JW’s Financial Coaching Podcast Lesson #86-Our financial situation is never permanent

Play
  • Today’s lesson is all about an article from the Washington Post titled “The remarkably high odds you’ll be poor at some point in your life.”
  • Great reminder that our financial is never permanent; it’s always in a constant state of flux
  • Great odds we will be both poor and rich at some point in our lives
  • Hey I joined Periscope
  • Quote of the week

The JW’s Financial Coaching Podcast_86

I’ll be honest with you. There are some weeks it is difficult to come up with material for the show. After doing a podcast for almost five years, you run out of stuff to cover. But then you read an article like The remarkably high odds you’ll be poor at some point in your life
in the Washington Post and you just know you are going to do a lesson on it.

I highly recommend reading the whole article yourself, but the results are based on almost 50 years of data and are truly fascinating and backup something I’ve known in my heart for a long time. That our financial situation is never permanent. we discuss the results in-depth but overall there is a really good chance you are going to experience year(s) of economic hardship. But on the flip side there is also a really good chance that your household is going to experience a year or years at the top of the income scale as well.

What does that tell us? Well it tells us that hard times won’t likely be here forever; as well as the good times might not always last as well. But in today’s lesson we discuss the five ways we can apply this research to our own economy:

  1. This life stage financially is only temporary
  2. Trouble WILL happen; not a matter of if, but when
  3. Plant for trouble so the lows aren’t that bad
  4. Plan for prosperity so we can handle it, instead of blowing it
  5. Can’t change the past-but can change how we react to our future.

Bottom line is this; are we going to allow our current situation to define us? Or will ee fight through and realize this is just one tiny sliver of our overall financial life?

I also recently decided to join Periscope and actually did a live ‘Scope during the recording of this podcast. If you are on Periscope please feel free to follow me @JWFinCoaching. So far I’ve been doing weekly Scope sessions but hope to do more in the future, not just on money, but in other areas of my life including sports and books.

Finally I also give an update of some of the books I’ve been reading this summer. I’ve read a few but the best so far has been The Personal MBA by Josh Kaufman. I share why I enjoyed this book and how it can boost your economic value no matter whether you are a CEO, small business owner, or everyday employee.

This lesson’s quote is brought to you by Audible.com and comes to us from the Bible.

A prudent person sees trouble coming and ducks;
    a simpleton walks in blindly and is clobbered.” ~ Proverbs 27:12

This passage from scripture ties in nicely with today’s topic.

Enjoyed this lesson? If so, please consider taking a few minutes to leave a review of the show either in Stitcher SmartRadio, or iTunes. For a step by step video of how that works, please watch this video on how to leave a review in iTunes.

You can subscribe to future podcasts through Stitcher SmartRadio or iTunes, or by downloading the iPhone app. Or you may listen to the podcast on the JW’s Financial Coaching Facebook Fan page.

If you have any comments, questions, or ideas for future shows you can send them to me and I will integrate them into a future show. There are two ways to get in touch with me: 1.) Email me at JWFinancialcoaching@gmail.com – Please put “podcast” in the subject line and keep your questions brief so they are readable on air. 2.) Simply fill out the form on the contact page. Please fill out your name, email, and your question/comment/suggestion and we will read it on air.

 

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JW’s Financial Coaching Podcast Lesson #85-Using financial products for what they are intended for

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  • A lot of times financial stress is caused by using financial products not in a way that they were originally intended for
  • Why retirement, insurance, emergency savings, and your house shouldn’t be used for other things
  • How using those products for what they were intended will make your financial life easier
  • What to do with your tax refund
  • Quote of the week

JW Financial Coaching Podcast 85For a lot of us, money can be a difficult and confusing thing to grasp. There are a lot of reasons for this including lack of financial awareness, family history, no desire to learn how to handle money. But the more and more I hear people talk about their money struggles the more I realize that some of the confusion results from us using financial products for uses other than their original intent.

Today we are going to talk through four different financial products/assets that we are using differently than their original intent. Some of these we use differently because we are marketed to that way via the banks or some salesman. Others’ non-original uses result from just not being prepared or paying attention to our finances. Below are the four that we will talk about today

Financial Product/Asset Intended Use Un-Intended Use
401(K)/IRA (Retirement) To save for use after retirement Pay off debt/Emergency Fund
Insurance Protect family financially in case of negative life event (death, disability, accident) Way to save for retirement or children’s college fund
Emergency Savings Keep family from falling off financial cliff in case of a financial emergency Use to fund inconveniences that weren’t planned for
House Place to eat, sleep, and live your life Emergency Fund/Retirement Funding

 

Now we aren’t picking on anyone if you have or are doing any of these. But after going through the list it’s no wonder why money can be so confusing. But when we use these products for their original use our lives are less cluttered and our finances become clearer.

Below are other blogs or lessons of the show where I talk about these products more in depth.

In addition I also comment about an article I found on bankrate.com titled “How Americans will spend their tax refund”. 30% of Americans will use their refund to pay down their debt. While that is very admirable I can’t help but wonder how many of them have debt because they got a refund? The reason for the refund is because you have too much withheld from your paycheck. Instead of scraping by, wouldn’t it be better to get your money each month and use that to avoid debt in the first place?

This lesson’s quote is brought to you by Audible.com

“Someone else is happy with less than what you have” ~ Unknown

Enjoyed this lesson? If so, please consider taking a few minutes to leave a review of the show either in Stitcher SmartRadio, or iTunes. For a step by step video of how that works, please watch this video on how to leave a review in iTunes.

You can subscribe to future podcasts through Stitcher SmartRadio or iTunes, or by downloading the iPhone app. Or you may listen to the podcast on the JW’s Financial Coaching Facebook Fan page.

If you have any comments, questions, or ideas for future shows you can send them to me and I will integrate them into a future show. There are two ways to get in touch with me: 1.) Email me at JWFinancialcoaching@gmail.com – Please put “podcast” in the subject line and keep your questions brief so they are readable on air. 2.) Simply fill out the form on the contact page. Please fill out your name, email, and your question/comment/suggestion and we will read it on air.

You can find prior editions of the podcast at the podcast archive page.

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Friday Financial Tidbit-Money is Money, No Matter the Source

Money is always money whether it is cash, coin, or a number in your bank account. But have you noticed how we tend to view money differently via the source in which it is earned? I touched on this a little bit on the latest lesson of my podcast, but I was thinking about this the other day when I was daydreaming about what my family could do with a sum of money that we had recently come into. It was then that I realized that I viewed this money differently from my regular earned income. While pondering this some more I realized that I tend to view money differently depending on how it was acquired.

For example, I view our income as the money we use to pay for our standard of living. My family uses it to pay our necessities each month such as food and shelter. We use it to make our mortgage payment and pay our insurance premiums. We also use that money to give and invest off the top, before the money even hits our bank account. We also do a little savings with the money as well.

But our tax refund? For some reason I view that as money to be spent. Now yes, I don’t recommend getting a tax refund, but in our current financial situation the way the IRS does tax withholdings it makes it impossible not to get one, but that’s another blog post. When the refund hits our account I’m already thinking about buying the latest gadget or a new piece of furniture, which is funny because I’m usually frugal when it comes to buying new things.

But for a bonus, that is money I view as a way to save for a big purchase like a home remodel. Or as a way to save for future use such as a vacation or a way to fund our next car purchase.

Now that I’ve noticed that I do this, I’m asking myself why I never think to give any more than a tithe from my paycheck or a bonus. I never think to invest a percentage of money received from a bonus, refund, or gift into my Roth IRA or my children’s college fund.

But I’ve realized that it isn’t just me who thinks like this. All over social media and in conversation people are sharing what they have bought or are going to do with their tax refund. But does this separation of how we treat money by how we receive it hurt our finances? If we have a goal, shouldn’t all of our money go to it regardless of the source? If we’re trying to get out of debt, we wouldn’t go buy a new television with our normal income, but why is it okay to do it if it is a tax refund? Or if we want to save an emergency fund, any extra money we get should go to that.

I’ve written before about the importance of being financially intense and focusing on one task at a time. But I’ve recently realized there are some areas of my financial life where I’m not. So what about you? Do you view money differently depending on the source? Why do you think that is?

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JW’s Financial Coaching Podcast Lesson #84-Money is a good servant, but a bad master

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  • Remembering Dr. Thomas J. Stanley
  • Why do we treat the source of money differently?
  • Anthem and Identity Theft
  • Guest media appearances
  • Quote of the week

The JW’s Financial Coaching Podcast_84Today’s show is in memory of Dr. Thomas Stanley, who was tragically killed in an automobile accident last weekend. Dr. Stanley authored many books but his most famous was the classic Millionaire Next Door. That book is on my short list whenever someone asks me about must read personal finance books. It also was one of the big influences that got me interested in learning about personal finance and ultimately into coaching and blogging.

Rather than focus today’s lesson on one major topic I am doing something different today and am going to be talking briefly about a few different topics. I would love to hear whether you enjoy this format better.

The first topic we discuss is how we view and treat money differently depending on the source it came from. What I mean by this is, it just or me or do we view money differently when it is from our regular income compared to a bonus check? Or do we treat money from a garage sale differently than an inheritance or tax refund? I know I do and most of my peers do as well. I noticed this recently on Facebook when a lot of people were sharing what they had bought with their tax refund. But why is this? The way I look at it your normal income is what you pay your bills with, investing in your 401(K), and give. Tax refund is money to be spent, while bonus money is money to save for a larger purchase like a vacation or car. However I never think about investing or giving any of that money.

Ultimately though if we have a certain goal such as getting out of debt, building an emergency fund, or saving for a down payment on a home, shouldn’t all of our money, no matter what the source, go towards that goal? I believe so but am intrigued as to why we don’t do that.

Identity theft and data breach seems to be more and more common. Recently Anthem announced that over 80 million people had their personal data compromised including their name, address, date of birth, income, and social security number. While that is scary, it is also a good reminder that you really can’t protect your identity. So how do we guard against it? Well really the best thing we can do is to monitor our credit report.

I’ve done whole shows on the credit report before, but this is just a reminder to check your credit reports at least once a year. You can do so for free at annualcreditreport.com. If you go through that site you can get a free annual credit report from all three of the credit reporting agencies. Checking your credit report can’t stop identity theft, but it can stop it from growing quickly.

Finally I am proud to share with you a couple of guest post appearances I’ve made recently. The first was a guest interview on Mint.com. They asked me several questions pertaining to how I started in financial coaching, what financial coaching looks like, and how money is more than just the numbers.

The second guest appearance was on the website Scratch Wireless and had thoughts from me and 24 other personal finance experts on how to save money each month. I discuss my answer and why I think that it is true as well as discuss other people’s advice. We also dive into the thinking that the best way to save money is to spend.

This lesson’s quote is brought to you by Audible.com and comes to us from a French Proverb:

“Money is a good servant, but a bad master.”

Enjoyed this lesson? If so, please consider taking a few minutes to leave a review of the show either in Stitcher SmartRadio, or iTunes. For a step by step video of how that works, please watch this video on how to leave a review in iTunes.

You can subscribe to future podcasts through FeedburnerStitcher SmartRadioiTunes, or by downloading the iPhone app. Or you may listen to the podcast on the JW’s Financial Coaching Facebook Fan page.

If you have any comments, questions, or ideas for future shows you can send them to me and I will integrate them into a future show. There are two ways to get in touch with me: 1.) Email me at JWFinancialcoaching@gmail.com – Please put “podcast” in the subject line and keep your questions brief so they are readable on air. 2.) Simply fill out the form on the contact page. Please fill out your name, email, and your question/comment/suggestion and we will read it on air.

You can find prior editions of the podcast at the podcast archive page.

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My employer’s 401(K) administrator thinks you’ll always have some kind of consumer debt. What says you?

Debt ForeverYes, this is part of a real email I got from my employer’s 401(K) provider. I tried to read the whole article but after reading the first two sentences I just had to stop. The article first promises something that is almost impossible to do: manage debt and save. I always am puzzled as to what the phrase, “manage debt,” actually means. But after working with people for over five years on getting a better handle on their money, the best way to maximize your savings and to ensure that you will stick with savings over the long term is to become debt free first. But that isn’t really fun to tell people because we want to believe that our debt isn’t preventing us from saving and that we can save sufficiently without having to go through the hassle of becoming debt free first.

After that opening statement the next sentence might be one of the most depressing sentences I’ve read in a long time. I think they forgot to put the word “almost” in front of everyone. Yes, it’s true that most people have debt of some kind, but not everyone does. If you’ve read this blog for long you know that I believe that you can pay off your existing debt and live a debt free lifestyle, and I’m not the only one who believes that and lives that out in their finances.

I guess the thing that gets me and made me write a response to that article is that the article is spreading the belief that debt is a way of life and will always be. “You’ll always have a car payment,” “your student loan will be there forever,” and “you have to use credit to build wealth,” are myths out there that aren’t true and believing them will cost you large sums of money.

But what do you say? Do you believe you’ll always have some kind of debt for as long as you live? If so, why do you believe that? If not, why do you believe something that is so counter culture? Feel free to share your thoughts below.

 

 

 

Posted in Debt, Debt Free Living, Investing, Personal Story | Tagged , | 2 Comments

JW’s Financial Coaching Podcast Lesson #83-Garbage in, Garbage out

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  • I wonder what would happen if the grocery store checkout lanes contained positive material?
  • Today’s lesson inspired by a thought I had while grocery shopping
  • The power of negative thinking
  • How what we are putting into our mind impacts our bottom line
  • Quote of the week

The JW’s Financial Coaching Podcast_83

Today’s lesson is inspired by a thought I had a few weeks ago at the grocery store. No it wasn’t about how much groceries cost or how in the world we’re going to afford groceries when our two boys go through adolescence.  But more along the lines of what would happen at the checkout registers if they had quality material instead of the gossip magazines they sold currently.

That got me to thinking about what else we’re spending time on or putting into our minds that is negative or trivial. Turns out it is a lot of different things. TV, Facebook, Video games, sports, and on and one. Now granted none of these things in itself are necessarily bad. But how much time are spending on these activities? Are they defining who we are and what we do? If we are filling our mind and time thinking about trivial stuff, when do we have time to focus on the important stuff? Are these activities stopping us from starting a business, writing a book or blog, making a career change, or volunteering more?

This impacts our finances because we are what we think about. Or lives are not a grapefruit; we don’t have sections of our lives, like money, family, faith, career, hobbies, physical health, that never interact with each other. Rather it is like a pie that has different sized slices for the things we do and care about, but they touch one another and interactive with each slice.

So what do you remember about what you did last week or last month? Was it something positive? Negative? Trivial? Why is it that we remember what we remember? We probably remember what we did the most.

To get positive material in my mind. I’ve been doing several things lately:

However I still have a long way to go. I need to remember to put myself out there to create more relationships that I can network with. In addition I also need to create more long term goals for this blog and podcast.

The financial lesson from today’s show is about improving your finances by believing that you can first win with money as well as eliminate the distractions that keeps us from getting to where we want to go. It’s like nurturing ourselves with junk food; it will number our hunger for a little while, but why settle for that when we can eat a nice five course dinner instead?

This lesson’s quote is brought to you by the JW’s Financial Coaching Newsletter and comes to us from Benjamin Franklin:

“An investment in knowledge pays the best interest”

Enjoyed this lesson? If so, please consider taking a few minutes to leave a review of the show either in Stitcher SmartRadio, or iTunes. For a step by step video of how that works, please watch this video on how to leave a review in iTunes.

You can subscribe to future podcasts through FeedburnerStitcher SmartRadioiTunes, or by downloading the iPhone app. Or you may listen to the podcast on the JW’s Financial Coaching Facebook Fan page.

If you have any comments, questions, or ideas for future shows you can send them to me and I will integrate them into a future show. There are two ways to get in touch with me: 1.) Email me at JWFinancialcoaching@gmail.com – Please put “podcast” in the subject line and keep your questions brief so they are readable on air. 2.) Simply fill out the form on the contact page. Please fill out your name, email, and your question/comment/suggestion and we will read it on air.

You can find prior editions of the podcast at the podcast archive page.

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JW’s Financial Coaching Podcast Lesson #82-What’s holding you back from accomplishing your dreams and goals

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  • Unscripted show today
  • Not about goal setting, rather;
  • What’s holding you back from accomplishing your goals?
  • We might not like the answer to that question
  • The Countdown to take control of 2015

The JW’s Financial Coaching Podcast_82This lesson is light on show notes. The reason is because this show is unscripted. Usually around New Year’s I discuss the importance of setting goals. While I still think goal setting is important, today we focus on what’s holding you back from accomplishing those dreams and goals.

Instead of simply setting our goals for the year and mapping out a plan, let’s take time to reflect on those goals and why we aren’t able to accomplish them. The answers might not be exactly what we want to hear, but the self reflective time might be critical to motivating us to make the changes necessary to reach our goals.

Below is a few resources I’ve done in the past on goal setting:

We also talk in today’s lesson about the Countdown to take Control of 2015.

Enjoyed this lesson? If so, please consider taking a few minutes to leave a review of the show either in Stitcher SmartRadio, or iTunes. For a step by step video of how that works, please watch this video on how to leave a review in iTunes.

You can subscribe to future podcasts through FeedburnerStitcher SmartRadioiTunes, or by downloading the iPhone app. Or you may listen to the podcast on the JW’s Financial Coaching Facebook Fan page.

If you have any comments, questions, or ideas for future shows you can send them to me and I will integrate them into a future show. There are two ways to get in touch with me: 1.) Email me at JWFinancialcoaching@gmail.com – Please put “podcast” in the subject line and keep your questions brief so they are readable on air. 2.) Simply fill out the form on the contact page. Please fill out your name, email, and your question/comment/suggestion and we will read it on air.

You can find prior editions of the podcast at the podcast archive page.

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JW’s Financial Coaching Podcast Lesson #81-Breaking down the Latte Factor

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  • What the Latte Factor metaphor is
  • Popularized by David Bach’s book Automatic Millionaire
  • What you can do instead of the Latte Factor
  • What are you doing with your extra money from lower gas prices?
  • Quote of the week

The JW’s Financial Coaching Podcast_81

I love to read. I especially love to read books on personal finance. It doesn’t matter who is the author. Lately I’ve read a few books from Ramit Sethi (I Will Teach You to Be Rich) and Zac Bissonnette (How to Be Richer, Smarter, and Better Looking Than Your Parents) that mentioned the Latte Factor. In reading other books over the years I’ve heard a lot about the Latte Factor, both good and bad but never fully checked it out for myself until recently.

For those of you who don’t know, The Latte Factor is a metaphor created by personal finance author David Bach and is predominately featured in his book The Automatic Millionaire (You can download a free audio copy at Audible.com). The Latte Factor is a metaphor on investing which shows how the everyday small expenses can cost you thousands or even millions over time.

The concept is simple; take that “small” daily habit that you spend money on whether it is your daily latte, fast food trip, pack of cigarettes, etc. If you took that amount and instead invested it, it would grow.  Below is an example from the book on how much money you would invest if you cut out the $3.50 out of your daily spending or $5.00:

LatteFactor1As you can see, after a decade you would have a good chunk of money, but not life changing money. But look at what happens if you invested that amount each month earning an average of 10% a year:

LatteFactor3With that being said, on today’s show I share the pros and cons of the Latte Factor metaphor. Overall I think it is a great metaphor and anything that motivates people to start to get into investing I’m all for. But I also like focusing on the bigger stuff instead of having to scrimp and cut out a lot of smaller things in your budget. So what instead if we did, not the Latte Factor, but the Car Payment Factor?

The average car payment today is $470. Below is what would happen if you invested the average car payment, or half of the average payment:

LatteFactor2That is an expensive car payment! We cover all of these topics and more on today’s lesson. But what are your thoughts on the Latte Factor? Have you given up small daily pleasures for bigger gains? What have the results been?

This lesson’s quote is brought to you by the JW’s Financial Coaching Newsletter and comes to us from Albert Einstein:

“The hardest thing in the world to understand is the income tax.”

Enjoyed this lesson? If so, please consider taking a few minutes to leave a review of the show either in Stitcher SmartRadio, or iTunes. For a step by step video of how that works, please watch this video on how to leave a review in iTunes.

You can subscribe to future podcasts through FeedburnerStitcher SmartRadioiTunes, or by downloading the iPhone app. Or you may listen to the podcast on the JW’s Financial Coaching Facebook Fan page.

If you have any comments, questions, or ideas for future shows you can send them to me and I will integrate them into a future show. There are two ways to get in touch with me: 1.) Email me at JWFinancialcoaching@gmail.com – Please put “podcast” in the subject line and keep your questions brief so they are readable on air. 2.) Simply fill out the form on the contact page. Please fill out your name, email, and your question/comment/suggestion and we will read it on air.

You can find prior editions of the podcast at the podcast archive page.

Posted in Books, Investing, Net Worth, Podcast | Tagged , , , | Leave a comment

VLOG-The Best Way to Payoff Debt

What’s the best method to pay off your debt? The Debt Avalanche, Debt Snowball, or another method? Well, I have my preferred method when I coach people, but in the video below I discuss the best method is the one that will motivate you to make the highest monthly payments.

As described in the video, if you have $10,000 in debt, the only way to get out from underneath it is to make $10,000 worth of payments. So whatever method keeps you focused on making those payments in the shortest amount of time, then do it. If you are mathematical, the debt avalanche will probably be your best bet. If you are momentum driven, then the debt snowball will be your best bet.

Paying off debt can be overwhelming, but you have to start somewhere. Like the old adage goes, the best way to eat an elephant is one bite at a time.

Posted in Vlog | Tagged , , | 2 Comments

JW’s Financial Coaching Podcast Lesson #80-The FICO score is a PRODUCT

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  • Sharing a revelation I had about FICO
  • What the FICO score really is
  • Don’t make financial decisions based on a product
  • Making financial decisions based on what others tell us is important
  • Quote of the week

I’ve spoken and written before about my feelings about the FICO score but today I want to share a revelation I had recently while reading an article talking about FICO’s new credit scoring system FICO 9.

There are a lot of great quotes in there but the light that went on in my head while reading the article was that FICO isn’t a score . . . it’s a product. I’ve always known FICO is a product but it really dawned on me the absurdity of measuring how well we are doing financially based on a product. What makes it worse is that in another article I found most people believe that mortgage companies aren’t going to switch over to FICO 9 any time soon.

The JW’s Financial Coaching Podcast_80With that being said, in today’s lesson we are going to discuss why measuring yourself against a product design to help lenders, not consumers, is dangerous. Also we’ll discuss what to measure yourself against instead.

For other lessons I have done on credit reports and credit scores:

This lesson’s quote is brought to you by the JW’s Financial Coaching Newsletter and comes to us from Calvin Coolidge:

“There is no dignity quite so impressive and no independence quite so important as living within your means.”

Enjoyed this lesson? If so, please consider taking a few minutes to leave a review of the show either in Stitcher SmartRadio, or iTunes. For a step by step video of how that works, please watch this video on how to leave a review in iTunes.

You can subscribe to future podcasts through FeedburnerStitcher SmartRadioiTunes, or by downloading the iPhone app. Or you may listen to the podcast on the JW’s Financial Coaching Facebook Fan page.

If you have any comments, questions, or ideas for future shows you can send them to me and I will integrate them into a future show. There are two ways to get in touch with me: 1.) Email me at JWFinancialcoaching@gmail.com – Please put “podcast” in the subject line and keep your questions brief so they are readable on air. 2.) Simply fill out the form on the contact page. Please fill out your name, email, and your question/comment/suggestion and we will read it on air.

You can find prior editions of the podcast at the podcast archive page.

Posted in Debt Free Living, Podcast | Tagged , , , | Leave a comment