When I graduated high school my mom gave me two options: college or get a job. Apparently there are more alternatives these days, especially to avoid the debt load of student loans. Formula Capital’s James Altucher discusses his theory on why sending your kids to college is a bad idea. Apparently “get a job” isn’t on the list. Click here for full article 

Helping You See the Big Picture

Do you picture yourself owning a new home, starting a business, or retiring comfortably? These are a few of the financial goals that may be important to you, and each comes with a price tag attached.

That’s where financial planning comes in. Financial planning is a process that can help you reach your goals by evaluating your whole financial picture, then outlining strategies that are tailored to your individual needs and available resources.

Why is financial planning important?

A comprehensive financial plan serves as a framework for organizing the pieces of your financial picture. With a financial plan in place, you’ll be better able to focus on your goals and understand what it will take to reach them.

One of the main benefits of having a financial plan is that it can help you balance competing financial priorities. A financial plan will clearly show you how your financial goals are related–for example, how saving for your children’s college education might impact your ability to save for retirement. Then you can use the information you’ve gleaned to decide how to prioritize your goals, implement specific strategies, and choose suitable products or services. Best of all, you’ll have the peace of mind that comes from knowing that your financial life is on track.

THE FINANCIAL PLANNING PROCESS
Creating and implementing a comprehensive financial plan generally involves working with financial professionals to:

• Develop a clear picture of your current financial situation by reviewing your income, assets, and liabilities, and evaluating your insurance coverage, your investment portfolio, your tax exposure, and your estate plan
• Establish and prioritize financial goals and time frames for achieving these goals
• Implement strategies that address your current financial weaknesses and build on your financial strengths
• Choose specific products and services that are tailored to meet your financial objectives
• Monitor your plan, making adjustments as your goals, time frames, or circumstances change

SOME MEMBERS OF THE TEAM
The financial planning process can involve a number of professionals.

Financial planners typically play a central role in the process, focusing on your overall financial plan, and often coordinating the activities of other professionals who have expertise in specific areas.

Accountants or tax attorneys provide advice on federal and state tax issues.
Estate planning attorneys help you plan your estate and give advice on transferring and managing your assets before and after your death.

Insurance professionals evaluate insurance needs and recommend appropriate products and strategies.

Investment advisors provide advice about investment options and asset allocation, and can help you plan a strategy to manage your investment portfolio.

The most important member of the team, however, is you. Your needs and objectives drive the team, and once you’ve carefully considered any recommendations, all decisions lie in your hands.

WHY CAN’T I DO IT MYSELF?
You can, if you have enough time and knowledge, but developing a comprehensive financial plan may require expertise in several areas. A financial professional can give you objective information and help you weigh your alternatives, saving you time and ensuring that all angles of your financial picture are covered.

STAYING ON TRACK
The financial planning process doesn’t end once your initial plan has been created. Your plan should generally be reviewed at least once a year to make sure that it’s up-to-date. It’s also possible that you’ll need to modify your plan due to changes in your personal circumstances or the economy. Here are some of the events that might trigger a review of your financial plan:

• Your goals or time horizons change
• You experience a life-changing event such as marriage, the birth of a child, health problems, or a job loss
• You have a specific or immediate financial planning need (e.g., drafting a will, managing a distribution from a retirement account, paying long-term care expenses)
• Your income or expenses substantially increase or decrease
• Your portfolio hasn’t performed as expected
• You’re affected by changes to the economy or tax laws

Waddell & Reed does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice or may be relied on for the purpose of avoiding any federal tax penalties. The selection of appropriate planning options or strategies should be made on an individual basis after consultation with appropriate legal, tax and financial advisors. It is important that you retain the services of legal counsel to plan and implement any legal documents that you may require and that you consult a tax advisor for an explanation of the tax effects of any particular planning options or strategies on your personal financial situation.

Waddell & Reed financial advisors are able to offer insurance products through arrangements with insurance companies. Guarantees provided by insurance products are subject to the claims-paying-ability of the issuing insurance company.

Most homeowners won’t be surprised when they open their property notices from the Maricopa County assessor this weekend. Values on most Valley homes have dropped.

But homeowners hoping for an immediate property-tax reduction will be disappointed.

Property-tax statements lag valuations by 18 months in Arizona, so homeowners won’t see a drop in their taxes until late 2009. And if Valley municipalities raise taxes to offset budget shortfalls, there won’t be a drop even then.
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The overall median value of homes in metropolitan Phoenix fell 13 percent, to $199,800 from $229,500, according to the assessor’s latest report, which covers the market from mid-2006 through the fall of 2007. About 94 percent of all Valley homes fell in value.

“The slide in residential-home values that we have seen over the past year or two is now being reflected in the notices all property owners will receive,” Maricopa County Assessor Keith Russell said.

Next year’s valuations, which will reflect today’s price drops, are bound to fall even more.

In the latest report, Buckeye saw home prices drop the most with an almost 25 percent decline. Home values fell in all but four Valley communities: Gila Bend, Guadalupe, Paradise Valley and Carefree.

Part of the lag time between property valuations and taxes is built into the system so property owners can appeal the valuations.

A record number of Maricopa County homeowners appealed their property valuations last year, which were based on the wild price run-ups of 2004 and 2005. About one-fourth of the 4,513 homeowners won their appeals.

Barbara Anderson appealed the property valuation on her Moon Valley home last year and the year before.

She is hoping her valuation this year will better reflect what her hillside home in north Phoenix is worth but is concerned that, even if values go down, taxes will go up because of government budget shortfalls.

“We are thinking about donating some of our land so it can be preserved and not developed because our property value and taxes have already climbed so dramatically,” she said.

Many economists and real-estate market watchers say this is the wrong time to raise taxes because many people are already struggling to keep up with their mortgage payments. Most property taxes are tacked onto homeowners’ monthly home-loan payments.

“Property taxes should go down with home values, but cities are confronting budget issues now,” said Jay Butler, director of Realty Studies at the Morrison School at Arizona State University’s Polytechnic. “A lot of homeowners are already being squeezed with other rising costs and aren’t going to be happy if their tax bill keeps going up.”

Maricopa County homeowners will begin to receive their latest property valuations in the mail today. Most will see a third straight annual drop in home values.

Residential property values fell an average of 15.2 percent in 2009, according to the latest report from the Maricopa County Assessor’s Office.

Values fell 23 percent in 2008, following a 13 percent drop in 2007.

“It’s still bad but not as bad,” county Assessor Keith Russell said.

Last year, the overall median value of homes in the county fell to $131,700 from $155,300.

Some Valley cities fared better than others. For example, home values in Tempe declined 13.4 percent in 2009, while they dropped 27.3 percent in Tolleson.

County homeowners have yet to see declines in property taxes similar to the drops in property valuations, and they won’t again this year.

Many Phoenix-area municipalities and school districts are facing budget gaps and will likely have to raise property taxes this fall.

Property-tax bills lag valuations by 18 months in Arizona and are based on a complex formula that includes funding for multiple municipalities and school districts. Most property-tax money goes to education.

The tax bill homeowners receive this September will be based on 2008′s valuation. Assessments going out now will be reflected in 2011 tax bills.

To save money, the Assessor’s Office is now printing property valuations on a single sheet of paper that is folded to postcard size for mailing.

County property valuations were previously sent in standard business envelopes that also contained several public-information inserts.

The Assessor’s Office saved 40 percent in printing costs by switching to the single-sheet valuation report.

“We want people to know about the new format for their valuations so they don’t mistake them for something else and throw them away,” Russell said.

If property owners think their valuations are too high or low, they must lodge an appeal with the Assessor’s Office by April 13.

Last year, 20,000 people appealed their real-estate valuations in Maricopa County, double the number of appeals from 2005. About 1.5 million properties were valued by the Maricopa County assessor during 2009.