CapitalWe Financial Planning

Runaway subscriptions and massive piles of paperwork? Financial clutter can cost money and add stress (I know it does for me). Take control and spruce up your financial life with this quick read.

Declutter Your Financial Life the Easy Way Less clutter can make it easier to achieve your goals.

Women - Does it ever feel like the financial industry ignores your concerns, without even knowing what they are? If so, this FREE guide about women’s money myths is for you. Inside, you’ll discover how to overcome the obstacles society puts in front of women.

Do Your Finances Feel Overwhelming? Money Is For Women! A FREE Guide: 3 Wild Truths and 2 Worn Out Fairy Tales

Do we control markets? Nope. The economy? Nope. Lawmakers? Still nope. A pandemic? Definitely nope. What do we control? Ourselves and our finances. Take control of your financial clutter in 7 easy steps. Click to learn more!

How Financial Clutter Costs You Time & Money Your financial clutter needs to go. Here's why.

Do you file/need to file Taxes in the US?

YOU CAN FILE TAXES FOR FREE, but NOT the way TurboTax claims.

If you were told to use TurboTax, then STOP and read this!

TurboTax sucks.
They lobby to keep taxes complicated, so that they can profit.
They use unethical practices to put you into a paid offering, even if you qualify for free filing.
Not to mention it is time consuming and annoying software.

So here are some alternatives:

If you earn less than

These are the same.

But they are not the same.

And the difference is time. (or rather, inflation)

I bought the same brand at the same store, one year apart and I noticed that the box was smaller.
Even though I had paid the same $$ for it.

Turns out, companies know we will notice if they increase prices.
But we wont notice if they reduce quantities?

This is a concept called Shrinkflation.

You’ve all experienced it before, especially in India (which has a high inflation rate)

- The Aloo Tikki burger is smaller ( no we didnt just get bigger hands)
- The Hot chocolate fudge is smaller ( yes, the ice cream to fudge ratio is off)
- The Lays Magic masala is basically just air ( that is all you will get for Rs 20 these days)

This year, with high inflation in the US, the same thing is happening here.

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I made ONE change to reduce a client’s taxes ~5%

It is, sadly, something the Tax preparer did not inform the client about.

But it took me less than 5 minutes to fix.

My client had their taxes done by a standard tax prep service which told them HOW MUCH they had to pay.

They never mentioned WHY they had to pay.

I was able to review their tax return and catch they that they were paying a PENALTY for underpaying the IRS.

You can also avoid the underpayment penalty if:
1) Your tax return shows you owe less than $1,000
2) You paid 90% or more of the tax that you owed for the taxable year or 100% of the tax that you owed for the year prior, whichever amount is less

In the clients case, they were withholding less taxes on their paycheck due to some stock grants from their company.

Effectively, we just went and completed a W-4 form to change their tax withholding (~5 minutes)

People often think Financial Planning is only about Investing, so I am sharing a Friday series where I talk about things we do for clients: Financial Planning Friday!

When it comes to talking about money, many women feel like men take up all the air in the room. Things like modern marketing, society, and the men in their lives have convinced women that managing money is challenging and confusing. The truth is, your finances can be as simple and easy as you want. Learn more in this FREE guide!

Feel Silly Asking Money Questions? Free Guide for Women Discover 3 wild truths and 2 worn out fairy tales

These three words could change your life.

And they will make you rich, but ONLY if you use it in a very narrow context.

JUST.

KEEP.

BUYING.

Note: This is not for material possessions.

This is for income producing assets.

But what if you dont have enough money left over after expenses to invest?
Well, we just need to flip that habit on its head!

Set your AUTOMATED transfers in the following order to save 15%:

Method 1: Waterfall method
- Set your paycheck to come into your savings account
- Transfer 10% immediately to investments
- Transfer 85% to your checking account from the savings account.
- Use all the money in your checking account for monthly expenses.

Method 2: Hub and spoke Model
- Set your 401k to come out of your paycheck
- Set your paycheck to come into your checking account
- Transfer 5% immediately to a brokerage account
- Transfer 5% percentage to a Roth IRA
- Transfer 5% percentage to a savings account
- Transfer 15% into a secondary checking account for discretionary expenses
- Use all the money in your primary checking account for monthly expenses.

It takes 10 minutes to automate and you literally never have to think about it again.

How do you manage your money? Waterfall or hub-and—spoke?

Marriage is a $250,000 mistake.

And it one of the most expensive mistakes you can make.

Even if you get married in India.

The BIG FAT Indian wedding is a reality for many people whether they agree with it or not.
I am NOT saying that expensive wedding = Bad.
I just think Putting your entire savings towards one special day = BAD.

Each $10,000 that you invest at 31 years old will be worth $255,477 assuming the historical return of 10%.
(Even assuming a nominal return rate of 7% it is ~$100,000)

The memories you make on this day are for life.
But it does not mean you have to stretch yourself financially for the wedding, especially since an average wedding in the both the US and India cost roughly about $30,000.

The worst part?
Weddings WILL go over budget.

Which means you will need to take out a loan, OVER AND ABOVE your savings.

So make sure you can REALLY justify the costs to yourself.

How much did you spend/ do you plan to spend on your wedding?
Was the cost worth it?

Friends and clients in [LOCATION]! There’s plenty of uncertainty to go around this month, but there’s a lot we can do to spruce up what’s in our control: our finances. Here are 7 surprisingly simple things we can do to *spring clean* our finances.

Simple Spring Cleaning for Your Financial Life Say goodbye to financial clutter & hello to clarity.

There is a fear that Charles Schwab might go out of business

And people are worried because their investments are held at Schwab.

That is billions of $ of life savings.

But what would ACTUALLY happen?

Most brokerages tend to carry SIPC insurance insurance so your money is safe…
Sort Of.

Here are some scenarios:
1) The brokerage will get bought out by a different brokerage. e.g. HSBC bought SVB Europe for $1 after the bank failed on Friday. Similarly, a healthy company can just buy that arm of the business and your accounts would transfer in kind to the new brokerage.

2) If you had

I spent a lot of money going out.

And it was affecting my budget.

Meeting friends at a bar for a drink to hang out.
Eating out to catch up with friends.
Going out on weekends.

I realized loved experiences but it was hurting my pocket.
And then I realized there is ONE way to fix it:

Identify WHY you are doing the things you are going out, and think of alternate solutions.

Here are a couple of ways of achieve them.

1) You want the ambience of going out:
- Drink only Water at the restaurant.
- Eat at home before you go.

2) You want the company of your friends:
- You can host at your home or meet at a public place.
- Spending quality time is important here, how does it matter where?

3) You want to try new cocktails/food:
- You can limit your purchase to ONE item.
- You can go with friends to share “family style”.
- You can also try to cook recipes from the internet with friends at home.

4) Overall experience:
- You can go in with a pre-defined limit to the $ you will spend (each meal/ each week/ each month). e.g. only $30 for one dinner.
- Build a buffer of 20% since some places are now instituting a mandatory tip (which are not reflected in menu prices)
- Don’t be pressurized by friends to spend more money to hang out

What about spending money is important to you?

What happens when a bank runs out of money?

This happened to Silicon Valley Bank (SVB) on Friday.

How?

Basically, people were on track to withdraw more cash than the Bank had available (in cash).

What now?

The US requires each bank to carry FDIC Insurance so your money is safe…
Sort Of.

Here are some scenarios:
1) If you had

I made ONE change to make a client ~$5,000

They had their house down payment $200,000 sitting in a “High Yield” Savings account, paying 2.5%

We moved this to something called short-term Treasuries which are currently earning 4.78%

Here is what you DIDN’T know:
1) These rates will increase as the Fed increases rates
2) Since Treasuries are Issued by Federal Government, you dont have state taxes on it!

Effectively, if you have 5% state tax or more, you are effectively earning 5% interest!

People often think Financial Planning is only about Investing, so I am starting a Friday series where I talk about things we do for clients: Financial Planning Friday!

Does it feel like the money world is completely ruled by men? Is it hard sometimes to speak up and ask questions? Take the power back with this FREE guide about money myths holding women back.

Intimidated by money? It's not your fault! FREE guide Money IS for Women: 3 Truths and 2 Fairy Tales

My question to you is : WHY did you move abroad (to the US)?

What steps have worked in making progress towards these goals?

What is holding you back in your journey?

I am interested in hearing your story in the comments below👇🏾

What does the festival of Holi have in common with Personal Finance?

Holi is the festival of colors. It is typically celebrated to mark the beginning of Spring and the triumph of Good over Evil.

- Holi is fun when you play with a lot of colors, but choose your colors wisely (Strategize what financial Goals are important to invest in, but make sure you investments are diversified)
- You need a good scrub to wash off the colors after playing Holi (Do some financial deep cleanse and get rid of “colors” that dont look good on you - debt, bad investments, etc)
- It is custom to share sweets with friends, family and community (Remember money does not buy happiness)

It is also a reminder to invest early and often, because no matter how gloomy, Spring is always around the corner.

Rang Barsao! Happy Holi!

 

We’re not in control of markets, the economy, or the world. But we are in control of more than we think. Learn how to tidy up your financial life in this month’s Visual Insights Newsletter!

Financial Spring Cleaning the Simple & Painless Way Here's the no-fuss way to tidy up your financial life.

Passive income is overrated.

And it doesn’t exist.

Most activities that claim to be “passive income” are not REALLY passive.
They cost you in some form of:
- Time
- Money
- Peace of Mind

The best “Passive Income” strategies are to earn more by up-skilling yourself and automating your finances to save more money on the day your paychecks hit.

What passive income activities have you tried?

A Financial Planner/Advisor will not make you rich.

As a Financial Planner, my job is NOT to make the highest returns for you.

My job is to increase the probability in building wealth by reducing your risk.

Selling stock granted by your company to buy a passive index fund is one such way to reduce your risk.

- It could be a bad move since Tesla is up 802% in 5 years.
- It could also be a good move since Wayfair is down 50% in 5 years.

Who knows how the tables will turn in the next 5 years?

-Facebook was up 120% from 2017-2021
- In just the last year it is down 52%

You can still get rich slowly and steadily.

Would you sell your company stock? Why or why not?

If you are an Immigrant on an Green Card looking to moving back to your home country, there are two numbers you should know.

178,000 and 2,000,000.

Because these relate to an “Exit Tax”

As a permanent resident, if you:
- Fail to meet the residency requirements (6 months), OR
- Earn more than $178,000, OR
- Have a Net Worth greater than $2,000,000

Then you are subject to Exit tax when you want to give up your Green Card.

This means, the day that you choose to forfeit your Green Card, the IRS will pretend you sold EVERYTHING you own and make you pay taxes on any gains.

Of course, there are ways to plan around it. But you need to weigh all your options really carefully.

Do you think we should Tax people trying to give up their permanent Residency?

Even Gods are not immune to Compound interest.

The temple of Thirupathi in South India is believed to have been built to help Lord Vishnu pay back a loan that he borrowed from Lord Kubera (the treasurer of Heaven in Hindu mythology).

Legend goes that when Lord Vishnu wished to marry Padmavathi, for which father, a King, asked for a hefty sum of money in order to deter the marriage.
To pay for his wedding, Venkateswara decided to borrow that sum ($17000/ Rs. 14 Lakh) from Lord Kubera with the promise that he would not leave Earth till the loan was paid off.

The catch?

The tenure of the loan was supposed to be 4,320,000 years(One Yuga).

Can you guess what happened?

Compound interest happened.

The temple collects $85 MILLION (Rs. 706 crores) each year. And the loan is still being paid off.

Would you want compound interest working FOR you (investments) or AGAINST you (high interest debt)?

Financial companies make their services sound so complicated, many women feel they can’t handle their finances without them. Here’s what they don’t tell you: taking control of your money can be as simple or complex as you want it to be. Discover how to overcome the money myths society teaches women in this FREE guide.

Money IS for Women: A must-read FREE Guide 3 Wild Truths and 2 Worn Out Fairy Tales

Play the Losers game.

Don’t be cool, dont be extravagant.

Its the winning formula. Want to know why?

Because you are not trying to do fancy sh*t.
With investments and personal finance, you need to get to good enough, and if you are able to sustain that over a long period of time, you are well ahead of everyone else.

You DONT have to buy the high-tech company that you do not understand.
You DONT have to buy a house at a low cost to flip and sell.

What you CAN do:
1) Start Early
2) Spend less, save more
3) Invest the difference
4) Live your life

You will be rich before you know it.

When you think about what matters to you, does a cause, organization, or value come to mind? Your financial investments can reflect your personal and emotional investment in the things you care about, not just your financial goals. Want to learn how? Read our Sustainable Investing guide. Then, let’s discuss your values and how we can turn them into investments.

Sustainable Investing Can Shape the Future Align values, potential growth, fulfillment & the future

How I drove a convertible for less than $2000/ year:

The year was 2016. My then car, a ‘97 Honda Accord had been stolen.
Armed with a $2000 insurance payout and bit of a robust Emergency fund, I got to looking for a convertible, with a budget of $8000.

I hit up Craigslist and narrowed it down to 2 models:
1) Mazda Miata - Too small
2) Nissan 350z

I saw two 350Zs. One for $9k and one for $12k
For the second one, we met at the Nissan service center, where they assessed the car and provided a list of potential repairs which I was then able to use to negotiate the price of the car down to $10k.

I was over budget, but I frickin LOVED the car.

Purchase price: $10,000
Maintenance, registration, etc over 4ish years: ~$2,800
Sale Price: $6000

Total Cost of Ownership: ~$6800 over 4 years

Who says fun things have to be expensive? 😎
Whats an expensive, fun purchase that you love?

When did you start investing?

Most people I talk to say that they will start investing once they start making more money, but the thing is, most investments compound over time, so the biggest factor you have in your favor when you are young, is time!

Someone who is investing $1000 each month at the age 32, is going to be behind someone who started with $500 each month at the age of 22!

This is not a post to make you feel like you are behind.
The best time to start was yesterday, but the next best time to start is today.
Can you commit to automating a small investment today?

Did you know that the Tax system in the US is pay-as-you-go, and not due all-at-once on Apr 15th?

We often think of taxes being held in an "escrow" account which we get back after we file taxes, but there are situations where you might have a tax penalty even though you have been paying taxes from your paycheck.

One such example I saw: A couple of tech companies that give their employees stock (RSUs/GSUs) will tell you that taxes were withheld. Often they dont tell employees that they withhold a flat 22%, which may or may not be in-line with the employees tax bracket. I have had a couple of clients find out they were paying penalties because they had not paid enough over the course of the year.

The more you know...

Inflation is out of control.

The Fed is trying to bring it back to the 2% mark.

But do you know WHY we are targeting 2%?

Turns out, there is no actual reason for the 2% inflation target that the US Fed and other central banks have adopted as the standard. It just kind of…happened.
Inflation targeting was just something that was adopted as a practice by New Zealand in 1989. Other countries followed, with the US officially adopting a target only around 2012!

Economists make the case for Price stability and high employment rates. A target of 2% anchors expectations for consumers, though similar cases can be made for -1%, 0%, 3% or even 4% inflation!
Here is an great explainer video: https://buff.ly/41qIity
What are your thoughts on the inflation target of 2% making things slightly more expensive each year? Would you prefer lower or higher rates?

There are new subscriptions coming.

And you might want to add this to your list of monthly expenses

One reason: Food.

As subscriptions become more commonplace in our lives as consumers, I feel like I could get behind this (at the right price).
While cooking at home is obviously the most cost-efficient and healthiest option, I can definitely understand that people feel that cooking is a hassle or are just stretched too thin to be able to do that and this might provide a good value for money.

If Chipotle offered a subscriptions to their bowls for a discounted rate, I see that being a great deal for college students to get their meals for cheap.

Restaurants will ultimately need to make money too, so I would hate for them to push customers into their subscription and slowly start increasing their prices (I am looking at you 👀 )

Would you sign up for something like this? Why or why not?

https://buff.ly/3YZs1Kn