The Best Apps For Tracking Spending

April 11, 2025

In my 16 years in the financial services industry, I have noticed an interesting phenomenon when it comes to spending plans (aka budgets – those terms will be used interchangeably in this post). Most people I coach understand the importance of tracking their spending to ensure they are spending less than they make. Despite that understanding, many people do not actually have a spending plan in place.

I hear a lot of reasons for this like, “it’s too much work,” “I don’t know where to start,” or “I’ve started to make a budget, but just never stuck with it.” Luckily in today’s age of technology, we no longer need to write out our expenses or plug them into a spreadsheet. There are a slew of apps that will help us see where we are spending our money and make sure that we don’t spend more than we make.

Let’s look at several of the more popular ones out there to see how they work and who they work best for (in no order of preference):

YNAB or You Need A Budget

www.youneedabudget.com

Cost: $14.99 per month or $98.99 annually after a 34-day free trial

How it works: YNAB is a pure budgeting solution – it does not offer other features like investment tracking or bill pay. Previous versions of YNAB were desktop-based apps, but the latest version is web-based. This means you can automatically connect your bank and credit card accounts to import transactions versus uploading files from your bank, and you no longer have to manually enter transactions to make sure they are all captured.

Because budgeting is all YNAB does, they provide a strategy using three rules to help you spend less than you make, pay off debt, and stop living paycheck to paycheck.

Who it works best for: Those looking for a more hands-on approach and who resonate with the three rules YNAB applies to their budgeting strategy. Also, those “budget purists” not looking for other features like access to credit scores and investment tracking will enjoy the quality of the budgeting resources.

PocketGuard

pocketguard.com

Cost: Free. Upgrades for an added fee.

How it works: PocketGuard connects to all your financial accounts and creates a simple budget. It focuses on what you have available for spending – aka what is “left in your pocket” for the day, week, or month. It does account for bills, spending, and savings contributions as well. PocketGuard also allows you to dig a bit deeper to track certain spending categories like groceries, clothing, or eating out.

Who it works best for: Those looking for a simple, bare-bones budgeting app.

GoodBudget

goodbudget.com

Cost: Free version or $10 per month ($80 per year) for an upgraded version

How it works: GoodBudget is a digital version of the old envelope system. Instead of carrying around an envelope with cash for each spending category, this app allows you to do that digitally. Each time you spend in a certain category, money is removed from that envelope. Once the envelope is empty, you can’t spend any more in that category.

It is not required to link accounts to GoodBudget, but you can upload a CSV file from your bank to populate transactions. You then create your envelopes and add money you earn or is already there. Then you fill your envelopes and track your spending from those envelopes. Not overspending becomes easier with the envelopes and allows you to save for other goals.

Who it works best for: Those who like the envelope system (it has been around for a long time because a lot of people have had success with it) and are looking for a digital way to use it. You can use the free version across two devices, so couples can stay on the same page. Remember, it only works if you stick to the philosophy of the envelope system – once an envelope is empty, you must stop spending!

Banking apps

Many banks also have budgeting tools and apps to help you track your spending and save for your financial goals. Some have internally developed apps, while others have acquired platforms. For example, Chase offers an app that tracks spending. These apps generally integrate with your bank account automatically. Check with your bank to see what tools they offer and test drive them to see if they work for you.

The bottom line

As you can see, there are a lot of tools out there to help you with your spending plan (this list is not exhaustive either). Each one works a bit differently and offers unique features and different pricing as well. Finding the right tool for you is critical in helping you develop your budget, and most importantly, stick with it!

Having a spending plan is so important to your financial well-being because it allows you to live within your means, avoid debt, and save for the things that are most important to you. If you have struggled to put one in place in the past, hopefully, this will help you renew your commitment to your financial goals. Happy budgeting!

Here’s What To Think About When Deciding What To Do With Your Old 401k

April 11, 2025

If you have an old 401(k) account from an old job (or maybe even 2 or 3), you’re not alone – the number of people that work (or plan to work) for the same company for their entire career continues to shrink and that trend appears likely to continue. That doesn’t mean you shouldn’t be taking advantage of the opportunity to save in a tax-advantaged way through payroll deductions at each job. It just means you could have one more loose end to tie up when you switch jobs.

There are several options for your old 401(k) money – for some people the answer may be obvious, but for others a bit more nuanced. Let’s take a look at those options, along with the pros and cons of each to see which makes the most sense for you.

Option 1: Leave the account where it is

Many companies will allow you to keep your retirement savings in their plans after you leave your job (although most require your balance to be above a minimum level, typically $5,000). If you haven’t taken any action yet because you are deciding what to do next, this “default” option may work out fine as there are some good reasons to leave your account right where it is. The good news is that you can always change your mind and move it at a later time.

Reasons you’d choose this option:

Separation of service rules: If you leave your job in or after the year you turn 55, you are able to take withdrawals from your current 401(k) account without penalty prior to reaching age 59 ½, which is the normal age to access retirement savings without penalty.
Investment options: If you like the investment options within your former employer’s plan, you can stick with that familiarity. In some cases, that plan may offer unique investment options that you may not be able to hold in an IRA or your current job’s plan.
Lower costs: Many large employer-sponsored plans offer low-cost institutional share class mutual funds and index funds, which are generally less expensive to own than what’s available in individual accounts. While saving 0.5% each year on mutual fund expenses may not sound like much, it can really add up over a long period of time.

The thing to look out for:

Some employers opt to stop covering specific administrative fees for the accounts of former employees, so keep your eye on your statements after you’ve left, and if you start seeing a fee, that would be a reason to explore options 2 or 3.

Option 2: Roll it into your new employer’s plan

Rolling your account into the 401(k) plan with your new employer likely includes the same benefits as keeping it with the old plan. However, old retirement accounts are often neglected over time since you are no longer making contributions to the plan. Rolling (or transferring) the money into the new plan can offer some additional advantages as well.

Reasons you’d choose this option:

Simplicity: Having all your retirement savings together in your new plan could make it easier to track your progress while having everything under one log-in.
Ability to borrow: While borrowing from your retirement plan while still working is not usually recommended, many plans allow you to take 401(k) loans. Often this loan has a reasonable interest rate, and you pay the interest back to yourself, not the employer or 401(k) company. Rolling your old plan into your new one can give you a larger base from which to borrow should the need arise. Be careful though! Borrowing from your 401(k) comes with risk to your retirement and must be considered very carefully.

It should be noted that you will want to do this as a direct rollover, moving money directly from plan to plan. This makes your life easier by completing the rollover while also making sure the move does not become taxable.

Option 3: Roll over to an Individual Retirement Account (IRA)

Much like moving the funds to your new employer’s plan, you can instead roll the money directly into an IRA. The pre-tax money would be deposited into a traditional rollover IRA and Roth funds into a Roth IRA. Alternatively, you could roll pre-tax money into a Roth IRA, though it’s important to consider that rollover conversions of pre-tax money are taxed as income.

Reasons you’d choose this option:

Control: This option allows you to have the account at the financial institution of your choice. Many people like this idea as they feel they have more control of the funds and may have a larger selection of investment options beyond the limited menu of choices their employer’s plan may offer.

Reasons to NOT choose this option:

No separation of service rules: Once you move your money out of your 401(k) and into an IRA, you lose the ability to access the funds penalty-free if you left your job at or after age 55 – you’d have to wait until 59 ½.
Possible higher costs: Unless you work for a very small company with a limited 401(k) plan, your costs are likely to be higher overall with an IRA than with an employer-sponsored plan that can take advantage of institutional pricing.
The pro-rata rule for pre-tax IRAs: If you’ve ever considered using the “back-door” Roth IRA strategy, be aware that the presence of a pre-tax IRA can trigger tax consequences due to the pro-rata rule. Make sure you’re clear on how that works if you anticipate a higher income along with a desire to continue saving into a Roth IRA.

Option you should avoid unless absolutely necessary: Taking the money as a cash distribution

This is the least appealing option and should only be considered in the most extreme cases of financial hardship. Cash distributions are fully taxable and may be subject to a 10% penalty if you are under age 59 ½. This option is especially tempting when you have a small balance, but do your best to avoid it. Those small amounts add up!

So, if you are considering a job change – or have already made a change – consider all of your options in terms of the retirement account(s) you have left behind. And remember, you have time to make this decision, assuming your account balance exceeds the minimum rules.

Ideas To Make An Impact With Your Tax Refund

February 18, 2022

When tax season arrives it’s time to gather those receipts and crunch those numbers! For millions of Americans, it’s also a time of great anticipation as we await the annual windfall that is our tax refund.

Before spending all your refund on a new TV or that new car that will saddle you with high payments for the next 5-6 years, take a deep breath and think about how you can use that money to improve your current and future financial situation. Here are some ideas:

Shoring up your financial foundation

Establish or strengthen your emergency fund – Most experts recommend having 3-6 months of expenses saved in an emergency fund to deal with unexpected expenses or even bigger events like job loss and illness/injury. Starting with $1,000 – $2,000 will get you on your way and allow you to stop using credit cards to deal with unexpected bills.
Pay down high interest debt – If you have credit cards or other high interest debt (north of 6% interest rate), using your refund to pay that down will save you a lot of money in interest. Once you pay off your cards, stop using them! Breaking the cycle of debt (see emergency fund above) will allow you to save for other goals and keep more of your hard-earned money.
Save for retirement – Using your refund to fund an IRA to help you prepare for retirement may not seem as fun as a trip to Vegas – but is a great way to get the most bang for your refund buck.

Give your financial goals a boost

We all have financial goals that we are saving for, and a tax refund is a fantastic way to give those an extra boost! Here are some examples to consider:

Saving for college – Open or add money to the kiddos 529 plan.
Saving for retirement – Increase your savings into your 401(k) or IRA.
Vacation – Set more money aside for that next vacation.
New car fund – The more cash down you have, the lower your monthly payment, which means less money spent on interest.

Split your refund

It is ok to treat yourself with your tax refund, but be careful about spending all your refund on indulgences. Split your refund to take care of past, present, and future you!

Past You – Pay off those lingering debts.
Present You – Treat yourself! Take 10-20% of your refund to get or do something for yourself.
Future You – Increase your savings for emergencies or other goals.

Evaluate your withholdings

While getting a big tax refund each year feels like a bonus or gift, the truth is you overpaid the government throughout the year. It amounts to an interest free loan that you give to Uncle Sam. If you typically receive a large refund each year, consider using the IRS Withholding Estimator to determine how much you should have withheld from each pay check.

The goal should be to get a small refund each year (around $100 or $200) – nobody wants to write a check to the IRS every spring. While your refund may be less, you will have more money in your paycheck to reach your financial goals more quickly, so if you do make adjustments, make sure you make the most of the extra dollars each pay day. The key with that increased take home pay is to make sound decisions each month to improve your overall financial situation.

Your Next Steps

Decide how your tax refund can best be used to reach your goals – remember, a little indulgence is ok!
Review your withholdings and adjust if necessary, to keep more of each paycheck where it belongs – with you!
If you need some help deciding what to do with your refund or looking at your withholdings, speak with a Financial Coach.

Making good choices with your tax refund and go a long way to improving your financial situation – now and in the future. Focusing on your priorities may not get you all the things you want right now, but it will help you get the things you want most in the long run! Happy Tax Season!

Scammers Are Out There & Even Millennials Are Falling For Them

April 25, 2019

I recently read an article about how millennials fall for financial scams more than any other age group. Now, I’m not going to pick on millennials here, but it got me thinking about how prevalent financial scams are, especially if the generation who grew up doing internet research is falling for them.

How can we all protect ourselves from being scammed in this age of social media and online consumption? It can be a challenge when so much of life is shared online and so many of our purchases are made on computers and devices. Scams work because they look and sound legitimate and can catch us when we are not expecting it.

Common scams that people are falling for today

This is not an all-inclusive list, but some common scams include:

Phony debt collections – this can include people claiming you owe an outstanding debt from a credit card, medical bills, or even the IRS. This is especially easy to fall for if you actually DO have one of these things.
Identity theft – people can access personal information by hacking corporate records to access data they can use to steal your identity.
Impostor scams – scammers pretend to be a family member in an emergency to try and convince you to send them money to help.
Travel, vacation and timeshare scams
Mortgage and debt relief scams – more than one of my non-planner colleagues has forwarded an email about student loan relief, asking if the planner team thinks it’s legit and those things look real if you don’t do some digging!

Avoiding a scam

Scams most often present themselves through an email or phone call, although more and more are showing up as social media posts. Ever received an email from a wealthy person in some far-off country wanting to give you millions if you just wire them some cash to move the money to you? Or get a call from the IRS saying you owe thousands right now or they will have you arrested? Some scams may be easy to spot, while some may be tougher to identify.

Here are some great tips from the Better Business Bureau to help you avoid being scammed. In addition, know that the IRS does not call people to collect tax debts – they will send you a letter. And law enforcement does not charge you a fee for their services, so if you get a call from law enforcement asking for money, that is a huge red flag!

Trust your gut

I spoke with someone a few months ago who was in a panic because they received a call from a debt collector demanding immediate payment from a debt that was allegedly from several years ago. They had not received anything in the mail regarding this debt – another red flag. They could not recall ever doing business with this company.

We took a step back and went through the following steps to flush out if this was real or a scam:

Pull your credit report – if this was a real debt, it would show up on your credit report. In this case, it was not on the report.
Ask the creditor to identify the name, address and phone number of the company they are calling from – if it is legitimate, they will provide this information without hesitation. If not, they may avoid providing this information. Even so, do not discuss this over the phone! Request a validation notice be sent via mail – which they are required to do.
Ask them for the last four digits of the debtor’s social security number. If they provide that information – huge red flag! Real debt collectors are not allowed to do that by law.

After taking these steps, we spotted the scam and saved this person thousands. Trust your gut and ask questions!

By following the tips provided, you can protect yourself as much as possible from scams that are out there. Being diligent is the key and safeguarding your information makes it much harder for scammers to victimize you.

Stay safe out there!

Why You Should Consider An Ethical Will

April 10, 2019

Most the time when we talk about the importance of estate planning, those conversations focus on the need for people to formalize the legal documents we associate with an estate plan: a Last Will and Testament, beneficiary designations, asset titling, trusts, etc. To be sure, those are very important things to have in place for a lot of reasons.

Beyond that though, there is one estate planning document that is optional but could be just as important to those most important to you – an ethical will, which is sometimes just a letter to your family.

What is an ethical will?

For this post, I am going to use the terms ‘ethical will’ and ‘family letter’ interchangeably. Simply put, it is a way to pass along the non-material things you have acquired over a lifetime to your loved ones. A way to express to them what you value most in your life.

Passing along those things you can’t value

This idea goes back in time and across multiple religions and cultures. Some examples for what it may include are:

Your values
Life lessons
Stories from life about key moments or key people in your life
Your hopes and dreams for your family and friends in the future
Expression of forgiveness to those you wish to reconcile with

It is not a legal document – it will not distribute any material assets to anyone.

Why do an ethical will?

The truth is that none of us are defined by the assets we have acquired when it is all said and done. We are remembered by the people we impact and the way we live. An ethical will is a way to tell those you love what they mean to you and what you hope they learned from you along the way. What a beautiful gift.

Shaping and sharing your legacy

Sadly, I lost my father 10 years ago. While I miss him dearly – from his sage advice in times of trouble to his amazing sense of humor – I think about him daily and the lessons he taught me are never lost. That impact means more to me than any material wealth he could have left for me or my mom and sister. A family letter is a great way to document those feelings and lessons for all time. What a blessing!

How to create your own ethical will

There is no one-size fits all way to do an ethical will – since it’s not a legal document, it can really be anything you want it to be. Celebrations of Life is a great resource to help you get started, but it is a deeply personal thing that should reflect who you are.

A chance to get creative

It can be written or done on video – how cool that your family would be able to watch any time they need to! My colleague Brian had a friend who made a video of how to grill a good steak for his young son when he found out he wouldn’t live to teach him himself. And this is not something that needs to be saved until your death. Share it while you are still living if you would like. Again, there is no one way to do this.

Including an ethical will or family letter in your estate plan helps to pass down the essence of who you are to your loved one. This added step goes beyond making sure your family is taken care of financially by reminding them of what matters most in life. What a beautiful gift!

What Happens When Someone Dies Before They Retire

April 02, 2019

Dealing with the loss of a loved one is obviously one of the most difficult periods in anyone’s life. Dealing with grief can be compounded by dealing with the financial matters that need to be wrapped up – things like probate, insurance claims, and dividing assets can be time consuming and stressful. Today I want to focus on the benefits that survivors may be entitled to if a loved one is still working when they pass away.

Pension

If your loved one had a pension with their employer, it is likely that plan has some type of pre-retirement death benefit. Each plan will have different options available to a surviving spouse or beneficiary, so it is important to reach out to the plan administrator to see what your options are to claim this benefit. You can get that information from HR at the company where the pension started.

401(k), 403(b) or other employer-sponsored plans

While not all employees still have access to a pension, most will have access to an employer-sponsored retirement plan like a 401(k) or 403(b), and hopefully they were saving into it. Assuming the account had named beneficiaries at the time of death (good reminder here to make sure you have updated beneficiaries on your accounts), those beneficiaries are entitled to that money before probate is completed. There are certain deadlines on making decisions, so you may need to address this before other things in the estate.

Spouse as beneficiary – If the beneficiary of a 401(k) (or similar plan) is the deceased’s spouse, they can either treat that money as if it was theirs all along or roll it into an inherited IRA account. One big difference between these two options is that as an inherited account, the surviving spouse can take penalty free distributions if they need to, whereas, if they treat it as their own, they must generally wait until age 59 ½ to receive distributions from the account penalty free. They should familiarize themselves with the required minimum distributions imposed based on the specific choice and situation.
Non-spouse as beneficiary – If the beneficiary on the account is someone other than a spouse (usually a child or children), the options are a little bit different. The plan may or may not allow you to leave the funds in the plan itself, so you may have to open an inherited IRA account. You generally have two options with the money:

Take all the money out within 5 years of the owner’s death (technically by December 31^st of the fifth year following their death) and pay ordinary income taxes on each withdrawal.
Take the money out in annual increments over your life expectancy (based on IRS life expectancy table) and pay ordinary income taxes on each withdrawal. This is referred to as a “stretch IRA” since you can stretch those withdrawals over your lifetime.

You will want to reach out to the 401(k) plan administrator to initiate the process of transferring the account – you can usually find this information on any recent statements or from HR at the company where they worked. You should also check with a tax professional to discuss the tax implications of your strategy with the funds.

Life insurance

Many employers offer basic life insurance benefits to their employees at no cost to the employee. In addition, your loved one may have purchased additional coverage at work. In the best case, the employer will reach out to you with that information, but it is worth a call to their HR or benefits group to see what life insurance coverage your loved one had. Remember, life insurance proceeds are tax-free to the beneficiary, and they are not included in probate, although they may be taxable to the estate in certain instances.

Other thoughts

If your loved one provided the health insurance for you through work, you may continue that through COBRA coverage for up to 18 months. You should also explore other coverage options to see what the most cost-effective option for you is – if you have insurance available through your job, this would be a qualifying event, allowing you to enroll mid-year if needed, but there is a time limit to making that change from the date of death.

I also encourage everyone to review all your beneficiary designations, your will, and other estate planning documents to make sure things are up to date. Also, maintaining a simple file with who to contact for all your accounts and policies – including those at work – will make it much easier for your loved ones to know who to contact should something happen to you.

A Working Parents Guide To A Budget-Friendly Spring Break

March 11, 2019

Spring break is an anticipated holiday for kids (young and old) around the country. It can also be a stressful time for parents that have to work and are not able to take time off – or maybe don’t have the extra cash for a big trip. We want to keep our kids occupied and entertained, but that can be easier said than done when time and/or money may be tight.

Here are some ideas to help make spring break a blast for your kiddos without stressing you out … too much.

Job share the parenting – If you are married or have an ex that you share parenting with, divide the week between the two of you. Maybe you take off the first half of the week while the other parent takes off the second half. This allows you to spend some fun time with the kids and still tend to those pressing matters at work.
Over the river and through the woods… – Spring break can be a good time to enlist the help of grandparents to spend some quality time with their grandkids. If the grandparents live somewhere else, it can be a fun experience for the kids to travel somewhere away from home. Aunts, uncles and cousins work too – this was my experience growing up and it was always a blast to play and stay with some relatives.
Send them camping – I’m not suggesting packing the kids off to the woods alone for a week to connect with nature. Find some local camps in your area that match what your kids like to do – science, music, math, sports – there are all sorts of options. Now, I know what you are thinking, camps are expensive. But many offer scholarships or discounts if you enroll more than one child in the camp to help with the cost.
See what their friends are up to – If your kids have friends that are sticking around over break, organize some play dates with their parents. In exchange for taking your kids for a day, offer to have them over one evening or weekend so they can enjoy a night out – everybody wins!
Master the “staycation” – If you have some time off, but don’t want to spend a fortune on an expensive trip, find some cheap local activities to enjoy. This is my plan this year. My wife is a teacher and she will be off with the kids, but I plan to just take a couple of days off that week so we can ski one day (we live in Colorado – it’s not cheap but we have mastered the art of a “reasonable” ski day) and spend some time together at a hot spring in the mountains.
Check your benefits for back-up care – Worst-case scenario, if you’re unable to take any time off and you’ve tapped all your free care resources, check with your workplace EAP – many employers offer back-up daycare support for a limited number of days. Assuming you haven’t used all those up with snow days, you may find some relief there if needed.

The important thing is to keep things in perspective and relax! There are plenty of options to provide a fun and engaging spring break for your kids, even if you must work and have limited funds. With a little research and planning, you can all have a great spring break!

Where To Go To Create A Will

March 06, 2019

I’m sure you’ve heard before that having an estate plan is a crucial part of your financial plan. One crucial element of your estate plan is your Will – especially if you have minor children (as my colleague Doug Spencer outlines in this post).

Unfortunately, this is an area that is often put off for a variety of reasons. One reason we procrastinate on our estate planning is concern over the complexity and cost we think will be involved, but that’s actually not a super valid reason, based one what I know.

With this post, I want to dig into the various options for creating a Will (and other crucial estate planning documents) to help with eliminating at least one hurdle that may be stopping you.

4 different ways to create your Will

Estate planning attorney

A lawyer that specializes in estate planning can be a tremendous help in determining what documents are appropriate for you and making sure those are drafted accurately to reflect your intentions. This would certainly include your Last Will and Testament.

This option would typically be the most expensive one – but as my fellow-planner Erik Carter points out, you may be able to access an estate planning attorney at a discounted through your EAP or a pre-paid legal plan at work. Erik’s post is also a great resource for other ways to find a good attorney to help you with your Will.

Check at work

As mentioned above, your employer may offer some options to draft your will through either your EAP or a pre-paid legal benefit. Often, these plans offer free online Will services or discounted rates to consult with an attorney.

Software/online options

There are a host of programs available online to help guide you through the process of creating your own Will. You can check out this review to evaluate which features you value most, including:

Overall functionality
Need for frequent changes
Simplicity
Ease of use
Cost

This is the option my wife and I went with to create our will way back when, and it was relatively painless to get through.

Back of a napkin

You’ve probably heard the old saying, “Just because you can do something, doesn’t make it a good idea.” I would say that applies to this option. Not every state allows a holographic, or hand-written Will and it may open the Will up to contestation. However, in some cases it can be valid. You can learn more about this option here if interested.

Bottom line

You need a Will. Period. Regardless of age, wealth, or assets.

It is certainly not the only part of your estate plan you need to address, (while linked in the intro, this post from Scott Spann outlines other important steps – and how to accomplish them!) but it is an important step to take. Hopefully the resources here will help make it easier for you!

Creating A Values-Based Spending Plan

February 28, 2019

Note: Today’s post was co-authored by my colleague Laura Finn, who is a Senior Consultant at Financial Finesse.

Here at Financial Finesse, we talk to a lot of people about budgets (we often call them spending plans). We talk about tools to help you create a spending plan, tips to help and guidelines on percentages of take home pay you should allocate to housing, transportation, savings, etc.

But how do you account for the things you love, but don’t really fit into a traditional spending plan? A recent team exercise shed some light for me on something I had never really considered (shout out to Statia Thomas for this great idea) – why don’t we build our spending to reflect the things we value and enjoy the most in life? We decided to explore this concept more in depth.

What the “traditional way” is missing

As a financial planner, I champion the idea that operating within the confines of your spending plan is fundamental to reaching your goals. So then why do so many people struggle with this seemingly simple concept?

Our theory is that it’s not that most people don’t understand the concept; it’s that the spending plan may not be reflective of what truly makes you happy in your everyday life! While most of us have inherent needs for food, shelter, transportation, and saving for retirement, what about the other inherent “needs”? While I may value experiences (like travel or local concerts), others value more tangible items (Laura admits that she goes to Sephora so often, she uses their black-and-white bags to bring her lunch to work).

These examples may or may not resonate with you, but you probably have your own version of travel or Sephora. The key to success is to ensure that these things are captured in your spending plan and have their own line item. Trying to pretend as though they don’t exist will not only continue to thwart your short-term spending plan, it may keep you from hitting those long-term, larger goals.

What if you’re not sure what you truly value? Our solution is start with the person who knows you best: you!

Hack yourself!

The first step in making your values-based spending plan is to work to better understand yourself. What items and activities do you truly love? Do they cost money? Here’s a short list that our group brainstormed for themselves during this exercise:

Vinyl record collection
Graphic T-shirts
Makeup and hair products and services (aka Sephora)
Gym membership and spinning app
Golf
Travel

After making this list, we went around the group and shared if we budgeted for these items. The answers were mixed, but the bottom line is, most of us could refine our spending plans to better include the things that we loved most.

Maybe you like grabbing drinks with your colleagues, and your spending patterns truly reflect this. Let’s go a step further: If you find yourself at your favorite watering hole each week, how much are you typically spending there? And, more importantly, why are you there?

Are you there because you truly enjoy the environment, or is it the company you value? The bottom line is if it’s important enough to you, then it should have its own line item in your budget! But how much should you allocate? If you find that you enjoy the atmosphere, perhaps you can find ways to lower your tab there by eating or drinking less, or, if it’s the company you value, perhaps you can find a less expensive way to get together (such as hosting at someone’s home twice a month).

The bottom line is, there are trade-offs here. And frankly, if you truly love your outings as they are, find another trade-off within your spending plan. For instance, if you care less about what kind of car you drive than spending time with your friends, perhaps keep this in mind when it’s time to make your next purchase.

Making it about you instead of what society may be saying

The overriding message here is to make your spending plan a true reflection of who you are and what you love rather than making it follow anyone else’s ideals and guidelines. We all need shelter, but does the big house (with the large rent or mortgage) really make you happy? Maybe cut that back to spend less there in order to spend more on your record collection or makeup.

The goal is to shift your mindset to have your spending reflect what YOU value as opposed to what the world around you tells you is important. What a cool lens to view your spending plan through! If our spending aligns with what we value, might more of us be able to stick with a spending plan long term?

A mindset shift, but don’t forget the basics

We need to be clear here. We are not suggesting that you stop saving for emergencies or retirement in order to spend more on the things you value. Rather, changing our mindset about where we spend money and understanding the “why” in our spending patterns can help us establish a healthier relationship with our money.

Be gentle with yourself and don’t go it alone

This is always true when we are trying to make any change in our lives – it’s bound to be tough. Let’s take trying to be healthier for example. It never happens overnight, and we will always have stumbles along the way. This is natural and even healthy, if we don’t let that discourage us to the point of giving up.

Let your spouse or a confidant know what you are trying to do and ask them to be an accountability partner to help you stay the course. Having support can make all the difference!

This was such a fun exercise for us and I am so excited to share this with all of you. I hope this helps if you have ever struggled to stick to a spending plan.

Do Your Financial Habits Feel Like Groundhog Day? How To Escape The Cycle

February 01, 2019

One of my favorite movies is the 1993 Bill Murray classic Groundhog Day. For those that haven’t seen it (you should check it out), the theme is a reporter sent to Punxsutawney to cover the annual Groundhog Day events who finds himself reliving the same day over and over again.

When your finances feel like Groundhog Day

Do your finances ever feel like you are reliving the same issues over and over again? We set out with the best intentions to pay down credit card debt or get serious about our spending plan – only to find we slip back into the same habits with the same issues a few months later. It happens to a lot of us. So how do we break the cycle and move from the perpetual financial winter to a new spring?

Make a start

It sounds simple – and it is, but don’t confuse simple with easy. The first step to any change we want to make is to take the first step. Maybe that means tracking your expenses, so you can start to build your spending plan to live below your means. Maybe it means pulling the credit card out of your wallet to help resist impulse purchases. Taking that first step leads to other steps. Before you know it, you have some new habits that will lead you to those financial goals you have set.

Be realistic

Of course, setting goals is important, but if they are not realistic, you will soon become frustrated and more likely to stop trying. No one pays off all their credit card debt overnight nor do they become conscientious spenders with a snap of the fingers. Set realistic time frames with incremental milestones to track your progress and reaffirm that you are on the right track.

Don’t do it alone

We all need some help when making lifestyle changes – be it our finances, health goals, or other changes we want to make. Seek out support from your spouse, family and friends to help hold you accountable and provide encouragement. Utilize your workplace financial wellness benefit if you have one to get tips and ideas on how to make your goals happen.

Be gentle with yourself

We are not perfect, and you will have slip ups along the way. That is okay. Don’t beat yourself up. Learn from the mistakes and keep pressing forward.

Know you can do this!

I mean it. Believe you can change your financial situation. People do it all the time! But you have to it to make it happen. Again, seek encouragement from those close to you to help in those times when you are discouraged.

Making a change is hard. It involves some sacrifices, but it is so worth it to be in control of your money instead of feeling your situation is in control of you. But it doesn’t just happen. Making a plan following these tips will help you end your financial Groundhog Day – the movie, not the little woodland creature that “predicts” the end of winter.

Are You Making The Most Of This Employee Discount Program You Probably Have?

January 16, 2019

I was recently facilitating a workshop about money management and the discussion turned to finding ways to save money. Several people in attendance started talking about discounts they receive on various things as an employee of their company.

As someone who is always looking for hacks to save money, I was so excited to hear this conversation unfold. One gentleman mentioned he saves 20% each month on his cell phone bill. Another mentioned they just saved on travel for an upcoming vacation his family was taking. One of the attendees was an HR representative and she took some time after the workshop to show everyone the website with all their “perks at work” and it was awesome to see all the things they could save on!

Savings from A to Z

When I got home I started looking at my own employee discount program – I wanted in on this too! I could not believe what I was missing. Here are a few examples of things we get discounts on:

Clothing
Cars – yep, on actual cars. Not to mention insurance, service, and maintenance
Travel – airlines, hotels, car rentals, and vacation packages
Electronics
Fitness
Child Care
Cell phone – phones and plans
Entertainment – concerts, sporting events, movies, and theme parks
Appliances
Flowers
Wine (score!)
Shipping
Toys
Tax Preparation

The list goes on and on. You even earn points as you go that you can use later for more stuff. Many of these programs also offer temporary deals around the holidays and other times throughout the year.

Pump the brakes

As I was looking at all these discounts, my mind starting racing about all the cool stuff I could buy. Then I stopped myself short – is it really “saving” money when you’re actually spending it? Remember, a 30% discount on something you don’t need is still a bad deal for your spending plan and your important financial goals if it wasn’t something you had planned for already.

Worth looking into

So I can see how these programs can actually lead to potential over-spending, but if you are like me, you may not be taking full advantage of some great savings on everyday things and those big-ticket items that often pop up as needs from time-to-time. If you have to replace the fridge, why not get a discount? Family coming to visit and wanting to check out local museums? Definitely worth looking to see if you can get a deal on tickets.

Saving money can be hard, but looking all resources – especially those offered through your employer can help make it easier. Thanks to those workshop attendees for opening my eyes to this program!

How I Plan To ‘Bring It’ In 2019

January 02, 2019

Editor’s note: As we launch 2019, I’ve asked each of our bloggers to reflect on their own personal goals, plans or thoughts on the past or upcoming year. Our hope is that you not only draw inspiration from our sharing over the coming weeks, but also that we are all able to feel more connected through our shared human experience and recognize that no matter where we are on our personal financial wellness journeys, that we all have similar hopes, dreams and struggles. Happy New Year! Here’s what Chris has to say:

As we enter the new year, I really enjoy setting some goals for the various aspects of my life to work on. I’m not so much into resolutions and you won’t find me in the gym the first week of January (I do like to exercise, but do it at home), but a new year lets us all take a fresh look at our goals and work toward a better version of ourselves. So here are some things I will be working on in 2019:

My 2019 life focus areas

My financial wellness

Spending less on things and more on experiences. As my kids get older (almost 9 and 12), I find the fleeting time with them as kids compels me to want to expose them to experiences. Not to mention, they have more than enough stuff. I plan to do more skiing with them this winter and continue our travels to see National Parks, beautiful beaches, and cities we haven’t visited yet. Even small things like going for a hike or hitting golf balls are time well spent as a family. This is something we started doing in 2018 and will continue to do.
Continuing to work the budget. This one is not my favorite, to be very honest. But it is so important. I like to revisit household expenses once a year or so to make sure we aren’t overpaying for cable, cell phones, etc.
Saving for goals. I plan to increase my retirement savings a tad, fund a Health Savings Account (this is a new one for me), and finish paying off my car – hooray! The plan then is to use that money to increase funding for shorter term goals like vacations (see above).

My physical well-being

Continuing to exercise regularly. 2018 was a good year for me in this area. I was able to start a regular workout regimen, which to be honest I have done about a million times before. But this year I was able to stick with it and even do better with my eating habits. The results have been awesome, and I am super motivated to keep it going.

My mental well-being

Reading more. I used to read a lot and I’m not sure what happened, but I stopped. I already went to the library to get my library card and my goal is to spend the last minutes of the day reading in bed instead of watching something on the iPad.

My spiritual well-being

Spending more quiet time. For me, this takes the form of prayer and reflection. Maybe for you it is meditation. But taking time to quiet the mind and reflect and center is something I need more of.
Giving back. I can do better in giving of my time to make my community a better place. I want that experience for my kids as well. We’ll be seeking out ways to serve together throughout the year.

As you consider your goals for 2019, make sure you focus on all areas of your life. Check in with your goals at least once a quarter to see how you are doing. And be realistic (see this about setting SMART goals) in your goal setting. I wish you all a prosperous and healthy 2019!

5 Steps To Creating Your Retirement Budget

December 06, 2018

Preparing for retirement is a career-long endeavor requiring a lot of planning and saving over many years. For most of that time, we use some form of a retirement calculator to see how we are tracking in terms of being able to replace 75-80% of our pre-retirement income. But once we reach 5-10 years out from retirement, we need to focus on our specific expenses in retirement and make sure our income sources are adequate to meet those needs. That’s where having a retirement budget comes into play.

Making sure we live below our means does not lose importance once we decide to call it a career. If anything, understanding our expenses becomes more important than ever in retirement. Taking time to think through your expenses in retirement will help insure you can do all the things you have planned and that your money lasts for the long run.

Step 1 – What are you spending now?

The best way to start is to look at what you are spending now. This gives you a baseline to work from.

Step 2 – What will your lifestyle look like in retirement?

Thinking through how you want to spend your time and what that may cost is important to factor into your budget. Try to be as specific as you can. Some examples include:

Travel – Many retirees plan to travel more, especially in the early portion of retirement. But what does that look like for you? Is it travelling the world? Loading up the RV and hitting the road? Or maybe something in between?
Housing – This is a biggie. Do you plan to stay in your current home when you retire? Are you planning to relocate to a warmer climate or to be closer to family? Maybe you want to downsize to a smaller home.
Hobbies and entertainment – How you spend your time can impact your budget. If you want to play more golf for instance, does that include a club membership? If you decide to take up a new hobby, what will that mean for your spending?

Step 3 – Going up or down?

Most retirees find they don’t spend more when they retire. But every case is different, and you may find you may not spend much less once you retire. Some expenses will go up in retirement – health care as we age (click here for help with how to estimate those costs), perhaps your entertainment spending (travel, dining out, etc.). Other categories of spending may go down. Perhaps you intend to pay off your home, which would have a significant impact on your cash flow.

Certainly, things like 401(k) or other retirement account savings will stop, as will payroll taxes (assuming you are not working part time into retirement). Adjusting these categories based on how they may change will crystallize your expenses.

Step 4 – Monitor and adjust

Your expenses are likely to change throughout retirement, so it is important to monitor your spending and adjust your budget periodically. Many find that as they age in retirement, items like travel will decrease over time, while health care expenses increase.

Step 5 – Structure your nest egg

Once you have your expenses documented, consider having 5 years’ worth of those expenses available in cash or other safe vehicles. Having next month’s housing or grocery money invested in the stock market can leave you in a bad position if the market enters a downturn. Keeping your short-term funds safe will ensure the money is there when you need it.

Having other funds invested for income and still others invested for growth will help replenish the cash you spend and still provide the longevity your nest egg needs for the long haul.

Having a detailed budget in place 5-10 years out will allow you to adjust while you are still working (if necessary). This planning will set you up to enjoy the lifestyle you want during your retirement!

How I’m Planning To Manage My Holiday Spending

November 27, 2018

We all know that the holidays can be a total budget buster. It is so easy to get caught up in the season and wind up spending more money than we have or intended to spend. This leads to the credit card shame in January, when we vow that next year will be different.

Rather than let that scene play out for me, I’m going to try something different this year. I like to keep things simple – so here is my plan: Only spend cash and unused gift cards. That’s it. Here’s how I’ll do it.

Using cash only

Many you have probably done this in the past, but I am going to shop only with cash this year. I’ll be leaving all cards (debit and credit) at home so there is no temptation to go over my budget. Once I know how much I plan to spend on a loved one’s gift, that is the amount of cash I will have with me to spend for them.

The logistics

This requires some planning throughout the year. My wife and I set our total holiday budget back in June, so we had enough time to set aside the funds we will need to execute our strategy. I am generally not one that carries around a lot of cash, so this will be different for me. I also have to think about what happens when I buy an item on sale – do I buy more for that person since I’ll have cash left over? Or tuck the savings away for something else? That’s up to you to decide.

What about online shopping?

I plan to do most of my shopping in person, but I realize that online may offer a lot better deals on certain items. This strategy can still work though. If you do a lot of online shopping, consider having a separate checking account that only has the money you want to spend on holiday shopping and use that debit card to achieve the same result. Just be careful to stick to your plan and don’t deviate (seriously, DON’T DO IT)!

Using the gift that keeps on giving

The other thing I plan to do (don’t tell my family and friends) is to use the pile of Amazon, Best Buy, fill-in-the-blank retailer gift cards from holidays and birthdays gone by that I haven’t used. I sometimes (ok, most of the time) forget that I have these, and many have never been used or still have a balance on them. So, I am going to use those to supplement my cash strategy and help with any online shopping I will be doing. As of now, I am sitting on about $200 worth of re-gifting gold! I could spend it on some gadget I don’t need, but instead I am going to use them on what I really want – making sure I don’t get the credit card blues in January!

It has been brought to my attention by my loving wife that this is kind of cheap (I added the words kind of) and not in the spirit of the giver’s wishes. I disagree. Free money is near the top of the list of my favorite things, so I see it as thrifty. Besides, would the giver prefer the cards lay unused in my desk drawer forever?

Keep things in perspective

So there you have it, my plan for Operation 2018 Holiday Spending. No matter what your plan, the most important thing is to make sure it involves a budget you can afford and mechanisms to make sure you stick to it. And above all, make sure you take care of yourself this holiday season; spend time with the ones you love the most, take time to give back, and reflect on all the good in your life and give thanks.

Happy Holidays from my family to yours!

How Does Bankruptcy Work?

November 15, 2018

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

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

There are two main options

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

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

What bankruptcy will do

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

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

What bankruptcy will NOT do

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

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

Other things to know

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

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

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

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

November 07, 2018

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

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

Mom and Dad to the rescue!

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

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

What it means for my kids

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

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

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

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

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

3 Things About Halloween That Apply To Your Money As Well

October 31, 2018

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

How Halloween & your money are related

There’s more than one way to do it

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

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

Don’t eat all your candy right away

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

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

It’s usually more fun than scary

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

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

Happy Halloween!

Alternatives To A Cash-Out Refinance

October 15, 2018

I recently wrote about cash-out refinancing to tap into the equity in your home including the pros and cons of doing so. Today I want to explore some alternatives to the cash-out refinance if you decide the bad outweighs the good in your situation. Let’s look at a few options that are available.

Take out a personal loan

A personal loan is an unsecured loan from a bank or credit union. Often the interest rates are higher than an equity-based loan because you are not using your home to secure the loan, so the bank is taking on more risk. The upside is that you aren’t putting your home at risk should you default on the loan payments.

Use a credit card promo offer

If you are tackling a small project, you could also use credit card promotional offers such as offering your 0% for a certain amount of time. Be careful here though – you want to make sure the debt is paid off before the offer expires and high interest rates take over, so make sure you can afford the monthly payment required to make that happen.

Consider a second mortgage

A second mortgage (sometimes called a home equity loan) allows you to borrow against the equity in your home without having to change the terms of your original mortgage. So you can still tap your equity but you wouldn’t have to forfeit a great interest rate or reset the payment term. If you set up a 10-year term on the second mortgage for instance, after 10 years, you will be back to where you would have been before the loan in terms of your primary mortgage. This option often makes more sense if you’re using the proceeds to fix up your home, as the interest will still be deductible.

Look into a HELOC

A home equity line of credit (HELOC) is similar, but often comes with a variable interest rate that may increase over the life of the loan. The difference is that you only use as much of your equity as you need, rather than taking one lump sum as you do with a home equity loan. Both options will use your home as collateral, so make sure the payment fits your budget before moving forward.

Don’t forget a student loan for education

If you are looking to use the money to pay for education, consider a federal student loan to fund that instead of your home’s equity. Not only do they offer flexible repayment options and are designed specifically to pay for education expenses, if you run into a situation where you’re unemployed or have other hardships, you may even be able to put the loan into forbearance, which you can’t do with a home-based loan.

Explore a small business loan

If your goal is to fund a business opportunity, then a small business loan may make sense. This takes your home off the table should the business not pan out. Explore options for loans backed by the Small Business Administration to help keep the interest rates more reasonable.

Hopefully this series helps you weigh if a cash-out refinance is right for you, and presents some alternatives to help you make an informed decision on your cash needs and options!

Should You Do A Cash-Out Refinance?

October 08, 2018

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

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

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

Advantages of a cash-out refinance

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

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

Disadvantages of a cash-out refinance

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

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

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

Important Home Maintenance Tasks I Do Every Fall

September 26, 2018

Earlier this year I wrote about home maintenance tasks I do in the spring to keep our house running efficiently. I thought it an appropriate time to revisit this issue as we move into fall to point out some things I do to make sure the house is ready for winter.

One of things I love about living in Colorado is the four distinct seasons we experience. But the fluctuations in temperature and moisture can be hard on a house. Making sure things are set for the winter helps avoid costly issues that heavy snow and freezing temps can cause.

Here are some of the things on my fall to-do list to make sure we are set for the first snow:

Winterize the lawn

As the grass starts to turn dormant for the winter, I like to give it a good feeding in the later part of fall. This helps the grass green up better in the spring and is critical to maintaining a healthy lawn.

How I do it: I head to the local garden center and pick up a winterizing fertilizer. Then I like to mow first to pick up any leaves one last time before I apply the fertilizer. Make sure to water it in and you are all set for a healthy lawn come spring!

Store garden hoses

Make sure all hoses are removed from your outdoor faucets and empty of water. Leaving them attached increases the chances of water backing up into the pipes inside the exterior walls. If that water freezes, it can crack the faucet or pipes.

How I do it: I make sure all hoses are removed from outdoor faucets early in the fall just in case a sudden cold spell rolls through. I also store the hoses in the garage over the winter to lessen exposure to the elements and prolong the life of the hoses.

Drain the sprinkler system

Even sprinkler lines that are underground can freeze, so it is a good idea to make sure your sprinkler system is ready to go for winter before it is too late. Of course, make sure the controller is off and inside valves are shut down.

How I do it: I prefer to hire an irrigation professional to come in and drain our system. They will also blow out all the lines with an air compressor to make sure all the water is out. This usually costs around $75, but it is cheaper than having to replace burst lines and valves in the spring (or having to buy an air compressor)!

Clean the gutters

I do this in the spring too, but after all the trees drop their leaves, make sure to clean out those gutters for the winter. Rain and snow melt that doesn’t flow freely can freeze and cause pricey damage.

How I do it: I use a blower and my hands (with gloves) to make sure the gutters are clean. I also look for any damage or sagging that needs attention. If you see a lot of asphalt from your roof shingles, check out the roof while you’re up there to make sure it is in good repair. It’s important to mention safety here – using a leaf blower on the roof requires concentration and strength. If you have a steeply pitched roof or are at all concerned about being steady on your feet, hire a professional for this task.

Check and service your furnace

The middle of freezing temps in the winter is no time to find out that your furnace is on the fritz. Making sure everything is working before winter will keep your family comfortable and safe on those frigid winter days (and nights). Regular maintenance may also be required in order to keep any warranties valid on your HVAC system.

How I do it: I schedule an appointment with a heating and cooling company every year to inspect and service our heating system. It usually costs $70-$100 for them to come out to the house. I also make sure I change the filters every 60 days – I do this year-round. How often you change your filters depends on your household – my colleagues with multiple pets change theirs out more often.

Other things to consider

Much of this may depend on the climate you live in, but some other things to look at include:

Making sure there are no air leaks around doors and windows.
Check your chimney to ensure it is free of debris and animal nests.
Trim back plants and trees. Keep limbs and branches away from your house to avoid damage and excess moisture.

There you have it – another installment of our home maintenance series! Just like spring, looking after your home in the fall helps keep costs down and efficiency up.