Getting a Degree of Financial Security

June 14, 2021

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Rich & Kristina Messenger

Rich & Kristina Messenger

Senior Vice President



McKinney, TX

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June 14, 2021

Getting a Degree of Financial Security

Getting a Degree of Financial Security

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

As of 2019, the average college graduate earned 75% more than the average high school graduate.¹ When you crunch the numbers, it’s actually a more robust investment than stocks or bonds.

This income difference is making saving for retirement difficult for millennials without a college degree. According to the Young Invincibles’ 2017 ‘Financial Health of Young America’ study, millennial college grads – even with roadblocks like student debt – have saved nearly $21,000 for retirement.² That’s quite a lot more as compared to the amount saved by those with a high school diploma only: under $8,000.

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

Here’s an issue plaguing both groups: more than two-thirds of all millennial workers surveyed do not have a specific retirement plan in place at all.³

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

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

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¹ “College grads earn $30,000 a year more than people with just a high school degree,” Anna Bahney, CNN, Jun 6, 2019, https://www.cnn.com/2019/06/06/success/college-worth-it/index.html

² “Financial Health of Young America: Measuring Generational Declines between Baby Boomers & Millennials,” Tom Allison, Young Invincibles, Jan 2017, http://younginvincibles.org/wp-content/uploads/2017/04/FHYA-Final2017-1-1.pdf

³ “Retirement Plan Access and Participation Across Generations,” Pew, Feb 15, 2017, http://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2017/02/retirement-plan-access-and-participation-across-generations

May 26, 2021

The Better Choice: Federal or Private Loans for College

The Better Choice: Federal or Private Loans for College

Education can be one of the best investments you can make in your future.

Those with a bachelor’s degree earn, on average, almost $1 million more over their lifetime than those with just a high school diploma. And a person who gets a master’s degree can earn more money than someone with a bachelor’s degree!¹

But how should you pay for higher education? You may not have enough cash on hand to afford school. That means you’ll need student loans. That begs another question—should you get a federal or a private loan? There are many factors that go into answering this question. Let’s break down some pros and cons for both federal and private loans so you can decide which route is right for you.

Federal loans come straight from Uncle Sam. It all begins with filling out a FAFSA form. This form determines your eligibility for loans, grants, and work-study programs.

Federal student loan rates are typically lower than for private lenders. Federal loans also offer more flexible repayment options—you can make payments as a percentage of income or defer them until after school ends. You may also qualify for relief if you default on your loans. In general, a federal loan can be a good choice for many students, whether they’re pursuing a bachelor’s or master’s degree.

But remember, there are potential limitations to how much the federal government will lend you. Private loans may be needed to fill in the gaps. They typically charge higher interest rates and have stricter payment options. But they can sometimes be refinanced for better terms.

So if you need loans to afford your education, opt for federal loans first. Then, use private loans to cover the rest, refinancing as needed.

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¹ “The College Payoff: Education, Occupations, Lifetime Earnings,” Georgetown University Center on Education and the Workforce, 2011 https://cew.georgetown.edu/cew-reports/the-college-payoff/

² “Federal Versus Private Loans,” Federal Student Aid, https://studentaid.gov/understand-aid/types/loans/federal-vs-private

May 24, 2021

Why Families Buy Term Life Insurance

Why Families Buy Term Life Insurance

Why does term life insurance seem to be so common among your friends and family?

For many, it’s simply the most affordable strategy for securing life insurance. And that means it can provide critical financial protection for many different situations. Here are a few of the most common reasons families choose term life insurance.

The power of term life insurance is that it’s typical affordable. It provides a death benefit for a limited term, typically 20-30 years, which means you can often purchase more protection at a lower price than other types of policies. As long as your protection lasts while you have financial dependents, you’re covered.

But there are more pragmatic reasons why families buy term life insurance. For many, it serves as a source of income replacement. When a breadwinner passes away, the income they provide is gone. That means a family might find themselves with a serious cash flow deficiency in addition to the tragic loss. The death benefit can replace the lost income.

A family might also need to purchase life insurance when they have dependents, such as college-aged kids with high educational expenses. If a family has dependents and no life insurance, the burden of funding higher education falls on the family, who are down an income. With term coverage in place, they have the financial power to help cover those bills with confidence.

Term life insurance can also be invaluable for families with high debt obligations. Because it’s often so affordable, term life insurance may provide significant coverage without diverting financial resources away from getting out of debt. And, if the policyholder passes away before the debt is eliminated, the death benefit can also go towards finishing off loans.

Finally, term life insurance can be used to cover the costs of funeral expenses. Families who don’t have any other form of coverage for these out-of-pocket bills often need extra cash to cover the costs of burial. Term life insurance is a simple way to pay for the funeral the family needs.

In conclusion, term life insurance can be a great way to cover the costs of many big ticket items and expenses at a reasonable cost. Would that be a good fit for your family? Contact me, and we can explore what it would look like for you!

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May 19, 2021

The Advantages of Survivorship Insurance

The Advantages of Survivorship Insurance

A survivorship policy pays out only after two people pass away.

Why does that matter? For many families, it doesn’t. They need more traditional forms of life insurance that protect income for their spouses and children.

But there are specific situations where survivorship insurance might be critical for your legacy. Read on for the advantages of survivorship insurance!

First, survivorship insurance can be an invaluable tool for estate planning. If one spouse dies, they can pass their assets to their spouse without facing federal estate taxes.¹ Not so for wealth left to future generations! For some couples with substantial assets to pass on to children, survivorship can leave a sizable death benefit that can offset the cost of estate taxes.²

If this strategy appeals to you, reach out to an attorney and a financial professional. You’ll need their help to get your estate in order and navigate your state’s tax system.

Second, survivorship insurance can cover ailing or elderly couples. As a rule of thumb, survivorship insurance is a good option for those who don’t qualify for term or permanent life insurance due to health or age. That’s because the rates are based on two life expectancies, potentially lowering rates and increasing your likelihood of qualifying.³ This is especially useful if the couple has children who are still dependents or will need special care.

In conclusion, survivorship insurance can be a powerful tool for specific people in specific situations. That’s why it’s best to collaborate with legal and financial professionals to make a decision that will be right for you and your family.

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¹ “An act of mutuality: Survivorship insurance,” Shelly Gigante, MassMutual, Mar 30, 2021, https://blog.massmutual.com/post/survivorship-insurance

² “An act of mutuality: Survivorship insurance,” Shelly Gigante, MassMutual, Mar 30, 2021, https://blog.massmutual.com/post/survivorship-insurance

³ “An act of mutuality: Survivorship insurance,” Shelly Gigante, MassMutual, Mar 30, 2021, https://blog.massmutual.com/post/survivorship-insurance

May 17, 2021

A Matter of Life and Debt

A Matter of Life and Debt

You might never have thought about this before, but how are debt and life insurance connected?

Well, the answer is very simple. Debt is one of the largest financial struggles in society today—total consumer debt has grown to a staggering $14.9 trillion as of 2020.¹ That represents a staggering financial burden on Americans throughout the country.

But what happens if someone in debt passes away? The debt doesn’t just vanish. The estate of the deceased is often responsible for repaying creditors.² That means a family, already down an income, has to cope with the stress of managing debt.

That’s where life insurance can help.

Life insurance pays out a lump sum in the event of death. The money can help family members repay debt, care for children or other dependents, and provide financial security to those left behind.

So how much life insurance do you need? That’s something only you can answer for your own household. Typically, experts recommend 10X your annual income to provide a sufficient financial cushion for your family. But, depending on your level of debt or the particular needs of your spouse and children, you may require more coverage!

Life insurance could be critical for the financial well-being of your family if you’re carrying debt. It might provide the cash they need to pay your creditors and start building a new future.

If you’re looking for life insurance, contact me. We can estimate the amount of protection that’s right for your family!

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May 12, 2021

A Beginners Guide to Saving and Shredding Documents

A Beginners Guide to Saving and Shredding Documents

It’s time to manage all those papers that are taking up space in your filing cabinets!

But how? Which documents should you preserve? Which ones should you shred? Here are 11 helpful tips on what to do with tax documents, legal documents, and property records.

Documents to keep <br> At the top of this list? Estate planning documents. Your will, your living trust, and any final instructions should be carefully labeled, stored, and protected. Your life insurance policy should be safeguarded as well.

Records of your loans should be preserved. That includes for your mortgage, car and student loans. Technically, you can shred these once they’re paid off, but it’s wise to keep them around permanently. Someday you may have to prove you’ve actually paid off these debts.

Tax returns <br> Here’s a trick—keep tax returns for at least 7 years. Why? Because there’s a 6 year window for the IRS to challenge your return if they suspect you’ve underreported your income.¹ Keep your records around to prove that you’ve been performing your civic duty by properly reporting your income.

(Check your state’s government website to determine exactly how long you’re supposed to keep state tax returns.)

Property records <br> Keep all of your records pertaining to…

  • Your ownership of your house
  • The legal documents for buying your house
  • Commissions to your real estate agent
  • Major home improvements

Save these documents for a minimum of 6 years after you move out of your home. If you’re a renter, keep all of your records until you’ve moved out. Then, fire up your shredder and get to work!

Speaking of your shredder…

Annual documents to destroy <br> Every year, you can shred paycheck stubs and bank records. Just be sure of two things…

First, make sure that you’re not shredding anything that might belong in your tax records.

Second, be sure that you’ve reviewed your finances with a professional who will know which documents may need preserving.

Once you’ve done that, it’s fine to feed your shredder at your discretion!

Credit card receipts, statements and bills <br> Once you’ve checked your monthly statement against your bank records and receipts, you’re free to shred them. You may want to hold on to receipts for large purchases until the item breaks or you get rid of it.

When in doubt, do some research! It’s better than tossing out something important. And schedule an annual review with a licensed and qualified financial professional. They can help you discern which documents you need and which ones can be destroyed.

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¹ “Save or Shred: How Long You Should Keep Financial Documents,” FINRA, Jan 27, 2017, https://www.finra.org/investors/insights/save-or-shred-how-long-you-should-keep-financial-documents

April 14, 2021

The Time Value of Money and College

The Time Value of Money and College

College is one of the most expensive things that you can spend your money on, but it might not always be a good investment.

College graduates make much more than high school graduates over their lifetimes.¹ Some people think this means going to college is worth the cost because they’ll be able to pay off the loans with their higher salaries after graduation. But as you’ll see in this article, there’s another critical factor you should consider before going off to school.

Which career path will empower you to start saving sooner? The longer your money can accrue compound interest, the more it can grow. Working an extra four years instead of attending school could result in retiring with more. Let’s consider two hypotheticals that illustrate this point…

Let’s say you land a job straight out of high school at age 18 earning $35,000 total annual salary. You’re able to save 15% of your income in an account where the interest is compounded monthly at 9%. Assuming you work until 67, or 49 years, and consistently save the same amount each month over that time period at the same interest rate, you would retire with almost $4 million!

What if instead you attend college and graduate after 4 years? You land a job that pays $60,000 annually and are able to save 15% of your income. If you also retire at 67 after 45 years of work, saving 15% every month, you’ll retire with $4.7 million. That’s almost $700,000 more than the non-graduate!

But what if student loans prevent you from saving for 5 years after graduation? You’d retire with $3 million. In this hypothetical scenario, losing 9 years of saving results in a college graduate actually retiring with less than someone who diligently works and saves right out of high school.

The takeaway isn’t that you shouldn’t attend college. It’s that you should carefully weigh the costs of higher education. Is there a career path you could take right out of high school that would have you saving right away? Will your degree land you deep in debt and behind the 8-ball for building wealth? Or do the benefits of the degree substantially outweigh the costs? Don’t attend a college just because it’s what your peers are doing. Consider your passions, weigh the benefits, and calculate the costs before you make your decision!

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

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“The College Payoff,” Georgetown University, https://cew.georgetown.edu/cew-reports/the-college-payoff/

April 12, 2021

Home Buying for Couples: A Starter Guide

Home Buying for Couples: A Starter Guide

Buying your first home is an exciting, yet daunting process.

You and your significant other already have a lot on your plate in planning this huge purchase—from deciding how much house you need to fitting it all into a budget. Read on for some tips that will help ease the process of buying a house as well as help you save money in the long run!

Evaluate your financial situation before you start house hunting. It’s important to know what kind of mortgage payment is feasible for the income in a household. You’ll also have to contend with hidden housing costs like property taxes, renovations, and repairs. Calculate your total income, and then subtract your current expenses. That’s how much you have at your disposal to handle the costs of homeownership.

Improve your credit score. If you’re a first-time homebuyer, your credit score is important—it can profoundly affect your ability to get approved for loans and mortgages! The higher that number goes up, the easier it may become to get approval from lenders. You can help yourself out by paying off any outstanding debt balances such as student loan payments, medical bills, and credit card debt before going house hunting.

Start saving for a downpayment. As a rule of thumb, you’ll want to put down at least 20% of the home’s purchase price. This can take years, especially if your budget is tight! However, it’s well worth it—you may avoid the hassle of paying private mortgage insurance (PMI), which can substantially add to your monthly housing payments. A sizeable downpayment can also lower your interest rate and reduce the size of your loan.¹

Decide how much house you need. This is a tough question to answer, but it’s crucial that both partners are united on this front. Otherwise, one partner might feel like a house doesn’t meet their needs. Sit down with your partner and discuss what exactly you desire out of your home. How many bedrooms will you need? Do you want a big yard or a small one? How close to work do you want to live? Hammer out the important details of what you want in a home before the shopping begins!

Decide on your budget. Knowing how much you can afford before shopping for a home will help narrow down the options. Typically, housing costs should account for no more than 30% of your budget. That includes your mortgage payment, repairs, HOA fees, and renovations. Spending more than 30% can endanger your financial wellness if your income ever decreases.

Buying a home can be an exciting time for couples. But it’s important to take the necessary steps before you start house hunting. Remember, you want your new home to be a source of joy, not financial stress! Do your homework, talk with your partner, and start saving!

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“Do you need to put 20 percent down on a house?,” Michele Lerner, HSH, Sep 2, 2018, https://www.hsh.com/first-time-homebuyer/down-payment-size.html

April 7, 2021

The Power of Living Benefits

The Power of Living Benefits

Preparing for the possibility of a critical medical illness or condition is probably not high on your list of fun things to do.

But its importance cannot be overstated—two-thirds of people who file for bankruptcy do so because of medical debt.¹

What many don’t know, however, is that life insurance can help you shoulder the high cost of medical care… if you utilize living benefits!

How living benefits work <br> Almost all life insurance policies come with a death benefit. It’s money that will go to your beneficiaries when you pass away. A living benefit is a feature of some life insurance policies that allows you to access the death benefit while you’re still alive.

So let’s say you have a life insurance policy with a $400,000 death benefit. You suddenly get diagnosed with a serious illness that requires you to take time off work and undergo intensive medical treatment.

That means you’re facing a substantial expense with a decreased income. Your medical crisis has also become a financial crisis!

But what if you could access your death benefit in the present? $400,000 may cover a substantial portion—perhaps even all—of the cost of treatment.

And you don’t have to use your entire benefit. If your medical bills add up to $100,000, you could use $100,000 from your life insurance policy to cover your expenses, and leave the remaining $300,000 as the death benefit!

Keep in mind that only certain types of illness may trigger your ability to access your benefit. That’s why it’s important to work with a licensed and qualified financial professional to create the right policy for you.

If you’re interested in what living benefits would look like for you, contact me. We can review your income and how much life insurance your family needs!

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¹ “This is the real reason most Americans file for bankruptcy,” Lorie Konish, CNBC, Feb 11 2019, https://www.cnbc.com/2019/02/11/this-is-the-real-reason-most-americans-file-for-bankruptcy.html

March 29, 2021

Personal Finance Moves For Small Business Owners

Personal Finance Moves For Small Business Owners

As a small business owner, you’re responsible for everything—from saving on office supplies to making sure folks get paid to knowing what taxes to file and when.

A big part of success is educating yourself on how your personal finances affect your business and vice versa. Here are a few moves that can help keep your personal finances healthy while you grow your business.

Keep track of your monthly income and expenses. Your business income can vary dramatically from month to month, depending on the season, number of sales, trends in your market, etc. These could potentially cause your average bottom line to be lower than anticipated.

That’s why it’s critical to track your monthly income and then budget accordingly. As your income grows and shrinks, you can adjust your spending.

Set up an emergency fund. This money can be used to cover unexpected costs, such as unanticipated repairs or an illness. But, when you own a business, it can also help you make ends meet if business is slow or, say, if a global pandemic shuts down the world economy. Save up 6 months’ worth of spending in an account you can easily access in a pinch!

Know what you owe, to whom, and when it is due. Personal debt can be a serious challenge for small business owners. It may motivate them to make foolish financial decisions to pay off what they owe, regardless of the consequences.

That’s why it’s important to manage your finances responsibly so that debt doesn’t become a problem. Adopt a debt management strategy to reduce your debt ASAP. Your business may benefit greatly from it.

Get professional advice if you need help with your finances. If it’s at all feasible for your business’s budget, get a professional set of eyes on your books. They’ll help you navigate the world of finances, share strategies that can help make the most of your revenue, and show you how to position yourself for future success!

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March 15, 2021

What You Need To Know About Life Insurance

What You Need To Know About Life Insurance

Buying life insurance is something that many people put off.

But it’s important to take the time to learn about what type of policy you may need and how much coverage you should buy. If you have a family, buying enough life insurance might be the most important part of your financial strategy.

Here are 4 things you need to know before you buy life insurance.

What is life insurance? Simply put, life insurance is an agreement between an insurer and a policyholder. When the policyholder dies, the insurer is legally obligated to pay a set amount of money, called a death benefit, to whomever the policyholder had predetermined.

Do you need life insurance? If people you love are dependent on your income, you may need life insurance. The death benefit can serve as a replacement for income that would vanish in the case of your passing. A personal tragedy doesn’t have to become a financial crisis!

What if I don’t have any dependents? Then life insurance may not be for you! However, you should note that life insurance might be useful if you’re carrying high levels of debt like student loans or a mortgage.

How much coverage should I get and how long should my policy last? As a rule of thumb, your life insurance coverage should be worth 10X your annual income. That should provide your family with a financial cushion while they grieve and plan for the future.

If you buy a term policy, be sure that it lasts through periods of high financial responsibility like paying a mortgage or raising a family.

If you want to learn more about life insurance, let me know! I can help you evaluate your financial situation and what a policy would look like for you.

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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 10, 2021

How to Reduce Debt

How to Reduce Debt

Paying off debt can be a great feeling.

The burden is lifted and you have more control over your financial situation. If you’re like many, however, paying down debt hasn’t been an easy task due to high interest rates and the sheer size of what you owe. Many people find themselves in situations where they feel helpless. But following some tips from this article can show you a path towards financial health!

Start by making a budget. Write down your income on a piece of paper or spreadsheet. Then, calculate how much you spend, on average, every month. If you can, categorize all of your expenses in order of amount spent. Be sure to also rank your debts from highest to lowest interest rate!

Then, subtract your expenses from your income. The result is how much cash flow you have available to attack your debt.

But before you start chipping away at what you owe, devote your cash flow to building an emergency fund. Why? Because it will provide a cash reserve to pay for unexpected expenses that you might otherwise cover with more debt!

Then, focus all your financial resources on your highest interest loan. Make minimum payments on all your debts until that top priority debt is eliminated. Next, move on to the next debt. Rinse and repeat until you’re debt free.

Track your spending and cut back where possible. When you budget, you might find that you have almost no cash flow. If that’s the case, you’ll need to reduce your spending. Start by cutting back on categories like clothes shopping and dining out.

Above all, be consistent! Reducing debt is no easy task but it’s doable. Cutting back on your spending and consistently budgeting may not be easy in the short-term, but the sense of relief that comes with being debt free is well worth the effort.

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March 8, 2021

What to Do If You Can't Pay Your Bills

What to Do If You Can't Pay Your Bills

If you’re having a hard time paying your bills, there are two strategies that might help you find relief.

A financial professional can help you decide which one works best for you, but here’s what we know about each approach…

Contact everyone you owe. You don’t need to worry about getting punished for asking a creditor if they’re willing to negotiate. Even if they say no, you still gain the satisfaction of knowing you tried. Doesn’t it make sense that a landlord would want their tenant to pay more than nothing? Or credit card companies would want some level of payment over none at all? It’s worth giving it a shot!

Write a letter explaining your situation. Detail why you’re not able to make payments, state how much you can pay instead, when you believe you’ll start making regular payments, and list your income and assets. You might be surprised by how effective your request for relief actually could be!

Work with a debt counselor. Debt counselors can feel like a life-saving resource if you’re drowning in debt and unable to manage your finances. They can help you understand your credit report, help you negotiate with creditors, and offer advice on how to pay off your debts.

However, verify that the debt counseling agency you work with is properly qualified to help you. Here’s how…

■ Find your counselor through the Financial Counseling Association of America or the National Foundation for Credit Counseling. ■ Ask what services they provide for free. Be cautious if they charge for workshops or if they immediately recommend a debt management program. ■ Check their standing with the Better Business Bureau.

Finally, check out the Consumer Financial Protection Bureau’s website to learn more. They have educational resources, links to useful services, and even templates for appeal and complaint letters.

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March 1, 2021

How to Find Your Net Worth

How to Find 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.

Net worth is just a balance sheet of a person’s assets and liabilities, not unlike the balance sheets used in business. You also have a net worth, and it’s important to know what it is.

Calculating your net worth is simple. 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
  • Any amounts owed to you
  • Cash value of life insurance policies

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

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

Your total liabilities subtracted from your total assets equals 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 a chance to build any personal assets.

It’s 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.

Measuring your net worth regularly can be a strong motivation when saving for the future—it can mark progress toward a well-reasoned financial goal.

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

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February 24, 2021

2 Strategies to Build Credit When You’re Young

2 Strategies to Build Credit When You’re Young

The sooner you establish your credit score, the better positioned you’ll be for financial success.

Why? Because your credit score touches every aspect of your financial life—a high score can help you obtain a lower interest rate on mortgages and car loans, insurance payments, and even your rent!¹ That can help free up more cash for building wealth.

So, where do you start?

Apply for a credit card… and then use it responsibly! Credit cards are excellent tools for building your credit history. If you attend a university, you might be able to score a student credit card. However, just remember that credit cards are not free money. The less you use your credit card, the higher your credit score. Choose a few recurring expenses, and limit your credit card usage to those. Then make sure you pay off the balance every month, on time.

Use automatic payments on all your debts. Missing payments on your debt obligations can torpedo your credit score. It’s absolutely critical to pay on time for your credit card bill, student loan payments, and anything else you owe.

Consider automating all of your debt payments. It’s a simple, one-time move that can steadily reduce your balances and help boost your credit score.

As you build your credit history, you’ll be able to apply for credit in larger amounts, and you may even start receiving pre-approved offers. But beware. Having credit available is useful for certain emergencies and for demonstrating responsible use of credit—but you don’t need to apply for every offer you receive!

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February 8, 2021

3 Steps to Reduce Debt with Limited Income

3 Steps to Reduce Debt with Limited Income

Is your income holding you back from paying down debt?

It may feel like necessities such as housing, groceries, and transportation are consuming your cash flow. So how can you pay down debt if you feel like you’re struggling to put food on the table?

Reducing debt with a limited income is certainly a challenge. But if you know the right strategies, it’s an obstacle that you can work to overcome. Read on for tips that can help you pay down debt, regardless of how much you earn.

Budget debt payments first. The next time you sit down to budget, start by allocating money for reducing your debt. It should be your number one priority. Then, budget for essential living expenses like housing, utilities, and groceries. If you need more cash flow, cut down on non-essential spending like dining out and purchasing new clothes.

Start a side gig. If cutting expenses alone doesn’t free up enough cash, explore ways to make more money. That doesn’t always mean starting a second job—after all, this is the golden age of side gigs! Here are just a few hustle ideas for your consideration…

■ Resell books, clothes, and shoes you might pick up from the thrift store on eBay ■ Rideshare or deliver groceries and food ■ House sit, baby sit, or pet sit for friends and neighbors

Ultimately, your ability to earn income is only limited by your creativity in solving problems. What other opportunities are there for you to help others and earn extra income?

Make more than minimum payments. Your debt will linger if you make only minimum payments. That’s because minimum payments are nearly erased by interest. You make a payment, but the interest may put you almost right back where you started.

Instead, choose one debt to eliminate at a time. You should start with the one with the smallest total balance or the highest interest rate. Keep making the minimum payments on your other debts, and target that one debt with the rest of your available financial resources. Once it’s gone, choose the next smallest balance. Rinse and repeat until your debts are gone.

The biggest takeaway is that if you’re working with a limited income, paying off debt has to become your number one financial goal. Devote as much of your budget towards it as possible and increase your earnings if you have to. But it’s well worth the effort—once your debt is gone, you’ll have significantly more income for building real wealth!

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February 3, 2021

Strategies for Coping With Medical Bills

Strategies for Coping With Medical Bills

What’s your strategy for paying medical bills?

It’s a question anyone serious about protecting their finances must answer. Afterall, medical expenses are the number one cause of bankruptcy in the country.¹

But there are resources at your disposal. Read on for some strategies to help you lighten the financial burden of medical bills.

Review your bill for mistakes. Somewhere between 30% to 80% of medical bills contain errors.² Check every bill you receive for any mistakes and report them immediately. You don’t need to pay for medical services you didn’t use!

Negotiate a payment plan. The scary price tag on your medical bill isn’t always final. Hospitals are sometimes willing to negotiate a lower cost if they’re aware of your financial situation. Contact your healthcare provider and inform them if you’ll struggle to pay the sticker price. Then, ask for price alternatives or for a more lenient payment plan.

Avoid using credit cards for medical bills, if possible. Using credit cards to cover medical bills can be a critical blunder. Instead of paying a low interest–or maybe no interest–bill to a hospital, you may end up making high-interest payments to your credit card company.

Whenever possible, use cash to pay for medical expenses. That may mean cutting on vacations, not dining out, and holding off on purchasing new clothes until the bill is settled. (Hint: A great reason to keep an emergency fund is to pay unexpected medical bills.)

If none of these strategies make a dent in your medical expenses, consider reaching out to a professional for help. Hospitals and insurance companies sometimes have case workers who can point you towards programs, organizations, and agencies who may be able to help provide some financial relief.

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¹ “Top 5 Reasons Why People Go Bankrupt,” Mark P. Cussen, Investopedia, Feb 24, 2020, https://www.investopedia.com/financial-edge/0310/top-5-reasons-people-go-bankrupt.aspx

² “Over 20 Woeful Medical Billing Error Statistics,” Matt Moneypenny, Etactics, Oct 20, 2020, https://etactics.com/blog/medical-billing-error-statistics#:~:text=80%25%20of%20all%20medical%20bills%20contain%20errors.&text=Some%20experts%20across%20the%20web,between%2030%25%20and%2040%25.

January 18, 2021

3 Strategies to Increase Your Credit Score

3 Strategies to Increase Your Credit Score

Is your credit score costing you money?

A recent survey found that increasing a credit score from “Fair” to “Very Good” could save borrowers an average of $56,400 across five common loan types like credit cards, auto loans, and mortgages.¹ That’s roughly $316 in extra monthly cash flow!

If your credit score is anything but “Very Good,” keep reading. You’ll discover some simple strategies that may seriously help improve your credit score and increase your cash flow.

Pay your bills at the strategic time. <br> Credit utilization makes up a big portion of your credit score, sometimes up to 30%.¹ The closer your balance is to your credit limit, the higher your credit utilization. The lower your utilization, the less you’re using your available credit. Creditors view a lower utilization as an indicator that you’re responsible with managing your credit.

Here’s a simple way to lower your credit utilization–ask your creditors for when your balance is shared with credit reporting agencies. Then, automate your bill payments to just before that day. When credit reporting agencies review your balances, they’ll see lower numbers because you just paid them down. That can result in a lower credit utilization and a higher credit score!

Automate debt and bill payments. <br> Late payments for your credit card bill, phone bill, and utilities can negatively affect your credit score. If you have a habit of paying your bills late, consider automating as many of your payments as possible. It’s a convenient and simple way to make your finances more manageable and help increase your credit score in a single swoop!

Leave old credit accounts open. <br> So long as they don’t require a monthly fee, leave old and unused credit accounts open. Any open line of credit, even if it’s unused, increases the amount of available credit you have at your disposal. And not using that credit lowers your overall credit utilization, which can help increase your credit score.

Closing unused credit accounts does the opposite. It lowers your available credit and spikes your credit utilization, especially if you have large balances in other accounts. So if you have credit cards you don’t use anymore, leave those accounts open and hide the cards in a place where they won’t tempt you to start spending!

The best part about these strategies? You can act on them all today. Ask your creditors when your balance is shared with credit reporting agencies, then automate your deposits to go through right before that day.

When you’re done automating your payments, put your unused credit cards into a plastic bag and put them deep into your freezer. In just a few hours, you’ll have set yourself up to increase your credit score and save money!

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January 11, 2021

Simple Ways to Streamline Your Budget

Simple Ways to Streamline Your Budget

Is your budgeting system slowing your financial progress?

It’s not hard to tell if it is. Consistently ignoring your budget and failing to see results like increased cash flow and reduced debt could be indicators that something’s wrong.

Fortunately, it’s not hard to streamline your budgeting process. Here are two simple steps you can take to make your budget more manageable and more effective.

Prioritize your short-term budgeting goals <br> Splitting your cash flow between non-discretionary spending, savings, your emergency fund, and debt reduction may make you feel like you’ve got all the bases covered, but spreading yourself too thin might actually be diminishing the power of your money. It creates a house of cards that’s waiting to collapse!

Instead of trying to knock out everything at the same time, your budget should reflect your current financial situation. Prioritize where you put your money for the goal you’re trying to achieve. Start by putting all your excess cash flow towards an emergency fund. Then, target your debt. And finally, start directing your income towards building wealth. You’ll more effectively clear the obstacles that block the way towards financial independence.

Automate everything <br> What if there were a way to automatically make wise financial decisions without even thinking about it? That’s the power of automation.

Once you’ve determined your short-term budgeting goal, set up automatic deposits that move you closer towards achieving it. If you’re building an emergency fund, set up an automatic transfer from your checking account to a high-interest savings account every payday. You can do the same with essential bills and utilities as well.

Once you prioritize and automate your budget, there’s a great chance that you’ll see real progress towards your goals. And once you see progress you’ll feel empowered, maybe even excited, to keep pushing towards building wealth and creating financial independence.

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December 28, 2020

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.

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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.

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