Don't Panic: What You Need To Know For Your Life Insurance Medical Exam

May 20, 2019

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Luis Puente

Luis Puente

Educator and District Leader

2711 LBJ Freeway Suite 300

Farmers Branch, TX 75234

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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!’


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.

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.

April 8, 2019

Quick ways to cut your monthly expenses

Quick ways to cut your monthly expenses

Looking to save a little money?

Maybe you’re coming up just a tad short every month and need to cut back a little bit. If you’re scratching your head wondering where those cuts are going to come from, no worries! Reducing monthly expenses may not be as hard as you think.

Complete an insurance review
Often, there could be an opportunity to save some money on your insurance without even switching companies. It might be worth taking the time to review your insurance policies carefully to make sure you’re getting all the discounts you’re eligible for. There may be auto insurance discounts available for safety features on your car such as airbags and antilock brake systems. You may also get a multi-policy discount if you have more than one policy with the same company.

If you aren’t sure what to look for, contact your insurance professional and ask for an insurance review with an eye toward savings. They may be able to offer some advice on changes that can lower your monthly premium.

Shop around on your utilities
Some consumers may have a choice when it comes to utility providers. If this is you, make sure you shop around to get the best rate on your household utilities. Research prices for electricity, water, gas, or oil. If your area has only one provider, don’t worry, you may still save money on utilities by lowering your consumption. Turn off the lights and be conservative with your water usage and you might see some savings on your monthly utility bills.

Cell phone service
Your cell phone bill may be a great place to save on your monthly expenses. It seems like every cell phone provider is itching to make you a better deal. Often, just calling your current provider and asking for a better rate may help. Also, study your data and phone usage and make sure you’re only paying for what you use. Maybe you don’t really use a lot of data and can lower your data plan. A smaller data plan can often save you money on your monthly bill.

Interest on credit cards
Interest is like throwing money away. Paying interest does nothing for you. Still, we’ve probably all carried a little debt at one time or another. If you do have credit card debt you’re trying to pay off, you may be able to negotiate a lower interest rate. You can also apply for a no interest card and complete a balance transfer (if any associated fees make sense).

The other benefit of low or no interest on your debt is that more of your payment applies to the principal balance so you’ll potentially get rid of that debt faster.

Subscription services
These days there’s a subscription box service for just about everything – clothing, skin care products, wine, and even dinner. It can be easy to get caught up in these services because the surprise of something new arriving once a month is alluring and introductory offers may be hard to resist. But if you’re trying to save on your monthly expenses, give your subscription services a once over and make sure you’re really using what you’re buying. You may want to cut one or two of them loose to help save on your monthly expenses.

It is possible to cut back on your monthly budget without (too) much sacrifice. With a little effort and know-how, you can help lower your expenses and save a little cash.

April 3, 2019

Phishing, Part 2

Phishing, Part 2

Phishing can be perpetrated via text or voice (and it may even be done in person).

Here are a few pointers on how to avoid becoming a victim. Since subtle phishing attacks can be very sophisticated, you should always be alert and proceed with caution when interacting online or when giving out your personal information.

Avoiding phishing in text…

1) Know and trust the hyperlink.
It’s important to be on the lookout for phishing attempts both in your private and professional life. Obvious scams that show up in your spam folder – like a solicitation to invest in an overseas company you’ve never heard of – are easy to avoid. But what if you receive a message from an “old colleague” with a link to their Facebook page or their new business? Would you click it? If yes, before clicking, would you check the link address at the bottom of the browser or your email client? If not, and that old colleague isn’t who they claim to be, you might become the victim of a phishing attack.

A stop-now red flag is when the link doesn’t look like it will go exactly where it says it will. The email message may show the text “www.example.com” which looks legitimate, but in reality this link leads to “www.this-is-a-scam.com”. That’s an obvious one, but scammers are clever. The deception could be something less conspicuous, wherein www.example.com would lead to www.exanple.com. If you’re not paying close attention, the latter might be an imitator site.

2) Be wary of impostors
Once the victim lands on www.exanple.com (with the “n”), they may not notice the site isn’t authentic. A good rule of thumb is that after you click a link – after determining as best you can that it is legitimate, of course – you should always double check the URL bar to ensure it is the website you intended to visit. If the visuals look like what you were expecting but the address in the URL bar is not, then it could be an impostor site. If you enter any personal information on this page, you may be directed to a fake internal site or receive an error that asks you to try again later. While you wait to try again, the phisher can take the information you just sent them and do the damage.

Shortened links can present a problem, since they offer legitimate uses for many messaging services to help trim character counts. Unfortunately, this means it is easy to hide the true destination until the person clicks the link and lands on a malicious page. It is essential to check the URL bar in the browser to ensure you are where you want to be.

3) Be aware of what information you make public
Social media is a treasure trove of personally identifying information. Attackers don’t even need to really phish for it since there are some nefarious techniques they can employ, like utilizing memes and social media response posts. For example, a post may ask for three pieces of information about you to generate your “Hollywood nickname”: your first pet’s name, your high school’s first word, and the name of the street you grew up on. You might end up with something like “Fluffy North Oak”. Amusing? Sure. But those three words are partial answers to commonplace security questions that grant access to bank accounts, corporate IT systems, and other valuable entities, as well. If the attacker knows that information about you, they may be able to thwart one more layer of IT security.

Avoiding attacks on the phone…

1) Know the right number
Phone- and voice-based phishing tends to rely heavily on high pressure tactics and smooth talking. If you get a call you’re not expecting from someone you don’t know, you should immediately be on your guard. If someone calls claiming to be from your credit card company, do not give them any important information. Tell them you will call back. You should then look up the correct number on their website or your bill and call that number to avoid connecting to a fraudster. If the other party then insists you talk to them during this call or that they call you back, then there is a good chance they are not actually an employee of that company.

2) Be wary of driving callers
Driving callers are those that keep pushing you to answer. This type of caller will encourage you to do something and may even become angry if you do not comply. Many people, to restore social cohesion, will comply. That can quickly lead to divulging personal information. If someone is pressuring you on the phone, you should be very wary of giving them the information they want.

They might make claims like they are government officials investigating a case, that you owe their company money for some obscure subscription you supposedly bought years ago, and other high-pressure scenarios. Conversely, they may try to use other tactics like guilt. They may state that if they do not resolve this issue with you, right here and right now, they will be fired or not have enough in their next paycheck for rent. Don’t fall for these tactics and remain alert.

Follow your instincts
If your gut is telling you that a situation feels off, then listen to it. Always do your due diligence to stay safe online and before you share personal information. This can’t be said enough – if something seems like it’s too good to be true, then it probably is.

March 27, 2019

Emergency Fund Basics

Emergency Fund Basics

Unexpected expenses are a part of life.

They can crop up at any time and often occur when you least expect them. An emergency expense is usually not a welcome one – it can include anything from car repairs to veterinary care to that field trip fee your 12 year old informed you about the day of. So, what’s the best way to deal with those financial curve balls that life inevitably throws at you? Enter one of the most important personal financial tools you can have – an emergency fund.

What is an emergency fund?
An emergency fund is essential, but it’s also simple. It’s merely a stash of cash reserved solely for a financial emergency. It’s best to keep it in a place where you can access it easily, such as a savings account or a money market fund. (It also might not hurt to keep some actual cash on hand in a safe place in your house.) When disaster strikes – e.g., your water heater dies right before your in-laws arrive for a long weekend – you can pull funds from your emergency stash to make the repairs and then feel free to enjoy a pleasant time with your family.

Some experts recommend building an emergency fund equal to about 6-12 months of your monthly expenses. Don’t let that scare you. This may seem like an enormous amount if you’ve never committed to establishing an emergency fund before. But having any amount of money in an emergency fund is a valuable financial resource which may make the difference between getting past an unexpected bump in the road, and having long term financial hindrances hanging over you, such as credit card debt.

Start where you are
It’s okay to start small when building your emergency fund. Set manageable savings goals. Aim to save $100 by the end of the month, for example. Or shoot for $1,000 if that’s doable for you. Once you get that first big chunk put away, you might be amazed at how good it feels and how much momentum you have to keep going.

Take advantage of automatic savings tools
When starting your emergency fund, it’s a good idea to set up a regular savings strategy. Take a cold, hard look at your budget. Be as objective as possible. This is a new day! Now isn’t the time to beat yourself up over bad money habits you might have had in the past, or how you rationalized about purchases you thought you needed. After going through your budget, decide how much you can realistically put away each month and take that money directly off the top of your income. This is called “paying yourself first”, and it’s a solid habit to form that can serve you the rest of your life.

Once you know the amount you can save each month, see if you can set up an automatic direct deposit for it. (Oftentimes your paycheck can be set to go into two different accounts.) This way the money can be directly deposited into a savings account each time you get paid, and you might not even miss it. But you’ll probably be glad it’s there when you need it!

Don’t touch your emergency fund for anything other than emergencies
This is rule #1. The commitment to use your emergency fund for emergencies only is key to making this powerful financial tool work. If you’re dipping into this fund every time you come across a great seasonal sale or a popular new mail-order subscription box, the funds for emergencies might be gone when a true emergency comes up.

So keep in mind: A girls’ three day weekend, buying new designer boots – no matter how big the mark-down is – and enjoying the occasional spa day are probably NOT really emergencies (although these things may be important). Set up a separate “treat yourself fund” for them. Reserve your emergency fund for those persnickety car breakdowns, unexpected medical bills, or urgent home repairs.

The underpinning of financial security
An emergency fund is about staying prepared financially and having the resources to handle life if (and when) things go sideways. If you don’t have an emergency fund, begin building one today. Start small, save consistently, and you’ll be better prepared to catch those life-sized curve balls.

March 25, 2019

Credit unions: What you should know

Credit unions: What you should know

If you’ve always used the services of a traditional bank, you might not know the ins and outs of credit unions and if using one might be better for your financial situation.

Credit unions are generally known for their customer-focused operations and friendliness. But the main difference between a bank and a credit union is that a credit union is a nonprofit organization that you have to be a member of to participate in its services. Credit unions may offer higher interest rates and lower fees than banks, but banks may provide more services and a greater range of products.[i]

Read on for some basics about what you should know before you join one.

Protection and insurance
Just like banks, your accounts at a credit union should be insured. The National Credit Union Share Insurance Fund (NCUSIF) functions to protect consumer deposits if the credit union becomes insolvent. The fund protects up to $250,000 per customer in deposits.[ii] Be sure the credit union you select is backed by the NCUSIF.

What credit union is best for you?
Today there are many credit unions available. Many now offer 100 percent online banking so you may never need to visit a branch at all.

The most important feature in selecting a credit union is to make sure they meet your personal banking needs and criteria. Here are a few things to consider:

  • Does the credit union offer the products and services you want? Can you live without the ones they don’t?
  • Do they have competitive interest rates when compared to banks?
  • Are the digital and online banking features useful?
  • What are the fee schedules?
  • What are the credit union membership requirements? Do you qualify for membership?

Take your time and do some research. Credit unions vary in the services provided as well as the fees for such services.

What to expect when opening a credit union account
Each credit union may have slightly different requirements when opening an account, but in general, you will most likely need a few things:

Expect to complete an application and sign documents. When opening a credit union account, you will likely have to fill out some forms and sign other paperwork. If you don’t understand something you are asked to sign, make sure you get clarification. Be prepared to show identification. You will likely be asked to show at least two forms of identification when opening an account. Your credit union will also probably ask for your social security number, date of birth, and physical address. Be prepared to show proof of your personal information.

Make the required opening deposit. On the day you open your credit union account, you’ll likely be asked to make an opening deposit. Each credit union may have a different minimum deposit required to open the account. It could be up to $100 (or more), but call the credit union to make sure.

Unique benefits
Credit union accounts offer some unique advantages for members. You may enjoy more comfortable access to personal loans or even auto financing and mortgages. Credit unions may offer other perks such as fee waivers, as well as discounts on other products and services that come from being a member.

If participating in a customer-owned bank sounds interesting to you, a credit union may be a good option. There are more credit unions available today than ever. Do your research. You may find an option that compares to your current bank, but offers some greater benefits that will make it worth the switch.


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 financial professional, accountant, and/or tax expert to discuss your options.

[i] https://www.creditkarma.com/advice/i/difference-between-credit-union-and-bank/
[ii] https://www.ncua.gov/support-services/share-insurance-fund

March 4, 2019

Tackling long term financial goals

Tackling long term financial goals

Many of us have probably had some trouble meeting a long-term goal from time to time.

Health, career, and personal enrichment goals are often abandoned or relegated to some other time after the initial excitement wears away. So how can you keep yourself committed to important long term goals – especially financial ones? Let’s look at a few strategies to help you stay committed and hang in there for the long haul.

Start small when building the big financial picture
Most financial goals require sustained commitment over time. Whether you’re working on paying off credit card debt, knocking out your student loans, or saving for retirement, financial heavyweight goals can make even the most determined among us feel like Sisyphus – doomed for eternity to push a rock up a mountain only to have it roll back down.

The good news is that there is a strategy to put down the rock and reach those big financial goals. To achieve a big financial goal, it must be broken down into small pieces. For example, let’s say you want to get your student loan debt paid off once and for all, but when you look at the balance you think, “This is never going to happen. Where do I even start?” Cue despair.

But let’s say you took a different approach and focused on what you can do – something small. You’ve scoured your budget and decided you can cut back on some incidentals. This gives you an extra $75 a month to add to your regular student loan payment. So now each month you can make a principal-only payment of $75. This feels great. You’re starting to get somewhere. You took the huge financial objective – paying off your student loan – and broke it down into a manageable, sustainable goal – making an extra payment every month. That’s what it takes.

Use the power of automation
It seems there has been a lot of talk lately in pop psychology circles about the force of habit. The theory is if you create a practice of something, you are more likely to do it consistently.

The power of habit can work wonders for financial health, and with most financial goals, we can use automation tools to help build our habits. For example, let’s say you want to save for retirement – a great financial goal – but it may seem abstract, far away, and overwhelming.

Instead of quitting before you even begin, or succumbing to confusion about how to start, harness the power of automation. Start with your 401(k) plan – an automated savings tool by nature. Money comes out of your paycheck directly into the account. But did you know you can set your plan to increase every year by a certain percentage? So if this year you’re putting in three percent, next year you might try five percent, and so on. In this way, you’re steadily increasing your retirement savings every year – automatically without even having to think about it.

Find support when working on financial goals
Long term goals are more comfortable to meet with the proper support – it’s also a lot more fun. Help yourself get to your goals by making sure you have friends and allies to help you along the way. Don’t be afraid to talk about your financial goals and challenges.

Finding support for financial goals has never been easier – there are social media groups as well as many other blogs and websites devoted to personal financial health. Join in and begin sharing. Another benefit of having a support network is that it seems like when we announce our goals to the world (or even just our corner of it), we’re more likely to stick to them.

Reaching large financial goals
Big, dreamy financial goals are great – we should have those – but to help make them attainable, we must recast them into smaller manageable actions. Focus on small goals, find support, and harness the power of habit and automation.

Remember, it’s a marathon – you finish the race by running one mile at a time.

February 25, 2019

The dangers of payday loans and cash advances

The dangers of payday loans and cash advances

If you’ve ever been in a pinch and needed cash fast, you may have considered taking out a payday loan.

It may make sense on some level. Payday loans can be readily accessible, usually have minimal requirements[i], and put money in your hand fast.

But before you sign on the dotted line at your corner payday lender, read on for some of the downsides and dangers that may come along with a payday loan.

What is a payday loan?
Let’s start with a clear definition of what a payday loan actually is. A payday loan is an advance against your paycheck. Typically, you show the payday loan clerk your work pay stub, and they extend a loan based on your pay. The repayment terms are calculated based on when you receive your next paycheck. At the agreed repayment date, you pay back what you borrowed as well as any fees due.

Usually all you need is a job and a bank account to deposit the borrowed money. So it may seem like a payday loan is an easy way to get some quick cash.

Why a payday loan can be a problem
Payday loans can quickly become a problem. If on the date you’re scheduled to repay, and you’re coming up short, you can extend the payday loan – but will incur more fees. This cycle of extending the loan means you are now living on borrowed money from the payday lender. Meanwhile, the costs keep adding up.

Defaulting on the loan may land you in some trouble as well. A payday loan company may file charges and begin other collection proceedings if you don’t pay the loan back at the agreed upon time.

Easy money isn’t easy
While a payday loan can be a fast and convenient way to make ends meet when you’re short on a paycheck, the consequences can be dangerous. Remember, easy money isn’t always easy. Payday loan companies charge very high fees. You could end up with fees ranging from 15 percent or more than 30 percent on what you borrow. Those fees could be much higher than any interest rate you may see on a credit card.

Alternatives to payday loans
As stated, payday loans may seem like quick and easy money, but in the long run, they may do significant damage. If you end up short and need some quick cash, try these alternatives:

Ask a friend: Asking a friend or relative for a loan isn’t easy, but if they are willing to help you out it may save you from getting stuck in a payday loan cycle and paying exorbitant fees.
Use a credit card: Putting ordinary expenses on a credit card may not be something you want to get in the habit of doing, but if given a choice between using credit and securing a payday loan, a credit card may be a better option. Payday loan fees can translate into much higher interest rates than you might see on a credit card.
Talk to your employer: Talk to your employer about a pay advance. This may be uncomfortable, but many employers might be sympathetic. A pay advance form an employer may save you from payday loan fees and falling into a debt cycle.

If possible, a payday loan should probably be avoided. If you absolutely must secure a payday loan, be prepared to pay it back – along with the fees – at the agreed upon date. If not, you may end up stuck in a payday loan cycle where you are always living on borrowed money, and the fees are adding up.


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 financial professional, accountant, and/or tax expert to discuss your options.

[i] https://www.speedycash.com/faqs/payday-loans/requirements/

February 13, 2019

How to know when you need life insurance

How to know when you need life insurance

You might expect someone in the insurance business to tell you that anyone and everyone needs life insurance.

But certain life events underscore the reasons to secure a policy or to review the coverage you already have in place, to help ensure that it’s structured properly for your needs going forward.

Following are some of them…

You got married. Congrats! If you have a life insurance policy through your employer, it probably won’t provide enough coverage to replace your income for more than a year or so if you pass unexpectedly. (You might want to find out the specifics for your policy.) It’s time to get a quote and learn your coverage options now that you have a spouse.

You started a family. Having children is a responsibility that lasts for decades – and costs a lot. The average cost of raising a child until age 17 is estimated at $285,000.[i] Families with children have an average of 1.9 kids[ii], which nearly doubles those long-term costs. (That figure doesn’t include college tuition, fees, room and board, etc.) It’s time to consider a coverage strategy.

You bought a house. We don’t always live in the same house for the length of a mortgage, but a mortgage is a long-term commitment and one that needs to be paid to help ensure your family has a roof over their heads. In many cases, two incomes are needed to cover the mortgage as well as life’s other expenses. Buying a home is among the top reasons families buy life insurance.

You started a business. Congrats, again! Starting your own business may be a terrific way to build your income, but it isn’t without risk. Business loans are often secured by personal guarantees which may affect your family if something were to happen to you. Also consider the consequences if you aren’t around to run the business. How much time and money would be needed to find a replacement or to close the business down? All things to consider when looking for coverage.

You took on debt. Any sizeable debt can be a reason to consider purchasing life insurance. When we die, our debt doesn’t die with us. Instead, it’s settled out of our estate and paying that debt may require liquidating savings, selling assets, or both. In some cases, family members may be on the hook for the debt, particularly if the only remaining asset is the home they still live in. Life insurance can help put a buffer between creditors and your family, helping prevent a difficult financial situation. Your birthday is coming. Seriously. Life insurance rates may be more affordable now than they’ve been in the past – but every year you wait may cost you money in the form of higher premiums. Life insurance rates go up with age.

It never hurts to take some time and review the coverage that you have in place. To be sure, life insurance can be an essential part of a financial strategy and help provide a safety net for your family if something were to happen to you.


[i] https://smartasset.com/retirement/the-average-cost-of-raising-a-child
[ii] https://www.statista.com/statistics/718084/average-number-of-own-children-per-family/

February 11, 2019

Bankruptcy – Consequences and Aftermath

Bankruptcy – Consequences and Aftermath

If you or a loved one is at (or think you may be at) the place where you’re wondering if declaring bankruptcy[i] may be the path to take, there are several serious consequences to be aware of.

Depending on the type of bankruptcy (Chapter 7 or Chapter 13)[ii], debts may be eliminated, reduced, or restructured into a less burdensome repayment plan.

But what about the consequences that arise during the process itself, and what is the aftermath?

Before and During Filing
Before you even file there are consequences that can arise from bankruptcy proceedings: the law requires that the filer undergo credit counseling [iii] by a government-approved entity to ensure the filer understands what will take place during the process and have a chance to look at other options. If bankruptcy still seems to be the only viable option, the filer will then have to file in federal court, paying a filing fee of hundreds of dollars.[iv]

During the process, a schedule of assets and liabilities must be submitted for review by the court. That means the creditors and court will be able to look into your private financial life. Furthermore, the bankruptcy will become part of the public record, and therefore your financial details will be exposed to public scrutiny. Next, in Chapter 7, nonexempt assets will be sold by the trustee to help pay creditors. For Chapter 13, the court, creditors, and debtor will work out a repayment plan based on the financial situation of the debtor.

Discharge usually occurs for Chapter 7 within a few months, and the debtor will be free of the debts. In Chapter 13, discharge comes as a result of successfully completing the repayment plan. If the schedule of assets and liabilities is not filed in a timely manner, the request may be dismissed. If the repayment plan is not strictly followed, the court may dismiss the process and decide in favor of the creditors (who may repossess assets).

Impact on Your Credit Report
Once discharge occurs, the debtor will have escaped from the shadow of debt. However, the ghosts of the filing will remain on the credit report for several years.[v] A Chapter 13 filing will stay for seven years, while a Chapter 7 filing will remain for ten years. It should be no surprise that a bankruptcy, regardless of type, will negatively impact your credit score.[vi] However, over time if an applicant can show a good faith attempt to repay the debts, and begin to develop good credit habits, creditors may be more willing to cooperate.

Successive Filings
One important point to consider is the ability to refile. Because Chapter 7 completely erases debts, possibly with very little partial payment required if the debtor’s nonexempt assets are minimal, the debtor must wait eight years before another discharge would be granted. (One may file bankruptcy before this time, but a discharge – the actual debt elimination – would not be granted.) On the other hand, a restructuring under Chapter 13 is less detrimental to creditors, so another discharge may be granted in a bankruptcy that is filed just two years after the first bankruptcy is filed.

The concurrent and subsequent, long lasting consequences of filing bankruptcy are significant, and those who can avoid bankruptcy should certainly consider all the alternatives. If bankruptcy seems to be the only option, filers should thoroughly understand the consequences of the process before committing to that course of action.


This article is for informational purposes only and is not intended to offer legal advice or promote any certain plans or strategies that may be available to you. Always seek the advice of a financial professional, accountant, attorney, and/or tax expert to discuss your options.

[i] https://www.uscourts.gov/services-forms/bankruptcy
[ii] https://www.nolo.com/legal-encyclopedia/what-is-the-difference-between-chapter-7-chapter-13-bankrutpcy.html
[iii] https://www.consumer.ftc.gov/articles/0224-filing-bankruptcy-what-know#counseling
[iv] https://www.nolo.com/legal-encyclopedia/bankruptcy-filing-fees-costs.html
[v] https://www.experian.com/blogs/ask-experian/removing-bankruptcy-from-your-credit-report/
[vi] https://www.moneycrashers.com/bankruptcy-affect-credit-score/

February 4, 2019

When is it OK to use a credit card?

When is it OK to use a credit card?

Even though your budget might be 100% on point, your retirement accounts well-funded, and you’ve got something stashed away for the kids’ college tuition, sometimes an emergency rears its ugly head.

And despite your best efforts, your only option to cover it might be to use a credit card.

Let’s face it. Once in a blue moon there may not be enough emergency fund to go around. Sometimes the water heater needs replacing right before the in-laws arrive for Thanksgiving. Doesn’t this kind of thing seem to always happen the same week your child falls off the swingset and needs an ER visit?

What is the best way to handle using your credit card for an emergency? Here are a few tips that may help you get out of a jam if you choose to use your credit card.

Take out a loan
If you’re planning on putting an emergency expense on a credit card, make sure it’s truly a last resort. If possible, try to find other ways to cover the expense first. Can you ask a friend or family member for a loan? You may consider other loan options such as a personal bank loan or a home equity loan. These options do carry interest, but the rate may be lower than the one for your credit card.

Use a low interest card
Find and keep the lowest interest rate card you can. Many credit cards may come with an introductory zero percent interest rate for a specified period. But pay attention to the interest rate that applies after the initial period. This is what you’ll be obligated to pay after the introductory period expires.

Keep a healthy credit score
If you have good to excellent credit, you may be able to secure a zero percent interest card to use specifically for the emergency. The idea is that you would plan to pay off the balance during the introductory period.

If your credit score isn’t high, work on it. Make your payments on time and strive to keep a low credit card balance.

Build your emergency fund
At one time or another, many of us have been caught off guard with an emergency. A well-stocked emergency fund is the first line of defense when those unplanned expenses come up.

Aim for an emergency fund equivalent of 6 to 12 months’ worth of expenses. If that seems overwhelming, focus on smaller goals such as saving $500 and then try hitting $1,000. With time and diligence, your emergency fund will grow, and you may not have to worry so much about needing to put emergency expenses on a credit card.

Getting through a pinch with a credit card
If you are in a pinch and absolutely must put emergency expenses on a credit card, shoot for the lowest interest rate and pay it off as quickly as you can. Meanwhile, continue to build your emergency fund so you can be prepared in the future.

January 28, 2019

Your credit score – 4 things you need to know

Your credit score – 4 things you need to know

You’re probably aware that your credit score is usually accessed when you apply for new credit, such as a credit card or an auto loan.

But you may not know it might also be requested by landlords, employers, and even romantic partners.[i]

So what are your credit score and report, what are the factors that determine them, and why do so many diverse parties request to see them?

What is a credit score and what is a credit report?
Your credit score is simply a number that encapsulates your ability to repay debt. It isn’t the only way interested parties can assess your creditworthiness, but it’s certainly often used as a preliminary factor. Having a higher score may lead to lower interest rates, more successful credit applications, and possibly more trust in general.

Your credit report is much more comprehensive and shows your outstanding debts, how well you pay them, the age of the accounts, and so forth. A single bad account on your credit report might damage your score, but your counterparty may be willing to work with you if you can show a strong history with your other accounts – and can justify the problem account.

What constitutes your credit score?
Credit reports are maintained by the three main credit reporting agencies: TransUnion, Equifax, and Experian. A credit score is generated by FICO, VantageScore, and some financial institutions may have their own proprietary algorithms to determine their own scores.

In general, scores are determined by the variously-weighted categories of payment history, the amount owed (credit utilization), the age of the accounts, how much new credit you’ve requested recently, and the types of accounts (revolving, mortgage, student loans, etc.).[ii] Of course proprietary scores may take many other factors into consideration.

Who wants to see your credit score?
Lenders may screen you based on your credit score, then use other factors to determine if they’ll give you a loan. Instant-approval lenders, like credit card companies, may just use your credit score to determine your creditworthiness. For large, long-term loans, like mortgages, you can expect to have to turn over your credit report as well.

Landlords may ask for a report, but might also request your credit score as well. They have the obvious financial interest in relying on you to pay your rent from month to month, but they also may have in mind that if you’re responsible with your money, perhaps you’ll also be responsible to take care of your rented living quarters.

Employers may ask to see your credit report. They may make hiring decisions based on the report, but some states have disallowed the practice.[iii] The chance that financial hardship may prompt employee theft is one reason they may ask, as well as wanting to see your consistency in paying debts over time, which may correlate with your punctuality and persistence at work.

How to improve your score
Those with poor credit may want to improve their credit history, which may in turn improve their credit scores. Payment history makes up 35% of the FICO scoring factors, and this will take time to improve. However, 30% of the score is determined by how much you owe, which can quickly be improved by paying down your debt. The 15% determinant that is credit age can, of course, only improve with time, but the 10% of your score attributed to new requests and 10% to types of credit can be managed in a short timeframe, too; try to avoid applying for a lot of new credit and, when you do, try to get different types of credit.[iv]


[i] https://www.businessinsider.com/good-credit-score-can-help-you-get-a-date-2018-2
[ii] https://www.thebalance.com/fico-credit-score-315552
[iii] https://www.thebalancecareers.com/why-do-employers-check-credit-history-2059598
[iv] http://money.com/money/collection-post/2791957/what-is-my-credit-score/

January 21, 2019

Do you know your net worth?

Do you know your net worth?

Usually when we think of net worth we imagine all the holdings of a wealthy tycoon who owns several multi-million dollar businesses.

Or a young heiress on the New York social scene, or a successful blockbuster movie actor.

However, you have a net worth too. Essentially, your net worth is a personal balance sheet of your assets and liabilities, not unlike the balance sheets used in business.

Calculating your net worth
First, you’ll want to tally up all your assets. These would include:

  • Personal property and cars
  • Real estate equity
  • Investments
  • Vested retirement plans
  • Cash or savings
  • Amounts owed to you
  • Cash value of life insurance policies

Next, you’ll calculate your liabilities (amounts you owe someone). These would include:

  • Loans
  • Mortgage balance
  • Credit card balances
  • Unpaid obligations

Your total liabilities subtracted from your total assets establishes your net worth.

The number could be positive, or it could be negative. Students, for example, often have a negative net worth because they may have student loans but haven’t had much of a chance to build personal assets yet.

It’s also important to realize that net worth isn’t always equal to liquid assets. Your net worth includes non-liquid assets, like the equity in your home.

What should your net worth be?
The notion that you should be at a certain net worth by a certain age is mostly arbitrary; wealth is relative. Having a hundred thousand dollars stashed away might sound like a lot, but if you live in an affluent area or have a large family to provide for, it may not last long if your job disappears suddenly. In other situations, the same hundred thousand dollars might be a fabulous starting point to a growing net worth.

Net worth can be a way of “keeping score”, but it’s important to remember the game is one in which you are the only player and you’re playing to best yourself. What someone else has or doesn’t have isn’t relevant to your needs and your future goals for your family.

Looking ahead
Measuring your net worth can be a strong motivation when saving for the future. Do you want to be a certain net worth by a certain age? Not if the number is pulled out of thin air. If your net worth marks progress toward a well-reasoned goal, however, it’s extremely relevant.

When you’re ready to put together a personalized plan based on your net worth and (more importantly) your future goals, reach out anytime. We can use net worth as a starting point and a measurement tool, while keeping squarely focused on the real target: your long-term financial strategy.

January 21, 2019

Preparing to buy your first home

Preparing to buy your first home

Home buying can be both very exciting and very stressful.

Picking out your dream home is thrilling, but credit scores, applications, and mortgage underwriting requirements? Well, not so much. Don’t let yourself be deterred. Here are a few moves to make before you amp up your home buying search that will help increase the fun and decrease the stress.

Know what you can afford
One of the first steps to home buying is knowing how much you can afford. Some experts advise that a monthly mortgage payment should be no more than 30% of your monthly take-home pay. Some say no more than 25%. If you stretch past that you could become “mortgage poor”. Consider this carefully. You might not want to be in your dream house and struggling to pay the utility bills, grocery bills, etc., or find yourself in a financial jam if an emergency comes up.

Get your finances ready for home buying
If you’re scouring listings, hunting for your dream home, but you’re not sure what your credit score is – stop. There are few things more disappointing than finally finding your dream home and then not having the financial chops to purchase it. You’ll need to get your finances in order and then start shopping. Focus on these areas:

Credit score: Your credit score is something you should know regardless of whether you’re home shopping. Usually, to get the best mortgage rates, you’ll want a score in the good to excellent range. If you’re not quite there, don’t despair. If you make payments toward your other obligations on time and pay off any debt you’re carrying, your credit score should respond accordingly.

Down payment: A conventional mortgage usually requires a 20 percent down payment. That may seem like a lot of money to come up with, but in turn, you may get the best interest rates, which can save you a significant amount over the life of the mortgage. Also, anything less than 20 percent down and you may have to purchase Private Mortgage Insurance – it’s a type of insurance that protects the lender if you default. Try to avoid it if you can.

Get pre-qualified before you shop for a home
Once you have your credit score and down payment in order, it’s time to get pre-qualified for a mortgage. A prequalification presents you as a serious buyer when you make offers on houses. Mortgage pre-approval doesn’t cost you anything, and it doesn’t make you obligated to any one house or mortgage. It’s just a piece of paper that says a bank trusts you to pay back the loan.

If you go shopping without a pre-approval, expect to get overlooked if there are other bidders. A seller will likely go with the buyer who has been pre-approved for a mortgage.

Prepare your paperwork
Getting approved for a mortgage is going to require you to do a little legwork. The bank will want to see documentation to substantiate your income and lifestyle expenses. Be prepared to cough up income tax documents such as W-2’s, paystubs, and bank statements. The sooner you get the paperwork together, the easier it will be to complete the mortgage application.

Shop for the best mortgage
Mortgage rates differ slightly depending on the lender, so shop for the lowest possible rate you can get. You may wish to use a mortgage broker to help. Also, get familiar with mortgage terms. The most common household mortgages are a 30-year term with a fixed rate, but there are 15-year terms, and mortgages with variable interest rates too.

Do your pre-home-buying homework
With a little legwork early on, home buying can be fun and exciting. Get your finances in order and educate yourself about mortgage options and you’ll be decorating your dream home in no time.


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 financial professional, accountant, and/or tax expert to discuss your options.

January 14, 2019

Should I pay off my car or my credit cards?

Should I pay off my car or my credit cards?

Credit card statements and auto loan statements are often among the bigger bills the mail carrier brings.

Wouldn’t it be great to just pay them off and then use those monthly payments for something else, like building your savings and giving yourself a bit of breathing room for a treat now and then?

Paying extra money on your credit card bills and your car loan at the same time may not be an option, so which is better to pay off first?

In most cases, paying down credit cards might be a better strategy. But the reasons for paying off your credit cards first are numerous. Let’s look at why that usually may make more sense.

  • Credit cards have high interest rates. When you look at the balances for your auto loan vs. your credit card, the larger amount may often be the auto loan. Big balances can be unnerving, so your inclination may be to pay that down first. However, auto loans usually have a relatively low interest rate, so if you have an extra $100 or $200 per month to put toward debt, credit cards make a better choice. The average credit card interest rate is about 15%, whereas the average auto loan rate is usually under 7%, if you have good credit.[i]

  • Credit cards charge compound interest. Most auto loans are simple-interest loans, which means you only pay interest on the principal. Credit cards, however, charge compound interest, which means any interest that accrues on your account can generate interest of its own. Yikes!

  • You’ll lower your credit utilization. Part of your credit score is based on your credit utilization, which specifically refers to how much of your revolving credit you use. As you pay down your balance, you’ll not only pay less in interest, you may also give your credit score a boost by reducing your credit utilization.

The numbers don’t lie
Let’s say you have a 5-year auto loan for $30,000 at 7% interest. You also have an extra $100 per month you’d like to use to pay down debt. By adding that 100 bucks to your car payments, over the course of the loan you can cut your loan length by 10 months and save $972.32.[ii] Impressive.

Let’s look at a credit card balance. Maybe the credit card interest rate is higher than the car loan, but hopefully the balance is lower. Let’s assume a balance of only $10,000 and an interest rate of 15%. With your minimum payment, you’d probably pay about $225 monthly. Putting the extra $100 per month toward the credit card balance and paying $325 shortens the payment length for the card balance by 26 months and saves $1,986 in interest expense.[iii] Wow!

The math tells the truth. In the above hypothetical scenarios, even though the balance on the credit card is one-third that of the total owed for the car, you would save more money by paying off the credit card balance first.

Financial strategy isn’t just about paying down debt though. As you go, be sure you’re saving as well. You’ll need an emergency fund and you’ll need to invest for your retirement. Let’s talk. I have some ideas that can help you build toward your goals for your future.


[i] https://www.valuepenguin.com/auto-loans/average-auto-loan-interest-rates
[ii] https://www.bankrate.com/calculators/auto/early-payment-payoff-calculator.aspx
[iii] https://www.bankrate.com/calculators/credit-cards/credit-card-payoff-calculator.aspx

January 7, 2019

More financial tips for the new year

More financial tips for the new year

There’s nothing like the start of a brand new year to put you in a resolution-making, goal-setting, slate-cleaning kind of mood.

Along with your commitment to eat less sugar and exercise a little more, carve out some time to set a few financial aspirations for the new year. Here are some quick tips that may add up to significant benefits for you and your family.

Check your credit report
Start the new year with a copy of your credit report. Every consumer is entitled to one free credit report per year. Make it a point to get yours. Your credit report determines your credit score, so an improved score may help you get a better interest rate on an auto loan or a better plan for utilities or your phone.

Check your credit report carefully for accuracy. If you find anything that shouldn’t be there, you can file a dispute to have it removed. There are several sites where you can get your free credit report – just don’t get duped into paying for it.

Up your 401(k) contributions
The start of a new year is a great time to review your retirement strategy and up your 401(k) contributions. If saving for retirement is on your radar right now – as it should be – see if it works in your budget to increase your 401(k) contribution a few percentage points.

Review your health insurance policy
The open enrollment period for your health insurance may occur later in the year, so make a note on your calendar now to explore your health insurance options beforehand. If you have employer-sponsored health insurance, they should give you information about your plan choices as the renewal approaches. If you provide your own health insurance, you may need to talk to your representative or the health insurance company directly to assess your coverage and check how you might be able to save with a different plan.

Make sure your coverage is serving you well. If you have a high deductible plan, see if you can set up a health savings account. An HSA will allow you to put aside pretax earnings for covered health care costs throughout the year.

No spend days
Consider implementing “no spend days” into your year. Select one day per month (or two if you’re brave) and make it a no spend day. This only works well if you make it non-negotiable! A no spend day means no spur of the moment happy hours, going out to lunch, or engaging in so-called retail therapy.

A no spend day may help you save a little money, but the real gift is what you may learn about your spending habits.

Do some financial goal setting
Whether we really stick to them or not, many of us might be pretty good at setting career goals, family goals, and health and fitness goals. But when it comes to formulating financial goals, some of us might not be so great at that. Still, financial goal setting is essential, because just like anything else, you can’t get there if you’re not sure where you’re going.

Start your financial goal setting by knowing where you want to go. Have some debt you want to pay off? Looking to own a home? Want to retire in the next ten years? Those are great financial goals, but you’ll need a solid strategy to get there.

If you’re having trouble creating a financial strategy, consider working with a qualified financial professional. They can help you draw your financial roadmap.

Clean out your financial closet
Financial tools like budgets, savings strategies, and household expenses need to be revisited. Think of your finances like a closet that should be cleaned out at least once a year. Open it up and take everything out, get rid of what’s no longer serving you, and organize what’s left.

Review your household budget
Take a good look at your household budget. Remember, a budget should be updated as your life changes, so the beginning of a new year is an excellent time to review it. Don’t have a budget? An excellent goal would be to create one! A budget is one of the most useful financial tools available. It’s like an x-ray that reveals your income and spending habits so you can see and track changes over time.

Make this year your financial year
A new year is a great time to do a little financial soul searching. Freshen up your finances, revisit your financial strategies, and greet the new year on solid financial footing.

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. Before investing or enacting a savings or retirement strategy, seek the advice of a financial professional, accountant, health insurance representative, and/or tax expert to discuss your options.

January 7, 2019

Read this before you walk down the aisle

Read this before you walk down the aisle

Don’t let financial trouble ruin your future wedded bliss.

Most newlyweds have a lot to get used to. You may be living together for the first time, spending a lot of time with your new in-laws, and dealing with dual finances. Financial troubles can plague even the most compatible pairs, so read on for some tips on how to get your newlywed finances off to the best possible start.

Talk it out
If you haven’t done this already, the time is ripe for a heart to heart talk about what your financial picture is going to look like. This is the time to lay it all out. Not only should you and your fiancé discuss your upcoming combined financial situation, but it can be beneficial to take a deep dive into your past too. Our financial histories and backgrounds can influence current spending and saving habits. Take some time to get to know one another’s history and perspective when it comes to how they think about money, debt, budgeting, etc.

Newlyweds need a budget
Everyone needs a budget, but a budget can be particularly helpful for newlyweds. A reasonable, working household budget can go a long way in helping ease financial stress and overcoming challenges. Money differences can be a big cause of marital strife, but a solid, mutually-agreed-upon budget can help avoid potential arguments. A budget will help you manage student loans or new household expenses that must be dealt with. Come up with a budget together and make sure it’s something you both can stick with.

Create financial goals
Financial goal setting can actually be fun. True, some goals may not seem all that exciting – like paying off credit cards or student loans. But formulating financial goals is important.

Financial goal setting should start with a conversation with your new fiancé. This is the time to think about your future as a married couple and work out a financial strategy to help make your financial dreams a reality. For example, if you want to buy a house, you’ll need to prepare for that. A good start is to minimize debt and start saving for a down payment.

Maybe you two want to start a business. In that case, your financial goals may include raising capital, establishing business credit, or qualifying for a small business loan.

Face your debt head on
It’s not unusual for individuals to start married life facing new debt that came along with their partner – possibly student loans or personal credit card debt. You may also have combined debt if you’re planning on financing your wedding. Maybe you’re going to take your dream honeymoon and put it on a credit card.

Create a strategy to pay off your debt and stick to it. There are two common ways to tackle it – begin with the highest interest rate debt, or begin with the smallest balance. There are many good strategies – the key is to develop one and put it into action.

Invest for the future
Part of your financial strategy should include preparing for retirement, even though it might seem light years away now. Make sure you work a retirement strategy into your other financial goals. Take advantage of employer-sponsored retirement accounts and earmark savings for retirement.

Purchase life insurance
Life insurance is essential to help ensure your new spouse will be taken care of should you die prematurely. Even though many married couples today are dual earners, there is still a need for life insurance. Ask yourself if your new spouse could afford to pay their living expenses if something happened to you. Consider purchasing a life insurance policy to help cover things like funeral costs, medical expenses, or replacement income for your spouse.

Newlywed finances can be fun
Newlywed life is fun and exciting, and finances can be too. Talk deeply and often about finances with your fiancé. Share your dreams and goals so you can create financial habits together that will help you realize them. Here’s to you and many years of wedded bliss!

December 31, 2018

Considering a home equity loan?

Considering a home equity loan?

Home prices may be leveling off in some areas but they’ve had a healthy recovery nationwide, leading to massive amounts of untapped equity.

According to a recent report, the average homeowner gained nearly $15,000 in equity in the past year and has nearly $115,000 available to draw.[i]

This can be good news if you need to increase your cash flow to pay for a special project or unusual expense.

Home equity risks
It might be obvious, but a home equity loan is secured by your home, based on the equity you’ve built. Your eligibility for a home equity loan involves several factors, but a primary consideration is going to be the difference between your home’s market value and the remaining balance on the mortgage. Keep in mind that missed payments due to a job loss, illness, or another financial setback may put your home at risk from two loans – the original mortgage and the home equity loan. Before you take out this type of loan, make sure you have a solid strategy in place for repayment.

Home equity loan costs
Funds acquired through a home equity loan can feel like found money, but keep in mind that a home equity loan takes an asset and converts it to debt – often for up to 30 years. As such, you’ll be paying certain fees to use the money.

Home equity loans often have closing costs of 2% to 5% of the loan amount.[ii] It might be worth it to shop around, however, to see if you can find a lender who won’t bury you in fees and loan charges. Interest rates may vary depending on your credit rating and other factors, but you can expect to pay about 6% or higher. If you were to borrow $100,000 of the $115,000 the average homeowner now has in equity, the interest costs over 30 years would be $115,000 – $15,000 more than you borrowed. If you can manage a 15-year term instead, this would drop the interest costs down to about $52,000.[iii] Carefully consider what you’ll use the funds to purchase. A new patio addition to your home or a pool with a deck may not add enough value to your home to offset the interest costs.

Tax benefits
Once upon a time, the interest for a home equity loan was tax deductible, much like the interest on a primary mortgage. Now, there are some rules attached to the tax benefit. If you use the loan funds to make improvements to the home you’re borrowing against, you can usually deduct the interest. In the past, the tax benefit didn’t consider how the funds were used.[iv]

Home equity loans can be a powerful financial tool. But as with many tools, it’s important to exercise caution. Before signing on the dotted line, be sure you understand the long-term cost of the loan. With interest rates climbing, a home equity loan isn’t as attractive a source of funding as it once was.

Depending on how the funds are used, a home equity loan can make sense. If you’re buried in high-interest debt, like credit cards, the math might work to your favor. However, if the money is spent on a shiny, red sports car and a trip to Vegas, it might be tough to make a financial argument for that – unless you win big.

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 financial professional, accountant, and/or tax expert to discuss your options.

[i] https://www.cnbc.com/2018/07/09/homeowners-sitting-on-record-amount-of-cash-and-not-tapping-it.html
[ii] https://www.lendingtree.com/home/home-equity/home-equity-loan-closing-costs/
[iii] https://www.mortgageloan.com/calculator/loan-line-payment-calculator
[iv] https://www.cnbc.com/2018/05/21/5-things-to-know-before-taking-out-a-home-equity-loan.html

December 31, 2018

Top 10 ways to save more than last year

Top 10 ways to save more than last year

If you’re starting the new year resolving to save a little more money than last year – great idea!

A healthy savings habit is foundational to good financial health. But maybe you’re looking at your budget (you have a budget, right?) and wondering how you’re going to come up with that extra money to put away.

Maybe your budget is already pretty tight with very little wiggle room. Don’t despair! Read on for ten ways even the most financially strict households can save a little more this year.

Automatic savings from your paycheck
One of the easiest ways to stash some extra cash is to have it directly deposited into a separate savings account. Update your direct deposit to include a percentage or a dollar amount from your paycheck that will go directly into a savings account every time you get paid.

Cashback offers
If you use credit cards for household expenditures such as groceries or gas, find a card that gives you money back on the purchases you make. When it comes time to redeem the rewards, opt to deposit the extra cash right into your savings account.

Cut the grocery bill
Food for your household can often be one of the biggest monthly expenses. You can help cut your food costs by meal planning, buying what’s on sale, using coupons strategically, and shopping at farmers markets. Try to steer clear from pre-made foods and convenience frozen items. The least expensive way to buy food is often to purchase whole food items in bulk.

Make sure that if and when you fall under budget for groceries, you’re saving that leftover money. If this becomes a trend, try cutting your grocery budget by the average amount you’re falling under each month and officially allocating the surplus to your savings.

Shop the sales
Using coupons or buying items that are only on sale is a great way to save extra money. The challenge here is to avoid buying something just because it’s been marked down. Simply put, if you do need a new item, like a pair of glasses, try not to pay full price. It’s worth it to shop around for the best deal.

Eat at home
Whether you’re single or have a family, cooking and eating at home is probably going to be better for your wallet. No one could deny that eating out can be expensive, and the cost can quickly add up. Prep meals ahead of time and pack your lunches and snacks.

Make sense of your cents
What do you do with your pocket change? Most of us find a little of it everywhere – in our car, on the dresser, in the washing machine, and at the bottom of our purses. Pocket change is money, and it adds up. Treat your pocket change with the same attention you give to paper money.

Start by keeping it in one place, like a change jar or dish. Then, periodically deposit it into your bank account.

Take advantage of free entertainment
Learn where to look, and you’ll find free entertainment abounds. Instead of paying to see a local band, look for a free show. Craving a little café culture? Save the cost of a designer coffee and bring your homebrew to the city park.

Create an emergency fund
Creating an emergency fund doesn’t sound like a money-saving strategy, but it is. Why? Because when an emergency comes up, you’ll have money at hand to deal with it. An emergency fund keeps you from putting surprise expenses on a credit card and potentially incurring interest.

Stash the windfalls
Found money can boost your savings this year. Found money may include bonuses, gifts or inheritance. Any income that is not accounted for in your regular budget is found money. Stash found money and your savings account will grow. If you can’t bear not to treat yourself to something, go for it but commit to saving half.

Curb impulse buys
Impulse purchases may wreck even the most conscientious savings plan. If you want to save successfully, you’ve got to curb your impulse buys. Try using the 24-hour rule. For any non-essential purchase, wait 24 hours. This will give the impulse a chance to fade, and you might realize you don’t really need or want the item.

Reward yourself
Saving money isn’t easy, but with the right strategy, you can make your savings goals a reality. Good luck and here’s to a prosperous year!

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