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Posted by Greg Caramanica on December 21, 2017

Holiday Travel – without breaking the bank

Travel to Christmas Markets in Germany on a budget!

My family and I just got back from an amazing week long trip to Europe and it didn’t cost us a fortune!  But how?  Surely, travelling to German Christmas markets (see picture above) in the height of the Christmas season would not be cheap – or so we thought.

A great strategy (that I share with many of my clients) for managing family finances is to have a primary credit card that both husband and wife use to charge most of their everyday expenses.  This creates a centralized view of spending that makes it easier to identify when you are spending more than your budget allows and apply the brakes when needed.

This is not to say that you won’t have other credit cards.  You will likely need a  backup that you can use in case your main credit card gets stolen or is otherwise not usable.  It’s smart to use this backup credit card for monthly subscriptions and other recurring fees that you don’t want to be disrupted if your main card stops working (which may happen more frequently if you are using it for everything else).

If you are using a main credit card for the majority of your everyday family spending, it is best to pay it off monthly or else you’ll start to accrue finance charges that will negate the benefits of this approach.  You’ll also need to increase your emergency savings to cover a whole month of typical credit card spending, so that you can still pay your credit card balance from the previous month if you lose your job (or other disruption in income).

Using credit cards for everyday spending is not for everyone.  If you have a tendency to overspend when using them, there are other techniques and approaches that may suit you better. Talk to your financial advisor to determine the right technique for you.

But if it works for you, consider the potential travel benefits!  If you choose a credit card that has a travel rewards program (preferably with a low or no annual fee), you could build up benefits each year when using the card for the majority of your everyday expenses, which can add up quickly!

In our case, we were able to pay for four seats, round trip, from Washington D.C. to Munich, as well as a full week’s rental car with our travel rewards.  This shaved over a thousand dollars off the cost of our trip, leaving us with expenses related to food, beverage (gluhwein!), lodging, and souvenirs.  Lodging for most of the trip through AirBnB helped to trim that cost down even further – as well as a favorable exchange rate.  In the end, we probably spent less than $2,000 for a week in Germany.  And we had a great time doing it!

We also travelled to Austria to see the amazing Alps, pictured here:

Travel to the Austrian Alps on a Budget!

If you’d like to talk more about this strategy and other strategies for affording the things you want in life, give us a call!

Danke (German for “Thanks”),



Posted by Greg Caramanica on November 26, 2017

How to Survive the Holidays, Financially

Holiday Spending - Survive the Holidays

The end of year holidays are a joyous time that provide happiness to a great number of people. It is a time when we think of others and a time when the emphasis is on giving.

How do you survive the holidays, financially?

You might not like it, but the best way to control your spending is to create a plan and stick to it. This can be difficult for some, especially in the midst of the holiday season when the air is filled with excitement and the marketing machine of tv, radio, and print advertising perpetually encourage you to spend more.  The idea of constraining your spending during the holidays can stir up many emotions, leaving you with mixed feelings.

Even though planning your holiday spending can be uncomfortable, we can all agree that our loved ones and friends would certainly not want us to go into debt. If they found out that we spent months recovering our bank accounts after the holidays, I’m sure they would rather have something smaller or less expensive instead.  Could you imagine the guilt they would have if they found out they were the cause of your financial distress?

The balance of affordability and generosity is important. The holidays are certainly a time to give and feel good about bringing happiness to others. A proper financial plan can give you a feeling of freedom, knowing that you are spending in a responsible way and purposefully carving out time and resources for others without getting yourself into debt.  It’s the no-guilt holiday approach. Doesn’t that sound amazing?

When should you create your plan? Well, the best time is in the beginning of the year, in January to April.  This is the time when all your final numbers should be available about your prior year’s earnings, taxes, and spending when the buzz of the Holidays is no longer a factor.  Creating a plan outside of the holiday season will reduce the negative emotions.  Then, next year, you can look back on that plan and take your own advice, from a less emotional you, about how much to spend.

So, what can I do now?

Well, you can certainly take the time to prepare a rigorous plan during the holidays, but it’s better to wait.  In the meantime, create a preliminary plan just focusing on holiday spending.  You can do this by quickly looking back at last year’s spending and vowing to spend less.  This is especially important for those of us who spent months paying off credit cards or dipped into savings a little too much, sacrificing other financial goals we had been saving for.

If you review last year’s spending and didn’t feel like you needed to cut back, then congratulations, you are one of the few that fit into this category. Just make sure you are being honest with yourself!

In summary, a sound approach for surviving the holidays, financially is:

  1. Take a quick look at last year’s spending and vow to spend less this year.
  2. Create a quick budget from these numbers, understanding how much you can spend on each person.
  3. Shop online if you can, so that you aren’t subjected to the messaging and spending environment as much as you would be if you went to the stores.
  4. Stick to your plan when buying gifts this year!

Then, in the first quarter of next year:

  1. Take stock of your earnings and spending for the previous year.
  2. Build a robust financial plan where you are honest with yourself about your financial goals and how you plan to accomplish them, taking everything into account and prioritizing. As part of this, create a budget for the year, including next year’s holiday spending with a clear mind, free of the holiday “buzz”
  3. And then, stick to your plan!

Happy Holidays everyone! Be safe!

Posted by Greg Caramanica on November 6, 2017

What is a Registered Investment Advisor (RIA) and why does it matter?

Arlington Wealth Planning is a Registered Investment Advisor (RIA) and I am an Investment Advisor Representative (IAR).  Many people may be wondering what that means and why it matters.  Well, it’s a long story, but I will shed some light on the meaning here.

My understanding is that there are two main ways one can register themselves as a financial planner.  He or she can either be a Registered Representative (RR) or an Investment Advisor Representative (IAR).  Here are the big differences:

Registered Representatives:

  • Work for a “Broker/Dealer” that is a FINRA member firm. The Broker/Dealer provides compliance and access to the investment marketplace.
  • Are required to pass FINRA exams, such as the Series 7 (General Securities Representative) and the Series 63 (Uniform State Securities Law), and maintain them through continuing education and further examination
  • Are usually paid through commissions.  For example, Registered Representatives would only get paid if you invest through them and typically they would receive commissions from the investment company.
  • Typically are held to a standard of “suitability,” which means that they must provide investment advise that is suitable to the client’s needs

Investment Advisor Representatives

  • Work for a Registered Investment Advisor (RIA) that provides compliance and access to the investment marketplace. In our case, Arlington Wealth Planning is the RIA and I am the IAR.
  • Are required to pass FINRA exams, such as the Series 65 (Uniform Investment Advisor Law), and maintain them through continuing education and, possibly, further examination
  • Are usually paid through fees.  For example, the customer would pay the advisor for services provided, at a pre-agreed upon price.  This payment is usually paid directly to the RIA and is not commission related (e.g. not paid as a result of selling an investment, but rather as a result of providing a service).
  • Are typically held to a standard as a “fiduciary,” which means that they must have the client’s best interest mind, given their entire financial situation, when making recommendations.

Those two definitions may sound similar, but the last two bullets are significant – how we get paid and the standard to which we are held.  There is a trend in the financial planning industry toward fee-based compensation (the RIA/IAR model).  For instance, recently, the Department of Labor (DOL) published it’s Fiduciary Rule (currently on hold), which attempts to prevent retirement investments from being provided through the commission model (without a special contract).  The justification is that there is a perceived conflict of interest for financial planners who earn a commission on the sale of investments, in that they may be drawn to recommend investment products that pay them more commission.  While suitable, the product might not be the “best” product for the customer when you consider the rest of their financial picture.

This is where the standard is important.  The suitability standard simply means that the investment recommendation must fit the client’s need.  For instance, the client could ask the financial planner to invest $10,000 into a mutual fund.  The planner’s job, under the suitability standard is to find the mutual fund that best suits the client’s investment horizon, risk tolerance, objective, etc.  However, the fiduciary standard is different.  Under the fiduciary standard, the planner would collect information about the client’s entire financial situation to determine whether a mutual fund is what should be recommended in the first place.

This example is fairly simple, but the situation can become quite complex.  In our experience, the general sentiment of the people we serve is that they would rather pay a fee than a commission for financial planning.   We at AWP agree.   The fee-based business model makes more sense to us, as fees correspond to services rendered, and not to products sold.   Tying compensation to services means that there is more of an incentive for planners to provide quality service, not just to push more product.  We hope this means that customer service in the financial industry will be more important – like it is for us.

Posted by Greg Caramanica on November 2, 2017

Is the prevalence of information hurting the financial planning profession?

With the advent of information technology and the increased ability for people to find information at their fingertips, those in the financial planning industry might have been concerned that financial planners would go out of business. On the contrary, financial planners are being sought even more so – at least in our experience. What we’ve seen is that the availability of information has created consumers who are more financially literate and, as a result, are more aware of the kinds of things they should be concerned with. This awareness has nearly eliminated the need for financial planners to instill a sense of importance and urgency – clients already know that it is important to manage their finances and have a plan. Has this put financial planners out of business? In a word, no. The reason is simple. The prevalence of information, while making people more aware, has also resulted in an inundated consumer. The information that is so abundant is not just for financial planning, but for home renovation, car repair, economics, and any number of the million, or so, topics out there that one might be interested in learning. This torrent of information has created a more aware consumer, but also a consumer who is interested in finding a specialist who can help them to make sense of all the information. The availability of information has certainly changed the financial planning industry, but not how we thought. Instead of encountering people who are already experts in financial planning, financial planners are finding customers who are broadly educated in a number of areas and already understand the urgency of saving for their future, but looking for a partner to help them with the analysis and walk the path together. This is what we provide at Arlington Wealth Planning.

Posted by Greg Caramanica on November 2, 2017

A new look

We are happy to release the new look and feel of the ArlingtonWealthPlanning website!