Category Archives: Why

Why You May Want to Accept that Seemingly Lowball Offer for that Small Royalty Interest You Have Acquired Some Time Ago …

While we all envy the person on television like Jud Clampett that receives some great news on a royalty interest, (or misses a rabbit only to hit oil) …in real life frequently this can be more trouble than gift.

Living in Texas a state that produces oil and natural gas royalty rights are very popular and frequently handed down from one generation to the next.

Continued Disposition Problems

We are continuing to run into an ever increasing number of need to dispose of seemingly small mineral right properties that maybe had an offer at one time or another that actually cost more to dispose of them the offer.

Photo by Albert Hyseni on Unsplash

Please don’t run out and dump that long ago relative’s income producing oil or gas property that has been in the family for years producing a nice monthly check … but the hundred dollar or seemingly worthless offer for that very small parcel of land that has a very small mineral right may be a good offer not only from a small tax reporting over the years that you may have to do but also from an organization standpoint in your estate.

While there are exceptions and of course when oil prices were in the mid 100s there were extreme cases of payments, it is very likely if you are receiving a very nominal amount of money from your mineral interest over the past decade that that mineral interest likely has very little value and maybe more of a burden to you from a tax standpoint and especially to your heirs from an estate cleaning standpoint than it’s worth.

No Need to Be Reckless – Do some Research

This is once again not an endorsement to go recklessly sell the mass form of income property but rather a recommendation to maybe think twice and do a little research when receiving a seemingly low offer by a professional mineral person who wants to consolidate his portfolio and take that interest off of your hands!

Have a Great “Cleaner Estate” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Proxy Season is Here … Why We Vote For You and What to Do if You are Receiving Proxy Information

Almost all public institutions of all shape and form have what is called a Proxy Vote.

The Proxy is an at least Annual Vote for various items such as approval for management salaries, mergers, company purchases and just an annual approval to continue current services.

Why We Vote Your Proxy

As a regular practice we vote Proxies for all clients. This accomplishes multiple items:

  • Much Greener – We get one statement for literally 100’s of client votes
  • We actually vote – always for management – if we disagreed we would not own the respective asset
  • We keep a permanent record of the vote
  • By voting for you, your mailbox is not stuffed full this time of the year

We try to receive electronic information as much as possible – this is once again green but much of this information is still delivered the old fashion way by snail mail

What to Do If You are Receiving Proxy Information

Occasionally Proxy directives for us to vote for you falls off the system …

When this occurs your mailbox will begin getting full…

No worry, just reach out and we can easily refresh your directives back to us and stop the pelting of mail.

Given the large number of collective votes, we do not know if you have fallen off the directives list, so please do not hesitate to ask us for a refresh.

Have a Great “Proxy Vote Update” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Why Student Loan Debt Has Grown So Fast – Change In US Household Types of Debt – Interesting Chart From HowMuch.net – Paired with Another Interesting Chart that Explains from Visual Capitalist

We ran across this neat chart below from “HowMuch.net, a financial literacy website”… which stunned us.

The comparison growth of student loan growth versus other types of debt is amazing.

For the record we are huge fans of higher education, but not the debt that may come with it.

So we set off to see if there were a cause and effect for the above chart…

Thanks to our friends at Visual Capitalist the following chart answers a lot.

The small blue shaded area is inflation, compared to how fast Tuitions have increased… No wonder the gigantic growth in Student Debt…

Have a Great “Cause and Effect” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Why You Should Check Your Social Security Earnings Credits No Matter Your Age

While many may argue contrary to our fantastic Social Security speaker whom we have had twice now Mr. Tom Clark who assures us that Social Security will always be there, many do not believe this for various reasons. 

No matter your beliefs or age we highly encourage you to check your Social Security Statement and most importantly your Social Security Earnings Record.  

Earnings Benefit Credit Statement

Do not be concerned if just as this example, does not show your 2020 earnings posted as of yet there have been some delays and normally this is not posted at an early time in the year anyway . 

What we want to be concerned about is if there are gaps in our earnings history or a partial credit (change of employers) that should have been credited. there are many reasons that this can occur such as just a lost document in the Mail or an employer was bought out or closed and did not report your hard earned earnings period. 

How Do I Find This Statement? 

In 1999, the Social Security Administration mailed a paper copy to everyone every year. Budget cuts a dozen years later stopped this handy paper copy, leaving all of us to easily forget to double check our statement annually. 

For the record according to the Administration folks at age 60 are supposed to receive a paper copy, but our informal poll shows a low hit ratio. 

Not to worry, it is not that hard set up an account, ESPECIALLY if it is your first time. 

Go to www.ssa.gov and either log into your account or create an account and pull down your statement…

Oh, keep your credentials safe … lost mine and was a huge pain getting logged back into the site!

Have a Great “Social Security Earnings History Check Reminder” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Why you need to know your Credit Score and where to get your Annual Free Credit Report – Re-run Annual Reminder

As mentioned last week this is a re-run post that is timely and a good idea to do every year…. hat tip DK!

Knowing your credit score and your credit report has become increasingly important. With updates in technology and increases of consumer related fraud, we all need to keep an eye on our credit and our credit score for protection.

Why Do I need to Know or protect my score?credit-40673__340

While you may not owe anyone, anything i.e. have a loan with anyone … well done by the way….. A bad credit score can still affect items such as your automobile and your homeowners premiums… no kidding (see this  Forbes article.) We cannot blame them, there is data to check and it is their responsibility and ability to review it.

Bottom line a bad credit score or report may be costing you more money.

How do I get a copy of my credit report?

After you get your score, you may want to get a detailed copy of your credit report. Go to www.annualcreditreport.com, which is a free service offered for your own protection by the three agencies. There are tons of sites out there that are not free and try to seduce you into paying an unnecessary monthly fee, this site has been checked and is safe.

You may request all three services or just use one and keep the other two available at a later time. This may be handy as you only get one free report per agency per year. If you stagger the reports you can inquire at different times, keep later dates open for inquiry.

If your report is good, there is likely no reason to get more than one agency report.  If your report has deficiencies you may protest from the site as it is reported.

Taking time to review your credit and credit score is easy and may save you angst and money!

Have a great “Safe Credit” day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com

What to do When You’re in an Automobile Accident? Multiple Professional Interviews Done on the Subject … A Follow Up to Buy or Lease

So after much deliberation from our post on Buy or Lease that Next Car, you are behind the seat of your “New to You” vehicle, and you did it with knowledge, style, and confidence.

Congratulations!

What’s Next? Not being negative here….

Recall the Scout Motto “Be Prepared”

What to Do When You are in an Automobile AccidentAuto Accident

First and most importantly, if there is an injury of any seriousness immediately call 911 and get the EMT there to help.  This sounds obvious, but in every case the following interviews and information was preceded by this fact.

Former Police Chief, Current Judge Offers Suggestions

“Use your camera as a weapon; Video tape and picture everything you possible can, including VIN numbers of the cars involved, and even get an interview with someone as a witness if you had someone that would do that.”

Police from Local Campus Near Home

A Second interview of a local campus police officer went like this – Upon request they would gladly do a police report and they could also call the local police, in this case Dallas.  They would do a police report if the damage was more than $2000. otherwise, they would generally not do a police report unless asked.  He also mentioned to take pictures of everything and if possible make sure automobile and license are both valid or legit.

Call to Insurance Company for Guidance

Per a call to my automobile insurance company the following were suggested:

  1. Get a police report if possible especially if the damages are of substance
  2. If you’re in a no-fault state you’ll need to contact your insurance carrier no matter if
  3. Use Phone to take Pictures of everything – theme developing here

The idea for this article came on a chance plane ride with the former Police Chief sitting next to me as the Buy or Lease Article was being completed/edited on the plane ride….

Thanks Chief for the idea….

Let’s Be Careful Out There – Showing Age  (Hill Street Blues)

Have A Great “Prepared if in an Accident” Day!

John A. Kvale CFA, CFP

 

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents

Should you Buy or Lease that Next Car?

Long desired but fearful of repercussions of writing this article, we finally had the courage to jump in. Opinions on this subject are sometimes very strong (maybe even divisive!) on either side of the fence.

In doing research for this we came across a very handy internet site, www.usedfirst.com. While you may only be interested in buying a new car or leasing, one of the most important items is the residual value, especially in leasing. As the following neat graph shows from the site, there are dramatic differences in the decay value of cars. In our opinion, worthy of at least a few minutes research, especially if you are open to different makes and models.

 

Depreciation Comparison Studies

Those that are interested in buying a used car, the handy site will also target an expected BEST year to buy the car, as shown in the next very high end auto, with a steep depreciation schedule.

Benz Depreciation chart

The Case For Leasing

Leasing a car is by far the least expensive from a out of pocket standpoint (minimum monthly payment) way to get into a NEW Car.

In certain cases there is a great desire to drive a vehicle that is no more than two or three years old, in this case leasing is likely your best decision. Continued safety is certainly a big point for the new car ownership.

The Case For New Car

If you are one that must have a new car, but are willing to keep it for an extended period of time,  purchasing a new car is likely your best option.

A favorite place to buy a new car which we have had good experience is a membership program such as Costco or Sam’s or any other type of membership that gives you some sort of unique advantage or barrier for the general public. Always check the prices using your friendly Internet as there is tons of information out there to get the price range of the vehicle you want.

The Case for a Used Car

With a normal depreciation of between 15% and 30% per year (there are exceptions, but on the average these numbers are correct), our favorite “new car to you” purchase recommendation is buying a one or two-year-young automobile with low mileage, and keeping it until it will drive no more. Most cases this will save you a great deal of money-there are exceptions be sure, we recently ran onto a situation where a later year brand new car was within striking distance of a used car because the new models were coming out. In this case it made sense not to opt for a one-year-old car and just buy a late year new car. But on the margin, the statistics above are true.

Have a Great “Lease or Buy Car Informed” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents

Why an Inheritance is usually NOT Taxable !

Several times in the most recent quarter we were asked, and discussed in detail, if an inheritance is taxable? Because of this repeated subject we thought it appropriate to broach the subject here.

So is an inheritance taxable?inheritance

For the most part no. There are of course exceptions (certain states have silly inheritance laws, but these are slowly being repealed due to state resident desire). Under current tax law, upon death after tax investments receive a step up in basis, which means they are marked as the value of the deceased as fair value. This means that if an asset was purchased for just pennies decades ago, it’s new basis for the inheritor is the fair market value at the date of death.

As a side note for those thinking of gifting appreciated assets (to non charitable recipient) one might want to consider this step up in basis. If you gift a highly appreciated asset it will carry your basis and the recipient will then have Taxes upon sale.  All things considered equal, upon death that same asset under current tax law will transfer to the recipient with little or no taxes.

Once the assets are transferred into the beneficiaries account, the interest, dividend and capital gain clock will begin and moving forward, taxes will be due on this amount as the beneficiary becomes the owner of the asset, but the initial transfer will not be taxable, a very fair tax situation.

Receiving an IRA as Inheritance?  There are taxes, but not Immediately

Under current tax laws an IRA will pass to a spouse, child, sibling or other direct heir with no mandatory complete distribution necessary-there will be possible minimum distributions.

If a spouse is in the age range of RMD (Required Minimum Distributions) the receiving beneficiary spouse will pick up mandatory distributions based on his or her age. If a child is the recipient of an IRA the child’s age blended with the original decedent and will be computed to mandate a non-penalty but much smaller required minimum distribution even if the beneficiary is very young.

If the inheritor wanted to distribute the entire IRA, she/he has that option with no penalty, however this would bring full taxable income for the entire amount of the distribution, a decision that would need to be carefully considered before commencement.

So in summary, the immediate transfer of assets carries very little tax burden to the inheritor. Moving forward interest, dividends, future capital gains in after-tax accounts would be taxable, and in the case of an IRA the beneficiary, the RMD amount will be required and taxable, but in almost all cases these are the only taxes mandates.

Have a Great “No Inheritance Tax” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents

Email Address is the New Home Mailing Address – Why the Restrictions Associated with Changes!

In the good old days our physical home address was the most important item for delivery of mail and physical identity. Not sure if your mailbox is like many, but for the most part paper delivery is WAY down and expected that in the next few years many entities (Credit Card, Mortgage, Paychecks… any kind of monthly statement) will completely discontinue options for paper delivery …. this is a much greener approach, and will certainly help our environment – we know it may be uncomfortable for some, but likely inevitable!

Email address replaces Home Address – Our Collective Responsibilitiesicons-157872__480 email address

Given the above mentioned facts, with our email address now been our most likely contact … similar to our physical address in the good old days, new restrictions for our collective security are welcomed, needed, and expected.

It’s for our own collective safety that to change an email address on a delivery should be more secure!

In today’s more secure and safe environment for us to change an email address on your information we will now need to submit a signed document – ok … it’s a bit of a pain, and in the good old days when delivery was mostly to our physical address we could do it for you – but that was as they say … the good old days.

With 95% of our clients receiving all of their information completely electronically we feel like we are the norm, and accept the new responsibility but slightly more challenging changes to our electronic delivery.

Docusign Anyone ? More to come on this soon!

Just a heads up in advance,  when we change our email there will be additional documents for our collective security to make the change.

We will make it super easy, but there will be an extra step.

Sorry for the hassle but again certainly for our collective security!

Have a Great ” Email is New Home Address” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents