<p>Wi$e Up Teleconference Call Budget to Save August 31, 2006 Speaker 3 – Michael Schulman</p><p>Jane Walstedt: And now, let me turn the program over to Sarah Miller, who is also part of the Women’s Bureau team that plans these teleconference calls, to introduce our third speaker.</p><p>Sarah--</p><p>Sarah Miller: Thank you, Jane.</p><p>Michael David Schulman is a Certified Public Accountant and Personal Financial Specialist, a designation awarded by the American Institute of Certified Public Accountants.</p><p>He is the third-generation owner of Schulman CPA, a full-service tax, accounting, and auditing firm founded in 1952.</p><p>In 1999, Michael formed Schulman CPA/PFS, P.C. to provide personal financial planning services.</p><p>In 2002, he formed Excelsior Senior Advisors LLC to provide PrimePlus/ElderCare services to those who are (or who are about to become) older adults.</p><p>Michael is a frequent speaker on tax and financial planning topics, has written numerous articles for newspapers and professional journals, and has appeared on television and radio.</p><p>Michael is a member of the American Institute of CPAs, the New York State Society of CPAs, and the California State Society of CPAs. He is active on financial planning and elder care committees. He also serves as a lecturer for the Foundation for Accounting Education, the education arm of the New York State Society of CPAs.</p><p>In addition to his professional certifications, Michael holds academic degrees from the Massachusetts Institute of Technology, the University of California at Berkeley, and Fordham University. He holds NASD Series 6, 63, and 65 licenses, as well as life and health insurance licenses.</p><p>Michael was a speaker on our March 31, 2006, Wi$e Up teleconference call, “Understanding Taxes: Make The Most of Your Return.” And we’re pleased to welcome back Michael Schulman.</p><p>Michael--</p><p>Michael David Schulman: Hi, everybody, and thank you very much. And I join my other speakers in thanking you for being part of this.</p><p>Okay. First of all, show of hands. How many of you actually budget? Not many, that’s what I thought.</p><p>Okay. So you’re tuned in to the right show.</p><p>Budgeting can be approached from many different perspectives. Certainly, Ric is right in terms of accumulating wealth. There’s no better way to beat a budget than to accumulate wealth. But that’s easier said than done.</p><p>For most people, their jobs are fixed, their salaries are fixed, their benefits are fixed, and the incoming end of their budget is fixed. But not so fixed is the outgoing. The mortgage, the car payments, those are pretty much fixed. But after that, there’s a lot of fat in there. But how can you find some more to add to your budget?</p><p>I have a very easy way to find each of you free money to add to your budget. Write yourself a letter and say, “Dear Self, my mortgage just went up $50 a month or my rent just went up $50 a month.” Get the letter, grumble, and realize that you’re going to have to pay it to live where you are. And pay it, and put the $50 aside. It’s your money.</p><p>Very similar to what Ric said in terms of paying yourself first, but people don’t pay themselves first, but they pay their mortgage. So when you sit down to pay that mortgage, pay yourself, give yourself some money. There are all kinds of ways in which you look up and down and trim and find a couple of bucks.</p><p>As a tax manager, as a CPA, I want to provide some other ways of finding a little bit of money. Look at your paycheck when you get it and decided if you have the right number of personal exemptions.</p><p>For many of you, the biggest paycheck you get anytime during the year is when you get that big tax refund on April 15. And I think that’s a disaster because you’re going to spend it. It’s going to come in and it’s going to wind up in a casino, in a movie theater, in a vacation. It’s going to go somewhere, except in a properly managed investment account.</p><p>I know this for a fact because I see it with my clients. And you know it for a fact because you’re just sitting there nodding your heads up and down because you just got that check a couple of weeks ago and it’s gone already.</p><p>A better strategy is to adjust your withholding so you have more money coming in to you on a weekly basis. Take that money, and as Ric said, now pay yourself first. Take some money [and] put the money aside. Don’t look to the April 15th interest free loan that you’re lending the government. Take that money. Get it now.</p><p>Something else that people don’t think about is really longer-term budgeting. If you're younger adults and you have young kids, you realize that somewhere down the road, college is a-knocking. I have one daughter just out, another son just in, and I know the cost of college, and it’s not cheap.</p><p>Start putting that in your budget now. Get into a 529 plan [a plan to save for your children’s college education; read more about 529 plans at www.savingforcollege.com]. Contact some local schools about prepaid tuition plans. You can pay for that now. You can put that in your budget and get a fixed college price [for] down the road. Don’t be hesitant -- spend now for future expenses.</p><p>Another perfect example--depending on your age--and this may be towards the older of you listening on the phone as you get to be about 45 or 50--is long-term care insurance. Half of you will wind up in a nursing home way down the road.</p><p>You can fix that cost by buying long-term care insurance now. It’s not that expensive; it fits in your budget. You insure your house. You insure your car. Insure your health. And by insuring your health now, by paying certain insurance premiums now, you can fix the cost. It’s a perfect budgeting concept.</p><p>It’s a little unusual. We don’t think of long-term care and other insurances as budget. But long-term care insurance, disability insurance, and the like, these are income replacements, these are expense replacements, and what they do nicely is they lock in the cost now, at a fixed cost now. Again, it might not apply to everybody who’s listening, but if you're my age-- and I’m 55, creeping higher--it certainly is extremely relevant. You’d like to find ways in which you can fix expenses going down the road.</p><p>In terms of income, if you have money that you can invest, as Ric said before, invest that money, save it. And it’s… because at some point what you’d like to be able to do is lock in a fixed income stream possibly, so you know what your income is coming in.</p><p>These are more longer-term strategies than shorter-term. Pay yourself first, I agree with the other two speakers, is really probably the most important, and the way I suggest you do it is you sit down, you write yourself a check [at] the same time you pay your mortgage.</p><p>The price of gas has gone up, and I’m sure all of you are managing to pay for your gas. It’s a struggle, but you found the money somewhere in your budget.</p><p>And the reason you found the money is you're simply buying less of other things--maybe not consciously--and you can do that same thing now. And that’s a strategy that I’ve used with my clients, and it works. And it takes a lot of the uncertainty out of where the money is going to go.</p><p>So my little piece comes from the tax end in terms of withholding taxes, in terms of possibly buying alternative things with your money to fix the expenses down the road. I have never seen a budget work for more than two years.</p><p>But every April 15th when you sit down, look at your tax return -- and this will be my last piece of information -- sit down and look at your tax return, go over the income and expenses on there, look at them for a year and decide what you can do to change that.</p><p>You can look at your dividends and interest at the end of your tax year and say, “Jeez, it’s a lot less than last year, but interest rates have gone up. What am I doing wrong? I can find more income here.”</p><p>Look at your expenses. Get down. If you do it in pencil and paper, you can knock it off in a couple of hours. And you just have to do it once a year while you’re preparing your taxes. You can get a really good handle on where your spending is going.</p><p>And I agree with the other speakers as well, be so, so careful with credit cards. There are credit cards out there now that you will never ever ever pay off. I got an offer for a card that has a minimum payment less than the monthly interest increasing in the card. That card will never be paid off. So you have to be very careful. You don’t want to pay 36% a year for food. That’s ridiculous.</p><p>We’re not very good at living within our means, and it’s very difficult to tell people that’s what they have to do. But when you’re talking about budgeting, that’s exactly what you’re talking about doing.</p><p>You’re talking about living within your means from whatever income source you have. There’s no crime in getting a second a job. There’s no crime in looking for a different job.</p><p>But for many of us who are trained in what we’re trained in, our job is our job and our income is fixed. Before that money gets to you, get your medical premium paid, fully fund that 401(k), put some money aside for the kids’ colleges, pay yourself first, and you’ll see, as the previous speakers said, it will be so much easier to take what’s left and manage [rather] than live in suspense the entire month as these costs come through and you have to search for money that’s not there.</p><p>Good luck to all of you. Thanks.</p><p>Jane Walstedt: Thank you very much, Michael.</p><p>Michael David Schulman: You’re welcome.</p><p>Jane Walstedt: Good points about the taxes and the long-term care. I know that certainly that the sooner you start to pay in for long-term care, the less you’re going to have to pay. The older you are, the higher the premium.</p>