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Life Without (Credit Card) Debt

Life Without (Credit Card) Debt

Our parents, uncles, aunts, and maybe even our grandparents tried to warn us about credit cards.

In some cases, the warnings might have been heeded but in other cases, we may have learned the cost of credit the hard way.

Using credit isn’t necessarily a bad thing, but it may be a costly thing – and sometimes even a risky thing. The interest from credit card balances can be like a ball and chain that might never seem to go away. And your financial strategy for the future may seem like a distant horizon that’s always out of reach.

It is possible to live without credit cards if you choose to do so, but it can take discipline if you’ve developed the credit habit.

It’s budgeting time. Here’s some tough love. If you don’t have one already, you should hunker down and create a budget. In the beginning it doesn’t have to be complicated. First just try to determine how much you’re spending on food, utilities, transportation, and other essentials. Next, consider what you’re spending on the non-essentials – be honest with yourself!

In making a budget, you should become acutely aware of your spending habits and you’ll give yourself a chance to think about what your priorities really are. Is it really more important to spend $5-6 per day on coffee at the corner shop, or would you rather put that money towards some new clothes?

Try to set up a budget that has as strict allowances as you can handle for non-essential purchases until you can get your existing balances under control. Always keep in mind that an item you bought with credit “because it was on sale” might not end up being such a great deal if you have to pay interest on it for months (or even years).

Hide the plastic. Part of the reason we use credit cards is because they are right there in our wallets or automatically stored on our favorite shopping websites, making them easy to use. (That’s the point, right?) Fortunately, this is also easy to help fix. Put your credit cards away in a safe place at home and save them for a real emergency. Don’t save them on websites you use.

Don’t worry about actually canceling them or cutting them up. Unless there’s an annual fee for owning the card, canceling the card might not help you financially or help boost your credit score.¹

Pay down your credit card debt. When you’re working on your budget, decide how much extra money you can afford to pay toward your credit card balances. If you just pay the minimum payment, even small balances may not get paid off for years. Try to prioritize extra payments to help the balances go down and eventually get paid off.

Save for things you want to purchase. Make some room in your budget for some of the purchases you used to make with a credit card. If an item you’re eyeing costs $100, ask yourself if you can save $50 per month and purchase it in two months rather than immediately. Also, consider using the 30-day rule. If you see something you want – or even something you think you’ll need – wait 30 days. If the 30 days go by and you still need or want it, make sure it makes sense within your budget.

Save one card for occasional use. Having a solid credit history is important, so once your credit balances are under control, you may want to use one card in a disciplined way within your budget. In this case, you would just use the card for routine expenses that you are able to pay off in full at the end of the month.

Living without credit cards completely, or at least for the most part, is possible. Sticking to a budget, paying down debt, and having a solid savings strategy for the future will help make your discipline worth it!


¹ “How to repair your credit and improve your FICO® Scores,” myFico, https://www.myfico.com/credit-education/improve-your-credit-score


Toxic Financial Habits

Toxic Financial Habits

As well-intentioned as we might be, we sometimes get in our own way when it comes to improving our financial health.

Much like physical health, financial health can be affected by binging, carelessness, or simply not knowing what can cause harm. But there’s a light at the end of the tunnel – as with physical health, it’s possible to reverse the downward trend if you can break your harmful habits.

Not budgeting A household without a budget is like a ship without a rudder, drifting aimlessly and – sooner or later – it might sink or run aground in shallow waters. Small expenses and indulgences can add up to big money over the course of a month or a year.

In nearly every household, it might be possible to find some extra money just by cutting back on non-essential spending. A budget is your way of telling yourself that you may be able to have nice things if you’re disciplined about your finances.

Frequent use of credit cards. Credit cards always seem to get picked on when discussing personal finances, and often, they deserve the flack they get. Not having a budget can be a common reason for using credit, contributing to an average credit card debt of $6,913 for balance-carrying households.¹ At an average interest rate of over 16%, credit card debt is usually the highest interest expense in a household, several times higher than auto loans, home loans, and student loans.²

The good news is that with a little discipline, you can start to pay down your credit card debt and help reduce your interest expense.

Mum’s the word. No matter how much income you have, money can be a stressful topic in families. This can lead to one of two potentially harmful habits.

First, talking about the family finances is often simply avoided. Conversations about kids and work and what movie you want to watch happen, but conversations about money can get swept under the rug.

Are you a “saver” and your partner a “spender”? Is it the opposite? Maybe you’re both spenders or both savers. Talking (and listening) about yourself and your significant other’s tendencies can be insightful and help avoid conflicts about your finances.

If you’re like most households, having an occasional chat about the budget may help keep your family on track with your goals – or help you identify new goals – or maybe set some goals if you don’t have any.

Second, financial matters can be confusing – which may cause stress – especially once you get past the basics. This may tempt you to ignore the subject or to think “I’ll get around to it one day”.

But getting a budget and a financial strategy in place sooner rather than later may actually help you reduce stress. Think of it as “That’s one thing off my mind now!”

Taking the time to understand your money situation and getting a budget in place is the first step to put your financial house in order. As you learn more and apply changes – even small ones – you might see your efforts start to make a difference!


¹ “2020 American Household Credit Card Debt Study,” Erin El Issa, Nerdwallet, Jan 12, 2021 https://www.nerdwallet.com/blog/average-credit-card-debt-household/

² “2020 American Household Credit Card Debt Study,” Erin El Issa


How To Spend Your Windfall

How To Spend Your Windfall

If you come into some extra money, how should you spend it?

On one hand you may have some debt you’d like to knock out, or you might feel like you should divert the money into your emergency savings or retirement fund.

They’re both solid choices, but which is better? That depends largely on your interest rates.

High Interest Rate. The sooner you eliminate high interest rate debt, the better. Credit cards and personal loans can swiftly spiral out into crushing financial burdens. Even the highest income gets stretched thin if the interest rate is too high!

So if you fall into some extra cash and you’re faced with high interest debt, consider the peace of mind debt freedom would bring. It may be far more valuable than some zeros in a retirement account.

Low Interest Rate. On the other hand, sometimes interest rates are low enough to warrant building up an emergency savings fund instead of paying down existing debt. An example is if you have a long-term, fixed-rate loan, like a mortgage.

The idea is that money borrowed for emergencies, rather than non-emergencies, will be expensive, because emergency borrowing may have no collateral and probably very high interest rates (like payday loans or credit cards).

So it might be better to divert your new-found funds to a savings account, even if you aren’t reducing your interest burden, because the alternative during an emergency might mean paying 20%+ rather than 0% on your own money (or 3-5% if you consider the interest you pay on the current loan).

Raw Dollar Amounts. Relatively large loans might have low interest rates, but the actual total interest amount you’ll pay over time might be quite a sum. In that case, it might be better to gradually divert some of your bonus money to an emergency account while simultaneously starting to pay down debt to reduce your interest. A good rule of thumb is that if debt repayments comprise a big percentage of your income, pay down the debt, even if the interest rate is low.

The Best for You. While it’s always important to reduce debt as fast as possible to help achieve financial independence, it’s also important to have some money set aside for use in emergencies.

If you do receive an unexpected windfall, it will be worth it to take a little time to think about a strategy for how it can best be used for the maximum long term benefit for you and your family.


Unwinding Yourself Into Stress

Unwinding Yourself Into Stress

Americans carry a stunning amount in credit card debt— $895 billion as of June 2021.¹

You read that right: $895 billion. And that’s after decreasing in 2020 due to the pandemic.

It seems like many have ended up being owned by a tiny piece of plastic rather than the other way around.

How much have you or a loved one contributed to that number? Whether it’s $10 or $10,000, there are a couple simple tricks to get and keep yourself out of credit card debt.

The first step is to be aware of how and when you’re using your credit card. It’s so easy – especially on a night out when you’re trying to unwind – to mindlessly hand over your card to pay the bill. And for most people, paying with credit has become their preferred, if not exclusive, payment option. Dinner, drinks, Ubers, a concert, a movie, a sporting event – it’s going to add up.

And when that credit card bill comes, you could end up feeling more wound up than you did before you tried to unwind.

Paying attention to when, what for, and how often you hand over your credit card is crucial to getting out from under credit card debt.

Here are 2 tips to keep yourself on track on a night out.

1. Consider your budget. You might cringe at the word “budget”, but it’s not an enemy who never wants you to have any fun. Considering your budget doesn’t mean you can never enjoy a night out with friends or coworkers. It simply means that an evening of great food, fun activities, and making memories must be considered in the context of your long-term goals. Start thinking of your budget as a tough-loving friend who’ll be there for you for the long haul.

Before you plan a night out:

  • Know exactly how much you can spend before you leave the house or your office, and keep track of your spending as your evening progresses.
  • Try using an app on your phone or even write your expenses on a napkin or the back of your hand – whatever it takes to keep your spending in check.
  • Once you have reached your limit for the evening – stop.

2. Cash, not plastic (wherever possible). Once you know what your budget for a night out is, get it in cash or use a debit card. When you pay your bill with cash, it’s a concrete transaction. You’re directly involved in the physical exchange of your money for goods and services. In the case that an establishment or service will only take credit, just keep track of it (app, napkin, back of your hand, etc.), and leave the cash equivalent in your wallet.

You can still enjoy a night on the town, get out from under credit card debt, and be better prepared for the future with a carefully planned financial strategy. Contact me today, and together we’ll assess where you are on your financial journey and what steps you can take to get where you want to go – hopefully by happy hour!

¹ “2020 American Household Credit Card Debt Study,” Erin El Issa, Nerdwallet, Jan 12, 2021, https://www.nerdwallet.com/blog/average-credit-card-debt-household/


Avoiding Overdraft

Avoiding Overdraft

“It’ll be fine,” you think as you swipe your card and enter your pin.

You haven’t spent that much money this month. There should be plenty left over to cover this, right?

Wrong.

Before long, the bank has sent you the alert—your account is in the red. You’ve overdrafted. Now you’ll almost certainly face two consequences…

1. Overdraft fees. The bank’s favorite way to slap you on the wrist for overspending. These are, on average, $33.58 per overdraft as of 2021.¹

2. Interest. The only reason you can keep purchasing once you’re in the negative is because the bank loans you money. And with every loan comes interest.

It may not seem significant, but these add up. In 2020, Americans spent 12.4 billion in fees alone.²

Here are some strategies to help your bank account stay above water…

Don’t activate overdraft coverage. This way, purchases that push your bank account past zero will be denied. Overdrafting becomes impossible. There are, however, two serious drawbacks…

You may feel silly if you try to make a purchase and it doesn’t go through. You may need to make a legitimate emergency purchase that exceeds the amount in your account.

Fortunately, there are other strategies at your disposal.

Link a savings account. If you have an emergency fund, you can link it directly to your spending account. That way, if you overdraft, your emergency fund will automatically make up the difference.

This works well for covering emergency expenses. But if your regular spending overdrafts your account, you may squander your emergency fund on non-emergencies.

Budget better. Consistent overdrafting may mean that you have a spending problem. If that’s the case, the time has come to cut back. Set up a budget that keeps your spending above water each month. That way, you won’t come close to the dangers of overdraft.

It all comes down to why you’re overdrafting. If you overdraft on occasion because of emergencies, simply link your emergency fund to cover the difference. But if it’s the symptom of a deeper issue, it may be time to seek help.


¹ “Overdraft fees hit another record high this year—here’s how to avoid them,” Alicia Adamczyk, CNBC, Oct 20, 2021, https://www.cnbc.com/2021/10/20/overdraft-fees-hit-another-record-highheres-how-to-avoid-them.html

² “Banks Charged Low-Income Americans Billions In Overdraft Fees In 2020,” Kelly Anne Smith, Forbes, Apr 21, 2021, https://www.forbes.com/advisor/personal-finance/how-to-prevent-overdraft-fees/


The Power of Paying with Cash

The Power of Paying with Cash

Debit card usage spiked during the COVID-19 pandemic, a trend that seems unlikely to reverse soon.¹

In an era of less social contact, debit cards are convenient. Just swipe and go. Even more so for their mobile phone equivalents: Apple Pay, Android Pay, and Samsung Pay. We like fast, we like easy, and we like a good sale.

But are we actually spending more by not using cash like we did in the good old days?

Studies say yes. We spend more when using plastic – and that’s true of both credit card spending and debit card spending.² Money is more easily spent with cards because you don’t “feel” it immediately. An extra $2 here, another $10 there… It adds up.

The phenomenon of reduced spending when paying with cash is a psychological “pain of payment.” Opening up your wallet at the register for a $20.00 purchase but only seeing a $10 bill in there – ouch! Maybe you’ll put back a couple of those $5 DVDs you just had to have 5 minutes ago.

When using plastic, the reality of the expense doesn’t sink in until the statement arrives. And even then it may not carry the same weight. After all, you only need to make the minimum payment, right? With cash, we’re more cautious – and that’s not a bad thing.

Try an experiment for a week: pay only with cash. When you pay with cash, the expense feels real – even when it might be relatively small. Hopefully, you’ll get a sense that you’re parting with something of value in exchange for something else. You might start to ask yourself things like “Do I need this new comforter set that’s on sale – a really good sale – or, do I just want this new comforter set because it’s really cute (and it’s on sale)?” You might find yourself paying more attention to how much things cost when making purchases, and weighing that against your budget.

If you find that you have money left over at the end of the week (and you probably will because who likes to see nothing when they open their wallet), put the cash aside in an envelope and give it a label. You can call it anything you want, like “Movie Night,” for example.

As the weeks go on, you’re likely to amass a respectable amount of cash in your “rewards” fund. You might even be dreaming about what to do with that money now. You can buy something special. You can save it. The choice is yours. Well done on saving your hard-earned cash.


¹ “Debit Spending Is On The Rise, But Is It Here To Stay?” Visa Navigate, Apr 2021, https://navigate.visa.com/na/spending-insights/why-debit-spending-is-on-the-rise/

² “MIT study: Paying with credit cards activates your brain to create ‘purchase cravings’ for more spending,” Cory Stieg, CNBC, Mar 13, 2021, https://www.cnbc.com/2021/03/13/credit-cards-activate-brain-reward-network-create-cravings.html


How to Build Credit When You’re Young

How to Build Credit When You’re Young

Your credit score can affect a lot more than just your interest rates or credit limits.

Your credit history can have an impact on your eligibility for rental leases, raise (or lower) your auto insurance rates, or even affect your eligibility for certain jobs (although in many cases the authorized credit reports available to third parties don’t contain your credit score if you aren’t requesting credit). Because credit history affects so many aspects of financial life, it’s important to begin building a solid credit history as early as possible.

So, where do you start?

  1. Apply for a store credit card.
    Store credit cards are a common starting point for teens and young adults, as it often can be easier to get approved for a store card than for a major credit card. As a caveat though, store card interest rates are often higher than for a standard credit card. Credit limits are also typically low – but that might not be a bad thing when you’re just getting started building your credit. A lower limit helps ensure you’ll be able to keep up with payments. Because you’re trying to build a positive history and because interest rates are often higher with a store card, it’s important to pay on time – or ideally, to pay the entire balance when you receive the statement.

  2. Become an authorized user on a parent’s credit card.
    Another common way to begin building credit is to become an authorized user on a parent’s credit card. Ultimately, the credit card account isn’t yours, so your parents would be responsible for paying the balance. (Because of this, your credit score won’t benefit as much as if you are approved for a credit card in your own name.) Another thing to keep in mind is that some credit card providers don’t report authorized users’ activity to credit bureaus.* Additionally, even if you’re only an authorized user, any missed or late payments on the card can affect your credit history negatively.

Are secured cards useful to build credit?
A secured credit card is another way to begin building credit. To secure the card, you make an initial deposit. The amount of that deposit is your credit line. If you miss a payment, the bank uses your collateral – the deposit – to pay the balance. Don’t let that make you too comfortable though. Your goal is to build a positive credit history, so if you miss payments – even though you have a prepaid deposit to fall back on – you’re still going to get a ding on your credit history. Instead, it’s best to use a small amount of your available credit each month and to pay in full when you get the statement. This will help you look like a credit superstar due to your consistently timely payments and low credit utilization.

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.


Source:
“Will Authorized User Status Help You Build Credit?” NerdWallet, Sep 24, 2021, https://discvr.co/2lAzSgt.


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!


4 Ways to Get out of Debt

4 Ways to Get out of Debt

Dealing with debt can be scary.

Paying off your mortgage, car, and student loans can sometimes seem so impossible that you might not even look at the total you owe. You just keep making payments because that’s all you might think you can do. However, there is a way out! Here are 4 tips to help:

Make a Budget. Many people have a complex budget that tracks every penny that comes in and goes out. They may even make charts or graphs that show the ratio of coffee made at home to coffee purchased at a coffee shop. But it doesn’t have to be that complicated, especially if you’re new at this “budget thing”.

Start by splitting all of your spending into two categories: necessary and optional. Rent, the electric bill, and food are all examples of necessary spending, while something like a vacation or buying a third pair of black boots (even if they’re on sale) might be optional.

Figure out ways that you can cut back on your optional spending, and devote the leftover money to paying down your debt. It might mean staying in on the weekends or not buying that flashy new electronic gadget you’ve been eyeing. But reducing how much you owe will be better long-term.

Negotiate a Settlement. Creditors often negotiate with customers. After all, it stands to reason that they’d rather get a partial payment than nothing at all! But be warned; settling an account can potentially damage your credit score. Negotiating with creditors is often a last resort, not an initial strategy.

Debt Consolidation. Interest-bearing debt obligations may be negotiable. Contact a consolidation specialist for refinancing installment agreements. This debt management solution helps reduce the risk of multiple accounts becoming overdue. When fully paid, a clean credit record with an extra loan in excellent standing may be the reward if all payments are made on time.

Get a side gig. You might be in a position to work evenings or weekends to make extra cash to put towards your debt. There are a myriad of options—rideshare driving, food delivery, pet sitting, you name it! Or you might have a hobby that you could turn into a part-time business.

If you feel overwhelmed by debt, then let’s talk. We can discuss strategies that will help move you from feeling helpless to having financial control.


Pros and Cons of Simple Interest

Pros and Cons of Simple Interest

Brace yourself: You’ve been brought here under false pretenses.

This post is not so much about a list of pros and cons as it is about one big pro and one big con concerning simple interest accounts. There are many fine-tooth details you could get into when looking for the best ways to use your money. But when you’re just beginning your journey to financial independence, the big YES and NO below are important to keep in mind. In a nutshell, interest will either cost you money or earn you money. Here’s how…

The Pro of Simple Interest: Paying Back Money

Credit cards, mortgages, car loans, student debt – odds are that you’re familiar with at least one of these loans at this point. When you take out a loan, look for one that lets you pay back your principal amount with simple interest. This means that the overall amount you’ll owe will be interest calculated against the principal, or initial amount, that was loaned to you. And the principle decreases as you pay back the loan. So the sooner you pay off your loan, you’re actually lowering the amount of money in interest that you’re required to pay back as part of your loan agreement.

The Con of Simple Interest: Growing Money

When you want to grow your money, an account based on simple interest is not the way to go. Setting your money aside in an account with compound interest shows infinitely better results for growing your money.

For example, if you wanted to grow $10,000 for 10 years in an account at 3% simple interest, the first few years would look like this:

  • Year 1: $10,000 + 300 = $10,300
  • Year 2: $10,300 + 300 = $10,600
  • Year 3: $10,600 + 300 = $10,900

In a simple interest account, the 3% interest you’ll earn is a fixed sum taken from the principal amount added to the account. And this is the amount that is added annually. After a full 10 years, the amount in the account would be $13,000. Not very impressive.

But what if you put your money in an account that was less “simple”?

If you take the same $10,000 and grow it in an account for 10 years at a 3% rate of interest that compounds, you can see the difference beginning to show in the first few years:

  • Year 1: $10,000 + 300 = $10,300
  • Year 2: $10,300 + 309 = $10,609
  • Year 3: $10,609 + 318 = $10,927

At the end of 10 years, this type of account will have earned more than the simple interest account, without you having to do any extra work! And that’s not even considering adding regular contributions to the account over the years! Just imagine the possibilities if you can get a higher interest rate and combine that with a solid financial plan for your future.

One final thought: Simple isn’t always the way to go, and that can be a good thing.


Is It Ever OK To Use a Credit Card?

Is It Ever OK To Use a Credit Card?

Is it ever OK to use a credit card? Yes… but with qualifications.

Let’s explore some situations where using your credit card makes sense…and what pitfalls to avoid.

You’re strategically leveraging rewards. It’s perfectly possible to reap the benefits of cash back rewards without going into debt to earn them. How? Try using your credit card just for everyday purchases like gas and groceries. If you don’t overspend, you’re essentially getting paid for using your card.

But that’s the trick. Those rewards can make it tempting to buy things you don’t need. It’s easy to justify excess purchases if you’re earning those extra points! But in the long-term, the rewards won’t outweigh the costs and risks of overusing a credit card. So if you think you can thread the needle of responsibly using a credit card to leverage points without overspending, go for it!

You’re making significant online purchases. The simple fact is that there are serious rewards—and protections—when you use your card for online purchases. This is especially true for travel. Some cards offer specific rewards for booking hotels or plane tickets that you should certainly take advantage of. There are also some protections for online purchases that credit cards offer. Once again, don’t plan a fancy vacation just to take advantage of rewards. But if you need to travel, you might as well get any benefits coming to you!

Wisely using credit cards is a matter of self-control. If you can take advantage of rewards and protections without overspending, good for you! For others, however, it may be wise to avoid cards altogether while they pay down their debt.

Not sure which strategy is best for you? Contact a licensed and qualified financial professional. They can help evaluate your situation and make a recommendation.


Why Generation Z's Financial Habits are Fascinating

Why Generation Z's Financial Habits are Fascinating

Gen Z has grown up in a world where social media rules. They’ve never known it any other way.

The older Gen Zers have just come out of college, but this group’s imprint on society is already clear. You might be surprised by their attitude towards money and wealth! Let’s explore how these digital natives interact with money and why their financial habits might be influencing your business strategy.

Social media is an integral part of their world. They spend more time on their phones, tablets, and laptops than any other generation. The iPhone was old news by the time younger Gen Zers were born. This generation needs a whole new set of rules for how they shop and find financial advice.

For instance, Gen Zers are 72% more likely to buy from brands they follow on social media.¹ And there’s been an explosion of financial advice–not all of it good–on TikTok—#personalfinance has 3.5 billion views on the platform.² So if you’re interested in not just understanding Gen Zers, but also getting their attention, it pays to keep up with social media trends.

Gen Zers have yet to accrue massive debt. Gen Zers have thus far avoided the traps of credit card and student loan debt that have burdened every generation before. The numbers aren’t stellar–on average, Gen Zers have over $10,000 in non-mortgage debt–but that’s just a fraction of the debt carried by the typical Millennial or Gen Xer.

Of course, Gen Zers haven’t had as much time to accrue debt. It could well be that in 10 years they have just as many student loans and high credit card balances as older generations. But there is hope! Why?

Gen Zers are avid budgeters. 68% of Gen Zers use some form of budgeting system.³ Only 41% of the general population can say the same.⁴ That’s a massive improvement! If Gen Zers can use their budgets to avoid massive debt, they could find themselves well positioned financially.

In other words, Gen Z is hungry to learn how money really works. They’re already taking steps to avoid the missteps of past generations. The real question is who will teach them what it takes to become wealthy?

¹ “Generation Z Spending Habits for 2021,” Lexington Law, Feb 8, 2021, https://www.lexingtonlaw.com/blog/credit-cards/generation-z-spending-habits.html

² “Viral or vicious? Financial advice blows up on TikTok,” Nicole Casperson, InvestmentNews Feb 15, 2021, https://www.investmentnews.com/financial-advice-blows-up-on-tiktok-but-at-what-cost-202260#:~:text=That%27s%20what%20financial%20advice%20is,form%20of%2060%2Dsecond%20videos.

³ “Generation Z Spending Habits for 2021,” Lexington Law, Feb 8, 2021, https://www.lexingtonlaw.com/blog/credit-cards/generation-z-spending-habits.html

⁴ “What Is a Budget and Why Should I Use One?,” Tim Stobierski, acorns, Sep 6, 2019, https://www.acorns.com/money-basics/saving-and-budgeting/budget-meaning/#:~:text=While%20many%20factors%20likely%20contribute,budget%2C%20according%20to%20U.S.%20Bank.


Bad Financial Habits and How to Overcome Them

Bad Financial Habits and How to Overcome Them

Read on if you ever find yourself struggling to stay afloat financially.

Do you ever feel like no matter how much money you make, it never seems like enough? You’re not alone. A recent survey found that more than half of middle-income families didn’t have three months of expenses saved.¹ Debt and spending can be out of control for many reasons—the economy, our upbringing, or even because we’re hardwired to want more. This article explores three bad habits that may be hurting your financial situation. You might be surprised by what they are!

Treating credit cards like free money. When you’re tempted to buy something and don’t have the cash, it’s easy to just use credit. But instant gratification can have serious consequences. Little by little, you may find yourself racking up more and more debt. Paying your monthly credit card bill can start requiring all of your cash flow… and maybe more. Yikes.

The solution? Limit your credit card usage as much as possible. Make a habit of only using your credit card for certain low-dollar items, like gas. If you can’t buy your impulse purchase in cash, go home!

Trying to buy happiness. It’s tempting to think that you’re going to be happy if you buy one thing or another. But what happens when the newness wears off? Suddenly, you have a closet full of clothes and shoes that really aren’t making you any happier! The same is true of houses, cars, gadgets, anything you can think of. Buying things to keep up appearances or just because you think they’ll make you fulfilled is a recipe for overspending on things that, ultimately, don’t matter.

The key is to find happiness beyond your material possessions. That’s no small task, and there’s no set road map for it. But it’s absolutely critical to find a source of meaning that isn’t tied to stuff and things. You could be happier—and more financially stable—for it.

Ignoring your financial situation. Let’s face it—finances can be scary! Overwhelming debt, paying for college, and feeling out of your depth are uncomfortable emotions. And ignoring and denying uncomfortable feelings is often a first line of defense.

But it’s a dangerous game. Ignoring what the numbers tell you can lead you deeper and deeper into financial instability. You could be setting up a much harder path for yourself in the future than if you tackled your financial situation now.

Tackling your financial fears isn’t always easy. It might require serious soul searching. Just know these three things…

Acknowledging the problem is the first step. Once you can admit that your finances need help, you’re ready to start making positive changes.

Seeking help is always wise. Whether it’s a friend, spouse, qualified counselor, or financial professional, enlisting help can give you the courage you need to face your fears.

You can do this! It might not feel like it, but you have what it takes to confront this challenge… and win! Don’t lose hope, and start moving forward.

Managing your money wisely requires more than knowing different techniques and strategies. It takes maturity. The more you invest in making improvements to your life overall, the better emotionally equipped you’ll be to navigate the world of personal finances.

¹ “A year after COVID, personal finances are not so grim for millions of Americans,” Jessica Menton, USA TODAY, Apr 9, 2021, https://www.usatoday.com/in-depth/money/2021/04/09/irs-stimulus-check-2021-third-covid-payment-unemployment-benefits/7015277002/


The 5 Things To Do With Your Inheritance

The 5 Things To Do With Your Inheritance

If you are in the position of receiving an inheritance, congratulations!

You have a chance to make your life even better with this gift. However, it’s important to handle it wisely so you don’t create any regrets down the line!

Pay down debt. Receiving a sudden windfall is the perfect opportunity to take a chunk out of any credit card debt or student loans that are hanging over you. You may even be able to pay off your car or house!

The simple fact is that debt wears down your ability to build wealth. Using your inheritance to help pay off your loans can position you to start building wealth sooner rather than later.

Build your emergency fund. Having cash on hand can be a game-changer. It empowers you to tackle emergencies like a child’s broken arm, an unexpected car repair, or even short-term unemployment—without turning to debt.

If you don’t have three months of expenses saved, consider using your inheritance to create some financial peace of mind for your family by setting up an emergency fund.

Save for retirement. Now that you’ve covered your bases, you can start using your inheritance to start building wealth for the future. As soon as you can, meet with a licensed and qualified financial professional to start developing a strategy that will make your money work for your future!

Fund your kids’ college education. College is pricey. Whether your children are very young or almost at university age, now is a good time to start saving for college. Once again, it’s best to meet with a financial professional to decide the best way to go about funding your child’s education.

Finally, have fun! You’ve done the hard work of getting rid of debt and building your emergency fund. Now that you have a college education and/or your retirement savings strategies in place, there’s no reason not to splurge on something fun with your inheritance! Just be sure that your fun doesn’t send you back into debt or dip into your emergency fund!


Should You Apply For a Personal Loan?

Should You Apply For a Personal Loan?

Sometimes the world throws financial obstacles your way.

And that’s normally when your emergency fund would kick in. But what if you don’t have an emergency fund? Or what if there isn’t enough money in it to cover your current catastrophe? If you find yourself in this situation, you might consider applying for a personal loan to close the gap—but should you?

The simple answer? Probably not.

Starting with the basics—what is a personal loan? A personal loan is an unsecured debt that allows people or companies in need of money to borrow funds from lenders for any reason including but not limited to…

- Home improvements - Medical expenses - Debt consolidation

These loans are often set up for a short period of time with fixed monthly payments.

There are pros and cons to any form of debt. Personal loans are no different—they have their own set of benefits and drawbacks.

Personal loans can offer lower interest rates than credit cards, which can help you save money on interest payments. That can make them useful for consolidating other high interest rate loans.

However, personal loans can come with higher fees and significant interest rates. And for most financial emergencies, personal loans simply aren’t your best option. For instance, if you’re struggling with medical debt, you should first consider negotiating with your doctor’s office for more favorable payment terms first.

It’s not advisable to use a personal loan to make a large purchase, like a new TV, either. If you’re using the money for anything other than a last resort for emergencies or debt consolidation, it’s probably not worth it and could end up costing you more in interest payments down the road.

In conclusion, personal loans can be useful in specific circumstances or if you’re at the end of your financial rope. But they shouldn’t be your first option. Making sure you’ve got a sufficient emergency fund in place, a well-thought-out budget, and a solid savings strategy set up as soon as possible may help avoid the need for a loan and create more debt.


Four Ways to Fend Off Credit Card Fraud

Four Ways to Fend Off Credit Card Fraud

In 2019, 14.4 million people were victims of identity theft.¹

The internet has made it possible for someone to steal personal information and commit credit card fraud from the comfort of their own home. Being a victim of credit card fraud can seriously impact your financial well-being by decreasing your credit score and sinking you deep into debt. Repairing the damage can be stressful and time-consuming. Take a look at some tips on how you can fend off credit card fraud and stay safe online.

Don’t give your credit card number to anyone who calls you on the phone. Hang up and call their customer service line directly. Unless you can verify that you’re speaking with a legitimate institution, keep your card information to yourself. The same is true for emails, sketchy websites and landing pages, and social media posts.

Avoid sensitive accounts on public Wi-Fi. If you’re using a public Wi-Fi network, it’s possible that someone could be eavesdropping on your information. That’s because public internet is relatively insecure—hackers have far easier access to your passwords and account information in a coffee shop than in your workplace. It’s always safer to check your bank accounts on a private Wi-Fi connection that’s password-protected.

Review transactions often, if not daily. Make it a habit to check your credit card account regularly to ensure all charges are accurate. If you notice any suspicious activity, whether it’s a store you’re not familiar with or a charge from a location in another state, contact your credit card customer service immediately.

Separate your cards from your wallet. If a thief nabs your purse or wallet, will they have access to your credit cards? Consider buying a separate wallet to carry your credit and debit cards. It’s a simple step that might protect your bank account from pickpockets and muggers. (Hint: Consider using a minimalist wallet for your cards. Carrying two bulky wallets would just be inconvenient!)

In conclusion, there are many ways to avoid credit card fraud. Try following the tips in this article, and stay vigilant about your account information.


“What Are Your Odds of Getting Your Identity Stolen?,” Eugene Bekker, IdentityForce, Apr 15, 2021, https://rb.gy/tdft4g


What Can You Do To Increase Your Credit Score?

What Can You Do To Increase Your Credit Score?

For many families, a good credit score is the key to not only borrowing money but also buying your dream home and starting a family.

But what if you have bad credit? This blog post will explore strategies that might help increase your credit score so that you can borrow more money or get approved for loans more easily.

Keep your credit card balances low. Part of your credit score depends on something called credit utilization. Using up your credit limit can negatively impact your score and drag it down. That’s why it’s best to restrict your credit card usage to certain types of purchases. If you start closing in on that credit limit, consider putting yourself on a spending freeze or using cash for a while.

Don’t close old accounts that you have a good history of paying on time. Why? Because closing accounts can technically lower your credit limit. Even though you’re not borrowing more money, you’re suddenly utilizing a greater percentage of your credit. That can result in your credit score taking a hit, even though your credit habits haven’t changed. So keep those old accounts with good payment histories open!

Check your credit report for errors and inaccuracies. Did you know that anyone can get a copy of your credit report? It’s true! You’re entitled to a free copy of your credit report every 12 months. Visit the Federal Trade Commission’s official website to discover how you can get your report. Once you have it, you can check it for errors that may have negatively impacted your score.

If you’re curious about how your credit score impacts your ability to make big purchases, let me know! We can review your situation and work on a game plan to improve your score and move towards your goals.


What You Need to Know About Debt Consolidation

What You Need to Know About Debt Consolidation

You’ve been struggling to keep up with your debt payments for weeks, months—maybe even years.

You’re tired of feeling like you’re drowning in a sea of credit card balances and student loans. The good news is that there are options available to help you break free from this cycle!

One option is debt consolidation. It involves taking out one large loan (typically through a bank) to pay off all your other smaller debts.

Let’s discuss how debt consolidation works, who may benefit from it most, and what you need to know before making a decision about whether or not this option is right for you.

Debt consolidation is a way to combine some or all of your debt into one loan. This can make a significant difference in your debt reduction by…

  1. Simplifying the repayment process
  2. Potentially lowering your interest rate

Let’s consider an example. Let’s say you have two debts, one that’s $3,000 at 10% interest and another that’s $5,000 at 15% interest. If the term of both loans is 5 years, you would pay almost $3,000 in interest! Consolidating your debt into one loan that’s $8,000 at 7% would almost halve your interest payments.

There are several types of loans that this process can deal with, including home equity loans or car loans. It’s also possible to use a new credit card with a promotional interest rate and high credit limit to pay down your other debts (use this method with caution). Debt management programs sometimes offer debt consolidation for unsecured debt like credit cards and medical debt. Just know that you may not qualify for these types of loans if it’s too soon after filing bankruptcy or if you have a low credit score.

But debt consolidation may not always be your best option, especially if you can’t secure a lower interest rate or the term of the loan is significantly longer than your current loans. It’s best to collaborate with a financial professional who can help you assess your situation and create the right debt-busting strategy!


Protecting and Growing Your Emergency Fund

Protecting and Growing Your Emergency Fund

Nearly 25% of Americans report that they have ZERO dollars saved for an emergency.¹

If something unexpected were to happen, do you have enough savings to get you and your family through it and back to solid ground again?

If you’re not sure you have enough set aside, being blindsided with an emergency might leave you in the awkward position of asking family or friends for a loan to tide you over. Or would you need to rack up credit card debt to get through a crisis? Dealing with a financial emergency can be stressful enough – like an unexpected hospital visit, car repairs, or even a sudden loss of employment. But having an established Emergency Fund in place before something happens can help you focus on what you need to do to get on the other side of it.

As you begin to save money to build your Emergency Fund, use these 5 rules to grow and protect your “I did not see THAT coming” stash:

1) Separate your Emergency Fund from your primary spending account. How often does the amount of money in your primary spending account fluctuate? Trips to the grocery store, direct deposit, automatic withdrawals, spontaneous splurges – the ebb and flow in your main household account can make it hard to keep track of the actual emergency money you have available. Open a separate account for your Emergency Fund so you can avoid any doubt about whether or not you can replace the water heater that decided to break right before your in-laws are scheduled to arrive.

2) Do NOT touch this account. Even though this is listed here as Rule #2, it’s really Rule #1. Once you begin setting aside money in your Emergency Fund, “fugettaboutit”… unless there actually is an emergency! Best case scenario, that money is going to sit and wait for a long time until it’s needed. However, just because it’s an “out of sight, out of mind” situation, doesn’t mean that there aren’t some important features that need to be considered for your Emergency Fund account:

  • You must be able to liquidate these funds easily (i.e., not incur penalties if you make too many withdrawals)
  • Funds should be stable (not subject to market shifts)

You definitely don’t want this money to be locked up and/or potentially lose value over time. Although these two qualities might prevent any significant gain to your account, that’s not the goal with these funds. Pressure’s off!

3) Know your number. You may hear a lot about making sure you’re saving enough for retirement and that you should never miss a life insurance premium. Solid advice. But don’t pause either of these important pieces of your financial plan to build your Emergency Fund. Instead, tack building your Emergency Fund onto your existing plan. The same way you know what amount you need to save each month for your retirement and the premium you need to pay for your life insurance policy, know how much you need to set aside regularly so you can build a comfortable Emergency Fund. A goal of at least $1,000 to three months of your income or more is recommended. Three months worth of your salary may sound high, but if you were to lose your job, you’d have at least three full months of breathing room to get back on track.

4) Avoid bank fees. These are Emergency Fund Public Enemy No. 1. Putting extra money aside can be challenging – maybe you’ve finally come to terms with giving up the daily latte from your local coffee shop. But if that precious money you’re sacrificing to save is being whittled away by bank fees – that’s downright tragic! Avoid feeling like you’re paying twice for an emergency (once for the emergency itself and second for the fees) by using an account that doesn’t charge fees and preferably doesn’t have a minimum account balance requirement or has a low one that’s easy to maintain. You should be able to find out what you’re in for on your bank’s website or by talking to an employee.

5) Get started immediately. There’s no better way to grow your Emergency Fund than to get started!

There’s always going to be something. That’s just life. You can avoid that dreaded phone call to your parents (or your children). There’s no need to apply for another credit card (or two). Start growing and protecting your own Emergency Fund today, and give yourself the gift of being prepared for the unexpected.


¹ “Nearly 25% of Americans have no emergency savings,” Quentin Fottrell, MarketWatch, Jun 9, 2020, https://www.marketwatch.com/story/nearly-25-of-americans-have-no-emergency-savings-and-lost-income-due-to-coronavirus-is-piling-on-even-more-debt-2020-06-03


5 Common Financial Mistakes That Parents Make

5 Common Financial Mistakes That Parents Make

It happens every day. Parents make financial blunders that can impact their children’s future.

These mistakes are often avoidable. But a parent who has the best intentions and lacks the knowledge needed to properly manage their finances may not recognize these errors until the damage has been done.

Here are 5 common financial mistakes every parent should be aware of!

1. Not saving for their children’s education. You know the numbers—it seems higher education is growing more and more expensive every year. So the time to start financially preparing for your child’s university years is today. Meet with a financial professional to discuss how you can pay for college without resorting to student loans!

2. Not saving for retirement. Skimping on your long-term savings might be tempting, especially if your budget feels stretched to the breaking point by the basic expenses of providing for your family!

But saving can support your long-term financial position. It gives you a shot to pay for your own retirement, it can reduce the impact of long-term care on your family, and it might even create a financial legacy to leave to your children.

3. Spending too much on credit cards. It’s not just parents. Many Americans overuse their credit cards. But it can be a little too easy to do for parents on tight budgets. Don’t have enough in cash to buy your child a new toy? Just put it on the card!

Unfortunately, credit cards can become a significant drain on your cash flow. And the less available cash you have on hand, the less you’ll be able to save for your other financial goals!

4. Buying a house they can’t afford. Make no mistake—your family needs space. You need space! Just make sure that the house you buy is actually within your budget. Mortgage payments can chip away at your cash flow and reduce your wealth building and education funding power. And don’t forget to factor in the cost of house maintenance before you move in.

5. Buying things they don’t need to impress other parents. You love your kids and want the best for them. That’s what makes you a great parent!

But be mindful of why you buy things for your family. Are you providing for your kids? Or are you simply trying to impress your friends and neighbors? Take care that you put the wellbeing of your family first, not the opinions of others.

If you need help navigating your financial responsibilities, contact me! We can discuss strategies that might give your family the upper hand they need to thrive.


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