Have you ever heard of an Income Share Agreement? If you have not, you are not alone. It is an innovative way to pay for college when all other options are exhausted. This type of plan is currently only offered at a few colleges like Purdue University and the University of Utah.

The way an Income Share Agreement works is that in lieu of taking on loans, students sign a contract that pledges a certain percentage of their income once they graduate and get a job back to the University. The amount and the term varies by major. For instance, in computer science, a graduate would pay a lower monthly rate for less time based on the assumption that their income will be higher. Conversely, an English major will pay a higher percentage of their income over longer period of time based on their lower earning potential. The most popular major that uses this program at Purdue is Biology. Biology students end up paying about 16% of their annual salary back to the school for 112 months, or $550 per month.

Income Share Agreements are not for everyone. The are largely unregulated, there is no early payoff option, and the are 100% private meaning there is no government forgiveness option. However, they provide an opportunity to finance higher education that may not be available for certain students, and they won’t saddle you with debt for 20-30 years. Despite the very small number of schools currently using this program, it is a program that I could see becoming more popular in the future.

Today’s society is saturated by acronyms, contractions, and verbal shortcuts. Who doesn’t like a good “BOGO” (buy one, get a second one free) or a “Twofer” (two for the price of one)? These are often found in grocery stores and general retailers, but have you ever heard of a “Twofer” for financial planning services?

Several years ago, Adam and I started a new financial planning organization, Van Wie Financial, modeled on our collective business experience. Business School students and graduates use a lot of buzz-words these days, and one of them is “best practices.” That is exactly what we set out to do with Van Wie Financial.

Business startups can be tedious and difficult, but they present a perfect opportunity to “get it right the first time.” That was our goal in forming Van Wie Financial and the Van Wie Financial Hour radio program. Starting a service business means finding a way to provide top quality services that provide actual value. Being a boutique family business in a big industry dictates differentiating ourselves from others, many of which are large and high-profile.

Aside from the natural advantage of being an educated and qualified father-son team, we decided to operate the business as a “Twofer.” This means that all clients of the firm are handled by both of us, from the initial meeting through what we hope will be years of an ongoing business relationship. They are our clients, not “Adam’s clients” or “Steve’s clients.”

While our business structure provides an obvious value to clients, it also provides them with a viewpoint fashioned through different experiences, over a varied time frame. Generational outlooks are not always identical, so we blend our knowledge and experiences into a customized approach for any particular client’s situation.

Van Wie Financial has been very successful, which reflects the thought and planning that went into its creation. We are proud to say that about 35% of our clients are single women and female-controlled accounts. Some are widows, some divorced, some single, and others happily married while being in charge of the financial aspects of life. All are comfortable with their business relationship with Van Wie Financial.

Anyone seeking a long-term association with a financial advisor should consider getting a “Twofer.” Check out our website, “strivuswealth.com” or give us a call at (904) 685-1505 to discuss our services. After all, doesn’t everyone love a “Twofer?”

Van Wie Financial is fee-only. For a reason.

Late spring is graduation season across America, including high schools, colleges, vocational colleges, and military academies. As a direct result, a sudden rush of job seekers annually pours into the labor market. While competition every year is intense, 2019 is shaping up to be one the best years in history for graduating job applicants. There are, quite literally, more jobs available than applicants to fill them.

Many of today’s graduates are, like “Uncle Eddie” in National Lampoon’s Christmas Vacation, “holding out for a management position.” Graduates too often believe that everything they need to know is reflected in the diploma they received for completing the required curriculum. They are too often wrong.

Even the most diligent among the graduating masses may not be prepared for the “big jobs” they seek. College doesn’t prepare students for that job; it only prepares them to begin a career. Even the professions, including medicine and law, will not produce outstanding practitioners right out of college. Many, in fact, need several more years of study, only then to become someone’s understudy while their skills are honed.

Offering advice to recent graduates is likely an exercise in futility, as many have not yet learned how, when, and why to listen. Science has recently shown that the human brain is not fully developed until ages 26 to 28. Complex decision making is a skill developed over time and with experience.

How many times have we all mused, “If only I had known then what I know now?” Success in 21st Century America is dependent on what you actually know, how hard you work, and how artfully you utilize everything you learn. The college education dilemma will get more and more complicated. Rethinking post-high school education is a must for young people today. There are many ways to quality for success and a happy life.

These days we are having a great national debate, not just on younger voting, but on the value vs. cost of higher education. Educational debt now exceeds credit card debt, and consumes such a large portion of the income of recent graduates that lifestyle decisions are being postponed. This helps no one.

Not everything you need to know will be taught in school. Formal education is, in fact, a small, but important step in a successful life. Enjoy the ride, make some mistakes, but most of all find and seize an opportunity to begin your real education. Life.

Van Wie Financial is fee-only. For a reason.

Americans love their income tax refunds. Some take vacations with the proceeds, others finally pay off lingering Christmas bills, and yet others put a down payment on a new car or other high-priced toys. A few use the annual event to fund a Retirement Account, and we congratulate them for finding a worthwhile use for their own money. After all, their own money is being returned to them by the same government that took it away in the first place. The annual refund has become a staple in American lifestyle. That is unfortunate (I know, that is not what most people believe, much less what they want to hear).

Every now and again our overly-complex U.S. Tax Code is changed significantly by Congress. When this happens, new tax withholding tables are produced by the IRS. The new tables are designed to reflect differences in expected individual tax bills after the tax changes are applied. In theory, your individual refund (or tax due) will remain roughly the same as the prior year. In theory.

The Tax Cuts and Jobs Act of 2017 was passed late in 2017, and took effect almost immediately on January 1, 2018. This change caught most of us by surprise, and left insufficient time for IRS to make required tax withholding table changes. Subsequently, many people were surprised that their refunds were vastly different in early 2019. Reactions went both ways, as the tax changes affected people differently.

While there is a direct relationship between “take-home pay” and tax refunds, that distinction is lost on many Americans. Although most people received larger paychecks throughout most of 2018, many failed to make the connection between their net paychecks and the next tax refund (or bill). Many were mightily unhappy with refunds they received in 2019 for the prior tax year.

As the 2019 tax return filing season began, early tax refunds were, on average, smaller than those received in 2018. This left many people bewildered, and served as political fodder for opponents of this Administration. However, as more and more tax returns were processed, 2019 refunds rose to historical averages. The naysayers quickly quieted.

From the perspective of a financial planner, the most desirable tax refund (or tax bill) is a big, fat Zero. This would mean the taxpayer pre-paid the exact amount due, rather than making an interest-free loan to “Uncle Sam.” Theory is wonderful, but it is apparent that many people would rather receive a refund.

IRS uses Form W-4 to give taxpayers some say in how much of their gross pay is withheld from every check. The W-4 is once again being redesigned, and when that is complete, we will cover the new form and its implications. For now, rest assured that about 84% of taxpayers received actual cuts in taxes starting in 2018. Managing your refunds will take some doing. We offer Tax Planning to clients as part of our overall service.

Meanwhile, do not expect to find a simpler Form W-4 in 2019. Adapting your own withholding to the current Tax Code will require a more thorough understanding of the changes.

Van Wie Financial is fee-only. For a reason.

A simple definition of tariff is a tax levied on imports. There is considerable discussion as to who actually pays any tariff. Eventually, all taxes are passed on to the ultimate consumer. The tariff is not, however, called a tax at the point of purchase. Instead, the tariff is embedded in the price of the item being purchased, which then costs more. Once collected, tariff revenues are sent to the Customs Agency of our Federal Government.

There are tariffs built into the cost structure of a vast array of imports purchased in the USA. Generally small, most tariffs do not completely offset the cost of buying American counterpoints, but they make our goods somewhat more competitive. The remaining inequity results from bad trade “deals” negotiated over decades by US trade officials. The North American Free Trade Agreement, or NAFTA, is a great example. There are dozens of Trade Agreements, but NAFTA has proven extremely onerous to Americans.

NAFTA was implemented on January 1, 1994, after which our economy boomed. At that time, NAFTA was apparently doing no harm, and perhaps was even contributing to the success of the economy. That is exactly what we were told by politicians and the media. Below the economic surface, in America’s Rust Belt things were deteriorating fast. Factory closings and job losses were mounting, and replacement jobs were nowhere to be seen. Still, macroeconomic numbers remained strong for a long time, due to the burgeoning Internet economy. Then, in early 2000, the “Dot-Com” bubble burst.

Most political conservatives were free trade disciples, and many still are. From now on, however, we will find out just how “free” and just how “fair” our Agreements are in reality. Merely including the word “free” in a trade agreement does not make it so. Details matter, words mean things, and information is now readily available, thanks to the Internet.

The Trump Administration is currently imposing tariffs in order to eliminate tariffs. As strange as that may sound, it is working. Tariffs imposed by the Administration in 2018 on steel and aluminum imports from Canada were lifted several days ago. Three days later Canada lifted the retaliatory tariffs they had imposed on our farmers and ranchers. This is a giant step toward fairness and complete implementation of the USMCA (United States, Mexico, and Canada Trade Agreement), otherwise known as “NAFTA 2.0.

President Trump claims that tariffs are a necessary tool toward “getting to zero tariffs.” So far it has worked as advertised. If correct, this will be a turning point in worldwide trade, eventually benefiting everyone, everywhere, for a long time. What an incredible legacy that would be.

Brilliant economist Milton Friedman once said, “One of the great mistakes is to judge policies and programs by their intentions rather than their results.” Recent results suggest that tariffs can be used as a force for free and fair trade.

Van Wie Financial is fee-only. For a reason.

April 15, 2019 was a month of reckoning for the Tax Cuts and Jobs Act of 2017. That was the first time taxpayers had to pony up their unpaid taxes on income earned in the first year under the new law. We know that more than 80% of taxpayers received a cut relative to the prior year, but we had so far been unable to gauge the effect on government revenues. Simple reasoning says that when tax cuts are implemented, the government collects less money. This assumption uses “Static” budgeting, which does not account for changes in human behavior, and once again it has proven fallacious.

“Dynamic” analysis considers changes people make in response to external stimuli. Economically, when people have more money to spend, the confident consumer tends to purchase more merchandise and services. Companies prosper, profits rise, and taxes are paid on those profits. At the same time, hiring takes place, and more taxpayers are created. Concurrently, businesses are started and expanded, and the Treasury gets a share of all the new prosperity.

Proponents of the 2017 Act cited the probability that cutting taxes would actually enhance government revenues. This “Dynamic” budgeting proponents were basing their argument on history by pointing to the aftermath of tax cuts implemented by John F. Kennedy, Ronald Reagan, and George W. Bush.

Results of what actually happened during 2018 (and paid in April of 2019) were announced earlier this month, and the “Dynamic” scorers prevailed. According to Investors Business Daily, government revenue in April was $515 Billion, an increase year-over-year of 13%, and a new April record. Further, for the first 7 months of this fiscal year, revenues are up 11.5%. Payroll taxes are also up, increasing by 2.8%.

Now the CBO (Congressional Budget Office) is increasing its estimates for economic growth and revenue, having added an additional $1 Trillion to their earlier estimates. Congress forces the CBO to use Static Budgeting. It doesn’t take a rocket scientist to understand that a change to Dynamic Budgeting would produce more reliable results. Congress apparently has very few accomplished economists, and even fewer rocket scientists.

One additional complaint about cutting taxes was also dispelled in the recent CBO report. Claims that tax cuts went mostly to “the rich” didn’t pan out, as taxation became even more “progressive” after the 2017 Act. Right now, fewer people are living paycheck-to-paycheck than ever before, and the “Quality of Life Index” is at a 14-year high.

Tax cuts work every time they are tried. How much proof do we need to provide for Congress to make the lower rates permanent? Or, better yet, to further reduce our tax burden.

Van Wie Financial is fee-only. For a reason.

“Crisis” is one the most abused words in the English language today, being haphazardly applied to whatever political disagreement of the day, the national debt, our failing “public” educational system, border security, the increasing national drug problem, trade wars, and on and on, ad nauseum. Perhaps the biggest tragedy in this scenario is that truly important issues become indistinguishable from lesser problems. When everything is called a crisis, nothing gets treated appropriately as a crisis.

We shouldn’t use the term “crisis” lightly – it should be extremely important on a national scale. The size and rate of increase of personally-held educational debt qualifies (in our opinion) as a national crisis. We know how we got there; can we find a way out? Let’s “set the table,” as the popular saying goes.

Following the victory experienced by the USA winning WWII, remaining service members came home in large numbers. Concurrently, at every level of production, America was returned to a consumer orientation. Multitudes of marriages occurred, tens of thousands of homes were built, and vast numbers of children were born. The “American Dream” was in full bloom. The “Greatest Generation” (a term coined by Tom Brokaw as far as we know) desired to provide their offspring with a better quality of life than they themselves had experienced.

Our national standard of living rose dramatically in the years following WWII. It was widely assumed that the Baby Boomer Generation would go to college, simply because that was acknowledged to be the path to success. The American Dream, parents believed, begins at the hallowed halls of higher education.

At the time, post-secondary education was inexpensive, effective, and rare. Demand was growing, and prices inevitably rose. New college entrants began to borrow money, and lenders were more than happy to oblige. When the borrowers graduated, they simply paid off the debts the old-fashioned way; monthly payments until the balance was zero.

However, the rapidly-escalating cost structure of institutions required ever-increasing borrowing. Students were delighted to have their parents absorb part of the debt. Today, parents account for 14% of new college loan originations. Many parents lack resources to repay their loans without sacrificing hard-earned lifestyles.

We have said that student loan debt has become a crisis. According to the website Studentloanhero.com, aggregated college debt in the U.S. is now $1.56 Trillion, spread among 45 million Americans. That figure is approximately 1.5 times the nation’s credit card indebtedness.

During the “Great Recession,” wages and salaries stagnated, and only recently have they begun to rise. 11.5% of student borrowers are 90 days or more behind in their payments. Far too many parents and grandparents on fixed incomes are experiencing declining quality of life. Graduates are feeling pressure to delay big decisions regarding starting families, buying homes and cars, and other life-changing events. This creates a drag on the nation’s economy.

Unlike many forms of debt, student loan debt is generally not forgiven in a bankruptcy, despite contributing to many of those same bankruptcies. There are now some student loan forgiveness programs, but they are complicated and fraught with potential pitfalls.

There are answers to the complexities of educational funding. More than ever, college planning has become a key element of Comprehensive Personal Financial Planning. It is never too soon to begin the process of planning for educational expenses. Finding a qualified financial advisor begins with a search for a fiduciary Certified Financial Plannerâ.

Van Wie Financial is fee-only and always a fiduciary. For a reason.

Living in good economic times (as we are) should be fun and prosperous, so we should be happy. Most of Van Wie Financial’s clients, as well as most people we talk to on our radio show, fall into that exact mold. Yet we are deluged in the media with morose descriptions of current sub-standard life in America. Warnings of an all-but-imminent recessionary downturn in the economy are everywhere.

Ubiquitous “gloom and doom” predictions are designed to get our attention. One of the oldest sayings in media is that “if it bleeds, it leads.” Good news is boring, optimism is uninteresting, and satisfaction is unacceptable to political candidates aspiring to replace incumbents at all levels of government.

Coupling the media frenzy with a general misunderstanding of economics produces misguided and unfounded negative forecasts. Anyone with a reasonable education in modern economics knows that the American economy has responded to recent tax cuts and regulatory repeals in a positive manner.

Disagreeing with current Administration policies does not make current policies incorrect or ineffective. This plain fact disappoints many people who despise the current Administration. It does not, however, change the laws of economics. Wishing on a star is not about to change anything in a massive and fast-moving economic system. Capitalism is alive and well in the United States.

Investors would be wise to ignore the ramblings of partisan naysayers. Individually, developing long-term goals and plans to reach those goals is the same great idea it has always been. Many people are uncomfortable planning and investing by themselves, and that is why Van Wie Financial is here to help.

Recent studies have shown that investors under perform their own assets. This more-or-less strange sounding result is easily explainable. Fear and greed cause many investors to ignore the most simplistic rule of success; buy low and sell high. Doing the reverse is not only detrimental to success, it is unfortunately commonplace.

We have said many times that the hardest job of a competent financial advisor is to avoid “doing something” at those frequent times when we are convinced that any change is most likely to produce bad results. We appear to be in an era where patience is a virtue.

One day that pesky predicted recession will hit. We will react accordingly, as should you. That day is not today.

Van Wie Financial is fee-only. For a reason.

On a recent Van Wie Financial Hour live radio program, we had a phone call from a listener with an excellent question. The caller was in his 80s and owned a profitable Variable Annuity (VA) that he had moved into cash when the market got rough late last year. His essential question was whether to get back into the market, and if so, when and how to do that.

We generally start our discussion by asking questions. From our line of questioning, we deduced that the caller had no foreseeable use for the money in the annuity. He has children, and they are the named beneficiaries on the account. From there, we determined that his investment priorities were not actually those of a typical person in his or her 80s. In fact, the objective of the account was to provide for his children.

Had the caller’s priorities been determined to be those of a typical 80-something, we would have advised an investment plan that was oriented toward income and preservation of capital. However, knowing that this money was most likely going to help fund the later years of his children, we suggested a somewhat more aggressive investment plan.

Without the luxury of a long and detailed discussion, we suggested dividing the money in the VA into a 1/3, 1/3, 1/3 allocation among Target Retirement Funds with varying target dates. This plan is simple, well-diversified, and carries enough market risk that the possibility of growth is solid.

When advising older investors, it is essential to discover the true objectives of their investments. Things are not always exactly what they seem on the surface. The purpose of having a thorough Discovery (an element of the overall Personal Financial Planning process) is to individualize financial advice. This is not possible on a short phone call, so our goal on the radio is to tell people what can be done, rather than what to do. There is only so much that can be done on a limited telephone call.

If your situation is in any way non-standard (and whose isn’t?), it may benefit you to have a thorough and confidential discussion in our office. We offer a free conversational meeting in our office just for the asking. We call that process “Suitability,” the purpose of which is to determine if we all believe there may be value in establishing an ongoing relationship.

Van Wie Financial is fee-only. For a reason.

This past weekend, our radio show fell on 4/20, and for those of you not familiar with the term, that number is commonly used by consumers of marijuana to signify using the product. The roots of the term are traced back to a San Rafael, California high school in the 1970’s. Over the years, April 20th has morphed into a counter-culture holiday that has grown in size and scope to include festivals across the United States, and the world. It also has an activist tilt, as the day is used to push for marijuana legalization, although one has to assume that this takes place earlier in the day, as motivation might be lacking in the afternoon.

The marijuana industry in America is still in its infancy, as technically it is still illegal at the Federal level. Obviously, the push is towards legalization on a state by state basis, but the industry is still hampered by the legal status at the federal level. The industry would benefit if things were reversed, and the Feds made it legal, and then it was illegal on a state to state basis. There are currently 10 states where marijuana is legal for recreational use. There are an additional 23 states, including Florida, where marijuana is legal for medicinal use, but not recreational. There are only 15 states left where marijuana is still fully illegal, and the rest have seen it at least decriminalized.

Marijuana has two main extracts, which are THC and CBD. THC is the extract that causes the feeling of getting “high”. CBD does not cause this feeling, but still has the health benefits, and therefore has grown in popularity in recent months so much that Walgreens plans on selling it in certain markets. CBD is used for a large variety of ailments, from depression to pain relief to lowering anxiety and blood pressure.

Medical Marijuana is the next step up from CBD, and it has a variety of uses as well. The most common is pain relief caused by different conditions including headaches, cancer, or glaucoma. Medical Marijuana is sold in stores called dispensaries, and is only available with a marijuana card prescribed by a doctor. Other uses for medical marijuana include muscle spasms, nausea, and weight loss caused by disease. Medical marijuana can be smoked, vaporized, eaten , or taken as a liquid extract.

Recreational marijuana is primarily used for pleasure, inducing the “high” feeling that is frequently referenced by pop culture. It is also used for medical issues, although a marijuana card is not needed to purchase it. Retail stores in states that have legalized marijuana are abundant, and in many cases are serious businesses that aim to maximize the overall customer experience. These aren’t the shady back room deals that you may or may not have experienced in your youth.

The point of all this is that Marijuana is now a serious industry in the US, with some major money backing it and some serious retail operations and serious consumers. The industry is in its infancy, but the competition level is already quite high (no pun intended). However, buying publicly traded companies that are in the industry is quite risky, and there is a better way to participate. Two ETF’s are now available, the first being MJ, which is offered by Tierra Funds and has grown to more than a billion in assets. The other, which was just released on 4/19, trades under the ticker YOLO, and is offered by Advisorshares. The largest holding in MJ is Aurora Cannabis, followed by GW Pharmaceuticals and Canopy Growth. Other names you may have heard of include Cronos and Tilray, both of which have been in the news lately. As with most ETF’s this is a great, cheap way to diversify in the industry and avoid single-stock risk.