What Britain’s “Nudge Unit” Can Teach Us About Achieving Goals

May 12, 2017

In a recent episode of the Freakonomics podcast called “Big Returns from Thinking Small,” two members of “The Nudge Unit” (an arm of the British government designed to help save money) talk about the process they use to help improve processes and save money. They also dive into how they take that process home with them and make progress on their personal goals. It’s a 7 step process that could very easily be replicated by anyone to make progress on their own personal financial goals.

Step 1:  Set a goal!

What is it that you’re trying to improve? Some examples are  reduce your debt, increasing your retirement savings, buying a house, and building an emergency fund. These goals can be very simply stated and right to the heart of the matter.

Step 2: Make a plan.

This is where the goal becomes actionable. Using some of the above examples: Pay an extra $100 per month on your credit cards. Sign up for the rate escalator and increase your 401(k) contribution by 2%/year.

Step 3: Make a commitment (a public one).

I’ve done this with exercise goals. I have used the website stickK.com as well as their phone app to commit to a goal and have a “referee” to hold me accountable. I haven’t used my kids or my girlfriend as a ref because they’d likely be too lenient and let me off the hook. Instead, I’ve used friends and former teammates who will have no trouble telling me I fell short.  Whatever your goal is, ask a couple friends to be your “accountability partner.”

Step 4: Have a reward or punishment in place.

For many people, it helps to have a reward or punishment system. Allow yourself to buy a few books or running shoes or something small but fun AFTER you pay off a credit card.   Take a nice vacation AFTER you pay off your student loans.

Donate $50 to a charity that goes against every fiber in your being or wear the jersey of your most hated sports team if you don’t reach your financial goal. (If you’re a Game of Thrones fan, you could always ask a friend to get a bell and walk behind you, loudly saying “shame” if you fall short of the goal.) Knowing the consequences – good and bad – of your actions can help you stay focused on the task at hand.

Step 5: Share the goal.

Post your goal to Facebook, Twitter, Instagram, etc. so that you are publicly declaring your commitment to the goal. Ask your friends for support or see if anyone wants to join you in your quest to help make progress in their lives too. When I’m hiking, going uphill always seems easier when I’ve got someone with me to talk to. The same concept applies when trying to reach the top of the hill financially.

Step 6: Get feedback.

Measure your progress. If you have $10,000 of credit card debt and want it gone in 3 years (36 months), do an end of each month measure to see if you’re reducing $277.78 or more of debt. Tracking your progress and knowing exactly where you stand toward your goal can be massively motivating.

Step 7: Stick!

Practice progress. Celebrate it. Course correct when needed.   Learn from the process.

Keep doing what’s working and do more of it if possible. Stop doing things that take you further from the goal. Be resolute and gritty on your way to reaching your goals.

This is the process that a unit of the UK government used to improve their processes and save money and helped the members of that unit replicate that success in their personal lives. It works. If you use this rough framework, you can nudge yourself ever so gently into reaching just about any goal that matters to you.

 

 

Failure Is All Around Us – And That’s a Good Thing

April 14, 2017

One of the consistent themes in life – in virtually every facet – is failure. It was one of the things that the University of North Carolina basketball team talked about after they beat Gonzaga for the national championship. Last year, UNC lost in the national championship game to Villanova University. This year’s team used last year’s loss as motivation. There are countless examples in the sports world of a failure being used as a motivation for a future success, but it only works if something is learned in the process.

We see that when we are interviewing candidates for positions here at Financial Finesse. At some point in the process, the conversations usually turn toward their biggest successes and failures in life. It’s amazing the stories that we hear about both sides of that equation.

More often than not, the lessons learned from the failures are much more valuable than the lessons learned from the successes. The same concept has proven to be true in the financial lives of many employees I talk to each week. There are a few “rules” that I use when coaching a person through a failure to help them not repeat it and to end up in a better place because of the lesson learned in the failure.

1. Forgive yourself. There is absolutely nothing to be gained from berating yourself and giving yourself negative messages. Say “I messed up this time, but I’ll get better.”

One of the more common “failures” people talk to me about is amassing credit card debt. They view it as a personal failure, and many people think that they’re the only person in the world who has gotten a little bit in debt. When they learn that others have been in this position (and MUCH worse) and then gotten themselves out of debt with just a few slight tweaks, they can exhale, begin to forgive themselves for the debt, and prepare to move forward.

2. Figure out why it happened. What exactly led to the failure? Was it a lack of attention? Was it a disregard for the consequences? A lack of information/education or something outside of your control?

Once you figure out the why, the real learning is possible. In the debt situation, it’s usually a simple lack of attention to detail that created the issue. A $20 purchase here, $25 there, a doctor’s visit with a copay and a night out with friends and all of a sudden there is more month than paycheck – and the need to use a credit card is there. If that pattern persists for long enough, there can be a few credit cards approaching their credit limits.

It’s not malice or blatant carelessness. It’s a gradual slow creeping up of credit card debt that happens when there isn’t a focus on exactly where each dollar is going. I’ve met a lot of people with significant credit card debt. Exactly zero of them woke up one day and said “I’m going to max out four different cards today and then struggle to pay them back.” It’s a slow build, and once there is a realization of that – the pay down can start.

3. Recognize that whatever the failure is, it isn’t YOU. It’s usually just one behavior that if modified ever so slightly, can be turned into a strength/reason for your next success. The tired old movie line “it’s not personal, it’s just business” is important here.

Don’t take a financial speed bump as a personal failure. It isn’t you. It’s situational…and situations can change.

4. Change whatever that behavior is! This is by far the most important step. The old “if you keep doing what you’re doing, you’ll keep getting what you’re getting” phrase comes to mind.

Usually, changing a behavior isn’t as tough as we think it is. I’ve started to use an app to track my exercise and nutrition and as a result, my level of fitness is increasing while my level of body fat is decreasing. One quick change – using an app to log my meals and my exercises – is helping me make very small changes that are providing good results.

5. Stick to the positive change. The world is filled with stories of people who have made progress, only to regress after a short period of time. I’ve had friends lose 25-50 pounds, only to put on 30-55 after burning out of the program they used to lose it. I’ve seen people file bankruptcy because of massive credit card debt, only to rack up another $40-50k in credit card debt within a year or two of the bankruptcy.  Progress is best when it’s sustainable.

It’s impossible to go through life without experiencing failure. If someone does, it means they’ve either never tried anything difficult or they have absolutely zero self-awareness and don’t recognize their failures. Neither is ideal. So if it’s virtually impossible to go through life without experiencing it, embrace the failure that is all around us and use it to motivate you to a future success.

 

Meet Our Newest Planner: James Jacobucci

April 10, 2017

The newest member of our CERTIFIED FINANCIAL PLANNER™ team, Jim Jacobucci, CFP®, MBA, has always liked to save money. It’s one of the reasons he switched careers to financial planning from manufacturing. I asked Jim some questions about his money story, money and family life, and what it means to come to Financial Finesse:

What’s your personal mission? Who do you most want to help?  I most want to help people who generally do not have access to sound financial guidance. Those who have problems making ends meet each month or who have taken on high levels of credit card debt need help just as much, if not more, than anyone else. My mission is to provide sound guidance on how to navigate through everyday financial issues that are important to everyday people.

What’s your money story – what your parents taught you about money, etc.? Did you hold any negative beliefs about money that you had to overcome? For as far back as I can remember, I liked to save money. I’m not really sure why. When I was, say, 8 years old, I did not have a goal in mind to buy something specific, but I just liked to save what little money came my way.

I do not recall my parents teaching me specifically about money, but we were a middle class, single income family. When my dad was working, things were fine, but if he was laid off, things got pretty tight, pretty quickly. Maybe just experiencing this influenced me to save when I could.

What is the biggest mistake you ever made with your money, and what did you learn from it? The biggest financial mistake I ever made was not having an adequate emergency savings fund while I was going through a career change. I knew that my income would drop during this transition, but I did not properly plan for all scenarios. For a while, money was pretty tight until I gained some more traction in my new profession. What I learned from this is to always hope for the best but plan for the worst when it comes to making decisions that will have a long term financial impact.

What have you learned about money and marriage that you can teach the rest of us? I am very fortunate in that my wife and I are pretty much on the same page regarding our finances and how to prioritize. And therein lies a lesson learned. This may sound a bit too clinical, but I believe when you commit to spending the rest of your life with someone it just makes sense to be sure you have the same general philosophies when it comes to money.

My wife and I never really had in-depth money conversations before getting married, but you get a pretty good grasp on someone’s financial tendencies when you are spending time together. While dating someone, if I saw she was spending frivolously on luxury items at the expense of more practical things, that would have been a red flag for me. Not that she would be “wrong” in her spending choices, but having such a different outlook on spending compared to mine would present some challenges if we did get married.

How do you teach your kids about money? I try to explain to my kids why I am making the everyday choices that I am with regards to money. It started out at the grocery store when they were young.

If we were going to buy a gallon of ice cream, I would explain why I was buying the brand that I was. Was it on sale? If one brand is more expensive, is it worth spending that extra dollar on that brand or would it be wiser to spend that dollar somewhere else?

Now that they are a bit older, when it is time to make a purchase for my kids for say, new summer clothes, it is left up to them what to buy (as long as it is tasteful). They are given a budget of how much to spend, but it is up to them on how they spend it. My wife and I certainly provide some coaching along the way and help weigh the pros and cons of buying a designer item vs. a more run-of-the-mill item.

What do you think your generation does differently with money/attitudes about money? Being a Gen Xer, I think my generation sees money that is something that you need to work hard for, to earn. Put in an honest day’s work and get an honest day’s pay.

If you could wave a magic wand and reform financial services, what would you do? I am frustrated that those who need the most help, those who are really struggling to make ends meet, get the least help. One of the great things about delivering workplace financial wellness benefits is that we’re compensated and incentivized equally for offering financial guidance to an employee with a net worth of $10 or one with $10 million. This is the approach of Financial Finesse and why I love working here.

Tell me about your financial coaching philosophy? First and foremost, I respect every employee that I am coaching. They may be in a bad financial spot, but there are always reasons for getting to where they are.

Understanding those reasons, how they affected their finances, and what can be done to improve their financial wellness is what I strive to do. I never pass judgment on a person, regardless of their situation or how they got there. It’s my job to listen and understand and give employees the tools to make improvements.

Why did you want to earn your CFP® designation? What does it mean to you? There were three main reasons that I decided to pursue my CFP®: to broaden my knowledge base in tax and estate planning, to provide myself with a certain level of intellectual stimulation that was lacking in my job at the time and to give me the ability to help a wider range of people. To me, the CFP® designation represents an ongoing commitment to keep current on financial planning topics, which enables me to be in a position to help people make the right financial decisions.

Is there anything that really surprised you about coming to work at Financial Finesse? Why? The thing that surprised me the most about coming to work at Financial Finesse was all of the planners are deeply involved in the company in areas which impact how workplace financial wellness programs are designed and delivered. They are involved in many parts of the business – research, consulting, communications, recruiting and fact-checking. This is a great because the planners all have unique skill sets and experiences that are useful in multiple areas of the company.

 

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

 

Financial Lessons From a Chess Board

March 31, 2017

I don’t always watch 60 Minutes anymore, but when I do, I am reminded that I have liked it since I was a kid. That brings up a few points. First, the show has been on a very long time! Second, I was a weird kid – watching 60 Minutes while my neighborhood friends rode their bikes. I’d join them before and after so it’s not like I wasn’t social too…just nerdy.

In a recent episode, there was a story about a man teaching chess to kids in Mississippi. Google “60 Minutes chess” and watch the quick story. Here’s a quick synopsis of the segment. What I found fascinating is that while he’s teaching the kids to play chess, he is actually teaching them about far more than that. He’s teaching incredibly valuable life lessons.

I have some odd thoughts on parenting, but I’ve summed it up this way: If I teach my kids how to win with class, lose with grace and think through a decision making process, I’ll feel like I’ve prepared them for the real world. That’s a part of what he is teaching these kids.

Chess, like life, requires patience and constant learning in order to succeed. They kids, like all of us, learn more from their losses than their wins. For them, this is because they review the losses for what they could have done better. The sting of a loss is a great teaching tool.

In a way, conversations about money can have that flavor too. I’ve talked with a lot of people who start their conversations with me by saying “I’m lousy with money” or “I’ve made a lot of mistakes in my financial life.”   The good news is that they recognize that they could have done things differently. The downside is that they haven’t worked with anyone, like a coach, who has been able to help them review their mistakes and provide suggestions for ways to improve based on those losses.

When I hear conversations start that way, I immediately stop the conversation and tell people that they are no longer allowed to speak negatively about their financial skills. I ask if they were handed a violin and put on stage with the New York Symphony, if they’d do well or if they’d fare well in a chess match against Bobby Fisher (for those with great memories) or Magnus Carlsen (for a more current reference) if they have never played before. The answer is a universal “NO.” Those are skills that are honed over a lifetime of practicing and learning.

Managing your personal finances is way easier than mastering chess or the violin so it won’t require nearly as much effort or skill. In fact, it’s relatively simple to become a financial success. There have been years worth of blog posts in this space giving little tips about how to become financially well/secure. I’ll close by summing up several years of posts in a few bullet points:

  • Spend less than you take home.
  • Save 15-20% of your income for retirement.
  • Have a healthy emergency fund. (Start with $1,000, get to $2,500, and then get to 6-9 months of expenses over the course of time.)
  • Pay attention to where you spend money. No one will care about your money as much as you, so guard every dollar that you work hard to earn.
  • When you mess up, which we all do, figure out why. Learn from it and don’t repeat it.

 

 

 

Hiding Purchases From Your Husband is So 1950

March 29, 2017

When I was a little girl, I remember my great aunt sending my mom money with a note that simply said, “Please don’t send a thank you note. I don’t want my husband to know.” My great uncle was a bit of a curmudgeon and my aunt would have suffered for her generosity. I also remember my grandmother taking me shopping for back-to-school clothes but telling me to leave everything in the car when we went back to her house so my grandpa wouldn’t know she was spending money. Sound familiar?

A lot of us grew up with this example and continue to exhibit similar behavior in our lives today. Have you ever rushed to put purchases away in the closet before your husband could see or stuffed your Lululemon purchases into your purse before walking into the house to avoid a potential fight about overspending on perceived wants versus needs? How about hiding a Target splurge on stuff for your kids?

While these actions may have been slightly justified back in our grandma’s day, these are all examples of financial infidelity. Just like if you were deleting texts between you and a male coworker to avoid a fight with your husband, hiding purchases from him is the same behavior. It’s a violation of trust. What do you really have to hide?

Back then, women didn’t have as many choices when it came to careers and having their own money or even sometimes in choosing a life partner. I will never forget the day I nervously broke the news that my first marriage was ending to my grandmother. Her response surprised me.

She said, “Good for you. You will do just fine. If I’d had a career and options like you, neither one of my marriages would have lasted.” And while I didn’t relish the thought of anyone I love feeling “stuck” with someone else I love, I understood what she meant and she was right. The big difference between back when my grandmother had to sneak spending behind my grandpa’s back and today is that if you find yourself in a marriage where you truly don’t have economic power, you have the choice to work it out or leave.

I’m not saying you shouldn’t have the autonomy to make your own purchasing decisions – quite the opposite. You may never get on the same page with your spouse about the value of spending on certain things like clothes or wine or electronics or name the thing that causes money fights in your marriage. But there are ways to solve that without hiding purchases such as having separate spending accounts where you agree that you each can do whatever you want with that money with no judgment and no arguing. The kicker is that you both have to stick to the agreement where you only spend that money and not other money that’s allocated towards your family’s goals.

It may be a challenge to arrive at an amount you both agree on for your spending money. When a spender marries a saver, the saver will always want to spend less, but there are logical ways to arrive at that number. Start with your shared goals like retirement, paying off debt, saving for college, etc. Assign a number to those goals and calculate what it will take to get there and agree together whether that amount is reasonable or if you need to modify the goal. Getting on the same page about this helps you both feel responsible for your part in achieving that goal and should help the saver partner relax a little bit about spending on things they don’t perceive as necessary.

Kelley Long is a resident financial planner with Financial Finesse, the leading provider of unbiased workplace financial wellness programs in the US. For more posts by Kelley or to sign up to have her weekly post delivered to your inbox each Wednesday, please visit the main blog page and sign up today.

Why and How to Have Weekly Money Talks

March 28, 2017

When I first got married, money talks in my home looked something like this: I brought out my spreadsheet and the four other programs I was working on to have a financial summit with my husband. He mentally tuned out the second he saw the first version of the budget and was in another place (I suspect it was at a college football game) by the time the meeting was over. Over the years, I learned to simplify my budgets and my husband brought both his mind and body to the meeting. My colleague Steve offers great insight into how to make couple money meetings work that I wish I knew from the beginning:

I have a confession to make. For over a decade in my professional career, I was the pot calling the kettle black. Almost 20 years ago, I followed the advice of a fellow CFP® professional and started advising clients to schedule a weekly 30 minute money meeting to focus on their finances, but I wasn’t doing these myself. Then about 7 years ago, I started having those meetings with my spouse and guess what? They work.

The basic idea is this. Many of us can go a month or longer and not spend any time thinking about our investments or whether we are spending our money on what is important to us instead of where we have always spent it. We pay our bills but don’t think about our spending plan.

On a side note, I hate the word “budget.” It sounds like “diet” to me. They both are limiting and negative.

A friend of mine told me “Steve, you’re a financial planner. Don’t think of it as a diet. Think of it as an eating plan.”

That works for me. I don’t think of my spending as a budget. I think of it as a spending plan.

The ideal time to have a conversation about money is not when you’re late for work, trying to get the kids off to school and have a deadline that is consuming all of your mental energy – been there done that. The Weekly 30 Minute Money Meeting can either be with yourself or with your partner. The rules are the same:

1.You cannot change the past. It is a waste of time to argue about or beat yourself up about things that have already happened. Learn from your mistakes (we have all made them) so you don’t repeat them in the future.

2. Be thoughtful and focus on the future. With my eating plan, if I choose to have a 1,500 calorie breakfast (which is delicious), I’d better plan on eating a lot of salad with little dressing for the rest of the day. If I choose to spend my future paychecks now (think credit cards), I’d better plan on not spending any other money.

3. Hold yourself accountable. Notice I didn’t say hold your partner accountable. We are adults and need to hold ourselves accountable. If you make a mistake, own it and try hard not to repeat it.

4. Schedule the meetings when your energy is high. I am an early morning person. I wake up at 5:30 am every day no matter the time zone or if it’s a weekend.

The ideal time for me would be 6:00 to 6:30 on Saturday morning. My wife’s response to this suggestion is not fit for publication. We meet from 11:00 to 11:30.

These are some tricks to make the most out of your meetings:

  • Put them on your calendar and if you think about something, pull your phone out and add a note to this week’s meeting. That way you don’t forget it.
  • Use the meetings to develop a spending plan. Your spending plan needs to get you, not the other way around. Look at your bank’s online tools, other online tools like Mint, our Easy Spending Plan, a custom made Excel spreadsheet or paper and pencil. Try different ones until you find the one that gets you.
  • Find an item in your spending plan that you buy because you have to but don’t enjoy spending money on and see if you can cut that cost.  Think of auto insurance and electricity. Any money you can free up from those is money you can save or use for something you want.
  • Run a retirement estimator calculator and make sure you are on pace to retire. Update this at least once a year.
  • Run a DebtBlaster calculator and make sure you are paying off your debt as efficiently as possible. Update this every 6 months or when you pay something off.
  • Review your investments at least once a quarter and make sure you are taking an appropriate amount of risk.

As someone who has done this for a while, the benefits of these meetings include reduced financial stress, you and your partner having a plan and fostering honest, direct and sincere conversations about money. Start now. Don’t wait a decade…like some people.

 

 

What Do You Owe You?

March 24, 2017

As someone who loves a good “pregame speech” and has heard and given fiery speeches before and during games, the field of motivational speaking is one that I enjoy. It turns out that one of our newest planners, Vekevia, shares a love of a good fiery speech. We talked about this recently and she shared this with me:

I love listening to motivational/inspirational speakers. They remind me of why I’m working towards a particular goal, which is what helps keep me going when things are tough or just not running as smoothly as I’d like. They drive me to keep pushing forward when what I am seeing doesn’t necessarily look as promising as I envisioned.

That helps in life goals and is especially true with financial goals. I heard one motivational speaker, Eric Thomas, ask the crowd a series of questions to get them to self-reflect. His message was “You Owe You” and I want to share the questions he asked:

“Know ‘what do you want’. What do you want in your marriage? What do you want with your son and your daughter? What do you want in your health? What do you want financially? How much money do you want to make a year?

What do you want to drive? How do you want to live? Stop just waking up like an accident. What do you want? And then, once you find out what you want, spend the rest of your natural life waking up and going after it.”

Managing your finances/financial planning is a life-long process. You don’t get to just plan today and then that’s it. You’re done.

For some, that can sound like a daunting task, especially if you don’t enjoy the process. I think that’s what makes it even more important to know why we have the financial goals that we have. Here are some tips to figuring that out.

Identify the ROOT of your goal. Know your big picture.

How to do it:

Go beyond your need to save to send your kids to college, pay off your student loans or buy a house. Do you want to give your kids a life full of better opportunities than you had when you were growing up? Do you want to be debt free and create or continue growing wealth in your family or simply gain a sense of freedom? Do you want to move into another neighborhood to surround yourself and/or your family with better opportunities? Do you want to live more comfortably?

Determine WHAT has to happen for you to get to that goal.

What to consider:

Do you have to stop spending as much on eating at restaurants or other forms of  entertainment? Do you need to get a handle on how much you swipe your credit card? Do you need to sit down with your spouse and get on the same page about your finances?

Tools:

Easy Spending Plan

Expense Tracker

Debt Inventory

Create a clear plan of HOW you’re going to make it happen.

How to do it:

Get Smart About Your Financial Goals

Include some goals that are short-term so you have small wins and give yourself some “atta boys” along the way. Include long-term goals as well so you are always planning for consistent progress. Take advantage of resources you have through your financial wellness program at work. Find out what assistance is available through your employee assistance program (EAP) at work.

Do something daily and make it a HABIT.

How to do it:

List small steps you can take every day or every week to get you to your long-term goal. I live by my calendar. Work tasks are included. Workouts are included…everything. If it’s in my calendar, it’s getting done.

Self-reflect.        

What does that mean?

At times, taking a minute to “stop and smell the roses” makes sense. It allows us to reflect on where we are, where we’ve come from and where we’re going. Pausing for a moment to experience the “now” and be grateful for all that we have provides a meaningful context for pushing forward.

Alter your plan if it’s not working.

What to consider:

Why isn’t it working? Do you need to make a simpler goal? Were the steps unrealistic or too ambitious? Do you need an accountability partner? Make changes to your plan accordingly so that your next steps take you closer to your goals.

Reward yourself.

Really?

I’ve found that people who are always pushing toward a goal without acknowledging their own success have a tendency to backslide or mentally break after a period of time. Reach a goal and congratulate yourself in some small way. One of my coworkers is working toward some fitness goals and is watching his food intake and his exercise routine. When he hits a milestone, he allows himself a “go crazy day” without working out and eating a gigantic plate of nachos, knowing that the next day, it’s back to the grind. Knowing that a small reward is ahead allows him to stay focused in between milestones.

It’s up to us to live up to our full potential. We have goals and we have to find a way to make them happen. We have to find a way to work around what we can’t control and do everything in our power to find a way to win.  You owe it to you to become financially secure. If this blog post isn’t enough to motivate you toward your goals, watch Dr. Eric Thomas and he’ll light a fire that will help you get started toward your goals.

 

 

Don’t Lose Your Voice When It Comes to Your Finances

March 14, 2017

My husband loves cars. No, I mean he really, really, really loves cars. Whenever he is driving, our conversations will quickly go from what we are going to eat for lunch to the engine power on the vehicle next to him – often in the same sentence. 

I thought I was all alone, until my colleague, Vekevia, shared with me that her husband loves cars too. As we started talking, I wanted to share her wisdom on how to keep the peace in a household with very different interests, especially when one person manages the household finances. Below are her thoughts:

Some couples manage money together and other couples have one person who primarily manages the money. Usually, in cases where one spouse manages the finances for the family, that individual is more financially savvy or may just be better at handling that responsibility.  That makes sense.

It becomes an issue when either spouse, most likely the one not handling the finances, feels like their financial goals or desires are overlooked or not taken as seriously as the other spouse’s financial goals or desires. This is especially true when you just do not see eye to eye on the value of what either spouse holds dear. I handle the finances in our family and have had to learn to work with my husband so that we both feel heard.

My husband is an avid car lover and I don’t just mean that he enjoys seeing nice cars. No, his passion extends far beyond that. He is fascinated over how a car is designed and built. He cares about the horsepower and enjoys seeing how it performs.

Every year, we go to a well-known racetrack in our area to see other car enthusiasts show off what they’ve built and race each other. As you might suspect, this is not cheap. On average, the cost to build a car like what you would see at this type of event can sit close to six figures and annual maintenance after racing can fall in the five-figure range. Guess what? He wants to build one.

Initially, this was a problem for me because I do not value cars the way he does. I just like when a car is visually appealing, dependable.…and INEXPENSIVE! The good news is that we are compromising and he plans to build a much less expensive car, but the financial planner in me wants to scream. Cars are depreciating assets that lose value rapidly over time.

However, my husband’s passion for cars, as expensive as it may be, holds a value that I can’t technically plug into my calculator and put down on paper. It would mean a lot to him for his dream to become a reality at some point this lifetime.  I value him and his happiness. Life is short and you only live once.

Being financially healthy doesn’t mean denying yourself the things you’re passionate about just because of cost. It’s about fitting your passions into your budget. Sometimes, you may have to find ways to make more money or decrease your expenses. We’ve chosen to fit building a car into our budget, not at the sacrifice of keeping a roof over our head, saving for our son’s college, or being able to retire, but it’s important, so it’s there.

Are you in a similar situation with your spouse? Here are some tips to show your spouse he/she has a voice in your finances:

  • Have an open conversation about your financial passions or dreams.
  • Decide what you value most. (You may have to choose 1 or 2 passions each this go around and take on the others in your next lifetime.)
  • Calculate how much you need to save for other financial priorities like retirement and funding your kid’s education.
  • Estimate the cost of making it all a reality.
  • Determine if your current income can carry the cost.
  • Seek opportunities to increase your income. That might mean pursuing a degree to make a career change, going for a higher paying position, or taking on a second job for extra income.

Realize that the cost of something is important, but so is the way your partner feels when you are willing to acknowledge and support his/her interests. You both should have a voice in your finances and work together to set up a feasible plan to make your dreams become a reality.

 

 

Have Financial Secrets? Why You Should Just Let It All Out

March 10, 2017

One of my crazy theories of life is that talking to others about your financial life is more intimate and personal than talking about any other topic in life. I have been at holiday parties in the past and learned within minutes of meeting someone that they are unhappily married and having an affair.  To test that theory, I have asked about that individual’s job, ballpark annual earnings and amount of debt – only to be told that those questions were far too personal. I explained that I wasn’t being a jerk. I was testing a theory about money being a more intimate subject than intimacy, and they laughed and agreed.

When I read this article about financial secrets women haven’t shared with their closest of friends, it didn’t surprise me. In my role here at Financial Finesse, I routinely hear people tell me that they are coming to me for guidance and direction before they admit their financial secrets to their spouse. In the article, one woman admits to being broke from divorce, one has $100k in student loans, another has a credit card problem, one has no savings, one says her credit score sucks, another says that childcare eats up everything she earns and the last one has been unemployed for two years.  These are all issues that I’ve talked with people about over the course of time and helped them develop solutions, but without that initial conversation, the problem remains in the shadows and creates unnecessary tension and stress.

When I’ve had these conversations with people, the overwhelming emotion at the end of the conversation is relief. They feel like they’ve been able to unburden themselves in a safe environment with someone who won’t judge them and who will work with them to help find a way out of the situation.  Often, the burden of carrying a secret is worse than the actual secret. Apparently, the old political phrase “the cover up is worse than the crime” has a financial corollary.

If you’re walking around with a secret in your financial life that makes you feel like you carry a heavy weight on your shoulders, do yourself the favor of talking to a financial professional about it. Getting the secret out is the first step. From there, a plan can be put in place – regardless of what your financial burden is – to make progress.

You will be surprised by how liberating it is to just share the secret. (One of my favorite art projects ever is Post Secret, where people share life secrets anonymously and countless suicides have been prevented). That’s the first step in resolving the issue. So get out there and ask for help – whether your issue is credit card debt or trying to figure out how to minimize the tax burden on the sale of a big block of Snapchat stock. It’s a sign of wisdom, not weakness, to get help where help is needed.

 

 

 

Getting Smiles Into Your Days

March 03, 2017

As I sat down to write a blog post, my phone’s text message alert went off.  One of my friends sent a message that he was watching the Baltimore Orioles first spring training baseball game of the year. He sent that to a group of us who get together periodically to go to baseball games and that message made me smile. When pitchers and catchers report to spring training, it tells me that warm weather is right around the corner. The first day of spring training games is almost a holiday in my mind.

Opening Day is one of my favorite days of the year. As a kid, my uncle took me to a lot of Opening Day games in Baltimore and that feeling of being a kid taking the day off from school to watch baseball still hits me as an adult. Baseball, to me, means the end of winter and the start of spring and summer which are my favorite seasons.  It’s all about renewal and hope (for a winning season). On Opening Day, everyone believes that their team has a shot at winning the World Series. 

I’ve seen the spirit of hope and optimism hit employees of our client companies when we have had a few conversations and their debt level starts to come down. A large percentage of people I talk to are coming to me for help with reducing or eliminating their debt load. In those cases, the first meeting is usually one where they come in looking very tense and full of stress. Being overwhelmed with debt, from my observations, is bad for a person’s posture, mood and stress level. 

After the initial conversation, we put together a personalized plan of attack for their debt and we check in periodically (the time line depends on the person and the severity of the debt load) for what I like to call “brag sessions.” In a brag session, they come in and tell me how much of their debt they’ve been able to pay down since our last meeting. We celebrate the progress and acknowledge that there is still room to go. The important part is that these sessions are enjoyable and we are always looking for ways to make more progress. 

In many cases, after a couple years of check-ins and brag sessions, the debt level is close to zero and you can see their eyes light up when talking about what life will be like when they get to $0 debt. I’ve had a number of people come in to the office and pull up their final credit card balance on their laptop to show me that they just paid their last little bit of debt off. When they show me that or bring in the checkbook and write the last check in the office, their level of excitement about what comes next reminds me of the first days of baseball season when excitement and optimism reign.

Are you’re looking for a way to generate some smiles and some enthusiasm into your days? Check out some spring training baseball or..get one of your debts to $0. Either way, it’s a great idea.

What Do You Really Need?

February 24, 2017

I try to maintain a calm demeanor in most circumstances. Even-keeled would typically be a good descriptor for me. But some things are worth really getting excited about.

When I saw the headline “Nation’s Bacon Reserves Hit 50 Year Low as Prices Rise”, I was no longer so calm, cool and collected. “ARE YOU KIDDING ME??? WHAT THE ***??? YOU CAN NOT BE SERIOUS!!!” That’s just a small and sanitized version of the words that came out of my mouth.

Bacon is good! Most things are better with bacon. (I’m part of the crispy bacon fan club. I don’t like it under-cooked.) But…I digress (which bacon always makes me do).

The good news is that we are in no danger of running out of bacon, which the article points out toward the end. It just took a wee bit of calm to come over me to process that little tidbit. I can’t imagine a world without bacon, and I’m glad that I won’t be forced to live in it. The thought of that, if only a fleeting thought, made me ponder the concept of living without things…and living with too many things.

For most of the developed world, we live in abundance. We don’t have to stalk our prey and kill it in order to eat. We head to the grocery store and come home with bags or we hop on our phones and order take-out. We sit on furniture and have to figure out which of the many articles of clothing in our closets we want to wear on any given day. Painting with a broad brush, we in the United States live in abundance right now.

Yet, that abundance creates some issues. Our near constant state of abundance helps create an instant gratification society, which leads many people to live above their means and incur a fairly sizeable amount of debt. It’s through over-spending that I see far too many people with near-crippling levels of credit card debt. 

When someone really wants to reverse that trend and get serious about paying off their debt and building wealth, I sometimes steer the conversation into the concepts of abundance vs. scarcity. The “what do we REALLY need?” question is a fun one to ask. It helps to re-frame the conversation.

In an effort to see if someone is receptive to a radical life change, I will ask (when the person seems like they are willing to engage in the discussion) if they’ve ever considered moving into a very low cost housing situation, selling most of their possessions and trying to live like a minimalist. Most people won’t ever consider that lifestyle, but for my deep debt conversations, it’s a starting point for things that they are willing to live without. (Bacon is NEVER one of the things I suggest living without.)

I know a lot of the personal financial press will talk about small ways to save money (give up Starbucks and pack your lunch), and I talk about that stuff too. But I like to start with the two biggest areas of spending in most people’s lives – housing and transportation. Most of the people I’ve met with who have large credit card balances (except those who incurred the debt because of job loss or medical expenses) pay 60-70% of their monthly income on mortgage/rent plus car payment and car insurance. I’m a big fan of keeping housing costs below 25-30% of take home pay and transportation costs below 10-15%.

If those expenses can be trimmed, progress can happen quickly.  Cutting back on some of the small things can add fuel to the fire. Going slightly minimalist and selling “things” at a yard sale or on eBay can simplify life and raise funds to pay off debt. It all adds up. But for me, starting the conversation with the biggest expenses creates the opportunity for the biggest results.

If you’re in debt and looking to get out, think about the things that you REALLY need and the things you could live without.  Start big! Look at the biggest expenses in your budget and challenge yourself to reduce them. And if you try to take my bacon, prepare to lose a limb!  

How an Argument on Valentine’s Day Made Our Marriage Stronger

February 14, 2017

When I think of Valentine’s Day, I always think of my first Valentine’s Day after I got married. We were new homeowners undecided as to how to decorate our home. I am a saver and I wanted to bargain shop and slowly decorate. My husband is a spender who was tired of walking around empty rooms and wanted to start buying furniture without looking for a deal (gasp). Our discussion, or rather argument, about how we would buy furniture was the first dose of reality that we had very different thoughts about money.

Now, I am sure some of you are asking yourselves why she is talking about an argument on Valentine’s Day. Trust me. I am going somewhere with this. It was not easy, but after we both stopped pouting, our argument made us realize that in order to have peace, we needed to agree on how we will spend money as a couple so over the next few months we came up with a plan to manage our finances together. The following is how we were able to do it without strangling each other:

1. We had money meetings a few times a month. We had a meeting a few days before the new month began to discuss what expenses were coming up during the month and a shorter meeting before each pay period to make sure nothing changed or was forgotten. The longer we did this, the shorter the meetings became. This went a long way to prevent arguments about last minute unexpected spending.  Consider using a budget worksheet as a tool to map out your spending plan as a couple.

2. We set up communication ground rules for the meeting. First, we agreed to obey the principle my kids learned in kindergarten that if you have nothing nice to say, then say nothing at all. We established the budget meeting as a no nagging, judging, and cursing zone with no sarcastic remarks allowed. We also had to give one compliment about how our spouse managed their money. Work with your partner to come up budget meeting ground rules.

3. I agreed to keep the meeting short and my husband agreed to bring his body and mind to the meeting.  I also agreed to be flexible on the meeting times if important events arise, such as my husband’s favorite team playing. Agree on a meeting date and time where both of you can be mentally as well as physically present.

4. We set up 4 accounts: a joint checking account where both of our paychecks initially went into for the household bills, separate checking accounts where money was transferred from the joint checking account for personal spending that we did not have to consult each other on, and a joint savings account. We agreed on how much each of us would get to spend every pay period. Every couple is different, so discuss the best opton for the both of you.

5. We also came up with spending ground rules. For us, it was that we would not spend anything over $100 from our joint account without discussing the purchase with each other. We also agreed that we would not discuss money spent in our personal accounts. I deliberately mentioned this twice because for some couples, it’s important to have personal money you can spend freely.

So as odd as it sounds, our argument on Valentine’s Day was one of the best things that could have happened to us. It led us to getting on the same page about money, which brought us closer together as a couple. As you celebrate Valentine’s Day, consider using the day to go over ideas on how to help you and your partner manage money better together.

 

Questions Your Future Self Wants to Ask You

February 13, 2017

Have you spoken to your future self lately? According to UCLA Professor Hal Hershfield, we often feel disconnected from the people we will become in the future. In essence, our future selves are strangers to us. Envisioning ourselves in the future, says Hershfield, helps us save more money and make better financial decisions.

In Hershfield’s research, participants were shown computer-aged avatars of their current selves. Then they were asked to make a choice of how to spend $1,000: buying a gift for a friend/family member, investing in a retirement fund, planning a fun event, or saving money at the bank. Participants who had seen the vivid digital image of their future selves were twice as likely to put money into the retirement fund.

I am guessing that if you had a conversation with Future You right now, he or she might have some pretty challenging questions for you. Here are some things Future You might ask you. How would you answer?

  • Have I turned out the way you thought I would?
  • How did you manage to save so much for retirement? Tell me how you did it.
  • I’ve got more money now than I need to live comfortably. How should I put it to the best use?
  • That was a great investment! Tell me how you chose it.
  • Who was your financial role model?
  • How did you decide to choose our career?

Future You could also have some recriminations, such as:

  • When are you going to pay me back all the money you borrowed from me?
  • Were those student loans worth it?
  • He/she didn’t turn out to be a great financial life partner. What were you thinking?
  • You spent that much on shoes/cocktails/gambling? Why?!!

Does having a frank conversation with your future self sound like just the thing you need to get you motivated to change your financial behaviors? Hershfield’s digital avatar creator isn’t available for public use. However, you can create an aged photo of yourself with age progression apps such as In 20 Years, Age Me, or Hour Face.

The Future Self in my blog photo? That’s our CEO’s son Jay, age 7, who is envisioning himself at 100. You know he’ll make some great financial decisions. Will you?

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

 

How to Have The Money Talk

January 30, 2017

Are you in a serious relationship, thinking about moving in together, engaged or even newly married?  If you are contemplating sharing a household together now or at some point in the future, there’s no better time than the present to discuss your finances.  “Your life partner can be your best financial friend or your worst financial enemy,” according to Financial Finesse CEO and author Liz Davidson.  Marriage is an emotional and spiritual partnership, but it’s also a legal financial relationship.  Money is the leading cause of stress in relationships, but it doesn’t have to be.  The foundation of any successful economic partnership, including living together or marriage, is strong communication with full financial disclosure.

Ground rules

The Money Talk can sometimes bring strong emotions to the surface, so choose a place to have your discussion that will be relaxing and free of distractions to both of you.  Choose a pleasant, neutral location where you have sufficient privacy.  Keep these ground rules in mind:

  • Make sure your discussion is scheduled for a time of day that works for both partners. My husband prefers to talk money and night and I prefer the morning. Over time, we’ve learned over time to bring up financial decisions during breaks in the work day, or on weekend days is best if we’ re going to have the most productive conversations.
  • No alcohol! While a glass of wine could give you courage to disclose your student loan balance, each partner should have their wits about them. It will much easier to listen compassionately without judgment if you are free of cocktails. Feel free to stash a bottle of champagne in the fridge for later to celebrate this milestone in your relationship.
  • Set a beginning and end time for your discussion. If you don’t finish everything, set up a follow up date.
  • Don’t judge. Your partner has a different money story and may have different values and financial priorities than you. Refrain from expressing opinions – think of this conversation as an exercise in  information-gathering.

What to discuss? Make sure that you’ve covered all your bases:

Tell each other your money stories

  • How did your parents handle money? What do you think of how they handled their finances? How did that impact you? If you’ve never thought through your money story, the book The Feel Rich Project, by Michael Kay, CFP® has some helpful chapters on how to assess your history.
  • How would you describe your financial personality? Are you a saver or a spender, or something in between? Do you like to plan carefully, or be more spontaneous? Do you collaborate, or prefer to decide independently? Are you more likely to be meet your own expectations or those of others? Consider using this framework for thinking about how you best create financial habits. If you want to dive deeper into the financial personality question, you can both take an online quiz here or here and compare notes.
  • What’s the biggest financial success you’ve had? What are the factors which contributed to it?
  • What’s the biggest financial failure you’ve had? What are the factors which contributed to it?
  • If you’ve been married or living together before, how did you handle money together? What worked, and what didn’t?

Take inventory – how much to you spend, what do you own and what do you owe?

Now that you’ve reviewed the emotional side of money, it’s time to get practical. Compare notes on your income and expenses:

Income

  • How much do you each make? Do you expect that to increase, decrease or stay the same in the short term?
  • Do you have other sources of income, such as rental property, business investments or trust income?

Expenses

  • How much and what are your “must pay” expenses every month – housing, transportation, insurance, child support, tuition, etc.
  • Do you track your expenses? What system do you use?

Assets

  • How much are you saving for retirement as a percentage of your income? How much have you saved so far in retirement accounts, such as 401(k) or 403(b), Roth and traditional IRAs?
  • If you own your home, what’s it worth approximately?
  • Do you have an emergency fund? How much do you have in cash reserves?
  • What other investments do you have?
  • Do you co-own any of your assets with someone else?

Debt

  • What is your mortgage balance, rate and remaining years to pay, if you have one?
  • How many credit cards do you have? Do any of them carry balances that don’t get paid off in full each month? How much?
  • Do you have outstanding student loans? Are they private or federal loans? Are you current on paying them?  Are you in a loan deferral or forbearance period?
  • If you have non-mortgage debt, do you have a plan for paying it off? By when?

Insurance

Financial wellness means that you are prepared for unexpected and expensive events, such as a major illness or car accident.

  • Do you have health insurance? What kind of health care benefits are available to you at work?
  • Do you have short and/or long term disability income insurance?
  • Discuss your auto insurance. Do you have the bare minimum coverage, or are more fully protected?

Show each other your credit reports

Now comes the hard part. Show each other your credit reports. For many couples, this is the most difficult part of the conversation. Remember, regardless of your credit history, transparency here is an act of love. If you are thinking about spending your lives together you’ll have an economic and financial partnership, not just a romantic one. Full disclosure is essential, especially for engaged and married couples, who will generally be held legally responsible for debts their spouse occurs during the marriage.

  • Access your free credit reports from the three major credit bureaus at annualcreditreport.com or share your report from any online credit monitoring service you use, such as Credit Karma or Credit Sesame.
  • Review and discuss any major items, such as bankruptcy, short sales, and a history of significant late payments or charged off accounts. Do you see evidence that your partner has good financial habits, or is working to develop them after a financial mishap?
  • If one partner has significantly better credit than the other, how will this impact how you manage money together?

What are your financial priorities and long term goals?

Once you’ve tackled the rough part of the conversation, you can head to the fun part!  A successful marriage begins with a shared vision. Ask each other:

  • If everything worked out exactly the way you wanted it to financially for us, what would that look like?
  • Where do you see us living now? In five years? In retirement?
  • If we plan to have children, do you think one of us should take a career break to raise them? For how long?
  • When would you like to be financially independent enough to have the option to retire?
  • Can you define “financial independence” for me?
  • What would happen if one of us got sick or laid off? How do you think we should handle it?
  • If one of you has children from a previous relationship, how do you plan to handle the costs of raising them, including sending them to college? See Financial Planning Tips for New Stepparents for ideas.
  • If one of you has significant debt, such as credit card balances or student loans, what is your target time to have them paid off completely?

Not a one-time event

Congratulations on getting through your first “Money Talk!” We hope this will be the first of many ongoing conversations about your joint finances. Marriage can teach you a lot about money.  Now that you’ve established a foundation of transparency, full disclosure and sharing your visions, set up regular “money meetings” to talk through ongoing financial business.  You’ll have a better personal – and financial – relationship for doing that.

How to Stop Hating New Year’s Resolutions

January 03, 2017

I was having a conversation with friends over my favorite dessert, which is basically anything chocolate. One of my friends mentioned New Year’s resolutions and like a symphony, I heard a range of moans and groans. I told them to consider re-framing their idea of success by focusing on consistently (not perfectly) making small changes instead of focusing only on the end goal. If they change their behavior and do it consistently, the natural byproduct is their goal.  I gave them the following as a starting point to consider.

Being Healthier:

1. Replace two drinks a day with water. If you cannot stand the tastelessness of water, throw in some fruit – strawberries, lemons, etc for extra taste.

2. Fill half of your plate at lunch or dinner with vegetables. A salad is a quick and easy solution. Just minimize the dressing to 2 tablespoons or less.

3. Consider having a “walking” meeting with a colleague. Commit to a 15-minute walk during lunch. If you travel a lot, you can use workout apps with various workout programs and even a coach to keep you motivated like Aaptiv or Fitstar.

Saving money

1. Start off with an amount you are confident you can save per pay period and adjust your payroll to have the funds automatically sent from your paycheck to a savings account. You can always increase the amount.

2. Consider using the “round-up-to-the-nearest-dollar” bank savings feature or have deposits (interest, ATM usage rebate) automatically deposited into your checking account.

3. Have a “no-spend day” when you choose where you are committed to not spending any money for the day.

Becoming Debt Free

1. Stop using your credit card. The easiest way to reduce the amount you owe is not to acquire any new debt.

2. Call your creditors and ask for an interest rate reduction. Research from CreditCards.com cited that 3 out of 4 people who ask for interest rate deductions actually get it.

3. As we head into tax season, consider earmarking part of your tax return to reduce your debt.

What are your goals? Starting off with the small changes can give you the quick wins to keep you motivated to reach them by the end of 2017. Then maybe you won’t groan the next time you hear about New Year’s resolutions!

 

 

Should You Pay Off Your Mortgage Early?

December 23, 2016

One of the questions that I have fielded fairly often in my career as a financial planner is about paying off a mortgage vs. keeping it for those who have the ability to write a check and pay it off all at once. I have had a lot of discussions with my friends who are in financially -oriented careers as well as with friends who have no financial background but who always show an ability to use common sense. After years of having this same debate, we have found that there is no true consensus around this topic.  But we have come up with the most important points to consider on each side.

In favor of keeping the mortgage: If the mortgage rate is 4% and it’s tax-deductible, the tax-adjusted cost of the loan is around 3%. If you can do better than 3% on your investments, keep paying the mortgage and invest your cash.

In favor of paying it off: For every dollar you pay in interest, you get a tax break of maybe $.25 to $.40. To me, that sounds like losing 60-75% of each dollar. The total interest cost can be 2-3x the amount borrowed over the life of the loan. You still lose over half of each dollar paid in interest with the tax impact factored in.

And in down markets (not that we’ve seen one since 2008), you not only lose money in your investment accounts (think about the -37% S&P 500 returns in 2008), but the interest on your mortgage is lost opportunity cost. Paying off the mortgage in Jan ’08 would have yielded a 4% return with the assumptions above. Keeping it would have cost 41%, the 4% paid in interest along with the 37% lost if your returns were similar to the overall US stock market. A mortgage can be viewed as a means of leverage, and as we’ve seen with the financial markets, leverage isn’t always a great thing.

I have seen dozens of “keep vs. pay off” mortgage calculators. The inputs on the calculators usually include the interest rate of the mortgage, the investment account’s assumed rate of return, and income and/or tax rate of the homeowner, along with other more specific data items.  The one thing that is NEVER seen in these calculators is “How are you wired? How would you sleep best at night? Do you like having a mortgage or do you really despise owing money to anyone?”

The most sophisticated calculators miss the single most important factor in this decision. Which option feels best to you? Financial planning isn’t always about the numbers. Sometimes human behavior and psychology are even more important.

In my experience, the option that feels best is the option that individual will choose. This is the same in your financial life as well as with exercise and nutrition. The things that work best are the things that you feel are consistent with your internal wiring.

There is a lot of analysis, discussion, calculations, changing of assumptions, and an enormous amount of time devoted to this decision. In the end, I’ve seen that what matters is the emotional viewpoint of each individual. Almost always, emotions outrank number crunching in this kind of analysis.

 

What I Really Want for Christmas

December 21, 2016

It’s the most wonderful time of the year: that time when we all give thanks for what we already have, then storm the malls for 30-ish days to buy more stuff. We’re constantly asked what we want for Christmas and then the rest of the year, we try to reconcile our consumer culture with our desire to be content with what we have. So when I’m asked for my wish list, I confess that instead of thinking of presents, I wax idealistic and think in terms of what I would want if it weren’t for that pesky reality issue. In no particular order, this is all I want for Christmas — or ever:  

1. A couple do-overs

I actually don’t regret the headline “mistakes” of my life — like saying “I do” when we didn’t or changing my college major in order to graduate on time. Those things have led me to where I am today, which is exactly where I want to be. It’s those little things I’d like to go back and fix like the time in 4th grade when the kids on the bus were teasing my little brother and I chimed in rather than stood up for him or skipping my best friend Jenny’s bridal luncheon because I didn’t want my boyfriend at the time to be bored. A mulligan wouldn’t change the course of my life, but it could have made a big difference to someone I care about.

2. Everyone to give a crap about the environment

It’s the only earth we have. I don’t get why some people are able to turn off their give-a-darn when it comes to taking care of it — like the woman who told me that recycling is “impossible” at her house because she has two teenagers. Nice excuse, but don’t teenagers typically care more about that stuff than their parents?

I’d even be satisfied if everyone just turned off the water while brushing their teeth. I see people lamenting global warming but then toting around disposable plastic water bottles. Just one small change can make a difference.

3. No more homeless pets

At one time in my life, I actually lived with four cats. I dream of opening our home to a dog or two once we have a yard and won’t have to walk up three flights of stairs for every walk. It kills me to go by the shelter and see those poor puppies and kitties waiting for some love and attention. Please spay and neuter your pets. And the next time you want a furry friend, adopt from the shelter instead of buying from the store.

4. Money to cease being taboo

I always say that if people walked around with their credit card balances displayed, everyone would feel better about their financial situation. It saddens me how many wonderful, successful people I know are secretly freaking out inside about money. They feel trapped in a lifestyle that is destroying them financially. If we were more honest with each other about our fiscal challenges, we’d all find it easier to resolve the problems and focus our energy on the things that really matter to us.

Of course I’d love to see world peace, an end to greed, and the ability to time travel, but let’s not get carried away. These four wishes are near and dear to my heart. What would you put on your suspended-reality wish list? I’d love to hear your answer on Facebook. And happy holidays!

Like what you’re reading? Sign up to receive my weekly blog posts directly to your email inbox. Go to the blog main page and enter your email address. You can subscribe to all posts or select your favorite topics and authors.

Does Your Aging Parent Need Help?

December 06, 2016

My father had a presence about him that made him seem larger than life. As my father started aging, we still saw him as invincible and initially ignored the signs that he could no longer take care of himself. As we celebrate this holiday season, take the time to observe your parents as well as any other elderly relatives to see if they may need help. My sister-in-law was the first to notice the changes in my dad so be sure to involve your spouse in the observation too. Look for the following warning signs:

1. Home in Disrepair – As you pull up to your elderly relative’s driveway, look for signs of disrepair. Does the exterior of the home need painting, is the driveway cracked, are newspapers piling up. (It may be a sign that she cannot move around as much).

As you enter the home, look to see if the home is more cluttered or disorganized than normal. Is there an odor? Is there a lack of food (he could have problems paying for food or he may not be able to travel to buy food) or does he have a lot of expired food? If you find there is a problem, consider talking to your relative. It may be as simple as helping them once a week or month or hiring a caregiver or it may be time to look for an assisted living facility.

2. Deteriorating Physical Health – Has the personal hygiene of your relative changed? Has she experienced unusual weight loss? Does he have unexplained bruising? (My father had bruises due to falling, but did not want to tell us.) Is she more tired than normal?

Does he have more bottles of medication than you remember? Is she actually taking her medication. (You can look at the date the medication was given and check the bottle. If it’s full after several weeks, she may not be taking her medication. If it’s empty after a month, she may not be able to travel to get  her prescription filled.)

Is he struggling to move around his home? First step would be to talk to your relative about his health. If possible, go to a doctor to understand any health challenges and if there is a need for a caregiver.

3. Cognitive Impairment. If you can, check his mail for late notices, bounced checks and collection notices. (This could be due to a lack funds as well.) These could be signs of forgetfulness. Does she seem to be confused or uncertain about doing tasks that were once familiar – cooking a favorite meal, playing a familiar musical instrument, recounting a favorite story she has told for years and/or forgetting a favorite song? Do you notice a change in his mood – more closed, angry, depressed or unusual mood swings?

If you have concerns about cognitive impairment, talk to your parent and if possible, talk to his physicians about getting your parent or elderly relative evaluated.

As I write this, I know firsthand that not all parents are cooperative. If your parent is resistant to talking about your concerns, be patient. Websites like AARP offer a wealth of resources on care giving. An aging life care professional  (sometimes known as a geriatric care manager) is a specialist trained to help with the care of the elderly. Ask questions to get to the root of why they are resistant.

Ultimately, it was a team effort that convinced my father to go to an assisted living facility where he is doing great. We got a lot of people involved, including clergy and a social worker, to talk to our father. The key is to respect how your parents feel, lovingly but persistently keep talking, involve as many people as you need, and take it slow. Consider using the holiday season not only as a time to spend with your loved ones but also to uncover a need for help. This could be the greatest gift you give your family member.

 

 

How Being Grateful Can Help Make You Richer

November 23, 2016

It’s easy to practice gratitude during the month of November when much of the month’s activities center around an actual day of giving thanks, but carrying that feeling with you year-round can be more of a challenge. However, scientific evidence is mounting that the simple practice of giving thanks can have myriad positive benefits in life. In fact, a regular practice of gratefulness can actually help with your finances.

What is Gratitude?

First, it’s important to understand that gratitude is actually made up of two parts, according to Robert Emmons, Ph.D, who is considered to be the leading scientific expert on gratitude. The first is what most of us already know: it’s an affirmation of goodness in our lives, even when there are things going wrong. An example is giving thanks for access to clean water and abundant food, even if you’re struggling with a health issue.

But the second part is where it can really manifest in more of what you really want. It’s recognizing that the sources of that goodness come from outside ourselves. It means we realize that the gifts for which we are giving thanks came from other people or in some cases, a higher power, should you believe in one. We can certainly appreciate the traits we have that help us in life, but real gratitude is the humble acknowledgment that much of what we have is due to the generosity and goodness of others.

How Does It Work?

Dr. Emmons has found that gratitude brings several benefits: increased happiness, stronger relationships, less anxiety, longer sleep, and better overall health and resiliency. It’s that final piece, resiliency, that can really help you find more financial success when you’re able to quickly bounce back from setbacks such as earning too little, spending too much or finding yourself overwhelmed with debt. Gratitude also helps block negative emotions and helps you to quickly find solutions and get working on them. With that in mind, here are three ways to add more gratitude to your daily life, all year long.

1. Keep a daily gratitude journal. My friend Ellen Rogin observes in her book Picture Your Prosperity that people who were overspenders in her practice talked a lot about what they didn’t have in their lives, while good savers talked about what they were thankful for. In one study, people who kept a gratitude journal reported increased well-being, better health, more exercise, and increased optimism.

When we acknowledge and give thanks for what we do have, instead of lamenting what we don’t, we open ourselves up to receiving more of what we want. As you’re keeping your journal, think of the positive aspects of your finances. Perhaps you are working to pay down debt, but you can still give thanks for the ability to make your payments on time each month.

2. Foster an attitude of abundance. Don’t just write about what you’re grateful for. Expect more of what’s good and it will appear. The Law of Attraction says that what we focus our attention and energy on will manifest itself in our lives.

I experienced this myself. When I was first working to dig myself out of credit card debt, all I could see was how long it was going to take me to pay it off and I was preoccupied with what else I could be doing with that money. I was on the financial struggle bus. But when I shifted my mindset to placing my debt payments in the category of “just another bill,” and trusted the plan I had put together, I was better able to enjoy the money I wasn’t spending on debt and actually found myself able to pay off the debt sooner than I’d planned.

3. Give some away. Hopefully you already know how great it feels to give to others, but research by Arthur Brooks, Ph.D., finds that as people give more, their incomes actually increase. Of course, people who make more give more, but Dr. Brooks found that as people’s charitable contributions increased, so did their income. A study comparing two similar families where one family simply donated $100 more than the other, found that the higher-giving family will earn an average of $375 more income that year than the other one!

It sounds a little crazy, but consider this: giving money away or spending it on others has a tendency to make you feel more wealthy. This causes you to feel happier, and greater happiness tends to lead to greater career success, so there you have it. Consider building some charitable giving into your budget.

What methods do you use to practice gratitude year round? I’d love to know so that I can practice them myself! Please send me an email or let me know on Twitter.

 

Receive the Tip of the Day in your inbox every weekday! Just enter your email address on the Financial Finesse blog main page, and select which categories you’d like to receive. 

 

 

How to Deal With Adversity

November 18, 2016

As I type this, I’m watching protests in the streets of several US cities and hoping that the protests remain peaceful. In my lifetime, I’ve never seen election results trigger this type of reaction. Whether it’s spontaneous or planned and well-funded is something that I’ll let the political talking heads debate. I’m also seeing college students being given the opportunity to skip exams and classes while they process the election results, which I find to be a bit ridiculous.

A huge chunk of life is about dealing with adversity and these kids are being taught by their institutions of “higher learning” that they don’t have to deal with it. As a person who has had to deal with many adversities over the course of my lifetime (it doesn’t make me special, it makes me human!), I have some rules to live by that make sense (to me) to put into place when things don’t go your way. These rules work when your candidate loses an election, when you lose a loved one, if you get swept up in a layoff, or if you tear your ACL pretending to be 20-something and taking on a physical challenge (not that I’d EVER do that):

1) Remember that this adversity is only temporary! If the person just elected doesn’t do a good job, he or she can be removed in 4 years. Most obstacles in life can be overcome, and for those that can’t, we learn to dull the immediate pain and find a new path to our goals.

2) Look at the small picture for a change. When I see something going on in the world that I can’t control, like the events of 9/11, I stop looking at the big picture and start to narrow the things I give time and attention to. I felt helpless to do anything on a large scale after 9/11, so my focus went to being the best father I could be. I spent extra time and attention getting my kids out of the house and into nature and talking about life. Sometimes those conversations got serious, but mostly we told stories, laughed and were reminded that while the world was a bit scary, our little circle was in great shape.

3) Focus on your personal goals, write them down and revisit them frequently. I have a few different “goal lists.” I have them for my work life, my personal life and my fitness level.

When I’m at my best, I look at these goals every day or every 2-3 days at worst. It helps remind me about what’s important in my life and that I can have a big impact on myself. That’s a much bigger level of influence than I can have on an election or similar obstacle. Remembering what’s important and having actionable steps to take in your own life is a great respite from the events of the world.

4) Give yourself a “time out” from technology. Unless your obstacle is a job loss, which requires a lot of the job search to be done via technology, shutting off the TV, Facebook, Twitter, etc is a wonderful idea. Your time is the most precious resource you have, so give the time that you’d normally give to technology back to yourself. Go to a museum, take a walk, read one of the classics that you’ve always wanted to read, sit by the water, hit the gym, ride a bike…do something to change up your routine and you may notice that a vacation from technology improves your view of the world.

5) Do something for others. When things in my life have been far less than ideal, I’ve made an extra effort to find ways to give back to my community. Volunteering at a homeless shelter or school, driving for Meals on Wheels, donating blood, visiting a nursing home with your dog, helping in some way at a children’s hospital — the list is endless. When we put ourselves and our problems away for a minute and help others who have far worse problems, an amazing thing happens. We realize how small our seemingly big problems can actually be.

In my life and yours, there will be days when we wish the day would just end and we see no real solutions to the things creating strife in our world. They can’t be avoided. It’s on those days that I hope you remember reading some financial planner’s blog and decide to give one of his suggestions a shot.