How To Plan For A Successful Launch Of Your Side Gig

April 18, 2019

In today’s age, more people are creating a business of their own, often to supplement their main source of income. Not too shabby of an idea as you look for ways to accomplish your goals sooner like saving more for retirement or passing on a legacy to your family. Perhaps you’re simply looking to pursue a life- long dream of having a business of your own.

Timing is important

I spoke to someone that had recently started a business on the side that she was extremely excited about. She was considering taking out a 401(k) loan to help cover a season of lower profits – it wasn’t due to low revenue, because business profits typically aren’t extremely high when a business is in the new phase.

Her issue was that it was winter and wintertime for her type of business is a very slow season, yet she had opened her doors for business just before the season started. We spoke more and worked through the details to help her move forward.

How to plan for success right out of the gate

People have many amazing business ideas, and some have the courage to go for their dream. I’ve found that people sometimes forget how much market research along with having a solid business plan can help them succeed sooner than later. It’s important to anticipate things like:

Who is going to be interested in what the business offers enough to actually make a purchase?

  • What’s the best time to start the business?
  • When might you expect lower revenue?
  • How can you prepare for that?
  • How can you compete as your industry evolves?

The list goes on.

Questions to answer and plan for

What if the needs or wants of those your business serves changes? What can you do to anticipate that before it happens, and how will you prepare your business to evolve accordingly? How will you serve your customers’ current needs, while anticipating and proactively being ready to serve the needs and wants they don’t even know they have yet.

Where to find help getting started

The good news is that there are plenty of resources out there to help you learn these important aspects. Taking time to review this stuff ahead of time can save you stress, help you avoid having to take on unnecessary debt and could possibly even be the difference between a business that succeeds versus one that fails.

  1. Check out this 10 Step Guide to Start Your Business created by the U.S. Small Business Administration.
  2. Use SCORE to find a mentor in your area, get help with building your business plan, join workshops/webcasts across various business topics and more.
  3. Learn from a fellow planner’s journey with his wife in starting a business.
  4. Finally, here’s another encouraging perspective.

The secret ingredient to all successful businesses

Whatever you do, remember to believe in yourself – you possess everything you need to succeed, and the things you’re missing are out there for you to learn as long as you’re willing to commit. That’s empowering.

The difference between you and the people you see being successful in their business is that they went for it. Fail forward. One guarantee that you will fail is to never try. So, happy planning!

4 Red Flags To Watch Out For With Student Loan Pay-off Offers

March 22, 2019

If you’re dealing with student loan debt, I’m sure you already know that the total amount owed these days is over $1.5 trillion. Wouldn’t it be nice to be able to hit the reset button and just not have to pay that debt back? Or to at least get some type of relief, either in the form of a lower interest rate, or legitimately having the debt forgiven?

There are actually programs out there to help with that, but before you start taking advantage, it’s important to understand that there are some scams out there too. How do you know?

Here are the red flags to watch out for

Red flag #1: A promise to just wipe away all your debt

It’s hard to get in a relationship with someone who makes promises they can’t keep. If a company is promising they can wipe out your debt or slash it in half, a red flag should go up.

It’s true that there are ways that your federal student loans can be forgiven if you meet the requirements. Those include being employed by a government or not-for-profit organization, and making at least 10 years’ worth of payments. If that’s you, you may be able to receive loan forgiveness under the Public Service Loan Forgiveness Program or if you’re a teacher you might be eligible for the Teacher Loan Forgiveness program.

However, taking advantage of these opportunities is totally on you, so beware of any company telling you they can make it happen without the above circumstances.

If you have private loans, the fact is that they don’t have a loan forgiveness option. Consider reaching out to your private lender directly to inquire about this as rules can change, but walk away from anyone promising to alleviate you of all your private debt without you actually having to pay it off.

Red flag #2: Charging a fee to help you

There are federal programs available to help with federal student loan debt and enrolling in one of those programs costs you exactly $0.00. Not a typo. It’s free. 

A scam artist will entice you by letting you know these programs are available to you and that they can help enroll you into one. All you have to do is pay them a fee. Don’t fall for it!

Also, watch out for companies that want to charge you a fee to help you refinance or consolidate any of your loans. You typically can do that without an upfront fee as well.

Why pay someone for something that you can do on your own at no cost besides your time? It’s true that time is money and money is time, but in this case it doesn’t sound like a good deal. Check out your federal loan servicer for more information – they are there to help for free.

The bigger lesson here is that whenever you’re presented with programs that require upfront or advanced fees before they help you, it’s a sign that you may be about to fall for a scam.

Red flag #3: Pressure to act immediately

In most areas of life when someone is trying to rush you into making a decision, it’s a good time to pump the brakes a bit and do your due diligence. Check out the company or program you’re considering. How much information is out there about them? Are there reviews available for you to learn more about them?

Visit their website, but don’t enter any personal information on their site before you’re comfortable that it’s safe. Ask people you trust which companies they’ve used to refinance or consolidate their loans. Take the time you need to make sure you’re signing up for a good deal. If anyone is trying to get you to act right away before a “deal” goes away, let it – it’s probably not a good deal anyway.

Red flag #4: Requesting your social security or account number

Another red flag is when a company contacts you first, then asks for personal information like your Federal Student Aid ID or your Social Security number. Obviously if you’re making a call to a loan servicer or to refinance or consolidate, you’ll eventually have to provide that information, but anyone contacting you and leading with that request should be a red flag.

A legit company will likely not ask you for this type of personal or sensitive information until you’ve decided to move forward with engaging their services.

What to do if you suspect a scam

The reality is that scam artists exist. If you come across a student loan scam, please take the time to report it by filing a complaint with the FTC, and the CFPB.

The bottom line is that the best way to pay off your student debt, whether you have federal, private or both, is to know your options and put together a plan of attack on your own. Sometimes that may mean not prioritizing paying back your student loans over other financial goals, other times it may mean that you do. Either way, take caution not to get scammed in the process.

How To Break Old Money Cycles When You’re The First In Your Family To ‘Make It’

March 07, 2019

I recently read an interesting study about the psychological impact of what it means to be the first in your family to “make it.” This particular study focused on being the first to go to college, but the concepts also translate into what someone may deal with mentally when they are the first in their family to land a career, buy a home, etc. – accomplishments that many would classify as “making it.”

The study points out that the transition to college for many low-income and first-generation students is also a transition in their social class. If you’re one of the first in your family to “make it,” you probably know that new challenges and questions often arise. Do you ever find yourself thinking things like:

  • “I don’t belong here…”
  • “Am I cut out for this?”
  • “My family thinks I think I’m too good for them now.”
  • “I don’t know how to relate to my campus peers, they live a completely different life than me.”
  • “I’m too nervous to talk with my professor.”
  • Or any other number of thoughts that it can feel like no one else is thinking but you…

The impact on financial choices

These are totally normal thoughts to have, in fact. The thing that always makes me sad is seeing someone who’s done all the work to boost themselves toward a better life, and yet they are unable to boost themselves into the next level of financial security because they’re caught in old money cycles passed down through generations.

The mental impact of being the one that “made it” can affect your financial choices and not in a good way. You might be the first in your family to earn a degree or land a decent paying job, better yet a career. Or maybe you did both? Earned a degree AND landed a career, making more and doing more than those you’ve spent your entire life with.

That can feel weird. AND because that feels weird, you might think “I don’t know what to do with this, considering no one I know can tell me because they’ve never been here before.”

So, maybe you make the extra pay, but don’t save it. You have seen people live paycheck to paycheck and that’s a behavior you’re familiar with, so you do the same. Not because you don’t make enough to do better. You do it out of habit. Out of familiarity.

AND, since you made it, don’t you owe them everything anyway?

It’s easy to think that, especially if you’re hearing that from your loved ones. If you feel like you have to share it in some way, check out the ideas in this article called Ways To Help Others Without Hurting Your Own Finances.

If, on the other hand, you’re worried that keeping a closed hand could lead to losing everything you’ve worked so hard for, that’s fine, just don’t go to extremes. It’s easy to think (or hear from others) that you have a responsibility to give it all away. It’s fine to share, but take care of you too. Learning how to fit tithing into your other financial priorities can help. And there’s some merit to sharing: there are ways that giving your money away may actually improve your budget.

Getting your finances on the right track

To get started and figure out what the right track is, try these 5 steps to determine your financial priorities. If you have a financial coaching benefit at work, this is a great time to reach out to them and get some assistance.

No shame, no blame

“Making it” can be stressful so please don’t waste your precious energy on not having everything figured out. Reach out for help and don’t worry about getting your finances in order first. That would be like waiting until you’re healthy before going to the doctor.

Congrats on making it this far! Getting your finances in order will help push you and your family even further!

 

What Do You Need To Know About Pre-Paid College Plans?

February 21, 2019

When it comes to saving for college for your kids, perhaps you’ve looked in to pre-paid plans offered by your state. Let’s review that decision from all sides.

What exactly is it?

A state pre-paid college savings plan is basically a plan that is sponsored by the state that allows you to open an account and save towards future college expenses now before your kid goes to college, BUT you typically get to lock in the cost of tuition at today’s rates.

The typical perks

1) Lock in today’s rates – The idea is that you essentially may not need to worry about how much college costs go up in the future because you lock in today’s tuition (and certain fees) in your state at participating colleges and universities.

2) Not directly responsible for investment performance– Another benefit is that you usually don’t have to worry about investing your contributions on your own over the years OR choosing a company to manage those funds on your behalf – the state assumes that risk and responsibility.

While the stock market will definitely have its ups and downs, you likely won’t have to worry about adjusting your investments because that’s all done within the prepaid plan.

3) Still covered at other schools – Typically, you can still use the money if your child goes to a school not covered under your state’s prepaid plan, including schools outside of your state’s plan, although you’ll likely have to pay more.

4) Still considered a parental asset – These plans are considered to be owned by a parent and are reported on the FAFSA, but it counts much less when determining how much a family is expected to contribute towards a child’s college costs than if the account was considered the student’s asset. 

What’s the catch?

I know, it sounds almost too good to be true. Here’s what you need to know: not all state prepaid plans work the same. Be sure to know what you’re getting into even though the perks sound promising.

QUESTIONS TO ASK so that you know what you’re getting into and can make a sound decision:

1) How is your money protected? Some plans have a guarantee and others don’t. Some plans have failed in the past and people have lost money that they’ve contributed.

 2) How long has the plan been around? Has it ever defaulted or had any negative news in the past? A plan that has been around for many years, without issues paying out as students transition to college is more reputable than a plan that hasn’t been around as long or that is not popular in the state and isn’t really being used/invested in. (Example: Illinois)

3) What schools accept your state’s pre-paid plan?A quality education is important, so you’ll want to make sure that an education from the schools on the list will be worthwhile.

4) What if your child chooses a school not on the list? With most plans, you’ll be able to receive the value of what it costs to go to a school in the state you purchased the plan and then put those funds towards the tuition for a school not on the list or even one in another state.

You could be on the hook for additional tuition costs if what the pre-paid plan provides is not enough to cover the out of state school.

5) Are there any penalties if you request a refund? Find out the refund policy and any associated fees. For instance, some plans only refund the exact amount you put into the plan and may even subtract a fee from that. Other plans may allow a percentage of any investment gains to be included in the refund.

6) Are there any restrictions with how soon you can request a refund? Some plans require you to wait two years, or you’ll be charged a penalty reducing how much you’ll receive as a refund.

7) How much does it currently cost to cover tuition and applicable fees in your state? Visit several school websites in your state that have quality education options and find out their costs. You can call the school as well. Compare that to how much it would actually cost you per credit hour based on the monthly cost of the plan. Make sure that you won’t be paying significantly more over time than the promised locked in cost of today’s tuition rates in your state.

8) Exactly what expenses does the prepaid plan cover? Some only cover tuition and certain fees. Find out what those fees are. Contact several of the colleges and universities in your state and find out what fees they charge that the prepaid plan will not cover.

9) What is your plan to save towards expenses not covered by the pre-paid plan? Dormitory expenses are not likely to be automatically included, but some state prepaid plans offer a separate dormitory option that you can add on for an additional cost.

Some people opt for a combination of a state’s prepaid plan to lock in tuition costs, along with other savings options like a traditional 529 savings plan to fund expenses, like books, that may not be included under the state pre-paid plan.

Prepaid plans aren’t for everyone.

For families that are pretty locked in on what school their kids will attend, these can be a great hedge against future costs of education. The trade-off is that you may limit your options and are locking your kids into going to college in order to receive the most value for your money. Whichever side you find yourself on, it’s important to understand the ins and outs of whatever you choose.

Budget-Friendly Ideas To Enhance Your Child’s Learning

February 12, 2019

I’ve spoken with people who have a specific type of schooling in mind for their young and toddler age children that doesn’t always exactly match what they are actually being taught in school. They are looking for ways to incorporate more learning activities, without impacting their budget too much.

If you are a parent that likes the idea of your children learning another language, learning to read early, fine-tuning their math skills, etc., and are looking for budget friendly options to support their learning at home or outside of the classroom, here are some ideas our planner team shared that could help.

Want them to learn another language?

If you speak more than one language, a perfectly free option is to simply speak your other language to your child instead of paying for multilingual preschool or language classes. My colleague Cynthia spoke French to her kids until they went to kindergarten so that they had exposure to the language. She also suggested joining or creating a foreign language play group, as well as playing foreign language CDs in the car and watching DVDs together that are in whatever language you want your toddler to learn.

Structured activities (i.e. sports groups and other learning groups) too costly?

Cynthia also suggested simple activities that make an impact like taking your toddler on a science walk every day instead of paying for structured activities. Jump in the mud, watch the digger at construction sites, throw sticks in the river, pick up bugs, etc.

Looking for a customized learning program?

Consider a home education program. Cyrus likes IXL Learning, which allows you to create a personal learning experience for kids of all ages for as little as $10 per month if you go with their more basic options. They cover various topics like math, science, Spanish and social studies. Another perk is that IXL’s questions automatically adjust to the level of difficulty for your child.

Cyrus also found Meet the Sight Words videos and flash cards to be very helpful for his child. You  can check those out as well as other educational tools offered by the Preschool Prep Company.

Want them to learn with others but can’t find a school you like?

How about organizing a homeschool/preschool cooperative with other like-minded parents? Cynthia had a friend that went this route and as her kids grew older, it turned into an actual school. With this group, each parent could be responsible for one part of the program (i.e. math or science), so that it’s not too overwhelming. You could also rotate houses or use a church or community center.

Budget friendly ways to support your kids’ education exist. Just find the one that works best for your family.

How State Income Taxes Work When You Live Or Work In Multiple States

February 06, 2019

For people who travel a lot for work or live close to a state line, state income tax withholding and filing is often a bit confusing. Maybe you earned income in more than one state during the year or in some cases, you may not even live in the state where your employer has an office.

We get a lot of questions about this stuff and while we’re not tax professionals nor is this intended to be tax advice, I’m hoping to provide some clarity around how it all works. There are several moving pieces, and everyone’s situation can be a bit different, so consider consulting with a tax professional if you’re unsure so that you don’t end up with any unwanted tax surprises.

How multi-state income taxes work

The default rule for determining state income tax withholding is to withhold tax for the state in which you actually provided a service – you pay first to where you work, then possibly also to where you live. It gets a bit more complicated when you earn income in more than one state or if you earn the income in a state but live in another. Other withholding rules come into play.

Where are you actually a resident?

Typically, the state where you’re considered a resident governs how you’ll ultimately be taxed on your income. States have their own rules around how to treat income you earn there as either:

  1. A resident, who had income from another state, OR
  2. A non-resident who had income from within that state.

Check the rules of your state here.

TIP: A common misconception is that if your employer’s home office is in New York for instance, that your employer has to withhold New York state income tax from your pay, even if you did not earn any income in New York for the year. That’s actually not true – I live in Florida (where there are no income taxes!) and Financial Finesse is headquartered in California – thankfully I don’t have to pay California taxes.

If however, your employer’s home office is located in the state where you’re considered a resident, your employer would have to adhere to that state’s laws. In addition to withholding income tax for other states where you earned income, your employer may have to withhold that state’s income tax from your pay though you did not earn income there. It depends on what the state’s law says.

Does your home state have a reciprocal agreement with any of the states you worked in?

A reciprocal agreement, also called reciprocity, is an agreement between two states that allows residents of one state to request exemption from tax withholding in the other (reciprocal) state. So for example, if you’re a resident of Michigan who works in Ohio, your employer only has to withhold Michigan taxes and you don’t have to worry about Ohio, even though that’s where you earned all of your income.

If an agreement exists, you’d reach out to your payroll department to request the exemption form. This can save you the trouble of having to file multiple state tax returns at least for each of the states that have the agreement.

How do you know if an agreement exists or not? This website lists all the states along with the necessary forms you have to supply to payroll to avoid the tax withholding from the state where you work. 

TIP: If there is an agreement and A) You don’t submit an exemption to avoid having income tax withheld from states where you are not a resident, and/or B) Your employer withheld the tax either inadvertently or due to state law, you can file a non-resident tax return in the applicable states and apply for a refund.

If there is NOT a reciprocal agreement, then the laws of each state have to be considered

I have had several New York residents who work in other states throughout the year inquire about this, as New York does not have a reciprocal agreement with any other states at this time. In that case, there are two steps here:

Step 1: If you’re a resident of New York or if the state where you’re considered a resident is not listed, you’ll need to check with your state to confirm your residency status and its withholding requirements based on that status. For instance, you may be considered a resident or a part-year resident and each of those could require a different set of tax forms to be completed or steps to be taken.

Step 2: For all other states in which you earned income, confirm your residency status (likely a non-resident in this case) and follow their tax filing guidelines for a non-resident.

Check the rules of each state here. For those unlucky New Yorkers, they may work out of the state every day of the year, but if they call NY home, they will still have to pay some of their income to their state.

At the end of the day, having an idea of what happens when you earn income in more than one state is already a positive. You may need to reach out to your payroll department to make sure they are aware of your residency status and are applying the rules per that state as well as the other guidelines mentioned here.

Then when it comes time to filing and ensuring you don’t overpay, it may be worth it to hire a tax pro – most DIY softwares are not equipped to file multiple non-resident returns in a way that can ensure you’re not over (or under) paying one state or the other.

How Child And Dependent Care Tax Breaks Work

January 29, 2019

During tax time, do you ever get to the section about child care expenses for the year and get confused about what’s really allowed and if you made the right decision? If you have been contributing to a Dependent Care FSA, does that mean that you are NOT able to take advantage of the Dependent Care Tax Credit? Let’s review how it works.

What are the tax breaks exactly?

Dependent care flexible spending account

The Dependent Care FSA (DCFSA for short) is an account where you choose to automatically have money deducted from each of your paychecks BEFORE TAX is taken out, which you can then use to pay for child care expenses that year. The IRS allows you to set aside up to $5,000 each year, regardless of how many kids you have.

How it works

In other words, you use pre-tax money to pay for the eligible child and dependent care expenses, so that $5,000 is not included in your taxable income for the year.

Child and dependent care tax credit

The Child and Dependent Care tax credit is not tied to your work, but is something that allows you to claim a credit against your taxes for the year. The credit is equal to 20% up to a maximum of 35% of your total child care expenses, limited to $3,000 for one dependent OR $6,000 for two or more dependents. So for example, if you have one child and paid $5,000 in child care expenses for the year, the most you can claim toward your credit would be $3,000, and your credit would be a percentage of that amount (20% up to 35%, depending on your total income).

If you have more than one child, it doesn’t matter how your costs are divided between the dependents either. You can pay $1,000 for one dependent and $4,000 for the other dependents and it doesn’t matter since the credit is simply based on the total cost.

How it works

A tax credit essentially reduces your tax bill, dollar for dollar, rather that just reducing your taxable income like a tax deduction. So if you owe $2,000 in taxes and your credit is worth $1,000, you would only owe $1,000 in taxes. This credit is not considered “refundable” though. So if you owe $900 in taxes and the credit is worth $1,000, you simply won’t owe anything. You don’t get to pocket the extra $100.

Sounds like a no brainer to go with the credit, right?

It’s true that at first look, the credit seems to be the obvious choice because it goes dollar for dollar against your actual taxes and not just your taxable income. However, the more money you make, the lower the percentage of eligible expenses you can claim as a credit, so there becomes a certain point where the DCFSA (aka the deduction) makes more sense.

 1) Your income matters. Did you make $43,000 or less during the year?

  • YES – You’ll typically have a better tax savings if you claim the credit, REGARDLESS of how many dependents you pay child care expenses for.
  • NO, I make more than that – You’ll likely benefit more by contributing to the Dependent Care FSA

You can dig into the math on that here. 

2) Can you get the credit AND contribute to the Dependent Care FSA in the same year?

Per IRS, the maximum credit you can take for child care expenses is reduced by whatever amount you contribute to a Dependent Care FSA. Remember, if you answered YES to # 1 above, taking the max credit for eligible expenses (up to $3,000 for one dependent or $6,000 for two or more dependents) typically gives you a bigger tax break.

Benefiting from both usually works out when the below is true:

  1. Your income is higher than $43,000 AND
  2. You have child care expenses for two or more dependents AND
  3. The expenses exceed $5,000 (which is the maximum you can contribute to the Dependent Care FSA)

3) If you fit into 1, 2, and 3 above and want the benefit of both tax breaks, how do you do it?

  • 1st – Contribute $5,000 to a Dependent Care FSA
  • 2nd – Take the credit for any remaining expenses up to another $1,000

Child care can be expensive, but we can do our best to budget for it and take advantage of tax breaks like these to help shave off some of the cost and use that extra money towards other goals like traveling and saving for retirement.

When Does A Debt Management Program Make Sense For You?

January 22, 2019

I recently worked with a woman who, after a series of life events, had accumulated many different credit cards, payday loans and other debt, and it had become overwhelming to manage all the payments required. In order to get started on digging out, she signed up for a debt management program (“DMP”). Most DMPs are basically a program that allows you to make one payment to a credit counseling agency, then the agency pays your creditors on your behalf. Sometimes they can negotiate a lower interest rate and have certain fees waived for you.

These programs are not for everyone, so first consider the pros and cons of these programs. If you do decide to pursue this as a solution, going with a non-profit credit counselor is often the most reliable way to go and can help you avoid scams. Not sure if a DMP is what you need? Here are some things to consider.

A Debt Management Program might make sense when:

  • You’re avoiding opening mail from creditors
  • You can’t seem to keep track of all the different payments and the due dates
  • You’ve already tried to negotiate repayment options with creditors and it didn’t work
  • You’re overwhelmed with the number of creditors to deal with or the balances you owe
  • You find yourself making extra payments on some debts and then falling behind in the other debt payments
  • You need someone to hold you accountable to a plan

A Debt Management Program might NOT make sense when:

  • You are comfortable contacting the creditors and working out a repayment plan – you can save on the fees and have more flexibility this way
  • You’re ok with asking the creditors for a reduced interest rate if possible and they grant it to you, making your payments more manageable
  • You think you could do it yourself and come up with a budget and repayment plan you can stick with
  • You’re looking to negotiate for a reduction in your outstanding balances – this isn’t what a DMP does, and going this route could have much longer-lasting effects on your credit score

Everyone’s situation is different, but read more about what it’s like to work with a credit counselor. Typically, someone can have their debt under this program paid off in 3-5 years. Take a look at the above and if you feel a Debt Management Program is a route that could make sense for you, it’s worth exploring.

8 Ideas To Make The Biggest Impact With Your Bonus

January 08, 2019

This time of year, we often talk with people who are preparing to receive a bonus at work, either about how to make the most of it or how to best handle the taxes, or ideally, both!

Depending on your line of work, earning a bonus may come along often or only rarely, but regardless, when it does, it’s easy to start dreaming of a bigger home, nicer car or even just a fancier wardrobe. Sometimes, the money is literally spent on material things before we actually receive the deposit in our account.

Will it make a big difference? Could it?

At the extreme, many of us think that having more money will make our lives easier, only to find that when we look back over the years we’ve received the bonuses, we realize that the extra money was nice, but nothing really changed in the way we feel about our financial situation. Or we start expecting bonuses so that when they go away, we are financially unprepared for the loss of income.

Hitting the pause button

The next time you find yourself preparing to receive a bonus, before you start bookmarking properties or loading up your shopping cart, PAUSE. This is the perfect opportunity to make a huge impact on your future finances (yes, often by forgoing the immediate spending) and to ultimately make sure that you never have to revisit these thoughts again.

Here are eight suggestions that may not sound very exciting, but when taken seriously, can get you to the point of NOT depending too heavily on bonuses in order to have the life you dream of.

1. Accelerate debt pay-off – Use the Debt Blaster calculator to find out just how much sooner you can get those lingering student loans or credit cards paid off by making a big lump sum payment.

2. Bump up your emergency fund – If you don’t yet have several months of expenses set aside in a separate account, this is your chance to check that off your financial priority list.

3. Max out your Health Savings Account (HSA) – If you are enrolled in a High Deductible Health Plan (HDHP) but aren’t funding it to the maximum amount allowed, this is a good opportunity to do so. Not only will it reduce your taxes, but if you can avoid spending the money on everyday stuff and save it for potential bigger expenses down the road, it can serve as a back-up to your emergency fund.

If you haven’t contributed enough to hit the maximum allowed for last year, you actually have until the tax filing deadline in the spring to send a check or make a deposit directly to the financial institution where your HSA account is held and have it count as a deduction from last year’s income.

4. Contribute more to your 401(k) – Retirement may seem way off (especially if it literally is), but saving more in your earlier years will give you more options for later years. Use the Retirement Estimator calculator as a way to gauge how even just one percent more saved at a young age could mean retiring a year or more earlier than you expect, then consider using some of your bonus to allow you to bump up your per-paycheck contributions.

5. Save for short and/or long-term goals in a Roth IRA – You can put an extra $5,500 into a Roth IRA for 2018 ($6000 for 2019), and even more if you’re 50 or older. When just starting out, a lot of people actually use a Roth IRA as another back-up emergency savings account. Since whatever you contribute can always be taken out tax-free and penalty-free, it can be a way to build up an emergency fund, while also boosting your long-term savings if you end up not having an emergency.

Check out these 12 benefits of a Roth IRA on top of that. (By the way, you can still make a 2018 contribution to a Roth IRA by the tax filing deadline of April 15, 2019.)

6. Purchase some stock through your Employee Stock Purchase Plan (ESPP) at work – If your employer offers an ESPP, it’s a great way to get more bang for your buck because you purchase shares of your employer’s stock at a discounted price (or least without having to pay a brokerage commission). You can leave that money alone until retirement or some people prefer to sell right away to take the earnings from the discount, then put that money toward their next big vacation (or one of the other 7 options here).

7. Set it aside for future education needs – This is a great opportunity to boost savings for your kids’ (or other loved ones’) education expenses. If you don’t already have a 529 account, that’s one way to get started. There are other ways to save as well, which are included here.

8. Accelerate your mortgage pay-off – Maybe you dream of paying your mortgage off early – your bonus can help you make extra principal payments and get you closer to achieving that goal. You can run the numbers with this calculator (scroll down to see the impact of an extra payment or two each year.)

Beware of lifestyle creep

At the end of the day, the point is to enjoy life and a part of enjoying life is having enough money to pay the bills and save for the future while still living in the moment! Beware of lifestyle inflation: our “needs” tend to grow as our income grows. I’m not suggesting that you continue to live like a college student, but living below your means is the key difference between most “everyday” millionaires and those who may earn the same salary, but spend every dime they have.

Like I said before, be careful you don’t become dependent on your bonus for living expenses and instead use them as an opportunity to supercharge goals you’re already working toward. You put in the hard work needed to earn those bonus checks. Now, make the most of it by making sure you are financially stable in the future.

 

5 Steps To Determine Your Financial Priorities

December 17, 2018

Do you ever find yourself wondering what you should be doing to manage your finances? What’s the right next step? What should you focus on first?

Well, you’re not alone. This is a regular conversation I have with people. To help, I’ve created this step-by-step guide to help you get things in order and see what you should focus on next. 

STEP ONE: Do you have at least $1,000 in savings to cover emergency expenses?

Got it: Great. You can use that money to cover unexpected medical, auto, or home costs that come up. Go to STEP 2.

Not there: Now is the perfect time to create a monthly spending plan via paper/excel or maybe even an app if you haven’t already. Look for ways to cut back on things killing the budget and find ways to improve how you manage your spending. If you need help paying bills or covering the basics, check out these ideas.

STEP TWO: Are you saving enough in your 401(k) to get 100% of your employer’s match?

I’m getting the match: Perfect. You’re getting “free money” and tax benefits at the same time. Move on to STEP 3.

  • For guidance on how to invest the money you’re contributing in your 401(k), go here.

I’m not: Increase your contribution to at least get the match. If money is tight, consider bumping up your contribution just 1% or more per year until you hit what’s needed to get the match

  • Your 401k might have an auto-escalator tool, which let’s you set a schedule of automatic increases – set it up for the same time you get your annual raise and you won’t even notice the difference.

STEP THREE: Do you have any high interest rate debt? (greater than 4%?)

I don’t: Great. Move to STEP 4. Just remember that not all debt is created equal. Interest you pay on student loans and mortgage debt may be tax deductible. However, try to keep these total payments under 25% of your monthly income.

I do: You finished STEP 2 above, so you already made sure you’re contributing enough to get the match from your employer in your 401(k). Now it’s time to make a plan to eliminate that debt. You can choose to pay off your debt starting with the lowest balance first OR starting with the debt with the highest interest rate.

STEP FOUR: Do you have enough savings to cover 3-6 months of necessary expenses?

Yes. Got it under control: Nice. On to STEP 5. This also helps in the event you find yourself looking for work. (It typically takes 1 month to find a job for every $10,000 you make.)

Not yet: Pay yourself first.You can set up an automatic transfer from your paycheck into a separate savings account until you’ve built up enough savings. Here’s how to start or boost your emergency fund. 

STEP FIVE: Are you on track to replace at least 80% of your income in retirement?

Yes, I’m on track: Congrats. Expenses tend to drop in retirement, but make sure to run a projection yearly to stay on track.

  • Not sure how you much you’ll need for retirement? The sources of income you’ll have in retirement, what your likely retirement expenses will be, how much of a gap there is (if any), and how long you might spend in retirement all come into play. Go here to find your retirement number.
  • Have a Health Savings Account (HSA)? Check this out first.

Not yet: Use the Retirement Calculator to see where you stand and try to increase contributions as needed.

  • Remember, just like in STEP 2, consider bumping your contribution up just 1% or more per year until you hit the percentage you need to contribute to get on track for retirement.

Trying ‘softer’

Figure out where you are on this guide and start working on your finances from there. I heard someone quote an author once stating that instead of trying harder, we should “try softer” to make one simple change or focus on one step at a time. Some of the best advice ever.

How We Are Deciding Which Spouse’s Insurance Plan To Use

November 28, 2018

My husband recently changed careers and is starting with his new employer at the end of this month. We’re all very excited about the transition as a family, but we have a very important decision to make: are we going to stay covered under our current health insurance plan that I have through work or are we going to move over to his plan? Or should the kids join my husband on his plan while I stay on my own? Decisions. Decisions.

How do you decide whose health insurance to use?

When both partners have benefits through work, it’s a good idea to re-examine your family coverage each year. Here are some of the things that we are considering as we decide which benefits to choose. These questions might trigger some points that are important to you and your family as well as you make your decision whether to stay put or move on to your spouse’s plan:

Questions to ask

  1. Are our current doctors considered in-network under my husband’s plan (especially the kids’ doctors)?
  2. Do my husband and I like the primary doctor options who fall in-network under his plan?
  3. If my husband has employee-only coverage at work, does his employer cover his monthly premium? (mine does)
  4. How do the monthly premiums and deductibles compare to what’s available under our current plan?
  5. Once we hit the deductible, how much is our coinsurance (the percentage we are responsible for paying)?
  6. Is a high deductible health plan (HDHP) an option with his employer and how much, if anything, does his employer contribute to a health savings account on his behalf?
  7. Are there any upcoming specialists we’ll need to see? Surgeries any of us will need? If so, are they covered? And how much would we be responsible for paying?
  8. Are there any specific medications we know we’ll need that are not covered under my husband’s plan?

These are some of the things we’ve started to consider. Thinking through your situation and coming up with your list of questions like these, or points that you want to be sure you address, will help you choose the coverage that best meets your needs. Be sure to break down the costs and compare apples to apples when choosing the right health insurance plan and steer clear of common mistakes that are often made during enrollment.

When you need to switch mid-year

It’s important to note that our decision happens to fall during my open enrollment period at work, but if it were outside of my company’s open enrollment period, my husband’s change in employment status (and thus his new eligibility to be covered under a health plan) would be considered a qualifying life event and we’d have a short time frame (typically 30 days) to make changes to our health plan.

 

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

November 20, 2018

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Is everything titled in the most advantageous way?

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

Don’t wait for your spouse to speak up

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

Is Buying A Home Warranty Worth It?

November 05, 2018

I spoke with someone the other day that had purchased a 20+ year old home. I could tell by the sound of his voice how excited he was, but he also gave me a laundry list of maintenance and repairs he had to make shortly after the purchase. We started talking about home maintenance plans, often referred to as home warranties. Here’s what we discussed in order to help him decide whether it was worth it.

What to know before you buy a home warranty

What does it cover?

Most companies are flexible and allow you to customize a plan that meets your specific needs and covering what’s important to you. Typically, you can choose to cover appliances (i.e. your refrigerator, washer & dryer, oven, etc.) OR you can choose to cover systems like your air conditioning and heating system, plumbing, and electrical systems. Many will also let you do a combination of the two, covering as many appliances and systems as you prefer.

How much does it cost?

Obviously this is a big part of the decision. Cost typically depends on which company you decide to go with as well as wha’ts covered (and for how long). Compare multiple companies to narrow in on the best home warranty companies. You’ll likely pay a standard monthly fee linked to the type of maintenance plan you choose. Then, you’ll agree on the per service call fee that you’ll be responsible for whenever you have a technician come out to your home. Be sure to factor these costs into your budget. If you opt to be responsible for less money out of pocket when you have a service call, you’ll pay a higher monthly fee for having the plan in place.

How does it work?

Typically, no matter what time of day, or what day of the week, if a covered item breaks, you can contact your provider and they will send a technician out to you. However, it’s important to understand that most warranties require you to use one of their technicians, so if you have an emergency and call someone else, you probably won’t be able to make a claim on your warranty.

The pros and cons of home warranties

Pros:

1) Extends the life of your appliances

2) Extra protection for homes with either the original or older appliances

3) Likely to keep home appliances and systems more energy efficient

4) Peace of mind – you don’t have to do the maintenance on your own, or find a reliable repair person on your own

5) Alleviates some of the need to maintain a larger savings account just for home repairs

Cons:

1) Potentially more costly over the long-term – you might not use the service for years and could have saved those funds for any future repairs/replacements at a lower total cost

2) Service delivery may not be prompt – some may have to wait prolonged periods for someone to come out to fix their problem and it may require multiple visits. This often won’t work if your issue is something pressing like a failed hot water heater when you have guests staying in your home.

3) Confusion around what’s actually covered – be sure you read the fine print and ask questions, so you don’t have any surprises. For example, your furnace warranty may be voided if you don’t have a technician check it annually.

4) More expensive than DIY maintenance – with a little TLC of your own you could save money, you just have to stay on top of it.

Rule of thumb for home repairs and maintenance

Before you purchase a home, be sure to put funds aside for potential repairs and replacement costs. How much you set aside depends on the age of your home – somewhere between 1% – 4% of the purchase price is a good range. If you are already in your home, include those expenses in your budget and designate money each month to get ahead of any needed maintenance.

If you’re in the process of saving and you are concerned you’ll need maintenance before you have enough funds to cover the associated costs, you might consider having the home maintenance plan for a short time-frame, like one or two years.

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

October 22, 2018

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

Feeling financially unprepared

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

Help is out there, but you have to ask

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

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

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

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

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

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

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

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

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

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

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

 

Should You Buy A Home Now Or Wait For Prices To (Maybe) Drop?

October 10, 2018

There was a recent news release about certain locations in the US that have started to see foreclosures creeping up again and that has some people worried about the market dropping again and watching home prices fall as well. As a result, more people are asking if they should go ahead with their plans to buy a new home now or wait until prices drop. Here’s how I see it.

Timing the market is almost always a bad idea

The reality is that when you start asking questions like this, you’re basically trying to time the market. Your needs really should trump whatever the market is doing. Being prepared financially (i.e having a healthy credit score, funds saved towards the down payment, etc.) is the answer.

That holds true whether you’re a real estate investor looking to make a short-term investment or you’re in it for the long haul and plan to keep it as a rental property. Make sure it’s a good investment and the numbers make sense.

If you’re looking to purchase a home as your primary residence, and you find one that fits your budget that also meets your other needs, then worrying about its value decreasing in the short-term really shouldn’t be a huge concern. The longer you plan to stay in the home, the less of the impact a drop in value might have. You might feel a bit of buyer’s remorse or have less equity to start, but if the home is affordable and meets your anticipated long-term needs, it’s probably still a great deal for you.

Home prices fluctuate. When the market falls, some homes will decrease in value more than others. It’s true that when that happens, short sales and foreclosures will become available, but will the type of house you are interested in be on that list? And when will it happen? Here are some other factors to consider.

Deciding whether to buy now or wait for a good deal

1) Do you care enough to wait it out? If you’ve been dealing with a home that’s too small for your current family, you’re tired of renting, or you’re already finding investment properties that fit exactly what you’re looking for and the numbers make sense, you may prefer not to wait.

On the other hand, if are content with your current living arrangement or you aren’t in a rush to purchase an investment property, you likely don’t really feel pressure to buy now. Waiting for a deal that motivates you to move forward could make sense.

2) Are you looking for a very specific type of home? For example, do you only want to live in a particular neighborhood, or are you picky about exactly what features your future home needs to have? The more specific your list, the more of a challenge it will be to wait for exactly that type of home to become available when home prices drop.

3) Is the home you want available now and you can afford it? If it’s a good deal now (meaning it fits within your budget, is in a good location, etc.) and you can get exactly what you’re looking for, then now might be the time to go for it regardless.

4) Do you have enough cash on hand? When prices drop, many others may be going after the same homes you’re interested in. You’ll likely need funds stashed away, ready to make an offer, but be prepared to potentially be outbid.

5) Is the type of home you want more than what you can afford? This could easily be the case for those in extremely expensive real estate markets. You might choose to wait to see if you can get one that meets your needs and falls within your price range if/when prices drop. The solution is not to overspend, but it doesn’t hurt to see what’s available – assuming you can wait until such a drop happens, if ever.

6) Do you need to sell your current home? Waiting for prices to drop in order to score a better deal when buying might feel right, but if you also need to sell your current home in order to make a down payment, any savings could be washed out by a drop in value of your current home or could even cause you to miss out on a deal if you’re unable to sell your home. Unless you’re prepared to make a temporary move so you can sell your home first, it’s probably best to just buy the home you want/need when you’re ready and work to sell your current home quickly.

7) Should you go for a short sale or foreclosure? You might find what you’re looking for in a short sale, a foreclosure or a home that needs some work but has potential. The seller, whether the owner or the bank, is usually motivated to sell the property. Also, you’d likely get instant equity, but the process to purchase these types of properties can be involved and lengthy. You could save yourself a lot time and headache by going for bank approved short sales vs those that have not gone through the approval process. You can also look for foreclosure properties on Bank REO lists.

Beware that some of these properties may not be in the best condition and that you may be responsible for any repairs needed. Just know that regardless of what happens to the real estate market in the future, these types of properties are available now, so you don’t have to wait for the market to fall before you look into this option.

The bottom line

All in all, it makes sense to make a purchase when you are financially prepared and you find a property that fits your needs. If you find that now, great. Waiting to see if prices will drop could work out, or you could find yourself waiting and waiting, so it’s up to you to decide. No matter what, it’s most important to make sure you have your ducks in a row before you buy in any market.

 

Coping With The Financial Side Of Mental Health Issues

September 27, 2018

The more people I meet, the more I realize that so many of us are suffering in silence from things like severe anxiety, depression, and other mental health or stability challenges. I’m always grateful when people open up to me about what they experience and how it’s impacting their ability to function and give what it takes to make a living. This enables me to pass this wisdom on to others in my work.

You are not alone

The most important thing I’ve learned so far is this: You are not the only one experiencing this. It’s ok to talk about it. Give yourself the freedom to admit it doesn’t feel normal. Give yourself the attention you need and the time to take care of you.

It’s such a sensitive topic and many don’t reach out and talk to anyone about what they are going through. They say that are suffering and they have a hard time functioning in the normal day to day activities. It also impacts their ability to show up for work – not just physically, but emotionally and mentally. It can have negative effects on their ability to earn stable income and manage their funds in general.

Addressing the medical issue is something I’ll leave to that profession, but if you have reason to believe that you may need to take some time away to address your mental health in the future, here are some things you can do to keep your finances in order.

Keeping your finances together when it feels like your head is falling apart

1) Get ahead of any negative impact to your finances – Think about what would happen if things get to the point where you need time off work and plan for that just in case. How much time might you need and would it be paid time off? Will you have to transition to a different role at work to have a more balanced lifestyle? What if the pay is less? Do some research to find out if you need to start shifting some things around in your life to allow for a period or no pay or lower pay.

2) Make a plan for how you would keep afloat if you are unable to work – I spoke with someone who had multiple breakdowns at work that would not allow her to function, despite how much effort she put into doing so. Her doctor recommended she take a leave from work immediately. What if that was your situation? How would that impact you financially? The last thing you need to do is worry about how you are going to make ends meet, when you’re supposed to be taking time off to take care of yourself and get yourself to where you need to be.

3) Budget for what you need to help you cope or heal – Make room in your budget not only for that gym membership, travel, massages or whatever it is that helps you to balance your life, but also to build your emergency fund. If you must cut back on how many hours you’re working, it’ll ease the transition if you are living below your means and if you have funds set aside to buy you some time while you seek the medical assistance or take the break away that you need.

Consider saving closer towards 6 months or more in your emergency fund, so that you will be able to access those funds while you take time off work to heal and potentially still have some funds left in that account when you return to work.

4) Understand how Social Security Disability Insurance and Supplemental Security Income might help you – If you meet the eligibility requirements, these programs provide monthly income in the event you are unable to work for an extended period of time.

5) Find out if any short-term and long-term disability benefit you have at work covers mental health – Learn about the eligibility requirements and approval process under your plan at work. Most pay a portion of your salary, typically 50-70% of your income, while you are out of work due to a disability. Get clear on any waiting periods, and budget accordingly for reduced or no income.

6) Prepare for a potential unpaid leave of absence from work under FMLA – The Family and Medical Leave Act (FMLA) provides certain employees with up to 12 weeks of unpaid, job-protected leave per year. You may have to use your FMLA leave while receiving disability pay from work. Some employers require you to use up your paid vacation leave and paid sick leave or family leave for all or a portion of the time you’re on FMLA. Find out more about how that works here and be sure to know what your employer requires.

7) Look to your benefits at work for assistance – Your EAP can provide you with a referral to a counselor if you’re not certain how to address your mental pain – you typically receive a couple sessions free of charge, then have the option to continue via health insurance coverage (if available) or out-of-pocket.

If your employer offers financial wellness services, take advantage of it and get your questions answered and have a plan to cope with your situation before it becomes a strain financially.

8) Be mindful of medical costs by staying in-network and reviewing prescriptions ahead of time –  One challenge to many healthcare plans is that there are very few in-network psychiatrists and therapists available on some plans. Do what it takes to stay in-network if at all possible, and if not, then interview providers by asking if they offer a sliding scale for patients without insurance assistance – many do.

If your doctor prescribes you any medication, work with her to make sure that your insurance will cover it as well. Many plans require prior-authorizations or have alternate meds they prefer, which can save you a bundle. If your doctor feels strongly about prescribing something that doesn’t have great coverage on your plan, she may be able to offer you a coupon or suggest a pharmacy that offers it at a lower price. Shop around.

You are your most valuable asset and you have to be healthy to give the best version of yourself. Be sure to make room in your life to take care of yourself and remember that extends to your mental health. Take advantage of the resources around you and know that it’s ok to talk about it and get the help that you need. I understand and there are many others out there who will as well and who are standing by to help you through this. You’ve already taken a step in the right direction by reading this blog to help you or someone you know who’s going through this.

Ways To Get Creative So You Can Save More Money Without Giving Up Perks

September 17, 2018

At some point in life, most people find themselves in a situation where they simply need to cut back on expenses in order to save more money for whatever reason. When that time comes, usually the little “perks” they’ve added to their life make the most sense to cut first. It’s easier these days to find an alternative to cable. It makes sense to buy coffee less often on your way to work, or to buy clothing when it’s on sale.

But what about those other expenses that technically fall under the category of perks, but cutting them out of the budget feels more like giving up a need that makes sure you’re life can keep on track? Sure, you’re paying for a convenience, but some expenses that are discretionary feel more like a necessity to keep your life running smoothly.

Spending more money than we have is not an option, at least not if you want to be financially well. When it comes time to trim back on those things that may seem like luxuries you can’t live without, here are some tweaks that might help you to keep those “perks” while still cutting back on spending.

Get creative with your cleaning service

Amount saved: $70-$150/month

No matter what’s going on, you still need your place cleaned, and chances are you have a cleaning service in the first place because you’re either too busy or just too overwhelmed with the task of cleaning. Before you start giving yourself the new nickname of Cinderella and thinking you have to cut a cleaning service out of your budget completely, consider a few of these ideas:

  • If you usually have your house cleaned weekly: Consider stretching out the time between services and having your home cleaned every two weeks, once a month or once every other month. You may have to get out the vacuum a few more times or learn to live with a little more dust, but knowing it will be done eventually can help.
  • If your house is just too big: Cut down on the hours you pay for help and just have them clean part of the house – have high traffic areas cleaned every week and others only every other week or less.

When you really need to eliminate the expense entirely: Check out Pinterest or this Better Homes & Gardens List for some house cleaning schedules to help you stay on top of it all on your own. A little structure goes a long way, and remember that you can break it into chunks. Here are some tips on how often you should clean everything.

Re-work your gym membership to fit your needs

Amount saved: $10 – $150 or more/month

  • Make sure you’re not paying for perks you don’t use: If you really want to stick with your current fitness facility, check to see if you can opt for a less expensive membership that takes out access to things you don’t use. For example, you may be paying for fitness classes you rarely join or access to a pool you have zero desire to get in to.
  • Shop around: You might be able to find a cheaper membership at a competitor’s location. There are some fitness centers like Planet Fitness where you can get a membership for as low as $10 per month for access to the basics.
  • Check your benefits: Many employers offer their employees access to corporate discounts on gym memberships. Don’t forget to check your health insurance – the plan we have at Financial Finesse offers partial reimbursement of membership fees to certain facilities as long as you go a certain number of times per month.

When you really need to eliminate the expense entirely: Working out at home can be just as effective – check out these personal training apps that seem to be highly rated.

Compromise on carry-out with a meal prep service

Amount saved: potentially hundreds/month

So many people I talk to say that carry-out food is the issue with their budget. Believe me, I’ve been there: life happens, the kids have to eat and there just isn’t any time to cook. You try to find the healthier options, but eating out can be expensive for the family, and healthy options add to that cost.

A meal prep service might be just what you need. Plan it out and give yourself the flexibility to have at least one day each week where you don’t have to worry about what you’ll make for dinner or realize at the last minute that there isn’t anything in the fridge to cook. Once it’s in the budget, you don’t have to feel bad about giving yourself the needed break. And, you won’t spend unexpectedly.

There are many ways to cut back and work within your budget so that you can save for that vacation you’ve been wanting to take, or cover your tuition when you go back to school, or send your kids to college, or for other goals like retirement. A little creativity can help you to put together a spending plan that works best for your needs and lifestyle without having to completely give up those perks that make your life run smoothly.

Ways To Help Others Without Hurting Your Own Finances

September 06, 2018

One of the joys of working in my role is how many people I speak with who are wonderful, good-hearted people. They love giving back, whether it’s money they give to charities, religious organizations, or even family and friends. Sometimes I talk to people who volunteer so much to help a cause that it’s like they have a second job.

The caretaker’s connundrum

This is all very commendable. But what happens when you give so much money to others that you don’t have enough left to build your own emergency fund, save for retirement, or cover your own bills? Or when you spend so much time helping that you aren’t able to pick up more hours to help meet your own financial goals? Or what if your family and friends look to you to bail them out of financial trouble, help them start a business, allow them to come live with you for free, etc. but then leave you in the lurch with big bills?

This is a common situation I encounter, and I admire people with such big hearts, but I also feel for them because I know that the solution isn’t to just stop doing it. Here are some thoughts and ideas that I’ve shared with people who feel torn between a desire to give back to others versus taking care of themselves. The good news is that there are ways to be creative and do both.

3 ideas to consider about giving

1) Time is money

If you typically give cash donations or pay people’s bills for them, don’t forget that giving your time can be just as beneficial as giving actual cash. You can help serve food at the homeless shelter, volunteer for the kids’ ministry or another ministry at church or spend an evening cleaning at the local animal shelter. If you’re more inclined to help out people you know, the same concept applies: what about rolling up your sleeves to help someone repaint their house so they can save money, or be available to help them babysit while they go on a job interview?

2) If your situation has changed, your giving may need to change

It’s tempting to keep up a level of giving that you’re used to even after you may have had a drop in your income or even an increase in your overall expenses. You can still give at a level that works for your budget AND volunteer some of your time or services. If gift giving is the issue, plan ahead for birthday and holiday gifts and buy items on sale. Have a game plan for your spending, so you aren’t caught off guard.

3) Other creative ways to help that don’t require you to give up resources

If someone you care about comes to you with a need that would put you out financially, you don’t just have to say no. Be an ear to your friend or family member and offer them guidance or help them find resources available so they can be better equipped to help themselves. You may learn something for yourself in the process! Here are some ideas:

  • Are they unable to work due to physical or health issues? Perhaps they qualify for government assistance like food stamps or Social Security Disability. Help them do the research and apply.
  • Did they lose a job? They might be eligible to receive unemployment pay. Offer to wait with them at the office while they apply.
  • Do they make too little money in general and are struggling to make ends meet? United Way is a great resource to see what programs they might be eligible for within the county where they live. Some programs will give them funds towards paying bills. Beyond that, you can be a resource and help them figure out next steps when they can’t pay their bills.
  • Are they going through something that has them down emotionally, which also might be negatively impacting their performance and work and in other areas of their lives? Have them check with their HR department at work to see if they have access to a counselor through an Employee Assistance Program (EAP) at work.
  • Did they recently have a baby and are struggling with the added financial responsibilities? Here are some employee benefits that could help new moms/parents in general.
  • Is the baseline issue that they aren’t able to get a handle on how they manage their money? Help them create a budget and find ways to cut back and find extra money in their current budget. Be a good role model and show them how to do it, rather than just giving them money.

Sometimes all a person really needs is a caring friend to empower them to get on their feet and hold them accountable for taking the steps to helping themselves. Helping others and giving back can bring great joy and a sense of purpose, so keep that up but remember to make sure you are financially sound first. That puts us in a better position to best help others along the way.

How To Fit Tithing Into Your Other Financial Priorities

August 28, 2018

There are a number of opinions out there on whether people who are paying off debt and/or under-saving should tithe (the practice by some religions of giving 10% of your income to the church) before paying off debt and saving. I’ve spoken with many people who struggle with this answer. Often, they have already gotten into a bit of debt and aren’t really sure how much they should or can afford to tithe.

I won’t get into whether or not you should tithe — to me that’s a decision everyone has to make for themselves and I’m not trying to make any religious statements here. But for those who decide that it is an important priority, there are ways to do it while also keeping your finances in order. The last time I was asked this question by someone struggling with making it all work, here is how I framed my guidance:

Think of it this way:

1) Commit to the idea fully – If tithing is a priority for you, write out your plan to make it happen. Be specific with how much you will give and how often.

2) Write it in to your budget – Once you know how much you are going to tithe, subtract that amount from your monthly income and create a budget to live off what’s left. It’s really the only way to make it work.

We mean well, but often, we make the decision to buy the car, purchase the home, etc., BEFORE considering how much we can afford after tithing. Things could be smoother if we account for the tithe and then decide how much of a car or mortgage payment we can afford.

3) Cut back on other spending  – If you find you can’t tithe at the level you wish, look for areas in your budget where you might be able to cut back in order to make it work. Think about your own personal priorities.

4) Find ways to increase your income – Explore opportunities to earn additional cash to help pay down your debt or save by working more hours, having a second job, etc.

5) Don’t tithe on credit – If you feel led to give more, go back to step two and make room in your budget to give more instead of putting your tithe on a credit card. Tithing on credit will add to the time it will take you to pay off your debt.

6) Make sure you’re getting your full tax deduction – If you itemize your taxes, you may be able to claim a deduction for the amount (or a portion thereof) of the tithe you give.

Remember that you are in control

You don’t have to feel guilty about tithing instead of paying off debt or saving. You just have to find a way to make it all work. If it’s important to you, add tithing as a line item in your budget and make your financial decisions based off what is remaining.

Recognize that tithing while in debt could take you longer to pay off your debt or save. You have the control to work more hours, cut back on spending elsewhere, or slowly increase your level of giving overtime as you free up more cash and start giving the amount you ultimately want to give.

7 Steps To Planning A Budget-Friendly Vacation

August 23, 2018

As a parent of a newborn and toddler, I can totally relate to people who feel like they just don’t have the money to get away, but are practically dying for a vacation. We give so much time to our careers, our spouses, friends and family and while those are all important to us, we all could use a break away from responsibilities… A “brain break” to keep you sane. It makes all the early mornings, late nights, missed lunch breaks, days dealing with a sick kid, etc., more manageable.

Vacations can be budget killers though, especially when we make impulse purchases for a get-away. The key is to start the planning before you start to go nuts so you can travel (and regain your sanity) without breaking the bank.

I reached out to a friend who manages to travel multiple times throughout the year with a family of four. She and her husband have two young children, both under the age of five, just like us. Here’s how she makes it work.

1. Plan ahead

It seems so obvious, but many of us don’t take the time. My friend and her husband take one international trip each year to celebrate their anniversary without the kids. The way they do this is that they start to plan the trip one year in advance, which means they are already planning next year’s trip while on this year’s.

They also take a minimum of two family vacations within the States, which they plan for that at least six months in advance. One thing that planning ahead does is that it helps them to avoid peak season pricing. That way they are able to take the same trip for less money than someone who waits until summer is here before booking their flight, hotel, etc.

2. Add it to the budget

Yep, a lot of keeping our money in check comes back to how we manage it on a day to day, month to month basis. Determine how much you’re willing to spend on vacations for the year, then figure out how much to save each month to get there. To make sure the savings happen, treat it like a bill you have to pay. You may have to cut back in some other areas to reach your goals.

3. Create a separate account

Consider putting your travel funds in a separate savings account where you bank. You can move the funds to your Travel Account manually each paycheck or set up automatic transfers.

4. Decide where, how often and what ahead of time

In order to budget, it will be important to decide how you like to travel, especially if money is tight. Do you prefer extended stays where you’re fine spending a week or two away at a middle-of-the-road hotel where you aren’t too concerned if the food is just ok? Maybe you’ll even opt to cook on vacation and save money there. This could allow you to spend more time on vacation, if that’s most important.

On the other hand, you may be fine with taking only one or two trips, but go all out. Some people would much rather have a breath-taking, pampering experience where they don’t lift a finger, even if it’s only for a couple of days.

5. Be mindful of when

If you can keep your dates flexible, you won’t be forced to spend more during peak travel seasons. This can be a HUGE money-saving strategy. My friend says that being flexible also helps her family take advantage of deals for last minute travel as well.

6. Work to stay on budget when you go

In order make sure they don’t go over their budget, my friend has a few strategies. For local trips, they use cash for everything except for booking the hotel. She plans everything out beforehand including using TripAdvisor to look at menu options so she can come up with a daily spending budget for the trip. Hotels that have breakfast included in the room help with this as well.

7. Don’t forget stay-cations

You don’t have to leave your ZIP code in order to have a fun getaway. Setting aside $200-300, or whatever works for you, for a weekend trip to a local resort can be just as sanity-saving. The kids feel like they are out of town on vacation and the parents get a break from cleaning, cooking, and some other responsibilities. It’s a win for the entire family.

So what are you waiting for? Spring break will be here before you know it. Get planning! Finally taking a vacation…AND staying within your budget… it’s a win for the whole family!