Beware Black Friday ‘Deals’

November 23, 2018

As we see the full retail advertising onslaught and stores open ridiculously early for Black Friday (some are even opening on Thanksgiving Day now, which I find appalling), please try to remember a couple of things:

1) This is the time of year when emotions can override logic and overspending can occur. I have spoken with countless people who end up with a sizeable chunk of credit card debt because of holiday spending. Go into the shopping season with a list (wow, I’m becoming my mother!) of who you are buying gifts for and set a budgetary target. Then, stick to those targets. Those Black Friday “deals” may not seem like such a deal if they have 19.9% interest tacked on to the balance next summer.

2) The people in your life, if they are anything like me, will be happier to spend time with you than they are with any gift that you might buy. I’d wager that if you think back over the last several years, you probably can’t remember what you bought for each person on your list or what they bought for you. It’s a season of friends, family and togetherness – not retail profits.

Drink some cocoa, enjoy your friends and family – and have a safe, fun, and financially secure holiday season.

How To Make Sure Your ‘Non-Money’ Spouse Is OK With Your Finances

November 20, 2018

One theme I have noticed when talking with some married people (most often women but not always), is one person being uncomfortable with their finances but not knowing what to do about it. These are couples who are saving, but most of the money including retirement funds and assets in general (like the house) are in the other spouse’s name.

In some cases the wife is concerned because she either hasn’t worked at all, worked off and on, or worked but made significantly less income than her spouse. Other times, they are not comfortable with how their husband is managing their funds. They also feel like the financial advisor they are using is only focused on relating to the husband and meeting his goals, which makes the wife feel left out and vulnerable – this becomes especially concerning when the husband passes away and leaves her to manage the finances (with a stranger as an advisor) for the first time.

This really can be the situation, no matter the gender. It’s not so much that the money managing spouse is intentionally leaving the other spouse out (that’s a whole separate issue), it’s usually more that he/she doesn’t know how to share the duties in a way that makes sense. Sometimes the other spouse simply isn’t interested or when you’re busy running your life, it’s often easier for one person to take on the money while the other tackles other equally important areas of life.

How to make sure your ‘non-money’ spouse is ok

Has your spouse expressed these feelings with you? OR if your spouse hasn’t said anything and you do run the show, it may be time to take a temperature check and initiate a conversation to see where he/she stands. If you’re the spouse with most of the assets in your name, or you are the sole/majority income earner for the family or you manage your family’s finances all on your own, here are some questions to ask that can help your spouse feel more involved and at ease.

Do you need more retirement savings in your spouse’s name?

This easily happens when one spouse far out-earns the other, but there are ways to get at least some retirement savings into the lower (or non) earning spouse’s name:

1) Your spouse can increase his/her retirement plan contributions at work – you may have to balance out cash flow another way.

2) Increase contributions to your spouse’s IRA (or spousal IRA if your spouse isn’t working).

Does your spouse feel uncomfortable having to ask for spending money?

There are ways to get around this no matter who earns what, you just have to remember that you’re both on the same team to try and avoid money fights.

1) Transfer a certain amount of funds each paycheck to an account for your spouse to spend without having to ask for permission.

2) Set up money dates so that your spouse has the opportunity to help make major financial decisions.

Do you have a plan that you’re both comfortable with should you unable to work?

This is a common fear that’s expressed by non-earning or lower-earning spouses that’s completely legitimate. You need a plan in case the worst happens.

1) Talk about what this would look like and understand how your ability to cover your expenses, keep up the same lifestyle, etc., might change. Would your spouse need to go back to work? Are you both making sure your spouse takes time to keep his/her skill set current so that transitioning back into the workforce wouldn’t be as difficult?

2) Disability insurance is extremely important to protect your family and to keep you on track in the event you find yourself unable to work due to a disability. Everyone needs this, but it’s especially important when a family is heavily reliant on one income. 

Does your spouse agree with the way you invest in your accounts?

Typically, one spouse is more aggressive than the other, but because the more aggressive spouse also manages the finances for the household, they ultimately end up making the decision. There’s a balance.

1) Find out both of your investment preferences and take that into account when making decisions. If you are vastly different and you feel that your spouse’s conservative nature could seriously compromise your long-term goals, perhaps he/she can invest more conservatively in his/her own accounts while you maintain a more aggressive mix in your own and joint accounts.

Does your financial advisor make sure that he/she understands your spouse’s needs and goals?

Make sure you’re getting value for what you’re paying your advisor – the best ones know how to balance couples who have differing interest and knowledge levels and ensure that both partners feel comfortable and heard.

1) Include your spouse in on all or at least annual meetings with your advisor.

2) If your advisor and your spouse just don’t click, it might be time to look for a new one.

Is your spouse comfortable he/she will be able to make ends meet if you were to pass away?

No one likes to have these conversations, but they are necessary for your spouse to feel more comfortable with you being the “money spouse.”

1) Discuss what income sources will be available to help your spouse continue meeting their monthly financial needs.

2) Discuss and create a plan to help your spouse still reach financial goals that you two have decided on.

Is everything titled in the most advantageous way?

Is your spouse’s name on the assets you both technically “own” or is everything in your name? It’s a good idea to make sure that the titling of things like your home, vehicles and even bank accounts is the best way to have it legally set up. You’ll also want to make sure that the two of you on the same page with that.

Don’t wait for your spouse to speak up

“Non-money” spouses don’t always express concerns they have about the family’s financial picture. They sometimes have questions that they don’t want to bring up or really don’t know how to initiate the conversation. Try letting this guide your discussion and at least provide an opportunity for conversation, a chance to address any concerns, and make sure you have a solid plan in place.

Why I Hate Black Friday

November 19, 2018

I admit it. I am a huge fan of Dr. Suess’ How the Grinch Stole Christmas. The original animated classic from 1966 narrated by Boris Karloff, that is. It is truly one of my holiday favorites, along with Charles Dickens’ A Christmas Carol; specifically the 1999 TV movie version featuring actor Patrick Stewart as Ebenezer Scrooge. Yes, I do own them both on DVD, and they come out of their cases each year right about the same time I trot out my favorite pumpkin pie recipe for Thanksgiving.

♫♪♪ ♫♪ You’re a mean one… Mr. Grinch! ♪♫♪♫

Based on this introduction, you might get the idea that Christmas is not my favorite holiday. That’s not true. It’s not the holiday that I hate. It’s all the needless, crazed, (over) spending that takes place, not to mention all of the “noise, noise, noise noise” (advertising), to quote my holiday hero, Mr. Grinch. Nor am I anti-capitalist. I love capitalism. I just love it in a calmer, more controlled, responsible way.

So, why my disdain for Black Friday – the day after Thanksgiving; the Super Bowl of shopping days? Here are a few reasons:

  • Low inventory of “deals,” or sometimes only one at that great Black Friday price.
  • Retailers who mark stuff up just to mark it down.
  • All of the pushing, shoving, and generally rude shopper behavior.
  • You probably have the day off (unless you work retail). Why get up so darned early on your day off?  (Unless you are going fishing).
  • Perhaps most importantly – getting ensnared by the sales hype can become a budget buster!

People get so caught up in the momentum that budget discipline often goes out the window, credit balances soar, and the New Year is considerably less happy when those bills start showing up. Last year, for instance, Americans on average ran up more than $1,000 in additional credit card debt due to holiday shopping. Worse, almost one third of them estimated they would be still paying for the gifts they bought well in to May.

Bah. Humbug. 

So, what are some alternative things to do instead of shopping, getting trampled, stressed out, and blowing your budget before you’ve enjoyed that last leftover turkey sandwich?

  1. Do absolutely nothing. It’s Friday AND a holiday. Enjoy the time off. You’ve earned it. (I plan to be fishing that day).
  2. Ring a bell next to a kettle. Help serve some meals. Feel good by doing good.
  3. Go camping. Unless you live where it snows (make a snowman?). I live down South, and November is perfect camping weather!
  4. Get a massage. No stress there.
  5. Get a head start on next year’s budget/financial plan/insurance review, etc. You’ll have it out of the way and you can enjoy the rest of the holiday season without that little voice in your head nagging you about how much you’ve neglected your personal finances. A good place to start is by requesting a free copy of your credit report from annualcreditreport.com.

Make regifting great again

I’m not suggesting we alienate friends and family and do away with holiday gifts altogether. Let’s just put a little more thought and strategy into it. For example, there is a group of people in Ashland, Oregon, who celebrate with an “Abundance Swap,” bringing things they don’t want and exchanging them for stuff they do want or need. It’s an interesting and fun twist  on socially acceptable regifting. And why is there so much stigma about regifting; don’t we recycle everything else already? For more great alternative and fun gift ideas, check out BuyNothingChristmas.org.

This year, let’s take a break from the nonsense of Black Friday sales and Cyber Monday online deals (you are supposed to be working, anyway). In the end, we will all be much wealthier, healthier, and happier. Now who wants another slice of pumpkin pie?

Avoid Making These 4 Mistakes During Open Enrollment

November 16, 2018

Fall is a time of leaves changing colors, children going back to school, families enjoying Thanksgiving dinners, and… open enrollment. Yes, it’s the opportunity for most employees to select which benefits they will choose for the following year. Here are some of the most common mistakes we see people make:

1. Not fully understanding the value of an HSA-eligible health insurance plan

According to a recent study, HSA-eligible high deductible health plans have gotten 400% more popular over the last decade. These plans tend to come with lower premiums (what you pay per month or paycheck for your coverage) but higher deductibles (what you pay out-of-pocket before most of the insurance benefits kick in) than more standard health insurance plans. In addition, they make you eligible to contribute pre-tax dollars to an HSA (health savings account) that can be used tax-free for qualified medical expenses at any time.

Possible free money

While it’s easy to compare the difference in premiums and deductibles, don’t forget to factor in the value of the HSA. First, many employers will actually make contributions to your HSA for you. That’s free money! If you contribute on top of that, you also get a break on your taxes.

For example, I recently spoke with an employee who would save almost $1,900 a year in premiums by choosing the high deductible health plan. In addition, he would receive $1,000 in his HSA from his employer and would save almost another $2,000 in taxes by contributing another $6,000 to the HSA. The $4,900 in total savings dwarfed the difference in deductibles.

2. Under or over funding an FSA

FSAs (flexible spending accounts) let you put money away pre-tax that can be used tax-free for health or dependent care expenses. If you’re in the 24% tax bracket, that’s like getting a 24% discount on those eligible expenses! Not taking full advantage of these accounts could cost you hundreds or even thousands of dollars in lost tax breaks.

However, there is a catch. Unlike HSAs, FSAs are “use it or lose it” so you don’t want to contribute more than what you’re pretty sure you can spend. (Having a general health care FSA also precludes you from contributing to the more valuable HSA in the same year.) If you do end up with extra money in the account at the end of the year, try to use it by stocking up on qualified supplies like contact lenses and prescription drugs. You can find FSA-eligible items here.

3. Not taking advantage of a prepaid legal plan for estate planning

Do you have updated estate planning documents like a will, durable power of attorney, advance health care directive, and living trust? If not, you can save a lot of money by using your employer’s prepaid legal service to have these documents drafted or updated. You pay a fee per paycheck, but the legal services are free or heavily discounted. You can then choose not to renew it the following year after you’ve gotten your documents in place.

4. Ignoring insurance benefits you may actually need

Disability insurance

Disability insurance is often overlooked even though about 25% of 20-yr olds are likely to be out of work for at least a year due to a disability. If your employer doesn’t provide it, you may want to purchase it. The good news is that employee-paid disability benefits are tax-free.

Life insurance

Your employer may offer you life insurance coverage equal to one or more times your salary, but you may want to purchase supplemental life insurance if you have dependents. You can use this calculator to estimate how much you need. Then compare the cost of purchasing it through your employer with the cost of a policy in the individual market. (See if your coverage at work can be converted to an individual policy once you leave the job.)

Your benefits can be a significant part of your total compensation and open enrollment can be your only chance to take full advantage of many of them. When in doubt about your selection of benefits, see if your employer offers a financial wellness program with free guidance and coaching from unbiased financial planners who are trained on your particular benefits. Then go and enjoy the holidays knowing that your family is protected.

 

A version of this post was originally published on Forbes

How Does Bankruptcy Work?

November 15, 2018

It happens. Good, hard working people find themselves overwhelmed with serious debt problems and considering filing for bankruptcy. For many, the idea of filing for bankruptcy carries a lot of negative connotations and they dismiss it as an option out of hand. However, it exists for a reason.

There are a lot of options out there to deal with debt, and I’m not suggesting that bankruptcy is the best solution for you. However, bankruptcy can be a powerful tool to help people get out from underneath serious debt issues. My goal here is to explore the basics and clarify a few important points about what bankruptcy can and cannot do, for those that may be considering this option.

There are two main options

There are two primary options for consumer (non-business or individual) bankruptcies – Chapter 7 or Chapter 13. They each offer different benefits and may treat debt and property issues differently as well, so knowing the difference is important.

  • Chapter 7: This option is primarily reserved for individuals with lower incomes and the eligibility requirements are harder for just anyone to meet. Chapter 7 bankruptcy will discharge most debts the filer has (see below for more on this), but any property that you are behind on payments for is likely to be lost (there are exemptions for items you’ll need to work and live). Basically what this means is that, for example, if you’re behind on your car payment, you’ll get out of the loan, but you’ll also lose your car. You may also be required to sell other items of value that you already own.
  • Chapter 13: Unlike Chapter 7, this option is designed to give you the ability to re-structure your debts into a court-approved repayment plan over a 3-5 year period.  This plan may include lower payoff amounts on some debts, with some balances forgiven, but it won’t just get rid of all your debts. A Chapter 13 filing can help stop mortgage foreclosures, allow you to keep property that isn’t protected with an exemption, and adjust amounts due on secured debt when the debt owed is more than the property is worth (a car loan of $15,000 on a vehicle worth $10,000, for instance).

What bankruptcy will do

While things vary based on the type of bankruptcy filed for, in general, you can expect bankruptcy to provide the following forms of relief:

  • Stop collection calls and activities
  • Stop a foreclosure, repossession, eviction, or wage garnishment
    • This may be temporary until the automatic stay expires, at which point your house or car may be lost if you can’t bring payments current under Chapter 7.
  • Wipe out credit card and other unsecured debt

What bankruptcy will NOT do

Unfortunately, filing for bankruptcy doesn’t take care of all debt issues. Knowing the limitations is important to make an informed decision. Some things bankruptcy will not address include:

  • Keeping property you can’t afford
    • Property that has a lien (like your house or car) is still at risk. Bankruptcy can eliminate the obligation to pay the debt, but it does not take a lien off the property.  So, if you cannot make the payments, that property can be foreclosed or repossessed once the automatic stay is lifted.
  • Eliminate child support and alimony obligations
  • Eliminate most student loans
  • Eliminate tax debts in the vast majority of cases
  • Other issues:
    • Debts you fail to list in your filing are not dischargeable
    • Debts related to liability from a driving while intoxicated are not dischargeable

Other things to know

Filing for bankruptcy will stay on your credit report for up to 10 years and may make it hard to obtain credit for that time. This does not have to be a deal breaker if the advantages are more compelling than the cons, but be aware that it will follow you for up to a decade.

Bankruptcy also isn’t free – your workplace EAP may help with this, but know that you even after your day in court, you probably will still have bills to pay.

Hopefully this helps clarify how bankruptcy can help if you are in serious debt trouble. You should explore all your options before filing for bankruptcy. This may include negotiating with creditors directly, tightening your budget to attack debt more aggressively, and credit counseling services to name a few.

What A Veteran Wishes She Could Tell Every New Soldier

November 12, 2018

If someone were to ask me what I am the most proud of, next to my family, I would say that I am the most proud of having served in the military. The military is where I developed a strong work ethic. I also learned to think of others before myself and I learned to lead even though I may not have had all of the answers. I enjoyed every crazy moment in the military (well, if I am honest, the port-a-potties were not fun, yuck!) and I grew close to many of the servicepeople I served with.

Twenty years later, I am proud to call some of the soldiers I served with my dearest friends. Many of my friends went on to have wonderful careers both in the military and as civilians but others left the military early and struggled as a civilian. Some left on their own; others were forced out of the military.

The one thing that determines success after military life

If I had to name the number one thing that differentiated the people who were successful from the ones that struggled, I would say it was how they managed money in the military, particularly debt. During my military career, I worked in security and human resources and I was nothing short of shocked at how many careers and, unfortunately, lives ended because of badly managed finances. What made me angry were the predatory lenders that I felt preyed on soldiers.

I understand that ultimately people make their own choices but keep in mind, when I was in the military at the age of 22, soldiers called me mom. I was the oldest of all of my female friends. I think sometimes people forget how young people are when they join the military. Most aren’t even old enough to legally drink!

What was your money situation after high school?

Think back to your late teens and early 20s. How knowledgeable were you about money management or debt? How would you have reacted if everywhere you turned people were offering you credit cards, car loans, payday loans, and every other financial vehicle that can tie soldiers to an insane interest rate?

You combine the impulses of people barely out of their teens with easy credit, a steady paycheck and a lack of money management skills, and you have a mixture that only leads to broken hearts and dreams. Worse yet, the decisions some of the soldiers make in their teens and twenties impacts their future. Bad money decisions can lead to reprimands from senior leadership, garnishment of wages (commercial lenders can garnish up to 25% of a soldier’s paycheck), lost careers or even future careers, lost security clearance and some lost the will to live.

How our society contributes to the financial mistakes of our soldiers

Outside of just about every military base I have ever visited were payday loan companies, title pawn shops, rent-to-own stores and questionable car dealerships, ready to take a young soldiers’ future from them. I, like most soldiers, had no money management skills when I joined the Army and I quickly found myself in debt. Lucky for me, I had only gotten into a little debt (under $1,500) before a colleague with excellent money management skills got ahold of me.

How I got control of my situation

Under his tutelage, I was able to quickly pay off the debt and I was able to save a good portion of what I made. Because I was not burdened by debt, I was able to make the choice to leave active duty, join the reserves, finish college and ultimately fulfill my dream of helping people manage their finances. If I had not had the intervention from my colleague, I probably would have continued to accumulate debt, I would not have been financially able to leave the military and if I had gotten into enough debt, I would have to had to declare bankruptcy – ending both my military career (I had a position that required a security clearance) and my dreams (it is virtually impossible to find a position as a financial advisor with a bankruptcy record.)

I am grateful that the military is beginning to acknowledge that there is a serious problem. They have started mandating financial education classes for soldiers. I do believe that the programs need to go further, with a focus on true financial wellness though.

Financial wellness is a state of well-being that encompasses all facets of financial planning with a focus on behavioral changes. It goes beyond simply telling people what to do and guides them by showing them what to do. Ultimately, financial wellness is about empowering individuals to take control of their financial lives and goals.

What I would tell all new soldiers if I could

If I could talk to new soldiers, I would tell them that the future is theirs for the making or destroying. I would tell them that debt for many is leveraging their futures on circumstances and events for which they have no control over. I would tell them that every financial decision they make is mapping a future for them – it is their choice where that future leads.

I would help them to understand that budgeting is simply directing money ultimately in the direction of their dreams – a cheaper car payment may free up the cash to save for a home or a college savings plan. I would tell them that a financial plan is a process of making sure that all areas of their financial life are working in harmony with their deepest values, hopes, and dreams.

Mostly, I would want to give those that sacrifice their lives for our freedom, the freedom from feeling burdened and lost in a sea of debt – to give them hope for the future that they have earned.

How To Manage Your Finances If You Hate Dealing With Money

November 09, 2018

Do you sometimes know what to do with your money but still don’t take action on that knowledge? A recent financial coaching discussion reinforced the influence of the “knowing – doing” gap. It also helped illustrate how the gap between our financial knowledge and actual money-related behaviors can sidetrack progress towards important life goals.

The story of Maria

Here was the situation. Maria (not her real name) is a recently divorced mother of two who was struggling to balance making payments on her student loans, car loan and credit card bills with a desire to begin saving for unexpected expenses and most importantly to her – retirement. She knew that despite the fact she still had enough income to meet her family’s basic needs, there wasn’t much breathing room and something needed to change.

Maria used spending tracker tools like Mint.com in the past and she understood that an emergency fund would help her break the cycle of living paycheck to paycheck. She also understood how important setting aside money for retirement and her children’s future education costs are during this season of life.

When we know what to do, but still don’t do it

Maria’s biggest obstacle wasn’t knowledge. It was avoidance. Money arguments are often linked to divorce and her prior marriage seemed like a constant wave of disagreements about how to best manage their finances. Avoiding money matters became her coping mechanism of choice. As a result, she put her credit card payments on auto-pay and didn’t really know how much debt she had accumulated since the divorce was final.

How we become money avoiders

In general, money avoiders tend to view money as negative and a source of fear, anxiety, or possibly even disgust. Money avoiders often have beliefs that wealthy individuals are greedy. They also tend to develop thoughts that they don’t deserve money or that money is bad (and quite possibly the root of all evil) so it’s not okay to accumulate more wealth during your lifetime than you will actually need.

Money avoiders may experience conflicting beliefs that having more money and wealth could improve their life satisfaction, self-worth, and social status, while at the same time believing all the negative things. This belief system can create a tug-of-war between feelings of contempt toward money and wealthy individuals to placing too much emphasis and value on the role of money during their life journey.

Money avoidance can involve both “doing” and “not doing” things. Not surprisingly, money avoiders have difficulty organizing financial statements and frequently struggle discussing money matters. It may seem like a no-brainer suggestion to simply get organized, but money avoiders are pretty darn good at…well…avoiding!

Are you a money avoider?

This financial coaching scenario isn’t unique. Money avoidance is a common obstacle on the path to attaining an authentic sense of financial wellness. You may be a money avoider if any of the following are true:

You have financial denial

This occurs when we tend to minimize our money problems or try to avoid thinking about financial matters altogether rather than accept and deal with our financial realities. People with issues related to financial denial have trouble opening bank or credit card statements. They don’t see the need for a financial plan. Money avoiders also struggle to communicate with their partner about money and have a tendency to avoid savings or building wealth.

Symptoms:

  • Frequent late fees
  • Regular overdraft charges
  • Accumulating significant debt
  • You don’t open your statements

You have financial rejection

Have you ever known anyone who appeared to feel guilty about having money? People who reject money, another sub-group of money avoiders, often feel that they do not deserve good things in life. Accumulating money is viewed as an undeserved gift. This is a common money-related problem that some people experience after inheriting large sums of money.

Symptoms:

  • Rapidly spending an inheritance
  • Actively avoiding the acquisition of wealth
  • Taking an unconscious vow of poverty
  • Giving money away to your own detriment

You have difficulty spending money

Living within your means and spending less than you make is considered a best-practice behavior. At the extremes, this can become a potentially self-destructive financial behavior. These spending difficulties common among money avoiders are often based on seemingly irrational feelings of fear or anxiety. They may also be accompanied by self-sacrificing tendencies and a sense of guilt whenever they spend money.

Symptoms:

  • Guilt over spending money
  • Excessive frugality even when you have money available
  • Spending money causes physical pain

You avoid risk to an excessive degree

Some people would rather do nothing than lose anything. Risk avoidance may come in the form of how people choose to invest. Risk avoiders tend to focus on things such as market risk rather than why they are investing in the first place.

Symptoms:

  • You keep your retirement savings in cash or the lowest risk option, even when you have more than 10 years to go
  • You have large amounts of cash set aside that are way more than enough to cover emergencies
  • You check your investment accounts daily and obsess over every market movement

How to overcome money avoidance

Let’s go back to the original financial coaching scenario. Maria acknowledged having a long history of trying to avoid money. Ignoring bank account and credit card statements and refusing to open statements from her 401(k) provider were just some of the symptoms. Maria was essentially sabotaging her financial success. Here are some steps Maria started taking to move into the direction of meaningful change.

1. Start talking about money and life. (Reframe how you think about money.) Maria was encouraged to think about her own money story and the experiences that helped shape her beliefs about money. She also started identifying ways to challenge money scripts that were supporting her avoidance of money matters.

2. Make a list of “SMART” life goals. In order to get Maria focused on her financial plans, the core focus of her coaching discussions centered around her life. She dedicated time in between her roles as mom and employee to establish meaningful goals that were Specific, Measurable, Achievable, Relevant, and Time-Bound. This helped her prioritize the things that mattered the most and filter out some of the noise and distractions.

3. Express gratitude. Maria began a gratitude journal and committed to writing down 3-5 things she was grateful for each day. Shifting her attention to the “gifts” that she was grateful for in life provided a new sense of appreciation of what was good about the world and her life. This was a refreshing alternative to focusing on what was wrong in her financial life.

4. Commit to daily check-ins and weekly check-ups. (Start small.) Reversing over a decade of financial avoidance doesn’t just change with the flip of the switch. Maria decided to use her bank’s spending tracker app to monitor where her money was going. After breaking through the fear of the unknown, she dedicated 45 minutes to reviewing where her money went over the last 3 months.

The next day, she used this information to begin setting some spending limits for the next 2 weeks. She set an alert on her phone to remind her to log into her online banking app at the same time each day during her lunch break. This helped her increase the overall awareness of her financial situation and made her weekly spending plan reviews easier to stick with.

5. Focus on the quick wins first. The last thing money avoiders like Maria want to worry about is a list of 20 things to do to take control of their financial life. That would be too overwhelming. Instead, she was encouraged to take small steps such as checking her credit report, logging into her 401(k) account and gathering her credit card statements. Small wins helped her build up the courage to start finding solutions to her lack of financial wellness.

6. Seek out professional guidance and social support. Maria had already started to seek out the financial wellness coaching services offered by her company as an employee benefit. Her financial wellness plan also included self-care for emotional well-being to help her deal with the aftermath of divorce. Maria is still working to build her social support network and gradually feels more comfortable talking about her finances in a proactive manner.

The best news is that Maria is no longer a money avoider. She is now turning knowledge and awareness into an actionable plan that will continue to improve her sense of financial wellness. What step(s) will you or the money avoider in your life take?

 

A version of the post was originally published on Forbes.

Why I Will Stop Giving My Kids Money Once They’re Employed

November 07, 2018

One of the topics that comes up on our Financial Helpline is employees looking at options to provide financial support for their adult children. Often parents are calling to explore ways to get at their retirement savings (either through a 401(k) loan or other withdrawal) to help their kids navigate challenges they are facing. I guess I shouldn’t have been surprised then to learn that this study found parents spend twice as much on their adult children as they save for retirement. I knew they were helping them, but I was stunned!

I would never tell anyone how to parent and, as a father of two daughters, I get that parents would do anything for their kids regardless of the cost. However, it got me thinking and I thought I would share some of my own story to help shed some light on this issue.

Mom and Dad to the rescue!

As a young professional fresh out of grad school, I was living and working in Los Angeles. While I was making a livable wage, I found the cost of living in LA was putting me in a tight spot every month financially. I found myself using credit cards to pay for my entertainment (which was more than I care to admit as a single guy in LA) and even some necessary expenses. Before long I was calling the bank of Mom and Dad asking for a “loan” to help me get by each month.

As many parents would, they agreed to help me out. I wish they would have said no. Sounds strange, but by bailing me out, I didn’t have to learn how to manage my money. This became a real issue later as I had an emergency come up and I had to ask for a sizeable chunk of money that resulted in my parents dipping into a retirement account to cover for me. While I have since learned to manage money on my own and repaid my parents – the embarrassment I felt still is fresh in my mind. The last thing I wanted was to hurt my parents’ ability to retire, but I wasn’t mature enough at the time to think about the difficult position I was putting them in.

What it means for my kids

I would have been much better off had my parents simply told me that they could not help me out and that part of being an adult is to learn to manage my finances more responsibly. This would have made me a better money manager much earlier in life, because I would have had no other choice.

So, when I think about my two young daughters, I know it will be a different story. Instead of handing them money when they are adults, I plan to serve them now by teaching them about saving for the things they want, living below their means, and sacrificing what they want right now to have what they want most. Not because I don’t love them and wish to see them struggle, BUT because I do love them and want to see them start their own lives with the tools necessary to manage their finances.

My hope is this will help them be grateful for the things money can afford them AND appreciate the hard work necessary to earn a living. I know they will struggle as young adults just like I did (and like most of us do), but by helping them with a spending plan and healthy money habits rather than giving them money, they will learn earlier in life how to better handle their finances. While I am beyond grateful to my parents for their help, I wish they would have done the same for me.

As the old saying goes, give them a fish and they eat for a day, but teach them to fish…

If you are struggling with the tension of trying help your kids without damaging your own finances, hopefully my story will help. Believe me, helping them learn good habits will benefit them much more in the long run than any short term gift or loan can!

This Money Belief Is What Keeps Many People In Debt

November 06, 2018

One of the most interesting things I’ve learned from having the opportunity to discuss money with people from all walks of life is how much of an effect that our deep-seated money beliefs have on our financial outcomes. One of these beliefs is how we perceive whether or not we need to buy something – some people buy what they can “afford,” while others go with what they actually need. I know, because I used to embody this belief.

Little decisions that are actually a big deal

Every day we make little decisions like whether to take the bus or hail a cab or whether to cook dinner versus order delivery that aren’t really just about time and/or a willingness to go the “tougher” route – how you make these decisions is actually a key determinant of your financial situation. It’s how even people who make hundreds of thousands per year end up riddled with debt and with very little savings (true story, I know people like this).

What it looks like

This really struck home with me recently, when I met up with friends who had taken the subway and walked about a half mile to the place we were meeting – a minor inconvenience versus just getting dropped off out front. These are people who could easily afford the $10 it would cost to hire a ride, but their mindset is, “Why spend the money if we don’t have to?”

On the flipside, I’ve heard people joke that they’re “too poor” to own a car, but not “so poor” that they have to ride the bus. The irony is that I own a car and yet I take the bus all the time – finding the economical way to accomplish life is not just about whether or not you can afford it, it’s about spending according to what you need – it’s a mindset.

Why it’s a big deal

This may not seem like a big deal – saving $10 here and there on transportation around a city is not going to make or break your ability to retire, (although there is an argument that it might – see this calculator) but that mindset where your spending decisions are made by whether or not you can afford something, versus whether you really need to spend the money is what’s so dangerous.

Many people use the “affordability test” when deciding what kind of car or house to buy – just because you can squeeze $450/month out of your budget in order to make a car payment doesn’t mean you need that nice of a car. Likewise, the feeling of being “house poor” often originates from someone buying what they think they can afford, which is really much more than they need.

How this mindset had me living paycheck-to-paycheck until my 30’s

I can get a little lecture-y on this, but that’s only because I’ve been there – until about the age of 32, I was caught in a loop of saving and spending that was keeping me on the edge financially, no matter how much or how little money I made. I lived in the nicest apartment I could afford and bought my last new car based literally on what I had left over in my bank account each month, not based on what would allow me to work toward other goals of escaping credit card debt and building up an emergency fund.

What changed for me

The thing that revealed this psychology to me was when I found myself needing dental work that required an up-front payment in excess of $5,000, which of course I didn’t have. Without a second thought, I charged it to a credit card, then started aggressively paying $300 per month toward the balance until it was gone. My “aha” moment was when I realized that I was able to “find” $300 per month toward a payment, but prior to that I somehow didn’t feel like I could “afford” to save that same amount.

Once I paid that balance off, I immediately added an automatic deposit to my savings in the same amount, which eventually lead to a real emergency fund. Seeing the balance of that account hit $1,000 lead to a shift – having a comma in my savings account relieved a burden of financial stress I didn’t even know I was carrying.

The key take-away

It was a crucial lesson, that translated to literally every other payment I had in my life. In the past, whenever I had a payment end, such as paying off my car loan, I always found a way to replace that payment, like moving into a more expensive apartment. If I could go back in time, I’d stop 30-year old Kelley and tell her to instead stay in the cheaper apartment and stop paying for things just because she could afford them and instead talk to her about living within your means according to what you need, versus what you want or can afford.

The next time you find yourself making a financial decision with the reasoning that “it’s what you can afford,” stop and ask yourself if it’s also what you really need, or if it might make more sense to keep that money in your pocket. The way I talk myself out of spending in these situations today is to remind myself that every dollar I don’t spend today is a dollar that can help me stop working sooner.

How An Extra Four Hours Per Week Can Supercharge Your Goals

November 02, 2018

I believe firmly in the financial power of the side hustle. There’s a second source of income for nearly everyone. For me in midlife, it’s rental real estate, but when I was young and single, it was bar-tending.

For someone else, it could be babysitting, dog walking, teaching, writing, multi-level marketing or working in a store or café. Not sure if you have the time or skills to earn a second stream of income? Start by asking yourself, “If there was something I could do that I enjoyed for just four hours per week to earn extra money, what would that be?”

Four hours per week…

I am not suggesting you work two full-time jobs. I want you to have a balanced life. Chances are, however, that you have four hours per week that you’re not currently using to their full advantage.

I already have another stream of income and I still do, but if I needed to add another, I know exactly where I’d find that time. Despite my packed schedule at Financial Finesse, keeping an eye on our real estate investments and raising kids, I spend about four hours obsessively reading three newspapers online. This could be you, or maybe you’re the one who binge watches Netflix, scrolls through Instagram or Facebook or spends hours waiting for your child at soccer practice. There are many more productive things we could do with those four weekly hours.

What a few hundred extra dollars per month can do

Working 4 extra hours a week doesn’t seem like much and the pay may seem insignificant at first glance, but I invite you to explore the true impact: An extra $200 per month from babysitting is helping a Financial Helpline caller pay off her $15,000 in credit card debt in less than four years vs. the more than twelve years it would take if she just paid the required minimum. She’ll save nearly $14,000 in interest payments. See the illustration here.

Another employee is using his $300 per month income from doing projects on Fivver to build his down payment savings. He is planning to buy a home in an expensive city, so he needs a good sum to even qualify for a low down payment mortgage. Because of his extra income, he’ll be able to build his down payment fund from $18,000 to the $25,000 in savings he needs in two years.

What could a few hundred dollars extra per month do for you? Does this idea sound intriguing? If so, keep this guidance from our CFP® professional team in mind:

Do something you enjoy

My fellow planner, Mark Dennis, has been an online college professor teaching business and personal finance classes on the side since 2009. It’s a strong fit for him, because it’s related but doesn’t conflict with his primary job at Financial Finesse, and he enjoys doing it. “Additional income is very handy as my daughters enter into their college careers,” explained Mark, who is facing a mountain of tuition payments.

Our Planner Operations Director, Linda Robertson, used to moonlight during the Christmas season nights and weekends at the mall selling jewelry while still working full-time. “I earned a nice commission on gold and diamond sales,” she remembered. “But most importantly, I learned so much about the 4 Cs of diamonds that now when I buy jewelry for myself, I know what to look for (plus I used to get a great employee discount when I worked there!).

Look for flexibility (if you need it)

Fellow planner Tania Brown was a part-time security guard when she was younger to furnish her first condo without having to go into debt. “The hours were flexible enough for me to maintain a full- time job,” explained Tania. “Because I worked nights, I was able to study since I was also going to school.” Mark, our planner who is also an online professor, teaches around his primary work schedule and vacations. He has even taught classes while on a cruise ship!

Work for yourself

If you’ve got kids, are caring for an aging parent, or have a ridiculous commute, part-time self-employment is likely to be a better fit. I have many friends who generate extra income from offering nutritional products, clothing, jewelry or household goods. My husband and I fit our rental real estate business around demanding, professional jobs. Since we use a property manager who can handle the urgent and daily tasks, we can work on the business evenings and weekends.

Kelley, who was a passionate income-diversifier in her early career years, signed up for a babysitting service where parents requested sitters and she could go in and see if there were any she wanted to do. “The pay was great, parents LOVED that I was older, and I even found some regular gigs where I’d go over early in the morning to get the kids to school so mom and dad could go in early and leave in time for school to get out. Then I’d go to work at the normal time,” she explained.

Or work for someone else

If you don’t have an entrepreneurial side, no worries. There are plenty of part time jobs to be had. Planner Steve White has worked part time at Home and Garden shows, boat shows, and fairs for vendors as a lead generator. “You have to be comfortable talking to a lot of people,” he cautioned.

Kelley worked a retail job on several occasions throughout her 20s and 30s. Her most memorable was working weekends at Michaels craft store during the holidays. See her post: 5 Seasonal Jobs To Earn Extra Holiday Cash.

Experiment with a future career or business idea

For Mark, his online teaching is likely a gig he can continue on a part-time basis when he is ready to ease into semi-retirement. For you, it could be an excellent way to test a business or investment idea. Just make sure it doesn’t compete with your current employer.

Get paid for your hobby

Kelley also taught fitness for 12 years. “Not only did I get paid to work out, but it got me to the gym when I may have not otherwise gone, and it was a free membership,” she recounted. “This experience also bled over into my professional career. It was great networking and also helped me with presentation skills.”

When Linda was in her early career, she found her salary didn’t give her enough fun money. “I’d get off every day at 3:30 when the bank lobby closed so I felt like I had extra time on my hands. I started working part-time after work at a tanning salon next door to the bank for free tans and extra spending money.”

Experiment with what works until you find a good fit

Kelley also used to be a part-time pet-sitter. After trying her hand at dog-walking, she switched to cat-sitting. “There are limited hours that people actually want their dog walked, so you’re limited in income,” she described. “However, a cat sitting gig was much more palatable. Times were more flexible, so I could accept more clients, and there’s money to be made by staying over to care for pets.”

When part-time work isn’t a good idea

There are some periods in life when focusing on income diversification may not be the best fit. I can’t imagine working two jobs when my daughter was a baby. It was hard enough working at one, with a maternity leave. Your current job may be more than a 40-hour per week commitment, or you have personal or health challenges that require your time and attention.

However, if you’ve got some time that’s not being put to its highest use, consider a four-hour per week side hustle. Then set a goal for that money. You’ll be surprised at how far that takes you.

 

A version of this post was originally published on Forbes.

5 Places To Keep Cash For Short-Term Goals

November 01, 2018

A common question I receive is where to put savings for short-term goals like an emergency fund or the down payment on a home you’re planning to purchase in the next few years. First, you probably don’t want to put it in anything risky like stocks, real estate, commodities, cryptocurrency, or even many types of bonds. That’s because their value could be down when you need the money. At best, you’ll be forced to sell at a loss and at worse, you might no longer have enough for your goal.

Where to stash your cash

Rewards checking account

Pro: Believe it or not, these checking accounts can pay more interest than anything else I’ve seen these days. The highest paying account on DepositAccounts is currently yielding over 5%! Many also reimburse ATM fees.

Con: They only pay those interest rates on a limited amount of money (the one above is limited to $10k) and you have to jump through several hoops like using direct deposit, electronic statements, and even using your debit card and/or the website a minimum number of times in a month. Many of these may also not be local to you so you would have to bank remotely.

Online savings account

Pro: They tend to pay more than brick-and-mortar banks, but unlike the reward checking accounts, they require very little effort. In fact, you can typically link them to your current checking account.

Con: Some only pay the rate on a limited balance.

Certificates of deposit (CD)

Pro: These generally pay a higher interest rate than savings accounts.

Con: You generally can’t add to a CD (you typically have to purchase new ones each time) and you lose some of the interest if you cash it in before it matures.

I-bonds

Pro: These savings bonds are guaranteed by the federal government, don’t fluctuate in price (although the interest rate fluctuates with inflation), are state tax-free, can be federal tax-deferred, and are currently paying a little over 2.5%. The interest can also be tax-free for education expenses if you meet the qualifications.

Con: You can only purchase up to $15k per year and you can’t cash them in the first 12 months. If you cash them in the first 5 years, you lose the last 3 months of interest, so these are best for goals that are at least a year out, ideally more than 5 years.

Life insurance cash value

Pro: These can provide the highest interest rates and you can borrow from it tax-free.

Con: Purchasing a new policy can be very expensive and the fees and insurance costs can outweigh the benefits of the cash value.

There is no one best place to stash your cash. It all depends on your situation and what you value. If you’re not sure which option makes the most sense for you, consider consulting with an unbiased financial planner. Your employer may even offer free access to them as part of a workforce financial wellness benefit. If so, take advantage of it since no fees means more cash in your stash.

 

3 Things About Halloween That Apply To Your Money As Well

October 31, 2018

While shopping for Halloween costumes for our kids recently, I started thinking about what we can learn from Halloween as it relates to our money (yes, these are the things I think about). Bear with me on this one. When you really think about it, it makes sense.

How Halloween & your money are related

There’s more than one way to do it

Do you have a neighbor that goes all out for Halloween with lights and decorations? (Maybe you are that neighbor.) Or maybe you really like going out with the kiddos or passing out candy to the trick-or-treaters. On the other hand, maybe Halloween just isn’t for you and you make a point to keep your porch light off on October 31st. The point is that there is no right or wrong way to enjoy Halloween – it’s whatever works best for you. And when it comes to your money, there is no wrong way to manage your finances either, as long as you’re on track to meet your goals.

The key is finding the tools and process that works best for you. Some people like to track every dollar spent and check their investments very regularly. Others prefer to track spending at a very high level and rarely check in on their investment accounts. Still others find a way to do it that requires very little hands-on activity. If you haven’t found a way that works for you, keep trying new ways. If you are living below your means and taking action to reach your goals, there is no right or wrong way to do it!

Don’t eat all your candy right away

As kids, it is really hard to have the discipline to not eat all of those Halloween treats right away. In my house, we take the candy haul and hide it from our kids and give it to them over time. As adults, we need that same discipline when it comes to our finances. Whether it is impulse buys, taking vacations we can’t afford, or just living beyond our means in general, we need to find a way to enjoy our money without spending it all at once.

Having a spending plan in place and sticking with it over time allows us to make the most of our income to reach our financial goals. Like any new skill, this takes time and practice. It is ok to have slip ups and setbacks – that is a healthy part of learning and is natural. Just like we know eating a lot of candy in one setting is not healthy, we can ensure our spending reflects what is most healthy for our finances in the long run. Perhaps the key for you is to find a way to “hide” money from yourself!

It’s usually more fun than scary

The excitement of a good scare in a haunted house is something a lot of us enjoy. Unfortunately, many people I speak to on our Financial Helpline are scared by the prospect of improving their finances. But once they start taking small actions, they find the progress they make to be empowering and fun. Reaching goals (and rewarding yourself when you do) leads to setting bigger goals.

Being in control of your money is fun and rewarding. And the best part is, no matter where you start from, you can do it! While it may be scary at first, getting started really is the hardest part.

Happy Halloween!

How To Escape A Financial House Of Horrors

October 30, 2018

Sometimes our finances become so scary they make us want to close our eyes and wish away all the monetary mayhem. Unfortunately, financial denial only makes things worse. Here are some ideas to help chase away those financial boogeymen for good.

When a financial nightmare becomes reality

I was speaking with an employee the other day who reminded me just how easily we can slip into serious financial trouble when we let a few things slide. In this case, what started out as seemingly good idea to consolidate some student loans a couple of years ago in exchange for a smaller monthly payment was later accompanied by creeping credit card debt, followed by some back taxes owed to the IRS, a short sale on the family home, child support payments slipping into arrears, and basically an ugly financial monster of debt, fees, late payments, low credit scores, and garnishments that became just too horrible to look at anymore.

Rather than face down these monetary monsters and escape the nightmare, the person became defensive and began to ignore the growing financial burden. Although he paid just enough to keep bill collector zombies at bay, he no longer had any idea of the balances owed, how much was being charged in interest, or when (if ever) he might be able to pay off these debts. He had become detached from financial reality, and who could blame him? He was trapped in a financial horror show.

Financial worries haunt us

Money worries in general are fairly common. According to the American Psychological Association’s (APA) annual Stress in America report, over one-third (34%) of adults are haunted by worries over unexpected expenses. One quarter (25%) of Americans feel stressed and tortured by the struggle just to make ends meet for essential expenses. While we cannot escape worrying about money from time to time, how we choose to react to financial stress can either help us or hurt us.

How you deal with it makes a difference

Some people manage stress by exercising, practicing yoga, or meditating. These are great ways to help us feel better and avoid letting stress overwhelm us to the point that we are unable to take action. Others turn to less healthy alternatives: smoking, alcohol or other forms of substance abuse, along with good old fashioned denial. Avoiding things that make us feel uneasy is a common and natural reaction, but not always a healthy one.

Denial doesn’t make the financial ghouls go away

Unfortunately, ignoring the financial boogeymen in our lives will not make the money problems go away and very likely will make them worse. How can you tell if you are only procrastinating versus denying your financial reality? Here are some warning signs:

  • Unopened bills and financial statements are piling up.
  • You consciously avoid thinking or talking about money.
  • You have no idea what your net worth might be.
  • You are afraid to check your credit score.
  • You blindly let your spouse handle all of the finances.

How to get rid of the financial issues that haunt you

Ultimately, financial stress is best resolved by eliminating the source of the stress. It’s time to face down those money demons and “G-Y-F-S-T!” – Get Your Financial Stuff Together. Some other ways to help you exorcise those pesky financial demons include:

  • Find a friend. This could be your spouse, significant other, family member, or someone else you trust. Talking things over can help you put things in perspective and take inventory of what you can do to turn things around. Plenty of professional help is available as well:
  • Create a plan. If you have several money monkeys on your back, don’t try to tackle all of them at the same time. Pick one to focus on for now, preferably the one that makes you most uncomfortable. Among the many things Mark Twain is famous for saying, his advice on eating frogs applies here (do it now, and start with the biggest one).
  • Grab some tools. Anyone who’s watched an episode of The Walking Dead knows not to take on a zombie bare handed. Technology makes it fairly easy these days to get free help with budgets, debt reduction calculators, retirement estimators, credit reports, credit scores, and more. Pencil, paper, and spreadsheets still work too.

Most importantly, keep at it. Once we are willing to shine a bright light on our financial monsters, they don’t look quite so scary and eventually you can make them go away forever.

How to Save Money While Preparing For The Next Disaster

October 23, 2018

When financial planners talk about emergency preparedness, they’re typically referring to emergency savings, insurance, and estate planning documents. All of those are important but could be useless in a natural disaster like Hurricane Michael. The news stories may have faded but the Gulf Coast is still reeling from this unexpectedly strong storm and its accompanying surge. For the rest of us, the time to prepare for an emergency is when there isn’t one in sight.

That’s why emergency planning should include a 3 day emergency kit of basic supplies. FEMA and the Red Cross also recommend having enough food and water for at least two weeks. Some preppers even like to keep a whole year’s supply of food. This may sound like a waste of money, but there are ways for storing food and other emergency supplies to make good financial sense:

1) Only store what you’re actually going to use. It doesn’t make sense to purchase food you wouldn’t want to eat, especially when you’re stressed during an emergency. In fact, your best bet is to simply purchase in advance what you would buy anyway. This allows you to buy in bulk, which is a great way to save money. It also saves you time in not having to make as many trips to the grocery store and we all know that time is money.

2) Shop around. By buying in bulk, you can take advantage of warehouse clubs like Costco and Sam’s Club. Don’t forget to compare prices with online retailers though. You can also take advantage of sales to opportunistically add to your supplies anytime you see a good deal.

3) Rotate your supplies. By storing what you’ll actually use, you can simply replenish your storage supplies as you use them. Just be sure to watch the expiration labels and make sure you eat food and use batteries before they expire.

4) Keep less in emergency cash. If you know you have food to eat in a financial emergency, you can keep less cash in savings and have more of it invested for a higher return. Of course, food supplies can’t fully replace emergency savings, since you’ll still want to be able to afford repairs without going into debt or pay your bills if you’re in between jobs. It’s a good idea to keep some actual cash on hand in your emergency kit too. But keep reading for more on that…

5) Be inconspicuous. If you let everyone around you know that you have food and other emergency supplies, you could be bombarded by people begging for things (or even worse, stealing) in an emergency. It’s up to you to decide who you share or trade with when disaster strikes.

You don’t have to be a crazy prepper to want to have some food and other basic supplies for the next emergency. You also don’t have to waste money doing so. Following the tips above can actually save you money…and maybe much more.

 

7 Tips To Help If You’re Pregnant & Struggling Financially

October 22, 2018

When you find out you’re pregnant, it can bring about a wave of emotions, both positive and somewhat stressful. You feel excitement about your little bundle of joy. You also might wonder how your life will change, worry whether you can handle all the changes, be concerned if you have enough people in your circle to help you, and the list goes on.

Feeling financially unprepared

Then, there are some that have the added stress of not feeling like they are in a position to financially handle what comes along with having a baby. That includes not only taking care of the baby, but paying the doctor bills, formula, diapers, etc. When a colleague recently asked me for ideas on this since I’d just had a baby and it’s been decades since his daughter was born, I figured the information I shared with him could help others as well.

Help is out there, but you have to ask

Be encouraged that there are many programs in place to help lighten the load. There are typically state and local organizations that can help. It can get overwhelming with where to begin. Here are some resources that are a great place to start.

1) Contact your local United Way and other local charities – Dial 2-1-1 from your phone in order to reach your local United Way. They can save you some time researching as they have knowledge of the various programs and options available in your area that could offer you some assistance.

The United Way can help with finding shelter, food, supplies and other necessities. They are an excellent resource, but essentially give you a list of organizations and contact numbers for you to reach out to on your own. Among some of their ideas, they may suggest contacting The Salvation Army, local religious organizations, and hospitals, who tend to have discounted or free diapers and clothes, among other baby needs.

Some people find making multiple calls to be overwhelming. Consider sticking to calling one or two of their suggestions each day to keep it manageable. 

2) Find help paying for formula and food – Your local food pantry/bank, coupons and samples could save you money here as well. Low income families might also be eligible for their local WIC (Women, Infants, and Children) program, which may provide food for the baby as well as mom. 

3) Get free diapers or at least discounted – The average baby goes through six to 10 diapers per day. Add that up for the year and that’s over 2,000 diapers a year. Find ways to take advantage of coupons, free samples and programs like the National Diaper Bank Network and more here. 

4) Look for other free stuff – Secondhand clothing and toy stores typically have new or gently used items to help care for your baby. You can find free or discounted baby clothing, car seats, cribs, and other baby supplies to ease your financial burden. 

5) Get help paying for child care – You may be eligible for funds to help lessen the hit of child care expenses, or qualify for Early Start and Head Start programs to support your child’s development. 

6) Prepare for your prenatal and postpartum care – Contact your health insurance provider in order to find out exactly what type of services are covered for pregnancy and delivery. Some plans offer access to a nurse via phone to ask any questions you might have. You might even be able to get pregnancy related items like a free breast pump. Most health insurance companies have special programs for expectant mothers, so make sure you enroll. 

7) Manage the money you have – It will help to have a plan to manage the money you do have, whether that amount feels significant or not right now. Consider the likely expenses from pregnancy to delivery. Check out some tips on what to do when you’re expecting, like putting together a budget while you’re on maternity leave and when you return.

If you or someone you know is finding it challenging to meet their needs during pregnancy or even after giving birth, share these ideas with them. Getting the help they need could allow them to feel more in control and free to celebrate their journey.

 

Everyday Things You Can (& Should) Negotiate

October 18, 2018

Is everything negotiable? It’s not a part of the American culture to negotiate much, but you’d be astonished at what you can bargain for if you think outside the box. Negotiating prices is both an art and a learned skill. Those who do it the best often pay less than the rest of us for typical expenses.

Recently Katie Warren, a reporter for INSIDER, asked me for some ideas on costs you can negotiate, and I crowd-sourced responses from our team of CERTIFIED FINANCIAL PLANNERS™. I was floored by what they suggested: who knew you could negotiate so many things? Read Katie’s article for Nine Surprising Things You Can Negotiate To A Much Lower Price and check out these amazing money-saving tips from our planner team:

Auto repairs

When our blog/content editor and planner, Kelley Long, recently learned that she needed a new hose for her beloved MINI’s air conditioning, she debated making the repair versus trading in the car. When she took it in for the repair and before signing the estimate, she decided to risk asking, “is that the best you can do on price?” “I was pleasantly surprised when the manager stepped right in, played with some numbers and came back at about 75% of the previous estimate,” observed Kelley.

“I was at a dealership service center too, not a mom-and-pop place. I will never again pay the first price I’m quoted!”

“Mechanics regularly mark up parts costs from 10% to 100%. Challenge them on this mark up,” suggested fellow planner Teig Stanley. Stanley, who is a world-class negotiator, recommended, “If you do some research and find the same quality part elsewhere for less, offer to purchase it and have it shipped directly to the mechanic. Be sure the mechanic still honors their labor warranty, and that the part still comes with a warranty as well.”

Home improvements

Larger home projects are almost always negotiable, such as a bathroom or kitchen renovation, painting, landscaping work or building a deck. Make sure to get three quotes on any project.

If your preferred contractor has a higher bid on the project, see if you can negotiate with them by sharing competitor’s bids. Once you collect bids, let your decision wait for a week or two if you can. A contractor who is really interested in the work may come back to you with a lower bid. Don’t lower your overall budget, though, since you’ll need to create some wiggle room for contingencies. We’ve done several projects on our home and each one has had unexpected expenses.

Rental agreements

Are you willing to sign a multi-year lease? As a landlord, I’ve occasionally accepted negotiated offers from tenants who offer a rent lower than the listing, in return for signing a 3-year lease. Keep your offer reasonable (5-10 percent below listing).

Another alternative would be to propose a lower rent in the first year, with rent increases in year 2 and 3. If you’re in a rental unit which doesn’t accept pets but you really, really want that dog or cat, consider trying to negotiate with your landlord by offering to pay a non-refundable cleaning deposit (typically $250-350) and a slightly higher monthly rent ($50-75).

Elective medical procedures

Kelley wrote a moving blog post last year, Should You Go Into Debt To Get Pregnant? about how she and her husband made financial decisions around pursuing IVF. “It’s big business and everything is negotiable – the cost of the procedure, the meds, and even refunds in certain cases when the procedure doesn’t result in the wished-for outcome,” she shared. “It took tenacity, but we ended up being compensated not only for unused services when IVF failed, but we also got our clinic to reimburse us for meds they had us order that we never needed.” 

Teig insisted that medical and dental expenses are always negotiable. “I may not know the going market rate, but I start by offering up either a ‘here’s what I’ll pay for that,’ and/or request a long term 0% interest payment plan.” Teig added, “Remember, in the U.S., medical care is a business. It’s not rude to ask a business owner (usually the doctor or dentist in this case) what their cost is before profit and then offer a reasonable premium over cost.” He said he’s paid a lot less than others for medical and dental services over the years with this strategy.

Cell phone plan

Carriers are competitive and most of the representatives at the local store are on commission, so asking for everything the competitor is offering at a lower price is a good way to start, noted Teig. If your carrier can’t at least meet it, consider heading to the other carrier. That’s what our Think Tank Director, Greg Ward, does.

He negotiated his family’s satellite TV bill. “Basically, I called and asked to “cancel” my service,” he explained. “The customer rep transferred me to an accounts specialist who actually has the power to negotiate fees and expenses. I said I’d like to stay (having been a loyal customer for several years), but other service providers were offering me better deals. I gave them a choice: either decrease my bill, increase my level of service, or terminate my contract. They offered me more services at a reduced price to keep me loyal.”

One hiccup, he added, is that he must call every 3 to 6 months to request the same discounts. Greg said that’s a small price to pay for his $360 annual savings.

Credit card fees

Teig offered that he has yet to pay an annual fee on the points cards he uses for travel. “I call a month before the annual fee comes around and ask the company to waive it,” he described. “As long as I’ve been using the card and paying on-time (these are the reasons they give) I save myself at least a $100 per year per card.”

Big ticket purchases

“Always ask for at least 10% off at a “big-box” store whenever you shop there. It’ll take a few more minutes because a manager has to approve, but this approach never fails me and sometimes leads to even bigger discounts when I uncover hidden manufacturer incentives,” advised Teig. My husband, Steve, impressed me early in our relationship when he walked into a car dealer with a cashier’s check and announced that’s how much he was willing to pay for the make and model of car he wanted to buy. It worked.

Lessons and personal services

I’ve negotiated 10-20% discounts on personal training, language learning and sports lessons by being willing to pay up front for a package of multiple lessons. Teig says he does the same thing. “It annoys my wife sometimes, but I always offer to pay less when I’m buying products or services. For example:  My wife and I are ballroom dancers and occasionally engage in expensive coaching for competition. We recently bought a coaching package of lessons through a world-renowned studio system, and I offered to pay the company 20% less than they requested. They negotiated to 10% down, which saved me hundreds of dollars just because I asked!”

Give negotiating a try

What’s the worst that could happen? The person with whom you are negotiating could say, “no.” However, if you don’t ask, you’ll never know! For more tips on how to bargain, see this article. Do you have a successful negotiating story you’d like to share? Send it to me at [email protected].

 

Should You Do A Cash-Out Refinance?

October 08, 2018

It seems like I have been hearing a lot more advertisements for the concept of a cash-out refinance recently (maybe I just noticed it more). Perhaps due to the recent tax law change that disallows the deduction of interest for home equity loans that aren’t used for home improvements? Either way, it got me thinking about the idea and I wanted to explore the pros and cons a bit further.

A cash-out refinance is when you refinance your existing home loan with a larger loan that uses the equity you have in your home to provide cash back to you at the time of closing. It’s basically a way for you to get access to your home equity without having to sell it. Technically, you can use that cash for whatever you want, but the most common uses include:

  • Home improvements – using equity to make improvements to your home can add to the home’s market value and be a sound investment. Be careful here though – make sure the improvements are things future buyers will value, and not things only you and your family will enjoy.
  • Education – pursing a new degree or certification may help you earn a higher salary and benefit you in the long run. If you are confident that is the case, then pulling cash out of your home may make sense.
  • Business opportunities – while it may be tempting to use cash from your home to start a business or get in on that “once-in-a-lifetime” opportunity your neighbor told you about, be careful here. It is hard to make a business work long-term, and you need to make sure you can repay your loan if the venture doesn’t pan out.
  • Pay off credit cards – this seems to be the one mentioned most on the advertisements I’ve been hearing. And it makes sense on the surface – pay off high interest debt with a much lower interest rate and get that credit card monkey off your back. While getting out of credit card debt is important, using equity in your home to do it does put your house at risk if you default on your mortgage. Adding that risk to the decision is important.

Advantages of a cash-out refinance

If you are considering a cash-out refinance, it is understandable as to why. While interest rates have been creeping up in recent years, perhaps you can still lower your rate AND accomplish another goal at the same time. After all, using your home equity lets you:

  • Access a considerable sum of money – you may have tens, or even hundreds, of thousands of dollars in equity built up in your home.
  • Borrow at low interest rates – even with interest rates rising, mortgage rates are still much lower than personal loans, and certainly credit cards.
  • Repay it back over a longer time – your new mortgage can be for 15 or even 30 years, so you can really stretch that out. See below for thoughts on why that may not be such a good thing though.
  • Retain the ability to deduct the interest – the new tax law eliminated the interest deduction for home equity loans used for anything other than home improvements, but when you do a cash-out refinance, it’s the primary mortgage on your house, so you can still deduct all the interest you pay on the first $750,000 of indebtedness even if you use that cash for other purposes.

Disadvantages of a cash-out refinance

As with all things it seems, there are pros and cons to consider with a cash-out refinance. Some of the downsides to keep in mind include:

  • Interest costs – refinancing generally means you re-set the clock on the mortgage term. This increases the total interest that you end up paying over the life of the debt. So, if you use cash to pay off credit cards, you may end up paying off that debt for up to 30 years.
  • Closing costs – a fact of life with a mortgage loan. Whether you roll them into the loan or pay them up front, they are real, and they can be significant – sometimes thousands of dollars.
  • Putting your house at risk – your mortgage bank uses your home as collateral for the loan. If you don’t make payments, you face losing your home through foreclosure.
  • Your payment will go upThis calculator – unless you’re significantly reducing your interest rate, chances are your monthly payment will increase for the additional money you’re borrowing. can help you to run the numbers.

These issues often make a cash-out refinance a risk not worth taking. Of course, every situation is different, so my next post will focus on alternatives to the cash-out- refinance.

 

Life Hacks To Make Life Easier For Working Moms (& Dads)

October 05, 2018

When you’re a typical working mom with school age kids, daily life can feel like a rush from one urgent task to the next. Balancing the demands of your job and your kids can feel like juggling cats and flaming torches at the same time. Your mastery of the two is richly rewarding, but it requires practice. I checked in with other working mothers at Financial Finesse to compare notes on what they did to optimize their time. Here are some life hacks that we use to make the day easier:

1. Keep a family calendar

Air traffic control of activities and schedules is essential. We all keep a central family calendar somewhere – and we are the ones who keep track daily of what’s in it. “An online calendar is an absolute lifesaver,” says fellow planner Tania Brown. Don’t forget to schedule money maintenance tasks like regular “money dates” with your spouse to review financial decisions and time to review and pay bills (see #5) and rebalance your retirement investments. Some calendar tools we use include:

Cozi Family Organizer: Tania suggested this genius, free app, which lets you coordinate schedules and activities across devices, track grocery lists, plan meals and manage shared to do lists. Since everyone in the family with a smart phone can use the app and manage shared calendars and activities, this is the perfect app for people with teenagers. One constraint: you can share a “read-only” feed from your work calendar into Cozi, (and your Cozi calendar into your work calendar), but you won’t be able to modify your work calendar from Cozi.

Outlook: Both my husband and I use this popular Microsoft tool at work, so after exploring other options, I settled on it for keeping all my work and family obligations color coded in my work calendar. My work version syncs with my Outlook phone app, so I always know what’s coming up. Steve uses Outlook at work, too, so we can send each other reminders for our travel and for kid events/chauffeuring that we need to track.

I also share my calendar with colleagues who need access to my schedule and can import my work assignments from our company planner schedule. The downside of this for someone who likes their privacy would be that others at work can see your family schedule. That doesn’t bother me, though.

This free online calendar and app allows you to share and update your calendar with everyone who has permission to access it. You can sync Google calendar with your Outlook calendar at work or Apple iCal as well as access it on your phone. If you’ve got a Gmail address, you won’t need any additional sign-on to start using it.

2. Give your kids chores and pay them for it

“Have the kids handle a chore and pay them for it. Even if they don’t do it perfectly, they are learning how to do it and participating in the family business,” said fellow planner Daphne Winston. She paid her twins (now adults) for doing extra chores, and her mother paid her when she was a child.

I grew up this way, too. Now my kids get an allowance, for which they have certain chores they must do like keeping their rooms tidy and helping in the kitchen or laundry – but there are some kinds of things we’ll pay extra for like pulling weeds in the garden. Paying your kids for chores can help them learn the value of money and how earning income relates to work.

3. Prep meals in advance

“Prep as much of lunch and breakfast as possible the night before to make things run extra smoothly in the mornings,” says Vekevia Tillman-Jones, who has two young children. Tania, who loves to find ways to save on food that don’t require extreme couponing, makes peanut butter sandwiches in bulk and freezes them. I swear by my slow cooker.

Planning and prepping meals can save you money (by not resorting as much to take-out) and time. Home cooking has secret financial power! We all make a little wiggle room for takeout on our busiest days, though, and don’t beat ourselves up if we order a pizza or take-out Thai food.

4. Hire a responsible teenager – or retiree

Daphne explained that friends hired her teenage daughters to drive their kids to after school activities. “My friends then could work and be around to pick their kids up afterwards,” she noted. “Of course, you must make sure you choose responsible teenagers to haul your precious cargo around, but it was a lifesaver for my friends.”

I’ve got a retired neighbor who will take kids back and forth to activities. She charges a higher rate than a teenager but she is a more experienced driver! Senior consultant Lisa Painter uses a student au pair to help with kids, which is more affordable than a nanny in pricey Los Angeles. Operations manager Jill McLane relies on her village. “We really depend on our friends and they do the same with us.”

5. Pay your bills on the 1st of the month

Auto-pay is wonderful, but it’s easy to forget to review your bills before they are paid. We’ve all got our utility and cell phone bills on auto-pay. Many of us travel for work, so reviewing expenses on key credit card bills before paying them is a best practice. If something on the bill looks weird, there’s time to check into it before paying.

6. Put a load of laundry in every morning

This is my go-to mom hack to keep on top of the never-ending laundry that comes with having kids. I work from home when I’m not traveling, but you don’t need to work from home to practice this. I put a load in the washer in the morning, switch it to the dryer before dinner, and fold clothes before bed. When I got my first bonus from Financial Finesse, I asked brilliant space maximizer Evelyn Cucchiara (The Toy Tamer) to redo my laundry and play rooms so they were easier to keep tidy (working mom priorities, right?!). Nearly three years later, I am happy to report that both rooms are still tidy.

7. Let the kids sleep in their clothes

If you have a child who has challenges getting ready in the morning, consider letting them sleep in their clothes. After a nighttime bath or shower, let your child pick their clothes for the next day. This can be quite helpful if you have a late sleeper or a very early start on school or childcare. We’ve used this life hack in our family and it works.

8. Buy birthday party and hostess gifts in advance

Buying gifts in advance can save money as well as time. Whenever I see a good birthday party gift on sale, I buy several. This way, I avoid that last-minute trip to the closest toy store, which makes my child a half hour late for the party.

I like to shop at my local toy store, where they will wrap them all for me, but I’ll also snag a bargain on Woot when I see one. If I’m heading to Marshall’s or Home Goods to browse and see a good deal on a great host/hostess gift, I’ll stock up and keep it in my gift closet. That way, when we get invited to someone’s house for a meal or a party, I’ve got something on hand.

9. Outsource grocery shopping

Going to the grocery store by myself can be a vacation, but bring along two kids and it’s an obstacle course. I try to shop with each of my kids individually at least once a month (so they know how to shop and to teach them about financial choices). The rest of the time, I’m looking for hacks.

“Use a grocery shopping service,” recommended Daphne. Services like Peapod or ShopRite From Home will delivery groceries for a nominal fee. This helps you stick to your budget (no impulse buying!) and saves lots of time. Vekevia likes to order groceries online and set it up for pick-up so all she has to do is drive there and they load her groceries into her car. Jill said, “we use an app, Grocery IQ, that syncs our grocery list so whoever runs out of something adds it and whoever shops has the full list.”

10. “No” is a complete sentence

Tania said “So many of my friends feel guilty for saying no to anything – school events, volunteering, their kid’s requests. PTAs can be relentless. I believe in the power of the word “no” and that it is a complete sentence – no explanation required. This includes saying no to a culture that believes your kids should be in 100 activities a week. We limit the number of activities so we have a life on the weekends.”

You can say no to financial commitments as well, not just time commitments. Make sure you have an up-to-date family spending plan so you can decide whether something is in line with your financial priorities. Then be willing to say no as a complete sentence.

The big idea? Aim for work-life integration, not work-life balance

On some days, work demands more from me than expected, and on other days, the kids demand more. I’ve learned through trial and error that the goal is where I’m creating synergies between my work and family life. Instead of trying to block my time proportionately between competing goals, leaving work at work and home at home, I am learning to weave the two together to optimize my time most effectively with lower stress.

I take an afternoon hour with my kids when they get off the school bus and when everyone’s in bed, I’ll write a blog post. It certainly helps that our CEO is a working mom herself and that she’s set up a business model where the planner team works from home. But there are ways to do this if you have to go to the office every day as well. It’s about making it work for you and your family.

 

A version of this post was originally published on Forbes

How Spending In Your 30’s Has Changed Over The Years

October 02, 2018

A recent article in AXIOS highlighted the difference in how 30-year olds today spend their money verses 30- year olds 27 years ago. This interested me because I was in the 25 – 34 age group 27 years ago and now have a child who is in the 25 – 34 age group. It’s clear to me that we have different priorities at this age, but I was never sure if it was because she’s a girl and I was a guy, so I had to check the stats.

How we are different

According to this, my child and her peers spend more on education, health care, rent and contribute more to Social Security than I did, and they supposedly spend less on reading materials and alcohol (I never smoked and rarely have bought new clothes), which seems to make sense to me (and makes them sound a lot more responsible than I remember being at that age!). The cost of items that have increased is greater than the cost decrease from items that have gone down, so her net cost is higher.

These are interesting facts that Cliff Clavin from “Cheers” would gladly quote while drinking beer (sorry I don’t have a reference for the 30’ish crowd), but how can we use this information?

The real takeaway

The thing I get from this is that while you have extremely little control over the economic environment you are in, you do have control over what you spend your money on. Don’t be discouraged because the economic environment you are in is different than before — it is always changing.

To cope with that reality, your spending plan must:

  1. Reflect the environment that you are in
  2. Always be cash flow positive (i.e. you have to spend less than you make)

To create a spending plan

Remember, current trends and economic realities don’t HAVE to dictate how you spend your money. As Cliff would say, “It’s a little known fact that the tan became popular in what is known as the Bronze Age.” Now I need to see if I can binge watch “Cheers” on Netflix.

How You Might Be Making 40% More Than You Think At Work

September 28, 2018

Are you overlooking the real value of your benefits when you think about your compensation? Probably. According to a recent report, employer-paid benefits improved wages for private industry workers by 46.6% ($11.50 average benefits costs for average wages/salaries of $24.72 per hour). Did I mention that most of those employee benefits are not taxable to the employee?

Your benefits are worth more than most of us appreciate

While you’re making decisions about your health insurance and other employee benefits for the upcoming year during this open enrollment season, I invite you to take some time to calculate and appreciate their value. Think of it this way: if you were self-employed, you’d have to earn more than 50% more per hour to pay your own benefits costs plus the employer’s share of FICA taxes (Social Security and Medicare).

That’s assuming you could get similar pricing on insurance, which is unlikely. While there are many advantages to being your own boss, lack of access to group insurance coverages and retirement planning contributions aren’t in the plus column.

How to estimate the financial value of your benefits

Health insurance (typically $5,000 – $30,000)

Your health insurance is probably the most significant component of your benefits. How can you value what your employer contributes for you and your family, as well as the discount you receive on coverage for participating in a large group plan?

According to the 2018 Milliman Medical Index, the cost of healthcare for a typical American family of four covered by an average employer-sponsored preferred provider organization (PPO) plan is $28,166, with employers typically picking up 56% of the cost. That means that participation in their company sponsored health care plan is worth at least $15,788 for that family.

Of course your insurance costs may be different, and your employer may subsidize more or less of that. In my case, my employer pays 100 percent of my individual health insurance premium. My husband’s employer pays most of the coverage for him and our kids. Don’t dismiss the enormous financial value of company-subsidized health insurance just because it’s a common benefit in large companies. You’d have to earn nearly twice as much as the premium costs to pay for that insurance on your own after taxes.

Health Savings Account (HSA) (typically $500-$1,500 plus current and future tax savings)

More and more employers are also offering high deductible health plans in conjunction with a health savings account (HSA). In many cases, they’re contributing to the employees’ HSAs as well. Financial Finesse, for example, contributes $1,500 to my HSA, and I contribute additional funds pre-tax to get to the annual limit.

HSAs are a widely misunderstood and underrated benefit, and if you fully utilize your HSA, the long-term tax advantages can be significant to you in retirement. Whenever possible, I use other funds to pay my deductible and out-of-pocket expenses, so I can invest my HSA funds to grow tax-free. I save all my receipts for future reimbursement. If I follow that strategy for ten years and earn an 8 percent return, that HSA account would be worth around $50,000, which could be withdrawn tax-free by submitting accumulated medical and dental expenses.

Retirement plan (typically 2-6 percent of your salary in matching contributions)

According to the Society for Human Resource Management (SHRM), 42% of companies with employer-sponsored 401(k) plans match employee contributions dollar for dollar up to a certain amount. 56% of companies require workers to save 6% or more in order to receive the full employer-matching contribution. Your company may also make additional profit-sharing contributions to your account.

A typical employee with a $50,000 annual salary who earns an 8% annual return on their 401(k) contributions and has a 3% employer match would see an additional $73,628 in their account from the matching contributions after twenty years. (See calculation here.)

There’s also the value of having an employer-sponsored retirement plan in the first place. If you don’t have one as an employee, you won’t be able to save as much for retirement in tax-advantaged accounts. The consequence: employees without a work-sponsored retirement plan are far less likely to save for retirement. In fact, according to the National Institute on Retirement Security, 45 percent of working age households in the U.S. have zero retirement account savings.

Dental insurance ($1,500 – $4,500 annually)

The next time you have a cavity filled or need a crown, you’ll be grateful you have coverage to pick up some of the costs. Typically, dental coverage pays for half of certain procedures, as well as for preventative care, up to a certain limit per family member per year. Some dental coverage also includes benefits for orthodontics.

Disability insurance ($2,000 to $5,000 per year)

Premiums for insurance that replaces a portion of your income if you can’t work due to a non-work-related illness or injury can be paid for by the employer, employee or both. Purchasing this insurance as individual policies would be quite expensive.

Group policies are much less expensive per covered employee, so even if you’re paying some or all of the premiums yourself, you’re a getting a good deal — if you have access at all. According to the Bureau of Labor statistics only 25% of U.S. employees have access to both short and long term disability insurance benefits through their employer.

Life insurance ($250 to $500 per year)

Many large employers cover their employees with term life insurance at one times their annual salary. Supplemental term coverage is often available for a low, additional cost. The first $50,000 of group life is not taxable to you. The imputed value of coverage over that amount will show up on your W-2.

Employer contribution to FICA (7.65 percent of salary)

What is FICA and why does it get so much money from my paycheck?! FICA stands for Federal Insurance Contribution Act, e.g., Social Security and Medicare, and your employer pays just as much as you do towards both programs. The employer contribution adds up to 7.65% of your salary and bonus (up to a max on the Social Security tax). When you are retired and draw Social Security and utilize Medicare for health insurance, know that your employers were partners in getting you there.

Employee Stock Purchase Plan (ESPP) (typically 10% to 15% of market value per share purchased)

In a typical stock purchase plan, the employer offers employees the opportunity, but not the obligation, to purchase publicly traded company stock at a discount from the market value. Depending on how much you contribute, that can add up to thousands in discounts annually. Remember that your discount is taxed like income and taxes are withheld on it from your paycheck.

Tuition reimbursement (typically $1,500-$5,000 annually for approved coursework)

Many large companies offer tuition reimbursement for degree programs, professional certifications and courses related to your job. Reimbursement levels may depend on your grades. The first $5,250 of what your employer pays is excluded from your taxable income, but you may have to pay taxes on tuition paid in excess of that amount. (See the IRS guidelines here.)

Student loan benefits (typically $1,000-$2,000 annually, with a lifetime maximum)

Student loan repayment as an employee benefit is growing in popularity as the average student debt loan for those with a bachelor’s degree has hit $37,172. What’s that worth? For a student loan of $10,000 with a 6.75% interest rate, an extra $100 per month in company paid student loan benefits applied towards the principal could help pay off the loan in 55 months instead of 120 and save $2,144 in interest. (See calculation here.)

Unemployment insurance (0.3% – 1.5% of salary)

Under the Federal Unemployment Tax Act (FUTA), employers pay your unemployment insurance, not you, as well as most states. If you lose your job through no fault of your own, and you meet your state’s requirements, you can file for unemployment benefits for some period of time (which varies by state). Like all types of catastrophic insurance, you hope you won’t have to file a claim – but it’s comforting to know that it’s there if you need it.

Financial Wellness benefits ($500 – $2,500 annually)

If you’re fortunate to have access to employer-paid financial coaching and guidance, that’s like having a financial planner on retainer all year long. That could easily cost hundreds or even thousands of dollars a year. Use your financial wellness benefit to understand and maximize the value of your other employee benefits, as well as to take your personal financial plan to the next level.

Other great voluntary benefits

Your company may offer other voluntary benefits such as voluntary life insurance, gym membership, pre-paid legal assistance, commuter benefits, employee discounts, pet insurance, health and wellness programs, access to group long term care insurance, etc. The value can vary a lot. You will pay a cost for voluntary benefits, but because they are group plans, the cost is often much lower than what you would pay if purchasing them individually.

Adding it all up

What’s your estimate of what your employee benefits are worth? Add up the items and divide the total by your salary and bonus to see what percentage it actually makes up. When you look at those numbers, my guess is that you’ll appreciate those benefits more.

 

A version of this post was originally published on Forbes.