Posts Tagged ‘money & finances’

Reader Transformation: Cherie Lowe’s Money Makeover

Monday, February 16th, 2015

Cherie Lowe_Slaying Debt

Author of Slaying the Debt Dragon (our m challenge book for February) Cherie Lowe, together with her husband, Brian, paid off $127,482.30 in a little under four years! She wrote about the ups and downs of their debt-slaying journey on her popular website, www.QueenOfFree.net. Cherie so so inspirational – I loved reading about their journey towards slaying debt and am so excited to be sharing her expertise with you today. Be sure to snag her book for our discussion next week. In the meantime, here are some motivational words from Cherie! 

Hi my name is Cherie and my family paid off over $127K in debt in four years.

Wait. Let me start again.

Hi my name is Cherie and I’ve made some pretty ridiculous money mistakes.

I’ve purchased more than I could afford, wracked up debt, and simply not paid attention.

I’ve been angry with my husband over what we could and couldn’t spend, overindulged my kids, and believed the lie that just one more dinner out/cute outfit/gift for someone else really couldn’t hurt.

I’ve felt guilty, ashamed, overwhelmed, and stupid for my own decisions. And then I crawled into a place of hopelessness where I quietly tucked away the mistruth in my heart that we were the only ones.

No one else could have made this many mistakes.
No one else could feel this out of control.
No one else could have been that dumb with money.

Those emotions locked up my soul in a dungeon where I couldn’t find the key. Tightly gripping my heart, they paralyzed me from starting to find a way out.

Personal finance is personal. Money is emotional. You can have free budget printables. You can have a rock solid strategy and all of the best information to guide your journey. You can even have the wherewithal and guts to get out of debt. But from my experience it takes even more than that.

Unless you slay debt, it will never truly be gone. Here’s the difference. If you merely get out of debt then you can get back into debt again. But if you slay debt, it is vanquished, dead at your feet, never to come to be resurrected.

Want to know the good news I already know about you? You have what it takes to be successful with money and slay your debt dragon. You are smart enough. You are strong enough. And while it might not seem to be true right now, you have the resources to complete your epic battle.

My main purpose in writing Slaying the Debt Dragon: How One Family Conquered Their Money Monster and Found an Inspired Happily Ever After was to spread hope. I didn’t want anyone else to believe the lies I bought into. I didn’t want anyone else to feel alone. Instead, I wanted to remind fellow debt slayers of some of the things they already knew and provide practical tools to guide their journey. I wanted to share what I learned from our days of battle – the good, the bad, and the ugly – so that others could find victory from our mistakes, encouragement from our story. From what it looks like celebrate your child’s birthday when living on a tight budget to how to manage your meals more effectively, from the essentials of communicating well with your spouse about money to realistic budgeting methods, you can begin your very own financial happily ever after.

I love this paraphrase of a G.K. Chesterton quote:

Fairy tales are more than true: not because they tell us that dragons exist, but because they tell us that dragons can be beaten.

Your dragons can. be. beaten. There is a way out. Hope abounds. Step into your story. The greatest adventure is just about to begin.

Debt-is-your-enemy-not-the-budget.-2-300x300

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Kelly Whalen’s Down to Basics Money Series

Thursday, February 12th, 2015

K. Whalen Money Series

All through 2014, as our Money & Finance contributor Kelly Whalen, from The Centsible Life, walked us all through the basics of budgeting from start to finish so that we would be able to have a stronger grasp on managing our family’s personal finance. One of the best things we can do to save our family money is to begin to control our funds (and to not let them control us).  As part of our m challenge focus on money management, I thought this would be the perfect time to gather all of Kelly’s brilliant tips in one place! 

Kelly Whalen’s Down to Basics Money Series

Budgeting 101: 5 Easy Steps to a Budget that Works

Reducing Expenses: Put the ‘Personal’ In Your Finances

Money Savvy: How to Deal with the Unexpected

Earn More Money to Help Save More and Pay off Debt Faster

Evaluating the Cost of Home: Renting vs Buying

Cars, Trains, Bikes, and Feet: How to Get Around for Less

Can Debt be “Good” Debt?

5 Ways to Teach Kids Money Management

Do You Really Need That Degree? College Loans, Options, and Savings

Planning for your Second Life: The New Retirement

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Planning for your Second Life: The New Retirement

Monday, November 17th, 2014

From our money & finance contributor, Kelly Whalen.

Note: This will be my last post as a contributor for MomAdvice. Thank you for all the thoughtful comments, support, and most especially thank you to Amy for the opportunity. My hope is that if you look through the archives of my posts you will get a clear financial education from beginning to end. It only seems fitting to end our journey with retirement.

Planning for your Second Life The New Retirement

Most of us grew up with the notion that retirement came after 40+ years in the workforce and came with golf, social security checks, and retiring to somewhere warm. For most Americans that dream of the ‘golden years’ has disappeared. Somewhere during our recent recession it became more obvious that the idea of traditional retirement wasn’t going to be an option for most people. In fact over 60% of Americans have under $25,000 saved for retirement. *

That doesn’t have to be a bad thing, though. You no longer have to tie yourself to a cubicle or labor every day and then sit on your buns from 65 on. Instead you can plan for a second life that will be just as fulfilling as your first career — a second life that may even start sooner than you think.

Planning for your Second Life: Financial Planning

Start Saving Now

Saving early means your savings have longer to grow. If you haven’t started saving now is the time to start. If you have been saving for retirement consider ramping up your savings for 2015.

Take Advantage of your Retirement Options

  • 401ks are popular for companies and they offer a great advantage—free money in the form of matching from your employer.
  • Roth IRAs are another great option. In addition to using the funds for retirement you can also use them for educational costs. This allows you to bank money for your kids’ college educations, but if they don’t need or use it you can continue to bank on it for retirement.
  • If you’re self-employed look into a self-employed 401k. They offer you the ability to save more than most retirement options and have low maintenance costs.

Live on Less
It’s always good to live on less, but especially when you start to think about retiring. Cutting back on expenses now not only means more savings to grow, but you will become accustomed to living well within your means.

Planning for your Second Life: Work

Don’t Stop Working
The reality for many of us is that we will continue to work well past the traditional retirement age of 65. While you may not be suited to your current career there are other opportunities to use your skills to earn an income. Below are a few options to consider.

  • Finding a Work/Live Job: House sitting, live-in jobs such as caretaking or management can provide you with a place to live rent-free. This can be a great option in retirement to slash housing costs, and allow you to earn an income.
  • Offering your Skills as a Consultant: While you may leave your 9 to 5 gig you can still use your skills to earn income as a consultant. Whether you work with a consulting company or strike out on your own you may find you can earn even more than your typical paycheck as a consultant.
  • Bartering or Work for Trade: Relying on your skills and hobbies will allow you to barter or trade services with others. For instance, a former CPA may do taxes for a small business client bartering for their services. You can also trade your time for services such as working the front desk at your local gym for 5 hours per week in exchange for free membership.

Planning for your Second Life: Housing

Go Multi-Generational
As housing costs and expenses soar it makes sense to share housing costs, but instead of renting out a room to a stranger, or downsizing consider living with family members. While it may not work for everyone it can be a huge money saver and a way to stay connected with your family members. The big benefit comes in divvying up the housing costs and the household chores.

Planning for your Second Life: Phase Two Begins

Start Phase Two Now
Instead of waiting until your kids are all grown and you’re in your 60s to retire take a hard look at what it would take for you to be able to work less, downsize, or move somewhere more affordable now. While you may not be able to retire in the traditional sense you can realign your budget and thinking to fit a lower stress phase two of life and possibly even find room in the budget to take on a project or build a new career based on your passions instead of the need to climb the corporate ladder.

With careful and strategic planning you can move into the next phase of your life and find it just as fulfilling (if not more so) than your first life.

*Source: Employee Benefit Research Institute

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Do You Really Need That Degree? College Loans, Options, and Savings

Monday, October 27th, 2014

From our money & finance contributor, Kelly Whalen.

College debt has reached an all-time high in the United States. Collectively, we owe over a trillion dollars in student loan debt. Yes, trillion with a capital T. It’s actually over $1,200,000,000,000. Ouch.

Is that degree really worth it

Student loan debt is unlike most other debts though in that it is nearly impossible to get rid of, known as forgiveness or discharge. This means even if you fall on hard times, lose a job, or your life circumstances change drastically it’s extremely uncommon to have that debt wiped away – you’re pretty much stuck with it. For some adults this means they will be carrying debt from choices made in their teens and twenties well into their middle age and often they’ll still be paying off those debts while paying for their children’s education.

When considering our finances it’s important to look at the impact student loan debt has since many readers are impacted by college debt. It’s likely you still owe for your college education if you have one (and often even if you don’t have a degree!). Others may be considering college costs for their children whether they’re toddlers or getting ready to head to college. Finally, there are many adults who go back to school when they change professions or need additional education to improve their earning power.

Since there are a lot of scenarios to cover here I’ll break them down, and you can head to the subsection that applies to you.

Already in Student Loan Debt

You already have a degree and the debt to prove it. While you may owe anywhere from a few thousand to tens of thousands the advice to not get into debt doesn’t apply. You need solutions and advice on getting out of student loan debt.

Consolidate

If you have multiple loans look into consolidation. You can consolidate loans with your spouse as well. This may allow you to get a lower interest rate or lower monthly payment, but it also makes it easier to manage than several loans.

Pay More than the Minimum

While it’s common sense, paying more than the minimum means you will pay it off sooner. Some ways you can ‘find’ more than the minimum in your budget include: slashing expenses (like dropping cable or getting a cheaper cell phone plan) or adding any pay raises to your loan payment.

Work a Side Gig or Second Job

Need to earn extra money to meet your loan payments or increase your payments to pay it off quicker? Get a side gig or work a second job to earn extra money to put towards your college loans.

Investigate Options

If you’re really struggling financially like having no job call your student loan company before you skip a payment. They may be able to hold or defer payments or offer some other options to help keep you from defaulting on your loans.

Getting Ready or Going to College

If you or someone in your family is headed to school or back to school for a degree it’s the perfect time to consider all the options.

Do you Really Need That Degree?

While a college degree is still statistically going to increase your earning ability over time it’s not always a necessity in every profession. Some professions simply don’t require a degree, and many trades are desperately seeking qualified and well-trained individuals.

Additionally, the job market has changed drastically to allow small businesses with little overhead to thrive. In an age of consulting, freelancing, and startups a degree is nice-but it’s not exactly a requirement. Depending on your skillset you may not have the need for a traditional college diploma.

Check Pay Rates and Rental/Home Prices

Whether you’re going back to school or headed to college for the first time you need to consider the cost versus the income you will earn in the future. While we all know there are no guarantees of future income checking pay rates in your area and investigating the cost of housing will help you get a general idea of what you’ll have to spend on student loan repayment.

For instance, it doesn’t financially make sense to spend $150,000 on a degree if the average entry-level earnings are $35,000 per year and average rentals cost $750/month.

The math would show you it would take an awfully long time to pay back your loans, and in the end it’s unlikely to be worth the added stress and costs when you could get a solid education and degree for 1/4 that cost.

Exhaust Scholarship and Grant Options

Grants and scholarships are plentiful, but it takes some hunting and some time to getting the most money you can for school. If you dedicate the time upfront though you could end up saving thousands of dollars. There are scholarships and grants that are high value and competitive, and there are smaller scholarships and grants that are for less money and more obscure.

Consider Starting Small

Instead of diving into a 4 year college with big expenses consider a local, smaller school to get your initial credits out of the way. You could even consider an online education if you’re an adult or need to work full-time to fund your education.

Saving for Future College Costs

Saving for your children or family members who you hope to help go to college is a great gift, but you have to consider all the options before you start saving.

It’s vital to be sure you aren’t locking up money that is needed for an emergency fund or for retirement first and foremost.

However, if you have a healthy emergency fund and are (mostly) on track with retirement savings here are come options to consider:

529 Plans

529s are a great option since they offer no taxes when withdrawn for qualified education expenses like tuition. Many states also have no tax on withdraws.

There are two types:

  • Pre-paid plans: You pay for college costs at today’s rates even if costs go up when your student goes to school.
  • Saving plans: Savings plans are based on the stock market with a mix of investments that get more conservative as your child nears college age.

The downside: Funds that aren’t used for college are taxed fully and a 10% penalty is tacked on. While it’s hard to tell when they’re infants, it’s not exactly ideal if Junior decides not to go to school or ends up with a full scholarship.

Roth IRAs

Roth IRAs are a retirement savings vehicle, but they also offer the option of withdraw for college expenses. This can offer the best of both options for families who need to get the most out of their long-term savings.

With a Roth IRA you can use funds for educational expenses OR retirement meaning if your child doesn’t need all the funds you can continue to grow them for retirement without paying penalties.

The downside: Current Roth IRA limits mean you can only save $5,500 each year or $6,500 if you’re over 50 in these accounts.

Note on investing for college: You can encourage family members to add to your little tyke’s college fund (for instance in lieu of gifts for the holidays or birthday presents). For instance grandparents can gift funds to each child, currently you can give $14,000 per year without penalties. 

When Should You NOT Save?

If you’re in debt or struggling financially saving for college shouldn’t even be a consideration. High interest debt (i.e., not your mortgage or your own student loans!) should be tackled before you consider saving for college. If you’re paying 14.99% on your credit cards the math is against you saving for college costs…for now.

Parents often make the mistake of saving for college funds over retirement thinking they have less time to ‘catchup’ on college education costs, but if they aren’t maxing out their retirement savings they could be in major trouble later in life.

While it is a great goal to make sure your children enter adulthood debt-free it shouldn’t come at the cost of your own savings and financial stability-that will impact your children now.

What it comes down to is this–take care and consider all your options whether you’re paying off college costs or saving for your children’s future.

What are your thoughts on student loan debt and college savings? Do you still owe for your education or are you worried about financing your children’s education?

 

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