Your house is a very, very, very fine house, with two cats in the yard, life used to be so hard. Now everything is easy 'cause…you updated your property and casualty policy.

Property & Casualty insurance (P&C) is a term for policies that cover things like your house, cars, RVs, boats, motorcycles, etc. and the liabilities associated with them. These types of policies help safeguard against property damage as well as protect you from liability issues.

Most often, a person’s home is their biggest asset. Doesn’t it make sense to make sure it’s properly protected in case of a loss? Now is a great time to do some “spring cleaning” regarding your P&C policies. Because of the high inflation we have experienced, and the significant increase in home values, it’s important to make sure your coverage is up to date with the current value of your home.

Homeowners are typically required to maintain a policy that covers 80% of the replacement value of their home. If the coverage falls below the required amount the insurance company assumes the homeowner is self-insuring for the difference. This is called the coinsurance clause in the policy. This clause requires a policy holder to maintain the right level of coverage, so the insurance company receives a fair premium for the risk of possible claims.

Here's an example of how the increase in value of your home can result in inadequate coverage if your policy is not updated. If you bought a house for $300,000 and the insurance company is insuring it for 80% of the value (the required coverage, excluding the value of the land, which is not part of replacement value of the house), and you suffered a loss, the insurance company would pay up to $240,000 to rebuild the house. If your house increases in value from $300,000 to $500,000 the insurance company will pay per the coinsurance formula in the policy.

The typical coinsurance formula is:

(actual amount of insurance / required amount of  insurance) X amount of loss = amount of claim.

If your policy hasn’t been updated to the proper value this is how the insurance company would calculate the payment for the loss filed: ($240,000 / $400,000) X $100,000 = $60,000. Resulting in a $20,000 coinsurance cost to the homeowner to complete the needed repairs.

Some homeowner policies have an inflation clause that automatically increases the policy to the required level. This is one reason why homeowners policies tend to increase regularly, because the value of the home keeps going up. While we don’t anticipate having losses, they do happen, so we need to keep our policies up to date to make sure we don’t fall into a coinsurance scenario. 

Photo by Ian MacDonald

It’s usually pretty easy to love and care about the people in our lives, especially when it comes to family, but sometimes life calls on us to take that a step further and become caregivers.

People become caregivers for many different reasons. Often times, an elderly parent is in need of care from their children, sometimes a grandparent steps in to care for a grandchild. Other times, it could be the need of a sibling or other relative, or perhaps a friend stepping in to help another friend or neighbor. However, it comes about, becoming a caregiver can be both rewarding and burdensome. 

A caregiver is someone that provides care and tends to the needs of a person with short- or long-term limitations due to age, injury, disability, or illness. This could mean providing physical, social, medical, and emotional support. While it’s easy to list the black and white expectations of a caregiver, it goes much deeper than superficial actions. Being a caregiver means becoming an advocate, a cleaner, a medication dispenser, a cook, and requires flexibility. All those responsibilities can feel overwhelming. It can also create a huge financial  burden to both the person needing care and the caregiver. A study done in 2011 showed that women over 50 who leave the workforce to care for a loved one lose up to $324,000 in wages, Social Security   benefits, and private pensions over their lifetime      because of their caregiving responsibilities.

Being a caretaker is not all bad, though. It is, in fact, a wonderful opportunity to develop a sense of empathy and greater understanding of others. It allows you the chance to learn patience and problem-solving and enhance communication skills. You can develop many abilities that could be useful in other areas of your life.

So where is the balance between the overwhelm and the reward? A lot of it comes down to how well the person needing aid has prepared financially. When people include a Long-Term Care (LTC) policy in their retirement and financial plan it ensures that if the time comes, there is money set aside for their needs, easing the burden a lack of money could place on them and their caretaker. Having LTC insurance in place changes the role of the caregiver to a care manager, allowing them to pay for professional help when needed, relieving the burden of being a sole caregiver. The role change can also relieve other personal burdens felt as a caregiver, reducing the pressure it places on their family and work life. However, one of the greatest blessings comes from the piece of mind it can provide.

Being a caregiver can be a rewarding and fulfilling role. It provides an opportunity to give back and help someone else. It’s important to plan financially and avoid the negative pitfalls of being financially unprepared. Having a LTC policy could be an option as you plan for your future retirement needs, for both you and your loved ones that would be taking care of you, providing peace of mind for everyone involved.

Photo by Lina Trochez

The Producer Price Index (PPI) is an inflationary measure similar to the CPI. The difference, though, is while the CPI measures the change in what a consumer pays, the PPI measures the change in what the producer or manufacturer pays for the raw materials they use. Over 16,000 establishments provide about 64,000 price quotations every month creating the pool of information used to determine the PPI. The monthly PPI report publishes more than 3,800 commodity price indexes for goods and more than 900 services.

The PPI helps economists foresee inflation. It is also used for tracking price changes by industry and comparing wholesale and retail price trends. The PPI does not include the price of imported goods; however, it does include export prices. The PPI is useful for tracking the production flow price changes as products move through the various stages of production and manufacturing. This allows the production flow to be monitored, which helps economists to assess the degree of change in inflation rates producers face at earlier stages of production and throughout the manufacturing process to the final product.

The Producer Price Index for final demand fell 0.1 percent in December. Prices for final demand goods decreased 0.4 percent, while the index for final demand services remained unchanged. Prices for final demand rose 1.0 percent in 2023.

The Consumer Price Index is one of the most commonly used indicators used to measure inflation and deflation. The CPI measures the overall change in consumer prices based on about 80,000 different price quotes on a selection of goods and services over time. The data is collected monthly from 23,000 retail and service enterprises as well as 50,000 rental housing units. The collection of goods and services are considered a “basket;” this basket is filled with popular goods and services regularly purchased by Americans. The cost of this basket is compared to what it would have cost the year before, and then multiplied by 100 to determine the percent change.

You’ll notice that the report is for November. That is because the data hasn’t been collected for December, until the month is over. December’s data will be released in January, and so forth. This is why the CPI is considered a lagging indicator, because it is measuring the data that occurred in the past.

We can’t escape paying taxes. It’s a part of life; it’s unavoidable. Even folks that try to evade paying their taxes end up paying. Afterall, failing to pay his income taxes was the tipping point in being able to convict famous mob boss, Al Capone. One way or another, Uncle Sam gets his payday. So, what does this mean for your retirement accounts?

Required Minimum Distributions (RMDs) are a minimum amount you must withdraw from your retirement accounts and act as a safeguard for the IRS against people using a retirement account to avoid paying taxes. Since traditional IRAs and 401(k) plans use pre-tax dollars, the IRS enforces RMDs to keep people from avoiding paying the deferred tax which is owed on the contribution. RMDs generally kick in when you reach age 72.

The amount you are required to withdraw changes from year to year and is determined by your life expectancy. It is calculated by dividing your account(s) year-end value by a factor associated with the estimated remaining years of your lifetime based on a table that can be found on the IRS website.

To calculate your RMD, the first step is to determine your account(s) balance as of December 31 of the pervious year. Then, using the IRS chart, find the distribution factor that corresponds to your age on your birthday for the current year (The factor number goes down the older a person gets). Then you divide your account(s) total by the factor number. Your withdrawal can occur periodically throughout the year, but the total amount must be withdrawn by December 31 of the current year. There are a couple different tables used when finding your divisor for beneficiaries of retirement accounts and for account holders that have a spouse that is much younger, make sure you use the one that applies to your situation. Click here to see the IRS RMD Table iii.

Here’s an example: Let’s say Abe turned 74 on September 3rd of 2023, and his IRA was worth $300,00 on December 31 of the prior year. Abe would need to divide $300,000 by 25.5 (from IRS table iii), making his RMD $11,765. If Abe has multiple IRAs, he will need to calculate the RMDs separately. Depending on the type of retirement accounts Abe has, he may be able to add all the RMDs together and withdraw the totals from one account, otherwise he will need to withdraw from each retirement account separately.

The minimum distribution rule applies to the original account holder and their beneficiaries in the following types of plans: Traditional IRAs, SEP IRAs, Simple IRAs, 401(k) & 403(b) plans, profit sharing plans, and Roth IRA beneficiaries.

Most people begin making withdrawals from their retirement accounts before the required 74-year threshold. If you put off your withdrawals until later, it could bump you into a higher tax bracket. It’s important to have a retirement plan involving tax strategy.

Photo by Josh Appel

Here we go again. Another round of New Year’s resolutions. Making New Year's resolutions dates back over 4,000 years to the ancient Babylonians and Romans. The New Year as we know it came about when Julius Caesar implemented the Gregorian calendar, shifting the start of a new year to January instead of March (the planting season). During this time, resolutions were made to their gods and included things like being better people and honoring commitments. Overtime as cultures changed, so did the resolutions.

Nowadays, the top resolutions are things like exercising more, losing weight, saving more money, etc. A recent survey found that 80% of respondents felt confident in their ability to reach their goals. Yet research suggest that only 9% of Americans that made resolutions actually  complete them, with most people quitting by the end of January.  With so much confidence, why do so many people fail to finish?

We’d like to share a few keys to success to help you  complete the goals you have set for yourself.

Key 1: When and why a goal is set is important. Many people set new year’s resolutions for traditions sake, which doesn’t offer the proper motivation to truly commit to something. Goals should be set when the change is needed. The need for change can be a powerful motivator.

Key 2: Keep things simple. If you try and tackle too many goals at once or commit to something too big it leads to failure. When most people experience failure, they lose the motivation to keep trying. To avoid that, pick one goal and focus on it.

Key 3: Keep it short. Don’t set your finish line a year away. By setting a shorter timeframe you allow for easier and multiple successes, and each of those successes compound throughout the year.

Key 4: Remember to make it fun. Making changes can be hard, which can be discouraging. That’s why it’s important to add an element of fun to whatever you’re trying to achieve. If you can make something fun and enjoyable, you tend to look forward to it, increasing your chances of sticking with it.

Key 5: Be realistic. We’ve all been told as children to “reach for the stars,” or “you can be anything!” While these are great sentiments, they are not very realistic. If you want to achieve a goal, you need to make your goal something that you can realistically complete.

Key 6: Don’t get caught up in doing it perfectly. Go into it knowing there will be mistakes. That’s OK! Sometimes making mistakes along the way teaches us and helps us grow more than doing something perfectly would have. Typically, a goal is meant to improve you or your life. Learning from mistakes is a great way to improve yourself.

Key 7: Have a backup plan. If you do fall off the wagon or feel like you’ve completely failed it’s important to have a plan in place with steps that get you back on track.

Key 8: Don’t be afraid to ask for help. There are no bonus points or extra fancy crowns awarded at the finish line if you did it without any help. Often, a little nudge from a friend or a professional gives momentum as well as accountability.

Key 9: Understand what success looks like. Success doesn’t look the same for everyone. Knowing what success looks like for you will help define what your goals should be and what you’re aiming for.

Photo 1 by Nerene Grobler

We’ve seen our economy ebb and flow over the last few years. Reports come out and economists and financial experts weigh in on the data. Do you know where they are getting their information from? Do you know what to look for in the reports so you can better understand what’s happening and what could happen in our economy?

Analysts use economic indicators to interpret current and future investment possibilities as well as the overall health of the economy. Economic indicators are pieces of data that are used to interpret the growth of different sectors as well as broad economic direction. They help investors uncover new investment opportunities so they can update their portfolios, and possibly avoid some investment pitfalls.

Here are the broad indicators that give us a picture of what the economy is doing and possibly could do in the near future.

Leading indicators point to future changes in the economy. They are used for short-term predictions of economic developments because they typically change before the economy does. Some examples of leading indicators are Gross Output (GO), GDP, CPI, and consumer spending.

Lagging Indicators generally come after the economy has changed. These indicators are most helpful when looking to confirm specific patterns. These are then used to make predictions based on the patterns that emerge. These indicators are not used to directly predict economic change. Some examples of lagging indicators are unemployment rate, corporate profits, and labor costs per unit of output.

Coincident Indicators provide useful information about the current state of the economy because they happen at the same time as the changes they signal. Some examples of coincident indicators are industrial production, trade sales volume, and personal income.

Photo by: Markus Spiske

Gifts for family and friends, Christmas cards, food and parties, there always seems to be something more to spend money on during the Christmas season. According to the National Retail Federation, the average American spends about $1,000 on Christmas each year, about 71% of that goes to buy gifts. For the last decade, U.S. Christmas spending has increased year-over-year. If you’re not managing your cashflow during the holiday spending spree, you could wind up in a Christmas cash flow crunch.

While cash crunch is usually used in reference to a business, we can experience the same thing in our own personal spending. When there is more money going out than is coming in you get a cash flow crunch. The best way to avoid this is to have a strategy in place before you feel the crunch. A big part of that is creating a budget or a spending plan. It’s important to tell your money what to do and assign it to a particular task. For example: X amount of dollars goes to paying yourself first in terms of savings and/or investing, then an amount for specific bills, while other parts of your income can be assigned to gifts or entertainment.

Remember that a budget is only part of a financial strategy. Your budget is like a roadmap for your money, an easy way to know when and when not to spend. To truly avoid the cash flow crunch you need more. Start by setting clear goals for what you want to achieve with your money. Set a deadline for those goals and decide what choices need to be made to succeed. An effective strategy will position you on the playing field in a way that you can win. It’s all about looking to the future and generating results.

Your strategy will be unique to you and your goals, but some points to think about include things like reducing your spending, deciding what parts of your spending lifestyle are needs, and which can be paused or done away with. Embrace the age-old question- what are my needs vs. my wants? This is a very emotional question, which makes money decisions emotional. When we control our emotions about money, we can control our money better. The answers to the needs vs. wants questions will be different for everyone. What may be practical to one family may seem lavish to another. It’s important not to judge. However, we all have the same basic needs: Food, Shelter, and Clothing. Beyond that anything else might be up for discussion.

The most important part of your strategy needs to be taking action. You can plan and strategize until you’re blue in the face, but unless you act and put that plan into motion, you will not see any results. You may never achieve your goals, and you may never win that end prize of a comfortable retirement. This Christmas avoid the cash flow crunch and give yourself the gift of financial freedom.

photo: Heidi Fin

December swoops in in a rush, bringing thoughts of jingle bells, twinkle lights, Christmas shopping, and parties. The stores are decked in signs and banners advertising holiday sales, the latest gadgets, and trending must-haves. In the hustle and bustle of Commercial Christmas it does one good to slow down and remember the most meaningful part of Christmas - giving.

It can sometimes be difficult to know what to give, especially to those who have little. This year, consider an option that makes giving to those in need as easy as buying a candy bar from a vending machine.

Light the World Giving Machines made their debut in 2017. Since then, they have raised more than $22 million in donations for both local and global charities. Their purpose, to make giving instant, memorable, and fun. They are set up exactly like a vending machine. You select from the listed items, swipe a credit or debit card, and a card representing your gift drops into the receiving bin, allowing you to see the donations pile up.

This year, a mobile Giving Machine will make its way through Texas, arriving in the North Texas area December fifth. The first stop will be in Fort Worth in Sundance Square. From there it will travel to Grapevine, and then McKinney. Visitors to the Giving Machines can purchase items for people in need both in Texas and around the world.

The locations and dates are:

Sundance Square, Fort Worth Dec. 5-7

Grapevine Dec. 9-17

Downtown McKinney Dec. 19– Jan. 1

Giving Machines partner with eight local charities as well as two global ones. Every penny of your donation goes to the item you select and is delivered by the participating charitable organizations. This is made possible because The Church of Jesus Christ of Latter-day Saints covers all the operating costs of each Giving Machine, including credit/debit card fees, making your donation even more impactful.

If you are not living in an area where Giving Machines will be set up, you can still donate online at GivingMachine.org. Your donations to the Giving Machines are tax deductible; you can get a receipt by text or email.

This Christmas take a moment, whether at a Giving Machine or by some other means, to bring light into someone’s life who may feel as though they are in darkness. Share the joy and love of the holiday.

For more information and to see a list of participating charities go to givingmachine.org

From all of us at Yield Financial, we hope that you and your family have a wonderful Christmas and a Happy New year.