Football and planning for your future…
September 10, 2011
I love posting this article during football season. If you’ve read it before, read it again, as it will be a good reminder for you. If you’re reading for the first time, enjoy!
OK, I admit it. I like football. Although I don’t understand all the strategies just yet, I enjoy watching the carefully
planned plays. Sometimes they work, sometimes they don’t, but nevertheless, very fun stuff to watch.
As I’m watching the games, it occurs to me that football and finances have a lot in common. (I admit, sometimes it’s hard for me to turn my ‘work’ brain off, even in the middle of an exciting game). The plays are carefully planned, the teams spend countless
hours practicing and strategizing, there is an experienced coach that guides the team to victory and they never give up. Their goal is specific, understood by all and there is serious motivation to win. Do you see where I am going with this?
Your money matters, your financial roadmap, requires the same mindset as those big, bad, burly football players. If you don’t have a specific plan in place, if you don’t practice and don’t have someone guiding you, you will probably not end up where you want to. When it’s time to send your kids to college, go on that vacation or retire, where are those funds coming from? What if you lost your job unexpectedly? Do you have reserves to fall back on?
Imagine those football players running onto the field with no plan, no plays. It would almost be painful to watch. Complete chaos. Is that what we enjoy watching? Doubtful.
So, is your financial picture complete chaos? If so, don’t panic. It’s never too late to get things in order.
Start by having a plan. Write down specific goals, what action steps are necessary to achieve those goals and by when. If lifestyle changes must occur, define what those changes are and commit to that change. Sit down and pull all your bills out for the last month. Determine your fixed expenses and compare that to what you actually spend every month. Sometimes this alone can be a real eye opener. Where does all that extra money go? The local coffee house? Lunch out? Those shoes you had to have?
Here’s an interesting statistic: If you saved $4 per day (one coffee) for 5 days per week for 52 weeks and invested that money at 10%, do you know how much you would have after 40 years? Some would say about $80,000, $90,000 even $100,000. Nope, you would have $553,396. Compounding interest is your new best friend.
So, make plans for your vacation and sending your kids off to college, just remember to plan for your money issues as well.
It’s all going to be okay…
March 13, 2011
Given what is happening in our world these days, it’s easy to get stuck. Stuck in the unknown, stuck in fear, or stuck with worry…it tests us all. If we allow ourselves to only focus on the challenges and tragedies, our days can become very bleak.
I’m not suggesting we ignore what is happening around us. Quite the contrary, I feel we should take action to help those around us in every way possible. Whether it is our time, our money or our prayers, we should help.
So, where am I going with this? Over the last several years we have been bombarded with the financial crisis. It would be literally impossible to turn on the news without some sort of story related to our economic challenges. No doubt, we have had some difficult times.
But, I’m here to share some inspiring news! Here’s some statistics that I think will make us all feel better. As you probably know, in 1932 the U.S. experienced the Great Depression. Did you know that in the subsequent 5 years, the market experienced a 194% return? Exciting to think about, isn’t it?
In 1982, the U.S. had the worst recession it had experienced in the prior 25 years. But, in the subsequent 5 years, the market experienced a 183% return!
Here’s one more. In 1994, the U.S. had a dramatic tightening of interest rates, (which means interest rates were going up). In the following 5 years, the market experienced a 213% return! Wowza!
Even in our difficult times, we have rebounded, and rebounded nicely. Look to the future with optimism and hope, as we will surely look back at this time in history and appreciate the healthy rebound. It’s all going to be okay…
Control? Yes and No…
February 18, 2011
Two weeks ago, on a quiet Saturday night, I got a phone call from my nephew. Being the prankster that he is, I normally take what he says with a grain of salt. “We have a little flooding problem over here and mom needs you to come over.” Not taking him seriously, I calmly said, “Devin, really?” “Yes, really” he says. We repeated these same words three times before I realized he was serious.
As I jumped in my car, I still wasn’t 100% convinced he wasn’t pulling another prank. Then I walked into their home. My sister was devastated, as she watched the ‘rain’ from the second story continue to fall onto our grandmothers antique dining room set. We moved as fast as we could to remove belongings, dry furniture and figure out what to do next. All the while, I just held my sister, telling her this was just temporary. We would get everything repaired and before she knew it, her home would be her castle again.
Like me, her home is her sanctuary. It’s the place we go to when we need calm and quiet. It’s a peaceful feeling when our home is clean, free of clutter and everything is in its proper place. We are in control. Or are we? Yes and no.
To think that we have total control over everything in our lives is a bit ignorant. At least in my opinion. We don’t. And that alone can make some people go nutty. As a control freak myself, I oftentimes struggle with this myself. But, here is how I find my balance.
First, I’ve learned to let go and hand over my issues to God. If that offends you, I’m sorry. But, finding a higher source to lean on, gain strength from and get direction from is, I believe, the first step towards finding peace. Whether you are dealing with a flood in your home, a health scare or money challenges, finding a source of strength, other than yourself, is paramount in getting through it.
Second, with those issues you do have control over, take the bull by the horns. For example, if you have money challenges, such as mounting credit card debt, take proactive steps towards resolving this. Contact your creditors and try negotiating lower interest rates or do a balance transfer to a zero percent interest rate card (Citicards and Discover have some nice offers right now). Then, cut up your cards. Don’t close the account, as this will oftentimes lower your credit score.
Another aspect you do have control over is your mindset. If you think you’re set up for failure or set up to succeed, you are right. Having a positive mindset, despite the bumps, will carry you through difficult times. Read uplifting books or get involved with an activity that brings you absolute joy. It’s not always easy, I’ll give you that, but perseverance and a positive attitude will take you farther than you ever thought possible.
If you learn to let go of those things you can’t control, master those issues you can control and enjoy the journey along the way, you will create a life of joy and peace. Despite the unexpected floods.
Help, I can’t get out of credit card debt!
October 9, 2010
I was recently asked a question about credit card debt that I think many people can resonate with, so I decided to post my response. The question was, “I have about $8,000 in credit card debt and I’m making payments, but it seems I’m not making any progress. Should I just declare bankruptcy?”
Here is my response:
Your question is a common one, especially in these challenging economic times. People are using credit cards to buy groceries, gas and other necessities. I’m happy to hear that you are making payments and taking a proactive approach.
You aren’t seeing much of a dent because most of your monthly payments are going towards interest, not the principal. Take a look at what interest rate you are paying and try to get that down. Contact your credit card company and speak to a supervisor. Tell them you are doing everything you can to make these payments, but you are having a tough time. Ask them if they can reduce your interest rate or have any type of special programs for people in your situation. Bottom line, it’s in their best interest to work with you, because if you decide to declare bankruptcy, they may never get a dime. (By the way, bankruptcy should be avoided at all cost, as it creates havoc to your credit score for years).
Fortunately, there is a lot of help for consumers who are overwhelmed with their debt. Some of the ‘debt help’ or ‘debt consolidation’ businesses aren’t exactly legitimate. They will typically ask for a nice chunk of money up front and oftentimes, can create more of a mess than what you started off with. Only work with debt counselors that are recommended by the National Foundation for Credit Counseling (www.nfcc.org- 800-388-2227).
These counselors will sit down with you and work out a repayment plan. Typically, they will gather all your debts and you will make one single payment to the counseling agency. Oftentimes, the counselors will negotiate deals where some of your credit is forgiven or they can get your interest rate reduced. This service isn’t free though, so be sure to ask what their fee is.
Again, much of this can be done on your own. Don’t be afraid to contact your credit card companies and push a bit. If they say no, call them back in one month. Always speak to a supervisor or manager.
On the other side of the coin, let’s talk about ways you can make larger payments every month. Take a hard look at your spending habits and find items you can cut out of your monthly expenses. This part of the equation is always challenging, as we have certain habits that can be tough to break. Here’s a few simple ways to cut back:
• If you eat lunch out at work, consider taking a sack lunch
• Make coffee at home in the morning rather than hitting the coffee shop
• Check your cable TV and cell phone plans and see if you can cut back on services
• Watch the ‘emotional spending’ going on (buying something to feel better)
• When purchasing something, ask yourself “do I need this or want this”. If you answered ‘want’, put it back.
I realize this can feel like sacrificing quite a bit, but consider how great you will feel when your credit cards are paid off. Plus, the interest that you will be saving over time can be applied towards building your financial freedom account! I know you can do it!!
Teens, money and mistakes
June 2, 2010
This week we’re on to number three!
The number three mistake we as parents are making: Not holding our kids accountable. If your child does something against the household rules, typically there are consequences. Pull on the dog’s tail and you may get bitten. This is how our kids learn right from wrong, good from bad, etc. When it comes to spending money or using credit cards, oftentimes parents come to the rescue. Bailing our kids out of a financial mess, without having them pay the consequences, isn’t holding them accountable. As a parent of a teen myself, I understand how difficult it is to watch our kids ‘fall’, but fall they must, in order to pick themselves back up. Stop rescuing and instead, use the word ‘NO’ more often. Easier said then done, I get that, but start today and they reap the benefits tomorrow.
Top 5 mistakes parents are making with teens and money: Mistake number one
May 19, 2010
Money is a topic that makes most people cringe. Especially in the present economic climate, it’s generally not a fun conversation to have. I’d like to change that. Some tell me that my mission of teaching financial literacy to teens is similar to turning the Titanic…it’s going to take a long, long time and require a lot of effort.
Fine, we better get moving now then!
Although I prefer to discuss what we as parents are doing correctly, I’ve been asked several times from various people, to talk about what we are doing wrong. Let me start by saying, don’t beat yourself up if you find some of the following issues ring true for you. We are all doing the best we can, so take the information, make the changes that apply and move forward.
Number one mistake: parents aren’t talking! We talk about school, friends, drugs, smoking, sports and more, but never about money. Without question, everything I mentioned above is critical, it’s just not enough. Start the conversation about money over dinner, while driving or when shopping at the grocery store. It doesn’t need to be some heavy, boring talk, which would tune your kids out anyways. The intention is to bring an awareness of spending habits, saving habits, credit card pitfalls, and more, to your child’s radar.
Keep it simple, keep it short. Talk often, listen more.
Stay tuned for next week when I discuss mistake number two!
Forbes article on kids and money
April 21, 2010
Here’s a great article that Forbes put out recently on kids and money. I thought you would enjoy it. Check it out here:
4 Top tips for raising money savvy teens
February 22, 2010
When it comes to teaching our teens how to manage money, the hardest part can be knowing where to start. There are so many pieces to this necessary puzzle, but the time to start is now. Here are the top four factors that every teen must understand to insure financial independence and peace.
Number one: Learn to live beneath your means. Simply stated get a grip on your spending habits and spend less than you earn. Preferably, much less. Seems simple enough and it certainly isn’t rocket science, but this one little tip is what many people struggle with. Use a spending tracker for a few weeks to get a feel of how and where your money is spent. You may be surprised. Spending less than what we earn can sometimes be tough, especially with the peer pressure many teens face. Bottom line, it becomes a choice. A choice of priorities. If I was paid $1.00 for every time I heard, “I just don’t know where my money goes,” I’d be sitting in my beach chair enjoying the Hawaiian Islands.
Number two: Show them the power of saving early. Our teens are blessed with the gift of time, so show them how quickly $40 a month can add up to thousands with the magic of compounding interest. Whenever I show a group of teens the power of time and investing, I get a combination of jaws dropping and eyes widening. I think I have more fun than they do. Check out www.moneychimp.com for easy and fun calculators.
Number three: Understanding credit cards is non-negotiable. We must educate our teens on the pitfalls, as well as the advantages, of credit card usage. Without a complete understanding of how finance charges will sneak up on them, they are bound to get into trouble. Bottom line: if they can’t pay for the item in full when the bill arrives, they shouldn’t be buying it, (excluding emergencies, of course.) This ties in with item number one above; don’t spend what you don’t have.
Number four: Last, but certainly not least, introduce them to the importance of their credit score. A good credit score can mean the difference between being approved for an auto loan, getting a job (many employers will pull credit before hiring) or being able to qualify for a home someday. Without a doubt, interest rates they pay will be higher with poor scores, which equates to money flying out the window.
There are certainly more topics to cover when it comes to money education, but these four are the top on my list. Be sure to talk with your teens and seek help yourself, if needed. As always, I’m here if you need me.
New credit card laws may save the day for college bound teens
January 20, 2010
Credit cards can be a man’s (and woman’s) best friend…or worst enemy. They can save the day when an unexpected expense occurs, a flat tire at 2:00 am blows, or a medical emergency hits you from behind. In the event of an amazing sale at your favorite store, this little piece of plastic can become your biggest nightmare.
For college bound teens, credit card companies have, in years past, made it very easy to obtain credit cards. According to a recent Sallie Mae study, college students carried an average balance of $3,173 on their credit cards last year, a record high since the first analysis in 1998. A whopping 82 percent revolved a balance each month.
On May 22, President Barack Obama signed the Credit Card Accountability, Responsibility and Disclosure, or Credit CARD, Act of 2009 into law. Among many changes, one in particular is geared towards those college kids.
Effective February 2010, consumers under age 21who can’t prove an independent means of income or provide the signature of a co-signer aged 21 or older, won’t get approved for credit cards. The provision protects young people who lack the means or the knowledge to handle credit cards from drowning themselves into debt.
Although credit cards are important, especially for obtaining a credit history, which is necessary for good credit scores, people need to understand the pitfalls.
Given this new law, we should see more debt free college graduates. At least when it comes to credit cards!
Teens are asking, "what's the big deal about credit scores?"
September 30, 2009
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