The Housing Act is intended to revamp the housing finance industry, encourage home ownership and help prevent foreclosures. Below is a summary of some of the tax provisions in the bill that will affect current and future home owners:

* The Hope for Homeowners Program: The Act creates a new Federal Housing Authority (FHA) program designed to help borrowers in danger of losing their homes to foreclosure. Eligible homeowners may be able to pay off their original (foreclosing) lenders with a fixed-rate, 30-year-term mortgage for up to 90 percent of the appraised value of the property.

Eligible homeowners are those who originated their loans before January 1, 2008, spend more than 31 percent of their monthly income on their mortgage, and are currently in danger of foreclosure. Borrowers would have to share future equity with the FHA. The program is completely voluntary; banks may elect not to participate. The program begins on October 1, 2008 and ends in September of 2011.

* Temporary mortgage foreclosure protection for military members: The Act provides mortgage foreclosure protection for members of the U.S. Armed Services by temporarily increasing (through December 31, 2008) the maximum loan guarantee for VA loans. The period a lender must wait before initiating foreclosure proceedings after a service member returns from service is extended from 90 days to 9 months. Increases in mortgage interest rates above 6 percent are suspended during the period of service and for one year after a service member ends service. This provision will sunset on January 1, 2011.

* Temporary tax “credit” for first-time homebuyers: First-time homebuyers of a principal residence purchased after April 8, 2008 and before July 1, 2009 may take a refundable tax credit of 10 percent (up to a maximum of $7,500; $3,750 for married persons filing separate returns) of the purchase price of the property. The credit is phased out for individual taxpayers with adjusted gross incomes (AGIs) ranging from $75,000 to $95,000 ($150,000 to $170,000 if married filing jointly). However, taxpayers must repay the credit taken over 15 years in equal installments as a surcharge on their annual income tax return.

* Temporary standard property tax deduction for taxpayers who don’t itemize their deductions: For 2008 only, taxpayers who do not itemize their deductions will be allowed to take a real property tax standard deduction (in addition to the standard deduction) of up to $1,000 if married filing jointly ($500 for all other filers).

* Reduced homesale exclusion for nonqualified use: For sales and exchanges of a principal residence after December 31, 2008, the $250,000 ($500,000 if married filing jointly) homesale exclusion won’t apply to the extent the gain is allocated to periods (not including any period before January 1, 2009) during which the property is not used as the principal residence of the taxpayer or the taxpayer’s spouse.

These are just a few of the provisions in the new act. For more information, please visit ‘Housing Rescue Bill…’

Introducing a new consulting service: Jump Start Your Finances

Are you:

• Overwhelmed by your company’s 401K choices?
• Confused about investment products?
• Living from paycheck to paycheck?
• Saving enough to meet your financial goals?
• Getting all the tax deductions you are entitled to?

Jump Start Your Finances is a consultation session for younger individuals and couples, who have important questions about their finances, but who may not yet need a written financial plan.

The Jump Start Your Finances Consultation will teach you:

• How to choose the right investments for you,
• About diversifying your portfolio and why it’s important,
• Why you should check your credit every year,
• How to create a realistic and workable spending plan,
• About basic income tax planning, including how much you should withhold from your paycheck.

The Jump Start Your Finances Consultation is a 2 hour consultation, in person or via telephone, and is perfect for recent college graduates, first-time employees and beginning investors. Here’s what you’ll get from your financial checkup:

1. 1-on-1 coaching session with a CFP/CPA
2. A review of your 401K or other employer-sponsored plan
3. A Prioritized “to-do” list
4. Educational worksheets on financial planning topics

Ready to get started? Contact Kristine McKinley at 816-739-4853, or email us at kristine@beacon-advisor.com to setup your consultation today!

Looking for the perfect gift this holiday season? A gift certificate for the Jump Start Your Finances Consultation is a thoughtful gift for the holidays, graduation, weddings, or any occasion! There’s no better gift than the peace of mind that comes with preparing for your financial future.

I have always loved the convenience of debit cards, but this recent experience has me re-thinking the cost of that convenience.

First, your liability if you are a victim of debit card fraud is greater than if someone steals your credit card or uses your credit card to make unauthorized purchases.

With credit cards, your liability for unauthorized transactions is limited to $50. However, most major credit card issuers have a zero liability policy, so you typically aren’t liable for anything if you are a victim of credit card fraud.

With debit card fraud, your liability is limited to $50 only if you notify your financial institution within two business days after realizing their card has been lost or stolen. After that, your liability is limited to $500 if you report any suspicious activity within 60 days of receiving your account statement. After 60 days, your liability is unlimited, so it’s very important to check your statements on a regular basis.

Another big difference is that with debit card fraud the thief is stealing money directly from your checking account. Which can mean bounced checks, late fees, or even black marks on your credit report while you’re fighting to get your money back. With credit card fraud, you are fighting unauthorized charges, which can reduce the amount of credit you have available, but it doesn’t affect your cash flow like debit card fraud.

Even if you detect the fraud early and you are able to recover all of the money taken from your checking account, with debit card fraud you may be without your money for a period of time while your bank is investigating the fraud. I was very discouraged to find out that my bank can take up to 10 days to refund the money to my checking account (a previous bank refunded my money the same day when I was a victim years ago). And in some cases, your bank has up to 45 days to refund your money!

So what can you do to avoid debit card fraud (or credit card fraud)? While you may not be able to avoid it completely (if a thief really wants your money he’s probably going to get it no matter how cautious you are), here are some steps you can take to minimize your risk for fraud:

• Check your account balance and activity frequently - I check mine at least once a week, and usually more, but since I was on vacation this past week it took a little over a week to discover the unauthorized transaction in my checking account.
• Call your bank immediately if your debit card is lost or stolen.
• Check your bank statements immediately (no throwing them in a pile or drawer to review a month later).
• Notify your bank by phone (or in person) and in writing as soon as you discover the fraud.
• If it’s an unauthorized transaction, contact the company the thief purchased goods through immediately upon discovering the fraud - in writing.
• Be cautious about where you use your debit card. I’m not sure how the thief got my debit card information since I use my debit card frequently, but I’m pretty careful about not using my card on websites that don’t look secure, or stores where I don’t shop regularly.
• Keep receipts or other records to back up all of your purchases. If you use your debit card frequently but don’t keep good records, it’s possible that an unauthorized transaction could slip by you unnoticed.
• Use a credit card instead of a debit card if you are shopping online or with someone you don’t know.

A recent GfK Roper Reports survey indicated that 55 percent of respondents said they are limiting “discretionary expenses like eating out and vacations.”

If that sounds like your agenda, here are some ways to save on travel this summer:

Stay closer to home: Is it that boring around home? Rather than flying across the country, check out the tourism website for your state or the nearest adjoining state to yours and just see what looks interesting. Those websites offer coupons, too. Also, sign up for e-mail from your local transit agencies and check their websites - you might hear about special deals at local museums or parks and free parking sites where you can leave your car before you pick up the train or bus.

Get smart about your travel points: If there’s a particular hotel chain you’re going to stay in, see whether they’re part of a larger network where you can earn points or other incentives toward future stays. Also, rather than multiple credit cards, try and narrow your usage to plastic that carries the best points plans toward hotels, airlines and car rental agencies you use all the time for fun or business.

Go off-season: Admittedly, it’s tougher with kids since they can only travel when school’s out, but if you don’t have a family, start traveling out-of-season all the time. Vegas and Aruba might be hotter than blazes in July, but as long as you have sun block and access to good air conditioning, then you can take solace counting what you’ll save on hotels, meals and other expenses that dip in price when the crowds are low.

Let travel opportunities find you online: If you have a favorite airline, resort or hotel chain, get on their mailing lists online and be ready to react if they offer a great deal.
Look for value weeks on the calendar: For family friendly venues, you might want to check prices on the edges of summer when schools are still letting out or going back into session. It’s not a bad time for grownups to travel either - you’ll beat the crowds.

Check out your motor club: Major organizations like AAA negotiate good prices on popular tourism locations around the country, even places like Disney World. Again, even if you don’t have kids, check your motor club’s offerings on hotel, destination, rental car and even train discounts.

Merge errands into your trip: This is not just vacation advice, but good everyday advice - if you can pack regular errands into your vacation time in the car, do it. For example, when returning from a trip, consider incorporating your regular errands on the drive home (consider stopping in states or counties with cheaper sales taxes that might save money on similarly priced items).

Leave or return on a Monday or Tuesday: Play around with the days of the week that you can schedule your trip just to see if you can find significant savings on hotel and airfares. Fighting to get home on a Saturday or Sunday can cost you money.

Pinch those gasoline pennies: If you’re driving your own car on trips, focus on maintenance and when and where you’re buying your gas.   Keep your tires inflated and make sure your engine is in good shape for maximum fuel economy. Also, don’t carry tons of stuff - heavier cars burn more gas.  Consider joining a wholesale club that sells their own gas onsite - you might save a considerable sum not only at home, but in out-of-town locations where you’re staying (hit the Internet and check before you go). Also, buy gasoline mid-week when prices generally stabilize from spikes entering the weekend and starting the workweek. Last but not least, buy gas when daytime temperatures are lowest. Why? Because during cool hours, gasoline is densest and packs more fuel power.

June 2008 - This column is produced by the Financial Planning Association, the membership organization for the financial planning community, and is provided by Kristine McKinley, CFP, CPA, a local member of FPA.

Garrett Planning Network

(Lee’s Summit, MO) February 24, 2008 - After concluding their tax preparation activities, many people will see that they are entitled to a refund from Uncle Sam. “Whether you refund is large or small, you are wise to determine now what you will do when that check arrives,” says Sheryl Garrett, CFP®, author of Personal Finance Workbook For Dummies® (Wiley, November 2007) and founder of the Garrett Planning Network (www.GarrettPlanningNetwork.com). “Don’t fritter it away or spend it on a whim.”

On a recent teleconference, network members brainstormed thirteen ways taxpayers can put this “found money” to work:

1. Put the entire amount, up to the maximum allowed by law ($4000 for an individual in 2007 unless you are age 50+, then the maximum contribution is $5000; $5000 for an individual in 2008 unless you are age 50+, then the maximum is $6000), into a Roth IRA assuming your income falls below the government thresholds (the phase out for singles in 2007 is $99-$114,000 and in 2008 it’s $101-116,000; for married couples in 2007, the phase out is $156-166,000 and in 2008, it’s $159-$169,000).

If you are saving for higher education funding needs, withdrawals of regular contributions to a Roth IRA are not subject to tax or penalty and can be made at any time, and you can take a “qualified distribution” (one that is made after a 5 year holding period, beginning on the first day of the first year for which the contributions were made), if one of the following applies: (1) you are a first-time home buyer, (2) you are age 59 1/2 or older (3) the distribution is due to death or disability. If your earned income for 2007 is higher than the phase-out thresholds, put your “found money” into another qualified retirement plan such as a 401(k), 403(b) or 457 plan if your employer offers one. Consider contributing to a traditional IRA if you have maxed out contributions to your employer-sponsored plan or if a Roth IRA is not an option.

2. Give the money to charity and you can claim that amount as a tax deduction on your 2008 tax return, if you itemize using Schedule A of Form 1040

3. Sign up with www.kiva.org and provide micro-loans to budding entrepreneurs in third-world countries. If you’re feeling especially patriotic, you might consider investing in small business start-ups in the US, for instance: helping a relative by providing seed money for a local venture.

4. Start a tax-sheltered 529 college savings plan to fund your own or children’s/grandchildren’s educations. Consider funding an Education Savings Account (ESA), formerly called a Coverdell account, if you plan on paying private school tuitions through secondary school. (Coverdell phase outs in 2007 and 2008: Single- $95-$110,000; Married Filing Jointly - $190-$220,000)

5. Check that you have adequate insurance coverage on the following types of policies: property and casualty, life insurance, health insurance, long-term care and disability insurance. Use the tax refund money to pay the premiums.

6. Use the refund money to engage the services of an attorney. If you don’t have a will then have one drawn up. Without a will issues such as child guardianship and disbursements of assets will not be decided by you, but rather the laws at the time. For high net worth families, make sure your estate plan is up to date.

7. Use the money to purchase stock mutual funds at lower prices. Some funds offer lower initial purchase amounts, especially for IRA’s, or even lower if automatic transfers are made from your bank account or paycheck. While the market has been gyrating wildly, there’s never been a better time to invest. If you have cash sitting on the sidelines, you may miss the next market upswing. Time in the market matters more than trying to time when to get into the market. If you are investing for the long-term, you can’t afford not to be invested in stocks. Remember the old adage, “buy low and sell high.” Stock prices are low right now. Consider international as well as domestic opportunities.

8. If you have credit card debt, pay off as much as possible. For free credit reports go to www.annualcreditreport.com (the only authorized source for free credit reports). Use part of the money to obtain your FICO score from this site(the rating that shows how credit worthy you are). Correct any misreported items and work to keep your credit reports clean. Make your payments on time and don’t take on more debt than you should. Try to live within your means. Get help at the Consumer Credit Counseling center.

9. Mortgage interest rates are the lowest we’ve seen in years. If you have a good credit score, now is a good time to refinance your first mortgage and/or to wrap our Home Equity Line of Credit (HELOC) or second mortgage into a more attractive home loan. Consider a 15-year loan to accelerate the payout. Get out of variable loans now. Use your “found money” to pay points and loan costs.

10. During economic slowdowns, including a recession, job losses and/or business declines are inevitable. Take a course, add to your credentials and consider how you can improve your skill set to make yourself as attractive as possible in the marketplace.

11. Schedule your annual check ups with your doctor and your dentist. Use the tax refund money to pay the deductible and co-payments. Join the YMCA or the local health club, consult with a nutritionist, or buy a piece of exercise equipment (and be sure to use it!). Without your health, wealth is not important.

12. Schedule a financial check up for yourself. Annual trips to the dentist, the doctor - and your financial planner - are wise investments. A professional financial adviser can help you see tax loss harvesting opportunities, assess investment options, analyze insurance coverages, and plan for a secure retirement.

13. Purchase a gift certificate, for a set amount of professional financial advice, for a loved one. If you can’t afford or don’t want to pay for a complete financial plan, find a financial planner who works by the hour and will render as much help and advice in the time allotted by visiting www.GarrettPlanningNetwork.com.

About The Garrett Planning Network, Inc.

What: An international network of independent professionals who offer financial planning and advice on an hourly-as-needed, per-project and/or retainer basis. No commissions or third-party compensation is allowed. Now anyone regardless of income or net worth can hire an independent financial planning professional to help them make better financial decisions.

Network Founder: Sheryl Garrett, CFP® — author of several financial planning and investment books including her latest, Personal Finance Workbook For Dummies® (Wiley, November 2007). Recipient of numerous industry awards. Profiled in hundreds of national publications including Wall Street Journal, New York Times, Kiplinger Personal Finance, MONEY magazine and multiple times on the TODAY show, Bloomberg TV and Fox News affiliated stations. Named four times to Investment Advisor magazine’s annual list of the “Top 25 Most Influential People in Financial Planning.”

Headquarters: Shawnee Mission, Kansas (Kansas City metropolitan area)

Year Founded: 2000

Contact: (866) 260-8400 or info@garrettplanning.com

Web: www.GarrettPlanningNetwork.com

Membership Guidelines: Members pay an annual licensing fee in exchange for network training, support and participation. Members also must be CERTIFIED FINANCIAL PLANNER™ certificants or actively working toward that status, independently registered in the state in which they practice or with the U.S. Securities and Exchange Commission, and adhere to a strict code of conduct, ethics and compensation.

Number of Members: Approximately 300 across the United States and overseas, including Lee’s Summit, MO based Kristine McKinley.

Located in Lee’s Summit, Missouri, Kristine McKinley,CPA, CFP®, is a member of the Garrett Planning Network. Her firm is also a member of the National Association of Personal Financial Advisors (NAPFA) and the Financial Planning Association. Ms. McKinley offers a complimentary, no-obligation Get Acquainted meeting to discuss her services and help potential clients determine if there is a good fit. More information can be obtained at www.beacon-advisor.com, by phone at 816-739-4853 or by email at kristine@beacon-advisor.com.

The most important thing you can do during volatile market times is to have a plan, and to NOT make rash decisions based on emotion. During volatile markets, planning is essential to minimize your stress level. That doesn’t mean that you won’t feel nervous if your investments decline, but focus and confidence will help you fight the natural human tendency when it comes to your own nest egg to sell when the market is down. Remember the old adage “Buy low, sell high”? Now is the perfect time to “buy low”.

A well diversified portfolio is one of your best allies when markets are volatile. Remember, you are investing for the long term; even if you are retired your investment horizon could still be 20+ years. Market downturns can be great buying opportunities for the long-term investor. For example, your regular 401K contributions this month are purchasing more shares than 6 months ago. When you actually need these funds in 5, 10, or 20 years, chances are very good they will have significantly increased in value. So by buying when the market is low, you are actually leveraging your money to work harder for you in the future.

On the other hand, if you are reaching the end of your accumulation years and/or entering the distribution phase of your life, you will not want to make any rash decisions based on the market’s short-term volatility. The worst thing you can do is to fall prey and “sell low” because you are panicked. So, give yourself a 10 day breather after any big market event - whether up or down - and give me a call before you make any buy or sell decisions. There may be some tweaking we can do to your portfolio to help you get through the volatility, without selling out when the market is down.

No matter which stage of investing you are in, the message I am trying to communicate to you is this: if your financial plan and investment strategy was sound a week ago, it is still sound today. Unless something has changed in your life, it is unlikely that you should take radical action. If you feel like your portfolio does not reflect your goals or risk tolerance, then now may be a great time to schedule a financial checkup to review your portfolio. Otherwise, remember that you are investing for the long-term, and this short term volatility will eventually pass.

Expect the market to be volatile this year. In addition to the recent recession fears (the media is not our friend in this case), we are in an election year, so expect more volatility in 2008. However, this too shall pass! Keep focused on your goals, post them in plain sight and review them often.

Probably the best advice I can give you is something I heard a CNBC analyst say this morning (while we waited for a low opening on Wall Street): “If you’re investing for more than 12 months, you should turn the news off, it doesn’t affect you today”.

Why you should check your credit report

• to check for errors
• to check for fraud and identity theft
• to get the best interest rates
• more and more people are relying on credit scores - car insurance, employers, etc.

When to check your credit report:

• Once a year if you have good credit and don’t anticipate any large purchases in the near future
• Before a major purchase, such as a new home, new car, etc. - should request your credit report 6 months ahead of a big purchase so you have time to correct any errors
• If you’ve been denied a credit card, loan or other product or service because of your credit (you are entitled to a free credit report if you have been denied credit based on information found in
  your report)
• If you suspect that your identity has been stolen
• If you are starting a plan to get out of debt or repair your credit.

How to check your credit:

There are three credit reporting agencies (Equifax, Experian and TransUnion), and they are required to provide you with one free credit report each year. The three agencies do not always share the same information, so it’s important to check all three.

You can order all three credit reports at one time, but it may be a better idea to check one company one month, wait a few months, then check another company, then the third company a few months later.
This way you are getting three free credit reports a year, and you are checking several times a year, so you are more likely to catch errors and/or fraud.

Go to www.annualcreditreport.com to request your free credit report online. This is the only authorized source for consumers to check their credit report online for free. There are commercials and websites for other companies who claim to offer your credit report online for free, but they are generally selling a service or they are a scam.

In addition, you can call 1-877-322-8228, or you can write for your free credit report at: Annual Credit Report Request Service, PO Box 105281, Atlanta, GA 30348-5281.

Finally, you can purchase a 3-in-1 report, which is basically getting all three reports from each of the credit bureaus. This is a good idea if you have never requested your credit report before, or if you suspect fraud. You can purchase your 3-in-1 credit report at www.myfico.com.

Money Makeover: Couple frets over saving at the same time for their retirement, kids’ college expenses

by Gene Meyer
The Kansas City Star

Steven and Angie Cortez look into the future and see a financial dilemma they want to resolve now.

The couple, who both are educators and not yet 40, theoretically will be eligible to retire when Steven turns 53 and achieves the combination of age and years in service to qualify for Kansas Public Employees Retirement System teachers’ benefits.

That doesn’t seem realistic, the Olathe residents say, because their children, twins Kennedy and Carson, who turn 6 Monday, will still be in college when the milestone arrives.

They don’t mind postponing retirement for a few years. But they are concerned about how best to prepare now to hit two humungous savings targets — college and retirement — so potentially close together.

“We’ve been told that we should max out our Roth IRA savings before we contribute anything to college funds, but I’m not sure that’s the best way to go,” Steven Cortez said.

Neither target is an easy one.

Some rough, back-of-the-envelope calculations based on College Board projections show that the $50,000 it costs to send a student to a public college for four years now may more than double by the time Kennedy and Carson are freshmen. For a private school, the already higher costs will almost double too.

But a financial planner who analyzed the Cortezes’ situation more thoroughly calculates Steven and Angie also need to accumulate $1.97 million in the next two decades to supplement his KPERS and their other projected retirement benefits so he can retire at 60 and live as comfortably as they do now.

“Retirement savings should be your higher priority,” said Kristine McKinley, the certified financial planner from Lee’s Summit who examined the Cortez’s circumstances.

Saving for retirement often is more urgent than saving for college, McKinley said. First, as is the case with the Cortezes, retirement requires more money than college. Second, families have resources such as loans, grants or scholarships to turn to if savings come up short. Retirees have far fewer alternate choices.

But there’s good news too, McKinley told the couple.

Saving more aggressively and more efficiently now for retirement should also provide a potential cushion to help with the college funding if that’s needed.

The keys are Roth IRAs that the Cortezes opened to provide tax-free income when they retire. In a jam, Roth savers also can withdraw money they’ve contributed — but not the investment profits earned — before retirement without incurring penalties, she said. Pulling money out also will trim the account’s potential growth, however, so it shouldn’t be done lightly.

Click here to continue reading…

The new bill would reduce the interest rate on need-based student loans to 3.4% (currently 6.8%) over the next four years.

It would also increase the Pell grant maximum to $5,400 over the next five years.

Other provisions in the bill will help borrowers who are having trouble meeting payments due to economic hardships. 

For more details, click here.

1.  Why aren’t my bond funds performing well?  or
2.  Why do I need bond funds in my portfolio?

The main purpose of bond funds (or bonds) is to provide diversification for your portfolio.  Diversification reduces the risk that your portfolio will lose money in a market downturn.

Bond funds typically go down when the stock market is performing well, and up when the stock market takes a turn down.  So when your stocks and stock funds are performing well, it’s normal for your bond funds to have a small or even a negative return. 

A balance of stocks and bonds in your portfolio reduces the volatility of your overall portfolio, and reduces your potential losses during market downturns.

Still not sure if you need bond funds in your portfolio?  Check out these returns of stocks and bonds during market downturns:

Total Returns of Stocks and Bonds During Market Downturns
	From December 31, 2000 to October 31, 2002	From June 30, 1990 to October 31, 1990	From July 31, 1987 to December 31, 1987	From December 31, 1972 to October 31, 1974
Bonds	29.07%	2.93%	2.97%	6.17%
Stocks	-37.39%	-14.09%	-21.39%	-32.99%

Source: Calculated by American Century Services, LLC, using information and data presented in Ibbotson Investment Analysis Software ©2007 Ibbotson Associates, Inc. All rights reserved. Used with permission. Stock returns are represented by the S&P 500 Stock Index, an unmanaged group of stocks considered to represent the stock market in general. Bond returns are represented by the Lehman Brothers Intermediate Government/Corporate Bond Index, an unmanaged market value weighted index of government and investment grade corporate fixed rate debt issues with maturities between one and 10 years. Stocks may be volatile. Past performance is no guarantee of future results.

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