2 Ways to Begin Planning for Financial Security

For many of us, the American Dream is all about creating financial stability through what we all hope will be a successful enough career to warrant an early retirement; and of course, the earlier the better. When it comes to realistically planning for the future, however, your late 20’s can be a very interesting time – personally, professionally, and financially.

Not only are you further removed from the antics of college and squandering paychecks; 30 is staring you right in the face, and it’s suddenly holding you accountable for where you’re at in life. The time is also creeping closer and closer for taking the next step with relationships, houses, babies, and every other part of growing up that can make you quickly feel old.

Most importantly, though, is the fact that for many of us, our late 20’s represents a time when we are finally in a steady occupation and earning decent enough money to start looking towards the future.  That is why it is so important to prepare and be in the right position to take advantage of that moment; here are two ways to initially place yourself on the proper path to financial security:

  1. Properly Leverage the Resources around You- Whether it’s as simple as sitting down with your recently retired parents who can help outline best practices or looking into additional retirement options with your office’s HR Department, you are doing yourself a significant disservice if you aren’t utilizing every resource around you on your quest to gain financial security. Often, your friends and family have already gone through life’s major events- houses, weddings, babies, etc; so why wouldn’t you learn from not only their successes, but from their mistakes too? This practice should start when you are about to graduate college as you can pick up a lot from your friends in terms of how to find a job, begin paying off debt, and establishing a savings account. From there, work with your employer to learn all that they offer from a retirement fund perspective. Businesses will often even match a certain percentage of your paycheck if it is allocated to your 401k; you’d be a fool not to take advantage of that free money by contributing the maximum that they’ll match. As you get older, pay attention to the changing landscape of financial opportunities that come your way; be ready for AARP and embrace Senior Discounts whenever possible. Seek professional assistance and know your finances/assets! Remember, you simply can’t retire, early or not, without first learning how to do so; not in the broad sense, but for your specific situation.
  1. Stay On Track Through Short Term Goals – It can be very easy to get lost and, therefore, frustrated in solely establishing long term goals for yourself, especially in areas of your life that are considered high stakes for the future. Experts suggest that providing yourself with quick goals that offer success early and often can go a long way in getting you in the right groove of practicing sound financial activity. For example, rather than just a broad goal of retiring by 40, create a series of smaller goals that can act as both checkpoints for maintaining progress as well as milestone moments for celebrating achievement. Your first goal should b a simple one- get a full time job. From there, your next goals can be paying off half of your student loan debt by 25; all of it by time you’re 30. While striving towards loan freedom, you could also establish a string of professional and personal goals to match up where you plan on being at that point in your life. For example, at 25, secure a management position; by 30 save enough to buy a ring and get married. The point is, your goals are going to change from time to time as your life does; so although it is great to have an end-game (i.e. the broad sense of “early retirement”), you need to create a set of firm short term goals to help lead you there. It is way too easy to get lost in something that always feels like a distant dream; knocking down these goals one by one will help you build momentum and gain the confidence needed to ultimately succeed.

Take Control of Your Electronic Entertainment Budget

It seems like every few weeks there’s a new “must-watch” movie or show. Competition between traditional and new production companies is driving the wave of high-quality content. I can’t complain, but it’s also hard to keep up. I have an ever-growing list of binge-able things to watch, read and listen to, and in the meantime, I’m paying bills for multiple bills month.

As long as my family’s necessary expenses are covered, spending money on entertainment can be worth it. However, I’ve also noticed that, left unmonitored, expenses can slowly grow out of control. I’d rather look for ways to save money and make more meaningful purchases.

Periodically reviewing how much you spend on entertainment, especially electronic entertainment, could be a good place to start.

Take stock of where you currently stand. Find your starting point by making a list of expenses that fall into the category of electronic entertainment. If you don’t have a budget where you can easily look up this information, you can review previous bank statements or connect your accounts to a budgeting app that can automatically pull in your spending history. This might also be a good time to try several budgeting apps and begin using the one you enjoy the most.

Give traditional cable or satellite TV expenses a second look. If you haven’t “cut the cord” – canceled your cable or satellite TV service – now might be time to give the idea some thought. Many alternative, and often cheaper, options have become mainstream, including free and a la carte sports programming. Even premium networks are sold on their own or as inexpensive add-ons to other services.

You may not want to cancel your entire service but after reviewing what you pay for and regularly watch, you might discover that you could be just as happy with a less expensive package.

In either case, regularly calling your service provider and negotiating your rate could save you money. This same tactic could also work with internet service providers.

Consider splitting the cost with someone else. Some subscription entertainment services can be shared with friends or family. A few even offer several tiers of service, or family packages, that let you create profiles and stream from multiple devices at once. Although the price might be higher for a multi-user account, you’ll still save on a per-person basis.

Choose the person or people you share your account with carefully. In some cases, sharing an account with a non-family or household member could be a violation of the terms and conditions, and with some types of accounts, you could be giving the other person access to your debit or credit card number.

Make a list of free resources you can use. Knowing where you can turn to (legally) watch shows and movies, including recent releases, could put you at ease if you’re worried about canceling a service.

You could start by using ad-based websites that legally host movies and shows. While there are commercial breaks throughout the videos, the services are completely free, and some have mobile apps that you can use to start or resume a video while you’re away from home.

As I’m sure you’re aware, there are plenty of free books, CDs and magazines at many libraries. But the library systems are also keeping up with the times. Some let you “check out” audiobooks, movies and shows without having to visit a branch.

Bottom line: Having access to a wide variety of shows, movies and other types of electronic entertainment can be well worth the cost, but don’t let your monthly expenses go unchecked. Between monthly subscription services, Internet and cable you could be paying several thousand dollars a year.

Find a happy medium by canceling services you don’t want anymore and finding ways to save on those you do. You could then use the savings for something more meaningful. Perhaps that means going to a sports game with friends or family rather than paying for a television service, or putting the money towards a non-entertainment goal, such as a college or retirement fund.

By Nathaniel Sillin

Planning a Home Remodel that Actually Pays Off

There was a time when contractors building McMansion-style home additions or Michelin-worthy kitchens were a regular sight in many neighborhoods – until around 2006, when the Great Recession began to take hold.

Here’s the good news: home improvements are starting to add value in a rising housing market. Here’s the bad news: you have to be very careful about the renovation or remodeling projects you select to avoid over-stretching your budget.

In general, completing successful home improvements comes down to two critical questions:

Will you get most of your money back when you sell your property? (The days of 100 percent-plus returns on renovations are over, at least for now.)

How will project costs affect your overall financial plan?

Here are questions to fuel your planning:

How long you plan to live in the home after the renovation. The Great Recession proved many homeowners didn’t recoup elaborate – or sometimes modest – improvement costs when selling their homes. Even in a recovering market, it’s good to be wary. For now, renovate for the long haul and your personal enjoyment, not overnight sale.

Neighborhood style and standards. We’ve all seen it – the oversized addition that dwarfs the rest of the houses on the block, the $50,000 kitchen upgrade in a small home where a spruce-up for $10,000 or less would do. It’s important to know how your tastes align with what is salable in your market (see Cost vs. Value, below).

Opportunistic buying and installation times for various projects. Take replacement windows, for example. Collect bids in mid-summer and recheck them in late fall — you’ll likely find significant savings on both windows and installation.

Available renovation tax credits on federal, state and local levels. Are there credits or tax incentives on structural equipment or appliances that can offset the cost of whatever you’re planning?
Potential effect on property taxes. Could an elaborate renovation actually turn off future buyers thanks to higher maintenance costs and property taxes?

Intelligence on recent purchase prices and home features. Smart homeowners keep an eye on recent home sale prices in the neighborhood and the features – or lack of them – that made the transaction.

For more detailed information, seek knowledge on a more local level:

Get to know your neighbors. If your neighbors have done home improvements inside and out, politely ask if they’ll share their story.

Befriend a broker. Real estate brokers and agents are happiest when they’re closing deals, but they like to build long-term relationships, too. The best brokers are happy to share neighborhood renovation value intelligence in exchange for a house tour. They can’t sell a house filled with overpriced improvements.

Before major projects, consider a home inspector. A home inspector’s job is to determine if the structural and mechanical aspects of a property are up to code. If a home hasn’t had a structural or mechanical upgrade for many years, professional inspection may detect trouble spots and intermediate upgrades that could be far more valuable than cosmetic work.

Talk to a tax professional. Federal and state tax credits and deductions may be available as part of any project you do. The IRS has a current summary (http://www.irs.gov/uac/Newsroom/Energy-Efficient-Home-Improvements-Can-Lower-Your-Taxes) of 2014 energy credits and related resources.

Check your credit reports and scores. If you need to borrow to complete a project, it’s a good idea to check your credit reports and current credit score to determine whether you’ll qualify for a loan. You have the right to get all three of your credit reports – from Experian, TransUnion and Equifax – once a year for free. You can do so by ordering directly from AnnualCreditReport.com.

Talk to a financial planner. Any home improvement project is potentially major when compared to what you earn or have in savings. A certified financial planner can help you evaluate potential projects against the competing financial goals in your life like saving for retirement and your children’s college tuition.

Figure out what you can do yourself. Whether it’s painting, landscaping, carpentry or electrical work, helping with a few DIY finishing touches on a home improvement project can save money. Just make sure you have the time and skill to pitch in.

Bottom line: Approach a home renovation as you would any other major financial decision – do your homework and see how it fits into your overall financial plan.


By Jason Alderman

When Retiring Together Doesn’t Make Sense


Back when people from the Baby Boomer generation were first planning their lives together, most married couples looked forward to working hard for a few decades, buying a house, raising a family and then retiring together while they still had enough money and energy to travel and pursue favorite hobbies.

Some couples do manage to pull this off and thrive; but for many others, any of a host of obstacles can block their ability to retire at the same time. For example:

  • Thanks to periods of unemployment, home-value decline or 401(k) account loss suffered during the Great Recession, many couples simply don’t have enough money to retire together comfortably.
  • If there’s a significant age difference, one spouse may not have accumulated enough Social Security credits to qualify for a benefit by the time the other is ready to retire.
  • Women often worry that the couple hasn’t saved enough since they’re statistically likely to survive their spouses – often for a decade or more.
  • One spouse must continue working to supply employer-provided medical coverage until both reach Medicare eligibility age (65 in most cases).
  • One spouse is just hitting his or her stride, career-wise, and isn’t ready to slow down.

Among couples who have managed to save enough to retire together, when it comes time to pull the trigger many realize they haven’t fully agreed on where or how to retire; or they discover that their wishes have diverged over the years. This can put tremendous strain on a marriage if you’re not willing to compromise and talk things through.

Long before you actually retire, ask yourselves:

  • Should we downsize to a smaller dwelling or even move to a retirement community?
  • Sell the house, buy a trailer and live like nomads for a few years?
  • Move to a warmer climate or to be nearer our grandchildren?
  • Move to a state with lower taxes or cost of living?
  • Start a small side business to keep money rolling in?
  • Are we finished supporting our children financially?

Even before asking those tough questions, you already should have begun estimating your retirement income needs. Social Security has a helpful online Retirement Estimator that can help ( www.ssa.gov/estimator). After you’ve explored various retirement scenarios, consider hiring a financial planner to help work out an investment and savings game plan, or to at least review the one you’ve devised.

Along with the financial impact retirement will have on your marriage, keep in mind that this may be the first time that you’ve been together, day in and day out. Many people are so consumed by their jobs that they haven’t taken time to develop outside interests and hobbies. Well before retirement, you and your spouse should start exploring activities and networks of friends you can enjoy, both together and independently. Consider things like volunteer work, hobbies, athletic activities or even part-time employment if you miss the workplace interaction and need the money.

And finally, if your plan is to have one spouse continue working for a while, try living on only that one salary for a few months before retiring as an experiment. This will give you an inkling of how well you’ll do financially and whether you might both need to keep working to amass more savings.


By Jason Alderman

Some Couples Invest in Their Future in Ways Other Than a Diamond Ring

What does an engagement ring look like? For many people, my wife included, the answer is a diamond ring. While that’s a concept that didn’t became widely accepted until the diamond industry’s marketing campaigns in the mid-1900s, it’s one that holds strong today. However, some couples are going in an alternative direction. The intention isn’t to be cheap, but rather to use the savings to make a different kind of meaningful investment in their future together.

When and how a proposal happens can be a surprise, but hopefully, the answer won’t be. That is likely doubly true if the question is popped without a diamond engagement ring, or perhaps without a ring at all. As always in a relationship, communication is key. While some people may be excited by the idea, it could be a deal breaker for others.

What will a meaningful investment look like to the both of you? A friend of mine recently shared with me the story of how he proposed to his now wife, and the decision to forgo an engagement ring altogether.

When they first started discussing marriage and engagement rings, she said she’d rather put the money towards a down payment because starting a home together was more meaningful to her than a ring. He didn’t ask right away, but when he did take a knee, ringless, and ask her to marry him – clearly she said yes. Today they live in the home the savings helped buy, wear only wedding bands and he says neither of them regrets the decision.

A down payment might not make sense for you, but there are other ways to invest in your future together. For some couples, paying down debts or saving for their wedding so that they don’t go into debt might be a better fit. Or, you might want to start a travel or honeymoon fund.

Consider your options if you want to buy a ring. Understandably, the idea of proposing without an engagement ring isn’t for everyone, and there is a middle ground. A less expensive engagement ring with the savings going towards your shared goal.

Here are few options you could discuss with your significant other:

Alternative stones. There are a variety of alternative precious and semi-precious stones you could pick for the ring. Matching a stone’s color to the person’s eyes or choosing their birthstone could imbue the ring with a personal touch. However, be careful about picking a “soft” gem that could be easily scratched if it’s worn daily.
Diamond look-alikes. You could choose a synthetic diamond or a stone that looks similar to a diamond but costs much less, such as a cubic zirconia. Some of the man-made and alternative options can look more brilliant than genuine diamonds, and you don’t need to worry about whether or not the stone is conflict-free.
A solid band. While it won’t have the same flash as a ring with a large gemstone, choosing a smaller diamond or solid metal band with a symbolic meaning could be just as meaningful to your partner.
Family heirlooms can also make for memorable engagement rings and often there isn’t a price tag attached (although a lengthy discussion might be in order). A vintage ring could appeal to some people’s style, or the center stone could be reset in a modern band. In either case, there’s something special about wearing a gemstone that’s been in one of your families for generations.

Decide on your priorities as a couple and act accordingly. According to The Knot’s 2015 Real Weddings Study, an average of $5,871 was spent on engagement rings. For some, there’s no better way to spend money. After all, it’s a ring that’s going to be worn for decades.

However, you can discuss engagement ring expectations before you ask someone to marry you. If a diamond isn’t particularly important, an alternative ring or gemstone, or no ring at all, can be an equally timeless and beautiful gesture of love when you both know the money is going to an important step in your future together.

By Nathaniel Sillin

How to Cope With a Changing Payday Cycle

A change in a payday cycle can throw a real monkey wrench into your financial planning. Learning to make money last for an entire month or to meet all your expenses on time with staggered paychecks can be a challenge. Here are some ways to alter your money management style if you are struggling with adjusting to a more or a less frequent paycheck.

First things first: Examine your spending plan
No matter whether you get paid once a month, twice a month, or every two weeks, it all comes down to having a plan for your money. Once you know where your money should be going over the course of a month, it becomes a lot easier to figure out the timing aspect. So begin by tracking your income and expenses and creating a spending plan. A spending plan worksheet, online money tracker or mobile app can help you get started out. A good spending plan not only allows you to meet your expenses, but also helps you save for your goals and know how many “treat yourself” expenses you can afford.

Examine how you think about your paycheck
When you get a paycheck, do you already think about all the ways you can spend it? Or do you find yourself just hoping the money will last until the next check comes? If so, you may want to re-examine how you think about your paychecks. Once you have a spending plan, the next step is figuring out what you want to achieve with your money. Write down your short-term, mid-term and long-term financial goals and how much money they require. Next, figure out what you have in your savings, the pay periods or months until the target date, and the savings you’ll need per pay period or per month to achieve your goal. You can make your own worksheet or use a financial goals worksheet. Instead of just trying to make the money last or cover your expenses, think of your paycheck as a way to get you closer to achieving those goals. Goal-setting resources online, such as the Dream It and Achieve It mini-site, can help guide you in getting your own plan in place.

Here are some techniques for putting that paycheck to work for you:

The calendar approach
One potentially difficult aspect of multiple paychecks in a month is having bills due on different dates and not having a lump sum at the beginning of the month to divide among the bills. To combat this problem, open a calendar and record all your bills’ due dates for next month. Then you can use the timing of the bills to determine which bills will be paid with which paycheck. It is best to try to even out the total amount due for the bills for each paycheck. If it seems like too many bills might be falling in the period for one of your paychecks, try to pay some early in order to spread them out to make them more manageable.

The envelope system
Before computers, many families used paper envelopes with cash in them to separate out the money that would be going to particular bills. The goal is to control spending by setting aside budgeted amounts for each category of bills into separate envelopes. With this method you would have an envelope labeled for each bill like your rent, insurance, utilities, etc. When a need arises to spend money, you use the money out of the appropriate envelope. While you could still do that if you feel most comfortable with it, for many people it is best to not have large sums of cash lying around the house.

A more secure option would be to use different accounts with your financial institution or prepaid debit cards to assign money to certain bills. You can even have direct deposit into the separate accounts. However you decide to set up the accounts, the key is to have one account set up specifically for bill payment money. And if you have already done a spending plan, you should have a pretty good idea how much money you will have to pay those bills as well as your other expenses.

If you have multiple monthly paychecks and don’t have enough money in the first one to cover all your bills, you can use a “half-and-half” approach. First figure out the total amount you pay on bills each month. You can automatically have half of that total put into your “bills” account with the first check and then the second half put in when your second paycheck comes. If you get paid weekly, you could put in approximately a quarter of the amount each pay period. If you want to make it even easier, set up automatic payments of the bills from your dedicated account.

The credit card method
The Credit CARD Act of 2009 dictated that credit cards now must have a 21-day grace period. In other words, you have 21 days to pay off any charges you made on the card before interest can be added to the bill. If you are having trouble coming up with the money to pay a certain bill by the due date, putting the charge on a credit card will buy you some time. However, this approach takes discipline. You must pay off the credit card balance within the grace period or, in the final analysis, you will end up paying more for the bill because of the interest charges. It is also vital to avoid using the credit card to pay for non-necessities. When deciding which credit card to use to pay a bill make sure to consider the fees. Compare cards to find the right fit for you. Make sure to compare the Annual Percentage Rate, grace period, credit limit, annual fee, and late fee. Or use a Credit Card Search Checklist worksheet to help you make the comparison.

The cushion
This is the easiest technique to manage once you get it going, but it can also be the toughest to start. The concept is to get enough money in the account you pay bills with to not have to worry about potentially overdrawing. Ideally, you would want to have at least half your total monthly living expenses as a floating balance in the account you use to pay bills. That way, if you get multiple paychecks each month, you should have enough to cover your bills for the month when you get your first paycheck. Then you don’t have to stress about making it to the next paycheck. However, this can be easier said than done if you are living paycheck-to-paycheck. But when you do your spending plan, make a list of items you could eliminate or cut back on for 1-2 months. By making some small sacrifices for a few weeks, you could set yourself up for years of less worry.

Avoid salary advance or “payday” loans
While the idea of getting money based only on a promise to pay in a few days or weeks can sound attractive, be aware of the consequences of having to pay extra money to get caught up on bills. Needing salary advance loans more than once a year is generally considered a sign that your personal financial plan needs some adjustments to create more savings for unexpected expenses.

Try the above methods before turning to salary advance loans. If you find that none of these techniques work for you, contact your financial institution to see if they provide loans with relatively low interest and other terms that make them a better option than salary advance companies.

Switching to smaller paychecks more often or larger paychecks less often can take some adjustment. But developing a plan for your income will help you take the change in stride and may even lead to a better personal system for maximizing your money.

Revised January 2016.