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How to Throw a Fabulous Holiday Party…on a Budget


I love to entertain, especially during the holidays while my Christmas tree is up and the house is warm and inviting. However, hosting parties can be expensive, and it is so easy to overspend on food and decorations. So tonight, I ventured out to Walmart on the night before Thanksgiving (not recommended!) to see if I could throw a fabulous holiday party for 20 of my closest friends for just $200. Is it possible???

Although happy hour parties with heavy hors d’oeurves sounds like a good idea, I have learned that they can turn into an all night affair! So, I decided on Dessert and Champagne at 9 pm.

Champagne – Christalino is really great and I recently found it on sale at my local Albertsons for $7.10 a bottle (Walmart didn’t carry it, but I highly recommend making the extra trip to find it.)

  • You will need a case for 20 people –$85.20
  • Grab a bottle of cranberry juice to make Poinsettias and stretch your supply – $2.98
  • Make it pretty by dropping fresh cranberries into the flutes – $1.68
  • Total $90

Cheese – pretty display, crowd pleaser, and regardless of how much you have it always seems to last (no one wants to eat the last bit!)

  • Brie $4.48 (you can also just serve baked brie with cranberries and walnuts in phyllo dough)
  • Gruyere $2.50
  • Onion Chive Goat Cheese $4.48
  • Carr’s water crackers $3.98
  • Pepperidge Farm Entertainment Quartet $2.68
  • A bunch of grapes $1.68 (throw in leftover raspberries from mousse below)
  • Total $20  

Desserts! Not only do freshly baked goodies show you care, but they are affordable and make your house smell wonderful!

  • Delicate Lace Oatmeal Cookies
    • 1c sugar – $2.82 for 4lbs
    • 1 stick butter -$2.50 for 1lb
    • 1 egg – $1.58 for dozen
    • 2T flour – $1.84 for 2lb
    • 1 c oatmeal – $2.42 for smallest
    • 1t vanilla – $2.48 for smallest

Preheat oven 325. Cream butter and sugar. Beat in egg. Add flour. Stir in oatmeal and vanilla. Cover cookie sheet with foil, lightly spray grease. Drop small balls of mixture onto cookie sheet widely spaced. Bake till lightly brown. Peel from foil when cool. Careful, they break easily. Makes 2 dozen- you have plenty of ingredients to double recipe.

  • Mini Key Lime Tarts topped with whipped cream
    • Mini Walker’s shortbread cookies – $2.50 for 35
    • 1/4c sugar
    • 14oz can sweeten condensed milk – $2.25
    • 4 egg yolks
    • 8oz cream cheese – $1.48
    • ½ c key lime juice – $2.48 for a sack
    • Reddy Whipped cream – $3.48 can (or whip 16oz heavy whipping cream with sugar to taste – $2.62 )

Place cookies in bottom of mini cupcake pan (you should use the papers but I forgot to get price, probably $2). Blend sugar, milk, cream cheese together in cuisinart. Add egg yolks and blend well. Slowly add lime juice. Pour over cookies and refrigerate overnight. Top with whipped cream. This mix might yield more than 35, but that’s how many cookies came in a package.

  • Chocolate Mousse with raspberries and whipped cream
    • Instant Jello Chocolate Mousse – oops missed price, say $4 for 2 boxes
    • 1c milk – $1.28 for a pint
    • Raspberries – $1.98 container
    • Whipped cream
    • 2 packages 15 Mini Phyllo Shells – $3.48 

Follow instructions on box. Place raspberry in bottom of shell. Dish mousse on top and topped with whipped cream.

  • Total dessert ingredients – $40

Grand Total $150! (plus tax)

Leaves plenty for cocktail napkins, maybe a poinsettia, and possibly extra champagne! 

When I started this article I really didn’t think I could do everything I wanted for $200, but I did without skimping on anything I planned and even came in underbudget! Just because money is a bit tight doesn’t mean you can’t throw a fabulous party.

Happy Holidays!


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Change is Good…Simplify Your Life


What can you do to simplify your life and lighten your load?

  1. Clean your closets – donate old clothes, organize, declutter.
  2. Make a To-Do list of everything that needs to be done around the house, office, etc. Prioritize and Do.
  3. Get a new mattress – you will sleep better and feel better.
  4. Take a spa day so you feel fresh and beautiful (home spa works too and yes men too).
  5. Clean all the junk out of your fridge and pantry and fill it with healthy treats.
  6. Get a physical and get physical – find a workout program you enjoy and stretch daily.
  7. Quit smoking, reduce caffeine and alcohol intake (ok, maybe this is not so simple!).
  8. Pay off your credit cards and debts to friends and family, stop buying things you cannot afford, and rebuild your emergency fund.
  9. Figure out your net worth, cut the fat out of your budget, and make a plan to achieve your goals – hire a financial planner to help.
  10. Go on a date with your spouse, your kids, your friends – enjoy life!

Whether you just do some minor tweaking or a full overhaul, it is important to keep changing and evolving. Everything is within our reach, we just have to reach for it.

Gelasia Steed, CFP®
Founder
Steed Investments
Ft. Worth, TX


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The Fed versus Deflation, Inflation and…Stagflation


The mighty Federal Reserve certainly has a big job to fight all things bad in the economy – unemployment, recession, deflation, inflation and something we haven’t seen in a while, but seems to be on the horizon – big, bad, ugly stagflation.

Bernanke declared war on deflation with his easy monetary policy after the financial crisis and it looks like he won! However, for some reason (perhaps his duel mandate to fight unemployment) he is not acknowledging the eminent warnings and actuality of inflation. What happens when high unemployment persists, economic growth slows, and prices rise? Stagflation. If the Fed combats recession by lowering interest rates and curbs inflation by raising interest rates, how does the mighty Fed combat stagflation?

According to Wikipedia, Stagflation is a combination of stagnation and inflation coined by British politician Iain Macleod in his speech to Parliament in 1965. Wikipedia expands:

Economists offer two principal explanations for why stagflation occurs. First, stagflation can result when the productive capacity of an economy is reduced by an unfavorable supply shock, such as an increase in the price of oil for an oil importing country. Such an unfavorable supply shock tends to raise prices at the same time that it slows the economy by making production more costly and less profitable.[5][6][7]

Second, both stagnation and inflation can result from inappropriate macroeconomic policies. For example, central banks can cause inflation by permitting excessive growth of the money supply,[8] and the government can cause stagnation by excessive regulation of goods markets and labor markets,[9] Either of these factors can cause stagflation. Excessive growth of the money supply taken to such an extreme that it must be reversed abruptly can clearly be a cause. Both types of explanations are offered in analyses of the global stagflation of the 1970s: it began with a huge rise in oil prices, but then continued as central banks used excessively stimulative monetary policy to counteract the resulting recession, causing a runaway wage-price spiral.[10]

To the first principal, oil prices have swung from $140 high pre-crisis to $30 in depths of the recession and back up to $100 today – one could call that a supply shock. Add on 80% annual rise in cotton prices, 130% rise in corn prices, spikes in copper, steel, aluminum, wheat, you name it. Those are all inputs for our final goods. Companies will squeeze margins in the short term because commodity prices are volatile, which is why the Fed looks at core CPI that strips out volatile food and energy prices; however, prolonged higher input prices will eventually result in higher prices.

As for the second principal, excessive growth in the money supply – the Fed has kept interest rates extremely low for 2 years plus injected liquidity through two rounds of quantitative easing to combat the recession and stave off deflation. Add in excessive government regulations and the unknown regulations to come with Dodd Frank and you have all the ingredients for stagflation.

Don’t just take my word, this recent article published in the Wall Street Journal by Ronald McKinnon, professor at Stanford explains how Fed policy has been exporting inflation to countries we import our goods from by devaluing our dollar and how 0% rate has constrained small business credit slowing our economy and keeping unemployment high. This article published by the BBC warns of the risk of stagflation if commodity prices remain high.

I do not know how the Fed can combat stagflation, but perhaps if the government would step back allowing markets to adjust and reduce tax and regulation uncertainty allowing businesses to expand and hire maybe positive animal spirits will ward off stagflation.

Gelasia Steed, CFP®
Founder
Steed Investments
Ft. Worth, TX


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Financial Priorities for New Graduates


You’ve done it graduate – passed all your classes, despite all your partying, and got a sheepskin for your wall! Now it is time to get a job and start contributing to society (maybe after a quick trip to Europe!). But wait, before you go squander your new paycheck on fill in the blank, what should your financial priorities be?

Budget

Boring. But, before we do anything we need to know how much you have left over after you pay your bills and feed yourself. Create a budget spreadsheet starting with your monthly take-home pay. Then, list all your fixed expenses (rent/mortgage, utilities, loans, insurance, cell, etc.), estimate your variable expenses (groceries, gas, dining out, etc.), and calculate what’s left.

Emergency Fund

What happens if you lose your job or get sick and can’t work…Aflac? Nope, an emergency fund keeps you from calling on mom and dad who have long since tired of footing your bills. Set up an autodraft into a savings account to cover 3-6 months of living expenses. Keep it in cash – no Kramer’s stock picks! Use this money for emergencies – new tires, home repairs, Vegas (just kidding!) – when you deplete it, restart your autodraft until it is rebuilt.

Debt Reduction

Unless your parents spoiled you rotten, you probably have some hefty student loans, some expensive credit card debt, a car loan, and maybe a mortgage. What should you pay off first? Pay the highest interest rate debts first, usually your credit cards. Consolidate your student loans at the lowest rate possible. Your car loan is probably at a higher rate, but student loans can take an eternity to pay off and could reduce your borrowing capacity for a new home, so consider splitting between the two. A mortgage is a good tax deduction, so I wouldn’t worry about paying this off yet. However, you should pay off an expensive home equity loan or a 2nd lien.

Retirement

I know you’ve just started working and retirement seems like a million years away…and it will be if you don’t start saving now! At minimum, take full advantage of any employer match. Ideally, you should maximize your retirement contribution. But, first, you might need to concentrate on building that emergency fund and paying off expensive debts. Bonus: it is a great tax deduction!

Fun Saving

Now that you’ve done all the boring, responsible work, set up a FUN savings account for vacations (Vegas baby!), a new car, shopping spree, boat, whatever. Thinking about getting married and buying a new home? Start building up savings for a ring and a down payment. I recommend 20% so you don’t have to get the expensive 2nd lien and have equity in your home.

It is so easy to spend all your paycheck and wonder where it went. If you take the time to prioritize and crunch a few numbers, you will be leaps and bounds ahead of your peers who don’t. Welcome to the Real World Graduate!

Gelasia Steed, CFP®
Founder
Steed Investments
Ft. Worth, TX


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How Much House Can I REALLY Afford?


Post financial crisis people are really questioning how much house they can really afford. Before 2008, loose lending standards caused many homebuyers to buy much more house than they could truly afford. Now lenders are so tight that if you are not a cookie cutter loan applicant you may struggle to get a loan. So what’s realistic? There are numerous calculators online that calculate a basic payment-to-income ratio of about 30% of your gross income less debts. But, trust me the banks are doing a whole lot more than that today! And so should you since a new home is major purchase. Let’s do some math to figure out how much house you can REALLY afford?

  1. Estimate how much cash you will get at closing when you sell your current home:  
    • What’s the fair market value of your home? Check the tax appraisal, google similar houses for sale in your neighborhood, find recent comparable sales, and interview 2-3 realtors to see what they honestly believe it will sell for.
    • Subtract out your loan balances.
    • Subtract closing costs and realtor commissions – ask your realtor to estimate. 
    • Subtract your prorated share of property taxes.  
    • Bam – cash at closing – hopefully a positive number!
  2. Figure out how much you will need out of pocket for your new home:
    • I know I am supposed to tell you a magical price range, but you probably already have something in mind!
    • Multiply by 20% for your downpayment.
    • Subtract your cash at closing.
    • Bam – total out of pocket – do you have this amount in savings? No. Can you go on a savings marathon so you have more to put down? Can you lower your price range? 
  3. Next, calculate your new monthly mortgage:
    • New home price less your downpayment.
    • Plus closing costs – get a good faith estimate.  
    • Plus your prorated share of property taxes and interest for that first month and any escrow balance due.
    • Check your tax assessor’s website for a tax estimator or call them.
    • Ask your insurance company to estimate your new homeowner’s insurance.
    • Add all that up and use any online mortgage calculator to calculate your monthly mortgage payment– if you can’t afford 20% down, also calculate your 2nd lien and PMI.
  4. My grandmother told me “It’s not the cost of the house that’s the trouble; it’s the cost of maintaining it.”
    • Ask the seller for a history of the utility bills.
    • Check the seller’s disclosure to see how old the HVAC, roof, appliances, etc are.
    • Review the inspection report and be prepared for your new house to “christen” you with a major repair– look into home warranty insurance.
  5. Finally, plug your new monthly mortgage and expenses into your budget to see how it affects your bottom line – make sure you still have room to save for other goals and cushion for emergencies. And, don’t forget your decorating budget – you will want new stuff in your new house! Here’s an article I wrote to help you figure out your budget.

There is not a magic calculator that can tell you how much house you can afford because there are too many variables. Ideally, you should put 20% down to avoid the higher costs associated of 2nd lien and PMI. However, I know sometimes that is not possible. Doing the math will show you exactly how much you need out of pocket and how much the new mortgage and bigger bills will affect your budget, so you can see how much you can really afford.

Disclosure – I am not a realtor, lender or mortgage broker, so please forgive any errors or omissions! This is only intended to help give you plan.  

Gelasia Steed, CFP®
Founder
Steed Investments
Ft. Worth, TX


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Luck of the Irish


Has your portfolio been kissed by the luck of the Irish or cursed by the Ides of March? This month marks the two year anniversary of the bull market after a vicious decline during the financial crisis and a long, miserable recession. People are starting to feel a bit better about investing, but if you chase that leprechaun to the end of the rainbow will you find a pot of gold or be fooled?  

Buy low, sell high…but my crystal ball is broken, and it’s just impossible to predict where the market will go from here. What can you do? Here are some ideas that may help, but please consult your financial adviser first!

Do a little spring cleaning – take some profits and make sure you are properly diversified. It wouldn’t hurt to raise a little cash either just in case the long days of summer beat your portfolio down especially after the Fed removes quantitative easing in June (unless they extend it again).

Take cue from Bill Gross the “Bond King” and shorten up your bond portfolio maturities because rates will only go up from here and you will want to be flexible. However, do keep bond exposure since money market rates are essentially 0% and bonds help reduce the overall volatility of your portfolio.

Diversify into some alternatives. If you own a house, then you have real estate in your portfolio, which tends to keep pace with inflation. REITs are pricy now and are hard to shop, but maybe you could find a decent company that has real estate exposure…maybe apartments given all the foreclosures and tight lending (just a thought).

Commodities have been on quite a run, but I still think it is a wise hedge against inflation. Not that I am suggesting burying gold bars in the backyard, although I did hear that a couple states are actually considering accepting gold in addition to dollars – is this a sign gold is expensive? Speculators have also pumped up oil prices this month with all the unrest in the Middle East and cotton is at its highest price ever in history. I am not recommending shorting any of these, but instead of trying to time the market, spread out your buying into thirds over the next few months or year. Look for an index that owns companies directly instead of the futures so you aren’t crippled with contango. And, make sure it is broad across all commodities – agriculture, metals, energy, water, etc.

And, perhaps you could cherry pick some good dividend paying stocks that are not as volatile as the overall market. I found a couple decent bargains out there recently, but again I suggest spreading your buying so you can take advantage of a pullback if one comes along. 

Don’t let those leprechauns trick you into buying a pot of fool’s gold, be proactive and prepared for whatever the market may bring – and then you won’t need the luck of the Irish! Happy St. Patrick’s Day!

Gelasia Steed, CFP®
Founder
Steed Investments
Ft. Worth, TX


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Will QE2 Boost our Economy and Create Jobs?


During the third quarter, the S&P 500 rose about 11% thanks mostly to the anticipation of a second round of quantitative easing, QE2 – the Fed plans to buy over $600 billion of treasuries vehemently trying to avoid a double dip recession.

Economic improvements have been tepid and recent deteriorating data helped push the Fed’s decision. Unemployment is still high and hasn’t budged much and even edged higher to 9.8% down from 10.1% last October, although weekly jobless claims are trending lower, finally. GDP growth has slowed from 4-5% at the beginning of the year to about 2% the last couple quarters.

What are the intended consequences of QE2?

  • Keep interest rates low to spur business investment and support the real estate market.
  • Provide liquidity.
  • Devalue the dollar, oops I mean, maintain competitive currency to reduce our trade deficit and possibly add (artificially) to GDP growth.
  • Spark inflation to 2% (and no more!) to most importantly AVOID DEFLATION.

What are the unintended possible outcomes of QE2?

  • Higher rates – the global financial crisis is rearing up again in Ireland, Portugal and Spain causing investors to flee to the safety of US treasuries keeping yields higher than targeted.
  • Liquidity not getting into the pockets of Main Street – tighter lending and credit standards in response to the financial crisis has made it harder for families and small business owners to get loans.
  • Continued high unemployment and slow economic growth – despite added liquidity and lower rates, new laws and tougher scrutiny have encouraged big businesses and banks to hoard cash opposed to expanding their business and hiring.
  • Runaway inflation – rising commodity prices warn of inflation, which could force the Fed to tighten before the economy has recovered – uh oh double dip. 
  • Trade Wars – we live in a global economy and we live better lives because of it. Imposing trade barriers and devaluing currencies is not an effective policy for any country and will hurt our global economy causing prices of goods and services to spike and could even result in supply shortages.
  • Stagflation – rising prices with stagnant economic growth makes everyone poorer.

On the bright side, QE2 has boosted the stock market and perhaps it will buy the government some time to decide what to do with the expiring tax cuts and unpopular, unclear regulations that are hindering business spending and hiring.

Gelasia Steed, CFP®
Founder
Steed Investments
Ft. Worth, TX


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What Should I Expect From a Financial Planner?


Financial Planner, Certified Financial Planner™, Financial Adviser, Financial Consultant, Wealth Manager, Money Manager, Stockbroker, Chartered Financial Analyst, Registered Investment Advisor, Chartered Life Underwriter – OMG! Whom should I hire?

I am not going to differentiate among all these titles because I am not a dictionary and am not even sure I can! I am going to outline what you should expect from a Certified Financial Planner™ and a comprehensive/holistic financial plan. Then, you can decide if that is what you need and want from a financial professional.

What is a Certified Financial Planner™ (CFP®)

A CFP® practitioner has met the CFP® Board’s education, examination, and experience requirements, which include completing the CFP® academic program, having a bachelor’s degree, passing the CFP® certification exam (2 days, 10 hours; it’s a doozy), and having at least 3 years of full-time, related work experience. CFP® practitioners adhere to high standards of ethical conduct and must meet continuing-education requirements to maintain their certification. CFP® practitioners have a fiduciary duty to make recommendations based on the “best interest” of their clients. Learn more at http://www.cfp.net/

What is a Comprehensive/Holistic Financial Plan?

Picture a puzzle of all your financial pieces – investments, retirement, estate, insurance, education, and taxes. A financial plan puts all these pieces together to show you where you are, where you want to be, and what you need to do to get there. The process goes something like this:

  1. Establish the relationship – sign an agreement so you both know what to expect from each other.
  2. Discovery – you and your planner figure out all your goals. Everyone wants to plan for retirement, but you might fail to plan for caring for your aging parents or for your own health care, which may impede the success of your plan. Also, your planner will ask for details of all your finances – the more you provide, the better your plan.
  3. Analyze – planner reviews your data, analyzes how well you are doing to meet your goals, and figures out what changes you can make to better achieve your goals.
  4. Presents the Plan – the plan puts all your pieces together and outlines recommendations to help you achieve your goals. For instance, your planner may recommend anything from maximizing your 401(k) contribution and buying a long-term care policy to a complex web of trusts and planned gifting to reduce your estate tax burden.
  5. Implementing Recommendations – usually your planner can implement some of the recommendations and/or refer you to someone who can. Or you can take your plan and shop around. Ideally, independent planners research products and prices so you can make the best informed decision to meet your needs. For instance, your planner might refer you to a couple mortgage brokers/banks so she or he can compare several good-faith estimates to help you decide whom to use.
  6. Monitor – life changes and investments do not perform as expected; a financial plan is a snapshot and must be monitored and reviewed to keep you on track. Your plan will probably have numerous action items that cannot all be done at once; you will have to prioritize. Each annual review, you and your planner will go over what you completed, possibly add new items to the list, and reprioritize. Financial planning is an ongoing process.  

A financial planner is like a coach guiding you to make the best financial decisions to meet your specific goals and needs. There is not one product or investment that fits all – planners shop around, think outside the box, and advocate for your success. A good financial planner gets up close and personal, so interview a few to make sure you find a planner you trust and are willing to divulge your deepest, darkest secrets to – it goes well beyond your bank statements.

Gelasia Steed, CFP®
Founder
Steed Investments
Ft. Worth, TX

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