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The Most Important Rule For Buying Life Insurance

The Most Important Rule For Buying Life Insurance

Your life insurance coverage should be worth roughly ten times your annual income.

That’s not as crazy of a number as it might appear. Your income funds your family’s lifestyle and fuels their dreams. It’s how you pay for the house, the car, their education, and all the big and little things that make life run.

So what would happen if your income were to suddenly stop if you became ill or were to pass away?

Could your family afford to stay in the neighborhood? Would a child have to compromise their education? Would your spouse have to get an additional job to cover the daily costs of living?

Life insurance helps answer those questions in the event of your income disappearing.

So why buy a policy ten times your annual income?

First, it can act as a buffer while your family grieves and figures out next steps. A proper life insurance death benefit can allow your family to cover final expenses while they decide how to move forward.

Second, it can help your family pay off remaining debts and start funding future opportunities. This reduces the financial burden your loved ones will face in your absence.

Obviously, there are exceptions to this rule. A stay-at-home parent provides services and care that would be costly to replace and should be covered with that in mind. Families with medical concerns might need to consider a policy worth more than ten times their annual income.

But in general, a life insurance policy for ten times your income will help cover the major expenses your family will face.

Want a more precise estimate on how much life insurance you and your family need? Contact a financial professional. They can offer insights into how much coverage your specific situation calls for!


This article is for informational purposes only and is not intended to promote any certain products, plans, or strategies that may be available to you. Before purchasing a life insurance policy, seek the advice of a qualified and licensed financial professional, accountant, and/or tax expert to discuss your options.


One Simple Rule For House Hunters

One Simple Rule For House Hunters

The real estate market has witnessed a wild year.

All the ups and downs and uncertainty about the future have made it hard to tell if now is the time to buy or if it’s better to wait things out!

Fortunately, there’s a simple principle that can bring some clarity to your house hunting process. The 30/30/3 Rule can help you determine the right amount of house for you, whatever your stage of life! It’s composed of three mini-rules that we’ll explore one at time.

Don’t spend more than 30% of your gross income on mortgage payments.

In other words, don’t sign away too big of a portion of your income in mortgage payments. This rule makes sure you have a healthy chunk of your cash flow available for other essential spending and building wealth. There’s definitely wiggle room to pay more as income increases, but 30% of your gross income is still a good target!

Have 30% of the home’s value saved in cash before you buy.

Banking up a solid stash of cash before you purchase can protect you from several threats. Using about 20% of that cash as a down payment can get you lower mortgage rates and dodge private mortgage insurance.² Also, keeping a 10% buffer provides you with a useful line of defense against unexpected repairs and appliance replacements. Just remember to keep your housing fund away from risk. Think of it as an emergency fund for your house rather than a savings vehicle!

Avoid houses over 3X your gross annual income.

This one is simple—Don’t buy a house you can’t afford! Do you make $50,000 per year? Shoot for a maximum $150,000 price tag. This is a simple way of narrowing your house hunting and managing your overall debt.

Why The Rule Works.

Let’s say you’re earning an income of $60,000 per year, or $5,000 per month. You read the headlines about the housing market and decide to snatch up a home. An opportunity presents itself—there’s a gorgeous home in a good neighborhood that’s selling for $180,000 (3X your annual income, and almost impossible to find) with a 7.3% interest rate (the national average). With monthly payments of $1,365 per month, you’ll only be handing over 27% of your income to the bank. Over $3,500 dollars of cash flow would be at your disposal!

What if you had the same income level but were looking at a house worth $360,000 (6X your annual income)? You’ll be forking over nearly half your income for your house. That’s a huge amount of firepower that could be used to build wealth or start a business!

Don’t forget to review your home buying plan with a financial professional who can help put this helpful principle into practice!


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/


Are You Prepared For a Recession?

Are You Prepared For a Recession?

The purpose of this article isn’t to speculate whether or not a recession is on the horizon. It’s to make sure you’re ready if it is.

Some downturns can be seen from a mile away. Others, like the Great Recession and the Coronavirus lockdowns, are black swan events—they catch even the experts off guard.

But they don’t have to find YOU unprepared.

Here’s a quick checklist to help you assess your recession readiness.

Your emergency fund is fully stocked.

Without well-stocked emergency savings, losing your job could spell disaster for your finances—you’d be forced to rely on credit to cover even basic expenses. When you re-enter the workforce, a huge chunk of your income would go straight towards paying down debt instead of building wealth.

That’s why it’s critical to save three to six months of income asap. It may be the cushion you need to soften the blow of unemployment, should it come your way.

You’ve diversified your income.

Recessions don’t discriminate. They affect everyone from the poorest to the wealthiest. But one group weathers downturns better than most—those with multiple streams of income.

If you have more than one source of income, you’re less likely to feel the full brunt of a recession. If one stream dries up, ideally you would have others to fall back on.

What does that look like? For many, it means a side hustle. Some create products like books, online guides, etc., or they might do something like acquire rental properties. These types of businesses typically only require a one-time effort to produce or purchase but will yield recurring income.

If you’re ambitious, you could create a business to generate income that far exceeds your personal labor. It’s not for the faint of heart. But with the right strategy and mentorship, it could lend your finances an extra layer of protection.

You’ve diversified your savings.

Just as you diversify your income streams, you should also diversify your savings. That way, if one account loses value, you have others to fall back on.

What could that look like? That depends on your situation. It’s why talking to a licensed and qualified financial professional is a must—they can help tailor your strategy to meet your specific goals.

You’re positioned to make bold moves.

The wealthy have long known that recessions can be opportunities. With the right strategy, you may actually come out ahead financially.

But in order to take advantage of those opportunities, you need to have cash on hand. That way, when others are forced to sell at a discount, you can scoop up assets at a fraction of their true value.

So if you want to be in a position to take advantage of a downturn, make sure you have ample cash on hand. That way, when an opportunity comes knocking, you’ll be ready to answer.

No one can predict the future. But by following these tips, you can prepare your finances for whatever the economy throws your way.


What Does Financial Control Look Like?

What Does Financial Control Look Like?

You work too hard for your money to let it go to waste.

So why does it feel like you have so little control? How many people feel financially helpless? Like there is barely enough to make ends meet and never enough to prepare for the future?

78% of Americans were living paycheck to paycheck before the pandemic hit.¹ That means most of us weren’t in control of our finances. We were just riding the coattails of a fabulous economy.

So what does it take to achieve financial control?

Here are some basic ways to grab the reins of your personal finances!

Knowledge.

You should know how much you make. But do you know how much you spend and on what? Discovering that your bank account is empty at the end of each month is one thing. But figuring out where your money is going—that’s something else entirely. This knowledge is what will help equip you to create a strategy and take control of your life.

Start by figuring out how much you spend in total and subtracting that number from how much you make. Then, break down your spending into categories like rent, gas, eating out, entertainment, streaming services, and anything else that takes a chunk out of your normal expenses. It might feel like homework, but hang in there.

Preparing.

Goals are the key to creating an effective financial strategy. You have to know what you’re building towards if you want to develop the best steps and strategies. It’s okay to think simple. Maybe you’re just trying to get out of debt. Perhaps you’re trying to save enough to start a business or buy a home. Or you might be a bit more ambitious and have an eye on a dream retirement that you want to start preparing for now.

Figure out what it is you want and how much it will cost. From there you can use your budget to start cutting back in categories where you spend too much. You might discover that you need to increase your income to accomplish your goals. Map out a few steps that will move you closer to making your dream a reality.

Action.

Once you’ve built a strategy based on your goals and budget-fueled insights, the only thing left is to follow through and take action. This isn’t a grandiose, one-time maneuver. This is about little decisions day in and day out that will help make your dreams a reality. That means making small moves like meal prepping at home instead of eating out, or avoiding clothing boutiques in favor of thrift shop finds. Those little acts of discipline are the building blocks of success. You might fall off the wagon every now and again, but that’s okay! Pick yourself up and keep pushing forward.

It’s important to have each of these three components operating together at once. Knowing your financial situation and not doing anything about it may not do anything but cause anxiety. Cutting your spending without an overall vision can lead to pointless frugality and meaningless deprivation. And a goal without insight or action? That’s called a fantasy. Let’s talk about how we can implement all three of these elements into a financial strategy today!

¹ “78% Of Workers Live Paycheck To Paycheck,” Zack Friedman, Forbes, Jan 11, 2019, https://www.forbes.com/sites/zackfriedman/2019/01/11/live-paycheck-to-paycheck-government-shutdown/#3305f4cb4f10


The Hidden Truth About Debt Consolidation

The Hidden Truth About Debt Consolidation

You’ve probably heard of debt consolidation. It’s a way to help lower your interest rates and monthly payments by packaging all of your debts into one neat little bundle.

And it can be helpful—if properly structured, consolidation can noticeably lower your interest rate.

But if you’re serious about getting out of debt, it shouldn’t be the only tool in your arsenal. Why? Because debt consolidation doesn’t do anything to attack your balance.

Let’s say you have three debts…

■ $3,000 personal loan at 7% interest

■ $15,000 car loan at 5% interest

■ $8,000 credit card balance at 15% interest

That comes out to a total monthly debt payment of $2,160. That’s a lot of money!

But what if you consolidate those debts into a single $26,000 loan with a 7% interest rate? Your new monthly payment would be $1,820. Not bad!

Now consider another scenario—what if instead of consolidating your debts, you could slice your total debt burden in half?

Your monthly payment would plummet from $2,160 to $1,080. And because you’re paying less each month, you’d have more money available to put towards building wealth, ASAP.

That’s important because the sooner you start building wealth, the better. The longer your money can grow via compound interest, the wealthier you can become.

So while debt consolidation can be helpful, it shouldn’t be your only strategy for getting out of debt. It’s just one tool in the arsenal.

If you’re not sure where to start with debt, meet with a debt relief specialist. They can point you towards the strategies and relief programs you need to get out of debt—for good.

This article is for informational purposes only and is not intended to promote any certain products, plans, or strategies that may be available to you. Any examples used in this article are hypothetical. Before taking out a loan, enacting a funding strategy, or setting up debt consolidation, seek the advice of a licensed and qualified financial professional, accountant, debt expert, and/or tax expert to discuss your options.


Mediocre Money Mindsets

Mediocre Money Mindsets

Healthy money habits start with mature money mindsets.

Even though it’s not always obvious, we carry lots of assumptions and attitudes about money that might not be grounded in reality. How we perceive wealth and finances can impact how we make decisions, prioritize, and handle the money that we have. Here are a few common money mindsets that might be holding you back from reaching your full potential!

I need tons of money to start saving

It’s simple, right? The rich are swimming in cash, so they’re able to save. They get to build businesses and live out their dreams. The rest of us have to live paycheck to paycheck, shelling out our hard earned money on rent, groceries, and other essentials.

That couldn’t be further from the truth! Sure, you might not be able to save half your income. But you might be surprised by how much you can actually stash away if you put your mind to it. And however much you can save right now, little as it might be, is much better than putting away nothing at all!

I need to save every penny possible

On the other side of the coin (get it?) is the notion that you have to save every last penny and dime that comes your way. There are definitely people in difficult financial situations who go to incredible lengths to make ends meet. Just ask someone who survived the Great Depression! But most of us don’t need to haggle down the price of an apple or forage around for firewood. And sometimes, the corners we cut to save a buck can come back to bite us. Set spending rules and boundaries for yourself, but make sure you’re not just eating ramen noodles and ketchup soup!

I don’t need to budget

There are definitely times when you might not feel like you need to be proactive with your finances. You don’t feel like you’re spending too much, debt collectors aren’t pounding down your door, and everything seems comfortable. Budgeting is for folks with a spending problem, right?

The fact of the matter is that everyone should have a budget. It might not feel important now, but a budget is your most powerful tool for understanding where your money goes, areas where you can cut back, and how much you can put away for the future. It gives you the knowledge you need to take control of your finances!

Breaking mediocre money mindsets can be difficult. But it’s an important step on your journey towards financial independence. Once you understand money and how it works, you’re on the path to take control of your future and make your dreams a reality.


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.


Beware These Budgeting Potholes

Beware These Budgeting Potholes

So you’ve made the commitment and started your budget, but after a while something seems off.

Maybe your numbers never add up or too many expenses are coming “out of the blue”. You might also feel a sense of dread every time you make a purchase. No matter what you do, this whole budgeting thing doesn’t seem to be working.

Hang in there! Here are a few budgeting potholes that might be slowing down your financial goals and how to avoid them!

Stinginess

Budgets are supposed to help you use your money wisely. They should be a positive part of your life—they’re not supposed to make you feel like you’re constantly failing. But sometimes our passion to save money and get our financial house in order gets the better of us, and we set up budgets that are too restrictive. While coming from good intentions, an overly thrifty budget can actually make it harder to achieve your goals. An impossible to follow plan can make you feel discouraged and resentful. You might even decide that it’s not worth the hassle! Try starting with a more reasonable strategy and then build from there!

Too complex

Sometimes our budgets are just too complicated to actually be useful. Not everyone loves working with numbers, and sometimes fiddling with spreadsheets can get so overwhelming that we just want to quit. Plus, there’s plenty of room for human error! A good option is to investigate free budgeting sites or apps. All you do is punch in the correct numbers and the magic of technology will do the rest!

One time budget

Life is constantly changing. Your simple, streamlined budget might be perfect for the life of a young single professional, but will it still hold up in five years? Where will the portion of your paycheck that works down your student loans go once you’re debt free? And when will you start saving for a house?

Take some time every few months to review your budget and see what’s changed. Evaluate what you’ve accomplished and areas that need improvement. Ask yourself what your next milestones should be and if those line up with your long-term goals!

Budgeting takes work. But it shouldn’t be a burden. Cut yourself some slack, prune your process, and stay consistent. You might be surprised by the difference filling in budgeting potholes can make in your financial life!


Who Qualifies for Student Loan Forgiveness?

Who Qualifies for Student Loan Forgiveness?

Here’s every Millennial’s dream—you wake up one day to find all your student loan debt completely forgiven.

Recently, that dream became a reality for dozens of former students when the U.S. government gave $17 billion of debt relief to 725,000 borrowers.¹

Still, that hardly puts a dent in the $1.6 trillion in student loan debt collectively owed by 43 million Americans.²

So, what are the chances that your loans will be forgiven, and how do you know if you qualify?

Here are three ways to qualify for student loan forgiveness…

Public Service Loan Forgiveness

Work for a qualifying non-profit or public organization? Then you qualify for the Public Service Loan Forgiveness (PSLF) program.

Under this program, your remaining loan balance will be forgiven after you make 10 years’ worth of payments.³

And fortunately, it just got far easier to qualify—before recent reforms, the denial rate for the PSLF program was up to 99%.⁴

So if you’re a public servant, head over to the Federal Student Aid website and click Manage Loans.

Teacher Loan Forgiveness

Similar to the PSLF program, the Teacher Loan Forgiveness program is available for educators. If you’ve taught in a classroom for 5 years and meet the basic qualifications, you could be eligible for up to $17,500 of debt forgiveness.⁵

But be warned—there are some highly specific qualifications. From the Federal Aid website:

“You must not have had an outstanding balance on Direct Loans or Federal Family Education Loan (FFEL) Program loans as of Oct. 1, 1998, or on the date that you obtained a Direct Loan or FFEL Program loan after Oct. 1, 1998.”⁶

Sound complicated? That’s because it is. As with most financial moves, meet with a debt professional or financial planner to see if you qualify.

Total and Permanent Disability Discharge

If you’re totally and permanently disabled, you may be eligible for a complete discharge of your student loan debt.

You’ll need to submit proof of your disability to your loan servicer. The proof can come in many forms, such as a doctor’s letter, a Social Security Administration notice, or documentation from the U.S. Department of Veterans Affairs.

As with everything involving bureaucracy and disability, you may quickly find yourself mired in red tape and conflicting phone numbers. That’s why it’s always wise to seek out professional help if you think you might qualify.

The sad truth is that few actually qualify for these programs. If you work in the private sector, are healthy, and face significant debt, you’ll need to find alternative strategies for moving from debt to wealth.

Still, it’s good to know that there are options out there for those who qualify. So if you think you might be eligible for one of these programs, don’t hesitate to explore your options.


¹ “Here’s who has qualified for student loan forgiveness under Biden,” Erika Giovanetti, Fox Business, Apr 26, https://www.foxbusiness.com/personal-finance/student-loan-forgiveness-programs-biden-administration

² “Student Loan Debt Statistics: 2022,” Anna Helhoski, Ryan Lane, Nerdwallet, May 19, 2022 https://www.nerdwallet.com/article/loans/student-loans/student-loan-debt

³ “Want Student Loan Forgiveness? To Qualify, Borrowers May Need To Do This First,” Adam S. Minsky, Forbes, May 16, 2022, https://www.forbes.com/sites/adamminsky/2022/05/16/want-student-loan-forgiveness-to-qualify-borrowers-may-need-to-do-this-first/?sh=6aa44a617cdb

⁴ “Want Student Loan Forgiveness?” Minsky, Forbes, 2022

⁵ “Teacher Loan Forgiveness,” Federal Student Aid, https://studentaid.gov/manage-loans/forgiveness-cancellation/teacher

⁶ “Teacher Loan Forgiveness,” Federal Student Aid, https://studentaid.gov/manage-loans/forgiveness-cancellation/teacher


The Right Way to Respond to Economic Volatility

The Right Way to Respond to Economic Volatility

Inflation. Tumbling market values. Supply chain catastrophe. Wars and rumors of wars. Pandemics.

These words have been plastered all over the news and social media feeds for the last two years. And there’s no sign of it stopping.

As individuals and as businesses, we can’t control the economy.

But what we can control is how we respond to it.

The key is to stay focused on your long-term goals, and make sure your actions align with them.

Here are a few tips on how to navigate economic volatility…

1. Check your emotions. Fear is the natural response to economic volatility. What will happen to your job? What will happen to your business? What will happen to your retirement savings?

Know this—one of the worst mistakes you can potentially make is acting rashly on those fears. Volatility creates opportunity. Don’t lose out on potential because of headlines you read. Instead, assess your situation, what you stand to lose, and opportunities you might have.

2. Stay focused on your goals. It’s easy to get caught up in the day-to-day noise of the news. But if you want to help your sanity—and make sound financial decisions—it’s important to keep things in perspective.

How far are you from retirement? What kind of lifestyle do you want in retirement? What’s your strategy for protecting against long-term losses?

If your goals are in line with your current reality, take a deep breath and ride out the storm. If not, it’s time to reevaluate where things stand and make adjustments as necessary.

3. Review your budget and financial strategy. Once you’ve gotten past the initial emotional reaction, it’s time to take a clear-eyed look at your budget and finances.

There are two critical components to examine here—your emergency fund and your debt.

If you have an adequate emergency fund in place, keep it intact. Resist the temptation to tap into your savings to cover short-term losses. You’ll need your emergency fund for different expenses, like emergencies.

As for debt, make sure you’re not overextending yourself with credit cards and loans that only might make sense when the economy is booming. If you lose your job in a downturn, the last thing you want is high-interest debt hanging over you.

4. Meet with your financial professional. It’s simple—a licensed and qualified financial professional can help stop rash financial decision making in its tracks.

A financial professional can help you see the big picture, keep things in perspective, and develop a strategy that can help you stay on track—no matter what the economy throws your way.

While economic volatility can feel frightening, it’s important to stay focused on your long-term goals. Having the right mindset and guidance can help you navigate a crisis with confidence.


Credit Score vs. Credit Report

Credit Score vs. Credit Report

Your credit score is a big deal. At the least, a low score can saddle you with high interest rates, or at the worst, prevent you from getting important loans.¹ It can even be a roadblock to renting a house or getting a job!²

But what exactly is a credit score? And how is it different from a credit report? It turns out the two have a close relationship. Let’s explore what they are and how they relate to each other.

Credit Report. Your credit report is simply a record of your credit history. Let’s break that down.

Many of us carry some form of debt. It might be a mortgage, student loans, or credit card debt (or all three!). Some people are really disciplined about paying down debt. Others fall on hard times or use debt to fuel frivolous spending and then aren’t able to return the borrowed money. As a result, lenders typically want to know how reliable, or credit worthy, someone is before giving out a loan.

But predicting if someone will be able to pay off a loan is tricky business. Lenders can’t look into the future, so they have to look at a potential borrower’s past regarding debt. They’re interested in late payments, defaulted loans, bankruptcies, and more, to determine if they can trust someone to pay them back. All of this information is compiled into a document that we know as a credit report.

Credit Score. All of the information from someone’s credit report gets plugged into an algorithm. It’s goal? Rate how likely they are to pay back their creditors. The number that the algorithm spits out after crunching the numbers on the credit report is the credit score. Lenders can check your score to get an idea of whether (or not) you’ll be able to pay them back.

Think of a credit report like a test and the credit score as your grade. The test contains the actual details of how you’ve performed. It’s the record of right and wrong answers that you’ve written down. The grade is just a shorthand way to evaluate your performance.

So are credit reports and credit scores the same thing? No. Are they closely related? Yes! A bulletproof credit report will lead to a higher credit score, while a report plagued by late payments will torpedo your final grade. And that number can make all the difference in your financial well-being!


¹ “The Side Effects of Bad Credit,” Latoya Irby, The Balance, Mar 4, 2021, https://www.thebalance.com/side-effects-of-bad-credit-960383

² “The Side Effects of Bad Credit,” Latoya Irby.


Money is Symbolic

Money is Symbolic

Money is symbolic.

Sure, it’s a source of value and a medium of exchange. But above all, it’s a symbol.

What is a symbol? It’s a visible representation of something that’s invisible.

Think about it—can you see success? Not really. It’s an abstract idea. So money is largely how people evaluate if they’re succeeding or failing.

What do you see when you imagine a successful person? Expensive cars, big houses, fancy clothes, and lots of zeros in a bank account.

Those are the symbols of success. And make no mistake—money is the central symbol of success.

How do you feel when your bank account looks full? You probably feel awesome! You get a quick rush, and your steps are just a touch lighter.

But what about when you’re in debt or when you can’t make ends meet? Maybe you feel not so great. You might become stressed and anxious, and feel like you’re not good enough.

That’s because money is a visible representation of your success or failure. It’s a way to keep score.

You see that loaded bank account, and you think “Everything looks good! I’ve really got my act together.”

You see an empty bank account, and you think “What have I been doing? I’ve really messed up my finances.”

Here’s the sticking point—the symbolic nature of money is great for motivation. But it’s terrible for guiding decisions.

Why? Because chasing the symbol can easily lead you to making moves that give you the appearance of wealth without being wealthy. You start buying things far beyond your budget to represent wealth you don’t actually have. This is the fast-track to living paycheck-to-paycheck.

But as motivation? That’s where the power of the symbol lies. Think about that bump you get when you see your net worth climb. Use that feeling as fuel to keep pushing when you hit roadblocks and obstacles.

So what does money mean to you? Is it a scorecard? A way to motivate yourself? Or something else entirely?

How you answer those questions will determine whether money is a powerful tool or a dangerous weapon in your life.


Intrinsic vs. Extrinsic Motivation

Intrinsic vs. Extrinsic Motivation

What gets you more motivated—the reward or the process?

That’s the question that divides intrinsic motivation from extrinsic motivation. And learning the difference could salvage your career from disaster.

Why? Because different motivation types are useful in different circumstances.

Intrinsic motivation is process focused. It comes from the sense of satisfaction from a job well done. It’s why you keep coming back to hobbies you love, or why you’re compelled to work on that project even when it’s not required. You do it for the love of the game.

Extrinsic motivation is reward focused. It comes from the anticipation or acquisition of something tangible, like a trophy, a raise, praise, or a bonus. It’s the reason you put up with a high paying job you hate, or why you grind out those extra reps at the gym. You do it for the payoff.

Intrinsic motivation is internal, while extrinsic motivation is external.

Here’s the strategic difference—intrinsic motivation is powerful long-term, extrinsic motivation is powerful short-term.

Think about it. How long can you really tolerate that awful job? Eventually, it’ll wear you down, no matter the pay. It will tax your mental health, your relationships, and your quality of life. Trying to leverage reward motivation over the long-term is a recipe for burnout.

That being said, it’s excellent if you need a burst of energy. “Just a few more months, and then I’ll be debt free. I can make it.” Extrinsic motivation is often what we rely on to push through short-term challenges.

By contrast, intrinsic motivation can provide powerful groundwork for planning long-term goals. What are the hobbies and activities you find inherently rewarding? Are they career oriented? Family focused? That’s where you should focus your long-term energy.


Getting Out Of Debt Doesn't Make You "Free"

Getting Out Of Debt Doesn't Make You "Free"

Debt is an unfortunate reality for most people in America.

The average household owes $6,000 in credit card debt alone, and the total amount of outstanding consumer debt in the US totals over $15.24 trillion.¹ It’s a burden, both financially—and emotionally. Debt can be linked to fatigue, anxiety, and depression.²

So it’s completely understandable that people want to get rid of their debt, no matter the cost.

But the story doesn’t end when you pay off your last credit card. In fact, it’s only the beginning.

Sure, it feels great to be debt-free. You no longer have to worry about making minimum payments or being late on a payment. You can finally start saving for your future and taking care of yourself. But being debt-free doesn’t mean you’re “free” to do whatever you want and get back into debt again. It means you’re ready to start building wealth, and chasing true financial independence.

For example, when you first beat debt, are you instantly prepared to cover emergencies? Most likely not. And that means you’re still vulnerable to more debt in the future—without cash to cover expenses, you run the risk of needing credit.

The same is likely true for retirement. Simply eliminating debt doesn’t mean you’ll retire wealthy. When you become debt-free, you can put those debt payments towards saving, leveraging the power of compound interest and more to help make your dreams a reality.

But now that you’ve conquered debt, that’s exactly what you can do! You have the cash flow needed to start saving for your future. You can finally take control of your money and make it work for you, instead of the other way around.

So don’t think of being debt-free as the finish line. It’s not. It’s simply the starting point on your journey to financial independence. From here, the sky’s the limit.


¹ “2021 American Household Credit Card Debt Study,” Erin El Issa, Nerdwallet, Jan 11, 2022, https://www.nerdwallet.com/blog/average-credit-card-debt-household/

² “Data Shows Strong Link Between Financial Wellness and Mental Health,” Enrich, Mar 24, 2021, https://www.enrich.org/blog/data-shows-strong-link-between-financial-wellness-and-mental-health


Don’t Become a Victim of These Secret Money Mistakes

Don’t Become a Victim of These Secret Money Mistakes

The most dangerous money mistakes are the ones you don’t notice.

Is racking up credit card debt or taking out payday loans financially dangerous? Of course! But they’re obvious. Hard to miss. They’re like a voice yelling into a megaphone “Hey! Don’t do it!”

But what about money mistakes that aren’t so obvious? Or even worse, money mistakes disguised as money wisdom?

Those may not devastate your bank account in one swoop. But they often go unaddressed. And over time, they add up.

So here are some money mistakes you might not have noticed.

Penny pinching. Sure, it sounds like a great idea in theory. But when you’re constantly scrimping and saving, it’s tough to enjoy life. What’s the point of working so hard if you can’t enjoy a reasonable treat now and then?

Plus, penny pinching may stop you from taking calculated risks that could save your money from stagnation.

So instead of extreme thriftiness, try moderation instead. You may find yourself far more inspired to budget and save than if you commit to complete frugality.

Under or over filling your emergency fund. A lot of people make the mistake of not having an emergency fund at all. It leaves them vulnerable to unexpected expenses and financial emergencies.

But when you have too much money in your emergency fund, it might be tough to make any real progress on your long-term financial goals. A good chunk of your net worth could be sunk into an account that’s not growing.

The solution? Save up 3 to 6 months of income in an easily accessible account, but no more. Use that money to cover emergencies ONLY. If it runs low, refill it.

Once your emergency fund is fully stocked, you can devote the rest of your income to building wealth.

Leaving goals undefined. It’s tough to achieve a goal you don’t have. Do you know where you’ll be financially in 5 years? 10? What are some things you’d like to save towards? A nicer home? An awesome vacation? A comfortable retirement? Not sure?

That uncertainty makes it easy to fudge good financial habits. It’s hard to see how lapses in your overall strategy can impact your big picture because you don’t have one.

So when it comes to your money, be specific. Very specific. Write out your goals and make sure they’re measurable. That way, you can monitor your progress and ensure you’re on the right track.

Be on the lookout for these dangerous money mistakes. They may seem innocuous, but they can add up over time and stop you from reaching your financial goals. Stay vigilant and steer clear of these traps!


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