Time & Savings

You may not think that my title goes along with a consistent thought pattern, after all, taxes are one of those normal life headaches that cost us money and typically, savings is something we are doing that provides a long-term benefit. But what if you could save money and reduce your taxes at the same time?


Have you considered the tax-deferral available to you by utilizing an IRA? IRA accounts have been around for a long time, and yet, many of us don’t take the opportunity to fund this portion of savings that avoid the taxes that would be imposed upon that income you are setting aside for future use – in retirement.


We have a couple of good options for your consideration. Washington State Bank offers these first two options to anyone who wishes to start or continue depositing dollars for retirement planning.

  1. Traditional IRA – every taxpayer in the United States has this option, even if you are covered by an employer 401k or other type of retirement program. There are limits to the amount you may contribute, and I would encourage you to speak with your tax preparer about those limits.
  2. Roth IRA – this is going to be after-tax dollars, so you don’t receive the immediate benefit, but since you have already paid taxes on these contributions, you will be able to withdraw those funds with very little tax consequences in the future. In most cases, the withdrawals will be tax free.


Additionally, we have a partnership with NestEgg that allows you to access investment products that are typically offered in a brokerage with a discounted fee structure. These investments allow you to increase your potential return over the time that you are working toward retirement. Nest Egg is an online brokerage and they offer one on one service as well as the opportunity for you to make investment choices on your own.


Let me give you an example of how much you might be saving over a 20-year time frame…


For example, you decide that in 2024 you wanted to defer the full amount of $7,000 to an IRA account. And you commit to setting aside this amount each year going forward.  $7,000 per year for the next 20 years. I am going to use a conservative 6.0% return on investment over the 20 years. (For this example, I am using the Future Value of Money Calculator at calculator.net)


In 2024, you begin and at the end of the first year you have a total of $7,420.00. At year 5 you would have a total of $39,459.00 (while contributing $35,000) By year 10, your $70,000 investment would be worth $92,265.00. In year 20, compounding has almost doubled your investment of $140,000 to a total of 279,949.09.


If you are young and can afford this $7,000 annual investment – according to this calculator, you would accumulate $1,000,000 in 39 years. So, if you are in your 30s today, by beginning this simple plan, you would have saved one million dollars by the time you are 70 years old! I think just about everyone would be excited about that number.


Start small, finish big. The rules of compound interest are always the same. If you don’t have $7,000 today, start by adding to your IRA on a monthly basis – that would be about $600.00 per month. 


Maybe the first question is why am I not already doing this?

 

Michael Herzog

President

Happy New Year

By Emily Brandenstein • January 6, 2025
As I was taking some time to reflect upon all that has happened in my life and the world around me during 2024, I thought of these words from Scripture found in Isaiah 9:6 – “For a child is born to us, a son is given to us. The government will rest on his shoulders. And he will be called: Wonderful Counselor, Mighty God, Everlasting Father, Prince of Peace.” My wife and I welcomed three new grandchildren into our lives during 2024, two of our sons are now parents and “wow!” what a ride this has been so far! I always thought that I was protective of my own children, and yet, I find myself even more concerned for the well-being of my grandchildren – looking around our current world, I’m guessing you are experiencing some of the same feelings as we turn the page on 2025. One of the biggest things I have found true is the cost of everything from diapers to formula to toys and books has gone up quite a bit over the last number of years; frankly, I was shocked at the cost of a package of diapers! I have always tried to keep a close eye on my personal finances and watch those pennies to avoid over-spending, but once again, it isn’t just about my own spending, it’s also about keeping a close eye on who else might be trying to “spend” my money. Nope, not talking about my wife or others in my home – I’m talking about those fraudsters that are hard at work trying to pad their own financial picture at my expense. As we step into this new year with hope and excitement, it’s also a great time to protect what matters most — our personal information. Identity theft is a growing concern, but by staying vigilant and informed, we can safeguard ourselves. Here are a few simple tips to help prevent identity theft in 2025: Monitor Your Accounts: Regularly check your bank and credit card statements for any suspicious activity. Very important to check the statement if you are needing to prove fraud. Use Strong Passwords: Create unique and strong passwords for each of your online accounts. Passphrases are also helpful and easy to remember – ie. “Fall is my favorite time of year” – the more characters that you can use, the better. Shred Personal Documents: Shred any sensitive papers before discarding them to avoid dumpster divers. Washington State Bank will be hosting another shred day this spring for your larger projects. Enable Two-Factor Authentication: Secure your accounts with an extra layer of protection. This is most commonly established by a text message to your phone or adding an authenticator from Google, Microsoft, etc – that produce a login code for you. Stay Wary of Phishing Scams: Always verify sources before sharing personal or financial information online. When your bank sends you a code and it has the following message: WE WILL NEVER ASK FOR THIS CODE, please take that seriously – no one from a financial institution needs to have access to your online banking. To revisit my opening paragraph. Isaiah was writing about the coming Messiah – the child will establish a new, eternal government – He shall be called Wonderful Counselor, Everlasting Father, and Prince of Peace. Remember that He called us to be wise as serpents and gentle as doves – Part of wisdom is protecting yourself and your home from these various “serpents” looking to steal what you are working for in this life. Protect yourself and reap the benefits of peace in your homes. Don’t be a victim of identity theft in the new year or any year for that matter! Let’s start 2025 with a plan to stay vigilant in our finances and prosperous in our lives! I look forward to sharing more of this new grandparent journey with you over the next year – and more ideas on making the financial parts of your lives work to your benefit! May God bless each of you as we begin the New Year of 2025! Michael Herzog President

Trick or Treat, or Mostly Just Trick

By Emily Brandenstein • November 6, 2024
When I was much younger, my father used to prepare for a long road trip by starting at our kitchen table and pulling out the current edition of the Rand McNally US Atlas. If you are of a certain age, you will remember this large book that was filled with maps by state to include all of the U.S. highways, state routes and back-country roads located within each of our 50 states. My father would go on to mark up the route in the book so Greetings to all of you who may be reading this short post! I love the changing of seasons in the Midwest, the renewed palette all around us as the trees and shrubs begin to show the Fall’s festival of color. Children are starting to think about the upcoming holidays and the annual gathering of candy from local neighbors willing to share. But, along with all of the positive vibes from the change to cooler weather come the regular emails and phone calls from “helpful” people looking to separate us from our money in less than honest ways. October has often brought a special emphasis on Cyber Crime and awareness to the dangers that our online lives make us susceptible to in the wider world. I was recently reading an email newsletter that I received from BankBeat, and in this article I thought it would be important to lift a couple of sections as additional information. Quoting from the article: “The statistics for individual fraud are staggering. According to the FBI’s 2023 Internet Crime Report , 880,418 complaints of cyber-crime were reported to the FBI by the public, a 10 percent increase from 2022. In 2023, there were more than 3,200 data compromises, up from 1,801 the year prior, according to the Identity Theft Resource Center. A study conducted by the Federal Reserve Bank of Boston indicates that check fraud in 2023 was $20 billion, up from $100 million in 2006.” Data compromises almost doubled from 2022 to 2023! $20 billion in check fraud in 2023! The criminals are very busy indeed. Even so, there are a few things that you can do to keep yourself safe from being a victim. First, NEVER, NEVER, NEVER click on a link in an email that you receive. If you receive a message from a familiar company telling you that you made a purchase or that your payment has been declined – DO NOT CLICK the provided link. Simply go to that familiar website directly, log into your account and check your activity. Let me give you an actual example of what this looks like…I receive at least 5 of these per week. Here is the text… “Thank you for your purchase. You bought $856.72 on October 21, 2024 using your credit card XXXX. If this wasn’t your purchase please click the link and you will be directed to our customer service team. Again, thank you for buying from Apple.com.” When you click the link you are immediately transferred to the scammers who will then look to “assist” with your purchase. They will likely ask you to let them share your computer screen – giving them access to your PC. Then they will obtain your credit card or bank account information in order to confirm that they have the correct information. Meanwhile, you are giving them access to your accounts and banking information. Do NOT make the mistake of thinking you can outsmart them, they are very good and very convincing. Secondly, keep your phone secure by not answering calls that you don’t know the caller. If a call comes to my phone, and the person doesn’t show in caller ID, I don’t answer. So, if by some chance you call my phone, you will likely go to voicemail. Very few scam calls leave a message. That is the easiest way to keep yourself safe while using your phone. Third, and final for this article, obtain a good Identity Theft partner. For many years you have heard advertisements for these companies, and there are many good ones, but be aware of the cost. I find that the companies with advertising budgets are typically, not always, more expensive to utilize. Also, be cautious about the “First Year Free or discounted”, that normally means that the ongoing years will be more expensive. We have a ID Theft program called ID Theftsmart here at the bank that is pretty economical and you don’t even have to be a cyber security. That was my only bank advertisement this month – but if you’re serious about staying safe online consider visiting these pages for more info: 1. Federal Trade Commission 2. CISA 3. National Cyber Alliance Have a wonderful Fall season and take some time to be safe online! Michael Herzog President

Budget Roadmap

By Michael Herzog • September 5, 2024
When I was much younger, my father used to prepare for a long road trip by starting at our kitchen table and pulling out the current edition of the Rand McNally US Atlas. If you are of a certain age, you will remember this large book that was filled with maps by state to include all of the U.S. highways, state routes and back-country roads located within each of our 50 states. My father would go on to mark up the route in the book so that if things became confusing, he had the plan for us to take in traveling to our destination. This book has since been replaced by our electronic maps and personal guides on our phones, tablets and computers. Gone but not forgotten completely – did you know you can still buy a paper map? Anyway, my point in this little trip down memory lane is this, without a map you are going to travel around and around looking for that final destination – the end of your journey. It is the same way with our finances in today’s world, we need a map to direct us on our journey to that final destination. Depending upon your goals at whichever stage of life you find yourself, there are some signposts along the journey that I want to focus on over the next couple of paragraphs. Let’s take out our maps and start the journey…  First, you need to identify your destination on the journey. There is a famous proverb that goes like this, “The journey of a thousand miles begins with one step.” The first step is identification of the goal – all the rest of the steps follow from this first choice. Some of you may be thinking about a first purchase – a car, a house, that dream vacation – others may be further down the road looking toward retirement, there are so many choices available. Next, there are three steps to take, and often you will accomplish these sitting at the kitchen table and writing out a plan to take you on your journey. Just like my father would mark up the journey, so we need to take some time and write out a plan to reach that destination – in finance terms, we are creating a budget. Budget has such a sterile connotation, but it’s really just a roadmap to help us direct our spending and saving to reach a goal. The budget, in written form, can be a concrete map to assist us in staying with our plan – maintaining our focus. Additionally, there is likely some work to do on credit and our spending. It is a little-known fact that in today’s world, your personal credit score determines much more than whether or not you will qualify for a loan. Credit factors into your cost of insurance on your house and car, it factors into your ability to obtain a rental property, or even the rate that you will pay on some loans (auto, home, credit cards). Building good credit is important on your journey. Finally, how do you handle emergencies? What happens to your planning when something goes sideways? Of course, no one taking the time to read this little article ever has something happen that wasn’t planned for, but just in case…what will you do? I want to encourage you to plan for emergencies in your financial roadmap. My father always had several things in the trunk of our car – jumper cables, a good tire iron, a quart of oil, and a gallon jug of water – our emergency roadside box. On all of our family trips, we never had to use any of those things, but they were always in the trunk of the car – my father wanted to be prepared for possible emergencies on our trip. So it is for us, we may not be able to predict the emergency, but being prepared is the next best option. In closing, I would like to make an offer to all of you that are reading this article, to look for the Banzai! link under the services tab. After you click the link you will be directed to a site full of tools and ideas to help you draw up that map for your future self. Don’t wait…do this today and start setting yourself up for a successful journey! Michael Herzog President
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