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Personal Finance: How Is Your Financial Wellness?

February 27, 2017

Marcus Winbush, CFP® — CEO, True North Capital Alliance

Have you ever wondered why some people seem to manage well on their income while others struggle financially no matter how much they earn? The secret likely has much to do with what we might call “financial wellness.” By “financial wellness,” I don’t mean wealth; rather the term refers to a state of financial health. Financial wellness involves living within your means and making sound financial decisions that enable you to achieve the short- and long-term goals that are important to you.

Achieving financial wellness is an ongoing process. No matter the state of your financial wellness today, the important thing is to start where you are, do a thorough check-up of your financial tendencies, and put plans in place to move steadily toward wellness.

Take stock of how you spend money

Do you know with reasonable certainty where your money goes each month? Most of us can rattle off the amounts we spend on the big budget categories such as housing, transportation, utilities, grocery, loan/credit card payments, savings, and investments. But we often lose sight of many other expenditures that sometimes drain more of our money than we anticipate.

The first step toward financial wellness is to understand precisely how you spend money on a regular basis. Conduct your own spending review using your bank statement and credit card statements for the last one or two months. Make a list of your expenditures, paying close attention to the amounts you spend on daily living expenses (e.g., dining out, coffee, clothing, grooming, entertainment, impulse spending). Look for obvious places where you can eliminate or reduce spending.

Such a review can be eye-opening; it may be just what you need to pinpoint the gap between what you think you spend each month and what you actually spend. For most of us, this gap amounts to “spending leaks” in our finances, and these leaks can undermine the progress we hope to make toward our savings and investment goals.

Develop a budget: income, spending, and saving

With the insights gained from your spending review, create a workable, realistic budget for your monthly spending, saving, and investing. If your spending review revealed a shortfall in your monthly finances, you may need to take immediate steps to reduce spending, create additional income, or get out of debt. If debt reduction is a pressing need, consider the strategy described in our earlier post, “Saying Goodbye to Debt: A Simple Method That Works.”

If your income is adequate, the challenge may simply be a matter of committing to live within your means. Be sure your budget accounts for regular monthly expenses as well as larger expenses that occur quarterly or semi-annually (e.g., car insurance, homeowners/renters insurance, life insurance, etc.). An effective way to deal with these periodic expenses is to calculate the monthly average for these items and set up a special savings account where you can accumulate the monthly average amount until the payment is due. This lets you smooth out your budget and avoid spikes in your expenses.

Another potential budget-busting snafu is out-of-control discretionary spending. At the beginning of the month, consider setting a limit for discretionary spending each month and then create an “allowance,” which you take in cash for such spending.

Continue to track your spending and review how well your plan is working. Make adjustments as needed to stick to your budget, and resist using credit or making unnecessary purchases.

Set Long-Term and Short-Term Goals

Getting a handle on your monthly spending and saving is a significant step, which allows you to confidently set short- and long-term goals that are important to you. You may choose to set short-term goals (2-5 years) for any number of things such as paying off debt, traveling to special destinations, purchasing big-ticket items, and so on.

Money management experts recommend making emergency savings a top priority short-term goal. Having emergency savings to cover living expenses for three to four months is the best way to prepare for unexpected events such as a job loss, medical emergency, major car repairs, or similar events. To ensure that you reach your savings goal, pay yourself first with automatic transfers from your checking account to your saving account as you receive your paycheck(s).

You will no doubt set long-term financial goals for bigger items such as a home, college education for children, retirement, and assets you wish to pass to future generations. To address your long-term goals, consider working with a trusted financial advisor to develop the best strategies for your specific dreams and goals.

Financial wellness is achievable, but it takes commitment, time, and perseverance. The benefits of good financial management are many: improved cash flow, savings, peace of mind, and a strong sense of confidence as you make progress toward financial wellness. The benefits are clearly worth all the effort you put into the process.


True North Capital Alliance is registered as an investment advisor with the states of Minnesota and Texas. The firm only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment advisor does not constitute an endorsement of the firm by securities regulators nor does it indicate that the advisor has attained a particular level of skill or ability.

Past performance is not a guarantee of future results.

All expressions of opinion are subject to change. This content is distributed for informational purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, products, or services.

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Financial Resolutions: Making Them Work

February 6, 2017

Marcus Winbush, CFP® — CEO, True North Capital Alliance

Are you among the many Americans who began 2017 with financial resolutions you hope to achieve by year end? If so, I applaud your forethought: Setting a goal is key to making progress in any area of life—none more so than personal finances. According to a survey of consumers conducted for Fidelity Investments in October 2016, 37 percent of Americans made financial resolutions for 2016, and about the same number will likely make financial resolutions for 2017.

If you haven’t set financial goals for the year, now is a great time to do so.

Top Financial Resolutions for 2017

In addition to the survey cited above, Student Loan Hero and GoBankingRate.com also surveyed consumers to gather insights about their priorities and prior success with New Year’s resolutions. All three surveys are remarkably consistent in identifying the top five financial resolutions for 2017:

  • Save more (spend less).
  • Pay down (or pay off) debt.
  • Build an emergency fund.
  • Improve credit.
  • Save for retirement.

These are admirable goals, but without proper preparation, the odds may work against bringing them to fruition. After all, New Year’s financial resolutions usually require significant change in a person’s attitude and lifestyle, and change is seldom easy.

Do New Year’s Financial Resolutions Really Work?

Contrary to popular opinion, the answer is a resounding, “Yes.” Many survey participants reported considerable success in sticking to their resolutions from year to year. For example, almost half of those participating in the Fidelity Investments survey said they had “managed to achieve 80 percent or more of their goal” from the previous year. Therefore, they were quite optimistic about the goals they set for 2017.

From the outset, it’s important to count the cost, lay out a game plan, review progress regularly, and make changes if something isn’t working. People who make and keep their resolutions have identified several keys to success:

  1. Write your goals down. Someone famously said, “Goals that are not written down are just wishes.” Studies show that people who write their goals are more apt to accomplish them; there is a certain power in taking the time to formulate clear, precise goals for yourself. In the case of your new year’s financial resolutions, you may simply need to refine your goals to be sure they are specific enough for you to take action and measure your progress along the way. If one of your financial resolutions is to save for retirement, for instance, you would do well to consult with a trusted financial advisor who can help you frame such a long-term goal and create a comprehensive plan.
  2. Refine your goals if necessary. Goals should be specific and measurable. It’s not enough to say, “I want to save more money this year.” A more useful goal would be, “I want to save $200 each month this year.” Or “I want to build an emergency fund equivalent to two months’ take-home pay by the end of the year.” Specific goals are very powerful motivators; they help us envision what it is we want to achieve, and they seem to pull us into the process. The more specific your goal, the easier it is to know what you need to do. For instance, for your savings goal, you might set up automatic transfers from your checking account to your savings account based on your pay schedule. You may also identify other funds to help you realize your goal (e.g., a percentage of your income tax refund or bonus).
  3. Share your goals with someone you trust. Having an accountability partner is another critical success factor. In the Fidelity Investments survey, 53 percent of the participants said, “Talking with friends or family can help you stay focused on your goal.” The person you choose may be a trusted friend, family member, or financial advisor—someone who wants to help you succeed and who can give sound advice if needed.
  4. Check your progress regularly, but give yourself room to “fall.” Major life changes usually do not proceed in a straight line. Expect some setbacks, and be prepared to rebound should you experience setbacks. Draw on your own resilience and support from your accountability partner(s) to help you get back on track as quickly as possible.
  5. Reward yourself along the way. Pursuing a financial goal requires sacrifice, and behavior changes are never easy. Keep your focus on achieving your big goals, but reward yourself when you reach checkpoints along the way. Set up rewards that are meaningful to you without taking you off your financial goals.

Finally, learn as much as you can about what it takes to win in this important area of life—personal finance. From time to time, we publish informative posts on personal finance topics such as getting out of debt, monitoring credit information, and retirement planning/investing. And, of course, you can find reputable tools and information sources online to address your specific areas of interest.

Feel free to contact me if you have questions (marcus@truenorthcap.com).


True North Capital Alliance is registered as an investment advisor with the states of Minnesota and Texas. The firm only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment advisor does not constitute an endorsement of the firm by securities regulators nor does it indicate that the advisor has attained a particular level of skill or ability.

All expressions of opinion are subject to change. This content is distributed for informational purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, products, or services.

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Beware of Tax Scams

January 25, 2017

Marcus Winbush, CFP® — CEO, True North Capital Alliance

The Internal Revenue Service has started accepting and processing 2016 federal individual income tax returns. They expect more than 153 million returns to be filed this year. For most taxpayers, the process will be routine and uneventful. However, the IRS warns taxpayers to be aware that the tax-filing season is also prime time for tax scams.

Tax scams take many forms, and criminals continue to refine their tactics for taking advantage of unsuspecting taxpayers. Be alert for these common telephone and email phishing scams.

Callers Pretending to Be IRS Agents

In the last few years, taxpayers have reported an increasing number of automated calls from people claiming to be IRS agents. Typically, these callers leave a voicemail message urging taxpayers to call immediately to settle their tax bill or face drastic consequences. Often the caller claims that this message is the final warning before the IRS or another agency takes legal action against the taxpayer. These callers can be aggressive and threatening. According to the IRS, taxpayers also receive live calls from scammers claiming to be IRS agents demanding tax payments via “prepaid debit cards, iTunes, and other gift cards or wire transfer.” In another variation of this scam, IRS impersonators call taxpayers claiming they have the person’s tax return and need to verify some information before the person’s return can be processed.

Unless you are expecting a follow-up call from the IRS, these calls are almost certain to be scam attempts as our post, “Is the IRS Calling You?” explained.

Phishing

The IRS reported roughly a “400-percent surge in phishing and malware incidents in the 2016 tax season.” To “phish,” scammers create emails that appear to be an official communication from a well-known organization such as the IRS, other government agency, or business. A tax-related phishing email may claim, for example, that you are entitled to an unexpected refund that requires you set up a special “e-Refund” account to have funds transferred to your bank account. For phishing to work, scammers must get you to go from the phony email to a website they control. Thus, phishing emails almost always include a website link for you to click on. If you do so, it takes you to their site and asks you to provide personal information such as account numbers or passwords, which can then be used fraudulently. These sites may also have malware that can infect your computer allowing criminals to access your files and track your keystrokes to gain information.

Like phone scams, phishing scams are designed to gain access to your personal information. Taxpayers should be aware that the IRS does not initiate contact with taxpayers by email, and legitimate businesses do not request personal or financial information by email.

Identify Theft

In all these tax scams, the goal is to get you to provide personal and financial information such as your social security number, bank account numbers, or credit card numbers. In the hands of criminals, your personal information can be used to file fraudulent tax returns or to open accounts in your name—perhaps using your identity for countless fraudulent transactions.

Be Vigilant

The best offense is a strong defense to protect your essential data. If someone claiming to be an IRS agent contacts you requesting personal information or demanding immediate payment of taxes, the IRS recommends the following actions:

  • Hang up immediately and report any suspicious call as outlined below.
  • Do not give out any personal and financial information over the phone or respond to requests via email.
  • Instead of responding to a phishing email supposedly from the IRS, forward the email to the IRS at phishing@irs.gov.
  • For suspicious phone calls, file a report on the IRS’s Impersonation Scam Reporting site, or call 800-366-4484. Report the incident to the Federal Trade Commission using their FTC Complaint Assistant. Be sure to add “IRS Telephone Scam” in the notes.

Scammers continue to modify their approaches, so vigilance is essential.

I encourage you to share this information with others in your circle of influence—particularly those who may be especially vulnerable to the deceptive, high-pressure tactics that scammers use.


True North Capital Alliance is registered as an investment advisor with the states of Minnesota and Texas. The firm only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment advisor does not constitute an endorsement of the firm by securities regulators nor does it indicate that the advisor has attained a particular level of skill or ability.

All expressions of opinion are subject to change. This content is distributed for informational purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, products, or services.

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A Look Back at 2016

January 18, 2017

Weston Wellington, Vice President, Dimensional Fund Advisors

Down to the Wire

Every year brings its share of surprises. But how many of us could have imagined that 2016 would see the Chicago Cubs win the World Series, Bob Dylan receive the Nobel Prize in Literature, Donald Trump elected president, and the Dow Jones Industrial Average close out the year a whisker away from 20,000?

The answer is very few—a lesson that investors would be wise to remember.

At year-end 2015, financial optimists seemed in short supply. Not one of the nine investment strategists participating in the January 2016 Barron’s Roundtable expected an above-average year for stocks. Six expected U.S. market returns to be flat or negative, while the remaining three predicted returns in single digits at best. Prospects for global markets appeared no better, according to this group, and two panelists were sufficiently gloomy to recommend shorting exchange-traded emerging markets index funds.1)Lauren Rublin, “Peering into the Future,” Barron’s, January 25, 2016.

Results in early January 2016 appeared to confirm the pessimists’ viewpoint as markets fell sharply around the world; the S&P 500 Index fell 8% over the first 10 trading sessions alone. The 8.25% loss for the Dow Jones Industrial Average over this period was the biggest such drop throughout the 120-year history of that index.2)www.djaverages.com, accessed January 6, 2017. For fans of the so-called January Indicator, the outlook was grim.

Then things seemingly got worse.

Oil prices fell sharply. Worries about an economic debacle in China re-entered the news cycle. Stock markets in France, Japan, and the UK registered losses of more than 20% from their previous peaks, one customary measure of a bear market.3)Michael Mackenzie, Robin Wigglesworth, and Leo Lewis, “Stock Exchanges across the World Plunge into Bear Market Territory,” Financial Times, January 21, 2016. Plunging share prices for leading banks had many observers worried that another financial crisis was brewing. As U.S. stock prices fell for a fifth consecutive day on February 11, shares of the five largest U.S. banks slumped nearly 5%, down 23% for 2016.

The Wall Street Journal reported the following day that “bank stocks led an intensifying rout in financial markets.”4)Tommy Stubbington and Margot Patrick, “Banks Drop as Global Rout Deepens,” Wall Street Journal, February 12, 2016. A USA Today journalist observed that “The persistent pounding global stock markets are taking seems to be taking on a more sinister tone and more dangerous phase, with emotions and fear taking on a bigger role in the rout, investors questioning the ability of the world’s central bankers to calm the market’s frayed nerves, and a volatile environment in which selling begets more selling.”5)Adam Shell, “Market Tumult Charts New Waters,” USA Today, February 12, 2016.

February 11, 2016 marked the low for the year for the U.S. stock market. While prices eventually recovered, as late as June 28 the S&P 500 was still showing a loss for the year. Meanwhile, a number of well-regarded professional investors argued that the next downturn was fast approaching. One prominent activist in May predicted a “day of reckoning” for the U.S. stock market, while another reportedly urged his fellow hedge fund managers at a conference to “get out of the stock market.” A third disclosed in August a doubling of his bearish bet on the S&P 500.6)Dan McCrum and Nicole Bullock, “Growing Bears Provide Soundtrack for Investors,” Financial Times, May 21, 2016.

Throughout the year, some observers fretted over the pace of the economic recovery. The New York Times reported in July that “Weighed down by anemic business spending, overstocked factories and warehouses, and a surprisingly weak housing sector, the American economy barely improved this spring after its usual winter doldrums.”7)Nelson D. Schwartz, “US Economy Stays Stuck in Low Gear,” New York Times, July 29, 2016.

Despite all this noise, the S&P 500 returned 11.9% for the year, and international stocks 8)Source: MSCI International stocks represented by the MSCI All Country World ex US IMI (net div). returned 4.4% for U.S. dollar investors (6.9% in local currency) 9)Local currency return calculation represents the price appreciation or depreciation of index constituents and does not account for the performance of currencies relative to a base currency such as the U.S. Dollar. Local currency return is theoretical and cannot be replicated in the real world., helping to illustrate just how difficult it is to outguess market prices. Once again, a simple strategy of embracing sensible asset allocation and broad diversification was likely less frustrating than fretting over portfolio changes in response to news events.


Past performance is no guarantee of future investment results. Indices are not available for direct investment; therefore, their performance does not reflect the expenses associated with the management of an actual portfolio.

Diversification does not eliminate the risk of market loss. Investment risks include loss of principal and fluctuating value. There is no guarantee an investing strategy will be successful.

All expressions of opinion are subject to change. This article is distributed for informational purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, products, or services.

True North Capital Alliance has no affiliation with DFA; however, the firm uses DFA funds and strategies in developing its investment models.

True North Capital Alliance is registered as an investment advisor with the states of Minnesota and Texas. The firm only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment advisor does not constitute an endorsement of the firm by securities regulators nor does it indicate that the advisor has attained a particular level of skill or ability.

Dimensional Fund Advisors LP is an investment advisor registered with the Securities and Exchange Commission.

References   [ + ]

1. Lauren Rublin, “Peering into the Future,” Barron’s, January 25, 2016.
2. www.djaverages.com, accessed January 6, 2017.
3. Michael Mackenzie, Robin Wigglesworth, and Leo Lewis, “Stock Exchanges across the World Plunge into Bear Market Territory,” Financial Times, January 21, 2016.
4. Tommy Stubbington and Margot Patrick, “Banks Drop as Global Rout Deepens,” Wall Street Journal, February 12, 2016.
5. Adam Shell, “Market Tumult Charts New Waters,” USA Today, February 12, 2016.
6. Dan McCrum and Nicole Bullock, “Growing Bears Provide Soundtrack for Investors,” Financial Times, May 21, 2016.
7. Nelson D. Schwartz, “US Economy Stays Stuck in Low Gear,” New York Times, July 29, 2016.
8. Source: MSCI International stocks represented by the MSCI All Country World ex US IMI (net div).
9. Local currency return calculation represents the price appreciation or depreciation of index constituents and does not account for the performance of currencies relative to a base currency such as the U.S. Dollar. Local currency return is theoretical and cannot be replicated in the real world.
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December Jobs Report: Gained 156,000 Jobs; Wages Tick Up

January 10, 2017

Marcus Winbush, CFP® — CEO, True North Capital Alliance

At its December 2016 meeting, the Fed’s Policy Committee voted unanimously to raise the federal funds rate to a range of 0.50 to 0.75 percent—its first increase since December 2015. Fed Chair Janet Yellen noted that this decision was a vote of confidence in the strengthening U.S. economy as well as an expectation that the economy would continue to progress.

It would seem that the jobs report issued on Friday, January 6th corroborates the Fed’s assessment of the U.S. economy and does nothing to deter the Fed from considering future rate increases. Although job creation was slightly less than economists expected, the report showed continued tightening in the labor market and a long-awaited uptick in wages. All in all, the report confirms that the U.S. economy ended 2016 on a strong note.

Highlights of December 2016 Jobs Report

The December jobs report issued by the Department of Labor shows a tightening labor market, which some Fed officials believe may be approaching “full employment.”

In December, nonfarm payroll employment rose by 156,000 jobs with the strongest growth in health care (up 43,000) and social assistance (up 20,000). Employment continued a modest upward trend across broad segments of the economy including food services, transportation and warehousing, financial activities, and manufacturing. However, mining, construction, and trade showed little change in December. In total, the economy added 2.2 million jobs in 2016, which is less than the increase of 2.7 million jobs in 2015.

The unemployment rate ticked up slightly to 4.7 percent from its November low of 4.6 percent. However, at 4.7 percent, unemployment stands at its lowest year-end level in a decade.

In deliberations leading up to its December rate increase, the Fed closely scrutinized measures that might indicate lingering slack in the labor market. For example, Fed Chair Yellen, was particularly concerned about the number of persons identified as “involuntary part-time workers.” This term refers to individuals who would prefer full-time employment, but are working part-time because their hours have been cut or because they are unable to find a full-time job. Although the December number of involuntary part-time workers remained unchanged at 5.6 million, the number of workers in this category declined by 459,000 over the year.

The number of people participating in the labor market continued to hold steady at 62.7 percent, unchanged over the year. Likewise, the number of long-term unemployed individuals (i.e., those jobless for 27 weeks or more) held steady for the month at 1.8 million; however, the total declined by 263,000 over the course of the year. Both these indicators point to continued tightening in the labor market.

Perhaps, one of the brightest spots in this report is in the earnings data, which shows the best gains since 2009. In December, average hourly earnings rose by 0.4 percent, which led to a 2.9 percent increase in earnings for the year. This represents a 7-year high.

Are the Fed’s 2017 Projections on Track?

Following the release of the December jobs reports, several Fed officials reiterated their expectation that rates will rise again this year in line with projections in their December 2016 policy meeting minutes. In her January 6th interview with Fox Business, Cleveland Fed President Loretta J. Mester called the December jobs report “decent” and “in line with what we’ve been seeing.” Her further assessment of the jobs market is “that we’re basically at full employment from the point of view of the monetary policy goal, one of our dual mandate goals.”

The Fed will continue to monitor economic conditions and react accordingly: “In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation.” As it stands now, the Fed projects a federal funds rate of 1.4 percent by the end of 2017, which likely translates into three rate increases.

The Policy Committee meets again on January 31-February 1; however, most analysts do not expect the Fed to raise rates at that meeting.


True North Capital Alliance is registered as an investment advisor with the states of Minnesota and Texas. The firm only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment advisor does not constitute an endorsement of the firm by securities regulators nor does it indicate that the advisor has attained a particular level of skill or ability.

Past performance is not a guarantee of future results.

All expressions of opinion are subject to change. This content is distributed for informational purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, products, or services.

Continue Reading No Comments

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