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January 2018: How to Keep Your New Year’s Resolutions


January 2018 How to Keep Your New Year’s Resolutions

new years resolutions

By Gary Pevey


Each year many of us make New Year's Resolutions. In essence, we are promising ourselves that we will change something that may have been habitual for a very long time. On average, by the second week in February, the change is forgotten, and we go back to old habits.

Simply making yourself a promise will not create change. Because habits are processed in the brain thousands of times faster than intentional behavior, the only reliable way to change an entrenched habit is to develop a new habit. Studies show that the new habit or activity must be repeated daily over the course of six weeks to truly become a habit. Coincidentally, most resolutions fail shortly before this amount of time.

How can you keep your resolution?

  1. Write down your goal and be specific:  Get healthier is not specific enough. Lose 30 lbs is better.
  2. Write down how you intend to reach the goal: Eat less is not specific enough. Allow sweets once a week, or only eat 2 slices of bread per day, or follow Weight Watchers or another plan.
  3. Keep these in front of you as a reminder.
  4. Follow the plan for a minimum of 6 weeks. The first couple of weeks will probably be the hardest.
  5. Make a plan for when you have reached your goal to reward yourself and only alter it if necessary (i.e. stop losing weight and go on a maintenance program).

Whatever your promise, we wish you great success in 2018!



10 Financial Tips for January 2018:

1.  Are you planning to collect Social Security in the near future? The Bipartisan Budget Act of 2015 makes it difficult to pick the best strategy without expert advice. The Social Security handbook has over 2,700 rules. Explanations of the rules are found in the Program Operating Manual System (POMS). Social Security employees are prohibited from giving you advice about when to take Social Security. They can only let you know the amount of your benefits. Talk with an advisor who has the tools to help you decide your best strategy for receiving benefits. The benefits could mean thousands of extra dollars in your wallet!

2. The tax laws have changed!  The experts are claiming it is the biggest overhaul since 1986. How can you benefit?  If you are 59 ½ years of age or older and have a nest egg in your 401K or IRA from which you are able to withdraw money from the existing investments without penalty, you may benefit from the new law if your current marginal tax rate is lower than when you made the contributions to these plans. It will take a little digging on your part to determine your previous tax rates, but the effort will be worth it.  Remember, all present-day tax dollar savings result in increasing your rate of return on existing assets without market risk.

3. Do you really own your 401K or IRA or are you just renting the money? Qualified plans are under complete governmental control. The government will determine what % will be yours and what will be theirs. You won't know how much yours is until you withdraw the money. The government doesn't care what income tax bracket you are in when you make the contributions to your 401(k), IRA, 403(b), etc. They are only interested in what tax bracket you are in when you take your money. You need to be concerned with both your current bracket and your future bracket. We recently saw the tax law change and it will undoubtedly change again in the future. This is an excellent opportunity to review your government-controlled assets. 

4. Do you think current tax rates are high? Let's take a look at history. The average marginal tax rate since inception is 58.06%. The highest tax rate in history was 94% in 1944 and 1945. You had to be earning $200,000 at that time to be in that bracket. That is equivalent to $1.8 million in today's dollars assuming a 3% inflation rate. Special note - Ronald Reagan officially switched from the Democratic party to the Republican party in 1962. However, he had voted Republican in the 1952 presidential election. One of the biggest reasons, according to the Rugby Times, was the 90% marginal tax rate at that time. He thought the rate was grossly unfair.

5.  It is important to understand the value of having a fixed-rate mortgage on your house:

  • The fixed rate by definition is fixed for the life of the loan. In most cases it is usually 15 or 30 years. The rate does not increase regardless of inflation and current costs to borrow money.  
  • The most costly mortgage payment is the first payment. The remaining payments don't hurt as much due to the effects of inflation.
  • The best time to place a mortgage on your house is when you purchase a new house. Money outside the house benefits you in case of expected and unexpected events.
  • Equity inside the house benefits the mortgage and other lien holders.

6.  This is the latest revision of the S&P 500 chart January 10, 1996 through January 10, 2018. What do you think will happen next? Investments, by definition, increase and decrease in value. Are you prepared for the next downturn when not if it happens?

7.  It is important to remember that the future guarantees us at least one thing - uncertainty!  It is important that we develop our financial strategies, regardless of age and stage in life, that insure we are prepared for life's unexpected events.  Avoiding threats, fulfilling obligations, and having predictable income regardless of market conditions, health status or world situations are essential for sound planning.

8.  Are your assets adequately protected from creditors? The assets you own may not be yours if they are not adequately protected! Every state has its own creditor laws. It is important to know the specific details on assets that are protected from creditors and those subject to attachment. Read more at Asset Protection Book for information about your state. Contact a local creditor protection attorney for more specific information.

9.  Indexing on Income tax brackets has a new method of calculating inflation.  Tax brackets, standard deductions and many other items will be adjusted using a chained consumer price index. The result is lower adjustments in the future for inflation, thus, smaller increases in tax deductions than current indexing. This is a hidden tax, and over time, will mean higher taxes for everyone.

10.  If 2018 is anything like 2017 it will be a year of unexpected events and uncertainty. How do you prepare for it? According to Futurist, David Houle, "it is hard to fight the universe, so find your flow and go with it."  Mr. Houle also commented, "As a country and as humanity we can't go back. The past is gone. The only choice we have is to face the future and create the future.  Many people say they don't like change. Well in a universe where the only constant is change, avoiding change will be ever more painful in the years ahead. The only state of being where one cannot feel change is to be in a constant state of change. Then you are aligned with the changing universe."



Gary Pevey CLU ChFC

Wealth Design Group

3445 American River Drive, Suite B Sacramento, CA 95864

(916) 480-0669


Investment advisory services offered through Wealth Design Group, a Registered Investment Adviser registered with the State of California. Securities offered through Mutual Securities, Inc., Member FINRA/SIPC. Wealth Design Group is not affiliated with Mutual Securities, Inc.