What Are the Effects of Closing a Credit Card?

November 11, 2019

View Article
Denise and Chris Arand

Denise and Chris Arand

Executive Vice Presidents/Financial Strategists

2173 Salk Ave
#250
Carlsbad, CA 92008

Subscribe to get my Email Newsletter

November 6, 2019

Common Financial Potholes

Common Financial Potholes

The journey to financial independence can feel a bit like driving around with your entire retirement fund stashed in the open-air bed of a pickup truck.

Every dollar bill is at the mercy of the elements. Think of an unforeseen medical emergency as a pop-up windstorm that whips a few thousand dollars out of the truck bed. And that time your refrigerator gave out on you? That’s swerving to avoid a landslide as it tumbles down the mountain. There goes another $1,000.

Emergencies like a case of appendicitis or suddenly needing a place to store your groceries usually arrive unannounced and can’t always be avoided. But there are a few scenarios you can bypass, especially when you know they’re coming.

These scenarios are the potholes on the road to financial independence. When you’re driving along and see a particularly nasty pothole through your windshield, it just makes sense to avoid it.

Here are some common potholes to avoid on your financial journey.

Excessive or Frivolous Spending
A job loss or a sudden, large expense can change your cash flow quickly, making you wish you still had some of the money you spent on… well, what did you spend it on, anyway? That’s exactly the trouble. We often spend on small indulgences without calculating how much those indulgences cost when they’re added up. Unless it’s an emergency, big expenses can be easier to control. It’s the small expenses that can cost the most.

Recurring Payments
Somewhere along the line, businesses started charging monthly subscriptions or membership fees for their products or service. These can be useful. You might not want to shell out $2,000 all at once for home gym equipment, but spending $40/month at your local gym fits in your budget. However, unused subscriptions and memberships create their own credit potholes. If money is tight or you’re prioritizing your spending, take a look at your subscriptions and memberships. Cancel the ones that you’re not using or enjoying.

New Cars
Most people love the smell of a new car, particularly if it’s a car they own. Ownership is strange in regard to cars, however. In most cases, the bank holds the title until the car is paid off. In the interim, the car has depreciated by 25% in the first year and by nearly 50% after 3 years.

What often happens is that we trade the car after a few years in exchange for something that has that new car smell – and we’ve never seen the title for the first car. We never owned it outright. In this chain of transactions, each car has taxes and registration fees, interest is paid on a depreciating asset, and car dealers are making money on both sides of the trade when we bring in our old car to exchange for a new one.

Unless you have a business reason to have the latest model, it’s less expensive to stop trading cars. Think of your no-longer-new car as a great deal on a used car – and once it’s paid off, there’s more money to put each month towards your retirement.

To sum up, you may already have the best shocks on your financial vehicle (i.e., a well-tailored financial strategy), but slamming into unnecessary potholes could damage what you’ve already built. Don’t damage your potential to go further for longer – avoid those common financial potholes.

  • Share:

October 28, 2019

3 Simple Benefits of Indexed Universal Life Insurance

3 Simple Benefits of Indexed Universal Life Insurance

If you’re not familiar with indexed universal life insurance, you’ve come to the right place.

What is an IUL?
Indexed universal life insurance (IUL) is a type of permanent life insurance that has an investment element that helps the policy build cash value.

Part of the premium for an IUL is invested in stock options that track an index, like the S&P 500 or NASDAQ 100. This provides a higher growth potential than a whole life policy or a standard universal life policy (both of which provide a conservative fixed return). Gains may be capped in an indexed universal life policy, but the policy provides protections that prevent stock market meltdowns or slow slides from eroding the cash value in your policy.

Here are some of the main benefits of an IUL:
1. It protects your downside. Unlike direct investments, mutual funds, or other types of investments – an indexed universal life policy protects your downside. If the market drops for the index (or indexes) your policy tracks, you keep the gains and are sheltered from the losses. Don’t you wish your 401k or private investments could do that?

2. The cash value in your policy grows tax-deferred. Without the frequent tax liability that often comes with trading in and out of stocks or funds, the cash value can grow unhindered by the ball and chain of capital gains or income taxes.

3. Gains for an indexed universal life policy can be significantly higher than with a whole life policy or a universal life policy. Even with capped gains, which is a tradeoff in exchange for providing a floor to protect your policy from losses, the gains in an indexed universal life policy can outpace the earnings in fixed-rate policies. As with any investment, time tends to be your best friend, smoothing the down years (flat years for an IUL) with strong years to build an upward trend line.

An indexed universal life insurance policy can help supplement your retirement savings strategy and work in parallel with your existing 401k and IRAs – but with access to your cash value before age 59 ½ – or after – and without the dreaded 10 percent penalty for early withdrawal.

Summing It Up
As both a permanent life insurance policy and a tax-deferred investment vehicle that shields you from market losses, an indexed universal life policy can help provide for your family at nearly any point in life and then provide for your beneficiaries when you pass away.

  • Share:

October 16, 2019

Tips on Managing Money for Couples

Tips on Managing Money for Couples

Couplehood can be a wonderful blessing, but – as you may know – it can have its challenges as well.

In fact, money matters are the leading cause of stress in modern relationships. The age-old adage that love trumps riches may be true, but if money is tight or if a couple isn’t meeting their financial goals, there could be some unpleasant conversations (er, arguments) on the bumpy road to bliss with your partner or spouse.

These tips may help make the road to happiness a little easier.

1. Set a goal for debt-free living. Certain types of debt can be difficult to avoid, such as mortgages or car payments, but other types of debt, like credit cards in particular, can grow like the proverbial snowball rolling down a hill. Credit card debt often comes about because of overspending or because insufficient savings forced the use of credit for an unexpected situation. Either way, you’ll have to get to the root of the cause or the snowball might get bigger. Starting an emergency fund or reigning in unnecessary spending – or both – can help get credit card balances under control so you can get them paid off.

2. Talk about money matters. Having a conversation with your partner about money is probably not at the top of your list of fun-things-I-look-forward-to. This might cause many couples to put it off until the “right time”. If something is less than ideal in the way your finances are structured, not talking about it won’t make the problem go away. Instead, frustrations over money can fester, possibly turning a small issue into a larger problem. Discussing your thoughts and concerns about money with your partner regularly (and respectfully) is key to reaching an understanding of each other’s goals and priorities, and then melding them together for your goals as a couple.

3. Consider separate accounts with one joint account. As a couple, most of your financial obligations will be faced together, including housing costs, monthly utilities and food expenses, and often auto expenses. In most households, these items ideally should be paid out of a joint account. But let’s face it, it’s no fun to have to ask permission or worry about what your partner thinks every time you buy a specialty coffee or want that new pair of shoes you’ve been eyeing. In addition to your main joint account, having separate accounts for each of you may help you maintain some independence and autonomy in regard to personal spending.

With these tips in mind, here’s to a little less stress so you can put your attention on other “couplehood” concerns… Like where you two are heading for dinner tonight – the usual hangout (which is always good), or that brand new place that just opened downtown? (Hint: This is a little bit of a trick question. The answer is – whichever place fits into the budget that you two have already decided on, together!)

  • Share:

October 14, 2019

Getting a Degree of Financial Security

Getting a Degree of Financial Security

The financial advantage gap between having a college degree and just having a high school diploma is widening!

In 2015, the average college graduate earned 56% more than the average high school graduate. This is the widest gap between the two that the Economic Policy Institute has recorded since 1973!

This income difference is making saving for retirement difficult for millennials without a college degree. According to the Young Invincibles’ 2017 ‘Financial Health of Young America’ study, millennial college grads – even with roadblocks like student debt – have saved nearly $21,000 for retirement. That’s quite a lot more as compared to the amount saved by those with a high school diploma only: under $8,000.

However, a college grad may encounter a different type of retirement savings roadblock than a reduced income – student loan debt. But the numbers show that even with student loan debt, the advantages of having a college degree and a solid financial strategy outweigh the retirement saving power of not having a college degree.

Here’s an issue plaguing both groups: more than two-thirds of all millennial workers surveyed do not have a specific retirement plan in place at all.

Regardless of your level of education or your level of income, you can save for your retirement – and take steps toward your financial independence. Or maybe even finance a college education for yourself or a loved one down the road.

The first step to making the most of what you do have is meeting with a financial advisor who can help put you on the path to a solid financial strategy. Contact me today. Let’s work to get your money working for you.

  • Share:

October 9, 2019

Are You Sitting Down?

Are You Sitting Down?

When things go wrong or we face an unexpected expense, we usually have one of two choices: Use credit to navigate a short-term cash crunch, or dip into savings.

In either case, it’s a good idea to have liquid funds available. Using credit can actually make your money problem worse if you don’t have enough to pay off the balance each month to avoid incurring interest charges. If you use savings but don’t have a comfortable cushion put away, repairing your home’s ancient A/C system may deplete your emergency stores, leaving you with nothing to replace the washer and dryer that decided to break down at the same time.

Ideally, you’ll have enough money saved to cover the unexpected. However, if you’re like many American households, that may not be the case. The U.S. personal savings rate continues to fall.

National Savings Rate
The savings rate is calculated as the ratio of personal savings to disposable personal income. In March 2018, the U.S. personal savings rate was about 3% shows that we’re not as good at saving as we used to be. In the past, the long-term average personal savings rate was over 8%, with some periods of time when it was over 15%. Kind of shames our current 3% savings rate, doesn’t it?

The national personal savings rate is also skewed by higher income savers, with the top 1% saving over 51% and the top 5% saving nearly 40% of their disposable income. Unsurprisingly, lower income families can have more difficulty with saving, as most of their paycheck is often already earmarked for basic bills and normal household expenses.

A recent survey by GOBankingRates found that nearly 70% of Americans have less than $1,000 saved and more than a third have nothing saved at all. Yikes. Age and levels of responsibility can influence savings rates. Anyone with a growing family – particularly a homeowner or a household with children – knows that surprise expenses aren’t all that surprising because the surprises just keep coming. This can put pressure on the best laid plans to try to increase savings.

How to Save More
If you have a 401(k), your contribution to it comes from a payroll deduction, meaning your 401(k) contribution is paid first – before you get the rest of your paycheck. If you have a 401(k) or a similar type of retirement account, there are lessons that can be borrowed from that account structure which can be used to help build your personal savings.

Paying yourself first is a great way to begin building your emergency fund, which can leave you better prepared for the proverbial rainy day. If you look at your monthly expenses, and if your household is like most households, you’re almost certain to find some unnecessary spending.

Start paying yourself first – by putting some money aside in a separate account or a safe place. This can help prevent some of those unnecessary expenditures (because there won’t be money available) while also leaving you better prepared.

The next time the car needs repairs, the A/C stops working, the fridge stops freezing, or the lawnmower breaks down, you’ll be ready – or at least you’ll be in a better position to bail yourself out!

  • Share:

October 2, 2019

3 Easy Ways To Save For Retirement (Without Investing)

3 Easy Ways To Save For Retirement (Without Investing)

Our retirement years will be here sooner than we think.

Ideally, you’ve been putting away money in your IRA, 401k, or other savings accounts. But are you overlooking ways to save money now so you can free up more for your financial strategy or help build your cash stash for a rainy day?

1. Pay Yourself First.
If you’re making contributions to your 401k plan at work, you’re already paying yourself first. But you can also apply the same principle to saving. (If you open a separate account just for this, it’s easier to do.) If you prefer, you can accomplish the same thing on paper by keeping a ledger. Just be aware that paper makes it easier to cheat (yourself). With a separate account, you can schedule an automatic transfer to make the process painless and fuhgettaboutit.

Here’s how it works. Whenever you get paid, transfer a fixed dollar amount into your special account – before you do anything else. If you don’t pay yourself first, you might guess what will happen. (Be honest.) If you’re like most people, you’ll probably spend it, and if you’re like most people, you might not really know where it went. It’s just gone, like magic.

Paying yourself first helps to avoid the “disappearing money” trick. Hang in there! After a while, as the money starts adding up, you’ll impress yourself with your savings prowess.

2. Got A Bonus From Work? Great! Keep it.
What do you think most people are tempted to do if they get a bonus or a raise? What are YOU most tempted to do if you get a bonus or a raise? Probably spend it. Why? It’s easy to think of 100 things you could use that extra cash for right now. Home repairs or upgrades, a night out on the town, that new handbag you’ve been coveting for months… Maybe your bonus is enough for you to consider trading in your car for a nicer one, or getting that new addition to your house.

Receiving an unexpected windfall is fun. It’s exciting! But here is where some caution is wise. Pause for a moment. If you had everything you needed on Friday and then get a raise on Monday, you’ll still have everything you need, right? Nothing has changed but the calendar. If you hadn’t gotten that bonus, would your life and your current financial strategy still be the same as it was last week? Consider putting (most of) that extra money away for later, and using some of it for fun!

3. Pay Down That Debt.
By now you’ve probably heard a financial guru or two talking about “good” debt and “bad” debt. Debt IS debt, but some types of debt really are worse than others.

Credit cards and any high-interest loans are the first priority when retiring debt – so that you can retire too, someday. Do you really know how much you’re paying in interest each month? Go ahead and look. I’ll wait… Once you know this number, you can’t “unknow” it. But take heart! Use this as a powerful incentive to pay those balances off as fast as you can.

The cost of credit isn’t just the interest. That part is spelled out in black and white on your credit card statement (which you just looked at, right)? The other costs of credit are less obvious. Did you know your credit score affects your insurance rates? Keeping those cards maxed out can cost more than just the interest charges.

Every month you chip away at the balances, you’ll owe less and pay less in interest. (You’ll feel better, too.) And you know what to do with the leftover money since you knocked out that debt. Hint: Save it.

But keep this in mind – life is about balance. It’s okay to treat yourself once in awhile. Just make sure to pay yourself first now, so you can treat yourself later in retirement.

  • Share:

September 4, 2019

Savings Rates Need Some Serious Saving

Savings Rates Need Some Serious Saving

Ever hear the old story of the 7 years of plenty followed by 7 years of famine?

In the years when there was an abundance of crops, it was wise to store up as much as possible in preparation for the years of famine. However, if instead of saving you ate it all up during the 7 years of abundance, the result would be starvation for you and your family during the 7 lean years. This might be an extreme example in our modern, First World society, but are you “eating it all up” now and not storing enough away for your retirement?

The definition of retirement we’ll be using is: “An indefinite period in which one is no longer actively producing income but rather relies on income generated from pensions and/or personal savings.”

According to this definition, the “years of plenty” would be the years that you are still working and generating income. While you still have regular income, you can set aside a portion of it to save for retirement. This amount is called the “Personal Savings Rate.”

According to the latest statistics, the personal savings rate for Americans is approximately 2.4% annually. If you compare that with the average during the 1970’s of a 10% annual savings rate, you’ll see it has decreased significantly. This should set off some alarms concerning the impact on your retirement savings.

Suppose you’re looking to retire for at least 10 years (e.g., from 65 years old to 75 years old). Even if you’re planning to live on only half of the income that you were making prior to retirement, you would need to save up 5 years worth of income to last for the 10 years of your retirement. But if you’re currently saving only 2.5% of your income per year, it would take 200 years to save up 5 years of income replacement!

So unless you’ve found the elixir of everlasting life, we’re going to need to do some serious “saving” of the personal savings rate. Is there a solution to this dilemma? Yes. If you’re looking for possible ways to store up and prepare for your retirement, I’d be happy to have that conversation with you today.

  • Share:

August 5, 2019

Worry Once. Suffer Twice.

Worry Once. Suffer Twice.

If you Google “how to be financially independent,” over 4 million search results come back.

And for a good reason: People are really worried about their finances. Last year, 76% of Americans experienced some kind of financial worry.

Do any of these top 5 concerns feel true for you?

1. Health Care Expenses/Bills – 35%
2. Lack of Emergency Savings – 35%
3. Lack of Retirement Savings – 28%
4. Credit Card Debt – 27%
5. Mortgage/Rent Payments – 19%

If worrying means that you suffer twice, millions of people are suffering twice over their finances.

What kind of double-suffering are you experiencing – and are you ready for a way out?

The best way to learn and achieve financial independence is with someone who already knows – an ally to walk the road with you. Someone who has been where you are. Someone with the tools to help you. Contact me today, and together we can get you moving towards financial independence – and some peace of mind.

  • Share:

July 15, 2019

Building a Bridge Over the Retirement Gap

Building a Bridge Over the Retirement Gap

If you’re already eyeing the perfect recliner for your retirement, hold that thought. And you might want to sit down. And start rifling through the ol’ couch cushions for a little extra change…

Because here’s a doozy: US women are 80% more likely than US men to experience poverty during their retirement.

Part of this startling retirement savings gap could be due to the unique set of circumstances that women face while preparing for retirement.

One of the most obvious of these unique circumstances? Women live longer. In the US, a woman is expected to live about 81 years vs. a man’s expected 76 years. Women have years longer to live than men, but the troubling percentages above suggest that most women are not even financially prepared to live as long as men are expected to!

This retirement savings gap may look and feel massive, but it can be bridged. And it all starts with a solid life insurance strategy. A tailored strategy has the potential to be beneficial for women and men: Women can help themselves be more financially stable and prepared as they look toward retirement, and men have the potential to provide for the women their lives – even after they’re gone.

Your unique situation and goals all factor in to how you want to kick back when you retire. I’m here to help. When you have a moment, give me a call or shoot me an email.

  • Share:


July 10, 2019

You'll Still Need This After Retirement

You'll Still Need This After Retirement

Ask anyone who’s had a flat tire, a leaky roof, or an unexpected medical bill – having enough money tucked away in an emergency fund can prevent a lot of headaches.

It may seem obvious to create a cushion for unexpected expenses while you’re saving up for retirement, especially if you have kids that need to get to their soccer games on time, a new-to-you home that’s really a fixer-upper, or an injury that catches you off guard. But an emergency fund is still important to keep after you retire!

Does your current retirement plan include an emergency fund for unexpected expenses like car trouble, home or appliance repair, or illness? Only 41% of Americans surveyed said they could turn to their savings to cover the cost of the unexpected. That means nearly 60% of Americans may need to turn to other methods of coverage like taking loans from family or friends or accruing credit card debt.

After you retire and no longer have a steady stream of income, covering unexpected expenses in full (without interest or potentially burdening loved ones) can become more difficult. And when you’re older, it might be more challenging to deal with some of the minor problems yourself if you’re trying to save some money! You’re probably going to need to keep the phone number for a good handyman, handy.

Don’t let an unexpected expense after retirement cut into your savings. A solid financial strategy has the potential to make a huge difference for you – both now and during your retirement.

Contact me today, and together we can put together a strategy that’s tailored to you and your needs.

  • Share:


July 8, 2019

How to Avoid Financial Infidelity

How to Avoid Financial Infidelity

If you or your partner have ever spent (a lot of) money without telling the other, you’re not alone.

This has become such a widespread problem for couples that there’s even a term for it: Financial Infidelity.

Calling it infidelity might seem a bit dramatic, but it makes sense when you consider that finances are the leading cause of relationship stress. Each couple has their own definition of “a lot of money,” but as you can imagine, or may have even experienced yourself, making assumptions or hiding purchases from your partner can be damaging to both your finances AND your relationship.

Here’s a strategy to help avoid financial infidelity, and hopefully lessen some stress in your household:

Set up “Fun Funds” accounts.

A “Fun Fund” is a personal bank account for each partner which is separate from your main savings or checking account (which may be shared).

Here’s how it works: Each time you pay your bills or review your whole budget together, set aside an equal amount of any leftover money for each partner. That goes in your Fun Fund.

The agreement is that the money in this account can be spent on anything without having to consult your significant other. For instance, you may immediately take some of your Fun Funds and buy that low-budget, made-for-tv movie that you love but your partner hates. And they can’t be upset that you spent the money! It was yours to spend! (They might be a little upset when you suggest watching that movie they hate on a quiet night at home, but you’re on your own for that one!)

Your partner on the other hand may wait and save up the money in their Fun Fund to buy $1,000 worth of those “Add water and watch them grow to 400x their size!” dinosaurs. You may see it as a total waste, but it was their money to spend! Plus, this isn’t $1,000 taken away from paying your bills, buying food, or putting your kids through school. (And it’ll give them something to do while you’re watching your movie.)

It might be a little easier to set up Fun Funds for the both of you when you have a strategy for financial independence. Contact me today, and we can work together to get you and your loved one closer to those beloved B movies and magic growing dinosaurs.

  • Share:


July 1, 2019

Retirement Mathematics 101: How Much Will You Need?

Retirement Mathematics 101: How Much Will You Need?

Have you ever wondered how someone could actually retire?

The main difference between a strictly unemployed person and a retiree: A retiree has replaced their income somehow. This can be done in a variety of ways including (but not limited to):

  • Saving up a lump sum of money and withdrawing from it regularly
  • Receiving a pension from the company you worked for or from the government
  • Or an annuity you purchased that pays out an amount regularly

For the example below, let’s assume you don’t have a pension from your company nor benefits from the government. In this scenario, your retirement would be 100% dependent on your savings.

The amount you require to successfully retire is dependent on two main factors:

  • The annual income you desire during retirement
  • The length of retirement

To keep things simple, say you want to retire at 65 years old with the same retirement income per year as your pre-retirement income per year – $50,000. According to the World Bank, the average life expectancy in the US is 79 (as of 2015). Let’s split the difference and call it 80 for our example which means we should plan for income for a minimum of 15 years. (For our purposes here we’re going to disregard the impact of inflation and taxes to keep our math simple.) With that in mind, this would be the minimum amount we would need saved up by age 60:

  • $50,000 x 15 years = $750,000

There it is: to retire with a $50,000 annual income for 15 years, you’d need to save $750,000. The next challenge is to figure out how to get to that number (if you’re not already there) the most efficient way you can. The more time you have, the easier it can be to get to that number since you have more time for contributions and account growth.

If this number seems daunting to you, you’re not alone. The mean savings amount for American families with members between 56-61 is $163,577 - nearly half a million dollars off our theoretical retirement number. Using these actual savings numbers, even if you decided to live a thriftier lifestyle of $20,000 or $30,000 per year, that would mean you could retire for 8-9 years max!

All of this info may be hard to hear the first time, but it’s the first real step to preparing for your retirement. Knowing your number gives you an idea about where you want to go. After that, it’s figuring out a path to that destination. If retirement is one of the goals you’d like to pursue, let’s get together and figure out a course to get you there – no math degree required!

  • Share:


June 26, 2019

A Lotto Bad Ideas

A Lotto Bad Ideas

A full third of Americans believe that winning the lottery is the only way they can retire.

What? Playing a game of chance is the only way they can retire? Do you ever wonder if winning a game – where your odds are 1 in 175,000,000 – is the only way you’ll get to make Hawaiian shirts and flip-flops your everyday uniform?

Do you feel like you might be gambling with your retirement?

If you do, that’s not a good sign. But believing you may need to win the lottery to retire is somewhat understandable when the financial struggle facing a majority of North Americans is considered: 78% of American full-time workers are living paycheck-to-paycheck, and 71% of all American workers are currently in debt.

When you’re in a financial hole, saving for your future may feel like a gamble in the present. But believing that “it’s impossible to save for retirement” is just one of many bad money ideas floating around. Following are a few other common ones. Do any of these feel true to you?

Bad Idea #1: I shouldn’t save for retirement until I’m debt free.
False! Even as you’re working to get out from under debt, it’s important to continue saving for your retirement. Time is going to be one of the most important factors when it comes to your money and your retirement, which leads right into the next Bad Idea…

Bad Idea #2: It’s fine to wait until you’re older to save.
The truth is, the earlier you start saving, the better. Even 10 years can make a huge difference. In this hypothetical scenario, let’s see what happens with two 55-year-old friends, Baxter and Will.

  • Baxter started saving when he was 25. Over the next 10 years, Baxter put away $3,000 a year for a total of $30,000 in an account with an 8% rate of return. He stopped contributing but let it keep growing for the next 20 years.
  • Will started saving 10 years later at age 35. Will also put away $3,000 a year into an account with an 8% rate of return, but he contributed for 20 years (for a total of $60,000).

Even though Will put away twice as much as Baxter, he wasn’t able to enjoy the same account growth:

  • Baxter would achieve account growth to $218,769.
  • Will’s account growth would only be to $148,269 at the same rate of return.

Is that a little mind-bending? Do we need to check our math? (We always do.) Here’s why Baxter ended up with more in the long run: Even though he set aside less than Will did, Baxter’s money had more time to compound than Will’s, which, as you can see, really added up over the additional time. So what did Will get out of this? Unfortunately, he discovered the high cost of waiting.

Keep in mind: All figures are for illustrative purposes only and do not reflect an actual investment in any product. Additionally, they do not reflect the performance risks, taxes, expenses, or charges associated with any actual investment, which would lower performance. This illustration is not an indication or guarantee of future performance. Contributions are made at the end of the period. Total accumulation figures are rounded to the nearest dollar.

Bad Idea #3: I don’t need life insurance.
Negative! Financing a well-tailored life insurance policy is an important part of your financial strategy. Insurance benefits can cover final expenses and loss of income for your loved ones.

Bad Idea #4: I don’t need an emergency fund.
Yes, you do! An emergency fund is necessary now and after you retire. Unexpected costs have the potential to cut into retirement funds and derail savings strategies in a big way, and after you’ve given your last two-weeks-notice ever, the cost of new tires or patching a hole in the roof might become harder to cover without a little financial cushion.

Are you taking a gamble on your retirement with any of these bad ideas?

  • Share:


May 15, 2019

3 Advantages to Being the Early Bird

3 Advantages to Being the Early Bird

Extra-large-blonde-roast-with-a-double-shot-of-espresso, anyone?

As the old saying goes, “The early bird catches the worm.” But not everyone is an early riser, and getting up earlier than usual can throw off a night owl’s whole day.

But there are a couple of things that, if started early in life (and with copious amounts of caffeine, if you’re starting early in the day, too), could benefit you greatly later in life. For example, learning a second language.

The optimal age range for learning a second language is still up for debate among experts, but the consensus seems to be “the younger you start, the better.” It’s a good idea to start early – giving your brain an ample amount of time to develop the many agreed upon benefits of being bilingual that don’t show up until later in life:

  • Postponed onset of dementia and Alzheimer’s (by 4.5 years)
  • Much more efficient brain activity – more like a young adult’s brain
  • Greater cognitive reserve and ability to cope with disease

Imagine combining that increased brain power with a comfortable retirement – an important goal to start working towards early in life!

Here are 3 big advantages to starting your retirement savings early:

1. Less to put away each month.
Let’s say you’re 40 years old with little to no savings for retirement, but you’d like to have $1,000,000 when you retire at age 65. Twenty-five years may seem like plenty of time to achieve this goal, so how much would you need to put away each month to make that happen?

If you were stuffing money into your mattress (i.e., saving with no interest rate or rate of return), you would need to cram at least $3,333.33 in between the layers of memory foam every month. How about if you waited until you were 50 to start? Then you’d need to tuck no less than $5,555.55 around the coils. Every. Single. Month.

A savings plan that aggressive is simply not feasible for a majority of North Americans. Nearly half of Canadians are just getting by, living paycheck-to-paycheck. So it makes sense that the earlier you start saving for retirement, the less you’ll need to put away each month. And the less you need to put away each month, the less stress will be put on your monthly budget – and the higher your potential to have a well-funded retirement when the time comes.

But what if you could start saving earlier and apply an interest rate? This is where the second advantage comes in…

2. Power of compounding.
The earlier you start saving for retirement, the longer amount of time your money has to grow and build on itself. A useful shortcut to figuring out how long it would take your money to double is the Rule of 72.

Never heard of it? Here’s how it works: Take the number 72 and divide it by your annual interest rate. The answer is approximately how many years it will take for money in an account to double.

For example, applying the Rule of 72 to $10,000 in an account at a 4% interest rate would look like this:

72 ÷ 4 = 18

That means it would take approximately 18 years for $10,000 to grow to $20,000 ($20,258 to be exact).

Using this formula reveals that the higher the interest rate, the less time it’s going to take your money to double, so be on the lookout for the highest interest rate you can find!

Getting a higher interest rate and combining it with the third advantage below? You’d be on a roll…

3. Lower life insurance premiums.
A well-tailored life insurance policy may help protect retirement savings. This is particularly important if you’re outlived by your spouse as he or she approaches their retirement years.

End-of-life costs can deal a serious blow to retirement savings. If you don’t have a strategy in place to help cover funeral expenses and the loss of income, the money your spouse might need may have to come out of your retirement savings.

One reason many people don’t consider life insurance as a method of protecting their retirement is that they think a policy would cost too much.

How much do you think a $250,000 term life insurance policy would cost for a healthy 30-year-old?

Less than $14 per month. That’s a cost that would easily fit into most budgets!

You may still need a little caffeine for the extra kick to get an early start on powering up your brain (or your retirement savings), but sacrificing a few brand-name cups of coffee per month could finance a well-tailored life insurance policy that has the potential to protect your retirement savings.

Contact me today, and together we can work on your financial strategy for retirement, including what kind of life insurance policy would best fit you and your needs. As for your journey to the brain-boosting benefits of being bilingual – just like with retirement, it’s never too late to start. And I’ll be here to cheer you on every step of the way!

  • Share:


May 13, 2019

6 Financial Commitments EVERY Parent Should Educate Their Kids About

6 Financial Commitments EVERY Parent Should Educate Their Kids About

Your first lesson isn’t actually one of the six.

It can be found in the title of this article. The best time to start teaching your children about financial decisions is when they’re children! Adults don’t typically take advice well from other adults (especially when they’re your parents and you’re trying to prove to them how smart and independent you are).

Heed this advice: Involve your kids in your family’s financial decisions and challenge them with game-like scenarios from as early as their grade school years.

Starting your kids’ education young can help give them a respect for money, remove financial mysteries, and establish deep-rooted beliefs about saving money, being cautious regarding risk, and avoiding debt.

Here are 6 critical financially-related lessons EVERY parent should foster in the minds of their kids:

1. Co-signing a loan

The Mistake: ‘I’m in a good financial position now. I want to be helpful. They said they’ll get me off the loan in 6 months or so.’

The Realities: If the person you’re co-signing for defaults on their payments, you’re required to make their payments, which can turn a good financial situation bad, fast. Also, lenders are not incentivized to remove co-signers – they’re motivated to lower risk (hence having a co-signer in the first place). This can make it hard to get your name off a loan, regardless of promises or good intentions. Keep in mind that if a family member or friend has a rough credit history – or no credit history – that requires them to have a co-signer, what might that tell you about the wisdom of being their co-signer? And finally, a co-signing situation that goes bad may ruin your credit reputation, and more tragically, may ruin your relationship.

The Lesson: ‘Never, ever, EVER, co-sign a loan.’

2. Taking on a mortgage payment that pushes the budget

The Mistake: ‘It’s our dream house. If we really budget tight and cut back here and there, we can afford it. The bank said we’re pre-approved…We’ll be sooo happy!’

The Realities: A house is one of the biggest purchases couples will ever make. Though emotion and excitement are impossible to remove from the decision, they should not be the driving forces. Just because you can afford the mortgage at the moment, doesn’t mean you’ll be able to in 5 or 10 years. Situations can change. What would happen if either partner lost their job for any length of time? Would you have to tap into savings? Also, many buyers dramatically underestimate the ongoing expenses tied to maintenance and additional services needed when owning a home. It’s a general rule of thumb that home owners will have to spend about 1% of the total cost of the home every year in upkeep. That means a $250,000 home would require an annual maintenance investment of $2,500 in the property. Will you resent the budgetary restrictions of the monthly mortgage payments once the novelty of your new house wears off?

The Lesson: ‘Never take on a mortgage payment that’s more than 25% of your income. Some say 30%, but 25% or less may be a safer financial position.’

3. Financing for a new car loan

The Mistake: ‘Used cars are unreliable. A new car will work great for a long time. I need a car to get to work and the bank was willing to work with me to lower the payments. After test driving it, I just have to have it.’

The Realities: First of all, no one ‘has to have’ a new car they need to finance. You’ve probably heard the expression, ‘a new car starts losing its value the moment you drive it off the lot.’ Well, it’s true. According to CARFAX, a car loses 10% of its value the moment you drive away from the dealership and another 10% by the end of the first year. That’s 20% of value lost in 12 months. After 5 years, that new car will have lost 60% of its value. Poof! The value that remains constant is your monthly payment, which can feel like a ball and chain once that new car smell fades.

The Lesson: ‘Buy a used car you can easily afford and get excited about. Then one day when you have saved enough money, you might be able to buy your dream car with cash.’

4. Financial retail purchases

The Mistake: ‘Our refrigerator is old and gross – we need a new one with a touch screen – the guy at the store said it will save us hundreds every year. It’s zero down – ZERO DOWN!’

The Realities: Many of these ‘buy on credit, zero down’ offers from appliance stores and other retail outlets count on naive shoppers fueled by the need for instant gratification. ‘Zero down, no payments until after the first year’ sounds good, but accrued or waived interest may often bite back in the end. Credit agreements can include stipulations that if a single payment is missed, the card holder can be required to pay interest dating back to the original purchase date! Shoppers who fall for these deals don’t always read the fine print before signing. Retail store credit cards may be enticing to shoppers who are offered an immediate 10% off their first purchase when they sign up. They might think, ‘I’ll use it to establish credit.’ But that store card can have a high interest rate. Best to think of these cards as putting a tiny little ticking time bomb in your wallet or purse.

The Lesson: ‘Don’t buy on credit what you think you can afford. If you want a ‘smart fridge,’ consider saving up and paying for it in cash. Make your mortgage and car payments on time, every time, if you want to help build your credit.’

5. Going into business with a friend

The Mistake: ‘Why work for a paycheck with people I don’t know? Why not start a business with a friend so I can have fun every day with people I like building something meaningful?’

The Realities: “This trap actually can sound really good at first glance. The truth is, starting a business with a friend can work. Many great companies have been started by two or more chums with a shared vision and an effective combination of skills. If either of the partners isn’t prepared to handle the challenges of entrepreneurship, the outcome might be disastrous, both from a personal and professional standpoint. It can help if inexperienced entrepreneurs are prepared to:

  • Lose whatever money is contributed as start-up capital
  • Agree at the outset how conflicts will be resolved
  • Avoid talking about business while in the company of family and friends
  • Clearly define roles and responsibilities
  • Develop a well-thought out operating agreement

The Lesson: ‘Understand that the money, pressures, successes, and failures of business have ruined many great friendships. Consider going into business individually and working together as partners, rather than co-owners.’

6. Signing up for a credit card

The Mistake: ‘I need to build credit and this particular card offers great points and a low annual fee! It will only be used in case of emergency.’

The Reality: There are other ways to establish credit, like paying your rent and car loan payments on time. The average American household carries a credit card balance averaging over $16,000. Credit cards can lead to debt that may take years (or decades) to pay off, especially for young people who are inexperienced with budgeting and managing money. The point programs of credit cards are enticing – kind of like when your grocer congratulates you for saving five bucks for using your VIP shopper card. So how exactly did you save money by spending money?

The Lesson: ‘Learn to discipline yourself to save for things you want to buy and then pay for them with cash. Focus on paying off debt – like student loans and car loans – not going further into the hole. And when you have to get a credit card, make sure to pay it off every month, and look for cards with rewards points. They are, in essence, paying you! But be sure to keep Lesson 5 in mind!’

  • Share:


May 8, 2019

What is your #1 financial asset?

What is your #1 financial asset?

What is your #1 financial asset? It’s not your house, your retirement fund, or your rare baseball card collection gathering dust.

Your most valuable financial asset is YOU!
Today – Labor Day, the unofficial last day of summer – let’s look at ways you can develop your skills and outlook in the workforce as we move from summertime vacation mode into finishing 2018 strong.

You might be savvy at home improvement, you might be a whiz with your finances, or you might have the eye to spot a hidden treasure at a yard sale, but how do you increase your value as a laborer in the workforce? One of the top traits of successful people is that they come up with a plan and they execute. Waiting for things to happen or taking the crumbs life tosses their way isn’t on their to-do list. Whether you’re dreaming of a secure future for yourself and your family, or if you want to build a career that enables you to help others down the road (or both!), the path to your goal and how fast you get there is up to you.

Increase your value as an employee
Working for someone else doesn’t have to feel like a prison sentence. In a recent study, nearly 60% of entrepreneurs worked full time as an employee for someone else while planning and building their own business on the side. Being employed is a chance to learn alongside experienced mentors, and prime time to experiment with how you can best add value. In many cases, successful entrepreneurs spent their time in the workforce amassing a wealth of information on how businesses are run, making mental notes on what doesn’t work, and practicing what can be done better.

View your time as an employee as an opportunity to hone your problem solving skills. It’s a mindset – one that can make you a more valuable employee and prepare you for great things later. Being seen as a problem solver can grant you more opportunity for promotions, pay increases, greater responsibility, and perhaps most importantly, open up more chances for life-enriching experiences.

Build your financial strategy
While you’re working to increase your value as a laborer, you’ll benefit from steady footing before taking your next big step. This is where building a solid financial strategy comes into play. Nearly everyone has the potential to be financially secure. Where most find trouble is often due to not having a plan or not sticking to the plan. A few simple principles can guide your finances, setting you up for a future where you have freedom to choose the life you envision.

  • Pay yourself first. Starting early and continuing as your earnings grow, begin the habit of paying yourself first. Simply, this means putting away some money every month or every paycheck that can help you reach your financial goals over time. Ideally, this money will be invested where it can grow. The goal is to get the money out of harm’s way, where you would have to think twice before dipping into your savings before you spend.
  • Develop a budget and consider expenses carefully. Think about expenditures before opening your wallet and swiping that credit card. Avoid debt wherever possible. Most people are able to have more money left over at the end of the month than they might realize. Don’t be afraid to tell yourself “no” so you can reach a bigger goal.
  • Plan for loved ones with life insurance. Here is where the value you provide your family through your hard work comes into sharp focus. Life insurance is essentially income replacement, should the worst happen. Meet with your financial professional and put a tailored-to-you life insurance policy in place that assures your family or dependents are taken care of.

Put your skills to work as a leader
Once you’ve established a level of financial security, now is the time to think about giving back by providing opportunities and helping others to realize their goals. There’s an old saying: “You’ll never get rich working for someone else.” While that’s not always true, trying to realize your long-term financial goals in an entry-level position might be an uphill climb. Moving up into a leadership position can teach you new skills and can increase your earning power. The average salary for managers approaches six figures!

You might even be ready to branch out on your own, investing the knowledge and leadership skills you’ve gained over the years in your own venture. Consider becoming an entrepreneur with your own financial services business – this can allow you to help others while building on your continuing success as a financial professional.

Whether you choose to strike out on your own, start a new part-time business, or grow within the organization or industry you’re in now, there are key traits that will help you succeed. Having a future-driven, forward-thinking mindset will guide your decisions. Your sense of commitment and the leadership skills you’ve honed on your journey will define your career – and perhaps even your legacy – as others learn from your example and use the same principles to guide their own success.

  • Share:

April 24, 2019

Some Numbers Are Hard to Believe – Like These!

Some Numbers Are Hard to Believe – Like These!

1.32 billion people log in to Facebook every day.

Apple has now sold over 1 billion iPhones. Google processes 1.2 trillion searches every year. And – perhaps the most difficult to believe of them all – the world hotdog eating record stands at 70 dogs in 10 minutes. I apologize ahead, but just visualize that. Seven hotdogs down the hatch every minute.

Here’s another number that’s almost beyond comprehension: 56% of Americans have less than $10,000 in retirement savings. You may be thinking – how can that be? Sadly, it’s true. Here’s another number that’s hard to… swallow (again, I apologize). One out of 4 Americans 65 and over rely on Social Security as their only source of retirement income. Yes, you read that right – 25%! It’s no wonder that 60% of Baby Boomers are more afraid of outliving their money than dying.

Why share these hard to believe numbers? To motivate you – at whatever age you are today – that you can start saving more right now. If you want to have a million dollars at the age of 65, how much do you need to start saving every month? That depends on your current age. If you’re 25, you’ll need to save a minimum of $158.12 per month. At 35, the amount jumps to $442.00 per month. At 45, it’s $1,317 monthly. At 55, you’ll have to save $4,882.00 per month. And at 60, you’d have to save $12,913.00 every month.

How much do you need to save to hit your goals? What’s the right financial vehicle to help you do it? Those are important questions. Best not to wait to find the answers. Contact me, and let’s get to work on a strong insurance strategy.

  • Share:


April 22, 2019

A Pocket Guide to Homeowners Insurance

A Pocket Guide to Homeowners Insurance

Homeowners insurance should bring peace of mind.

The right policy is there to help protect you if something happens to your home. Since a home may be the most significant investment many of us make in our lives, the proper homeowners insurance should be a major consideration.

Getting the right homeowners insurance is essential, but doesn’t have to be difficult. Still, how do you know if you’re selecting the right type of insurance policy for your house? Read on for answers to some common questions you might have.

What is the purpose of a homeowners insurance policy?
A homeowners insurance policy is a contract by which an insurance company agrees to pay for repairs or to replace your home or property if it is involved in a covered loss, such as a fire. A home insurance policy may also offer you liability protection in case someone is injured on your property and files a lawsuit.

Do I have to have homeowners insurance?
Your mortgage company will probably require a homeowners insurance policy. A lender wants to make sure their investment is protected should a catastrophe strike. The mortgage company would need you to insure your home for the cost to replace it if it were to be destroyed in a covered accident.

How do I know how much insurance to buy for my home?
The limit – or amount of insurance you place on your home – is determined by several factors. The construction of your home is typically going to be the largest determinant of the cost to replace it. So consider what your home is made of. Construction types include concrete block, masonry, and wood frame. Also, consider the size of your home.

Personal property is another consideration when determining how much insurance to purchase for your home. A typical homeowners insurance policy usually offers a personal property limit equal to half the replacement cost of your home. So if your home is insured for $100,000, your policy may automatically assign a personal property limit of $50,000.

What is the best deductible for a homeowners insurance policy?
When it comes to deductibles, consider selecting one that you can easily and quickly come up with out of pocket, just in case. Homeowners insurance policy deductibles may range from $500 to $10,000. Some policies offer percentage deductibles for certain damages, such as windstorm damage. For example, a coastal resident may have a windstorm deductible of two percent of the dwelling limit and a $1,000 deductible for all other perils.

There may be some cost savings features when you select a higher deductible on your homeowners insurance. Talk with a licensed insurance professional about your deductible options and premium savings.

Know the policy exclusions
All homeowners insurance policies typically contain exclusions for accidents and damages they don’t cover. For example, your policy likely does not cover damage to your home caused by an ongoing maintenance problem. Also, most homeowners insurance policies don’t automatically cover losses resulting from a flood.

Exclusions are important because they drive coverage. Talk to your insurance professional about your policy’s exclusions.

Know the basics and talk to a professional
As far as homeowners insurance policies are concerned, it’s crucial for homeowners to know the basics – limits, coverages, deductibles, and special exclusions. If you have specific concerns about your homeowners insurance, seek guidance from a licensed insurance professional.

  • Share:


This article is for informational purposes only and is not intended to promote any certain products, plans, or strategies that may be available to you. Before taking out any loan or enacting a funding strategy, seek the advice of a licensed financial professional, realtor, accountant, and/or tax expert to discuss your options.

April 15, 2019

Is a home really an investment?

Is a home really an investment?

The housing market has experienced major peaks and valleys over the past 15 years.

If you’re in the market for a new home, you might be wondering if buying a house is a good investment, or if it even should be considered an investment at all…

“Owning a home is the best investment you can make.”
We’ve all heard this common financial refrain: “Owning a home is the best investment you can make.” The problem with that piece of conventional wisdom is that technically a home isn’t an investment at all. An investment is something that (you hope) will earn you money. A house costs money. We may expect to save money over the long term by buying a home rather than renting, but we shouldn’t (typically) expect to earn money from buying a home.

So, a home normally shouldn’t be considered an investment, but it may offer some financial benefits. In other words, buying a home may be a good financial decision, but not a good investment. A home may cost much more than it gives back – especially at the beginning of ownership.

The costs of homeownership
One reason that buying a home may not be a good investment is that the cost of homeownership may be much higher than renting – especially at first. Many first time homebuyers are unprepared for the added expense of owning a home, plus the amount of time maintaining a home may often require. First-time homebuyers must be prepared to potentially deal with:

  • Higher utility costs
  • Lawn care
  • Regular maintenance such as painting or cleaning gutters
  • Emergency home repairs
  • Higher insurance costs
  • Private Mortgage Insurance (PMI) if you don’t provide a full 20 percent down payment

A long term commitment
Another problem with considering a house as an investment is that it may take many years to build equity. Mortgages are typically interest heavy in the beginning. You can expect to be well into the life of your mortgage before you may see any real equity in your home.

Having the choice to move without worrying about selling your home is a benefit of renting that homeowners don’t enjoy. The freedom to move for a career goal, romantic interest, or even just a lifestyle choice is mostly available to a renter but may be out of reach for a homeowner. So, be sure to consider your long term goals and aspirations before you start planning to buy a house.

When is buying a home the right move?
Buying a home in many cases can be an excellent financial decision. If you are committed to living in a specific area but the rent is very high, homeownership may have some benefits. Some of those may be:

  • Not having a landlord make decisions about your property
  • Tax savings
  • Building equity
  • A stable place to raise a family

Buying a home: Not always a good investment, but may be a good financial decision
Although buying a home may not pay you in high returns, it can be an excellent financial decision. If owning a home is one of your dreams, go for it. Just be aware of the costs as well as the benefits. If you’ve always wanted to own your own home, then the rewards can be myriad – dollars can’t measure joy and the priceless memories you’ll create with your family.

  • Share:


This article is for informational purposes only and is not intended to promote any certain products, plans, or strategies for saving and/or investing that may be available to you. Market performance is based on many factors and cannot be predicted. Any examples used in this article are hypothetical. Before investing or enacting a savings or retirement strategy, seek the advice of a licensed financial professional, accountant, realtor, and/or tax expert to discuss your options.

April 10, 2019

When should you see a financial professional?

When should you see a financial professional?

Just about anyone may benefit from seeing a financial professional, but how do you know when it’s time to get some professional guidance?

Many people work through much of their financial life without needing to talk to a financial professional, but then something may change. Maybe you are approaching retirement and want to make sure you have your bases covered. Perhaps you just received an inheritance and aren’t quite sure what to do with it, or maybe you received a big promotion with a substantial raise and want a little help with your existing financial strategy.

Whatever the case may be, here are a few signposts that indicate it may be time to see a financial professional.

You are unsure about your financial future
If when thinking about your financial future, and you keep coming up with a blank slate, a financial professional may help you formulate a solid savings strategy. If you’re feeling overwhelmed by differing financial responsibilities, a conversation with a financial professional may help you sort it all out and develop a roadmap. If you’re juggling a lot of financial balls, such as student loan debt, retirement savings, credit card debt, building an emergency fund, trying to buy a house, etc., you may benefit from some professional financial input.

You have inherited a large sum of money
Coming in to an inheritance is a key signal to seek out a financial professional. A financial professional may be able to help you determine the options you have to manage the money that you may not be aware of. The important thing with an inheritance is to take your time when making decisions and consider any long term implications for your family.

You want a professional opinion
Say you like managing your own money, and you’ve been doing a pretty good job of it. You read the financial news and keep up with the latest from Wall Street. You may feel you’re doing just fine without the help of a financial professional, and that’s great. But, getting a second opinion on your finances from a qualified financial professional may go a long way.

Sometimes with our finances we may have a blind spot – a risk we may not see, or an opportunity to do something better that we haven’t noticed. A financial professional may help you find those opportunities and help eliminate those risks. Even if your finance game is on a roll, a little professional guidance may help make it even better.

  • Share:

Subscribe to get my Email Newsletter