Jacob Sensiba, Author at The Free Financial Advisor

How My Finances Have Changed with Covid

May 20, 2020 by Jacob Sensiba Leave a Comment

Aside from the death and illness, it has caused, Covid-19 has done a number on the financial system and the economy.

I’m writing this on May 19th, and up to this point, over 30 million people have filed for unemployment benefits.

In my previous post, which can be found here, I detailed how you can plan in the event of job loss.

Even if you haven’t lost your job, more than likely, your finances have changed. In this article, I want to pull back the curtain on how my finances have changed during this environment.

My Job

Thankfully, I’m still working. I work for my family’s business. Technically speaking, we have four family businesses and I work three out of the four in various capacities.

Two out of those three businesses are very resilient during recessions, so I’m not terribly worried about my income from those two sources.

The last, however, will be influenced by movements in the market. If I do my job well, it shouldn’t vary a ton, but if I don’t, my clients will feel the pain, as will I.

The reason being is I, typically, charge a percentage of the assets under management (AUM). If account values go down, so does the fee I receive. The two go hand in hand, as they should. If I do a poor job, I should make less. It just makes sense.

With that said, my income hasn’t moved too much from the financial advising gig. It dropped a little bit last month, but I imagine it’ll come back up by the end of May, as the market has recovered.

Opinion: The Economy

I don’t know if I’ve mentioned it yet here, but my opinion of the economy is darker than some. I think there will be a cascade of bankruptcies in the public and private sectors.

With regard to the public sector, the companies that are rated BBB are already at record highs. When revenues stop coming in or significantly reduce, it’s hard for companies to make interest payments to lenders (holders of debt).

Companies will start defaulting on their debts, and the ability to pay, as well as other factors, help determine the credit rating. This will cause a slew of BBB rated companies to get downgraded.

Funds

With regard to fixed income mutual funds and ETFs, the vast majority of them have rules they need to abide by. One of those rules could be only investing in investment-grade companies.

Investment grade is anything from AAA to BBB. My fear is that when companies get downgraded from BBB to BB, it’ll cause funds to dump those companies; exasperating the sell-off.

My Finances

With that said, here’s how I’ve adapted.

My finances really haven’t changed much. I’m spending more on groceries, especially right now as I am stocking up on certain goods. The added benefit of that is I’m spending less on food from restaurants, which saves me money and I’m eating healthier too.

So you’re spending more on groceries and less on take-out…what else? Well, given the nature of Covid and the uncertainty that surrounds it, my priorities have shifted a little.

More Cash

I’ve planned my clients’ portfolios with the above scenario in mind. The majority of clients aged 60 and up are positioned more conservatively than normal. With that in mind, all of the portfolios I manage will take a little hit, and my income will drop as a result.

I’ve suspended my retirement contributions, via payroll deduction, until I feel comfortable again. This may seem counterintuitive because of the stress I put on leaving things alone and dollar-cost-averaging as prices go lower.

Due to the fact that my income has some variability, not to mention my rental property and the uncertainty of my renters’ making rent payments (because of talks about forgiving rent payments for those affected by Covid), I have to keep more cash available than normal.

Retirement Contributions

As I mentioned, I stopped my automatic retirement contributions, but I am making voluntary contributions to my Roth IRA when I feel my cash available is adequate.

Other than that, nothing else has changed. Debt payments will continue as planned and saving for a down payment on a house will also continue.

Be advised: Any opinion expressed about the market/economy is strictly an opinion and should not be viewed as a certainty. Additionally, my preparations for said opinions are specific to me. Consult your financial professional about your particular situation.

Job Loss: What to do

May 13, 2020 by Jacob Sensiba Leave a Comment

Losing your job is like a big punch to the gut. At first, it’s hard to process, but then your head starts spinning. What will I do for work? How will I pay my bills and put food on the table? What will my family do?

Taking a deep breath is a good first step. After that, it’s time to put a plan into action. Many of you could be experiencing this right now, given what the world looks like today.

In this article, I’m going to lay out how to financially prepare before and in the midst of a job loss.

First thing

As I said, this will be a big shock to absorb. Give yourself some time to realize what has happened. More than likely, you’ll go through the 5 stages of grief.

Unemployment

One of the first things you should do is apply for unemployment. There might be some hoops that you have to jump through, but one imperative item you need to confirm with your old employer is that you were let go and without cause. Resigning or being fired for cause disqualifies you from collecting unemployment.

Set money aside for taxes. Unemployment does not withhold FICA taxes or state income tax (if applicable). If you normally receive a refund, you might get a reduced refund or none at all. Plan accordingly.

Severance

The next step has to do with severance. If you were let go or fired without cause, your company will, most likely, offer it to you. It isn’t required by law, but most companies do it. Take severance home and review it closely. Don’t sign right away. Once you’ve reviewed it, take it back and negotiate.

Job Search

Starting looking for a new job right away. It does not pay to wait. All jobs are first come first served, set get searching as soon as possible.

Be picky, but pick up a job of some sort that will provide you with some cash flow.

Is now the time for a career change? Have you been dissatisfied with your industry or line of work? Do you have the skills and/or qualifications to make such a change? These could be questions to consider.

Finances

With regard to any debts that you have outstanding, call your creditors and see if they will let you defer payments, or at least make reduced payments, for a while. Also, make the minimum on your debt payments. Having cash available for other necessary items is more important.

Relentlessly cut expenses and review your budget with fine-toothed comb. Again, cash flow is your friend in your new situation so the more liquidity you have the better.

Pad your emergency fund. Obviously, this is something that needs to be done before you lose your job, so it’s imperative that you listen. Common advice is to save 3-6 months’ worth of expenses. If you’re self-employed and are responsible for payroll and other business expenses, it’s prudent to have 6-12 months worth saved.

HELOC? That stands for Home Equity Line of Credit. Is that something you are able to do? Is that something that you want to do? A HELOC turns the equity you’ve accumulated on your home into a loan.

Insurance

Life and disability insurance are very important coverages to have, but a just loss and loss of income could derail those coverages. There is a rider that can be added (waiver of premium) at the time of application so your policy stays in force while you are unable to make payments. *Be advised: this has to be done when you sign up, not after the fact.*

Healthcare is another important item to take care of. First off, if you have any appointments you were waiting to schedule, do it now before your coverage changes. The next step is to find a suitable replacement for your current coverage. This could be taking your spouse’s insurance, finding new coverage on the marketplace, or signing up for COBRA.

Retirement

Avoid dipping into retirement savings – this should be your last resort. Retirement savings accrues most effectively when you leave it alone. That’s when compounding works the best. Not only that, withdrawing funds prematurely will subject you to income taxes and an early withdrawal penalty.

Do you have 401(k) loans? If the answer is yes, you’ll be required to pay that loan back in its entirety in the next 60 days, otherwise, it’ll be considered a withdrawal. Again, taxes and a penalty.

Make a decision on what to do with the old retirement plan – Do you roll it to your new employer, roll it to an IRA, or leave it with the current institution. If you have a lower account balance, your HR department could require you to transfer it or cash out. Each company is different.

Dealing with Market Fluctuations

May 6, 2020 by Jacob Sensiba Leave a Comment

Over the past couple of months, we’ve seen increased volatility. Put simply, volatility is periodic market fluctuations.

In a month, from the end of February to the end of March, we saw the S&P 500 drop nearly 35%. Obviously, it wasn’t a straight drop. There were several up days and a few relief rallies.

Since then, we have seen the S&P come back to the tune of 22%.

In this article, I want to give a little information about how I deal with market fluctuations, where I look for opportunities, and how retirement savers navigate these difficult times.

What I Learned

At the beginning of my career, I always dreaded experiencing a bear market. What do I do? Do I sell out of everything to avoid the decline? What do I tell my clients? How will they react?

As I gained more experience and read more, I learned what to do.

Keep in mind that I started my career in 2014, still in the middle of a long bull market, and since then I’ve read everything I could get my hands on about finances, markets, and economics. I’ve listened to podcasts and watched YouTube videos.

A lot of the people that I learned from attributed their success to when they got started. Two gentlemen really stick out.

One began his career in 1987 and lost his shirt on Black Monday (20% decline in one day, October 1987). This taught him about diversification and the importance of a long-term strategy.

The other got started in the early 80s but had a much different experience. He did some research and analysis and found a lot of risk in the credit market. He stuck his neck out on this trade and what he predicted came to fruition.

However, the markets didn’t react how he thought. What he learned was that fundamentals are important, yes, but what [almost] matters more is investor behavior.

Market Fluctuations

In periods of heightened market volatility, I pretty much hold my ground. I help my clients plan accordingly and coach them about what to do when stocks fall.

We put together the parachute before we jump out of the plane, not on the way down. That’s where people get into trouble. That’s why asset allocation is so important.

When building a portfolio, it’s vital to take your age (time horizon) and risk tolerance into account.

What may even be more important is the investor’s behavior. They might have a long time horizon and be fairly tolerant of risk, but if they’re going to lose sleep over a 10% correction, you need to position their portfolio accordingly.

Because my clients and I plan ahead, generally, I don’t do anything and I advise them to sit tight. What you don’t want to do is sell out of fear. At that point, you have probably experienced enough of the decline that it doesn’t make sense.

Exceptions

That said, I did some broad selling during the month of March. There were two positions that I used specifically to serve as a shock absorber during declines, and those did not perform as I’d hoped. So I sold them.

I realized they weren’t doing what I wanted them to and I cut my losses. Good traders and investors have an incredibly short leash when it comes to limiting their losses.

Opportunities

Generally speaking, I’m not a stock picker. I’m an asset allocator. Stock picking is not an efficient use of my time. However, sometimes it’s necessary and market fluctuations often create opportunities.

There are two positions, in particular, that I’ve been buying over the last month or two. I found enough of a disconnect between the price and what I thought the value would be over the long term, that I slowly invested into these two positions.

By the way, this slow investing is called averaging in, or dollar-cost averaging. Ideally, you invest at lower and lower prices, reducing your overall cost basis. My method is to take advantage of that disconnect I mentioned, but also leave enough on the side in case it goes lower so I can buy more.

How to Plan

Planning for market fluctuations isn’t something you do when you think it’s coming, it should be part of your plan all along.

Age is a big factor when determining the time horizon. The other items to consider, as I mentioned, are goals, risk tolerance, and investor behavior.

As an advisor, you have to be acutely aware and familiar with your clients, their risk appetite, and their personality. Only then are you able to plan with them, then guide them during trying times.

That’s probably one of the biggest things I’ve taken away from these market fluctuations. I’ve received two phone calls. That tells me that I’ve trained them well. That I’ve done a good job planning with them and that they are comfortable with how their portfolios are positioned.

Employer/Employee Negotiation

April 29, 2020 by Jacob Sensiba Leave a Comment

Negotiation between an employee and employer (or possible employer) come up, salary is often, if not always, the first thing that comes to mind.

Did you know that you can negotiate more than just your salary?

Obviously, if you believe you are worth more, then you should negotiate your salary, but if you feel you are adequately paid or your employer won’t budge on salary, there are a number of other things you can turn to.

What can be negotiated?

As I said, there are a plethora of items that could be up for negotiation. Some of these may depend on the size of your employer and/or the structure of the company, but here’s a solid list that’ll get you started.

More time off – Vacation, paid time off, etc. It really does pay to take a break from the grind every once and awhile. Studies show that employees that take vacations are more productive than employees that don’t. Not only that, but there are several other benefits as well! (Source)
Job title – A change in your job title could lead to more respect received by you, as well as feeling more respected by your superiors.
Allowances/reimbursements – The list for allowances given by an employer is endless, but the common ones are transportation, health insurance (choices), flexible spending account, wellness programs, dental insurance, life insurance, and disability insurance.
Flexible schedule – Working from home is an in-demand perk nowadays. Especially for people with families. Being able to spend time at home like that is invaluable. Plus, it gives you an excuse to work in your pajamas.
Equipment upgrades – Whether you work at a desk or operate machinery, having new equipment is always helpful. It makes you more efficient and it can eliminate the headache of working with old equipment.
Training and education – Going back to school, tuition reimbursement, and/or job training to help you with your current employer.
Bonuses – A signing bonus if you’re accepting a job or an end of the year bonus based on some metric.
Relocation/moving expenses – If you’re accepting a new position and have to relocate, this can be part of your offer. If you get moved to another location with your current firm, if they don’t offer it, it’s something worth negotiating.
Stock options – Potential ownership of your organization, to be exercised at your discretion. Most big company CEOs offer this as part of their compensation.
Severance – If you’re let go or fired from your employer, it’s the compensation they provide while you look for a new job. Not required by federal law and only a few states make it a requirement, but most companies offer it.

How to negotiate

Now that we’ve covered what you can negotiate, let’s discuss how you negotiate.

Know your alternative – that could be a different job or a different position within your current organization.
Minimum willing to accept – this could be related to your salary or some of the items from above.
What’s the ideal – know what you exactly want out of the negotiation.
What gives you leverage – how do you add value, or maybe you have a better offer at another company.
Consider these same concepts from the manager’s perspective.

Severance

We mentioned severance above, so I wanted to give a little insight as to how to negotiate that if those circumstances arise.

Take the other side’s perspective – What are they set to gain or lose with the severance you agree on.
There’s a financial range for severance – Dismissal because of something you did should result in a lower severance. Dismissal because of something out of the company’s control should result in a more severance.
Review work history, closely – Job performance, punctuality, rapport with colleagues and management, etc.
Employer flexibility – Not flexible with what the law says, can’t help you with insurance but might be able to give more severance to “reduce” cost of COBRA, timing payment of benefits (request to get it later as not to affect your unemployment benefits), and a lump sum for outplacement services.
Negotiation, with the future in mind – Next job.

Negotiation is a part of being an employee, and it’s also a part of life. Knowing what to negotiate and how to negotiate are two very powerful tools.

Audit Your Digital and Financial Life

April 22, 2020 by Jacob Sensiba Leave a Comment

There’s no better time to audit your financial and digital life than tax time.

Having these two things orderly and up to date not only helps you stay organized but also gives you an opportunity to review your progress.

Review your budget

First things first. Review your budget.

Have any line items changed? Have there been additions? Maybe you paid off a debt and that line item can be dropped off?

If that’s the case, you can adjust your debt repayment plan. Whatever money was going to that paid off debt, funnel it a different one. You can do that by using one of two strategies.

One, the debt avalanche, where your dollars go to the debt with the next highest interest rate. Two, the debt snowball, where you focus that money on the debt with the next lowest balance.

Increase savings rate

If it’s been a while since you adjusted your savings rate, now is the time to see if you can tolerate an increase. Bump up your salary reduction plan an additional 1%. If you’re saving $50 per month for emergencies or your kid’s college fund, can you do another $10?

Review investment portfolio allocation

Is your current portfolio allocation still suitable? Whether or not you rebalance can hinge on two things. One, did your risk tolerance or time horizon change enough to warrant an adjustment? Or two, did your investments perform so that you’re no longer where you started?

Asset allocation tends to get out of whack when stocks perform well. 2018 is a good example, where the S&P 500 index finished up over 20%. More than likely, some rebalancing took place at the beginning of 2019.

Related: Why Asset Allocation Matters

Tighten up your expenses

Sell items you no longer have use for. You get rid of some clutter and can make a little money in the process.

Review your subscription list and get rid of things you don’t need. With so many subscription-based offerings, it’s easy to keep saying yes until you’re shelling out too much money each month. Audit these subscriptions and get rid of the ones you don’t need.

Call your internet provider. It’s more costly to acquire a customer than it is to retain a new one so they should work with you a little.

Do the same thing with your credit card company. They want to collect on the debt you owe them, so if that means lowering your APR by a percentage point or two, they’re more willing to help you out.

Related Reading: Quick and Easy Ways To Save Money

Digital

As our devices become more and more embedded in our way of life, we accumulate various types of accounts. Email, social media, and the like; this leads to endless different amounts of information that can be used against you. Time to purge (not like the movie).

Destroy or recycle old devices – This will clear up space that can be better used by something else. Make sure you wipe the device before recycling it.
Change passwords – Complex passwords are vital in our data-driven society. Long passwords with numbers and special characters must be used to protect your data.
Remove old accounts. Social media, email, and apps that you no longer use can be deleted and removed. Make sure that you delete the data from those accounts before you remove them, however. Just in case the owners of the site/app/program use the data from those apps for their personal gain.
Make sure your devices are up to date – This is elementary data protection. Up to date devices have patches for bugs and possible holes in their system. Your operating system is your first line of defense.

Keeping your life organized and performing a regular review/audit is imperative, whether we’re talking about your digital or financial life.

Stay on Track with an Accountability Partner

April 15, 2020 by Jacob Sensiba Leave a Comment

With most things in life, it often helps to have someone with you. Experiences, whether good or bad, are almost always better when you have someone to share it with.

Finance is no exception. In a world that’s connected more than ever before, it’s time to find an accountability partner.

This accountability partner could be anyone. A spouse or significant other, a friend, or someone you met at a local coffee shop.

In this article, we’re going to explore what makes a good accountability buddy and how you can encourage/help each other.

Choosing a financial accountability partner

Ideally, your financial accountability buddy will have similar goals as you and hopefully will hold the same financial philosophies, as well. If you’re saver, they’re a saver. If you like to cook at home, they like to cook at home.

Honestly, the most important thing to find in an accountability partner is someone that will keep you honest. Someone you can and should be totally honest with.

Tell this individual your goals. What you want to accomplish and what purpose your money serves. Then ask them the same thing.

You just need someone that can be honest with you and someone you can be honest with.

Mentor

An accountability partner can also come in the form of a mentor. Someone that’s been where you are before and/or someone that’s had similar goals as you before.

They can guide you along your journey, correct you if you’re making mistakes, or just be someone you can turn to if you have questions or start to feel discouraged.

Example

While doing research for this post, I came across an article about a couple. This couple had a goal of paying off tens of thousands of dollars worth of student loans.

After they came up with this goal and developed a plan on how to achieve it, they told some close friends. Friends that could keep them honest.

Because of that, this couple was more able to be honest when turning down invitations to hang out. These social outings often involved going to bars and restaurants, which costs money. Money that they didn’t want to spend so they could achieve their goal.

Create challenges

To make things fun, or competitive depending on your personality, you can create challenges. For example, who can save the most money (as a percentage of salary) in a month, or who can go the longest without spending any money.

Be advised, a no-spend challenge typically excludes necessary expenses like bills, rent, and debt payments.

Another thing you can do is create a list of inexpensive dates/activities you can do together, or with your significant other (SO) if your financial accountability partner isn’t your SO.

Scheduling

Schedule regular check-ins with each other. How frequently you check-in can be up to you, but it should be no less than monthly.

You should also establish a rule for impulse purchases or expensive items. If you want to buy something that’s over a certain dollar amount, you have to check in with your accountability partner first.

Why Your Will Should Be Up To Date

April 8, 2020 by Jacob Sensiba Leave a Comment

With the Coronavirus making its way through countries and countless healthcare systems, it’s a good opportunity to check in with everyone about their will and general estate planning.

We’ve written a couple of posts about the finer details of estate planning, but one of the most important things you can do is make sure that you have an updated will.

Beneficiaries

A beneficiary is anyone that will receive an asset, or assets when you pass away. You will have beneficiaries listed on your retirement accounts and life insurance policies. They can also be added to brokerage accounts via a Transfer on Death (TOD) designation.

It’s important to note that beneficiary designations and TOD designations bypass probate. The assets that the deceased owned at the time of death do not need to go to court. They go directly to the beneficiary (beneficiaries) listed on the account.

So…why is it so important to keep your beneficiaries up to date? The obvious answer is because life changes all the time.

Life Changes

People get married, divorced, re-married, etc. People have kids or marry someone that already has kids. The more grim circumstance is when a beneficiary predeceases you. It’s unfortunate, but something that does happen.

When you assign beneficiaries, there is often a box you can check labeled “per stirpes”. This simply means that if one of your beneficiaries passes before you do, that beneficiaries portion would be received by their children instead.

Not only can changes take place with your beneficiaries, but they can also change with the people you’ve entrusted with your estate. Roles like the power of attorney and executor.

Again, people can pass away before you and/or relationships can fall out of favor.

When it comes to your assets, those change often too. Good or bad years in the stock market can see drastic fluctuations in portfolio value.

Moving will change your residence, but it can also change your net worth depending on the value of your new home and how much you owe on that home. Remember Finance 101? Net worth = assets – liabilities?

Consequences

There could also be consequences for not having an updated will. The wrong beneficiaries could receive assets. Your power of attorney could be your brother and not your sister.

You actually have a much higher net worth than you thought, so now your heirs will have to pay estate taxes. Had you known that, you could have taken advantage of the gift tax exclusion and shared your wealth in order to bring your net worth down to avoid taxes.

To sum things up, you need an updated will because the items within it are going to change…plain and simple.

Hacks for Covid-Related Issues

April 1, 2020 by Jacob Sensiba Leave a Comment

Our daily lives have been disrupted. People are working from home, unable to go to the store, or have lost their job.

For those of us that are able to continue living our lives, relatively normal, with some minor inconveniences, we need to adjust.

We need to take advantage of the 21st-century technology available to us. This could be anything from grocery shopping apps, social media, or the apps of your favorite stores.

In this article, we’re going to dive into some of the tools and hacks you can use to help get through this period of quarantine and social distancing.

Grocery Shopping Hacks

There are several hacks you can use to make your trips to the grocery store more efficient and effective.

Get what you need and get out. You HAVE to make a list and you NEED to stick to that list. This isn’t the time to browse or look for sales (more on that in a minute), buy the items on your list and leave.
Plan your route – If there’s a particular store you frequently visit, use that store’s app to plan your route. Personally, I go to Walmart for almost everything. The first thing I do is make my list. Then I go onto the app and start searching for the items on my list. The location marked as “your store” will pinpoint which department, aisle, and shelf position for your item.
Buy in bulk – with items that won’t go bad or if the time in which you need to use it by is several months or years in the future, buy it in bulk. Be careful, however. It is important to do the math. Figure out the “per unit” price and make sure buying in bulk is an economically beneficial decision.
Look up recipes ahead of time that require only a few/minimal ingredients. Ideally, you’ll want to find recipes that require few ingredients that can also make a healthy amount of food. That way you have leftovers. The way I like to think about it is how much does each meal cost?
That brings me to my next point…buy foods you can freeze, or make meals that you can freeze. This gives you food that you can use down the road and also gives you something easy to eat if you’re tired or aren’t feeling well.
One more quick one – Use your knuckles and/or elbows when possible. We all want to stay healthy and avoid passing Covid onto others. Where it makes sense, try not to use your hands.

Grocery Shopping Apps

There are possibly hundreds of grocery shopping apps available, but in doing my research, I found five apps that I thought were extremely useful.

Flipp – Matches coupons from your favorite brands with the weekly flyer from your favorite store.
MealBoard – Manages your recipes, grocery list, and it also keeps track of what you do or don’t have in your pantry.
Grocery Pal – Browse sales and coupons from the stores you frequent, and seamlessly add sale items to your grocery list.
Out of milk – Lets you know what’s in your pantry and what you need to add to your shopping list.
Big Oven – Kind of like a social network for groceries and recipes. Find out what your connections are buying to get inspiration for recipes. You can also type in the ingredients you do have and find some recipes you can make with those ingredients

Working from home

It’s no doubt that we are extremely fortunate to be able to work from home. With all of the technology available, a considerable amount of the workforce is able to tap in from a remote location and still get their stuff done.

As lucky as we may be, working from home comes with its own unique challenges. Here are some hacks for those working from home.

Get dressed like you’re going to work – this is something that’ll help you psychologically. It’ll trick your brain into thinking you’re going to work. This helps you frame your mindset for work.
Designate a work-space in your home – a psychological trick as well as a means to an end. You can’t work in front of the TV. You need a space where you can actually be productive.
Keep a strict schedule (if you can) – Now this isn’t possible for everyone, especially if you have little kids at home that need constant attention. Just do your best. Lean on your family members to watch the kiddos for a little while so you can get some work done. Also, please remember to take breaks. Check-in with friends and colleagues. Try to make your day as normal as possible.
Communicate everything – Almost to a fault. Send emails and texts. Make phone calls about anything and everything. We’re so familiar with communicating in person that we don’t realize how much we actually say.

Working together

My favorite part of this post. Writing about the human condition and how in times of crisis we always put our differences aside to help our neighbor.

During this pandemic, do what you can to help your fellow humans. Offer to pool resources together. Share recipes. Have a rotation of who goes to the grocery store.

If you have an elderly neighbor or family member, do everything you can to help them. Go to the store for them. Send letters to loved ones. Send letters to folks in nursing homes and assisted living facilities.

We’re not all scientists, healthcare professionals, retail employees, or other essential professions that are keeping the wheels turning, so we have to do our part in some form or fashion. Be nice.

Reading and Resources:

What are the Advantages and Disadvantages of Saving at a Bank

www.crgfinancialservices.com/

My Life and How I Manage Stress

March 25, 2020 by Jacob Sensiba Leave a Comment

This post is going to be very candid. I’m going to highlight what’s been happening in my life recently, how I’ve dealt with it, and what habits really help.

Let’s just tackle the last month, shall we?

I had three things going on all at once.

We’re Moving

First, I ran into an issue at my current apartment. When I was shown the unit, I mentioned that I’d have my dog, Mya, a couple of days per week. The remainder of the time, she’s with my ex-wife.

I looked at the unit in October of 2019 and they were fine with it. Come to find out the Condo Association where I rent has a 25-pound weight limit on dogs. Mya is 75 pounds, so there were a few complaints.

I tried to get them to make an exception and my landlord (the owner of the condo) went to bat for me. I was thankful for that but to no avail.

The choice was to part with the dog or find a new place to live. My son and I love Mya, so it was a pretty easy decision. We’re moving.

Thankfully, we were able to find a place pretty quickly. Our new home has more space and a basement, and that’s something I’ve wanted for my son so he has plenty of room to play when the weather is crappy.

Investment Property #1

Second, my old house (the one my ex-wife and I own) is being rented. It’s March 24, 2020, as I’m writing this and our tenants have moved in.

There was a strong push to get everything done sooner than I anticipated because of the Covid-19 situation. They (the tenants) wanted to get as far away from the city as possible, and our house is 45 minutes from the nearest “big” city. They moved in, a week or so ahead of schedule.

I busted my butt to try and get the house ready for them, but that had to be done when I had free time. Outside of business hours and outside of when I had my son. That left me with two nights per week and all day Sunday.

It was a lot of work, but I’m happy to say that I got it all done. The tenants are pleased and I’m looking forward to providing a lovely home for them.

The Market

Third, the elephant in the room. Covid-19. There has not been much of an impact on me personally. My lifestyle hasn’t changed much, though, I’m not sure what that says about my lifestyle.

I avoid going out as much as I can. I also forego taking my son to his favorite play place on Wednesdays.

Outside of that, it’s created an extraordinary amount of volatility in the markets. Thankfully, I prepared clients ahead of time, in terms of proper asset allocation and mentality.

On the other side of things, I’m part of our building’s tech department, so there was a strong push over the last two weeks to set my colleagues up so they are able to work from home if it’s deemed necessary.

I’m not going to lie, things have been incredibly stressful. A lot of work in a short amount of time and a relatively significant change in my living situation. Not to mention, I’m trying my hardest to limit the impact moving has on my son.

What habits help?

I’m meditating more regularly, I’m interacting with people I care about more often, and I’m viewing everything (or trying to) from a positive point-of-view.

The meditation calms me and makes it easier for me to find my “center”. It also reminds me to breathe when I start to feel too anxious or overwhelmed.

With regard to social interaction, I’m just meeting a primal need as a human being. We’re social creatures, not to mention I’m fairly extroverted, so talking with people always gives me a good boost.

The last piece is the x-factor. I’ve shifted my mindset and I have Stoicism to thank for that. If there’s an obstacle or a trial, I’m always looking for the bright side and I’m always looking for a lesson to be learned.

As I dive deeper into Stoicism, I find more value and gain more insight from it.

It’s been busy and challenging, but I’m doing much better from a mental perspective. Keep putting in the work, find habits that help, and things will get better.

To learn more about Stoicism, I highly recommend Daily Stoic. They have weekly newsletters, videos, and podcasts.

A Systematic Approach to Goals

Jacob Sensiba

www.crgfinancialservices.com/

Financial Stability and Marriage

March 18, 2020 by Jacob Sensiba Leave a Comment

Marriage and finances. Why do these so often go together like oil and water? Why is money such a contentious topic in most households?

It’s because people go through life differently. Depending on how you were raised, what you learned, and what you personally experienced, your money philosophy will be different from that of your spouse.

Before we talk about that, however, I’d like to touch on financial stability and why the growing trend is being financially stable before committing to someone.

Financial Stability

It makes sense from a psychological perspective. Having financial stability makes you appear more mature and that you have your priorities straight. People who see that, probably see someone that’s ready for a commitment.

Additionally, getting married, and marriage in general, can be an expensive endeavor.

Obviously, it depends on the wedding you want, but the average price tag on a wedding nowadays is around $25,000 (source). Add onto that a honeymoon that could take you to another state, if not another country, and you’re spending a lot of money within the first month of being married.

What, historically, follows is a house and kids. Both, though worth every penny and minute, are expensive.

Because everyone has a different experience, and there are so many of them out there, I can’t go into detail about every one of them. Instead, I’ll speak generally about what they are trying to do.

Debt

People are trying to get out of or get a firm grasp on their debt. Whether it’s student loans, credit card debt, or medical bills, nobody wants to go into a committed relationship, let alone marriage, with a significant amount of debt.

Not only does debt hinder you from putting it towards future wants and needs, but when you get married, your debt becomes your spouse’s debt as well. You don’t want to burden them with that.

People want to be financially stable going into a marriage so they can afford the wants that often come with marriage, and they don’t want to be sacked with debt that brings down the family balance sheet.

Credit

Another piece of the financial puzzle that people try improving is their credit score. Your credit score plays a factor in almost every important life event. Where you live, where you work, and what you drive, your score could play a role.

Your financial philosophy is how you view money and how you use it.

Philosophy

Are you a saver or a spender? Do you view credit cards as a tool or a money sucker? When you do spend, do you prefer to buy stuff or experiences? Would you rather invest with the chance to earn more or put those dollars in a savings account for safekeeping?

As I mentioned before, your upbringing, what you’ve learned, and your personal experiences shaped the answers to these questions.

When you commit to a relationship, you’re going to have different answers. The key with any part of marriage, and money is no exception, are compromise and communication. You have to find some middle ground so each individual is getting their needs met, to an extent.

What you have to do is sit down with your significant other, dive deep into each other’s life experiences with regard to money, and what’s important to you, both now and in the future.

Once you have a good understanding of where you’re both coming from and what you want, you can work together to develop a plan, and once you have that plan, you can start executing

My Job

Opinion: The Economy

Funds

My Finances

More Cash

Retirement Contributions

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First thing

Unemployment

Severance

Job Search

Finances

Insurance

Retirement

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What I Learned

Market Fluctuations

Exceptions

Opportunities

How to Plan

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What can be negotiated?

How to negotiate

Severance

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Review your budget

Increase savings rate

Review investment portfolio allocation

Tighten up your expenses

Digital

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Choosing a financial accountability partner

Mentor

Example

Create challenges

Scheduling

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Beneficiaries

Life Changes

Consequences

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Grocery Shopping Hacks

Grocery Shopping Apps

Working from home

Working together

Reading and Resources:

We’re Moving

Investment Property #1

The Market

What habits help?

Financial Stability

Debt

Credit

Philosophy

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