After a short period of saving more of their disposable income at the depths of the recent recession, Americans are returning to recent historical patterns of spending more and saving less.

Usually this trend indicates “happy days are here again” as the decline in savings means consumers’ confidence is rising. That is not the case today. Consumer confidence is just half of what it was at the peak of the “good old days” of 2007. That year our national savings rate was 2.1%, just above its post-WWII low in 2005 of 1.5%.

As millions of jobs disappeared and consumers hunkered down during the 2008-2009 recession, our savings rate almost tripled. In 2008 it was 6.2%. This thriftiness didn’t last long; by the fall of 2011 our savings rate was back to a paltry 3.6%.

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How’s this for a convincing excuse not to save for retirement? “I can’t help it. The human brain is programmed for financial failure.”

An estimated 80 percent of our decisions are made emotionally. Our brain is divided into three sections. The upper brain, or cerebral cortex, is where we reason. The middle brain, or limbic system, is where we react to emotional impulse. The lower brain, or basal ganglia, is what regulates the operations of the body.

The limbic system, where our emotions reside, functions to move us toward pleasure or away from danger. Feelings like fear or anger can cause us to move away from a perceived danger, while feelings of joy or pleasure can impel us toward a perceived benefit or reward.

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Would you be willing to foreclose on your own child? It’s one of the important questions to answer before you even think about loaning money to your kids to buy a house.

According to a February 16 article by Craig Guillot at nasdaq.com, “As more young people struggle to qualify for mortgages despite record-low mortgage rates and affordable home prices, some parents have decided to step in and become their child’s mortgage lender.”

If done carefully, such a loan can be a source of income for the parents as well as a leg up for the kids. Guillot offers some excellent advice from Rick and several other sources on ways to prevent lending to your kids from becoming a financial and family disaster.

Read “Is lending to your child worth the risk?” here.

If you’re one of the early birds who already have their tax returns filed, chances are you’re expecting a refund. Routinely receiving a large refund isn’t a great idea, since you’re just getting back the interest-free loan you made to the government. If you’re expecting one this year, though, what should you do with it?

Here’s Rick’s advice, as cited by Kristen Colella in a February 14 article at MainStreet.com: “I would recommend people strongly consider applying their tax refunds to any credit card debt, as most credit card interest is in excess of 10%, making reducing your debt a wise investment.”

To find out how many people intend to follow that advice, you can read “What To Do With Your Tax Refund” here.

Many couples agree one of the most problematic areas of their coupleship is the topic of money.  I can’t tell you the number of couples that have told me, “Our relationship is great in every department, except money.  We just can’t talk too long about money before getting into an argument.”

If this statement is true for you and your partner, we have a unique opportunity for you.  Dave Jetson and I have partnered together to offer a most unique experience for couples to deal with money issues. The”Love, Couples and Money” workshop will help couples better understand their relationship as individuals and as a couple around money.

This workshop starts at 5:00 pm on Thursday, April 12th and ends at noon on Sunday, April 15th.  The cost is a very reasonable $3,950 per couple that includes meals and lodging!  The workshop will be held in the beautiful Black Hills of South Dakota at the new Terra Sancta Retreat Center in Rapid City.

Make an investment in your coupleship that will pay big dividends for years to come.  Join us for an experience that may change for the better how your coupleship works around money.

Last week’s column offered four ways to prepare for inevitable financial calamities by building a financial shield against disaster. This week adds four more strategies that are as much about people as about money.

1. Build a good support team before you need one. In the middle of a financial trauma isn’t a good time to find professionals you can trust. This is best done when you are not under pressure and can take the time you need to research, interview, and analyze options. Professionals you need to vet and have on call could include an attorney, accountant, doctor, therapist, financial planner, insurance broker, bookkeeper, and banker.

2. Keep your career skills up to date. Continue Reading »

I am so sad to learn of Jeff Zaslow’s death today as a result of a car accident. Jeff was a noted author and columnist for the Wall Street Journal.

Zaslow was instrumental in promoting the concept of financial therapy. He attended the first workshop we did at Onsite in 2003. His subsequent column in “Moving On” resulted in launching the concept of financial therapy nationally.

He did a follow-up column on financial infidelity with us several years later that was also the first time the concept appeared nationally.

I remember Jeff best for his rapid fire style of interviewing. I told my wife that being interviewed by Jeff was similar to being caught in a blender. His style of questioning was intense and relentless.

We’ve lost a true talent and an inquiring mind who always seemed to find himself on the cutting edge of the topic at hand.

My thoughts and prayers are with his family tonight.

The Senate is considering eliminating the ”stretch IRA”,  a popular estate planning strategy that allows a beneficiary of a non-spouse IRA to  stretch out required minimum distributions (RMD) over their life expectancy. The provision requires inherited IRAs to be distributed within 5 years of the original owner’s death.

The provision is included in the “Highway Investment, Job Creation and Economic Growth Act of 2012″ currently before the Senate Finance Committee.

According to Michael Kitces, CFP, author of the Nerd’s Eye View, “The most direct implication of the new rules is that the opportunity to maximally stretch an IRA for the next generation may be significantly curtailed.” Continue Reading »

It’s amazing that the words Charles Dickens penned in the 1840′s are still so relevant today.  One of his most popular books, “A Christmas Carol” is my most loved book and has certainly impacted my life. It was the inspiration of the book I co-authored with the Klontzes, “The Financial Wisdom of Ebenezer Scrooge.”  The wisdom contained in his fable as it pertains to making emotionally and financially sound decisions is remarkable.

For more on Charles Dicken’s 200th, click here.

Preparing for an unanticipated and unforeseen financial disaster may seem like an oxymoron. How can you possibly prepare for something that is unknown?

You can, as long as you remember that the only thing really “unknown” about most potential financial calamities is their timing. We know perfectly well we’re likely to have emergencies; we just don’t know exactly what or when. They may take the form of expensive car repairs, trips to the emergency room, the loss of a job, or a significant investment loss. The question really isn’t “if;” it’s “when.”

Here are four tips on preparing for the inevitability of a financial calamity.

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