Cash Flow Planning

Finding Your Style Can Save You Money

Finding Your Style Can Save You Money

This article was originally published July 23, 2015.

There was a time when men’s grooming and fashion were as complicated as women’s. But that time is long gone.

In fact, the average American spends $161 per month on clothes, with women spending 76% more than men annually, according to CreditDonkey. And a recent study by OnePoll for Groupon found that women spend an additional $313 each month on the rest of their appearance, on average. This amount of spending can do serious damage to your budget and keep you from meeting your financial goals.

Fortunately, it’s possible to start spending more prudently. First, review your spending habits and determine how much of your disposable income you can truly afford to spend on your appearance each month. Awareness is the first step towards developing better habits. Finding your style can also help.

Why You Have a Closet Full of Clothes but Nothing to Wear

Many women buy clothing that they seldom wear. It’s usually because the article of clothing did not suit them or fit their style. Maybe a well-meaning friend or salesperson insisted, “it looks fabulous on you!” Then you realize later it most decidedly does not.

It’s easy for a wardrobe to mushroom with such ill-advised purchases but still feel like you have nothing to wear. Finding your style can help you spend less, save more, and curate a wardrobe that feels more like you.

4 Tips for Finding Your Style

Style Tip #1: Identify the Pieces You Wear Most Often

Go through your closet and pull out the pieces that you wear over and over again. These will offer strong clues about how you like to look.  As you’re pulling out the items you love, set aside anything you haven’t worn in a year.

Style Tip #2: Look for Inspiration

Browse magazines and tear out pictures of outfits that appeal to you. Alternatively, you can pin photos on a Pinterest Board.

Style Tip #3: Revisit Your Routine

Your routine activities can provide clues about what to stop buying. For example, if you’re not going to many cocktail parties, you probably don’t need to own ten cocktail dresses! In other words, make sure your wardrobe fits your current lifestyle.

Style Tip #4: Hire a Professional Stylist

If you find it impossible to audit your closet yourself, hire an expert to help you. An experienced stylist or organizer can help take the emotion out of the equation and squelch your attempts to hold onto clothing that doesn’t work for you or your lifestyle.

You can also employ a stylist to help you shop. A good stylist will help you fine-tune your personal style, go shopping with you seasonally, and even find great items on sale for you.

Even though hiring help will cost you money, it will be well worth it in the end when you have a new, well-edited wardrobe. And once you have a better handle on your personal style, you’re likely to save time, energy, and money in the future.

Finding Your Style Has Multiple Benefits

Besides the cost savings, finding your personal style can have psychological and emotional benefits. When your appearance accurately reflects who you are inside, you may find you feel more confident and in control of your life.

If you’re looking for more tips on how to curb your shopping habit, check out: 25 Tips to Get Your Clothes Shopping Habit Under Control.

And for a fresh, inspiring approach to budgeting, download The Happiness Spreadsheet to create a spending plan that’s aligned with your values.

Finally, if Curtis Financial Planning can help you take control of your finances and secure your future, please schedule a call.

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25 Tips to Get Your Clothes Shopping Habit Under Control

25 Tips to Get Your Shopping Habit Under Control

We originally published this article on June 16, 2018.

If you’re like a lot of Americans, your spending habits may have changed during the Covid-19 pandemic. For many of us, staying at home meant spending less and saving more. And with nowhere to go, buying new clothes didn’t feel like a priority.

Now that the economy is reopening, you may feel the urge to make up for lost time—and potentially reignite your shopping habit. Before returning to old habits that are interfering with your financial goals, getting you into trouble with a significant other, causing you to rack up credit card debt, or simply making you feel bad about yourself, consider these strategies to get your clothes shopping habit under control.

First, Face Reality

Compare last year’s credit card and bank statements to 2019 and figure out how much money went to clothing and accessories each year. If your clothes budget decreased significantly over the last 12-15 months, you may not be able to reasonably maintain that level of spending post-pandemic. Instead, set a new goal to cut your 2019 clothes and accessories budget by 20%. (Trying to cut spending too much at first is a recipe for failure, so it’s best to do it in stages.)

Now that you have a new budget, you’ll need some strategies to stick to it.

Consider these tips to get your clothes shopping habit under control:

Notice that many of these tips are as much about the psychology of shopping as they are about the acquiring of new clothing, shoes, and accessories.

  1. Try very hard to intentionally schedule shopping trips instead of spontaneously dropping into your favorite stores just to “take a look at what is new.”
  2. Don’t shop when you are lonely, tired, frustrated, anxious or bored.
  3. Avoid shopping immediately after a setback or a major victory.
  4. When the adrenalin kicks in and you catch yourself in a shopping frenzy, leave the store before buying anything. Focus on centering yourself first.
  5. Don’t let friends, shop-owners or salespeople convince you that something looks great on you when you don’t think it does, or it’s just not your style.
  6. Decide what you need in your wardrobe and make a list. Take the list with you when you go shopping.
  7. Before you buy anything on sale, ask yourself whether you would buy it at full price.
  8. Think quality, not quantity. Not only will the item of clothing last longer, but you are likely to love it longer too.
  9. Stop rationalizing. You don’t need a whole new wardrobe because you got a new job or because you now work at home.
  10. Buy things you’re going to wear now, not for a far-off occasion or event that may never happen.
  11. Buy clothing for the way you live now, not for the way you wish you were living. (For example, buying a fancy dress when you never go to fancy parties.)
  12. Avoid buying one-off pieces of clothing that don’t go with anything in your wardrobe.
  13. Don’t buy clothing in the wrong size thinking you’ll lose weight or have it “taken in.” (Although, having a good tailor is worth its weight in gold.)
  14. Try shopping with cash, not credit cards. It’s easier to set limits.
  15. Limit the number of trendy items you buy to just a small percentage of your wardrobe.
  16. Think #10: everything you buy should be as close to a “10” as possible.
  17. Realize that a new dress, skirt, blouse, or jacket are not going to make you more beautiful or change your life.
  18. To help make better buying decisions, analyze your wardrobe to understand what your favorite go-to pieces are. What are the common themes?
  19. Home in on what colors and styles look best on you to limit choices.
  20. Instead of going shopping with girlfriends, do something else, like going for a hike, to a museum, or out to lunch.
  21. One-in, one-out rule. (If your wardrobe is very large, you may want to release two or two pieces for each that you buy.)
  22. Think like an economist and analyze cost per wear before buying.
  23. Track your clothing and accessories spending to hold yourself accountable.

Kick Your Shopping Habit, Once and for All

If you’re able to stick to your new budget for a few months, set a lower budget for the next month and see how it goes. Tracking your spending not only keeps you honest, but it will also show you if you tend to buy the same items over and over, which is very common. How many pairs of jeans or black tank tops does one need?

It may take several attempts to get your clothes shopping habit under control. But with each small victory, you will get stronger. Just think about all the time and money you will gain by not buying so many clothes and what else you can do with it to make your life better.

P.S. This post is written by someone who loves fashion and who continues to incorporate these tips into her own shopping habits. 🙂

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Budgeting For Happiness: Your New Spending Plan

New Spending Plan

Many women resist traditional budgeting because it feels so restrictive. Your new spending plan prioritizes what’s most important to you.

At the mention of the word “budget,” many people cringe. Like the word “diet,” it brings about a sense of dread, thoughts of deprivation, and the possibility of failure. Instead of focusing on the long-term rewards of effective budgeting, you start to focus on what you can’t have right now. When that deprivation mentality kicks in, it makes mindless shopping or impulse purchases harder to resist. But don’t fret; this mindset is fixable if you take a different approach with your spending plan.

The Psychology of Budgeting

There’s a psychological side to budgeting. It involves motivation, discipline, and often a bit of creativity. The idea of budgeting creates an emotional response in your brain, and it’s not always a good one. Creating and sticking to a budget can feel like yet another task on your already endless to-do list, not to mention the fact that this task also involves math, which most of us tend to avoid. But stick with me here because you do need a budget, just not the kind that fills you with an impending sense of doom. 

Why You Need a Budget 

As challenging as it can be, budgeting is a necessary not-so-evil. For starters, identifying where your money is going every month can help you find ways to cut back, increase your savings, and work toward your financial goals. A recent U.S. Bank study revealed that only 41% of Americans use a budget, even though it’s one of the most effective ways to keep track of our finances. 

It’s time to try a better way. Budgeting can help you improve your financial security, limit unaligned spending, and avoid debt and financial stress. It’s one of the quickest and easiest ways to increase your financial control and sense of financial fulfillment. 

What If There Were a Better Way? 

The key to better budgeting is to make it feel less like deprivation and more like prioritization. Understanding your core values, financial and otherwise, and aligning your spending with them can be very motivating. And when you feel more aligned, it tends to lead to greater fulfillment and better habits. 

Here are some suggestions for aligning your new budget spending plan with your values: 

  • Create a financial plan that emphasizes your goals, whether that’s early retirement, real estate investments, or that long-awaited vacation  
  • If you’re estimating costs, it’s always better to be conservative (i.e., overestimate rather than underestimate)
  • Link your spending to things that you value—this may require some self-reflection work, but it will be worth it 
  • Use visuals to maintain your motivation (pop pictures on the wall over your desk or create a vision board on Pinterest), and revisit your goals regularly  
  • Give yourself grace and a chance to rework the numbers or try again if you fall off track 

Your New Spending Plan

To implement these ideas in your own budget, download The Happiness Spreadsheet for a fresh, inspiring approach to budgeting that aligns your spending plan with your values.

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12 Simple Steps to Financial Success

12 Simple Steps to Financial Success

This article was originally published December 29, 2011. In the spirit of ongoing financial wellness, we thought we’d give 12 Simple Steps to Financial Success a refresh for 2021 and repost. Happy new year!

The new year is upon us, and January is always a good time to look towards the future and recommit to past personal finance goals or create new ones. Just in time to round out your new year’s resolutions, here are some simple steps all independent women can take for a more financially successful 2021.

12 Simple Steps to Financial Success This Year:

  1. Develop a habit of saving. It’s never too early or too late to start.
  2. Build a budget that aligns with your values. Think about what makes you happy and then allocate your money accordingly.
  3. Create a financial plan that reflects your most cherished goals. Think of it as a roadmap to happiness.
  4. Invest the maximum amount you can for retirement. You will need more money than you think.
  5. Build and maintain a diversified investment portfolio. Don’t worry about finding the “best” investment.
  6. Review your spending periodically to keep yourself on track. It’s the key to living within your means.
  7. When it comes to investing, avoid the crowd—and tips from well-meaning friends and relatives.
  8. Understand that volatility is a normal occurrence when investing in stocks. Keep a cool head and stick to your plan.
  9. Know what your money is doing. They say ignorance is bliss, but that’s not the case when it comes to your finances.
  10. Insurance protects you from the unexpected. It’s just smart to have the right coverage.
  11. Choose your advisors wisely: Find people you like, trust, and who will listen to you.
  12. Spend on the things and experiences that make you happy. They make life worth living!

Your New Year’s Challenge

Choose one of these 12 simple steps to financial success as your new year’s resolution for your finances and write a short (200–250 word) journal entry describing how you’ll put it into action. Studies show that just writing down your goals increases the likelihood that you’ll achieve them. Then, review your plan routinely throughout the year so your resolution is always front-of-mind.

If you’d like to work on any or all of these steps with a trusted financial partner, please get in touch. We are here to help!  

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Returning 2020 RMD’s To Avoid Taxation – New IRS Notice

One of the March 27, 2020 CARES Act’s key provisions was to waive the requirement to take Required Minimum Distributions (RMD’s) in 2020. This waiver is good news for retirees who don’t need the money but have to withdraw and pay taxes anyway. However, some people take their RMD, part or in whole early in the year, or take it as a monthly distribution starting in January. At first, it appeared that these early-birds did not catch the worm in this case, because they didn’t avoid the tax on this income.

Good News
The IRS must have heard the groans from the early-bird RMD takers (and their financial advisors and accountants) because they have modified the rules several times since the original provision passed into law.

The Fix
On June 25th, the IRS issued a notice that fixes all the confusion for those who took RMDs earlier. The Notice says that all RMDs taken in 2020 can now be rolled back into the IRA. These rollovers need to be completed by the latest, August 31st of 2020 – including RMD’s taken in January, received as monthly distributions that may be more than 60 days old, and any RMDs withdrawn by beneficiaries.

How Do You Return Them?

With most custodians, you can do a rollover electronically. Or call and find out what the correct steps to take. If you have a financial advisor, they can do it for you.

Documentation: Best Practice

To prevent any problems later, be sure to document these transactions. Take notes and put them in your 2020 tax file, save a copy of your statement that reflects the transactions. Lastly, don’t forget to tell your tax accountant about the rollover so you don’t pay unnecessary tax.

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Creating New Spending Habits After Shelter-In-Place

Cooking At Home

One of the most desired and, at the same time, hardest-to-do financial tasks is to create a budget and stick to it.

I know this from my personal experience and that of my clients. It is the rare person who enjoys purposefully creating spending limits – because that is what a budget does – it sets limits on spending. These limits are necessary to reach important savings goals like retiring or buying a house, but that doesn’t make them any more comfortable. What if there was an easier way to create new spending habits?

Why not take this rare opportunity to create new spending habits instead of going back to the old?

Admit it- you enjoy cooking more than you thought you did, and you can’t believe how much money you are saving by not eating out as much. You look in your closet and you are dismayed about how many clothes you own and don’t wear – and you don’t think you will need them after you no longer have to shelter-in-place. You’ve enjoyed neighborhood walks and Zoom Zumba classes much more than you ever liked going to the gym. If this is you – take the opportunity to build a new budget around this lifestyle. You don’t have to eliminate all past activities that you once enjoyed, but you may find it much easier to cut back now.

Want to make budgeting more fun? Download The Happiness Spreadsheet, a free tool that helps you create a budget you can live by!

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A Great Alternative to Grocery Stores: Farmer’s Markets

My anxiety level spikes at the thought of going to a grocery store. The lines are long, and once inside, it’s like playing bumper carts with your fellow shoppers all scrambling to keep out of each other’s way. I’m so grateful to the workers who are cashiering and bagging groceries, but I worry about them at the same time.

Photo Courtesy of CUESA

A great alternative and one I highly recommend is shopping at your local farmer’s market.

You will be outside in fresh air;
You will buy produce harvested the day before;
You will find sustainably raised meat, fish, and eggs and fresh cheese;
You will most likely find freshly baked bread and good coffee;
You will be buying from small farmers and other independent food businesses who need your support.

I guarantee you’ll feel energized and happy after spending an hour or two in a farmer’s market community.

PRECAUTIONS TO KEEP YOU SAFE

Photo Courtesy of CUESA

Farmers and other vendors are taking precautions to keep you safe by offering bagged fruits and vegetables, selecting items for you, maintaining lines, and encouraging the use of apps, or credit cards instead of cash. Some are offering curbside pickup of pre-packed boxes. The farmers market at the Ferry Plaza farmers market in San Francisco run by CUESA – The Center for Urban Education For Sustainable Agriculture, has curated a “best of the market” box that you can purchase on-line and then drive-by to pick up. I bought it last Saturday, and I’ve been enjoying the bounty all week.

If you live in the San Francisco Bay Area and would like to be notified about the CUESA Farmers Market Box availability sign up here. You can also order from the individual farms that sell at the market here.

If you don’t live nearby, here is an excellent directory of farmer’s markets nationwide. And lastly, if you aren’t convinced yet, the CUESA staff wrote an excellent article about why farmer’s markets are essential for our health and well being.

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THE CARES ACT REVIEW PART V: Health Provisions

Photo by Ani Kolleshi on Unsplash

One of the objectives of the Coronavirus Aid, Relief and Economic Security Act (CARES) is to help people get the care they need with fewer obstacles and less-in-person contact. It adds to the health provisions in a bill passed in March – the Families First Coronavirus Response Act (FFCRA).

The CARES ACT health provisions will be most beneficial to families with High Deductible Health Insurance plans (HDHPs) and health savings accounts (HSAs) or flexible spending accounts (FSAs), which are pre-tax savings accounts for healthcare expenses. However, Medicare Part D participants and anyone who gets a test for COVID-19 will benefit too.

EXPANDED USE OF HSAs
Temporary provision:
-Telehealth services used to be subject a deductible, now they are covered before a patient has met the plan deductible. Usual cost-sharing, such a co-pay, is still allowed. This provision will sunset in December 2020.

Permanent and retroactive to January 1, 2020 provisions:
-It’s now ok to buy over-the-counter medical products, such as OTC drugs and surgical masks, without a prescription and get reimbursed by an HSA. With the prior rules, effective since January 2011, a prescription was necessary for reimbursement.
-Certain menstrual care products such as tampons and pads are now reimbursable medical expenses.

PLANNING TIP: For individuals and families experiencing cash flow issues some of the existing HSA rules can help. For example, there are no time restrictions or deadlines for when you can reimburse yourself from your HSA. You can claim reimbursement for eligible items if you have proof of purchase as far back as when you first opened the account.

PLANNING TIP: While HSA can’t be used to cover your share of employer-provided medical insurance, they can be used by unemployed people to pay premiums on an independent policy or coverage through COBRA.

COVID-19 TESTING WITHOUT COST SHARING
The FFCRA mandates that private insurance companies and Medicare cover COVID-19 testing and a vaccine for free. The CARES Act extends free testing to any services or items provided during a medical visit that results in coronavirus testing. Medical visits can be in-person, a telehealth visit, an urgent care or emergency room visit. This benefit remains in effect only while there is a declared public health emergency. It’s not certain if self-administered tests (if and when available) will be covered.

The CARES ACT also clarifies that Medicaid must cover such tests regardless of whether they are authorized for emergency use by the FDA.


PRESCRIPTION SUPPLY BENEFIT

Medicare PART D recipients can order up to a 90 day supply of medications. Prior to the CARES Act passing, a PART D insurance plan had the option to relax their “refill too soon” restrictions but now they are required to do so. The change is designed so that all Part D enrollees can get an extended supply of medications during the COVID-19 public health emergency.

PLANNING TIP: Place orders of your medications for 90-day supplies to save trips to the pharmacy and the hassle of having to reorder in less time.

SOME OTHER HEALTH PROVISIONS
-Reauthorization of programs to strengthen rural community health, the Healthy Start program, Temporary Assistance for Needy Families
-Dollars to support domestic food assistance programs (breakfast and school lunch, SNAP, emergency food assistance.
-Funding for the Defense Production Act, Pandemic Response Accountability Committee, Disaster Relief Fund, FEMA, Indian Health Service, CDC, Substance Abuse and Mental Health Services Administration, CMS, Public Health and Social Social Services Emergency Fund and others.

If you missed Part IV: Review of the Paycheck Protection Program (PPP) go here.
And, for a comprehensive article about HSAs, go here.

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The CARES Act Reviewed: Part III Expanded Unemployment Benefits

Photo Credit: Annie Spratt, Unsplash

MILLIONS OF PEOPLE ARE OUT OF WORK

With millions of people out of work due to the Coronavirus, the CARES Act provides much-needed relief in the form of expanded unemployment benefits. It covers workers previously ineligible for benefits, including self-employed, part-time workers, gig workers, freelancers, and independent contractors. It also helps those who have recently exhausted their weeks of benefits and those who haven’t earned enough to qualify for state unemployment. And, it offers benefits to those who are personally affected by the virus due to being ill themselves or being a caretaker to a family member who is sick and many more.

A new program of this size and scope will take a lot of time to get set up and it’s challenging to get the most up-to-date and accurate information. For people who are applying for benefits, the wait-times are long, and state websites are crashing. And there are stories that some workers won’t get the full benefit due to not being able to document their income fully. But it will help many people.

DETAILS
Here are details that I have been able to glean so far:

Federal Pandemic Unemployment Compensation

This is an addition to regular state unemployment checks.
Those who have lost their jobs will get whatever their state usually provides for unemployment, plus $600 per week for up to July 31.

Federal Pandemic Emergency Unemployment Compensation:

People who have exhausted their regular State benefits (which max-out at 26 weeks in California), could get up to 13 more weeks, for a total of 39 weeks.

Federal Pandemic Unemployment Assistance

For newly eligible workers.
The program will provide temporary unemployment assistance to the self-employed and people unable to work for many reasons due to the COVID-19 emergency, for example, people who have contracted the virus, caretakers, people who can’t work because of quarantines, or the person’s place of business has closed. This program does not require a person to actively seek work to receive benefits like most state programs. The benefits are available for the duration of the covered person’s inability to work, beginning retroactively to January 27, 2020, and ending on December 31, 2020, up to a maximum of 39 weeks. These benefits will be no less than $600 a week.

Federal Incentives to Create Short-Time Compensation Programs

The Federal Government will fund 100% of the costs for states that currently have an STC program (California has one) and 50% for those states that choose to implement one through December 2020. These programs are also known as work-sharing or shared-work programs and are an alternative to layoffs for employers experiencing a reduction in available work.

Note: This bill leaves out those workers who are able to work from home, and those receiving paid sick leave or paid family leave. New entrants to the workforce who cannot find jobs would also be ineligible.

Here are some additional resources:

If you missed Part II: Retirement Account Provisions, go here

Next up: The CARES ACT and Small-Business Provisions

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CARES Act Review Part II: Retirement Account Provisions

Photo Credit: Kelly Sikkema, Unsplash

There are several retirement account provisions in the CARES ACT meant to reduce your tax liability or help with current cash flow or both. Here are the details:

1. RMD-REQUIRED MINIMUM DISTRIBUTIONS

You don’t have to take your RMD (Required Minimum Distribution) for 2020, whether it be from an IRA (regular, Simple, SEP), inherited IRA, 401(k) plans, 403(b) plans or 457(b) plans.

PLANNING TIP: If you already withdrew your RMD for 2020, and the withdrawal has been within 60 days, you can redeposit it to your account and avoid tax. If a distribution was taken more than 60 days ago and you can qualify for the coronavirus-related distribution (described below) you can redeposit it and avoid tax. Note: Non-spouse inherited IRA beneficiaries cannot redeposit the withdrawal. 

2CORONAVIRUS DISTRIBUTIONS FROM RETIREMENT ACCOUNTS  – new more tax-friendly rules 

For 2020, the 10% penalty will be waived for taking an early distribution from your IRA or employer plan. Previously, distributions before the age of 59 1/2 incurred a 10% penalty in addition to tax owed (with a few hardship withdrawal exceptions).

  • The distribution can be up to $100,000
  • It must be taken in 2020
  • The income is spread over 3 years for tax purposes unless you proactively elect to include it all in 2020
  • Beginning on the day after receipt of a Coronavirus-related distribution, an individual has up to three years to repay the amount as qualified rollover distribution (in one or multiple payments). Any distribution going back to January 1, 2020 qualifies

PLANNING TIP:  If you elect to take a distribution, it may be beneficial to include the entire distribution in 2020 if you expect your income to significantly decline in 2020 and be higher in future years).​​​​​​

PLANNING TIP: In a perfect world, withdrawing from retirement accounts early should be a last resort. These accounts get tax-deferral benefits to incentivize us to save for our future non-earning years. The compounding that happens when the money is left to grow tax-deferred is invaluable in building a nest egg. However, keeping that caution in mind, these are challenging times and the loosening up of these rules may be very helpful to many people. The good news is that there is a way to pay it back and avoid tax and penalties.

 Eligibility (very broad):

  •  People diagnosed with COVID-19, or have a spouse or dependents diagnosed with the virus.
  •  People who are experiencing adverse financial consequences as a result of being quarantined, furloughed, laid off, reduced hours, unable to work because of childcare issues, and a handful of other similar reasons.
  •  Business owners that had to close or operate under reduced hours
  •  Meet some other reason that the IRS decides to say is OK

3. ​​​​​​​COMPANY RETIREMENT PLAN LOANS – a provision to further expand company retirement plan loans (like from a 401(k):

  • The maximum amount of an allowable plan loan doubled from $50,000 to $100,000
  • The loan may be for up to the present value of the participant’s account
  • Payment on plan loan otherwise owed may be delayed for one year

In addition, the usual 20% mandatory tax withholding for non-direct rollovers from company plans is waived for 2020.  However, you will still need to pay tax (at tax time) on any amounts that you don’t roll back into a retirement plan within 60 days.

Next up: A review of enhanced Unemployment Benefits in the CARES Act

If you missed Part I: Stimulus Payments go here.

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