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August 7, 2020

Credit Card Self-Control

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Credit Card Self-Control

August 7, 2020

Credit Card Self-Control

Have you ever fallen under the spell of a credit card?

We don’t think of those little pieces of plastic as having magical properties, but they certainly have a way of making our money vanish! And what’s more, they seem to hold a mystical power over our spending habits. What starts as innocent online window shopping can suddenly become a credit fueled buying bender.

But credit cards aren’t sorcery. There are actually some very simple steps you can take to help achieve credit card self-control!

Review your spending habits
The first step to controlling your credit card habit is to acknowledge that you need to change it. And there’s no better way of doing this than by facing the numbers and confronting yourself with how much you’re actually spending. It’s not always easy to do! Avoiding looking at your bank account or monthly statement is something that many of us have done at some point in our lives. Sweeping the issue under the rug is much easier than confronting the problem!

That’s all well and good until you’ve dug yourself into a debt hole. Take a deep breath, find the information you need, and survey the damage. The shock of seeing those numbers might be enough to cool your spending habits.

Hide your credit cards
But you might need to take more direct measures. Perhaps just the sight of a credit card is all it takes for you to unleash a torrent of foolish spending. Consider physically separating yourself from your cards if this is the case. There are several ways to accomplish this. You can take your cards out of your wallet and leave them on the bedside table. Erase your cards from your preferred browser. There are even stories of people placing their cards in a bowl of water and placing that in the freezer! Find whatever method works best for you.

Visit a store without your card
Like it or not, you can’t hide from credit card temptation forever. You’ll eventually find yourself in a setting where you feel the itch to make a wild purchase on your card. But there are ways to head those desires off at the pass. Try visiting one of your favorite stores without the card. Bring a little bit of cash for an emergency, but not enough to be dangerous. Walk around, take it all in, then walk out. This ritual will remind you that you don’t have to buy something every time you visit a store. You can also try visiting with an accountability buddy who can inspire you to use self-control.

Your credit card spending habit might feel like it has magical power to control your actions. But it doesn’t! You actually have much more power than you might think. Try out a few of these tips and see if they make a difference in how much you spend each month.

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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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Emotional Intelligence And Money

Emotional Intelligence And Money

We’re used to thinking of intelligence as our ability to process and master new information.

It’s not something we usually associate with kindness or compassion or empathy. In fact, we might think of highly intelligent people as being cold and almost robotic! But there’s more to intelligence than being able to recall obscure facts or recite esoteric trivia.

Intelligence isn’t just about learning what you’d find in a textbook. Our brains receive emotional and personal information every day that we have to understand and act upon. The ability to identify and manage these feelings successfully is rated as emotional intelligence, and it plays a role in our quality of life. It also makes a big difference in how much we make. Some research indicates that people with a high emotional intelligence score (also called EQ) make an average of $29,000 more than people with a lower score.(1)

But… why?

Why would understanding and processing our emotions correlate with a higher annual income? How else could your EQ affect your financial life? Let’s explore the relationship between emotional intelligence and money!

Emotional intelligence helps you make wise decisions
We all have feelings about money. And those feelings impact our decision-making process. You might be really proud of how much you earn and want to flaunt that with purchases you make. Or spending might be difficult for you because of your background and upbringing. Maybe you’re afraid to even look at your bank account after a stress-fueled shopping spree.

Identifying those feelings is essential to understanding your financial decisions. It helps you recognize your motivations and the processes that lead to certain actions. And once you’ve identified those root feelings, you can start to make changes that will alter your actions.

High emotional intelligence is a workplace advantage
To start with, there are some fields where emotional intelligence is foundational. Recognizing and empathizing with the emotions of others is pretty much required if you’re a counselor, a diplomat, or any kind of negotiator. But you might be surprised by how much EQ can affect success in other careers. Building and maintaining relationships can give you an edge in just about any workplace or market. For instance, L’oreal increased net revenue by $2.5 million by prioritizing EQ when hiring salespeople.(2) Most effective leaders have high EQs.(3) It makes sense; it’s much easier to inspire people when you understand their motivations and feelings and speak to their specific goals.

How to increase your emotional intelligence
So how can you boost your emotional intelligence? Here are a few simple practices that can make a big difference in how you relate to others and interact with your feelings.

- Process your own emotions. Try to capture how you feel in a three word sentence. That could be something like “I feel happy” or “I feel frustrated” or “I feel tired.” Avoid framing those sentences in terms of what other people are doing. Steer clear of “you are blank” and consider your own emotions!

- Consider another perspective. Empathy is key to emotional intelligence. Try to see the situation through the other person’s eyes the next time you start to get frustrated or annoyed. What does this person value? Do they have past experiences that are influencing their actions? Are they doing something out of fear or anger?

- Control your feelings. This is the tricky part. It’s one thing to recognize that you’re angry or sad. It’s another thing to reign in those emotions before you act on them and potentially make a situation worse. Remembering to pause for a moment and breathe deeply in stressful situations can be a huge help. Ask yourself if this issue will be important tomorrow or if you’re just getting swept away in the moment. Sometimes it’s best to remove yourself from the situation to gain a bit of clarity and perspective!

Emotional intelligence might not seem important compared to other skills. Being aware of your feelings isn’t something you can put on a resume, and it’s not normally enough to land you that dream job. But it can give you a key advantage as your career progresses. Try developing some of the EQ skills mentioned in this article and see where they take you!

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Should You Only Use Cash?

July 6, 2020

Should You Only Use Cash?

Bills and coins are outdated.

Who actually forks over cash when they’re out and about anymore? Paper money and copper coins are a relic of the past that are useless in a world of credit cards and tap-to-pay…

Except when they’re not.

Using cards and digital payment systems actually comes with some pretty serious drawbacks. Here’s a case for considering going cash only, at least for a little while!

The card convenience (and curse)
Plastic cards can make spending (a little too) easy. See an awesome pair of shoes in the store? No problem! Just swipe at the counter and you’re good to go. Online shopping is even more frictionless. Everything from new clothes to lawn chairs is a few clicks away from delivery right to your front door.

And that’s the problem.

You might not notice the effect of swiping your card until it’s too late. Those shoes were a breeze to buy until you check your bank account and see you’re in the red, or you get your credit card bill. It’s easy to find yourself in a hopeless cycle of overspending when buying things just feels so easy.

The pain of spending cash
Handing over cash can be a different phenomenon. Paying with actual dollars and cents helps you connect your hard-earned money with what you’re buying. It makes you more likely to question if you really need those shoes or clothes or lawn chairs. Studies show that people who pay with cash spend less, buy healthier foods, and have better relationships with their purchases than those who use credit cards.(1) That’s why going with cash only might be a winning strategy if you find yourself constantly in credit card debt or just buying too much unnecessary stuff every month.

Security
To be fair, cash does have some safety concerns. It can be much more useful to a criminal than a credit card. You can’t call your bank to lock down that $20 bill someone picked out of your pocket on the subway! That being said, cards expose you to the threat of identity theft. A criminal could potentially have access to all of your money. There are potential dangers either way, and it really comes down to what you feel comfortable with.

In the end, going cash only is a personal decision. Maybe you rock at only buying what you need and you can dodge the dangers of overspending with your cards. But if you feel like your budget isn’t working like it should, or you have difficulty resisting busting out the plastic when you’re shopping, you may want to consider a cash solution. Try it for a few weeks and see if it makes a difference!

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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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What Are the Effects of Closing a Credit Card?

June 1, 2020

What Are the Effects of Closing a Credit Card?

Americans owe over $900 billion in credit card debt, and credit card interest rates are on the rise again – now over 15%.

If you’re on a mission to reduce or eliminate your credit card debt, you may decide to just close all your credit cards. However, some of the consequences may not be what you’d expect.

Lingering Effects: The Good and the Bad
Many of us have heard that credit card information stays on your credit report for 7 years. That’s true for negative information, including events as large as a foreclosure. Positive events, however, stay for 10 years. In either case, canceling your credit card now will reduce the credit you have available, but the history – good or bad – will remain on your credit report for years to come.

Times when cancelling a card may be your best bet:

  • A card charges an annual fee. If you’re being charged an annual fee for the privilege of having a credit card, it may be better to cancel the card, particularly if you don’t use the card often or have other options available.
  • Uncontrolled spending. If “retail therapy” is impeding your financial future by creating an ever-growing mountain of debt, it may be best to eliminate the temptation of buying with credit by cutting up those cards.

When You Might Want to Hang Onto a Credit Card:
You may not have known that one aspect your credit score is the age of your accounts. Canceling a much older account in favor of a newer account can leave a dent in your credit score. And canceling the card won’t erase any negative history, so it may be best to hang on to the older credit account as long as there are no costs to the card. Also, the effects of canceling an older account may be larger when you’re younger than if you have a long credit history.

Credit Utilization Affects Your Credit Score
Lenders and credit bureaus also look at credit utilization, which refers to how much of your available credit you’re using. Lower percentages help your credit score, but high utilization can work against you.

For example, if you have $20,000 in credit available and $10,000 in credit card balances, your credit utilization is 50 percent. If you close a credit card that has a credit limit of $5,000, your available credit drops to $15,000, but your credit utilization jumps to 67 percent (if the credit card balances remain unchanged). If you’re carrying high balances, going on a credit card cancelling rampage can have negative effects because your credit utilization can skyrocket.

To sum it all up, if unnecessary spending is out of control or there is a cost to having a particular credit card, it may be best to cancel the card. In other cases, however, it’s often better to just use credit cards occasionally, or if you have an emergency.

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How Do Youtubers Make Money?

May 27, 2020

How Do Youtubers Make Money?

People make tons of money on YouTube.

And a lot of it doesn’t seem to make any sense. The highest paid YouTuber is Ryan Kaji, an eight-year-old child who opens toys and plays with them on camera. He made $26 million from June 1, 2018 to June 1, 2019 (1). The list of highest earning YouTubers includes another child, multiple gamers, and a group of guys who do tricks.

So how do people make money opening toys, playing video games, or doing makeup tutorials? What value are these people bringing to their millions of viewers?

The power of the parasocial
It’s important to understand why people watch YouTube. Part of it is for the occasional funny video. Those are great, but they’re difficult to monetize. What’s become more common is for someone to start a channel dedicated to creating a certain kind of content. It can be anything from music reviews to makeup tutorials to skit comedy. Viewers stumble onto the channel and enjoy what they see, but soon something special starts to happen; they form a type of relationship with the content creator.

This is a well-observed phenomenon called a parasocial interaction. People start to feel like they know someone without ever actually meeting them in real life. You’re not just watching someone play video games or watching the news or listening to a music review. You’re spending time with someone you relate to and think of as a friend, sort of. And that results in racking up consistent viewing hours.

Ads
Roughly 1 billion hours of YouTube videos get watched every single day (2). It’s really the perfect platform for almost anyone trying to advertise their business. Content creators can become YouTube partners once they have a certain number of subscribers and watched hours. This allows them to put ads in their videos with Google Adsense, provided they follow certain guidelines.

On paper, ads don’t pay much; Forbes estimated in 2018 that top YouTube talent could make about $5 per 1,000 views from ads (3). That’s why the key is to create lots of bankable content. Uploading 5 days a week with an average of 100,000 views per video 52 weeks per year could hypothetically earn you $130,000 annually. But there’s more ways to monetize YouTube than ads.

Sponsorships
There are plenty of businesses looking for more personal ways of marketing their products. (Remember that YouTubers can have parasocial relationships with their audiences.) A recommendation from your favorite channel feels like a recommendation from a trusted friend. And brands are willing to pay big dollars to cash in on that opportunity. Compensation for a sponsored video varies on the size of a YouTuber’s audience, but on average it’s around $2,000 per 100,000 subscribers. This is where the numbers start to skyrocket. A single sponsored video per week with 100,000 views can now potentially net you $130,000 annually. At that point, you’re poised to grow your audience and further increase your cash flow.

Realistically, YouTubers make money the same way entertainers have for years. They draw attention to ads and are mouthpieces for brands. The differences are that the barriers to entry are incredibly low and scope of the audience essentially limitless. There’s no doubt that YouTube has revolutionized who gets to shape modern media.

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New Money

May 20, 2020

New Money

Last time we looked at old money.

We saw that it’s built on a very specific set of values and exists in very specific places. But what about so-called new money?

The new money story
New money is characterized by a story. It begins at nothing, or next to nothing, and builds a fortune through hard work, grit, and determination. These rags-to-riches tales have been around for a while, but they’ve gripped the American imagination, especially since the last half of the 19th century. Andrew Carnegie and Steve Jobs are the classic examples of new money narratives, both men coming from immigrant families and amassing huge fortunes for themselves to change the world.

New money values
Building a fortune from scratch relies on a different mindset than managing a pre-existing legacy. Risk taking and innovation are often encouraged and even flaunted by the new money class. It’s a forward-thinking, even progressive, attitude that’s always looking for the next way to make another dollar.

The openness of new money
Progressivism and hustle are the hallmarks of new money. That’s resulted in new money existing in a unique world. New money tends to be found in the hotspots of entertainment or technology. That means movie studios attracting actors look for a break or technical schools swarming with students trying to build a digital future. The new money ethos has also resulted in very specific spending patterns that are more public. Highly visible charities, brash social media presences, and expensive toys and gadgets are all part of the package. But so is an interest in looking like an everyman. Fashion choices tend to be simple, most classically t-shirts or turtlenecks. It’s a far cry from the aloof elegance of old money!

Blurry borders between old and new
The lines between old and new money get complicated in how life plays out. Plenty of tech fortunes have been squandered over the last 30 years, while others have quietly decided to manage their wealth in obscurity. Plus, there’s no shortage of American aristocracy looking to flex on social media!

The biggest key is that old money and new money are built on values and mindsets. You can manage wealth earned from a mobile game like an oil tycoon from a long lost era and secure a legacy for your kids. Or you can forsake your family’s business of 200 years and forge your own path with hard work and grit. It’s up to you how you manage your specific circumstance!

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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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The Keys to Paying Your Bills On Time

The Keys to Paying Your Bills On Time

Not paying your bills on time can have significant impacts on financial health including accumulating late fees, penalties, and a negative hit on credit scores.

But maybe you – or a friend – learned about those consequences the hard way. Most late bill payers fall into 1 of 3 camps: they forget to pay on time, they don’t have enough income, or they have enough income but spend it on other things.

In case you – or your friend – are stuck in 1 of these camps, consider the following tips to help pay the bills on time.

I forget to pay my bills on time.
If this is you, you’re actually in a more advantageous position. There are many easy fixes that can help get you back on track.

  1. Use a calendar. This is a tried and true, but often underutilized, method to track your bill due dates. When you get a notice for a bill – either by email, text, or snail mail – jot the due date on your calendar. You can also set a reminder if you use an electronic calendar.
  2. Fiddle with your due dates. Many companies offer flexible due dates. Experiment with what due dates work for you. Some people like to pay their bills all together at the beginning of the month. You may find that you like to pay some bills in the beginning and some in the middle of the month. It’s up to you!
  3. Take advantage of grace period/late fee waivers. If you do forget about a bill and have to make a late payment, give the company a call and ask them to waive the late fee. Late fees can add up, ranging from $10-50 depending on the account. It’s worth a try!

I don’t have the money to pay all my bills.
If your income doesn’t cover your outgo no matter how diligently you pinch those pennies, it won’t matter what type of bill payment method you use, you’re going to have trouble. If you’re in this situation, there are 2 solutions: increase your earnings or decrease your expenses.

  1. Find a side gig. Take a temporary part-time job to make some extra income. Delivering pizza in the evenings or on weekends might be worth doing for a few months to make some extra dough.
  2. Shop around. Shop around for savings. Prices vary on almost everything. Take a little extra time to make sure you’re getting the rock-bottom best prices on your insurance, cable, phone plans, groceries, utilities, etc.

I overspend and don’t have enough left to pay my bills.
Managing income and expenses takes some practice and persistence, but it is doable! If you find yourself consistently overspending without enough left over to cover your bills, try the following:

  1. Create a budget. Get familiar with your income and expenses. This is the only way to know how much disposable income you’re going to end up with every month. You can track your budget daily on an app like PocketGuard, Wallet, or Home Budget.
  2. Stash the money for bills in a separate account. Put your bill money in a separate checking or savings account. This will keep it quarantined from your spending money and help make sure it’s there when the bills come due.

Good Financial Habits
If you feel bill-paying-challenged, or you have a friend who is, try some of the above tips. Taking care of your obligations when you need to can relieve stress, build good credit, and reinforce healthy spending habits for life!

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Are Gym Memberships Worth It?

Are Gym Memberships Worth It?

Let’s face it—we’ve all botched a New Year’s fitness resolution.

Sure, we started the year with great intentions and a few gym visits, but it didn’t take long for our resolve to waver and we never returned. However, many of us have kept that membership around. After all, we paid so much to sign up that we might as well hold on to it just in case our motivation comes back, right?

Wrong.

It turns out that gym membership might have been a bad value right from the start. But how can you tell? Here’s a few things to consider if you’re thinking about finally moving on from your overly ambitious New Year’s resolution.

How gym memberships work
Gym memberships seem pretty simple on the surface; you pay once a month for access to gym equipment during operating hours. But annual fees and initiation fees can add up pretty quickly, meaning that you can potentially sink hundreds of dollars into a gym. National gym chains may range in price from $164 to $1,334 per year, but the national average comes out to $696 annually. Plus, some gyms make you sign a contract locking you into a year-long membership. You have to pay for the membership regardless if you work out!

The big question: Are you paying for something you won’t use?
Gym memberships are more cost effective the more you take advantage of them. Going to the gym seven times a week at an average priced gym? Let’s do the math. You’ll pay $1.90 per visit. Go four times per week? $3.36 (1).

But let’s say you visit the gym about four times per month for an hour-long sweat session. You’ll wind up spending $14.50 per hour! To put that in perspective, we spend an average of $0.28 on Netflix per hour. Sitting around watching TV is far more cost effective than working out.

Alternatives to gym memberships
So what can you do if you want to get fit but don’t want the potential financial black hole of a gym membership? It’s often cheaper in the long run to build your own gym at home rather than getting a membership. You also might want to see if your apartment or office has a serviceable gym. If all else fails, you can always do body weight exercises. You might be surprised by how grueling and intense push-ups and squats can be!

The bottom line is that the keys to making your gym membership worth it are motivation and discipline. The cost of buying a membership isn’t enough incentive (2). You have to find a deeper drive to get you in the gym week in and week out. Check out the costs of your local gym, weigh the alternatives, and ask yourself why you want to start working out before you sign that contract!

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What's a Recession?

February 12, 2020

What's a Recession?

Most of us would probably be apprehensive about another recession.

The Great Recession caused financial devastation for millions of people across the globe. But what exactly is a recession? How do we know if we’re in one? How could it affect you and your family? Here’s a quick rundown.

So what exactly is a recession?
The quick answer is that a recession is a negative GDP growth rate for two back-to-back quarters or longer (1). But reality can be a bit more complicated than that. There’s actually an organization that decides when the country is in a recession. The National Bureau of Economic Research (NBER) is composed of commissioners who dig through monthly data and officially declare when a downturn begins.

There’s also a difference between a recession and a depression. A recession typically lasts between 6 to 16 months (the Great Recession was an exception and pushed 18 months). The Great Depression, by contrast, lasted a solid decade and witnessed unemployment rates above 25% (2). Fortunately, depressions are rare: there’s only been one since 1854, while there have been 33 recessions during the same time (3).

What happens during a recession
The NBER monitors five recession indicators. The first and most important is inflation-adjusted GDP. A consistent quarterly decline in GDP growth is a good sign that a recession has started or is on the horizon. Then this gets supplemented by other numbers. A falling monthly GDP, declining real income, increasing unemployment, weak manufacturing and retail sales all point to a recession.

How could a recession affect you?
The bottom line is that a weak economy affects everyone. Business slows down and layoffs can occur. People who keep their jobs may get spooked by seeing coworkers and friends lose their jobs, and then they may start cutting back on spending. This can start a vicious cycle which can lead to lower profits for businesses and possibly more layoffs. The government may increase spending and lower interest rates in order to help stop the cycle and stabilize the economy.

In the short term, that means it might be harder to find a job if you’re unemployed or just out of school and that your cost of living skyrockets. But it can also affect your major investments; the value of your home or your retirement savings could all face major setbacks.

Recessions can be distressing. They’re hard to see coming and they can potentially impact your financial future. That’s why it’s so important to start preparing for any downturns today. Schedule a call with a financial professional to discuss strategies to help protect your future!

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Now’s the Time for Future Planning

February 10, 2020

Now’s the Time for Future Planning

What happened to the days of the $10 lawn mowing job or the $7-an-hour babysitting gig every Saturday night?

Not a penny withheld. No taxes to file. No stress about saving a million dollars for retirement. As a kid, doing household chores or helping out friends and neighbors for a little spending money is extremely different from the adult reality of giving money to both the state and federal government and/or retiring. Years ago, did those concepts feel so far away that they might as well have been camped out on Easter Island?

What happened to the carefree attitude surrounding our finances? It’s simple: we got older. As the years go by, finances can get more complicated. Knowing where your money is going and whether or not it’s working for you when it gets there is a question that’s better asked sooner rather than later.

When author of Financially Fearless Alexa von Tobel was asked what she wishes she’d known about money in her 20s, her answer was pretty interesting:

Not having a financial plan is a plan — just a really bad one! Given what I see as a general lack of personal-finance education, it can be all too easy to wing it with your money… I was lucky enough to learn this lesson while still in my 20s, so I had time to put a financial plan into place for myself.

A strategy for your money is essential, starting early is better, and talking to a financial professional is a solid way to get going. No message in a bottle sent from a more-prepared version of yourself is going to drift your way from Easter Island, chock-full of all the answers about your money. But sitting down with me is a great place to start. Contact me anytime.

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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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Saving For Retirement: Where Do I Start?

January 29, 2020

Saving For Retirement: Where Do I Start?

We all know we should be saving for the future.

But depending on your stage in life, it might feel like retirement is either too far away or it’s too late in the game to make much of a difference. Regardless of your income—or which season of life you’re in—you can (and should) start saving for retirement. Here’s how to get started:

Make savings automatic
Have your employer deposit a set dollar amount or percentage from each paycheck to a savings account or your 401(k). It’s an effortless way to start loading your savings account while also reducing temptations to overspend.

Pay yourself first
Your attitude towards saving makes a big difference. It shouldn’t be something that is optional after all of your other spending. If you view saving the way you would a bill and pay it to yourself first, you will be far more likely to save.

Investigate IRA options
An IRA is a retirement account that invests your money in stocks and bonds. Many people opt for either a traditional IRA or a Roth IRA, though there are other types to choose from. The big difference between the traditional and the Roth is how and when their tax exemptions kick in. Contributions to the traditional are tax deductible until they are withdrawn. A Roth, on the other hand, gets taxed on contributions but withdrawals are tax deductible and get to grow tax free. The maximum amount you can contribute to an IRA is $6,000 – $7,000 per year (depending on your age), so you’ll need to consult your budget to see how much you can put away.

Establish your permanent lifestyle
It’s easy to be tempted to try to one-up our friends’ and neighbors’ lifestyles. But continually increasing your cost of living can set your retirement up for failure. Establish a basic amount of what it takes for you to live a comfortable lifestyle, and stick to that mode of living. Doing so can help you save money right now and also give you an idea of how much you’ll need to save for retirement.

Meet with a financial professional
Investing can be intimidating, especially when it’s your future on the line. Be sure to meet with a licensed professional before you make any big saving decisions. Getting an extra pair of qualified eyes on your goals and strategies is always a good move and can help bring you peace of mind about your retirement strategy!

Whether you’re just entering the workforce or retirement is right around the corner, there are many ways to contribute to your future. By adjusting your lifestyle, investing carefully, and making it a priority to prepare for the future, you can nurture your peace of mind and look forward to seeing how your financial strategy unfolds in your golden years.

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Market performance is based on many factors and cannot be predicted. This article is for informational purposes only and is not intended to promote any certain products, plans, or strategies for saving and/or investing that may be available to you. Any examples used in this article are hypothetical. Before investing or enacting a savings or retirement strategy, seek the advice of a licensed financial professional, accountant, and/or tax expert to discuss your options.

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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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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3 Ways to Save Money (No Formulas Needed)

January 13, 2020

3 Ways to Save Money (No Formulas Needed)

When you’re ready to take control of your finances, it can seem overwhelming to get your savings plan going.

Every finance expert has a different theory on the best way to save – complete with diagrams, schedules, and algebraic formulas. Ugh. But saving money isn’t complicated. Here’s a secret: the best way to save money is not to spend it. It’s that simple.

Turn Off the TV
The act of turning off your TV to save money on electricity may not make much difference. Running a modern TV for as long as 12 hours per day probably costs about $8 per month. The real expense associated with your television comes from the advertisements. Look around your home and in your driveway and you’ll probably see some of the fallout associated with watching television. Advertisers have convinced us that we need the latest and greatest gizmos, gadgets, cars, homes, and that we need to try the latest entree at our favorite chain restaurant before the deal goes away forever! Skipping the TV for some time spent with family or enjoying a good book may not only cost you less money in the long run, it’s priceless.

The 30-Day Rule
Here’s how it goes. If you want something, and that something isn’t an emergency, make a note of it and then wait 30 days before revisiting the idea of purchasing that item. Your smartphone is perfect for this because it’ll probably be in your hand when you first find the item you want to buy. Use a note keeping app or a reminder app to document the date and details about the item. After 30 days, the desire to purchase that item may have passed, or you may have concluded that you didn’t really need it in the first place. If you still want the item after 30 days – and it fits into your budget – go for it!

The 10-Second Rule
The 30-day rule is useful in a lot of cases, but it may not work so well for some types of household spending, like grocery shopping. 30 days is too long to wait if you’re out of coffee or cat litter. Even so, the grocery store is a hotbed for impulse buying – sales, specials, and check-out aisle temptations may be too much to resist. Instead of dropping items into your cart on a whim, wait 10 seconds and then ask yourself for one good reason why you need to purchase this particular item right now. Chances are pretty good – that there isn’t a good reason. Ding! You just saved money. That was easy. (Hint: Always make a list before you head to the store.)

Now that you’ve gotten rid of the idea that trigonometry + calculus + geometry = financial independence, which money-saving tip will you put into practice first? (Quick note: The 30 Day Rule does not apply here – no need to wait to get started!)

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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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