Let’s Get Ready to Rumble…

May 24, 2016

I may have mentioned in prior blog posts that I am a huge boxing fan. There really was no choice. From the time I could crawl, I remember sitting in my dad’s lap watching boxing with my brothers and loving every second of it. (Unfortunately, I loved it a little too much and my teacher once called my parents about a boy I practiced my left hook on – mind you, he did dare me.) My earliest memories of television are watching Michael Buffer introduce the boxers and give his famous tagline,  “Let’s Get Ready to Rumble.”

When summer starts coming and the expenses start mounting, I often think of Michael Buffer’s tagline. Summer time is a rumble between my finances and ever-mounting increases in expenses. Initially, I just noticed that money was tighter in the summer time, not really being able to figure out why. After I discovered the power of creating a monthly spending plan and tracking my expenses over a number of years, I noticed a certain pattern began to emerge in my family’s spending and I was able to prepare for the increases in expenses.

Summer Camp – I live in the south so my kids are done with school and free daycare (public school) at the end of May. Even though they have after-school care and school activities, summer camp is still more expensive. If this sounds like you, consider contacting your daycare about sibling discounts, reductions based on income or early registration. Second, research the summer camps not only for the best fit for your children but for the best value. Consider using last year’s childcare expense as a starting point, divide it into 12 to get a monthly average and contribute that amount to a dependent care flexible spending account (FSA) if eligible so the funds can come out tax-free to pay for your childcare expenses.

Vacations – Make sure your summer vacation does not follow you for the next 6+ months in credit card expenses by saving for it now. Honestly assess your finances to see if you can afford to get away on a vacation or if an inexpensive staycation is a better financial fit. Consider using a  travel budget calculator to estimate your travel expenses. To come up with the amount of money you may need to save for your vacation, divide the estimate by the number of pay periods you have. From there, it’s a matter of setting aside the funds until your vacation.

Utilities – Depending on your climate, you may find your utility bills creeping up. I live in Atlanta and I find my electricity skyrockets in June. If you have a pool, your expenses may go up due to water and pool maintenance. Your water bill may also increase due to lawn care. Review your statements from last summer to estimate your costs for this year and look at where in your budget you may need to cut back to make up for the additional cost.

Holidays – I find Memorial Day, the Fourth of July and Labor Day to be expensive holidays because we typically do a day trip or a lot of activities on those days. Consider thinking through what activities you want to do. Will you be flying or driving? Will you need a hotel? Will you be eating out or munching on picnic foods?

Write down what you think the expenses may be. Add 10% for extras. Then break down the amount by the number of pay periods you have until the event and start saving.

Parties –  If you are like our family and love to cook and feed people then summertime gives you plenty of opportunities as well as expenses. All of a sudden, the patio furniture may need to be replaced and a new grill may be “needed.” Plan for the food and estimate the costs. Then divide the costs by the pay periods you have until the event to estimate how much you may need to save.

Gas:   Typically gas prices go up in the summertime. There’s not much you can do about the increases, but you can look on apps like gas buddy to look for cheaper gas. You can also use some of the fuel economy tips from the U.S. Department of energy like driving the speed limit or removing unneeded items from your truck or using cruise control to make your car more fuel efficient.

Consider thinking about the things you want to do and start saving for them now. One great idea I heard was to create a “summer sinking fund” that you use to save throughout the year so you have a pool of money available for upcoming summer expenses. Saving now, even in small amounts, will a long way into taking out the worry of summer expenses.

 

Quiz: Are You Underearning?

May 23, 2016

Are you constantly scrambling to make ends meet? While there can be many causes to budget problems, including sudden unemployment, overspending and big credit card or student loan balances, one frequently overlooked trouble spot is how much you earn. “Underearning” is the persistent state of earning less money than you are capable of earning, given your education, experience and the economic environment, in a way that negatively affects your financial health.

What’s the difference between underearning and living the simple life…or underearning and choosing to work in a lower paying non-profit or public service job in your field? The key is whether or not you are earning as much money as you need to meet basic living expenses. Underearning is not the same as poverty, although persistent underearning can lead to poverty. Underearning is a type of self-induced deprivation of financial wellbeing.

It is not dependent on profession or income. The medical school graduate who takes a job making less than she needs to pay her rent and student loans is underearning. People can appear financially successful, but still live paycheck to paycheck with a negative net worth. If you can meet all your basic expenses (housing, food, transportation, clothing, health insurance, etc.), save enough for retirement, and have some money left over for enjoying life now without going into debt, you aren’t underearning, even if you don’t make a high wage.

Underearning behavior is a symptom of an underlying belief system. It generally comes from a personal sense of unworthiness and/or lack of self regard, which manifests as an inability or unwillingness to seek appropriate compensation for one’s efforts. Underearning can include active activities such as the PhD in computer science who works in the bicycle shop and lives at home with his parents or the mother who spends all her time volunteering at her children’s’ private school while building up a huge credit card balance paying the tuition.

It can also include passive activities such as failing to turn in rebates after purchases, forgetting to submit benefits-related expenses for reimbursement, or paying excessive brokerage fees for investment management – areas where many busy professionals fail to fully maximize. According to Barbara Stanny, author of Overcoming Underearning: a Five Step Plan to Lead a Richer Life, those who underearn, “devalue themselves, giving away their time, knowledge, skills.” The good news is that because underearning involves some level of self-sabotage, bringing self-awareness and compassion to changing behaviors that deflect money can lead to a full turnaround.

Do you think you might be underearning? Take the quiz below to find out. Rate your answer to each question by assessing how often you engage in that behavior:

Never                   0 points

Rarely                   1 point

Often                    2 points

Almost Always     3 points

____I regularly accept lower-paying work which does not reflect my education and experience.

____I only work part time.

____I don’t think employee benefits are an important part of my compensation.

____I work all the time but I never seem to have enough money.

____I spend most of my week volunteering for causes and organizations.

____I believe most people who have money are greedy.

____I believe most people who have money are unethical.

____I resent people who have money.

____I believe that people who have money only have it because they are lucky.

____I don’t think my skills are worth much.

____I have never asked for a raise.

____I don’t make as much money as I think is fair.

____I feel poor.

____I would be embarrassed to tell my friends how much I really make.

____My income does not cover all my basic needs (food, clothing, shelter, transportation, healthcare).

____I do not save for retirement.

____I have trouble maintaining an emergency fund.

____I only pay the minimum payments on my credit cards and don’t pay them off.

____My income is not enough for me to pay down my debts.

____My student loans are in forbearance or on an income-based repayment plan.

____I incur library fines for not returning books or movies on time.

____I forget to use available coupons or discounts for things I usually purchase.

____I forget to submit rebates or expense reimbursements for which I am eligible.

____My salary is less than 90% of the median salary for those in my profession.

____If I am self-employed, my business is losing money.

____If I own a business, I do not pay myself a sufficient salary.

____Once I find a new job, I want to leave it soon.

____I believe that if I spend money on myself, no more will come in to replace it.

____I believe I will never have enough money.

____I have an advanced degree (e.g., graduate school or professional) but generally earn less than the median U.S. income (about $54,000 for 2014).

____Total Score

How did you do?

0 – 15 points                      Underearning is not a big problem. Congratulations!

16 – 35 points                    Some underearning behavior or limiting beliefs around money

36 – 55 points                   Underearning behavior contributing to financial challenges

55 points or higher           Serious underearning limiting financial wellness

Is underearning something you would like to address? In next week’s post, I’ll write about steps people can take to begin challenge limiting financial beliefs and earn an income that corresponds to their capabilities.  In the meantime, start with the two books listed above. Send me your thoughts or questions at [email protected] and follow me on Twitter @cynthiameyer_FF.

 

Why I’m Thanking Google and the CFPB

May 20, 2016

It’s a regular part of my day to talk to people who are struggling with debt. Some people facing what they consider a crisis level of debt will occasionally make a hasty decision, one that they find helpful in the moment but later regret, and take out a short term loan.  These “payday loans” are available to borrowers with less than stellar credit scores and are readily available in nearly every community in the country, but they are often pretty terrible financial tools.  The interest rates, when looked at as an annualized rate (because rarely are they paid off in the required time, so they continually roll over into new short term loans with the interest continuing to accrue at a high rate), rank up there with the loan sharks in old gangster movies. As a result, the Consumer Financial Protection Bureau is working toward getting this payday loan industry regulated and reigned in a bit.

It was refreshing for me to read this article about Google banning payday loan ads on their search engine. The last few people I talked to who had payday loans found their payday lender online after searching for ways to get out of debt. If they used Google to search for ways to reduce/eliminate debt on a semi-frequent basis, payday lenders could show up on their computer screen and look like a way to reduce a short term pressure. Sure, it adds longer term pressure but in that moment of temporary weakness, the short term pressure release seems like a perfectly rational idea. Now, people who search for short term loans or ways to get out of debt will not see payday lenders showing up on their laptop with the promise of solving a problem (by creating a bigger one!).

I’m pleased with Google’s new approach to payday lending, and I’d love to see that industry shrink as more and more people learn more about how to manage their personal financial lives and master the basics. The “basics” as I see it are: spend less than you make, save a portion of each paycheck, build a comfortable reserve fund and avoid high interest debt. Those who do that will be able to avoid the perils associated with these loans.

For anyone considering a payday loan…DON’T! We’d be more than happy to help you consider other alternatives. Ask us a question on our Facebook page, send us a Tweet or mail us a letter with your situation and we’d be more than happy to help you find a better alternatives. The CFPB and Google are taking action on an issue that we have been helping people address for many years, and I, for one, am happy to see the progress.

 

7 Things I Didn’t Do When I Was in Debt

May 11, 2016

It may surprise you to know that since graduating from college, I’ve dug myself out of credit card debt not once, but twice. The reasons I got into debt are best saved for future posts, but both times I got out because I reached a point where I basically put the cards away and settled in for the long haul of paying it off. In both instances, becoming debt free again involved some significant lifestyle sacrifices. Here are 7 things that I do today, some big and some small, that I DIDN’T do when I had debt:

1. I didn’t take cabs. One of the things I love the most about living in Chicago is that there are literally at least four ways that I can get from one place to another. When I was facing a $12,000 credit card balance while trying to build a business and working a minimum-wage retail job in 2011, I rode my bike everywhere. If I couldn’t ride, I took public transportation. Riding in a cab was out of the question unless my personal safety was in question. These days I’m more inclined to hop in a cab to save time or if I’m tired, but I still try to avoid paying to get from place to place if I don’t have to.

2. I didn’t go on vacation. This is a tough one, especially since I had a sense of YOLO exacerbated by the fact that I have some pretty major personal travel goals, but part of the reason I was in debt was due to meeting some of those goals. Sure I went places. Friends and family got married and I didn’t miss that, but I’ll always remember the time a close friend got married in Florida and while I attended the wedding, I was unable to extend the visit into a real vacation because I couldn’t afford the extra nights in a hotel or the time away from work. These days, we plan ahead for travel and don’t go if we can’t pay ahead of time.

3. I didn’t shop at Nordstrom. I honestly didn’t even know what the inside of a higher-end department store looked like until I was debt-free. If I needed to buy clothing, I shopped at discount outlets or Target. It didn’t feel right to me to spend money on luxury brands while I was still paying down debt. Now I’m more of a Nordstrom Rack aficionado but only if I can turn around and pay off the charge card the day after I shop.

4. I didn’t drink $12 per glass wine. When I went out with friends, I usually stuck to cheap beer or limited myself to one glass of wine before attempting to move the party to a BYOB situation. Nothing sucks up extra money like alcohol and while these days I can afford to be picky about what I drink, I definitely couldn’t afford to be a wine snob when I was debt-ridden.

5. I didn’t get my nails done. To me, having manicured fingers and pedicured toes is a luxury. And while no one can make my nails look as nice as a pro, this was not a “need” in my book while I was in debt. I did my own or occasionally traded my mom for a good foot rub. (We still do that!)

6. I didn’t get massages. I am well-aware of the health benefits of a good massage and during my years of credit card debt, a fair share of birthday and Christmas gifts were massages, but it was not something that I scheduled on a regular basis. If I could afford a massage, I could afford to pay more on my debt.

7. I didn’t get my hair colored.  I’ve been coloring my hair since the age of 25, and I really appreciate having a colorist fill in my roots every 6 weeks or so. Back in the day though, I did it myself with color kits purchased at BOGO sales at the drug store.

This is what worked for me and my values and it may not work for you. But if getting out of debt is a top priority, then I encourage you to take a look at where you’re spending your money and see if you can cut out one or two of these things in order to increase your payment. For motivation, plug it into the “New Monthly Amount” of the Debt Blaster calculator to see how much sooner you can be debt-free.

 

4 Things I Wish Someone Told Me Before I Graduated From College

May 10, 2016

As I talk to my friends’ graduating children, I am always struck by the hope in their faces. They believe that they control their futures and that their lives will be better. It makes me think about my own graduation and reflect on what I wished someone would have told me about finances:

#1- I will actually have to pay back the money I was taking out in student loans. I do not remember thinking about paying back my student loans. I probably thought that the student loan fairy dropped into my college’s financial aid office after graduation and deleted my debts. If I had known how long and painful it would have been to pay back my student loans, I may have made different choices. I encourage parents to sit down with their kids, calculate repayment costs, estimate their starting salary and give them a cold dose of reality as to what their paycheck may look like after taxes and deductions come out.

#2- The car I stupidly bought after college graduation will become the story I tell people about what not to do when you graduate. I worked so hard to graduate and my car was old so I purchased a car I really did not need. It was cute and in the showroom and the second I saw it, I said “I do.” What I did not realize was that I was also saying “I do” to a 5 year car loan that took almost a 4th of my income at that time. I wished someone would have told me that the car I get will dictate my ability to save money, take vacations and contribute to my 401(k) plan.

#3- A business wardrobe is not a reason to get into credit card debt. I was lucky enough to land a job with a large corporation but I realized that I needed to get business clothes. I used this as an excuse to run up $3,000 in credit card debt on a new wardrobe. I think this included a Coach bag and wallet that I never used. I wish someone would have told me that credit card debt is not necessary and worked with me on a plan to pay it off

#4 – The earlier you contribute to a 401(k) plan, the less you need to contribute. I wish someone would have told me how important it was to contribute early, the power of compound interest and how starting with even a small amount makes a big difference, especially when your employer is giving you free money in the form of a match to help you save for retirement. Talk to younger people about how your choice to save early has helped you or about your regret in not starting earlier. Run an estimate for them so they can see how a little makes such a big difference .

Looking back, I wished I would have gotten a cold dose of “adult” reality. I wished I would have known that being on my own meant that my financial choices had consequences that can easily be taken care of if I had been willing to buckle down and pay off my debts instead of using credits cards to upgrade my lifestyle. The best gift you can give a college graduate is to help them start off their futures on the right financial footing. Work with them on a budget, encourage them to pay off credit card debt, teach them the importance of contributing to a 401(k) plan and help them come up with a game plan to pay off their student loans before their children are in college.

 

 

How to Teach Your Kids About Money

May 04, 2016

A recent survey on kids and money revealed that 4 out of 5 Americans believe that an allowance helps to teach children the value of money and financial responsibility but only 68% actually pay an allowance. With student loan debt growing at an average of over $2,700 PER SECOND, it’s essential that kids enter college with a baseline of knowledge so they know what they’re getting into with this debt. If you’re not modeling good behavior for your kids, you may be setting them up for financial stress down the road. I don’t have kids yet, but I have a lot of plans for how we will ensure that they set themselves up for financial success. Here are some ways to teach your kids (or nieces and nephews) about money before they have to start making important decisions on their own:

Start early: As soon as kids learn how to ask for things (or start throwing themselves screaming on the floor of the grocery store because you won’t buy candy), they can understand the concept that they have to wait to buy something by saving up for it. Instant gratification is a problem that plagues humans for life, but teaching kids how to delay it is a predictor of future success. Whenever your child receives money, have them add it to a jar or piggy bank and consider keeping a paper record to instill banking knowledge as well. Every so often, help her count to see how close she is to her goal. Help keep her eye on the prize by explaining how much closer she is to reaching the goal with each addition.

Explain trade-offs: Once your child enters school, he is ready to learn that when you spend money on one thing, you’ll have less to spend on another. Use grocery shopping as a way to demonstrate this. Give him a budget for his own treats, and then as he’s making his selection, explain how buying expensive yogurt might not allow him enough to also buy his favorite juice boxes. Share your own financial decision making as you’re shopping for the household as well.

There are also a bevy of free web-based money games out there. Try the Great Piglet Challenge or Kids.gov for a variety of fun games. Heck, try them yourself. (I’ve yet to conquer the Great Piglet Challenge!)

Consider an allowance: Whether or not you think kids should “earn” money through household chores or if you consider pitching in to be a part of family life, an allowance is a great way for kids to learn how to spend and save. You can also explain how compound interest works once kids reach the “tweens” stage. Use real numbers and say, “If you save $1 per day starting now, you could have over $26,000 by age 65. But if you wait to save until you’re 30, you’ll only have about $15,000.” This may make it easier to talk your tween out of buying a daily sugary snack at school and instead save the money toward a new video game.

Consider college costs: Whether or not you’ll be able to afford to send your kids to the college of their choice, discuss how their decision will affect you financially. If your child will require financial aid in order to pay for school, share your own struggles with debt as a way to explain the consequences of student loans. And don’t shy away from having them take a part-time job to save toward spending money in college. Understanding how hard it is to earn money will make them appreciate the value and think twice about blowing it all on beer and pizza…just most of it.

Drive their own decisions: Once your teen is ready to start driving, instead of just handing her the keys and crossing your fingers that she’ll drive safely, put some of her skin in the game too. My parents had me take care of my own car insurance when I got my first car, which was a great way for me to learn several money lessons. Instead of doing it for me, my mom had me call their insurance contact to ask to be added to the policy. The agent walked me through the additional costs and I handed over money to my dad each month to pay my share.

If I was late or short paying, my car was parked until I paid up. I not only learned how to budget for my bill, I was empowered to take responsibility and when it came time for me to get my own solo insurance policy, I knew what I was doing. Thanks, Mom and Dad!

Most importantly, it’s vital to model good money habits for your kids. We all have our own money stories – our personal frame of reference based on our own experiences growing up around money. For most of us, the biggest influence in our stories came from our parents. Set your kids up for success by rewriting your own story to one of success and financial security.

 

How Financial Wellness is Like Weight Loss

April 28, 2016

I always like to say that financial wellness is a lot like weight loss. When I came across this article in Vox about “surprisingly simple tips from 20 experts about how to lose weight and keep it off,” I realized just how true that is. Here are the weight loss tips and how they apply to financial wellness:

1. There really, truly is no one “best diet.” Scientific studies have found that all of the various diet plans have about the same modest long term results. What matters is finding one you can actually stick to. The same is true of money management systems and asset allocation strategies.

2. People who lose weight are good at tracking – what they eat and how much they weigh. They tend to count calories and weigh themselves at least once a week. In the same way, you need to track or otherwise limit spending, continually re-balance your investments, and periodically run a retirement calculator to make sure you’re still on track.

3. People who lose weight identify their barriers and motivations. Like with diet and exercise, we usually know what to do with our finances. The hard part is actually doing it. Start with knowing the “why” that motivates you. Then look for the barriers that are standing in your way of taking action.

4. Diets often fail because of unreasonable expectations. People tend to overestimate what they can achieve in the short run and underestimate what they can achieve in the long run. Don’t try to save too much too fast. Instead, set big long term financial goals that motivate you and then see how much you need to save to achieve them.

5. People who lose weight know how many calories they’re consuming – and burning. Similarly, you need to know how much income is coming in and going out. Making sure the latter number is lower than the former is the only way to increase your wealth.

6. There are ways to hack your environment for health. For example, don’t surround yourself with unhealthy foods. Simple things like where your food is served from and what size plate it’s on can also affect how much you eat. For your financial life, don’t put yourself in situations where you’re likely to spend more and try to automate your savings as much as possible.

7. Exercise is surprisingly unhelpful for weight loss. More accurately, exercise alone isn’t very effective since people often eat more to compensate for the calories they burn. Earning more income can have the same effect when we automatically spend more as well.

8. Weight loss medications aren’t very useful. Neither are “metabolism boosting” supplements. Complex, sophisticated, and high-fee investments are the weight loss medications and metabolism boosting supplements of the financial world. Stick to the basics.

9. Forget about “the last 10 pounds.” If they’re that hard to lose, people generally gain them back. Most of the health benefits came from the other lost pounds anyway. Likewise, trying too hard to save more can backfire if it starts to feel like too much deprivation. Allow yourself to splurge now and then too.

So what’s the main thing that weight loss and financial wellness have in common? They are both about making small changes over a long period of time. Instead of looking for the quick fix, find an approach that you can stick with.

 

Detox Your Finances

April 26, 2016

Every spring, I get the itch to clean. It drives my family crazy but I cannot stand clutter. If I see an item either not being used or not organized for a future purpose, I am probably throwing it away. The great part about my habit is that my family is scared to leave anything out so I rarely have to pick up behind anyone. My reasoning is that everything is either working towards a goal or working against a goal – in this case, clutter.

Finances can be looked at the same way. Either what you are doing is working towards your goals or working against your goals. This is a great time to detox your finances of anything that may be toxic to you reaching your financial goals. If you are not sure where to start, consider this as a starting point:

Did you get a big tax refund or owe Uncle Sam a check? The goal should be to break even – not give the IRS an interest–free loan or owe money. Use the IRS withholdings calculator for guidance on how much withholding to claim on your W4. This is extra money that could be used for financial goals like savings, getting out of debt or college.

Do you feel like your money goes into a black hole the second you get it? Consider detoxing your budget of expenses that are wrecking havoc with your finances. These are what I consider to be the most toxic:

Eating Out: This is like a vortex that sucks money from you. Consider bringing your lunch to work 2x a week. If you go out with friends, eat before and have a large appetizer or salad or soup

Cable: There are so many options today that make it easy to cut the cable cord. Consider streaming devices like Google Chromecast, Apple TV, Amazon Fire TV or Roku to stream TV and movies through services like Netflix, Hulu, and Sling TV so you won’t go into television deprivation.

Mobile Phone: Contact your cell phone provider about discounts on your cell phone package.  Another consideration is to use tier 2 carriers such as Cricket, Metro PCS, Boost or Straight Talk that generally work with the same cell phone towers as the bigger carriers like AT&T, Sprint, T Mobile and Verizon but at a fraction of the cost.

Are you looking to make a major purchase like a house or car? Get an annual free credit report from all three reporting agencies from websites like annualcreditreport.com. Once you get your credit reports, review them for toxic information using websites like Nolo.com. If you find errors, you can dispute them online. As you review, pay close attention to the following:

  • Review your personal information to make sure all of your information is correct – your name, Social Security number, marital status, etc.
  • Review the your account history to make sure that it is accurate.

Don’t just do spring cleaning. Take the time to detox your finances as well. It can help rejuvenate your New Year’s resolutions and help ensure that all of your finances are working towards your goals.

 

5 Songs That Could Ruin Your Finances

April 13, 2016

I love how music can pump you up, calm you down, soothe a broken heart, bring back old memories and generally set the tone in any situation. Ever notice yourself singing along while grocery shopping? That’s not on accident. Those songs are strategically selected to make you stay longer and buy more.

There are lots of great songs out there that have positive money messages (here are 5), but there are also plenty that send the wrong idea to listeners. At the risk of sounding like a boring fuddy duddy, I came up with some financial guidance to help solve these artists’ money blues. Try not to make these mistakes with your money:

Last Friday Night – Katy Perry: There are plenty of things mentioned in this song that moms everywhere wouldn’t approve of, but the part about maxing out your credit cards is what gets me. First of all, you don’t have to max out your cards to have fun and second, you definitely won’t be doing it all again next Friday without some serious financial discipline during the week to pay down the balance. Just in case, here’s our Debt Blaster calculator to help reign in that debt, Katy.

Time Of Our Lives – Pitbull: I actually understand what it’s like to take a look at your bank account balance and know that there’s not enough in there to cover upcoming bills. What I’m not a fan of is going out to “get up in this club” and blowing what money you do have when you know your rent is going to be late. If Pitbull just used the No-Tracking Budget to make sure he has enough set aside to cover bills, I bet he could pay his rent on time AND still have a good time.

Mo Money Mo Problems – Notorious BIG: I said this phrase to a friend in jest once, and he shot back with, “I bet the panhandler down the street would disagree.” That really made me think. It’s true that lottery winners and other people who strike it rich tend to have people coming out of the woodwork asking for money, and the whole idea is that we wouldn’t have these problems if we didn’t have money, but let’s not confuse that with thinking if you didn’t have money, you would have fewer problems. They’d just be different problems.

One of my favorite bits of wisdom to share is that if we all threw our problems in a big pile and could pick any ones we wanted, we’d all take our own back. Remember that the next time you get stressed about your finances (even if it IS a lack of having enough) and remember that it could always be worse. Shift your focus to what you DO have and you just might be surprised at how you begin to see more of those good things in your life.

If I Had A Million Dollars – Barenaked Ladies: So if you actually had a million dollars, you probably shouldn’t buy a llama or an emu. Here are some things you could do though: pay off debt, establish your emergency fund, max out your 401(k), or do something fun and then save the rest for the future. DON’T quit your job unless you’re pretty close to retiring already.

Just Got Paid – ‘N SYNC: One thing I could conclude about this is that Friday night is a bad night for your finances! Seriously though, I know plenty of people who celebrate “Paycheck Friday” with a “treat yo’self!” attitude and then spend the rest of the week complaining that they’re broke. It’s fine to cut loose and celebrate the weekend. Just make sure you’re putting something aside for the future, paying your bills and saving for budget-breaking expenses before blowing the rest on Friday night.

What about you? What are your favorite money songs? Share them with me on our Facebook page or email me and I’ll include them in a future post.

 

 

Don’t Make My Moving Mistakes

April 08, 2016

After a long process (it started with my first offer in August) of looking for, making offers for and securing financing for a new place to live, I just finished moving. Whew, that was a process…While I’ve done it many times in my life, I always forget how tough it is and how many things come up and how they can be budget busters. I re-learned a few things and maybe you can learn from my mistakes and not commit similar ones.

Always expect things to cost more than estimated! When you pay for a home inspection,  your inspector will find issues that need to be fixed – either by the seller or by you as the new buyer. In my recent experience, the issues that I needed to fix always cost just a bit more than anticipated.

For instance, there was some very worn and stained carpeting on the stairs that I wanted to replace. I looked under one area during the inspection that was a bit easy to peek under and I saw a nice wooden step. My plan was to simply pull up the carpet, have nice wood steps and remember NOT to wear slippery socks when going up and down the stairs.

Well, when the carpeting was removed, there were only two or three steps (out of 10-12) that looked decent. The rest were marked, scarred, virtually non-existent (a simple plywood plank, not a finished wood step) and my “nice wood stairs” idea went up in smoke. I called a friend who is in the carpet business and had him come out to salvage the situation with a newly carpeted staircase. It ended well, but that was a check I hadn’t anticipated writing.

What you can learn from my mistake: On your next move, either do some research into the pricing of each product/service that you will need or add in a “fluff factor” of 10-20% for the unexpected. It’s a bit cliché to say “expect the unexpected”…but, expect it! And do a room by room walk through with a notepad and build a list of projects that need to be done so that you have as much information as you can get to make your ballpark costs as accurate as possible.

You will pay for things you didn’t think you’d need!  When I moved, I thought I did a pretty thorough job of listing everything that I needed to pay for. I had movers, boxes, packing supplies, home inspection, appraisal, etc.

But there were two things that completely escaped my list. I forgot all about “service change” costs with my gas/electric provider and my phone/cable/Internet service provider.  Because my new place had never been serviced by these providers before, there were some installation charges added to the service change fees. In all, there were a few hundred dollars that I had no idea I’d have to spend.

Plus, my move was in April – which last time I checked was in the spring – but in Baltimore, the spring can have some cold days (as evidenced by the snow flurries I saw this morning). I completely forgot that my oil tank would need to be filled and it took about 250 gallons to fill. That was another big unexpected charge. Adding in a few other things that I hadn’t added to my list (shower rod and shower curtain, bath mats, outdoor deck chairs) – there was over $1,000 that I didn’t expect to pay but ended up paying.

What you can learn from my mistake: When you are calling your service providers, do it well in advance and ask about waiving the change fees in exchange for you being a loyal long term customer.  Ask for discounts. Ask if there is any way to lower your bill so that after you move, you have an embedded savings. I was able to do that with Verizon Fios and added a couple movie channels for less than my prior package price.

Finally, walk through with someone who has complementary skill sets. I understand the structural and mechanical pieces so I would have been better served to walk through (with my notepad) with someone who has more of a decorative slant than I do! (I’ll never be considered to have fashion/style sense.)

Moving is expensive…and exhausting….and frustrating. My budget was a bit busted and I am going to have to cut back in some other areas (dining out, coffee shops) over the next year or so in order to recover from the damage that the move did to my finances. But after spending a few nights in my new place and adjusting to the new sounds, I have to say it was very much worth the headaches! It’s a small price to pay for all of the reasons I chose to move and take on the financial trauma that a move can do to my regular budget.

 

 

 

5 Areas That May Need Some Financial Spring Cleaning

March 31, 2016

With Easter weekend behind us and spring officially in the air, it’s time for some spring cleaning. Don’t forget about cleaning your financial life too. While it’s much easier to see the clutter in your home, the clutter in your finances could have much bigger consequences. Here are several areas that may need some cleaning up:

Your expenses. If you’ve never taken a look at what you spend money on, it can be a real eye-opener. Start by gathering at least 3 months’ of bank and credit card statements and record each expense. You can also use a tool like Mint or Yodlee MoneyCenter to track your spending online for free.

Then go through your expenses and see what areas of waste you can cut. Are there things you’re spending money on that you don’t really need? If you do need it, can you get it in a way that costs less? You can get some ideas for savings here.

Your credit report. It’s been estimated that about 70% of credit reports have errors that could be hurting your score. If you haven’t done so in the last 12 months, you can order a free copy of each of your 3 credit reports (TransUnion, Equifax, and Experian) at the official site: annualcreditreport.com and report any discrepancies. You can also improve your score by getting current on your bills and paying down debt. Just be aware that old debt falls off your credit report after 7 years and making a partial payment or even acknowledging the debt to the creditor can restart that clock so if it’s getting close and you’re past your state’s statute of limitations for being sued by a creditor, you may just want to wait it out.

Your retirement account. Do you have retirement accounts that you left at previous jobs? If so, your overall retirement portfolio may not be properly diversified or you may be paying more than you need to in fees. Unless you have employer stock or are taking advantage of some unique investment option in the plan, you might want to roll those accounts to your current employer’s plan or into an IRA to make them easier to manage.

Your savings and investment portfolio. Many people have accounts they’ve opened or investments they’ve bought for different reasons over the years and now their savings and investments are a cluttered mess. Having 10 different bank accounts or 5 US stock funds isn’t diversification. Here are some simple ways to make sure you’re properly diversified.

Your legal documents. Tax documents only need to be kept for 7 years at the most. After that, you might as well just shred them. Estate planning documents should be checked to make sure they’re still up-to-date. Once your spouse finds out that your ex is still listed as your beneficiary or your youngest child wasn’t included, it may be too late.

How about you? Have you spring cleaned any of your finances? If so, share your experiences in the comments section below.

 

How to Trick Yourself Into Better Financial Behavior

March 29, 2016

A friend of mine once told me that any goal you want to achieve is about 80% behavior and about 20% head knowledge. We all know what to do to take control of our finances – spend less, dump consumer debt, and save more. However, as simple as it all sounds, it is not easy. Life and our emotions can get in the way of your goals.

I say if you can’t beat it, trick it. With April Fool’s Day just days away, take the following steps to trick yourself into better financial behavior: (Some may sound crazy but they work.)

1 . Can’t get the ball rolling on saving? Consider saving by setting up a payroll deduction into a savings account. That way you save it before you even have a chance to spend it.

2. Struggling to keep your hands off your savings? Try to use the hide feature on your online account to hide your savings account. If it is out of sight, it might be out of mind.

3. Still feel like you can’t trust yourself if the savings is at the same bank with your checking account? Consider moving your savings account to a different bank where you do not have immediate access to funds. Just don’t forget it’s there for when you do need the money.

4. Do you have a budget but have a hard time actually following it? Consider identifying areas where you overspend (eating out, groceries, clothes, etc) and using cash for those items. It makes you more mindful of your spending and it creates an automatic boundary.

5. Do you want to increase your retirement plan contributions but feel nervous about the increase? Consider contacting your retirement plan provider about a feature called auto-escalation. This gives  you the option to automatically increase your contributions annually, in many cases by as little as 1%. Tip: If you typically get an annual pay increase, consider timing the automatic increases a month after your pay increases so you won’t feel the difference.

A lot of times, we know what we need to do with our finances. The hard part is actually doing it. These steps may seem simple but they could be just the boost you need to help you reach your financial goals.

 

 

 

Quiz: Do You Have Landlord Potential?

March 21, 2016

[fusion_text]Online or on cable these days, you’ll find many self-described real estate experts who want to teach you their systems for finding and financing great real estate deals.  According to these self-described millionaires, people can make money in real estate if they think like an investor and have the right system. The temptations they offer are many: inflation-adjusted income, rising home prices, leverage and avoiding stock market risk.  I’m a rental property investor myself, so I know firsthand both the benefits and the challenges.

While single family homes, commercial properties and multi-family units may be good investments for some people, they are not for everyone. The truth is, rental real estate investing may seem safer than it really is. Each property investment has unique risks.  A rental real estate investment that remains vacant or results in large, unexpected maintenance costs could be financially devastating. 

Still, real estate evangelists aside, rental property investments can contribute to your income diversification, net worth and financial security if you choose wisely and at the right time. How will you know when you’re ready to be a landlord? Take this assessment to find out if you have landlord potential. Give yourself one point for each “yes” answer: 

My financial position:

____I have zero credit card and other high interest debt

____My credit score is 740 or higher.

____I have enough cash to put down 20% of the value of the property

____I have enough cash to pay for any necessary renovations

____I have enough cash to cover vacancies and maintenance on the target property for a year

____I am already contributing the maximum to my retirement plan at work ($18,000 plus $6,000 catch up contribution if 50 or older)

____I am already contributing the maximum to a Roth or Traditional IRA ($5,500 plus $1,000 catch up contribution if 50 or older)

____I am maxing out other work-sponsored employee benefits that fit my financial situation (e.g., HSA, FSA, etc.)

____I have enough other income to pay the rental property mortgage if there’s a sustained period of vacancy

____Total financial position score

Did you score 8 points or higher? Then you can move on to the next round. 

If you scored 7 or lower, you aren’t yet in a strong enough financial position to be a rental property investor. Without sufficient cash reserves, a real estate investment that turned out badly could send you into bankruptcy. If you carry balances on your credit cards, the most important investment you can make is paying them off. Before you even consider diversifying into individual rental properties, make sure you are on track to meet your retirement goals and maximize all your tax-advantaged benefits at work.

Real Estate Knowledge:

____I’ve read some basic guidebooks on rental real estate investing and landlording, such as Nolo’s First Time Landlord

____I’ve done a review of rentals in my target neighborhood and I know average rents, time on the market, crime and school statistics

____I have owned my own home for more than three years, so I have a very good idea of how much time is needed to take care of one

____I don’t yet own a home, but I plan to buy a multi-unit property and live in one unit

____I have enough time to manage the property myself

____I’ve run the numbers, and the gross monthly rent on my target property is 1% or more of the total property value

____I can afford a property manager and the investment is still profitable

____ I like to fix things and do home improvement work around the house

____I understand that one or a few properties in the same area are not a diversified investment and that means there is higher risk

____I have run income and expense projections for the property for a year, including worst case scenarios

____I have researched the pros and cons of different legal entities in my state to hold the property, such as a limited liability company

____I have spoken to a mortgage lender and am confident I’ll be approved for financing

If you scored at 8 on real estate knowledge and 8 on financial position, it looks like you have landlord potential. Happy property hunting!

If you scored 7 or lower, take some time to rethink this. Will this be a profitable investment? Do you have the time to manage the property yourself?  Are there risks you are not comfortable taking? What additional steps are needed before you move forward?

How did you do on the quiz? Do you have landlord potential? Email me at [email protected] or follow me on Twitter @cynthiameyer_FF. 

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Who Consumers Really Need to Protect Themselves From

March 10, 2016

This week is National Consumer Protection Week so you might have been hearing a lot about how to protect yourself from fraud, scams, identity theft, etc. This is important information but the reality is that the biggest threat to us as consumers is staring at us in the mirror. Here are some ways we sabotage ourselves and what we can do to protect ourselves: Continue reading “Who Consumers Really Need to Protect Themselves From”

What To Do Before You Say “I Do”

February 23, 2016

I am at a stage in my life where I can look back at my choices and say to myself, “What on earth was I thinking?” This is especially true when I think about past relationships. As I was talking to a group of young women who were recently engaged, I saw glimmers of my past relationships in their stories and thought to myself: what do I wish someone would had the courage to say to me that would had saved me from future pain? Continue reading “What To Do Before You Say “I Do””

Want to Quit Your 2016 Budget? Don’t!

February 02, 2016

If you have read any of my prior blog posts, you probably know that I have a thing for chocolate. I even do a run called “Hot Chocolate” held  in January. I do the 15K, about 9 miles, with water and chocolate stops along the way. Once I am done, you are given hot chocolate and I gulp it down in about 30 seconds. Despite the sub-freezing temperatures, I enjoy the runs because they gives me and my friends uninterrupted girl time to catch up. Continue reading “Want to Quit Your 2016 Budget? Don’t!”

5 Reasons You Shouldn’t Use Your Phone to Manage Your Money

January 27, 2016

A common request from users of our Financial Helpline is for money management app recommendations. I haven’t found one yet that I love, so I’m always on the lookout for new ways to make it simple and painless to track expenses, stick to a budget and save more money. In other words, I’m in search of the My Fitness Pal for money.

Continue reading “5 Reasons You Shouldn’t Use Your Phone to Manage Your Money”

Take Your Own Baby Steps

December 29, 2015

I am a huge fan of the movie “What About Bob?” starring Bill Murray and Richard Dreyfus. Bill Murray’s character was so overwhelmed by life that he went to see a psychologist (Richard Dreyfus’ character) for help. The psychologist introduced him to the concept of “Baby Steps,” which suggests taking small steps to achieve your goal. In the movie, Bill Murray took baby steps, literally, but the steps were baby steps based on Bill Murray’s mental state, not someone else’s mental state. Continue reading “Take Your Own Baby Steps”