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

Play
  • 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.

Posted in Books, Financial Discipline, Personal Story, Podcast | Tagged , , | Leave a comment

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

Play
  • 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.

Posted in Financial Goals, Personal Story, Podcast | Tagged , , | Leave a comment

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

Play
  • 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

Play
  • 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

JW’s Financial Coaching Podcast Lesson #79-The Relationship between Wedding Expenses and Marriage Duration

Play
  • Is their a link between amount spent on your wedding and the quality of the marriage?
  • What the research tells us
  • Why bigger isn’t always better
  • Why the rich aren’t afraid to ask for a deal
  • Quote of the week

Lesson79

On today’s lesson of the show we discuss an article I found titled “Expensive Rings Linked to Higher Divorce Rate”. The article points to a recent study which found that their is a correlation money spent on an engagement ring and a wedding and the chances of your marriage succeeding.

Now this isn’t a lesson about how much one should be or not be spending on an engagement ring or on their wedding. Rather it is a lesson discussing what we can take away from the research and how that applies not only to our marriage but to our finances as a whole.

We live in a culture today of consumerism and we are judged by our character or what we do for others. But rather how nice of a ring, wedding, car, vacation, house we have. How dangerous of a mindset is that for us? Bigger isn’t always better and the desire to impress those on an artificial level leads to stress not only with our finances and quality of life, but in our marriages as well.

Check out the following past shows that go well with today’s lesson:

This lesson’s quote comes to us from anonymous:

“You can always tell a rich man because he’s not afraid to ask for something cheaper”.

Enjoyed this lesson? If so, please consider taking five 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 Marriage, Podcast | Tagged , , | Leave a comment

Friday Financial Tidbit-What the Middle Class Can’t Do With Money

Due to my interest in all things personal finance, I read a variety of articles dealing with personal finance from all kinds of different sources. It helps me keep up with recent trends and know what pop culture is saying about money. I try to not get too overwhelmed with the news because I love instead to focus on the one economy that I can control: my own. But it is good to keep in touch with how people are doing as a whole.

Recently during my daily browsing I found a headline that caught my attention. It read, “7 things the middle class can’t afford anymore.” It’s worth the full read but in summary here is a list of the seven things;

  1. Vacations
  2. New Vehicles
  3. Pay off Debt
  4. Emergency Savings
  5. Retirement Savings
  6. Medical Care
  7. Dental Work

If you believe the article headline, that is really depressing. If you can’t do any of those things anymore, what can you really do? Now I’m not going to go into class warfare right now or debate income inequality or discuss what qualifies as being middle class. I’m also not going to talk about how ridiculous it is to generalize that all middle class Americans can’t do any of these things. But I’m also not going to make you feel bad if you are struggling or blame you for the situation you are in and I’m not trying to sound arrogant either. However our family has been able to do six of these things in the past 12 months and buying a new vehicle is something we aren’t very interested in. We are also middle class and other middle class families have done it as well.

It all comes down to having a plan and prioritizing what you really want to do with your money. Now granted, in your situation you might not be able to do all seven things at the same time. But if you focus on what’s really important to you and look at where your money is going, you will be able to do some if not all of these things.

Again, this isn’t to bewilder you or make you feel bad if you can’t do any of those seven things right now; I’m not blaming you or am not mad at you. But I want to encourage you in whatever financial situation you find yourself in today. There’s just so much negativity out there and it can make it sound like no one out there is winning. That’s just not true; people are winning, it just takes having a different perspective and being proactive with your money.

Posted in Debt, Investing, Personal Story, Spending | Tagged , | 3 Comments

Friday Financial Tidibit-The most important thing to remember about investing

If you’ve ever read a personal finance book or blog, eventually you will get to a chapter or post on investing. That’s because when a lot of us think about personal finance we initially think about this overwhelming topic. Some of the main topics covered and debated online include what average return we should expect, how much we should be investing each month, and also what we should invest in (bonds vs. single stocks vs. mutual funds vs. index funds).

If you look at the comments of any blog post on investing or look at critiques of those who have written books on the topic you see responses such as you can’t expect to get 12% annual return on a mutual fund, Fee-only financial advice is the only way to go, and passive managed index funds are better than mutual funds. While there may or may not be some validity to these points, these heated discussions often make those of us who are trying to learn about investing confused,  overwhelmed, and ultimately gun shy to start investing and so we keep putting it off.

With that being said, I decided to do an experiment and run some numbers. I wanted to find out what would happen if we invested $400 a month, which is about 10% of the median salary of $50,000, earning various rates of return. I wanted to know how much we would have at various points of time. Using a calculator from Bankrate.com I came up with the following results:

Saving example 10-13-2014

Obviously the higher rate of return, the more money you’ll have at the end. But notice what happens when you sit on the sidelines and do no investing. You get zero every time! No matter what the rate of return is, no matter how much is contributed, no matter what the asset allocation was, the result was the same; no investing equals no money.

Granted, that’s an extreme example. I’m not a retirement planner. I’m not trained or experienced enough to recommend certain funds, asset allocations, or expected rate of return. Although I do have my own thoughts and things I keep in mind when managing our family’s finances. But the most important thing when it comes to investing is to actually start. If you do find out you have the wrong allocations or the wrong choice of funds you can always change it later, but you can’t go back in time and invest. Even investing in something basic is better than doing nothing.

If you find the topic of investing confusing, boring or overwhelming, join the club. You aren’t alone but investing is an important part of a healthy financial plan. Once you are in a position to invest, consider opening an IRA on your own at one of the many online brokers or think about looking at working with a professional who will help teach you. Doing one of those things will be one of the best investment decisions you can make.

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JW’s Financial Coaching Podcast Lesson #78-Should we put our finances on autopilot?

Play
  • What is Automation
  • Why do we automate our finances
  • How to automate your finances
  • Pros and Cons of automation
  • Quote of the week

The JW’s Financial Coaching Podcast_78

To automate or not to automate? Automation is all the rage in personal finance. Today we discuss the what, why, and how of automating your finances as well as discuss the pros and cons of automation.

Automation can be a great tool to use in getting your financial order, but is it the be all and end all? In addition we also share feedback I’ve received on the topic from social media.

This lesson’s quote comes to us from Peter Lynch:

“”Know what you own, and know why you own it.”

Enjoyed this lesson? If so, please consider taking five 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 Financial Plan, Money Saving Tips, Personal Story, Podcast, Spending | Tagged , | Leave a comment