Finances for Fathers: Episode 64 of the Dad.Work Podcast

Dennis McNamara had the opportunity to connect with Curt Storring, the host of the Dad.Work podcast, in a wide ranging conversation focused on finances for fathers.

Some highlights from the finances for fathers discussion:

  • The fundamentals of fiscal fitness and why fathers need to figure this stuff out
  • Finding a balance between time, money and health
  • The return on investment (ROI) of doing men’s work
  • Dennis’ quarantine struggles and doubling down on health protocols to come out the other side stronger
  • Being confident, living with intention and having a more deep and more engaged relationship with those around you
  • The importance of an emergency fund
  • And way more depth than you’d usually find in a conversation about finances for fathers!

Dennis’ Dad.Work Bio:

Dennis McNamara is a dad to a three year old, a husband to his college sweetheart, and a comprehensive financial planner at, and co-founder of, wHealth (pronounced “wealth”) Advisors in Red Bank, NJ.

After graduating university in 2011 Dennis was teetering on a mental and emotional breakdown. With $7,000 to his name, Dennis spent a year exchanging his physical labor for a roof over his head on permaculture farms in Portugal and Costa Rica. After learning more about himself through these experiences he dedicated himself to rigorously pursuing purposeful work instead of job titles.

Since then, he’s been the US Director of Business Development at a social enterprise firm, a financial analyst at the private wealth management arm of Goldman Sachs, and most recently – in 2019 – made the leap to establish his own financial planning firm – wHealth Advisors.

Dennis has been mentioned in Forbes, US News & World Report, and Financial Advisor Magazine. He holds the financial designations of Certified Financial Planner (CFP), Chartered Financial Consultant (ChFC), Accredited Investment Fiduciary (AIF), and is a Certified Student Loan Professional (CSLP).

Outside of wHealth Advisors he is passionate about compounding healthy habits so that he can show up as the best version of himself – whether that be as a parent, a partner, or a professional.

You can follow along his Instagram @thewhealthadvisor or find more about the work he does with wHealth Advisors at whealthfa.com. There, you can also subscribe to his monthly newsletter which is as much about finances as it is about wellness, personal optimization, and taking meaningful steps to upgrading your life.

Streaming:

The podcast streams on Apple, Spotify, or directly from Dad.Work.

The Benefits of Cold Exposure

As you may know, cold exposure – also known as cold thermogenesis – has numerous benefits, from muscle recovery and fat loss to mental health, mood enhancement, insulin resistance, and immune function.

There’s no better time to explore (and embrace) cold therapy then when nature turns down the thermostat.

The discomfort of the cold is central to many of the benefits that are derived from it – doing hard sh*t makes us more resilient! It also allows us to train our brain and body for the hard things we inevitably must face in life.

Below are some tips and a breathwork exercise to help you start to become more comfortable during deliberate cold exposure.

Tips for Cold Exposure:

  1. Water temperatures at or below 59°F showed clinical benefits/improvements.
  2. Meet the cold with a relaxed, calm, mind and body
  3. Do a breathwork to calm your nervous system (see example below).
  4. Start with switching between cold and hot water during your shower. 15 seconds cold and 15 seconds hot. Increase the time of cold exposure as you progress. Repeat this 5x or for a few minutes.
  5. Try to expose your head and back of the neck at times. The back of the neck is where the vagus nerve connects to the brain.
  6. Try to incorporate cold exposure post-workout as it helps make the cold more tolerable. Your body also becomes more relaxed/tired after a workout, limiting the fight or flight response.

Pre-Cold Exposure Breathwork:

You can use this breathing exercise as priming before you cold plunge, and during to regulate your “fight or flight” response. The 4-7-8 breathing is a great way to calm your nervous system, release tension and calm your mind:

  • 4-7-8 Priming/ 2-3 min
    Breathe in deep through your nose for 4 seconds. Hold your breath for 7 seconds. Exhale through your mouth for 8 seconds
  • 2-3 rounds of 10 nostril breaths followed by a long active exhalation. Your exhale should make a “huuuuh” sound. Hold your breath at the end of each set as long as you can. Please do not pass out – be aware of your limits!

H/T to The Wisemen Project for summarizing the many benefits of cold exposure.

Reminder: Gents – the inaugural Wisemen Experience men’s health retreat still has room available. Consider joining if interested in applying ancient/science-based wellness modalities to improve your life as a partner, parent, professional… and beyond.

The 101 on I Bonds

Before diving into a 101 on I Bonds, let’s first acknowledge that they’re the most boring investment that we’re recommending to… just about everyone*. If inflation is something that’s top of mind, they may be a good addition to your portfolio. For more on our thoughts on inflation, see our piece from a few months back.

What are I bonds?

I Bonds are a type of U.S. savings bond designed to protect the value of your cash from a rise in inflation. They are meant to give investors a return + inflation protection on their purchasing power. An I bond earns interest monthly from the first day of the month in the issue date.

Interest is paid in two components: a fixed rate of return plus a semi-annual variable rate which fluctuates with inflation.

How is interest calculated?

Currently, I bonds provide an interest rate of 7.12%, and this rate is good through April 30, 2022. A portion of this rate is tied to inflation, so the rate adjusts every six months, on May 1 and November 1.

How do I bonds work?

When you purchase an I bond, you pay the full face value of the bond. Bonds can be purchased two ways: paper I Bond certificates or electronically registered I bonds through the TreasuryDirect.gov website.

I bonds earn interest each month, and the interest is compounded every six months. However, you don’t get access to the interest until you cash out the bond. Interest that you earn gets added to the value of the bond twice per year.

How much can I purchase?

Investors can buy up to $10,000 worth of I bonds annually through the TreasuryDirect website. In addition, you can purchase another $5,000 by applying your federal tax refund towards a paper certificate purchase. For instance, a family of four would be able to purchase $40,000 in I bonds annually via TreasuryDirect.gov, and up to an additional $5,000 (per SSN, per year) if they had a federal tax refund in at least that amount.

When do I bonds mature?

I bonds have a maturity of 30 years, so you can earn interest on them for 30 years. NOTE: You cannot cash out of your I bond during the first 12 months of ownership. If the bond is cashed out between years 1 and 5, the most recent three months’ worth of interest is forfeited.

Do I have to pay taxes on I bonds?

I bonds are exempt from both state and local tax, but you do have to pay federal tax on the interest. However, if used to pay for college, the interest is completely tax exempt. For reporting taxes, there are two options: report interest annually or at maturity when the bond is sold.

How do I cash in my I bond?

This will depend on whether you own a paper bond or an electronic bond:

  • Paper Bond
    • Bring physical bond and proof of identity to a bank or financial institution that will cash it in (recommendation: call in advance, not all institutions accept).
  • Electronic Bond
    • Can cash out directly through the TreasuryDirect website.

Should I bonds be a part of my portfolio?

Although purchase amounts are quite limited, there are a few advantages to I bonds that make them a consideration for any portfolio:

  • Inflation protection
  • Less volatile than equities
  • Essentially no default risk, they are backed by the US Treasury
  • Interest is exempt from state and local taxes
  • Interest is exempt from federal tax if bonds are used to pay for college

*Disclosure: Everyone’s situation is unique. Please speak with a financial professional before following any of this advice.

Living Your Eulogy Virtues

Awhile back in our piece on Minimalism we touched on the topic of death. Inspired by John’s January newsletter reflections on the passing of both John Madden and Betty White, let’s take a moment to reflect on our own mortality.

After noting “be proactive” as habit #1, Steven Covey, author of the “The 7 Habits of Highly Effective People,” suggests in his 2nd habit that we “begin with the ultimate end in mind.” The ultimate end being our funeral.

This advice is not new.

Seneca, the ancient Stoic, tells us something similar. He famously suggested that a helpful way to understand if we’re living in integrity with what we know to be true is to rehearse our death.

Enter the eulogy virtues.

Let’s flash forward to the future.

You walk into a funeral and realize it’s your funeral.

You see people there to celebrate you and your life. You take a seat and listen to the eulogies.

Who says what? What would your spouse or significant other say? Your kids? Your friends? Colleagues? Random people you may have helped at some point in life?

What qualities would they mention? And what virtues would you hope to be remembered for?

Your kindness? Your courage? Your generosity? Your commitment?

How would your life change if you embodied these qualities and began living in integrity with your virtues today?

 A Quick Trip to Hell

Now, imagine you’re sitting there listening to these eulogies and a door in the back of the room opens and someone walks in.

You turn around to see who it is. They look oddly familiar. They have a radiance and a confidence – a grounded power that’s palpable.

That astonishingly, radiantly alive person is you.

Well, technically, it’s who you could have become if you actually lived in integrity with what you knew to be true. Some would say meeting that version you, the person you could have become had you reached your potential, is hell.

Now pause.

Picture that awesome version of you.

What is one thing they do consistently that the current version of you doesn’t do consistently… yet?

Is today a good day to get started on that? 

New Year’s Resolutions

For the 50% of your that feel like Michael Scott, this may not be for you.

However, If you’re one of 31% of people planning to make a New Year’s resolution this year, or one of the 19% that are still undecided, now is a great time to reflect on the previous 11 (almost 12) months and begin setting some intentions for the year ahead.

Some New Year’s Resolution stats:

The most popular resolutions for 2021 are exercising more and improving fitness (50% of participants), losing weight (48%), saving money (44%), and improving diet (39%).

  • Of those who make a New Year’s resolution, after 1 week 75% are still successful in keeping it.
    • After two weeks, the number drops to 71%.
    • After 1 month, the number drops again to 64%.
    • After 6 months, 46% of people who make a resolution are still successful in keeping it.
    • After 1 year, 35% kept all their resolutions, 49% kept some of their resolutions, and only 16% failed at keeping any of their resolutions.

So, looking out to 2022, what are the steps you can take to increase the likelihood of being part of the 35% cohort that keeps all of their resolutions?

How to make (and keep!) your New Year’s Resolution

A recent NYT article by Jen Miller provides some helpful guidance on this topic:

“Your goals should be smart — and SMART. That’s an acronym coined in the journal Management Review in 1981 for specific, measurable, achievable, relevant and time-bound. It may work for management, but it can also work in setting your resolutions, too.”

  • Your resolution should be absolutely clear. “Making a concrete goal is really important rather than just vaguely saying ‘I want to lose weight.’ You want to have a goal: How much weight do you want to lose and at what time interval?” said Katherine L. Milkman, an associate professor of operations information and decisions at the Wharton School of the University of Pennsylvania. “Five pounds in the next two months — that’s going to be more effective.”
  • This may seem obvious if your goal is a fitness or weight loss related one, but it’s also important if you’re trying to cut back on something, too. If, for example, you want to stop biting your nails, take pictures of your nails over time so you can track your progress in how those nails grow back out, said Jeffrey Gardere, a psychologist and professor at Touro College of Osteopathic Medicine. Logging progress into a journal or making notes on your phone or in an app designed to help you track behaviors can reinforce the progress, no matter what your resolution may be.
  • Achievable. This doesn’t mean that you can’t have big stretch goals. But trying to take too big a step too fast can leave you frustrated, or affect other areas of your life to the point that your resolution takes over your life — and both you and your friends and family flail. So, for example, resolving to save enough money to retire in five years when you’re 30 years old is probably not realistic, but saving an extra $100 a month may be. (And if that’s easy, you can slide that number up to an extra $200, $300 or $400 a month).
  • Relevant. Is this a goal that really matters to you, and are you making it for the right reasons? “If you do it out of the sense of self-hate or remorse or a strong passion in that moment, it doesn’t usually last long,” said Dr. Michael Bennett, a psychiatrist and co-author of two self-help books. “But if you build up a process where you’re thinking harder about what’s good for you, you’re changing the structure of your life, you’re bringing people into your life who will reinforce that resolution, then I think you have a fighting chance.”
  • Time-bound. Like “achievable,” the timeline toward reaching your goal should be realistic, too. That means giving yourself enough time to do it with lots of smaller intermediate goals set up along the way. “Focus on these small wins so you can make gradual progress,” Charles Duhigg, author of “The Power of Habit” and a former New York Times writer, said. “If you’re building a habit, you’re planning for the next decade, not the next couple of months.”

New Year’s resolutions not for you?

Consider setting some basic intentions.

11 ways to make the most of 2022 (written by Diego Perez, @yung_pueblo):

  1. let yourself change
  2. make rest a high priority
  3. say no without feeling bad
  4. stop jumping to conclusions
  5. do not rush important things
  6. build your own idea of success
  7. make more time for key friends
  8. appreciate the small steps forward
  9. stay aligned with your highest goals
  10. take the risk when your intuition says yes
  11. build with people who are open to growth

Godspeed and good luck.

End of Year Planning

Some end-of-year housekeeping and planning strategies to close out the year on a good note:

Review your portfolio:

  • with upcoming transitions in mind. Are allocation changes needed to begin preparing for an upcoming milestone (i.e. retirement) or transition (i.e. job change, relocation etc.)?
  • for (in)appropriate risk. Has your risk tolerance or risk capacity (i.e. how much risk you can take without interrupting other goals/priorities) changed? Can you now take on more/less risk?
  • for rebalancing opportunities. Is your portfolio properly allocated based on a target model? Or has your overall allocation drifted due to outsized gains/losses?
  • for gain/loss harvesting. If you invest in a taxable brokerage account, and depending on your tax bracket, there may be opportunities to realize additional capital gains (while in a lower tax) bracket or offset capital gains with losses.

Required Minimum Distributions (RMD)

  • What they are: The minimum amount that must be withdrawn from pre-tax retirement accounts annually once reaching age 72. This does not apply to post-tax Roth IRAs.
  • Inherited IRAs: Have their own rules.
  • Deadline: All RMDs must be taken by December 31st.

Contribute to a Roth or Traditional IRA

  • Roth IRAs: Contributions grow tax-free and qualified distributions come out tax free. Income limitations apply.
  • Traditional IRA: Contributions may be fully, partially, or non-deductible, depending on your income and circumstances.
  • Annual contribution limit (per person): For 2020, 2021, and 2022 is $6,000, or $7,000 if you’re age 50 or older. This limit applies to all IRAs. Example: An individual could fund a Roth IRA with $6k, or fund a traditional IRA with $6k, or fund each with $3k. You (or your spouse) must have taxable income in order to make a contribution.
  • Deadline: You can make 2021 IRA contributions until April 15, 2022.
  • Backdoor Roth: Depending on your circumstances, and for those who exceed the contribution/deduction income limits, you may be eligible to make a “backdoor” Roth contribution. Read more about it here and be sure to do it under the guidance of your financial planner and/or tax advisor.
  • Roth Conversions: If you are currently in a low tax bracket and expect your tax bracket to increase in future years, you may consider converting some pre-tax funds to your post-tax Roth. Essentially, paying taxes now so that your retirement funds can grow tax-free into the future. Deadline: 12/31/2021.

Charitable Donations

  • Deadline: All 2021 cash/non-cash donations must be completed by December 31st.
  • Deduction: Those that do not itemize their taxes can still deduct donations: up to $300 for single filers and $600 for joint filers.
  • Donor Advised Funds: Gifting appreciated stock to a Donor Advised Fund avoids recognizing capital gains and potentially pre-funds future year gifting.
  • QCDs: If over age 70.5, you can avoid recognizing IRA RMD income by directing some/all of your distribution to go directly to charity via a Qualified Charitable Distribution.

All advice listed here is for informational purposes. Please consult your financial planner or tax advisor before implementing.