The Father’s Day Gift That Keeps On Giving

June 16, 2016

Are you looking for a last minute gift for Father’s Day? Instead of another necktie that he probably doesn’t need, why not a gift that keeps on giving: financial wellness? Of course, none of us can actually give someone financial wellness, but the next best thing would be our CEO’s new book What Your Financial Advisor Isn’t Telling You.

Don’t worry. If your dad is like mine and acts as his own financial advisor, this book could still apply because much of it covers essential personal finance information that financial advisors typically don’t tell their clients like how to build wealth in the first place. (Advisors generally won’t work with you unless you already have some wealth for them to manage.) If your dad does have an advisor, the book discusses how to best work with an advisor, how to know if he has the right advisor, and how to find a new one if necessary. Specifically, here are some topics that would be particularly useful for dads:

Life Insurance and Estate Planning. These are important topics for dads because they’re still typically the primary breadwinners in their families, and men generally don’t live as long as women. To really see the value of estate planning for dads and what specific steps they can take, see this blog post by my colleague Greg Ward.

Basic Money Management:Money is often cited as a top source of stress and an issue that couples fight about. It can be particularly difficult for new parents. Among all the other challenges are the additional expenses and possibly a loss of income if one parent takes some time off work. Having a better understanding of money management can lead to lower stress and more marital bliss for both mom and dad alike.

Investing. In my experience working with couples, the husband usually manages the family’s investments. However, it turns out that most would probably be better off letting their wives handle this since research has found that on average, women are better investors than men. This is because hormones like testosterone and cortisol can contribute to more overconfidence and less patience in men, which leads them to invest more in things they don’t fully understand, take bigger risks, and trade more frequently (which costs more money). Learning more about investing from an unbiased source can help them overcome their biology and become better investors.

What Your Financial Advisor Isn’t Telling You or a similar personal finance book can be a great Father’s Day gift that benefits the whole family. At the very least, it will be sure to cost you much less than the $116 average that people spend on a Father’s Day gift. You can always use those savings to buy him a nicer tie next year.

 

 

When Not to Pay Down Debt

June 09, 2016

In her new book, What Your Financial Advisor Isn’t Telling You, our CEO, Liz Davidson, writes about how paying off debt can be your greatest investment. As they say, a penny saved is a penny earned so if you pay down credit card debt at 19% interest, it’s like earning 19% guaranteed tax-free. But as with most financial planning guidelines, there are exceptions. Here are some situations where paying down debt may NOT be your best investment:

You can’t pay your bills. If you’re in severe financial difficulty, make sure you prioritize keeping a roof over your head, your car in the driveway, the lights and water running, and food on the table even over paying the minimum on your debts. Don’t jeopardize you and your family’s basic well-being to pay down debt that you might have to liquidate in bankruptcy anyway. In fact, if you think you might file for bankruptcy, don’t borrow or take withdrawals from a retirement account to make debt payments since those assets are generally protected in a bankruptcy.

You don’t have sufficient emergency savings. To avoid the problem above, you’ll want to have some emergency savings. You should have enough cash to cover at least 3-6 months’ worth of necessary expenses.

You can consider your ability to borrow from a retirement plan or the Bank of Mom and Dad as part of your emergency resources but not lines of credit since they can easily be cancelled, especially if you’re in between jobs or the economy is weak. This money should be someplace safe like a savings account or money market fund. Yes, the interest you’ll earn is probably much less than the interest you’re paying on debt, but how do you value avoiding eviction or foreclosure on your home?

You’re not contributing enough to max your employer’s matching funds. The only thing that beats saving 19% interest is earning 50% or 100% on your money. If you’re not maxing the match, you’re leaving free money on the table and getting behind on your retirement saving.

Your debt is costing you less than 4-6% in interest. If the interest on your debt is below 4-6% (after any tax deductions you get for the interest), you could probably earn more by investing extra savings (particularly in a tax-advantaged account) than you’d save by paying down that debt. That’s why they call low-interest mortgages, car loans, and student loans “good debt.” If the interest rate is between 4-6%, your decision depends on how aggressive an investor you are. Conservative investors would likely be better off (and happier) paying down the debt, while more aggressive investors are likelier to earn more by investing instead.

None of this is to suggest that paying down high-interest debt isn’t generally a good idea. These are just the exceptions. If you’re able to pay your basic bills, have sufficient emergency savings, are maxing the matching in your retirement plan, and have high-interest debt, paying it off IS your best investment.

A Cell Phone Case That Protects Your Phone, Your Money, and You

May 05, 2016

In What Your Financial Advisor Isn’t Telling You: The Ten Essential Truths You Need to Know About Your Money, our CEO, Liz Davidson, writes about the connection between our financial and physical health. In particular, financial stress is one of the leading forms of stress, which has a significant impact on our physical health and well-being. I recently made a purchase that also relates to both financial and physical wellness. It’s a cell phone case called SafeSleeve.

Aside from protecting your phone, the main purpose of the case is to protect your physical wellness by redirecting potentially harmful radiation from your cell phone away from your body. While it hasn’t been proven conclusively, many experts are concerned that exposure to this radiation could cause cancer. In fact, even the cell phone companies recommend generally keeping the phones several inches away from your body. But if you tend to keep your phone in your pocket like I do, that could be a problem. Someday, people may look back on our cell phone use the way people now look back at smoking cigarettes.

How could this case protect you financially as well? It obviously can help protect your phone from damage, which is important considering the cost of a new smartphone. If it works as intended, the value of avoiding cancer is arguably priceless.

It also includes slots to keep 3 credit or debit cards. This isn’t just for convenience though. The case acts to protect those cards from someone using an RFID reader to “skim” information from your cards and use it to make fraudulent purchases. Even if you don’t buy into the threat of RFID skimming, it can save you the expense and hassle of buying and keeping a wallet in addition to your cell phone.

So are there any downsides to the case? At about $40, it’s expensive for a cell phone case, although it was cheaper than competing radiation-blocking cases that lacked the wallet component. Another drawback is the risk of keeping your cards with your phone since if you lose it, you lose your cards too.

A third flaw is that there’s no space to hold cash. This could be a problem since some places charge more for using a card or don’t accept plastic at all. There’s also evidence that people tend to spend more with cards than with cash. Finally, I think it’s prudent to carry some cash at all times in cash of a power outage in which  credit card machines and ATMs aren’t working so I end up keeping cash in a separate money clip anyway.

Maybe you’ll never drop your phone, you won’t ever have your cards skimmed, and it will turn out that cell phone radiation doesn’t cause cancer. Then again, there’s a reason we keep emergency savings, buy insurance, diversify investments, and draft estate planning documents. Sometimes it’s better to be safe than sorry. At the very least, $40 is buying me some peace of mind…and less stress.

 

 

 

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””

Are You Lip Syncing Through Your Financial Life?

February 05, 2016

I’ve recently become a huge fan of the show Lip Sync Battle. Seeing celebrities “sing” the hits of their favorite artists while doing some very entertaining dances is absolutely hilarious. While it’s one of my guilty pleasures and has led to some world class laughter (“The Rock” as Taylor Swift, Anne Hathaway as Miley Cyrus, Channing Tatum vs. Jenna Dewan Tatum), in one of my odd “connect the dots” moments, I realized that I was having a conversation with someone who was lip syncing her life. Continue reading “Are You Lip Syncing Through Your Financial Life?”

The Other Side of American Greed

January 18, 2016

Friday nights on CNBC, households all over the country are watching American Greed, the wildly popular documentary series narrated by Stacy Keach which tells the real-life stories of financial crimes and the effect on their victims. There have been episodes about Ponzi schemes, mortgage fraud, identity theft, insurance fraud and investment scams. Some of them tell truly heartbreaking stories, where the people who were victimized by the fraud seemed to be making wise decisions, only to be fooled by someone with criminal intent. In all the episodes, the message is clear:  there are hucksters and criminals who are out to steal your money — and you’d better be on guard. It’s an important message, one that we all need to hear. Continue reading “The Other Side of American Greed”

Can Your Friends Help You Become Financially Independent?

January 11, 2016

Can your friends help you become financially independent? Yes — if you choose the right friends. My fellow planner, Kelley Long, recently wrote a thought-provoking post about how financial frenemies can sabotage your financial wellness. “Much like starting a new diet or fitness program has a higher chance for success if you do it with a friend,” she wrote, “engaging your friends in financial habit changes could greatly increase the likelihood you’ll stick to it.” I couldn’t agree more. Continue reading “Can Your Friends Help You Become Financially Independent?”

Start 2016 Right With This Reflective Exercise

December 30, 2015

As I reflect on the past year, I have plenty of personal milestones to celebrate (getting married and starting my career at Financial Finesse top that list), a couple things to mourn (my family lost two of our beloved pets), and quite a few more things to keep working on (this WILL be the year that I get back into those designer jeans!). Spending some time performing a “year in review” can be therapeutic. Recognizing how far you’ve come, even if you’re not quite where you want to be yet, is important to keeping you on the path to your goals. Continue reading “Start 2016 Right With This Reflective Exercise”

The Less Than 2 Hours a Week Money Prescription

December 17, 2015

Our newest blogger, Cynthia Meyer, wrote an excellent blog post on Monday about a “two hour a week money prescription.” While I think her suggestions can work perfectly for many people, others may find that even two hours a week seems like an unrealistic amount of time to be spent on finances. If you’re in that camp, don’t worry! Continue reading “The Less Than 2 Hours a Week Money Prescription”

My Declaration of Financial Independence

December 07, 2015

As I take over Financial Wellness@Work on Mondays (following in the very big shoes of Dr. Scott Spann, who is bringing Financial Finesse wisdom to the retirement planning pages of About.com), I thought I’d take some time upfront to tell you my story so you know my perspective. Twenty years ago, I declared financial independence. I remember my Financial Independence Day very clearly… Continue reading “My Declaration of Financial Independence”

3 Things I Didn’t Tell Clients as a Financial Advisor

December 02, 2015

Joining the planner team at Financial Finesse was a game-changer in my career and in my life. After years of frustration and creative effort to find ways to provide people with unbiased truth about how to make the right financial decisions for themselves, I’m finally free of the shackles of compliance, the pressure to sell and the need to gather assets. The sad reality is that there are very few avenues where financial planners can provide unbiased information while making a living and staying within the regulations of their industry. Continue reading “3 Things I Didn’t Tell Clients as a Financial Advisor”