Mending Your #SafetyNet

Edwin Harris – Mending The Nets (Photo credit: Wikipedia)At the end of the season, it’s a good time to mend your nets.

Updated Jan 2019.
Originally posted 2013.
Given today’s lengthy, record-setting US government shutdown and the hashtag #shutdownstories, this post needed an update. As a friend told me when we hit 40; “Exercise is no longer a luxury.” A safety net and emergency funds are no longer a luxury. This shutdown illustrates with stories the numbers about Americans living paycheck to paycheck.



When we reach the financial adult stage (your chronological age may vary); you may wish to mend or create a safety net. Safety nets are different from person to person; so feel free to select the pieces that match your own situation. 

Security Risk management: often solved with insurance products. Car, renters, condo, house, flood, fire and theft, cell phone, jewelry, business continuation etc. Even if you think you don’t have expensive things, you probably do. How much were your electronic gizmos? Can you afford being without [insert category here]? Many rental complexes now require renters to have insurance, which will also shield you from many liabilities (kitchen or electrical fire, water heater or tub overflow, leaky toilet, disposal failure, to name a few.) Check your specific policies for new exclusions based on the sharing economy, such as AirBNB or or using your car for ridesharing.

Savings (also known as cash these days due to barely visible interest). Rates are rising and one can earn more than whisper of interest One person’s emergency fund is $500, another’s is $10,000 and I have met someone whose security needs are met by one year’s income in the bank ($65,000). I like to suggest thinking of this fund in terms of months of income or expenses (whichever is greater). There’s a joke in there, sort of. What should be the minimum? My audiences are well informed and I hear 3-6 months from many when I ask this question. I suggest making the fund real by linking it to your insurance deductibles, the cost of 4 new tires, or even your family OOP, out of pocket limit for annual health care costs.

Residence  Home is where the heart is (and the bills) and your fridge. (see my earlier post called Clean One Refrigerator Shelf at a Time here)

Friends and Family Shoulders to cry on or celebrate with. Who can help you stay accountable to yourself? Who will understand and support your goals? Which of your friends or other loved ones can give you an assist with tangible or intangible help? Do you need to move into someone’s spare bedroom for three months while you save up for XYZ goal? (Tip: set a deadline for being in-residence-the relationship is something you don’t want to lose).

The Future What does your future hold? What’s on your bucket list?

• Encore Career
• Additional or ongoing education or professional development
• Retirement
• Caregiving for family member (s) now or in future
• Travel both domestic and foreign
• Volunteering (Peace Corps, Volunteer Vacations, International Red Cross)

Tools
Education, knowledge or wisdom (not to be confused with advertising, too many data points, endless supply of new products, Squirrel!),
Wisdom comes from mistakes, mistakes come from experience.  Or,

There is only one thing more painful than learning from experience, and that is not learning from experience.  ~Laurence J. Peter

Emotional IQ  Know yourself. Are you a DIY (do it yourself) person? How resilient are you? Can you reframe an experience and move forward? Do you want to bury the memories? What makes you feel shame (if anything) ? What are your money values ? Status or security, self fulfillment or self indulgence? Are you a planner, spontaneous spender, or celebrator?

How do you like to learn new information? Are you a lifelong learner? I have always enjoyed the opportunities I have had in my career to ask other people about their questions, or to consider what the important questions are for me when making a decision. Getting help with the right questions can be better than only searching for the answers.

Before You Quit Your Job-Five Factors to Consider

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Personal Goodwill in 2019

The “holidays” are over. Whether you call it the 12th day of Christmas, 6 January, or the Feast of the Three Kings, those days have passed.

• Did you survive or thrive?
• What traditions did you keep, or eliminate?
• What are your resolutions and goals for 2019?

Photo by freestocks.org on Pexels.com

These are questions grabbing the headlines on Twitter, your local newspaper (all the sections), and perhaps your favorite podcastBut wait! What is your real goodwill for 2019? In financial terms we call it your balance sheet. For businesses, goodwill is an intangible which represents real value.

“The goodwill of a company increases its value, as qualities such as the company’s customer base, its brands, products, location, workforce and reputation demonstrate the company’s proven track record of generating income.” via Investopedia https://www.investopedia.com/ask/answers/010815/how-does-goodwill-increase-companys-value.asp

In a 2014 post on this subject , I urged readers to consider their true balance sheet. This goes beyond the numbers to include personal goodwill, relationships, intangible assets, and experiences.  In 2019, with the 24 second news cycle (no longer 24/7) , market volatility, increasing interest rates, and a government shutdown, I believe it is ever more important to total up our non-financial assets.

A friend recently learned her skills were worth 12% more annually in the job market, but that it would require a heavy loss of professional autonomy. She chose to keep her autonomy and turn down the position. I recently was able to attend a birthday party for a family member where 15 relatives were in attendance; we ate, we drank, and we all enjoyed the surprise live music delivered to her door. It included Happy Birthday, on the bagpipes! As some of us mostly attend funerals, it becomes a priceless family memory.

If you have beloved family members who no longer travel for any reason, you have the experiences of travels with Mom, Aunt Susy, Uncle Sergio, or attending a cousin’s outdoor wedding (cupcake tower!)

Author and her mom at Fort McHenry National Monument. Photo credit to kind tourist.

During a time of job loss, or even getting home from a doctor’s appointment, do you have friends, family or faith institutions who can help you? That goes on your true balance sheet. Do you and your children talk or spend time with other over vacations, holidays or during stressful times? That is worth a lot. For those who have furry kids, same question. For singletons with an extensive chosen family beyond your family of origin, I hope that you find humor,  comfort, and support in these relationships.

Add those to your own bank. Research tells us about how our brain enjoys them more than the acquisition of things. Experiences generate three times the memories, from the anticipation, the actual event, and then the retrospection afterwards. I have a series of #UnfortunateEvents, for example, that comprise many of my personal vacations. They are funny now… but were not at the time. (River rafting accident, drunk guy in the aisle at 30,000 feet, and crying on an expensive Venetian gondola ride to name a few).

Personal and professional resilience count on your balance sheet. Deep breathing during stressful moments counts. (For some, that would be before public speaking. I find yoga more difficult than public speaking, but that’s just me!) Being intentional about your spending adds up. Decreasing debt is important as it leads to greater financial flexibility. Financial resilience and investing in personal attributes (reliability, integrity, courage and caring for others and yourself) loom large on the true balance sheet and are important for both personal goodwill and goodwill towards others in 2019. #IRL

Old Habits & New Resolutions July Update

July can be a time to review those New Year’s Resolutions. Did you make any for 2018? 

Even if you didn’t,  now is a good time to revisit the subject, as the year still has five months to go!

             Aauugghh!                                   Photo by Pixabay on Pexels.com

 

 

 

Often the calendar can help create structure for you. Bills get paid after payday; retirement plan contributions occur on paydays, etc. If you can itemize on your taxes, you may have dropped off many bags in the last week of December at your local thrift store. In my home town, Macklemore helped us out one year. Parents of college bound students have a date with the revised FAFSA; and by the end of January, you’ll have some thoughts about your past year’s tax return. For a quick read on what you can learn from your 2017 tax return from Morningstar, check here. Also, with that 2017 tax return near your screen, take a few minutes to run through a paycheck “checkup”. The IRS wants to help you with this, so you can withhold more in taxes if you need to, or loosen up those purse strings due to the increase in your standard deduction for 2018.

 

 

As mentioned in a previous post, Fidelity and others generate helpful suggestions for our annual resolutions. One study indicates that financial resolutions are easier to keep than those about food or exercise.

Let’s begin with the one geared for success! Financial tasks and affirmative statements.

In five months you can:

• Make 5 Roth IRA contributions
• Set up and fund an emergency savings account with $500-$1000
• Check all your accounts with beneficiaries- retirement, insurance and banking
• Increase your charitable giving in order to get that company match or set aside funds for a non-profit, instead of the IRS.

What do you want to improve during the balance of 2018?

 

Tax shelter or just an espresso?

 

Intimidating: Opting In

Personal finance is intimidating for many people. While we all love to seek out media which is scary, from movies, books, TV, to live theater and other works of art, those are things we generally opt into. Personal finances are a complicated part of modern life and sometimes we feel as if we don’t have the tools to deal with the situations we find ourselves in.  Can you opt out? Sometimes not. 

I meet people who tell me that their own finances scare them. They find it daunting to sit down and confront their balance sheet, regardless of how many digits are to the left of the decimal point. Professionals bandy about words and phrases like tax burden, cash flow, budget and the scariest phrases of all,

“Where do you spend your money?”

“If you have an unexpected bill of between $400-$2,000, how will you pay for it?”

“Have you begun to save for your retirement?”

and in Seattle, “Do you want to buy a house?”

This can be enough to send you screaming from the scene, while nervously looking over your shoulder, while thinking “I never want to see THAT again!”

I read this article in The Atlantic this week, about how people live paycheck to paycheck, even as they live a middle-class life. The online comments were mean and full of blame. To be sure, there is shared and personal responsibility to be had. No, maybe the author shouldn’t have drained a 401 (k) to pay for a wedding; no, he shouldn’t have missed a writing deadline and had to pay back the advance, but let the person out who has never missed a deadline in her life cast that stone. I don’t qualify.

Financial advisors are here to help and support people to make good decisions about their cash, their future and their piece of mind. We also want to help you move forward from bad decisions you own, or which were forced upon you. I believe my job is to meet you where you are, and help chart the path forward. For you do need a path, a vision, or some goals; otherwise you are just looking at your feet, not where you need to travel.

This path leads to a well-defended castle. Photo by Dana Twight

Opt out of the intimidation, and opt in to a new path for your finances. Collaboration might reduce the fear factor and even generate some satisfaction.

Zombies and Zinfandel: Handling Your Financial Monsters is tonight!

Old Habits and New Resolutions

January 1-31 is traditionally a time of making [and breaking] New Year’s Resolutions. Is it  crowded at your gym? Apps and online tools abound. Books and blogs on decluttering, tidying and organizing can easily be found in your inbox. It is said by some that a habit takes at least 6 weeks to create and people such as Gretchen Rubin and Beth Dargis have multi-day programs on offer. Behavioral economist Dan Ariely created  a short program in this  blog post.     To see the results of his research, visit this link from WYNC.

by Charles Duhigg

Often the calendar can help create structure for you. Bills get paid after payday; retirement plan contributions occur on paydays, etc. If you can itemize on your taxes, you may have dropped off bags in the last week of December at your local thrift store. In my home town, Macklemore helped us out one year. Parents of college bound students have a date with the revised FAFSA; and by the end of January, you’ll have some thoughts about your 2015 tax return. For a quick set of tax facts and limits from Morningstar, check here.

As mentioned in a previous post, Fidelity and others generate helpful suggestions for our annual resolutions. One study indicates that financial resolutions are easier to keep than those about food or exercise.

So let’s begin with the one geared for success! Financial tasks and affirmative statements. What do you want to improve in 2016?

Where to begin:

Meta Topics: There are meta topics, like what you learned from your family of origin about money, and if money represents the same thing to you and your partner (freedom or security for example).

Or

Nitty-Gritty Topics: There are also the nitty-gritty topics such as how to cut spending on meals out or groceries, am I saving enough for retirement,  and the ever popular  “am I spending too much on fill-in-the-blank ?”(e.g. coffee, furniture, clothing, wedding stuff, organic food, books).

This will be a series on how make the incremental changes which can be permanent, instead of the ‘cold turkey’, ‘all or nothing’ ‘you should do this’ framing which is [mostly] guaranteed to fail. Think of financial wellness, and small successes. Avoid binary thinking, see your progress on a continuum, and remember that like the stock market, it is time, not timing, which makes the difference. Ready, set…