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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.


How NOT To Spend Your Next Raise

How NOT To Spend Your Next Raise

You walk out of the office like a brand new person.

That’s because you’ve done it—you’re going to be earning a lot more money with that raise. The first thing that pops in your head? All the fancy new things you can afford.

Dates. Your apartment. Vacation. They’re all going to be better now that you’ve got that extra money coming in.

And to be fair, all of those things CAN get substantially fancier after your income increases.

But one thing may not change—you still might end up living paycheck to paycheck.

Why? Because your lifestyle became more extravagant as your income increased. Instead of using the boost in cash flow to build wealth, it all went to new toys.

This phenomenon is called “lifestyle inflation”. It’s why you might know people who earn plenty of money and have nice houses, but still seem to struggle with their finances. The greater the income, the higher the stress. As Biggie put it, “Mo’ Money, Mo’ Problems.”

The takeaway? The next time you get a raise, do nothing. Act like nothing has changed. Go celebrate at your favorite restaurant. Keep saving for your new treat. But you’ll thank yourself if you devote the lion’s share of your new income to either reducing debt or building wealth.

Rest assured, there will be plenty of time to enjoy the fruits of your labor in the future. But for now, keep your eyes on the most important prize—building wealth for you and your family’s future.


Here's an Eyebrow Raiser...

Here's an Eyebrow Raiser...

The key word in ‘Life Insurance’? Life.

If your family’s quality of life were suddenly threatened, you’d step in, wouldn’t you? Of course you would!

Having a well-thought-out, tailored-to-you life insurance policy is a way to preemptively and proactively protect your family’s quality of life.

Here’s an eyebrow raiser: 36% of people surveyed intended to buy life insurance at some point, but only 54% actually have coverage!¹ Despite people’s good intentions, ownership is actually decreasing.

Here’s an eyebrow lowerer: Life insurance can be thought of as a financial safety net. One that gives your family the time and space to recover and rebuild in the event of trying financial circumstances.

Odds are, you already think life insurance is a good idea. But waiting until tragedy or a sudden loss of income strikes is waiting too long to consider the benefits of life insurance.

Give me a call or shoot me an email, and together we can take your unique circumstances into consideration and put together a life insurance policy that fits your needs.


“2020 Insurance Barometer Study Reveals a Significant Decline in Life Insurance Ownership Over the Past Decade,” LIMRA, Jun 2, 2020, https://www.limra.com/en/newsroom/news-releases/2020/2020-insurance-barometer-study-reveals-a-significant-decline-in-life-insurance-ownership-over-the-past-decade/


Passive Income: How It Works

Passive Income: How It Works

What if there were a way to increase your cash flow without starting a second job, changing careers, or getting a raise?

If you’re like many, that sounds exactly like what you and your family need! Who wouldn’t want some extra money coming in? It might seem like pie in the sky, but it’s not a fantasy.

Earning a passive income is more achievable than you might realize. Read on to discover how passive incomes work, what makes them so advantageous, and common ways to create them.

In general, a passive income is cash flow that requires little to no regular effort to create and maintain.

That’s not to say that they don’t require work. But the labor involved in opening a passive income stream is normally upfront—you spend time and/or money in the beginning to set up the income stream, then sit back and reap the rewards as time goes on.

It’s an advantageous model because it can potentially free up your time—which is the most valuable resource you have.

But be warned—not all opportunities to create passive income are created equal. Here are a few proven strategies for you to consider!

Create digital products. EBooks, online courses, stock photos, and stock music are all passive income generators. They require initial time investments to create and publish, but then earn you money as users buy them over time.

Rent out property. Renting is a classic source of passive income. It requires money upfront to buy the property—and maybe time and more money for renovations. But once rent starts coming in, they’re income sources that don’t require your daily attention. (Note: Becoming a landlord may have other costs involved, like repairs or replacing old equipment or appliances.)

Build a team of sales professionals. This is the hidden gem of passive income. There’s a starting commitment of time to learn about your market and how to close sales. Then you’ll need to create a team of salespeople. Every time they make a sale, you earn a portion of the profit. Once you’ve mastered the basics, the sky’s the limit for how much passive income you can potentially earn!

If having a passive income stirs your interest, let me know. We can review your financial position, skills, and the opportunities available and see which one might work best for you!


Setting SMART Financial Goals

Setting SMART Financial Goals

So you’ve set some financial goals. Good for you!

But not all goals are created equal. Planning to win the lottery is a foolish objective that won’t help you fulfill your dreams. Spending hours clipping coupons worth a few dollars is probably a waste of time.

Fortunately, establishing proper goals is actually incredibly straightforward. You want to pursue objectives that are SMART—specific, measurable, achievable, realistic, and timely. Formulating these types of goals can radically focus your energy and increase your ability to get things done. Let’s start with the first criteria!

Specific. The more specific your goal, the more clearly you’ll understand exactly what you need to do to achieve it. It’s the difference between a vague daydream and a solid plan.

When writing out your financial goals, be crystal clear on exactly what you want to accomplish and why. Outline the steps and people needed to bring about your vision. Something like “I want to make more money” becomes “I want to earn a raise at work by taking on more responsibility.”

Measurable. How will you know if you’ve accomplished, exceeded, or failed your goal? Including a clear metric gives you insight into how close or far you are from completing your objective.

Decide on a clear numeric goal you can shoot for. Take a vague notion like “I want to save more money” and transform it into “I want to save 15% of my income this year for retirement.” You’ll have a clearer idea of what steps you need to take to meet that benchmark and feel a deep sense of reward once you hit the target.

Achievable. Trying to attain an ill-defined, pie-in-the-sky goal will only lead to crazy behavior, incredible discouragement, or both. If you’re aiming for something huge (which is admirable), break it down into mini goals and focus on one at a time. Achieving a goal like “I want to start a multi-million dollar business” takes careful planning, a lot of research, and loads of help, but there are many, many people in the world who have done just that. How do you eat an elephant? (One bite at a time!)

Relevant. Are your goals appropriate? That seems like an obvious question, but it’s a critical one to ask when establishing objectives. For instance, saving up $1,000 so you can buy your new niece a Swarovski crystal, gold-plated baby rattle (yes, that’s a real thing) might be really memorable, but do you have an emergency fund in place? Make sure you’re meeting those practical, basic financial goals before you start aiming for the non-essential ones.

Time-sensitive. Knowing that the clock is ticking is one of the most powerful motivators on the planet. You’ll want to establish a realistic time-frame, but deciding that you want to buy a house in two years or be debt free in six months can increase your intensity, narrow your focus, and inspire you to start working on your goals as soon as possible!

Do your financial goals meet these criteria? If not, don’t sweat it! Spend 15 minutes reviewing your objectives and work in specific details or break down some of your more ambitious targets. Remember, I’m here to help if you hit a financial goal roadblock and need some professional insight and clarity!


Flow And The Secret Of Productivity

Flow And The Secret Of Productivity

Peak human performance.

Operating at your full potential consistently sounds too good to be true. We all want to accomplish more at our jobs and around the house. But a million little distractions always seem to throw us off course. Sure, we all have flashes of inspiration, but many of us settle for a fraction of our true capabilities.

But there’s a better way.

Researchers have discovered that high productivity doesn’t have to be limited to short bursts. There’s actually a very specific state of mind that results in stunning levels of output that’s triggered by certain psychological factors. It’s called flow, and understanding how it works may change your life.

What is flow? Technically speaking, “Flow is a cognitive state where one is completely immersed in an activity… It involves intense focus, creative engagement, and the loss of awareness of the self.”¹ Think of it like this: what’s your favorite quarterback thinking about when he’s making a game winning play? Almost nothing else besides what he’s doing in the moment. That state of total concentration on the task at hand is what defines flow. Other sensations follow. Decisions seem to make themselves. You lose awareness of what’s going on around you. Time either seems to fly by or you see things in slow motion. And, most importantly, you feel awesome. You’re “in the zone.”

Achieving flow. You’ve almost certainly achieved this flow state at least once in your life. But it probably doesn’t seem replicable. You were just on during that highschool football championship game or playing that local show with your buddies or giving that presentation. Fortunately, research hasn’t just described flow; it’s discovered a few factors that contribute to achieving peak performance.

The first flow key is to establish goals. Your brain loves objectives. It loves feeling like it’s accomplishing things. Having a clear outcome in mind will help you tune out the distractions that don’t matter and hone in on what does. Identify your desired goal, outline in detail how you’ll accomplish it, and then proceed to the second flow key.

The second flow key is the balance between challenge and boredom. Very often, facing a difficult task doesn’t naturally induce deep focus. It actually can make us feel anxious, scared, and avoidant. However, a mundane and simple activity, like washing dishes, doesn’t require the brainpower to trigger intense concentration. Flow lives in the happy medium between those extremes of crushing anxiety and mind-melting boredom. You have to have the confidence that you can actually crush the challenge at hand, but also not find it too easy or boring. Dial in your ideal difficulty level before you start a project. Expect more from your mundane responsibilities and get help for the daunting ones. Raise the stakes for your performance but make sure you don’t drown in the process!

The third flow key is immediate feedback. Let’s say you’ve hired a coach to help you master a skill. Would you prefer them to write up an annual review on your progress or give you tips, critiques, and advice as often as possible? Think about all the bad habits and practices you would develop without their regular oversight. You might discover you’ve been doing things wrong for a whole year if you’re only getting an annual checkup! Instant feedback allows you to constantly refine your process and execution while also setting up micro goals for you to accomplish. It’s a simple way to add a dash of challenge to your daily routine that locks you in and helps you achieve peak performance. Seek out frequent feedback. Ask your boss or co-workers or coach to give you critiques as often as possible. That constant stream of input will either make you feel good about what you’ve accomplished or give you new obstacles to overcome!

Achieving this state of peak performance isn’t always easy. There’s a cycle to entering flow that includes a difficult first phase. It’s hard work for our brain to enter into total focus and concentration. This first barrier is where most of us quit because intense concentration doesn’t feel great at first. But overcoming that initial resistance can open up a whole new world of productivity and performance. Use the three flow keys, push past the opening waves of discomfort and get into your zone!


¹ “Flow,” Psychology Today, accessed Sept. 24, 2020, https://www.psychologytoday.com/us/basics/flow


Should You Give Your Child An Allowance?

Should You Give Your Child An Allowance?

Should parents give their children an allowance?

It’s a surprisingly difficult question to answer. Teaching your kids how to handle money is important. But how you go about giving them cash can set precedents that last a lifetime. Here are a few different takes on giving your kids money.

Not giving your kids money. There’s a lot to not love about this system at a glance, especially if you’re the kid. It seems like a way to simultaneously prevent your children from having fun and learn nothing about handling money. But it has some silver linings. Not paying your kids to do chores can be a way to teach them about the value of work without tying it to a monetary reward. That’s an important life lesson that can be applied to volunteer work and responsibilities with their future family. You also may be on a tight budget and handing out an allowance is just not part of your financial strategy right now.

Giving your kids an allowance (no work required). This is a system where you give your kids a set amount of money each week or month. This is a straightforward way to get your kids some cash that they can spend, save, and use to learn about money.

But just giving your kids an allowance without requiring something in return, like doing chores, has some potential drawbacks. Most people will eventually have to get a job so they can earn money. Giving cash to your kids without tying it in some way to work may create a sense of entitlement that simply isn’t realistic.

Paying your kids commission. In this system, you pay your kids as they complete tasks. You would set up a job posting with different payments for different chores. Pay your kids when they’ve completed the work. If they get the job done quickly with a good attitude and some extra flourish? Give them a raise! It’s a great way of rewarding excellence and teaching children the monetary value of their time and hard work.

But this system also has flaws. Some of the most rewarding work we do can be for family or friends, or to serve our communities—with no reward other than appreciation and pride in a job well done. Giving the impression that one should only put in hard work or help out with the family for cash isn’t something every parent is comfortable with.

Fortunately, there are many ways to combine each of these systems. You could have non-paying chores that are duties simply because the kids are members of the family and then extra paid jobs. Or maybe offer a base allowance to teach your kids about saving, giving, and spending, and then paid chores added on. These systems can evolve over time as your kids grow. Let the needs of your family and what you want to instill in your children guide you.


Big Financial Rocks First

Big Financial Rocks First

A teacher walked into her classroom with a clear jar, a bag of rocks, a bucket of sand, and a glass of water. She placed all the large rocks carefully into the jar.

“Who thinks this jar is full?” she asked. Almost half of her students raised their hands. Next, she began to pour sand from the bucket into the jar full of large rocks emptying the entire bucket into the jar.

“Who thinks this jar is full now?” she asked again. Almost all of her students now had their hands up. To her student’s surprise, she emptied the glass of water into the seemingly full jar of rocks and sand.

“What do you think I’m trying to show you?” She inquired.

One eager student answered: “That things may appear full, but there is always room left to put more stuff in.”

The teacher smiled and shook her head.

“Good try, but the point of this illustration is that if I didn’t put in the large rocks first, I would not be able to fit them in afterwards.”

This concept can be applied to the idea of a constant struggle between priorities that are urgent versus those that are important. When you have limited resources, priorities must be in place since there isn’t enough to go around. Take your money, for example. Unless you have an unlimited amount of funds (we’re still trying to find that source), you can’t have an unlimited amount of important financial goals.

Back to the teacher’s illustration. Let’s say the big rocks are your important goals. Things like buying a home, helping your children pay for college, retirement at 60, etc. They’re all important –but not urgent. These things may happen 10, 20, or 30 years from now.

Urgent things are the sand and water. A monthly payment like your mortgage payment or your monthly utility and internet bills. The urgent things must be paid and paid on time. If you don’t pay your mortgage on time… Well, you might end up retiring homeless.

Even though these monthly obligations might be in mind more often than your retirement or your toddler’s freshman year in college, if all you focus on are urgent things, then the important goals fall by the wayside. And in some cases, they stay there long after they can realistically be rescued. Saving up for a down payment for a home, funding a college education, or having enough to retire on is nearly impossible to come up with overnight (still looking for that source of unlimited funds!). In most cases, it takes time and discipline to save up and plan well to achieve these important goals.

What are the big rocks in your life? If you’ve never considered them, spend some time thinking about it. When you have a few in mind, place them in the priority queue of your life. Otherwise, if those important goals are ignored for too long, they might become one of the urgent goals - and perhaps ultimately unrealized if they weren’t put in your plan early on.


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How to save for a big purchase

How to save for a big purchase

It’s no secret that life is full of surprises. Surprises that can cost money.

Sometimes, a lot of money. They have the potential to throw a monkey wrench into your savings strategy, especially if you have to resort to using credit to get through an emergency. In many households, a budget covers everyday spending, including clothes, eating out, groceries, utilities, electronics, online games, and a myriad of odds and ends we need.

Sometimes, though, there may be something on the horizon that you want to purchase (like that all-inclusive trip to Cancun for your second honeymoon), or something you may need to purchase (like that 10-years-overdue bathroom remodel).

How do you get there if you have a budget for the everyday things you need, you’re setting aside money in your emergency fund, and you’re saving for retirement?

Make a goal
The way to get there is to make a plan. Let’s say you’ve got a teenager who’s going to be driving soon. Maybe you’d like to purchase a new (to him) car for his 16th birthday. You’ve done the math and decided you can put $3,000 towards the best vehicle you can find for the price (at least it will get him to his job and around town, right?). You have 1 year to save but the planning starts now.

There are 52 weeks in a year, which makes the math simple. As an estimate, you’ll need to put aside about $60 per week. (The actual number is $57.69 – $3,000 divided by 52). If you get paid weekly, put this amount aside before you buy that $6 latte or spend the $10 for extra lives in that new phone game. The last thing you want to do is create debt with small things piling up, while you’re trying to save for something bigger.

Make your savings goal realistic
You might surprise yourself by how much you can save when you have a goal in mind. Saving isn’t a magic trick, however, it’s based on discipline and math. There may be goals that seem out of reach – at least in the short-term – so you may have to adjust your goal. Let’s say you decide you want to spend a little more on the car, maybe $4,000, since your son has been working hard and making good grades. You’ve crunched the numbers but all you can really spare is the original $60 per week. You’d need to find only another $17 per week to make the more expensive car happen. If you don’t want to add to your debt, you might need to put that purchase off unless you can find a way to raise more money, like having a garage sale or picking up some overtime hours.

Hide the money from yourself
It might sound silly but it works. Money “saved” in your regular savings or checking account may be in harm’s way. Unless you’re extremely careful, it’s almost guaranteed to disappear – but not like what happens in a magic show, where the magician can always bring the volunteer back. Instead, find a safe place for your savings – a place where it can’t be spent “accidentally”, whether it’s a cookie jar or a special savings account you open specifically to fund your goal.

Pay yourself first
When you get paid, fund your savings account set up for your goal purchase first. After you’ve put this money aside, go ahead and pay some bills and buy yourself that latte if you really want to, although you may have to get by with a small rather than an extra large.

Saving up instead of piling on more credit card debt may be a much less costly way (by avoiding credit card interest) to enjoy the things you want, even if it means you’ll have to wait a bit.


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To close it or not to close it? That is the question.

To close it or not to close it? That is the question.

Your credit score helps determine the interest rate you’ll pay for loans, how much credit you’re eligible to receive, and it can even affect other monthly expenses, such as auto or homeowners insurance.

Keeping your credit in tip top shape may actually help save you money in some cases. With that in mind, how do you know if it’s a good idea to open a new credit card or to close some credit card accounts? Let’s find out!

Opening Credit Card Accounts
Opening a new credit card isn’t necessarily detrimental to your credit score in the long term, although there may be some potential negatives in the short term. As you might expect, opening a new credit card account will place a new inquiry on your credit report, which could cause a drop in your credit score. Any negative effect due to the inquiry is often temporary, but the long-term effect depends on how you use the account after that (not making minimum payments, carrying a high balance, etc.).

Opening a new credit card account can affect your credit rating in two other ways. The average age of your credit accounts can be lowered since you’ve added a credit account that’s brand new (i.e., the older the account, the better it is for your score). On the plus side, opening a new credit card account can reduce your credit utilization. For example, if you had $5000 in available credit with $2500 in credit card balances, your credit utilization is 50%. Adding another card with $2500 in available credit with the same balance total of $2500 drops your credit utilization to 33%. A lower credit utilization can help your score.

Closing Credit Card Accounts
Closing a credit card account can also affect your credit score, largely due to some of the same considerations for opening new credit card accounts. Generally speaking, closing a credit card account likely won’t help boost your credit score, and doing so could possibly lower your credit score for the same reasons above (lowering the average age of your accounts, increasing your credit utilization, etc.).

First, the positive reasons to close the account: This might be obvious, but closing a credit card account will prevent you from using it. If discipline has been a challenge, instead of closing the account, you might consider simply cutting up the card or placing it in a lockbox.

Second, the negative reasons to close the account: Closing a credit card account when you have outstanding balances on other credit card accounts will raise your credit utilization. A higher credit utilization can cause your credit rating to fall. You’ll also want to consider the average age of all of your accounts, which can play a big role in your credit score. A longer history is better. Closing a credit account that was established long ago can impact your credit score negatively by lowering your average account age.

Fair Isaac, the company responsible for assigning FICO scores, recommends not closing credit card accounts if your goal is to raise or preserve your credit score.[i]

Would opening or closing a bank account have any effect on my score?\ Closing a bank account has no effect on your credit rating and normally doesn’t appear on your credit report at all. When you open a bank account, however, your bank may perform a credit inquiry, particularly if you apply for overdraft protection. A hard inquiry (such as an overdraft protection application) can cause a temporary drop in your credit score. Soft inquiries – which are also common for banks – will appear on your credit report but do not affect your credit rating. Banks may also check your report from ChexSystems[ii], a company that reports on consumer bank accounts, including overdraft history and any unresolved balances on closed accounts.[iii]

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[i] https://www.myfico.com/credit-education/faq/cards/impact-of-closing-credit-card-account\ [ii] https://www.chexsystems.com/web/chexsystems/consumerdebit/page/home/\ [iii] https://www.mybanktracker.com/news/account-denied-chexsystems-report

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

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

I don’t know about you, but most people don’t like exams – either taking one or having one done to them.

But there’s no need to panic over your life insurance medical exam (yes, you’re probably going to have one). I’ve got some steps you can take before the “big day” to help prevent readings which may skew your test results or create unnecessary confusion.

One important thing to keep in mind is that the exam’s purpose isn’t to pass or fail you based on your health. Your insurer just needs to understand the big picture so they can assign an accurate rating. Oftentimes, the news can be better than expected, and generally good health is rewarded with a lower rate. Alternatively, the exam might uncover something that needs attention, like high cholesterol. That might be something good to know so you can make necessary lifestyle changes.

Think of your exam as a big-picture view. Your insurer will measure several key aspects of your health. These areas help determine your life insurance class, which is simply a group of people with similar overall health characteristics.

Your insurer will most likely look at:

  • Height and weight
  • Pulse/blood pressure tests
  • Blood test
  • Urine test

Tests can indicate glucose levels, blood pressure levels, and the presence of nicotine or other substances. Body Mass Index (BMI) – a measurement of overall fitness in regard to weight – may also be measured as part of your life insurance exam.

So let’s find out what you can do to prepare for your exam!

The most obvious cause that could affect your results is medications you’ve taken recently. These will probably show up in your blood tests. Bring a list of any prescription medications you’re taking so your insurer can match those to the blood analysis.

Over the counter meds can interfere with test results and create inaccurate readings too, so it might be best to avoid them for 24 hours prior to your medical exam if possible. Caffeine can cause spikes in blood pressure.¹ Limit your caffeine intake or avoid it altogether, if possible, for 48 hours prior to your exam. Smoking can elevate blood pressure as well.²

Alcohol has a similar effect on blood pressure.³ Try to avoid alcohol for 48 hours prior to taking your life insurance medical exam. Some types of exercise can also spike blood pressure readings temporarily.⁴ If you can, avoid strenuous exercise for 24 hours before your medical exam.

Some types of foods can create false readings or temporarily raise cholesterol levels.⁵ It’s best to avoid eating for 12 hours prior to your exam, giving your body time to clear temporary effects. Scheduling your exam for the morning makes this easier.

Stress can affect blood pressure readings.⁶ (Surprise, surprise.) Try to schedule your life insurance medical exam for a time when you’ll be less stressed. After work might not be the best time, but maybe after a good night’s rest would be better.

Have any further questions on how you can prepare for your exam? I’m here to help!


Sources:
¹ Sheps, Dr. Sheldon G. “Caffeine: How does it affect blood pressure?” Mayo Clinic, 10.19.17, https://mayocl.in/2DB4pSt.
² “Smoking, High Blood Pressure and Your Health.” American Heart Association, 1.10.2018, https://bit.ly/2pSR2HE.
³ “Short-term Negative Effects of Alcohol Consumption.” BACtrack, 2018, https://bit.ly/2E5iOFX.
⁴ Barlowe, Barrett. “Does Exercise Raise Blood Pressure?” Livestrong, 8.14.2017, https://bit.ly/2GGKd6K.
⁵ Hetzler, Lynn. “What Not to Eat Before Cholesterol Check.” Livestrong, 8.14.2017, https://bit.ly/2J01mq9.
⁶ “Managing Stress to Control High Blood Pressure.” American Heart Association, 1.29.2018, https://bit.ly/2Ghc11T.

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Making Money Goals That Get You There

Making Money Goals That Get You There

Setting financial goals is like hanging a map on your wall to inspire and motivate you to accomplish your travel bucket list.

Your map might have your future adventures outlined with tacks and twine. It may be patched with pictures snipped from travel magazines. You would know every twist and turn by heart. But to get where you want to go, you still have to make a few real-life moves toward your destination.

Here are 5 tips for making money goals that may help you get closer to your financial goals:

1. Figure out what’s motivating your financial decisions. Deciding on your “why” is a great way to start moving in the right direction. Goals like saving for an early retirement, paying off your house or car, or even taking a second honeymoon in Hawaii may leap to mind. Take some time to evaluate your priorities and how they relate to each other. This may help you focus on your financial destination.

2. Control Your Money. This doesn’t mean you need to get an MBA in finance. Controlling your money may be as simple as dividing your money into designated accounts, and organizing the documents and details related to your money. Account statements, insurance policies, tax returns, wills – important papers like these need to be as well-managed as your incoming paycheck. A large part of working towards your financial destination is knowing where to find a document when you need it.

3. Track Your Money. After your money comes in, where does it go out? Track your spending habits for a month and the answer may surprise you. There are a plethora of apps to link to your bank account to see where things are actually going. Some questions to ask yourself: Are you a stress buyer, usually good with your money until it’s the only thing within your control? Or do you spend, spend, spend as soon as your paycheck hits, then transform into the most frugal individual on the planet… until the next direct deposit? Monitor your spending for a few weeks, and you may find a pattern that will be good to keep in mind (or avoid) as you trek toward your financial destination.

4. Keep an Eye on Your Credit. Building a strong credit report may assist in reaching some of your future financial goals. You can help build your good credit rating by making loan payments on time and reducing debt. If you neglect either of those, you could be denied for mortgages or loans, endure higher interest rates, and potentially difficulty getting approved for things like cell phone contracts or rental agreements which all hold you back from your financial destination. There are multiple programs that can let you know where you stand and help to keep track of your credit score.

5. Know Your Number. This is the ultimate financial destination – the amount of money you are trying to save. Retiring at age 65 is a great goal. But without an actual number to work towards, you might hit 65 and find you need to stay in the workforce to cover bills, mortgage payments, or provide help supporting your family. Paying off your car or your student loans has to happen, but if you’d like to do it on time – or maybe even pay them off sooner – you need to know a specific amount to set aside each month. And that second honeymoon to Hawaii? Even this one needs a number attached to it!

What plans do you already have for your journey to your financial destination? Do you know how much you can set aside for retirement and still have something left over for that Hawaii trip? And do you have any ideas about how to raise that credit score? Looking at where you are and figuring out what you need to do to get where you want to go can be easier with help. Plus, what’s a road trip without a buddy? Call me anytime!

… All right, all right you can pick the travel tunes first.


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Your Life Insurance Rate & You: The Risk Takers

Your Life Insurance Rate & You: The Risk Takers

Lightning strikes and shark attacks and winning the lottery – Oh my!

Two big things to keep in mind:

1) None of these are likely to happen to you. (The odds of winning the lottery alone are 175 million to 1! Being killed by a shark: 3.7 million to 1. Getting struck by lightning: 960,000 to 1.)
2) Occasionally playing in the rain, swimming in the ocean, or buying a lotto ticket won’t affect your life insurance rate.

But…

Bungee jumping and kayaking and skydiving – Oh my! These 3 are a different story when it comes to determining your life insurance rate!

When you apply for a life insurance policy, the underwriting process involves reviewing a variety of different factors about you – your age, gender, family health history, lifestyle, etc. The underwriters need to help your potential insurer determine what kind of risk you pose to the insurance company.

What are insurance companies looking for? Ideally, someone who is young, healthy, and will not likely need their policy payout soon. These are the individuals who typically enjoy the lowest insurance rates. However, it’s important to note that no matter your age or how healthy you are, if you engage in some risky hobbies, they have the potential to bungee you right out of the easy-to-insure category.

Let’s take a look at skydiving, for instance. You voluntarily:

  • Strap a giant piece of cloth stuffed in a bag to your back.
  • Get into an airplane, take off, and then open the door mid-flight.
  • Approach said open door of the plane.
  • Jump. Out. Of the plane. Roughly 13,000 feet above the ground.

And we’re not even addressing the part where you trust the giant piece of folded up cloth to deploy correctly and carry you safely to the ground! This is textbook risky. (And certainly just one way to look at skydiving – most insurers don’t care that this might be a big check mark on your bucket list.)

When you raise your odds of being in harm’s way, you raise your life insurance rate – and sometimes your inability to be approved for a policy at all. In 2016, 1 in 153,557 skydiving jumps resulted in a fatality in the US. While these odds are not as likely as the odds of getting your cheek pinched by Great Aunt Gladys at Thanksgiving or seeing a brand new Porsche taking up two parking spaces at the mall on Black Friday, it’s a lot more likely than your lottery odds, to be sure.

And willingly leaping out of a plane is going to raise a red flag for any insurer.

Some other risky hobbies that may have an impact on your life insurance rate or policy approval:

  • Hot air ballooning
  • Scuba diving
  • Car racing, boat racing, bike racing
  • Skiing and snowboarding
  • Hang gliding

If you enjoy living a bit more adventurously than most, it doesn’t mean that you can’t get life insurance to protect your future and your loved ones. Working with me gives you an advantage: you’ll have multiple products and insurers to work with. This isn’t a guarantee for success, but we can embark on this journey together and explore your options. Finding a life insurance policy that suits your lifestyle isn’t an impossible task, but you should take that leap sometime soon. Why not start today? (Parachute optional!)


Sources:
The Balance: “What Are the Odds of Winning the Lottery?” 11.7.2017
NBC News: “Great White Hype – What Are the Odds of Being Killed by a Shark?” 6.25.2017
CBS: “Odds of winning Powerball jackpot less than being hit by lightning — twice.” 1.12.2016
HowStuffWorks: “How Skydiving Works.” 2017
USPA: “Who Skydives?” 4.2017

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Your Life Insurance Rate & You: Poor Health Habits

Your Life Insurance Rate & You: Poor Health Habits

What are you digging so deep in your pocket for? If it’s for a lighter, you might need to dig for some extra change, too…

… You’ll need help to meet your higher life insurance rate if you’re planning on lighting up a cigarette.

Health details and everyday habits that may seem small or insignificant can have a massive effect on your life insurance rate. You may have heard something about the underwriting process. The purpose of the underwriting process is to determine how risky a person will be to insure. And the riskier someone is to insure, the higher their rate is likely to be. That risk is calculated by how soon an insurer estimates an applicant will need the full payout of their life insurance policy.

Some factors that influence risk (like age and gender) are out of your control. But did you know that your habits can also send your life insurance rate up?

Here are 3 poor health habits that an underwriter will definitely uncover and will definitely affect your life insurance rate:

1. Smoking
If you smoke cigarettes, expect a higher life insurance rate. Period. Even products like nicotine patches, gum, or lozenges can earn a life insurance applicant “smoker” status (depending on the provider). At this point, are there really any lingering questions about how cigarettes affect your overall health and projected longevity? Cigarettes contain thousands of chemicals and at least 70 known carcinogens.

A bit of good news? The longer it’s been since you quit smoking, the better things might look for you from an underwriting standpoint. For instance, some underwriters are only required to look back into your history as far as 12 months, so if you have quit cigarettes for a year, you may end up with a better classification – and a better classification potentially means a better life insurance rate.

2. Being Too Overweight
An underwriter will also assess your height-to-weight ratio. Your unique ratio will classify you according to a certain rate. Being overweight or obese increases health risks like stroke, type 2 diabetes, coronary heart disease, and high blood pressure, among others. So the more overweight you are, the riskier you are to insure. And what does that mean? You guessed it: your chances of a higher rate are significantly increased.

3. Drinking A LOT of Alcohol
Did reading about this poor health habit throw you off? After all, a few drinks isn’t that bad, right? Well, “a few drinks,” no, but drinking in excess can start to have adverse effects on your overall health. Excessive or “binge” drinking would be 5+ alcoholic drinks for men and 4+ alcoholic drinks for women at the same occasion or within a couple of hours of each other on at least 1 day in the past month. Chronic excessive drinking brings these common health risks: liver disease, pancreatitis, cancer, brain damage, and more.

How will an underwriter know if you’re drinking to excess? They’ll give you a questionnaire, you’ll be subject to a medical exam, and they’ll see your driving record. So If there is any evidence of drinking excessively and getting behind the wheel of a car, consider your life insurance rates raised.

Kicking these 3 habits can have great effect on your personal health and on your life insurance rate! With a little effort, time, and preparation, you can put yourself in a better position for a potentially more affordable rate. But don’t wait to get started! Remember: when you apply for life insurance, you may not get full credit for changes to these 3 poor health habits made in the 12 months prior to your application..

Every insurer’s rates are going to be a little bit different, and that’s why you have an advantage by working with me. We’ll shop around for the policy and rate that’s tailored to your unique needs.

So if you’ve been waiting for a sign to stop smoking, quit eating too much junk food, or cut back on drinking, consider this it!


Sources:
American Cancer Society: “Harmful Chemicals in Tobacco Products.” 4.5.2017
Center for Disease Control: “The Health Effects of Overweight and Obesity.” 6.5.2015
National Institute on Alcohol Abuse and Alcoholism: “Drinking Levels Defined.”
Medical News Today: “10 health risks of chronic heavy drinking.” 12.8.2015

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