Category: Personal Finance

Tax Update for 2012-2013

Posted on by Evan in Taxes

If there is one thing I’ve learned over the years with regard to personal financial planning it’s that reviewing tax changes EARLY in the new year is important.  By the time December rolls around it is typically too late to make any meaningful changes to your tax bill for that year.  This will be especially applicable in 2012 & 2013 when many tax cuts are currently set to expire.  I am in the process of updating my tax summary sheet that focuses on personal & real estate related tax provisions.  I will upload it to this blog once complete.  In the meantime, HERE IS A LINK to a 4-minute summary of what you should know.  Please remember that it’s an election year and many in Washington DC may be extending some of these provisions to help their reelection chances.  In general, tax laws can change during the year and even retroactively so it’s best to talk with a competent tax professional about your individual situation.

Real Property Tax Explanation for Oregon

Posted on by Evan in Taxes

The Oregonian’s Brent Hunsberger wrote a good article over the weekend outlining Oregon’s confusing property tax rules.  What makes things difficult for homeowners to understand is why their property taxes rise even when their home value declines.  Brent does a good job of explaining:

“…tax bills will go up even though real market values declined again as of January 2011, the date of record for valuations, and were down at least 20 percent from their peak in 2008.

You can thank Oregon’s tax system for that.

In the ’90s, Oregon voters passed two constitutional amendments limiting growth in property taxes. One essentially divorced real market values from so-called assessed values. The lower value is used to calculate the taxes you owe.

The second amendment in 1997 capped property tax increases to 3 percent a year, though it exempted remodeling, new additions and new voter-approved levies from that cap. That measure also cut tax bills overall.

Market values skyrocketed after that while assessed values bumped up at a more modest rate. By 2008, real market values across the state were 86 percent higher than assessed values, according to the Oregon Department of Revenue. And though market values have declined since then, they still remain about one-third higher than assessed values in Portland’s urban counties. “

Are you looking for homebuyer assistance in PDX-Metro area?

Posted on by Evan in First-Time Homebuyer, Home Purchase

In my interactions with first-time homebuyers I am often asked about special assistance programs that may be available for them.  I recently came across the HOMEOWNERSHIP OPPORTUNITIES WEBSITE NORTHWEST which provides a search tool where you can plug in information about yourself and see what programs might be available to you.  It’s an easy way to do research on the various types of programs that are available.

Is hourly-based financial planning right for you?

Posted on by Evan in Personal Finance

If you’ve been following this blog for sometime then you may know that I earned my CFP® designation in 2010 and have begun working on a limited basis with clients providing financial planning services.  At this point I do not offer any financial products or services aside from my mortgage practice and am charging for my time.  This planning model is not very common so I am often asked how it works.  Allan Roth wrote THIS PIECE for moneywatch.com in which he lays out the pro’s & con’s of hourly-based planning nicely.  Here are some excerpts:

Pro’s:

  • “Fewer conflicts – Sheryl noted that the hourly model had less incentive to give a recommendation to benefit the advisor. For example, paying off a mortgage would mean less revenue for other fee models. Converting a 401K to an IRA also has more conflicts in the other models since more assets equals more fees or commissions.”
  • “More flexibility – Sheryl stated hourly advisors can recommend any product, as opposed to other fee models that are limited to being within a certain platform. For example, why would a fiduciary have their client in a money market earning 0.05 percent when there are safe places to stash your cash earning 20 times the amount? Also, certain CDs like Ally Bank and Security Service have great rates that also protect against the bond bubble. The hourly model doesn’t have the incentive to capture assets.”
  • “Works for the little guy – Sheryl says the client doesn’t have to have much money for the planner to be cost effective. The client may just need a couple of hours of advice and can be on their way, much in the same way they may need an attorney for one particular issue.”

Con’s:

  • “Client won’t seek advice – An argument for the percentage of assets model is that the client can call at any time without the clock running. They are not as likely to seek advice they may need if they are going to receive a bill for that call. I’ve also heard the criticism that hourly planners can over-bill their hours, though any fee model is vulnerable to fraud.”
  • “Client won’t implement – The argument here is that the other fee models give the advice and implement it. Hourly planners, including myself, give a written plan, discuss it with the client, but don’t always get involved in the implementation.”
  • “Not conducive to an ongoing relationship – People need ongoing advice from a long-term trusted advisor, rather than a one-time engagement.”

And my favorite quote of the article:

“A rule of thumb for all consumers to follow is that if you can’t explain your investments simply, you don’t understand them. And if you don’t understand them then you are probably transferring your wealth to your advisor.”