Wilson David Investment Advisors
I fix things. My specialties are financial planning, financial literacy education, taxes, and investment advice, but over my 30-year career, I've been able to help people fix problems with money, construction projects, meetings, sentence construction, culinary disasters, and academic difficulties.
I wish I were like Samantha of the TV show Bewitched and could just twitch my nose to repair everyone's problems. Unfortunately, no magic erupts when I twitch my nose. I help clients using my knowledge, experience, and hard work...although I like to think that our working together has its own magic. My work as a lecturer, teacher, copy-editor, writer, presenter, negotiator, researcher, and office manager in a diverse cross section of business, educational, and government organizations has helped me gain the depth of knowledge needed to advise my clients in all aspects of sound financial planning and investment. I have been described as a fast, cheerful, flexible worker who rapidly resolves unexpected problems and project difficulties. I manage work quality and time based on guidelines provided and use my talents to provide customers with top-notch service.
As a champion for financial literacy, I speak at high schools, libraries, career fairs, churches, businesses and community groups - anywhere I can get a platform! - to raise awareness about financial knowledge and safety. I recently published "Financial Advice for Blue Collar America" which offers guidance on basic concepts of money including insurance and taxes, financial traps to avoid, how to pay for college and tech school, and info about the bright future ahead for blue collar careers.
BA, College of William and Mary
MA, College of William and Mary
MBA, University of South Carolina
By choosing to work with this Advisor, you acknowledge that neither Wilson David Investment Advisors nor this Advisor makes any representations or promises that the services you receive are appropriate for you and your business or guarantees any specific outcome or results. Wilson David Investment Advisors does not guarantee the suitability of the Advisor for your particular needs and does not endorse the advice and services rendered by any Advisor. Wilson David Investment Advisors is a registered investment adviser registered in South Carolina and GA through FINRA. Any commentaries, articles or other opinions herein are intended to be general in nature and for current interest. All content on this website is presented as of the date published or indicated, and may be superseded by subsequent market events or for other reasons. All investments involve risk, including loss of principal invested. The answers presented on Ask an Advisor should be considered general information presented to inform the public. They are based on the information provided in the question, which may have omitted important details that would have changed the answer had they been known. Please consult a financial advisor before concluding that the information is relevant to your own situation.
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Hi – thank you for writing. This situation is a tough one to be in, and my heart goes out to you. It is scary and uncomfortable to owe more money than you have at the moment or that you can make in the near future. It won’t give you much consolation for me to tell you that you are not alone in being in this situation – you and many other Americans share a heavy debt burden.
Luke’s action items are great. I wanted to add a few more possible ideas. I don’t have to tell you that somehow you need to either spend less money or make more money so that you can apply the extra toward reducing your debt. That advice is so hard to implement because the basics of life are so expensive, and the extras of life are so appealing, seductive, and also expensive. It is SO HARD to reduce spending, and it’s often just as hard to increase earnings.
Practical Tips for Raising Cash – You may have already tried one or more of these, but just in case you haven’t, I’ve listed some ideas here.
- Work paid over-time if it’s available at your job.
- As Luke said, look around at your belongings to see what things you don’t really like or use that might be worth some cash. Sell things you don't need on eBay or at IWanta, being careful not to get scammed by unscrupulous “buyers.” Family and friends may also want to buy things from you.
- Consider asking for a raise at work if you haven’t gotten one in a while. They won’t fire you for asking, and the most they can say is no.
- Get a part-time, second, or seasonal job - finding one can be hard, though! You might have better luck during the Christmas season when stores do a lot of extra hiring. Look into this tactic in September or October so you don't miss out. Be creative about what you can do. My husband and I are 57 and 54 and throughout our careers we have always had at least two jobs – a main job and one or more on the side. Even if your career is not the type that lends itself to consulting, maybe you could earn some extra money by baby-, dog-, or house-sitting or food service or lawn work. Having a second job brings in more money each month and reduces what you spend on entertainment because more of your hours are taken up by working. Here are some more thoughts about the value of a second job.
- Cut unnecessary bills. Cutting out cable TV or pedicures technically doesn't generate cash, but it leaves you with more cash at the end of the month. It's hard to give up your favorite shows or an activity that makes you feel good, but if you console yourself with the idea that the sacrifice is temporary, that will help.
- Consider asking a wealthier loved one for help. You might ask for help paying a medical bill or a particularly expensive utility bill rather than ask for cash – sometimes a one-time concrete gift is easier to ask for and to give. Many people who are comfortable financially enjoy helping out loved ones who are in a pinch, but they tend not to offer help for fear of hurting feelings or opening the door to being asked repeatedly for help. It can be hard to ask, but it might be worth trying depending on your circumstances. It might be best to ask for a gift rather than a loan so you don't have repayment hanging over your head, and be sure to include an “out” for the person you're asking if they don't want to or aren't able to help. In your case, a loan with a very low interest rate could really help because you mentioned that you currently pay high interest on the debt you are carrying.You could send an email or letter to pave the way before asking verbally. Be honest about how hard it is for you to ask and how fine it is if the person doesn't end up helping. If your request is granted, be sure to say thank you verbally and in writing.
- Apply for assistance if you are qualified to receive it. There’s no shame in using food stamps, WIC, free or reduced lunch for the kids at school, or other forms of governmental help. Also consider faith-based help from your church, other churches, food banks, or other religious charities.
I hope that you can get to the point where you are able to pay off the loans! In doing so, you’ll raise your credit score and get to a place where you feel more financially comfortable. Best wishes to you and please write back to us with more questions.
Hi! I am sorry that you are experiencing health issues. Advisor Thom Hall’s answer is great and covers the different ways your ultimate Social Security Retirement benefit could be impacted. One other way you could have that retirement check affected is this; if you’re receiving Social Security disability benefits, your disability benefits automatically convert to retirement benefits when you hit full retirement age (FRA), and the amount remains the same. When you get SSDI, the disability benefit amount is the same as a full, unreduced retirement benefit. So another way that taking SSDI could affect your regular SS check would be if you had been planning to delay taking your benefit beyond your full retirement age (FRA), like until age 70 or something. Then you’d be getting a higher benefit check than if you had the SSDI converted to the full benefit that you get at FRA because when you wait years past your FRA, you get a much higher monthly amount. More info here: https://www.ssa.gov/planners/retire/1943-delay.html.
As Thom notes, we aren’t sure if when you say you have filed for disability, you mean that you’ve filed for Social Security Disability or filed for short- or long-term disability from private disability insurance you have from your work or that you bought on your own. If you have filed for Social Security Disability (SSDI), I want to let you know a few things so that you aren’t surprised if your request is denied.
To be eligible for SSDI it is required that a person meets these conditions (from SSA.gov):
- You cannot do work that you did before;
- We decide that you cannot adjust to other work because of your medical condition(s); and
- Your disability has lasted or is expected to last for at least one year or to result in death.
The SSA goes on to say that, “your medical condition must significantly limit your ability to do basic work activities—such as lifting, standing, walking, sitting, and remembering—for at least 12 months. If you can’t do the work you did in the past, we look to see if there’s other work you can do despite your impairment(s). We consider your age, education, past work experience, and any skills you may have that could be used to do other work. If you can’t do other work, we’ll decide that you’re disabled. If you can do other work, we’ll decide that you don’t have a qualifying disability.”
Also, keep in mind that SSDI looks at any work that you could possibly do as “being able to work.” So if you were a construction manager who made $130K per year who is now very disabled, but could still sit in a cashiers chair at Aldi part time making $8.50 an hour for 20 hours a week, you are considered “able to work” and will not receive SSDI. This is a fact even if you have been making $100K to $120K your whole adult life for 30 years of paying into the Social Security system. I have worked with many clients who didn’t understand this rule, and it is very upsetting to them when they realize it. This SSA site has more info: https://www.ssa.gov/pubs/EN-05-10029.pdf.
If you have applied for SSDI and are denied, it’s worth doing an appeal. You may also want to hire an attorney who helps with disability cases. I am so sorry that things are this way, and I hope you are able to manage. Thank you for writing.
Hi! Advisor John Barringer’s answer is exactly right, and I want to add a few words of clarification. First, regardless of whether you leave the money in cash or invest it in something else, you would owe tax on profits you made from it (if any). Second, it may be that money was already withheld from your paycheck to cover the tax you’d be likely to pay, so it may not be a tax “surprise” when you file. Third, you only owe tax on the profit you make from the sale. So, if you bought 100 shares of stock for $30 (a total of $3,000) and then the shares were sold at $40 (a total of $4000), you would owe taxes on only the $1,000 profit (less any sales cost), not on the whole $4,000. Also, you won’t owe any “tax penalties” as a result of this, but you might owe actual taxes. Thanks for writing!
Hi! Advisor Eli Weissman is exactly right. I wanted to add that you'll want to get that done within 60 days since the IRS sets a time limit on having the money out of a qualified retirement plan. Thanks for writing!
Hi - thank you for writing, and I'm sorry that you've hit a rough patch financially. I hope things will be better soon. Larry Frank's answer is spot on, but I wanted to suggest one other thing....maybe instead of taking that withdrawal, which you will need to pay income taxes for in the year you take it out and will ultimately reduce the amount you have, could you just add the $1,000 on to the existing loan? You'll still need to pay the entire amount back, but you won't need to pay taxes on the money that you are borrowing at this time. (Keep in mind that 401(k) money is tax-deferred, so when you do withdraw the money permanently you do pay tax on it.)
Additionally, you will probably incur a 10% penalty for withdrawing early. There are exceptions to the penalty but they are pretty much only for the following
- You're receiving distributions in the form of an annuity
- You're deemed totally and permanently disabled
- Your unreimbursed medical expenses exceed 10% of your AGI if you're under 65 at the end of the tax year (7.5% if you're 65+)
- The distribution is due to an IRS levy or your death
- You took the distribution as a military reservist called to active duty for more than 180 days
None of the above fits your situation as far as I can see unfortunately.
With a 401(k) loan you don't pay taxes at that time or get a penalty unless you don't pay it back within the specified time, usually 5 years.
I hope this info helps, and best wishes to you.