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Tag: financial planning

Tis the Season: End-of-Year Tax-Saving Strategies

Posted on by Robert Blakely

As the year draws to a close, so does the window for strategic tax planning and benefits. The decisions you make regarding your finances before December 31st can significantly impact your tax liability and overall financial well-being for the year ahead. Here we’ll explore end-of-year tax-saving strategies you can take advantage of before the year-end deadline to improve your financial picture in the upcoming year. 

Capitalize on Retirement Contributions

We’re nearing the end of the year, but there’s still time to boost and capitalize on your retirement savings. Be sure you are contributing to retirement accounts, like a 401(k) or an IRA, as they offer immediate tax advantages while helping ensure a secure, financially healthy future. Assess your current contributions and consider optimizing them before the yearly deadline to enjoy both short-term and long-term tax benefits. For IRAs, contributions can often be made until the tax filing deadline of the next year (usually April 15th). Remember: it is important to take a look at your entire financial picture before making significant changes to your financial plan. Talk to your financial advisor to find the best course of action to continue on a path to financial security. 

Leverage Health Savings Accounts and Flexible Spending Accounts

Health-related expenses can take a toll on your finances, but utilizing Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) can offer significant tax relief. Both HSAs and FSAs allow you to save for qualified healthcare costs. Any contributions made to these accounts may be tax-deductible, helping to reduce your taxable income. Whether or not you can open an HSA is dependent on your health insurance. These typically offer higher contribution limits and allow you to carry over funds. Opening an FSA is dependent on your employer. This type of account typically has lower contribution limits and does not allow you to carry over funds, so be sure to use them before the end of the year to avoid forfeiting them. Some FSAs allow a grace period or a limited carryover, but it depends on each individual plan. It is vital to weigh your options carefully and discuss any plans with your financial advisor to ensure the best financial outcome for you. 

Optimize Investment Portfolios

End-of-year is a great time to fine-tune your investment strategy. Consider tax-efficient investment practices such as:

  • Diversifying your account types
  • Holding investments for more than one year to qualify for lower capital gains tax rates

Take this opportunity to speak with a financial professional. They can help you diversify and rebalance your portfolio for tax efficiency and long-term growth. 

Charitable Giving for a Purpose

The final months of the year are the season of giving, and your generosity can translate into tax benefits. Charitable contributions to qualified organizations offer the opportunity for tax advantages including deductions, exemptions, and estate planning benefits. Consider various giving options to optimize your end-of-year tax-saving strategies. For example, explore bundling multiple years’ worth of donations into one tax year to exceed the standard deduction. Consult your financial advisor about your philanthropic giving to optimize your financial situation while bettering the world around you. Regardless of the details, remember to gather receipts and any other necessary documents surrounding your charitable contributions to claim the deductions. 

Explore Deductions and Credits

Among the end-of-year tax-saving strategies, there is an abundance of tax credits and tax deductions that should not be overlooked. Tax credits offer a direct reduction of your tax liability. Investigate credits such as:

Thoroughly research any deductions and credits to ensure you meet the eligibility criteria. Take the necessary steps to maximize them to put more money back in your pocket. If you need help discovering which ones are available to you, speak with a financial professional. 

After addressing your current end-of-year tax-saving strategies it is important to review your financial health as a whole. Revisit your financial goals and begin adjusting for the upcoming year. Being financially proactive and making informed decisions will help to optimize your tax situation and begin the new year on solid financial ground. If you are looking to improve your overall financial outlook and secure your financial future in the new year, contact the Blakely Financial team today. 

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals. Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM  to see what other financial tips we can provide towards your financial well-being.
Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.

Giving Tuesday: The Power of Charitable Giving

Posted on by Emily Promise

One of the greatest parts of the holiday season is giving. Giving Tuesday, a global generosity movement, takes place on the Tuesday after Thanksgiving each year.

What is Giving Tuesday?

Giving Tuesday began in 2012 as a simple idea: a day dedicated to encouraging people to do good. Since then it has grown into a movement meant to unleash the power of people and organizations to transform their communities and the world at large. It demonstrates the power of philanthropy and collective action, inspiring hundreds of millions of people a year to give, collaborate, and overall celebrate generosity. 

How to Get Involved

Everyone can participate in Giving Tuesday and there are various ways to contribute. The first step to getting involved is choosing a cause that resonates with you and your values. Research the organization of your choice to ensure your contributions go somewhere reputable. After choosing your cause, there are many ways to give. Monetary donations are a common method, but you may also consider donating your time, skills, or other goods when appropriate. You can also participate in local fundraisers, community drives, or events.

Charitable giving is not limited to individuals – it can be embraced by businesses and organizations as well. Ask your employer about a matching program for employee donations, a team volunteer day, donating a portion of sales, or even donating products. Engaging in those activities will boost your organization’s corporate social responsibility while creating a significant positive impact on your community. 

The Impact of Charitable Giving

Charitable giving is vital in addressing various societal issues such as poverty, hunger, education, health, and environmental conservation. There are a number of nonprofits and charitable organizations that do essential work for these causes, making tangible differences in the lives of those who need it most. Many of these organizations rely on the support of donors and volunteers to serve their respective communities. Donated dollars, goods, and time, contribute to providing meals to those who need them, educational opportunities to underserved communities, preserving natural habitats, and much more making the impact of philanthropy undeniable. 

The Joy of Giving and Its Rewards

One of the most amazing aspects of giving is that it does not only benefit the recipients – it benefits the givers, too! Giving to others can be personally rewarding, leading to increased happiness and reduced stress. While you’re making the world a better place you’re also enhancing your overall wellbeing. In order to qualify for tax deductions, donations must be made to qualified organizations from the IRS guidelines.

In addition to emotional benefits, philanthropic giving also offers tax benefits including deductions, exemptions, and estate planning benefits. By working with your financial advisor, you can maximize these benefits while aligning your philanthropic goals and financial objectives.

Giving Beyond Giving Tuesday

Giving can be a year-round endeavor! While Giving Tuesday is a great way to get started, it is not the only opportunity to give. Talk to your financial advisor about building charitable giving into your long-term financial plan. Determine a fixed amount or a percentage of your income or assets you would like to allocate to philanthropy. Explore various philanthropic vehicles to maximize the impact of your donations. As a high earner, you have the unique opportunity to make a meaningful and lasting impact on the world through philanthropy. Start building your philanthropic legacy today!

Ready to begin building your charitable giving into your financial plans? Contact Blakely Financial today to get started. 

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals. Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM  to see what other financial tips we can provide towards your financial well-being.
Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.
National Entrepreneurship Month: Managing Irregular Income and Retirement Options When You’re Self-Employed

National Entrepreneurship Month: Managing Irregular Income and Retirement Options When You’re Self-Employed

Posted on by Emily Promise

November is National Entrepreneurship Month and is dedicated to celebrating entrepreneurs, their spirit of innovation, risk-taking, and the economic growth they bring to our communities and the global economy. Honoring these entrepreneurial spirits would not be complete without acknowledging the unique financial challenges they face as self-employed individuals. In this blog, we’re answering common questions about managing irregular income and retirement options when you’re self-employed. These financial strategies and considerations will help you build a healthy financial future as an entrepreneur. 

How can I plan for my retirement while also reinvesting in my business?

When you are self-employed and running your own business, it is tempting to reinvest every dollar you earn right back into your business. Of course, it is important to reinvest some of your earnings to fuel essential growth in your business, but your financial security is also of high importance. Balancing these needs can be challenging, but is possible with proper and thoughtful planning. There are various types of retirement accounts for self-employed individuals including SEP IRAs, 401(k)s, and SIMPLE IRAs. These accounts offer tax advantages while allowing you to save for your retirement and a financially healthy future. The key to successfully utilizing a retirement fund is to contribute consistently, even when income is irregular. Work with a financial advisor to establish a realistic retirement savings goal, and aim to meet it each year. 

What deductions and credits are available to entrepreneurs?

There are many tax deductions and benefits available to self-employed entrepreneurs. The Tax Cuts and Jobs Act (TJCA) went into effect in 2018 and put several changes into place in tax deductions for the self-employed, some of which are permanent and others which are temporary. The following are only some of the current deductions that may be available to you to help reduce your taxable income:

  • Self-employment tax deductions refer to Medicare and Social Security taxes self-employed people are required to pay
  • Home office deductions allow you to deduct the cost of any workspace used regularly and exclusively for business, the business percentage of deductible mortgage interest, home depreciation, utilities, and repairs if you own your home. Rent deductions are also available if you rent your office space outside of your home. 
  • Internet and phone bill deductions allow you to deduct the business portion of these expenses regardless of whether or not you claim home office deductions. 
  • Health insurance premiums deductions are available if you pay for your health insurance premiums and are not eligible to participate in a plan through your spouse’s employer.
  • Meal deductions are relevant when traveling for business, at a conference, or dining with clients. 
  • Travel deductions apply to business travel lasting longer than an ordinary workday, requiring rest, and taking place away from where your business is located. 
  • Retirement plan contributions deductions are available and help you build up tax-deferred investment gains for the future.

Tax credits such as the Small Business Health Care Tax Credit and the Research and Development Tax Credit are also available. It is important to review your deductions and credits every year in order to make your business as profitable as possible. Consider speaking to a financial professional to help you maximize your benefits while remaining compliant with tax laws.

How can I ensure financial security for myself and my family after retiring from my business?

Planning for a financially secure retirement is not solely about accumulating wealth, it also involves creating a reliable income stream in your post-working years. Many different strategies can be used to build your retirement income plan such as investments, annuities, and Social Security. Additionally, be sure to create your estate plan to ensure your wealth lasts beyond your lifetime and can contribute to your family’s financial security. Consider life insurance and disability insurance as an extra layer of protection in the case of unforeseen events. Sit down with your financial advisor to determine which options are best for you based on your personal retirement goals and your individual financial circumstances. 

How can I balance my personal financial goals with the financial needs of my business?

Balancing your personal goals with the needs of your business may be daunting, but it is essential to your (and your business’s) financial well-being. To begin your balancing act, set clear priorities for your personal finances while keeping your business’s financial needs in mind. Use these priorities to create a budget that accommodates both business and personal aspects of your life. Build an emergency fund into this budget to help take care of any unexpected expenses, whether they are personal or business-related. The most important part of budgeting is sticking to your budget! If you are struggling to establish or stay within your set budget, reach out to a financial advisor.

What steps should I take to prepare for audits or regulatory inspections?

Facing audits or regulatory inspections can be nerve-racking, but with proper records and a strong financial team, you can navigate them smoothly. The best approach involves maintaining accurate financial records and documentation to ensure transparency in your financial affairs. Keep receipts, bills, and records of any necessary communication on hand. Additionally, take time to understand relevant regulations and tax laws through your own research and professional financial guidance. By staying informed and organized, you can help avoid any accidental lack of compliance to mitigate regulatory headaches.

By seeking professional financial guidance as an entrepreneur, you can proactively address financial challenges and reap the long-term benefits of effectively managing your irregular income and retirement planning. At Blakely Financial we understand that running a successful entrepreneurial venture is challenging, and our team of financial advisors would love to see how we can support your entrepreneurial efforts. Contact us today to get started. 

 

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals. Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM  to see what other financial tips we can provide towards your financial well-being.
Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.

Monstrous Money Mistakes

Posted on by Robert Blakely

It may be the season of spooky haunts and horrors, but don’t let these monstrous money mistakes lead you to the financial graveyard!

Investment Zombies

Don’t neglect your investment strategies. Just like zombies mindlessly wander, not actively managing investments can lead to missed opportunities or poor performance, even for high earners. Revisit and reevaluate your investment portfolio periodically to be sure you are diversifying your investments and maximizing your returns. Talking to your financial advisor can help you avoid an investment zombie apocalypse.

Estate Planning Ghouls

Failing to create a comprehensive estate plan can haunt families after a high-earning individual passes away. This mistake can lead to unnecessary taxes, legal battles, and confusion over asset distribution. Meet with your financial professional to discuss the best estate planning options for you and your loved ones. Review your plan annually and make adjustments to reflect any life changes that may occur.

Lifestyle Vampire

This monstrous money mistake involves succumbing to lifestyle inflation. High earners might start spending excessively as their income rises, without properly considering the long-term impact on savings and investments. Don’t bite off more than you can chew with your spending.  It is crucial to find a balance between your desired lifestyle and your long-term financial goals and well-being to really enjoy life to the fullest. 

Debt Demons

Credit card ghouls, student loan specters, and mortgage monstrosities. Oh my! These debt demons come in many forms and can feel like never-ending financial nightmares if not managed properly. Be sure to explore interest rates and different repayment options to pay down your debt, and even consider refinancing your loans or mortgage to make payments more manageable. Utilizing a budget can help you do this more easily. Exorcize these debt demons and keep control of your financial future!

Budget Banshee

You’ll hear the eerie wails of the budget banshees if you neglect proper budgeting. The shrieks serve as haunting reminders of overspending, impulse purchases, debt, disorganized finances, and unexpected expenses. Create a budget unique to your financial situation by tracking your income and expenses and establishing your financial goals. Explore where you may be able to save and remain disciplined when it comes to your spending. Don’t forget to factor an emergency fund into your budgeting to cushion the impact of any unexpected financial shock! Evaluate your financial health routinely and adjust your budget accordingly to banish the budget banshees. 

If you need help battling these monstrous money mistakes, contact Blakely Financial today. 

 

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals. Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM  to see what other financial tips we can provide towards your financial well-being.
Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.

Debunking 5 Common Financial Planning Myths

Posted on by Emily Promise

Did you know only 74% of Americans partake in financial planning and 90% of people say financial planning helped them achieve their savings goals? Financial planning is for everyone, regardless of income level, as it plays a major role in achieving financial security in the long run. These common financial planning myths often prevent people from engaging in financial planning, and we’re here to debunk them. 

Myth: It’s Too Late to Start Financial Planning

Don’t be fooled by this common financial planning myth – it’s never too late to begin financial planning! It is essential to recognize the power of starting now to ensure your financial security and well-being in the years to come. Even small steps can make a significant difference in achieving your financial goals, whether they are big or small. Talk to your financial advisor to begin your financial planning journey and see what steps you can take towards a secure future. 

Myth: Financial Planning is All About Investments

While having a diverse investment portfolio is a critical aspect of your financial plan, the financial planning process does not solely involve investments. In reality, it encompasses many elements including the following (and more): 

Work with your financial advisor to create a comprehensive plan based on your unique financial situation and goals. Utilize every tool in your financial toolbox to maximize your financial benefits long-term!

Myth: Financial Planning is Too Complicated

Financial planning can seem daunting, but your plan can be as simple or as complicated as you need it to be. You don’t need to be a financial expert with complex financial knowledge to create a basic financial plan! Simplify the process by breaking it down into more manageable steps. There are many resources and tools available for you to begin your plan, and financial advisors are here to assist you every step of the way. 

Myth: Financial Planning is Only for Retirement

Financial planning encompasses life as a whole, not just retirement. The process can yield results important to various life stages and goals such as paying for education, buying a home, family vacations, or even simply financial security. Set short-term, mid-term, and long-term goals, and use your comprehensive financial plan to meet these objectives. 

Myth: Financial Planning Guarantees Wealth

During the financial planning process, it is important to have realistic expectations for yourself and your finances. A financial plan can significantly improve financial well-being, but it does not guarantee instant wealth. By setting realistic and achievable financial goals, you have the opportunity to build your wealth over time. 

A financial advisor can significantly improve your financial planning process and help you lay your path to achieving your financial goals and securing your financial future. Contact Blakely Financial today to get started. 

 

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals. Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM  to see what other financial tips we can provide towards your financial well-being. Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.
Optimizing Your 401(k) Contributions

Optimizing Your 401(k) Contributions

Posted on by Robert Blakely

What is a 401(k) plan?

A 401(k) plan is a company-sponsored retirement plan that allows eligible employees to contribute a portion of their salary to a variety of investment options. 401(k) contributions are typically “before tax” money, meaning the amount you choose to contribute is deducted from your paycheck before taxes are taken out and you are paying taxes on a smaller portion of your salary. 

Many plans also offer options for employees to make post-tax ROTH 401(k) contributions from their paychecks. Post-tax ROTH contributions do not lower an employee’s taxable income, but they do grow tax-free and aren’t taxed upon withdrawal.

An additional benefit of a 401(k) plan is that when you finally pay the taxes on your 401(k) contributions, you may be at a lower rate. Typically, you begin withdrawing money from your 401(k) when you retire and you may very well be in a lower tax bracket at that time; thus you could end up paying less tax on your savings when you do eventually withdraw funds.

If your company offers a 401(k) plan and you are not participating, you may want to revisit your decision as they are a great opportunity and an easy way to save for the future. If you have just entered the workforce, retirement may be the last thing on your mind. Or if you are an older employee nearing retirement, you might be thinking it is too late. At any stage of life, 401(k)s can offer specific advantages that make them a great option for investing and saving.

Making the Most of Your 401(k) Contributions

Many employers offer matching contributions to 401(k)s. For example, your employer may offer a 4 percent match, where they will contribute the same amount you do, up to 4 percent. While this is their limit, you can personally contribute more. If you are not contributing to your company’s 401(k) plan and they have a match, you are leaving money on the table! Don’t be concerned if you cannot contribute the maximum amount to your retirement plan. Simply participating in an employer-sponsored plan puts you in a great position for a successful retirement, especially if you start early. If you are unsure about the specifics of your company’s plan, take the time to read over it thoroughly, perhaps with your financial advisor, so you can make the most of your money.

Combined Savings Strategy

A large number of people find success in a combined savings strategy using both a 401(k) and an IRA to truly maximize their retirement funds. A study conducted by the Employee Benefit Research Institute (2020) found that, on average, individuals who owned both a 401(k) and an IRA at some point during the six years of the survey had combined balances about 2.5 times higher than those who owned only a 401(k) or an IRA. People who owned both types of accounts consistently over the period had even higher balances. Talk to a financial advisor to explore your options and decide which is best for you based on your own income and circumstances.

A Few Key Points to Remember about 401(k)s

  • It is a retirement savings plan, so once you put money in it is best to leave it in. 
  • There are penalties if you take the money out before retirement age.
  • If you change employers you can roll your vested balance into your new employer’s 401(k) plan or into another qualifying retirement account such as an IRA.

No matter what, take advantage of any type of savings plan your current employer offers as the earlier and more aggressive you are, the closer you will come to achieving your financial goals. If you have questions, it is always a great idea to call a financial advisor for guidance. Contact the Blakely Financial team today to get started saving for your future. 

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals. Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM  to see what other financial tips we can provide towards your financial well-being.
Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.
Understanding Social Security Survivors Benefits

Understanding Social Security Survivors Benefits

Posted on by Emily Promise

Social Security provides retirement income for workers in the United States by replacing a portion of their pre-retirement income based on their lifetime earnings. What happens to your benefits when you or an immediate family member passes? In this article, we explore how Social Security benefits can extend beyond your lifetime and support your loved ones as Social Security survivors benefits. 

Defining Social Security Survivors Benefits

Social Security survivors benefits refer to the portion of Social Security funds set aside as a form of life insurance for widows, widowers, and any dependents of eligible workers. Funds begin being set aside from the day you start paying into your Social Security fund. There are two main determining factors when deciding on the presence and status of benefits: the deceased’s work history and the credits they have accumulated. The more years an individual works and is paying into the fund, the more credits they will earn, leaving a more significant benefit for loved ones to access after their passing. The number of credits needed to provide survivors benefits differs based on the worker’s age at the time of death. No one needs more than 40 credits to be eligible for Social Security benefits, so with the ability to earn up to 4 credits per year, anyone working and contributing to Social Security for at least 10 years is eligible. Each situation is different. For more insight, talk to a Social Security claims representative about your situation and choices.

Who qualifies for these benefits?

If you meet the necessary work requirements, different family members may be eligible to collect survivors benefits including:

  • Spouse
  • Ex-spouse
  • Children under a certain age
  • Parents over the age of 62 and dependent on your income

It is possible to have multiple survivors benefits within a single family but the amount that can be drawn for each within a single household is capped by the maximum family benefit. The percentage of benefits they receive will vary as follows, according to the Social Security Administration: 

  • Spouse or ex-spouse, full retirement age or older: 100%
  • Spouse or ex-spouse, age 60 through full retirement age: 71.5% – 99%
  • Spouse or ex-spouse with a disability, age 50 – 59: 71.5%
  • Spouse or ex-spouse caring for a child under age 16: 75%
  • Child under age 18 or who has a disability: 75%
  • Single surviving dependent parent: 82.5%
  • Both surviving dependent parents: 75% to each parent

Taxes and Optimizing Payout

Survivors benefits can be claimed even if the person making the claim is currently working. The amount may be reduced based on multiple factors including the survivor’s age and income. When you receive benefits of any kind, it is important to factor in taxes. The amount paid in taxes is determined by a calculation of combined income, which is defined as your adjusted gross income (AGI), plus nontaxable interest, plus half of your Social Security benefits.

When filing as a single individual if your combined income is: 

  • Below $25,000: Your Social Security benefits are not taxed
  • $25,000 – $34,000: 50% of your Social Security benefits are taxable
  • Over $34,000: 85% of your Social Security benefits are taxable

When filing status is married filing jointly if your combined income is:

  • $32,000 – $44,000: 50% of your Social Security benefits are taxable
  • Over $44,000: 85% of your Social Security benefits are taxable

Children may be subject to taxes on benefits if they hold trust accounts or brokerage funds. 

Someone already receiving their own Social Security benefits must choose between those and survivors benefits, they can not take both. Like retirement benefits, waiting until age 67 allows the payment amount to increase annually. Delaying survivors benefits may result in a larger payout overall than delaying your own Social Security. Talk to a financial professional to work out which option will have the highest payout. 

How to Apply for Social Security Survivors Benefits

Social Security survivors benefits are not automatic, you will need to go through a formal application process which can be completed by phone, online, or in person at a Social Security Administration office. Documents you will need to complete the process include:

  • Proof of death of your loved one
  • Birth certificate, for both you and your loved one
  • Proof of US citizenship, for both you and your loved one
  • Your loved one’s W-2 form or self-employment tax returns for last year
  • A marriage certificate, as a spouse
  • A final decree of divorce, as an ex-spouse
  • For other circumstances, other documents may be required

If you need assistance throughout the filing process, you are able to go into a Social Security Administration office either by yourself or with an advisor to work with a representative on your case. 

Contact Blakely Financial today to learn more about your Social Security survivors benefits. 

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals. Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM  to see what other financial tips we can provide towards your financial well-being.
Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.