Getting A Late Start To Saving Doesn’t Have To Be Scary

October 31, 2017

“Mommy, was there electricity when you were born?” 

This was the very serious question asked by my 8 year-old a few days ago. After explaining to her that yes, I was born after electricity and after dinosaurs became extinct, she seemed happy with the answer and skipped off.

But her question had me thinking about retirement — something about having a 4 in front of your age plus your kid thinking you were born prior to electricity gets you thinking about that. Then as I relayed the story to my friends, they started talking about their own fears of retirement, most of them centered around not starting early enough.

I guess that’s the great part about being in your 40’s — you are old enough to learn and recover from past mistakes, yet young enough to still have time to build a nest age. I reminded my friends of this fact.

There’s actually a lot you can still do in 10-20 years that can prepare you for a reasonable retirement:

  1. Strategize paying off debt: The smaller your expenses, the further your money will go in retirement, so work now to get all debts paid by the time you retire. For example, use a mortgage payoff calculator to estimate how much extra you would need to pay each month in order for your mortgage to be paid by retirement. Also, use the Debt Calculator to estimate when you will get out of debt and also to come up with a debt repayment strategy. With tax season right around the corner, this could be a great use of a future tax refund.
  2. Max out your retirement plan: Face the music and run a  Retirement Estimator to see how much of your income you may be able to replace when you retire. Ideally, you want to be able to replace at least 70-80%. If you got a late start saving for retirement, consider upgrading your retirement savings as opposed to upgrading your car or your home. Make maxing out your retirement plan a goal. For 2017, the maximum you can put into your employer retirement plan is $18,000, and it goes up to $18,500 for 2018. If this seems impossible, at least start with the employer 401k match and use features such as auto escalation to automatically increase your contributions until you hit the limit. If you get annual pay increases, consider increasing your contributions in the month you receive a pay increase — you can even have ½ the pay increase go to your retirement plan and keep the other half to spend today.
  3. Get your investments working hard to help you retire: A friend of mine used to always say that he worked too hard for his money to have it sitting around in a 401k plan doing nothing. Consider using tools like CNN Money’s Asset Analyzer to find the best investment mix for you. If you’re still unsure or want a simpler option, consider using a Target Date Fund.
  4. Keep your priorities straight when it comes to your kids’ college: The kindest thing you can do for your children’s future is to prioritize your retirement above paying for their college education. Think of it this way: what is more loving — to help your kids find a cost-effective way to get a college degree or for you and your spouse to spend 20+ years of your retirement sleeping on your kid’s couch because you did not save for retirement?

Getting a late start to saving doesn’t mean that a comfortable retirement is out of reach. It just takes a little bit more commitment to make it happen. Taking these steps will go a long way toward helping make it happen whether you’ve been saving for 20 years or just 20 months.

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

October 03, 2017

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

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

Getting a degree

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

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

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

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

Worth it or not?

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

Buying a car 

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

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

Car loan guidelines

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

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

Purchasing a home

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

Mortgage guidelines

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

Consider all the costs

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

Home repair rule of thumb

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

Looking for a better paying job 

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

Better pay does not always mean a better job

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

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

Do your homework before taking the plunge

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

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

Moving toward financial security

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

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

Ways To Save On Food That Don’t Require Extreme Couponing

September 26, 2017

I was recently talking with a friend who was struggling to save for emergencies, so I took a look at her budget and found some easy fixes around her family food spending. I told her it wasn’t the one day of eating out inexpensively that was hurting her, it was the fact that she was doing it 5 times a week, at an average of $30 a meal. That’s actually not bad for a family of 4, but it adds up — to an extra $600 a month!

We also looked at her grocery spending, which was about double what I pay for a family of the same size — this seemed like a no-brainer fix for me: stop eating out and start cooking at home. I told her when I was looking for ways to cut back and pay off debt,  I found my grocery spending was a Titanic-sized leak in my budget. I couldn’t see it because it was hidden behind daily trips averaging a small amount, but they added up to large amounts.

Eventually, I got sick and tired of having $5 in savings and shaved our dining out and grocery bills in half, without being an extreme couponer. Here’s what I did:

No extreme couponing needed

1. Invest in time-saving kitchen equipment. I am ashamed to admit that if I was stuck on a desert island with electricity and could only take a few things, I would have to debate between my kids and my slow cooker. My slow cooker is one of my favorite pieces of equipment. All I have to do is dump ingredients in the pot, turn it on and in the evening dinner is done.

I love that I can do all the prep days in advance too — I just put all the ingredients for the meals in large plastic bags, freeze them, then when it’s time to cook it, I take the bag of food out of the freezer the night before to let it defrost then dump it in the slow cooker in the morning. I am forgetful, so I got a programmable Crockpot with a timer that switches the setting from cook to warm when the food is done — this saved me from having mushy meals.

You can also choose a slow cooker based on how you eat — some come with a meat thermometer, and some even have an app so you don’t have to be in the kitchen to turn it on. Others have multiple functions so you can sauté and brown without having to use multiple pots. Some of my favorite websites for recipes include Stockpiling Moms, Crock-pot Ladies and The Crockin’ Girls (YouTube and Pinterest also have a ton of great recipes).

2. Meal plan for the week. I find when I don’t plan my meals, every bad food I have been fantasizing about magically appears on my plate, plus I’m much more likely to order take-out. If you struggle to meal plan there are a ton of great online meal planners  and apps to help you. I used Emeals initially, which sent me weekly meal plans and recipes as well as a shopping list organized by the sections in a supermarket — it also has an app, which was great for those days I forgot my grocery list. I am no Martha Stewart, so I chose the meal plan that was budget friendly and easy.

Lunch planning

Whatever we have for dinner becomes lunch the next day for the adults, but I found myself at times nearly pulling out my hair planning lunches for my kids. They really like peanut butter and jelly sandwiches though, so I starting making them in batches and freezing them. I also bought their favorite snacks in bulk and had them help put the snacks in individual bags — I found this was cheaper, and bonus — the more involved the kids are in the meal, the less likely they are to complain. One rule in my family is that the first person to complain about the meal is the person who cooks the next meal – it’s amazing how the fear of having prepare a meal can fix whiny kids!

3. Try a 6 month challenge. My family challenged ourselves to see how much we could save over a six month period by eating at home and strategizing our meals. This got us all excited about making a change and also made it easier to resist the temptation of dining out. We saved enough to pay for a family vacation for a week!

Other ways to save at the store

  • Don’t shop with kids or anyone that likes to “try something new.”  I love spending time with my husband and kids, but I find I spend a lot less when I grocery shop by myself. If possible, leave everyone at home.
  • Take a list. Always. This keeps me on track.
  • Sign up for store cards. If your store has online apps with a member card, sign up. Many times they can link your card to store coupons, so you don’t have to worry clipping your store’s coupons.
  • Shop with cash. I find the fear of not having enough cash at the register makes me think twice about purchases.

Start small

Making a dramatic change in your eating can be overwhelming, so start small. Start with a goal of cooking 2-3 meals per week and build from there. Once you are comfortable, start eating at home every meal by incorporating some of the ideas above.

If you have other tips or a favorite kitchen appliance please let me know on Facebook. I am always looking for ideas.

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5 Steps To Start Your Recovery After A Hurricane

September 19, 2017

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

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

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

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

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

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

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

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

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

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

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

Are You Ready For This Trifecta Of Budget Breakers?

August 29, 2017

As August winds down, we are entering what I call the “Superbowl” of budgeting season. This is the season where some of us will be victorious and have at least $1 left by 12/31 and others will have bank accounts on life support, crippled by the big three: Halloween, Thanksgiving and the granddaddy budget killer of them all, Christmas.

Worse still, once your bank account has made the final death spiral in the form of an American Girl doll purchase, you may be tempted to turn to credit, which ultimately extends the crippling. To increase the chances you’ll survive with your bank account intact, NOW is the time to start planning. Here’s how I get ahead of this trifecta of expensive holidays:

Halloween: Are you one who goes all out for Halloween by decorating your home and hosting a party in addition to buying everyone costumes for trick-or-treating? Then you need to start saving now. Log in to your account and add up your spending from October of last year — that amount is your Halloween budget. To make sure you have enough set aside, divide that total by how many paychecks you have between now and October 31st, then save it each paycheck until Halloween. I also start shopping online now for costumes on websites like Party City, SpiritHalloween, or Amazon for the best selection at the best prices.

Thanksgiving: Thanksgiving seems innocent enough, but it is crawling with budget busters. Daycare for kids on school break, travel and Thanksgiving Day meals can wreck havoc on your finances. Start asking around early to find a family member that may be able to watch your kids during Thanksgiving break. If you’re planning to travel via airplane, train or bus, buy your tickets at least one to two months in advance. I recall the year we hosted Thanksgiving when we were on a much tighter budget. To help, I made it more of a potluck by assigning dishes to everyone, then we just supplied the space, dishes, cutlery and turkey, saving us a lot of money.

Christmas: Start making your list now for who you are going to buy gifts for, along with your budget. After-Halloween sales are a great time to buy gifts for kids who like to dress up; costumes are up to 70% off. Start shopping high-end consignment shops now for kids’ toys. I found that new moms and newlyweds appreciate picture frames, which are an inexpensive and easy-to-find gift. Get creative — one of the best gifts I received when my daughter was younger was from another mother who gave me coupons for free babysitting. If everyone loves your chocolate chip cookies, consider baking a huge batch, then packing them in decorative tins from your local dollar store.

Now that school is back in session, the next couple months are going to fly by. You’ll be making New Year’s resolutions before you know it. Taking the time now to plan for the holiday trifecta will go a long way toward helping your budget (and your sanity) survive the holidays.

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Expecting? You Can Probably Skip These 3 “Needs”

August 22, 2017

I am a great aunt!!! My nephew and his wife recently welcomed my beautiful great-niece into the world, and I am so excited for them. As I saw the joy and, frankly, terror of the new life that they are now responsible for on their faces, I started to think of how I felt when I held my daughter for the first time. I felt this overwhelming responsibility to make her world perfect to the point where I was making financial decisions based on what I thought I should be doing rather than what made the most sense for our financial goals. I see a lot of new parents feeling the same way.

If you’re feeling the financial pinch of new parenthood, the good news is that a lot of the things we are told we “need” to have for our kids are actually just “nice to haves.” Here are three things that I initially felt like we needed that it turns out we could go without just fine.

Buying a bigger home because we need “room.”  To quote my colleague Daphne, “Really????” The last time I checked, all a 7 – 8 pound newborn did was eat, sleep and poop, mostly on top of mom. If we are honest, all the stuff we buy for the baby is mostly for us — the baby does not care. What your new baby needs are parents that are not financially stressed. Consider staying in your current home longer while working to pay off high interest credit cards, build an emergency fund, and ideally save up 20% to put down before purchasing a home with a mortgage payment that represents no more than 25%-35% of your take home income. Sticking to a mortgage within your means gives you the wiggle room to handle the sticker stock of childcare, which can easily be over $800 a month.

We have to have a super cute nursery. I have mentioned this in previous posts, but your newborn can barely see at first and will probably sleep with you for the first few months — the truth is that a nursery is unnecessary. The average cost of a nursery can easily exceed $2,000. I still regret that I spent so much money on a color scheme and furniture for a person that can only initially see black and white and slept 10 hours. In retrospect, not surprisingly, she did not care what the room looked like; she was never in it.

To save money, stick with the basics — even a bassinet with a shelf underneath for onesies, diapers, and receiving blankets is enough at first. You can buy more things as your baby gets bigger and starts needing more. Consignment shops, Craigslist, yard sales, and the moms of toddlers are your new best friends for finding great deals on baby items.

We need a bigger car because we need more “space.” I know that getting a car seat into a small car requires the skills of a Cirque du Soleil performer, but your newfound flexibility is better than being saddled with a $400 car payment. We were at the dealership getting ready to buy a larger car and thankfully starting thinking about our finances after the baby was born and changed our minds.

There are enough financial adjustments you will be making with the baby — diapers, wipes, formula which can easily cost over $100 month, not to mention my earlier mention of the possible $800 in childcare expenses. I decided to stick with my Pontiac Sunfire (two doors) then researched car seats for small cars and compact strollers to fit in my small trunk. It was tough, but the lack of payment gave us the breathing room to pay off debt, save for emergencies, and handle the financial needs of our growing family.

Thinking through your baby’s needs vs. wants can go a long way toward helping you manage your financial stress along with your growing family.

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How To Figure Out What Amount Of Life Insurance You Need

August 15, 2017

Thinking about what would happen if you or your spouse were to pass away is tough — no one really wants to imagine the worst happening. The sad reality is that bad things sometimes happen to good people, so we need to be prepared, but you don’t want to spend too much on life insurance since there’s a strong chance you won’t need it. I encourage people to think of life insurance in terms of taking care of their loved ones rather than planning for something bad to happen.

Adequate life insurance can help your family maintain their home and lifestyle if you are not around. It could also give your kids a chance to graduate college without being saddled with thousands of dollars in student loans. But how much do you really need?

Choosing how much life insurance to buy can be confusing, but you want to know how much you need before you sit down with an agent so you can feel confident in your investment. Here are three of the more popular methods of figuring it out:

  1. Multipliers of income: This one is pretty simple – you decide how much coverage you need based on how much you actually make each year. Keep in mind that it does not take into account inflation or your current and future financial obligations, just what life is like today. Here’s the rule of thumb:
    – If you are single with no dependents: enough to cover your burial expenses.
    – If you are married & your spouse earns a similar income:     5x your annual income.
    – If you are the primary income earner in your family: 10x your annual income.
  2. Human life value: This method considers the fact that if you were to pass away, your family would lose the value of your income not only now, but your potential income in the future, then calculates what amount would be needed to replace that. There are calculators that can help determine what your amount may be based on your income and obligations, considering your after-tax pay while adjusting for expenses that would no longer exist if you passed away, such as a second car. Keep in mind, these amounts are typically high and may over-inflate how much you need. Think of this as the “Cadillac” value approach.
  3. Needs analysis: No two people are the same and neither are their life insurance needs. This method basically says you should have enough insurance to cover certain things you value, such as paying off your mortgage or covering your child(ren)’s complete college education — someone else may choose to only have enough to cover 50% of their kids’ education or to only pay the mortgage for one year after they pass. Basically, the needs-based approach takes into account your personal situation to determine your insurance needs.

One great resource are the calculators on LifeHappens.org — my spouse and I both did this and boy was it an eye opener! It turns out that we had very different ideas on what we thought life insurance should cover, so it helped us to get on the same page about how much we should have, along with clarifying our expectations of what the life insurance would cover should one of us pass.

Out of all of the approaches, I like the the needs-based approach best because it takes into account exactly what you want to cover in order to give you a better picture of your needs. If you find that your life insurance needs are more than you currently have in place, take advantage of open enrollment season to increase your coverage at typically low group rates. You may also want to research rates with your home or auto insurance provider (sometimes they offer life insurance), your bank or even online.

No matter what, if you have a family or anyone who is dependent upon your income to fund their lifestyle, you need to have life insurance in place. There are too many stories out there about young families who are not only dealing with the unthinkable loss of a young parent, but also having to deal with the financial fall-out from a lack of insurance as well.

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5 Back To School Things To Plan For Now

August 08, 2017

The first day of school — ready or not, here it comes. For kids, it’s a mixture of excitement to reconnect with friends and dread of going back to homework and early bedtimes. For parents, I’d have to say it’s mostly just relief — either because they are no longer having to spend an arm and a leg on summer camp or because they cannot possibly handle another day of having their kids home all day, every day, needing to be entertained, fed, refereed and cleaned up after.

As we start to close in on the big day, it’s time to start firing up your budget for the following five things, as well as some ways to save on them:

  1. School supply list — This is the infamous list of school items that parents are asked to buy for their kids’ classroom and use throughout the school year. It can get pricey, so you have to get creative. Instead of buying pre-sharpened pencils, I get unsharpened pencils for much less and give my kids the “fun” project of sharpening them (it’s all about the spin). If I had a school supply item at home, I re-purposed it rather than buying new. Dollar stores and thrift stores are awesome places to find things like binders, document protectors, dividers and other supplies on the cheap. Shop early though, it is tough to find school supplies a week before school starts pretty much anywhere.
  2. School activities — I will admit, I am guilty of forgetting that some activities require payment in advance. Start budgeting for after-school activities and the ancillary costs right now. Is your kid in dance? Then you know to start hitting up consignment shops for jazz shoes, ballet shoes, and leotards. Is your kid in track? Plan ahead to shop during your state’s Sales Tax Holiday weekend, and start collecting store coupons for running shoes. Add the monthly cost of the school activity to your monthly spending plan so that it doesn’t take you by surprise.
  3. School lunch — If your kid buys lunch at school, estimate the average monthly cost and include this amount in your monthly budget as well. I normally make my kids lunches to save money. Last year, after a few weeks of half eaten lunches and a lot of complaining, I decided to get my girls involved. I had them go on Pinterest and give me five breakfast, lunch and snack items they like, with parameters – for example, snacks had to be a fruit or veggie and the lunch had to have some nutritional value. I also got them involved in making the lunches. I found they were less likely to complain and more likely to eat their lunch once they were involved in its creation. Standardizing breakfast, lunch and snacks became a time saver but also helped me find deals on items we use often. I also learned it was much cheaper to buy snack items in bulk and bag them myself rather than buy items pre-bagged, such as baby carrots or apple slices.
  4. School breaks — School may just be getting started, but start planning ahead now for days or weeks where you may need babysitting so you can line up affordable options. This includes holidays, teacher workdays, fall break, Thanksgiving break and Winter break. Since you may be used to spending more right now on summer camp anyway, consider diverting that money once school starts to a separate “school break” account so it doesn’t eat into your holiday spending budget. Don’t forget to reference this budget during open enrollment season at work so you can sign up for the Dependent Care Flexible Spending Account and use pre-tax dollars to pay these expenses.
  5. Clothing — My kids have the gift of destroying or losing clothing within the first few weeks of school so I stopped buying new items. I typically go to the consignment shops in the wealthiest part of town to shop for clothes – oftentimes with the tags still on them. To take it even further, I wait for a sales tax holiday – just make sure you wake up early to shop for school items, it’s a jungle out there.

Back to school is expensive, even if your kids go to public school. By planning ahead, you can prevent your wallet from screaming for mercy as you prepare and instead just enjoy having some peace and quiet at home again for a little bit.

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These 5 Expenses Surprised Me The Most About Pregnancy

August 01, 2017

When preparing to start a family, most couples are aware of the added costs they’re getting in to — child care, diapers, gear, etc. What I didn’t factor in when I got pregnant with my daughter was the added cost to clothe my growing body. Here are five things I had to shop for during my pregnancy, some completely unexpected.

  1. Shoes. I expected my waistline to expand, but it never occurred to me that my shoe size would change. I ended up having to go up a full shoe size the last few months of my pregnancy, and my feet were so swollen during the last few weeks that I ended up just buying a pair of black flats that could change with my feet and wore those every day til I delivered. Since I knew (hoped!) that my feet would go back to their normal size eventually, I shopped consignment shops for this temporary need. I was surprised by how many shoes I found that had been barely worn or with the tags still on them, so have continued to shop consignment for everyday wear as well.
  2. Underwear. Never being well endowed, the highlight of my pregnancy was being able to completely fill out tops for once. This also meant that I was changing bra sizes constantly. I started lactating about eight months in, so before my daughter was even born, I had to switch to nursing bras with extra padding or I had to buy padding for my bras. Stores like Target, Marshalls and TJMaxx had great inexpensive options. I also found that bikini style panties handled my growing tummy better than briefs. This may be TMI, but I wished someone would have mentioned this to me before I was pregnant so I could be prepared.
  3. Occasional outfits. Most expectant moms know they’ll have to buy some maternity clothes, but those occasional items like bathing suits or wedding wear are tough to spend a bunch of money on when you know you might only wear them once or twice. This issue continued even after I delivered, much to my disappointment. To deal with this, I sent out an S.O.S in the form of a massive text message (no shame in my game!) to other moms asking to borrow clothes. I always found a generous mom who not only offered her clothes, but also gave me baby items like clothes and blankets.
  4. Work clothes. I was determined to stay in my clothes for as long as possible, which lasted about 4 months. At first I used belly bands, which allowed me to wear my pants unbuttoned and unzipped for a bit longer. Once I grew beyond that little fix, I hit up every consignment shop in my area. I learned that when children’s consignment shops held their massive seasonal sales events that they also included maternity items, which enabled me to buy many clothes at great prices. This, plus asking friends for old clothes, allowed me to build my work wardrobe pretty inexpensively.
  5. The “in-between” stage. I wish I had known about the weird period after your baby is born when you still look pregnant, but you are too small for maternity, yet too big for your own clothes. The kindest thing I did for myself during this period was to rely on spandex and anything with elastic to get me through until I’d lost my baby weight.

One of the biggest hang-ups I had was asking for clothes — I felt like I was asking too much, but it turns out I shouldn’t have been so shy. When my turn came to help other expectant moms, I was only too glad to clean out my closet and get rid of the those maternity clothes. If you’re expecting your first, do not be afraid to reach out to friends for help — they’ll be glad knowing that their stuff will be going to good use!

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The Pros & Cons Of Using Debt Management Plans

July 25, 2017

Back in my twenties, I found myself bored with life and looking for a change. For most people, a new hair cut and outfit might suffice, but I decided to join the Army. I wish I had some deep, thoughtful, spiritual answer as to why I enlisted, but essentially, I was bored.

While in the Army, I was introduced to a whole new world of “necessities,” such as making sure the brand of my shoes matched the brand of clothing I was wearing. This new “necessity shopping” was expensive, but luckily Visa, MasterCard and Discover came to the rescue — mind you, this was before I was a financial planner, so a bit clueless to the woes of credit cards. It did not take long before I racked up more debt than I could pay off and quickly found myself in over my head.

Unsure of what to do, I reached out to a friend who had used a debt management program before and quickly signed up. In retrospect, I was lucky — the program I chose was a non-profit so it was an overall good experience, although there were definitely drawbacks. (programs that are run by for-profit enterprises are often predatory and can leave people worse off than before they started — to vet a potential credit counseling or debt management program, check to make sure they’re a member of the NFCC before you sign up for anything).

Here’s a quick review of what I learned along with the good, the bad and the ugly.

The Pros:

  1. Automatic discipline. While on the program, my credit was frozen, which prevented me from incurring additional debt. My monthly payments came out of my checking account automatically and I knew exactly how long it would take for me to get out of debt.
  2. Expert negotiators. I was young; I had no idea how to talk to a boy, much less talk to a creditor about lowering my debt. The counselor I worked with was trained to negotiate with creditors. She was able to get my interest rates cut in ½ and negotiated a payment plan that still allowed me to have a life while paying off my debts.
  3. Forced money management: To get on the program I had to work with my counselor to develop a spending plan. The spending plan helped me live within my means and manage my income.

Although the program did help me to pay off my debts there were drawbacks.

The Cons:

  1. Can affect your credit score. Everyone’s experience is different, but my creditors reported that I was on a debt management program to the credit agencies, so it showed up on my credit report. As a result, my credit score dropped (it eventually went back up once I completed the program). If you are thinking about buying a car or a home within the next two years, you may want to work with your creditors on your own to keep your score up.
  2. Fees. Although they were nominal, there were still fees to pay, which added to the total of what I had to pay overall to get out of debt. The fees can vary depending on your service provider, and are usually in the $25 to $50 per month range. (and if anyone tries to get you to pay several thousand up front, run away — that’s the wrong kind of program)
  3. Rigid terms. The terms you agree to are pretty set, with little wiggle room. Generally, if you miss even one payment, you can be kicked out of the program, depending on your creditor. If you have unsteady income, you may want to hold off on entering into a program until you are certain you can commit to the monthly payments.
  4. Only certain debts are covered. If you’re looking for help with your mortgage, car notes or other secured debts, a debt management plan won’t work — they really only cover unsecured debt such as credit cards or personal loans.

It’s important to understand that these programs are not a great fit for everyone. A debt repayment program renegotiates your repayment terms, but it doesn’t reduce the amount you owe. If you are looking for actual debt reduction, the program may not work. But if you’re ready to buckle down and do what it takes to be debt-free, then it can definitely make the timeline shorter and help give you the discipline you need.

 

 

 

How To Break The Cycle Of Debt

July 18, 2017

One of the biggest road blocks I faced when I was paying off debt was getting out of the “debt cycle.” If you’re struggling to break free of credit card debt for good, you may already be familiar: you pay off a card, only to have an unexpected expense pop up that plunges you right back in to debt again. You work hard to pay it off, then something else comes up… and the cycle repeats.

I’m grateful that I was eventually able to break the cycle, but I had to change my ways a little bit. Here’s how I did it:

  1. I created a spending plan.  I always planned for my bills, but I spent the rest of my money without boundaries, leaving me financially exposed to unexpected expenses or overspending that led me back to debt. To fix this, I created a plan for every dollar, sometimes called a “zero based budget,” to account for all my current expenses while also allowing me to start saving for future expenses like vacations, car and home maintenance. Remember this is your plan, so you decide what categories are important to you — I have a category for Starbucks. If you are short on time and technological skills consider using your bank’s online budgeting tools to create and track your budget — many have apps so you can track your spending on your smart phone. Other tools include Mint.com, the Easy Spending Plan or even just Excel.
  2. I started a savings account. A big mistake I made initially was to focus solely on paying off debt without having any money saved. Inevitably some type of emergency would come up and I’d find myself deeper in debt. As part of your spending plan, include a category to put at least $1,000 away in a mini-emergency savings fund ASAP. I labeled the account “Debt Proof Insurance” to remind me what the money was for. Where you keep the money depends on your level of discipline: if you are pretty disciplined, a savings account at your bank to transfer funds in to each time you get paid will suffice; if you are not as disciplined (aka you are in Club Tania), look at opening a savings account at a different bank, then having funds deducted directly from your paycheck to go to that separate account.
  3. I chose a repayment strategy that kept me motivated and consistent. There are a couple popular strategies out there for paying off debt, one of them where you work on paying off the lowest balance account first, another where you focus on paying off the highest interest rate first. Both work — the best plan for you is the one that will keep you motivated enough to get to a zero balance on all your debts. Paying off your highest interest rate first will save you the most money overall, but may not be the most motivating. For others, getting the quick wins from paying off the smallest balance may be what keeps you motivated.

    For me, it was paying off a credit card that I used to make a large, stupid purchase. Every time I saw the statement, I was reminded of my bad decision. Although this debt was not my lowest interest rate nor my lowest balance, I paid it off first because I wanted to get rid of the emotional baggage I felt each month when I received the statement. That was all the motivation I needed to keep myself on track until the last debt was paid off. Check out the Debt Blaster calculator for some motivation and a plan as well (it focuses on paying the highest interest rate first).

Probably the most important thing to do is to redefine progress when you are in the thick of paying off debt. Instead of just focusing on the ultimate debt free day, give yourself milestones to celebrate, like when you have paid off each debt, when you have paid off half or even when you denied yourself something so you have the money to payoff debt. These celebrations will keep you motivated until you can do your  “debt free dance.”

 

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Three Things To Shop For During Summer For Year-Long Savings

July 11, 2017

Summer is a fun time. I love the warmer months and having a schedule that does not revolve around my kids’ school schedule. For me, summer is also prime-time for planning out my finances for the rest of the year. This is the season where I start planning for fall and even Christmas, by shopping for items most people are not thinking about such as:

  1.  School Uniforms In the south where we live, the public schools in our area require uniforms. I learned a few years ago that a lot of parents sell their kids’ school uniforms to consignment shops shortly after the last day of school. To score the best deals, I wait a few weeks then start scouring nearby consignment shops for gently used uniforms in my girls’ next size up for next year. (I stopped buying brand new uniforms after observing the wonderful “art projects” my messy kids’ clothes become by the end of the school year.) To save money, I much prefer to buy gently used clothes from parents with either unusually neat kids or with amazing stain-fighting skills. Visit your local consignment stores and make friends with the owners and sales people — many stores have “membership programs” with great sales and some stores will even call you if an item you are looking for becomes available.
  2. Gifts I take full advantage of summer holidays to shop for birthdays and even Christmas gifts. Summer is full of big sale days: 4th of July,  Amazon Prime Day, Labor Day and even Back to School can score you some early Christmas gifts for kids. I sign up for coupons at my favorite stores and can normally wrack up great discounts on potential gift items. I also use back to school sales to stock up on home office supplies like printer paper and cartridges. Consider striking up a conversation with the sales staff. You can get insider information about unadvertised sales as well as how to get extra coupons by doing things such as “liking” the store on Facebook, writing a favorable review on Yelp, etc.
  3. Food During the summer there are many local farmers markets that may shut down during the fall. If you are looking for inexpensive ways to eat healthier after the markets close down for the year, get to know your local farmers in the summer and find out which ones participate in Community Supported Agriculture (CSA) programs, which are food purchasing memberships that allow you to buy a “share” of veggies, sometimes meats or even dairy items from a regional farmer. The farmer typically drops your share off at a designated location and time for you to pick up during the program. The USDA can help you find a CSA near you. Look for farmers who participate in a local market so you can speak to them directly and even try some of their food before signing up.

Summer can be a lot fun, but it’s also a great time to start saving for the fall. With a little bit of planning, you can find some great buys.

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7 Steps To Your Financial Independence Day

July 04, 2017

Happy 4th of July! To honor the theme of independence, I’d like to share an oldie but goodie, written by my colleague, Greg Ward, updated for 2017. Enjoy and have a safe celebration.

To honor our nation’s birthday, why not declare your own personal “Financial” Independence Day? To me, financial independence equates to not having to worry about money, so if you are worried about your finances, take these seven steps to economic freedom:

Step 1 – Establish an emergency fund

Failing to set aside money for an economic emergency or a rainy day is a sure way to get you in trouble if and when the rain comes. Arm yourself against such things by putting aside six to twelve months of expenses in a safe, liquid account such as a savings account or a money market fund.  You won’t make a lot, but you’ll have something to help you weather the storm.  A well-funded emergency fund is the first step to a worry-free financial life.

Step 2 – Pay off high-interest debt

Borrowing money at a high interest rate is a form of voluntary slavery. Emancipate yourself by committing extra payments to the debt with the highest interest rate. Once that’s paid off, use the newly freed money to make an even bigger payment on the debt with the next highest rate, and continue this process until all high-interest debt has been wiped away. If you are truly averse to debt, you can continue the process until your low-interest debt, such as your mortgage, is paid off too. Not owing ANYONE money may be the ultimate form of economic freedom.  See how a little extra payment can go a long way toward paying off debt with our DebtBlaster calculator.

Step 3 – Save more for retirement

According to our research, over 90% of employees are saving for retirement, but less than 30% are confident in their ability to achieve their retirement goals. Take the worry out of retirement by running a retirement projection, and applying any recommended changes. For many, it’s simply a matter of socking away more. For others, it may mean working a few more years, or investing a little more aggressively. Whatever you do, don’t rely solely on your employer or the government. Financial independence comes from self reliance.

Step 4 – Manage your income taxes

Don’t let fear of the tax man cause you undue worry. In the spirit of the Boston Tea Party, say no to higher taxes by contributing to tax-deferred accounts like a traditional 401(k), IRA or even your HSA. You can avoid income taxes in the future by contributing to a Roth retirement account today, or save for specific expenses completely tax free by contributing to a flexible spending account or health savings account. There’s nothing wrong with paying your fair share, but that doesn’t mean you have to give Uncle Sam an interest-free loan every year, which is exactly what you are doing if you receive a large tax refund every year. Take back what’s yours by adjusting your tax withholding so that you pay what you owe while keeping what you deserve.  Knowing you WON’T owe the IRS money is another step toward financial freedom. The IRS has a nifty withholding calculator you can use to estimate the appropriate number of allowances to claim on your W-4 tax withholding form.

Step 5 – Invest in and out of the U.S.

America may be the land of the free and the home of the brave, but it only represents about half of the world’s economy, so make sure to diversify your investment portfolio so that it includes both foreign and domestic holdings. Complement your U.S. stocks and bonds with international stocks and bonds, and don’t overlook investing in emerging markets (as long as you have the tolerance for the volatility, that is). Round out your portfolio with a decent level of exposure to real assets such as commodities and real estate. That way, when you read about the economic problems in Europe and the U.S., or about the possibility of higher interest rates or rising inflation, you can take comfort in knowing you have exposure to assets that may actually perform well in these types of environments.

Step 6 – Have adequate insurance

No one ever expects to get into a car accident, become disabled, end up in a long-term care facility, or die young, but the reality is that such things will happen, and being without adequate insurance is a sure way of putting you and your loved ones in a financial mess. Maintain your financial independence by insuring against such risks. A well developed insurance plan offers peace of mind, so review your coverage periodically to ensure you are prepared for whatever life throws your way. A good insurance agent can help you understand the risks, and make sure you are adequately protected.

Step 7 – Have an estate plan

You’re working hard to achieve the American Dream, don’t lose it for lack of planning. Learn how to maximize wealth transfers by utilizing tax credits and exemptions. You can also minimize estate taxes and probate fees through proper asset titling and the use of trusts. Your estate plan should include a will, a financial and healthcare power of attorney, and a healthcare directive (also called a living will). Without an estate plan, you may have to rely on the government to decide who gets your stuff when you pass on. A good estate plan allows you to control your assets “beyond the grave,” thus preserving your financial independence. There are a number of websites that provide access to inexpensive estate planning documents, including www.nolo.com and www.legalzoom.com.

Our country was founded on the principles of life, liberty, and the pursuit of happiness. I don’t know about you, but for me, happiness comes from knowing I’ve done all I can to protect me and my family from financial hardship. If you wish to live financially independent as I do now, take these steps, and choose to live financially free! There’s nothing more patriotic than that.

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

June 27, 2017

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

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

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

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

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

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

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

How I Sold All My Stuff Online

Debt Blaster calculator

8 Inexpensive Ways To Prepare Your Home For Sale

 

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The Difference Between a Financial Wellness Benefit & Your 401(k)

June 20, 2017

Before I joined Financial Finesse as a member of the Planner Team, I worked for a large wealth management institution as a 401(k) plan specialist. As a 401(k) plan specialist, my role was to help design and implement 401(k) plans for companies as well as educate their employees about their retirement accounts. One of my bigger frustrations in that role was that I was pigeon-holed into discussions solely about retirement contributions and asset allocation.

Although these topics are important when it comes to retirement planning, as I tried to educate people about how to save for retirement, I quickly found that the real problem people were facing wasn’t that they didn’t know how much to contribute or how to invest. The reason they weren’t making full use of their 401(k) savings accounts stemmed from a lack of emergency savings or a budget.

This often leads to using a credit card or 401(k) loans to get through unexpected events like medical issues or family emergencies, and definitely gets in the way of being able to save for retirement. In order to help people achieve a secure retirement, I realized that they first needed help achieving a secure today.

A lack of solutions

As I looked for a way to help, I found myself stumped. I was trained to help people avoid estate taxes but not how to help someone who was overwhelmed by medical debt. My meetings were supposed to be focused on getting more money into 401(k) plans and helping people choose the best investments, not how to put together a budget or handle debt. The compliance rules in the industry kept me from REALLY being able to help with the other stuff, the stuff that had to be overcome before I could be of any use with my training and work objectives. It broke my heart to be sitting in 401(k) enrollment meetings, talking to people sometimes in tears over a financial crisis, feeling completely unable to help.

Finding a way to help

I knew that I really needed to be helping people navigate these barriers before my work as a 401(k) specialist would have any meaning. I started looking around for solutions, even something that I could offer as part of my meetings so that they could help themselves. That’s when I came across Financial Finesse, a company that provides employees with a workplace financial wellness benefit. I knew instantly I had found a new home. For the first time I could:

  1. Focus on financial wellness vs. just trying to get more money into the accounts I managed.
  2. Help “everyday” people with their daily financial needs vs. strictly helping affluent people become more affluent.
  3. Stop being judged by sales quotas and instead be judged based on whether or not I changed lives for the better.

The difference between your financial wellness benefit & your 401(k)

While employees often come to us with questions about their 401(k) and companies often hire us to satisfy their fiduciary duty as a 401(k) plan sponsor, my colleagues and I spend more of our time helping people deal with the rest of their financial picture – how to choose the right mortgage, how to pay off credit cards, deciding the best way to deal with their student loans, etc. The big difference is that we take a look at your TOTAL picture, not just the balance in your 401(k). And that’s what I love the most about my job – helping people with what they really need.

Your 401(k) is one piece of your financial wellness puzzle. Working with a planner through your workplace financial wellness benefit helps you to see where it fits in among all your other priorities. If you’re fortunate enough to work for an employer that offers you a financial wellness benefit, I encourage you to take advantage today.

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

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3 Common Home Buying Mistakes You Probably Haven’t Thought Of

June 13, 2017

When the real estate market is hot like it is right now, I can’t help but compare it to “whack-a-mole” — as soon as a listing goes up (or in some places, even before), it seems like it’s sold. I can’t help but think of buyers who often have to make a buying decision within hours of touring a new listing or risk missing their chance to “whack” and score their dream home.

When preparing to shop for a new home, most people do a great job following the general financial guidance such as:

  • Reviewing their credit scores,
  • Paying off high interest credit card debt;
  • Saving 20% for a down payment; and
  • Coming up with a budget to spend only 25%- 35% of their monthly take home pay on housing (this includes mortgage, interest, taxes, HOA fees AND insurance).

But when the market hits “whack-a-mole” status, I’ve found that few people give much thought beyond the basics. Digging into my own, “don’t ask me how I know,” file, here are three more considerations that buyers should keep in mind as they shop, no matter how hot the market is:

  1. Think about selling before you buy. Unless you are 100% certain that this is your “forever home,” consider your future buyers before making an offer. One of the biggest mistakes I made when I bought my first home was that I failed to consider how “sellable” my home would be if I wanted to move in the future. Several years later when I did move, I had a hard time selling because I owned in a struggling school district, which eliminated parents as potential buyers, as well as others who knew that a school district could make or break your ability to re-sell. Before you make an offer, do some quick research on the neighborhood and school district so that when you decide to move, you’ll be able to cast the widest net and capture as many potential buyers as possible.
  2. Shop around for everything. If my #1 mistake was not considering a future move, a close second was not shopping for all of the products and services I would need in the home-buying process. My Realtor was not bad, but I relied on her for everything, including finding a mortgage. When I reviewed my mortgage options after the fact, I realized that I could have gotten a much lower interest rate. I also realized that I paid too much for my appraiser, home inspector and even my homeowner’s insurance and Realtor’s commissions. (I still #FeelLikeASucker) Do not make my mistake – no matter how awesome your Realtor is, ask about her commissions. Shop for mortgage rates and compare your options.
  3. Buffer your budget. No matter how many websites you read about homeownership, some expenses are going to catch you off guard. For instance, I grossly underestimated utilities. I created my budget using the average my Realtor gave me, not realizing that it was an average or really what that meant. So when I moved in record cold temperatures in January, my gas bill was much higher than average. My moving expenses were also slightly higher than I expected, and I failed to factor in the fact that I was paying the final utility bills for my old apartment, while also paying utilities for my new home. To avoid becoming house poor in your first month, make sure you add an extra 10%-20% to your first couple months’ planned spending to account for the unexpected.

Following the guidance above may take some extra time, but trust me, it will pay off in spades and your dream of home ownership won’t turn into a cautionary tale.

The 4 Money Questions Every Couple Needs To Answer

June 06, 2017

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

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

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

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

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

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

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

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

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

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

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

How To Plan A Budget Friendly Summer Vacation

May 30, 2017

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

The basics

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

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

Food and souvenirs

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

Staying put

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

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

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

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

How Sitting in Traffic Can Improve Your Finances

May 23, 2017

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

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

Audio books

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

Podcasts

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

Putting it to work for you

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