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Author Archives: Ryan Law

Tax Tips

By Wendy Brumbaugh

April 15, the typical tax deadline, is over for most people and we are not thinking about taxes. However, now is a good time to start thinking about next year. After all, the topic is fresh on our minds.

There are a few things we can do to make the process easier:

First of all, keep good records. Whether that means filing receipts or keeping your QuickBooks up to date, the end of the tax year will be less of a burden.

Second, don’t procrastinate. Stay on top of your financial responsibilities. You may want to complete a net worth statement each year at this time.

And third, do your homework. Tax laws change and it pays to know about certain tax credits, exemptions, and deductions.

If you have questions, call your CPA before you make the appointment for filing your taxes. It will make your life simpler as well as his/hers.

Wendy Brumbaugh, Family Financial Education Specialist
Headquartered in Shelby County, NE Region

Home “Sweat” Home

Robert O. Weagley, Ph.D., CFP®

This past weekend I, finally, had a weekend where I could stay home and get some work done on my yard. Then, it rained all day on Saturday. Sunday, the grass dried and, by mid-day, I could plant seedlings in my garden, while relishing in the sticky Missouri clay covering my hands; mowed the yard; and performed other assorted tasks on my quest for nirvana through the art form I call Zen and the Art of Weed Pulling. (Seriously, I try to put myself into a state of consciousness where, when I pull weeds, I stretch my 63 year old muscles while mindfully pulling each young intruder in the attempt to remove all evidence of its existence on my part of our planet. While I am seldom successful, I am delighted to report that others share this illusion. Check out this article in the Washington Post: http://www.washingtonpost.com/local/zen-and-the-art-of-weeding/2013/05/12/b780c600-b97c-11e2-92f3-f291801936b8_story.html )

While I suppose this is therapeutic (most of my friends know that I need to find the time for therapy), my children never shared my passion for yard work. That is, unless they were having their friends over for a party and then, they encouraged me to find time to get ‘er done. Little did I know that my millennial children were simply demonstrating traits of their generation. Millennials tend to be liberal in political ideologies, supporting gay marriage and legalization of cannabis; less likely to practice organized religion; more likely to be unemployed; and more likely to return to their parents’ home to live. Moreover, in the aftermath of the Great Recession, they are less likely to be home owners and to continue to rent their housing. Why?

For most people, buying a home requires one to borrow money. Besides witnessing the problems of homeowners during the recession, young people have average student loan debt of nearly $30,000 in 2012, growing from $18,650 eight years earlier. Studies of the cost of renting compared to buying consistently find that owning is less expensive. Yet, these studies often only compare the cash flow of paying rent versus mortgage payments, while neglecting home purchase costs such as a down payment, closing costs, and higher interest rates charged to purchasers with substantial existing debts, such as a student loan and credit cards. The net worth of millennials may be holding them back, while they rent to become financially prepared to own. Although surveys show that the percentage of millennials who say this is the reason for renting has been falling, the issue of dollars is always key to decisions of a relatively large magnitude. This may be especially true for the generation who witnessed the mass foreclosures of recent years. Looking past the money, what is driving this trend?

For one, every generation likes to spend time with others like them. Urban, apartment living provides entertainment, restaurants, concerts, civic events, and nightlife. Often, smaller studio apartments may be rented with the amenities being shared with other tenants. Movie rooms, exercise equipment, social recreation rooms with ping-pong and pool tables, a swimming pool, a sharing library, electric car charging ports, as well as other life enhancers are often available to renters in newer complexes in redeveloped urban areas.

When millennial renters begin to have children and consider the suburbs for their children’s socialization, they may still rent until they get to know their new community and their habits within the community. If they don’t like where they are, renting provides the flexibility to move. The flexibility to move is key to this group. The Bureau of Labor Statistics reports that they tend to change jobs three times more often than those older. It is clear that renting makes it that much easier to “move on up” should the opportunity arise.

While it is generally assumed that a neighborhood of home owners is more stable and safe, it is also true that, if one is blessed with a bad neighbor, a renter only has to put up with it until the lease expires. With homeownership, one may have to wait until the neighbor, or you, die. You just never know when the American dream becomes the nightmare on Elm Street.

Finally, if you don’t own your home you likely do not have to sweat while cleaning the gutters, mowing the lawn, or gardening. Moreover, you do not have to pay for repairs, upgrades, and the inevitable furniture that must be purchased to fill the rooms. Renting keeps these items out of your budget, giving you more resources for that coveted trip to Chile, like my millennial colleague took over Christmas. On the other hand, you won’t be able to build the equity from homeownership, develop lifelong friends for your children and yourself that follow from a stable neighborhood, and, perhaps, you just might find that homeownership completes your picture of financial success. Or, it just might be the case that you discover that you revel in the Zen of pulling weeds, while sweating around your home, sweet home.

Bank Overdraft Protection Services

By Trish Savage, M.S., AFC® University of Missouri Extension Family Financial Education Specialist

Do you use an overdraft protection service from your bank or credit union? If so, you are one of the many consumers who do. Overdraft protection is an option most banks and credit unions offer to their clients so transactions (demands for withdrawal) will be processed and vendors will be paid even when there is an overdraft.

An overdraft occurs when the demand for payment arrives at your bank after you have written a check, have an electronic automatic bill payment processed, requested an ATM withdrawal or submitted a debit card transaction and there are insufficient funds in your bank account to cover the amount. Overdrafts can be very expensive because both vendor and bank can charge fees for transactions when there are insufficient funds.

The best way to prevent costly overdraft charges is to manage your cash flow. Simply put: know your account balance and spend accordingly. But, “life happens” and situations can arise when your funds don’t cover your spending. As with any product or service, buyer beware is a healthy approach for consumers. Bank regulators and the Consumer Financial Protection Bureau (cfpb) have been noticing the increase use and cost of these services. According to the cfpb “overdraft and insufficient funds fees generate over half of bank profits as the fees charged to consumers are high compared to the cost for the banks”. When a bank covers the amount that you are short instead of returning the check or declining the debit, basically, you make a short term loan (with fees and interest charged). Before signing up for an overdraft protection service, find out the bank’s specific options and fees as they usually have multiple ways to cover overdrafts, some more costly than others.

Tips for replacing the need for overdraft protection:

• create a spending plan based on your cash flow
• balance your checking account and view your accounts online for up-to-date balance
• start an Emergency fund for those unexpected financial demands
• arrange for email or text alerts to warn of possible overdraft
• arrange automatic deposit from income sources or use mobile bank deposits

Check out these articles for further information on overdraft protection services:

Saving for College

By Ryan H. Law, M.S., CFP®, AFC®

College is expensive. FinAid (http://www.finaid.org/savings/tuition-inflation.phtml) reports that tuition rises at twice the rate of inflation, or about 8% per year.

However, getting a college education is one of the best things you can do to positively impact your earnings throughout your life. The National Center for Education Statistics (https://nces.ed.gov/fastfacts/display.asp?id=77) reports that those with a bachelor’s degree earn 57% more than those with a high school diploma, and this trend continues as more education is attained:

With this thought in mind (college is expensive but worth it) I want to explore some ways that you can save up for college – either for yourself right now or for children or others in the future.

  • Start young! If you have young children you can save up for college using a 529 plan. Each state has a 529 college savings plan and most of them offer great benefits. For example, the Missouri MOST plan (https://www.missourimost.org/content/home.html) offers tax benefits such as deferred tax on earnings, tax-free withdrawals (when used for qualified expenses) and state income tax deductions. While the specific tax benefits will be dependent on your tax situation, these are great benefits! In addition, the MOST plan has some matching funds available, anyone can contribute to children’s accounts, you are investing with great companies, and you can start with very small investment amounts. 
  • If you are still in high school (or know someone who is) make sure you focus on your grades and extra-curricular activities. While a few students will get athletic scholarships, there are many other scholarships out there for students with good grades or those in leadership positions. I received a 4-year scholarship for leadership, and much of my wife’s undergraduate degree was paid for because of her involvement in 4-H. I had friends who received great offers and scholarships because of their grades and ACT exam scores. It pays to focus!
  • During your senior year in high school and all through college apply for EVERY scholarship you are eligible for, including departmental or college scholarships, scholarships available through your work or any through your parent’s workplace. In addition, check with local service organizations. There are also some great scholarship searches out there, but I would encourage you NOT to pay for one – use free ones such as FastWeb (http://www.fastweb.com/college-scholarships) that are established and free to you.
  • Work during school. Don’t fall for the myth that you need to focus 100% on school and don’t want to work. Studies have shown (http://www.usnews.com/education/blogs/college-cash-101/2009/10/09/7-reasons-to-work-your-way-through-college) that those who work actually earn better grades. It also helps to improve your resume, especially if the work is in your field. Students who work more than 20 hours a week start to see their grades fall, however, but working is a great way to reduce costs.If you have opportunities to work at home during breaks, take advantage of it!  I remember one break where I went home and worked at a local restaurant, Frontier Pies. I would arrive at around 6 in the morning, bake pies for a few hours, be a waiter for the lunch rush, go home and rest then work the dinner shift. I earned a lot of money that week that I was able to use to help pay for school expenses.
  • Look for unique opportunities to reduce expenses such as being a Resident Assistant. I was a Resident Assistant for almost three years and saved a lot of money on rent.
  • Be sure to fill out the FAFSA each year – this form determines your eligibility for grants, loans and work-study, and many colleges use it to determine scholarships as well. Try to get it in by February 1 of each year you will attend school.
  • Be aware of how much you are paying in tuition – and if you can’t afford going to school where you are or at your dream college, consider a lower-cost school, even for a year or two. This can save you thousands of dollars a year and you can generally transfer in later on.
  • A huge expense for college students are the books – look for any opportunity you can to lower this expense. Buy used books as often as possible or check with the professor to see if a previous edition is acceptable. You can sometimes get copies of e-books for much cheaper. I bought many of my books for school on www.half.com.

Professional Liability Insurance: Not Just For Medical Professionals

By Jesse B. Jurgenson

Americans are more litigious than in the past1. For example, in 2007 medical malpractice costs totaled $30.4 billion suggesting that Americans still maintain an increased willingness to sue physicians and other health-care providers for alleged or actual acts of malpractice[1]. The dollar amounts are staggering considering that this is only one professional area which may fall under the suggestion that professional liability insurance may be a necessity more than a luxury. Even if you have not made a mistake, it is still possible to be sued which may result in unforeseen legal expenses to resolve even the most absurd of allegations.

According to the Insurance Information Institute, if you provide any type of advice, expertise, or professional service, you risk being sued by a customer, client, or other party who claims he or she was injured due to your negligent act, error, or omission. This type of negligence is sometimes referred to as “malpractice.” Professional liability insurance, also called errors and omissions (E&O) liability insurance, pays the cost of your defense and any damages awarded, up to policy limits. Insurance companies have developed many specialized policy forms that respond to the individual risks characteristic of particular professions and services[2].

Professional liability insurance is available for a wide array of professional categories. It may take on different forms and names depending on the profession. For example, in reference to medical professions it is called malpractice insurance, while errors and omissions (E&O) insurance is used by insurance agents, consultants, brokers, and lawyers. Other professions that commonly purchase professional liability insurance include accounting and financial services, construction and maintenance (general contractors, plumbers, etc.), pharmacists, transporters, veterinarians, educators, mental health professionals, architects, engineers, optometrists, real estate professionals, dentists, and fitness professionals. Generally speaking, any profession that requires a high degree of education and/or specialized training who regularly gives advice to clients may want to research their potential risk exposure[3].

The reality is that when something happens and a patient (or client) is injured in some manner, including financial harm, most attorneys will name in the lawsuit everyone who was involved in the patients’ care or service. That happens whether you have your own coverage or not. But if you do have your own coverage, and are named in a malpractice (or similar) suit, your policy can protect you by preparing you for the legal process and paying for your defense and any settlement or judgment against you. Your employer’s policy may cover you, but only up to a point. Your employer’s policy is designed to fit their own needs and protect their interests first. If you have your own individual protection, you will have the benefit of your own representation that is concerned specifically with your interests[4].

Professional liability insurance is a specialty coverage and is not provided under homeowner’s endorsements, in-home business policies, or business owners policies (BOPs)[5]. Common claims that professional liability insurance covers are negligence, misrepresentation, violation of good faith and fair dealing, and inaccurate advice[6]. It does not provide coverage in the event of criminal prosecution, nor all forms of legal liability under civil law.

If your normal business practice involves storing client or customer information electronically, cyber liability insurance offers various coverages in the event of security or privacy breaches including the loss of confidential information by allowing, or failing to prevent, unauthorized access to computer systems, cyber terrorism, or cyber extortion[7]. Although this may be more relevant to business owners, cyber liability insurance coverage will likely not be automatically included on a professional liability insurance policy but may be available for purchase as a stand-alone policy based on the nature and scope of your business.

Some advantages to consider when decided whether to purchase professional liability insurance coverage are[8]:

  1. Commercial general liability (CGL) insurance usually excludes coverage for professionals, mostly through the use of a professional services exclusion on CGL policies. This creates a potentially large exposure for the professional because the standard of care under which they operate creates a heightened liability exposure. Professional liability insurance helps to cover this exposure.
  2. Professional liability insurance claims often involve financial damages, which are generally not covered by a CGL policy. CGL policies respond to bodily injury, property damage, or personal injury (such as libel, slander, or invasion of privacy).
  3. It typically responds to claims alleging that the professional failed to perform as well as caused damages because of the way he or she performed. Failure to perform claims typically are not covered by the CGL insurance form.
  4. Some states require that professionals (such as doctors) carry professional liability insurance before they can be licensed. It is also not uncommon to see this requirement be present as a requirement to provide services through a specific contract or agreement.

There is an added cost to purchase professional liability insurance coverage. The amount may vary wildly based on your profession and desired levels of coverage.

How much coverage do you need? That can also vary. For example, a medical doctor is at a greater risk of being sued, and for a higher dollar amount, than a plumber would and therefore need more liability insurance. You can usually get a good sense of lawsuits involving your type of business through your trade association2 along with a list of potential coverage providers. An alternative option may be to contact an insurance company in which you have an existing relationship with and ask if they offer this type of specialized coverage.

Overall, whether or not to obtain professional liability insurance coverage is a personal choice whose costs and benefits should be evaluated. What is right for one household may not hold true for another. As with most insurance products, there are countless coverage options and specific limitations of each product. Talking to an insurance professional and gathering all of the facts necessary to make an informed decision may be the best first step to take.

Guest contributor Jesse Jurgenson is an AFCPE Accredited Financial Counselor and past Financial Counseling Supervisor with an NFCC certified non-profit family service organization. He is also a current Ph.D. student and Graduate Instructor in the Personal Financial Planning Department.


[1] Rejda, G.E. (2011). The Liability Risk. In Principles of Risk Management and Insurance (pp. 429-432). Boston, MA: Pearson Education.

[8] Leimberg, S.R., Price, K.W, & Pedre, J.M. (2015). Professional Liability/Errors and Omissions Insurance. In Insurance Planning and Risk Management (pp. 353-356). Erlanger, KY: The National Underwriter Company.