Jacob Sensiba, Author at The Free Financial Advisor

Set a Holiday Budget That Works

November 10, 2021 by Jacob Sensiba Leave a Comment

With the holidays right around the corner, it’s time to get your shopping and holiday preparation done. That means you’re going to have to spend money. The holidays can be rather expensive for people. Especially, if you have a lot of people to buy gifts for, you have to travel, or you’re hosting a party. Here are some tips on how to set a holiday budget that works for you.

Start by asking some questions

If you want to make progress, it all starts by asking questions.

How many people do you have to buy gifts for?
Would your friends or family be open to a gift exchange?
Do you have to travel?
Do you have to host a part?
Would you be open to a potluck?

Having answers to these questions would help a lot when budgeting for the holidays. While we’re here, you should ask these questions far in advance so you can save throughout the year.

Budgeting

For example, you have 10 people to buy gifts for. How much do you want to spend on each person? Do you want to spend more on your parents than you do on everyone else? Let’s say you plan on spending $50 per person. That’s $500 worth of gifts. If you save $10 per week, you’ll have enough saved for gifts in your holiday budget.

Traveling

Knowing ahead of time if you have to travel is useful too. Then you can be picky about your flight, but buying in advance is usually more economical than waiting until the last minute.

When it comes to buying your plane tickets, it might not be a bad idea to put them on a credit card and pay off the balance right away. When you do this, you’ll show some activity to the credit card company, show an on-time payment, and accrue some rewards points.

Planning ahead

Another point about planning ahead – supply chains are disrupted and products are more expensive. If you plan ahead, you a) allow enough time for your purchases to be sent to you and b) you’re able to find deals on the things you want to buy.

Decorating

When it comes to holiday preparation and decoration, it might make sense to get a few items to get you through this holiday season, and then when everything goes on sale, load up for next year.

Gift exchange

A gift exchange could relieve a lot of financial pressures during the holiday season. If you get a group together and establish a budget, you could enjoy the gift-giving and receiving process without breaking the bank. You could also have fun with it and make the gift exchange a white elephant, where you buy gag gifts instead.

Buy Now, Pay Later

One last thing you can keep in mind. With the rise in popularity of Buy Now, Pay Later (BNPL), you might want to consider it if your finances are tight. BNPL gives you the ability to spread payment over several months. Be careful though, you can get into trouble if you start missing payments, and your credit can take quite the hit.

The holidays can be expensive, but if you plan ahead it doesn’t have to have an impact on your wallet. Set a holiday budget that works for you.

Disclaimer:

**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see the website for full disclosures: www.crgfinancialservices.com

Jacob Sensiba

My name is Jacob Sensiba and I am a Financial Advisor. My areas of expertise include, but are not limited to, retirement planning, budgets, and wealth management. Please feel free to contact me at: jacob@crgfinancialservices.com

www.crgfinancialservices.com/

How to Prep your Finances Before you Quit your Job

November 3, 2021 by Jacob Sensiba Leave a Comment

There are a lot of jobs open right now. Maybe you’re not particularly happy in your current role so you’re looking for other opportunities. Before you leave, you need to make sure you have your affairs in order. Here’s how to prep your finances before you quit your job.

Some things to make note of first.

Plan Ahead

If you want to quit, but don’t have anything lined up yet, get that process started ASAP. There may be a plethora of jobs available right now, but that doesn’t mean you’re going to get one right away.

Ideally, you’ll have an accepted job offer before you quit your current job, but that won’t apply to everyone.

You could be leaving a hostile work environment, you could have a bad work/life balance, or you’d like to explore different opportunities.

That’s why you must do your best to always be prepared because you never know what is going to happen. You can’t predict the future.

Before you quit your job, here’s what you have to do.

Have Money Saved

Make sure you have money saved. You truly don’t know how long it’s going to take to find another job. That’s why I say you should have one lined up before you quit your current job. That’s also why the common advice is to have 3-6 months of living expenses saved in case you lose your job.

It’s also important to see what’s out there. As I mentioned in the beginning, there are a lot of jobs available, but that doesn’t mean you’re going to find a better one. Do your research.

Prep Your Finances

If you want to be able to have less liquid money available, work on your expenses. Cut down where you can. If you’re servicing debt, get it paid off so you don’t have that liability sitting out there. If you don’t have any liabilities, you remove the chance that you’ll miss a payment (which is bad for your credit score). Your credit score is important in today’s economy, especially when looking for a job.

Back-Up Plan

Whether you are exploring a different field entirely or looking for a better role in your current industry, it’s a good idea to have something to fall back on. Even with a record number of job offerings, the job market is still unpredictable. Make sure you have a contingency job picked out that matches your skillset and expertise just in case the role you’re pursuing doesn’t work out.

Make Money in the Meantime

Learn how to make money…quickly. If the job hunt is taking longer than you expected, find a way to supplement the income you lost. There are several ways to hustle your way into a wage nowadays. Uber, Lyft, Instacart, UpWork, Fiverr, and more. There are plenty of companies that’ll hire you as a contractor. If you’re making money, that could enable you to be very picky on the job you take.

Health Insurance

Last thing. Don’t forget about healthcare costs. If you get benefits from your current job, figure out how/if you’re going to get health insurance while you are out of work. Short-term plans might meet a need if you’re just looking for disaster coverage, but if you’re someone that requires ongoing medical care, there’s probably something else that’ll meet your needs better.

Prep your finances BEFORE you make a move.

Disclaimer:

Jacob Sensiba

www.crgfinancialservices.com/

Here Is What To Do If You Have Debt In Arrears

October 25, 2021 by Jacob Sensiba Leave a Comment

This article is a response to a reader’s question about paying off debt on an irregular income. They write:

Can you advise me how to manage to settle my absa loan & credit card because they are in arrears

At my work I earn with commission , sometimes I didn’t earn.

Here is my answer:

Being in debt is a challenge. It takes away money you could use for more productive things. It’s even more difficult when you’ve missed payments and your debt is now in collections. If that’s you, here are some tips to help you settle your debt that’s in arrears.

Pay down debt

Utilize some debt repayment strategies.

Debt snowball – pay your smallest balance first while making minimum payments to your other debts. When you pay off your smallest balance, move on to the next smallest balance. As you get rid of debts, you’ll be able to make larger payments to the following debt.

Debt avalanche – pay your highest interest rate first. Similar strategy as the “snowball”. Once your highest interest rate debt is eliminated, pay as much as you can towards the debt with the next highest interest rate.

Use retirement funds to pay off your debt. You’ll likely, depending on your age, pay a 10% tax penalty, however (if you’re under 59 1/2). Do you have any cash accumulated in a whole life insurance policy? Use that cash value to pay off your debts

Negotiate

How much, in terms of dollars, can you pay to your creditors as a settlement? Figure out what that number is before you start contacting creditors.

It may take a couple of phone calls, so don’t get discouraged. If you don’t like what you’re hearing from the representative you’re talking to, try and get a hold of a different one. Remember the dollar amount you can pay and don’t go over that amount. If you can pay 50% of what you owe, start with an offer to pay 30%. The creditor will counteroffer and hopefully, the agreed amount is 50% or lower.

Make sure you’re clearly communicating the financial hardship you’re experiencing that put you behind on your debts. Getting sympathy from a representative could help you! Get any settlement or repayment plan in writing as soon as possible.

Make sure you’re speaking to your creditors, not collections agencies. Collections agencies will take a settlement amount and sell whatever is left to another agency. Before you’ll know it, they’ll be after you again. Speak to the creditor you initially owed. Also, be prepared to pay taxes on the forgiven amount.

Bankruptcy

Nobody likes to think about it and it would be a very difficult decision, but it might be one to strongly consider if you want to settle your debt.

If you don’t have luck with negotiations, you might have to consider bankruptcy. There are generally two options – Chapter 7 and Chapter 13. Chapter 7 clears all of your debts. Chapter 13 is more of a reorganization.

Check credit reports

Clarify with the credit reporting agencies how things were settled. Clean up the report and it could help your score a little. Late payments and charge-offs stay on your credit report for 7 years. Debts in collections stay on your credit report for 180 days.

Debt settlement is about commitment. There are penalties if you miss ONE payment of your agreed-upon settlement, so don’t miss!

One more thing. Know your rights. There are several things collectors can’t do:

They can’t threaten you
They can’t shame you
They can’t force you to repay your debt
They can’t falsify their identity to trick you
They can’t harass you

It’s a tough road, but getting out of debt is paramount for your psyche and your financial success. Utilize strategies to pay down debt. Speak with your creditors about negotiating. If negotiation doesn’t work, consider bankruptcy. Once you settle your debt, review your credit report and dispute errors.

Disclaimer:

Jacob Sensiba

www.crgfinancialservices.com/

Financial Planning Month

October 20, 2021 by Jacob Sensiba Leave a Comment

October is Financial Planning Month so I want to go into a little detail about why financial planning is so important and what aspects need to be considered.

Now let me start by saying money is not the end all be all, but having some is better than having none. Being financially prepared is incredibly important, both for your psyche and for your budget.

Why financial planning is important

Saving some of what you earn is the first step to financial preparation. Having an emergency fund is essential. Those who don’t have emergency funds probably have to pay for emergencies with credit cards. That leads to debt and money wasted on interest.

What about saving for medium-term goals? Being able to save for a down payment for a house can save you money on your monthly payment, and can make your offer to buy more enticing in this competitive market. The less you “finance” the more you save because you’re not paying (or you’re paying less) interest.

Saving for retirement is paramount. Social security will not pay all of your expenses. You need supplemental income to be able to live when you no longer can earn money.

To be able to save, you need to plan. That plan is called a budget and you need to set one so you know how much you HAVE to spend on necessities, how much to save, and how much you COULD spend on wants.

Planning also matters so you stay out of debt. Unplanned expenses come up and it’s vital to have money saved up during those times.

What goes into a financial plan

A few of them I’ve mentioned so far – having an emergency fund, having a savings plan in place for medium-term goals, having a retirement plan in place for when you need it, and budgeting.

A great financial plan takes two approaches – macro and micro. A macro view of your financial plan is more of an outline. How much do you save for this, that, and the other (emergencies, short-term and medium-term goals, and retirement).

The micro has to do with the details and how you meet those goals. What kind of debt payments do I need to make in order to have it paid off in three years? How much do I need to save per month to have my down payment ready? How much do I need to save, given a projected ROI, to meet my retirement nest egg goal?

Insurance

Another important piece to your financial plan is your insurance. Are your home and vehicles adequately protected? Are you protected? Is your ability to earn a living protected? Making sure you have proper coverage for your property, liability, and your life is vital.

Estate planning

Creating a plan for yourself and for your family is the last step. If you have assets you want to leave them and/or liabilities you want to take care of, you need to spell that out in a legal document (like a will or a trust). An estate plan is all-encompassing and needs to include your investments, property, liabilities, and insurance.

Disclaimer:

Jacob Sensiba

www.crgfinancialservices.com/

Who Needs to Worry About the Stock Market and Why?

October 6, 2021 by Jacob Sensiba 1 Comment

Earlier this week we saw the NASDAQ take a dive and Facebook lost 5% in one day. Volatility is part of the stock market. That’s how it’s been and I think that’s how it’s always going to be. Suffice it to say that the stock market is otherwise unpredictable and it’s something that investors are aware of. But who really needs to worry about the stock market?

Who needs to worry?

The complicated answer is, it depends. It depends on what you’re saving for, how old you are, and your time horizon.

Generally speaking, if you’re saving for retirement, the people closer to retirement need to pay attention to the market more than the younger people. That’s also why asset allocation is important. The closer you are to retirement, the more money you should have in less risky investments.

Time Horizon

If you have a short-term goal you’re saving for then you have to be a little more careful. If you’re saving for college, for example, the closer you get to having to use those funds to pay for college, the more conservative you’ll have to be.

What happens in the stock market only concerns people with a short time horizon. I actually should phrase it differently. What happens in the stock market SHOULD only concern people with a short time horizon.

Asset Allocation

When I say all of these things, I’m specifically talking about broad-based financial planning. People who are saving for a particular goal and are using asset allocation for their investments. Meaning they’re selecting mutual funds or ETFs that follow some sort of index. If you’re investing in specific stocks or thematic ETFs, then you probably have to pay a little more attention.

And I’m not saying that people with long-term time horizons shouldn’t pay attention to their accounts. I’m simply saying that they shouldn’t live and die on what the value of their account is day in and day out. Don’t worry about the stock market.

Disclaimer:

Jacob Sensiba

www.crgfinancialservices.com/

What Currently Present a Risk to Markets?

September 22, 2021 by Jacob Sensiba Leave a Comment

Where is the market going? What kind of risks do we need to be aware of? There are three or four things to pay attention to right now. The FED, interest rates, inflation, Covid, China, the government, and geopolitics. Do any of these present a risk to markets?

Okay, more than three or four things, but the first three can all be lumped together. Interest rate policy is enacted by the FED and what happens with interest rates has a direct impact on inflation. Furthermore, the government also has a chance to impact inflation.

And I apologize if we bounce around a little from topic to topic.

The FED, Interest Rates, Inflation

The government and the FED have a lot of control over what inflation is going to do. We had a lot of liquidity injected into the market because of the pandemic, and there’s a very good chance we’ll see more of that in the near future.

A $3.5 trillion bill is circulating through Congress right now. If this bill gets passed, we’ll have a lot more liquidity injected into the market. That’s likely to be a large tailwind for inflation (which is already running much hotter than expected). If the FED continues to provide an accommodative monetary policy, we’ll see inflation get out of control, and they’ll have to increase interest rates much sooner than they had planned.

Covid

Covid is still hanging around. 75% of the country has received at least one shot and now the administration is pushing booster shots. This is even after the CDC and the WHO have insisted on holding off on a third shot until less fortunate countries have a chance to get more of their first poke. The numbers need to level off soon or I fear lockdowns may rear their ugly head, and we all know how much the economy liked that the first time around.

China

China is a new story. Specifically, Evergrande. The ginormous real estate company is on the brink of bankruptcy. Comparisons have been made to the collapse of Lehman Brothers during the GFC (great financial crisis). We’ll see what happens and if the Chinese government decides to step in. Ripple effects through the global monetary system are possible.

Geopolitics

The last story is geopolitics. This has to do with the deal the US and Australia struck to help the Australian government build nuclear-capable submarines. It angered France because they already had a deal with Australia to help them build submarines (not nuclear-capable though). Britain feels pretty good because they helped broker the US/Aussie deal. Most likely, this will end up being only noise but could present a risk to markets. Something to keep your eye on.

Disclaimer:

Jacob Sensiba

www.crgfinancialservices.com/

My Thoughts on Climate Change

September 8, 2021 by Jacob Sensiba Leave a Comment

There’s no doubt climate change is a problem and this post isn’t going to be me grandstanding about the dire consequences of no action, and it certainly won’t be refuting that climate change is real. This post will specifically be about what I think the free market will do to fix it and what us ordinary people can do to contribute positively to the situation.

Now I have to admit, when it comes to understanding climate change and acting in a fashion that would make some sort of positive impact on our current direction, I’ve taken a more laid-back approach.

I was annoyed by both sides of the argument as I felt they were both taking an extreme stance (shocking right?). Also, I feel like humanity has a beautifully unique ability to figure things out when it’s necessary.

If you want to learn more about the evidence and facts surrounding climate change, here are two sources – Climate.NASA.gov and Climate.gov.

Tech Meets Climate Change

There are a plethora of inventions, some being used right now and some still in the works, that will help fight climate change. Because there are so many and I want to spotlight as many as I can that seems like a good idea, I’m going to organize them in a few ways.

Alternative Energy – Massive palm tree wind farms, future iterations of solar panels, kinetic pavement, new power transfer technologies, nuclear fusion.

Save the atmosphere – Drone that plant trees, satellites that spot methane leaks, giant vacuums to clean carbon from the air.

Save the environment – pumps that cool coral reefs, plastic eating enzymes, encourage phytoplankton to grow using technology, futuristic agriculture, protect bees.

Uncategorizable – genetic modification, solar geoengineering.

What can you do?

Like I said in the beginning, climate change is a problem, but human beings are smart enough and innovative enough to find solutions to fix it. In the meantime, there are some things you can do to help.

Have an energy audit
Change your light bulbs to LEDs
Replace HVAC filters frequently
Wash clothes in cold water
Upcycle furniture
Recycle clothes
Unplug electronic devices when not in use
Obsess over every drop of water
Recycle
Hand dry your clothes
Reduce food waste
Don’t drink bottled water
Carpool or take public transportation

There are a lot of things you can do to make an impact. If everyone contributed a little to the cause, maybe we can move the needle.

Sources:

Globalcitizen.org

BBC.CO.UK

Archive.curbed.com

Disclaimer:

Jacob Sensiba

www.crgfinancialservices.com/

Technological Investment Opportunities

August 25, 2021 by Jacob Sensiba Leave a Comment

Throughout history, some of the best companies are ones that created a product or service that solved a problem. I believe the vast majority of successful companies in the future are going to be technological or innovative in nature. In the coming years, there will be incredible technological investment opportunities. Here are some areas I think we should watch.

Space

When billionaires start spending billions of dollars, it’s hard to ignore. Especially, when all eyes seem to be on them when they’re making these gigantic moves. When it comes to colonizing Mars, space tourism, and all of that, it’s hard to see, at least right now, a company being able to profit on this segment. Eventually, we’ll be advanced enough that it’ll happen, but I don’t know how far away that is.

When it comes to sending satellites to orbit and payloads to the International Space Station (ISS), profitability seems more likely and much sooner.

Medical equipment/Pharmaceuticals

These are separate sectors, but I’m lumping them together for the sake of organization. I do this because they are both going after the same goal, making the human population healthier. They are doing this by helping cure diseases and making it more efficient and effective to maintain health.

There are plenty of diseases that need cures and a lot of self-sabotaging behaviors that humans need help with. It’d be silly to think that this area won’t be innovative and an incredible technological investment opportunity.

Renewable energy/Nuclear fusion/Clean up carbon emissions/environment

I’m not going to lie, with regard to the areas/sectors in this article, this section is my favorite. With all of the reports, publications, politicians, and scientists sounding the alarm bell about climate change, it’s impossible to ignore the technological investment opportunities coming down the pike.

Fintech

I’ll be perfectly honest, I’m not 100% sure what kind of advancements will come out in the financial technology space that hasn’t come out already. Perhaps what will end up happening is more efficient iterations of the processes, programs, and products we have right now.

Robotics/AI

Right after the renewable energy section of this post, in terms of my favorite, is this one because it has the ability to have an impact on everything.

Here’s the challenging part, at least challenging in terms of investability. There are going to be a lot of companies that invest in AI and machine learning. The biggest spenders and investors of AI technology are large technology companies that exist already.

Apple, Amazon, Google, Microsoft, and the like are already changing the game for AI. Finding a smaller company whose sole product/service is AI is going to be tough, but that doesn’t mean it’s impossible.

There are a lot of cutting-edge, technological investment opportunities that will present themselves in the future. Make sure you’re paying attention and take advantage of those opportunities.

Disclaimer:

Jacob Sensiba

www.crgfinancialservices.com/

What Does an Increase in Yields Look Like?

August 4, 2021 by Jacob Sensiba Leave a Comment

I’m not going to lie. I had a lot of trouble coming up with the substance for today’s article. There have been developments since I wrote two weeks ago, but that hasn’t really changed some of the things I’ve said before. I still see inflation as a problem and I still see investment opportunities in a select few areas. What does an increase in yields mean?

The Federal Reserve

The one new piece of information that is worth noting is that the FED has indicated that if the information supports their narrative, they will decrease their asset purchasing program later this year.

That’s a very significant piece of news and the market knows it. Yields increased immediately, only by 7 basis points, or .07%. That may sound like a small move, but in a couple of minutes, that’s HUGE.

Covid

Two weeks ago I mentioned the possibility of mask mandates and stay-at-home orders. I thought that the Delta variant was causing enough worry and panic that this could happen.

In the United States, we have not seen any stay-at-home orders, but we have seen mask mandates and vaccination requirements. Outside of the U.S., however, we have seen a crackdown on domestic and international travel.

There’s a possibility that we see more stay-at-home orders as the Delta variant continues to spread and increase the number of Covid cases.

Investment Implications

With the threat of inflation becoming more poignant and stay-at-home orders becoming more likely, what are the investment implications?

When it comes to inflation, the short-term effects will be much more dramatic and noticeable than the long-term effects. I think a rise in inflation and a drying up of liquidity will have broad, negative effects throughout the financial system.

An increase in yields will cause bond prices to drop. An increase in yields will make servicing that debt more expensive, so it’s likely R&D spending will go down. It could also negatively affect sectors that rely on borrowing.

There’s also a chance that people will save more. An increase in yields means the interest rate for their savings account will go up, making saving more attractive. If you want to save, try signing up to Digit.

An increase in yields could also cause a migration from “riskier” assets to assets deemed less risky.

Only time will tell what inflation will look like, how the FED will respond, and what the implications will be.

Disclaimer:

Jacob Sensiba

www.crgfinancialservices.com/

The Resurgence of Covid and What it Means

July 21, 2021 by Jacob Sensiba Leave a Comment

In today’s post, we’re going to talk about the investment and economic implications caused by the resurgence of Covid-19 due to the delta variant. Supply and logistics changed dramatically last year when parts of the world shut down. Delivery times slowed down and costs increased because of lack of supply and disrupted logistics.

We started to see a recovery. Supply issues started to resolve themselves. Supply chain constraints started to get better. Costs for items (due to chip shortages and increases in energy prices) started to level out.

So what’s going to happen if we have a resurgence of Covid and things shut down, or slow down, again?

The Federal Reserve

Like everything, only time will tell. The FED gave a little glimpse into what their plans were for interest rates and quantitative easing at the last meeting. They state that if the economy continues to improve as it has been, they might reduce their balance sheet and consider increasing interest rates by the end of 2023.

If the delta variant causes enough of a disruption, that could push back their timeline for ending/implementing such a plan. In either case, they’ve stated that they will continue with easy monetary policy for the foreseeable future, even if inflation starts to run hot.

Commodities

If the risks around Covid-19 continue to present themselves, we’ll continue to see moves in important items, including the US Dollar, Gold, Treasuries, Yields, and Oil.

In risk-on environments, the USD, gold, and Treasuries typically increase in value. Yields usually will go down as well. The only X-factor when it comes to economics and commodities is oil. The change in the price of oil is very different this time because of travel restrictions and stay-at-home orders.

Oil

Demand for oil went straight down, so oil prices went down. Major oil producers needed to then reduce production to decrease supply so prices could recover. Then demand started to pick up and oil prices quickly came back so production needed to increase to level off prices.

With all that said, oil prices and the major producers’ production will be range-bound for a while. The delta variant is causing too much worry to peg a direction for oil in the near term.

Long-term, I think oil will recover to pre-pandemic levels for a little while, but as electric vehicles and renewable energy become more commonplace, I think demand will dry up. Then prices will go down as a result. How much the price of oil goes down, only time will tell.

Investment Opportunities

If there’s a resurgence of Covid or not, there are a few opportunities I think will transcend the short-term volatility, and I’ve talked about them before. Clean energy and healthcare. I think both of these industries, in terms of runway, are in their infancy.

Healthcare has come so ridiculously far over the years, but I feel there’s so much room to run yet. Clean energy is just getting started. With countries and companies vowing to reduce carbon emissions to zero over the coming years, or decades, there will be rapid advancement in this sector.

Disclaimer:

Jacob Sensiba

Start by asking some questions

Budgeting

Traveling

Planning ahead

Decorating

Gift exchange

Buy Now, Pay Later

Related reading:

Disclaimer:

Plan Ahead

Have Money Saved

Prep Your Finances

Back-Up Plan

Make Money in the Meantime

Health Insurance

Related reading:

Disclaimer:

Pay down debt

Negotiate

Bankruptcy

Check credit reports

Related reading:

Disclaimer:

Why financial planning is important

What goes into a financial plan

Insurance

Estate planning

Related reading:

Disclaimer:

Who needs to worry?

Time Horizon

Asset Allocation

Related reading:

Disclaimer:

The FED, Interest Rates, Inflation

Covid

China

Geopolitics

Related reading:

Disclaimer:

Tech Meets Climate Change

What can you do?

Related reading:

Sources:

Disclaimer:

Space

Medical equipment/Pharmaceuticals

Renewable energy/Nuclear fusion/Clean up carbon emissions/environment

Fintech

Robotics/AI

Related Reading:

Disclaimer:

The Federal Reserve

Covid

Investment Implications

Related reading:

Disclaimer:

The Federal Reserve

Commodities

Oil

Investment Opportunities

Related reading:

Disclaimer: