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The Questions You Need To Ask Yourself

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Questions are a fantastic way to understand things better. They are vitally important in our everyday lives.

One area where I think they are underutilized is personal finance.

You NEED to ask yourself questions on the regular so you can discern if you are doing the right things and taking the correct steps for YOU.

In the following article, we’re going to explore the various questions you need to ask yourself in order to be financially effective.

What is my goal with money?

This is a fairly general question, so we’ll break it down into three buckets: short term, medium-term, and long term.

  • Short-term (Under 2 years) – If you are saving for a short-term goal, what is it? A vacation? Down payment on a house? No matter the goal, that money will be used soon so the best place for it is in a savings account.
  • Medium-term (2-10 years) – This could be anything from a down payment for a house to saving for your kids’ college education. What you do in the interim depends on when you’ll need it and the goal you are saving for. If it’s less than 5 years, I’d still recommend a savings account or short-term bonds. Something that can earn you a little interest, but is still relatively safe. That 5-10 year period depends on the goal. If there’s a particular dollar amount you need to it (down payment, for instance) I’d go no more than moderately aggressive. You want to earn a little, but you don’t want that saved amount to go under what you need.
  • Long-term (10+ years) – Most often, a goal that’s over 10 years away can be invested in the stock market, though the percentage of your assets that’s actually in the market depends on the risks you are willing to take and when you need to access those funds.

Related reading: Financial planning for all ages

How much am I willing to lose before I sell?

I almost always propose this question to new clients because it gives me a good understanding of their risk tolerance.

If they are only comfortable with losing 10 percent of their portfolio, they’ll be invested pretty conservatively.

On the other hand, if they can tolerate a 50 percent drawdown and not bat an eye, then we can “put the pedal to the floor”, excuse the expression.

Determine how much of a loss you can stomach and that will give you a good idea of how to allocate your assets.

Related reading: Are you taking on too much investment risk?

How long will it take to adjust my allocations?

Questions regarding asset allocation, typically, pertain to risk and time horizon. For example, if you start saving for retirement when you’re 25, the majority of your portfolio will be in equities (stocks).

This allocation, generally speaking, is suitable for you for a couple of decades. At which point, you’ll probably (again, speaking generally) want to shift a little more of your portfolio to bonds.

Your allocation will, and should, shift over time, and once you get within a few years of your goal, the primary objective of your portfolio becomes capital preservation.

Related reading: Why asset allocation matters

Are my actions suitable for my current financial situation?

Financial situation takes everything into consideration (income, debt, spending, savings, etc.) Actions can be anything related to those items.

Specifically what I’m talking about is how much you are saving, how much you are spending, and how much $ you’ve dedicated to paying down debt.

If you have a sizeable amount of debt and not a whole lot of savings, it’s time to cut your spending. Conversely, if you’ve paid down your debt and are ahead of the game with your savings, it would be alright if you loosened up a little and enjoy yourself.

Like everything in life, your personal finances are a delicate balancing act, and when you ask questions, you can figure out how to shift your priorities.

How is my money being spent?

Kind of related to the last point. Tracking your spending to find out exactly where all of your dollars are going is an important step.

Another recommendation I usually make is to create a financial playbook. Here’s a brief outline of how I create a financial playbook:

  1. Big picture – List all assets and liabilities. How much you have saved and how much debt you have.
  2. List your necessary expenses – These are things that you have to pay (rent, utilities, transportation, food, minimum debt payments, etc.)
  3. List your monthly income
  4. Total up your monthly necessary expenses and your monthly income and see how much you have leftover. What’s leftover will help you discern what to do with it.
  5. I would list another line item for “fun,” though I would keep it to a minimum.
  6. What’s left after fun should be saved and used on debt.

Related reading: How to cut your spending

Conclusion

As I said in the beginning, questions help us understand the world, and ourselves, better.

Having a better grasp on why and when we make certain changes or do certain things is a must if we are to be more effective in managing our finances.

How to Stop the 8 Causes of Overspending

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Overspending is one of the reasons why individuals seek debt relief through a bankruptcy filing. Most individuals are guilty of overspending at some point during their adult lives. Below are eight causes of overspending and suggestions for how you can stop overspending.

  1. Failing to Budget

Many people view personal budgets as denying themselves what they want to purchase. They overspend to maintain the lifestyle they desire without thinking about the future. Unfortunately, once you become accustomed to a specific lifestyle, you may borrow money and incur debt to continue the lifestyle even though you cannot afford the payments in your budget. At some point, the overspending will catch up with your budget.

The best way to avoid overspending is to create and live within a budget. Budgeting does not need to mean you have to give up what you desire. Budgeting allows you to reduce expenses so you can save money for the things you desire. Budgeting can also help you identify the difference between a “need” and a “desire.” You can make budgeting easy and less stressful by using an online budget tool such as Mint, Acorns, or YNAB.

  1. Stress and Emotional Overspending

Some individuals deal with stress or emotional situations by shopping. Often referred to as “retail therapy,” shopping can help you focus on something other than stressful situations or unhappy emotions. It can be difficult to recognize that you use shopping to deal with emotional issues and stress. In many cases, a family member or friend may say something.

According to John Scura from the Scura Bankruptcy Law Firm, many times due to uncontrolled stress, people tend to overburden themselves with more debt than they can handle.

If you find yourself purchasing items you do not need when you are stressed or sad, you may need to find ways to curb that spending, such as creating a budget, getting rid of credit card accounts, and finding another healthy outlet for stress and emotions.

  1. Peer Pressure

Peer pressure is a common reason for overspending. You are out with friends, and your friends are spending money, finding great deals, and having fun. It can be difficult not to want to join in the fun by purchasing items that you cannot afford and that you do not need.

If you are trying to save money or living within a strict budget, do not feel shy about sharing this information with your friends. You may be surprised to discover your friends need to save money too. Try to find other activities to do with friends that do not involve shopping or spending money.

  1. The Holidays and Special Occasions

The holidays and special occasions can trigger overspending, especially when you are trying to please or impress someone. For example, you are attending the wedding of a college friend, and you think you need a new wardrobe, or the wedding is a destination wedding that you really cannot afford to attend. For Christmas or birthdays, you tend to purchase gifts that are extravagant and far more expensive than anyone else purchases for the occasion.

If you find yourself overspending during the holidays or for special occasions, you may want to try the envelope method of budgeting. Place money in an envelope with each person’s name. The money in the envelope is the maximum you may spend on that person or occasion.

  1. Opening Multiple Credit Card Accounts

Too many credit card accounts may cause overspending. Credit card companies entice consumers into opening new accounts with specific perks and benefits, such as no interest for an introductory period or rewards. Store cards are notorious for offering a percentage off your entire purchase the day you open and use your credit card.

You can limit your credit card debt by using one or two major credit cards with low credit limits. If you max out the card, you cannot charge anything else until you pay down the debt.

  1. Spending Has Become an Addiction

Some people cannot control their urges to purchase items. They purchase items they do not need, and they cannot afford. They may have multiple duplicates of items they purchase. In this instance, a person should consult a counselor or therapist to inquire about professional help with an addiction disorder.

  1. Spending at Specific Times of Day

Do you notice that you spend more money in the evenings when you are relaxed and shopping online or when watching shopping networks on television? Maybe you shop on the way home from work or on the way to work when you are rushed and less likely to pay attention to how much money you spend?

Some individuals create a habit of shopping at certain times of the day. If you notice that you shop or spend more money during certain times of the day or days of the week, you may want to make a conscious effort to cut spending on those days and at those times unless it is absolutely necessary.

  1. Poor Money Management Skills

In some cases, overspending stems from the lack of or poor money management skills. Managing money wisely is not something that humans instinctively know. Many of us learn our money management skills from our parents. Some individuals who overspend did not have positive role models for wise money management. However, you can learn how to manage your money wisely. You can take an online course to learn about personal budgeting, the wise use of credit, retirement savings, and managing debt.

 

Written by John J Scura III, Esq.

Partner, Scura, Wigfield, Heyer, Stevens & Cammarota, LLP

John has been Certified by The Supreme Court of New Jersey as a Civil Trial Attorney. Whether it is a personal injury case, bankruptcy case, litigation case or other type of matter, John wants his clients to participate in the decision making process toward solving their problem in the best way possible.

https://www.scura.com

Your Wealth: What You Shouldn’t Do

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Establish an emergency fund, pay down debt, save for retirement, and grow your wealth! Much of your financial life is focused on the things you should do.

However, what I think to be more important are the things you shouldn’t do!

Educational Debt

There’s been a lot of literature/news over the last few years about how much of a problem student loan debt is. As of 2018, total student loan debt was $1.47 trillion. With a T! (Source)

That said, here are some things you should avoid.

  • Taking on too much – Some degrees/professions require a lot of schooling, which can lead to large amounts of student loan debt. And I don’t mean to speak ill of any degrees/professions, but if your desired career requires a “basic” 4-year degree, it’s probably best to find an in-state university to cut costs. Better yet, start at a local 2-year university or tech school until your Gen. Eds. are complete, then transfer.
  • Not having a plan for after – I think this is a common fear for Millennials and Gen Z, but you have so much time to figure things out. Don’t just go to college to get a degree. If you need time, take time. Once you figure out what you want, determine what you need to do to get there.
  • Not researching options – There are SO many student loan options. Depending on what type of loan you choose (private or public), you could have a wide range of payback methodologies. I wrote about student loan options and payback options in two previous posts. Check them out!

Credit cards

There are two BIG problems with credit cards. People who use them irresponsibly and people who don’t use them at all.

  • Using irresponsibly – This one pretty much speaks for itself. This pertains to people who spend way more than they ought to. A good rule of thumb is to only buy something using a credit card if you have the funds readily available to pay the balance off. Don’t have the money, don’t put it on the card. Doing so will cost you in interest and can really set you back.
  • Not using at all – Better than the first point, but still not great. Using a credit card can help your financial situation if you use it correctly. Most of them have rewards of some sort. It’s another credit account on your report. Charging and paying off right away establishes a good payment history. All good things for your credit score.

No emergency fund

Establishing an emergency fund is Step 1. If you don’t have money set aside for unexpected expenses, you’ll have to charge it. This leads to the point above about irresponsible use.

Save $1,000 for emergencies, turn your attention to high-interest debt (credit cards), and then shift your focus back to your emergency fund once that debt is paid off.

Spending

  • Paying bills late – Not paying your bills on time, especially ones shown on your credit report is a big mistake. The #1 factor in calculating your credit score is payment history. Paying ONE bill late will knock your score down. Just one. Don’t do it.
  • Spending too much – (See irresponsible credit card use) This is especially harmful if you frivolously spend BEFORE taking care of important “budget items”. Things like saving, debt payments, and bills.
  • Being too frugal – Though frugality is helpful in building wealth, it can also hurt you. There comes a point when you are too frugal. A vital life skill is doing things in moderation. If you pinch pennies and forego rewarding yourself, you run the risk of breaking the bank on a “bender”.

Investing

  • Waiting – I cannot stress enough the importance of investing early. What helps you make the most of your retirement savings is compound interest. The more time you have to invest, the more compound interest works in your favor.
  • Panic selling – This is a timely point since the market dropped almost 5 percent in the last week. Selling out of fear is always bad. More often than not, when you “panic sell,” you’ve already experienced the majority of the drawdown. Now, this depends on your particular situation, but it behooves you to stay invested during that period.
  • Using generalities when setting up an investment plan – Your investment plan needs to reflect your goals, risk tolerance, time horizon, and behavior. Using generalities is good for someone who writes about this stuff, but it’s not good for YOU. Your plan has to be tailored to YOU.

Life and Wealth

  • Sticking with a job you hate – Sometimes money and comfort makes us do things we don’t want to do. Being unhappy at your job is not worth it. It’s important, however, to thoroughly think through this decision. Quitting is tough, but if your family counts on you for income, you need to have a plan in place before you jump ship.
  • Comparing yourself to others – I’m going to encourage you to develop a new mindset because society taught us that wealth looks like fancy cars and big houses. I want you to think about stealth wealth. It’s probably my most favorite phrase/term. Someone with stealth wealth lives within their means. They live in a modest home, drive a car for transportation only, but saves more than the average person. They don’t “look” wealthy, but their retirement account says otherwise.

Further reading:

What it takes to be a successful investor

How to pay off credit card debt

Creating a financial plan you can stick to

What It Take To Be A Successful Investor

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What makes a successful investor? Is it your ability to beat the market or to beat your competition?

In my opinion, being a successful investor doesn’t have to do with out-earning your peers or leaving the S&P in the dust. No, my definition is very simple.

Develop an investment plan using a variety of factors, and be able to execute and follow that plan indefinitely.

Suitability

This is step 1. You need to figure out what your “suitability” is. Your suitability will lay a very good foundation upon which you build your investment plan. Suitability involves three things:

  • Risk tolerance – This is your ability to handle drawdowns in your portfolio. If you crumble with fear every time you lose 5 percent, then you’ll probably want a fairly conservative portfolio*. On the other hand, if you have no problem seeing your portfolio drop 50 percent, then you’re ready for a more aggressive allocation.
  • Time horizon – Probably the most important factor of the three. Your time horizon is basically when you’ll need the money. A long time horizon allows an investor to take on more risk because there’s more time for them to recover from drawdowns. The inverse is true for short time horizons. You’ll want to be conservative because you have little time to earn back what’d you lost.
    • Long time horizon – 10+ years
    • Medium time horizon – 2-5 years
    • Short time horizon – Less than 2 years
  • Goals – What’s your plan? Is this savings going to be used as a down payment for a house? If so, there’s probably a minimum dollar amount you have in mind and you’ll want to tip the odds in your favor that you don’t go below that. Similarly, if this is for retirement and you have 30 years to invest, you have the green light for risk assets.

Keep in mind that all three of these things, plus one other, need to be used together when determining your asset allocation. If you are tolerant of risk, but need the money in 5 years, somewhere in the middle between aggressive and conservative is probably better. That one other thing is your behavior as an investor.

Investor behavior

The finance/investment world is coming around to this, but your psychology is a HUGE factor as an investor.

Obtaining a high return on assets is one of your goals, but it should not be the primary goal. When you create an investment plan you have to make sure it’s something you can actually stick with.

I wrote about it previously, here.

You could be tolerant to risk and you could have a long time horizon, but if you lay awake at night every time the market drops, then you need to rethink your approach.

That kind of fear and anxiety hinders your ability to follow your plan. What normally happens, is someone sets an unrealistic investment plan, one where they take on too much risk.

Thereafter, volatility picks up. They check their portfolio and it’s declined 15 percent. They wait a day and check the next.

Another 2 percent drop. Then the thought of 2008 creeps into their heads and the panic sell.

You can set up a great investment plan, but your behavior will ultimately make the decisions. Keep that in mind.

Asset allocation

Using your suitability and behavior, you can then determine your asset allocation. The types of assets you use in your allocation can vary. If you wanted to invest a small percentage of your portfolio in gold, for instance.

The three most common assets are stocks, bonds, and cash. With risks ranging from high risk to virtually (there’s always some risk) no risk.

Speaking very generally, people with long time horizons and are more tolerant of risk, have a more aggressive portfolio. The inverse is true for people with short time horizons and a low-risk tolerance.

That said, the ultimate goal is to develop a plan that meets your goals in the smoothest fashion possible.

Ignore the noise

Throughout your investment “career” you’ll run into people, friends, family, or even random people on the street that will tell you the sky is falling or that the newest IPO will go gang-busters and you need to get in now!

Put your blinders on. There are two things that hurt investors. Their own behavior and their ability, or lack thereof, to tune out what’s happening around them.

This is extremely difficult because we, as humans, have evolved to use our peers to compare or judge, our standing in society.

Stay in your lane and focus on your goals.

Never stop learning

Every single experience in your life is a learning opportunity, especially the bad one. I recommend journaling daily, recount your day, and dig little nuggets of knowledge from your experiences.

Additionally, take in some form of content every day that improves your understanding in your line of work, or in an industry that you’re interested in.

With regard to your finances, give our Toolkit page a look. There you’ll find a number of books and resources to enhance your financial know-how.

Please be advised: Everything written in this article is for informational purposes only and should not be taken as investment advice. Opinions are my own and do not reflect the opinions of this publisher or my employer.

Further reading:

The Psychology Of Money

 

Strategies For Improving Your Credit Score

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Your credit score is extremely important, nowadays. It determines whether or not you qualify for other credit accounts, and if so, what terms. It plays a factor in where you live, and it can even impact job opportunities.

That said, it’s crucial you do everything you can to improve and keep your score high.

What impacts your score?

There are five factors that play a role in calculating your credit score. They are listed below with percentages to discern how big of a role each one plays.

  1. Payment history (35%) – How frequently do you make on-time payments. This number should be 100%
  2. Credit utilization (30%) – How much credit have you used compared to how much you have available. For example, if you have $20,000 of credit available and used $5,000, you have a utilization rate of 25%. Credit rating agencies want to see it below 30%, but the lower, the better.
  3. Credit age (15%) – How old are your current credit accounts? The older, the better. This means that every time you open a new credit account, your credit age drops.
  4. Types of credit (10%) – Credit cards, loans, student loans, etc. Variety helps here.
  5. Number of credit inquiries (10%) – Hard credit inquiries negatively affect your score. Like the utilization, low numbers are better.

(Source)

What hurts your score

There are a few things that negatively impact your score. I’ll list the bad things from the list above, then I’ll list a few others.

  • Poor payment history – If your payment history is below 100%, you’re already starting from behind. Anything under 100% gets notched down.
  • High utilization rate – As I said, rating agencies want to see utilization rates under 30%, so anything over that will bring your score down.
  • Low credit age – Older accounts are better for your score
  • Only one type of credit account
  • A large number of credit inquiries
  • Bankruptcy – Negatively affects your credit score and stays on your credit report for 10 years.
  • Liens and judgments taken out against you – Negatively affects your score and stays on your report for 7 years

Starting from a low score

If you are starting from a lower score, it could be from past experiences (bankruptcy or liens), and if that’s the case, you can only improve. Unfortunately, time is your enemy right now until those drop off.

The first place I would start is to pay off your current debt. If you don’t have any open credit accounts, the next step is to open one.

Individuals with low scores will have trouble opening credit accounts, so I would start with a secured credit card.

A secured credit card is like a regular one, except you establish the credit limit with a deposit. The amount of your deposit is the amount of your limit.

This is a slow and steady way to improve your payment history and show the credit rating agency that you’re responsible.

Current credit accounts

Speaking generally, I advise people to keep their credit accounts open. The one exception is you do plan on closing a credit account, make it one you recently set up.

Getting rid of a new account will increase your credit age, which should increase your score.

New credit accounts

If you’re looking to increase your score, I’d recommend abstaining from opening any new accounts, unless you’re someone that needs to open that secured credit card to rebuild your score.

The other two exceptions would be opening an account for a credit card balance transfer or a personal loan for debt consolidation.

Opening new accounts hurt twice. One, you effectively lower your credit age. And two, when you apply for a credit account, it counts as a hard credit inquiry.

Don’t do it unless you have to, and if the long-term benefits outweigh the short-term penalties.

Pay down debts

Paying down debt is a slow way to improve your credit score, but it’s a tremendous way to improve your finances overall.

Less debt means less money needed to service that debt. Less debt means a lower utilization rate (number 2 factor).

Also, when you make debt payments [on time], you’re strengthening your payment history (number 1 factor).

I recently wrote an article, linked here, about paying down debts. Give it a read. In that article, you’ll also find helpful resources on similar topics.

Utilities

The last thing I would do is check to make sure your utility provider (for me, my local municipality has its own utility company) is listed on your credit report.

My previous utility company (WE Energies) did come up on my credit report. It’s another “credit type” and another way to strengthen your payment history.

Further reading:

My Thoughts On The Market

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Let me start by saying that I have no clue what is going to happen in the stock market in the next 12 to 18 months, what I do know are several of the factors that have a say in what happens.

If you guessed that at least one of those factors has to do with President Trump, then you’re right.

Trade

The big elephant in the room. Honestly, I have no idea how this is going to pan out. Obviously, it behooves both parties to get this rectified as soon as possible, but it makes sense for China to hold out until the 2020 elections.

If they make a deal now, the US has more leverage at the moment and will probably be on the winning side of things.

If they wait until 2020, they have a chance of getting a Democratic president elected, and more than likely, they’ll reverse course on trade.

I think the odds increase that a Democratic president will win because if a trade deal isn’t reached, the market will negatively react and if the market tanks while Trump is president, he’ll be in trouble.

The US also decided to slap tariffs on European goods. This matters because if a deal is made with Europe, that gives the US that much more leverage. They won’t need China as much, and it’s clear that China needs us. We’ll see what happens.

Interest Rates

You may have caught wind of the most recent jobs report. We added over 200,000 jobs last month, which was much stronger than expected.

You’d think that kind of surprise would be good for the market, wouldn’t you? Unfortunately, the strong jobs report signaled a stronger economy than previously forecasted.

A stronger economy gives the FED less of a reason to cut rates this month. Where it stands now, I don’t know what they will do at the next meeting.

I was certain they would cut, but that was before the jobs number. I think it will benefit us down the road if they don’t. The reasons I think that have been explained before, but I’ll give you a synopsis real quick.

Typically, in the normal business cycle, rates will start [generally] low and consistently rise in tandem with economic expansion. Once the expansion peaks, the FED will cut rates to promote borrowing, which translates into spending.

Here’s the kicker. The prime rate (the rate the FED controls and the rate that affects all other rates) needs to be at a certain level when the FED cuts. If the prime rate isn’t high enough, then the FED won’t be able to cut enough to stimulate the economy.

What does this mean?

The current economic and political environment in the US is like nothing we’ve ever seen before. Our respective parties are at each other’s throats, which doesn’t make cooperation easy.

The unemployment rate is as low as it’s been in 50 years, inflation is crawling, rates are still ridiculously low, and the market is making new highs.

The FEDs impetus for raising or not raising rates is the level of inflation. It’s lower than their 2% target so they took their foot off the gas.

We are at the end of an expansion, which means a recession is most likely on its way, if not in the works already.

If you have less than 15 years until retirement and reallocate your accounts to be a little more conservative than usual. If you have over 15 years until retirement, I wouldn’t make any adjustments (allocate according to risk tolerance, time horizon, and goals).

Keep in mind that if you shift to more conservative and the market continues to rise, you’ll lose out on some gains, but if the market tanks, that conservative tilt should help minimize the damage.

How To Cut Your Spending

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Do you know what could really help you reach your financial goals? Answer: If you had more money to work with! Cutting your spending is an integral part of your finances.

I’m not saying you need to cut out the things you love (insert Starbucks coffee, avocado toast, etc.). I’m saying you need to splurge on those things wisely, either by reducing their frequency or cutting out something else.

Let’s figure out ways we can cut our spending.

Track spending

How are you supposed to know what to cut spending on if you don’t know where your money is going?

Go back a few months and look for a “pattern.” Where is all of your money going? Bills, housing, transportation, debt payments, etc. are in their own category. Everything else that’s not considered necessary spending (minus groceries) goes in the discretionary spending category. Everything else that’s not considered necessary spending (minus groceries) goes in the discretionary spending category. Keep in mind, things will change if you’re living in an affordable city like Columbus, Ohio, rather than an expensive place like New York City.

This discretionary spending is what you need to pay attention to.

Grocery spending is necessary, but the amount can vary. Figure out what you typically spend, each month, on groceries and determine if that amount can be lowered. More often than not, it can. Just don’t go hungry.

Budget (and budget alternative)

The classic budget lists the necessary expenses (housing, groceries, debt, utilities, savings, and other bills). You then assign dollar amounts for other “unnecessary” expenses (take-out, clothes, etc.).

The dollar amount is what you’d like to spend on that item/category, and not go over. The purpose of a budget is to come to a total expenditure that’s less than your monthly income.

My approach is similar. I list the necessary expenses (excluding debt payments and savings). Just the things I need to pay (housing, streaming, utilities, insurance, and transportation).

Next is my grocery budget. This is a necessary expense, but I try to keep it relatively low. Between my son and I, the limit is $300 per month. Then I list debt payments and savings.

I calculated how much I needed to pay per month to pay off my debt by a certain date. My savings is automated and partitioned.

I have one savings account for emergencies, one for car repairs, one for holiday spending, and one for vacations. Once a week, money is automatically transferred from my checking to each savings account.

The amount of each transfer is less mathematical and is more about comfort. My retirement savings is done right away at the beginning of the month so I don’t have the chance to spend it away.

Whatever remains is mine to do with as I please.

No spend days

Have one day per week or a few days per month where you don’t spend any money.

I’ve seen some people go as far as having a no spend week! Implement these days at your discretion because obviously, you’ll still want to pay your bills and such.

Another cool idea is to restrict paying for certain items during particular times of the year. For example, you don’t buy any clothes during the month of September, or you don’t have any take-out/restaurant food in April.

Coupons/rewards/etc.

With smartphones, applying coupons to your purchases has never been easier. I use coupons.com. You can save which coupons apply to you and they can be scanned at checkout. From your smartphone!

Also, wherever you do your shopping, make sure you are a member/rewards member. There’s usually a sale for members. Excluding paid memberships (like Costco), being a rewards member is free and can save you money.

By the way, it costs money to shop at Costco, but their goods are very reasonably priced. They make their money on the memberships, and they sell all of their goods at cost. That means they sell a product at whatever price they paid to get it in the store.

Use price per unit/item

When you are making a decision about how much of something you need to buy, always use price per unit as your factor. The overall price of something may look less expensive than the bulk item, and it is at the time of purchase, but more often than not, the price per unit is lower for the bulk item.

It’ll cost you more when you check out, but through time, you’ll spend less money.

Quick hacks to cut expenses

  • Negotiate a lower interest rate on your credit cards
  • Balance transfer to 0% introductory APR
  • Personal loan to lower average credit card APR
  • Unplug unused electrical devices
  • Cancel unused subscriptions
  • Reduce entertainment expenses
  • Carpool to work
  • Keep tires properly inflated (better gas mileage)
  • Use LED light bulbs
  • Use a programmable thermostat
  • Lower the temperature on your hot water heater
  • Eat at home more/eat out less
  • Buy generic

Conclusion

Achieving financial success doesn’t have to be difficult and boring, though it does take some discipline. Small rewards are important. Without them, you’ll go crazy!

Cut the fat off of your budget, and you’ll see how much better it feels to make significant progress in your financial life.

How to Save Money on Summer Clothes for the Kids

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Kids grow just as quickly as the seasons change which is why many parents find themselves clothes shopping several times a year. With retail prices continuing to rise, buying comfortable, trendy, items for each of your children can cost you an arm and a leg. As summer is just around the corner, it’s a high probability that you’re wondering how you can shave some of those costs.

There may not be a way to keep your kids the same size for a few months, but you can save money on clothes with these savvy shopping tips below:

Hand Me Downs

Before you head off to the store to shop for kid’s clothes start by clearing out their closets. If you have children of varying ages and sizes, you can give your smaller children clothes previously worn by their older siblings. This would then reduce the number of clothes you need to buy for them.

Clothing Swaps

If you don’t have children of varying ages and sizes, that doesn’t mean you can’t take advantage of hand me downs. Instead, talk with other parents you know and host a clothing swap. This is where everyone would bring their children’s used clothes to your place. Everyone can sift through piles of clothes and grab things that fit their children for the summer.

DIY

If you have the time and resources, making clothes for your kids can save you a lot of money. Of course, you’d need to have a sewing machine, sewing supplies, fabrics, and patterns to put together nice outfits for each of them. If you’d like a little headstart, however, you could also order blank clothing at wholesale prices from vendors like ShirtSpace. Once the clothes arrive you can customize them with decorative prints and designs.

Yard Sales

Want to catch kid’s clothes at a bargain? Then, look no further than your local yard sales. People are constantly purging their homes and now is when they often put out their slightly used items for sale. You can find shorts, t-shirts, tank-tops, and other summer clothing items at a steal of a price. You can find yard sales by driving around your neighborhood, checking at traffic lights for flyers, and checking in the online classifieds.

Alterations

Another method to try when you want to save money on kids clothes is alterations. What some parents find is that their kids grow taller but don’t necessarily get wider. This means that long-sleeve shirts and pants often get a bit too short in the arms and legs. Just a few short alterations and you could turn them into short-sleeve shirts and shorts for the summer.

Flea Markets

Best described as a yard sale on steroids, flea markets are the perfect place to find good deals on summer clothes for kids. There are plenty of vendors with a variety of options to choose from. Whether they’re slightly used products or affordable merchandise purchased at wholesale prices, you can find a few basic outfits to send your kids off to camp with.

Deals and Coupons

Of course, you can’t talk about saving without the old tried and true methods like searching for deals and using coupons. Pay attention to sales papers and advertisements for deals on clothing for children and try to shop during those promotional periods. You should also check online, social media, and in the newspapers for coupons to use online and in stores to lower your purchase prices.

It’s almost summer and your kids will need tons of shorts, shirts, tanks, and other summer wear to get through the season. Though you probably can’t salvage much from the items they wore last year, you can cut back on how much you spend on your next shopping trip. The above suggestions can help you find kid’s summer clothes at a steal of a price. Now, instead of worrying about what they’ll wear this season, you’ll be trying to figuring out how to store everything.

Financial Planning For All Ages

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Don’t you hate it when you Google financial planning tips, and it spits out articles that don’t apply to you? This could be because you’re a different age than the article is directed towards or you’re in a different position.

Well, look no further. I’ve created a rough outline of how you can plan, regardless of your age or situation.

But I’ll be honest with you, a lot of this article will link to resources or previous articles that explain these topics in more detail, but I wanted to create a rough outline of how people in different age groups can plan.

Twenties

Ideally, you want to get a budget started, but nobody likes doing that. Instead, give your money a job. Figure out when you would like to have your debt paid off, then do the math to determine how much per month you need to pay.

List that payment plus housing, transportation, food, and other bills. That total tells you how much MUST go out, everything else is extra to do what you please.

In terms of saving for retirement, you have a lot of time to put money away, but if you start sooner, you’ll have to save less later. 10% of your salary is a good goal. If you can’t get there just yet, save what you can, but try to incrementally increase it over time.

Investment allocation here, as well as in your thirties and forties, should primarily be stocks. Not 100%, but definitely the majority of what you own.

Thirties

The financial plan in your thirties is similar to the one in your twenties. Pay down debt and save for retirement. However, at this point, you probably have more assets and you may have some children as well.

With the cost of tuition constantly rising, saving for their future education costs is important. The 529 is the most popular, and probably the best vehicle available to do just that. (Be advised: 529 plans do involve risk so please talk to your financial advisor prior to investing)

With more assets and children, comes more insurance. Make sure your property and belongings are adequately protected. Additionally, if your children depend on your income for support, life insurance and disability insurance are a must!

Fourties

Same story, different decade. Pay down (off) debt, save for retirement, and make sure you have adequate insurance. (Honestly, the save more, pay down debt, and have insurance is a great catch-all financial plan).

At this point, however, your retirement plans should become more detailed and concrete. Through your twenties and thirties, retirement planning essentially was just saving for retirement.

Now you should think about where you live and what you’ll do. You should also calculate if you’re on track and increase your savings if you’re behind.

Fifties

Hopefully, by the end of this decade, your debt will be mostly paid off, you have a good idea of what retirement will look like, and you’ve determined what needs to be done (if anything) for you to hit your target number.

As you age through your fifties, you should start thinking about adjusting your investment allocation. You don’t have as much time to gain back what you lose during a down market.

Reallocating to a 60/40 or 50/50 (stocks/bonds), depending upon your risk appetite, is a good way to reduce your risk and still participate in a bull market.

Sixties

Where you are at this stage in life depends on a few factors. Have you saved enough to live comfortably in retirement? Do you enjoy what you do? Are you healthy? Plans for Social Security?

If you haven’t saved enough, then you’ll probably have to work a little longer so you can save more. If you like what you do, then why not continue if you are able? If you don’t, consider a career change or (if you’ve saved enough) volunteering for a cause that’s meaningful to you.

If you are healthy, I recommend staying active and social as long as you can. Activity and a healthy social life are two of the three important variables for a fulfilling retirement.

Social Security and when to receive it is a huge decision. Obviously, I’m going to recommend waiting as long as you can so you receive a higher monthly benefit, but there are other things to consider.

Are you healthy? What’s your family history like? Do you have adequate savings/retirement income from other sources?

Health and family history help determine longevity. Poor health and/or poor family history may give you a reason to start receiving earlier.

There are calculators out the web (like this one here) that can help you discern what’s the best strategy for you. That’s to say, how do you optimize your Social Security and other retirement income so you receive the most possible?

Seventies

We’re living longer, healthier lives now, and down the road, the retirement age will probably make its way into the seventies.

If you have to work for the income, you’re not alone. As of 2017, the percentage of the population that are 70 or older and still working was 19%. Up from 11% in 1994. (Source)

My recommendation. Develop an income strategy that will a) afford you to live a somewhat comfortable lifestyle (obviously, cutbacks are necessary if money is tight) and b) help your savings last as long as possible.

There are a variety of calculators out there to help figure this out.

Conclusion

Financial planning is tough. As I said in the beginning, not many like to budget, so it’s important to give your money a job. $100 goes towards emergency savings, $1,000 to retirement, and $250 for debt repayment.

Do this, along with several of the other items I listed (as well as the ones linked below) and you’ll do just fine.

Helpful articles and resources:

Retirement, It’s More Than Money

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When it comes to retirement, most people think about money. Don’t get me wrong, the financials are important, but it’s not the only thing to consider.

Sure, a well-funded retirement gives you utility and flexibility, but that only goes so far. You have to think about what you’re going to do, where you’re going to live, and how those golden years will be spent.

In this article, we’re going to dive into the non-finance side of retirement.

Where will you live?

One of the most important considerations is where you’re going to live, and there are many factors to take into account.

Are you/do you need to downsize?

If your children are out of the house, downsizing may cross your mind. The time and energy needed to maintain a house are significant. Moving to a smaller place could be a good move.

You’d spend less time cleaning, and you would use less energy keeping your home at its desired temperature.

Move to another state?

There are many states around the country that are go-to destinations for retirees. Do you know why? Generally speaking, the climate is better (no snow or cold winters to deal with), and there are no state income taxes.

Moving to a different state is a big move, so you need to consider all factors as to whether it’s the right move for you.

Things to consider:

  1. Taxes
  2. Climate
  3. Activities
  4. Family

Another Country?

There are several countries around the world with the cost of living metrics much lower than the United States.

Here’s an article by U.S. World News that lists the most desired countries for retirees. Some of the factors include the cost of living, climate, and health care.

What will you do?

Are you going to work, volunteer, or play golf? A lot of people say that when they retired, they were busier than when they were working.

What you do in retirement will play a significant role as to how fulfilling your retirement is. It can also play a role when deciding where you want to live.

If you want to spend as much time as you can with your grandkids, then you’ll probably want to stay close to them.

Whatever you decide to do, you have to make sure it fulfills four things.

  1. The activity has to make you use your mind. You need to stay sharp.
  2. The activity needs to create a community, of sorts, around you. Having a network of people you talk to and hang with is important.
  3. The activity needs to keep you active.
  4. The activity needs to give you a sense of purpose. Checking those first three things is awesome! That’s a great start! I would recommend you do something that benefits others. Whether it’s your community or people in need.

The most important factor in retirement, for current retirees, is their health. Keeping active, social, and mentally stimulated is essential for a long and happy retirement.

Conclusion

When we talk about retirement, finances play a very important part, but it absolutely should not be the only thing you think about.

What you do, where you do it, and who you do it with are all incredibly important details to keep in mind.

If you’d like to learn more about anything I talked about, I’ve linked to several resources below.

Should I Downsize?

When Should You Retire?

Income During Retirement

Retiring Out Of State

Retiring Abroad

What You Need To Know About Retirement Savings