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You Can Be Financially Free: Break The Chains of Living From Paycheck to Paycheck

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how to stop living paycheck to paycheck

Living paycheck to paycheck isn’t just financially challenging; it’s incredibly stressful. For many households, being that close to the financial edge every single pay period seems like an inescapable situation. Fortunately, there is a way to break the chains and move toward something better. If you’re trying to figure out how to stop living paycheck to paycheck, here are some tips that can help you become financially free.

Closely Examine Your Spending

The first thing you need to do if you want to figure out how to stop living paycheck to paycheck is to take a close look at all of your spending. That means going beyond your typical monthly bills and debt payments. You need to determine where every single dollar (or penny) is going each month, allowing you to identify leaks that are putting a strain on your budget.

Usually, this involves examining all of your spending from at least the past three to six months. You need to figure out where your money is going, ensuring you can see the patterns or habits that aren’t serving you well.

Additionally, spend time thinking about your spending motivations for anything that’s not related to a genuine necessity. Do you struggle with impulse purchases during routine grocery trips? Have you made exploring products online when you’re bored a habit? Do you shop in response to emotional distress?

By understanding not just where your money is going but also why you’re spending in that manner, you’re giving yourself the ability to make sounder decisions moving forward. You can set up barriers or select alternatives to help break bad habits, allowing you to adjust your spending and ensure your financial future.

Set Up a Workable Budget

While part of examining your spending focuses on identifying leaks, it also provides you with critical information about your regular expenses. One reason many people struggle to create a workable budget is they can’t accurately estimate how much money they need to dedicate to specific spending categories. After reviewing three to six months of data, it’s far easier to identify realistic targets, allowing you to create a budget that aligns with reality.

Begin by accounting for necessities like rent, mortgage payments, utilities, minimum debt payments, insurance premiums, groceries, and transportation. Determine which ones are fixed and which ones you can potentially alter, separating out the viable targets if you need to cut back.

After that, add in costs that you can potentially eliminate or significantly reduce. Entertainment, dining out, high-cost self-care, delivery services, beyond-necessity clothing, and similar expenses usually belong in this category.

Once you do that, compare the total cost of your expenses to your income. If your outgoing money is close to (or in excess of) what you bring in, then reductions are usually necessary. Determine what non-necessities are worth targeting. Maybe you could pare down on streaming services, stop dining out, or take other steps to free up cash.

Additionally, see if you can find cheaper alternatives to any necessities. For example, could you change to a lower-cost cellphone or internet plan? You could also see if you can get more affordable auto, home, or renters’ insurance by switching providers.

The goal is to cut back enough to ensure your income exceeds your monthly spending. By doing so, you can get on a path that makes living paycheck to paycheck a thing of the past.

Increase Your Income

When your expenses and income are too close together, you don’t have any money left to tackle other financial goals. If you’ve cut back your expenses as far as possible and still can’t break the cycle of living paycheck to paycheck, then finding ways to earn more income is the logical next step.

If you’ve been working in your current position for a while, haven’t received a raise recently, and have a history of meeting or exceeding expectations, then asking for a raise is potentially worthwhile. Before you meet with your manager, spend time looking at your recent performance and gather examples of successes. That way, you can justify your request with greater ease and increase the odds that they’ll agree.

Another option is to look for a higher-paying position elsewhere. This is worth considering if you have in-demand skills and the average salary in your area for people with your capabilities is higher than what you’re currently receiving, particularly if your current employer isn’t willing to increase your pay rate.

If you have multiple working-age people in your household and they’re not all financially contributing, you can also see if they can pitch in to create more room in the budget. Be honest about the current situation and find out if they’d be willing to contribute.

Finally, you can also explore getting a second job or a side gig. There are many flexible options available, allowing you to continue working in your current position while also securing income through another employer.

Set Up an Emergency Fund

As soon as you’re able to set money aside in savings, make creating an emergency fund a priority. By having at least $1,000 in an account to handle the unexpected, you can avoid having to turn to debt to cover an emergency. Essentially, it allows you to build a cushion. Along with making the unexpected easier to manage, it can provide a lot of peace of mind. Plus, if you choose a high-yield savings account to hold the money, it’ll earn interest and grow faster.

You don’t need a lot of cash to start an emergency fund. Even setting aside $10 per week will allow you to build one up over time, so don’t let having to begin small prevent you from getting started.

Get Guidance from a Professional

If your financial situation is especially challenging, there are free resources available that can help you find a viable path. Certified non-profit credit counseling organizations are an excellent place to turn. They often have educational materials and workshops available that can prove valuable. In some cases, credit counselors can even help you make a budget or figure out how to get your financial footing at no cost to you.

By working with a reputable credit counseling organization, they may even be able to create a debt management plan that can reduce your costs. For example, they might be able to negotiate with your lenders on your behalf, as well as wrap up all of your debt obligations into a single, convenient monthly payment. While they may charge a small monthly fee for the service, the overall savings typically more than offset it. Just make sure you find a reputable agency, such as one that’s certified by the National Foundation for Credit Counseling (NFCC).

Use Your Why as Motivation

In many cases, breaking the cycle of living paycheck to paycheck means making some sacrifices along the way. You may need to forgo activities or spending that you enjoy, and that’s not easy.

What’s important to remember is why you’re trying to better your financial position. By keeping that in mind, you can stay motivated.

Additionally, it’s also critical to remember that sacrifices today can lead to a brighter tomorrow. As you right your financial ship, you can achieve vital goals. Plus, once your financial house is in order, you may have more room in your budget for niceties, allowing you to loosen up without having to return to paycheck-to-paycheck living.

Do you have any more tips that can help people figure out how to stop living from paycheck to paycheck? Have you tried any of the strategies above and want to tell others about your experience? Share your thoughts in the comments below.

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Can Families Still Afford A Trip to Disney?

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A trip to Disney World or Disneyland seems like a fantastic idea for a family vacation. However, once you start looking at the cost, you may wonder if a Disney vacation is actually affordable. Many families don’t realize how much they’ll have to spend until they start exploring, and a bit of sticker shock is usually part of the equation. If you’re wondering, “Can families still afford a trip to Disney?” here’s what you need to know.

What Impacts the Cost of a Trip to Disney

The price of a Disney vacation varies based on a few factors. First, whether you go to Disneyland or Disney World makes a difference, as the cost of flights and accommodations depends on distance and location. Additionally, Disneyland and Disney World ticket prices in 2023 went up by as much as 8.9 percent in October and now cost as much as $194 per day pretax. Even the cheapest tickets are spendy, usually running $104 per day pretax.

Exactly how much you’ll pay for tickets varies based on the days you plan on visiting, the type of ticket you select, and whether you choose one-day or multi-day ticket options. Further, features like park-hopping and line-skipping increase the price.

Plus, you have to figure out how much you’ll spend on food. Dining in Disney parks can get expensive fast, and while you can offset this by bringing outside food and drinks with you, you’d have to haul everything.

Finally, there’s a good chance you’ll want some souvenirs, and those aren’t usually cheap. Again, the precise price depends on what you select, but it’s wise to determine how much you’d likely want to spend on mementos.

How to Estimate the Cost of a Disney Vacation

In many cases, the only way to know for certain how much a trip to Disney will cost your family is to run the numbers. Begin by exploring park ticket prices on the days you’d want to visit. Determine how many days you want to enter the park, as well as the type of tickets you’re open to using. If you need to keep the costs down, keep the tickets as basic as possible, skipping options like park hopping to get a better deal.

Also, check out travel and accommodation costs by using various websites. Many sites are excellent for finding low-cost airplane tickets, so leverage those when possible. For accommodations, it’s usually cheaper to forgo Disney resorts and select something offsite. Check out hotels, motels, and vacation rentals near the park. Just be aware some types of accommodations may come with a shuttle to the parks, so they may help you avoid expenses like taxis, rideshares, or rental cars.

Then, factor in the cost of meals. This part is tricky, as costs can vary wildly. One way to standardize it is to check out Disney dining plans, which are prepaid options. During 2023, quick-service dining plans run between $24 and $60 per person per day, while the standard dining plan is closer to $30 to $95 per person per day. Generally, those get you two meals with drinks and one snack with a drink each day.

Finally, factor in souvenirs. Often, what’s best here is to determine the maximum amount you’d like to spend per person and use that as a limit. Once you do that, add everything together, and you should have a solid estimate.

Can Families Still Afford a Trip to Disney?

Whether a trip to Disney is affordable depends on an individual family’s financial situation. However, by using the process above, you can figure out if a Disney vacation works with your budget. For some, it may be too expensive or might require saving over a period. For others, it may be doable. But even if it’s manageable, most would agree that a trip to Disney is expensive.

Do you think that the Disneyland and Disney World ticket prices in 2023 mean most families can’t afford the trip? Do you have any tips that can help families make visiting Disney more affordable or manageable? Share your thoughts in the comments below.

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Cost-Effective Ways to Naturally Treat Chronic Pain

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People have turned for centuries to herbs, oils, and alternative medicine to help pain. Some people prefer natural remedies because they lack artificial chemicals, but others prefer them because they often save money. There are sufficient devotees of natural remedies that there are college courses that can provide a doctorate in naturopathic medicine.

How Does Pain Occur?

To understand pain relief, it can be helpful to understand how pain occurs. When a body part is injured, the body tissue in that area releases chemicals near the injured leg. Those chemicals will irritate the end of the pain nerves. Next, the nerves send a pain message to the spinal cord and then to the brain.

When the body tissue heals, the chemicals stop flowing, and the pain signals are contained. It may interest you that the body’s response to a trauma – like an auto crash – will send a burst of adrenaline through the body. That adrenaline influx can temporarily decrease pain symptoms. Natural remedies seek to invoke relief in a similarly natural way.

Natural Herbs Taken by Mouth

One cost-effective spice many people use for pain relief is clove oil. Cloves have a spicy smell and are known for relief tooth and gum pain. Ginger is another piquant spice often made into tea and used to ease muscle aches from arthritis. One more spice that has been gaining in popularity for pain control and inflammation relief is turmeric. Turmeric is often placed in capsules or mixed into tea.

Willow bark is taken directly from white willow trees, as its name implies. Willow bark is a salicylate – which means it acts similarly to aspirin. Boswellia is a resin (also called Indian frankincense) that effectively relieves muscle aches from arthritis. A dietary element shown to reduce pain is the cost-effective use of polyunsaturated fatty acids (like sunflower and corn oils, as well as fish oils).

Natural Topicals and Inhalations

Essential oils, like rosemary and peppermint oils, have been shown to relieve inflammation and pain by manual application to the pain site. Peppermint oil is often applied to the forehead and temples to penetrate the sinuses and provide relief for headaches. Capsaicin has also been increasing in popularity for arthritis relief. Capsaicin gel originates from chili peppers; the same heat you experience when you eat chili will penetrate your muscles to relieve pain.

One of the most well-known substances to inhale for natural pain relief is marijuana. There has been a recent increase in the legal uses of medical marijuana. For example, Florida is home to 800,000 users of medical marijuana. One less controversial and very inexpensive plant used for inhalation is eucalyptus, the main ingredient in a popular menthol inhalation rubbed on the chest.

Other Natural Pain Relief Methods

If the pain involves an injury to your muscles, you should consider consulting a chiropractor to help with pain relief. 35 million Americans visit chiropractors yearly. Chiropractors utilize natural methods, including massage, cold compresses, and spinal adjustment. Another popular natural method is acupuncture, which uses tiny needles placed strategically on specific points in the body.

Many other people find pain relief by practicing yoga – or other methods of contemplative movement like tai chi. These practices use breath control and meditation to stretch their muscles and relieve tension and pain gently. The breathing and meditative movements will allow dissipation of pain signals, leading to pain relief.

An internet search can help you discover other types of natural pain relief. Many people who feel challenged by today’s high medication costs have embraced the use of herbal and alternative medicines. If you try the above suggestions, you will soon find a reduction in both your pain and your medication costs.

Affordable Alternatives to Traditional Divorce: A Guide to Low-Cost or No-Cost Divorce Options

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how to get a free divorce

Ending a marriage is always difficult. Regardless of whether it’s the right move, the situation is emotionally charged. Then, when you factor in the cost, the hardship seems to multiply. Fortunately, there are steps you can take to minimize the expense. By going with one of the affordable alternatives to traditional divorce, you can pay far less and may not have to spend anything at all. If you’re trying to figure out how to get a free divorce (or at least a low-cost one), here are some options to explore.

Research Divorce Fee Waivers

For civil court proceedings like divorces, counties typically have a fee waiver program available. This option targets lower-income households and aims to make civil court filings and associated fees affordable (and potentially free) for individuals who don’t have the money available to cover the cost.

Usually, whether a person qualifies for a fee waiver is based on their family size and household income. In most cases, the cutoff is a specific percentage above the Federal Poverty Standard, and the Federal Poverty Standard varies depending on the number of people within the household. If you want to see if you qualify, you can typically find information about the program on a county agency website.

Get a Settlement Agreement in Place

When it comes to divorce proceedings, uncontested divorces are generally less expensive than contested ones. If you and your soon-to-be former spouse both believe that a divorce is wise and agree on the distribution of marital assets, getting a settlement agreement in place before filing for divorce can help.

Divorce settlement agreements – also referred to as property settlement agreements or marital settlement agreements – are formal documents that outline how property, assets, and debts will be split between the two parties. In some cases, people can handle these on their own, or they may be able to use a lower-cost mediation service over a lawyer to get one in place. Doing so, can streamline the divorce filing and any subsequent processes, keeping the total cost minimal.

Do a DIY Divorce Filing

One of the least expensive options available for divorce is a do-it-yourself (DIY) divorce filing. With this, you’ll prepare the paperwork yourself instead of hiring an attorney to do it for you, and that can result in significant savings.

In many cases, the required forms are available online, so your only cost would involve printing the paperwork. Your local court clerk’s office may also have divorce packets available with the needed documents, either for free or for a very low fee.

A similar option that costs a bit more but is still far less expensive than hiring a lawyer is to use an online divorce service. Through the website, you’ll get walked through the completion of any required forms, which makes the process easier.

Check for Simplified Divorce Options

Many states and counties offer simplified divorces, and they’re often less expensive than a more traditional proceeding. These are available to couples who agree the divorce is uncontested and when there isn’t any property that needs dividing, and there are no shared dependent children.

Often, getting a simplified divorce isn’t unlike working through the settlement agreement process. It results in a far more streamlined procedure as the court doesn’t have to make major decisions. In turn, the total cost is less.

Try Divorce Mediation

If you’re facing a contested divorce, divorce mediation is a lower-cost option that is worth exploring. With mediation, a trained and neutral mediator works with both spouses to negotiate solutions to any disagreements.

The goal is to ultimately create a settlement agreement in advance, but the process accommodates situations where negotiating is necessary. It’s a financially beneficial option since working with a mediator is potentially far less expensive than having the disagreements addressed in court.

Find Pro Bono or Volunteer Lawyers

Low-income households may have access to free or reduced-cost legal services through nonprofit organizations in their area. As a result, even a contested divorce is far less expensive as you don’t have to pay for an attorney.

With this approach, you can get assistance with the entire process, including any required filings and court appearances. If you want to explore this option, look for legal aid organizations in your area.

Consider an Annulment

Marriage annulments are far less expensive than traditional divorces, but they aren’t available to everyone. Generally, an annulment declares that the marriage was invalid, and since that’s the case, conditions must be met. For example, if one spouse was not in a condition or position to properly consent – such as by being intoxicated when the wedding took place – then getting an annulment may be an option.

The rules of annulments can vary by state. As a result, you’ll need to look at the requirements in your area to determine if it’s an option.

Do you know of any other options that can help people figure out how to get a free divorce or a low-cost divorce? Have you used any of the traditional divorce alternatives above and want to tell others about your experience? Share your thoughts in the comments below.

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Appreciating vs. Depreciating Assets

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African American woman reviewing her assets.

It’s widely known that there are two types of assets: appreciating and depreciating.  However, what is less well known is the difference between what’s classified as appreciating and depreciating.

In this article, we will look at what each term means, examples of each, and how to use them effectively.

What’s appreciation?

Appreciation is the increase in value. The majority of assets used to accumulate and grow wealth, appreciate. An asset can appreciate because of supply, demand, or a change in interest rates.

What’s depreciation?

Depreciation is the exact opposite. It’s the loss of value. The most common example is a car, but more on that later.

It is a new year and time to start thinking about tax plans for this financial year. The tax depreciation schedule calculator is a simple online tool that allows an employer to calculate the depreciation value of vehicles used for commercial purposes. This tool can help employers who wish to ensure that the correct amount of tax is deducted from their staff’s wages and prevent any penalties from being handed out.

Appreciating assets

  • Stocks – It’s commonly known that investing in stocks is the best way to not only keep pace with inflation but to grow your wealth. A stock is partial ownership in a public company. Popular examples include Apple, Amazon, Facebook, etc. (Click here to learn more about stocks)
  • Real estate – Single-family homes, duplexes, apartment complexes, etc. Though the pace at which real estate appreciates dwarfs compared to stocks, it does so slightly over time (source).
  • Private equity – This can be starting a company of your own or you can invest in a startup. There are also private equity funds that exist, as well. Basically, it’s a company or venture that is not open to the public (i.e. stocks on the exchange, etc.).
  • Alternative – Less common assets that could appreciate (cryptocurrencies, precious metals, art, and other collectibles).
  • Bank accounts – Savings accounts, certificates of deposit, etc. These don’t appreciate much, especially in the current “low-interest-rate”. Some may argue that you shouldn’t classify these as appreciating assets because inflation erodes away the purchasing power over time.

Depreciating assets

  • Cars
  • Boats
  • Furniture
  • Equipment
  • Patents/Copyrights – Patents, other than section 197 intangibles, have a useful life of 10 years and can be amortized over that 10 year period (source).

What’s the point?

Understanding appreciating vs  depreciating assets gives you more wealth building potential and greater tax flexibility.

  • Appreciating assets – Owning and investing money in an appreciating asset is the key driver in growing your wealth. Those who’ve accumulated significant amounts of wealth have done so by earning a living, saving, and investing diligently over decades.
  • Depreciating assets – There are a few reasons to own a depreciating asset.
    • Fun and convenience – We own and drive cars because we need them to go places. We buy boats because they are fun. In either case, you could also own a car or boat for your business, in which case it would serve a different purpose.
    • Business – Owning and operating machinery and equipment is how many of us make a living or run a business.
    • Tax write off – If you use equipment, machinery, cars, etc. for business, oftentimes you can use the depreciation of that equipment as a tax write off.  Financial advisors use a set of fancy calculations to come up with the tax benefits of depreciation, we won’t go into that here.

Conclusion

Appreciating and depreciating assets both serve a purpose. It’s important to know the difference between the two and how to use each one as effectively as possible.

Stocks can sometimes experience periods of volatility and negative performance. During such periods, the value of such stocks may decline.

Be advised: talk to your accountant about specifics.

Here’s What The New 2024 Military Pay Raise Will Look Like

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Each year, servicemembers wait to see if they’re getting a pay raise. Whether one occurs depends on Congressional and Presidential action, as the increases are tied to defense spending bills that are created and approved on an annual basis. Currently, a significant military pay raise seems to be in the works. Additionally, there are other potential pay bumps that could impact specific servicemembers. Here’s what military pay make look like in 2024.

Proposed Military Pay Raise for 2024

Currently, proposals outlining potential pay increases for military service members contain a 5.2 percent pay bump. Versions created by the House and Senate both include the raise. If approved, that rate would go into effect in 2024, officially becoming the largest pay increase for servicemembers since 2002.

Is the Pay Raise Guaranteed?

While a pay raise is highly likely to materialize for military members in 2024, the above rate is simply proposed; it’s not formalized yet. As a result, there’s the possibility that it would change before anything is officially approved.

Still, the proposal is receiving significant and broad support. Both the House and Senate proposals contain the same 5.2 percent pay raise, and President Biden has also shown support for that figure. As a result, there’s a good chance it will become part of any formally approved defense spending bill.

Utilizing a BAH Calculator for Informed Financial Planning

In light of the proposed military pay changes for 2024, understanding the intricacies of your compensation is essential. One crucial aspect that service members should consider is the Basic Allowance for Housing (BAH), which plays a significant role in their overall financial well-being. By using a BAH calculator, military personnel can estimate their housing allowance based on their rank, location, and dependents, helping them make informed financial decisions and ensure their housing needs are met effectively. This tool becomes especially valuable in times of proposed pay adjustments, as it allows service members to plan their finances more accurately. For example, BAH income can be used to help qualify for a va loan and va construction loan or other important financial milestones.

Other Potential Pay Changes

Another proposal by the House outlines potential pay increases for enlisted service members with a rank of E-6 or below. Essentially, the pay scale for servicemembers of those ranks would get reworked, leading to a notable bump in base pay.

Based on the bill, an E-1 with a minimum of four months of service would see their base pay go up to $2,600.60 per month. An E-2 would receive $2,799.20, while E-3s would get between $2,900.90 and $3,050.60, with variances based on years of service.

The ranges for E-4s and E-5s (also based on years of service) would become $3,010.50 to $3,250.30 and $3,100.30 to $3,250.20, respectively. Finally, an E-6 who has less than two years of service would get $3,210.

The reason for this proposed change is largely based on concerns that junior enlisted aren’t receiving enough pay to afford food, housing, and similar necessities. These worries were more pronounced once inflation began skyrocketing in 2022.

Additionally, fears that military pay rates weren’t competitive when compared to the private sector played a role. If the salaries aren’t competitive, recruitment and retention become challenging, making it hard to maintain proper personnel levels.

However, it’s critical to note that this is merely a proposal at this point, and there’s no guarantee of approval. Still, the likelihood that changes are on the horizon remains reasonably high, as there’s broad support for ensuring military servicemember pay is reworked to increase its competitiveness.

Do you think the 2024 military pay raise makes sense based on the state of the economy? Do you believe that servicemembers deserve more? Share your thoughts in the comments below.

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How to Get the Most From Your Car Accident Settlement

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Surviving a car crash can shake you up, leaving physical scars and causing deep emotional wounds. Crashstats states that millions of people are injured on U.S. highways annually. Navigating the aftermath, including the financial implications, can be overwhelming. But knowing how to get the most out of your car accident settlement can help lighten the load. There are fundamental steps to nail down when dealing with a car accident claim. Sticking to these can ensure you get what’s rightfully yours and help keep your wallet healthy during this tough time.

Seek Legal Guidance from Experienced Personal Injury Lawyers

Did you know that there are approximately 60,670 personal injury lawyers in the United States as of 2022, as stated by IBISWorld? Getting a solid lawyer on your side is super important. They’ll guide you through all the legal mumbo-jumbo and fight for your rights. Getting a top-notch personal injury lawyer on your side can give you killer advice and strong support while navigating the settlement process. A skilled lawyer negotiates with insurance companies and assesses the full extent of your damages. They ensure you’re treated fairly and get what you deserve for your hurt and losses.

Document and Evaluate All Damages

After a car accident, it’s essential to document and evaluate all damages meticulously. This includes not only physical injuries but also property damage. Don’t forget to jot down every penny spent on medical stuff and any missed work cash. You should have the details of all medical treatments, prescriptions, and related expenses incurred due to the accident.

Don’t forget to note how the crash ruined your daily routine and peace of mind. This is when you want to highlight emotional distress, pain, and suffering. Getting all your loss info together is super important. It’s the key to scoring a settlement that makes up for everything you’ve been through.

Understand the Dynamics of Insurance Claims and Market Trends

Delving into insurance claims and market trends starts with understanding basic concepts, such as policy terms and claim processes, before advancing to the more complex dynamics of market trends. GlobalNewswire tells us that turbochargers are blowing up in a big way. Between 2022 and 2030, we will see serious growth globally in the turbocharger market. This points to major advancements and trends in-car tech. When hashing out a car accident settlement deal, you must understand how this can shape your game plan. Ensure you get a good grip on your insurance policy’s ins and outs.

Know what’s covered, what isn’t, and how to use it effectively. Stay in the loop about how market trends can mess with your car’s worth and how much fixing it might cost you. Armed with this understanding, you’ll have the upper hand in bargaining. It lets you make smart calls about your payout, rooted in facts.

Be Patient and Diligent Throughout the Process

Securing the most finances from your car accident settlement often requires patience and diligence. Although it might feel overwhelming and take a while, staying driven and keeping your eyes on the prize is vital. Don’t let any setbacks throw you off course. Respond promptly to any requests from your legal representative or insurance company, and stay actively involved in the negotiation process. Keep the communication line open with everyone who’s part of this deal.

Navigating a car crash settlement can be like finding your way in a maze. But don’t sweat it; by sticking to these steps, you’ll not only master the intricacies but also get the reimbursement that’s rightfully yours. Truly understanding insurance claims plus market shifts can tip the scales in your favor.

Looking after your health and protecting your finances is key. Don’t shy away from getting help from seasoned experts or diving deep into the nitty-gritty of procedures—it can hugely sway the result of your car accident claim. Be proactive, be informed—your outcome depends on it.

How Colors Affect Your Investment Decisions

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When I was a new advisor, one area I failed to understand was the importance of color. We are, at our heart, 90% subconscious beings. Sure, we have thoughts, but while we’re deciding which ice cream to eat, our automatic mind is handling the so-much-more trivial tasks of (among many, many others) breathing and sensory response. Those who are able to reach those subconscious portions of us are more likely to sell us on pursuing whatever it is they’re selling.

I was in the business of selling you on your goals. Better yet, I was in the business of selling you on the fact that you’d rather pay me to handle as much of your money as possible.

I wasn’t selling actual products, I was selling the concepts of trust, commitment, and richness. These concepts can be expressed in colors.

Colors Affect Decision Making

The use of color in sales isn’t limited to investment advisors. On the contrary, most advisors have little understanding of the importance of the subconscious on a client’s decision to say “yes” or “no” to a strategy. Yet there’s tons of research available, from color’s role in shopping to fruit-buying, and even clean energy and cleaning supplies.

Marketers understand the role of color. So should you.

Brief overview of colors

Most of the colors below have two different associations, that depend on your experience and temperament

  • Red – Danger, power, and strength. On the other side of the coin, passion, desire, and love are also associated with this color.
  • Green – Growth and harmony. Common associations include tranquility and a sense of calm.
  • Blue – Trust, peace, compassion, and warmth. Can also emit feelings of sadness and cold.
  • Brown – Dependability and resilience. Users of brown are typically more reserved.
  • Orange – Joy, enthusiasm,  and attraction are common associations. Orange is also used to call attention.
  • Purple – Mysterious, wealthy, and soothing (to some).
  • Yellow – Aggressive, energetic, and cheerful.
  • Black – Power, aggressiveness, and sadness.
  • White – Purity, bland, and cold.

Effective Colors

If I had meetings with potential new clients, I’d choose royal blue ties. Royal blue suggests security and trust. My goal with new clients was to be the guy they could hand money over to manage. Imagine that you were meeting with an advisor that you’d never previously met. Would you trust a guy wearing red?

In later meetings, when we’d talk about investing, I’d switch colors to green. Hunter green especially is a wealthy color. This was most effective with clients who seemed to be in love with the pursuit of money. If I projected wealthy colors, they were more likely to accept my counsel and allow me to manage more of their assets inside my firm. Even so, if I wore green to meetings where we were signing contracts, it symbolized that these were going to be big money-making investments.

Avoid These Colors

I owned a kick-ass yellow tie. Besides being the color of caution, my blondish hair created a pale, washed outlook. It seemed like I might be sick. This unsteady, youthful, and pale look decreased sales.

Red was a color I played games with. I had a red marker on my dry erase board. When I was disproving something other advisors had told my client, or I was recommending areas we wanted to avoid, I purposefully used red. I switched to blue or green markers to illustrate my own strategies.

What Does This Have To Do With You?

Colors affect all of your buying decisions. If an advisor is recommending a change in your strategy, be aware of her choice of colors when making an argument. When you’re handed a prospectus for a product, look at the colors they choose. When you go to a financial company website, avoid the urge to choose based on the color pattern.

Let’s look at a few examples:

Fidelity.com: Bright, fresh green. The only orange is the “choose an account button.” Orange is a “call to action” color. Blue is only used in the words “See how Fidelity can help.” Remember what I said about trust? These colors aren’t accidents.

Vanguard.com: Red all over the place. At first blush, this seems like a mistake, but think about what Vanguard sells. They sell at a lower cost and the fact that you’re probably paying too much if you’re looking somewhere else. Even the keyword on the side, “Vanguarding” suggests stopping to think. Red increases your heart rate, gets you excited, and creates energy. Red is the perfect color for what Vanguard sells.

Scottrade: An interesting choice….purple. This isn’t a bad move either. First, it’s different from the others, but purple is a calm, soothing color. As a slightly smaller broker, Scottrade’s job is to get you to think of them as a steady ship (often I was surprised that many of my clients had never heard of Scottrade).

TDAmeritrade: Check out all the green.

Ameriprise:  Tons of royal blue. Why? This is an advisor-driven company, so they’re not going to sell red. They’re selling a trusted relationship.

E-Trade: Their site is too busy. Lots of green, some blue, and a little purple all make sense. The black across the top is interesting. Black is a power color. I used it during what we’d call “come to Jesus” meetings (I don’t mean to be offensive – that’s the term every office I ever worked in called it when clients needed to either be given the boot or get on board). However, it’s also an impulse shopping color, so maybe E-Trade thinks they have to get people while the impulse is on.

Charles Schwab: Blue, with a big lime button in the middle “get guidance” button and an orange “open an account” button at the top.

The Most Important Point To Remember

Colors are used against you all the time. To stay in control of your money, use colors defensively. Or, when you’re up for your next raise, use colors against your boss!

For more on financial advisors and how to pick the right one check out these great articles.

When I Was a New Financial Advisor
What is the Role of a Financial Advisor?
Afraid To Meet With a Financial Advisor? Here’s How the First Meeting Goes 

Photo credit: wazimu0.

Is Forming an LLC the Right Move for Your Rental Property?

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If you own rental property, you may wonder if setting up an LLC for it is the best choice. Ultimately, there are plenty of benefits to using an LLC for rental property management, but there are also some drawbacks to consider. If you want to know whether an LLC is the right move for your rental property, here’s what you need to consider.

What Is an LLC?

An LLC (limited liability company) is a type of business structure. It’s one of the less complex options available, and you have the option of operating it alone, as part of a partnership, or with a group.

With an LLC, you get pass-through taxation as an option. While corporations are taxed on their profits, and then the owner’s income is also taxed, an LLC allows the profit to pass through to you without it being taxed at the company level. As a result, the earnings are only taxed as individual income, minimizing how much you’ll spend in taxes.

The Benefits of Forming an LLC for Your Rental Property

Limiting Personal Liability

The primary benefit of setting up an LLC for rental property is that it limits your personal liability. Essentially, if you own a rental property as an individual, if someone files a lawsuit relating to that property, your personal assets are at risk. With an LLC, you separate your personal assets from your rental properties, reducing your risk dramatically.

Creating Property Separation

When you’re setting up an LLC, you aren’t restricted to just one. Instead, each rental property you own could be part of its own LLC. With that, a lawsuit involving one property doesn’t inherently impact any of your other rentals, providing your broader rental operation with some protection.

Simplified Expense Management

Starting an LLC can help you access business bank accounts. Then, you can open an account specifically for your LLC and use it to manage all related income and expenses. That centralizes the related banking activities, and that can make tracking the associated spending and claiming operating costs on your taxes more straightforward than if it was done through your personal account.

The Drawbacks of Forming an LLC for Your Rental Property

Getting a Mortgage Is Harder

In many cases, buying or refinancing property under an LLC is harder than doing so as a homeowner. Lenders often have more stringent requirements related to investment or company-owned properties, so qualifying for a mortgage may not be as straightforward as you expect.

Mortgage Interest Rates May Be Higher

Along with mortgages being harder to get when they’re acquired through your LLC, the interest rate you’re charged may be higher. How much higher will vary depending on several factors, but it can be a significant difference.

LLCs Have Ongoing Costs

Operating an LLC does come with ongoing expenses related specifically to keeping the company compliant with local regulations. You’ll have to pay for annual filings. Plus, you’ll need to renew any related licenses or permits, and those can come with fees every year.

How to Decide If Forming an LLC for a Rental Property Is Right for You

Setting up an LLC for a rental property does come with benefits, but there are also downsides to going that route. As a result, you need to determine if the pros outweigh the cons in your eyes as a starting point.

It’s also wise to explore some alternatives to setting up an LLC. For example, some people may find that an umbrella insurance policy – sometimes referred to as landlord insurance – provides them with enough protection without the hassles associated with an LLC. You may also determine that another business structure is a better fit.

Ultimately, an LLC can be the best move for some rental property owners, but it may not be the ideal option in all cases. Research the paths available to you, then select the one that works for your situation.

How to Set Up an LLC for Rental Property

First and foremost, it’s critical to note that how LLCs are set up does vary by state. However, many of the core parts of the process are highly similar.

You’ll need to find an available name for your LLC as a starting point. Creating the Articles of Organization and an LLC Operating Agreement, and you might need to publish a Notice of Intent. You’ll also need to secure any licenses or permits that are required in your state and register the LLC with the appropriate state entity. Setting up a business bank account is wise, as well as updating rental leases to show the LLC as the owner.

It is critical to note that if your rental property has a mortgage associated with it, you’ll need to contact your bank to find out whether you can transfer the title to the LLC. Additionally, you’ll want to find out if there are any expenses related to making that change, such as an interest rate adjustment or various fees.

Once your LLC is set up, you may have certain ongoing costs, too. For example, many states have an annual fee requirement, and you might need to pay specific state or franchise taxes.

Do you think that forming an LLC for rental property is a smart move, or do you feel that it’s unnecessary? Did you form an LLC to manage your rental property and want to tell others about your experience? Share your thoughts in the comments below.

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4 Key Indicators You’ve Found a Private School Worth Your Money

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More and more people are realizing that a private school is the best option for their children. This is based on the continued better performance of children in private schools than their public counterparts. As a result they’re willing to make the financial sacrifice that it takes to put their children through private school. That said, not all private schools are created equal, so how do you know you’ve found one that’s worth your money? Here are four key indicators.

1. It Places an Emphasis on Sustainable Efforts

The first indication that you’ve found a good private school is that it places an emphasis on sustainability. With the state of the environment becoming a matter of concern with increasing urgency and more people making an effort to go green, this is an important consideration. That said, you can find out whether the private school in question teaches about environmental sustainability. To this end, they could teach younger students that the three Rs are reduce, reuse, and recycle, according to National Geographic. Based on this, you may know that the school in question intends to produce citizens who are capable of living sustainable lives.

2. It Offers a Recognized Curriculum

Something else that could show you that you’ve found a private school that’s worth your money is the curriculum it offers. Private schools are typically independent in terms of their funding, academic calendars, and even the curriculum. This means that there are going to be many variations in terms of the curricula offered from one private school to another. In this case, some of the curricula may not be recognized by other institutions of learning. This can pose a serious issue when it’s time for a child to graduate and go to college if they come from a school with an obscure curriculum.

3. It Has a Low Teacher-Student Ratio

The best private school should also have a low teacher-student ratio. When this is the case, you can be sure that each student will receive more individual attention from their educators. As a result of this, students are more likely to keep up with their academics and thrive because their teachers won’t let them fall behind.

Note that a mere 25% of all schools in America are private schools. With that being the case, their tuition and other details may make it hard for a large part of the population to afford to put their children in private schools. This is the main reason for the typical low teacher-student ratios common in private schools.

4. It Has a Clean and Safe Environment

Finally, the right private school will have an environment that’s safe and clean. In such a case, it’s going to be harder for issues like sickness and diseases to spread among the student population. On this note, keep in mind that carpet can last for anywhere from five to 15 years. This depends on the carpet fibers, carpet cushion, carpet type, and how much foot traffic the carpet experiences, according to Angi. Since finances are not much of an issue for private schools, it tends to be easier for them to maintain high standards of cleanliness and hygiene.

If the private school that you want to enroll your child in meets these four qualities, then it’s worth your money without a doubt. Don’t hesitate to keep searching until you find a private school that fits the bill for you. Your efforts will be validated by the amazing performance of your child at the end of their academics.