Wednesday, January 18, 2017

Succession planning: How to hand off your business to your kids (or somebody else)

"The brave may not live forever, but the cautious do not live at all.”Richard Branson, international business entrepreneur who is selling his Virgin America airlines to Alaska Airlines.

By JULIA ANDERSON
In the region where I live near Portland, Oregon, many small businesses are owned and operated by women.
In fact, Portland is known generally as a town where smaller, family-owned businesses have thrived, unlike its coastal neighbors to the north and south -- Seattle and San Francisco -- where the behemoths of industry dominate the landscape.

Women-owned businesses that I know about have successfully operated in the health care industry, are in retailing and marketing, hospitality-travel and real estate. In addition, women I know have worked side-by-side with a spouse to build businesses in such diverse industries as manufacturing, construction, automotive supply and trucking.

Many of these successful enterprises were launched by people born after World War II who have put their heart and soul into their business over the past 25 or 30 years. But what happens when these Baby Boomers, now in their 60s and early 70s, begin to age into retirement? Should they sell out or let the kids carry on?

It is never too soon to start talking about succession planning with your kids or with younger employees who might want to take on operations when it is time for you to step-away.

“Those that work on a plan will have a much better chance of a hand-off,”  Ted Austin, senior vice president with the Private Client Reserve of U.S. Bank in Portland, told me.

According to industry statistics, 25 percent of family business transfers fail because of poor succession planning, he said.

“The biggest obstacle is around communication," he said. "Some people build a business with the idea someone will buy it. For others, the family name is on the door with the expectation the operation will stay in the family. One way or another you have got to talk about it.”

For business succession planning to succeed, Austin recommends these steps:
  •  Start talking sooner than later within the family about how to handle the legacy of your hard work.
  •  Find out if the next generation is interested in continuing the business or if you should begin looking into a buyout by a group of employees or an outside investor.
  • Set up a plan for how the transition will work. What’s the timeline? How will responsibilities be shifted? Will dad and mom still come to work every day even though they may no longer be in charge? How will employees be kept in the loop?
Austin at U.S. Bank suggests that a good exit plan may spin out over a five- or ten-year period after a lot of questions have been answered.  For instance, will it be a buyout by the children over time or will ownership shares be gifted to the next generation?
 
“The more clarity in the plan related to legal governance of the business going forward means less stress during family gatherings at Christmas or while on a family vacation in Bend. Austin cautions that mistrust or misunderstanding can put a damper on family events.

Building an advisory team

Good succession planning may mean putting together a team of professional advisers – an attorney to write out a legal agreement, a financial planner to help with estate and retirement planning and a bank trust officer who can advise on tax strategies, creditor protection and asset management.

“Depending on the complexity, this professional help will cost money,” Austin said. “Make sure the family understands that cost.”

Succession planning evolves with the business but doing it sooner than later can make the difference between a successful transition and disaster.  Advisers at SCORE, a national small business mentoring network, say that business owners should not shy away from succession planning because it looks too far in to the future.

“Devising a formal plan that outlines who will own and operate the company, once you are not in the day-to-day role, is a critical path decision that has a direct impact on long-term business profitability,” they say.

Before embarking on an exit strategy, business owners should seek legal advice and possibly a “business evaluation expert” who can help make sure every transition option has been, considered, the Small Business Administration recommends.

“Without naming names, if you drive down Portland’s Broadway you will see a lot of families that have built wealth, generation by generation through a growing family business,” Austin said. “Where it has gone extremely well, family members have been involved in the business. They have been able to look under the hood so that when it comes time they will be as ready as they can be. Or they decide this isn’t something they want to do, so everyone can plan for that change.”

Will the business founders be able to pass on the company to his or her next generation or will a new owner step in with a buyout, ready to take the reins? That business succession conversation must launched by the business owner with her family.

Why not make it happen this year!

Friday, January 13, 2017

My rheumatoid arthritis: One year on there are still lots of questions, no clear answers

"Trouble has no necessary connection with discouragement. Discouragement has a germ of its own, as different from trouble as arthritis is different from a stiff joint." -- F. Scott Fitzgerald, American novelist regarded as one of the greatest American writers of the 20th Century.  (1896-1940)

Editor's note: For another first-person experience with polymyalgia rheumatic (PMR) from Washington Post writer Alice Reid (Jan. 14, 2017). Click here.

BY JULIA ANDERSON
A year ago, I was diagnosed with rheumatoid arthritis. My symptoms were most typical of polymyalgia rheumatica…a type of RA that causes muscle pain and stiffness, especially in the shoulders.

The condition came on in a matter of two weeks. At the outset, it was so bad that I could not roll over in bed without crying. I could not lift dishes out of the dishwasher. I couldn’t wash my hair without gasping with pain when I lifted my hands to my head. Walking became a shuffle.
Terrified, I saw a physician’s assistant and then a rheumatologist.

First the good news. My condition, a year later, is much improved!

The RA symptoms are still present but I describe them to my doctor as similar to discomfort from strained muscles in my shoulders and thighs. Occasionally, the inside of my wrists hurt. I have little or no swelling in my hands. I am back to doing most of the things I like to do such as traveling and, this winter, downhill skiing.

But I am aware that I have this problem that comes and goes, but never completely goes away.
I take methotrexate, an RA treatment standby, as well as a prescription anti-inflammatory drug (NSAID) called Diclofenac.

The problem is that I am NOT pain-free.

My doctor wants me to be pain-free because the pain indicates that the disease is still “active” and working on my body. Long-term that could mean trouble, debilitating trouble.

After a year of tracking these symptoms, looking at my blood test results and seeing me during regular office exams, my rheumatologist is still not sure what version of RA I have. Some of my symptoms suggest polymyalgia rheumatic but I also might have psoriatic rheumatoid arthritis or something else.

What is it?

According to a Mayo Clinic web site, polymyalgia rheumatica almost exclusively affects older adults with the average age at onset of 73. Women are about two times more likely to develop the disorder. And polymyalgia rheumatica is most common among whites in northern European populations. With the last name Anderson, you can guess my genetic background. I’m 70.

They also say that rheumatoid arthritis is more common in people whose parents may also have had the disease or some form of arthritis. That would be my father.

The broad definition of rheumatoid arthritis is that it is a chronic inflammation disorder that can play havoc with more than just your joints. It occurs when your body mistakenly “attacks your own body’s tissues,” mainly the lining of your joints. This in turn eventually causes swelling that results in bone erosion and joint deformity. There can also be trouble with other systems...your eyes, your ears, cardiac system, gastric system. Really concerning.

Glen Frey, Eagles co-founder and band member, died about a year ago (2016) from complications (pneumonia) related to rheumatoid arthritis and the immune suppressing drugs he was taking for it at the time of his death at age 67.

At the time, Marcy O’Koon, senior director for consumer health at the Arthritis Foundation, told The New York Post in an online report that with immune-suppressant drugs “you are vulnerable to infection, in fact, speaking to RA, you’re more vulnerable to infection anyway. That’s something people have to watch out for and contact their doctor at the first sign of fever, she said.

O’Koon also said that those who suffer from the chronic inflammatory disorder have to weigh the many life-changing benefits of strong drugs that treat the disease against their nasty side effects.
That is what I’m doing, right now.

Looking at Humira

After a year of trying several other drugs (Leflunomide and Sulfasalazin) in combination with methotrexate with no clear satisfactory (totally pain-free) result, my doctor is now talking about Humira.  She called it a “miracle drug” and said that many of her patients found it very helpful.

Humira is a leading anti-inflammatory drug (also known as Adalimumab) used to treat symptoms and prevent the progression of active rheumatoid arthritis and something called ankylosing spondylitis. That’s another inflammatory disease that affects the spine and sometimes, the eyes. (It turns out there are many different kinds of rheumatoid arthritis, which can affect children and young adults, as well as seniors, like me.

There are big trade-offs in using Humira (known as a biologic drug), and it is not just its high cost.

This drug can lower your white blood cell count, which increases the chance of getting an infection. It also lowers the ability of your blood to clot. This is serious stuff: When using Humira you are supposed to even be careful brushing your teeth or using dental floss. You are not supposed to touch the inside of your nose or your eyes without washing your hands.

And you are “to avoid contact sports or other situations where bruising or injury might occur,” says the Mayo Clinic drug report. Then there’s the higher risk of cancer including lymphoma, leukemia, lupus and nervous system problems, according to the Mayo report.

Since neither Medicare nor my cheap Medicare-advantage plan cover the cost of this medication, I was told that my personal cost to buy Humira for a year would be about $10,000. At the peak, it would cost me $4,800 a month. That’s something to think about.

Considering my options

Like a lot of things related to rheumatoid arthritis, there are no clear cut answers for what exactly is going on with my autoimmune disease or how exactly to best deal with it. As I see it, my options are to: continue with the methotrexate/Diclofenac combination and endure some RA discomfort. Or figure out a way to start taking Humira with all of its precautions and side-effects with the hope that I would be pain-free and slow the progress of this disease. (Just read through comments on a Humira user review Web site. Some of the comments were really scary).

My doctor also suggested that I reconsider taking a bit of prednisone in combination with the methrotrexate. But I hate prednisone for the side effects…weight gain, puffy face, sleeplessness…depression. All lovely. For a rundown on all this stuff, click here.

My last thought: I have new sympathy and respect for people living with rheumatoid arthritis (about 1.3 million). It means varying degrees of chronic pain. It means fatigue that comes and goes without much reason.

It means having good days and bad days with little true understanding from those who don’t have it and/or don’t know about it.

So my RA journey continues. I feel lucky in many ways that rheumatoid arthritis has only lately entered my life, that my pain issues are much improved and that there are options and drugs in the arsenal that my doctor has yet to use to continue to give me the life I enjoy.

FOR MORE:
Why do autoimmune diseases affect women more often than men? click here.
Humira user forum, click here.
Cost of Humira, click here.
Beating the high costs, click here.
Ways to beat the high costs, click here.

Monday, January 2, 2017

Bit by FitBit. An investing lesson relearned

"Behind every stock is a company. Find out what it's doing."Peter Lynch,  Fidelity Magellan Fund manager from 1977 to 1990, during which time the fund's assets from $20 million to $14 billion. (1944 -   )   


BY JULIA ANDERSON
There’s a lot to like about FitBit wearable health and fitness tracking devices. Interactive with a smart phone app, a FitBit – worn like a wrist watch -- will track the steps you take every day, calculate how many stairs (or the equivalent elevation gains) you climb daily and give you your heart rate at any given moment. While asleep, a FitBit can detect how many times in the night you become restless, roll over or get up to raid the refrigerator.

Using the app, you can clock in your daily water and food intake and track your overall physical performance in terms of calories in and calories out.

The app uses clever graphics and trends charts to show you your progress. It rewards you with "badges" when you reach certain milestones. All very clever.

After receiving a FitBit as a birthday present last year, I was so impressed with the product that I bought stock in the publicly traded company, FitBit Inc., headquartered in San Francisco. In 2015, the company reported revenue of $1.86 billion on sales of 21.4 million "connected health and fitness devices."

Last week, I sold my FitBit stock investment at a 70 percent loss!

This lesson is something I occasionally must (painfully) relearn: Don’t be a gambler (you idiot), be an investor!
These are the rules (my rules) that I violated:

  - I bought the stock on an emotional whim rather than after taking time to do research on the company, its products and financial performance. If I had done that I would have noticed that FitBit management and the stock were under pressure in late 2015.

  - I failed to evaluate FitBit competition in the wearables market. Competition from the likes of Apple and Samsung, not to mention smaller competitors. 

  - Fitbit does not pay shareholders a quarterly dividend. Instead, investors are in it for a hoped-for big run-up in share price. Only buy a stock like this if you can afford to lose every cent that goes into the gamble.

  - I failed to recognize the techy trendiness of Fitbit products, not unlike GoPro wearable/mountable cameras. GroPro stock had peaked just a year earlier (2015) at $82.35 a share and then plummeted over the next 12 months to $17 a share. That was just about the time that I was falling in love with FitBit.

A month (January 2016) after my investment, FitBit was hit with a class action lawsuit claiming that its heart rate technology was not accurate enough for people with health issues. Turns out that this technology in all wearables is a bit iffy. The negative news churned around for the next six months.

In quarterly reports, the company’s earnings per share had weakened even as revenue (sales) were increasing. The share price went from about $30 to $12 by the end of March 2016.

At that point, I decided to hold the stock until the end of the year for tax purposes. Selling FitBit at a long-term (owned more than 12 months) capital loss can be used to off-set any long-term capital gains incurred during the year from other stocks sold at a profit. This gave me some comfort.

Meanwhile, my own FitBit that I was wearing pretty much all the time began to physically come apart after 10 months of use. The colorful rubbery housing became unglued from the postage-stamp electronic device sitting inside. I tried gluing it but that didn’t work. Durability of some FitBit products turned out to be an issue, which resulted in complaints on online reader boards. Click here.

To my surprise, I received a new FitBit for my birthday again, this past year! This one has a different flaw that aggravates me….in the night, if I move my arm, the FitBit face lights up to tell me the time. That’s like having someone turn a flashlight on in my face. I have enough sleep issues as it is, so I stopped wearing it. Apparently you can go to the iOS app and turn off the QuickView button. Haven't tried that yet, too busy.

Investment analysts at Standard & Poor Capital IQ (click here) , rate  FitBit stock as a HOLD with a 52-week target price of $11. The stock starts 2017 at $7.32 a share. At that price, someone might make some money if and when the company turns around. As an emerging growth stock in a fickle market, analysts see "limited long-term visibility" for FitBit share performance. In other words, they don't know where FitBit's share price might go.

Forecasts call for a 10 to 15 percent FitBit sales revenue increase in 2017. Earnings per share could to climb from 57 cents to 74 cents. As the leading provider of wearable fitness-tracking devices, FitBit still has potential, analysts said.
Negatives include stiff competition, manufacturing supply issues, rising costs and softer demand. FitBit product prices range from around $100 to $200.

A Zacks Equity Research post at Nasdaq.com, asked this week, “Is There Hope for FitBit (FIT) investors in 2017?” Zacks mentioned several of the negatives already described in this report. But then said that in spite of all the gloominess surrounding the stock, the fact that Fitbit is still No. 1 in the wearables market and apparently saw a good fourth quarter (2016) gives investors reason for hope in 2017.

Not for me.

I’m too busy relearning my own basic rule about not buying stock in trendy, techy companies that don’t pay a dividend. If I had 20 years to see how it all turns out, maybe I could justify continuing to own FitBit shares. But it is easier for me to sell, take the loss and move on.

There are gamblers and there are investors. I try to be an investor. An investor does the research, buys for the long-term and reinvests the dividends for 20 years.

Or as investment guru, Peter Lynch, says, "Know what you own, and why you own it."

In the case of FitBit, I didn't know what I owned. I just fell in love.

For more:
Understanding capital gains and losses, click here.
Going All-in: Comparing Investing and Gambling, click here.
What is the difference between investing and gambling? click here.
25 Rules for Investing, The Street,  click here.


Thursday, November 3, 2016

Will election results matter to markets? Not really

"Time and time again, political parties have tried to recruit the stock market to their side. Most of the time it backfires." -- Peter Eavis, writing for the New York Times, 2016.

BY JULIA ANDERSON
As a retiree living mostly on investment income, I am at the mercy of capital markets and corporations that make a profit and pay me a quarterly dividend.

So how nervous should I be about what political party wins the national election and about who will be sitting in the White House in January? According to the experts at Fidelity.com, I can relax.

“Over the long-term there has been no significant difference on average, between which party controls the White House,” they say.

Neither should I worry about a change in my federal tax obligation, say reporters at the Washington Post.
That said, many of my friends believe that if one or the other party wins the Presidency, we are doomed. The reality is that it will take a lot more than that to upend the economy.

Here’s the key statistic:
Since 1960, the overall average annual return from the American stock market is 12 percent. When Democrats were in office, the annual return was 12.2 percent. During Republican administrations the annual return was 11.8 percent
.

Yes, the Democrats want to tighten regulations on big banks and the health care industry including drug pricing. While tighter regulations can be a factor, bigger trends related to job creation and interest rates on loans may be more important.
“Ultimately, the performance of the economy probably will continue to have the greatest influence on the financial sector,” said Chris Lee, manager of Fidelity Select Financial Services.

 Lee agrees that a “growing global trend toward populism” suggests that regulatory pressure on banks will continue. There is some bi-partisan thought that the Glass-Steagall Act should be reinstated. The Depression-era law that separated commercial banking from securities activities was repealed in 1999.

My view is that banks are part of the bedrock of our economy. With tightened lending regulations, they should continue in their role as lenders. The real disruption in banking is the ongoing Information Age transformation related to online transactions and instant market manipulation. It is a miracle to me that I can deposit checks and pay bills using my smart phone. How many brick and mortar branch offices will banks need going forward? Or for that matter, how many employees will they need? I still like that 3 percent bank dividend.

As for health care, innovation is a huge factor in ongoing profitability for health care corporations and for drug companies. But you’ve got to be in it for the long-term.

Despite strong revenue growth, I have watched my Bristol-Meyer stock decline in value by 23 percent over the past year. That is because analysts are concerned about one of the company’s cancer drugs that failed to meet “its primary endpoint.” The people at S&P Capital IQ still rate the company as a buy. I am going to hold on for the 3 percent annual dividend and because an aging global population means more pills for more people.

As for other sectors, Fidelity analysts expect the energy industry profitability to strengthen in the coming year thanks to growing demand and cost reduction. Just stay away from extremely competitive alternative energy businesses.

Industrials and materials also should continue to strengthen. Typically in the late stages of a bull market (which we have enjoyed for seven years) consumer spending slows (which it is). Industrials on the other hand have a strong outlook because commodity prices should increase. 

Meanwhile, infrastructure spending (as promised by both political parties) is poised to increase as state budgets loosen up. Spending on roads and bridges should increase which is good news for companies like Caterpillar. Despite deadlock in Congress, we have a five-year highway bill and a two-year defense bill, which should give some stability to planning.

Meanwhile, the Washington Post compared tax policies of the two political parties. For the average retired couple with median income of $59,000, there would be no changes in taxation under the Clinton administration and an estimated $600 reduction in federal taxes with a Trump tax plan.

It would be nice to see the opposing political parties actually work together to get a few things done. More stalemate would undermine all the big picture problems that need attention.

I just need to keep reminding myself that over the long term, political parties are NOT an important factor in market ups and downs.

"How Politics Influences the Stock Market: Not Very Much, click here.
 

Thursday, October 27, 2016

Sixtyandsingle expands to TVCTV community television

"To change the way American women think, plan and save for retirement."  - Julia Anderson, founder and contributor at www.sixtyandsingle.com


BY JULIA ANDERSON

Life is good here at sixtyandsingle.com.

My mission to inform women about money, investing and retirement planning continues to expand. Here’s the news: This month, I was invited to tape 10 spots for broadcast on the community cable television channel TVCTV in Beaverton, Ore.

My topics covered a range of material drawn from my posts at sixtyandsingle.com:

The miracle of compound interest for savers. click here.

Romance doesn’t end after age 60, but a pre-nup helps. click here.

My five steps to retirement planning. click here.

Dogs are great pets but can you afford one? click here.

How inflation takes a bite out of your retirement income. click here.

A family meeting about estate planning can lower the stress level for everybody. click here.

Preventing elder financial abuse. click here.

What are RMDs and how to plan for them. click here.

How to hire a financial adviser. Questions to ask. click here.

Do women invest differently than men? Yes, and that is good and bad. click here.

Column continues

Meanwhile, my Smart Money column continues to appear in the Portland Tribune every month. This month’s topic: Oregon’s plan next year to implement a retirement savings program for people working for businesses that don’t offer one. Click here.

And next month, I hope to be back with the folks at TVCTV creative serves to tape a Q&A with Alan Edwards, senior public affairs specialist with the Portland office of the Social Security Administration. When and how to start taking Social Security benefits is a topic of our time.

My mission
Some years ago I wrote a mission statement for www.sixtyandsingle.com. Here it is: "To change the way American women think, plan and save for retirement." I am happy to report that I am staying true to that mission.

Friday, October 21, 2016

Your 60s. It is about change, making the best of it

"Just because you're grown up and then some doesn't mean settling into the doldrums of predictability. Surprise people Surprise Yourself." - Victoria Moran, author "Younger by the Day: 365 Ways to Rejuvenate Your Body and Revitalize Your Spirit."
 
BY JULIA ANDERSON
“WOW that was exciting!”
In the decade of my 60s that is just ending, I experienced the deepest losses and the most triumphal gains of my life.
Readers here at sixtyandsingle have followed along as just about everything that could happen, happened:

A late in life divorce that brought me to my knees.
The end of my long-time job at the newspaper.
The death of my best friend.
A new beginning as a freelancer from home. Launching this blog.
Reinvesting my 401(k) nest egg and signing up for Social Security, then Medicare.
Remarrying!!! Building new relationships and embracing new family. (I had no idea that riding on the back of a motorcycle could be fun.)
Being caught up in family financial turmoil surrounding my mother’s final years and her death at age 98.
Saying goodbye to the family farm.

And at the end of my 60s, accepting a diagnosis of rheumatoid arthritis that has sharpened my focus on health issues and on end of life planning. (This year I updated my will and wrote instructions for dispersing my tangible assets.)

There were practical aspects to my 60s focused on retirement planning, money management and family finances. The emotional side of it meant adjusting to loss -- of my marriage, my full-time job and certain friends. It meant embracing a new 60-and-single world, walking through doors and embracing new opportunities. As the decade ends, I say, wow, you name it, I have lived through it. (And written about it).

Friends have experienced their own trauma. Spouses have died. Others have struggled to care for husbands with Parkinson’s, mental illness and heart disease.

Two friends endured foot surgery. Another spent more than a month lying face-down on a bed because of an eye problem.
Our 60s… it is a big decade!

My dog died.

By the end of it, I am coming to terms with the aging process. Nevertheless, each morning, as I pluck a mini-forest of hairs out of my chin, I feel like I have a lot left to do. Leaving a legacy. Writing a book. Dispersing certain collectibles. Downsizing (but not too much). Traveling. And giving love to those closest…family and friends.

While working at the daily newspaper was an engrossing and rewarding way to make a living, I don’t miss the job, the grind of it.

True heaven is staying in bed with a second cup of coffee, reading the online Wall Street Journal on a Monday morning with no deadlines.

Everything changes in your 60s. Some of my friends have slipped into new orbits centered on children and grandchildren. I miss them but not as much now as before.

There are new interesting people in my life … step-children, grandchildren and new friends whom we have met on the same journey.

Women I know, see 70 as the new 50. No one seems ready to give up being creative -- painting, gardening, cooking, raising money and giving.

Both single and re-married, I appreciate my 60s for what I know now about myself.
This decade asks us to dig deep at a time when we thought things were supposed to get easier. Ha!

As a writer, I feel lucky that my 60s gave me a chance to make sense of life before my higher cognitive powers slip away.
It bothers me that Annie Dillard has quit writing. That Nora Ephron is dead. (I loved “Heartburn.”)

Thank you, Anne Lamont for continuing to enthrall me with your take of the world, on life and love. You have never given up.

I have a friend in her mid-80s who not long ago wrote a great story based on her girlhood during World War II. She gives lectures about it.

My freelance work allows me still to report and write. I continue to passionately share information with women about money, retirement and making the best of it in our 60s.

I worry about the women who have worked most of their lives but have not saved enough to live comfortably in retirement. I lament that women are not more interested in their own financial literacy. None of this long-range planning stuff is complicated.

My most popular topics: traveling solo, remarrying after 60, five steps to retirement planning, financial planning, adjusting to life as a single woman over 60, pre-nups, wills, estate planning, bank trusts.

Some of these posts will soon air on TVCTV, the public television channel in Beaverton, Ore.
And I still report for KXL 101.1 FM.  I am the Smart Money columnist for the Portland Tribune. All fun.

For me, a new relationship has meant the world. Maybe that is because I was so unceremoniously dumped at age 60. Breaking new trail (as a friend recommended, early on) has provided wonderful experiences and memories to dilute those of the past. Unfortunately how relationships end is how they are remembered.

Best advice from my grief counselor: “Cry with your eyes open.”

As much suffering as I did over the end of my long-time marriage, I rejoice in the companionship and comfort gained from this new man in my life.

Loving someone it turns out does not have to be a lot of work. That loving someone can be comfortable, fulfilling. No topic is off limits. Thank you, God (and only you know what I’m talking about).

Love in all its forms is more important than ever to me. You just keep giving it away.
As Jane Austen wrote, “Let other pens dwell on guilt and misery.”

At the end of my 60s, I wake up every morning feeling blessed.
That second cup of coffee helps.
 

Thursday, September 8, 2016

Dogs: They love us, we love them. But what about those vet bills?

"Dogs never bite me. Just humans."  - Marilyn Monroe. American actress and model. (1926-1962)


By JULIA ANDERSON
While having my new yellow Labrador checked out at the vet’s the other day, a distraught family came rushing through the front door carrying a dog in their arms that looked injured. The girls were sobbing, their mothers, clearly upset.
A technician quickly took them into a private exam room where the sounds of the crying girls were muffled by a closed door.

I don’t know what had happened to the dog, which looked to be a floppy-eared brown and white Spaniel, but it was likely hit by a car. The situation was serious.

The other day, a friend of mine who owns two small house dogs, shared that she had spent $3,000 twice on her cuddly pooch to have its hearing restored. These dogs are beloved family members who live indoors, share a night time bed with their owners and eat tidbits from the table

There’s no doubt that my friend can afford the vet bills and the loving care that she and her husband lavish on these dogs, but the young family with the injured dog may not have the budget for the hefty vet bill headed their way.
Dogs, while part of the American dream, can be expensive.

“You only want to do it, if you can afford it,” says Harrison Forbes, celebrity pet expert and author of “Dog Talk: Lessons Learned from a Life with Dog.”

So before your kids nag you into getting a dog, consider the set-up costs and the ongoing maintenance expense of owning a dog. If you are retired and on a fixed budget the financial challenge may even be greater.

New dog set-ups costs: Our new yellow lab came to our door, free as a stray with no collar and no “chip.” I checked with neighbors, put up a found-dog sign and looked at a countywide online “lost dogs” list. Nothing.

I had kept the dog-related stuff from when our wonderful black lab died a few years ago, so set-up costs were below average. We already had the leashes, collar, dog house, crate, dog food bin and even some toys left over from “Coot.” But in the first week of ownership, I spent $165 for a visit to the vet and for shots, $40 on new toys, $50 on dog food and $30 for one night of boarding.  First year dog ownership expenses can range up to $2,000 or more, according to a report at Kiplinger.com  (click here)

On-going dog-related costs: Annual dog food costs can average between $55 for a small dog (which seems low) to $300 for a large dog. Toys could run $75 a year. Vet care, around $260. By the way, bankrate.com reports that vet bills in the Portland area are 13 percent higher than the national average.

Add on grooming fees, travel/boarding expenses and pet insurance. The annual cost of owning a dog may climb to several thousand dollars a year.

In an article, "Don't let your dog send you to the poor house, Catey Hill writing at MarketWatch, said six in 10 American households have at least one pet. The average dog owner spends $227 per dog a year at the vet.

But the biggest cost may be unexpected emergency care or a surgery, especially as dogs age. Those fees may range between $3,000 and $5,000.

I am sure the family with the injured Spaniel could face a $600 to $1,000 bill depending on what will be done to save their beloved pet and family member. (Maybe they should have taken the dog home, get him resting in a comfortable bed to see how he does before heading straight for the vet's office.)

Other ways to cut costs: Make do it yourself dog treats and toys, use online coupons to get discounts on dog food purchases (wag.com, PetSmart and Petco), groom at home, exercise your dog to keep him healthy, shop around for a vet and stay current on shots and pills. And adopt a dog vs. buying a pure-bred animal.

Why own a dog, if it costs so much? Because we love them and even more important, they love us.
In older people, dog ownership can lower blood pressure and improve mental outlook.

Having a dog, teaches kids how to care for someone besides themselves. Playing with a dog reduces asthma in children and makes it less likely they will be over-weight, say experts.

These are all great reasons to own a dog. Just make sure you can afford one.

For MORE:
How to negotiate your vet bill. click here.
17 ways to save money on pet expenses, click here.
Creating a pet budget. click here.
U.S. News, saving money on your pet. click here
Ten Financial Lessons I learned from my dog. click here.
MoneyTalksNews click here.