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.

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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 , | 2 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

JW’s Financial Coaching Podcast Lesson #77-Can a saver learn to spend?

Play
  • Can a saver learn to spend money if it is not their natural tendency?
  • How saving can be taken too far
  • Why it is important to spend and not just save
  • Ways to help a saver loosen up their spending
  • Quote of the week

The JW’s Financial Coaching Podcast_77On the last lesson of the podcast we shared how it was possible for a spender to learn to save. Well on this week’s lesson we flip the script and share how a saver can loosen up their spending. Saving money in of itself is not a bad thing; however it is possible to take saving money too far. Spending money is a healthy exercise, if done properly, but it is not natural for a saver. Today we discuss three ways to help savers loosen up their spending. In addition we discuss the different between being cheap and being frugal and why it is important to spend money.

For more resources on related to today’s lesson check out the following:

This lesson’s quote comes to us from the legendary Bob Hope

“A bank is a place that will lend you money if you can prove that you don’t need 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 Podcast, Spending | Tagged , , | Leave a comment

VLOG-Another way to learn how to save

On a prior episode of the JW’S Financial Coaching Podcast I shared ways that a spender could learn to start saving some money. In that episode I forgot to mention another way to help you save money, which is to open a separate account to save money in. On today’s video blog I share why that is a great way to encourage savings no matter your income, current bank account balance, or savings rate.

To learn about other ways to become a better saver you can check out lesson #76 of the Podcast.

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JW’s Financial Coaching Podcast Lesson #76-Can a spender learn to save?

  • Can a spender learn to save money if it is not their natural tendency?
  • Why being a spender is not a bad thing
  • What keeps us from saving money
  • Ways to help us save more money
  • Quote of the week

Can a spender learn to save their money? I hear all the time from people, “I’m a spender, so I can’t possibly be expected to live on a budget or save money.”

But is that a valid reason not to save money? On today’s lesson we discuss why being a spender is not a bad thing, but rather it is the overspending that gets us. We also discuss what three things keep us from saving money, how to change those three things into our favor, and give three practical ways to increase your saving each month.

This lesson’s quote come from Dan Miller of 48days.com.  This quote comes from Dan’s latest book which he co-authored with his son Jared Angaza, titled Wisdom Meets Passion.

“Money is like fire: it can burn you and leave you disfigured, or it can keep you warm and safe.” ~ Dan Miller-Wisdom Meets Passion

If you are interested in downloading the audio version of Wisdom Meets Passion for free, please visit the podcast sponsor Audible.com

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 Discipline, Personal Accountability, Spending | Tagged , , | 2 Comments

JW’s Financial Coaching Podcast Lesson #75-How do you do fun money?

Play
  • What is “fun” money” and why it is important to have it in our budget
  • How to do “fun” money the right way
  • Why “fun” money is not an allowance
  • What the difference is between “fun” money and stopping at the ATM when you are low on cash
  • Quote of the week

“Fun” money can be named a lot of different things; blow money, spending me, cash but whatever you call it, it is an important piece to your budget. On today’s lesson we share what “fun” money is and isn’t, discuss its importance in your financial plan, and share the right way to do it.

No matter if you are a spender or a saver, fun money reminds us that it is financially healthy to spend as long as we do it in the confines of our monthly budget.

Also on today’s lesson we start a new segment called the Quote of the week. I’ll be sharing one quote a week that I find inspiring related to our finances. This week’s quote is

“Having the money in the bank does not tell you what you SHOULD do, it tells you what you CAN do.” ~ Jon White

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 Budgeting, Personal Story, Podcast, Spending | Tagged , , | Leave a comment

“I love my house . . . that is breaking my budget”

The other day I overheard someone talking with their friends about their new house. They were describing how nice their yard was, how much bigger their home was than their previous one, and all the remodeling they wanted to get this year. But I couldn’t help but chuckle to myself when I heard them say half jokingly

“I love my house . . . that is breaking my budget.”

You have to laugh at that quote because if you didn’t you might just cry. How many of us are in that exact same situation? We found a house we really really liked that is just a bit above our price range. We tell ourselves that with a little cutting back and a little sacrifice in some other areas of our finances, we can afford it.

But then we don’t account for other expenses like new furniture for the bigger house, repairs, an increase in taxes, as well as the time investment involved with a house and it starts to add up quickly. Not so much that you lose the home and go bankrupt. But more like how it puts a clamp down on us from doing other things such as paying off debt, saving up for things we truly want and need, and investing for our future.

The thing is that a house doesn’t have to become a budget breaker. But we sometimes can assume that it does because it feels like everyone else’s home is. I recommend having a mortgage payment between 25-30% of your after tax income which will allow for some breathing room in your budget. This can be achieved by doing a monthly budget which tells you where your money is going each month and by saving up and having a nice down payment which will put you into a position to love your house . . . while not busting your budget.

Posted in Budgeting, Mortgage, Personal Story | Tagged , | 1 Comment