for singles that have an AGI of $29,500 and married couples with an AGI of $59,000. That’s pretty awesome to save $2,000 for retirement and the IRS will reduce your taxes by $1,000. It’s free money!

Secret No. 5: Roth IRAs don’t have required minimum distributions (RMDs). When you turn 70 1⁄2, the government forces you to begin withdrawing money from your 401(k)s and IRAs so the IRS can collect taxes on that money. Roth IRAs don’t have this requirement allowing the money to continue to grow tax-free.

So there you are, my top five secrets about the Roth IRA revealed! And more good news – if you want to get a jump start on your Roth IRA savings, you can still open and contribute to a Roth IRA for 2012 until April 15.

Steve Doster is a Certified Financial Planner™ professional providing commission-free financial advice for do-it-yourself investors. You can reach Steve at Doster Financial Planning by phone 619-688-1192 or email steve@dosterfinancialplanning.com. You can also follow Steve on Facebook, Linked In, Twitter, or blog to get more personal finance advice and tips.

The Money Shot

BY STEVE DOSTER

There’s a little known insurance policy that is inexpensive and great to have. It’s called an umbrella policy and it also goes by the more technical name of “excess liability policy.” It protects your savings and assets if you are ever sued.

Auto and homeowners insurance have liability coverage already included, but it is limited to $250,000 to $300,000. An umbrella policy takes over for amounts that exceed those limits. You may think that you’ll never be sued, and if you are, it’ll never be more than $300,000. That might be a dangerous assumption to make, especially in a lawsuit-crazy state like California.

Let’s say you cause a car accident. The medical costs, loss of work and pain and suffering damages of the people in the other car total $400,000. Your auto policy would cover up to the liability limit of $300,000. The remaining $100,000 would come from your savings. If you don’t have the money, then your wages can be garnished up to 25 percent until the claim is paid.

However, if you have a $1 million umbrella policy, then it would pay the remaining $100,000 claim. And it only costs about $20 per month. That’s very inexpensive for the coverage and peace of mind.

You also get the legal help of a large insurance company to back you up if someone ever brings a frivolous lawsuit against you. The insurance company knows it will have to pay out any claim, so they provide the lawyers to fight the case. Without an umbrella policy, it’ll be up to you to hire a lawyer and pay for their work at $300-$400 per hour.

There are so many real-life examples of an umbrella policy protecting people. Consider if you could find yourself in any of these situations:

• A friend gets injured at your house or apartment.
• Your dog bites someone.
• You write a blog saying something bad about a company and they sue for defamation.
• Your kid causes a car accident.
• A tree in your yard blows over in a storm and injures someone.
• A repairman, landscaper or cleaning person gets injured while working on your property.

Any of these things can happen to us. An umbrella policy will protect you in case they do. And it’s easy to get. Just call your insurance agent to apply. The insurance company typically requires you to hold all of your cover (auto, home, etc.) with them before issuing an umbrella policy. They will also require that all of your policies have the minimum $300,000 liability coverage. That will result in slightly higher premiums.

However, the cost of getting an umbrella policy is well worth the protection it provides.

Steve Doster is a Certified Financial Planner™ professional providing commission-free financial advice for do-it-yourself investors. You can reach Steve at Doster Financial Planning by phone 619-688-1192 or email steve@dosterfinancialplanning.com. You can also follow Steve on Facebook, Linked In, Twitter, or blog to get more personal finance advice and tips.

Creative Futons Hillcrest grand opening

The media can be real Debbie-Downers sometimes. They spend months covering the negative part of a situation. Then it gets resolved and they are on to the next crisis. The Fiscal Cliff is a great example. For several months, there were all kinds of predictions about the bad things about to happen. However, Congress came through with a deal that fixed several long-term problems.

Very little coverage was given to the details of the deal before the media began talking about the looming debt ceiling crisis. I’d like to take a step back and go through some of the good stuff in the Fiscal Cliff deal.

Tax rates are permanent

That’s right, the current tax rates are permanent! I doubt there will ever be enough votes in Congress to change these income tax rates and capital gains tax rates. This takes out all of the uncertainty that revolved around the Bush tax cuts for 12 years. And certainty is really good for the stock market.

What’s also good is that the 10 percent tax bracket survived. It was set to expire and would have been difficult to get back.

Capital gains and dividends will continue to be taxed at 15 percent as long as you make less than $400,000 for singles and $450,000 for married couples. This is a great win for investors. They only pay 15 percent tax on money they make from investments held at least one year. Low rates on capital gains and dividends encourage people to invest and that’s good for the economy.

One big problem fixed in the Fiscal Cliff deal was the Alternative Minimum Tax (AMT). This tax law makes sure people that have too many deductions still pay their fair share in taxes. The problem was the income level never adjusted for inflation, so this tax was hitting more middle-income families. AMT now adjusts with inflation and will only be paid by those higher-earning families with lots of deductions.

Payroll tax goes back to 6.2 percent

You may be thinking that going back to the 6.2 percent payroll tax is a bad thing. However, it’s a good thing in my book. Congress gave us all a tax break for two years by lowering the payroll tax to 4.2 percent. Now it’s back to the normal 6.2 percent. This is a good thing because this money goes toward Social Security benefits. So instead of seeing a tax increase, think of it as saving an extra 2 percent for retirement.

Roth conversions for 401(k)’s

Something not talked about at all was the rule allowing people to convert some or all of their 401(k) to a Roth 401(k). This is great for people that have all of their retirement savings in pre-tax money and make too much to contribute to a Roth IRA. But plan carefully because any amount converted to a Roth 401(k) results in taxable income.

There isn’t room in this article to cover extended tax credits for college and child care, and the $5 million Estate Tax Exemption. However, know that there was a lot of good stuff in the Fiscal Cliff deal that will help your personal finances.

Steve Doster is a Certified Financial Planner™ professional providing commission-free financial advice for do-it-yourself investors. You can reach Steve at Doster Financial Planning by phone 619-688-1192 or email steve@dosterfinancialplanning.com. You can also follow Steve on Facebook, Linked In, Twitter, or blog to get more personal finance advice and tips.

We are three weeks into the New Year and most of us have already broken our New Year’s resolutions. That means you need some new ones!

Only 8 percent of people stick to their resolutions for the entire year. Many people use the New Year as an opportunity to make some gigantic change. That’s great and all, but there are already too many competing priorities for your time and energy. The “extreme makeover” approach to resolutions is doomed for failure.

The secret to resolution success is to keep it simple and focus on one thing at a time. Set small, attainable goals that you can achieve. Then next year you can build upon them.

My four easy financial resolutions are begin saving for retirement, start an emergency fund, payoff credit card debt and get your Advanced Health Care Directive.

The very first thing you need to do is start saving the minimum in your work retirement plan. Contribute enough to get the full employer match, which is typically 6 percent of your pay. Never, ever pass up on free money! Get that employer match.

The next resolution is to start an emergency fund. Begin small by saving $1,000 in a separate savings account to be used only for those unexpected emergencies like fixing the car or a broken arm. A sale at Nordstrom’s is not an emergency! Once you get $1,000 saved up, move on to the next resolution.

The third, and toughest, resolution is to pay off all credit card debt. Write down all of your credit card balances and rank them from highest-to-lowest by interest rate. Pay the minimums on all credit cards except the one with the highest interest rate. Make the maximum payment you can afford on this highest interest rate credit card. Attack it like a dog!

Your monthly retirement contributions and credit card payments should total at least 15 percent of your total pay. So if you save 6 percent to your 401(k), then credit card monthly payments should equal 9 percent. That’ll help you figure out how much to pay on that highest interest rate card.

After the first credit card is paid off, start making the big payment on the next highest interest rate card. Continue this process of paying off the highest rate card until all of your credit cards are paid off. Be sure to update your debt balances to track your progress and stay motivated.

Becoming debt-free can take a while. Use this time to work on the final financial resolution which is to get an Advanced Health Care Directive (AHCD). This document allows someone to make medical decisions when you are unable. I recommend hiring an estate planning attorney and get a Power of Attorney for Finances while you’re at it. But if you want to try it on your own, a sample AHCD form can be found on the California Attorney General’s Web site at oag.ca.gov/consumers/general/adv_hc_dir

These are your four easy financial New Year’s resolutions. Print out this article and put it on the refrigerator. This will keep them top-of-mind and increase your chances for your success.

PS: If you already have the these four resolutions finished, then increase your emergency fund to six months of living expenses and max out contributions to your work retirement plan.

Steve Doster is a Certified Financial Planner™ professional providing commission-free financial advice for do-it-yourself investors. You can reach Steve at Doster Financial Planning by phone 619-688-1192 or email steve@dosterfinancialplanning.com. You can also follow Steve on Facebook, Linked In, Twitter, or blog to get more personal finance advice and tips.

I’m sure you’ve all heard by now that the Supreme Court has decided to hear cases on the Defense Of Marriage Act (DOMA) and Proposition 8. Let’s assume DOMA is ruled unconstitutional and Prop. 8 is overturned. That would mean same-sex couples could legally marry in California and qualify for the 1,100 federal benefits currently received by opposite-sex married couples.

The financial benefits for same-sex married couples are far-reaching. The impact of the Supreme Court’s decision will be seen and felt in areas of taxes, Social Security benefits, pensions and estate planning. These benefits will drastically improve the financial lives of thousands of California same-sex couples if the Supreme Court rules in favor of marriage equality.

Let’s start with income taxes because this area affects all same-sex couples right now. Filing tax returns will become much easier. Couples will no longer need to file individual federal tax returns, and then complete a “dummy” federal joint return so a California joint return can be completed.

Just writing that sentence makes me confused. I can’t imagine how confusing it must be to actually jump through these hoops. After marriage equality is achieved, couples will be able to file one federal joint return and one California joint return.

Some of the other changes in taxes include:

• No more “splitting income” on tax returns

• Health insurance for your partner won’t be a taxable benefit any longer

• A surviving spouse will be able to rollover 401(k)’s and IRA’s of their deceased spouse into their own name allowing them to delay paying taxes until they retire.

The biggest financial benefit same-sex couples will get is the Social Security spousal benefit. This allows a spouse to receive 50 percent of their partner’s Social Security check even if they never worked. While both spouses are living, the retired couple collects 150 percent of the working spouse’s Social Security.

When one partner dies, the surviving spouse receives either their own Social Security benefit or their partner’s, whichever is higher. This will allow more gay and lesbian couples to have one parent stay at home to raise kids without sacrificing their Social Security benefits in retirement.

For pensions, couples will have the peace of mind that they have spousal survivor benefits. A survivor benefit is when a still-living spouse continues to collect their deceased partner’s pension. Many widowers of same-sex couples have already been financially devastated because they don’t have the right to their deceased partner’s pension.

Estate planning is another area that will be impacted by the Supreme Court’s decision. If DOMA is overturned, then a surviving same-sex spouse will no longer have to worry about paying estate taxes or how the assets of their deceased spouse will pass to them. Currently, there are legal hoops couples need to jump through to make sure this happens.

This is probably too much detail for some of you. However, if you are currently in a relationship, have ever been in a relationship, or ever desire to be in a relationship, then you should be following the Supreme Court hearings on the DOMA and Prop. 8 cases.

Their decision will have an enormous impact on your financial life.

Steve Doster is a Certified Financial Planner™ professional providing commission-free financial advice for do-it-yourself investors. You can reach Steve at Doster Financial Planning by phone 619-688-1192 or email steve@dosterfinancialplanning.com. You can also follow Steve on Facebook, Linked In, Twitter, or blog to get more personal finance advice and tips.

The American public has a huge lack of knowledge about investments. The reasons for this are numerous. The education system doesn’t teach kids about personal finance. People generally aren’t interested in investing. Plus the rules of the game are purposely made complicated to act as a barrier to learning. The less the public knows about investments, the more money can be made off of them.

This lack of knowledge is beyond unfortunate. Pensions are rarely offered by employers any longer, the Social Security age increased from 65 to 67 and Medicare changes are on the horizon. In this time of our history, it is more important than ever for every individual to have a basic understanding of investments in order to retire comfortably.

One way to increase your knowledge of investments is to read about it. There are thousands of books on the subject so it is even difficult to decide which one to read. That’s why I’d like to tell you about one book that is a great place to start.

It’s called The Investment Answer by Gordon Murray and Dan Goldie. Murray was a Wall Street veteran diagnosed with a brain tumor and six months to live. He called his good friend and financial adviser Goldie to say it was time they write a book explaining how regular folks should invest.

Their goal was to write an investment book that someone could read and understand in one sitting. In 75 brief pages, they provide the most important investment concepts you should know without using jargon or getting too technical. So it’s perfect for beginners and especially good for people that already work with a financial adviser.

This book is organized into five decisions everyone has to make regarding their investments. As the authors point out, we all make these five decisions even if we do nothing. So you might as well learn about investments in order to make these decisions based on knowledge rather than ignorance.

The five decisions are:

Should you try to invest on your own or seek help? If so, what type of adviser is best? Their answer is to hire an independent, fee-only financial adviser.

How should you allocate your investments among stocks, bonds and cash? Their answer is that your risk tolerance and age should determine what percentage of your portfolio to invest in stocks and bonds. The book provides plenty of guidance on this decision.

Which specific asset classes within the broader stock and bond categories should you have in your portfolio, and in what proportions? Their answer is to diversify your money among all the major asset classes: cash, short-term bonds, intermediate-term bonds, large cap stocks, small cap stocks and international stocks.

Should you choose an active management philosophy to try to outsmart the market or a passive investment approach that delivers market returns? Their answer is to choose a passive investment strategy.

How often should you rebalance your portfolio? Their answer is to rebalance once per year.

The reasons for their answers are laid out in a logical, easy-to-read discussion backed by facts that will make you an informed investor. Your answers may be different than the authors, and that’s perfectly fine. The important take-aways from this book are to 1) know what are the big decisions you need to make and 2) make those decisions with good information.

The bottom line is that you need to set aside the time to learn about investments. Now more than ever, your happy retirement is linked to your investments. Don’t leave it to chance and that it’ll all work out. Become informed and make good decisions.

Steve Doster is a Certified Financial Planner™ professional providing commission-free financial advice for do-it-yourself investors. You can reach Steve at Doster Financial Planning by phone 619-688-1192 or email steve@dosterfinancialplanning.com. You can also follow Steve on Facebook, Linked In, Twitter, or blog to get more personal finance advice and tips.

Everyone strives to be a millionaire. Think of the many television shows that have a $1 million prize for the winner. Or look at the lottery commercials touting the latest pot of multiple millions. I’m not going to discuss the ineffectiveness of this ambiguous goal many Americans have set for themselves. This can be a topic for another time. However, I will tell you how pretty much anyone can become a millionaire, and it’s fairly easy to do.

Becoming a millionaire is not done instantly with winning a reality show or picking the right lottery numbers. It’s done with consistent saving during your working career.

I advise clients to save at least 15 percent of their income to achieve goals such as buying a home and retiring comfortably. What is the current savings rate of Americans? It’s a measly 5 percent – well below the 15 percent target.

A 401(k) plan is the best option to save for retirement for most people. About 75 percent of employees contribute to their employer savings plan. That’s great! Unfortunately, they aren’t contributing enough. In fact, many workers don’t save enough in their 401(k) to get the full employer match. That’s free money going down the drain!

Let’s introduce our fictitious volunteer Pat to use as an example of how great it is to save in a 401(k). Pat earns $50,000 per year and contributes 5 percent per year to the 401(k) plan. The employer matches 50 percent of every contribution up to 6 percent of pay. (Notice that Pat is leaving some free money on the table.) If Pat maintains this savings level each year, then the 401(k) balance will grow to $290,000 in 25 years. Not too shabby for saving $2,500 bucks each year.

What if Pat increased her 401(k) contributions from 5 percent to 6 percent of pay and received the full employer match? The 401(k) balance would be $350,000 in 25 years. That’s $60,000 more for retirement just by increasing 401(k) contributions by $500 per year!

So how much do you need to save in your 401(k) to become a millionaire?

All you have to do is start saving a percentage of your salary that equals $1,000 each month into your 401(k). That will get you to $1 million in 25 years assuming your employer matches 50 percent of 6 percent, investment returns average 6 percent, and you get a 3 percent pay raise each year.

Saving $1,000 per month would be a pretty lofty accomplishment for someone like Pat. That’s why I’m not keen on having a $1 million goal. Instead, focus on your own personal savings rate.

If you don’t save anything in your 401(k) right now, then start putting in at least 6 percent of your pay. That’ll get you the full employer match at most companies. If you are already saving in a 401(k), then be sure to bump up that savings rate by 1 percent before the end of the year. Keep doing that each year until you max out your 401(k) contributions.

Becoming a millionaire is not going to happen overnight by winning the lottery. But millionaire status is easily attainable by saving each and every year during your working life.

Steve Doster is a Certified Financial Planner™ professional providing commission-free financial advice for do-it-yourself investors. You can reach Steve at Doster Financial Planning by phone 619-688-1192 or email steve@dosterfinancialplanning.com. You can also follow Steve on Facebook, Linked In, Twitter, or blog to get more personal finance advice and tips.

Collection agencies contacted 30 million people for unpaid medical bills in 2010, according to a survey by The Commonwealth Fund. It’s estimated that about one-third of those collections were the result of billing errors. You’d think that someone’s credit score wouldn’t be damaged by a billing error that wasn’t their fault. Unfortunately, that’s not the case.

Once a medical bill is sent to a collections company, either rightly or wrongly, it is recorded with the credit reporting agencies and stays on your credit report for seven years. It doesn’t go away even after the bill is paid. A credit score can drop by 100 points or more with just one small collection account, even if the rest of your credit history is spotless.

The end result is millions of consumers end up with lower credit scores and pay higher interest rates on things like mortgages, credit cards and car loans. And it’s all due to an unpaid medical bill that they didn’t know existed.

Medical billing errors occur in so many ways that it’s not possible to list them all here. Medical staff might make input errors for what services were received. A patient may assume the insurance company will pay a bill, but they don’t. Or the patient receives so many medical bills they can’t figure out what they owe versus what the insurance company will cover.

The problem has gotten serious enough for Congress to get involved. There is a bill called the Medical Debt Responsibility Act that will require any medical related collection account less than $2,500 be removed from your credit report within 45 days of being paid. Hopefully Congress will pass this act into law so consumers will stop getting financially damaged by medical billing errors.

In the meantime, there are a few things you can do to prevent medical bills ending up as a collection account on your credit report. The first step is to monitor your credit report like a hawk after you receive any medical care. The more care you receive, the more likely this problem can occur.

Get your free credit reports from annualcreditreport.com and monitor them for things like collections accounts. And consider signing up for a credit monitoring service after receiving medical care.

If you get a call from a collections agency, quickly determine if it’s a medical bill you owe. If it is, tell the collections agency that you will immediately pay the balance due and request that they don’t report the collection to the credit reporting agencies. Get this in writing.

If the collection account is already on your credit report and you know that you are not at fault, call the medical provider and explain their error (i.e. you didn’t receive a bill, the charge is not valid, etc.) Request that the collection account be pulled back. If the medical provider won’t do that, a last-resort option is to file a credit damage lawsuit. But consult an attorney first.

So the next time you receive medical care be sure to monitor your credit report for at least the next 12 months. This will help you avoid an unpaid medical bill ending up on your credit report and potentially costing you thousands of dollars.

Steve Doster is a Certified Financial Planner™ professional providing commission-free financial advice for do-it-yourself investors. You can reach Steve at Doster Financial Planning by phone 619-688-1192 or email steve@dosterfinancialplanning.com. You can also follow Steve on Facebook, Linked In, Twitter, or blog to get more personal finance advice and tips.

It’s that time of year when your employer rolls out their 15 percent increase to your health insurance payment. That’s a bad joke, but most likely a true statement. It’s also the time to review all of your employee benefits and sign up for the options that you need. Here are my tips and things to consider when choosing your benefits this year.

Retirement savings plan

This could be a 401(k), 403(b), 457(b), or TSP depending on your employer. Regardless of what plan is offered, be sure to sign up and contribute enough to receive the full company match. Every company has a different formula for their matching contribution. A typical match is 50 cents for every dollar you contribute up to 6 percent of your salary.

Disability insurance

If you are working, then long-term disability insurance is a must-have. Very few people can afford early retirement, so don’t ignore this benefit just because you might be a few years away from retiring. Long-term disability typically covers 50-60 percent of your base pay. Get at least the minimum coverage and seriously consider paying for the maximum coverage. Short-term disability insurance is optional if you have a properly sized emergency fund (3-6 months of living expenses).

If you are self-employed or your employer doesn’t offer disability insurance, then get your own policy and pay the premiums with after-tax money. The benefits you receive will be tax-free if you pay the premiums with after-tax dollars.

Life insurance

Employers offer inexpensive group life insurance. However, premiums increase every five years. Over a 30-year period, you are better off to get your own term life policy outside of work. The premiums on a term life policy don’t increase. This results in lower premiums paid on a term policy over a 20-year or 30-year period. The one exception is if you have a pre-existing condition. This is when the employer group life insurance is the way to go.

Group legal

Most folks don’t need an attorney on retainer. My only suggestion here is to sign up for the group legal benefit if you need to get estate documents. Pay the $10 or so monthly cost for one year. Have an attorney create your estate documents, and then drop the group legal coverage next year. Voila, you just paid about $120 for estate documents that typically cost $1,500.

Health insurance

Compare the comprehensive health plan options with the high-deductible plan. This can be done by assuming you have a huge medical bill of say $500,000. Go through how much you would have to pay in premiums, deductibles, co-pays and really focus on the maximum out-of-pocket amount for each health plan. Now you can compare the various health plans. What you may discover is that a high-deductible health plan has less financial risk for you in the event of a major medical incident.

If you choose a high-deductible health plan, then you qualify to contribute to a Health Savings Account (HSA). You can make pre-tax contributions up to $3,250 for one or $6,450 per family for 2013. Folks 55+ can add another $1,000 catch-up contribution.

Those are my tips and thoughts on employee benefits. Take time to review your employer benefits this year and be smart about it.

Steve Doster is a Certified Financial Planner™ professional providing commission-free financial advice for do-it-yourself investors. You can reach Steve at Doster Financial Planning by phone 619-688-1192 or email steve@dosterfinancialplanning.com. You can also follow Steve on Facebook, Linked In, Twitter, or blog to get more personal finance advice and tips.

Retirees live on a fixed income, so it is extremely important to get the biggest bang for those bucks. One way to do that is to confirm that you have the best Medicare Part D prescription drug plan. Retirees can boost their spendable income by reducing their Medicare costs with the right drug plan that matches the medicines they take.

Now is the perfect time to check your Medicare Part D coverage. You can switch plans during the Annual Open Enrollment Period, which is from Oct. 15 through Dec. 7. If you switch plans, your Medicare Part D coverage will begin Jan. 1 and will continue for the entire year.

There are so many insurance companies that offer Part D plans it can be overwhelming to research them all. Part D plans are very different, and the costs can vary greatly depending on the plan you choose. Even for the same drugs, there can be differences in costs for each plan within the same city. Comparing Part D plans is crucial, and choosing the right one for you should be considered an important financial decision.

There are many reasons someone may want to switch their Medicare Part D plan. Your medications may have changed from when you originally picked a plan. The Part D plan that you chose has changed which drugs it covers. Or maybe the costs of your plan increased quite a bit the last few years.

All of these are good reasons to go shopping for a different Part D plan. Luckily, Medicare created a user-friendly tool to sift through all of the options and find the best plan for you. Go to Medicare.gov and click on the “Find health & drug plans” button to begin the process of finding the right plan for you.

Enter your zip code and start the search. There are several questions to answer. For instance, this tool needs to know your current medications and dosages. It will also let you know if there is a generic alternative to any of your prescriptions.

The end result is a list of Part D prescription drug plans available in your area showing monthly premiums, deductibles, and overall costs based specifically on your medicines. Having this information in one place makes it easy to compare plans.

Be sure to focus on the “Estimated annual drug costs” column of the search results. What you will discover is that the insurance plans with the lowest monthly premium will end up being the more expensive plans. This is because deductibles and copays are typically higher in these plans. Don’t fall into the trap of just focusing on the plan with the lowest monthly premium. It’s the total cost of premiums, deductibles and copays that matters to your budget.

By using the Medicare.gov tool, you can make a knowledgeable decision on a plan that best meets your needs. You will very likely be pleasantly surprised that there is a less expensive Part D plan to cover your prescriptions. So go ahead and give yourself a raise! Switch to that less expensive Part D plan.

Steve Doster is a Certified Financial Planner™ professional providing commission-free financial advice for do-it-yourself investors. You can reach Steve at Doster Financial Planning by phone 619-688-1192 or email steve@dosterfinancialplanning.com. You can also follow Steve on Facebook, Linked In, Twitter, or blog to get more personal finance advice and tips.

Americans spend more than $45 billion on their pets every year. That’s not surprising since a pet is part of the family. However, that doesn’t mean you can forgo retirement savings or go into debt to care for the adorable little bundle of fur.

Pets aren’t quite as costly as children, but food, vaccinations and toys do add up. A large dog can cost about $2,000 each year. That can total as much as $20,000 over a dog’s life. It can break anyone’s budget.

You have two options: Buy a cheaper pet (pet rocks are free!), or carefully budget your dog’s care. I suggest the latter since rocks aren’t as much fun on walks in the park. Here are my top five favorite tips to save on your pet expenses:

1 Make friends with other pet owners that will babysit your dog. This will save hundreds of dollars a year on boarding costs. Of course, you have to return the favor and watch their pets. That’s why I prefer the non-pet owner friend for my little Boston Terrier. These friends can’t have their own dog due to work or travel schedules, but they love having a dog for a weekend or two during the year. And you don’t have to watch their pets in return!

2 Make your own pet toys. It’s amazing how much fun a dog can have with an old sock tied up in knots or a used tennis ball. And they cost nothing.

3 Shop around before choosing a veterinarian. Get an estimate or price list from several vets. Then research each vet on sites like Yelp. Choose a vet with the best combination of experience and value.

Also, never buy medicine from a vet clinic where markups can exceed 100 percent. Watch for pet stores and the Humane Society sponsoring events for low-cost vaccinations. For medicines, check out Web sites like 1800PetMeds.com or PetCareRX.com

4 Don’t cheap out on pet food, but don’t overpay either. Better quality food will cost more now, but can pay off in fewer health problems in the future. Look for brands that are affordable and not full of unhealthy fillers. Remember to feed your dog the right amount. Just like people, over-weight animals will have more health problems and higher vet bills.

5 Be a do-it-yourselfer! Paying someone to groom your dog, trim their nails and brush their teeth can cost a fortune, but you can do these things at home. As dog owners, we know how much they hate a bath or having their teeth brushed. Just think of it as a bonding experience. And use the money saved on a nice bottle of wine for later.

A word on pet insurance

Most people are better off forgoing pet insurance and instead putting the money they would have spent on premiums into a savings account. I got a quote for my 3-year-old dog. The annual premium was $660. That totals $7,920 assuming she lives another 12 years. The policy covered 90 percent of any illness or accident, but coverage stops at $3,000 per incident.

That means my little girl would need to have three very serious problems before the insurance would be a smart move. You never know what may happen, but I think the chances are slim my dog will need that much medical care.

But if you’re the type of person who would do anything to save your pet, including spend thousands of dollars on medical care, pet insurance might be a preferable alternative to going into debt. v

Steve Doster is a Certified Financial Planner™ professional providing commission-free financial advice for do-it-yourself investors. You can reach Steve at Doster Financial Planning by phone 619-688-1192 or email steve@dosterfinancialplanning.com You can also follow Steve on Facebook, Linked In, Twitter, or blog to get more personal finance advice and tips.

Get to know your future self!

It shouldn’t be a shock to hear that people don’t save enough for retirement. Americans are only saving 5 percent of their income, and that’s up from the typical 0 percent to 3 percent during the past decade. Yet 70 percent of us worry about retirement. See the contradiction? We are worrying about retirement, but not doing anything about it.

Most folks will say they simply don’t have enough money to put toward retirement savings. Turns out though that this is a bogus excuse as research is showing the real reason is actually psychological.

People can’t relate to being 70 or 80 years old. Their future self is some kind of stranger. In fact, when we think of ourselves in the future we actually use the same part of our brain that is used when thinking about a stranger.

Pretty cool stuff. Now we have a reason for not saving, but what can you do to fix the problem? The answer is to get to know your future self!

The easiest and simplest way is to “age-morph” a picture of yourself. The picture of the old guy in this article is actually me at age 70. The Reuben H. Fleet Science Museum in Balboa Park has this freaky machine that can turn anyone into a senior. There are also smartphone apps that do the same thing.

Seeing a picture of your future self helps the brain make a connection with that stranger. Once the connection is made, your behavior will change to help them. Research shows people save twice as much after viewing a picture of their older selves.

This totally makes sense to me and brings to mind a similar concept. Remember those Sally Struthers commercials with the starving children? It was heart-wrenching to see those kids. But then you see how happy the children are once they have food. Of course, you send money!

These commercials wouldn’t have been nearly effective if Ms. Struthers reeled off a list of statistics about children living in poverty. With pictures, you make a connection with the kids. They aren’t strangers any longer and you want to help.

It’s the exact same thing for your future self. That person is a stranger you don’t know or think about. Why give money to someone you don’t know? Almost everyone chooses to spend money on themselves rather than give it to a stranger. And that’s what retirement savings can feel like … giving your money away to a stranger.

But don’t let that happen! Get to know your future self. Age-morph a picture and set it as wallpaper on your smartphone. Think about the “future you.” What hobbies will “future you” have? What will “future you” like to do? Where might “future you” live?

Begin to get to know this stranger. You will discover that “future you” is a pretty awesome, amazing person. You’ll be motivated to help them by putting a little money aside. Then “future you” can enjoy life as much as you are enjoying it today.

Steve Doster is a Certified Financial Planner™ professional providing commission-free financial advice for do-it-yourself investors. You can reach Steve at Doster Financial Planning by phone 619-688-1192 or email steve@dosterfinancialplanning.com. You can also follow Steve on Facebook, Linked In, Twitter, or blog to get more personal finance advice and tips.

Pride weekend is history. All of that fun and celebration creates great memories; and you might find some more reminders of Pride 2012 once you open up your next credit card statements. You aren’t alone if you used a credit card that weekend because you ran out of cash. For a lot of people, yanking out the plastic is a natural reaction to spending that last bit of real currency. There’s a reason the average American household has about $16,000 in credit card debt.

There are a few different strategies to tackle credit card debt. I’ll talk about my favorite one in a minute; but no matter what method you choose, the first two steps are always the same. The first step is to write down all of your balances, interest rates, and minimum payments for each card.

It’s pretty common for folks with lots of credit card debt not to look at their debt balances. (Ignorance is bliss!) Writing it all down can be extremely scary; but also therapeutic. Staring at the totals will build your resolve to fix the problem and move onto the second step.

The second step is to stop using your credit cards. Put them in a container, fill it with water, and place in the freezer. This stops those impulse purchases. Your wits will come back before the ice melts and you’ll decide not to buy that thing you don’t need.

Now that you’ve acknowledged there’s a problem, it’s time to start paying it off. Here are the steps to do it:

1) Choose a monthly budgeted amount to pay toward credit cards.

2) Make the minimum payments on all the credit cards with the lowest interest rates.

3) Use the rest of your budgeted amount to pay down the highest interest rate credit card.

The steps are pretty simple, but an example can help us visualize the details. Let’s say you have a MasterCard with an 18 percent interest rate and a minimum payment of $50. There’s also a Visa with a 13 percent interest rate and minimum payment of $100.

The total minimum payments are $150. This $150 will now be a fixed amount in your budget until all of the credit card debt is paid. So you make the minimum payments of $150 this first month.

Then the total minimum payments decrease for the next month because you stopped charging on your cards. For the second month, make the minimum payment on the 13 percent Visa and use what’s left of the $150 to pay down the 18 percent MasterCard. The end result is a larger amount going toward the card with the highest interest rate.

It doesn’t seem like much at first, but soon you’ll be making an extra $10, $25 and $50 a month to pay down that 18 percent MasterCard. Eventually it will be paid off. And then you move on to the 13 percent Visa while still paying $150 per month regardless of the minimum payment.

Be sure to track your progress. It’s a great motivator to see those debt totals decrease each month. Getting control of your debt is the first step to financial independence. Stop putting it off. Make a plan to tackle your credit card debt and get it done.

Steve Doster is a Certified Financial Planner™ professional providing commission-free financial advice for do-it-yourself investors. You can reach Steve at Doster Financial Planning by phone (619) 688-1192 or email steve@dosterfinancialplanning.com. You can also follow Steve on Facebook, Linked In, Twitter, or blog to get more personal finance advice and tips.

Almost 50 percent of Americans cannot come up with $2,000 for an unexpected expense, even if they have 30 days to get the money. That’s pretty scary! Consider all the different ways someone may need to come up with cash quickly: $1,000 deductible to repair a wrecked car, 20 percent co-payment for a broken arm, or paying the rent after losing their job.

What everyone needs is an emergency fund. This is cash set aside to protect your monthly budget from being derailed by these inevitable, yet always unexpected, expenses that occur in life.

The number one reason people start the downward spiral into credit card debt is due to an unexpected expense that could only be paid for with credit. It’s usually the only option when you don’t have any cash. Once there’s a credit card balance, it’s easy to justify a new $75 shirt that won’t add much to your balance. A few more impulse purchases later, and next thing you know there’s a huge balance on your credit card at a 15 percent interest rate; and you can only afford to make the minimum payment. Credit cards can lead down a very slippery path. Use them with extreme caution.

Emergency fund basics

An emergency fund should be large enough to cover 3-6 months of living expenses. This money is held in a separate bank account so there is absolutely zero temptation to spend it on non-emergencies. Make sure to verify your bank is FDIC insured.

This money should never be invested in the stock market or any investments like CDs or bonds. I don’t care that interest rates are basically 0 percent in today’s economy. Why doesn’t anyone ever complain that their car doesn’t fly? Because a car isn’t designed to fly. So don’t grumble about your emergency fund not earning enough interest. That’s not what it’s designed to do.

The purpose of the emergency fund is safety and accessibility, not maximum return. When bad stuff happens, the emergency fund allows you to absorb those unexpected bumps and stick to your monthly budget without going into debt.

How to get started

If you currently don’t have an emergency fund or find it difficult to save money, the key is to start small. You have to realize that accumulating 3 month’s worth of expenses will take some time. If you set your immediate goals to be small and manageable, you will have a better chance to achieve them.

Begin with a small amount, maybe $10 a week initially. While this won’t add up all that quickly, the important thing is to start putting something away to make it a habit. After a month, you won’t even miss that $10, so bump it up to $20 per week. Take advantage of automatic online transfers so you don’t have to think about it.

The first step is to save $1,000 in an emergency fund. After that, focus solely on paying off credit card debt if you have it. Once all the debt is paid off, re-start the emergency fund savings until it’ll cover 3 months of living expenses.

Studies show that those without emergency funds are more likely to accumulate debt. It may feel like you can’t afford to have one, but the truth is you can’t afford not to have an emergency fund.

Steve Doster is a Certified Financial Planner™ professional, providing commission-free financial advice for do-it-yourself investors. You can reach Steve at Doster Financial Planning by phone 619-688-1192 or email steve@dosterfinancialplanning.com. You can also follow Steve on Facebook, Linked In, Twitter, or his blog dosterfinancialplanning.com

photos.com

The stock market had a nice increase over the first four months of the year. But now it’s been going down for May and June. Maybe it’s due to the Greek debt problem, or Spain’s bank bailout, or slow U.S. job growth. It’s enough to make you go crazy. But should it?

Heck no! None of us have control over these things. Yet we focus on them and create stress for ourselves. It’s a distraction from focusing on what we can control in our financial lives.

The first step to end the craziness is to set a few life goals, such as buy a home or travel the world, or when to retire. Once you set some goals, it’s easy to figure out how to get there. Not having financial goals is sort of like taking a road trip without deciding where you’re going.

How stressful would it be to jump on the freeway without knowing what city you were going to? You wouldn’t know how long you’d be travelling, nor would you know how much money to take, or if you have time to check out some sights along the way.

Not having financial goals causes the same uncertainty as travelling without a destination. You don’t know if you’re saving enough, when you can retire, or what standard of living you’ll be able to afford in retirement.

Folks that don’t set goals default to the goal of making as much money as possible. This leads to stock market watching. Because the only goal is to make as much money as possible; an increasing market makes them happy, while a down market makes them stressed.

In addition to setting some financial goals, focus on these four things that are well within your control:

• Pay off credit cards every month.

• Save at least 15 percent of your income.

• Don’t try to time the stock market.

• Have a diversified, low cost portfolio.

Don’t feel bad if you don’t know how to do some of these things. I remember starting my first job after college with a mechanical engineering degree (many, many years ago!). During the employee orientation, I had to make all kinds of decisions that I was not prepared to make. Was it better to put money in a 401(k) with pre-tax or after-tax contributions? How much should I contribute? Should I buy long-term disability insurance?

I was not prepared to answer any of these questions. That made me embarrassed; but I shouldn’t have been – and neither should anyone else. Personal finance is not taught in our education system. Very few people take a high school or college course in personal finance or investing.

My goal is to explain all things related to your financial life in a way that is understandable, straight-forward, and hopefully fun. It really isn’t too complicated once you are armed with some basic financial knowledge. Managing money is just a matter of someone taking the time to lay out the facts in a simple, logical format.

I look forward to writing this personal finance column to help everyone become a do-it-yourself investor. In the meantime, start thinking about your financial goals and focus on what you can control. If you do that, then you will definitely take the craziness out of your financial life.

Steve Doster is a Certified Financial Planner™ professional providing commission-free financial advice for do-it-yourself investors. You can reach Steve at Doster Financial Planning by phone at 619-688-1192 or email steve@dosterfinancialplanning.com. You can also follow Steve on Facebook, Linked In, Twitter, or blog to get more personal finance advice and tips.