Deciding Whether To Save Or Pay Down Debt Isn’t Just About Math

June 29, 2017

I recently saw this article titled, “A financial expert says deciding whether to save or pay off debt comes down to a basic math question” that quotes financial writer Jean Chatzky asking, “What am I getting on that money?” For example, if you can save in your 401(k) and get a 100% or 50% match from your employer, that’s probably the highest return you can get. That would be followed by paying off high-interest debt like credit cards that often have double-digit interest rates.

However, you may be better off investing extra money rather than paying off low interest rate debts like many student loans, car loans, and mortgages if you can expect to earn more on your investments than the debts are costing you. In other words, earning a 6% average annualized return on your investments is better than paying down a 4% mortgage (especially if the 6% return is in a tax-sheltered account and the mortgage interest is tax-deductible).

More than basic math

This is generally good advice. There are a couple of problems though. First, it doesn’t take into account emergency savings, which should be kept in a low-risk, low-return account like a bank account or money market fund. With bank interest rates typically below 1%, you would NEVER save for emergencies using that logic because you could always find someplace else to put your money with a higher expected return.

You know how there’s generally an inverse relationship between risk and return? Well, emergency savings and insurance policies have low or negative expected returns. (If returns on insurance policies were expected to be positive, insurance companies would go bankrupt). That’s because they provide the value of reduced or negative risk.

Where does the emergency fund fit in?

So how should you prioritize emergency savings? Like having adequate insurance, I would actually put them first. Yes, your expected return is low but the goal here is to reduce the risk of losing your home and/or car if you lose your job and can’t make the payments.

However, because the return is so low, you don’t want to have TOO much in savings. A good rule of thumb is to have enough to cover at least 3-6 months of necessary expenses and perhaps even 8-12 months, depending on how risky your income is, what other resources you have available, and who else you’re providing for. A tenured teacher with a retirement plan they can borrow against and no dependents needs a lot less than an entrepreneur with little retirement savings and a family to take care of.

Figuring in your personal feelings about debt

Second, don’t forget the emotional component. Some people are more bothered by debt than others. Even if they know they can earn more by investing extra savings, they would derive more happiness (or at least stress relief) from being debt-free than from having those extra investment earnings.

In the end, isn’t happiness the goal? (This isn’t to be confused with making emotional decisions that we’ll later regret. The key is to make decisions that will maximize our long term happiness.)

So remember, when you’re deciding whether to save or pay off debt, it’s not just a basic math question. It’s a personal question too. That’s why we call it “personal” finance.

 

Should You Go Into Debt To Get Pregnant?

June 28, 2017

After trying for nearly two years to conceive, my husband and I recently learned that our best chance of having a biological family will require us to undergo in vitro fertilization. If you or anyone you know has undergone this treatment, you probably already know that it comes with a hefty price tag and is rarely covered by insurance. Total costs vary according to each person’s needs and the community you live in, but generally the base cost is at least $12,000, and can easily exceed $25,000.

And that’s just the cost to GET PREGNANT. If it works, then I’ll also have to deal with the normal maternity costs that every expectant mother has to deal with like co-pays, co-insurance, etc. And don’t get me started on the cost of “gearing up” for baby – diapers, crib, car seat, the list goes on… but that’s a post for, hopefully, the near future.

In addition to the high price tag of IVF, the decision to pursue this method of family planning is often made in a time-sensitive situation – in less than a week I’ve gone from my initial “exploratory” consultation to starting the treatment. In other words, there isn’t really a lot of time to get your financial ducks in a row like you might have when planning to buy a home or some other expenditure that requires a big cash outlay up front.

Like most people I know, we don’t just have several thousand dollars lolly-gagging about in our accounts, which has us making a list of the pros and cons of various ways to fund this decision.

Things to consider

Your values. The first question we asked was, “How badly do we want this?” Some people will stop at nothing in order to have a baby, while others have a more, “If it’s meant to be, it will be,” attitude. I think we’re in the middle – willing to try this treatment, but we have already decided where we’ll draw the line if it doesn’t work. Kids are expensive enough to raise – sacrificing our financial stability to get pregnant in the first place doesn’t make a ton of sense if any debt incurred will cause stress in our lives and perhaps even our marriage. We feel very fortunate to even have this choice to make, and take our responsibility to our potential future children very seriously, including deciding not to have them if it means we won’t be able to provide them a stable home and life.

The add-ons. As with many big purchases, there is the “basic” level treatment, but there are also a variety of “add-ons” that are mostly optional. Some of the add-ons simply increase the odds of success, while others, like genetic testing of the embryos, ensure that any baby you do have will be free of genetic defects. To a certain extent, this also comes down to values – I’ve always felt that if God gave me a special needs child, that would be the path my life was meant to take. But now we basically have to answer the question, “Would you be willing to pay $7,000 to NOT have a special needs child?” I’ll be honest – I’m struggling with that one. It feels a bit like a “first world problem.”

But the secondary question is, since we’re already making this investment, why not chip in enough to give it the highest odds of success? In that case, it’s a cost-benefit analysis where you weigh the odds versus your own ability to absorb the cost without too much of a long-term financial impact.

Should you go in to debt?

Obviously we’ve already decided we want to have kids, so at the end of the day, this is mostly a financial decision with a side of manageable health risks. Since we don’t have enough cash on hand to fully fund the procedure, we are exploring several ideas. Here’s what we’re considering:

IVF loan. Yes, such a thing exists. However, when I saw that there is not only a 7.75% interest rate for those with the best credit scores, but an annual fee for the life of the loan, I crossed this option off our list.

0% promo rate credit card. First of all, we’d have to apply ASAP and hope that the credit limit granted is high enough. The primary consideration, however, is could we pay the card off by the time the promo rate expires? To figure that out, just divide the total amount by the number of months the rate is offered. For example, if the treatment costs $20,000 and the rate is good for 18 months, the question is, can we afford $1,111 per month? (yikes) This option also requires excellent credit.

401(k) loan. The interest rate is lower than the IVF loan and at least I’d be paying myself back, but I also have to consider that I’ll be forgoing possibly higher investment growth while I’m paying the loan back. (here’s a bit more on the pros and cons of this option)

Home equity line of credit (HELOC). The interest would be tax deductible, but also variable, so with rates going up, this could end up being more than the IVF loan if we take more than a year or two to pay it off. Plus this only works if we have enough equity and if the fees aren’t ridiculous either.

Rewards credit card. Putting IVF on a new Southwest Rapid Rewards card would be enough to earn me a companion pass pretty much right out of the gate, but it comes with a 16%+ rate. This option only works if we have another way to pay off the card right away, like taking out the HELOC. On the other hand, MONEY magazine has a great list of cards that come with low interest rates, so this is the other option.

How we’ll do it

Since the monthly payment required to pay off the 0% card is more than we can afford, we’ll most likely go with a hybrid:

  • Put as much as we can afford to pay monthly on a 0% card, then make sure it’s paid off before the promo expires.
  • Put the balance on my new Southwest Rapid Rewards card, then pay that off with a HELOC.

Using the rewards card to get the points buys us a couple weeks of time to line up a HELOC through the bank, but it will be important to have the cash in hand to pay off the card by the time the first statement is due. Even a $10,000 balanced carried over for one month could cost us $160 in interest.

At the end of the day, I’ve always known that by putting off having children while I pursued my career and found the perfect life partner for me, I was risking having to go down this road. If this process works, there will be no regrets. If it doesn’t work, at least we’ll know we tried everything we could, within our own personal limits.

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How One Woman Went From The Brink Of Bankruptcy To Retirement Ready In Two Years

June 27, 2017

Last week I wrote about how a workplace financial wellness benefit is different from your 401(k), and mentioned that one of the goals of my work these days is to change lives. In that spirit, I just have to share an amazing story of one woman I had the privilege to work with who literally turned her life around through her financial wellness benefit.

When I met this woman two years ago, she was contemplating bankruptcy but wondering if there was a possible way to avoid it. Additionally, she wanted to get herself to a place of being able to retire and know that she’d be financially secure for at least twenty years in retirement.

It was a tall order, but I’m not one to shy away from a challenge. After reviewing her finances, I told her that she could avoid bankruptcy and get out of debt completely, but she would have to sacrifice. And by “sacrifice,” I really meant it – it was a tough love kind of conversation. She said she was willing to try it, so here’s what I suggested she give up:

  1. Her stuff. I told her she needed a “fire sale” of everything but the clothes on her back and then to live on the bare minimum for a few years.
  2. Her home. She was living in an expensive part of the country, which meant that her monthly mortgage expenses added up to much more than the standard “25%-35% of take home pay” rule of thumb.
  3. Her community. Selling her house wasn’t enough – even if she moved to a different place, the area she lived in was so expensive that no matter what, she was going to struggle just to cover living expenses, which left little room for paying down debt or saving money.

To my delight, she did it! She took my guidance and sold everything, moved out of state and in with her mother until she paid off all of her consumer debt. And now she’s on track to retire when she wants to. Her sacrifice has given her the financial freedom to live life on her terms.

It’s hard for me to describe the gratification that I felt when I she emailed me her last status report to tell me all of this – it’s the essence of why I do what I do. But the real take away is that sometimes in order to get what we want to, we have to take a step back and give some things up. It wasn’t easy for her, but she decided that her long-term financial security (and owning up to the debt she’d incurred) was far more important to her than any house, outfit or piece of furniture. Sometimes it takes some tough love and real sacrifice, but in the end, it’s worth it.

For more on how she did it, check out these resources:

How I Sold All My Stuff Online

Debt Blaster calculator

8 Inexpensive Ways To Prepare Your Home For Sale

 

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What To Do If Your Spouse Has Bad Credit

June 26, 2017

Have you generally been financially responsible but your spouse or fiancé has made some bad financial decisions? Are you worried that your spouse will drag you down financially, or if you can make the debt and/or bad credit go away quickly? If so, you aren’t alone. Debt and poor credit scores are the norm.

According to a study from CFED, 56 percent of American consumers have sub-prime credit scores, which means they don’t have access to the best interest rates for mortgages, credit cards and car loans. Debt is a way of life for most Americans, says NerdWallet in a 2016 American Household Credit Card Study, with the average amount of credit card debt for those who carry it totaling $16,748. Over 44 million Americans have student loan debt, with 11.2 percent of borrowers delinquent or in default.

Does that sound familiar?

For better or worse

If you have a financially mixed relationship, I’ve got some tough love for you: even if you aren’t legally responsible – although in community property states you will be – it’s still your issue to deal with, too. Marriage is a legal partnership, not just an emotional and spiritual relationship. The only way to deal with debt or credit problems – either your spouse’s or yours — is for both of you to face them head on. If you don’t, it’s only going to get worse.

Excessive debt can drag down your financial life as a couple and lead to a cycle of low financial wellness, where you live paycheck to paycheck without building up emergency savings or saving for retirement. Plus, let’s face it – it can lead to some nasty fights! It’s best to prioritize paying debts as a married couple, even if they aren’t yours, because marriage is also an economic relationship. Each partner affects the whole.

Stop blaming your spouse

Do you plan to stay married? Ok, then stop blaming your spouse for the situation you are in as a couple.  Let it go. Blame and shame are not going to move you forward, and may actually make it much, much harder to negotiate changes in in your spouse’s behavior. Consider working with an unbiased CERTIFIED FINANCIAL PLANNER™ who can coach you through the process of figuring out how you are going to tackle the situation together. Find one by asking your workplace financial wellness program or look for a Fee-Only CFP®.

Practice full financial disclosure

When my husband and I first got together, we had the Money Talk. I was honest with him about where I was in my financial life (paying off some debt from a former business, downsizing my lifestyle so I could save more). Although he’d had it together since graduating college, he wasn’t the slightest bit judgmental. In fact, he was able to look at the situation quite logically and before we got married, we figured out a plan to tackle the last of my student loan and business debt.

We developed a strong, unified vision of where we wanted to go in our lives and how we would manage money together.  (You can read our story here.) Keep talking about money throughout the evolution of your relationship: have money meetings and make sure you understand each other’s financial values – the number one reason couples fight about money.

Set everyone up to succeed

Set up a system where the less savvy partner can succeed. This means:

  • Avoiding blame or judgement
  • Making money management a team effort
  • Setting up “yours, mine and ours” accounts for cash management so everyone has some control over some of their spending
  • Monitoring your credit monthly
  • Celebrating small wins

Consider workarounds to protect your credit

In the meantime, consider workarounds to protect your own credit and repair your spouse’s, such as putting some bills in an individual name and avoiding joint credit cards, car loans or mortgages, etc.

Worst financial enemy or best friend?

Let’s be realistic – if you weeded out everyone in the country who had debt or less than perfect credit, the pool of potential mates would be pretty small. That doesn’t mean it’s not important to address in your relationship, though. How you deal with credit card debt, student loans and/or poor credit scores in your relationship will determine the financial foundation of your marriage.

As our CEO Liz Davidson wrote in What Your Financial Advisor Isn’t Telling You, your life partner can be your worst financial enemy or someone who lifts you higher. Even if you don’t have the same levels of financial wellness levels when you start your life together, with good communication and ingenuity you can be best financial friends.

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The Financial Upside of Peer Pressure

June 21, 2017

Have you ever contemplated how the people you hang out with or follow on social media actually affect your financial status? Think about the last time you went on a diet or tried a new fitness regimen — if your friends were on board, chances are that you stuck with it longer than if you tried to go it alone. The same thing applies when it comes to your money, so much so that some banks have been known to check Facebook friend lists before granting people credit for things like a mortgage or car loan.

A Harris poll conducted on behalf of the AICPA found that 39% of people looked into a purchase or vacation solely because they saw it on someone else’s social media, further proving the power of peer pressure. Guilty as charged – in the past couple months I’ve booked a yoga retreat, shopped a new brand of yoga pants and tried an all-natural, aluminum free deodorant cream solely because of something I saw on Instagram. (are you sensing the hippie theme of my life these days?)

What made me step up

When I first meet people and tell them I’m a financial planner, they typically assume that I’m “perfect” when it comes to money – that I must have a balanced budget, successful investments and a sizable savings account that grows according to my detailed financial plan. The funny thing is, before I joined the Planner team at Financial Finesse, I was far from perfect. I knew what made a perfect financial plan, but I didn’t have one in my life.

All that changed, I think, due to the healthy peer pressure of working with other planners who are making better financial decisions, but also because of my daily work – I get to help clients who are like me, something very rare in the financial planning industry.

Typically, in order for a financial planner to make a living in this industry, you have to work with pretty wealthy people who invest money with you. I’d like to be like that one day, but for now I’m pretty much your average working person who falls victim to Semi-Annual sales and has to put hacks in place in order to avoid over-spending. Having the opportunity to talk with others who have the same struggles has actually helped me to overcome those struggles.

Using peer pressure to get richer

Put the power of peer pressure to work for you in your financial life by trying some of the following:

  • Talk to your friends about your financial goals and challenge them to join you, kind of like a weight loss challenge – what about a challenge to save a thousand bucks over the summer? When you all achieve the goal, celebrate with a spa day.
  • Look at who you follow on social media and consider adding positive financial influences, like Feed the Pig, Budgets Are Sexy or Financial Finesse. If you suffer from FOMO, you might want to hide some of the bigger bragsters in your network – trust me, their lives are not as fabulous as you think or they wouldn’t have so much time to be posting on social media!
  • Become a role model for your friends and family by brushing up on good financial habits, then talking about them at gatherings. Before you know it, people will be calling you for guidance and you’ll feel the positive peer pressure to practice what you preach. It works for me…
  • Subscribe to blogs that address the questions you have. Shameless plug, but I also like Daily Worth and The Muse for the articles they deliver to my inbox.

The bottom line is, if you don’t like your current financial situation, take a look at what effect your interactions with friends and family may be having. There are some you can’t avoid, like a sister who is constantly coming to you for money when in a pinch, but you can neutralize the negative peer pressure by putting positive money peers more deliberately in your life.

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Here at Financial Finesse, we believe strongly in the importance of workplace culture and the power of doing well by doing good. This article is the third in our week-long series of posts where we highlight a specific part of our company culture that helps to make Financial Finesse one of America’s best places to work. This is just one part of our celebration of recent recognition by Inc., who listed us as one of the Best Workplaces in 2017 and Entrepreneur, who named us to the Small-Sized Companies: The Best Company Cultures in 2017 list.

 

7 Places For Young People To Put Savings

June 15, 2017

In my last two posts, I wrote about why saving is such an important part of “adulting” and shared saving hacks for new grads. But where should those savings go? Here is how I would prioritize putting my savings if I were just starting out:

  1. Build up an emergency fund. You may still feel invincible, but you’re actually more likely to need emergency savings than anyone since you’re more likely to change jobs frequently and less likely to have retirement assets or home equity to fall back on in an emergency. Shoot for at least $2,000 in savings, which is what the Federal Reserve Bank estimates the average American needs to resolve a financial crisis. Ideally, you want to be able to cover 3-6 months’ worth of necessary expenses in case you’re in between jobs. After all, you can’t always rely on the Bank of Mom and Dad.
  2. Max a Roth IRA. Since Roth IRA contributions can be withdrawn tax and penalty-free at any time, a Roth IRA can be used to help build your emergency fund while also saving for the future. Just make sure you keep it invested relatively risk-free like in a savings account or money market fund until you’ve accumulated enough emergency savings outside your Roth. At that point, you can invest the Roth IRA more aggressively to grow tax-free for retirement. The younger you are and the longer the money will be invested, the more you can benefit from that tax-free compounding. You can also use the earnings penalty-free for qualified education expenses or up to $10k for a first-time home purchase.
  3. Max the match on your employer’s retirement plan. Once you’ve accumulated some emergency savings, make sure you’re contributing at least enough to your employer’s retirement plan to get the full match. Otherwise, you’re leaving free money on the table. If you can’t afford to do that right away, you can slowly increase your contributions over time. Some plans even have a contribution rate escalator feature that lets you automate that.
  4. Pay off high-interest debt. Once you’ve done the above, pay down any debt with interest rates higher than 4-6% since the debt may be costing you more than what you could earn by investing your savings. Start with the highest interest rate balance and then put the payments towards the debt with the next highest rate as each balance is paid off. You can see how quickly you can pay off the debt and how much interest you can save with this Debt Blaster calculator. Paying down the debt will also improve your credit score and improve your debt/income ratio, which can help you…
  5. Buy a home. Once you’ve settled down enough that you think you’ll keep it for 3-5 years, owning a home can provide tax benefits and allow you to build equity. However, you’ll need savings for a down payment, closing costs, and any furniture/appliances you want to purchase. Ideally, you want to put down 20% to qualify for the best mortgage rates and avoid having to pay private mortgage insurance.
  6. Max out a health savings account. If you’re in a high-deductible health insurance plan, you can contribute to an HSA pre-tax and use the money tax-free for qualified health care expenses. Unlike flex spending accounts, you can keep any unused money in the account and even possibly invest it. When you turn 65, you can then use it for any purpose without penalty so it can do double-duty as a retirement account too.
  7. Save enough to hit your retirement goals. If you’ve done all of the above, run a retirement calculation to see if you’re on track. If not, you may want to save more, starting with your employer’s retirement plan.

If you need help, consider consulting with an unbiased financial planner. Your employer may even offer access to some at no cost to you. Aren’t you starting to feel more like an adult already?

How Lower Gas Prices Could Mean an Additional $27,000 in Savings for You

June 14, 2017

A recent article in the New York Times pointed out that according to GasBuddy, gas prices are the lowest they’ve been in over 10 years – have you noticed? But more importantly, what are you doing with that extra money in your budget?

Unless you’re a professional driver, have a ridiculously long commute to work, or live in Southern California where my colleagues laughed when I shared this fact with them (taxes make up the majority of the price of a gallon of gas in that area), chances are that any savings at the pump have been casually absorbed into your everyday spending, offering little effect on your long-term finances.

In fact, lower gas prices may even compel you to spend more money on things like vacations, as the article points out – the people interviewed say that they’re planning to take more road trips due to lower gas prices. That kind of defeats the purpose, don’t you think?

A different way to think of it

You can get really technical in calculating how much you’re actually saving compared to last year – you’ll need to know the size of your tank, how many times you fill up per month and the actual difference in your spending on gas this year versus last year – but that’s not really the point. The point is that many of us have a fixed mindset about our inability to save due to a tight budget, and we miss opportunities that could painlessly help loosen things up.

The little things add up

The article estimates that a driver in the Midwest should be saving about $5 per fill-up. If you fill your tank once per week, that’s $20 per month or $240 per year. It doesn’t sound like much (it’s not), but it adds up. Increasing your 401(k) contributions by just $5 per week could give an estimated $27,000 savings bump to a 35-year old’s 401(k) balance over 30 years.

In other words, every $5 per week you can find in additional savings is a potential extra $27,000 toward retirement. With that in mind, what other ways can you find an additional five bucks per week?

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The 7 Top Saving Hacks for New Grads

June 08, 2017

Do you know a new or upcoming grad? Last week, I wrote about why saving is such an important part of “adulting.” Of course, the hard part is actually finding the money to save. This week, I’ll share some key saving tips to pass on to any new grads wanting to start out on the right financial foot.

1. Don’t forget the cost of state income taxes when evaluating job opportunities. Taking a job in a state without a state income tax like Texas, Florida, Washington, or Nevada can save you thousands of dollars in taxes each year. Make sure you factor that in when comparing compensation and cost of living.

2. Keep your housing costs as low as possible. It may be tempting to get the best home you can afford, but this is where you can save the most bucks. Housing is a fixed cost that’s hard to adjust if money gets tight.

The key is to live below your means. Consider starting out living with parents or roommates for a while. In addition to saving on rent, you can also split utilities and share the cost of furniture and appliances. When your income goes up, upgrade to a studio before getting a one bedroom. By improving your living situation gradually, you can get a new “shot of happiness” with each improvement while being able to save more at each step.

In my case, I lived with roommates all the way up until last year. I actually preferred having the companionship of living with people that’s harder to find after college, especially if you move to a new area like I did. Even now, I live in a small studio that I was able to purchase in cash from saving money on rent all of those years.

3. Don’t buy a new car. A new car is a lot more expensive but will turn into a used one as soon as you drive it off the lot. If you’re worried about maintenance costs, consider a certified pre-owned car. I made the mistake of leasing a new car right after college but then purchased a used car in cash after law school.

4. Limit your eating out and entertainment budget. Give yourself a fixed amount to spend each month. You don’t have to track where every penny goes but when the money is gone, no more spending until the next month. On the other hand, if you have money left over, you can carry it over to be splurged in the future. This method forces me to prioritize and look for deals when going out.

5. Be smart with your smart phone plan. Consider staying on your family plan or using a prepaid cell phone plan. My prepaid plan with Verizon costs me about half as much as the regular Verizon plan without any noticeable reduction in quality or services. I also like to buy last year’s newest and greatest phone at a discount. It’s still an upgrade for me and I don’t have to worry about any quirks with the latest phones that haven’t been worked out yet.

6. Don’t pay down your student loans early. This one may sound puzzling but the fact is that student loan interest rates tend to be lower than credit cards and less than what you can likely earn by investing your savings instead. See if you can lower your payments with an income-based, graduated, or extended repayment plan. This way, you can put your savings towards paying off higher interest debt or higher earning investments.

7. Automate your savings. Once you’ve figured out how much you can save with the above strategies, have those savings set automatically set aside before you have a chance to spend them on something else. First, make sure you’re contributing at least enough to your employer’s retirement account to max the match. Then set up automatic contributions to an HSA (if you qualify), a Roth IRA, and savings accounts for short term goals like a vacation or home purchase.

Any other ideas? What have you done to save money? Feel free to supplement this with any tips of your own.

The 4 Money Questions Every Couple Needs To Answer

June 06, 2017

My husband loves to mentor young men, especially married men — he says he hopes to help prevent some of these guys from making the same mistakes we made in our first few years of marriage. Lately he’s been noticing a trend — a lot of them are bringing up arguments about money. As he’s helping them work through these issues, it seems to stem from the fact that couples are thinking through every part of their relationship, but forgetting to discuss and agree on their financial lifestyle.

A financial lifestyle is basically how you, as a couple, choose to handle money. There is no right or wrong answer, just what will work best for both of you. As my husband talks about financial lifestyles, he encourages couples to ask the following questions:

How will you view the money that comes into the household?  Discuss how all money coming into your home will be labeled. Will it be “Yours and Mine,” “Yours, Mine and Ours” or simply all “Ours?” Will you have separate accounts only or two separate and one joint or only joint accounts? How will you make spending decisions about big ticket items? Many new couples find that they both just assumed it would be one way and are surprised to find their partner thought differently.

The thing is, it can be an evolution. My husband and I transitioned through each option. When we first married, everything was divided. After a few months, we decided that we wanted to share our joint bills, so we created a joint account for those expenses. A few years later, we were ready to put it all together and agreed to have only joint accounts. But first we established ground rules about how much was ours to spend individually, and we set limits on how much we can spend before we have to discuss the purchase. This saved us from a lot of future “discussions” (my southern way of saying, “fights worthy of WWE“) about spending money.

How will you manage your money? Will you both follow a strict budget or will you have a general idea of the spending and handle things as they come? Sit down with your partner and discuss how you will organize your spending.

As you may have guessed, I was the strict budgeter and my husband operated with no budget. At first, I stuck with my strict budget, which my husband never followed. I had to learn to get my husband involved in the process and give in to how he wanted to spend some of the money. We now have weekly money meetings to discuss the budget and any upcoming expenses.

Whose debt is it? This is a big one. It’s vital to discuss how you will handle any debt you’re bringing into the marriage as well as agree on how you’ll handle debt you incur together. Will it all be considered joint debt or will it be separated by the person who acquired the debt, with that person responsible for paying it out of “their” money?

At first my husband and I kept our debt separated based on whose name was on the bill. But after a few years of getting nowhere with paying off debt, we finally decided to combine it all and used our combined income to tackle it until it was gone. There is no right or wrong answer, just the right answer for you and your partner. The most important thing is to agree on the answer.

How much debt will you have?  Ask each other how you each feel about carrying debt and what your relationship with debt will look like throughout your marriage. Some people are fine having low interest debt such as student loans and a mortgage, some others dislike all debt, and yet others are fine with debt as long as the payments are manageable.

My husband and I are both debt averse, but we had very different perspectives as to how to pay off debt. I probably would have lived in a van to get debt free, but my husband actually wanted a life. We learned to meet in the middle. We agreed to budget our lifestyle expenses and to focus the rest of the funds on getting out of debt with ground rules like establishing no new debt. Listen to your partner and compromise to come up with a plan.

These discussion are tough, but the earlier you have them the less potential conflict — learn from us. My husband and I did not have these conversations early enough in our marriage. As a result, we fought about money and struggled until we learned that we can get so much further by working together.

The Thing That Millennials Are Getting Right About Money

June 02, 2017

If you know me, you know that it’s no secret I have a strong dislike for breaking down financial statistics by demographics. Yes, I realize that there are some benefits to looking at trends this way, but there’s a little part of me that bristles whenever we start pointing out the differences in people, especially in today’s less than harmonious political climate.

One of my guiding life principles is that people are people, and we are largely the same regardless of our age, gender, race and other demographics. We all want to see our friends, family and loved ones succeed and we all want to enjoy our lives. And while it may seem naïve and idealistic, I’d like to see those who hold opposing points of view start from a point of commonality in their discussions rather than defending their differences.

So while it’s clear that I am not a fan of discussing differences, I’m about to…

The stereotype

One of the things I often hear is that this current generation of millennials doesn’t seem to view working and saving for retirement the same way that older generations do. A common gripe of gen Xers and baby boomers is that millennials (I really despise that label, as do most of the members of that generation whom I know) are lazy slackers who want to be paid well with fancy titles before they ever accomplish anything.

“Those darn millennials…”

It’s easy to view the next generation as not being as hard working and ambitious as your own generation; I’ve seen that with the way my grandfather talked about my father’s generation and how my generation talks about millennials. Their music is too loud, they don’t work as hard and their standards aren’t as high. It seems like each generation has the same complaints about the succeeding generation as the prior generation had about them. There’s some beautiful irony there.

Surprise! They’re getting this one right

However, I recently came across a very interesting article about the financial behaviors of the millennial generation, which got me to thinking that maybe their bad rap is not justified. The article points out that it may be true that millennials aren’t saving as much for retirement as other generations may be, BUT – and this is a huge point – they do have a higher overall savings rate than other generations. On average, they are saving 19% of their income with over 1/3 of them saving in excess of 20% of their incomes. That’s absolutely incredible! Well done, millennials.

Saving for something else

The thing that irritates older generations though might be that the savings aren’t earmarked for retirement. The savings figures are high, and the money saved is often used for current lifestyle considerations such as travel, fitness & health, and dining out. They are spending money on experiences today rather than building up a gigantic nest egg for the future. Retirement isn’t at the top of their list of reasons to save.

The wisdom of those gone before

While older generations may view that as less than ideal, perhaps it’s just where they are considering their stage of life. And, perhaps it’s wise and it’s something learned from listening to and learning from prior generations. I have heard many older relatives say that they wish they had traveled more extensively when they were younger so that they had more energy and stamina, and their bodies didn’t rebel against long hikes through foreign cities.

A different perspective

Maybe, instead of seeing this generation as snowflake slackers, we should maybe try to see them as incorporating the wisdom of prior generations and putting it into action. Is it possible that millennials are more financially savvy and more mindful of the important things in life than they are being credited for? It’s something to consider.

If you’re a millennial reading this – great job saving so much of your income. It’s a fantastic habit that should translate to a nice bucket of money if/when you actually do retire. If you’re not a millennial and you’re reading this – I’d like to suggest that you maybe try to be more like a millennial and drive your savings rate up above 20%. As they’re learning to listen and implement wisdom from older generations, let’s learn from them as well.

 

The Top 7 Reasons Saving is the Most Important Part of Adulting

June 01, 2017

I recently celebrated my 38th birthday, which I guess officially puts me in my late 30’s. As I reflect on the past couple decades, I find myself thinking about how the effect of saving money early on really made an impact on my life and helped me to “adult” better. For all those lucky kids just getting started with adulting, here are my top 7 ways that saving money from day one will help make it easier:

Saving money = more life choices
  1. “Finding yourself.” You may still not know what you want to do when you “grow up” and that’s okay. In fact, I didn’t either — my first job interview after college was to sell newspaper advertising. Your early career years are a time to explore different career options. That means you’ll make a lot of mistakes. Having savings gives you the freedom to say “no” to a job or boss you hate in order to pursue something you’ll love.
  2. Security. You may land a great job but find that sometimes things don’t work out on the employer’s end. As the last one hired, young people are often among the first to be let go. Think of your savings as the lifeline keeping you from mom and dad’s basement. Having what our CEO calls “FU money” also means the freedom to walk from a job when you need to.
  3. Travel. One of my closest friends from college took a year off to travel the world shortly after graduation. If you’d like to do something similar, now is the time to do it before you’re tied down with obligations. Having money in the bank will make that a whole lot easier.
  4. Marriage. Unless you plan to elope, weddings are expensive. And even if you do plan to elope or not marry at all, the cost of attending other people’s weddings can really add up too. Having money set aside allows you to make the most of these happy occasions.
  5. Buying a home. An Australian billionaire recently stirred up controversy by blaming millennials’ inability to buy a home on their fondness for expensive avocados and coffee. He has a point. An increasing number of young people are putting off buying a home because they don’t have enough money for the down payment and closing costs. That means continuing to pay rent and helping someone else build equity instead of yourself.
  6. Starting a business. Even the most brilliant business ideas aren’t typically profitable right away. In the meantime, you’ll still have bills to pay. That pressure for a quick buck could lead you to short-term thinking at the expense of the long term growth of your business.
  7. Financial independence. Don’t think of it as “retirement” but as getting to the point where you work (or don’t work) as you want to. The sooner and the more you start saving, the sooner that day will come. Some people have even taken this to the extreme and retired before 40!

Don’t think of saving as deprivation. Think of the money in your bank as representing freedom. The more you have in there, the more options and freedom you have to live your life the way YOU want to.

This Easy Budget Hack Could Save You Hundreds Each Month

May 31, 2017

If you’ve ever taken the time to categorize your monthly spending, chances are you had a similar reaction that I did when I realized how much we spend on food each month – disbelief with a side of regret, anyone? It’s just the hubs and I for now, and we are pretty good about eating in, at least compared to a lot of our DINK (dual income, no kids) friends, so I’m always shocked when our grocery spending sometimes tops what I’d expect a family of four to spend.

Food is expensive…

The fact is, food is expensive and who wants to walk around the grocery store with a calculator? There are ways to counteract that by planning your menu around the grocery store sales, buying in bulk, etc., but sometimes life is just too busy, I know. So here’s an easy hack that I learned from my friends Jill and Andy:

The hack…

One week per month, skip the grocery store and instead eat what’s already on hand. Then take the money you don’t spend on groceries and transfer it to your savings account or use it to boost the payment on a high interest rate credit card. The only number you need to know is what you spend each week, on average.

The long-term effect…

This hack alone could boost your retirement savings by over $250,000 if you stick with it over the years or literally shave years off your debt payments if you use it to get out of credit card debt sooner. Plug your info into the Debt Blaster calculator to see the difference.

Get creative in the kitchen…

That’s it! No coupon clipping needed. It may require a little bit of creativity in the kitchen, but I always find it’s easier than it seems – digging out those jars of interesting sauces I impulse buy at Trader Joe’s or finally using that extra cooked orzo I froze feels so good and budget friendly. You can also use Supercook, a website that let’s you input ingredients you have hand, then suggests different recipes. Plus, it helps to clear your pantry, fridge and freezer of food that may otherwise end up in the trash – a double financial bonus!

How To Plan A Budget Friendly Summer Vacation

May 30, 2017

Ah, summer.  I often find myself yearning for the summers of my youth, when it was all about sleeping in, no school and nothing but fun. As an adult, it seems more like summer is about how my bank account can survive a vacation with my family. If you can relate, there is hope. I’ve found that taking a realistic look at how much money you can actually budget for vacations along with some good pre-planning, that a fun vacation is possible, no matter how much you can afford to spend.

The basics

If you want to leave town but have a tight budget, consider a road trip vs. flying. Use gas apps to help find inexpensive gas, which can help. I’m partial to GasBuddy, which uses GPS to find the cheapest gas around you.

We’ve also found that home sharing services like Airbnb or VRBO often offer better deals than hotels, especially on stays over 2 days. We have used both services for years so I feel like a bit of an expert here – make sure you read the reviews of places you’re considering and ask questions about anything that raises a red flag. Also, make sure you ask about what will be provided. We stayed at one condo that provided everything – beach towels, beach chairs, umbrellas, surfboards, even toys for the kids and basic food items, which saved us from having to haul all that stuff with us.

Food and souvenirs

To save money on food, pack snacks and lunches in a cooler and when you do eat out, look for restaurants where kids eat for free. If you are going to a high dollar destination like Disney, consider buying a few souvenirs in advance, then hide them to give to your kids when you arrive – trust me, this can save so much money and they won’t know the difference.

Staying put

Back when we were focused on paying off debt, we decided not to travel for vacation and instead implemented “staycations.” First we established ground rules like no checking work emails, minimal cleaning, and no trying to squeeze in errands like doctor’s appointments or cleaning gutters. We wanted to be on vacation in mind and body.

Then I planned out a week’s worth of activities that ended up costing us nothing. By combing local websites for free kids activities like movies in the park, puppet shows at the library and stores that offer free classes for kids, I was amazed at how many free or low cost events my city offered. We used an app to find the cheapest gas and tried to stick to activities close to home. You can also use sites like Groupon, Living Social or Yipit (which combines several online deal websites), for discounts on activities like amusement parks, movies and local events or check with your HR to see if they have any discount coupons.

For food, I went to the grocery store and picked up stuff for inexpensive lunches to take with us like pasta salads, sandwiches or ground turkey patties and hot dogs to grill. We learned to make everything special – a trip to the pool turned in to a cook-out with a family water game. One of my favorite parts was that I got the kids really cool water bottles that they liked so much they stopped asking to buy soda.

The bottom line is that we ended up spending less than $100 on our weeklong staycation and my kids say that is was one of their favorite vacations so far. Remember, the most important thing is to spend time with your family. Most kids do not care about the location. Taking the extra time to research freebies and discounts can save hundreds of dollars and help you plan a vacation no matter what your budget.

Follow This One Simple Rule for a Secure Retirement

May 26, 2017

While I was taking pictures of my middle guy and a whole bunch of his friends right before their senior prom, I was having a conversation with one of the other kids’ fathers. The inevitable conversation about what kind of work we do came up and he was, at one point in his career, working for a large accounting firm that has a wealth management arm. When he found out I was a financial planner, he shared a story about his colleague who ran that part of the business and had built himself a very nice retirement portfolio. My prom-dad-buddy asked him what the secret was that he used to grow his wealth & that of his clients.

The answer was simple: “Always live on your income from 5 years ago.”

When I heard that, I thought it was an interesting concept. If someone is accustomed to pay increases on an annual basis, this allows for a considerable amount of savings each year. This is a concept/theory that I had not heard before playing amateur photographer at prom time. But, it’s consistent with my very incredibly simple rules for personal financial management:

  • Spend less than you make
  • Don’t take on high interest debt
  • Save 10% or more of your salary
  • Always live on your income from 5 years ago

How it works

At a 3% pay increase, someone who earns $50,000 this year would earn $57,963 a mere 5 years later. Living on the original $50k would allow that individual to save almost $8,000 (probably closer to $5,000 after taxes & benefits) that year. If that same person contributed 10% of their income ($5,793) to their 401k – that’s one heckuva combined savings rate (>18%) before we even consider an employer matching contribution or account growth. If that pattern is repeated for a couple decades….retirement starts to look awfully secure. (I tried to do the math, but it got complicated. Suffice it to say, we’re talking about doubling your savings or more with this method)

There are a whole lot of very simple methods for becoming financially secure and these are just two of them. Managing your financial life isn’t as complicated as a lot of people make it sound. I’m a financial planner who hates the term “budgeting” because it sounds so restrictive and so much less than fun.  I prefer to have a couple of quick & easy spending guidelines instead, like these grumpy old man rules.

 

How Sitting in Traffic Can Improve Your Finances

May 23, 2017

Over the past few months, it feels like a cloud of transportation demons have settled over my poor city of Atlanta, Georgia. Over the past few months, a bridge on I-85, our major highway collapsed, a section of our second major interstate, I-20, buckled, and we had a sinkhole on Roswell Road, another major street. Atlanta has always been known to have traffic gridlock, so this series of events has taken many people’s already stressful commute to levels I questioned whether our city could survive.  My normally happy, mild-tempered friends started using words I never thought they’d say.

It got me to thinking about how many Americans spend hours each day getting to and from work and how much stress that must cause them. Of course then my mind turns to how I can help them escape this seemingly time-wasting activity, when it occurred to me that working on your money may be one of the best solutions: why not use that long commute frustration as motivation to up your financial game and find financial independence sooner? The best relief for traffic gridlock is never needing to sit in traffic again, so here are some ways to pass the time while hopefully moving yourself closer to financial freedom:

Audio books

Consider downloading financial audio books and listening to them while driving. You can check out this list of free places to download audio books. One of my personal favorites is Hoopla, who partners with many local libraries to provide free access to digital movies, music, eBooks and more, as long as you have a library card. If you’re not sure what books to read, use this great checklist from Business Insider. My personal favorite is listed as #1, written by Benjamin Graham, who was a professor at Columbia and counts Warren Buffet among his mentees.

Podcasts

If listening to an audio book is not your thing, then try listening to podcasts. US News & World Report, Entrepreneur and PlayerFM.com all offer great lists of suggestions. You can find a podcast that matches your driving distance or listen to a series while you creep along the interstate.

Putting it to work for you

As you listen, consider taking away one idea you will implement that week once your drive ends. It could be as simple as reviewing your 401k or checking your credit score. Bad memory?  Then use the voice recorder feature on your iPhone or Android to record your thoughts and takeaways from your drive to implement later.

 

Financial Advice Every New Grad Should Take

May 19, 2017

I’m at that age where my oldest child will graduate from high school next year and several of our friends have kids graduating from high school or college this month.  It got me thinking about graduation speeches and what I wish someone had told me about personal finance when I was their age.  So here is the world’s shortest, 3 point graduation speech:

  1. Avoid debt, even student loans. My kids are blessed. We have scrimped and saved so that they will have enough to cover 4 years of costs at an in-state university. They know that if they go to a private school or an out-of-state school that any difference in cost is on them. My younger child is considering one out-of-state school but only because they offer in-state tuition if her test scores are high enough. I have a nephew from Texas who went to Kansas State University because the scholarships he received made it the same or less than in-state costs at the University of Texas.  This won’t be the reality for a lot of kids, but the point is to do whatever you can to avoid debt for anything less than a masters degree – apply for scholarships, take a year off to work, work part-time during school, look into the military if that interests you or consider community college. This way you have the freedom of being debt free when you finish or if you do need advanced education or training, you will have less total debt and hopefully more income to counter.
  2. Live on 2/3 of your income. The wealthiest relative I have was taught this at his small high school in southern Kansas decades ago. He always saved 1/3 of what he made. Today I translate that to putting at least 10% into the 401k – or at least what the company will match, then increase it by 1% each year until you hit 10% or more (automate this with the rate escalator if your employer offers it) – and then save 1/3 of your take home while living on other 2/3. If you do have student loan debt, I would count paying down your debt as part of the saving piece. This may mean some sacrifices such as getting a roommate, not buying a new car, not upgrading your phone every year, etc., but if you live this way from the start, you get used to it. Imagine how quickly your loans could be paid off or you could save enough for a house down payment or you could take that trip of a lifetime by dedicating 1/3 of your take home pay to these goals! This is also important for when you start a family. The challenge that a lot of younger Baby Boomers and Gen X’ers like myself faced is that for many of us our parents couldn’t tell us or show us how stressful life can be with two people working full-time, paying for child care, etc. This way, if you and your spouse/partner have each been living on only 2/3 of your income all along, you can much more easily afford child care or if one of you decides to cut back to part-time for awhile or take a couple of years off, it won’t blow up your budget.
  3. Have a side hustle. My best friend realized last year that he could no longer coach his kids’ teams since they were both in high school, and he found himself with a void in his life. For years he was busy but fulfilled from coaching kids – he loves sports and he loves being around kids. To fill the void, he decided to try officiating as a way to stay around youth sports and get paid and he LOVES it! He has an outlet for his passion and the extra money is going to help put his kids through college. It is ideal if you can find a hobby that pays, but even if it doesn’t pay, we all need something outside of work. One way or another, whether it is for pay or volunteer, your life will be richer and more rewarding and it will make those inevitable rough days at work much easier to deal with.

Congratulations to the class of 2017! There are a lot of other important life lessons in the real speeches you will hear but I hope that when it comes to your money you remember to avoid debt, live on 2/3 of your income and have a side hustle! May you never lose faith in yourself, your future or your fellow Americans.

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The Surprise Costs of Senior Year of High School

May 16, 2017

I was recently talking to a friend of mine whose son is about to graduate from high school and she was telling me how expensive it is to have a senior and how she wishes she would have started planning earlier for all of the money she had to fork out. Below are some of the things she wished she would have saved for:

College Entrance Exam fees:  Most people forget to factor in the cost of college entrance exams. The SAT with the essay is $57, although the fee may be waived depending on your income. The ACT with writing costs $58.50. Similar to the SAT, the ACT can waive fees for low income students.

College entrance exam study programs: Initially, my friend used free programs like the ones at KhanAcademy.org  and her local library to help her son prep for the college entrance exams. He ended up needing a combination of online and classroom style learning, so she also enrolled him in a college exam prep program, which can easily cost over $1,000. She suggests working with your child’s school counselor to research and review different tutorial programs to find the best one to fit your child’s need and your budget. She also suggests outright asking for discounts and combing websites like Groupon and Living Social to look for discounted college prep tutoring.

College Application Fees: The average college application fee in 2016 was $42. Her son applied to six colleges so the costs added up quickly. Although my friend did not qualify, you may be able have application fees waived based on income, applying online, being an alumni, or visiting the college. She suggests you and your child talk to the school counselor early about ways to save on college application fees.

High School Tchotchke: My friend was blindsided by all the things that came up “senior.” Senior mugs, flags and tee-shirts were a few of the items her son wanted. Then she got hit again with senior pictures, yearbook, varsity jackets and the class ring. The yearbook and pictures alone can climb into the hundreds of dollars. Give your child a budget as to what he can spend.

High school events: Senior trips, college visits, graduation parties, prom, post graduation parties and the wardrobe to attend the events can easily add up to over $1,000. She had to give her son a reality check that he could not rent a helicopter for prom. She suggested saving in advance and talking to your child about  your budget and start shopping early for clothes. She rented a tux for her son’s prom but his date also rented her dress. Her son and his date went to a beauty college instead of a salon to cut his hair and style hers. A little researching and planning can save hundreds of dollars.

If you’re planning now for your child to head into senior year, use checklists like the one from Consumerist.com to estimate costs and start saving monthly. If your child is planning to work over the summer, have them contribute by saving part of their income to cover expenses. This may mean opening up a savings account and having part of your child’s paycheck automatically deposited into the savings account. Ultimately, the more planning you do and the more dialogue you have with your children about how much they can spend, the better you can manage the senior year dollar drain.

Easy Ways to Be an Economic Patriot

May 08, 2017

Are you looking to support the American economy by how you spend your money? If so, you’re not alone. About 80% of Americans would prefer to buy an American-made product, according to a 2015 Consumer Reports survey. In fact, six in ten people surveyed said they’d be willing to pay up to 10% more for a product if they knew it was American-made.

The problem is that in a global economy, it’s pretty challenging to easily discern what is American-made and what isn’t. Your computer or cell phone may bear the name of an American company but is manufactured entirely overseas. Conversely, your car or your ice cream may be produced in the United States by a foreign firm. Many goods are a hybrid of some components made overseas and some made in the U.S. So what’s a consumer who wants to express their economic patriotism to do?

Look for “Made in the USA” label

The lowest effort way to find out if something is made in the U.S. is to check the label or the box. According to the Federal Trade Commission, products with the label, “Made in the USA,” means that “all or virtually all, of the product has been made in America. That is, significant parts, processing and labor that go into the product must be of U.S. origin.”

The very first thing I do before deciding between competing products is look for that label. Remember, just because something has an American flag in the logo doesn’t mean it’s made in the U.S. See these guidelines from Consumer Reports on how to spot the real thing.

Buy goods made in the U.S. by global companies

That candy bar you crave might be manufactured in the United States by American workers for a global company. Many well-known brands have production and manufacturing in the United States, employing American workers and contributing to the local community and national economy. In fact, data from the Brookings Institute showed that as of 2014, 5.6 million Americans were employed by foreign-owned establishments – about 5% of the workforce. The easiest way to find out if a product from a foreign-owned firm is made in whole or in part in the U.S. is to check their website or do a quick Internet search of “where is ____ made?”

Shop small and shop local

Small businesses of less than 500 employees employ nearly half the American workforce (56.8 million employees). Every time you buy a birthday gift at an independently owned toy shop, buy your shoes at a local shoe store, or visit a local printer for party invitations, you’re contributing to your local economy and supporting local jobs. This past weekend, I was shopping for new hockey skates for my son, and I decided to buy them at a local shop instead of ordering them online.

Sure, online shopping is convenient, but my dollar doesn’t have as much power there. As it turned out, the hockey store was having a sale, and I ended up spending less money – and my son got a custom fit. If making an impact with your consumer purchases is important to you, there’s no place like home to do it.

 

Can you think of more ways consumers can be economic patriots? Please email me at [email protected]. You can also follow me on the blog by signing up here and on Twitter @cynthiameyer_FF.

 

What Does Self Storage Really Cost You?

May 01, 2017

My husband and nine year old son have a new favorite television show: Storage Wars. They love watching the quirky, somewhat foul-mouthed cast of characters bid at auction for the contents of abandoned storage lockers. My guys focus on the contents of the lockers and discuss whether or not they are worth purchasing but not me. When I watch with them, I can’t help but think of the original owners of all those unused possessions and what prompted them to keep so many belongings in storage.

Most of the lockers featured on the show are full of everyday household items and furniture. The storage facility has taken possession of the unit when the original owner did not pay their monthly bill. Why did the owner rent the storage unit in the first place?

Common reasons for renting a storage unit include relocation, divorce, dislocation, military deployment and death – and increasingly, just having too much stuff. According to a Self Storage Association fact sheet, nearly one in ten (9.5%) American households rent a storage space, with about 1 in 3 renters saying they will rent for two years or longer. Even more surprising, 65% of renters have a garage, 47% have an attic and 33% have a basement at home. What is the true cost of renting that space to store all that extra stuff?

Let’s take a simple example: Taylor, age 35, recently redecorated her home, but isn’t sure she wants to get rid of her old furnishings. Her belongings have sentimental value, but they aren’t worth that much – about $2,000 – and aren’t expected to increase in value. She rents a 5’ x 10” unit for $85 per month and moves her furniture and some old toys and books, artwork and party ware into it. Assuming the rental cost of the unit goes up with inflation (estimated at 3% annually) and Taylor keeps the storage unit for 10 years, she’ll pay over $11,000 over the total period to hold on to her $2,000 worth of stuff for ten years.

What if Taylor had sold her old furniture online or at a garage sale but she only netted $1,000? Instead of paying storage costs, she used the proceeds to set up a Roth IRA and invested in a diversified, low fee mutual fund. Every month, Taylor had $85 transferred from her checking account into the Roth IRA and bought more shares of the mutual fund. Over a ten year period, the mutual fund’s average annual return was 6%. Her Roth IRA would be worth $15,235. If she kept doing what she was doing, by the time Taylor was 65 it the Roth would be worth $86,383.

Think about it. Which sounds better to you – paying over $1,000 a year to store your excess stuff or having an extra $86,000 in tax free money in retirement? Now that’s a storage war.

 

Do you have a question you’d like answered on the blog? Please email me at [email protected]. You can also follow me on the blog by signing up here and on Twitter @cynthiameyer_FF.