Time Management 101

February 26, 2020

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Rita Taylor Stewart

Rita Taylor Stewart

Licensed Financial Representative



Midlothian, VA

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February 12, 2020

What's a Recession?

What's a Recession?

Most of us would probably be apprehensive about another recession.

The Great Recession caused financial devastation for millions of people across the globe. But what exactly is a recession? How do we know if we’re in one? How could it affect you and your family? Here’s a quick rundown.

So what exactly is a recession?
The quick answer is that a recession is a negative GDP growth rate for two back-to-back quarters or longer (1). But reality can be a bit more complicated than that. There’s actually an organization that decides when the country is in a recession. The National Bureau of Economic Research (NBER) is composed of commissioners who dig through monthly data and officially declare when a downturn begins.

There’s also a difference between a recession and a depression. A recession typically lasts between 6 to 16 months (the Great Recession was an exception and pushed 18 months). The Great Depression, by contrast, lasted a solid decade and witnessed unemployment rates above 25% (2). Fortunately, depressions are rare: there’s only been one since 1854, while there have been 33 recessions during the same time (3).

What happens during a recession
The NBER monitors five recession indicators. The first and most important is inflation-adjusted GDP. A consistent quarterly decline in GDP growth is a good sign that a recession has started or is on the horizon. Then this gets supplemented by other numbers. A falling monthly GDP, declining real income, increasing unemployment, weak manufacturing and retail sales all point to a recession.

How could a recession affect you?
The bottom line is that a weak economy affects everyone. Business slows down and layoffs can occur. People who keep their jobs may get spooked by seeing coworkers and friends lose their jobs, and then they may start cutting back on spending. This can start a vicious cycle which can lead to lower profits for businesses and possibly more layoffs. The government may increase spending and lower interest rates in order to help stop the cycle and stabilize the economy.

In the short term, that means it might be harder to find a job if you’re unemployed or just out of school and that your cost of living skyrockets. But it can also affect your major investments; the value of your home or your retirement savings could all face major setbacks.

Recessions can be distressing. They’re hard to see coming and they can potentially impact your financial future. That’s why it’s so important to start preparing for any downturns today. Schedule a call with a financial professional to discuss strategies to help protect your future!

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  1. https://www.thebalance.com/what-is-a-recession-3306019
  2. https://www.thebalance.com/what-is-a-recession-3306019
  3. https://www.thebalance.com/recession-vs-depression-definition-causes-and-stats-3306048

January 29, 2020

Saving For Retirement: Where Do I Start?

Saving For Retirement: Where Do I Start?

We all know we should be saving for the future.

But depending on your stage in life, it might feel like retirement is either too far away or it’s too late in the game to make much of a difference. Regardless of your income—or which season of life you’re in—you can (and should) start saving for retirement. Here’s how to get started:

Make savings automatic
Have your employer deposit a set dollar amount or percentage from each paycheck to a savings account or your 401(k). It’s an effortless way to start loading your savings account while also reducing temptations to overspend.

Pay yourself first
Your attitude towards saving makes a big difference. It shouldn’t be something that is optional after all of your other spending. If you view saving the way you would a bill and pay it to yourself first, you will be far more likely to save.

Investigate IRA options
An IRA is a retirement account that invests your money in stocks and bonds. Many people opt for either a traditional IRA or a Roth IRA, though there are other types to choose from. The big difference between the traditional and the Roth is how and when their tax exemptions kick in. Contributions to the traditional are tax deductible until they are withdrawn. A Roth, on the other hand, gets taxed on contributions but withdrawals are tax deductible and get to grow tax free. The maximum amount you can contribute to an IRA is $6,000 – $7,000 per year (depending on your age), so you’ll need to consult your budget to see how much you can put away.

Establish your permanent lifestyle
It’s easy to be tempted to try to one-up our friends’ and neighbors’ lifestyles. But continually increasing your cost of living can set your retirement up for failure. Establish a basic amount of what it takes for you to live a comfortable lifestyle, and stick to that mode of living. Doing so can help you save money right now and also give you an idea of how much you’ll need to save for retirement.

Meet with a financial professional
Investing can be intimidating, especially when it’s your future on the line. Be sure to meet with a licensed professional before you make any big saving decisions. Getting an extra pair of qualified eyes on your goals and strategies is always a good move and can help bring you peace of mind about your retirement strategy!

Whether you’re just entering the workforce or retirement is right around the corner, there are many ways to contribute to your future. By adjusting your lifestyle, investing carefully, and making it a priority to prepare for the future, you can nurture your peace of mind and look forward to seeing how your financial strategy unfolds in your golden years.

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

January 27, 2020

7 Money-Saving Tips for Budgeting Beginners

7 Money-Saving Tips for Budgeting Beginners

Starting a budget from scratch can seem like a huge hassle.

You have to track down all of your expenses, organize them into a list or spreadsheet, figure out how much you want to save, etc., etc.

But budgeting doesn’t have to be difficult or overwhelming. Here are 7 easy and fun tips to help keep your budget in check and jump-start some new financial habits!

Take stock
Laying out all of your expenses at once can be a scary thought for many of us. One key is to keep your budget simple—figure out what expenses you do and don’t really need and see how much you have left over. This method will help you figure out how much spending money you actually have, how much your essential bills are, and where the rest of your money is going.

Start a spending diary
Writing down everything you spend for just a couple of weeks is an easy way of finding out where your spending issues lie. You might be surprised by how quickly those little purchases add up! It will also give you a clue about what you’re actually spending money on and places that you can cut back.

Don’t cut out all your luxuries. Don’t get so carried away with your budgeting that you cut out everything that brings you happiness. Remember, the point of a budget is to make your life less stressful, not miserable! There might be cheap or free alternatives for entertainment in your town, or some great restaurant coupons in those weekly mailers you usually toss out.

That being said, you might decide to eliminate some practices in order to save even more. Things like packing sandwiches for work instead of eating out every day, making coffee at home instead of purchasing it from a coffee shop, and checking out a consignment shop or thrift store for new outfits can really stretch those dollars.

Plan for emergencies
Emergency funds are critical for solid budgeting. It’s always better to get ahead of a car repair or unexpected doctor visit than letting one sneak up on you![i] Anticipating emergencies before they happen and planning accordingly is a budgeting essential that can save you stress (and maybe money) in the long run.

Have a goal in mind
Write down a budgeting goal, like getting debt free by a certain time or saving a specific amount for retirement. This will help you determine how much you want to save each week or month and what to cut. Most importantly, it will give you something concrete to work towards and a sense of accomplishment as you reach milestones. It’s a great way of motivating yourself to start budgeting and pushing through any temptations to stray off the plan!

Stay away from temptation
Unsubscribe from catalogs and sales emails. Unfollow your favorite brands on social media and install an ad blocker. Stop going to stores that tempt you, especially if you’re just “running in for one thing.” Your willpower may not be stronger than the “Christmas in July” mega sales, so just avoid temptation altogether.

Keep yourself inspired and connected
Communities make almost everything easier. Fortunately, there’s a whole virtual world of communities on social media dedicated to budgeting, getting out of debt, saving for early retirement, showing household savings hacks, and anything else you would ever want to know about managing money. They’re great places for picking up ideas and sharing your progress with others.

Budgeting and saving money don’t have to be tedious or hard. The rewards of having a comfortable bank account and being in control of your spending are sweet, so stay engaged in the process and keep learning!

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January 20, 2020

Tips for Getting Out of Debt

Tips for Getting Out of Debt

Americans owe a whopping amount of debt.

Total consumer debt, for example, tops $4 trillion (1), and the average household owes $6,829 on credit cards alone (2).

Debt can cause a serious drain on your financial life, not to mention increase your stress levels. You may be parting with a big slice of your income just to service the debt—money that could be put to better use to fund things like a home, your own business, or a healthy retirement account.

Fortunately, there are lots of ways to get out of debt. Here are 3 of them…

Create a budget
Before you can start digging yourself out of debt, you need to know how you stand with your income versus your outgo every month. Otherwise, you may be sliding deeper into debt as each week passes.

The solution? Create a budget.

First, start tracking your expenses—there are apps you can get on your phone, or even just a notebook and pencil will do. Divide your expenses into categories. This doesn’t have to be complicated. Food, utilities, rent, entertainment, misc. Add them together every week and then every month.

Then, review your spending and compare it with your income. Spending more than you make? That has to be reversed before you’ll ever be able to get out of debt. Make a plan to either reduce your expenses or find a way to raise your income.

If debt payments are driving your expenses above your income, call your lender to see if you can get a plan with lower monthly payments.

Seek out lower interest rates
If you’re paying a high interest rate on credit card debt, a good portion of your monthly payment may be going towards interest alone. That means you may not be reducing the principal—the amount you originally borrowed—as much as you could with a lower interest rate. The lower your interest rate, the more your monthly payments can lower your debt—and eventually help you get out of it.

Find out the annual percentage rate (APR) on your current credit card debt by looking at the monthly statements. Then shop around to find any lower interest rates that might be out there. The next step would be to transfer your credit card debt to that new account with the lower rate. The caveat, however, is if any fees you may be charged now or after an introductory period would nullify the savings in interest. Always make sure you understand the terms on a new card before you transfer a balance.

Another option is to apply to a lender for a personal loan to consolidate your high interest rate debt. Personal loans can have interest rates significantly below those on credit cards. Again, make sure you understand any fees, penalties, and terms before you sign up.

Increase your monthly debt payments
Now that you’ve got your spending under control, it’s time to see if you can raise your debt payments every month. There are two primary methods to do this.

First, review your expenses to see if you can cut back in some categories. Can you spend a little time each week clipping coupons to reduce your grocery bill? Can you make coffee at home rather than purchasing it at the coffee shop every day? These changes can add up! Review entertainment costs, too. Can you cut out one or more streaming or cable services? It might be a good idea to find introductory offers that can reduce your monthly payments. Check into introductory cell phone offers, too, but always read the fine print so you don’t have any surprise fees or costs down the road.

Second, make a plan to increase your income. Can you ask for a raise at work, make a case for a promotion, or find a higher paying job? If that’s not in the cards, consider working a side gig. A few extra hours a week may increase your monthly income significantly—and help get you out of debt a little faster.

Are you struggling with debt? Get in touch with me and we can work on a strategy for a debt-free future.

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  1. https://www.cnbc.com/2019/02/21/consumer-debt-hits-4-trillion.html

  2. https://www.nerdwallet.com/blog/average-credit-card-debt-household/

December 23, 2019

Setting Up Your Reindeers For Success

Setting Up Your Reindeers For Success

Dasher. Dancer. Prancer. Vixen. Comet. Cupid. Donner. Blitzen. (And Rudolph too, of course.)

This is a holiday roll-call that’s instantly recognizable: the reindeer that pull Santa’s magical sleigh. But what if things got so hectic at the North Pole (not a stretch when you’re in charge of delivering presents to every child on Earth), that when it was time to hitch up the reindeer on Christmas Eve, they were all out of order?

Prancer. Cupid. Dasher. Comet. Dancer. Vixen. Blitzen. Donner.

Hmmm, someone’s missing…. what happened to Rudolph? (Looks like he got left behind at the North Pole. In all the hubbub one of Santa’s elves forgot to review the pre-flight checklist.)

Since so much can change during the year from one crazy “Happy Holidays!” to the next, your ducks – or reindeer, that is – may not even be in a row at this point. They could be frolicking unattended in a field somewhere! And who knows where your Rudolph even is.

We can help with that. An annual review of your financial strategy is key to keeping you on track for your unique goals. Lots of things can change over the course of a year, and your strategy could need some reorganizing. I mean, did you hear about everything that changed for Prancer? (What do you call a baby reindeer, anyway?)

Here are some important questions to consider at least once each year (or even more often):

1. Are you on track to meet your savings goals? A well-prepared retirement is a worthy goal. Let’s make sure nothing drove you too far off track this year, and if it did, let’s explore what can be done to get you back on the right path.

2. Do you have the potential for new savings? Did your health improve this year? Did that black mark on your driving record expire? Changes like these have the potential to positively impact your life insurance rate, but we’d need to dig in and find out what kinds of savings might be in store for you.

3. Have your coverage needs increased? Marriage, having a child, or buying a home are all instances in which your life insurance coverage probably should be increased. Have any of these occurred for you over the last year? Have you added the new family member as a beneficiary?

If you haven’t had a chance to review your strategy this year, we can fit one in before Santa shimmies down the chimney. Which of your reindeer do you need to wrangle back into the ranks before the New Year gets going?

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December 16, 2019

How to Make Better Financial Decisions

How to Make Better Financial Decisions

Numbers never lie, and when it comes to statistics on financial literacy, the results are staggering.

Recent studies indicate that 76% of Millennials don’t have a basic understanding of financial literacy. Combine that with having little in savings and mountains of debt, and you have the ingredients for a potential financial crisis.

It’s not only Millennials that lack a sound financial education. The majority of American adults are unable to pass: “To be financially literate is to have the knowledge, skills, and confidence to make responsible financial decisions that suit our own financial situations.”

Making responsible financial decisions based on knowledge and research are the foundation of understanding your finances and how to manage them. When it comes to financial literacy, you can’t afford not to be knowledgeable.

So whether you’re a master of your money or your money masters you, anyone can benefit from becoming more financially literate. Here are a few ways you can do just that.

Consider How You Think About Money
Everyone has ideas about financial management. Though we may not realize it, we often learn and absorb financial habits and mentalities about money before we’re even aware of what money is. Our ideas about money are shaped by how we grow up, where we grow up, and how our parents or guardians manage their finances. Regardless of whether you grew up rich, poor, or somewhere in between, checking in with yourself about how you think about money is the first step to becoming financially literate.

Here are a few questions to ask yourself:

  • Am I saving anything for the future?
  • Is all debt bad?
  • Do I use credit cards to pay for most, if not all, of my purchases?

Pay Some Attention to Your Spending Habits
This part of the process can be painful if you’re not used to tracking where your money goes. There can be a certain level of shame associated with spending habits, especially if you’ve collected some debt. But it’s important to understand that money is an intensely personal subject, and that if you’re working to improve your financial literacy, there is no reason to feel ashamed!

Taking a long, hard look at your spending habits is a vital step toward controlling your finances. Becoming aware of how you spend, how much you spend, and what you spend your money on will help you understand your weaknesses, your strengths, and what you need to change. Categorizing your budget into things you need, things you want, and things you have to save up for is a great place to start.

Commit to a Lifestyle of Learning
Becoming financially literate doesn’t happen overnight, so don’t feel overwhelmed if you’re just starting to make some changes. There isn’t one book, one website, or one seminar you can attend that will give you all the keys to financial literacy. Instead, think of it as a lifestyle change. Similar to transforming unhealthy eating habits into healthy ones, becoming financially literate happens over time. As you learn more, tweak parts of your financial routine that aren’t working for you, and gain more experience managing your money, you’ll improve your financial literacy. Commit to learning how to handle your finances, and continuously look for ways you can educate yourself and grow. It’s a lifelong process!

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December 11, 2019

Party of Two?

Party of Two?

Life insurance is the most personal type of insurance you can have in today’s world.

But there seems to be a lot of confusion about it. Every consumer has different priorities and feelings. Add to that the fact that life insurance can be used for a variety of financial goals and needs, and you have a recipe for befuddlement.

When it comes to life insurance, most agree that if you have children, you should probably have it. There is no question. But what if you don’t have children? Do you need to purchase life insurance? Here’s why it may still be important, even if you don’t have kids now (or don’t plan to):

Many households need a dual income to survive.
Since women began entering the workforce en masse in 1960, household incomes have been on the rise. Many households have now adopted a lifestyle that depends on a dual income to maintain itself. If you’re in this situation, there might be some consequences of your life insurance decisions.

If something happened to you or your spouse, would the survivor still earn enough money to maintain their lifestyle? If the answer is no, consider how a life insurance policy might help.

Mortgage debt is big debt.
Mortgage debt in the United States is big – bigger than credit card or student loan debt. Still, mortgage debt is “healthy” debt assuming the growing equity in a home makes it worthwhile.

But mortgage debt can become a problem if a household’s income takes a hit. Life insurance can protect families from this risk by helping to pay off a mortgage, should something happen to you or your spouse. Either a term life policy or a special mortgage life policy can be used to pay off a mortgage.

Mortgage life insurance can be a nice layer of protection for couples that don’t have children but do have a mortgage.

Life insurance can be used as a savings tool.
Many life insurance policies offer a cash value. This means that certain policies can be cashed in whether or not a death has occurred. In this way, a life insurance policy can act as a savings tool.

Couples without children can pay into their policy in the form of the premiums, and then cash it out for a retirement dream: a new home, a hobby business, or an extended vacation. Using life insurance as a savings tool can offer tax benefits, a guaranteed savings method for the “savings challenged”, and a creative way to finance a dream. In short, it’s a savvy use of life insurance for couples who don’t have kids.

Funeral expenses can wipe out an emergency fund.
A life insurance policy can help cover funeral expenses for you or your spouse. This is one of the most common uses of life insurance. The average funeral today can cost between $7,000 and $10,000. That’s enough to wipe out an emergency fund, or seriously deplete it.

Having a life insurance policy in place can help cover expenses if you or your spouse were to pass away unexpectedly, so you can leave your fund for the day-to-day difficulties intact.

Whether you have children or not, a sudden illness or loss of a breadwinner can have lasting consequences for the loved ones you leave behind. Taking advantage of a well-tailored life insurance policy to shield them from an unnecessary financial burden if something were to happen is one of the best gifts you can give.

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December 9, 2019

The Keys to Paying Your Bills On Time

The Keys to Paying Your Bills On Time

Not paying your bills on time can have significant impacts on financial health including accumulating late fees, penalties, and a negative hit on credit scores.

But maybe you – or a friend – learned about those consequences the hard way. Most late bill payers fall into 1 of 3 camps: they forget to pay on time, they don’t have enough income, or they have enough income but spend it on other things.

In case you – or your friend – are stuck in 1 of these camps, consider the following tips to help pay the bills on time.

I forget to pay my bills on time.
If this is you, you’re actually in a more advantageous position. There are many easy fixes that can help get you back on track.

  1. Use a calendar. This is a tried and true, but often underutilized, method to track your bill due dates. When you get a notice for a bill – either by email, text, or snail mail – jot the due date on your calendar. You can also set a reminder if you use an electronic calendar.
  2. Fiddle with your due dates. Many companies offer flexible due dates. Experiment with what due dates work for you. Some people like to pay their bills all together at the beginning of the month. You may find that you like to pay some bills in the beginning and some in the middle of the month. It’s up to you!
  3. Take advantage of grace period/late fee waivers. If you do forget about a bill and have to make a late payment, give the company a call and ask them to waive the late fee. Late fees can add up, ranging from $10-50 depending on the account. It’s worth a try!

I don’t have the money to pay all my bills.
If your income doesn’t cover your outgo no matter how diligently you pinch those pennies, it won’t matter what type of bill payment method you use, you’re going to have trouble. If you’re in this situation, there are 2 solutions: increase your earnings or decrease your expenses.

  1. Find a side gig. Take a temporary part-time job to make some extra income. Delivering pizza in the evenings or on weekends might be worth doing for a few months to make some extra dough.
  2. Shop around. Shop around for savings. Prices vary on almost everything. Take a little extra time to make sure you’re getting the rock-bottom best prices on your insurance, cable, phone plans, groceries, utilities, etc.

I overspend and don’t have enough left to pay my bills.
Managing income and expenses takes some practice and persistence, but it is doable! If you find yourself consistently overspending without enough left over to cover your bills, try the following:

  1. Create a budget. Get familiar with your income and expenses. This is the only way to know how much disposable income you’re going to end up with every month. You can track your budget daily on an app like PocketGuard, Wallet, or Home Budget.
  2. Stash the money for bills in a separate account. Put your bill money in a separate checking or savings account. This will keep it quarantined from your spending money and help make sure it’s there when the bills come due.

Good Financial Habits
If you feel bill-paying-challenged, or you have a friend who is, try some of the above tips. Taking care of your obligations when you need to can relieve stress, build good credit, and reinforce healthy spending habits for life!

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December 2, 2019

Royal Wedding or Vegas? Keeping Your Wedding Costs Under Control

Royal Wedding or Vegas? Keeping Your Wedding Costs Under Control

The average cost of a wedding in the U.S. is over $33,000. That’s an expensive day by any standard.

By comparison, that amount might be enough for a down payment on a first home or for a well-equipped, late-model minivan to shuttle around your 1.6 to 2 kids – assuming your family has an average number of children as a result of your newly wedded bliss.

Having cold feet about shelling out that much cash for one day’s festivities? Or even worse, going into debt to pay for it? Here are a few ideas on how you can make your wedding day a special day to remember while still saving some of that money for other things (like a minivan).

Invite Close Friends and Family
Many soon-to-be newlyweds dream of a massive wedding with hundreds of people in attendance to honor their big day. But at some point during any large wedding, the bride or the groom – or maybe both – look around the well-dressed guests and ask themselves, “Who are all of these people, anyway?”

You can cut the cost of your wedding dramatically by simply trimming the guest list to a more manageable size. Ask yourself, “Do I really need to invite that kid who used to live next door to our family when I was 6 years old?” Small weddings are a growing trend, with many couples choosing to limit the guest list to just close friends and immediate family. That doesn’t mean you have to have your wedding in the backyard while the neighbor’s dog barks during your vows – although you certainly can. It just means fewer people to provide refreshments for and perhaps a less palatial venue to rent.

Budget According to Priorities
Your wedding is special and you want everything to be perfect. You’ve dreamed of this day your entire life, right? However, by prioritizing your wish list, there’s a better chance to get exactly what you want for certain parts of your wedding, by choosing less expensive – but still acceptable – options for the things that may not matter to you so much. If it’s all about the reception party atmosphere for you, try putting more of your budget toward entertainment and decorations and less toward the food. Maybe you don’t really need a seven-course gourmet dinner with full service when a selection of simpler, buffet-style dishes provided by your favorite restaurant will do.

Incorporate More Wallet-Friendly Wedding Ideas
A combination of small changes in your plan can add up to big savings, allowing you to have a memorable wedding day and still have enough money left over to enjoy your newfound bliss.

  • Consider a different day of the week. If you’re planning on getting married on a Saturday in June or September, be prepared to pay more for a venue than you would any other day of the week or time of the year. Saturday is the most expensive day to get married, and June and September are both peak wedding season months. So if you can have your wedding on, say, a Friday in April or November, this has the potential to trim the cost of the venue.
  • Rent a vacation house – or even get married on a boat. The smaller space will prevent the guest list from growing out of control and the experience might be more memorable than at a larger, more typical venue. Of course, both options necessitate holding the reception at the same location, saving money once more.
  • Watch the booze costs. There’s no need to have a full bar with every conceivable drink concoction and bow-tied bartenders that can perform tricks with the shakers. Odds are good that your guests will be just as happy with a smaller-yet-thoughtfully-chosen selection of beer and wine to choose from.
  • Be thrifty. If you really want to trim costs, you can get creative about certain traditional “must-haves,” ranging from skipping the flowers (chances are that nobody will even miss them) to purchasing a gently-used gown. Yes, people actually do this. Online outlets like OnceWed.com provide beautiful gowns for a fraction of the price of a new gown that you’ll likely never wear again.

There’s a happy medium between a royal wedding and drive-thru nuptials in Vegas. If you’re looking for a memorable day that won’t break the bank, try out some of the tips above to keep things classy, cool – and within your budget.

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November 27, 2019

Allowance for Kids: Is It Still a Good Idea?

Allowance for Kids: Is It Still a Good Idea?

Perusing the search engine results for “allowance for kids” reveals something telling: The top results can’t seem to agree with each other.

Some finance articles quote experts or outspoken parents hailing an allowance, stating it teaches kids financial responsibility. Others argue that simply awarding an allowance (whether in exchange for doing chores around the house or not) instills nothing in children about managing money. They say that having an honest conversation about money and finances with your kids is a better solution.

According to a recent poll, the average allowance for kids age 4 to 14 is just under $9 per week, about $450 per year. By age 14, the average allowance is over $12 per week. Some studies indicate that, in most cases, very little of a child’s allowance is saved. As parents, we may not have needed a study to figure that one out – but if your child is consistently out of money by Wednesday, how do you help them learn the lesson of saving so they don’t always end up “broke” (and potentially asking you for more money at the end of the week)?

There’s an app for that.
Part of the modern challenge in teaching kids about money is that cash isn’t king anymore. Today, we use credit and debit cards for the majority of our spending – and there is an ever-increasing movement toward online shopping and making payments with your phone using apps like Apple Pay, Android Pay, or Samsung Pay.

This is great for the way we live our modern, fast-paced lives, but what if technology could help us teach more complex financial concepts than a simple allowance can – concepts like how compound interest on savings works or what interest costs for debt look like? As it happens, a new breed of personal finance apps for families promises this kind of functionality.

FamZoo is popular, offering prepaid cards with a matching family finance app for iOS and Android. Prepaid cards are a dime a dozen but FamZoo’s card and app do much more than just limit spending to the prepaid amount. Kids can earn interest on their savings (funded by parents), set budgets according to categories, monitor their account activity with useful charts, and even borrow money – complete with an interest charge. Sounds a bit like the real world, doesn’t it? FamZoo can be as simple or as feature-packed as you’d like, making it a good match for kids of any age.

Money habits are formed as early as age 7. If an allowance can teach kids about saving, compound interest, loan interest, and budgeting – with a little help from technology – perhaps the future holds a digital world where the two sides of the allowance debate can finally agree. As to whether your kids’ allowance should be paid upon completion of chores or not… Well, that’s up to you and how long your Saturday to-do list is!

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November 25, 2019

What to Do First If You Receive an Inheritance

What to Do First If You Receive an Inheritance

In many households, nearly every penny is already accounted for even before it’s earned.

The typical household budget that covers the cost of raising a family, making loan payments, and saving for retirement usually doesn’t leave much room for extra spending on daydream items. However, occasionally families may come into an inheritance, you might receive a big bonus at work, or benefit from some other sort of windfall.

If you ever inherit a chunk of money (or large asset) or receive a large payout, it may be tempting to splurge on that red convertible you’ve been drooling over or book that dream trip to Hawaii you’ve always wanted to take. Unfortunately for many, though, newly-found money has the potential to disappear quickly with nothing to show for it, if you don’t have a strategy in place to handle it.

If you do receive some sort of large bonus – congratulations! But take a deep breath and consider these situations first – before you call your travel agent.

Taxes or Other Expenses
If you get a large sum of money unexpectedly, the first thing you might want to do is pull out your bucket list and see what you can check off first. But before you start spending, the reality is you’ll need to put aside some money for taxes. You may want to check with an expert – an accountant or financial advisor may have some ideas on how to reduce your liability as well.

If you suddenly own a new house or car as part of an inheritance, one thing that you may not have considered is how much it will cost to hang on to them. If you want to keep them, you’ll need to cover maintenance, insurance, and you may even need to fulfill loan payments if they aren’t paid off yet.

Pay Down Debt
If you have any debt, you’d have a hard time finding a better place to put your money once you’ve set aside some for taxes or other expenses that might be involved. It may be helpful to target debt in this order:

  1. Credit card debt: These are often the highest interest rate debt and usually don’t have any tax benefit. Pay these off first.
  2. Personal loans: Pay these off next. You and your friend/family member will be glad you knocked these out!
  3. Auto loans: Interest rates on auto loans are lower than credit cards, but cars depreciate rapidly – very rapidly. If you can avoid it, you don’t want to pay interest on a rapidly depreciating asset. Pay off the car as quickly as possible.
  4. College loans: College loans often have tax-deductible interest but there is no physical asset you can convert to cash – there’s just the loan.
  5. Home loans: Most home loans are also tax-deductible. Since your home value is likely appreciating over time, you may be better off putting your money elsewhere rather than paying off the home loan early.

Fund Your Emergency Account
Before you buy that red convertible, put aside some money for a rainy day. This could be liquid funds – like a separate savings account.

Save for Retirement
Once the taxes are covered, you’ve paid down your debt, and funded your emergency account, now is the time to put some money away towards retirement. Work with your financial professional to help create the best strategy for you and your family.

Fund That College Fund
If you have kids and haven’t had a chance to save all you’d like towards their education, setting aside some money for this comes next. Again, your financial professional can recommend the best strategy for this scenario.

Treat Yourself
NOW you’re ready to go bury your toes in the sand and enjoy some new experiences! Maybe you and the family have always wanted to visit a themed resort park or vacation on a tropical island. If you’ve taken care of business responsibly with the items above and still have some cash left over – go ahead! Treat yourself!

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November 6, 2019

Common Financial Potholes

Common Financial Potholes

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

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

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

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

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

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

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

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

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

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

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

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October 28, 2019

3 Simple Benefits of Indexed Universal Life Insurance

3 Simple Benefits of Indexed Universal Life Insurance

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

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

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

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

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

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

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

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

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October 16, 2019

Tips on Managing Money for Couples

Tips on Managing Money for Couples

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

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

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

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

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

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

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

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October 14, 2019

Getting a Degree of Financial Security

Getting a Degree of Financial Security

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

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

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

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

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

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

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

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October 9, 2019

Are You Sitting Down?

Are You Sitting Down?

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

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

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

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

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

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

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

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

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

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

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October 2, 2019

3 Easy Ways To Save For Retirement (Without Investing)

3 Easy Ways To Save For Retirement (Without Investing)

Our retirement years will be here sooner than we think.

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

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

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

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

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

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

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

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

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

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

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

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September 4, 2019

Savings Rates Need Some Serious Saving

Savings Rates Need Some Serious Saving

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

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

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

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

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

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

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

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August 5, 2019

Worry Once. Suffer Twice.

Worry Once. Suffer Twice.

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

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

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

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

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

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

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

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July 15, 2019

Building a Bridge Over the Retirement Gap

Building a Bridge Over the Retirement Gap

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

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

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

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

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

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

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