Category: Opinion

Practical Money Matters – July 11, 2018

How do you envision your retirement? For some, there’s an idealistic image that many share of days spent walking along a warm beach, endless travel and a leisurely lifestyle. On the other end of the spectrum, some people haven’t had the opportunities that would afford them the ability to stop working when they want, never get to retire in the traditional sense and struggle to live on a fixed income once they’re no longer able to work.
Lessons From the Financial Independence and Early Retirement (FIRE) Community
There’s also a middle ground, those who can afford to stop working and live a modest lifestyle. But the financial requirements for seniors have changed and grown over the years, and so this middle option may be less common as a result. Employer pensions and other retirement benefits aren’t as prevalent or plentiful as they once were. Longer life expectancy and a rising cost of living can make it more difficult to live purely on Social Security benefits and retirement savings alone.
However, there are individuals and families who have been lucky enough to be in the position to retire decades before their 60s. They’re part of a social movement known as FIRE – financial independence and early retirement – that has its own values, rules, subgroups and lingo.
What is FIRE?
The idea of becoming financially independent, when you can live off the income from your savings and investments, and retiring early, a notion that can seem too good to be true. Even if the end goal is desirable, it may not be possible for many, and in cases where it is possible, some may not be up for the journey. Early retirees may live in small homes, drive old cars and avoid eating out prior to retirement – all with the goal of accumulating enough savings to live on after retirement.
There is more than one way in which people have achieved FIRE. However, there are a few basic rules to live by that could help you get there:
Live a modest and frugal lifestyle and put most of your earnings (often over 50 percent) into savings and investments.
Try to find ways to increase your savings rate by cutting expenses and increasing your income. Creating and closely monitoring a budget can help.
Look for opportunities to increase your investment returns and grow your money faster.
Aim to have enough in your savings that you can retire early, perhaps in your 50s, 40s, 30s or even earlier.
Reaching financial independence doesn’t necessarily mean you have to quit your job.
However, you now have that option and the freedom that comes with it.
How to apply the movement to your life
Realistically, reaching FIRE may not be an option for everyone. But increasing the gap between your income and expenses such that you have more money coming in than going out could help your financial situation even if you don’t think you can retire early (or event want to).
Here are a few ways to incorporate the guiding principles of the FIRE movement into your life without going to extremes:
Evaluate your priorities. This is always a great place to start. No one else gets to decide what’s truly important in your life. If you take the time to evaluate what you want and what’s important to you, it can help you set clear goals to strive for and a benchmark by which to measure the decisions that shape your financial future.
Decrease expenses. No matter your aptitude for a frugal lifestyle, look for ways to cut costs in different areas of your life. Housing, transportation and food are often major monthly expenses, so it could help to focus on these areas. Some FIRE devotees sell their cars or trucks and walk or bike to work. Organizing a carpool or taking public transportation could be a better fit for your lifestyle.
Increase your income. There are many ways to increase the other side of the equation as well. You could look for a side gig or negotiate a raise with your current employer. If you have the funds to make it work, taking on an investment property could also be a key to higher income.
Avoid lifestyle inflation. It can be tempting to “upgrade” your lifestyle when your income increases. However, if your goal is to increase the gap between your income and expenses, you’ll want to maintain your lifestyle while your income rises.
Aim for higher returns. Whether you’re a savvy investor or don’t know a stock from a bond, a little research and planning could help you make more money with your money. Even low-risk actions, such as moving your money to a bank or credit union that offers a higher interest rate, could help. Lowering the fees you pay on checking, savings and investment accounts could also help increase your returns.
Bottom Line:
Even if early retirement is not in your game plan, there are still valuable lessons and takeaways from the examples of those who have been able achieve this goal. If you’re intrigued by some of the concepts or think you may want to join others on the path to FIRE, there are resources and tools that can help. You can use basic online calculators to create a budget or check your savings progress and help you determine when you’ll be able to retire.
This article is intended to provide general information and should not be considered health, legal, tax or financial advice. It’s always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.

Consumer Counselor – July 11, 2018

How to get a stylish wardrobe on a budget
Looking your best and emulating the latest runway fashions can be easy with an unlimited budget, or even a personal shopper. But the majority of the general public must shop on a budget, which can seemingly make it challenging to look stylish. However, savvy shoppers know to upgrade a wardrobe without spending a fortune.
The fashion resource Who What Wear commissioned award-winning financial planner Pete Dunn to calculate just how much a person should be allotting to his or her wardrobe. The magic number Dunn came up with was 5 percent. Therefore, a person making $40,000 per year should be spending no more than $2,000 per year, or roughly $166 per month, on clothing. That may not seem like much, but with some smart shopping it can be enough.
Shop trendy, but affordable retailers such as Target, Zara, H&M, Everlane, and more offer pieces that focus on current fashion trends but at deeper discounts than high-end shops. While shoppers may not be walking out with designer duds, they will benefit from similarly cut and styled pieces and accessories that are still on point with the trends.
Another option is to frequent discount retailers that offer name-brand merchandise at significant savings. Stores such as TJ Maxx, Marshalls and Saks Off 5th may get the over-stock of other stores that they then sell for less. Many of these items may be a season or two late, but can still yield very fashionable pieces. If someone favors a certain designer or name brand, it may be sold in these shops at a fraction of the cost of other stores.
Stick to classic styles by filling a wardrobe with staples that will never go out of style, such as dark jeans, little black dresses, peacoats, classically cut blazers, a good pair of slacks, and similar pieces. These can be embellished with accessories that meet the current trends. Mix old and new pieces as they are acquired, and slowly weed out pieces that are worn out or no longer meet your needs.
Consider consignment shops as many deals can be found inside these shops. Such shops stock many different pieces, often at very low prices. These stores are great for people who appreciate vintage styles and/or those who want to add an accessory, say a high-priced purse, to an outfit without breaking the bank.
Look for fit and function – sometimes it’s best to invest in one well-made piece instead of spending the same amount on 10 less expensive items. Smart shoppers know how to pick and choose among foundation components of a wardrobe.
Building an impressive and stylish wardrobe can take a little time, but it’s achievable even on small budgets.

Practical Money Matters – July 4, 2018

By Bill Norton
Sharing money tasks could lead to healthier long-term relationships
While learning to discuss and manage money as a couple can be a challenge at first, figuring it out can pay dividends for years to come. It’s beneficial to start communicating about money early in a relationship and to maintain open communication on the subject as time goes on.
Like many couples, my wife and I disagree about money once in a while. Like many couples, my wife and I disagree about money once in a while. Generally, though, we understand – and perhaps more importantly, respect – each other’s financial decisions, including the occasional frivolous purchase.
We’ve also learned how to effectively combine our finances and share the financial tasks in our household, which were important steps in building and maintaining a healthy relationship as our family continued to grow.
One of the first money decisions many serious couples make is if and how to rearrange their finances once they decide to spend their lives together. As with many relationship-related decisions, there isn’t just one approach that will work best for every couple. However, these are a few popular arrangements that could work for you:
Move your money into joint accounts. Closing individual accounts and solely using joint accounts is one option. Some couples feel doing so is a reflection of their commitment to one another, and it can be easier to manage household finances when you pool money. However, some people don’t like the lack of having a designated “my” money account separate and distinct from the joint account(s).
Don’t combine finances. Keeping your finances separate might be a good idea, particularly if you both enjoy managing money on your own. However, you may need to have open and regular conversations to ensure bills don’t get overlooked and you’re both on track with your savings.
Open joint accounts and keep your separate accounts. Another option is to open joint accounts for shared bills and savings goals while also maintaining individual accounts that each of you can use however you want. The arrangement isn’t ideal if one partner feels strongly about combining or separating finances, but it can be a good middle ground.
Also, remember that your choice to combine your money or keep it separate isn’t set in stone. You can try out different options, and you may find that what works best for you both changes over time. Say you want to keep your finances separate at first. If one partner stops working after you have a child, that arrangement might not work anymore. You could then split the working partner’s income between shared and individual accounts or have it all go to a joint account that you can both use.
How you divide your money among accounts could also play into how you split and share financial tasks. With separate accounts, you both may have to take on some of the bills. But even with combined accounts, you’ll still have to decide who’s responsible for what.
Don’t put all the pressure on one person. One slip up can occur when one partner is clearly “the money person” in the relationship. He or she may be more interested in finances and even (gasp) enjoy budgeting. You may be inclined to let that person handle every serious money-related decision, but that could result in issues down the road.
When one person takes on 100 percent of the financial responsibilities, it can actually lead to resentment in both partners: the money person has an added burden of potentially making the wrong decision for the entire household, and even if the non-money person doesn’t enjoy managing money and is comfortable letting his or her partner handle the finances, he or she might not want to be left in the dark when it comes to financial decisions or be made to feel like their input/help isn’t needed.
Sharing financial responsibility can take many shapes and forms. It doesn’t necessarily mean you have to split up every task so you both do the same amount of work.
For example, if one person is more adept at managing bills, then perhaps he or she takes on that responsibility. Or, if someone stays home with a child, he or she may have a better understanding of how to manage the home-related expenses.
Even when one person does the physical tasks, like tracking and paying bills, you should still sit down together as a couple to discuss the household’s budget, how to decrease bills and how upcoming bills could affect the family. Then, you’ll both be involved in the decisions and outcomes.
The same principle can apply to other areas of your finances, such as researching large purchases or choosing investments. Whether you have regular financial discussions or have one-off financial conversations before making any big money-related decision, it’s the act of having those conversations that results in both individuals feeling a sense of ownership and contribution.
Bottom line: Managing money tends to be complicated even before you add in all the dynamics of a long-term relationship. However, when you are part of a couple, having a system for how you’ll share your money and make financial decisions together could help you avoid problems and keep small disagreements from becoming bigger. Couples can strengthen their relationships when they learn how to discuss money and how to work together to achieve shared financial goals.

Consumer Counselor – July 4, 2018

How to conserve mobile data to save money
Anyone with a smartphone is familiar with data plans. In fact, data may be more important to consumers than their phone minutes, as making phone calls has taken a backseat to various other smartphone capabilities.
Deciphering data plans has become complicated. As major mobile carriers frequently jockey for position, the prices of plans change depending on various factors, including data. Short-term offers to lure in new customers can also complicate matters, as can deciding just how much data one person needs.
Consumer Reports has done the research and offers their comparison on the most promising data plans. However, people looking to maximize the data they have and not incur any overage charges can consider these tips to conserve data and save money.
Restrict automatic downloads. Adjust phone settings to prevent operating systems from automatically downloading movies or apps or making phone updates when you are away from a Wi-Fi signal. This will cut down on data usage and improve the speed of downloads.
Disable background app refresh. On iOS systems, apps may update in the background to show new content when you return to them. To conserve data, select which apps to refresh in the background rather than having them all do so.
Take note of data usage. Determine how much data you’re consuming by examining current and past statements. Some providers enable you to set limits on data usage and even alert you when you’re getting close.
Connect to Wi-Fi whenever possible. Many public places now provide Wi-Fi access. As long as you are not sharing sensitive information, it can be safe to use public Wi-Fi, which should not count against your data consumption.
Turn maps off. Navigation apps can draw a lot of data. Turning them off when they’re not being used can reduce data consumption. Some maps can be exported as PDFs, which can be referred to while maps are offline as well.
Preserve your cache. Waiting for images from frequently visited websites to download each time you visit a site can drain data. Preserving your cache can reduce the amount of time it takes for websites to open.
Use mobile websites. Many mobile versions of sites are optimized to condense images and other files, which can reduce data consumption.
Opt for offline listening. The popular audio streaming apps have different offline options where music can be downloaded and played without having to stream over a connection.
Smartphone users can reduce their data consumption in various ways, and doing so can help save money.

Practical Money Matters – June 27, 2018

By Hugh Norton
A friend and I were recently discussing family pets. Their family had recently adopted a dog, and he was pointing out that while his children had fervently promised to take care of the pet with the best of intentions, they didn’t necessarily have the greatest track record of following through. After the first few months, he and his wife found themselves handling 90 percent of the responsibilities. While I laughed, I also know that it’s likely that our family will wind up having the same experience when we get a pet.
Regardless of who handles the bulk of the responsibility for a pet over the long term, the conversation got me thinking about the many valuable teaching moments that can present themselves when you bring a pet into your family. While parents often use pet ownership as a tool to teach overall responsibility, there are great opportunities to use the experience to impart lessons concerning financial responsibility as well.
Trying before buying and entrepreneurship – Children and teenagers don’t always understand the long-term consequences of their decisions. However, if you can get them to take care of neighbors’ or friends’ pets (with you there to supervise if necessary), they’ll be able to experience the balance of work and enjoyment that goes into having a pet before the final decision is made to foster or adopt a pet of their own.
It may even be a good way of creating income and encouraging entrepreneurship. They might offer their friends and neighbors a service – the first few dog walks, check-ins or litter box changes as freebies and then charge a small fee for their services. Even if they charge just $5 or $10 each visit, the experience will help them get a taste of the responsibilities of pet ownership while they practice entrepreneurship and learn about the effort needed to succeed and rewards that can come from starting a business. In addition, if they are able to amass an income of their own from the experience, you may want to consider having them chip in to cover part of the adoption fees.
How to create and follow a budget – The real work (and fun) starts once you bring a pet home. Picture this: your children have learned about the many responsibilities that come with having a pet and are taking it upon themselves to handle all the basic associated chores… a parent can dream, right?
Even if your children don’t exactly tackle these chores with the grit and determination you would have hoped for, you can teach them financial lessons by involving them in all pet-related financial decisions and transactions and by teaching them how to create and follow a budget. Have them start by listing out the necessary expenses, such as food, vet check-ups and toys. Then work together to research the anticipated costs and create a plan. There is a big difference in the budget needed to bring home a small goldfish versus a cat or even a large dog. One friend’s child fell in love with horseback riding after participating in the sport at camp. Now, in addition to taking care of the family dog, my friend and the child are exploring the possibility of signing up for horseback riding lessons or even sponsoring a horse.
If you want to teach your children about budgeting in this context, they’ll need an income to use to cover their expenses. The money could come from an allowance, continued pet care work or a part-time job if they’re old enough. Or you may have to fund a special pet care account that they help manage.
The importance of saving to cover long-term expenses – While a budget is primarily intended to be used to cover day-to-day expenses, it’s also an important tool for planning for the future.
To help teach your children the importance of saving, make sure to teach them to set aside money in the budget for longer-term expenses. Long-term costs could include holiday gifts for the pet, boarding or pet sitting fees for when your family travels or even an emergency medical fund for visits to the vet. Boarding and medical care can be quite expensive. To help set your child’s expectations and set savings targets, research your pet or breed of pet and base your savings plans on the information you find.
Tangible savings accounts, such as a jar labeled with the saving goal, could be a good option if only a small amount of funds needs to be saved. As savings needs grow, it could be a good opportunity to open a joint checking or savings account where your child can deposit money and practice using an account.
Bottom line: For children and adults alike, learning about money can be difficult when it’s only an abstract concept. By tying the prospect of getting and taking care of a new pet to the importance of earning, budgeting and saving money, you can help teach your children about financial responsibility and instill money habits that could serve them for the rest of their lives.


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