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Tax Return Preparation Versus Tax Planning

Tax return preparation is backward-looking.  It involves reporting what has happened in a particular tax year to the taxing authority.

Tax planning is forward-looking.  It involves making assumptions about the future, and based on those assumptions, implementing strategies to minimize your expected lifetime taxes.  It involves intentionally changing the numbers presented on a particular tax return due to the execution of tax planning strategies.  Examples of tax planning strategies include tax loss harvesting, tax gain harvesting, deduction clustering, and strategic Roth conversions.











Reasons to Consider Whole Life Insurance as Part of an Overall Financial Plan

The appropriateness of whole life insurance as part of a financial plan is based on many factors including the individual's financial goals, the extent to which they value the various benefits of the policy, what other financial products they have in place, their age and health, and which insurance company they try to obtain the policy through.











Deep Dive of Student Loan Simulator Calculations

In this article, we'll go through several hypothetical scenarios to better understand and verify the calculations performed by the Federal Student Aid Loan Simulator software.











How to Determine the Appropriate Size of an Emergency Fund

This article covers how to determine an appropriately sized emergency fund to address any sudden loss of income.











15-Year Versus 30-Year Fixed Rate Mortgage Comparison

This article addresses some of the calculations you may wish to perform when choosing between a 15-year or 30-year fixed rate mortgage.











Basic Estate Planning Documents

Estate planning involves establishing a plan to execute your wishes in the event of your incapacity or death.

Absent any estate planning documents, a probate court judge would oversee the process of deciding who manages your assets and takes care of you during your incapacity, who raises any of your dependent children, and who receives your assets upon your death.

This article discusses several estate planning documents which may avoid the probate process.











How to Determine your Long-Term Disability Insurance Need

Financial planning involves applying various stress scenarios to your current situation and evaluating how much of an impact it would have on your financial security.  One of the worst-case financial scenarios for you is becoming permanently disabled and unable to work in your chosen field, through accident or sickness, before reaching financial independence.











How to Calculate your Life Insurance Need

In this article, we'll go through the calculations involved in determining your life insurance need.

The Needs Approach lists out the things you need your life insurance to cover in the event of your immediate death, determines their present value (if the cash flows occur in the future), and sums them.  Typical life insurance needs for young families may include funeral expenses, elimination of debts, funding specific goals, and an income stream to the surviving spouse.







Cash Flow Statement Template



Cash Flow Statement for Tax Year _____

Cash Inflows Amount ($)
Employment income
Independent contractor/self-employment income
Investment income (e.g., interest, dividends)
Cash gifts received
Distributions from accounts (e.g., IRA, 401(k), brokerage, HSA)
Pension/annuity distributions
Social Security benefits
Permanent life insurance dividends
Rental income/royalties/alimony received
Other income
Total cash inflows
Cash Outflows Amount ($)
Taxes
Federal income taxes
State/local taxes
FICA (Social Security, Medicare) taxes
Property taxes
Other taxes
Total taxes
Debt Payments (principal and interest)
Credit card payments (if not paid off each month)
Student loan payments
Mortgage payments
Auto loan payments
Personal loan payments
Other debt payments
Total debt payments
Insurance Premiums
Term life insurance
Disability insurance
Healthcare insurance/Medicare/Medigap
Dental/vision insurance
Homeowner's/renter's insurance
Long term care insurance
Auto insurance
Personal liability umbrella insurance
Malpractice insurance
Other insurance
Total insurance premiums
Savings/Investments
Emergency fund contributions
Retirement account contributions (e.g., IRA, Roth IRA, 401(k), 403(b))
College savings account contributions (e.g., 529 plan)
Health Savings Account contributions
Brokerage account contributions
Annuity premiums
Permanent life insurance premiums
Reinvested dividends/interest
Other savings/investments
Total savings/investments
Essential Expenses
Rent
Groceries/personal care
Utilities (e.g., water, gas, electricity)
Fitness
Telephone/Internet
Home maintenance/HOA fees
Transportation (e.g., gas, auto maintenance, parking, tolls)
Clothing/dry cleaning
Childcare/school costs
Out-of-pocket healthcare costs (e.g., copays, coinsurance, prescriptions)
Other essential expenses
Total essential expenses
Discretionary Expenses
Vacations
Cash gifts
Cash charitable/church donations
Dining out
Cable TV, premium subscriptions, entertainment, etc.
Private school (K-12) tuition
Discretionary shopping
Pet expenses
Other discretionary expenses
Total discretionary expenses
Total cash outflows
Net discretionary cash flow













Balance Sheet Template



Balance sheet as of ________________

Assets Amount ($)
Savings
Physical currency (dollar bills, coins)
Checking account
Savings account
Money market account
Fixed annuity
Whole life insurance accumulated value
Other savings
Total savings
Investments
Brokerage account
401(k), 403(b), 457(b), IRA
Roth 401(k), Roth 403(b), Roth 457(b), Roth IRA
529 plan
Health Savings Account
Variable annuity
Variable life insurance accumulated value
Rental property
Other investments
Total investments
Personal use assets
Personal residence
Automobile(s)
RV, boat, condo, vacation home
Personal property
Other personal use assets
Total personal use assets
Total assets
Liabilities Amount ($)
Credit card
Auto loan
Mortgage
Student loan
Personal loan
Other liabilities
Total liabilities
Net worth
Total liabilities and net worth













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