The FIRE Movement – Is It For You?

By Trilogy Financial
October 30, 2019
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FIRE, an acronym for “Financial Independence, Retire Early” is trending as a new financial lifestyle.  In a nutshell, FIRE promotes extreme savings in your 20s, 30s, and 40s, with the goal of being able to live off passive income from the accumulated nest egg much earlier than typical retirement age.  Some proponents suggest saving 70% of your income until you have collected 25x your annual salary, cutting your working years in half.  Extreme saving is not a new idea, but the phrase has taken off in the last couple of years, creating a cult following online.

Putting aside additional savings to fund a “work optional” lifestyle is a fantastic idea in theory, but most Americans would find it quite difficult to only live on 30% of their income without making DRASTIC changes.  If you are willing to downsize, live with roommates in a cheaper part of town, eat beans and rice, drive an old car/take the bus, and limit purchases, you could be successful at FIRE.  However, this level of deprivation may cause unintended sacrifices that impact your social life and happiness.

Our take on FIRE is to find your happy medium.  For example, you absolutely should increase your savings rate incrementally every year if you can afford to do so, but initially choose an amount that’s attainable.  To help you get started, these are the questions we encourage clients to consider:

1) What is your current cash flow?

Do you have a firm grasp on how much you spend on monthly groceries?  Going out to eat? Gifts at the holidays for friends and family?  The key here is to consider all expenses, not just big-ticket fixed items like your car payment or mortgage.  Once you have an idea of how much you are spending compared to household income, you can then evaluate your current savings rate.

2) Where can you cut back to increase your savings rate?

Can you meal prep on Sundays to avoid going out for lunch during the week?  Can you stay in to watch a movie instead of going to a theater for date night?  Are you willing to have a “no-spend” week?  Some people use tracking software (our firm provides EMoney to our clients) to help set up electronic budgets to alert you when you are close to going over set categories of spending. Alternatively, can you bring in additional income via a side hustle?  Can you work additional hours at work to qualify for overtime pay?  Make an honest assessment to determine where you could potentially improve your cash flow on a monthly basis.

3) Are you debt-free, or leveraging debt appropriately?

A mortgage with a low-interest rate is an appropriate means of financing a lifestyle you want, while potentially building equity via real estate.  If you still have student loans or credit card debt, though, your increased cash flow should go towards paying this off ASAP. Just make sure you have 3-6 months of living expenses built up in an easily accessible emergency savings account as well.

4) Outside of your emergency savings, are your accounts keeping pace with inflation?

Historically, inflation rates average around 3% annually.  This means that your purchasing power decreases, as the cost of goods increases over time. Remember when you could buy a Coke bottle out of a vending machine for a dollar? Your parents or grandparents may even recall purchasing a soda for a quarter!  That’s inflation at work. If you’re planning to retire early, this means you need to account for inflation over several decades. The best way to maintain your purchasing power is by investing excess savings in the stock and bond markets and taking advantage of compounding interest over time. A Financial Advisor can determine the best investment strategy for you.

5) Are your investments in a diversified portfolio in line with your risk tolerance?

Trying to time the market to buy and sell holdings is incredibly difficult to do.  Diversification via broader index funds and investing consistently (to take advantage of pullbacks) has proven to be a more successful investment plan for most Americans.  The concern with the FIRE movement is knowing how risky you can or should be with your asset allocation depending on your time horizon to retirement.  For example, if you are closer to reaching your retirement goal, you don’t want 100% of your assets invested in the stock market.   A comprehensive financial planner can help determine how much risk you should be taking on by looking at your finances holistically, and ensuring portfolios are rebalanced regularly according to your needs.

The road to early retirement is still a long one, so you’ll need to regularly evaluate your progress, reassess as needed, and don’t forget to acknowledge small victories!

Our advice is to push yourself to save more, without going to the extremes of the FIRE lifestyle.  If you would like additional accountability, Trilogy offers progress checks through our Decision Coach process more frequently than annual reviews.  And if you need a road map to help find your path to success, reach out with any questions here.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine what is appropriate for you, consult a qualified professional.

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By Trilogy Financial
August 1, 2023

A romance scam, also known as an online dating scam, is when a person gets tricked into believing they’re in a romantic relationship with someone they met online, when in fact their other half is a cybercriminal using a fake identity to gain enough trust to ask — or blackmail — them for money.

Oftentimes, a romance scammer starts on dating sites or apps. But scammers have increasingly started finding targets on social media, too.

After connecting with someone through a fake profile, the scammer will strike up a conversation and start building a relationship by regularly chatting with them. Once they start to trust the romance scammer and believe they have a truthful relationship, the cybercriminal will make up a story, ask them for money, and vanish.

Types of Romance Scams

Some of the most common internet dating scams include:       

Fake Dating Sites: Scam dating sites claim to be legitimate but are actually filled with scammers or underpopulated. These websites are created to mine your information.

Photo Scams: Scammers will convince their target to send their personal information in exchange for intimate photos.

Military Romance Scams: The scammer will pose as a military member, likely deployed. They build trust by using military jargon and titles, then ask for money to cover military-related expenses, such as flights home.

Intimate Activity Scams: The scammer connects with their target on multiple social media websites. Once they become closer, the scammer convinces them to undress and then threatens them with the recordings.

Code Verification Scams: Scammers will send a fake verification code through email or text, posing to be a dating app or website. Once clicked on, it will ask for their personal information, including Social Security number and credit cards.

Inheritance Scams: Scammers will make their target believe they need to get married in order to get their inheritance. In this case, they will ask them to help pay for something like airfare.

Malware Scams: Malware is also common on dating sites. In this case, the recipient will interact with a scammer who sends them a website that looks legitimate; however, it's a page that includes malware.

Tips To Avoid Losing Money To a Romance Scam

  • Protect yourself and older loved ones by raising awareness. Although this can be an uncomfortable topic, make sure you, your family and your friends are familiar with romance scams. The more you know about these scams, the better prepared you are to prevent being a victim.
  • Check in on older loved ones. Scammers are seeking to target those living alone or grieving the loss of a spouse as they are more vulnerable.
  • Limit what you share online.Scammers can use details shared on social media and dating sites to better understand and target you.
  • Do your research.Research the individual’s photo and profile using online searches to see if the image, name or other details have been used elsewhere.
  • Go slowly and ask lots of questions.Don’t let the individual rush you to leave a dating service or social media site to communicate directly.
  • Listen to your gut.If the individual seems too good to be true, talk to someone you trust.
  • Don’t overshare personal information.Requests for inappropriate photos or financial information could later be used to extort you.
  • Be suspicious if you haven’t met in person.If the individual promises to meet in person, but consistently comes up with an excuse for cancelling, be suspicious.
  • Don’t send money.Never send money to anyone you have only communicated with online or by phone.

Think you’ve been scammed?

  1. Stop communicating with the individual immediately.
  2. Talk to someone you trust and describe what’s going on.
  3. Report the incident to local law enforcement.
  4. Submit a fraud complaint with the Federal Trade Commission.

Dating scams can have devastating consequences on individuals seeking love and companionship online. It's crucial to be aware of the red flags and take necessary precautions to protect yourself from falling victim to these fraudulent schemes. Even if it’s too late to recoup losses, details may help others from becoming a victim.

 

By Trilogy Financial
March 8, 2023

Estate planning is an essential step to help protect the wealth that you've spent your life building. Meeting with an estate planner will help to create a comprehensive plan that will allow your assets to effectively pass to your assigned beneficiaries. Creating this initial plan can feel overwhelming, and we are here to help you prepare.

Here are five important questions you can expect to discuss with your estate advisor as you start to plan for your future.

How Would You Like Your Wealth to Pass to Your Heirs or Elsewhere?

The basis of your estate plan is where you want to direct your wealth and how you'd like that to happen. No matter how large or small your estate is, you'll need to decide how it should be distributed among children, grandchildren, other family members or favorite charity organizations. For example, this could mean leaving different parties a percentage of your total assets, or leaving one child your business and another child your vacation home.

It’s important to also think about whether you want your beneficiaries to receive their inheritance all at once or not. If you have a disabled child requiring lifelong care on your list, or someone who needs a little extra help managing their money, you may want a trust or annuity structure in place to pay out the inheritance in increments.

What Can Be Done to Prevent Costs and Conflicts for Your Heirs?

Costs for your beneficiaries are most likely to come up if your estate needs to go through probate, which is the process by which a court distributes your assets. In addition to financial costs, there are other reasons to avoid probate. Probate can be a long and exhausting process – meaning, your heirs will not be able to access your estate right away. If you have dependents who will rely on the money in your estate, this can be an especially serious concern. In addition, probate adds your estate information to the public record, which you may want to avoid. There are several strategies your financial advisor might recommend to avoid probate. These include placing assets in a trust and moving funds into joint accounts with your beneficiaries.

Conflict among heirs is another common concern, especially in families where conflict already exists. While the legal documents included in your estate should help minimize disagreements and make it more difficult for someone to contest your wishes, communication during your lifetime is important as well. Disagreements often surround specific items like jewelry or sentimental pieces rather than your financial assets. Labeling these items, writing a letter of instruction and starting to pass on these things during your lifetime can all help make your intentions clear.

How Can You Reduce Your Tax Burden?

After a lifetime of working to earn your money, you likely want to direct your wealth to your loved ones rather than the government. In 2023, only estates valued at $12.92 million (or $25.84 million for some married couples) or more may be subject to the federal estate tax. If, upon your death, the total value of your estate is less than the applicable exclusion amount, no federal estate taxes will be due.

Depending on the state you live in, your heirs or your estate might also be subject to state estate or inheritance taxes. If taxes are a concern for your estate, there are several ways to reduce your tax burden.

One simple option is to start passing money along during your lifetime. Based on the 2022 gift tax exemption limit, individuals can give up to $16,000 per recipient per year. This lets you give money directly to your children or grandchildren while reducing the value of your estate, which will reduce your tax bill. Other options include a marital trust, which allows one spouse to place assets in trust for the other spouse, and an irrevocable life insurance trust, which can pay for life insurance premiums with tax-deductible funds and then avoid estate taxes later on.

Are You Already Working with Financial Professionals?

If you're already working with an estate attorney, a financial planner or a tax professional, it's important for your estate planner to understand the strategies your existing financial team has recommended. You'll want to make sure that all of these members of your team are working together so you aren't paying for duplicated efforts or conflicting suggestions.

If you aren't already working with a financial team, your estate planner may recommend that you do so depending on the details of your estate plan. If you have complex tax concerns, you might need to talk to a tax expert. Depending on the type of trust that you wish to establish, you may need an estate attorney to set it up.

How Will Changes in Your Life Change Your Estate Plan?

Your estate plan should have the flexibility to adapt to changes in your lifestyle, family structure or life expectancy. Your initial plan will be based on your current circumstances, but you should consider potential future concerns and possible solutions.

Divorce and Remarriage

Divorce and remarriage are common life changes that can affect your estate plan. If you remarry, you may not want your new spouse to manage the inheritance of your children from the first marriage. This can create the need for a new trust to be established. In addition, if you have more children in later marriages, you will again need to update your estate plan.

Life Expectancy and Medical Issues

There are other lifestyle considerations that might change as well. For example, if based on your family history you expect to live into your 90s, you might not want to start giving away assets to avoid estate taxes. And if medical issues arise and your life expectancy changes, you will likely need to adjust your plan.

While you won't need to make any decisions based on hypotheticals, it's a good idea to discuss the possibilities.

How to Get Started?

Your estate plan is a key component of your Life Plan. To create an estate plan that addresses the above questions and any other concerns you may have, you'll need to start by finding the right estate advisor. Talk to the Trilogy Financial team to take control of your finances today while maximizing your future opportunities.

Download your free Estate Strategies eBook to learn how to protect your estate.

 

family happy after meeting with estate planner
family happy with estate planning and secure future

 

Get Started on Your Financial Life Plan Today