Severance Explained

July 6, 2022

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Bree Hudson

Bree Hudson

Independent Consultant

5830 Granite Parkway
Suite 100
Plano, Texas 75024

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April 6, 2022

Understanding the Inverted Yield Curve

Understanding the Inverted Yield Curve

Inverted Yield Curve. It’s a phrase you may have heard before. More financial gibberish, right?

Wrong.

Paying attention to the yield curve is critical because it may indicate there’s a recession on the horizon. And as of March 29, 2022, it inverted for the first time since 2019.¹

What Is the Yield Curve?

The yield curve is simply a graph that shows the interest rates of different types of bonds. With a normal yield curve, bonds with lower lifespans (i.e., maturity) have lower interest rates. That’s because they’ll face less inflation and need less growth to keep up. By that logic, bonds with longer maturities have higher interest rates.

Put simply, if the yield curve is normal, a bond with a two year maturity will have a lower interest rate than a bond with a thirty year maturity.

So what happens when that gets inverted? Bonds with short maturities have higher interest rates, and bonds with long maturities have lower interest rates.

Why is that a big deal? Because it’s consistently correlated with economic recession. There have been 28 inverted yield curves since 1900, and 22 have correlated with recessions.²

And the average lead time from when the yield curve inverted to when the recession began was around 22 months.

This is not to say that you should start buying land in West Virginia or emergency rations. These are unprecedented times, and there may be other factors at play. But it’s at least a check engine light for your finances. Are you prepared for job instability? Is your emergency fund fully stocked? The time to start preparing for these possibilities is now. Meet with your financial pro today to make sure you’re prepared for whatever the future holds.

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¹⁺² “Explainer: U.S. yield curve inversion - What is it telling us?” David Randall, Davide Barbuscia and Saqib Iqbal Ahmed, Reuters, Mar 29, 2022, https://www.reuters.com/business/finance/us-yield-curve-inversion-what-is-it-telling-us-2022-03-29/

April 4, 2022

Rising Interest Rates and You

Rising Interest Rates and You

In mid-March, the Federal Reserve increased interest rates for the first time since 2018.¹

The Fed’s benchmark rate rose from .25% to .50%.

Now here’s the big question…

So what? Who cares?

You’re facing your share of financial challenges. Rent keeps climbing. The job market is in chaos. Gas prices are punishing. And almost everything in the grocery store just keeps getting more and more expensive. Who cares if the suits in Washington are changing made-up numbers on their spreadsheets?

The answer? YOU should.

Here’s why…

The Fed uses interest rates to combat inflation. The lower the interest rate, the higher inflation can rise. High interest rates tend to squash inflation.

That’s because interest rates impact demand. Think about it—are you more likely to borrow money when interest rates are low, or when they’re high? Everyone in their right mind will say low. So when the Fed lowers rates, a spending frenzy ensues. People borrow money to invest, start businesses, buy cars, buy homes, take vacations, get that game console they’ve been wanting, and to finally have that checkup they’ve been putting off. In other words, demand for everything skyrockets.

So what did the Fed do when a global pandemic shut down economies, closed businesses, and locked people indoors? They slashed interest rates from already historic lows.

And it worked, perhaps too well. Consider the housing market. In the dark early days of the pandemic, no one left their homes. Mortgage rates plummeted. And people noticed. More and more people took advantage of the situation to buy new homes. The demand for housing soared. So did home prices.² Cue the bidding wars and escalation clauses, and now we’re paying a king’s ransom for a 1 bed, 1 bath hovel.

And that’s been repeated in industry after industry as climbing demand meets clogged supply chains.

Now, the Fed is boosting interest rates, presumably to soften demand and discourage spending. Given the inflation of 2021 and early 2022, it’s an understandable move!

It’s critical to note that the Fed’s interest rate hike isn’t a guarantee—inflation could plummet, or it could soar. But it’s worth noting. It may even merit a call to a financial pro. They’ll be equipped to see if your financial strategy will be impacted by higher interest rates.

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¹ “Federal Reserve approves first interest rate hike in more than three years, sees six more ahead,” Jeff Cox, CNBC, Mar 16 2022 https://www.cnbc.com/2022/03/16/federal-reserve-meeting.html

² The housing market faces its biggest test yet, Lance Lambert, Fortune, March 28, 2022, https://fortune.com/2022/03/28/mortgage-rate-hike-could-slow-the-housing-market/#:~:text=When%20the%20pandemic%20struck%20two,to%20jump%20into%20the%20market.

March 28, 2022

Does Work-Life Balance Make Any Sense?

Does Work-Life Balance Make Any Sense?

It’s a well-known fact that work can be tough on your health and wellbeing.

But is it possible to have a healthy work-life balance? And if not, should everyone just resign themselves to the idea that they must choose between their careers or their families?

The term “work-life balance” is often used to describe the ideal of maintaining equal priorities between your work and personal life. But is this balance really possible? And if not, does that mean we should just accept that work will always come first?

There’s no denying that work can be demanding and time consuming. But many people feel that they can’t just leave their work at the office—it often follows them home in the form of stress, worries, or even arguments with loved ones.

On the other hand, it can be tough trying to fit in all the things you want to do with your personal time, and you may even feel like you’re sacrificing your career in order to have fulfilling experiences with your family.

So what’s the answer? Is work-life balance really possible, or is it just an unattainable fantasy?

The answer to this question is tricky, as it depends on individual circumstances. For some people, having a good work-life balance is definitely possible—they may have a job they love that doesn’t consume all their time, and they may be able to fit in personal commitments.

But for others, it’s a challenge. CEOs, lawyers, engineers, business owners, doctors, and high achievers often wake up to find they’ve spent their lives prioritizing their careers over their families, friends, and making memories. It’s one of the worst realizations a person can have.

Here’s a different take on the problem—what if the question isn’t about how to balance work and life, but about what you actually want?

Do you want a career full of travel and boardroom dealings?

Do you want a happy home surrounded by white picket fences?

Do you want peace, quiet, and a few acres with grass, trees, and streams?

Do you want limitless time to exercise your creativity?

These are tough questions with no easy answers. You may find yourself nodding to all of the above!

But here’s the truth—only one can be your top priority.

Decide what matters most for you. Then, integrate the rest into your vision of your life.

Prioritize your career above all else? Create a 5-year plan that will get you to your ideal job and then make it happen.

Value your personal relationships and family time above your career? Then build a business or take on freelance work that allows you the time and freedom to do the things you love outside of work.

The key is to find what works for you. And that means being honest with yourself about what you really want.

So ask yourself—what do you want? And how can you make it a reality?

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March 24, 2022

The Complete Guide to Buying Happiness

The Complete Guide to Buying Happiness

You’ve probably heard that money can’t buy happiness. But what if it could?

What if you were able to find a way of spending your money that made you happy, and the more you spent on it, the happier you became? Doesn’t sound possible, does it? But it IS entirely possible.

At least, that’s the premise of a paper written by scholars from Harvard, the University of British Columbia, and the University of Virginia. The title? “If Money Doesn’t Make You Happy Then You Probably Aren’t Spending It Right.”

The thesis? If you spend money right, it makes you happy. If you spend money wrong, it makes you feel… well, meh.

Here’s what they found…

Buy experiences, not things. The researchers found that people tend to be happier when they spend money on experiences rather than things. That’s because experiences provide us with opportunities to create memories, which can be recalled and enjoyed long after the experience is over. And as you get older, those memories become constant sources of joy, satisfaction, and happiness.

So if you’re looking to spend your money in a way that will make you happy, focus on things like travel, getaways, skydiving, sunsets, long walks, and conversations. Those will remain with you for the rest of your life.

Help others first. It’s a fact—social relations are critical for happiness. The better your relationships, the greater your happiness.

So it follows that one of the best ways to spend your money in a way that will make you happy is to help others. This could mean donating money to charity, or simply spending time with friends and family.

Focus on little pleasures. Another way to spend your money in a way that will make you happy is to focus on little pleasures. This one seems counterintuitive—shouldn’t you save a whole bunch of money and spend it on something fancy?

However, the paper cites research that frequency is more powerful than intensity. Is eating a 12oz cookie better than eating a 6oz cookie? Absolutely. But is it two times better? Probably not. It’s a concept called diminishing marginal utility—the more you indulge in something, the less enjoyable it becomes.

What does that mean? Frequent day trips beat rare but epic vacations. Fun, quiet date nights once per week beat going all out twice a year.

Pay now, consume later. Again, this seems counterintuitive. But it makes sense when you think about it.

Consider the all-too-common alternative—buy now, pay later. First off, this model encourages rampant spending. Without facing immediate consequences, it’s just too tempting to rack up debt and buy stuff you don’t need.

But more than that, it entirely removes antici…

.. pation from the equation. And that’s half the fun!

So instead of whipping out the credit card, save up. Pay cash. Delay gratification. You’ll enjoy your purchase more, and you’ll be happier overall.

So there you have it! The complete guide to spending your money in a way that will make you happy. Just remember—experiences over things, helping others first, little pleasures, and pay now, consume later. Follow these tips, and you may find that your money’s doing its actual job—making you happy.

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March 21, 2022

Homemakers Need Life Insurance, Too

Homemakers Need Life Insurance, Too

Are you a stay-at-home parent? Even if you’re not contributing monetarily to your family’s income, you still need life insurance.

That’s because you offer support to your family that’s as valuable as the main breadwinner.

Let’s break it down…

The goal of life insurance is to replace income. If the main income earner dies, the death benefit can replace their salary. It offers financial headroom for grieving families to help put their lives back together.

However, a stay-at-home parent provides services for their family that are just as important and can be expensive to replace.

For instance, what if you provide childcare for your family? Replacing your services could cost $8,355 yearly per child.¹

Then factor in other potential costs like…

  • Education
  • House cleaning
  • Driving kids to events
  • Running errands
  • Managing home repairs and yard maintenance
  • Planning meals, shopping, and cooking

And so much more! These costs are simply a snapshot of how much life insurance a homemaker could need. It should be enough to cover expenses to replace all the work you do around the house and on your family’s behalf.

If you’re not sure what that number is, contact me. We can sit down, review your family’s situation, and draw up a strategy to help provide for your loved ones, no matter what.

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“Parents spend an average of $8,355 per child to secure year-round child care,” Megan Leonhardt, CNBC, May 19 2021, https://www.cnbc.com/2021/05/19/what-parents-spend-annually-on-child-care-costs-in-2021.html

March 16, 2022

What You May Not Know About Life Insurance

What You May Not Know About Life Insurance

Life insurance has one main job—helping to protect your family’s financial security in the event of your death.

And it does that by providing your loved ones with a one-time payout that replaces your income.

Your family depends on you to provide. It’s how they afford necessities like food and shelter. It’s also how you support them with their lifestyle.

But if you pass away, your income dries up. Your family would have to face their financial responsibilities with fewer resources.

That’s where life insurance helps. If you pass away, your family receives a benefit that can help ease the financial pressure.

Instead of a yearly salary, your loved ones now receive a once-in-a-lifetime salary.

That’s why it’s common to base the size of your life insurance policy on your income. Rule of thumb, you want a policy that’s 10X your annual income.

So if you currently earn $60,000, you probably would need a $600,000 policy.

There are factors besides income to consider. For instance, your family may need more protection if you’re paying off a mortgage.

In conclusion, if anyone you love depends on your income, you need life insurance. It’s a way to provide for your family, even if you’ve passed away.

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This article is for informational purposes only and is not intended to promote any certain products, plans, or policies that may be available to you. Any examples used in this article are hypothetical. Before enacting a savings or retirement strategy, or purchasing a life insurance policy, seek the advice of a licensed and qualified financial professional, accountant, and/or tax expert to discuss your options.

March 14, 2022

3 Saving Strategies For College

3 Saving Strategies For College

In this day and age, it seems like college tuition is skyrocketing.

Students and parents are increasingly reliant on loans to cover the cost of higher education, often with devastating long-term results.¹

In this article we’ll cover three saving strategies to help you cover the cost of college without resorting to burdensome debt.

Strategy #1: Use “High-Yield” savings accounts. This strategy is simple—stash a portion of your income each month into a savings account. Then, when the time comes, use what you’ve saved to cover the costs of tuition.

Unfortunately, this strategy is riddled with shortcomings. The interest rates on “high yield” savings accounts are astonishingly low—you’d be hard pressed to find one at 1%.²

Even if you did, it wouldn’t be nearly enough. For example, if you had $3,000 saved for college in a savings account earning 1% interest per year, it would only grow to about $3,100 after four years—not enough to cover a whole semester’s tuition!

Even worse, inflation might increase the cost of tuition at a pace your savings couldn’t keep up with. Your money would actually lose value instead of gain it!

Fortunately, high-yield interest accounts are far from your only option…

Strategy #2: Consider traditional wealth building vehicles. That means mutual funds, Roth IRAs, savings bonds, indexed universal life insurance, and more.

The growth rates on these products are typically significantly higher than what you’d find in a high-yield savings account. You might even find products which allow for tax-free growth (the Roth IRA and IUL, for example).

But, typically, these vehicles have two critical weaknesses…

  1. They’re often designed for retirement. That means you’ll face fees and taxes if you tap into them before a certain age.

  2. They’re often subject to losses. A market upheaval could seriously impact your college savings.

Note that none of these vehicles are identical. They all have strengths and weaknesses. Consult with a licensed and qualified financial professional before you begin saving for college with any of these tools.

Strategy #3: Use education-specific saving vehicles. The classic example of these is the 529 plan.

The 529 is specifically designed for the purpose of saving and paying for education. That’s why it offers…

  • Tax advantages
  • Potential for compounding growth
  • Unlimited contributions

It’s a powerful tool for growing the wealth needed to help cover the rising costs of college.

The caveat with the 529 is that it’s subject to losses. It’s also very narrow in its usefulness—if your child decides not to pursue higher education, you’ll face a penalty to use the funds for something non-education related.

So which strategy should you choose? That’s something you and your financial professional will need to discuss. They can help you evaluate your current situation, your goals, and which strategy will help you close the gap between the two!

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Market performance is based on many factors and cannot be predicted. 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. Any examples used in this article are hypothetical. Before investing or enacting a savings or retirement strategy, seek the advice of a licensed and qualified financial professional, accountant, and/or tax expert to discuss your options.


¹ “Student Loan Debt: 2020 Statistics and Outlook,” Daniel Kurt, Investopedia, Jul 27, 2021, https://www.investopedia.com/student-loan-debt-2019-statistics-and-outlook-4772007

² “Best high-yield savings accounts in August 2021,” Matthew Goldberg, Bankrate, Aug 25, 2021, https://www.bankrate.com/banking/savings/best-high-yield-interests-savings-accounts/

March 14, 2022

Financial Essentials for Retiring Baby Boomers

Financial Essentials for Retiring Baby Boomers

Are Baby Boomers out of time for retirement planning?

At first glance, it might seem like they are. They’re currently aged 57-75, meaning a good portion have already retired!¹

And those who are still working have only a few precious years to create their retirement nest eggs and get their finances in order.

Perhaps you’re in that boat—or at least know someone who is. If so, this article is for you. It’s about some essential strategies retiring Baby Boomers can leverage to help create the futures they desire.

Eliminate your debt. The first step is getting rid of your debt. After all, it’s not optional in retirement—you’ll need every penny to fund the lifestyle you want.

That means two things…

  1. Don’t take on any new debt. No new houses, boats, cars, or credit card funded toys.
  2. Use a debt snowball (or avalanche) to eliminate existing debts.

That means focusing all of your financial resources on a single debt at a time, knocking out either the smallest balance or highest interest debt.

Eliminating, or at least reducing, your debt can help create financial headroom for you in retirement. It frees up more cash flow for you to spend on your lifestyle and on preparing for potential emergencies.

Maximize social security benefits. Delay Social Security as long as possible (or until age 70). Delaying Social Security increases your monthly payments, so it’s a simple way to maximize your benefit.

For example, if you started collecting Social Security at age 66, you would be entitled to 100% of your social security benefit. At 67, it increases to 108%, and by 70 it increases 132%. That can make a huge difference towards living your dream retirement lifestyle.

Check out the Social Security Administration’s website to learn more.

Protect your wealth and health with long-term care (LTC) coverage. The next step is to protect your assets from the burden of LTC. It’s a challenge 7 out of 10 retirees will have to overcome, and it can be costly—without insurance, it can cost anywhere between $20,000 and $100,000. That’s a significant chunk of your retirement wealth!²

The standard strategy for covering the cost of LTC is LTC insurance. It pays for expenses like nursing homes, caretakers, and adult daycares.

But it can be pricey, especially as you grow older—a couple, age 55, can expect to pay $2,080 annually combined, while a 65 year old couple will pay closer to $3,750.³

The takeaway? If you don’t have LTC coverage, get it ASAP. The longer you wait, the more cost—and risk—you potentially expose yourself to.

Pro-tip: If you have a permanent life insurance policy, you may be able to add a LTC rider to your coverage. Meet with a licensed and qualified financial professional to see if this option is available for you!

Review your income potential with a financial professional. The final step on your path to retirement is reviewing your income options. You want to strike a balance between maximizing your sources of cash flow and keeping control over your retirement plan.

Many retirees lean heavily on two primary income opportunities: Social security and withdrawals from their retirement savings accounts.

And that’s where a financial professional can help.

They can help you review your current retirement lifestyle goals, savings, and potential income. If there’s a gap, they can help come up with strategies to close it.

You’ve worked hard and made sacrifices—now it’s time to reap the rewards of all that elbow grease. Which of the essentials in this article do you need to tackle first?

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¹ “Boomers, Gen X, Gen Y, Gen Z, and Gen A Explained,” Kasasa, Jul 6, 2021, https://www.kasasa.com/articles/generations/gen-x-gen-y-gen-z

²”Long-term care insurance cost: Everything you need to know,” MarketWatch, Feb 19, 2021, https://www.marketwatch.com/story/long-term-care-insurance-cost-everything-you-need-to-know-01613767329

³ “Long-Term Care Insurance Facts - Data - Statistics - 2021 Reports,” American Association for Long-Term Care Insurance, https://www.aaltci.org/long-term-care-insurance/learning-center/ltcfacts-2021.php

March 7, 2022

Questions to Ask Before Buying a Home

Questions to Ask Before Buying a Home

Buying a home is one of the largest investments many people will ever make.

It’s also among the most complicated and time-consuming transactions. So before you sign on the dotted line, it’s best to ask yourself these key questions:

What are my needs for space?

How much can I afford to spend each month on my mortgage, utilities, and repairs?

Are there pre-existing problems with this property?

How is the neighborhood? Is it safe? Are the schools good? What kind of amenities are nearby (i.e., grocery stores, restaurants, sports)?

How much will I need for closing costs and my down payment?

What’s my strategy for a bidding war?

What are my needs for space? When you’re buying a home, it’s important to take stock of your needs for space. Do you need a lot of bedrooms for a growing family? A large backyard for barbecues and birthday parties? Or would you be happy with a more modest property that will save on monthly mortgage payments?

Planning ahead will help you stay within your budget and find the right property for your needs. Take time to sort through the options and be vigilant to rule out homes that may seem appealing at first glance, but might not truly serve your family.

If you’re unsure about what you need in a home, consult with a real estate agent who can help figure out the amenities that are best suited for you.

How much can I afford to spend each month? It’s important to be realistic about how much you can afford to spend each month on your mortgage. A good rule of thumb is that your mortgage payment should not be more than 30% of your monthly income. And remember—just because you’re pre-approved for a certain amount, that doesn’t mean it’s what you can actually afford to spend.

It’s also a good idea to have a budget for other costs associated with homeownership, such as property taxes, homeowner’s insurance, utilities, maintenance, and repairs. It’s impossible to fully estimate these costs in advance. But by planning ahead, you can get an idea of your potential monthly expenses and weigh them against your income.

Are there pre-existing problems with this property? It’s critical to be aware of any potential problems. This includes checking for any major repairs that may need to be done, as well as researching the surrounding neighborhood. Is this house in a flood plain? How is the foundation? When was the last time the roof was replaced?

It’s a good idea to have a home inspection done before making an offer on a property. This will help you get a better idea of the condition of the property and what repairs need to be made.

If you’re not comfortable with the condition of the property—no matter how beautiful or spacious the house is—it’s best to walk away and find a property that’s a better fit overall.

How is the neighborhood? Is it safe? Are the schools good? What kind of amenities are nearby? When you’re buying a home, it’s important to take into account the surrounding neighborhood. This includes researching crime rates, checking out traffic patterns, inquiring about the schools, and seeing how close you are to stores or activities that are important to you.

If you have children, it’s critical to research the schools in the area. You’ll want to make sure that there is a high-quality education available. You’ll also want to be aware of any negative reviews about the schools in the area.

How much will I need for closing costs and my down payment? There are a number of costs that you’ll need to budget for. This includes the down payment, closing costs, and moving expenses.

The downpayment is the amount of money that you pay upfront when you buy a home. It’s usually between 5% and 20% of the purchase price. So if you’re buying a $400,000 home, you’ll need to pay between $20,000 and $80,000 upfront.

Closing costs are the fees that are charged by the bank and the government when you buy a home. These costs can range from 2% to 5% of the purchase price. So in the example above, you would be paying between $8,000 and $20,000 in closing costs.

Moving expenses can range from $500 to $5,000, depending on how much stuff you have and how far you’re moving.

It’s important to budget for these costs ahead of time so that you’re not surprised when you sign the paperwork and are handed the keys.

What’s my strategy for a bidding war? It’s a problem that’s caught many off guard in the current housing market. That’s why it’s important to have a strategy in place. This includes knowing how much you’re willing to spend and being prepared to make a higher offer than the other buyers.

It’s also important to have your finances in order. This means that you should be pre-approved for a mortgage and have enough money saved up for your down payment.

If you’re not comfortable with the idea of a bidding war, it’s best to walk away and find a property that’s a lower price.

Buying a home is never an easy decision. That’s why these questions should all be considered ahead of time—preferably with your realtor—so they don’t catch you by surprise when buying a house! What other factors can you think of? Let us know what future homeowners might want to consider when purchasing a new home.

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March 2, 2022

Playing With F.I.R.E.

Playing With F.I.R.E.

Financial Independence. Retire Early. Sounds too good to be true, right?

But for many, it’s the dream. And for some, it’s even become a reality.

What is the Financial Independence Retire Early, or “F.I.R.E.” movement? It might be obvious, but it’s a movement of people who are striving to achieve financial independence so that they can retire early. How early? That’s up to each individual, but typically people in the F.I.R.E. movement are looking to retire between their 30s and 50s.

How are they doing it? By saving as much money as possible and living a frugal lifestyle. That might mean driving a used car, living in a modest house, and cooking at home instead of eating out. They scrimp and save wherever they can to save.

So why is the F.I.R.E. movement gaining in popularity? There are a few reasons…

Some people want freedom. They want the freedom to travel, to spend time with their family, and to do whatever they want without having to worry about money.

Others are tired of the rat race. They’re tired of working jobs they don’t love just so they can make money to pay for things they don’t really want. They’d rather be doing something they enjoy and have more control over their own lives.

And finally, people want security. They want the wealth they need to live comfortably and fear-free, and they want it now. They don’t want to wait until they’re 65 or 70 to start enjoying their retirement.

It’s a challenging path. Achieving financial independence and retiring early takes hard work, sacrifice, and planning. You’ll have to face financial challenges like covering health insurance, for one.

So if you’re thinking about joining the F.I.R.E. movement, what are some of the first steps?

1. Assess your finances. Figure out how much money you need to live on each month and how much you need to save to achieve financial independence.

2. Set financial goals. Determine where you want to be financially and create a plan to get there.

3. Make a budget and stick to it. Track your spending and make adjustments as needed so you can save more money.

4. Invest in yourself. Education is key, so invest in books, courses, and other resources that will help you build your wealth.

5. Stay motivated. Follow other F.I.R.E. enthusiasts online, read blogs and articles, and attend meetups to keep yourself inspired on your journey to financial independence.

So are you ready to play with F.I.R.E.?

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February 23, 2022

Is Saving Money on Utilities Worth the Effort?

Is Saving Money on Utilities Worth the Effort?

Penny pinchers and smart savers have developed dozens, perhaps hundreds, of ways to save money on their utility bills.

Have you heard of any of these…?

Putting rocks in the toilet tank to save money on water. Cranking down the thermostat in winter and cranking it up in the summer to save on power. Manically unplugging every appliance that’s not in use.

Maybe you knew a family growing up that used all these strategies to make ends meet. Or maybe it was your family!

But is it really a good idea to cut back on utilities?

If you’re backed into a financial corner or new to saving, it’s not a bad place to start. But if you’re working toward financial independence, you likely have greater obstacles to overcome.

Here’s a breakdown of the average American’s annual consumer spending…

Housing: $21,409

Transportation: $9,826

Food: $7,316

Personal insurance and pensions: $7,246

Healthcare: $5,177

Entertainment: $2,912

Cash Contributions: $2,283

Apparel and Services: $1,434

That’s a lot of money flying out the door each year!

Where do utilities fit into the picture? According to Nationwide, families spend an average of $2,060 on utilities each year.

That puts it towards the bottom of the average American’s budget.

Cutting your spending on housing, transportation, or food by one-third would free up more cash flow than reducing your utilities by half.

So before you invest in some space heaters or start lugging rocks into your bathroom, evaluate your overall spending. Are there problem areas where cutting back would create greater results?

If you answer yes, focus your time and attention first on those categories. Find a cheaper apartment or recruit roommates. Carpool with friends. Dine out less.

But if you’ve already budgeted and you still need more cash flow, turning off some lights and using an extra blanket or two at night won’t hurt.

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¹ “How much is the average household utility bill?” Nationwide, https://www.nationwide.com/lc/resources/personal-finance/articles/average-cost-of-utilities

² “Average annual expenditures of all consumer units in the United States in 2020, by type,” Statistia, Dec 9, 2021 https://www.statista.com/statistics/247407/average-annual-consumer-spending-in-the-us-by-type/#:~:text=This%20statistic%20shows%20the%20average,amounted%20to%2061%2C334%20U.S.%20dollars.

February 21, 2022

Debt is a Big Deal. Here's How to Use It Wisely

Debt is a Big Deal. Here's How to Use It Wisely

Debt must be respected. If you don’t take it seriously, it could derail your finances for good.

But while debt is no joke, it’s not necessarily bad. If handled wisely, debt can help you reach financial milestones and provide for your family.

It all starts with understanding the difference between good debt and bad debt.

Good debt is debt that you can afford and that can help you build wealth.

Think of it like this—often, you need to spend money to make money. But what if you don’t have mountains of cash to throw at every opportunity that comes your way?

That’s where good debt can help. It can give you the cash you need to seize opportunities like…

- Starting a business

- Buying a home

- Getting an education

Those can help you boost your income, purchase an appreciating asset, or increase your earning potential. And as long as you’ve done your homework and can afford your payments, good debt can help you leverage those opportunities with no regrets.

Bad debt is the exact opposite—it’s borrowing money to buy assets that lose value. That includes…

- Cars

- Video games

- Clothes

Debt can simply make these items more expensive than they already are. And what do you get in return? Nothing. Just more bills.

So if you find yourself borrowing money to buy things, stop and ask yourself: Am I making an investment? Do I think the value of this purchase will increase? Or am I simply spending because it feels good?

Here’s the takeaway—debt is a powerful tool that can be good or bad. Handle it wisely, and it can help you build businesses, buy homes, and increase your earning potential. Handle it carelessly, and you can cause serious harm to your financial stability. So do your homework, evaluate your opportunities, and meet with a licensed and qualified financial professional to see what good debt would look like for you.

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February 16, 2022

Manage Your Finances Like a Pro

Manage Your Finances Like a Pro

Do you ever feel like your money is going out the door as fast as it’s coming in?

Maybe you’ve tried budgeting, only to slip back into a pattern of unconscious spending.

Or maybe you’ve tried saving, but found that you simply don’t have enough cash at the end of each month.

If you’ve tried to get your finances in order but still struggle to stay afloat, this may be the article for you. Here are three dead simple things you can do right now to help you manage your money like a pro.

1. Download a budgeting app.

If you’re not a spreadsheet whiz, don’t worry. There are many free budgeting apps available that can help you keep your finances in order without breaking a sweat. Most of these apps make it easy to add transactions and set goals based on your income and expenses.

Best of all, some even sync with your bank account, so you don’t have to tally up your spending each month—the app does it for you!

Here are a few budgeting apps to consider…

Mint—Good overall budgeting app that syncs with your bank accounts

YNAB (You Need a Budget)—In-depth budgeting tool that’s more hands-on than other options

Mvelopes—Cash envelope budgeting system that syncs with your bank accounts

EveryDollar—Simple budget that requires manual input of expenses

Honeydue—Budgeting app designed specifically for couples

Each of these apps is free to use, but offer additional features for a monthly or annual fee.

2. Dial back subscriptions.

Do you have a gym membership, magazine subscriptions, or streaming services?

Better question—are you using your gym membership, magazine subscriptions, or streaming services?

If you’re like many, you’re shelling out money each month for subscriptions you don’t even use. You may have even forgotten that you’re still signed up for some of them!

But little by little, those subscriptions add up, depleting your cash flow each month.

So take some time to look at your transaction history to discover recurring charges. Then, cancel the ones you’re not using.

Pro-tip: You can also use apps like Truebill and Hiatus to help identify and cancel unwanted subscriptions.

3. Automate your savings.

Do you struggle to save money because of your spending habits? If so, it may be difficult to set aside cash while still having immediate access to it.

The good news is that you can set up an automatic transfer from your checking account to a savings account each month.

In fact, with this method, you don’t even have to think about it! It’s like paying a monthly subscription to a future of potential wealth and financial independence.

And it’s not difficult. Simply log in to your savings or retirement account and look for a transactions or transfers tab. Then, schedule a recurring deposit right after you get each paycheck. Just like that, you’ll automate a wealth building process that requires zero effort on your part.

If you want to manage your money like a pro, simply follow these three easy steps. With these simple moves in place, you’ll be watching your savings grow possibly faster than ever before!

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February 14, 2022

Tips for Saving Money on Homeowners Insurance

Tips for Saving Money on Homeowners Insurance

Trying to free up cash flow? Then look no further than your homeowners insurance.

That’s because there are several techniques you can use to help cut down your monthly premiums. Here are a few worth trying!

Go all out on security. One of the easiest ways to save money on homeowners insurance is to make your home more secure. Installing deadbolts, window locks, smoke detectors and fire alarms, motion detectors and video surveillance will not only help keep burglars out but may also reduce your premiums.

Just be sure to count the costs before you deck out your home. It may be more expensive to go all out on security than to pay your premiums as they are. Depending on how secure you already feel in your home, investing in extra measures may not be something you choose to do just yet.

Boost your credit score. Your credit score can have a big impact on your insurance premiums. The majority of insurers use it as a factor to determine what you will pay for homeowners insurance, so if your score is low, expect to pay more.

What can you do to improve your score? For starters, focus on paying all your bills on time. Next, reduce the balance on your credit cards. It’s a good idea to set up automatic monthly payments for your utility bills and other recurring expenses. It’s a simple, one-time action that can save your credit score from slip ups and oversights.

Eliminate attractive nuisances. If you have a swimming pool or trampoline on your property, expect to pay more for homeowners insurance. Insurers view them as attractive nuisances, and raise your premiums accordingly. That includes things like…

Swimming pools Trampolines Construction equipment Non-working cars Playground equipment Old appliances

It’ll be a weight off your shoulders—and your bank account.

Maximize discounts. You might be surprised by the wide range of discounts insurance companies offer homeowners. They include everything from not smoking to choosing paperless billing to membership in specific groups. It never hurts to ask your insurer what discounts are available.

Bundle your home insurance with auto insurance. Businesses love loyalty. And they’re not afraid to incentivize it. That’s why insurance companies will often reward you for bundling your home and auto insurance together. So if you already own a car, ask your insurer if you can purchase discounted home insurance. It may significantly lower your monthly rate.

Some methods are more obvious than others, but all of them can add up to big savings over time. Ask your financial professional for their insights, then reach out to your insurer. You may be surprised by how much you save!

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February 9, 2022

Why The Lottery Is So Addictive

Why The Lottery Is So Addictive

If you’ve ever played the lottery, then you know there is practically no chance of winning. You’re more likely to get struck by lightning than hit the jackpot.¹

But you also probably know that gambling is highly addictive. For some, there can be an undeniable draw to buying yet another ticket. Or pulling the lever on that slot machine again. Or buying into just one more hand of blackjack. Or making just one more ill-advised day trade.

Why? Because maybe, just maybe, this time will be different. This time, lady luck might save the day and solve your money problems.

There’s a quote from late comedian and lifelong gambler Norm MacDonald that captures this spirit perfectly…

“As long as the red dice are in the air, the gambler has hope. And hope is a wonderful thing to be addicted to.”

Now, if you fall into the black hole of gambling, you’ll find it’s a dead-end—gambling promises hope, but for many it delivers only disappointment and despair. How could it not? It dashes hopes time and time again, draining bank accounts and shattering relationships.

But here’s the thing—many leave the future to a wild bet without ever stepping foot in a casino or shady gas station.

They gamble that they’ll have enough for retirement, even though they do little to prepare.

They gamble that they won’t need long-term care, even though almost 70% will.²

They gamble that their incomes won’t dry up, even though employment isn’t guaranteed.

They gamble that they won’t pass away during their working years, even though the financial consequences could be devastating for their families.

And that’s all fine while the red dice are in the air. But when they land, your hopes could be dashed to pieces, triggering a financial crisis for you and the ones you love.

The takeaway is simple—hope is great, and hope is good. But hope alone isn’t enough. It’s far wiser—and it feels far better—to hope in well-laid plans than wild gambles.

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February 7, 2022

Why Debt Is A Big Deal

Why Debt Is A Big Deal

Debt is a word that strikes fear in the hearts of many. It ruins fortunes, causes untold stress, and topples governments.

Just ask a millennial about their financial struggles—student loan debt will certainly top their list.

But why? Why is debt so bad, anyway? After all, isn’t credit just money you can use now then pay back later? What’s the big deal?

Well, actually debt is a very big deal. In fact, it can make or break your personal finances.

This article isn’t for hardened debt fighters. You already know the damage debt can do.

But if you’re just starting your financial journey, take note before it’s too late. At best, debt is a tool. It certainly isn’t your friend. Here’s why…

It begins by lowering your cash flow. All those monthly payments bite into your paycheck, effectively lowering your income.

And that has consequences.

It can make it a struggle to afford a home. You simply lack the cash flow to afford mortgage payments.

It makes it a struggle to build wealth. Every spare penny goes towards making ends meet.

It makes it a struggle to maintain your lifestyle. You may find yourself choosing between the pleasures—and even the basics—of life and appeasing your creditors.

And that brings the risk of bankruptcy. It’s a last-ditch effort to erase an unpayable debt. It comes with a heavy price—creditors can take your home and possessions to make up for what you owe. And even if bankruptcy erases the debt, it will have a lasting impact on your credit score and financial future.¹

It can change your life forever, throwing your life into chaos.

Think about it—when was the last time someone smiled and fondly recalled that time they went bankrupt? Never. It’s a traumatic experience. This is something you want to avoid at all costs.

This isn’t to scare you into a debt free life or guilt you for using a credit card. Rather, it’s to educate you on the stakes. Debt isn’t something to be taken on lightly. It can have lasting consequences on your life, family, finances, and even mental health. Act accordingly.

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¹ “Bankruptcy: How it Works, Types & Consequences,” Experian, accessed Jan 7, 2022, https://www.experian.com/blogs/ask-experian/credit-education/bankruptcy-how-it-works-types-and-consequences/

February 2, 2022

Why It's Important to Protect Your Family With Life Insurance

Why It's Important to Protect Your Family With Life Insurance

If you have a family, you have many responsibilities.

You have a responsibility to help them celebrate promotions, birthdays, and holidays.

You have a responsibility to sit with them during their bad days, their break ups, their failures, their grief.

You have a responsibility to listen and understand, even if you have no clue what they’re trying to say.

You have a responsibility to own up when you mess up, and to forgive when they mess up.

And you wouldn’t trade those responsibilities for the world. In fact, they feel more like honors and privileges than burdens.

If you’re the breadwinner for your family, you have another responsibility and honor—to provide for them as best as you can.

It’s how you give them the big things, the little things, and everything in between.

But one tragic consequence of passing away is that you can no longer provide those things. You’re not there to help celebrate, to comfort, to listen, to forgive. In those ways, you’re truly irreplaceable.

That’s why many families choose life insurance. It’s an opportunity to provide for the ones they love.

The payout from life insurance, called a death benefit, gives their family cash that replaces the lost income. The family faces a long emotional journey of grief and healing. But they’re protected from a traumatic financial catastrophe.

In other words, life insurance gives you the power to fulfill one of your primary duties—provide for your family. And that’s one of the greatest gifts you can give.

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January 31, 2022

How to Get Financial Security Through Starting a Business

How to Get Financial Security Through Starting a Business

The idea of starting a business is often intimidating for people.

They might be afraid they don’t have the money to launch one, or they’re not sure if their ideas are good enough to turn into reality and make a profit. It sounds like the exact opposite of financial security!

But that doesn’t have to be you. There are strategies to get financial security through business ownership. You just need to know where to start. Here are some options.

1. Start part-time. It might seem contradictory to start as a part-time entrepreneur. But if you’re new to business ownership, it’s a great strategy. Why? Because it helps limit risk—you’re not relying on this business’s success to put food on the table. If it fails, it’s not going to hit so hard. And that risk limitation can make starting a business far less intimidating.

2. Stick with what you know. It’s normal to feel inspired to create the next Amazon, Google, or Apple. But one of the biggest mistakes new entrepreneurs make is biting off more than they can chew. Big ideas can be counterproductive if you don’t have experience in very competitive markets.

Instead, start small by choosing a field that you know. Are you secretly a guitar shredding maniac? Offer music lessons to your neighbors. Marketer by day? Become a marketing consultant by night.

There’s data to back up this strategy. Entrepreneurs with 3 years of experience in their industry are 85% more likely to succeed than entrepreneurs with no experience.¹

So follow the data, and stick with what you know.

3. Solve a problem. All successful businesses solve problems. They eliminate barriers and ease headaches. They make shopping easier, networking easier, working out easier. Think about your skills. How can you apply them to a problem?

Worthwhile problems for your business to solve can be widespread, highly niche, or underserved.

But the “best” problems are all of the above—they impact a vast market, they demand highly specific solutions, and are currently unsolved. The solutions to those problems can create vast fortunes for those who discover them.

It’s possible to get financial security through business ownership. Part-time entrepreneurship, sticking with what you know, and solving a problem are just three strategies that can boost your cash flow and help you reach your financial goals.

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¹ “Research: The Average Age of a Successful Startup Founder Is 45,” Pierre Azoulay, Benjamin F. Jones, J. Daniel Kim, and Javier Miranda, Harvard Business Review, July 11, 2018, https://hbr.org/2018/07/research-the-average-age-of-a-successful-startup-founder-is-45

January 26, 2022

Lessons You'll Learn on the Journey to Financial Freedom

Lessons You'll Learn on the Journey to Financial Freedom

Financial freedom is a process. It doesn’t happen overnight.

Instead, think of it as a journey with things to experience and lessons to learn along the way.

If you’ve embarked on the adventure of building wealth, here are 8 lessons about yourself and the world you can learn.

1. Money isn’t everything, but it makes things easier.

The first lesson you’ll learn on your journey to financial freedom? There’s more to life than money. There are people you care about. Hobbies that inspire you. Conversations that restore and heal you. Causes that matter. Without those, life is empty.

But you’ll also learn that money can make life easier.

It allows you to enjoy those things, to take care of yourself and your family, and to do something that has a bigger impact than what you might otherwise be able to do.

2. No one ever regrets saving for retirement.

“I should have saved less for retirement and spent more on clothes.” —No one

3. You can’t spend your way to happiness.

You’ll learn that there’s no amount of spending that can solve your problems. Instead of shopping sprees and new toys, you’ll come to prize experiences and memories above all else.

4. If there’s anything you want in life, you’ll need to work for it.

If something sounds too good to be true, it probably is.

If you want to build wealth and live a life you can be proud of, it’s up to you. There is no magic secret, no get-rich-quick scheme. And with that comes self-satisfaction and humility. If you have something, you’ve earned it. If it was given to you, it came from someone else who earned it.

5. Debt free doesn’t mean rich—just debt free!

Debt freedom is a critical step. But it’s not the destination.

Once you’ve eliminated debt, celebrate it. But this is no time to pause. It’s time to devote your resources to building wealth.

6. A job or career should never define you.

You are not your job. At minimum, your job is a tool to support your family. At best, your career is an avenue to express your talents and passions. But either way, your job should be aligned to, and subordinate to, your ultimate values.

7. Excuses and denials will destroy your dreams and freedom.

You’re going to be tempted. Whether it’s an expensive new toy, a nicer car you can’t really afford, or just another latte at Starbucks, the siren song of “I deserve this” can be loud. So can the “safety” of not being yourself or doing things just to impress others.

But no matter what, when you hear these things in your head, it’s time to pause. Is this really what I want? What am I trying to accomplish? What are my values? Those are your guides to financial freedom and happiness.

8. You’re far more powerful than you think.

As you progress in your journey to financial freedom, the hope is that you’ll wake up one day and notice that things are better. You’re less stressed. Your house feels more in order. You’re actually getting somewhere. And you’ll realize that you did that. Your good decisions and discipline is what got you here.

You can do things you never thought possible. You’re far more powerful than you think.

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January 24, 2022

Ways To Financially Protect Your Family

Ways To Financially Protect Your Family

What’s more worthy of protection than your family?

When you think of the people you love most, your family probably comes to mind.

When you think of your fondest memories, you probably picture your family.

When you think of who you’d give anything for, your family is at the top of the list.

So have you thought of how to financially protect your family if something were to happen to you? It’s no wonder if you haven’t. You likely weren’t taught how to keep your family’s finances safe.

Fortunately, it’s simpler than you may think! Here are a few ways to financially protect your family. Think of these as layers of fortification around the happiness, health, and safety of your home.

1. Create an emergency fund.

This is your first layer of defense. The goal? To catch and pay off any unexpected emergencies before they damage your finances. Otherwise, you may resort to costly debt to pay the balance.

There are two benchmarks for a good emergency fund…

First, it covers 3 to 6 months of expenses. That way you can weather even a significant stretch of unemployment or a considerable expense.

Second, the funds must be easily accessible. Remember, you’re not trying to grow this money into wealth. Instant access is far more valuable than rate of return.

2. Open sources of passive income.

Why? Because there may be times when working for money isn’t an option. If that happens, passive income can make all the difference.

Passive income does require an initial investment of time, money, and/or energy. But once it’s created, it can provide a constant stream of cash flow into your bank account.

Books, real estate, dividend yielding stocks, and even blogging can create passive income. Try your hand at a few with the help of a licensed and qualified financial advisor. If your finances grow tight, passive income may be the boost you need to make ends meet. It’s like giving your finances a second wind when the going gets tough.

3. Secure a life insurance policy.

Life insurance can replace your income in the event of a tragedy.

Think about it like this. If you passed away, your family wouldn’t just lose you. They’d also lose the income you provide. In addition to emotional grief, they may face a financial catastrophe.

Life insurance, when structured properly, can act as a safe house for your family. It can give them financial space to lay low, grieve, and make a new strategy for the future.

That’s why it’s common to buy life insurance that’s 10x your annual income. It gives your family the breathing room they will desperately need in the face of tragedy.

Which of these three ways to financially protect your family is most feasible for you to start right now? For many, it’s the emergency fund. If you don’t have one, let’s chat! We can review what it would look like for you to build one.

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