New content added to Mackey Advisors Website

Click here to read an interesting article by Jeff Plungis on credit card companies charging inactivity fees.

Click here to view the PDF of Forefield's 2010 Key Numbers for tax planning. These numbers will help you with:

• Individual tax planning
• Marginal tax planning
• Investment planning
• Education planning
• Retirement planning
• Business planning
• Estate planning
• Protection planning

If you have any questions or would like more information call 859.331.7755

To Roth or not to Roth?

Beginning in 2010 the AGI limit for Roth conversions is lifted. This raises new questions about when a Roth IRA conversion makes sense. It isn't an easy question to analyze. One thing for certain, when you make a conversion you are choosing to pay tax today to avoid tax tomorrow. Voluntary early tax payments are generally not on the top of any one's "fun things to do today" list.

There are some situations where conversions make sense. The key is to analyze your situation very specifically and avoid generalizations.

This is one of the best articles I have seen on the subject from David Loeper of WealthCare Capital Management.

May prosperity be yours,
Mackey McNeill, CPA, PFS, IAR
www.CultivatingProsperity.com

Once again, Mackey has done it again. Enjoy another great article from our November newsletter.

Caution – it’s the holidays!

When I was young, our Christmas celebration consisted of fruit, candy, a practical present or two (like PJs and underwear), and one treasure you really could not live without, like a Barbie doll or a BB gun!

In 1966, when I was eleven, we spent Christmas with my mother’s brother and his family of five children. He was a very successful physician and much more well to do than my family. Not wanting to be outdone, my parents rose to the occasion by increasing their gift-giving. I received a black and white portable television - my own personal TV! At the time, the cost of such an item was about $100, much more than my parents’ normal Christmas gift budget. This was my first taste, and one that has stuck with me all these years, of “keeping up with the Jones.”

The holidays, more than any other time, challenge us with balancing the desire to please and measure up as providers with the sanity of fiscal prudence. We know that the kids will be comparing their presents with their friends. Did they get the latest and greatest cool toy or electronic gadget? Do they have the right clothes to fit in?

Human beings change in one of two ways: either very slowly or in crisis. This past year has created economic crisis for many people. As a country, we needed a change in our money habits. We needed to cure our addiction to debt and get back to saving. And that is exactly what is happening. The economic crisis has reminded us that we need to prepare for the lean times when we are fat and happy, knowing that it is not if something will interrupt our lives but when.

The holidays offer a great opportunity to teach the value of moderation to our children and to help them understand what it means to live on a budget and to make good financial decisions, today and for your and their tomorrow.

Make this upcoming holiday season the best yet. Look over your cash flow and decide on a spending budget. Allocate that budget to all of those for whom you wish to bless with a gift. Shop wisely and stay within your budget. And enjoy the feeling of freedom and comfort that comes from knowing there are no credit card bills coming to haunt you in 2010! Now that is a reason to celebrate the new year!

Personally, my favorite holiday gift is one I ask for every year. I ask my kids to write down and give me one of two things: a short story of their own creation, or the top ten best things that happened to them over the past year. They read the story or list out loud and talk about it on Christmas day. In turn, I bake them a tin of their favorite cookies. While we still have “store bought” presents floating around our house, the cookie and story exchange is by far my most treasured exchange.

Choosing Less

We have been raised in a culture whose message is to choose more. More clothes, more entertainment, bigger homes, more work, more money. There is certainly a great deal to be said about what has been accomplished in the world when we seek more.

What we often miss is the blessing of less. What about less work, less money, fewer possessions and a simpler life? This path isn't revered by our society, yet it is a path that offers great riches.

I have been blessed to work with individuals on both the "more" and "less" path. Both paths can give rise to fulfilling and prosperous lives. Yet my experience is that it is rare to find someone who can walks "more" path in peacefulness and contentment. More likely I find my clients on the "less" path are peaceful and content.

Any choice to live outside the norms set by society, requires thoughtful introspection. My theory is that this required introspection for those on the "less" path leads to the experience of peace and contentment.

Where are you on the continuum of "more" or "less?" Of "peaceful with my lot in life" and "anxious?" Where do you want to be? What new choices are required for you to shift?

Growing through the Recession

At Mackey Advisors we have two main lines of business. Our personal financial planning division and our business services arena offering financial advisory services to small businesses in the area of tax, accounting, Controllership and CFO consulting.

As President of the company, the bottom line is my responsibility, which has been no walk in the park this year. I have updated our revenue forecast and reprojected our budget more times this year than in all the 27 years of my business career combined. As business clients cut back their budgets, some cut their service level with Mackey Advisors. We took that time and repurposed our efforts to marketing.

Having more time to tell our story has paid off. We are now experiencing a higher level of growth than at any time in our 27 year history. Recession? Maybe it is just another word for opportunity.

Mackey McNeill, CPA/PFS
President and CEO
Mackey Advisors
www.CultivatingProsperity.com

Social Security wage base remains at $106,800 for 2010

The Social Security Administration has announced that the wage base for computing the Social Security tax (OASDI) in 2010 remains unchanged at $106,800.

With consumer prices down over the past year, monthly Social Security and Supplemental Security Income benefits for more than 57 million Americans will not automatically increase in 2010. This will be the first year without an automatic Cost-of-Living Adjustment (COLA) since they went into effect in '75. Since there is no COLA, the statute prohibits an increase in the maximum amount of earnings subject to the Social Security tax as well as the retirement earnings test exempt amounts.

The FICA tax rate for employees and employers is 7.65% each—6.2% for Social Security and 1.45% for Medicare tax. For self-employed workers, the FICA tax is 15.3%—12.4% for Social Security and 2.9% for Medicare. There is a maximum amount of compensation subject to the Social Security tax, but no maximum for Medicare.

On a salary of $106,800 (or more), an employee and his employer each will pay $6,621.60 in Social Security tax in 2010, the same as in 2009.

A self-employed person with at least $106,800 in net self-employment earnings will pay $13,243.20 for the Social Security part of the self-employment tax in 2010, the same as in 2009.

The FICA tax rates have remained unchanged since '90.

Intergenerational Wisdom

I remember driving through town with my Mother, passing the Dairy Queen. “Can we stop for ice cream?” I asked. “We have ice cream at home,” was my Mother’s response. My Mother was raised in the midst of the Great Depression, and she knew how to stretch a dollar. Going out to eat anything, even something as simple as an ice cream, was a treat reserved for special occasions.

Most of my media requests are requests for tips for ways to reduce spending. When you get into the specifics, there are so many ways you can cut your spending. However, to be effective for the long term, it begins with changing our perspective and thinking.

We have to learn to think like our grandparents or great grandparents. We have to tap the wisdom of our great aunts and uncles.

The challenge really isn’t finding a new way to save money. The challenge is to find a new way of thinking about spending money in the first place.

Try this on as an opportunity. Make a date with an elder in your family. Sit with them and listen. Ask about their lifestyle, how they spent and saved money. Ask their opinion about debt and how they managed without it. Not only will you garner invaluable wisdom, you’ll warm the heart of someone that really matters in your life. There is nothing like a good listening to, to feel important. So go out there are make someone’s day. And in the process, change your prosperity, forever.

May prosperity be yours,
Mackey McNeill, CPA/PFS IAR

President and CEO, Mackey Advisors

www.CultivatingProsperity.com