Money atters M

VALENCIA COUNTY

News-Bulletin
August 25, 2012

2 Money Matters Valencia County News-Bulletin August 25, 2012

Small business plan includes asking a lot of questions

By Jason W. Brooks
News-Bulletin Staff Writer jbrooks @news-bulletin.com

Tom There does not seem to be any right or wrong answers when planning to start a small business, but there do seem to be some important questions that help an owner, or potential owner, assemble a plan. At the University of New MexicoValencia Campus, the Small Business Development Center helps new owners get started asking themselves some tough questions and coming up with tough answers. From advertising and promotion to capitalizing on strengths, asking questions seems to be an important key to small-business success. Wayne Abraham, the director of the local SBDC, along with business advisor Dave Carlberg, describe their detailed questionnaire that helps their clients get started. Attached are several worksheets that help owners assess elements such as start-up costs and personal finances. There are so many decisions to make in beginning a small business, it helps to have some kind of step-by-step list and a mentor to lead the way. Thats what the SBDC tries to be, and its steps include asking a lot of questions. One of which is what type of business to form: a sole proprietorship, general partnership, limited partnership, a limited liability company or a corporation. No situation is right for everyone, says Carlberg. Its important to assess needs accurately and honestly. A lot of people who come to see us have most of the pieces in place. We are purely consultants. Abraham said he examines each potential businessperson for passion a passion about the product or service they want to sell, and a passion to do whatever it takes to succeed. We dont tell people yes or no, or grade their plan, like on some kind of A-through-F scale, says Abraham. We just give them the facts. Carlberg and Abraham say not only must a comprehensive business plan be put together and followed, but there must also be flexibility. A business has to bend toward its clientele, to a degree. Sometimes, the changes are merely an addition to a product you already have, said Abraham. If 10 people ask for green chile at a restaurant, you better have green chile. Expect customers to want change from time to time. Carlberg said knowing the target audience is another important element. If a business is new or makes a major

Its important to assess needs We dont tell people yes or accurately and honestly. A no, or grade their plan, like lot of people who come to see on some kind of A-through-F us have most of the pieces in scale. We just give them the place. We are purely consulfacts. tants.
DAVE CARLBERG SBDC business advisor WAYNE ABRAHAM SBDC director

Basic sTeps To sTarTing a Business

Step 1. Define the business. Step 2. Choose a business name. Step 3. Choose and register your legal structure. Step 4. Obtain your federal employers identification number (FEIN) from the IRS. Step 6. Obtain your business license and other applicable licenses. Step 7. Complete form ES802 at the New Mexico Department of Workforce Solutions. Step 8. If you have employees, contact the IRS and your State Taxation and Revenue Office or a tax accountant for the appropriate tax forms and rates. Step 9. Check with an attorney regarding leasing agreements, contracts, patents, copyrights, intellectual property and licensing agreement requirements. Step 10. Determine Americans With Disabilities Act compliance. Step 11. Establish a business bank account. Step 12. Check your insurance coverage.
change, sometimes the target audience is different. You have to know the people that are reaching into their pocket for money to spend on your business, says Carlberg. If you normally open at 10 a.m., but decide to add breakfast burritos and coffee, maybe you start

opening at 5 a.m. You cant fight your target market. There are different types of businesses an individual or group can form, each with its own advantages and disadvantages and liability arrangements. There are a sole proprietorship, a general partnership, limited partnership, a cooperation and a limited liability company, or LLC. The SBDC consults with clients on how each of these five options would apply in certain situations. However, the center does not provide tax advice or specific direction in fact, one of the steps on their Basic Steps to Starting a Business checklist is to consult an attorney, and there are many tax-related items on the list as well. The SBDC has a sample business plan that includes a business description, market analysis, marketing plan, operating plan and management plan. The basic-steps worksheets also covers some important details, such as the requirement to provide workmans compensation once there are three or more employees in a company. Carlberg and Abraham know small business owners are a vital part of American growth and prosperity. Small businesses make up 70 percent of the U.S. economy, said Carlberg. Now, things are set up to make it difficult for businesses to grow past a certain point. But we still need them. Abraham said there are certain laws and tax provisions that encourage small businesses to avoid growing past a certain point. Theyre staying small to avoid heavy or complex regulations, he said. The economic instability of the last several years has included bailouts and failures of several large institutions, along with banks and other organizations sitting on much of their cash, not willing to lend it until things settle. However, Abraham said, the passion to start a business is what can get potential owners over the hurdles over borrowing start-up money, as well as other challenges, such as hiring employees. Its easy to get depressed after two or three banks shoot you down, said Abraham. But there are a lot of lenders, and programs through the USDA, and grants. Carlberg sees the small business as essential in Valencia County and throughout the United States. Small businesses are the engines of our growth, said Carlberg. If we shut off the key to that engine, we are idling, at best.

August 25, 2012 Valencia County News-Bulletin Money Matters 3

Retirement has to be planned out before the time comes

By Mike StearnS
News-Bulletin Staff Writer mstearns@news-bulletin.com

Any beautiful summer day, Gary Byczynski can be found swinging a nine-iron at Tierra Del Sol golf course. Byczynski is retired and is fortunate to be able to follow his desires and dreams. The self-employed auto mechanic from Long Beach, Calif., has a summer home in Rio Communities. Byczynski, and his bride of 27 years, Lee Higgins, are enjoying retirement with ample resources to travel to see their granddaughter in Indiana, take military cruises on Navy ships with their active-military son, live in the sun of New Mexico in the summer and the warmth of southern California in the winter. We are married, but she couldnt learn to spell Byczynski, said the jovial retiree of his wifes maintaining her Higgins name since their nuptials Dec. 22, 1985. But Lee not only maintained her name, she maintained her own financial plan for retirement. n See Retirement, Page 4

Mike Stearns-News-Bulletin photo

LEE HIGGINS, left, and husband, Gary Byczynski, right, get ready to enjoy a day of retirement at Tierra Del Sol golf course. The couple, from Long Beach, Calif., have a summer home in Rio Communities and have enjoyed retired life for the past eight years thanks to some good investments and financial planning.

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4 Money Matters Valencia County News-Bulletin August 25, 2012

from PAGE 3

Retirement: Its never too late

Even if it is just a little bit, everything you put away adds up, said Higgins, encouraging investing and saving. Dont spend all of your money partying, put some away, Byczynski said. You dont have to have everything under the sun. You can live life nicely, without having to have every fancy gadget that comes along. Panagopoulos would agree. Its never too late, said Panagopoulos of starting to invest in the future. It is not too late for someone who is 50 to plan for retirement or for long-term care. The financial planner noted that desire and discipline are the keys. The first step, and the most important step, is that they have to have the will and desire to do this, said Panagopoulos. It is harder now than it ever was before. So, guess what? They have to have a little more will and a little more desire. Panagopoulos noted that it is easy to be trapped into spending more than you make to acquire toys. The more debt a person has, the harder it is to climb back out into a savings position because of the interest one has to pay on the borrowed and spent money. It takes a lot of determination when they are bombarded by the media daily, saying dont you want to buy that new car or cell phone? said Panagopoulos.

Higgins was an escrow agent before retiring 10 years ago. Byczynski retired eight years ago. I had a 401(k) and then Gary did his own because he was self-employed, said Higgins. My boss did not do a real good job, joked Byczynski. My fund planner did a good job with investing. I was just hoping that investments would pay off. We have income property in California. Byczynski and Higgins are part of what financial planner Pavlos Panagopoulos calls the sandwich generation. Most of that generation is now retired. The Baby Boomer generation, of which Panagopoulos is a part, didnt have the same motivation when it came to planning for their later years in life. The Baby Boomers are probably the worst generation to come around for saving, said Panagopoulos, who plans retirements and gives investment advice as the only certified financial planner in Valencia County. They think that they deserve the fancy car and house, Panagopoulus said. Investment and saving are not a part of the Baby Boomer persona, he says. They are planning on inheriting. The generation before us is the generation that saved, said Panagopoulos. I tell them, dont count on inheritance from your parents because there may be health care costs or long-term care issues, The financial advisor also notes that society and the race to purchase the latest technological device has created an environment that encourages spending and not saving. Maybe it was harder even in the 70s or 80s to save than in the 50s or 60s. The media or society is encouraging people to buy things. You have to keep up with the Jones, said Panagopoulos.

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Higgins and Byczynski began investing in their retirement even before they got married. They continued through lean times and good times to get to their shared goal. Higgins advises young people that they need to take advantage of opportunities at work. The biggest thing that most young people dont take advantage of is the 401(k), said Higgins. Most companies match it to a point. That is really nice. Higgins also noted that when their plans lost a little bit because of the economy or the stock market, it was only because they had something invested. She said that was better than not having anything saved at all.

Higgins and Byczynski had stock investments, 401(k) plans, Individual Retirement Accounts and Social Security. Additionally, Byczynskis service in the Vietnam War qualifies him for medical assistance through the Veterans Administration. I guess the most beneficial thing I can say has been the Veterans Administration, said Byczynski, explaining that the VA had recently helped during hip replacement surgery. I cant say enough about what they have done. Panagopoulos noted that some tools are becoming tougher to get. Pension plans have virtually disappeared and 401(k) plans are being offered by fewer companies. The company match, which Panagopoulos called free money, is either shrinking or eliminated in some cases. Investments are becoming a bigger part of it. With the elimination of 401(k) and pensions, investments are more important, said Panagopoulos. He explained that advise from a financial planner is crucial in planning investments, due to the volatile stock
n See Retirement, Page 6

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August 25, 2012 Valencia County News-Bulletin Money Matters 5

Shopping local is about giving back to the community

By Brent ruffner
News-Bulletin Staff Writer bruffner@news-bulletin.com

Shop local. Its a simple message. Some businesses and groups alike have made keeping money in Valencia County a priority by promoting local businesses and letting residents know that there are resources in their own backyard. The Valencia County Chamber of Commerce is one of those groups. It sounds very basic, said Andy Gomez, president of the Valencia County Chamber of Commerce. But the goal is to bring people together. Gomez, whose term ends at the end of the month, said the goal of the chamber is to make local businesses aware of each other and how they can benefit from one another. On Sept. 15, the chamber is hosting a business expo at Daniel Fernandez Youth Center that is geared to give creative ideas to businesses who could use services from other local establishments. There will be presentations from different business owners as to how everyone can work together to do business. He said he expects 40 to 50 businesses to attend. Its all about exposure, Gomez said. You are only as successful as the (people) you serve. In recent years, Los Lunas has seen an upswing in development that included new housing and businesses such as Lowes, a home improvement store that was built on N.M. 6.

(Local people) are the reason we are in business. Some people come in two or three times a day. They are like family to us.
LARRY DUBOIS Sopas Restaurant

Gomez said he was impressed with people in Los Lunas after he came to the community from Las Vegas, N.M. They were very pro-growth and pro-business, Gomez said. But it doesnt hurt to be 20 miles south of Albuquerque in a bedroom community. He said its very important for business owners to stay up on what is happening in an around Valencia County with other businesses. Monthly luncheons and regular newsletters can keep companies up-to-date. Rhona Espinosa, executive director for the Greater Belen Chamber of Commerce, said she has had success as director since taking on the job in May 2010. She said business membership at the chamber has doubled since she took over. The chamber is working hard to promote local Belen businesses and, she said, she has received positive feedback from business owners who have seen better results with their company since joining the chamber.

Businesses can join the Greater Belen Chamber of Commerce for as little as $45 per year depending on the amount of employees at a particular business. We are just shouting out the word about what is going on in the community, Espinosa said. Espinosa, whose worked at her family business, Baca Auto, for 30 years, said small businesses are the heart of the community. She said the chambers quarterly workshops help businesses be successful. Baca Auto, a business that was in operation for 70 years, was successful because employees took the extra effort to make the customer happy, she said. Other businesses should make service a priority, she said, and advised that its vital that local companies put their customers first. Its that one extra service to make the customer feel appreciated, Espinosa said. People are willing to pay a little more for great service. Larry DuBois, of Sopas Restaurant in Bosque Farms, said the restaurant staff treats customers like their own friends and family. He said superior customer service is essential to being successful. (Local people) are the reason we are in business, DuBois said. Some people come in two or three times a day. They are like family to us. DuBois said the restaurants staff knows the names of some regular customers and he said people appreciate the friendly atmosphere. (In some cases) we know what the customers drink order is before they even sit down, DuBois
n See Business, Page 6

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6 Money Matters Valencia County News-Bulletin August 25, 2012

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from PAGE 5

Business: Loyal customers and good service are the key to success
ny to a successful stint in Valencia County for the past 26 years. RAKS, named after Richard Tabet, Ana Trujillo, Kenneth Trujillo and Sue Tabet, sell hardware and building supplies to private and commercial companies. There are four locations in the Albuquerque metropolitan area. We are still in business because we are locally owned and serviceoriented, Trujillo said. We, as local people, can make changes a lot faster than corporate people can. He said his management staff and employees have successfully built a rapport with community members. He said his management staff has been with the company a minimum of 15 years. You might not see the same person in a chain store 30 days from now, Trujillo said. He said customers will get the same quality as a chain, but RAKS purchases help money stay within the county and the state of New Mexico. He said businesses such as RAKS and other mom and pop stores are essential to the local economy. The profits (of chain stores) go back to wherever the corporate office is, Trujillo said. Ours stays in Valencia County and the state. DuBois said his customers come back to his business because they know what to expect. They always know that they are going to be taken care of.

said. Its pretty amazing. DuBois and five other partners have been open for 11 years and said the combination of good food and quality customer service will keep them in business. He said he and his family members do it all they cook, clean and bus tables. We arent just sitting around counting money, DuBois said. You got to get in their and get your hands dirty. RAKS co-owner Kenneth Trujillo has helped lead his compafrom PAGE 4

Retirement: Investing for the future can reduce tax payments now
tax-free income upon retirement. Whatever you can do, you want to save in a way that you dont have to pay taxes on what you are saving now, said Panagopoulos. So that means IRA or Roth IRA, even better. You put the money in and it grows tax-free. Panagopoulos explained about other investments that have tax advantages. Then there are tax deferred items. Annuities are tax-deferred and protect you in case you live too long. Life insurance is there to protect you if you dont live long enough, said Panagopoulos. It takes care of your family. Annuities provide income that you can never outlive.

market and losses in the housing industry. Panagopoulos said that the generation just beginning to plan for retirement, Generation X, is better prepared and more realistic about the tools that will be around when they get to retirement age. The generation coming up is leaner. They have seen the mistakes made by the Baby Boomer generation, said Panagopoulos. They dont believe that social security will be around. They are not counting on inheritance.

Its a marathon
Higgins and Byczynski are living nicely during their retirement years, despite falls in the economy and stock market. Dont panic, sooner or later it will come back up, said Byczynski. Panagopoulos explained that investors can survive through times of economic difficulty by keeping their eye on the finish line. He noted that starting is the most important step. Once they do something, then they can do something more. It takes baby steps, said Panagopoulos. There is hope in these matters. Just by people coming in and talking about wanting to do something, shows me that there is hope for our futures.

Defer or eliminate the tax

Investing in retiring can reduce your tax payments right now, according to Panagopoulos. IRAs and Roth IRAs reduce your taxable income and provide for a

August 25, 2012 Valencia County News-Bulletin Money Matters 7

Business advise for owners

By Julia M. DenDinger
News-Bulletin Staff Writer jdendinger@news-bulletin.com

SBDC StatiStiCS aCroSS the nation

A new job is created in the United States by an SBDC in-depth client every 9 minutes A new business is opened by an SBDC in-depth client every 43 minutes $100,000 in new sales are generated by SBDC in-depth clients every 9 minutes $100,000 in financing is obtained by SBDC in-depth clients every 17 minutes In 2008, SBDC in-depth clients saved 88,889 jobs and created 58,501

are put in the same category as a $50 billion business, he said. Regulators look at the loan profile for a bank. Lets say, 15 years ago, someone got a 30 year loan for a house. They never Walking into the Small Business missed a payment, solid people. The Development Center of Valencia County house was valued at $150,000 but the is walking into a trove of business new appraisal comes in at $110,000. books, magazines, advice and expertise. So the banks profile is written Headed up by Director Wayne down for the perceived loss of the Abraham and Business Advisor David value of the loan as properties are being Carlberg, the SBDC dispenses free appraised to market and that profile is advice to all comers. Whether you want thrown into the balance and puts banks to start a new business or expand an into the bad profile category, Carlberg existing one, they are your guys. said. Carlberg said right now, the country Banks have to come up with X numis mired in a challenging economy, to ber of dollars on a good loan to good put it kindly. people, he said. The economy is going While many have said the recession to be very is over and on tenuous until the upswing, Small Business Development Center people, everyCarlberg said body, begin you cant call it University of New Mexico-Valencia to understand a true reversal Campus that we are in a until the coun280 La Entrada Road, Tom lot of trouble as try starts seeHours: 8 a.m. to 5 p.m., Monday through a country. ing jobs come Friday So what back. 925-8980; www.nmsbdc.org does all that The rule of mean to busithumb used to nesses in be for every full-time employee added Valencia County? Well, over the years, to a community, three jobs were gener- survival has become harder and harder. ated, Carlberg said. The same rule While the SBDC is best known for applies now, but in reverse. helping new businesses build a business Instead of hiring more people when plan, coming up with new plans and theyre shorthanded, Abraham said long-range goals for existing businesses businesses are asking employees to wear is also a huge part of what they do, more hats. Carlberg said. They are working harder, longer We can council people on all aspects hours. You see people who dont want to of business, he said. Not just starttake time off and risk losing their job or ups. seeing hours cut, Abraham said. Were Abraham said they will sit down, seeing this in large corporations, too. one-on-one with a business owner, and Until we see the financial picture turn help them draw up a plan. around, they are going to continue to Looking at five to 10 years down hold onto their cash. the road, Abraham said many business Part of the struggle comes from new owners are looking for free or cheap banking regulations being introduced ways to promote their companies, both which, for better or worse, apply to all in Valencia County and across the counbanks, large and small, Carlberg said. try. When the banks look at capital n See Tips, Page 8 ratios, small businesses of $50 million

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8 Money Matters Valencia County News-Bulletin August 25, 2012

from PAGE 7

Tips: Separate business accounts help with accounting, budgeting

often interested in becoming vendors for local government entities, but the process can seem intimidating and daunting. Through the Procurement Technical Assistance Program, becoming a government contractor is almost painless, Carlberg said. The one-on-one advisors teach businesses how to effectively response to requests for proposal and requests for quotes, how to create and deliver presentations, federal accounting and invoicing practices and understanding government procurement regulations. Carlberg said the PTAP can help vendors become contractors for federal, state, county and municipal entities. Businesses can also take advantage of the SBDCs International Business Accelerator, Abraham said. This program can help connect small businesses with international trade opportunities, he said. We have a local business here who is doing business in Saudi Arabia. The SBDC can also help small business owners access loans backed by the U.S. Small Business Administration. The loans can be used for either starting or expanding a business, and SBA has loans specifically for veterans and the military community, disaster loans, export assistance loans and special purpose loans. Rhonda Davis and Mike Sumner, with New Mexico Bank and Trust, have some solid tips and advice for small business owners to maintain and increase their success. While business owners are experts in their field, the two say, they may not always know all the tax regulations and requirements that come along with owning their own business. Be sure and utilize an accountant or bookkeeper to organize your payroll and taxes, Davis said. What you dont know can hurt you! Tax regulations change frequently and can be hard to keep up with, let the professionals handle that, thus savings you time and possible fines and penalties. They recommend opening an operating account, payroll account and separate tax account. Keeping separate accounts can help with the business accounting and budgeting. A large part of fraud on business accounts arise from lost payroll checks or disgruntled employees, Sumner said. It is much easier to close just the payroll account if fraud arises than having to close your operating account and notify all your vendors. And whether you pay your tax monthly, quarterly or annually, setting aside funds each month to cover your tax liability is much easier than trying to come up with a large sum all at once, he advised. Find out what tax bracket youre in and transfer a sufficient amount into your tax account on a monthly bases. Life will be much easier come tax time, he said. Keeping good record is of paramount importance, Davis said. A monthly review of your income statement will tell you exactly where you are in the money making process, she said. If a business is experiencing cash flow problems, accepting credit cards is a good way of increasing cash flow, and can be less expensive than taking a loss on a bad check. Many businesses and customers are willing to pay quicker if credit cards are an option, Sumner said. They both also recommended working with the SBDC on a business plan, if you are considering opening a business or expanding your business. They can help you prepare a professional business plan, Davis said. They understand what lenders are looking for and can help you address each issue in a well thought out manner.

Recently, weve been focusing a lot on marketing in inexpensive ways, he said. They want to be known in the county, in New Mexico, nationally and internationally. And when it comes to free and cheap ways to promote a business, the Internet is almost second-to-none, Carlberg said. While a website used to be the sign of a possible fly-by-night business, today its a sign of credibility to have a web presence through a traditional site or social media service. Its kind of like it used to be a big deal when a business got a fax machine. Youd arrived, he said. You could do business the same day. Engaging in a web presence is just the way companies have to move to stay in step with their customers, Carlberg said. And its not just a website, Abraham said. You have to include social media to get a different target market than print or the web. Most of the younger consumers dont use email much, so you have to be willing to promote yourself through text and Facebook. This is not something you should approach casually. It should be part of your marketing plan, along with all your other tools. Carlberg said small businesses are

Ag diversification is an economical and viable option

By DeBorah Fox
News-Bulletin Staff Writer dfox@news-bulletin.com

August 25, 2012 Valencia County News-Bulletin Money Matters 9

The business of agriculture is tricky for any producer, but diversification can play a significant role in alleviating some of the risk. Valencia County has a long tradition and heritage of agricultural production, which farmers want to preserve. But that isnt easy with only an acre or two to farm. There are several large farmers and ranchers in the county, but 90 percent of the farms are less than five acres, meaning there is a lot of irrigated land that is in very small production, said former New Mexico State University Coop Extension Agent Kyle Tator. The way to preserve the countys agricultural tradition is to make it economically viable. Its an economy of scale, Tator said. There are fixed costs that you cannot get rid of. Crops must be grown that will bring a greater return than the costs of production, such as labor, diesel fuel, tractors, equipment, water and seed. Farmers wanting to maybe expand or make more money at the operation that theyre in need to consider highvalue crops, Tator said. They need to consider diversifying crops, so, instead of just three acres in straight alfalfa, maybe rotate through with some high value crops or plant some perennial crops that might reach a higher value. It can be as simple as diversifying into some type of livestock, or doublecropping growing more than one annual crop within the same year to produce two different yields. A hay grower might plant oats and sorghum for example, he said. Orchard growers can supplement their fruit crop by growing hay in their orchard. There are some challenges, like how to irrigate the trees and the hay at the same time, timing of harvests, but it is certainly doable, Tator said. A high-value horse hay, such as dwarf clover, would be a good example, and the plant also furnishes fertilizer for the orchard through nitrogen fixing. Any orchard floor covering that could be grazed, said Tator. A perennial forage pasture can grow hay in the summer and lease the pasture to a rancher in the winter or introduce a small beef operation. There isnt much that farmers and ranchers havent tried or arent doing already, Tator said. Its just at what scale, Tator said. He knows a family in northern New Mexico with only a half acre that they cut for hay, but in between cuttings, they have a mobile chicken coop that goes

Deborah Fox-News-Bulletin photo

THE COUNTRYS DROUGHT HAS forced livestock growers to buy more hay for cattle feed. The hay is in high demand, but growers are dependent on irrigation water, which is also in high demand.

through the field, and their daughters sell eggs at the local farmers market. The chickens get range fed while they fertilize the field. Bee hives can be added to just about any farm if you know how or are willing to learn. Honey is a high-valued crop, its a raw agricultural product, as well, said Tator. Bees promote pollination on your farm, and honey is a cash crop. Honey producers can also sell pollen and value added honey products. Theres also perennial edible crops, like raspberries, blackberries, strawberries, asparagus, things like that, that will grow here, Tator said. Finding the market for them other than the farmers market could be a challenge, but I know folks who do. Ive seen five acres of berries on Edeal Road, and theres a farmer in Tom who has probably close to two acres of berries, so its happening here. Its kind of exciting to see that folks are considering some of these alternative crops. Everything on the farm must bring in revenue. That is an old rule of thumb. Minimizing your risk is another big one, and you do that by taking steps to

make sure all your eggs arent in one basket, Tator said. Just like anything else, youre subject to what the market does. Hay markets been great the last couple of years, but that could change. The drought has forced livestock growers on range pastures to buy more hay for cattle feed, and so hay is in high demand, but hay growers are dependent on irrigation water, which is dependent on snow-pack from the Colorado mountains. There are no guarantees for farmers. Vertically integrating your farm by slaughtering your own livestock or taking chile and tomato crops and turning them into salsa, are steps toward gaining a bigger share of the revenue those crops can bring. Of course whenever you do that, its food processing and you need to get permits and labels and all that sort of stuff, Tator said. Its the next step, and the potential for that here is huge. There is a lot of different things that could be unique to Valencia County and marketed as a Valencia County product because they grow very well here. But in order to commercially produce value added products, livestock must be processed by a certified USDA butcher,

and canned goods must be processed in a USDA certified commercial kitchen. Until Valencia County is able to develop an economic development center of its own, alternatives such as the South Valley Economic Development Center offers a fully-equipped commercial kitchen, and the Taos County Economic Development Corp. has the first New Mexico mobile livestock slaughtering unit, a Mobile Matanza. Local meat producers might organize together to bring the truck to Valencia County on certain days of the year, he said. Meanwhile, the regional study for a wholesale sorting shed is underway. The feasibility study is being conducted by NMSU Cooperative Extension Services, and was funded by a grant. The whole idea is that local produce could be brought to this facility and then distributed into the local food chain, thereby stimulating the ag economy in the middle Rio Grande, Tator said. The purpose of the study is to see if Middle Rio Grande Valley producers could meet the growing demand for locally grown food in the metro area. n See Agriculture, Page 11

10 Money Matters Valencia County News-Bulletin August 25, 2012

Financially preparing for your childs higher education

By Julia M. DenDinger
News-Bulletin Staff Writer jdendinger@news-bulletin.com

Theres an old saying about children never getting cheaper. And even after they leave home to pursue higher education, parents may still be on the hook for the bill. But with an early start and some planning, families can sock away a good chunk of money for a bachelors degree, says Yvonne Sanchez, a financial advisor with Financial Network in Los Lunas. One of the easiest savings plans a family can start with is a savings account set up under the Uniform Gift for Minors Act, which is known by the unfortunate acronym as an UGMA, Sanchez said. There needs to be an adult co-signer, and once the child turns 18, they get the assets, Sanchez said. While an UGMA is a pretty straight forward savings mechanism, its not without pitfalls. Because the child becomes the owner of the assets at 18, they might not qualify for other sources of financial aid, she said. A better way to go may be a 529 Plan, which makes the child the beneficiary of the assets, but the responsible individual, usually a parent or guardian, remains the owner of the assets. Using a 529 also allows the funds to be used solely for higher education contributions as well as withdrawals are both tax exempt. But if the student decides to buy a sports car, there are penalties and

fines for using the account for a purpose other than higher education, Sanchez said. Also, if you have two 529 accounts, say for two children, and one doesnt use it for school or doesnt use it all, the funds can be transferred over to the account of the student who is going to use the money, she said. The UGMAs have no annual limit to contributions while 529s can only receive $250,000 a year. And you cant open up a lot of 529s with just $25 a month, Sanchez said. You dont need a large chunk of money up front. And students and parents shouldnt shy away from investing in the stock market, she said. To own a part of a publicly traded company, a person only has to own one share. This is something I did for my niece and nephew. I got them shares of Disney stock, Sanchez said. If you want kids to be involved in investing and money, do something they are already interested in. So with just a few shares, Sanchez said her family was able to review return statements and see how the value grew, giving them ownership in Mickey Mouse and Pluto. She also advised parents to let children pick at least some of the stocks they invest in. Maybe not the whole basket, but if they like Apple, let them buy a share, so they have input, she said. If parents want their children to be financially successful, they cant be afraid to talk to their children about money, Sanchez said. You have to talk to your kids about money. Maybe

they werent all good experiences, like a bankruptcy, but you learned some valuable lessons, she said. You have knowledge and can give them guidance. Setting up checking accounts and savings accounts can also be simple, inexpensive ways for children to get a good feel for how money works, especially if they work for that money. Ive seen the spending habits of my niece and nephew change, Sanchez said. Its one thing if mom pays for it, but if it comes out of their own pocket, and they see that balance drop, they put some more thought into it. There are also a plethora of budgeting tools and apps on the Internet and for smart phones, she said. There are also tools where you can set goals, like half of the price of a car, and it will back out how much per month you have to put away, Sanchez said. Rhonda Davis, with New Mexico Bank and Trust, agrees that the first step to helping a youngster plan and save for the future is to start early. There are several programs available to help parents save for their childs higher education expenses, Davis said. Not only can parents set up plans but also grandparents and other family members can do so. Davis advised that anyone thinking about starting an investment or savings plan should always consult with a financial advisor or tax professional prior to opening to determine which plan would work best for them.
n See Education, Page 11

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August 25, 2012 Valencia County News-Bulletin Money Matters 11

ResouRces foR kids and paRents

Path to Investing: www.pathtoinvesting.com; This website, sponsored by the Foundation for Investor Education, an affiliate of the Securities Industry Association, features objective investor education, resources and expert insights for investors of all experience levels. The Jump$tart Coalition for Personal Financial Literacy: www.jumpstart. org; This website, sponsored by the non-profit organization Jump$start, is dedicated to improving kids financial literacy. It provides links to various websites and resources that help educate students in money matters.
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Education: Start kids out early

sistent contributions is the key. Setting an automatic contribution is a great way of doing so. Davis said families and students should take advantage of the Legislative Lottery Scholarship. This is a free program for New Mexico residents and can cover tuition expenses at eligible New Mexico universities or vocational schools, but students have to meet the eligibility requirements. So, dont wait until your child is a senior to begin looking into this program, she said. Preparing a child for future financial challenges needs to start before they even leave high school, Davis said. Prepare you child for graduation by teaching them how to budget, she said. This can start at a very early age. When they start earning an allowance set down with them a help them develop a budget, setting aside a percentage for special activities or purchases. When you have to work for something and it takes a while to save for it, it makes that purchase or activity so much more meaningful. And before students leave the nest for college, Davis recommends opening a checking account for them, and going over the monthly statement together to teach them how to reconcile it. Teaching them to keep a check register and writing down all their purchases can help them avoid overdraft fees when they go out on their own, she said. Many banks offer free online banking with budgeting tools to help them stay on track.

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The two typical education savings plans are Coverdell Education Savings Accounts and 529 Plans. Davis said a CESA offers tax-free withdrawals for a childs education expenses. Contributions are not tax deductible, but you do not have to pay taxes on the earnings when eligible distributions are made. Funds do not have to be used just for college but can also be used for qualified elementary and secondary education expenses, Davis said. So, What happens if my child decides not to go to college? In many cases you can transfer assets into a CESA for a different family member who does. The 529 Plans offer special tax benefits and there are two different plans a pre-paid tuition plan and college savings plan, she said. The pre-paid college tuition plan allows you to pre-pay/lock-in tuition prices at eligible colleges and universities, while the college savings plan is another way to help save for your childs higher education expenses and offer a wider range of investment options, Davis said. Other options are traditional and Roth IRAs, which are mainly used for retirement purposes, also allow penalty free distributions for qualified higher education expenses, David said. If you would rather keep it simple and not worry about taxes and penalties, open a regular savings account, she said. This is a good option and offers lots of flexibility. With all of these savings programs, making con-

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There are no guarantees, but there is a lot of irrigated land in the region. Economically, we need to see if its viable, Tator said. So, thats whats going to be happening in the next few months. The Valencia County Extension Office is located at 404 Courthouse Road in Los Lunas. To reach them, visit www.valenciaextension.nmsu.edu phone, 565-3002, or email valencia@nmsu.edu. For more information about the Taos County Economic Development Corporation and the Mobile Livestock Slaughtering Unit call, 575-758-8731, or visit their website, www.tcedc.org/mantanzaProgram.html. To contact the South Valley Economic Development Center, call 877-0373, or visit www.svedc.org. The center is located at 318 Isleta Blvd. SW.

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