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August 3, 2020

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What Are We Spending Money On?

July 22, 2020

What Are We Spending Money On?

We spend a lot of money.

All things told, we spend about $101 per day, whether we feel it directly or not.(1) That comes out to roughly $36,764 per year. Over half of all Americans spend more than what they earn.(2) The bulk of that goes to important categories like shelter and utilities.(3) But it doesn’t take much digging to find some less important spending patterns. Here’s a quick look at what we’re spending (i.e., wasting) our money on!

Food
How can you waste money on food? It’s essential to survival and health!

But it turns out that throwing away cash on food is really easy. Americans spend an average of $209 per month on just eating at restaurants, which comes to a total of $2,508 yearly. Add in the cost of drinks and you’re at $4,776!(4) But that’s just eating when you’re out. Another huge issue is chronically overbuying food to consume at home. We throw out around $1,600 of food per family every year.(5)

That brings us to a grand total of $6,376 dollars spent each year on restaurants, drinks, and wasted food. And that’s not including categories like takeout!

Shopping
We’re notorious shoppers. We spend around $108 on approximately five impulse purchases per month. Online shopping is a substantial category as well, with our digital purchases costing us around $84 monthly. Interestingly, we spend nearly $94 per month on subscription boxes. That adds up to $3,432 on non-essential shopping annually.

Personal care
Everyone wants to look, smell, and feel attractive. And it turns out that most people are willing to pay a king’s ransom on their appearance. Personal grooming comes out to $94.25 monthly. Gym memberships (which often go unused) cost the average American $72.53 per month. All told, we spend around $2,000 annually on looking good.

Cable and streaming
Another big category of spending is entertainment and apps. The biggest culprit here is—surprisingly—cable. On average, we shell out $90 per month for unlimited access to reality shows and documentaries, many of which are now available online. Throw in spending on movie streaming ($23.09), music streaming ($22.41), and other paid apps ($23.24), and our overall spending on digital entertainment is around $1,904.88 per year!

Tallying these four categories, we see that Americans are spending about $13,712.88 annually on non-essential items. That’s a staggering amount of money! It’s enough for a full year of college, including tuition and books.(6)

Non-essential spending does have its place—it can actually be very important to your quality of life and overall well being. But you might be surprised by how much of your financial power is getting wasted on things that are truly unnecessary or have cheaper alternatives.

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The Food Waste Epidemic... And What You Can Do About It

June 10, 2020

The Food Waste Epidemic... And What You Can Do About It

Food waste is a big problem.

Don’t believe me? Just check out these food waste facts:

- The average family throws away around $1,500 of food every year.(1)

- One recent study found that we toss around a third of all consumable food, with wealthy nations being the biggest culprits.(2)

- Cutting back our food waste just 15% would free up enough food to feed 25 million Americans.(3)

Those are incredible numbers. And they touch everything from the poor in other parts of the world to your own wallet! But what can you do? How can you not only combat a global problem but also look out for your own financial needs? Here are a few practical ways to reduce food waste and save some money while you’re at it!

Shop with a plan
The first step to not wasting food is only buying food you plan on eating. That means deciding ahead of time what you want to eat, making a list, and only buying those items at the store. Sure, it’s thrilling to walk down the produce aisle just waiting for an exotic veggie to catch your eye or buying extra meat just in case you want pork chops instead of chicken thighs. But you’ll quickly find that shopping without a strategy can lead to overbuying. This raises the potential that food won’t get prepared and will get thrown out. Always start with a list and shop from there.

Online shopping may help you stay on track with your list—and save you a ton of time! It’s fairly simple these days to log in to your favorite grocery store app, check items off, then click Delivery or Pick-up. (Keep in mind the store may charge a small fee for these services, but if it means not throwing out yet another unopened box of spinach, it might be worth it!)

Store wisely
Even the best planner will overbuy at some point. Maybe there’s a great sale on your kids’ favorite snack crackers, or you want to pick up a couple extra bottles of wine since they’re BOGO. You might stock up on Monday and then remember you have dinner plans with the in-laws on Friday. Don’t panic! Keeping your food from going bad is actually pretty simple. For many perishable items, just take a deep breath, open your freezer, and put your food inside. Close the freezer door. Your food should be safe from going bad until your schedule clears up. Just remember to dethaw your food before you try cooking it!

If you find you’re stocking up often on dry goods, you might want to invest in some quality containers (plastic, glass or metal) to help keep your food fresher, longer.

Reuse (safely)
But what happens if you prepare a ton of food for a meal only to discover that your stomach is smaller than you anticipated? Open up the trash can and dump all of that delicious, edible food?

Never!

The classic leftovers loophole is to put your food in proper containers and leave them in the fridge until you can get back to them in the next day or two. You can also freeze leftovers if you need. But why stop there? Those leftovers are just begging to be transformed into something fresh and delicious! Why not stir fry them with some rice or cook them into a casserole? Get creative and make something new and amazing!

Reducing food waste takes a little work and planning. But with the right attitude, it can be a fun way of contributing to your community, helping the planet, and avoiding a hunger strike by your bank account!

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How Much Is Enough To Retire?

June 3, 2020

How Much Is Enough To Retire?

How much money do you need to retire? That’s a tough question to answer specifically.

People have different expectations of their golden years that range from simple and cheap to extravagant and expensive. But there are a few simple guidelines you can follow that might help point you in the right direction.

Standard of living
How do you envision your retirement? Surrounded by family and friends in the suburbs? Kicking back on white sands? Fishing outside your tiny mountain lodge? Each of these visions come with different price tags and will require different types of planning. Dreams of a simple and stripped back retirement will cost you less than touring Europe or enjoying exotic cocktails on the beach. Figure out the standard of living you want in retirement, estimate how much it will cost and for how long, and then make a plan.

How much should you have saved?

So you’ve figured out how much you want to spend annually during your retirement. How much does that mean you need to save? Let’s say you’ve done your homework and your standard of living will run you about $40,000 a year throughout your retirement. The general rule of thumb is that you want to be able to withdraw roughly 4% of your savings each year throughout retirement without running out of money. To find that number, just take your desired annual spending and divide it by .04 to get your savings target. That means you would need to save around one million dollars to sustain your lifestyle.

How much should you save per month?

Financial advisors typically suggest you put 15% of your income towards retirement. Just remember that there’s always some wriggle room depending on your situation! You might be well ahead of schedule already, due to your budgeting and thriftiness. Maybe you’re just now starting to save and you need to put away a little extra. It’s always best to consult with a professional before making a big saving or investing decision!

The sooner you start planning and setting goals, the better. Start thinking about what you want out of your golden years, crunch the numbers, and meet with a professional!

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How Much Should You Save Each Month?

How Much Should You Save Each Month?

How much are you saving?

That might be an uncomfortable question to answer. 45% of Americans have $0 saved. Almost 70% have under $1,000 saved (1). That means most Americans don’t have enough to replace the transmission in their car, much less retire (2)!

But how much of your income should you send towards your savings account? And how do you even start? Keep reading for some useful strategies on saving!

10 percent rule
A common strategy for saving is the 50/30/20 method. It calls for 50% of your budget to go towards essentials like food and rent, 30% toward fun and entertainment, and the final 20% is saved. That’s a good standard, but it can seem like a faraway fantasy if you’re weighed down by bills or debt. A more achievable goal might be to save around 10% of your income and start working up from there. For reference, that means a family making $60,000 a year should try to stash away around $6,000 annually.

A budget is your friend
But where do you find the money to save? The easiest way is with a budget. It’s the best method to keep track of where your money is going and see where you need to cut back. It’s not always fun. It can be difficult or even embarrassing to see how you’ve been spending. But it’s a powerful reality check that can motivate you to change your habits and take control of your finances.

Save for more than your retirement
Something else to consider is that you need to save for more than just your retirement. Maintaining an emergency fund for unexpected expenses can provide a cushion (and some peace of mind) in case you need to replace your washing machine or if your kid needs stitches. And it’s always better to save up for big purchases like a vacation or Christmas gifts than it is to use credit.

Saving isn’t always easy. Quitting your spending habit cold turkey can be overwhelming and make you feel like you’re missing out. However, getting your finances under control so you can begin a savings strategy is one of the best long-term decisions you can make. Start budgeting, find out how much you spend, and start making a plan to save. And don’t hesitate to reach out to a financial professional if you feel stuck or need help!

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Budget Date Ideas

April 29, 2020

Budget Date Ideas

Budgeting might seem like the death knell for your dating life.

No more extravagant dinners? No more fun times at the movies? No more nights out on the town? How else can you keep that spark alive? But sometimes adding constrictions to your dating life can be a fun change of pace and actually spice things up. Here are some great budget-friendly date ideas.

Cook dinner together
An expensive dinner in a nice part of town is always a killer date idea. But it can start to add up if you’re not careful. That’s why cooking a special dinner at home as a couple is a great alternative. You save money on ingredients, you get real portion sizes that will last you for days, and it’s a fun activity that takes teamwork. Not a chef by nature? YouTube will be your best friend. There are tons of great recipe walkthroughs that will help you two knock this one out of the park!

Go on a hike
You should never tell your partner to take a hike. But you should definitely ask your partner to go on a hike! There’s nothing much better than some physical exertion in the great outdoors with someone you care about. Just remember that this one can add up if you’re not careful. Here are some pointers to make your hike a thrifty winner:

-Drive your most fuel efficient car

-Avoid cutesy stops full of expensive trinkets

-Research and see if the trail you’re hiking charges for parking

-Pack as much food as possible

Follow these tips and you might be surprised how inexpensive a trek can be!

Watch a sunset
Sunsets are incredible. There’s no reason that you and your significant other shouldn’t be sitting outside to take in the everyday beauty of the sun slipping behind the horizon. Any sunset is good, but here are a few steps you can take to find the absolute best sunset for your dollar!

-Choose the right day. The best sunsets typically occur a few hours after rain while there’s still a bit of cloud coverage. Too many clouds hide the sun, but just a few will catch the final light of the day. Check your forecast ahead of time!

-Choose the right location. You don’t have to go far to find the perfect sunset viewing spot. Watching the last beams of the sun shine through skyscrapers? Amazing. Hitting up a small, local airport to watch planes at twilight? Gorgeous. Bathing in the light of golden hour on your front porch with your gal (or guy) beside you? One for the books.

-Pack a picnic. Wherever you decide to watch the sunset with your partner, just remember to pack some food. It’s a great alternative to an atmospheric (and expensive) restaurant!

Creativity is key. The more inventive your budget date ideas are, the more memorable they’ll be. You might find yourself looking back on your budget dating years as some of the best and most exciting of your relationship!

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Student Loans: avoid them or use them the smart way?

Student Loans: avoid them or use them the smart way?

Going to college can be a great way to invest in your future and get the training and education you need to thrive in the modern job market.

But we’ve all heard the horror stories of students saddled with thousands in loans that they struggle to pay back, sometimes for years. Student loan debt is often the most pressing financial issue for college students and recent grads.

So how do you take advantage of the benefits of a college education without burdening your future with years of debt? Here are some tips to help you avoid high student loan payments and pay your student debt off more quickly after graduation.

Work through school
The days of working a minimum wage job to put yourself through school seem to be over. However, working enough to cover at least some of your books and living expenses may make a huge dent in the amount of money you’ll have to borrow to graduate.

Work-study programs on campus are often good options, as they are willing to work around your class schedules. Off-campus part-time jobs can be a good option as well, and may offer better pay.

Live as cheaply as possible
Everyone knows the cliché of the broke college student existing on nothing but ramen noodles. While not many people would recommend trying to live on nutritionless soup every day, you should be able to find ways to cut your cost of living to reduce the amount of money you need to borrow to sustain your lifestyle.

Try living off campus with family or roommates and packing sandwiches instead of paying expensive meal tickets and dorm fees. Bike, walk, or take public transportation to avoid parking. Take advantage of free on-campus healthcare, counseling, free food events, free entertainment, and more so you can spend as little as possible on living campus life.

It’s okay to go out and have fun sometimes, but don’t borrow from your future in order to live beyond your means now.

Try to avoid unsubsidized loans
Subsidized loans are offered by the Department of Education at lower interest than many private bank loans, and they do not begin accruing interest until after you graduate. Take advantage of these loans first and try to avoid the unsubsidized private loans which begin accruing interest immediately and often have a higher rate. (1)

Be mindful of your future payments
It can be tempting to expect that you’ll have a great job earning plenty of money and time to pay back the student loans you’ve accumulated. But each time you take out a loan, you make your future payments higher and your payback time longer. Be sure to look at the numbers of how much your payment will be every time you up your loan amounts. Can you realistically envision yourself being able to pay that amount every month in just a few years? If not, it may be time to rethink the student loans you’re racking up, and possibly even reconsider your degree or career plan.

Go to trade school, earn an apprenticeship, or work in your chosen field before you commit to a college degree in that field
It’s not a popular topic with many high school guidance counselors, but learning a trade and finding a well-paying job without a degree is not only possible but a great option. Try finding an internship or trade school where you could get training for much less money than a university.

Consider community colleges and state schools
It’s a common misconception that private, ivy league, “big name” colleges are far superior to state schools and automatically the better option. However, state schools can often have great programs for far less money. Also, if you choose a local school, you can live close to your family support system while working through college. It’s possible to have a very successful career with a college degree from a state school, and be more financially stable in your future than someone struggling to pay off loans from an expensive private college.

Likewise, an associate’s degree from a community college can save money toward your bachelor’s degree, allowing you to pay far less than you would even to a state school. Just make sure your degree and credits will transfer to the university of your choice.

Find a graduate program that pays YOU
If you choose to pursue a Masters or Doctorate degree, try to find a program with a teaching assistant position, fellowship, or some other option for getting reduced tuition or getting paid to get the work experience you need.

Resist the urge to move up in lifestyle when you graduate
When you scrimp your way through school, it’s tempting when you get your first degree-related job to celebrate by loosening the reins on your frugal ways and start living it up as a young professional.

It’s great to reward yourself, and you need to adapt to your new financial situation (you may need a new wardrobe or a better car), but resist going too crazy with all the “extra” money a new job in your field can make you feel like you have. You should still live on a budget and manage your money carefully to pay off your student loans as soon as possible so you’re better prepared to move into the next phase of life unencumbered by a mountain of debt. Make paying back debt a priority, and pay extra when you’re able.

Education can be expensive and in some cases impossible to get without loans. But with frugality and an eye toward the future, you’ll be better prepared to get the education you need to succeed in life without being encumbered by debt for years. The high cost of education combined with the high cost of living can make a college education more of a financial burden for today’s students than ever before. By thinking outside the box and carefully prioritizing your educational goals—balanced with your finances—you can pursue your dream degree and have a better chance at a stable financial future.

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Begin Your Budget In 5 Easy Steps

February 3, 2020

Begin Your Budget In 5 Easy Steps

A budget is a powerful tool.

No matter how big or small, it gives you the insight to track your money and plan your future. So here’s a beginner’s guide to kick-start your budget and help take control of your paycheck!

Establish simple objectives
Come up with at least one simple goal for your budget. It could be anything from saving for retirement to buying a car to paying down student debt. Establishing an objective gives you a goal to shoot for, and helps motivate you to stick to the plan.

Figure out how much you make
Now it’s time to figure out how much money you actually make. This might be as easy as looking at your past few paychecks. However, don’t forget to include things like your side hustle, rent from properties, or cash from your online store. Try averaging your total income from the past six months and use that as your starting point for your budget.

Figure out how much you spend
Start by splitting your spending into essential (non-discretionary) and unessential (discretionary) spending categories. The first category should cover things like rent, groceries, utilities, and debt payments. Unessential spending would be eating at restaurants, seeing a movie, hobbies, and sporting events.

How much is leftover?
Now subtract your total spending from your income. A positive number means you’re making more than you’re spending, giving you a foundation for saving and eventually building wealth. You still might need to cut back in a few areas to meet your goals, but it’s at least a good start.

If you come up negative, you’ll need to slash your spending. Start with your unessential spending and see where you can dial back. If things aren’t looking good, you may need to consider looking for a lower rent apartment, renegotiating loans, or picking up a side hustle.

Be consistent!
The worst thing you can do is start a budget and then abandon it. Make no mistake, seeing some out-of-whack numbers on a spreadsheet can be discouraging. But sticking to a budget is key to achieving your goals. Make a habit of reviewing your budget regularly and checking your progress. That alone might be enough motivation to keep it up!

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7 Money-Saving Tips for Budgeting Beginners

January 27, 2020

7 Money-Saving Tips for Budgeting Beginners

Starting a budget from scratch can seem like a huge hassle.

You have to track down all of your expenses, organize them into a list or spreadsheet, figure out how much you want to save, etc., etc.

But budgeting doesn’t have to be difficult or overwhelming. Here are 7 easy and fun tips to help keep your budget in check and jump-start some new financial habits!

Take stock
Laying out all of your expenses at once can be a scary thought for many of us. One key is to keep your budget simple—figure out what expenses you do and don’t really need and see how much you have left over. This method will help you figure out how much spending money you actually have, how much your essential bills are, and where the rest of your money is going.

Start a spending diary
Writing down everything you spend for just a couple of weeks is an easy way of finding out where your spending issues lie. You might be surprised by how quickly those little purchases add up! It will also give you a clue about what you’re actually spending money on and places that you can cut back.

Don’t cut out all your luxuries. Don’t get so carried away with your budgeting that you cut out everything that brings you happiness. Remember, the point of a budget is to make your life less stressful, not miserable! There might be cheap or free alternatives for entertainment in your town, or some great restaurant coupons in those weekly mailers you usually toss out.

That being said, you might decide to eliminate some practices in order to save even more. Things like packing sandwiches for work instead of eating out every day, making coffee at home instead of purchasing it from a coffee shop, and checking out a consignment shop or thrift store for new outfits can really stretch those dollars.

Plan for emergencies
Emergency funds are critical for solid budgeting. It’s always better to get ahead of a car repair or unexpected doctor visit than letting one sneak up on you![i] Anticipating emergencies before they happen and planning accordingly is a budgeting essential that can save you stress (and maybe money) in the long run.

Have a goal in mind
Write down a budgeting goal, like getting debt free by a certain time or saving a specific amount for retirement. This will help you determine how much you want to save each week or month and what to cut. Most importantly, it will give you something concrete to work towards and a sense of accomplishment as you reach milestones. It’s a great way of motivating yourself to start budgeting and pushing through any temptations to stray off the plan!

Stay away from temptation
Unsubscribe from catalogs and sales emails. Unfollow your favorite brands on social media and install an ad blocker. Stop going to stores that tempt you, especially if you’re just “running in for one thing.” Your willpower may not be stronger than the “Christmas in July” mega sales, so just avoid temptation altogether.

Keep yourself inspired and connected
Communities make almost everything easier. Fortunately, there’s a whole virtual world of communities on social media dedicated to budgeting, getting out of debt, saving for early retirement, showing household savings hacks, and anything else you would ever want to know about managing money. They’re great places for picking up ideas and sharing your progress with others.

Budgeting and saving money don’t have to be tedious or hard. The rewards of having a comfortable bank account and being in control of your spending are sweet, so stay engaged in the process and keep learning!

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Tips for Getting Out of Debt

January 22, 2020

Tips for Getting Out of Debt

Americans owe a whopping amount of debt.

Total consumer debt, for example, tops $4 trillion (1), and the average household owes $6,829 on credit cards alone. (2)

Debt can cause a serious drain on your financial life, not to mention increase your stress levels. You may be parting with a big slice of your income just to service the debt—money that could be put to better use to fund things like a home, your own business, or a healthy retirement account.

Fortunately, there are lots of ways to get out of debt. Here are 3 of them…

Create a budget
Before you can start digging yourself out of debt, you need to know how you stand with your income versus your outgo every month. Otherwise, you may be sliding deeper into debt as each week passes.

The solution? Create a budget.

First, start tracking your expenses—there are apps you can get on your phone, or even just a notebook and pencil will do. Divide your expenses into categories. This doesn’t have to be complicated. Food, utilities, rent, entertainment, misc. Add them together every week and then every month.

Then, review your spending and compare it with your income. Spending more than you make? That has to be reversed before you’ll ever be able to get out of debt. Make a plan to either reduce your expenses or find a way to raise your income.

If debt payments are driving your expenses above your income, call your lender to see if you can get a plan with lower monthly payments.

Seek out lower interest rates
If you’re paying a high interest rate on credit card debt, a good portion of your monthly payment may be going towards interest alone. That means you may not be reducing the principal—the amount you originally borrowed—as much as you could with a lower interest rate. The lower your interest rate, the more your monthly payments can lower your debt—and eventually help you get out of it.

Find out the annual percentage rate (APR) on your current credit card debt by looking at the monthly statements. Then shop around to find any lower interest rates that might be out there. The next step would be to transfer your credit card debt to that new account with the lower rate. The caveat, however, is if any fees you may be charged now or after an introductory period would nullify the savings in interest. Always make sure you understand the terms on a new card before you transfer a balance.

Another option is to apply to a lender for a personal loan to consolidate your high interest rate debt. Personal loans can have interest rates significantly below those on credit cards. Again, make sure you understand any fees, penalties, and terms before you sign up.

Increase your monthly debt payments
Now that you’ve got your spending under control, it’s time to see if you can raise your debt payments every month. There are two primary methods to do this.

First, review your expenses to see if you can cut back in some categories. Can you spend a little time each week clipping coupons to reduce your grocery bill? Can you make coffee at home rather than purchasing it at the coffee shop every day? These changes can add up! Review entertainment costs, too. Can you cut out one or more streaming or cable services? It might be a good idea to find introductory offers that can reduce your monthly payments. Check into introductory cell phone offers, too, but always read the fine print so you don’t have any surprise fees or costs down the road.

Second, make a plan to increase your income. Can you ask for a raise at work, make a case for a promotion, or find a higher paying job? If that’s not in the cards, consider working a side gig. A few extra hours a week may increase your monthly income significantly—and help get you out of debt a little faster.

Are you struggling with debt? Get in touch with me and we can work on a strategy for a debt-free future.

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Why Financial Literacy is Important

Why Financial Literacy is Important

There’s a good chance that you’re facing a financial obstacle right now.

Maybe you’re trying to pay down some credit card debt, facing a meager retirement fund, or just struggling day-to-day to make ends meet.

It’s easy to feel overwhelmed and helpless in those situations, so much so that you might think learning a little more about how to manage your money wouldn’t make much difference right now.

But adopting a few key financial tips is often the best and simplest step towards taking control of your paycheck and finding some peace of mind. Here are some reasons why financial literacy is an essential skill for everyone to master, and a few tips to help you get started!

It helps you overcome fear
Let’s face it; money can seem scary. Mounting loans, debt, interest, investing—it can all be confusing and overwhelming. It may feel easier to ignore your finances and live paycheck to paycheck, never owning up to not-so-great decisions. But financial literacy gets right to the root of that fear by making things clear and simple. It empowers you to identify your mistakes and shows options to fix them.

Facing a problem is much easier once you understand it and know how to beat it. That’s why learning about money is so important if you want to start healing your financial woes.

It lets you take control of your finances
Financial literacy does more than just help you address problems or overcome obstacles. It gives you the power to stop being a victim and take control. You can start investing in your future with confidence instead of reacting to emergencies or going into deeper debt. That means building wealth and living life on your terms instead of someone else’s. In other words…

It helps you realize your dreams
Managing money isn’t about immediately seeing a bigger number in your bank account. It’s about having the resources and freedom to do the things you care about. Maybe that means taking your significant other on a dream vacation, giving more to a cause you care about, or providing your kids with a debt-free education.

Where to start
Acknowledging that you need to learn more can be the hardest step. That’s why meeting with a financial advisor is something you may consider. Calculate how much you spend versus how much you make and write down some financial goals. Then find a time to discuss your next steps. You may also want to sign up for a personal finance class that will cover things like budgeting and saving.

Financial literacy is one of the most important skills you can develop. Improving your financial education takes some time but it doesn’t have to be difficult. Give me a call. I’d love to sit down and help you learn more about ways you can take control of your future!

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How To Talk To Your Spouse About Money

January 15, 2020

How To Talk To Your Spouse About Money

Family finances isn’t always a fun topic.

But getting in the habit of discussing money early on in your relationship may help pave the way for a smoother future. Whether or not you see eye to eye, learning each other’s spending habits and budgeting styles can help avoid any financial obstacles in the future. Below are some tips on getting started!

Talk about money regularly
One of the best ways to approach a conversation about money is to decide in advance when you’re going to have it, rather than springing it on your spouse out of the blue. Family budgeting means making the time to talk upfront and staying transparent about it on a consistent basis. If you and your spouse choose to set a monthly or annual budget, commit to sitting down and reviewing family expenses at the end of each month to see what worked and what didn’t.

Start a budget
It’s easy to feel overwhelmed if you don’t have a family budget and don’t know where to start. However, with the development of mobile applications and online banking, you can now more easily track your spending habits to find ways to cut unnecessary expenses. For example, if you see that you’re going out to dinner most nights, you can try replacing one or two of those evenings out with a home cooked meal. Small changes to your routine can make saving easier than you might have thought!

Remember your budgeting goals
Budgeting comes down to a simple question—how will these money decisions affect the happiness of my family? For example, you might need to ask yourself if taking an awesome vacation to your favorite theme park will give your family more happiness than fixing your minivan from 2005. Can’t do both? You aren’t necessarily forgoing the vacation to fix your car; instead, you might need to invest in your car now rather than potentially letting a problem worsen. You might then decide to rework your budget to set aside more money every month to take the trip next year.

The key is that talking to your spouse about money may actually become more about talking to them about your goals and family. When you put it that way, it may be a much more productive and rewarding conversation!

Even if you haven’t discussed these things before you walked down the aisle, it’s never too late to sit down with your spouse. This topic will continue over time, so talking about your financials with your partner as you approach new milestones and experience different life events as a family can help you financially prepare for the future.

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Are You Unwinding Yourself Into Debt in 2020?

Are You Unwinding Yourself Into Debt in 2020?

Americans owe more than $800 Billion in credit card debt.

You read that right: more than $800 billion.

It seems like more and more people are going to end up being owned by a tiny piece of plastic rather than the other way around.

How much have you or a loved one contributed to that number? Whether it’s $10 or $10,000, there are a couple simple tricks to get and keep yourself out of credit card debt.

The first step is to be aware of how and when you’re using your credit card. It’s so easy – especially on a night out when you’re trying to unwind – to mindlessly hand over your card to pay the bill. And for most people, paying with credit has become their preferred, if not exclusive, payment option. Dinner, drinks, Ubers, a concert, a movie, a sporting event – it’s going to add up.

And when that credit card bill comes, you could end up feeling more wound up than you did before you tried to unwind.

Paying attention to when, what for, and how often you hand over your credit card is crucial to getting out from under credit card debt.

Here are 2 tips to keep yourself on track on a night out.

1. Consider your budget. You might cringe at the word “budget”, but it’s not an enemy who never wants you to have any fun. Considering your budget doesn’t mean you can never enjoy a night out with friends or coworkers. It simply means that an evening of great food, fun activities, and making memories must be considered in the context of your long-term goals. Start thinking of your budget as a tough-loving friend who’ll be there for you for the long haul.

Before you plan a night out:

  • Know exactly how much you can spend before you leave the house or your office, and keep track of your spending as your evening progresses.
  • Try using an app on your phone or even write your expenses on a napkin or the back of your hand – whatever it takes to keep your spending in check.
  • Once you have reached your limit for the evening – stop.

2. Cash, not plastic (wherever possible). Once you know what your budget for a night out is, get it in cash or use a debit card. When you pay your bill with cash, it’s a concrete transaction. You’re directly involved in the physical exchange of your money for goods and services. In the case that an establishment or service will only take credit, just keep track of it (app, napkin, back of your hand, etc.), and leave the cash equivalent in your wallet.

You can still enjoy a night on the town, get out from under credit card debt, and be better prepared for the future with a carefully planned financial strategy. Contact me today, and together we’ll assess where you are on your financial journey and what steps you can take to get where you want to go – hopefully by happy hour!

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The Pros and Cons of Budget Cars

January 6, 2020

The Pros and Cons of Budget Cars

Buying a car can be pricey.

The average used car costs about $20,000, while the average for a new one is around $37,000. When it comes to transportation (or anything else for that matter), it only makes sense that you’d want to save as much money as possible. But are there times when buying a used or budget car is a better investment than buying a new one? Here are some questions to ask yourself before you make that purchase.

How much mileage can you get out of this car?
One of the big things to consider when researching a budget car is how many miles of prior travel you’re paying for. Buying a cheap (although unreliable) car that breaks down on the regular due to wear and tear may give you fewer miles for your money than paying more for a car that might last 10 years. If you’re committed to buying used, you’ll probably want a mechanic to inspect the car for issues that might affect your car’s lifespan.

How much will maintenance and repairs cost you?
You might be one of the few who know someone with the auto know-how to keep an ancient car running for years. However, the average person will need to have car problems repaired at a professional shop, which can become expensive if it constantly needs work. This can be especially costly if you sink thousands into maintenance only for your vehicle to die for good earlier than expected. It’s worth considering that buying new might save you a huge hassle and potentially give you more miles for your money.

How does the interest rate compare for a new car vs. used?
The uncertainty involved with buying a used or budget car can increase the cost of financing. Lenders will often charge you higher interest for purchasing a used car than they would a new one. Having a high credit score will improve your rates, but that extra cost can still add up over time.

What you’re trying to avoid is buying a used piece of junk that requires constant maintenance at a shop, has a higher interest rate, and gives out too soon. There are definitely used and budget cars out there that have great value. Just be sure to do your research before you make such a significant investment!

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Ways to Curb Holiday Spending

November 25, 2019

Ways to Curb Holiday Spending

More than 174 million Americans spent an average of $335.47 between Thanksgiving and Cyber Monday this year. And the holidays are just getting started!

You and your wallet don’t have to suffer if you follow these simple ways to curb holiday spending. Well, ways to curb the rest of your holiday spending.

1. Decide beforehand how much you’re going to spend on gifts. Yes: Budget. This is one of the most spoken of tricks to curb spending, but do you actually follow through? Before you ever start your holiday spending, have a firm plan about what you’re willing to spend, and do not go a penny over. If you’re one of the millions mentioned above that already spend a good chunk of cash, be sure to take that into account when you set your new amount. A budget can help get the creative gift-giving juices flowing, too. Remember White Elephant parties where no one could bring a gift that cost over $15? There had to be a little extra thought involved: What would be an unforgettable gift that would fit right into your budget?

2. Dine in. When you’ve budgeted for picking up the tab on a big family meal outing, it can be no sweat! But when you haven’t, the cost can really sneak up on you. Say you venture out with a party of 15 family members. At $10 an entree plus appetizers, desserts, cups of cocoa for the kids, eggnog or something harder for grown ups, and any other extras… Whew, that’s going to be a credit card statement to remember! But what if you instead planned a night in with the whole family? A potluck or pizza night. The warmth and comfort of home. Baking cookies. Still with cups of cocoa and eggnog, but at a fraction of the cost. And with much more comfortable chairs.

3. Stay with relatives when you travel home for the holidays. This practice is standard for some, but if this suggestion makes your face flush and your blood run cold, this may help you change your mind: the average hotel stay costs $127.69 per night. That’s not including taxes and fees. Let’s say you head to the town where you grew up for 4 days and 3 nights. The 3 nights at a hotel are going to cost you…

$127.69 x 3 = $383.07

Add in tax and hotel fees as well as the daily cost of gas to and from the hotel, and the thought of a few nights spent in your childhood bedroom that now has the surprise treadmill-as-a-clothing-rack addition might not be so terrible.

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How To Make A Budget You Can Stick To

November 18, 2019

How To Make A Budget You Can Stick To

Some people love to live a life of thrift. For others, budgeting conjures images of excessive frugality, living in tents, eating nuts and berries.

To each their own! But budgeting doesn’t have to be a “Survivor”-level competition. There might be some sacrifice and compromise involved when you first implement a budget (depending on your current financial situation), but rest assured that there’s a happy middle to most things, a way that won’t make you hate the process.

Simplifying the budgeting process will help ease the transition. Check out the following suggestions to make living on a budget something you can stick to – instead of making a shelter out of sticks.

Use That Smartphone.

Your parents may have a used a system of labeled envelopes to budget for various upcoming expenses. Debit cards have largely replaced cash these days, and all those labeled envelopes were fiddly anyway. Your best budgeting tool is probably in your pocket, your purse, or wherever your smartphone is at the moment.

Budgeting apps can connect to your bank account and keep track of incoming and outgoing cash flow, making it simple to categorize current expenses and create a solid budget. A quick analysis of the data and charts from the app gives you a starting point. Maybe you’ll discover that you spent $100 on on-demand movies. One-click expenses like that definitely add up – and apps can help you see your money slipping away in vivid color (sometimes even with colorful pie charts).

Some apps give you the ability to set a budget for certain categories of spending (like those on-demand movies), and you can keep track of how you’re doing in relation to your defined budget. Some apps even provide alerts to help keep you aware of your spending. And if you’re feeling nostalgic, there are even apps that mimic the envelope systems of old with a digital spin.

Plan For Unexpected Expenses.

Even with modern versions of budgeting, one of the biggest risks to budgeting is the same as it was in the days of fiddly envelopes: unexpected expenses. Sometimes an unexpected event like car trouble, home repair, or medical emergency costs more than we expected. A lot more.

A good cushion to protect your budget from an unexpected expense is an Emergency Fund. It may take a while to build your Emergency Fund, but it will be worth your while if the tire blows out, the roof starts leaking, or you throw your back out trying to fix either of those things against doctor’s orders.

The size of your Emergency Fund will depend on your unique situation, but a goal of at least $1,000 to 3 months of your income is recommended. Three months of income may sound like a lot, but if you experience a sudden loss of income, you’d have at least three full months of breathing room to get back on track.

Go With The Flow.

As you work with your new budget, you’ll find that you miss the mark most months. Some months you’ll spend more. Some months you’ll spend less. That’s normal. Over time, you’ll have an average number for each expense category or expense item that will make it clear where you can do better – but also where you may have been more frugal than needed.

With these suggestions in mind, go ahead! Make that new budget, then buy yourself an ice cream or turn on the air conditioning. Once you know where you stand, where you need to tighten up on spending, and where you can let loose a little, budgeting might not seem like a punishment. In fact, you might find that it’s a useful, much-needed strategy that you can stick to – all part of the greater journey to your financial independence.

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Allowance for Kids: Is It Still a Good Idea?

Allowance for Kids: Is It Still a Good Idea?

Perusing the search engine results for “allowance for kids” reveals something telling: The top results can’t seem to agree with each other.

Some finance articles quote experts or outspoken parents hailing an allowance, stating it teaches kids financial responsibility. Others argue that simply awarding an allowance (whether in exchange for doing chores around the house or not) instills nothing in children about managing money. They say that having an honest conversation about money and finances with your kids is a better solution.

According to a recent poll, the average allowance for kids age 4 to 14 is just under $9 per week, about $450 per year. By age 14, the average allowance is over $12 per week. Some studies indicate that, in most cases, very little of a child’s allowance is saved. As parents, we may not have needed a study to figure that one out – but if your child is consistently out of money by Wednesday, how do you help them learn the lesson of saving so they don’t always end up “broke” (and potentially asking you for more money at the end of the week)?

There’s an app for that.
Part of the modern challenge in teaching kids about money is that cash isn’t king anymore. Today, we use credit and debit cards for the majority of our spending – and there is an ever-increasing movement toward online shopping and making payments with your phone using apps like Apple Pay, Android Pay, or Samsung Pay.

This is great for the way we live our modern, fast-paced lives, but what if technology could help us teach more complex financial concepts than a simple allowance can – concepts like how compound interest on savings works or what interest costs for debt look like? As it happens, a new breed of personal finance apps for families promises this kind of functionality.

FamZoo is popular, offering prepaid cards with a matching family finance app for iOS and Android. Prepaid cards are a dime a dozen but FamZoo’s card and app do much more than just limit spending to the prepaid amount. Kids can earn interest on their savings (funded by parents), set budgets according to categories, monitor their account activity with useful charts, and even borrow money – complete with an interest charge. Sounds a bit like the real world, doesn’t it? FamZoo can be as simple or as feature-packed as you’d like, making it a good match for kids of any age.

Money habits are formed as early as age 7. If an allowance can teach kids about saving, compound interest, loan interest, and budgeting – with a little help from technology – perhaps the future holds a digital world where the two sides of the allowance debate can finally agree. As to whether your kids’ allowance should be paid upon completion of chores or not… Well, that’s up to you and how long your Saturday to-do list is!

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What Does “Pay Yourself First” Mean?

September 18, 2019

What Does “Pay Yourself First” Mean?

Do you dread grabbing the mail every day?

Bills, bills, mortgage payment, another bill, maybe some coupons for things you never buy, and of course, more bills. There seems to be an endless stream of envelopes from companies all demanding payment for their products and services. It feels like you have a choice of what you want to do with your money ONLY after all the bills have been paid – if there’s anything left over, that is.

More times than not it might seem like there’s more ‘month’ than ‘dollar.’ Not to rub salt in the wound, but may I ask how much you’re saving each month? $100? $50? Nothing? You may have made a plan and come up with a rock-solid budget in the past, but let’s get real. One month’s expenditures can be very different than another’s. Birthdays, holidays, last-minute things the kids need for school, a spontaneous weekend getaway, replacing that 12-year-old dishwasher that doesn’t sound exactly right, etc., can make saving a fixed amount each month a challenge. Some months you may actually be able to save something, and some months you can’t. The result is that setting funds aside each month becomes an uncertainty.

Although this situation might appear at first benign (i.e., it’s just the way things are), the impact of this uncertainty can have far-reaching negative consequences.

Here’s why: If you don’t know how much you can save each month, then you don’t know how much you can save each year. If you don’t know how much you can save each year, then you don’t know how much you’ll have put away 2, 5, 10, or 20 years from now. Will you have enough saved for retirement?

If you have a goal in mind like buying a home in 10 years or retiring at 65, then you also need a realistic plan that will help you get there. Truth is, most of us don’t have a wealthy relative who might unexpectedly leave us an inheritance we never knew existed!

The good news is that the average American could potentially save over $500 per month! That’s great, and you might want to do that… but how do you do that?

The secret is to “pay yourself first.” The first “bill” you pay each month is to yourself. Shifting your focus each month to a “pay yourself first” mentality is subtle, but it can potentially be life changing. Let’s say for example you make $3,000 per month after taxes. You would put aside $300 (10%) right off the bat, leaving you $2,700 for the rest of your bills. This tactic makes saving $300 per month a certainty. The answer to how much you would be saving each month would always be: “At least $300.” If you stash this in an interest-bearing account, imagine how high this can grow over time if you continue to contribute that $300.

That’s exciting! But at this point you might be thinking, “I can’t afford to save 10% of my income every month because the leftovers aren’t enough for me to live my lifestyle”. If that’s the case, rather than reducing the amount you save, it might be worthwhile to consider if it’s the lifestyle you can’t afford.

Ultimately, paying yourself first means you’re making your future financial goals a priority, and that’s a bill worth paying.

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Are You Going for ‘Normal’ Spending?

August 19, 2019

Are You Going for ‘Normal’ Spending?

When planning your budget, what’s your definition of ‘normal’ spending?

For example, how much would you spend on a meal at a restaurant before it moves into lifestyles-of-the-rich-and-famous territory? $100? $50? $20? To some, enjoying a daily made-to-order burrito might be par for the course, but to others, spending $10 every day on a tortilla, a scoop of chicken, and a dollop of guacamole might seem extravagant. Chances are, there may be some areas where you’re more in line with the average person and some areas where you’re atypical – but don’t let that worry you. Read on…

In case you were wondering, the top 3 things that Americans spend their money on in a year are housing ($18,186), transportation ($9,049), and food ($7,203). Those top 3 expenses might very well be about the same as your top 3, but everything else after that is a mixed bag. Your lifestyle and the unique things that make you, well – you – greatly influence where you spend your money and how you should budget.

For example, let’s say the average expenditure on a pet is $600 annually, but that may lump in hamsters, guinea pigs, all the way to Siberian Huskies. As you can imagine, each could come with a very different yearly cost associated with keeping that type of pet healthy. So although the average might be $600, your actual cost could be well above $3,000 for the husky! That definitely wouldn’t be seen as ‘normal’ by any means. However, that’s okay!

What are we getting at here? It’s perfectly fine to be ‘abnormal’ in some areas of your spending. You don’t need to make your budget look exactly like other people’s budgets. What matters to them might not be the same as what matters to you.

So go ahead and buy that organic, gluten-free, grass-fed kibble for Fido – he deserves it (if he didn’t pee on the carpet while you were away, that is)! If Fido’s happiness makes you happy, then all the power to you. Just make sure that at the end of the day, Fido’s food bill won’t bust your budget.

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Are You Unwinding Yourself Into Debt?

May 22, 2019

Are You Unwinding Yourself Into Debt?

According to the Federal Reserve, Americans owe more than $1 trillion in credit card debt.

You read that right: more than $1 trillion.

That number is up 6.2% from 1 year ago. At this rate, it seems like more and more people are going to end up being owned by a tiny piece of plastic rather than the other way around.

How much have you or a loved one contributed to that number? Whether it’s $10 or $10,000, there are a couple simple tricks to get and keep yourself out of credit card debt.

The first step is to be aware of how and when you’re using your credit card. It’s so easy – especially on a night out when you’re trying to unwind – to mindlessly hand over your card to pay the bill. And for most people, paying with credit has become their preferred, if not exclusive, payment option. Dinner, drinks, Ubers, a concert, a movie, a sporting event – it’s going to add up.

And when that credit card bill comes, you could end up feeling more wound up than you did before you tried to unwind.

Paying attention to when, what for, and how often you hand over your credit card is crucial to getting out from under credit card debt.

Here are 2 tips to keep yourself on track on a night out.

1. Consider your budget. You might cringe at the word “budget”, but it’s not an enemy who never wants you to have any fun. Considering your budget doesn’t mean you can never enjoy a night out with friends or coworkers. It simply means that an evening of great food, fun activities, and making memories must be considered in the context of your long-term goals. Start thinking of your budget as a tough-loving friend who’ll be there for you for the long haul.

Before you plan a night out:

  • Know exactly how much you can spend before you leave the house or your office, and keep track of your spending as your evening progresses.
  • Try using an app on your phone or even write your expenses on a napkin or the back of your hand – whatever it takes to keep your spending in check.
  • Once you have reached your limit for the evening – stop.

2. Cash, not plastic (wherever possible). Once you know what your budget for a night out is, get it in cash or use a debit card. When you pay your bill with cash, it’s a concrete transaction. You’re directly involved in the physical exchange of your money for goods and services. In the case that an establishment or service will only take credit, just keep track of it (app, napkin, back of your hand, etc.), and leave the cash equivalent in your wallet.

You can still enjoy a night on the town, get out from under credit card debt, and be better prepared for the future with a carefully planned financial strategy. Contact me today, and together we’ll assess where you are on your financial journey and what steps you can take to get where you want to go – hopefully by happy hour!

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6 Financial Commitments EVERY Parent Should Educate Their Kids About

6 Financial Commitments EVERY Parent Should Educate Their Kids About

Your first lesson isn’t actually one of the six.

It can be found in the title of this article. The best time to start teaching your children about financial decisions is when they’re children! Adults don’t typically take advice well from other adults (especially when they’re your parents and you’re trying to prove to them how smart and independent you are).

Heed this advice: Involve your kids in your family’s financial decisions and challenge them with game-like scenarios from as early as their grade school years.

Starting your kids’ education young can help give them a respect for money, remove financial mysteries, and establish deep-rooted beliefs about saving money, being cautious regarding risk, and avoiding debt.

Here are 6 critical financially-related lessons EVERY parent should foster in the minds of their kids:

1. Co-signing a loan

The Trap: ‘I’m in a good financial position now. I want to be helpful. They said they’ll get me off the loan in 6 months or so.’

The Realities: If the person you’re co-signing for defaults on their payments, you’re required to make their payments, which can turn a good financial situation bad, fast. Also, lenders are not incentivized to remove co-signers – they’re motivated to lower risk (hence having a co-signer in the first place). This can make it hard to get your name off a loan, regardless of promises or good intentions. Keep in mind that if a family member or friend has a rough credit history – or no credit history – that requires them to have a co-signer, what might that tell you about the wisdom of being their co-signer? And finally, a co-signing situation that goes bad may ruin your credit reputation, and more tragically, may ruin your relationship.

The Lesson: ‘Never, ever, EVER, co-sign a loan.’

2. Taking on a mortgage payment that pushes the budget

The Trap: ‘It’s our dream house. If we really budget tight and cut back here and there, we can afford it. The bank said we’re pre-approved…We’ll be sooo happy!’

The Realities: A house is one of the biggest purchases couples will ever make. Though emotion and excitement are impossible to remove from the decision, they should not be the driving forces. Just because you can afford the mortgage at the moment, doesn’t mean you’ll be able to in 5 or 10 years. Situations can change. What would happen if either partner lost their job for any length of time? Would you have to tap into savings? Also, many buyers dramatically underestimate the ongoing expenses tied to maintenance and additional services needed when owning a home. It’s an accepted rule of thumb that home owners will have to spend about 1% of the total cost of the home every year in upkeep. That means a $250,000 home would require an annual maintenance investment of $2,500 in the property. Will you resent the budgetary restrictions of the monthly mortgage payments once the novelty of your new house wears off?

The Lesson: ‘Never take on a mortgage payment that’s more than 25% of your income. Some say 30%, but 25% or less may be a safer financial position.’

3. Financing for a new car loan

The Trap: ‘Used cars are unreliable. A new car will work great for a long time. I need a car to get to work and the bank was willing to work with me to lower the payments. After test driving it, I just have to have it.’

The Realities: First of all, no one ‘has to have’ a new car they need to finance. You’ve probably heard the expression, ‘a new car starts losing its value the moment you drive it off the lot.’ Well, it’s true. According to Carfax, a car loses 10% of its value the moment you drive away from the dealership and another 10% by the end of the first year. That’s 20% of value lost in 12 months. After 5 years, that new car will have lost 60% of its value. Poof! The value that remains constant is your monthly payment, which can feel like a ball and chain once that new car smell fades.

The Lesson: ‘Buy a used car you can easily afford and get excited about. Then one day when you have saved enough money, you might be able to buy your dream car with cash.’

4. Financial retail purchases

The Trap: ‘Our refrigerator is old and gross – we need a new one with a touch screen – the guy at the store said it will save us hundreds every year. It’s zero down – ZERO DOWN!’

The Realities: Many of these ‘buy on credit, zero down’ offers from appliance stores and other retail outlets count on naive shoppers fueled by the need for instant gratification. ‘Zero down, no payments until after the first year’ sounds good, but often may bite back in the end. Accepting an offer can require a full rate of interest to be paid dating back to the day of the purchase if a single payment is missed. Shoppers who fall for these deals don’t always read the fine print before signing. Retail store credit cards can be enticing to shoppers who are offered an immediate 10% off their first purchase when they sign up. They might think, ‘I’ll use it to establish credit.’ But that store card can have a high interest rate. Best to think of these cards as putting a tiny little ticking time bomb in your wallet or purse.

The Lesson: ‘Don’t buy on credit what you think you can afford. If you want a ‘smart fridge,’ save up and pay for it in cash. Make your mortgage and car payments on time, every time, if you want to help build your credit.’

5. Going into business with a friend

The Trap: ‘Why work for a paycheck with people I don’t know? Why not start a business with a friend so I can have fun every day with people I like building something meaningful?’

The Realities: “This trap actually can sound really good at first glance. The truth is, starting a business with a friend can work. Many great companies have been started by two or more chums with a shared vision and an effective combination of skills. The danger can center around maturity. If either of the partners isn’t prepared to handle the challenges of entrepreneurship, the outcome might be disastrous, both financially and relationally. It can help if inexperienced entrepreneurs are prepared to:

  • Lose whatever money is contributed as start-up capital
  • Agree at the outset how arguments will be resolved
  • Not always talk business around friends and family
  • Clearly define roles and responsibilities
  • Sign a well-thought-out, legally sound operating agreement

The Lesson: ‘Understand that the money, pressures, successes, and failures of business have ruined many great friendships. Consider going into business individually and working together as partners, rather than co-owners.’

6. Signing up for a credit card

The Trap: ‘I need to build credit and this particular card offers great points and a low annual fee! It will only be used in case of emergency.’

The Reality: There are other ways to establish credit, like paying your rent and car loan payments on time. The average American household carries a credit card balance averaging over $16,000 dollars. Credit cards can lead to debt that may take years (or decades) to pay off, especially for young people who are inexperienced with budgeting and managing money. The point programs of credit cards are enticing – kind of like when your grocer congratulates you for saving five bucks for using your VIP shopper card. So how exactly did you save money by spending money?

The Lesson: ‘Learn to discipline yourself to save for things you want to buy and then pay for them with cash. Focus on paying off debt – like student loans and car loans – not going further into the hole.’

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