Stimulus Checks: The When, How And What To Spend Them On

April 08, 2020

By now I’m sure you’ve heard that qualifying US taxpayers will be receiving a stimulus check, or what’s technically called your economic impact payment. If not, here’s what the IRS wants you to know. Beyond that, keep reading for a few tips on how to best make use of the funds once you receive them.

When should I get my check?

Per the US Treasury department and the IRS, economic impact payments are expected to begin going out mid-April. As of right now, you do not need to do anything else to get payment as long as you filed a tax return in 2018 or 2019 (if not, check out this flyer from the IRS). And remember, if you get a call asking you to make changes it’s a scam.

If your tax return included banking information for payment of taxes due or to direct deposit your refund, the IRS will send your stimulus check to you that way. If it did not, then you’ll receive a check. The IRS has also said there will be an opportunity to provide updated banking information, but the format is still to be determined as of the publishing of this post. We do know for sure that the IRS will be sending a follow-up letter advising you that the payment was sent, so that if for some reason you don’t get it, you’ll know to take action.

The best place to learn more about this is on the IRS website specific to these payments here, but the bottom line is: you don’t need to take action at this time to receive a check if you are up-to-date on your tax filings. Check out our stimulus check article to see if you qualify and to learn details of taxation.

What can I do with these checks?

Almost anything! They are being sent to make sure everyone can cover their essentials and possibly push cash back into the economy. While there are no restrictions on what you can use the funds for, we do have some suggestions on how to spend those checks.

If you’ve already lost income

If you are one of the 10 million Americans who have lost their income due to COVID-19 related changes, how do you make the most of this one-time payment? Here’s what we suggest:

  • Use the stimulus check to bridge the gap between your last paycheck and when unemployment kicks in (haven’t applied for unemployment? Check out this article about next steps).
  • Know your rights. Set up a Google Alert for your town, county and state. What are the rules on collections and evictions? Know what the rules are before using funds on something that has leeway. Keep in mind these are rapidly changing.
  • Contact your creditors to see if they will offer relief for debt payments; don’t ignore your bills, but work with them to see what flexibility they will offer. Make sure to ask about any fees that may apply. Check out this toolkit to prioritize bills.

If your income is not secure

Maybe you’ve lost a portion of your income or perhaps you are waiting to hear about a possible furlough. Let’s make sure you are taking care of yourself first and foremost.

  • Start with a hard look at your budget. What are your needs, what are your wants, and what are extras? Start living on that budget now.
  • Save any extra money and put it into your emergency fund. Check bankrate.com to make sure you are getting the highest interest rate on your savings.
  • Create a debt inventory, and prioritize debts based off flexibility. Focus on paying debts that have the least wiggle room.
  • If you have income still, continue to make contributions as able to your retirement account to get the full employer match. Keep your eye on the prize long term.

If your income is secure

Wonderful! Let’s do a spot check to make sure that you are in a good place. How can you make the most of this money?

  • Do you have a robust emergency fund? Ideally, this is 3-6 months of spending. If your income stopped tomorrow could you go three months with no changes to your spending?
  • What debt do you have? Make a list of what you owe, interest rates and minimum payments.
  • Are you maxing to the match on your retirement plan? It’s free money, make sure that you are getting it from your employer.
  • Have you funded a Roth or traditional IRA? Due to the tax deadline extension, you have until July 15th to max out your 2019 IRA or Roth IRA contribution. If you haven’t done it, you still have time!
  • Have you funded your HSA? Same goes for your HSA, you have until July 15th to make the maximum contribution.
  • If you have all your ducks in a row, help where you can, such as buying gift cards to small and local business to help support them while we are all home. If you are comfortable, get touchless take out.
  • Donate.  If you truly don’t need the money, consider donating it to a worthy cause. Keep in mind that charitable donations can be tax deductible.

Lastly, stimulus check or not, take some time to take care of yourself. Watch a cat video, play a video game or take a walk. And of course, wash your hands.

COVID-19 Relief For Rent & Mortgage Payments

April 01, 2020

What should you do if the COVID-19 situation makes it difficult to pay the rent or mortgage due to lost wages, caring for a sick family member, or your own illness? Passage of the federal CARES Act on March 27, 2020 may provide some relief.

If you rent:

  • Evictions are frozen for 120 days for renters who live in properties that receive federal subsidies such as Section 8 vouchers or for renters whose landlords have government-guaranteed loans, including loans backed by Fannie Mae, Freddie Mac, the FHA, or the USDA. 
    • If your rental unit is not covered by the CARES Act, individual states have issued similar suspensions on evictions. Check your state government’s website or seek legal assistance from your state’s legal aid society.
  • During this moratorium, landlords are forbidden to charge fees or other penalties for nonpayment of rent.
  • Landlords also can’t issue a notice to leave for 150 days after the Act’s passage.

If you have a mortgage:

  • If you lost a job or your income was reduced due to the COVID-19 outbreak, you may qualify to have your mortgage payments reduced or suspended for up to one year.
    • Specifically, federally-insured mortgage giants Fannie Mae (FNMA) and Freddie Mac (FHLMC) have been directed by regulators to offer mortgage forbearance and waive penalties and fees for up to 12 months.
    • Delinquency related to mortgage forbearance will also not be reported to credit bureaus.
    • Even if your mortgage is not backed by either FNMA or FHLMC, many banks are offering similar forms of mortgage relief during the pandemic. Check your bank’s website for more information.
  • If you are a landlord who owns one or more multi-family homes, you are also entitled to up to 90 days of forbearance on these mortgage loan payments if you also have documentation of a financial hardship. Landlords must have been current on payments as of Feb. 1, 2020, to take advantage of these protections and can make requests for up to 30 days of forbearance at a time.  

What you can do:

  • Continue to pay your rent or mortgage if you can, even if that means cutting out some other expenses or letting less critical bills slide a bit.
  • Definitely contact your landlord or mortgage servicer and let them know what’s going on with your financial situation if you are unable to pay some or all of what you owe each month.
  • Stay patient on the phone. Lenders and landlords are likely to be fielding many calls. Document all attempts to contact your lender or landlord.
  • Review the Consumer Financial Protection Bureau (CFPB)’s “Guide to Coronavirus Mortgage Relief Options,” which also includes protections for renters.

VIDEO: Your COVID-19 Financial Survival Kit

March 25, 2020

FAQs from Your COVID-19 Financial Survival Kit Webcast

March 25, 2020

You may have joined our recent webcast titled Your Covid-19 Financial Survival Kit. We had a lot of questions come through during the sessions so we want to share the commonly asked ones, with their answers! Our facilitator, Bruce Young, CFP, has provided written answers below.

Take a look at the different topic areas, and for more resources see the banner on the home page of your Financial Finesse Hub

401 (k)

Q) Should I keep funding my 401 (k)?

A) Yes! you are buying low and you don’t want to miss out on matching funds if it’s available to you.

Q) Should we lower the amount we are contributing to our 401 (k) for the current time period?

A) Unless you need to redirect funds to beef up your emergency fund, you should avoid lowering your 401 (k) contribution because you are now buying low and can take advantage of dollar-cost averaging.

Q) Is this a good time to increase my 401 (k) payroll deduction?

A) Yes, if you have an emergency fund already then this is a great opportunity to be investing more in your 401 (k) while the market is low.

Q) I am within 11 months of retirement – should more go to fixed income (money market, CD’s) or leave a portion to stocks, etc.?

A) Ideally, you will want to have up to 3 years’ worth of living expenses in a “safe” investment such as money market CD’s, etc. Typically, a conservative portfolio based on your comfort level of risk. An example might be 20 to 35% stocks, 65 to 80% fixed income.

Q) I am retiring in less than a year, should I continue to put money in my 401 (k)?

A) Yes, especially if you have a company match in your 401 (k).

Q) What if you have a 457? Should I borrow from a 457 before my 401 (k)?

A) While a retirement loan is generally a last resort, the benefit of taking a loan from your 457 is IF you had to leave / separate from service you may not be subject to the 10% penalty (if under age 59 ½)

Q) I have two years until retirement – what is my risk tolerance.

A) Typically, a conservative portfolio based on your comfort level of risk. An example might be 20 to 35% stocks, 65 to 80% fixed income.

Q) If I have a 401 (k) loan should I convert it to a distribution payout? I’m 65.

A) Ideally, no as you will be making it a taxable event.

Market

Q) Is there any benefit to withdrawing large sums of money out of bank accounts during these times ie how do you calm a panicked senior?

A) No. That being said, having a set amount of cash on hand ($ 200 – $ 1,000) for emergency cash transactions is a good practice.

Q) How do you communicate to friends and family members that they shouldn’t be liquidating at this point?

A) First off, it’s maintaining a calmness when talking with them. Going over what their time frame is (when they need the money), recognizing that the investment markets do go down and historically they have rebounded, and finally re-assess their risk tolerance, ie do they need to re-balance their portfolio.

Q) When is the market going to go back up?

A) I wish I knew! Seriously, no one knows that answer, hence sticking to the sound fundamentals of investing and (ideally) dollar-cost averaging into the market.

Q) Once the market stops going down, do you recommend investing in the stock market?

A) Since we do not know when that inflection point will occur, you want to maintain your investment strategy through both the ups and downs of the market.

Q) Is now a good time to purchase stocks?

A) Yes, if you have a long-term investment timeline this could be an excellent time to purchase stocks!

College

Q) Should I keep saving for my child’s education? Or keep it for emergencies?

A) Saving for a child’s education should be behind (1) saving for an emergency (2) saving for your retirement. Also, if there is any high-interest rate debt, that should be prioritized over children’s education.

Q) I have a high school senior going off to college in the fall. I’m concerned about the loss we have recently taken on the money we have set aside for college. Will the market rise soon enough, or should we sell and take a loss?

A) We do not know when the market will rebound. Prior to selling at a loss, consider alternative means, ie student loans that could be paid off once the market does return.

Emergency Fund

Q) What is the correct amount of money for an emergency fund?

A) Start with a goal of $ 1,000 working towards 3 – 6 months’ worth of NECESSARY expenses

Qis it a good idea to hide away money in our home if the market does not recover? Is this what you mean about emergency money?

A) Having emergency cash (think a range of $ 200 – $ 1,000) at home is advisable. Your emergency SAVINGS should be in a safe type of investment (think savings account, CDs, money market accounts).

Buying a Home

Q) I just bought a house this month at what seems to have been the peak of the housing market. Should I be concerned? Or is this a long-term, ride-it-out scenario?

A) Unless you bought the house with the expectation of “flipping” it, a home purchase is a long-term investment

Q) I’m saving up a down payment for a house, now that the stock market is plummeting, I want to invest some money in the market while prices are low, how should I prioritize this?

A) It depends on which goal is MOST important to you. If buying a home is, then saving in a savings/money market account is the preferred way to save. If buying a home is a “nice to do, but can wait” then investing in the market can be beneficial when prices are low.

Q) Hi, we have been preparing to buy a house in an area, that is always high demand and expensive and it will stay that way during the crisis too. Should we buy or wait if something good comes up?

A) With mortgage rates at historical lows, it may still be a great time to buy a home, but you’ll want to consider your job stability.

Q) I am currently in a transition, should I purchase a home or continue to lease/rent?

A) Mortgage rates are at historical lows, so you should consider job stability and how long you plan to stay in the area before making the decision.

Q) If possible, would this be a good time to refinance a mortgage?

A) Yes! Mortgage rates are at historical lows.

Student Loan

Q) How should you think about federal student loans now that interest rates are waived?

A) If you can continue to make your normal payment, this is a wonderful opportunity to pay down the balance more quickly. If you are having issues making the payment, contact your student loan servicer for a forbearance program.

Your Pandemic Financial Survival Kit: What To Do, What To Avoid, and Handling Change

March 25, 2020

The following post is an excerpt from the Financial Finesse Personal Finance FORBES Blog. You can read the original post in its entirety here.

The headlines about the coronavirus and reports of how it will impact the economy and potentially lead to a recession are all a cause for concern. The total impact of the extreme slowdown and virtual shutdown of many businesses is yet to be seen. However, many elements of how to manage any financial crisis still apply. 

Success hinges on the financial planning you do before you feel the impact of the crisis, during the period if you are affected, and when things revert back to normal. The following provides some of the things you’ll want to do and avoid doing and how to handle changes, including the return to normal. (We will get there!)

DON’T PANIC!

If you are nearing retirement or any other goal that would require you to sell some investments anyway (aka you need to start spending your savings in the next 0-5 years, depending on your risk tolerance), then regardless of what experts are predicting, it’s probably a good idea to plan ahead for withdrawals. If you’re like me with many years to go until you’ll need that money, here’s just a quick reminder that investing is for the long haul and in most cases, trying to time the market is a losing game. You may want to follow the advice of many investing experts and just stay the course.

Evaluate your risk tolerance and rebalance if needed

You can then take this risk tolerance questionnaire to make sure you have the right amount of your portfolio in stocks, bonds, and cash based on your time frame and comfort with risk. If your money is invest in a target date fund or other asset allocation fund, then this will already be done for you. If you’ve created your own mix, it might be time to reallocate between stocks and bonds. Here are 4 ideas to rebalance your portfolioif you need some guidance there.

Stay focused on the long term and your goals

Remember, the important thing is to stay diversified and focused on your long-term goals. When it comes to investing during a downturn, the answer is often not to do something. It is to just stand there (and maybe avoid checking your accounts too much). If anything, you might just get excited about the opportunity to buy investments “on sale” the next time you get paid and contribute to your 401(k) plan.

WHAT TO DO

Before an income loss: Planning 

3 months of expenses saved for emergencies

In an emergency, cash is truly king. No matter how adequate your emergency savings are, you never know how long you might need to cover expenses in the event of a loss of income. The rule of thumb is to 3 – 6 months of expenses in a savings account.

The specific amount you decide is best for you and your family will depend on your personal comfort level, the availability of other sources of financial support, and how risky your income is. Regardless of the amount, make sure the money is easily accessible in a savings account or safely secured in your emergency kit.

Strategies for Success: Consider opening a separate emergency savings account, and setting up automatic deposits into that account. A site like bankrate.com can you give you some good online options.

Create a crisis budget

This budget eliminates any non-essential spending and drills down to exactly how much you would need for the essentials like food, shelter and transportation. Knowing how much you need to survive will help prevent you from panicking because you know exactly what to cut back on and how long your savings would last.

Strategies for Success: Consider using budgeting software through your bank but also research other budgeting software programs like Mint.com or YNAB.com. If you are a pen and paper person, print out your statements and jot everything down or put it in a spreadsheet like this one.Tracking your spending will help you understand exactly where your money is going so that you can stay on track for your financial goals.

A plan for preparing to work from home or having your kids sent home

This is a tricky one. My wife and I are experiencing this right now. She will soon be working from home as well, which will be an adjustment for both of us. Here are some great ideas that I found and am applying to help prepare us for the transition!

If your children are sent home, what do you do? Our district has alerted us that learning will occur virtually if they have to. Every child is issued an iPad with an app that allows for that in our district. 

Check and see what the contingency plan is for yours. Make sure you think about how that might need to be worked out between you, (your partner if applicable), and your employer. Many employers are creating flexibility and instituting specific plans in light of the situation. Reach out to them to see what they are prepared to do to help you out. 

In addition, review your benefits. Perhaps you have back up childcare benefits or a discount on that. Of course, if everyone is sending kids home, you’ll have to figure out a plan of who’s going to stay with the kids. Some employers provide benefits around a care provider that will come to your home or a nanny – a similar service to that of care.com.

A plan in anticipation of getting sick for a prolonged period of time:

Confirm if your employer might offer paid sick or family leave. Take time to review your company benefits. Contact HR to make sure you are taking advantage of everything they are prepared to and currently offer. 

In addition, your state might offer unemployment insurance benefits during this period or assistance with necessities. For example, California recently announced measures to begin providing these benefits to their residents. There is also currently a bill being sent to the Senate to provide emergency relief across the board. Here is what is in it.

HANDLING CHANGE:

Loss of income: Implementing your plan

Contact creditors immediately

Even if you have an emergency fund, we have no idea how long a loss of income might last. As a safety measure, contact your creditors and inform them of your status. Hopefully, most of your creditors are well aware of the impact of the virus on their clients and will offer to work with you if you get to a point where you could no longer pay your bills. You might realize that the more you communicate with your creditors, the more willing they will be to work with you.

Adjust your lifestyle

Implement the crisis budget and immediately adjust your lifestyle to this new circumstance. Basically, any expense that does not involve the essentials such as food, shelter and transportation should come to a halt. This will help you weather this transitional period.

The Return to Normal: Recovery

Resist the urge to splurge

After a crisis, there might be a temptation to immediately go back to your prior spending, but doing that will prevent you from rebuilding your emergency savings. Plan to stick to your crisis budget until your emergency savings are rebuilt. 

Surviving the ‘stress test’

Making this decision now can help prepare you and your family and make this a minor blip on your finances rather than a life-altering crisis. No one’s financial situation is guaranteed, so we all must plan for unforeseen circumstances by:

  • NOT PANICKING
  • Focusing on the long term and your goals when it comes to investing
  • Having an emergency savings account
  • Having an idea of how much you need to maintain food, shelter and transportation
  • Being able to live off a spending plan
  • Immediately adjusting your lifestyle when a crisis strikes
  • Knowing your benefits to deal with loss of childcare, workplace changes, loss of income and handling sickness
  • REMEMBERING THIS TOO SHALL PASS

Employee FAQ’s Regarding Their Health And Wealth During COVID-19

March 24, 2020

In addition to the COVID-19 Financial Survival Kit Webcast, the FF team has received hundreds of proactive and reactive calls and emails from employees asking what they could and should be doing financially during this volatile time. We wanted to share some of the most frequently asked questions we’re hearing and the responses from our expert team of CFP® professional financial coaches.

1. I am not so worried about my 401k because I have some time until retirement, but I still have pre-school expenses. My child’s preschool has not yet said when they will open and if I need to continue to pay while they are closed. What should I do to manage the uncertain expenses?

Start with the facts and proactively plan for any variable you can control. Ask your daycare what their policies are and if they have any new updates. Many preschools / day cares are offering to reimburse or halt payments if your child isn’t coming in. Some will do that if it’s for a two-week period or more. Dependent care FSA’s are a resource, but most of the time only if people signed up at annual enrollment.

What are your options if your child needs to stay home longer than you are working from home? If you haven’t already, write down your budget and compare it to a new one with you at home. If necessary, decide which expenses you will cut. Explore ways to cover the need –high school kids are home; do you have one you trust who could watch your child? Are your parents able to help? Are you able to work from home long-term? If so, have a plan for your child so you can focus on work.

2. I am actually thinking about investing in this market, to take advantage of the lows. What do I need to consider before I do so?

Market corrections are historically the best time to invest, but every correction is different. Today (3/16/2020) the market has declined over 30% from its high point less than a month ago. The main concern this time is how COVID-19 will impact the economy over the long-term. For money that is intended for ten years and longer, this could be a great time to invest –stocks are cheap overall. It could also be a good time for tactical investors to purchase stocks with the intent of selling them for a short-term profit. This, of course, takes a higher risk tolerance for loss and more knowledge about investing.

Many brokerage firms offer inexpensive options to purchase a small number of shares so build positions over a few different time periods. If you want to buy 100 shares or put $1,000 in a certain stock, ETF or mutual fund –buy a third or half now and the rest later. This way, you’re not betting on one particular date and are dollar-cost averaging.

Regardless, first make sure your emergency savings are where they need to be –especially in light of this pandemic and how it might impact your income –if all that is set and you have no other short to medium term goals – then yes this can really help you boost your retirement savings. You can do this easily by simply increasing your 401k contributions into a strategy that aligns with this goal.

3. I am worried that I will not be able to stay productive while I am at home, trying to work and home school my three small children. How do I make sure that I am not penalized for this at work?

You’re not alone! First, contact your employer, and discuss how this needs to work. A lot of employers are making concessions and creating more flexibility. Plus, the federal government is putting more muscle behind this so that employers follow.

4. My partner wants to put more money into the market right now, but I am worried that we will just lose it all. What should we do and how do I get over this disagreement with my partner?

First, see response to question 2. Second, you should establish an amount that you are both comfortable with to invest and potentially experience short or long-term losses. Discuss how the loss could affect your overall plan. For the amount you are going to invest, consider investing over a few different dates to avoid trying to pick “best date.”

5. I have a healthy emergency savings account …. I think. How do I know what is a healthy emergency savings account now?

This depends on your specific circumstances. The short answer is: “if you tell me your emergency, I can tell you how much you need in your emergency fund,” but we don’t know exactly how that looks. Consider 3-6 months of expenses as a rule of thumb or how many months it would take you to replace the income you might lose. For some that might be 2-3 months for others it could be longer.

The average time it takes to replace every $10k in income can be about 1 month, but it really does depend on your job, industry and the current job market.The biggest risk for most of us is the loss of a job and this pandemic might have made that risk higher for some. It’s not a bad idea to beef up your emergency fund at this time, delaying major purchases for a few months if you have more risk, watching your spending a little closer and saving in general. If this blows over shorter than the experts expect, you will be in a great place.

6. I was planning to put some money into my kid’s 529 accounts, should I wait? Should I keep it in a more liquid account?

If you have an adequate emergency fund and low debt, you might want to continue purchasing funds in your 529 plan and take advantage of the monthly dollar cost averaging –purchasing shares of funds on the same date every month spreads your risk, buying more shares when prices drop.

7. My kid is going to college next year. How can I take advantage of the low interest rates that I have been hearing about?

Borrowing for your child’s education is a larger topic to really plan for. Student loans are not available a year before they attend school. There are opportunities right now for borrowing at low interest rates such as home re-financing, home equity loans and personal loans. IF, if, if this is your well thought out plan, you may want to talk to a couple lenders and explore rates. This is a good time to review your child’s investments and adjust if necessary. If available, this is a great conversation to have with a financial coach.

8. I wanted to invest some money into my house. Should I wait or use the time to stimulate the economy and online shop?

This depends on your overall financial health and balance sheet. The economy could use your help, but you shouldn’t put yourself in a potentially compromising position. I would first review your financial priorities. Do you have adequate emergency savings, are you contributing to your 401k to get at least the match, do you have any high interest rate debts?

Also, it depends how you want to invest in your home. Do you want to renovate, make repairs? Are you looking to make additional payments? Now might be the time to refinance your debts to lowers rate and explore making the same or more payments to pay them off faster vs investing for your long-term goals. There is a trade-off for every decision you make depending on the time you have to get to that goal, and your tolerance for risk.

9. I don’t know if my preschool can continue to pay teachers while the school is closed. Is there something that I can do to support them? Is the government doing anything to help these low paid hourly workers?

I recommend contacting your care provider and asking them directly. If you have the means, you can buy gift cards or offer to make a utility bill payment for them. One of our coaches has volunteered to continue school payments even though they’ve kept my kids at home. Congress is debating a relief package, but we don’t know what it entails or when it will be approved.

At this time we are not aware of any government sponsored or state sponsored programs to help this exact demographic – however in general, states are making unemployment insurance more readily available, some employers are offering paid time off, and paid family leave (depending on the size of the organization that may or may not be mandated at the federal level).

10. My partner may lose his job or some of his income. We were actually planning for our income to increase this year! How should I rethink all of this during this uncertain time?

Re-assess your situation and map out a scenario for both potential paths. If you have a decline in income, decide how you will either make up for that income in another way or decrease expenses. Challenge all your fixed home expenses – do you need them? Are you paying the right amount? Control your variable expenses – limit the amount you are spending on groceries, dining out, entertainment, etc.

Create a crisis budget then start living off of that right away to increase cashflow to savings. Try and build that up as much as you can. Line up other methods of income, savings that might be available to you as needed, review company benefits and speak with employer about help that might be available if you were to lose your income. Some are offering paid time off, paid sick leave, and/or paid family sick leave.

11. If you are in the position to help others, what are some immediate actions you can take?

  • Supporting small businesses
  • Supporting those who may be impacted more directly (teachers, childcare providers, people who work in your home)
  • Consider reaching out to elder care centers, nursing home or your neighbors that you know might be at risk. Offer to run errands for them –whether it’s shopping for groceries etc.

12. I have some loans that I was thinking about paying off (or I was debt snowballing my way to financial freedom). Is this a good idea or should I hold onto my cash?

It depends on your emergency savings situation, and the likelihood of your household losing income. If your savings aren’t where they should be and or you feel your income is in jeopardy – then the answer is to pause any aggressive debt paydown plans and save more cash for now. If your interest rates are high, you might keep a month’s expenses in cash and use the rest to pay off your debt.

13. What can I invest in that will help stimulate the local economy? The national economy?

Given the nature of the virus and our focus on containment and social distancing – make sure to follow CDC guidelines and do your best to support businesses in a way that serves your needs and helps stimulate the local economy but doesn’t put you or others at risk. (ie grocery stores, pharmacies, ordering your goods online to be delivered curbside, ordering delivery from local restaurants / deli’s if that fits your budget and needs). Don’t jeopardize your own financial safety in the process!

14. I’m planning to retire in three months and I’m invested in the market. What should I do? Will I still be able to retire?

This is a difficult decision because you might have experienced significant losses already. You should run a retirement estimate and re-assess your retirement plan to determine how the recent market declines have impacted you and your ability to meet your future retirement needs. If you are planning to retire in the next year or two, compare your current cash flow (income and expenses) with your potential phases of retirement (when your income or expenses change can define the different phases). With that analysis, you are able to identify shortfalls in the short, mid and long-term.

You might consider investing money you’ll need in the short-term (next 5 years) in a safe place like cash, stable value, money markets, CDs, etc. You can’t confidently expect losses to recover in time before you will need the money. The mid-term money could be invested conservatively with the goal of pacing inflation and fulfilling the shortfall need in 5-10 years. Short and mid-term bond funds, conservatively managed portfolios and laddered CDs are examples.

Money needed in more than 10 years can be invested according to your risk tolerance and need for potential growth. If you can determine that you don’t need to take a lot of risk to meet your needs, you might want to reduce it. If available, absolutely call a financial coach! 

15. Should I stop contributing to my 401k?

Typically, the answer is no for a couple of reasons. If you are getting an employer match, at least try to contribute enough to get that free money. For most plans, you are not able to get that matching opportunity unless you beef it up significantly at the end of the year. Also, you might have experienced losses in your account. One way to recover from these losses is to continue to dollar cost average (automatic investments over time) into funds that are down so when the market recovers, you see gains. Buy low for the long-term.

However, if you are in a situation where you have no or very little emergency savings and feel that your income is threatened then this might be one of the only times to consider doing that so that you can shore up your emergency savings. If you are in this situation you will FIRST want to challenge all of your expenses and keep only the essentials. All extra cash should be diverted into your emergency / crisis / protection fund.

16. What does it mean to take a 401k loan in a down market? What are the pros / cons versus using a credit card?

Taking a loan from your 401 (k) is discouraged unless necessary. But if you need to take a 401 (k) loan, it is best to avoid doing so in a down market. Of course, you don’t have the luxury of knowing when you will need it or even if you are in a market that is increasing or declining. If you take a loan when the market is low and pay it back monthly in a rising market, you are essentially selling at a low price and buying back as prices increase, not a good investment strategy. This could work in the opposite way if you take a loan and the market declines as you pay it back, this would be a good investment strategy if you could predict it.

How To Make Financial And Life Decisions in Uncertain Times

March 19, 2020

If you are a planner like me (full disclosure, I am not a CERTIFIED FINANCIAL PLANNER ™, but a planner in the generic sense), who likes to analyze all of her available options before making a thoughtful and well-informed decision, you may feel frozen from action in the current environment. New developments on public health recommendations, personal health recommendations, and the general state of the economy are being broadcast daily. How can we make the “right” decision when the situation may be entirely different tomorrow?

We all must make daily decisions, and in uncertain times, the importance of those may feel amplified as we try to control the situation as much as possible. To clarify, when I refer to “decisions,” I am referring to both the smaller things in life –Should I still plan a summer vacation? –and the bigger life event-related ones –Should I have another baby? Should I switch careers? These questions can be applied to all decisions, including financial ones.

One option is to freeze all decision-making until things have stabilized. For a lot of decisions, this strategy could work. However, what if you have a time-sensitive decision or an opportunity that may not last long? Below are a few questions to ask yourself as you navigate a decision in an uncertain time:

Do I really need to decide now?

When you are close to a situation, it can feel like you must decide right now. However, for most things in life, that’s not the case. Consider whether waiting to gain some perspective will help you make a better decision, and one that you feel more at peace with. Try to avoid letting fear and panic guide your decision making. Write a date on the calendar to revisit the decision, to hold yourself accountable to deciding and not putting it off indefinitely.

What is the best-case, worst-case, and most likely scenarios for each option? What are the potential upsides and downsides of each scenario?

This is something that I do a lot at work, when making my own decisions or helping a colleague make a decision. But I find that most of us are less likely to do it in our personal lives, and especially around our finances. It can be easy to get emotionally invested in a specific outcome rather than looking at all outcomes. If you’re not sure of the upsides and downsides of a financial decision, call a financial coach to help you identify them!

What is my back-up plan if things go poorly? What does my support system look like?

Contingency planning is critical here, and your support system plays a huge role in what your worst-case scenario looks like. Are you thinking of switching careers, moving across the country, or buying a house right as we head into a recession? Your age, your savings, your income streams, your partner, and your risk tolerance will all impact how the worst-case scenario looks for you.

Every day we make a multitude of choices, and ultimately our lives become the sum of these choices. Do what you can to set yourself and those around you for success, but know that there’s no such thing as a “perfect” decision

9 Ideas To Work From Home Successfully While Also Creating Fun For Your Kids

March 19, 2020

In the wave of the abrupt lifestyle changes prompted by COVID-19, having kids home all week without school or daycare is possibly one of biggest challenges for parents to manage, especially as we all adjust to working from home perhaps for the first time. Watching cabin-fevered kids binge-watch Netflix while inhaling their third snack by 10 am while trying to finish a conference call has us all offering immense respect to teachers. Sound familiar?

Most kids are enjoying this break from traditional school, but parents are quickly finding the need to create structure for their kids in a happy environment that fosters both stimulation for them and respect for their work schedule. Many kids have “optional” schoolwork during this time off, but does it have to be traditional learning? Is this a time to make learning fun and applicable at home? The parents at Financial Finesse figured there had to be a way, so we reached out to our colleague and work from home (WFH) veteran Teig Stanley, who grew up in an alternative-style school, home schools his daughter, and has worked from home for 20 years. Here’s what he had to say.

He broke down what we as parents need to do to remain productive, and secondly, what we can do for our kids to keep them stimulated and educated, while also just being KIDS!

For you

1. Establish boundaries

If you haven’t already established them, coach the kids, their friends, your spouse, pets, etc., directly on what these are for you while working. Teig’s are:

  • When the door to the office area is closed, or you are in the designated working area pretend it’s wired to explode if interrupted. I am only available for absolute emergencies.
  • During calls or meetings, you cannot engage with me.  If it’s an absolute emergency, you may write notes or questions on a piece of paper, but please make them only yes/no questions to which I can give a thumbs up or thumbs down. Discussion or negotiation can only be done after the meeting or between calls when I say it’s okay.
  • I create my daily schedule and post it somewhere conspicuous so the whole family knows what/where/when for me.

2. Set up YOUR schedule for check-ins on their schedule

Let them know at what times in the day you’ll be checking and make them prioritize what they trade off or lose if they’re not sticking to the plan. Work with your manager to match up your schedules. It’ll make everyone more comfortable.

3. Schedule brief moments away for yourself

Take a walk, put on headphones, read a book, cook, paint, etc. Whatever is a moment in the bubble for you. Just make sure you SCHEDULE it – and stick to your schedule.

4. Schedule many moments of time with your kids and spouse

It’s okay to shut work out during these ‘me’ times assuming you’ve scheduled it properly. Work will still be there.

For them

1. Establish boundaries

Discuss, write and agree upon:

  • Rewards for getting through the day and for operating according to the boundaries
  • Consequences for not operating according to the boundaries
  • Ask them to set up their own boundaries and lead by example in respecting theirs

2. Learn life skills

This is a chance to work on some life skills – even some of the cool ones. All people need to feel like they are contributing (even if they don’t think they do) to survival during a crisis. The kids will eventually go back to school for the regular curriculum. Take advantage of this moment!

  • Challenge the kids to accomplish one “adult” task each day (feel free to call them chores, jobs, operations, missions, etc.)
  • Have them take the lead on replacing something you’d normally do – or doing something you wish you had time/energy to do that’s easy-ish. Maybe home maintenance?
  • My kids love to help me cook. Give them a simple recipe to put together that can be baked for dinner or dessert that night. Who doesn’t love brownies (or licking the batter from the bowl)?
  • Kids learn a lot from YouTube. They then report in on whatever new skill or set of factoids they learned that day – every day. Even if I know something about what they learned I pretend I don’t until they teach me something.

3. Create a fun schedule that works for you and them

In normal school, kids are engaged about 4 hours out of 7, so keep in mind they may even need less than that of actual schoolwork at home. Also, I count a lot of my kids’ life skills as schoolwork if there’s a chance to apply them.

  • Continue the school routine – or modify it. Just keep in mind that it’s the routine that’s important here. It can’t be different every day.
  • Have the kids meet with you every morning and show you their day plan. It can’t be all recess.
  • Reward them in some way for whatever effortthey put in to making it work. Especially if they try, fail, and then look for another way to do it. It’s what they try out at this stage that will give them a successful mindset down the road.
  • If the school is still running on-line instruction in lieu of physical school, determine how flexible it is and work in fun activities around it.
  • Real life stuff counts as curriculum (in my book, anyway) – here are some alternative curriculum ideas:
    • Reading
    • Math
      • Any kind of measuring counts
      • Basic accounting counts – the financial planner in me is excited to have kids learn to balance a budget
      • Online math games like Fun Brain, or Cool Math Games
    • Writing
      • Online reading and games on Squiggle Park
      • Write 5 sentences a day on what you learned, what you read/watched, or a letter to someone
      • Post a photo and have the kids caption it – a meme is born
    • Science
    • PE
    • History/Social studies

4. Practice self-sufficiency

Access to self-sufficiency is key – kids like doing stuff for themselves.

  1. Set your kitchen/pantry/fridge/etc. up to give the kids access to stuff they can retrieve or make for themselves
  2. Post a list of food “ideas” so they aren’t asking you
  3. Their own plates/utensils/cups/etc. on their level if you’ve got little ones
  4. Their own office (like yours) since the kids are now working from home, too. Keep in mind they will mimic your work from home habits!

5. Let them be KIDS!

Most of all – let them be kids while they can be kids! Adult responsibilities will be here before they know it, and they’ll always remember how you reacted to this unique life event.

We hope this helps! These ideas can work for both you or your children’s caretaker. If you need more ideas or have questions about anything call a Financial Coach today!

5 Ways To Help Those Most Impacted By COVID-19

March 19, 2020

With COVID-19 sending millions to work-from-home and forcing businesses to temporarily shut their doors, nearly everyone is experiencing dramatic changes in their lifestyle. If you are one of the lucky few who have been able to adjust without major impact on your cash flow, there are a few things you can do to help those in less fortunate situations.

1. Buy gift cards to local businesses

Small businesses who rely on foot traffic or in-person interaction will feel the impact of mandatory closures much harder than large chains. As a way to show your support without physically being able to show up, consider buying gift certificates to your favorite local restaurants, fitness studios, boutiques, or salons. You can use the certificate once shops re-open while still providing them with revenue to help cover fixed costs like rent, insurance, or storage.

2. Continue to pay those who count on your business

Those who work out of people’s homes or who are paid based on the number of interactions they have with people will be stressed during this time. This can include everyone from childcare professionals, maids, fitness instructors and personal trainers, or personal care providers like your hairdresser. If you can afford to do so, consider:

  • Paying your nanny even though you are home with your kids
  • Scheduling a virtual session with your personal trainer or fitness instructor
  • Booking a haircut, nail appointment, or massage in advance
  • Buying merchandise or streaming content from up-and-coming musicians, comedians, or other artists
  • Giving tips to delivery people, many of whom are waiters or otherwise out of work
  • Refrain from freezing your membership if you attend a locally-owned fitness facility even if you can’t go
  • Donate to wellness practitioners who are offering free resources such as meditations or yoga classes via social media or livestream

3. Invest to stimulate the economy

When there’s fear in the market, opportunities present themselves to those who are prepared. If you have extra cash to work with, now is an excellent time to take advantage of a low market while also stimulating the economy. If you’re a savvy investor and have been eyeing a certain stock for a while, now you can essentially get it on sale. If you’re new to investing and don’t want to invest time into researching, you can purchase index funds, ETFs, or mutual funds. Regardless of your strategy, ensure you’re making smart investment choices that take your goals into account.

4. Donate to non-profits or consider fostering an animal

Many non-profits are having to cancel events that account for a large portion of their annual donations. If you regularly attend charity events, consider donating whatever you would’ve spent there, or even just donating your gas money now that you’re not driving so much. For those who are working from home, this is the perfect time to foster or adopt an animal. Pets still need homes and many volunteers are unable to show up for their shifts. If you can’t foster, consider a donation to the rescue to help with supplies.

5. Reach out to those who may feel isolated, at risk, or overworked

Those who are most affected by COVID-19 will be experiencing high periods of stress, either because of the extra work forced on their plate or the bulk of their work disappearing. Reach out to those who may be struggling and let them know we’re all in this together. Even if you can’t provide financial support, sometimes emotional support can inspire people to stay positive. Some ways you can show your emotional support are:

  • Email your favorite restaurant and tell them you can’t wait to come back
  • Tell your friends in the healthcare industry how much you appreciate them
  • Reach out to hairdressers, fitness instructors, nail technicians, or whoever you would run into under normal circumstances and see how they’re doing
  • Email teachers about your children’s progress or let them know how much you appreciate the work they do
  • Check in on those who are in the food service industry, working from home with children, living alone, elderly, or single parents

Showing support for our neighbors, friends, and family has never been more important. Do something kind, then spread the positivity by sharing it on your social media pages! These are the kinds of things people need in their news feeds.

Are You Financially Immune From The Next Emergency?

March 17, 2020

The following post is an excerpt from the Financial Finesse Personal Finance FORBES Blog. You can read the original post in its entirety here.

In many ways, emergency planning is the Rodney Dangerfield of financial planning. It gets no respect. The typical advice is to simply stash away enough cash savings to cover 3-6 months of income and then move on to more exciting topics like investing and retirement planning.

However, an event like the coronavirus has shown that merely having emergency savings is not enough. Just like an investment portfolio, a properly diversified “emergency portfolio” requires more than just savings in the bank. Here are the elements you’re going to want to make sure you have before the next big disaster:

1) An emergency kit

No, you don’t need to become a full-on “doomsday prepper.” You just need some basic tools, first aid supplies, and enough food and water to last at least 3 days. You can get checklists from the Department of Homeland Security and the Center for Disease Control. You can then supplement it with supplies for those types of disasters that are most common for your area.

2) Food reserves

If the emergency lasts more than 3 days, you’ll still want to be able to eat. Rather than purchasing specialized “emergency rations,” you can simply bulk up on long-lasting food that you already eat. At the very least, it’s something you know you’ll need and can benefit from even if no emergency ever happens. In fact, you’re likely to save money this way. Simply replace the items as you use them and perhaps add items when they’re on sale.

A food reserve can also be part of your regular emergency fund, thus reducing the amount of savings you need. After all, you can eat it when you’re unemployed too. Sure, you would miss out on the less than 1/10th of a percent (minus taxes) you’d otherwise be earning with that money in the average savings account. But according to the most recent CPI release, the inflation rate of food at home over the last 12 months ending in January was about 0.7%, so you’d actually be saving a little more than what you likely would have earned keeping that money in the bank.

3) Physical cash

No matter how adequate your emergency supplies are, you never know what you may need to purchase from someone else in an emergency. That’s why they say “cash is king.” Although the financial world refers to bank deposits and money market funds as “cash,” in a true crisis, banks may be closed, ATMs may not be working, and money market funds may not be available if the stock market is suspended (as it was after 9/11). Some preppers like to keep gold coins for this reason, but people may not know how to judge their value in a crisis. Instead, consider keeping at least a few hundred dollars in physical cash (even if it’s under the proverbial mattress).

4) Emergency savings

None of this means you won’t still need some savings in the bank. You can’t exactly use food to replace items damaged in a storm or fire. Nor is credit a good substitute for savings since lines of credit can always be cancelled, which is all the more likely during tough economic times or when you’re unemployed—the two times you’re most likely to need it. For this reason, you may want to use any low-interest (below 4-6%) credit available to you before your cash reserves so you can preserve them as long as possible.

How much do you need in savings? Even so-called “financial gurus” don’t agree. Dave Ramsey suggests a starter emergency fund of about $1k until you’ve paid off all your high-interest debt. Suze Orman recommends having 8 to 12 months’ worth of expenses in savings before paying off debt. What you decide to do may depend on your personal comfort level, the availability of other sources of financial support, and how risky your income is. You can use this calculator to get an idea based on your expenses and how difficult it would be to replace your income.

These savings should be somewhere safe and accessible like an insured bank or credit union account. If you want to maximize your interest, consider a rewards checking account. They can pay over 5% in interest, and many will reimburse your ATM fees as long as you’re willing to bank remotely, use direct deposit and electronic statements, and use your debit card 10-15 times a month.

5) Adequate insurance

No matter how much savings you have, it probably won’t be enough to cover some of life’s biggest financial disasters. That’s why you need adequate health, auto, renter’s or homeowner’s, disability, and life insurance. If you’ve accumulated a lot of assets, you may also want to consider enough umbrella liability and long-term care insurance to “CYA”: cover your assets.

Whether it’s the current threat of a possible pandemic or potential terrorist attacks, natural disasters, or financial crises, many experts fear that our world is only getting more dangerous. No one knows when the next disaster will be. The only question is whether you’ll be ready.