FINANCIAL CONSIDERATION$ DURING TRAN$ITION

Transcript:FINANCIAL CONSIDERATION$ DURING TRAN$ITION:
FINANCIAL CONSIDERATION$ DURING TRAN$ITION Presented by: Lisa M. Gabriel, CFP ®, ChFC ® President & CEO, Pinafore Wealth Counsel, Inc. DON’T PANIC! Make a plan – financial strategies, key moves and decisions can make the difference. FIRST STEPS…… Promptly file for unemployment insurance Handle severance package with care Maintain health insurance Continue life and disability insurance Map out priorities MAKE A FINANCIAL SURVIVAL STRATEGY SURVIVAL BUDGET Sources of income Severance pay Unemployment benefits Cash from emergency fund Working spouse’s income (decrease tax withholding) Temporary work/freelance SURVIVAL BUDGET Age 62 or older? Social Security (Earnings limit $15,480) Other Cash Sources (come with limits and consequences) Cash value of life insurance Home equity Reverse mortgage (62 or older) SURVIVAL BUDGET Think Outside the Box: Collect on loans you have made Ebay? Barter SURVIVAL BUDGET List expenses in order of priority Mortgage/rent Groceries/utilities Student loans Car payments/transportation Job search expenses Reduce discretionary expenses STUDENT LOANS Income-based repayment Student loan forgiveness program Public Service Loan Forgiveness Only applies to Federal Direct Loan Program Must make 120 on-time, monthly payments (10/1/2007) NC Foreclosure Prevention Fund Meet Robert Sherwood www.ncforeclosureprevention.gov 1-888-623-8631 “If you qualify, the NC Housing Finance Agency will make your mortgage payment directly to your loan provider or bank.” NC Foreclosure Prevention Fund Job loss, divorce, illness 0% interest up to $36,000 If you remain in home, loan is forgiven at end of 10 years Special program for Veterans SURVIVAL BUDGET Reduce contributions to retirement or educational savings accounts Consider government or private assistance Talk to your family Adjust expectations Teachable moment MANAGE DEBT Avoid using credit cards Contact creditors – renegotiate Sell collateral (car, boat) Consolidate debts – carefully Credit counseling service 800/338-2227 YOUR CREDIT SCORE Review your credit report and score www.annualcreditreport.com www.creditkarma.com Ways to improve your credit score Correct any inaccuracies Higher scores = lower premiums for auto and homeowners insurance Retirement Plan Decisions If you have a loan against your 401k it must be repaid per plan document If not repaid, it is treated as a withdrawal - taxable income and if you are under 59 ½ a 10% early withdrawal penalty is assessed Consider rolling 401k into IRA Rollover You control custodian and investments Review beneficiary designations Retirement Plan Decisions Withdrawals are taxed as ordinary income for the year in which you make the withdrawal. Also, you may have to pay a 10% penalty tax for early withdrawal if