SLP Toolkit Podcast, Episode 29, Transcript
Lisa: (00:10) Well, hey Sarah–
Sarah: (00:40) Oh are you starting?
Lisa: (00:40) What did you just interrupt me? You told me to start and then I start and then you interrupted me. You’re fired.
Sarah: (00:47) I know, this is very different when we’re not in the same room. We’re just going to wing this completely.
Lisa: (00:54) I know I miss you.
Sarah: (00:55) I know.
Lisa: (00:57) This is where you’re like, I don’t miss you.
Sarah: (00:59) No, I do. I miss your face. I love when you Zoom called me–or not Zoomed, FaceTime’d me the other day so you could look at me.
Lisa: (01:07) I didn’t want you to even talk, I just wanted the phone there. So if like I’m working and I look up, you’re there.
Sarah: (01:12) Right.
Lisa: (01:12) You’re like–
Sarah: (01:14) Technically it’s just the two of us, we could probably go to our office. But now we’re just living the quarantine life.
Lisa: (01:20) Exactly.
Sarah: (01:22) Complete homebodies. So anyway, super excited that we still get to do a podcast episode. It’s been a few weeks because you know, things have been crazy. So this is very timely, super important episode. And really excited that we get to do it. Do you want to introduce who else is in the confessional today?
Lisa: (01:40) Absolutely. We have Craig Goldslager in the house, or, you know, kind of in the house. Virtually in the house.
Sarah: (01:50) In his house.
Lisa: (01:51) In his house, we’re all in the house. But Craig is a financial planner who’s also married to an SLP. So he has been feeling this whole thing with COVID-19 in the same way that many of you are. And we thought it would be awesome to bring him on and really talk a little bit more about how this can impact us financially. What are some things we could do as a result? What can we prepare for maybe if this were to ever happen again? Or like I even heard about COVID coming in waves, like this might be phase one, so, you know, what can I do for phase two? Or, you know, just basically I’m drowning. So help us out, Craig,
Craig Goldslager: (02:27) Lisa, Sarah, thank you guys so much for having me. I’m so excited to be here, virtually of course, in the zoom confessional, as you say. Just before we begin, one disclosure I’d like to read. So within the financial services world, there are some regulations. And so I do just want to remind all of your listeners that anything I say today presented is for general education and informational purposes only. You should not rely solely on this information in making decisions about your specific situation. So it’s always important to consult with your tax legal or investment professionals for advice.
Lisa: (03:01) I feel like we should say that at the start of every–
Sarah: (03:01) I was just gonna say that. I’m listening to the disclaimer, and I’m thinking Lisa we should have a disclaimer because I don’t think anyone should be listening to anything we say.
Lisa: (03:11) Can we go back and dub that into every episode? And just actually, we’ll just, we can keep it Craig’s voice and then just–
Craig Goldslager: (03:18) We’ll just do a rerecord, I’ll make it sound a little more deeper voice than– like the movie voiceover guy. So a little more bass than that. But yeah, so I think that just starting off it’s, it’s so important. And as you said in the introduction, I would say most of my clients, about 75% are SLP’s or private practice clinicians all around America. So COVID-19 has impacted 100% of them in some way, whether it’s through their employment, their spouse’s employment, impacting their business, impacting their client’s ability to come see them. So dropping caseload by 50, 75%, even a hundred percent in some instances. So everyone’s feeling it, everyone’s impacted. And as you mentioned, there’s just a lot of things that have been released by the government through legislation over the past few weeks. There are things that individual states, individual cities are doing to try and help both individuals and business owners. So just a ton of information to try and share, to help everyone get through this unprecedented time.
Sarah: (04:22) Yeah. And it’s crazy because there is, there’s so much coming out and of course, like anybody that goes down the rabbit holes of like social media and stuff, and we’re all seeing these things, but it’s a lot to process. And those of us who don’t have strong financial backgrounds like myself, I mean, I can barely handle a budget. It’s a lot to process and I’m not quite always sure what applies to us. You know, Lisa and I are in a little different situation cause we have a small business. And so we’re trying to, you know, make sure that stays afloat. But can you talk a little bit about what programs are available? Like even what’s this CARES act I hear about? Or you know, some of the other stimulus packages.
Craig Goldslager: (05:01) Yeah. A great question. And so even if you are a small business owner, whether it’s you’re self employed, a 1099 independent contractor, some of the things that Sarah is talking about within the CARES act are applicable to you. And so, gosh, it feels like this was passed months ago, but it was enacted by the president on March 27th. So this was only a few weeks ago and it’s just days feel like weeks, if not months right now. Right? So the CARES act, to summarize it on a high level, it’s really broken down into five provisions. And I think everyone on the call should know about the five main things within the CARES act. So the first one that impacts most people directly is something called the economic stimulus package, which is a fancy way of saying checks in the mail. You might want to hold on Lisa, it depends on– not everyone will be receiving one. So hopefully you will. But one of the reasons, or I should say the reason why you may not is the treasury department’s basing the stimulus amount based on your adjusted gross income for 2019. So depending on your tax filing status, if you filed as a single individual, if you filed married, filing jointly, or if you filed as the head of household, there’s these different maximum amounts of adjusted gross income. So not your gross income. You can find that out by looking at your tax return, your 1040. And so depending on what that number is in that threshold, the government will send you a check. So if–
Lisa: (06:25) When do those start coming out?
Craig Goldslager: (06:25) If one of you wants to volunteer– so those, again, the treasury said they’d like them to start going out sometime in April. It might not come out till may. One of the benefits though is if– do either of you e-file your tax return?
Sarah: (06:38) Yes we do.
Craig Goldslager: (06:40) Awesome. So that means the treasury department has your, has your routing number, has your checking account number. So they will, if you’re eligible, they will be direct depositing the check right to your checking account. So make sure that if you’re checking, you still have that checking account that you filed for 2018. So if you didn’t file yet for 2019, they’re going to base your stimulus amount off of your 2018 tax return.
Sarah: (07:02) Okay. I was just going to ask that question, like if you haven’t filed yet, because that got postponed, right. We don’t have to file until June?
Craig Goldslager: (07:10) July 15th. So tax day got moved three months backwards. So, you know, everyone’s swamped right now. So all this legislation keeps coming out. There’s new rules for business owners. There’s new changes going on. So the government moved tax day to July 15th. So it’s no longer due April 15th. You can still file if you’d like, but you do have that built in extension.
Sarah: (07:30) Okay. So you don’t have to worry and rush and file to get the stimulus money. Okay.
Craig Goldslager: (07:34) No. Although, one thing to talk about with a financial advisor, or maybe even your CPA, depending on what your adjusted gross income was for 2018 versus 2019, it might be advantageous to get the return in. And so by the time this posts and the listeners are listening, you may have even gotten your stimulus by now. So again, just things to think about, determining what your adjusted gross income is. And so just taking an example of a single individual. If I’m single, I’ll be getting a check for $1,200 if I qualify, plus $500 for every child under the age of 17. And if I am filing single, I get a full stimulus or the $1,200 if my adjusted gross income is less than $75,000 for 2019 or 2018, if you didn’t file. The cap to get no stimulus for a single individual is 99,000. And then if you have that gap, if you’re in that gap between 75,000 and 99,000, the government’s going to drop your stimulus check by $5 per $100 of income. So, so without getting complicated, without getting into the math, there’s a lot of online–
Lisa: (08:40) It’s too early for math.
Craig Goldslager: (08:40) There’s a lot of online calculators. There’s a lot of ways if you just Google stimulus calculator, you’ll find a lot of information about it. So we don’t have to spend too much time talking about the specifics and the dollar amounts, but that is one source of income that the treasury department predicted that 90% of Americans will get some form of stimulus check.
Sarah: (08:56) Cool.
Craig Goldslager: (08:57) So, and then if, if who knows, if the COVID crisis continues for however long, they might do another batch of checks in a month or two.
Lisa: (09:06) I have an adult child who’s 19 and would have been 18 last year when we filed. Is she, if I’m head of household, is it still just all funneled through me? Or does she, is she considered her own?
Craig Goldslager: (09:18) Does she file?
Lisa: (09:19) yes.
Craig Goldslager: (09:22) So, so then I would, you wouldn’t be elig– you still claim her as a dependent though, right?
Lisa: (09:27) Yes.
Craig Goldslager: (09:28) So it’s hard because she can’t file for her own cause you’re claiming a dependent yet she’s above that age 17. So it’s kind of a lost opportunity, but yeah, just all these sub divisions and sub clauses within it. But again, based on your adjusted gross income, you still might be eligible for some stimulus. So that’s one part of the CARES act that was done. And again, if you don’t have direct deposit, you’ll get the check in the mail from the treasury and just like paper mail versus online transfers. It can take weeks if not months to get that check. So there’s no official timeline or no official estimate, but the check will be coming in the mail.
Lisa: (10:08) Cool.
Sarah: (10:09) That’s super helpful. And then I know– so if we have any listeners that do have private practices would the same thing apply? Like we just applied for the– is it PPP loan? Triple P? I don’t know what the cool kids are calling this loan, but that’s the one to help with our salary over the next few months.
Lisa: (10:30) And rent and all that kind of stuff.
Craig Goldslager: (10:33) Yes, exactly. So the PPP is a brand new program. It stands for payroll protection program loan. So I don’t know why not PPPL, I guess PPP sounds better, but people have been referring to it as the PPP. And so what that does is it makes you eligible to receive 2.5 times your average monthly payroll. And as Lisa was saying, average monthly payroll can include a lot of things. It can include salary, wages and commissions. It can include healthcare benefits. It can include retirement benefits. It can also include rent if you pay rent, utilities for your office location. So there’s a lot of eligible expenses. And what you do is you pool all that together. They want to see an average of the last 12 months. So you might be seasonally busy, maybe you work in the schools and your summer is a little lighter than the school year. So they want to smooth out that 12 month average. And you multiply that by two and a half times. And that’s what your eligible loan amount is. And what the government’s doing is you’re eligible for forgiveness on the first eight weeks of the loan amount after you start the loan. So let’s say I become eligible for a loan on May 1st. If I apply for a $30,000 loan, and let’s say my rent is $2,000 a month. So 2000 is part of that overall overhead, the payroll amount. So if I pay rent once a month, I pay it on June 1st and July 1st, that $2,000 payment will be forgiven so long as I meet the forgiveness criteria. So before I get into that criteria, it’s important to know that this is a program where if you are a business owner and your business is maybe not in the best state– this I’ve heard it being thrown around that this is loosely free money. I wouldn’t say that this is just money falling out of the sky to necessarily save a business that might be on the decline, or there might be other financial woes, but it certainly is a way to bridge the gap between now and the end of the COVID-19 pandemic. This will probably with us for an extended period of time, but if you’re concerned about keeping staff on payroll, W2 employees we’re talking about, not necessarily 1099 contractors. Because independent contractors are eligible to apply for their own PPP starting on April 10th.
Lisa: (12:55) That was my next question, because I think of when I was working full time in schools, I did pick up, you know, maybe four or five clients on the side, but I never had a formal business. I was the sole proprietor. I just used my social security at that time. And would that apply to me in that situation?
Craig Goldslager: (13:11) Right. And you were just filing a schedule C as part of the tax return?
Lisa: (13:16) I was considered it. Yeah, I was considered a 1099 subcontractor through like a therapy company.
Craig Goldslager: (13:23) Yeah. So that would be someone who’s eligible for this program as well. And that starts April 10th. April 3rd is when business owners were able to apply for the PPP. And so, so that forgiveness is eligible for the first eight weeks of expenses. What the terms of the loan are though is the term is over 24 months, but the first six months are technically forgiven expenses. You don’t have to pay anything for the first six– shouldn’t say forgiven, you don’t have to pay the first six months. It’s a deferral of payment. So then it really becomes an 18 month note at 1% interest. So for business owners out there, you know, if you go and apply for a loan, it’s usually significantly higher than that. 1% is still really great access to capital. And that’s why a lot of people are applying for it right now. There’s been conversations that this– so the government cleared $350 billion as part of this PPP. There’s been conversation that that money will all be gone by the end of April. So–
Lisa: (14:24) So you gotta get on this.
Craig Goldslager: (14:24) Yes, it is first come first serve. And a really important thing that I’ve noticed with my clients and just through other chatter is lending institutions want to work with their existing clients. They don’t necessarily want to take on new customers at this time. So whomever you have a business checking account and preferably a business line of credit or a business credit card through, that’s the institution you want to go to. Because at the end of the day, lending companies want to make these loans because they’re a hundred percent backed by the government, they get loan origination fees. So the bank is going to be making money. So if you apply for this, you don’t have to pay origination fees like you would for a mortgage or other types of loans. You just apply, the government covers all the costs. But what happens is it’s a simple three page application, much less laborious than a traditional mortgage or mortgage refinance or auto loan, other types of loans. And so what the government said to the banks is, yes, this is 100% on us. But if it’s nefarious activity, if it’s illegal activity, if we come back and you claim that this is not valid, you’re on the hook for the loan amount.
Sarah: (15:28) Wow.
Craig Goldslager: (15:29) So the banks, if you have a relationship existing with a banker or with the bank, you have an established history. They know you’re most likely, if you’re listening, an SLP or a private clinician, you have your monthly checks, checks go in your deposits. They know what your salaries are, they know your payroll. So they want to have that familiarization with you. It’s not every bank. I know some large national institutions where they explicitly say we are not taking new customers at this time. Other local credit unions might have different rules, but the first step is to go to your existing business lender.
Lisa: (16:03) Not only that, I think we initially tried to go through our bank, which is a large national bank, and it didn’t even have its application open. Then it opened for a really tiny amount of window over the weekend. So we put something in and they’re like, okay, we’ll contact you in a couple of days. And then we got something. What was it yesterday? Where they were saying, sorry you’re in a queue. And basically we can’t even guarantee that we’re going to be able to get to you. And we suggest that you go to outside lenders. So I was like, wow. And this is a huge bank.
Sarah: (16:34) And we’ve been with them for a long time. Yeah.
Lisa: (16:36) And so that’s the only thing I think we– and we didn’t want to wait on it because we did feel like it was important for us to do this as a small business. So we ended up using Lendio, yeah. And it was the most simple process. And we’re still waiting to get, you know, information back on if we’ll be approved, but it was super easy.
Craig Goldslager: (16:57) That’s great to hear. I’m happy to hear that because I’ve heard similar stories of existing lenders, having issues, not even having portals on their website, not having access for the clients to apply for the PPP. But I will say that again, this is, this was all enacted on March 27th. We’re recording today on April 9th. Usually we don’t give dates because you want the podcast information to be evergreen, but–
Lisa: (17:25) but it wont be.
Craig Goldslager: (17:25) Right, by the time you listen to this, there’ll be a new provision. There’ll be a new law. I’ve spoken with some of my clients and their therapists over the last week and information has changed since I’ve spoken to them about how things have changed. So, really important to do your due diligence, talk with your team of professionals. I’m a huge advocate of working with professionals, whether it’s accountants, attorneys, financial advisors, insurance professionals–
Lisa: (17:50) People much smarter than us.
Craig Goldslager: (17:51) Well I wouldn’t say–no,–
Lisa: (17:51) In their areas
Craig Goldslager: (17:55) In their areas, exactly. Right. I’m not– as we said in the intro, I’m married to one of you, I’m married to a speech pathologist, but yet we have our daughter go see another speech pathologist. That’s a separate podcast or a separate conversation, but just there are experts who know their information in and out. They are up to date on all of this legislation. They know how to do all of these things. And from my experience, everyone is so overwhelmed right now with learning teletherapy and finding new techniques to see caseload and see clients just to maintain some source of revenue right now. So you’re overwhelmed with that and to try and stack all of this on top is just, it’s asking for a lot. Not only being homeschooled teachers and everything else that’s going on right now.
Lisa: (18:42) Well, and even, I feel like–
Sarah: (18:43) Go ahead, sorry.
Lisa: (18:44) I was just gonna say in hosting, we’re hosting a conference right now that is specific to teletherapy. It’s slptelecon.com. And so what I’ve even seen– and we have a Facebook group that’s dedicated just to people that have participated in this. And they’re like, I’ve watched it now, but things have changed so much in a week. And now that, you know, it’s like one thing to get it in theory. And now I actually have kids in front of me and I want to go back and watch videos and figure out how to do this. This is a completely different mindset for the majority of people that always thought that tele-health was maybe an option, but not maybe for me. Like, I don’t want to do it, but it’s an option for other people. And now that it’s become like the only option, it’s just been huge, you know, to be able to pivot like that as a therapist.
Craig Goldslager: (19:26) Completely.
Sarah: (19:29) And that’s one of the things, you know, we talk about this a lot. I think one of our greatest strengths typically in this profession is our ability to be problem solvers and to be crazy resourceful. And we pivot in a 30 minute session, five times, you know, as we’re trying to problem solve through what’s happening, what’s working, what’s not working. And so thank goodness we have kind of that innate ability to do it. That being said, it’s such an impactful thing to try to learn all of these new skills, maintain everything. And like you guys said, everything’s changing on the daily, if not on the hour, it seems like. Schools are still trying to figure out what they’re doing. And then we have education laws that are going to try to figure out how to handle all of this, and then the stuff with finances and everything. It’s just a lot. And so I hope more than anything too, people just give themselves some grace and just do the best they can, you know, with what is going on. I don’t think anybody really has a clue, you know, what’s happening. And so I hope everybody’s just really kind and patient with themselves.
Craig Goldslager: (20:29) Yeah, just one topic about that Sarah. One thing is a saying that I like to say a lot that I’ve really adapted to my business in the last year is “perfect is the enemy of good.” And this is certainly a situation where you just got to plow through and do the best you can in all aspects. It’s just, it’s unprecedented for everyone in all aspects of life and who would have thought that, right? Every schools are closed. Daycares are closed, colleges are closed. It’s just, there’s so much going on that it’s like you said, have some grace and just, it’s okay, it’s okay. Nothing is perfect right now. And you might think, oh, I wish I did this on my session and did this with the client. But you know what, it’s amazing that they’re still getting services right now. And you’re able to try and complete an IEP or whatever the case may be. So, yeah.
Sarah: (21:16) And, and who knows? I think people might like this. I like to look at the Facebook groups and see what people are doing, but I keep thinking, you know, you’re developing another skill right now you didn’t ever know you were going to need. And so maybe you will be able to take on some clients doing this and, you know, become a 1099 contractor or have a side business or do this during the summer. And so that’s definitely something to think about too. You know, we are huge advocates for staying in the schools we need school-based SLP’s desperately. But we’re also very aware of the demands and how difficult it is. And then even just financial burden, sometimes a private practice is something that maybe we should always kind of have that idea of how can we make that work in our own lives? And so there might be a lot of teletherapists coming out of this, who knows.
Lisa: (22:01) Well, and there are school based SLPs who are teletherapists. So even, I even think in Arizona, we use that model for like more remote areas. I don’t think the major cities do it as much because there’s not the same need. There are the resources, the physical bodies there. And I think that’s the preference of most schools, but that is an opportunity still.
Craig Goldslager: (22:21) Yeah. And we lived down in Florida and it’s just, it’s changing. Even, we’re talking about legislation, the school district where we live at the beginning of the month, they said no to teletherapy, then it was approved conditionally. Then they said, no again. And now it’s back on. So they changed their mind four times within a week.
Lisa: (22:38) And I think that’s kind of the, how it is with everything right now. Everything is so– I don’t want to even say wishy washy. It’s just that it is changing minute by minute based on new information. So, I wanted to ask you another thing about you were talking about cash and the CARES act being sending out these checks, hopefully this month and then the opportunity to get cash if you’re a small business owner through those PPP loans. But what about in the meantime? What if I am in a situation because, you know, I know the whole idea of you’re supposed to have three months or two months or whatever of emergency finances on hand. I will tell you that has never been my forte and not because I wasn’t a great saver. I just, I was a single parent of two kids and you know, I was living very much paycheck to paycheck, so to save was a whole different option. So what would be maybe other avenues for getting cash if I don’t have that emergency stock savings and I can’t really wait until these checks clear in my bank?
Craig Goldslager: (23:40) Great question. So, one thing that– another change that the CARES act did was they’re allowing for something called coronavirus-related distributions from retirement plans. So if you have put money into something like a 401k or a 403b or an IRA, as examples of types of accounts, you do have access to that money more liberally than you would, if it wasn’t a coronavirus-related distribution. So what I mean by that is if you’re under the age of 59 and a half, and you want to take a distribution from your IRA, normally you have to pay a 10% penalty for accessing that money early. If you’ve been impacted by COVID-19, you can take one of these coronavirus-related distributions, and you don’t have to pay the 10% penalty. So if I want to take a $50,000 distribution and that’s up to a $100,000 distribution from the account, so let’s just use that number. If I want to take a $100,000 from my IRA or my 401k, normally I would take $10,000 right off the top and have to pay that as a penalty. So then I’d get 90,000 and then you do have to pay ordinary income tax on that distribution. So let’s say I’m at a 20% tax bracket. Normally that 90,000 would net to 72,000 because I’m paying 18,000 in tax. So you get rid of the 10% off the top. And then what also the coronavirus-related distribution allows you to do is you can stretch that tax liability over a three year period. So instead of that counting as $72,000 of income in 2020 for that distribution, I can stretch that out over 2020, 2021 and 2022. And if this is just a short term hiccup for your situation, you do have the ability to put the money back in over the course of a three year period as well. So normally you only get 60 days to do that, if you take money from an IRA and you want to just put it back, you can, in 60 days. Now you have a much longer window to do that. And you might not want to do that, but you can.
Lisa: (25:39) Is this specific just to 401k’s and IRA’s? Or what about if the bulk of my retirement is in something like a state retirement?
Craig Goldslager: (25:49) Like a pension program through the state?
Lisa: (25:51) Yeah. So like if you’re a school district employee, typically your pension is through the state retirement system. Not, not the same–
Craig Goldslager: (26:01) Depends. It’s hard because I wouldn’t– unless you’re going to actually cash in on the pension or there’s no penalty for early access. I know that it is for 401k’s IRA’s individually accounts. I would make sure with your state provider that you find out through the state of Arizona through the–
Lisa: (26:21) If there’s any provisions, yeah.
Craig Goldslager: (26:21) if there’s any provisions regarding that, because that’s a little trickier because you’re talking about like, if somebody has a pension, if they work for maybe a large hospital system or a large independent employer that still has pension systems, because those do still exist. It’s harder to access that because that’s an accrual benefit that’s going to be paid to you in retirement, right? Maybe when you’re 60, 65. So it’s harder to access that. It is applicable to a Roth IRA as well. So if you’re saving in a Roth IRA versus an IRA, we can talk about that– that’s its own podcast too, how to save pre-tax, post-tax, after tax, different things. But just know if you are in a liquidity crunch and you need cash, the financial advisor in me says, well, you know, you’re saving that money for retirement. But what you were saying Lisa is so important too, is that oftentimes people forget about liquidity and that’s so important to have savings and access to money if you need it, because who in the world predicted this? And so to have the ability to have access to cash. That’s what the government understands right now. And that’s why they’re doing that PPP program. That’s why they’re doing these coronavirus-related distributions. They know Americans need access to cash. And so they’re being flexible with giving you ways to do it. So that’s another way to access cash as well. One other thing, I’m sorry, while I’m rolling. The– we talked about the PPP. There’s another thing through the SBA, the Small Business Administration called an economic disaster loan. So we talked about just the PPP, the economic disaster loan is usually available under when there’s a disaster and your area is called the disaster zone. So think about something like hurricane Katrina, hurricane Sandy, some massive event that damages your area. All 50 States right now are considered a disaster zone because of the COVID-19. So what that makes you eligible for is to apply for something called an economic disaster loan. So that’s more of a traditional loan, not like the PPP program we talked about. You apply online through the sba.gov website, not through an individual lender. And so you apply through there, the interest rate is 3.75% if you’re a private business, 2.75% if you’re a nonprofit. But the nice thing about that, what they’ve done because of COVID-19 is you can apply and the first $10,000 will be considered a loan advance, which is interpreted essentially as a grant, because they say on the website that that does not need to be paid back. So you can essentially get access to that if you are a business owner, $10,000, basically as a grant. Not applicable to the PPP or other programs that we’re talking about. So just another way for business owners to get access to money.
Lisa: (29:06) And again as an individual contractor is that the same kind of principle or you have to be like?
Craig Goldslager: (29:12) So you can apply. You can go to the website, read through the criteria. It’s hard for me to say specifically, because depending on how you might be an independent contractor and a 1099, but I don’t know how your tax– I don’t know how you structure the business, right? Depending on how you file taxes, you might be eligible, you might not be. That’s also important in the PPP program. So certain ways you’re filing, if you’re an S corporation, it’s different than if you’re a sole proprietor versus a C corporation. So there’s different ways to calculate distributions and wages and salaries so that there’s– some can count some can’t count. Again, disclaimer, not an accountant. Just things that we help our clients work with through their accountants to figure out what’s best for their situation and what makes the most sense from a tax perspective.
Sarah: (29:58) Yeah, that’s what I was going to say too, is Lisa and I know very near and dear to our heart, how hard it is to get a business loan. We actually did a whole episode on us starting our business and how we had to try to scrape together the money to do so. And so you know, we’ve considered applying for this loan just because we have no idea what’s going to happen. Like we have no way to predict what our future looks like. And so we’re just trying to be proactive instead of reactive and make sure we’ve got some funds to handle what is– it’s unknown. We have no idea what’s gonna happen over the next–
Craig Goldslager: (30:31) And just more liquidity sources that we find sometimes when talking through with clients. Maybe at this point, you– we always encourage people to have a home equity line available. If you own your home or your own, your business property, you don’t have to use it. You don’t have to access it. But for times like this, it just comes in handy because the bank is swamped. They don’t necessarily have, you know, they’re just backlogged. And like I said earlier, they want to process as many of these applications they can, but it’s millions of applications that are coming through right now. So the home equity line of credit, or HELOC, just something to have. Usually your lender won’t make you pay to have it, but you just have the checkbook. And if you have to start writing checks, you can do it. You pay it off when the situation’s a little better, but it just gives you access to liquidity.
Sarah: (31:17) So it’d be difficult to get now probably, but that’s something just in the future when things are normal again, it’s a good idea to probably have.
Craig Goldslager: (31:24) Yeah, for sure. Other things if cash flow is tight, another thing I would suggest, I would imagine a lot of your audience has student loans. So depending on the student loan that they have, if it’s a federal direct student loan, they are deferring payments for six months through September 30th, 2020. So it’s really important to contact and be proactive and contact your provider and tell them that you want to do this because otherwise you’re probably on auto debit and they’ll just keep auto debiting your account. So what’s nice about that though, is even if you do the deferral though, if someone works for a hospital or a nonprofit, and they’re trying to qualify for public student loan forgiveness, the PSLF, these six months of payments through September 30th will count towards the 120 they need for loan forgiveness. So just a way to try and get some extra cash on hand. We’ve even had clients start calling their auto insurance companies. So like we’re a two car family, but the two of us have never left the house at the same time right now, right? One of us is home with the kids. The other might run to the market or something. So contact your auto insurance provider right now and talk to them and think maybe there’s a way that you can temporarily suspend a car from the auto insurance or drop your mileage significantly, and try and save some cash that could free up $50, $100, maybe even more dollars per month. So what I will say is people are being flexible because this is something that everyone is going through right now. So if you contact your loan providers, your credit card companies, I’ve even had some clients they’ve talked to their landlords for their commercial properties and asked for something called a rent abatement. So essentially that’s usually in the initial outset of the contract that you signed, but you might tell the landlord, COVID-19– I’m sure that he or she will be aware of COVID-19 and just, we’re going through a really hard time financially right now. Is there anything you’re willing to do? We want to keep paying our rent, but maybe you can help us out. Maybe you’ll give us 50% off the next three months if we pay you, or maybe you’ll give us a month free just to keep the lease through the term.
Sarah: (33:30) Right. You’re not using it, if you’ve got a clinic you’re not using that space right now.
Craig Goldslager: (33:33) Exactly. And they still want to get paid. Getting paid something is better than getting paid nothing. So I’m sure that people are willing to work– I’ve seen it firsthand with clients that they’ve called their landlord directly, and they’ve gotten a few hundred dollars off or they’ve gotten half off their rent. You know, just–
Sarah: (33:48) Now what about not paying your mortgage? You know, I obviously don’t not pay it and not talk to them, but I’ve seen where some mortgage companies will let you not pay and then tack it onto the end. But is that a good idea?
Craig Goldslager: (34:05) Again, it’s such a unique circumstance. The financial advisor in me says, be careful because you’re going to– if you defer the payment from now and tack it on at the end of a 30 year mortgage, interest will continue to accrue. So if my interest– most people, if you take a 30 year mortgage and let’s say you’re a year or two into it, the majority of your payment’s going towards interest right now, it’s not going towards paying down the principal. So if you’re paying all of this in interest, and then it just continues to accrue over time, yes, you’re tacking the balance on. So there’s a huge difference when we’re talking about forgiveness versus deferral. Most banks are willing to defer the payment, not forgive the payment. So you’re adding it onto the end. You know, at the end of the day, you have to pay for essentials right now, right? Your food, your water, your toilet paper.
Sarah: (34:51) Good luck.
Lisa: (34:55) You’re saving money there, there is no toilet paper.
Craig Goldslager: (34:56) Right? Exactly.
Sarah: (34:57) Everybody needs to put in one of those bidets, or whatever they’re called.
Craig Goldslager: (35:01) Yeah. That’d be a good industry to get into right now. So it just depends on your personal situation. You might be so cash tight that you want an extra month or two without a mortgage payment. So then it gets added on to the end. And so yes, it will increase the balance and you’ll owe it again at the end of the term. But I mean, another thing a lot of people like to do is pre-pay a mortgage and you might not even know it also, but you might be paying an extra few hundred dollars or thousands of dollars, who knows, to pay your mortgage off earlier. Call the bank and say, hey, I just want to make my minimum payment now, I don’t want to pay extra. Just keep finding all these sources of cash and saving the cash. So that’s another thing. It’s hard right now, but a lot of conversations we’ve been having also are about just refinancing debt. So we’ve been talking about a lot of the bad that’s going on right now, a lot of the difficult things. Some of the positive things are interest rates being so low. So it might be worth contacting your student loan provider or your mortgage lender, depending on what your interest rates are on those types of debt. You can certainly try and refinance, get a lower rate because right now mortgage rates, depending on when you got your mortgage, mortgage rates are as low as they’ve almost ever been. So it’s a great opportunity to try and find some extra cash flow that way. We’ve seen clients save thousands of dollars a month by refinancing a combination of student loans, commercial properties, personal properties, things like that. So again, it’s hard right now because there’s so much volatility in the markets, mortgage markets, equity markets that you just got to try and catch the lender at the right time. Right now, it’s not to say that rates might not be available in a month or two months, but you just want to again, make a phone call, send an email. Just people are home right now, right? People are– I don’t know about mortgage bankers specifically. They’re pretty swamped, but people are looking to have conversations and reach out to these providers and see if they’re willing to work with you.
Sarah: (37:01) Talk about volatile is the stock market. What if we do have, we’re not– again, this is not an area that I have any expertise in, but we do have some money in the stock market. Can you talk a little bit about that for any of our listeners that are panicked if they checked their recent, investments and they’re not looking so good? Do you have any, I mean, again, it’s hard to predict what’s going to happen–
Lisa: (37:30) Even my mom, she has, you know, her retirement in stocks and she’s gotten her most recent statement and is like, oh my gosh, I’m so nervous because I thought I had this much to live on. And now I see it, you know, so low.
Sarah: (37:44) Right.
Craig Goldslager: (37:44) I pause because it’s a loaded question. The number one question I have received when speaking with clients over the last four weeks, and it sounds Lisa like what your mom is saying, kind of like what Sarah’s saying, it’s just a really, really easy, basic three word question. Am I okay? And that means something different to different people based on where you are in life. So for instance, if I just graduated CF, and I’m just starting out in the schools and I’m in my mid twenties or late twenties, I have a potential 60 to 70 year time horizon because I’m going to be saving for retirement. Then what oftentimes people forget is you save all this big bucket of money to get to retirement, but then you have to live in retirement too. So all of a sudden you’ve been earning a paycheck for 30, 40 years while you’re working and now you’ve saved this pot of money and you have to spin income off of that pot of money. So to answer Lisa’s question about her comment about her mother, it just depends. So I think it’s really important for everyone to have a plan. It might not be the best time to develop a plan right now, or I should say it is the best time. I would not– I would caution about doing something based on just looking at your monthly or quarterly statements, because being a market historian and looking and analyzing and seeing how things go, this is not the first health scare that’s caused stock market jitters. It seems really extreme because it is the fastest bear market in history. So a bear market is defined as when the market goes from its top down 20%. That’s the fastest that ever happened. And so, as I mentioned earlier, days feel like weeks, weeks feel like months. And in the stock market, we know historically over time from, let’s say the last hundred years from 1920 to 2020 will return about 9% on average in a year. But it’s very rarely going to do 9% in any given year. That’s why it’s an average. So we’re talking about 9%. We’ve seen daily market moves of 9% this month. We’re seeing moves of a year in a day. So my number one thing that we talk to clients about, and we actually relate it to this. So if you’re a clinician who believes in evidence based practice, right? Research and showing outcomes and implementing things into your therapy, based on research and study, our practice believes in evidence based investing. So it’s based on historical research. We know how markets are supposed to perform. So a bear market going down 20% from top to bottom, that happens about one of one out of every five years. So it’s not unprecedented. Right now we’ve seen the top to the bottom was 36%. That’s happened eight times in history. So this is not unprecedented, it’s just the volatility and the speed at which it’s happened is so bad. And so by looking at daily statements or turning on the news, it’s really hard right now because they always have the little stock symbols in every channel. Now, even if you’re watching The Today Show, like my wife or you’re watching CNN or you’re watch– you don’t have to be watching the stock channel. You can be watching any channel and everyone’s talking about it, which makes it really hard to tune out.
Sarah: (40:55) It’s not on Bravo.
Craig Goldslager: (40:55) Okay, the housewives aren’t talking about it yet?
Lisa: (40:59) Bravo and MTV, those are my top viewings.
Craig Goldslager: (41:03) Good, okay. So listeners, stick to the Real Housewives and Bravo and MTV. But I call it financial pornography because what they’re really trying to sell are ratings, they’re still having advertising. They want people to watch their channels. And it’s a lot more, you know, a lot of that goes into the behavioral aspect and there’s a whole chapter of finance called behavioral finance. And there’s a reason why they light things up green and they light them up red. And why people– the pain of loss is so much worse than the joy of pain of gain that people– that they know, all of this stuff. And so the fact that they’re– because you have to think about how people are being compensated also when they’re just showing information. So for instance, if you’re seeing, let’s say you log onto your phone and you’re maybe looking at your accounts and you can trade on your phone, trade stocks or do whatever you want to do. If you see there’s people behind the scenes, every time you trade, they make money. So they’re trying to encourage trading in the account because they’re making money every time you make a trade. So the more you log in, the more likely it is you’re going to make a trade or make an impact or do something. When we talk about building a plan and having a plan in place, and we talked about the young CF. Now you talk about someone who’s retired or trying to live off of that big pot of money I talked about earlier. It’s just knowing what the expectations are for that money. For a retiree to be invested entirely in stocks, very risky proposition, just because they don’t have necessarily the investment horizon that we talked about for the CF who has 60 years of life expectancy. A retiree who is age 70 might have 20 years left and it’s going to take a lot harder to recover from a bear market or a down market. So knowing what the expectations are, knowing what you should look for, you know, if I’m living on a thousand dollars a month, $10,000 a month, whatever it is, having managed expectations and knowing what’s reasonable. And so that comes in the conversation with a financial advisor and you have that conversation. Here’s, what’s reasonable, here’s what we expect for the account. If someone gave me a hundred thousand dollars and said, I want to live off of $50,000 a year from a hundred thousand dollars, I would say that’s not reasonable. You can’t do that. There’s no investment in the world that’s going to get you consistently 50% every year. If you want to live on a 50% withdrawal rate, you need 50% rate of return. That just doesn’t work. So you have to figure out the numbers, figure out what’s appropriate and what’s reasonable, but the long and short of it is knowing where you are. If you have money saved for retirement, if you’re looking at your 401k statement or your IRA statement, most likely you’re not gonna need that money for 10, 20 years. So oftentimes the best action is no action. Even if you don’t act, you still are making the action of doing nothing, which is in my book considered still doing something. So usually that’s the best case.
Lisa: (43:57) Is this a time now where if I’m making charitable donations, I need to consider, like, I hate to even say that out loud, but like, should I be keeping that money? Or should I be, is that–
Craig Goldslager: (44:10) It’s such an internal question, but internal isn’t right, it’s individual. Some of my clinician clients, they give 10% of everything to charity and they’re still doing it right now. They don’t even get the tax break because, so we talk about accountants and we talk about, I don’t know, depending on whether you take a standard deduction versus you itemize your deductions, if you’re doing itemized deductions, you still benefit from being– aside from the good that you’re doing from– I shouldn’t say that goes with that being said, you’re doing great by donating to charity, right? You’re helping a lot of people who need help, but some of the benefits of donating is the tax benefit of doing that. Right? So if you’re itemizing your deductions, maybe you should continue to do that if you’re not benefiting from doing it hard to say. But that was another provision of the CARES act too, that there’s a $300 deduction above the line tax deduction this year. So without getting super technical, that’s another thing in the CARES act.
Lisa: (45:07) What about if I am completely unemployed right now? Is unemployment something I can go for?
Craig Goldslager: (45:15) Phenomenal question. This is a historic time to be filing for unemployment. The jobs claims numbers come out every Thursday. So we’re–
Lisa: (45:27) Sarah you’re fired.
Sarah: (45:27) What?
Lisa: (45:27) You’re fired.
Craig Goldslager: (45:29) So it’s funny– normally– well, it might not be such a bad thing when I tell you how rich unemployment is today. But one of the things that they did as part of the CARES act is implemented something called pandemic unemployment insurance. So normally if you become unemployed, like Lisa just fired Sarah. So now Sarah is unemployed
Sarah: (45:49) And I forgot nobody can see me, but I just shrugged.
Craig Goldslager: (45:53) sad face emoji.
Lisa: (45:54) Your lifestyle won’t change much right now. You’re like, okay, I guess I’ll just stay home some more.
Craig Goldslager: (46:01) Right? You’re staying home anyway. And so what’s happening is historically– and so I will start this with a caveat and disclaimer that every state has different qualifications and administration of– not social security– but of unemployment benefits. And so you have to apply through your state. So I don’t know what Arizona’s unemployment rate is, but in Florida, the average unemployment is let’s say $250 per week, if I get the full benefit. It ranges across the country for maybe 250 to 550 or 600. Right now with the pandemic unemployment insurance, the federal government is going to give you an extra $600 per week on top of what you get from your state. So if you qualify for $1 from Arizona, so maybe you are an independent contractor because independent contractors are now eligible to apply, self-employed individuals are eligible to apply. So if you were seeing a caseload of four hours a week apply, because if you get $1 from the state, it’s not either/or, or dollar for dollar match, you get $600 from the federal government per week for four months.
Sarah: (47:11) Oh good. I have to take– that’s what I’m losing sleep over at night is, and everybody is. I don’t mean just me– just me, I’m the only one worrying about it. But the unemployment, that just terrifies me.
Craig Goldslager: (47:23) So what I was mentioning at the– so the jobs numbers come out every Thursday morning and today was another five plus million. So right now, 19 million people who’ve applied in the– or have become unemployed in the last three weeks. The law before today, the most of the people to apply over a three week period in the history of unemployment was 2 million. And now we’re at 19 million. So we, you know, everyone hopes that this is a short term blip. Everyone hopes the economy comes back soon, but it is certainly a thing. And that’s why– so the CARES act altogether appropriated 2.3 trillion dollars–
Lisa: (48:05) Where does this money come from?
Craig Goldslager: (48:05) From the federal government. So they’re producing all this money, your kids, my kids, the grandkids. Depending on– that’s where at some day the government’s gonna have to foot the bill. And usually it usually comes down to two situations, right? Either want to be proactive and get this money in people’s hands now or you want to have 20% unemployment and deal with it at that point when there’s just anarchy and chaos. So they’ve chosen to do that now. This is one of the most proactive things the federal government, and the fed specifically has ever done by having all of this legislation and getting this money into people’s hands through all the different programs we’ve talked about so far today. And so the short answer to your question is at some point, the government’s going to have to foot the bill. And is that by increasing taxes? Is that pushing it off further down the road? I mean, one of the benefits for them by doing all these loan programs, I mentioned for the individual interest rates are so cheap right now, it’s also really cheap for them to do these programs because the fed dropped interest rates to zero a couple of weeks ago. So they’re doling out all this money at very low interest rates. And so they’ve talked about doing a– so there’ve been three phases of legislation so far, they’re talking about phase four at some point, and that might include an entire infrastructure overhaul in construction because we know that the infrastructure in America is falling apart, bridges, roadways, things like that. So that could put a lot of people back to work too. They might issue more types of government bonds, municipal bonds, things to get people invested in the government and local municipalities. So at some point the total debt of the country is in, I think, 18 trillion now. So now it’s 20 trillion. And so, I mean, it’s so hard to even conceptualize how big of a number that is, right? Like, if I were to ask you how many years do you think 1 trillion seconds is?
Lisa: (49:57) About four minutes.
Craig Goldslager: (50:01) 31,000 years. Like, and you don’t even know what that number means. So there’s a term in finance called denominator blindness. Like this number, these numbers are so big. I don’t even, I can’t even comprehend that. A trillion dollars, like what? It’s crazy. And so the nice thing is that they’re trying to help all these people and get money into their hands. So even if you are still working as a clinician and you have hours, even let’s say you have full hours and your spouse lost their job, or they were a gig economy worker, they were an Uber driver. They were a delivery person. Whatever the case may be, they can apply too. So more often than not, it’s worth trying to just get an application in. Hopefully your state has a good state unemployment website. Down in Florida it crashes all the time like it’s such a nightmare. The horrible thing is they’re having people like line up at libraries right now in person to try and fill out paper applications. And so it’s so bad that people can’t apply online, that they’re trying to do that. And it’s just, the last thing you want to do in a health scare is go line up somewhere and try and apply, and it’s a disaster. But even if your hours are reduced, you can apply too. So if I’m you seeing 20 hours of caseload and I’m down to 10, part of the unemployment insurance provision was a short term compensation program. So basically it’s trying to bridge the gap between your normal case load and your reduced case load. So throw an application in. Most applications will say something like, have you been directly impacted by COVID-19? And so, you know, it’s up to your discretion on why you’re filing and what you’re saying for, but most likely if you have children, your children aren’t able to go to daycare or preschool or regular school, however old they are. And a spouse has to stay home with the kids because there’s no way to do it. So some states might approve that as a reason, some may not. Again, it’s a state specific thing. Go on your state local website, unemployment website. There’s a good– maybe I’ll send you guys some links after this this that you can post.
Sarah: (52:01) Yeah, that would be great. We’ll attach any resources.
Craig Goldslager: (52:04) But there’s one really good– I’m drawing a blank on the name right now, but it gives the unemployment website for every state as like a one stop shop. So a good resource for the listeners. But yeah, unemployment, another way to get cash right now. You may think, you know, a lot of the situation is not any individual’s fault. So like I said, the government’s giving out all this money. There’s so many resources available. Don’t try and– do try and take advantage of the things that are available to you.
Sarah: (52:34) Well, and that’s what I was going to say. Like, I don’t know if this is naive to think this, but, you know, having lived in the last time that we had the crash, when was that 2008? You know to me, this feels a little different in the fact that there just seems to be more support. And, what’s the word? Like, my landlord can’t kick me out, right? Isn’t there some, some kind of law that you’re not allowed to kick me out of my apartment if I can’t pay my rent?
Craig Goldslager: (53:00) Right. So some states like New York state, New York City, they’ve been very, you know, it’s the epicenter. And so they’ve been very proactive with lot of this legislation. Governor Cuomo said that for 90 days, you can’t forbear on a resident or you can’t evict the tenant for 90 days. Whether they’re able to pay or not that you can’t evict someone for that. And so–
Sarah: (53:21) And electric companies can’t shut off your electricity and water companies can’t shut off your water. And so I feel like there is– you know, there’s things that are happening to help support everybody through these insanely difficult times, which that part’s unprecedented, you know?
Lisa: (53:36) I mean, and I think that’s the gist of what I’ve gotten from talking to you today too, is that look at what’s available right now. Like you’re not going to get evicted. You’re not going to get your power shut off, all of that. But then also then take a minute, get your bearings and figure out where is some of that hidden cash that I may not have thought about. So look into those 401ks or IRAs, if you have that home equity loan where you’re like, crap, I totally forgot I did have that. I mean, that’s a great idea to tap into the availability of unemployment on all levels. So whether it’s directly impacting your hours, like you don’t have to be unemployed, but if you’re losing hours, I mean, there’s lots of little things that you can do to get that cash flowing while you’re waiting for your stimulus check and what’s coming up next. So I love it. It’s– and again, like you said too, even defer your student loans, if you need to like, just be creative in what you’re currently paying.
Craig Goldslager: (54:32) Just make sure they’re federal student loans, because if you already and you go– but you could also talk to your lender, they might be willing to work with you right now, too. I mean, like I said, everyone’s going through it. A lot of the auto insurance companies know that nobody’s driving or driving very limitedly right now. So they’re issuing discounts automatically. But again, another one to add on is call them or go online and change the coverage on one of your cars. If you have multiple cars in the family, because I’m confident that both spouses, unless you’re both critical employees and you might be, so maybe you both are still driving. But you might not be, you both may be staying at home now. So then you might not need any cars. I don’t know.
Sarah: (55:10) I am saving a ton of money on gas.
Craig Goldslager: (55:12) Well, that’s the irony. Do you know gas for me down here? I saw $1.29 the other day.
Sarah: (55:18) Oh wow.
Craig Goldslager: (55:19) And I filled up once in March for both cars combined. One time. So.
Lisa: (55:25) Well this has been awesome, I think–
Sarah: (55:25) This has been so good. I was actually just thinking like when we get past this craziness and who knows when that is, I want to do another episode where we just talk about like planning.
Lisa: (55:41) for the future.
Sarah: (55:42) for the future. And, you know, just.
Lisa: (55:44) we’ll say hypothetically, it’s a 46 year old woman who owns a small business. Has couple of kids, didn’t have a lot to save for a retirement account
Craig Goldslager: (55:52) You’re never supposed to ask a woman her age, so it better be hypothetical. But I will say I think that’s a wonderful suggestion. Normally I’m not in such a crisis prevention and figuring out, I mean, these are all great resources we talked about today, but things will get back to normal at some point. Life will carry on, this too shall pass. And what I really focus on with clients or things like that, having a game plan in place and that can– you know, oftentimes it’s not where to find cash, but maybe I have excess cash in my life, or what should I be doing with this cash? Or how can I be better with my taxes and be more tax efficient? We talked a little bit about benefits, but sometimes people don’t even know what their employer benefits are. Or if you’re a small business owner, you are the employer, what are my benefits? What am I offering my people? We talked about asset allocation, should I own stock? Should I own bonds? What do I do in this type of environment? And so a lot of building the game plan, I know there was no business classes taught when you were in undergrad or getting your master’s degrees or earning your C’s. And so that’s really where a financial advisor comes into play, to help with all of these different things and put a game plan in place to help you figure out some of these questions.
Lisa: (57:07) So we will attach links to your website, but then also if you can share those links that you want us to post, then that’d be great. And we’ll just kind of go from there.
Craig Goldslager: (57:18) Awesome. Thank you, Lisa and Sarah so much for having me, this was so fun. What a nice reprieve from my normal, conversations right now. So.