The 8 Things That Saved Our Sanity When My Husband Went Back To School

November 08, 2017

When my husband and I first made the decision that he would stop working and go back to school full-time to take accelerated classes towards a nursing career, we were both pretty excited.

Sure, there were sacrifices involved. He’d sacrifice his desire to work and have a steady income for a short time as well as give up most of his free time to studying. I’d give up some luxuries so that we could cut expenses, and I’d need to hold down the fort when he needed to study, especially around exam time.

The thing we didn’t anticipate

What we did not really think about was some of the stress that came with our decision. Now, if you are superman or superwoman and you can do all things, that is awesome! I admire you! I have friends like that, but sometimes, I can’t find my cape. So, if you find yourself in a similar situation as us and you aren’t feeling superman-ISH and superwoman-ISH, I’m here to help you.

Here are some things that have helped us keep our sanity along the journey.

1. Control the emotional rollercoaster. Talk about your concerns and remember that you are both making sacrifices, so you’re in this together, fighting on the same team. It makes the journey so much better if you don’t spend your time arguing.

2. Be prepared to experience hiccups along the road. The spouse going to school is human and may not get an A+ on everything and may need to repeat a class. If you’re the one in school, don’t give yourself a hard time about that. If your spouse is in that situation, give him/her some grace.

3. Stick to a realistic budget. All work and no play is just boring and it’s not sustainable over a long period of time. Create a monthly spending plan, so that adjusting to your new level of income won’t leave you with more bills than money at the end of the month. It also will keep you from being disappointed when you aren’t able to conquer the world like you used to.

For instance, you may not be able to ramp up your savings of your own or for your kids’ college education during this time. This may not be the best time to accelerate your student loan payments either. Just remember that this is a temporary situation.

4. Get a head start and at least create a plan you can tackle once you are back to two incomes. That really helps us when we get to feeling stressed.

5. Have an outlet for you both. Remember, neither of you are robots. You need an outlet. I cut back on getting my hair and nails done as frequently and signed up for a personal trainer at the gym. (Best shape I’ve ever been in, by the way, and it’s a stress reliever.) Find budget friendly gyms in your area. Facilities like YouFit and Planet Fitness have great deals for gym memberships on a budget. Or sometimes you can get corporate discounts for gym memberships simply because of where you work. Check with your employer to see which gyms might offer additional perks.

My husband is an avid car lover and found his outlet by working part-time at a friend of the family’s mechanic shop. DOUBLE WIN! He had an outlet and we had additional cash to go enjoy ourselves!

6. Don’t overthink dating, JUST DATE! Everything you do does not have to be over the top or complicated. Walking around the lake or park, holding hands and talking doesn’t cost a penny…Well, except for the gas you use on the way if you have to drive, but you get the point. Groupon is your friend. Try a new experience together. 

The point is that consistent dates are important. Most of what I read says you should go on a date once a week. Wow! We have a 2-year-old and are still working on the consistency part. Like I said, I’m not superwoman.

7. Give yourself some grace about household chores. If it’s been a long day with work, school and the kids, consider leaving the dishes in the sink until tomorrow, or letting the dishwasher do the job.

If the thought of that makes you stress out, and you can find room in your budget, consider hiring a maid. You can have the maid service twice a month, once a month, whatever you can afford. Added bonus: You can still take credit for the clean house. Hey! You did the leg work to hire some help.

A lot of people have had a maid at some point, so you may be able to get a referral from a friend, family member, or co-worker. You can even check out Angie’s List. Don’t forget you might find a deal on Groupon, too.

8. Get help before things get out of hand. If you find it challenging to talk and your marriage is on a very rocky road, consider marriage counseling with the pastor at your church or seeking marriage counseling outside of church. Be sure that you and your spouse can both relate to, and feel comfortable opening up to the counselor.

Another option is to check with your employer. Many companies offer free/discounted counseling services to their employees through an Employee Assistance Program (EAP).

Keep the end-game in mind

The most important thing to remember is that your decision is going to better position your family to live the way you really want to in the long run. For us that means a number of things like more family time, and an overall better quality of life. Stick together, keep the end in mind and remember all your sacrificing will soon pay off.

And for those of you who listen to TD Jakes: Just remember these are light afflictions during a short time in our lives.

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The Science Behind Spending Habits & How To Break Them

November 07, 2017

I crave ice cream before bedtime. I know the high, empty calories are not good for me, but it’s still like a WWE fight in my brain every night – the good guy (don’t eat it) is on his back while the bad guy (go for it) has him in a figure 4 toe hold trying to convince him to surrender. The good guy is throwing counters at him – “this stuff is going to make you fat!” “you’re going to regret it tomorrow!” — while the bad guy keeps the pressure on – “you deserve it!” “it will make you sleep better!” Sometimes the good guy wins, but most nights I eat the ice cream and regret it in the morning.

What’s happening in your brain when you make a decision

What’s going on in my mind is called an intertemporal choice or decision. This part of our brain weighs the immediate versus delayed gratification, or how current decisions affect future opportunities. Marketers use our intertemporal utility function against us when they advertise. Being aware of what’s going on during this decision process can help us make better decisions, especially financially.

Here’s another example:

The case of the shopaholic

My daughter is a self-admitted shopaholic. I bet she has over 100 pairs of shoes. (don’t worry, she knows I’m writing this) She and I discussed what goes on in her mind when she makes the decision to purchase yet another pair.

What’s going on in her mind

She tells me that she sees herself wearing them with a particular outfit and getting compliments on how she looks. She has created an image around her shoes where her peers identify her as the “shoe princess.” When I asked her how she feels later about owning so many pairs, she says she has mixed emotions – she loves her title of the Shoe Girl, but she laments the amount of money she has wasted.

Conflicting priorities

At 23, she is starting to think about bigger financial decisions like getting her own apartment and purchasing a new car. With these new obligations, it will be very difficult to keep her title.

How she got to this point

The problem is that she has actually created a habit out of shopping, the same way other people pick up habits like smoking, checking their phone, or eating ice cream. Her brain has built in a craving for the next purchase. If she continues to let this habit control part of her financial life, she will struggle to accomplish her long-term goals.

Reversing the habit

So, what actions can she take to curb this craving and reverse the habit? The first thing she can do is recognize it as a habit. The awareness that her current behavior has negative consequences on her future is a good place to start. And understanding that seemingly small amounts of money spent or saved today, can have big impacts in the future.

Here are some concrete things you can do when facing an intertemporal choice around spending:

  • Create a budget line item for purchases. Some people go as far as opening a separate checking account and giving themselves an allowance every paycheck they can spend on discretionary items. If they have their eye on an expensive item, they wait until their allowance accumulates.
  • Have someone to run your purchases by. If you have a spouse, parent or friend whose opinion would be helpful in analyzing a purchase, make it a rule to call them before you pull the trigger.
  • Set some rules for yourself. Set a dollar amount for purchases that need to have a 24-hour waiting period before you can buy it. Many times, a day removed can make the impulse less favorable.

It’s working!

I have already seen progress in my daughter’s positive financial habits — these days she calls me when she wants to make a large purchase and plans out every paycheck. Now I need to take my own advice and start changing my own habits, like cutting out the bedtime ice cream snacks.

BTW – This blog is really about whiskey, not ice cream.

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On Conspicuous Consumption: How Jay-Z’s 4:44 Album Gets It Right

October 26, 2017

When hip hop artist Jay-Z released his most critically acclaimed album 4:44, it was praised not only for its transparency, but also because of its economic messages. It’s no secret that pop music does not have the best track record of promoting good financial decisions. And with a few exceptions, hip-hop is the worst offender. You can even find a song like “Money Ain’t a Thang” in Jay-Z’s old catalog.

Essentially that is what has driven the buzz about this project — Jay-Z goes counter to the braggadocio of his youth and gives a little sage advice on areas we could all stand to work on. Here’s what I mean.

“Ya’ll on the ‘Gram holding money to your ear. There’s a disconnect, we don’t call that money over here” – The Story of O.J., by Jay-Z

Calling out conspicuous consumption

In “The Story of O.J.,” he raps, “Ya’ll on the ‘Gram holding money to your ear. There’s a disconnect, we don’t call that money over here,” which is referring to the “money phone” phenomenon. If you are not sure what that is, search the term “money phone” and you will find countless images of people holding stacks of cash to their ear. It is a show-off maneuver that is supposed to convey that money is calling the person.

You may not have hundreds of dollars to your ear while posting it to Instagram, but it doesn’t take much to fall into the trap of conspicuous consumption — the desire to have the newest car, the swankiest house and even the newest iPhone — which can actually result in a circumstance that puts you further away from having the wealth you’re looking to represent in the first place.

The problem with conspicuous consumption

Conspicuous consumption says you don’t belong. Many try to increase their consumption level in order to raise their status among others and be a part of the “in crowd,” but it has been my experience that such conspicuous consumption often highlights the insecurity of the person.

In my years of working with truly affluent clients, one thing I gleaned is that it is very difficult to convince someone who is actually wealthy enough to have that status that an outsider belongs there. It is like being a traveler to a foreign country. The natives know tourists when they see one and affluent people know who is affluent and who isn’t, regardless of consumption levels. Gaudy shows of wealth tend to confirm a person’s status as lower; it doesn’t improve it.

Conspicuous consumption could be a symptom to a deeper concern — and it never ends. Outward displays of wealth can result in sabotaging your journey to building your actual wealth. Wealth is a relative concept and when we fall into “Keeping up with Joneses,” it can be a never-ending spiral. When you see someone with that new phone or in that nice car, it is likely that that person could be judging themselves against someone in an even nicer car.

The real way to measure your wealth

Here at Financial Finesse we have come up with a definition of financial wellness that is objective and has very little to do with what you own. Through our work with millions of Americans, we’ve defined that true financial wellness is:

A state of being where an individual has achieved the following:

  • Minimal financial stress
  • Living below their means with no high interest debt
  • An adequate emergency savings fund
  • Income and assets are protected from loss
  • And an ongoing plan to reach future financial goals

So for example, if you use debt to get those extra things that might make you look wealthier (or more financially well), you could find yourself cutting back on your lifestyle later to pay off the things you thought you would make your life better today. By making good financial choices now, you set yourself up for more of the things you like later, without sacrificing your future.

This is not say you cannot enjoy nice things — financial health does not mean you must quench your sense of style. I have my own penchant for Italian loafers and German cars, but I also recognize I really only need one black pair and one brown pair of loafers. I also purchased my Audi used and it has been paid off for several years now. There’s a balance.

Next time you feel like you need to buy something that would compromise your ability to reach that state of financial wellness, take a self-assessment — ask yourself if the things you want are the things you really want and not just for PDC (public displays of consumption.) Be authentically you, but keep your financial future in mind.

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Could This Be The Real Thing That’s Keeping You From Saving More Money?

October 25, 2017

Scene: Pet store, just before Halloween.

You walk in and the first thing you see is that all pet costumes are 40% off. Of course you stop to look, and ohmygosh, that princess costume is exactly what your Siamese cat needs because come on, she’s the most royal of them all. It wouldn’t be fair to just dress her up, so you also pick out a Jester costume for the kitten, which is actually kind of purrfect since he’s constantly annoying her while she’s holding court.

Holding court with the commoners

You move along to the next display and see that they also have Christmas collars and who doesn’t want their cats to be dressed up for the family photo?

And just like that, I went from buying a bag of cat food to (almost) spending $75 on impulse buys that I absolutely, 100%, would have regretted within a week.

A real joker

Sound familiar?

Each item on its own didn’t seem like much (although $25 is actually a lot of money for a cat costume, now that I’ve left the store and regained my rational mind), but this is how retailers snag your dollars. They KNOW that you’ll be drawn to those displays and they know that you’ll already be adding up the social media likes and comments before you even hit the register.

My mom could not resist this one for Taz – worth it!

While saving up for life’s events like weddings, holidays and other fun times is one key to avoiding that infamous “borrowing” from your savings (I used to do it too, I kept a running tally of what I took out of my savings thinking that some day I’d pay it all back, when like what, I won the lottery? I was kidding myself), reinforcing your wallet against impulse spending on stuff is another important key for many of us.

Ideas to overcome the impulse

I won’t insult anyone by suggesting you just stay away from Target or only shop with a list (although that works for some), but if you also find yourself spreeing away your extra dollars, try one of these methods to see if you can’t keep it in check.

  • Eliminate the extra cash from your checking account. There’s a reason that happy hour is always busier on payday — everyone feels richer due to the buoyed balance in their checking account. Psychologically, I know that I feel much more spend-y when I have some wiggle room in my account, but if the balance is getting down there, I instinctively think twice about spending on anything beyond planned purchases. Hack your own habit by transferring any money you’re not planning to spend on bills and other planned expenditures before your next paycheck to a separate savings account. You may need to dip into it when things come up you didn’t anticipate, but it may make you think twice the next time a shiny object catches your eye.
  • Give yourself a splurge budget. Whether that’s factoring in that you can’t get out of Target without spending $100, or keeping an extra fifty dollar bill in your wallet that only gets replenished on the first of the month, allowing yourself to partake in the impulse spending — but in a more mindful way — can help to keep it in check.
  • Remember what you’re saying no to by saying yes to the dress/scarf/tote bag/cat costume. This is the trick I used that had me putting the cat clothes back — I somehow had the presence of mind to remind myself that the more money I save today, the earlier I can retire or the more fantastic vacation we can go on next year. Maybe put a post-it note on your credit card or some other physical blocker that can take you out of your emotional/impulsive mind and back to your rational head.
  • Match your splurge. Make a rule that for every dollar you spend on an impulse buy you will match with a dollar to savings.
  • Save your savings. If you’re a sucker for a flash sale or love looking at the bottom of your receipt to see how much you saved at discount stores like Marshalls or TJ Maxx, make a commitment to actually save that money by pulling up your banking app on the spot and moving the “savings” amount into your actual savings account.
  • Put yourself on a temporary spending diet. One way to deal with the fact that impulse buying is our emotional mind overcoming our rational mind is to create a habit, which takes practice. I’ve lost count of how many food diets I’ve tried and while I may stray from the eating plans after approximately 11 days, some of the habits stick over time. For example, now that I know how much sugar is in a pumpkin spice latte, I’ve gone cold turkey even if I do pop into Starbucks for a treat on occasion — I just choose a lower sugar option. By committing to NOT impulse buy for, say, 21 days (the length of time many experts say it takes to create a habit), you may naturally quell the impulse even if you go off your “diet.”
  • Create an email filter for all retail emails to skip your inbox and go straight to a folder. This way you can still get the coupons if you need them, but without the daily nudges to shop. This is another trick I actively use and here’s how I know it works: If I know I need to go to Michael’s to buy something, I look in my “Shopping” email folder to see whatever coupon or offer they emailed me that day, but otherwise I’m not tempted because I don’t see it in my inbox. On the other hand, a few weeks ago, an Athleta email escaped the filter and within minutes of opening the email I found myself pages deep in yoga pants and sweater dresses. Danger zone!

What ways have you found that keep your impulse buying in check? I’d love to know and share them in a future post! You can email them to me or just comment on this article on our Facebook page.

 

Are You Committing Financial Infidelity?

October 20, 2017

Have you ever cheated or lied to your spouse or significant other regarding a financial matter? Amazingly, 42% of adults who combine their finances with a partner admit to committing financial infidelity, according to a survey last year. The survey also found that almost 4 in 10 people had hidden cash, a purchase, a bill, or even a bank account from their significant other, while 16% reported more significant lies such as how much they earned or how much they owed.

These numbers are higher than when the same survey was conducted 3 years earlier. Perhaps we need Sweetest Day as a reminder to be good to our partners after all!

Money fights can lead to divorce

I have to say that I’ve occasionally tried to pass off a new outfit as if it had been in my closet for a while, but never to the point where a financial deception would cause an argument between me and my husband. Luckily, we don’t fight about money since arguments about money and finances is the top source of marital tension based on Money Magazine‘s Americans and Their Money survey.

Fights about money that occur at least once a month were reported by 41%, followed by chores and quality time together, and this financial stress isn’t good on the state of their relationships. Utah State University professor Jeffrey Dew, an expert in money and family relationships, has found that couples who disagree about finances almost every day are 69% MORE likely to divorce than couples who rarely or never argue about money.

Spotting the signs of cheating

So how can you spot the signs that your partner in love and money is cheating on you financially? It usually gets detected with finding a stray receipt or credit card statement you aren’t familiar with, or even worse, calls from creditors.

Another red flag is if your loved one gets defensive or withdrawn when you try to bring up money issues or if they handle all the bills and you never get to see how the money is being spent (or earned). In some cases, financial deception could be a sign of a serious issue, such as gambling or a compulsive shopping addiction.

Avoiding financial infidelity

To avoid being cheated on or to fess up to your own financial infidelity, the first step is to sit down and have the “money talk” at least once a month. Clear the air and share all of your debts, account balances, and review your latest pay stubs. Talk about what is causing you to stray from your financial goals as a couple and set a spending limit like $100 for individual purchases that don’t require approval from your partner.

Paying the bills should be a joint venture so both of you know how much is owed and to which creditors. This way, the only thing left to argue about will be what’s for dinner tonight — which, believe it or not, 28% of couples argue about every month!

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How I Finally Found My Dream Job As A Financial Planner

October 06, 2017

For the past decade plus, I have been helping people with their finances. It’s what I love to do. But getting to my dream job was a different journey than what I thought it would be. I started in the financial planning business to help people and scratch an entrepreneurial itch I’d had for some time.

The challenge of getting started as a financial advisor

At my first firm, I quickly learned that being an advisor meant selling life insurance and annuities. Success was measured by how many prospects I could get in front of and how much commission revenue I could generate through product sells. This wasn’t exactly what I wanted to be doing — I knew I was helping my clients, but also knew I needed to expand my training to be able to provide help in all aspects of their financial lives.

So I completed the gauntlet that is CFP® certification, and landed at a large wealth planning firm in a consulting role working with affluent clients. I was delivering financial planning for my clients and helping them manage their assets – my dream job (or so I thought).

Something’s missing

I was loving my work with clients and I was a good financial planner. I especially enjoyed building relationships and managing investment portfolios.  I was making a nice living, working with a team of incredibly smart and honest professionals, and delivering on comprehensive wealth management for my clients. But it always felt like something was missing.

Measuring my impact

I started asking myself how much of an impact I was really having for my clients who were already in great financial shape before I ever met them? I was left unfulfilled by helping wealthy clients become marginally wealthier. To be honest, I knew they would be fine regardless if their portfolios had a good quarter or not. What about the people who don’t have a lot of assets for an advisor to manage? Who is helping them?

Following the money

In order for most advisors or financial planners to make a living, they have to sell a product or service. That means they have to find clients that:

  1. Need/want that product or service; and
  2. Can afford to pay for said product or service.

There is nothing wrong with an advisor expecting to be compensated — most are honest and hardworking and should expect to be paid for their services. But there is a disconnect. Those people struggling with debt or cash flow problems would benefit tremendously from working with a financial professional, but the compensation structure in the financial services industry essentially denies them access to the help they need.

Where financial wellness benefits come in 

Luckily for me, I found Financial Finesse a couple of years ago, a company dedicated to unbiased financial planning guidance delivered by experienced, qualified professionals available to people in any financial situation.  I had to bide my time to meet the 10 year experience requirement, but I am so glad I did.

Being with the company that pioneered the idea of employers providing financial wellness to their employees as part of their benefits is amazing. We help employers provide an important benefit to their employers that is shown to improve absenteeism, increase productivity, and save on health care costs as financial stress is reduced. We help employees find actionable solutions to their pressing financial issues through a coaching model with no hidden agendas.

Living my purpose

And I get to live my purpose by helping people make good financial choices and reach their financial goals — now that is my dream job.

Want more helpful financial guidance, delivered every day? Sign up to receive the Financial Finesse Tip of the Day, written by financial planners who work with people like you every day. No sales pitch EVER (being unbiased is the foundation of what we do), just the best our awesome planners have to offer. Click here to join.

How 4 “Good” Financial Decisions May Actually Lead To Financial Issues

October 03, 2017

“I don’t understand. How can I be financially struggling if I did everything I was told to do – get a degree, a good paying job, a car and a house?” This was the question posed by a young woman a few years out of college, wondering how she found herself living from paycheck-to-paycheck.

I told her that I am sorry. We are all great at giving general advice without explaining the boundaries needed for the advice to actually help and not potentially hurt someone financially. Getting a degree, a good paying job, a car and a home can all be tools to help you become financially secure if done strategically, with boundaries. If not, each decision can sink you into financial insecurity:

Getting a degree

An article by McGraw Hill Education mentioned that those with a college degree earn an average of a million dollars more than people without a college degree. There is a value to earning an education – if done without straddling you to debt that will take you into the next century to payoff.

I believe in doing what you love, but if you are sacrificing 4+ years of your life and possibly your finances for 10+ years of student loans, you should at least know the following about your future career: the minimum education requirements, the average cost to get the degree, the average starting salary and the average length of time it may take you to finish paying off the loan.

An article by Bankrate does a great job breaking down the numbers for you. Basically, you do not want to spend $150,000 on a degree that may only pay $40,000 a year. A rule of thumb is the total of a student loan should equal your minimum first year starting salary.

Even better, look for companies that will foot the bill for you. Employers like Starbucks offer programs that can help you get your degree tuition-free. Other employers offer tuition reimbursement programs to help you pay for college.

Worth it or not?

One of the best analogies I ever heard of pursuing a Master’s degree is to a tattoo. You really want to make sure you want to get one because the cost can be lifelong. If you are thinking of pursing a graduate degree, use graduate school ROI calculators to estimate if the cost is worth it. Bottom line: getting a degree is financially beneficial if you can do it cost effectively with a degree that will open the door to employment instead of a sinkhole of debt that will take you a century to climb out of.

Buying a car 

Yes, depending on where you live, you may need a car for transportation to get you to the job that will help you become financially secure, but this does not mean that car has to be a 2017 BMW when your salary can only afford a late model Corolla. If your car is older, driving it until the wheels fall off may be one of your best financial decisions.

An article by Consumer Reports mentioned that keeping your car until it at least hits 200,000 miles (on average about 15 years) could result in savings of $30k or more. Buying a vehicle with a history of reliability, following the manufacturer’s maintenance schedule and not skimping on parts can get your vehicle to the 200,000 and above mark.

Car loan guidelines

If you get a car loan, consider sticking to the 20/4/10 rule: 20% down, finance terms of no more than 4 years and a total monthly expense under 10% of gross monthly income (car finance rule of thumb).

When I was younger, it was hard not to feel tempted to “treat myself” to a new car. Today, the average monthly payment on a new car is $479 and the average car loan is $30,032. If you got a car at age 25 for even half that amount and invested the extra $240 in a mutual fund earning about 7%, you could have close to $300,000 by the time you are 55. So the next time you think about getting a new car, think to yourself, is it worth $300,000?

Purchasing a home

Buying a home when you are financially prepared can be a wealth builder. Buying a home when you are not prepared can be a wealth stripper that can haunt your credit in the form of a future short sale or foreclosure. Before purchasing a home, pay off high-interest rate debt so you have more disposable income and have a budget so you know how much of a mortgage to get to help you maintain your lifestyle.

Mortgage guidelines

The guidance is to get a housing payment (principal, interest, taxes, insurance and HOA fees) that represents about 25-35% of your take-home income. If you love to travel, consider looking for a mortgage closer to 25% of your take-home income to still give your budget room for your favorite activities.

Consider all the costs

Keep in mind that choosing a mortgage payment strictly based on what you pay in rent does not fully account for the additional cost of homeownership. For example, when our air conditioning went out in our $1,000 a month apartment, we called maintenance and had a brand new air conditioning unit with no cost out-of-pocket. If we were homeowners with a $1,000 mortgage, that same incident may have cost an additional $5,304 for a new air conditioning unit.

Home repair rule of thumb

A rule of thumb is to save about 1% of the purchase value of your home for repairs. The number can be adjusted based on the age, location and type of home.

Looking for a better paying job 

I am all about looking for better opportunities, but before you do, consider what you are giving up. I have a friend that accepted a job with a $20,000 pay increase. Sounds great, right?

Better pay does not always mean a better job

But after talking to her, there were a few details she had not considered. One, she was a single mom and her old job was very flexible in allowing her to work remotely and leave early or late so she could attend her child’s events. Her job also paid 100% of her medical premiums and paid almost 100% for her daughter’s. Her new employer’s benefits were going to cost her about $500 a month, instantly wiping out almost 1/3 of her new salary.

Her old job was also closer. The extra commute for her new job was going to cost her an additional $60 in gas monthly and $100 in monthly parking fees. Her old employer had a robust tuition assistance program and lots of opportunity for growth. Her new employer was a much smaller firm with no tuition assistance. She would also have to rebuild relationships – relationships that helped her get promoted and allowed her to have a flexible schedule.

Do your homework before taking the plunge

Before you take the plunge, do some homework. Go on websites like Glassdoor and research employee comments about your possible future employer. Employees are not shy about giving their opinion or sharing information.

Finally, do not make a decision emotionally. If you are frustrated, give yourself time to cool off before leaving. If you are overworked, take some PTO and carefully decide if leaving makes sense. The last thing you want is to have to take a step back in your career because of a bad move.

Moving toward financial security

Strategically making decisions regarding pursuing an education, a vehicle, a home and even a job will help ensure that each decision will take you a step further into financial security, instead of plunging you into a spiral that you may spend the next decade (or two) digging yourself out of. If you need help, consider consulting with a qualified and unbiased financial professional. Your employer may even offer one for free through a workplace financial wellness program.

This post was originally published on Forbes, September 3rd.

Why You Shouldn’t Be So Obsessed With Your Credit Score

September 27, 2017

I saw a headline recently about how to get your credit score above 800 that really had me shaking my head. My first thought was, “Who cares?” It’s true that a good credit score is essential to obtaining the best rates when borrowing to buy a home or a car, but it’s definitely not the end-all, be-all that a lot of young people seem to be obsessing over.

Once your credit score is over 750, you pretty much qualify for all the best rates anyway. Working to take it higher is really more about perfectionism or competitiveness that won’t really offer you any financial perks that you don’t already have. In fact, I’ve seen too many people actually hurt their financial situations in an effort to increase their score.

Your credit score is only a measure of one part of your financial wellness.

Great credit, bad finances

I remember working with a woman who was drowning in debt. She was scraping by to make her minimum payments and couldn’t pay her bills without using her cards, but her credit score was still pretty good because she was paying on time and hadn’t maxed out any cards. When I suggested she enter credit counseling to get it under control, she balked.

Credit counseling would be a ding to her credit score and she needed to keep that up so she could get more credit. I felt helpless. Keeping her score up was more important to her than addressing the thousands of dollars she was losing to interest each year and there was nothing I could show her that would change her mind.

Great finances, bad credit

On the flipside, I have a friend who has zero debt, a fully-funded emergency fund and is on track to retire, but he has a terrible credit score because he has avoided debt and has no real credit history.

The wrong way to compare

If you were to compare the financial wellness of these two people based on credit score alone, you’d get a completely wrong picture. It’s kind of like the thin person who looks super healthy but has high blood pressure, cholesterol issues and vitamin deficiencies. Keeping your weight down is just one component of good physical health.

Your credit score is simply a measure of your ability to pay lenders back when you’re supposed to. If you’re planning to borrow money soon, then it’s something to be worried about. But if you have no plans to buy a home, finance a car, go back to school on a loan or apply for any other type of credit, don’t worry about it so much.

What you should focus on instead

Generally speaking, the people that tend to obsess over their credit score are doing so because it’s something concrete they can measure. It’s just like getting on the scale each Monday morning to assess the weekend’s damage. But there are better ways to track your overall financial wellness that are much more likely to get you to financial independence.

Tracking your financial wellness by net worth

I used to focus on my total debt as a measurement of my financial wellbeing, but that can be a little depressing. It also wasn’t considering the fact that I was increasing savings in other ways so I started tracking my net worth instead, which has been incredibly motivating.

How to find your net worth

Your net worth is all your assets (savings, retirement accounts, home, car, etc.) minus all your liabilities (credit cards, student loans, mortgage, car loan, etc.). If you’re just getting started in life, chances are you have a negative net worth, but that’s ok. As long as it’s growing each month, you’re good.

High income does not always mean high net worth

Remember when Kanye West asked Mark Zuckerberg for a loan and we all pointed and laughed at the extravagant lifestyle he lives? He may have been asset rich, but he was also liability rich. He had a negative net worth. Your net worth is the ultimate measure of your financial wellness and your goal should be to increase that number, month over month.

If you can get your net worth up while also paying your bills on time, chances are you will have a decent credit score by default, although I once unfollowed an NFL player on Twitter for tweeting about paying his cable bill late “just for fun.”

Having a high income and a lot of money in the bank doesn’t a good credit score make (in fact, neither of those factors affect your score at all), but concentrating on keeping more of the income you make and paying back more of what you owe is bound to help you achieve financial freedom. Isn’t that ultimately what we’re all after anyway?

This post was originally published on Forbes, July 2nd.

6 Ways To Beat Financial Stress That Have Nothing To Do With Money

September 25, 2017

Are you insanely worried about money? Does worrying about paying the bills and tackling debt keep you up at night or lead to arguments? If so, you are not alone.

I’ve been there

In my early thirties, I was consumed with financial stress. Money worries were on my mind 24/7. For a long time, I rarely felt relaxed. My worry really began to overflow when I faced my financial struggles head on: I was spending more than I made, I still had student loan balances, I received an unexpected large tax bill that I couldn’t afford and I had to figure out how to live on a lower income following a career change.

How I dealt emotionally

I’ve written many times about how I declared my own financial independence and the specific behaviors I changed in order to achieve it over the past twenty years. What I haven’t written about so much is how I emotionally weathered those rough, early years of cutting my expenses, growing my income and tackling debt without losing my mind!

Here are six ways I stayed resilient. Try the one which intrigues you — or all of them in combination for a powerful boost:

1. Walk it off

During the period where I was struggling financially I walked every day for hours, rain or shine, to burn off my nervous energy. As I was young and single at the time, it was easy to just head out the door. Walking became my go-to strategy whenever I felt overwhelmed.

When I walked, I would usually start off ruminating about my problems, but after twenty minutes or so I found an easy rhythm and became more mindful of my surroundings. I walked for errands, for exercise and to spend time in parks. Eventually, I literally walked my way out of debt by giving up my car.

2. Practice yoga for strength, flexibility and acceptance

My big splurge back then was a 90 minute vinyasa class once a week at a beautiful yoga studio. Each class cost $20, so that was 40 percent of my weekly $50 entertainment budget, and it was worth it. At home, I practiced rounds of sun salutations to build strength, hip and shoulder openers to create flexibility, inversions for perspective change and relaxation poses for acceptance.

As my body grew stronger and more flexible, I found that I also became more emotionally resilient. I still practice most days, which helps me keep my sanity regardless of what life throws at me.

3. Meditate to foster kindness and compassion

I’d practiced yoga before, but I’d never tried meditation. Feeling stressed all the time seemed the perfect reason to learn how to do it. I tried a few classes, but what really worked for me was simply sitting quietly in a chair at home and paying attention to my breath for about 20 minutes per day.

It was such a helpful habit that I continue this daily, more than two decades later. Not sure where to start? Try an app like Headspace or the guided loving kindness meditation with Sharon Salzberg.

4. Process by putting it on paper

When my financial stress was at the highest points, I sometimes found myself bubbling with resentment. I was irritated with myself for letting the situation get out of hand, angry at clients who had not paid their bills and generally mad at the world for not living up to my expectations. Blaming yourself or others is never an effective motivational strategy, though.

Inspired by a book by Julia Cameron about jump starting creativity, The Artist’s Way, I began a journal writing program. For nearly two years, I wrote several pages in school notebooks every morning, writing about whatever I was thinking or feeling at the moment. I also used the questions in the book to prompt more thoughtful responses.

It’s worth noting that I’ve never gone back and read what I wrote – I was content with getting it all out on paper so could leave it behind me.

5. Say your prayers

Prayer is personal, and what feels most meaningful for one person can be different from another, depending on one’s spiritual tradition and beliefs. I can only tell you what helped me.

Despite 16 years of Catholic school, it wasn’t until I hit the financial skids that I developed a daily prayer practice that was personal and connecting. Don’t underestimate the power of asking for help, and for giving thanks for what you do have.

What I found the most helpful was asking God for wisdom and insight, so that I could make wiser decisions, and for resilience, to weather the financial storms.

6. Seek community

The Beatles had it right: we get by with a little help from our friends. The right traveling companions in life can help you in your journey to financial independence. As I wrote in this post, I formed a group with other self-employed friends to support each other in changing our financial habits. Because we each had different financial challenges and skills, we encouraged each other, gained inspiration from each other’s strengths, and held each other accountable.

Financial peace takes time

Going from financial stress to financial peace takes time. I’m financially independent now, but it didn’t happen overnight. Those early years of significant financial behavior changes were a struggle, but they were also deeply transformative.

These practices I’ve described are things that worked for me in supporting my journey. As our blog editor Kelley Long wrote, your money attitude can keep you poor. The opposite is also true — the right money attitude, along with the right financial behaviors, can make you financially independent.

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3 Important Adulting Lessons I Taught My Daughters This Summer

September 22, 2017

A few years back I wrote about my daughters’ experience with having college roommates and the perils that can come along with that. Well, they did learn some valuable lessons about reading a contract before signing it and that it’s not always good to live with friends!

I’m super proud to say that one daughter graduated from The Ohio State University in May and accepted a nursing position at a local hospital. Her twin sister is in the home stretch and will finish in December so they decided to move to a smaller place and eliminate the roommate drama.

Letting them figure it out

I purposely took a step back during all this transition because it was time for them to handle the tasks I normally would do such as arrange the movers, help pack, and review the new lease – what my daughters call “adulting.”  Their move was stressful – what move isn’t? –  but fairly uneventful. And they learned a lot.

Teaching them to adult

But there are still some areas of adulting where they need my guidance before I’ll feel comfortable just letting them figure it out. Here are three that I focused on this summer:

1. Read and understand ALL your employee benefits. My daughter accepted her full time position in June and had thirty days to review and enroll in her benefits. Luckily she has a mom who works in financial wellness and can help her decide what makes sense for her.

For instance, she declined her medical insurance because I will continue to carry her on my company’s insurance (thank you Financial Finesse and the Affordable Care Act), and she would have stopped there if I hadn’t spoke up.

I suggested she read all the benefits and think about what else is important for her. She eventually enrolled in her 401(k) (10% at my insistence) and pet insurance for their 14 year old dog Cosby. Smart.

2. Think about the longer term. I really don’t like nagging, however it’s necessary sometimes when the outcome is important. My newly hired child learned that the hard way when she received her 1st paycheck and realized that her 401(k) election hadn’t been processed. She emailed HR about the mix-up, got no response and gave up. That wasn’t going to work for me. I nagged her until she went to her HR department and had a representative correct the issue.

Why did I stay on her about this? Most new hires have 30 days to make benefit elections then must wait until open enrollment later in the year if they want to make changes. My daughter could have missed out on six months of 401k contributions plus the employer match – that’s $3,250. But over 40 years at a 7% return, that could grow to over $48,000! Now she understands why I pushed so hard for her to follow up.

3. Use your phone for more than texting and social media. Mind you, I appreciate the convenience of texting and using apps to stay connected, but when did talking on a cell phone become taboo? Maybe in 15 years when the Millenials and Gen Z’s are running the world this won’t be quite as important but for now, it’s sometimes necessary to call a person.

After their move, my daughters needed to update and pay their home and auto insurance. Somehow wires got crossed and the insurance was cancelled. My daughter emailed their insurance agent once she realized they had no auto insurance but didn’t get a reply.

She happened to mention this to me and I asked, “Did you call them?’  Her reply, “No.” My not-so-calm response was, “What?? This is urgent for you, so call the agent, leave a message if they don’t answer and get some insurance!” That did the trick.

What it means to adult

Adulting means taking responsibility for your actions and more importantly, the outcome of your decisions. Experience is teaching my daughters the importance of these lessons and thankfully they didn’t suffer any negative consequences.

Now if only my daughter would realize how much she spends on lattes, but that’s a lesson for another day. Perhaps Doug can help me when I’m ready to tackle that one…

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5 Steps To Start Your Recovery After A Hurricane

September 19, 2017

I’ll never forget the first day I saw the aftermath of Hurricane Katrina. It looked like something out of a sci-fi movie — homes smashed together like accordions and cars upside down throughout the streets.

Not only were the cars upside down, but a lot of the people I talked to felt like their lives were also turned upside down. They all said that they were initially shell shocked, not sure what to do. I can only imagine.

If you find yourself in a similar situation after one of our recent natural disasters, consider using financial toolkits like the one on the Consumer Financial Protection Bureau’s  website to map out a game plan.

Beyond that, here are 5 steps you can take to begin the process of getting your life turned right side up again:

1. As soon as you can, contact any of the following organizations for assistance:

  • FEMA (Federal Emergency Management Agency) — They can provide the latest information and resources specific to your area.
  • Call 2-1-1 — This is a free service offered by the United Way to help people find local resources. They can provide information about shelter and housing options along with utility assistance and disaster relief support.
  • Your local chapter of the Red Cross — They can help you find shelter, and in some cases, aid and vouchers.
  • Local places of worship — When I volunteered after Hurricane Katrina, my group (I went with my local church) went to other local places of worship to find out who had contacted them for help. We divided up the assignments by skill set and availability, then attempted to help everyone on the list. We helped with everything from cleanup and moving people’s possessions to actually repairing homes (this may vary depending on the volunteer skill level.)
  • Disaster Assistance Improvement Program —  You can use this website to see if your area has been declared eligible for individual assistance.

2. Contact your insurance company. Verify your coverage and if you do not already have a copy of your policy, ask for an electronic copy. Consider taking pictures and videos of any damages before you start cleanup to document any claims you are making. Use the Insurance Information Institute website to walk you through how to settle an insurance claim.

3. Contact your creditors. Even if you think you have it financially together, contact ALL of your creditors and inform them that you have been affected by a natural disaster. At a minimum, they will have it on record, so if you run into problems, you’re good to go. The key is to contact them BEFORE you miss a payment. If your income has been impacted, you can ask your creditors to work with you.

4. Beware of scammers and verify everything before working with a contractor. I was blown away by the amount of contractors going door to door offering their services (for a fee) during my volunteer time after Hurricane Katrina. Many were honest, but a few were scammers. Before agreeing to any type of work, get everything in writing and do not pay in cash and do not pay up front. Make sure you go online to read reviews of your potential contractor. And before you just sign up with someone who knocks on your door, try asking for referrals for local contractors, preferably one that has already worked with someone in your area.

5. Take care of yourself. You and your family have been through major trauma. If you are struggling to sleep or feel yourself slipping into depression, contact your company’s Employee Assistance Program for guidance. Don’t forget to talk to your kids — oftentimes they may need your help to express how they are feeling. Be patient; tempers may be shorter than average and your kids may be extra clingy. As you contact organizations for relief, consider also asking for counseling for you and your family, if needed.

Remember, recovering from a natural disaster takes time and often persistence. Consider using the steps above as a guide to get on the path to recovery.

Here’s How One Couple Is Achieving Financial Independence Before Age 50

September 08, 2017

One thing I love about working at Financial Finesse is that I have the opportunity to provide financial guidance to folks with a wide range of needs. The majority of my conversations are centered around the specific needs of an individual at a specific point in time — it gives my days a huge variety and I find that every conversation I have is unique.

However, I was recently reminded that while each person and their needs and goals are unique, many of us are in the same situation. It’s how we approach that situation is what leads to differing needs, goals and outcomes. Here’s what I mean.

The situation

I recently spoke with Craig (not his real name), who was looking at ways for he and his wife to maximize retirement plan contributions. Their goal was to save 50% of their income and to be financially independent in the next 5 to 10 years. He is 37 years old now. After assessing his situation, I agreed that they would actually be able to achieve that goal and be completely financially independent before the age of 50. Amazing!

As our conversation concluded, I found myself thinking about how this guy and his wife are doing things right but was also telling myself that their situation is unique and that they are lucky — they both have good paying jobs and could afford to sock away a good chunk of change to meet their goals.

But as I gave it more thought, I realized that their situation was not at all unique. Like may of us, they both went to school, got jobs that paid them fairly, eat 3 meals a day, live in a home and community they enjoy, etc. They weren’t born into money, they were working to accumulate their own savings. What is unique about this couple are their financial goals which translate to different than the “norm” habits and outcomes. So, what can we all learn from their success?

Learning from their success

Decide What Is Important To You. It’s all about prioritization. Craig’s top priority is to save early and often to achieve financial independence at an early age. My guess is, he’s not concerned about keeping up with the Jones’s, nor does he drive a luxury car.

I think you will agree that Craig has probably taken this decision to a bit of an extreme (not everyone can achieve financial independence by their mid 40’s), but we can all set realistic long term goals and adjust our spending and lifestyle behaviors to achieve these goals.

Making a small shift: Set a goal to retire one year earlier than originally planned. Then, cut out something that’s not as important to you as retiring earlier and apply the savings towards retirement.

Plan Early And Often. Rome was not built in a day. When I talked with Craig, it was clear he had been working consistently towards meeting his goal for a long time. My bet is that virtually every financial decision he’s made since his early 20’s has been influenced by his long-term goal. Again, he may be taking this to an extreme, but if you have a long-term vision, set the goal and work to achieve it, you may surprise yourself on what you can accomplish.

Making a small shift: Answer this question: what do you want to be different in your life 10 years from now? What small action can you take today to take a step toward that change?

Live Below Your Means. Craig and his wife most certainly live in a smaller home than they could afford to buy based on their income. If the bank says you can afford a $350,000 mortgage, that does not necessarily mean it would be a good financial decision for you. Consider what that larger mortgage payment would do to your day to day life style.

Look at it this way, if you had chosen a lower-priced home and reduced your 30-year mortgage payment by $100 per month, and instead directed that $100 to your 401(k) over the 30 years of your mortgage, you would have increased your retirement savings by $100,000 (assuming an annual return on 6%).  That’s real money that could allow you to achieve your financial independence sooner that you think!

Making a small shift: Maybe you can’t move to a home that’s $100 less per month or maybe you don’t have 30 years to save, but what other areas can you cut back so that you can find an extra $100? Use this calculator to see the impact of finding just an extra $3 per day to put away.

The key takeaway from Craig’s story is that if achieving financial independence is THE most important thing to you, it’s entirely possible. You just have to be willing to make some tough choices in order to get there.

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Our Top 10 Blog Posts Of 2017 (So Far)

September 04, 2017

This Labor Day, as you (hopefully) enjoy a day away from the normal go-go-go of daily life, we’ve curated our Top 10 most popular posts of 2017 so far, in hopes that one or all of them will assist you toward the goal of financial independence — aka, the day you have to labor only because you want to, not because you have to! Enjoy and have a safe and happy Labor Day!

Top 10 Financial Finesse Blog Posts So Far This Year

  1. What Are Your Health Insurance Options When Retiring Early?
  2. How To Avoid Borrowing From Your Retirement Plan
  3. How To Have The Money Talk
  4. How Long Should You Keep Financial Documents?
  5. Do You Need A Cohabitation Agreement?
  6. How Should You Invest Your Roth IRA?
  7. Quiz: Do You Get The Most Out Of Your Benefits?
  8. How I Sold Everything I Own Online
  9. The Best Financial Advice I’ve Ever Heard
  10. Should You Go Into Debt To Get Pregnant?

You may have noticed that we’ve added some new voices to our blog over the past couple weeks. Going forward, we will be mixing in the voices of our entire Financial Planner team and we think you’ll really like what they have to say.

If you have an idea for a post or a question you’d like us to answer, please email your thoughts to our blog manager and we will add it to our calendar.

Thanks for reading!

Don’t miss a single day of what our planners have to say! Sign up to receive the Financial Finesse Tip of the Day, written by financial planners who work with people like you every day. No sales pitch EVER (being unbiased is the foundation of what we do), just the best our awesome planners have to offer. Click here to join.

The Art Of Financial Trade-Offs: What Do You Value Most?

September 01, 2017

Last week, I found myself debating the best course of action for watching “The Money Fight” between Conor McGregor and Floyd Mayweather (spoiler alert: Mayweather won, to no one’s surprise). I’m a big fan of mixed martial arts (MMA), but for those who aren’t as into it, the appeal of the fight was that the biggest star in MMA (Conor McGregor) accepted a challenge from the biggest star in boxing (Floyd Mayweather) to go head to head in a boxing match, for what turned out to be Mayweather’s 50th win and last fight of his undefeated career.

I’m not a Mayweather fan (mostly because he glorifies a lifestyle of excessive spending, which is OK if you’ve earned $1 billion in your career like he has, but not great advice for most of his fans), so I was rooting for McGregor to win by early knockout. Despite the odds being stacked heavily in Mayweather’s favor, both men stood to win several million dollars.

In the fight world, this is a big deal. And, for me, it presented a challenge of how I wanted to watch the match — a challenge of both finances and fun. I had a few options here:

  1. Stay home and buy the pay-per-view at ~$100.
    Pros:
    – Watch in my PJ pants and eat/drink whatever I want.
    – Ability to adjust the volume to be whatever I need it to be.
    – No line at the restroom or waiting for a drink.
    Cons:
    – Unless I invited friends over and they brought food or beverages or chipped in for the PPV cost, this could be my most expensive option.
    – If something spectacular happens, there is no crowd yelling, which is part of the joy of watching with a crowd.
  2. Head out to a local pub that is showing the fight.
    Pros:
    – I can control the cost by limiting the number of cocktails and food I consume.
    – The bigger the crowd, the more entertaining the “oohs” and “aahs” and “OHMYGOD’s!” are.
    Cons:
    – It would be very crowded, so may be tough to get a table.
    – I’ve gone to watch big fights before and never gotten a table, and standing at the bar all night isn’t my favorite activity.
    – It could be a long night, so chances are that I would order food and a few beverages that could raise the cost close to the PPV cost.
  3. Skip the fight and read a good book, catch the highlights online the next day.
    Pros:
     – I get to read a classic and check it off my list.
    – It could be a nice, quiet night and I probably wouldn’t stay up till 1AM.
    Cons:
    – I wouldn’t get to experience the adrenaline rush and joy that I get when I see a great night of fights (although I find boxing incredibly boring after a decade-plus of watching MMA).

Making the trade-off

The trade-offs I had to make here, and that you probably face at times, had to do with several factors:

  • Cost vs. experience
  • How to spend discretionary dollars
  • Evaluating “needs vs. wants”
  • Probably a few others

At times, budgetary concerns are the deciding factor; other times, the fun and experience factor is what decides it. What I had to do in this situation was determine what my end goal was and then set a spending limit for my choice.

What I decided

I went with a hybrid of immersing myself in the experience while trying to limit my spending: I ended up going to a local pub with some friends, but first I made dinner for the kids and myself at home. That way I didn’t run up a big tab at the pub on food, but still got to see the fight without spending $100+.

I’m curious – how do others make this type of trade-off? I’d love if you would share your thoughts with me on Facebook or via Twitter.

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Is The Financial Tail Wagging Your Retirement Dog?

August 28, 2017

When someone asks you about your retirement plans, is your first thought to check your account balance? That could be holding you back from the life you dream of living in the interim years. Remember that money is there to support your life, not the other way around.

Here are 3 steps to help ensure you’re on track for retirement without letting it rule your life:

1. Forget about the money… for now. Money might limit some of the things we can do today, but it’s still just a tool, not a master. Make sure you’re using it the right way. Since the future is unknown, start by writing down everything you imagine your retirement lifestyle would be if you didn’t have to worry about the money:

  • Where will you live?
  • Where will you play?
  • Will you work or volunteer?
  • Perhaps a little of both, or neither?
  • Who will join you?

Consider the things you like to do and you want to continue doing regardless of your finances.

2. Compare the cost of your ideal retirement to the cost of your lifestyle today. To compare whether your ideal lifestyle will be a reality, use an Expense Tracker to help you review expenses over the last three to six months, then place a “plus” sign next to those you think will be higher (in today’s dollars) in retirement, and a “minus” next to those that will be lower.

Will you save money by not commuting to work anymore? Or pay less state and local taxes if you move? Websites like retirementliving.com and AARP.org offer a plethora of resources to help you with these details.

Now add up those pluses and minuses. Generally, more pluses mean your retirement lifestyle will be more expensive than your current one; and more minuses means it will be less expensive.

3. Run a retirement calculator. Once you have a better idea of what your ideal retirement lifestyle will cost, calculate if you’re on track for your goal or if you need to make up for any gaps. The sooner you know where you stand, the sooner you can make necessary adjustments like saving more, working longer, or re-evaluating your retirement ideals.

4. Make saving automatic. Make full use of your 401(k), which makes saving brainless and painless. If your plan offers an auto-escalator tool, enroll in that to have your contributions increased each year without you having to worry about making the change. To supplement your 401(k), set up a direct deposit from each paycheck into a separate savings account. That way you can relax, knowing that you’re accumulating savings, while enjoying the rest of your earnings to live for today.

Your retirement really is whatever you choose to make it. Let your dreams guide your actions, and you have a great chance at turning them into a wonderful reality.

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How I’m Teaching My Polar Opposite Daughters About Money

August 25, 2017

If you’re a parent, you probably know that sometimes you can be around your kids and wonder just how in the world they are actually related because they are so different. As a father and financial planner, I have really seen that difference in my two daughters this past year. My girls are teenagers and both are now working part-time and taking on more financial responsibility. That is where the similarities end.

Polar opposite financial personalities

My oldest daughter has a great work ethic and is a practical shopper when it comes to big ticket items, but she struggles to really plan or track her daily spending at all. My youngest daughter, on the other hand, will work only as hard as she needs to in order to make money and that’s it. When it comes to spending money, she values fashion over function and plans her expenditures down to the penny. Total opposites.

So how does a dad help these two very different daughters reach the same goal of financial well-being? Here’s how I am approaching it with each of them.

Work smarter, not harder

I don’t worry about my oldest daughter working hard enough. If things get tough, I know that she will do whatever it takes to make ends meet. As a result, my advice to her is not to work harder but to work smarter. She needs to take a look at the big picture before diving in to a project or a job to see if there are ways to be more efficient or even farm out the easier, less costly parts of a job.

Letting perfect get in the way of good enough

For my younger daughter, I know that she will have analyzed things from every angle to make things easy and efficient for her. Her challenge is that sometimes she lets the perfect get in the way of the good.

For example, she had a host of reasons for not wanting to work at the pool this summer – one of the few jobs that would take her before turning 16 this fall. She eventually found a job that was more to her liking, but she ended up only able to get 20 hours a week instead of the 32 per week she probably would have been able to get at the pool, which limited her earning potential. So for her and analyzers like her, sometimes it is better to take the good opportunity instead of waiting for the perfect one.

Finding a way to keep the little things in check

My oldest daughter is pretty good about finding a good deal when it is a big ticket item, but the little things kill her. When it was time to find a car – which she had to pay half of – she did extensive research and even though her dream car is an SUV, she realized that a compact car made more sense and found a great deal on a Ford Focus that should last her well into her young adulthood.

Day to day purchases are just the opposite – the debit card and apps like Starbucks make it very easy for her to fritter away her hard-earned money on convenience and impulse buys. She needs a better way to track her money.

She doesn’t need to spend hours each week planning out her spending, but I’ve suggested that she find a “hack” to make things easier like an app on her phone or using envelopes to limit impulse spending. Perhaps one of these six ideas from my colleague Kelley might help.

When fashion gets in the way of function

My younger daughter is constantly looking for car options… and she keeps looking for champagne cars on her beer budget. She likes crossovers but the challenge here is getting her to realize that they are more expensive so she would have to buy an older, higher mileage car that likely won’t last as long. Plus they would cost more to insure and burn more gas. She may feel cooler now, but will she still feel that way having to buy a new car all on her own in her very early 20’s? The jury is still out on whether she’ll listen to me or go with her penchant for fashion over value.

On the plus side, she has planned her day-to-day spending like a pro. She has literally budgeted every paycheck she is expecting between now and March to parcel out how much will go for the car, gas and her drama department trip to New York, while she plans to use her tips for fun money.

She puts her debit card away to prevent her from using it for impulse buys and only uses the cash tips for her spending money. I have given her a lot of praise for her planning and how she is managing her daily expenses.

The challenge that I talked to her about is over-planning – an issue that I have dealt with. She doesn’t really have an emergency fund or any wiggle room, so when she doesn’t get enough hours or things happen, it puts her into a tizzy. Planners like her and I will always struggle with over planning but having an emergency fund or a “life happens” line item in the budget can help ease the stress of things not going according to plan.

Different girls, same end goal

Despite their differences, my girls are great kids and both have a lot of money skills. The different personality traits mean that they may need different approaches to get to the same goal but I expect them both to do well in life.

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How My Money Attitude Was Keeping Me Poor

August 23, 2017

I’m a huge believer in the power that examining our own money beliefs can have in changing financial situations. Several years ago, I had an epiphany about how my own deep-seated assumptions and issues with money were literally keeping me from getting ahead financially.

When I stopped to think about how I’d watched my annual income more than double over the first ten years of my career and yet I was still living the same paycheck-to-paycheck lifestyle, it was like a lightning bolt of understanding struck me. I wasn’t struggling to save more money because I didn’t make enough, it was something else. And as I dug deeper into my money “rules” and assumptions, I was embarrassed and ashamed to realize the real issue.

I resented people who were better off than me.

Americans have a fascination with wealthy people (case in point: the Kardashians) and I’ve only met a few people who didn’t think that striking it rich wouldn’t be nice. Yet many of us harbor disdain and judgement for people who we perceive to be better off than us in our daily lives.

It’s one thing to envy Paris Hilton, but I was looking at people who were like me in many ways, just more financially comfortable, and placing them in a different class than I saw myself. This “me versus them” attitude was holding me back from ever actually allowing myself to get to a point of financial comfort, regardless of how much money I made.

I was literally sabotaging any chance I had at getting ahead because deep down inside, I didn’t want to be perceived as greedy, selfish, privileged, having it easy, etc. When I was super honest with myself, I admitted that I was harboring those judgments about people who seemed to have their financial act together. And I realized that not only were those judgments not true, they were actually hurting my own financial situation.

By challenging these assumptions and realizing that the real difference between those better off than me was more due to a difference in little financial decisions like driving a car beyond the loan payoff date or not buying as much house as they could afford, than them making more money or being greedy and selfish, my situation slowly began to change.

A tiny shift

As I started to release my negative feelings about people with money and instead practice an attitude of abundance, gratitude and “we’re all in this together”-ness, my money situation started to change.

  • My checking account started having more than $100 in it on pay day because I wasn’t buying my way out of guilt.
  • My savings account reached $1,000 and I let it continue to grow – something about hitting 4 digits and staying there turned out to be a HUGE shift for me.
  • I paid off my debt for good and never turned to credit cards again to plug a gap for something I should be saving for.
  • Most importantly, I started thinking of myself as someone who made smart decisions with money in order to give myself financial freedom, instead of someone who never had enough.

And I stopped looking at others who seemed to have more money than me as greedy and selfish and instead saw them as people who value financial security as much as I do. A nice side effect was that I was a happier person in general as well.

Test your own attitude

Here’s a quick test to see if perhaps you’re suffering from a similar subconscious reaction: If you find yourself living paycheck to paycheck no matter how much you make, ask yourself how you feel when you see someone driving a luxury car like a Mercedes or a Lexus. If you automatically assume the driver must be some rich jerk who thinks he’s better than you, you could be suffering from the same money mindset that was holding me back. (assuming the driver didn’t just cut you off in traffic, then I don’t care what kind of car they’re driving, they’re a jerk!)

Make the shift

To overcome it, start to become more mindful of your internal dialogue when it comes to financial security, then start to change it. Rather than, “Oh, I could never afford that,” start asking, “How can I afford that?” The next time you catch yourself saying, “That would never be me,” ask yourself, “Why not?”

As you start to answer those follow-up questions and take the time to be really honest with yourself, you’ll start to see a subtle shift in the way you handle money. Let your savings account cross that $1,000 mark and get used to it. Don’t be surprised if eventually you start to realize that a thousand bucks isn’t really that much, while also honoring the work it takes to get there. Question your assumptions about carrying debt — there’s no rule that says we always have to have a car payment or credit card balance.

That’s all it takes — a one degree shift that gets you further and further on a new course will eventually take you to an entirely new place financially.

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What To Do If You’re Worried About North Korean Nukes

August 17, 2017

I recently had someone ask me about what the effect could be on their investment portfolio and what they should do about it should North Korea actually launch a nuclear missile. We’ll get to that, but the reality is that your investments will likely be the last of your worries.

However, there are some things to do to prepare for a nuclear attack that may not only help bring some peace of mind during uncertain geopolitical times, but could also help you should other disasters strike such as a job loss or weather-related event.

1) Know what to do if you’re in the vicinity of a nuclear blast.

The Department of Homeland Security has a quick summary of what to do. Study them and consider taking first aid classes from your local Red Cross. Those skills can come in handy in a variety of emergencies. We change lives at Financial Finesse but this can actually save them.

2) Build an emergency kit.

You don’t have to be a crazy survivalist living in a mountain cabin to see the value of an emergency kit with tools, first aid supplies, and enough food and water to last at least 3 days. In fact, that’s what’s officially recommended by FEMA and the NY Times. A basic kit can be purchased for less than $100 from the American Red Cross or you can put one together for even less, especially if you already own many of the components.

3) Stash some cash.

In an emergency, cash is truly king. No matter how adequate your emergency supplies are, you never know what you may need to purchase from someone else after a disaster. After a nuclear attack, banks may be closed, ATMs may not be working, and money market funds may not be available if the stock market is suspended as it was after 9/11. That’s why you’ll want to keep at least few hundred dollars in physical cash (yes, even if it’s under your actual mattress). Some people hoard gold coins for this reason but will the people you want to buy from know how to value them? I’d stick with cash.

4) Have an emergency food reserve.

If the emergency lasts past 3 days, you’ll still want to be able to eat. Consider having enough food to last at least a couple of weeks. The nice thing about food (as opposed to say, gold) is that it’s something you know you’ll need and can benefit from even if no emergency ever happens.

First of all, you can save a lot of money by buying non-perishable food in bulk. You would then simply replace items as you use them and perhaps add items while they’re on sale. Storing food you eat anyway also ensures that you won’t be making a big change in your diet during an already stressful time.

Second, a food reserve can also be part of your regular emergency fund and reduce the amount of savings you need. After all, you can eat it if you’re unemployed too. Sure, you would miss out on the less than ½ of a percent (minus taxes) you’d otherwise be earning with that money in your savings account. But according to the most recent CPI release, the inflation rate of food over the last 12 months ending at the end of June was about 1.6% so you’d actually be saving more than what you likely would have earned keeping that money in the bank.

5) Make sure your portfolio is diversified.

If we do get attacked, once the initial shock has worn off, you’ll eventually notice that your portfolio will most likely be decimated. This is why it’s important to be diversified in assets like international stocks, government bonds, and possibly alternative investments like gold that may not be as adversely affected or may even benefit from a crisis. You can use this asset allocation guide based on your risk tolerance, follow one of these model portfolios, or simply invest in a “one stop shop” asset allocation fund. Just be sure that this is part of your overall long term investment strategy — don’t change your investments every time North Korea makes a threat or the President tweets one or you’ll likely decimate it on your own.

Hopefully, you’ll never need any of this. In the best case scenario, having a plan will simply provide some peace of mind. In the worst case, better safe than sorry!

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Is Your Side Gig Worth It?

August 16, 2017

There are lots of reasons to take on a side gig, not all of them financial. Perhaps you’re looking to gain experience in a new career field or you love the type of work but couldn’t do it full time (pet sitting comes to mind, one of my former side gigs). Finding a way to bring in some extra cash with your free time definitely makes sense, especially when it helps with things like paying off that lingering credit card balance or allows you to take a vacation you couldn’t otherwise afford. But not always.

My side gig of teaching group fitness is less about the money and more about guaranteeing I get a good workout in at least once a week (although I never complain about getting paid to work out!) But there may come a time when it’s no longer serving you, or you realize that you may actually be losing value, which is what lead me to go from teaching three classes per week to just one. If you’re thinking of a side gig, how do you decide if it’s actually worth it? There are a few things to consider.

What would you be doing otherwise?

I’ve met many interesting people riding around in ride-share cars over the past couple of years, most of them just trying to pick up a few extra bucks in their spare time. I often wonder if they’ve thought about the total trade-off they’re making considering the time they spend logged in but not driving anyone, the price of gas, the wear and tear on their vehicles, etc.

One way to figure out if a side gig like that is worth it is to consider what you would be doing with that time otherwise. If you’d be parked on the couch binge-watching old episodes of Friends or flipping through social media, then it’s probably a worthy trade of your time. But if you’d be doing homework, engaging in restorative downtime that may enhance your performance at your “real job” or something else that could potentially earn you more money down the road, then maybe it’s not worth it.

Is it serving you?

Teaching fitness definitely passes the first test — I’d either be sleeping or paying to work out elsewhere if I wasn’t teaching — but I recently found myself wondering if it was worth it in other ways. Besides actually teaching the class, I also have to spend time learning each class, which can add up to a couple more hours each week. And after more than 12 years doing it, I’m getting bored and I know it’s not making a difference to my fitness. But the kicker was that two of my classes were at 6am, which meant that two nights a week I had to be in bed by 9:30 if I wanted to get a full night’s rest.

Since I work from home, I no longer have to get up at the crack of dawn in order to squeeze in a workout, so I was having to get up early only because I was teaching. I knew I was done the night the Cubs won the World Series and I couldn’t fully enjoy the celebration because it was already two hours past my bedtime. Teaching daybreak classes was no longer serving me and the lifestyle I currently live, so I gave up my early mornings earlier this year and have never looked back.

How much is your time worth?

There’s actually a way to quantify the worth of your side gig as well. Oftentimes we just think of the total dollars we earn, when we should be thinking about the true hourly wage, including all the costs involved in the job as well as the time spent indirectly related to earning that money. In the book Your Money or Your Life, the author describes it as what you’re trading your life energy for so that you can quantify purchases in terms of how many total hours of your life you’re trading for that thing.

Here’s my calculation for teaching at the gym, where my $42 hourly wage turns out to be less than $2 per hour now that I’m down to just one class per week. If I were doing this only for the money, I’d have to re-think that trade!

 

What’s the impact?

Ask yourself if your side gig is truly something that is making a positive impact on your life. You may find that it is, that it’s the thing that gets you through long workdays. If that’s the case, it’s worth it. On the other hand, if you find that it’s adding stress to your life or you’re finding yourself saying no to things you want to do because of your side gig, it’s worth examining whether that stress and sacrifice is worth the extra cash.

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How To Choose Your Spending Plan Based On Your Learning Style

August 11, 2017

Just like people, spending plans (a better way to say budgets) come in all shapes, formats, styles, colors and any other distinguishing feature. They can be online, paper and pencil, a spreadsheet, a Word document, envelopes with cash, or multiple online accounts, to name a few. There isn’t really one that’s “better” than the others — the one that is best for you is the one that you stick with.

A good spending plan is one that seems to “get” you. If you have to work hard to get it, chances are you will lose interest after a few weeks and stop using it. Your spending plan may not be the one your coworker or spouse uses, and that’s OK. One way to narrow down the different ways to manage your spending plan is by knowing your learning style.

Discovering your learning style

My wife, like all good teachers, has the ability to adapt what she is teaching to each student’s learning style — different people learn different ways. If you already know your learning style, that’s great! I don’t, so being the lazy blogger that I am, I asked my wife for some good ways to figure out my learning style. She recommended EducationPlanner.org or Learning-Styles-Online. If you don’t already know your own learning style, try one of these — they are quick, less than 15 minutes to complete.

Matching it to your spending plan

Now to match the spending plan with your learning style. Education Planner categorizes people as Visual, Auditory or Tactile, while Learning-Styles uses Visual, Aural, Verbal, Physical, Logical, Social or Solitary.

If your learning style is Visual: Consider a technology based platform that has visual elements. My favorite online platforms include Mint, Every Dollar or You Need a Budget (YNAB), or your bank’s software (assuming it has visual elements like pie charts.)

If your learning style is Tactile, Logical or Solitary: Try spreadsheets — they are very popular especially with those of us who are a little more hands on; our Easy Spending Plan is an example of one.  Your bank or financial institution may also provide a spending plan that works for you. The great news is that the online and bank based software I’ve seen is aware that people learn different ways and allows you to use their platform the way you choose.

If your learning style is Tactile or Physical: Don’t forget the old school way of paying cash as much as possible and keeping receipts (I recommend an accordion file to manage receipts.) Study after study has shown that when we pay in cash, we spend less than when we swipe a card. And despite what my teenager tells me, cash is used by more than just me and drug dealers.

If your learning style is Auditory, Aural, Verbal or Social: Find a partner to work together on your spending plan and talk it out. For privacy, maybe don’t have this conversation in a public place as the folks at the coffee shop don’t need to know your personal business. But having the opportunity to sound it out and socialize could be the missing ticket to budgeting success for you.

For what it’s worth, I scored highest on Visual and lowest on Auditory using Education Planner, while Learning-Styles scored me highest on Physical and Logical and lowest on Aural. (my wife is not surprised to hear that I don’t learn by listening) That is why I use my bank’s online platform, which has graphs and allows me to download into Excel, while I also prefer to pay in cash. I also have a phobia about talking about money in public. If I had found this out before I wrote this blog, maybe it wouldn’t have taken me so long to develop a spending plan…

Once you know your learning style, look at different spending plan tools and find one that seems to get you.  Then comes the hard part: you need to use it. Try it for 3 months and if it is too much work for you, find another one. Don’t quit – keep experimenting until you find one that “gets” you.

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