Binge read all things wealth, debt, & lifestyle.
If you fall into any of those categories, read on...
A basic estate plan is something almost all of us should be thinking about. This starts with a determination of how your assets should be addressed upon your death. This can be accomplished through a will or a trust.
A will is a legal document designating what should become of your assets after your death. It should also designate a guardian for any dependents. A will can request an executor to create a trust after your death to hold assets for a minor (I would have an attorney set this up). A minor should never be directly listed as the beneficiary of a life insurance policy.
If you die with a will, your assets will go through the process of probate. Probate is the process of the legal system reviewing your will and the distribution of assets. This process takes time, involves lawyers, and costs money. Of note, 401(k) plans and IRAs...
What are the key things you need to do to protect yourself financially in the event of a recession?
1) Keep your emergency reserves in cash. This should be 3-6 months of expenses in a savings account or high yield savings account. If you are nearing retirement, it will need to be more. Don't be tempted to invest your emergency fund. It's a bad idea.
With current interest rates, a high yield savings account absolutely makes the most sense. Mine is paying 3%!
2) Mind your debt burden. High interest debt needs to go NOW. Make any sacrifice possible to pay off your high interest debt, particularly credit card debt. Low interest student loan debt is different and should find a different place in your money plan, particularly federal loans at the current 0%.
THIS IS THE TIME to get incredibly aggressive with paying off any credit card debt.
3) Stick with your investing strategy. Your stock/bond allocation should make sense for you in general, regardless of the market. You...
Personal finance is 1000% easier than fitness. You can literally find the motivation one time to set everything up, and then let the process work for you. Turns out, hitting the gym once won’t get you the abs.
We have 90% of our finances automated. What actually happens is this:
Multiple investments come out before we see our checks. This removes any temptation to spend the money and is one of the best personal finance hacks there is. These include:
- Her Roth 401k
- His traditional 401k
- Solo 401k (for small business owners only, but allows us save taxes on business income)
- His & her HSA *100% of balance is invested
- Dependent care FSA *not an investment, but reduces our income taxes and pays for childcare
After-tax investments are next. These include:
- His & her Roth IRAs
- Taxable brokerage
- Investment real estate
- Kiddo investments *For the full scoop on how to invest for kids, click here
*The Roth IRA always comes before the other...
If you're considering investing for your kids, check out this video to learn about the options you have in terms of account types.
Investing when your child is young can be extremely powerful, because it allows time to work magic in terms of compounding the money. Let's look at an example. Assuming you invest $3,000 for your child at birth in a custodial Roth IRA (this would assume your infant is doing some baby modeling and has an earned income to report!) and that money is allowed to sit until 65, your child winds up with almost HALF A MILLION dollars of tax free money*! Those numbers assume you never invest again for the child outside of the initial $3,000. Talk about building generational wealth.
Paying for a kiddo to attend college will also require investing - trying to save your way there would be incredibly difficult. If you're not sure how much college is expected to cost in the future, use this free online calculator to help you figure it out. Have a talk with your...
Is it better to invest in stocks or real estate?
This is one of my most common questions, so I thought I would share some pros and cons of each.
Investing in the traditional stock market is easy. It takes almost no effort and very little up front money. Although some index funds have minimum investments, the ETF equivalent often doesn't. You can start investing with less than $100. If you're investing well and using the right accounts, you can get substantial tax benefits for doing so. Of course, there is always the potential for loss of capital. The market may be down, and stay down, for long periods of time. The longer your investment time horizon for stock market investing, the less likely you are to lose money. In fact, if you hold investments for multiple decades the likelihood of losing money drops to almost zero.
Real estate has the potential to generate positive cash flow, and thus returns, even when the stock market...
If you're a PA or future PA, this is a must listen.
Some new data was recently published on the lifetime financial modeling of an average family practice PA. It's really unique for this type of information to come out specific to the PA profession, as most similar projections have been done based on the physician model. I was a guest on the JAAPA Podcast discussing this exciting publication.
Does the model apply to you? How does your cost of living affect the projections? What about student loan debt, and funding retirement?
Tune in to the podcast to find out more!
This post may contain affiliate links. If you make a purchase, I will be compensated at no additional cost to you. For my full disclosure, click here.
I recently asked you guys the worst money advice you had ever received, and tons of you said buy whole life insurance.
I shared the response and got a lot of questions.... what in the world is whole life insurance? Why do you say to buy term life insurance?
Let's break it down...
Whole life insurance, indexed universal life insurance, and other similar policies are permanent life insurance. They don't end after a certain number of years, like term life insurance does. The main difference is that these have a built in "cash value" or "investment" that you are creating with your premiums over time.
Sounds great, right? Not so much.
They also have complex rules and fees. If you want to gain access to the money before a designated number of years, there is a fee for that. There is also a monthly premium fee. And...
This post contains affiliate links. If you make a purchase, I will be compensated at no additional cost to you. For my full disclosure, click here.
It's not enough just to build wealth, you have to protect it! You may not perceive yourself as having wealth, but if you have money in your checking account, a savings account, retirement account at work, car, house or all of the above - you have wealth! Let's talk about various types of insurance you should be considering to keep yourself protected.
1. TERM LIFE INSURANCE
- If you have anyone who depends on you financially, you NEED life insurance. This can be a spouse, child, etc. Term life insurance (as opposed to whole life, universal life, etc) is inexpensive. We all feel nothing will ever happen to us, but the unfortunate reality is that it's possible. It would be bad enough for your family to lose you prematurely. Don't add insult to injury by leaving them in financial disarray. You should have at least...
If you're a consistent investor, CONGRATULATIONS. That alone is a major accomplishment!
If you're not sure how to invest, click here for help getting started.
As hard as you are working to save and invest, I'm sure you would want to know if something was draining your investments behind the scenes.
Well, something is.
It's your investing fees.
Fees come in several forms. The first is related to the investment itself. Each fund you choose has an expense ratio that represents the fund's internal operating expenses. It is represented as a percentage, and can be interpreted as the percentage of your returns that is taken from your account to pay for the fund's fees.
Not sure what the expense ratio is for the funds you've invested in? Just google the fund's ticker (collection of capital letters representing the fund name). Click the Morningstar link. The expense ratio will pop right up.
What's a good expense ratio? I prefer <0.10%. Most of my funds are...
Roth IRAs are one of the best tax-favored accounts to use for retirement investing.
You invest "after tax" dollars (meaning your contributions are not tax deductible). The contribution limit for 2022 is $6000, unless you qualify for a catch up contribution. After age 59 and 1/2, all of the funds in the account can be accessed TAX FREE. Yes, you read that right. In addition, Roth IRAs have several other benefits: