Jesus and Taxes (Ways to Pay Less)

Jesus and Taxes (Ways to Pay Less)

You may recall the story of Jesus being confronted by the Pharisees about whether or not to pay taxes to Caesar. This was not the first attempt to trap Jesus in his teachings. His response was surprising and enlightening. (And if you keep reading, you might find new ways to reduce what is “Caesar’s”…)

The Story

15 Then the Pharisees went and plotted how to entangle him in his words. 16 And they sent their disciples to him, along with the Herodians, saying, “Teacher, we know that you are true and teach the way of God truthfully, and you do not care about anyone’s opinion, for you are not swayed by appearances.[a] 17 Tell us, then, what you think. Is it lawful to pay taxes to Caesar, or not?” 18 But Jesus, aware of their malice, said, “Why put me to the test, you hypocrites? 19 Show me the coin for the tax.” And they brought him a denarius.[b] 20 And Jesus said to them, “Whose likeness and inscription is this?” 21 They said, “Caesar’s.” Then he said to them, “Therefore render to Caesar the things that are Caesar’s, and to God the things that are God’s.” – Matthew 22:15-21

Mic drop. (Well, pretty sure He didn’t have a microphone at the time, but if he did, a drop would be appropriate.)

The Response

How we most likely respond to this teaching is that we should pay taxes. If you believe in the Bible as the ultimate authority, there is further instruction found in Romans 13:

1 Let every person be subject to the governing authorities. For there is no authority except from God, and those that exist have been instituted by God…6 For because of this you also pay taxes, for the authorities are ministers of God, attending to this very thing. Pay to all what is owed to them: taxes to whom taxes are owed, revenue to whom revenue is owed, respect to whom respect is owed, honor to whom honor is owed.

Now let me be clear: I do NOT like paying taxes. Period. However, I also prefer to not be in jail while my kids grow up into adults. Therefore, I pay taxes that are owed to local, state and federal government entities. I also constantly look for opportunities to reduce what is owed.

As one of my tax professors asked: “What is the difference in tax avoidance and tax evasion?” Answer: Avoidance = Legal; Evasion = Illegal.

Ways to Pay Less

So how can you pay less in taxes? If you’re a resident of the State of Mississippi, you have a newly established tax credit opportunity! A tax credit is a dollar-for-dollar reduction of taxes owed.  A deduction lowers your overall taxable income. Bottom line: A credit is better than a deduction. You are redirecting tax dollars owed to the State to a select charity (or group of charities).

The Children’s Promise Act

The new credit allows for a State tax credit up to $400 (single) or $800 (married filing jointly) for donations made to a select list of charities. There is another $500 credit (single) or $1,000 (married filing jointly) for a separate list of charities. That’s a potential $900 total credit for single tax filers and $1,800 married filers! There is a $3 Million cap for the entire amount available. As of mid-November, there is approximately $2.8 Million still available! Click on this link to learn more. And of course, discuss with your CPA or tax professional to see if this opportunity works for your specific tax situation.

Retirement Accounts

Saving for retirement in tax-advantaged accounts continues to be a significant way to reduce your tax liability. The IRS recently released the new contribution limits for retirement plans and accounts. A highlight is that 401(k), 403(b) and most 457 plans allow for a $19,500 deferral, a $500 increase from 2019. Contribution limits for Traditional and Roth IRAs are unchanged at $6,000. However, don’t forget about the age 50 and over catch up contributions! (Click here for the IRS update on contribution limits.)

College Planning

Saving for college continues to be a struggle as college costs increase. Thankfully, there are several tax-efficient ways to save for college (and high school) for children and grandchildren, such as a 529 plan, Education Savings Account (ESA), Minor’s investment account (UTMA or UGMA) or a pre-paid tuition program. Each of these plans or accounts has its place in college planning. Deciding which one starts with the goal in mind. We would be glad to help walk you through the pros and cons of each option.

Hopefully, you have learned a new strategy or two that could help reduce your tax burden. The tax code continues to be quite complex. But if you look hard enough, you may find a way to better direct your hard-earned dollars.

*For financial planning clients of Rivertree Financial Planning: Please contact us as soon as possible if you have had any changes in circumstances, objectives, goals or risk tolerance.

Self-Awareness and Money

Self-Awareness and Money

I hope your fall season is going well and that you’re enjoying the cooler weather. Our newsletter topic this month might seem peculiar. What does money have to do with self-awareness, and self-awareness have to do with money? Quite a bit I’d say.

A Case Made

“Without knowledge of self there is no knowledge of God…without knowledge of God there is no knowledge of self.” Who said this? John Calvin, the great reformer! Now, we can take this quote out of context and too far by saying that introspection or self-awareness is more important than a knowledge of God. Calvin makes the case that these go together. We must see ourselves for who we truly are before a holy, righteous God. After true introspection should come humility.

But what I would also argue is that Calvin saw a place for knowledge of self. We often hear of self-forgetfulness – ignore our needs and only focus on others. But as I reflect on the life of Jesus, I can’t help but notice how many times he left the crowd to be alone. He recognized the times he needed to be alone with the Father, even though there were sick people to heal and lessons to be taught. Jesus had greater self knowledge and awareness than any other man who has walked this earth. He knew his calling, his mission, and his identity. And these impacted every decision he made.

And Money?

We all relate to money in different ways. Some of us never (or seldom) worry about it. Others think about it more often. And others are consumed by it. Where do you fall?

I would argue that first knowing how you personally relate to money is critical to making progress financially. If we know we’re prone to blow cash the minute it comes out of the ATM, then maybe that method is not best. Or perhaps it’s the opposite for you: cash gives you needed boundaries of when it’s gone, the spending stops. If it’s plastic, then spending continues.

We’re often asked by clients: Which budgeting system is best? We respond: “The one that you’ll actually do.” If a yellow pad and pencil keep you on track, then that’s best. If an excel spreadsheet, great. If an app, so be it! Ultimately, which system best helps you accomplish your goals?

What about investment account balances? TV financial pundits? Research online? Are these helpful for you, or do they create more stress? Perhaps you check your blood pressure next time you partake. Or maybe you already know the answer…you just don’t want to change. That’s okay for now. At least you know. But maybe change will come when “the pain of staying the same becomes greater than the pain of changing.” -Dr. Henry Cloud

Having self-awareness about your tendencies with money is critical.

A Helpful Tool

The Rivertree Team recently started the book The Road Back to You: An Enneagram Journey to Self-Discovery by Ian Cron and Suzanne Stabile. Whew! We have already had some good laughs as we’ve discussed our types and tendencies (and some occasional grunts as we read about the not so good parts of ourselves). The goal is that we know one another and ourselves better to create an even healthier work environment.

And at the spiritual level, considering what Brother Dave said to Ian, the author of this book: “Just remember, it’s only one tool to help you deepen your love for God and others….There are plenty of others. What’s important is the more you and Anne grow in self-knowledge, the more you’ll become aware of your need for God’s grace. Not to mention, you’ll have more compassion for yourselves and other people.”

What used to frustrate us about ourselves and one another can hopefully be replaced with compassion…and some friendly chuckles. 

Now What

Have you taken this journey before? If so, has it been helpful? If you haven’t taken this journey, I’d encourage you to do so. I am confident you’ll find it worthwhile.

*For financial planning clients of Rivertree Financial Planning: Please contact us as soon as possible if you have had any changes in circumstances, objectives, goals or risk tolerance.

Milestone: Rivertree Celebrates 10 Years!

Milestone: Rivertree Celebrates 10 Years!

We often hear of celebrating milestones: victories, championships, new beginnings, births, etc. But I generally don’t associate milestones with defeats, losses, deaths, and other unfortunate events. Listen to what Tim Fortner says:

“A ‘milestone’ comes from the use in olden times of having stones which told the traveler how many miles it was to the next city. They were a reference point which reassured the traveler they were on the right path.  Milestones have also been used to describe significant events in one’s lives.  In the Bible, especially, the Old Testament, we see a heap of stones to commemorate a significant event in the life of an individual or of the nation or people.

Joshua and the nation of Israel were experiencing some milestone events. Milestone events can be wonderful or they can appear as trouble, a loss, a setback. Certainly the defeat at Ai was especially troubling for Joshua and the nation of Israel.

With the Lord, a setback is a set up for a comeback. Now in order for this to be true, we must learn from our mistakes. We must learn the lesson the Lord would have us to learn, don’t we? Or else we are doomed to repeat them.  And when we learn something, we can begin again, more intelligently.   After what had happened at Ai, Joshua and the Israelites were discouraged.  Let’s face it- discouragement over the past failure and fear of the future are two common reactions which accompany failure.”

Your Milestones

In light of Fortner’s words, how would you describe and document your milestones? Could you do it in the form of a story? I was challenged some thirteen years ago to document the “fence posts” in my life – the significant people, places and events that have most shaped me. If you had to list your ten most significant “fence posts”, who or what has shaped your life, for better or for worse, what do you think that would look like?

For me, this exercise was fascinating, eye-opening and sobering all together. Then came the harder challenge: sharing these fence posts (i.e. “milestones”) with others. But not just any others – safe, loving people whose undivided attention was listening to my story. Whew! I’m having to take a deep breath even now as I remember!

Financial Milestones

What are your financial milestones? First job, first house, first credit card, last credit card (better!), debt payoff, mortgage payoff (party!), retirement account balance, extravagant giving, etc.? The list could go on, but again, what are yours? We’ve discussed many times the importance of setting goals. You are far more likely to celebrate some financial milestones if you have a plan in place. Behavioral finance research (which we believe in and practice with clients) continues to show that having a plan in place alongside your goals gives you far more probability of achieving them.

Our Milestones

In August, Rivertree set a milestone of its own. We were thrilled to celebrate the 10-year anniversary of the Company! Wow, how the time flies! As often said (particularly about parenting), the days are long but the years are short.

We have many milestones here at Rivertree:

-Opening an independent shop in 2009 on the tail-end of the Great Recession

-Amy joining the team (and taking a leap of faith in a young Company) in 2010

-Jonathan joining the team in 2013

-Brent joining the team in 2015

-Phillip joining the team in 2016 and continuing in a consulting role after leaving in 2017

-Valerie joining the team in 2017

Fast forwarding to today, we oversee approximately $140 Million in client assets and service over 500 households. We’re amazed and humbled at these milestones. And, they would never have been possible without the trust and confidence of our clients. We are committed to continually earning our client’s business as we walk alongside them and celebrate their milestones. From the bottom of our hearts, Thank you!

Now What?

Do you have the courage to document your milestones – the good, the bad, the ugly – that shaped you? Or better said – your personal story? If you do, I challenge you to share your story with a good friend. The outcome of this process may surprise you!

*For financial planning clients of Rivertree Financial Planning: Please contact us as soon as possible if you have had any changes in circumstances, objectives, goals or risk tolerance.

Financial Planning – Outside the Lines

Financial Planning – Outside the Lines

Are you tired of taking sides? Tired of having to choose one over another? Simply tired of making so many decisions every day? Well, I’m not surprised given that some studies estimate the average person makes 35,000 decisions a day. I feel exhausted just thinking about this!

So, what’s a person to do? Well, a starting place is simply to acknowledge the exhaustion that comes from having to choose so many times on a daily basis (enter “decision fatigue”). And if you are symptomatic of the condition “paralysis of analysis,” it’s just that much harder.

What about financial planning? Think you have some choices to make? Well, I think we’d agree that you do. So, what does financial planning “outside the lines” look like? We have some thoughts.

Firstly, Giving Credit Where It’s Due

I read Scott Sauls’ book Jesus Outside the Lines about 2 years ago. The timing of this book was perfect for me. Scott’s writings resonated with me, particularly as it related to politics, money, and hope (or realism). He approached these quite sensitive topics with humility and grace. I greatly appreciated this. So, thank you, Scott, for your book and helping me with the title of this post.

Investments

Let’s name a few choices you have: stocks, bonds, mutual funds, ETFs, annuities, passive, active, momentum, contrarian, etc. Shall I go on? I’ll spare you.

So, what’s an investor to do? And which of these options are best? Ultimately, you have to make a choice. Or, you choose to hire someone to help you.

Insurance

Buy term and invest the rest? Buy term and spend the rest? Or buy permanent, whole life insurance? Perhaps variable universal life? Follow the duck to Aflac or rely on your traditional health insurance? Work with an 800# rep or have a local agent? Which is best? (Answer coming…)

Estate Planning

Save money and do a cookie-cutter last will and testament? Or pay a local attorney to help? Retitle all assets possible into a revocable living trust, or go through the probate process? Name specific beneficiaries on all accounts, or let your will do the work?

So many decisions here. What’s a person to do?

Financial Planning (Outside the Lines)

It’s this: Developing a financial plan specific to you and your needs, goals and desires. It’s not a robo-advisor or robo-plan. It’s not a one-stop shop online or a local company advertising that they have all the right answers and solutions. It’s not an insurance company promising (almost) to save you 15% on premiums.

I remember early in my career thinking I had the perfect plan and most all of the answers to clients’ concerns and questions. My heart’s motive was to help. However, I learned with time and experience that I needed to step out of my personal story and enter into their stories.

The client may communicate their desire to have life insurance that is guaranteed to always be there. They may communicate their desire to have retirement income that they can never outlive, regardless of market conditions. The client may share their desire to work with a more traditional “brick and mortar” bank rather than an online bank paying a higher interest.

It starts with you, not us. Our personal plan might (or will) look different than yours. We are happy to share what we are personally doing in our financial plan. But again, we expect our plans to look a little different.

Our job and passion is to walk alongside you in your life story. We are morally and legally obligated to put your interests above our own. That’s how it should be.

We are deeply thankful for those who have asked us to come alongside them. It would be a privilege to have a conversation with you about how that might look in your life journey. And be assured that your financial plan will be designed outside the lines.

*For financial planning clients of Rivertree Financial Planning: Please contact us as soon as possible if you have had any changes in circumstances, objectives, goals or risk tolerance.

A Counterintuitive Freedom

A Counterintuitive Freedom

I hope you are having a good summer. I always enjoy the 4th of July holiday. I anticipate good food, good fellowship, and of course, some fireworks!

Before I continue, I’d like to pause and thank those who have served and fought for our country’s freedom. From the bottom of our hearts, thank you! Thank you to those who are serving now and have served in the past. I am certainly guilty of taking this freedom for granted many times, which is why I’m thankful for holidays and special times as these, when we honor those who have served.

The topic of freedom was discussed in our last Rivertree team meeting. Specifically, we discussed what freedom looked like in regards to finances. We could have gone many directions here: budgeting, freedom from debt, retirement nest egg, etc. But our discussion quickly went into a different direction.

Children

Many of us have children, grandchildren, or children that we may not be related to but consider our own. What a blessing children can be! And oh, what a challenge they can be…

Children need us. It feels good to be needed. And sometimes, it feels good to just be alone. Both are good and healthy.

But something happens to all children. It’s unavoidable. They grow up! Yes, I’m stating the obvious here, but humor me and keep reading.

Children grow physically. They grow emotionally. Hopefully for many of us, they grow spiritually.

But here’s my question: Are they growing into adults? I’m not talking about age of adulthood per your State’s law (FYI it’s age 21 for Mississippi, not 18).

Adults

What am I talking about in regards to adults? A responsible, contributor to society and at the core, a desire to be an adult.

But what happens? It doesn’t always go this way. Children rebel. They leave home before they’re ready. They denounce the wisdom they’ve learned through their early years. They hurt the ones who love them the most.

It’s devastating. What went wrong? Is it our fault as parents? I’d argue for most of us the answer is, “No.” It’s not your fault.

The Counterintuitive Freedom

Thankfully, we find the story of the prodigal son in Luke 15 of the Bible. The younger son requested an early inheritance (which is seldom a blessing to a child I might add). The son lived recklessly, wasted his money, and found himself feeding pigs (and even desiring the pigs’ food!).

At this point, we learn that the son “came to his senses.” He finally reached his point of true brokenness and need.

So, where’s the counterintuitive freedom I keep referencing? It’s this – Allowing our children to reach the place of brokenness rather than rescuing them. We “rescue” by giving them money. We rescue by bailing them out (including from jail). We rescue by not allowing them to truly experience the natural consequences of poor decisions and behavior.

“But what about mercy and grace, Scott?” I hear ya. I treasure mercy and grace. I’ve received it time and time again, from humans and The Lord Almighty.

When they’re children, we often do extend mercy and grace. We may discipline using other consequences so they don’t have to experience the natural consequence (and tragedy) of crossing the road before looking or playing with (or in) the fire.

But our topic today is adults, not children. For adults, it’s time that they experience natural consequences. It’s what the father did for his prodigal son. He allowed him to squander his wealth and live with pigs. Don’t you think this father had the ability to find his son and go rescue him? We don’t find this answer explicit in Scripture, but I think we can infer that the father did have this ability. But in his wisdom, he waited.

As a father, I sure wish Scripture gave us more information about what the father did and what he felt while he waited. How long did it take? Was he angry with his son, and even God? Did he grieve? Did he weep? Did he lose faith? We just don’t know.

Know this: There is counterintuitive freedom in allowing our adult children to experience the natural consequences of their decisions and behaviors, even if we have the means and abilities to “help.”

Love your adult children. Pray for them. Share the burden with God, and others. Give them the space to come to their senses.

Don’t lose hope. And when you feel like you have, God is big enough to listen and meet you where you are.

(Recommendation: I’m 70 pages into the book “Reaching Your Prodigal” by Phil Waldrep. Although I have more to read, I feel confident in saying that the author gets it. It’s answering the questions: What did I do wrong, and what can I do now?)

*For financial planning clients of Rivertree Financial Planning: Please contact us as soon as possible if you have had any changes in circumstances, objectives, goals or risk tolerance.

Living a “Just In Case” Retirement

Living a “Just In Case” Retirement

Very recently a couple of us from the office attended a retirement income planning seminar. The seminar was titled, “Don’t Live a Just in Case Retirement.” The presenter was Tom Hegna, an internationally renowned expert on retirement planning.

The seminar concepts were helpful and timely. Many points were reminders, but a couple of points struck a chord with me and are worth discussing.

One key point was this: “The success of your retirement is really not about assets.” Well, that’s controversial. Isn’t retirement about having a certain number? (i.e. How much do you have in your retirement nest egg?) Assets are lost, stolen, divorced, etc.

His argument was that the success of your retirement really depends upon how much guaranteed, lifetime retirement income you have. His argument is not just based on emotion, but research.

I have to agree. Our most joyful, content clients are the ones that know each month a set, guaranteed direct deposit is coming that doesn’t depend upon market performance. It’s backed by a pension guaranty, Federal government or an insurance company. This deposit is what used to be called the “mailbox check.”

But what’s the problem? There are fewer and fewer companies offering the pensions of one to two generations ago. It’s too costly and risky for employers. Therefore, we see defined contribution plans more today, such as 401ks, 403bs, and deferred compensation.

The risk has been transferred from the employers to the employees. The employees are in charge and responsible for saving enough for retirement. Problem is, how much is enough? Is it a certain number? We’ve dispelled that myth before. There’s no magic number that works for every person. Each person and financial plan are unique.

What’s the good news? We firmly believe a joyful, content retirement is possible, but it must come with a plan.

The second and last point that struck home with me was this: “How will you avoid risks detrimental to your plan?” Great question. Ignoring current and future risks is not wise. They need to be addressed. What are some of those risks?

  • Not maximizing your social security benefit
  • Inflation
  • Long-term care expenses
  • Sequence of returns risk (How the market performs in the early years of your retirement is a critical factor to be addressed.)
  • Longevity risk (outliving your assets)

The purpose of this writing is not to invoke panic and hysteria. Really, it’s not. I do, however, hope the items discussed moves you to taking action. “Any plan is better than no plan!”, said Tom.

And let’s not forget to address this topic from a spiritual standpoint. Are the items addressed above important? Yes. Are they ultimate? Absolutely not. For those who’ve trusted in our loving, heavenly Father, we know that our ultimate care is in His hands. So much so that he cares for us in this way:

Look at the birds of the air: they neither sow nor reap nor gather into barns, and yet your heavenly Father feeds them. Are you not of more value than they? 27 And which of you by being anxious can add a single hour to his span of life?[a] 28 And why are you anxious about clothing? Consider the lilies of the field, how they grow: they neither toil nor spin,29 yet I tell you, even Solomon in all his glory was not arrayed like one of these. 30 But if God so clothes the grass of the field, which today is alive and tomorrow is thrown into the oven, will he not much more clothe you, O you of little faith? 31 Therefore do not be anxious, saying, ‘What shall we eat?’ or ‘What shall we drink?’ or ‘What shall we wear?’ 32 For the Gentiles seek after all these things, and your heavenly Father knows that you need them all. 33 But seek first the kingdom of God and his righteousness, and all these things will be added to you.

34 “Therefore do not be anxious about tomorrow, for tomorrow will be anxious for itself. Sufficient for the day is its own trouble.” – Matthew 6:26-34 (ESV)

Living in the “already but not yet” is not easy. We know the ultimate battle has been won. We also know that on this side of eternity, the struggle and fight is real. Brokenness, hurt, loss and pain do exist. So how are we to respond? We trust. We follow. We love. We ask for help and forgiveness. And, we don’t give up.

Ask us for help. We’d love to walk alongside you through this journey of life. It’s not just about money for us. It’s a much bigger conversation.