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5 things to consider when creating an inheritance of assets

A lot of people associate the word legacy with the wealthy, but the truth of the matter is, planning for the legacy you want to leave is something that transcends your bank account balance

A lot of people associate the word legacy with the wealthy, but the truth of the matter is, planning for the legacy you want to leave is something that transcends your bank account balance

A lot of people associate the word legacy with the wealthy, but the truth of the matter is, planning for the legacy you want to leave is something that transcends your bank account balance. It’s about directing your assets — no matter the size of your estate — the way you see fit.

For many, this means giving to a charity or cause they support. Others just want to dictate how their money, or belongings, are distributed among friends and family. And often it’s a mix of both. Creating a legacy plan is how you accomplish this. Here, some advice for putting yours in place.

Get started. Sounds simple, but as with wills, this is an area that has many people dragging their feet. We don’t like to think about death. But a legacy plan is about life — you’re dictating how you’ll live on through what you leave behind. The earlier you create a plan, and share it with those you love, the better.

If you want to leave money to a specific charity, let the charity know. This is important, not only if you have special requests — setting up a scholarship in your name, perhaps — but also because the charity may have stipulations you need to follow or limitations as far as how they can accept your gift. Most charities will be extremely receptive to your desire to include them in your legacy planning. Be sure, too, to be specific. If you’d like your money to go to the local chapter of the Red Cross, for example, rather than the national organization, make that known.

A side note, here: Be sure to research the charity if you haven’t already. True, most people leave money to charities that they’ve long supported, but that doesn’t mean they’ve done adequate research. All too often, someone was solicited by a charity long ago, began making regular donations, and never did much digging into how the money is used or the operation run.

Keep your beneficiary designations updated. These are separate from, and trump, the information that is in your will, meaning that if the beneficiary on your 401(k) is an ex-husband, the account will go to him, even if your will states that all assets should be passed to your current husband. The same goes for life insurance policies. And if you want to leave a lump sum to a charity, you can always name that group as the beneficiary of a life insurance policy or a trust.

Communicate with your heirs. Leaving your children money in equal amounts certainly makes things easier. But if you can’t, or don’t want to, do that, at least explain your reasoning. And name them all as beneficiaries if you’re distributing a life insurance policy or trust, instead of naming one and asking him or her to divide it up. This way, you’re keeping the power in your hands and eliminating potential arguments.

Make a list of valuable items. It’s helpful to write down, and share with your heirs, a list of items in your home that hold value, whether they’re actually worth money or they’re merely sentimental. Otherwise, that $5,000 painting may get sold in a garage sale (and you’ll see your story on the local news.)

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5 tips to help you be rational about a windfall

Whenever you receive a windfall, no matter what the source, there are a lot of emotions involved. That’s particularly true when we’re talking about an inheritance, which tends to come at a time when you’re grieving. As I’ve written in this space before, emotions and money don’t mix well.

So getting the most from a sudden influx of cash like an inheritance depends largely on your ability to set your feelings aside and think rationally. How do you do that?

Whenever you receive a windfall, no matter what the source, there are a lot of emotions involved

Whenever you receive a windfall, no matter what the source, there are a lot of emotions involved

  1. Freeze. The first thing I like to see anyone do after a sudden influx of cash is nothing. Yes, nothing. Putting the windfall aside for six months may not earn you much interest, but it will give you a chance to get your bearings and figure out how best to put this money to use. That’s not to say you should stash a check, or, worse, bills, under your mattress. Put the money in a savings or money market account until you’ve made up your mind.
  2. Prioritize your immediate needs. The question often comes up: Should I put money in an emergency fund or pay down debt? My answer is both. Whenever you pay off debt, you’re getting an immediate return worth the interest rate you would’ve paid — so paying off an 18% interest rate credit card effectively gives you a return of 18%. But having cash on hand keeps you out of debt in the first place. Depending on how much money you have to work with, you may be able to take care of both. But if that’s not an option, stash at least $1,000 away in an emergency fund, then pay down high-interest rate debt. If you still have money left, go back to the emergency fund until you’ve built up three to six months worth of expenses. If you don’t, use the money you were previously paying toward credit card minimums to keep building up that savings account each month.
  3. Follow my hierarchy of savings. It says that the aforementioned emergency fund comes first. Next on the list are any retirement accounts that come with matched contributions, like a 401(k). Those matching dollars are free money, so take advantage of them. After you satisfy those rungs on the ladder, contribute to other tax-advantaged accounts, like an IRA or 529 plan for your kids. The money will grow tax-deferred (or, with a Roth IRA, you’ll pay taxes upfront but be able to pull it out tax-free in retirement). Finally, if you max out these options and you have money left over, look to discretionary accounts to continue to save more. These will allow you to invest, albeit without the tax advantages. Still, saving more when you have the opportunity is always a smart move.
  4. Have a little fun. Particularly if you’re used to pinching pennies, I’m giving you full permission for one small splurge. Use a percentage of the money — I’d cap it at 5% to 10% — to do something fun, whether that means buying a pair of shoes you’ve been eyeing or taking the family on a vacation. Allowing yourself a little freedom will make it easier to make responsible decisions with the remaining cash.
  5. Consider getting help. If you’re not used to having, let alone investing, large sums of money, paying for the help of a financial advisor is well worth it. He or she can help you create a financial plan that fits your new financial reality.
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6 things to consider for child support

If you have kids, one of the most complicated aspects of a divorce is the part that pertains to them — namely, custody and child support arrangements

If you have kids, one of the most complicated aspects of a divorce is the part that pertains to them — namely, custody and child support arrangements

If you have kids, one of the most complicated aspects of a divorce is the part that pertains to them — namely, custody and child support arrangements.

Each state has a method for calculating child support, based on a percentage of income. A judge will set the specific arrangements for the payments, but he or she will do so based on your state’s regulations. Here, a checklist of things the judge — and you — should consider:

  1. Who pays. And how much, how often. You’ll also work out the finer details of who covers specific expenses related to the child (like clothing, child care, extracurricular activities, school supplies, special lessons, medical bills, tutoring, etc.).
  2. How support will be enforced. In most cases, you can ask that support be paid through your state’s child support-enforcement agency. They will be responsible for collecting payments and distributing them to you, as well as stepping in when payments aren’t made. This is generally the best way to formalize the agreement, though you may pay a small fee. It’s worth eliminating the headache of tracking down payments yourself, though, particularly if you can’t trust your ex-spouse to pay up.
  3. Insurance for the children. If they are on your health insurance plan, and you want to keep them there, you may ask for additional support to contribute to those payments. Likewise, if they are on your spouse’s plan, your payments may be reduced slightly to accommodate that cost. Either way, be sure to work out how children will be covered and how that coverage will be paid.
  4. Future expenses. Things like college costs are often dealt with in a child support agreement. You might also wish to divvy up other expenses, like a wedding or future car.
  5. Whether support is paid when custody is shared. Often, if you are awarded joint custody, and you have similar incomes, no child support will be required. If your incomes are disparate, the parent with the higher income may still pay support even in a joint custody arrangement.
  6. Finally, most states have child support calculators or worksheets online that can give you a rough idea of how much you might receive — or be required to pay. To find yours, google “child support calculator” and the name of your state, or look on your state’s website. And be sure you’re clear on the difference between child support and spousal support or alimony. Alimony is completely separate and is designed to provide support to a lower-income spouse. Alimony is also tax-deductible; child support is not.
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4 tips for setting financial goals

It’s nice to think of the New Year as a fresh start, and while you can’t wipe the slate completely clean, turning the calendar page can give you the motivation you need to make some changes to your financial life.

To do that, it helps to have goals. I know — this sounds suspiciously like resolutions, promises that 45% of us make and only 8% of us actually keep. But the best way to keep from becoming part of that statistic is to set goals for the year. You have to figure out what you want before you can achieve it. Here, how to do that:

  • Settle on a savings goal. If you’re not currently saving anything, you want to start small with a figure that seems possible — otherwise, you’ll get discouraged and quit. Start with one or two percent of your income, with a plan to bump it up every year (if you earn yearly raises at work, that’s the perfect time to make this increase). If you’re already saving a little bit and want to increase that amount, gradually do that one or two percent at a time. This method means you’ll ease into saving more without shocking your system. The end goal is to save 10% of your income. The good news: Any employer contributions to your retirement account, like matching dollars, count toward that figure as well.
  • Decide where to save it. If you have a retirement plan at work, this question is a no-brainer — at least until you max it out. With a 401(k), you can contribute up to $18,000 in 2015 if you’re under age 50; those 50 and older can contribute an extra $6,000 in catch up contributions for a total of $24,000. You may also be offered the aforementioned matching dollars, and if you are, you want to contribute at least enough to your employer plan to grab those. Once you do — or if you don’t have a 401(k) — you can look at an IRA, which has lower contribution limits of $5,500 for those under 50 and $6,500 for those 50 and older*.
  • Stay motivated. A few things here: First, you should focus on one goal at a time, because research shows our willpower is limited. So get into a savings groove, then tackle the weight loss. Or quit smoking, then clean up your finances. Once you’ve started working toward something, the key to staying on track is building in small rewards, not just at the end, but along the way. So say you want to save $5,000 this year. For every $500 you put away, treat yourself to a manicure, a nice hot lather shave, a few drinks with friends — something you wouldn’t ordinary fit into your budget that will help you look forward to the next $500 benchmark.
  • Get some help. Having a financial advisor on your side can keep you on track to meet your goals. He or she can remind you why you’re saving when you feel the urge to spend, and calm your fears when you read a headline in the news that makes you question your investing strategy.

*Withdrawals are subject to ordinary income tax and may be subject to a federal 10% penalty if taken prior to age 59½.

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5 financial tips for women divorcing

If you’re looking at a potential split, or in the middle of one, the following tips will help you keep more money in your pocket

If you’re looking at a potential split, or in the middle of one, the following tips will help you keep more money in your pocket

It used to be that women were nearly automatically awarded alimony and full custody of the children in a divorce. Not many questions were asked. But these days, mothers are the breadwinners in 40% of households with children under age 18, according to research from Pew Research Center. Sure, many of those mothers are single parents, but 37% are married and still the sole or primary earner in their homes.

What that means is that more women are likely to be making alimony (these days called maintenance or support) payments in a divorce than ever before. Who gets the kids isn’t as easy a question to answer as it once was either. If you’re looking at a potential split, or in the middle of one, the following tips will help you keep more money in your pocket:

  1. Gather important documents. That’s tax returns, income history, account statements for both joint and personal accounts (including investment and bank accounts), credit card records, records of assets like your mortgage or car, insurance policies, and anything else that will need to be dealt with in a split. The more organized you are before you head to the attorney, the less time (and money) that counselor will spend trying to organize you.
  2. Carve out your own pot of money. You don’t want to do anything that could get you in trouble once the legal proceedings start — the last thing you want is to look like you’re hiding money — but with your lawyer’s blessing, it can make sense to open your own bank account and set aside enough cash to get you through several months. Open a checking account and a savings account, and apply for your own credit card if you don’t already have one.
  3. Pay attention to your credit score — and any joint credit cards. You should both agree to stop using joint cards, but it’s important to keep tabs and make sure that’s actually happening. If you don’t have much credit in your own name — many people falsely assume that their spouse’s credit will help their own, or that couples jointly share a credit report, neither of which is the case — and can’t qualify for a traditional card, apply for a secured card. It works like a hybrid debit and credit card: You put down a deposit, which becomes the line of credit. With responsible use, it eventually converts to a regular credit card.
  4. Get a good lawyer. Or, if you’re splitting amicably, a good collaborative attorney or mediator, which can save you money and make the process less painful. If you need a lawyer, meet with a few to find the right fit. A financial advisor can come in handy in this situation, too, to help you develop a new financial plan and invest any settlement coming your way.
  5. Review your insurance policies. You may be able to get rid of some, and you may need to add others. Start with your life insurance — if you don’t have kids, and the policy was to provide for your ex-husband, you can probably cancel it (unless your agreement stipulates that you can’t). Be sure to change your beneficiary if your spouse was previously listed (this goes for retirement accounts, too — the beneficiary listed trumps what your will says, a fact that often surprises people when it’s too late). If you were covered by your spouse’s health insurance, you may need a new policy, which you can purchase via the Affordable Care Act’s Health Insurance Exchanges. Note: You can do this even if it isn’t open enrollment time — divorce qualifies you for a special enrollment period. Finally, consider disability coverage, if you don’t already have it. It’s more important when you’re single.
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Don’t overlook the value of your 401(k)

Are-investors-saving-for-retirement

We know how 401(k)’s work. Money is pulled out of your paycheck before it ever lands in your bank account and, if you’re lucky, your company matches your contribution up to a certain percent and the money grows tax deferred in the account until retirement.

The 401(k), for most people, has become the primary savings tool for creating a retirement nest egg. It is a great option, but many people still feel saving for retirement is difficult and hardly simple. According to our Wells Fargo middle class study released in October of this year (during National Save for Retirement week), more than two thirds of Americans said that “saving for Retirement is harder” than they anticipated.There’s good news:your 401(k) provides you with an an easy way to save; the hardest part is getting started and staying on-track amidst day-to-day financial priorities. And I get it, just because it’s available to you doesn’t mean it’s simple. But it can be; if you know the steps you should take, and see the difference it makes once you’ve started.

There’s more good news.

In our recent Wells Fargo/Gallup Investor and Retirement Optimism Index, non-retired investors say that offering a retirement savings plan, such as a 401(k), is the most important benefit their employer provides (61%), besides health insurance, beating out paid time off, life insurance and stock options.

What-do-investors-think

Why is this good news? Of those polled, more than six in 10 (69%) non-retired investors have access to an employer-sponsored 401(k) plan, and 96% of those with access are actively contributing to their plan. That’s something to celebrate.And here’s more; we also learned that of non-retired investors:

  • 91% are currently saving
  • 86% percent say that their employer matches some part of their contributions, and 81% say this is “very important” in helping to save for retirement
  • 7 in 10 believe they could save more and the median additional amount they estimate they could save each month is $250.

So if you’re one of the many that has access to a 401(k), and you’re taking advantage of it, be proud. It’s one of the most important tools you have to help you reach your retirement goals. If you haven’t started saving yet, don’t worry; it’s never too late. Just commit to creating a plan to help you achieve your goals and then take small steps to achieve them.

Moral of the story: if you have a 401(k) available to you at work, take advantage of it. If you’re not sure you can afford to save more, discover how little changes to your spending, ones that are realistic to your budget, can have a big impact on how much you save for retirement.

Withdrawals are subject to ordinary income tax and may be subject to a federal 10% penalty if taken prior to age 59.

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5 tips to keep the cost of moving down

Moving is costly; there’s very little way around it. Here are 5 tips to keep the cost of moving down.

Moving is costly; there’s very little way around it. Here are 5 tips to keep the cost of moving down.

Moving is costly; there’s very little way around it. But it is at times necessary, and at other times worth the investment — when you’re downsizing, for example, or moving for a job that comes with a salary increase. Most experts say that when all is said and done, you should expect to pay about 10% of your current home’s sale price in relocation costs. Still, there are ways to keep those costs down. Here are five:

  1. Negotiate real estate agent commissions. In general, you’ll pay between 5% and 6% in agent fees when you sell a home. To lower that amount, meet with several agents and ask if they’re willing to negotiate. Some are more likely to lower their fee if your home is priced fairly high — because they’re making more money, anyway — or if you’re willing to price it really aggressively, which could result in a fast sale and less work on the agent’s part.
  2. Consider selling your home yourself. If you can’t get a agent to budge on commission, consider listing with a service like ForSaleByOwner.com , which allows you access to all-important MLS listings (which make your home searchable online). You’ll do all of the work, but the site will help you price the home and even find the paperwork you need to complete the sale. The service starts at around $80.
  3. Streamline your stuff. The less you move, the less it costs, so a relocation is a great opportunity to get rid of everything you don’t need, particularly if you’re moving to a smaller home and can’t fit it all anyway. Be honest with yourself about what you need to keep and what should be tossed or donated. Bonus: If you donate, you’ll be able to take a tax deduction on the fair market value of the items, money you can add to your moving budget.
  4. Time your move right. If you can, move mid-month, when movers aren’t as busy and are therefore more likely to cut you a deal. Prices are generally higher at the end and beginning of each month, when more people are shifting residences.
  5. DIY. No, it might not be worth carrying all those boxes and heavy pieces of furniture yourself. But anything you can do on your own will save you money. Even simply getting organized before the movers arrive will cut down on their time spent if you’re paying by the hour. But packing up yourself, instead of hiring movers to pack and transport your belongings, will cut costs significantly. You’ll save on packing materials this way as well — find boxes at local liquor or big box stores for free (ask friend who’ve moved recently if you can recycle theirs), and use cushy items you have to move anyway, like bed sheets and towels, instead of bubble wrap to pack fragile items.
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Less is more

I got a little cray-cray. I sent my husband on a dangerous Black Friday mission for Barbie Jeeps. I HAD TO HAVE THOSE JEEPS.

I got a little cray-cray. I sent my husband on a dangerous Black Friday mission for Barbie Jeeps. I HAD TO HAVE THOSE JEEPS.

Less is more, right? For the most part when we talk about money, we’re talking about being responsible: saving for retirement, planning college tuition for our kids (or hoping to be able to help them financially), or building a safety net should something happen to keep us from being able to make more money.

For some people, and I’ve been there myself, it’s about keeping the lights on, paying rent and hoping you’ll be able to stretch your money when it comes to buying groceries.

I’ve been that girl at the checkout, flushing with embarrassment when I had to count out change to pay for a package of chicken breasts or having to decide which items to put away.

In either scenario, our goal is usually the same: spend less, save more. In a culture filled with consumerism, sometimes, this feels impossible. I don’t think anyone sets out to keep up with “The Joneses” but nevertheless, it’s easy to get there.

You take your children to extravagant birthday parties and start to feel like the cake and backyard play date you’d planned for your own child isn’t enough. Your kid is going to be so disappointed if their party is super lame! Where’s Jr’s clown, bouncy house, cotton candy machine and elephant rides (I’m stretching a little bit here.) But before you know it, you’re spending more to keep your ankle biters from possibly being sad— and honestly, who can be sad when there’s cake?

We’re the guilty ones.

We’re the ones who make decisions on how to spend our money and what to spend it on.

I make an effort (sometimes feebly) not to give my kids everything they want, or even everything I could give them. Because I want them to know how it feels to want something so badly they have to work hard and save their money to buy it for themselves.

I want them to experience the satisfaction of achieving a goal.

And I need them to realize, from their own experience, that nothing in life is free.

Do I actually follow through with this philosophy? Not all the time. I’m a spender, remember? It takes serious restraint (and occasionally, my husband checking the bank statement, calling me and saying, “WHAT ARE YOU DOING?!”) for me to hold back.

One year, at Christmas , I got a little cray-cray. I sent my husband on a dangerous Black Friday mission for Barbie Jeeps. When I say it was dangerous— blood was shed. Not his, but still. (BTW, the fight was over towels. I’m so serious.) Back to my greediness— I HAD TO HAVE THOSE JEEPS.

Had my kids asked for them? Nope.

Were they a good deal? Sure— if you need a few hundred dollars worth of Barbie Jeep. But we didn’t, the girls hadn’t even asked for them, for crying out loud!

The next morning, I saw the Jeeps and was filled with guilt and regret. And on top of that? They were too small, even for my toddler. I don’t know any infants with the motor skills to drive a vehicle, even if it is made of plastic. But apparently there’s a market for that, and somewhere in this country, there is a 9-month-old leaving skid marks somewhere other than her diaper.

I asked my husband to take the cars back. I’m fairly certain the only reason he didn’t ask for a divorce right then and there, is because he’s a saver and didn’t want to spend the money, anyway.

There’s nothing wrong with splurging and indulging. Only you can know when you’ve gone overboard and I’m certainly not throwin’ shade at anybody, but I think a message we all need to hear from time to time is this: less is more.

My family is striving for less stuff and more joy over the things we do have. We’re a work in progress— but I’m still getting that elephant for Sadie’s 6th birthday.

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5 tips for how to prepare to sell your house during a relocation

Getting ready to move involves so many items on a to-do list that you may not have even considered staging your home.  But the longer a home sits on the market, the less likely you are to get a full-price offer.

Getting ready to move involves so many items on a to-do list that you may not have even considered staging your home. But the longer a home sits on the market, the less likely you are to get a full-price offer.

When it comes time to put their homes on the market, many sellers these days are investing in a bit of home staging — a few new accessories or a fresh coat of (neutral) paint that help a house put its best foot forward. In a piece of recent research , business professors from the College of William & Mary, Johns Hopkins University and Old Dominion University did a little digging into the practice. Their results: Staging won’t get a buyer to pony up more cash, but it can help the home make a better first impression, which can lead to a faster sale.

Getting ready to move involves so many items on a to-do list that you may not have even considered staging your home. But the longer a home sits on the market, the less likely you are to get a full-price offer. That’s why real estate experts have come around to believing that staging is an important step to take before you list your house. But you don’t have to hire a professional to do it. Here’s, how to give your home a spit shine yourself:

Bump up the curb appeal. It’s what’s going to get buyers to slow down and give your property a second look. Keep the lawn mowed, the garden beds weeded, and touch-up the paint on your mailbox. Plant new bushes in front of your stoop if the old ones are looking at little scraggily, and if your house has a porch, show of its potential with a few Adirondack chairs. Repainting the front door can catch a potential buyer’s eye as well.

Understand where to invest. Each year, remodeling magazine publishes a report on the cost versus value of popular home improvements. I like to consult it to find out where I should spend my discretionary home maintenance dollars. To reiterate the importance of curb appeal, replacing your entry door with a new steel version tops their list — doing so could get a you 96% return on your investment. In general, little upgrades like this are going to give you the most bang for your buck. New garage doors are high on the list as well.

Get rid of clutter. Think of this as s a free way to give your home a new look. Buyers want to be able to visualize themselves in your home, and a cluster of your family photos on the mantel or a pile of your junk mail on the kitchen table takes away from the experience. Now is the time to sort through the mess and streamline. Get rid of or pack away the things you don’t need before you schedule any showings. (And here’s a tip: Go on Facebook and Google the name of your town and the word sale. Chances are there’s a makeshift ongoing yard sale or two that you can use to unload items that have value. I sold a set of patio furniture and my children’s old bedroom furniture this way – both in less than a day.)

Spruce up anything that looks dingy or broken. That means touching up baseboards and door frames, scrubbing your grout, shining your kitchen faucet (or replacing it if necessary) and painting any rooms that are in need of a fresh coat or are an out-of-the-box shade. I’ve watched House Hunters enough to know that despite real estate agents stressing that paint is an easy fix, buyers definitely notice it first and factor it into their buying decision.

Schedule a practice walk through. First with your agent, who knows what buyers want and can quickly point out clutter that should be hidden, closets that should be cleaned and light fixtures that should be replaced. Then, ask a few friends to come over and give you honest feedback regarding what they’d notice as a potential buyer.

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Is healthy aging the oxymoron of our generation?

Is healthy aging the oxymoron of our generation? September was Healthy Aging month , and I found it a good time to take stock of my health discipline. For those of you in denial that you are aging at all, let me harsh your buzz by saying – you are aging. But are you aging in a healthy or unhealthy way?

A study in Current Biology found clues around why females may outlive males in the animal kingdom. The study was with fruit flies – it seems their one month life is a good gauge for us. That study talked about mitochondrial DNA factors that cause men to age and die more rapidly than females. Most statistics show women are living longer than men by 7 years, and we need to make sure those seven years are good ones. We need to focus on how to age well.

In my situation, we have a household with three females, and we likely all will live into our 90s. Our daughter was born in 2003 so there is a chance she will see 2103 – the 22nd century! I believe living longer is a good thing if you are staying healthy, able to be active, able to enjoy life. There is an opportunity, and potential issue, for women related to greater longevity – we want that longevity to be a positive, not a negative.

My view of healthy aging is to live through mid-life without the need of significant drugs and surgeries that can compromise your system. Yet, staying healthy is easier said than done when we are taking care of kids, parents, work groups, nonprofits, etc. Being able to sleep enough, eat fresh foods, exercise and live moderately is an amazing challenge. I exercise each day, but I fail miserably at the other three. Just as savings discipline is critical, health discipline will be my next great area to conquer. So, is healthy aging a possibility or an oxymoron? How are you aging healthily?

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