Mike Zeiter, CFP®, CPA/PFS Foundations Financial Planning, LLC
- 231 E 4th St. Suite B, Carthage, MO 64836
- (417) 986-3055
About Mike Zeiter, CFP®, CPA/PFS
I am a Certified Public Accountant and Certified Financial Planner who specializes in stock option compensation planning, tax planning, and wealth management. I work primarily with self employed individuals and executives receiving equity compensation from public companies. I started Foundations Financial Planning, LLC to utilize my tax and financial planning experience to provide comprehensive services for my clients.
After graduating with a Master’s degree in Accounting from the University of Missouri, I obtained my CPA license and worked for PricewaterhouseCoopers. In 2014, I began my own tax practice while working full time in the finance industry. Working with personal taxes made me realize the importance of comprehensive financial planning. Too many people miss out on potential savings because of a lack of planning. In 2016, I obtained my Personal Financial Specialist (PFS) license in order to become an investment advisor to assist people with comprehensive financial planning. In 2019, I officially became a CFP® which helps me provide the best service to my clients.
Whatever your situation is, I am here to help!
Let me start off by explaining the purpose of this post. Many of you are currently quarantined or spending countless hours inside your home due to the Coronavirus. Most of you are in the position where you are still employed but working from home and adjusting to a virtual work style. That is the group I am writing this for. I understand there is another group of people that are not working or may have significantly reduced hours and are wondering how they will pay the bills. I plan on creating a post for that group as well, but I am delaying it in hopes that we get some guidance from the Federal government on the stimulus plans.
We all hate being forced to stay home. Many of us normally love staying home to avoid large crowds of loud people. Now that we are being told to avoid large crowds of loud people, it’s all we crave. If you haven’t found things to do around the house that you have been putting off for months, I have a solution! Here are some things you can do to organize your finances while you are sitting and watching your favorite Netflix show for the tenth time.
Make a list of all your accounts – This is always the first step with my clients. Make a list of all your financial accounts: bank accounts, debt, retirement accounts, credit cards, student loans, mortgage, etc. This will give you the entire picture of your financial life. You can now see everything you own and everything you owe. This is your starting point.
Consolidate accounts – Look through your list of accounts. Do you have three 401(k)’s from old jobs? Is there an old savings account that your mom is still on from when you were in high school? Having more accounts makes everything harder to track. Simplify everything as much as you can. Your old employer retirement plans can be rolled into your current employer’s plan or an IRA. Five different store credit cards aren’t probably necessary anymore since four of them were opened to save 20% on some big purchases back in college. You may need some help transferring investment accounts because they tend to be more complicated and you don’t want to cause any tax issues but see what can be consolidated to make your life easier.
Review your bank statements – This is always a “fun” exercise. Download the last three statements you have from your main spending account. This could be your checking account or a credit card. The goal of this exercise is to review your spending to see what may be unnecessary. Do you need four streaming services as well as cable? Are you aware of how much it costs to feed a family of four each week? How did $500 worth of goods from Target disappear in three months? The goal of this is to open your eyes to areas where you could make minor changes but save quite a lot of money over time.
Review your bills – When was the last time you opened your phone bill? Most people auto-pay their utilities and never look at the actual bills. Do you realize that those teaser rates from your internet provider are long gone? Take some time to review your cable, internet, phone, trash, electric, gas, and insurance bills. Don’t pay for things you don’t need. Call your providers and see if there are discounts you may qualify for and shop around to see what other options you have.
Make a budget – Yes, we are getting into weeks three and four of the quarantine now. Nobody, except nerds like me, enjoy making a budget. Just give it a shot. See how much is coming in and how much is going out. Use your last three months of statements to start. You can even use one of the many free budgeting apps available. Push yourself to save more and spend less this year. The exercise of making a budget will help you realize what areas you need to focus on in terms of spending and saving. This doesn’t have to be strict rules on how much you can spend. It’s for you to truly think about where to use your hard-earned money.
Find ways to help your community – This last step should probably be the first activity for this group. Once again, this post is focused on those of you who have stable jobs and are not losing income during this time. Every community in our country is struggling right now to figure out how to get through this uncertainty. If you went through every step listed above, you should have been able to find some savings and work on a plan to save even more money going forward. Now, I am asking you to put that plan on pause for a month and use those savings to help others in your community. Find the Facebook pages of your local shops and restaurants. They are adapting every day so that they can stay open and continue to pay their employees. Non-profits may be providing services to a larger group of those in need. Anything helps!
When Tria and I moved to Carthage, I worked from home for over two years. It is a lot easier to be home that much when you have a purpose every day. Everything I listed out in this post can be done in front of the TV so it won’t be too boring. Most of you have probably contemplated doing these things for a few years, but never had the time.
If your biggest complaint this week is being bored at home for who knows how long, hopefully this helped. Most of us take for granted jobs that we can take with us wherever we go. We are the group that will determine whether local businesses will succeed. Not everyone can eat out for lunch and dinner, or even make their usual weekly grocery run because they may not be getting paid this month. Use this post to get your financial life organized so that you can support your community. Once this all passes, you will be ready to tackle all your financial goals.
Mike Zeiter, CPA/PFS, CFP®
Financial markets are designed to value companies and assets using all available information. This is called the Efficient Market Hypothesis. Investment companies have built systems to act within fractions of a second when news is released to get an edge on competitors. Whether you believe in efficient markets or not, it does mean one thing for certain: financial markets react quickly to breaking news. I am writing this on March 11, 2020. If you happen to be reading this at some point in the future, let me tell you how the news has been over the last month…terrible.
The Coronavirus has taken over every headline. It started in China and has spread throughout the world. China has essentially been shut down for most of this year. Italy is now under a nationwide quarantine. New York is under containment zones and the state is producing its own hand sanitizer. President Trump is banning travel from Europe. March Madness will be held without fans. The NBA has suspended its season. Each day seems to have a new story that is causing more and more panic.
Panic is never a good strategy for your finances. The stock market averages are down about 20% in the last few weeks. I completely understand if the Coronavirus scares you and you have stocked up on toilet paper, soap, and jerky. Whatever makes you sleep better at night. However, you should not make investment decisions based on fear. Instead, let’s look at some things that you can do right now while the market is down.
Make your 2019 IRA contributions – Have you maxed out your IRA contributions for 2019? You have until April 15 to make these contributions. The market could still go down, but your investments missed this big drop.
Make your 2020 IRA contributions – You can get a head start on your current year IRA contributions. If your IRA allows, you could even keep it in cash within the IRA. That would allow you to invest some now and spread the rest over the year. You could wait for some positive news, but that may result in you missing some gains from these low prices.
Raise your retirement contribution rate – Log in to your 401(k) and raise your contribution by a percentage or two. You can always lower it in a few months but try to put a little more into your retirement accounts while the prices are low. If it continues to go down during the year, you will be buying more shares with the same amount of money.
Do a Roth conversion – If you have been planning on converting a traditional IRA to a Roth IRA, now may be a great time to do that or even a portion of it. You will pay tax on these conversions based on the dollar amount at the time of the conversion. Let’s say your IRA was valued at $100k and it is now valued at $80k. You can do a direct rollover to a Roth right now. Your investments will stay the same, but your taxable income for 2020 will be $20k less.
Refinance your debt – Interest rates usually fall in situations like these. This can provide a great opportunity to refinance your mortgage, car loan, or business debt. Student loans should also be evaluated. However, make sure to review your student loan types because refinancing may disqualify you for various repayment programs.
Reevaluate your financial plan – This market drop should not have impacted your financial goals. If you are near or in retirement, your portfolio should be able to withstand a down market. If you are under 50 and planning to retire at 60 or later, this is a great time to put a little more into your retirement accounts. This is exactly why you have a written financial plan. Take a moment to look at your plan to make sure this doesn’t impact any of your goals.
I have no idea what will happen to the stock market over the next few months or years. You will see many articles telling you to buy the dips or sell everything before the market falls even further. Both of those could be the right decision. It just depends on your circumstance. The woman who sells today and eliminates the risk of losing more money that she needs for a down payment on her house in two years did the right thing. She could have earned more, but she accomplished her goals. The 35-year-old man who invests more in his retirement at this price and watches the market fall for a year but continues his investment plan also did the right thing. Even if he predicts the exact bottom of the market in 2021, he can’t go back and make 2019 IRA contributions because that opportunity ends on April 15. One person buys and one person sells on the same date. They both made the proper decision for their financial goals.
Panic is not a strategy, nor is it part of any financial plan. Take a minute to evaluate your situation, then act based on what you need to accomplish your goals.
Mike Zeiter, CPA/PFS, CFP®
The word entrepreneurship seems to make people think of a certain scenario. We all know a version of the “classic” American entrepreneur story. Person has a brilliant idea. Person brings the idea to life in their garage. Idea is a major hit. Person grows the business, brings in investors to expand, and they sell the business for millions to a large corporation. Everyone makes money. Person can retire. If they are too bored in retirement, they may try to start the process over again.
This is not what a typical entrepreneur looks like. The person above is a high risk, high reward entrepreneur. We only know the success stories because they resulted in extremely high rewards. A typical entrepreneur in America looks like the following story.
Someone works an average 9-5 job and is uninspired. They decide that they can offer their skills in a better way. They spend nights and weekends trying to sort out the details. They eventually quit their full-time job and take a significant pay cut. They struggle to pay the bills for the first three years or longer. They may fail. Eventually, the business starts to grow and make a decent profit. Most of the profit is reinvested in the business until they have a sustainable level of workload and income.
The key difference between these two entrepreneurs is that one has built the business in order to sell and the other has built the business in order to provide a product or service the best way they can. The first example allows business owners to cash out and retire if they wish. The second example creates a source of income for the business owner throughout life. These are the people you see running small shops and businesses around your community. Unfortunately, many of them are afraid to take too much of an income because they want to use that money to grow the business.
This scenario is all too common. Business owners will take a minimum income for themselves and keep reinvesting in the business. The goal is that the business will grow enough and provide a source of retirement income when the time comes. In general, this plan can work just fine. The issue is that business owners run a big risk by not diversifying into other assets and investments. The business may not be worth as much as they think when they are ready to retire. The business may not have any value to their family if they were to die before retirement. And, as we all know, the business may slowly lose money, and this puts their regular income and retirement at risk.
For those business owners in the second category reading this, my point is not to discourage you to reinvest in your business. This post is meant to encourage you to start thinking of your personal finances separate from your business. I went through this experience as well. My business provides income for me and my financial success is directly impacted by my business success. However, it can’t be the only form of financial security. Let’s look at some ways to diversify our business risk.
Retirement Accounts – First and foremost, business owners can set up a retirement account for themselves. Traditional and Roth IRA’s are the most basic options, but businesses can also set up their own business retirement account to allow higher level of retirement contributions. This is usually the best first step because it results in tax savings and allows you to grow your retirement accounts in investments other than your business.
Setting an Income – This is, surprisingly, less common than you think. Most small business owners withdraw money when they need it but keep the rest in the business. There are some tax planning items to consider around paying yourself a salary. However, it is important to remember that your personal finances are separate from your business finances. Pay yourself a salary and use it to finance your personal goals.
Business Continuity Plan – Write out a plan in the event of the business owner’s death. This is especially important if you are the sole owner. What happens to your family if you die tomorrow? Is the business worth anything? Don’t let all your hard work go to waste when you pass away.
Value the Business – Another good practice is to have your business professionally valued regularly. This will give you a better understanding of how much your business is worth. You will also be able to see how much of your net worth is tied to your business.
You have probably heard from any financial professional that investing everything in one company is a high-risk strategy. Having all your wealth tied up in your business should be no different. There is always the possibility that your business will fail to provide for you at some point during your life. Small business owners will naturally have a large percentage of their overall financial success tied to their business. Do everything you can to set yourself up for both business and personal financial success.
I love working with small business owners. They put their heart and soul into their business every day. My hope is that this post encourages you to separate your personal finances from your business and to diversify some of the inherent risk that comes from owning your own business. This will make things easier when you finally decide to slow down or step away from your business. Hopefully, that time doesn’t have to happen any time soon!
Mike Zeiter, CPF/PFS, CFP®
- Equity Recipients (RS/RSU SOP ESPP)
- Gen Y/Millennials
- Tax Planning
- Wealth Management
Ways Advisor Charges
- Monthly Fee
- Flat Fee
- Assets Under Management
- Monthly Fee: $400+/mo
- Flat Fee: $2,000+/engagement
- Hourly Fee: $200+/hr
- AUM: 0.75%