Binge read all things wealth building, debt reduction, & lifestyle.

Do you have a spouse, dependent(s), or substantial assets?

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...

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!

https://jaapapodcast.libsyn.com/

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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...

_{This post may contain affiliate links. If you make a purchase, I will be compensated at no cost to you. For my full disclosure, click here.} 

Are you wanting to "get into the market" or "become an investor", but you're not sure where to start?

IF YOU HAVE A 401(K) OR OTHER WORKPLACE RETIREMENT ACCOUNT, YOU ARE ALREADY AN INVESTOR. 

Surprised? Most people don't realize that their retirement accounts are simply a big bucket labeled with the way taxes are applied, with INVESTMENTS inside. 

Let's review a few tips to make sure you are investing well. 

1. USE TAX FAVORED ACCOUNTS FIRST
- You cannot underestimate how much taxes will affect your investments over time. 401(k) plans offers pre-tax contributions that give you an immediate tax benefit. A Roth 401(k) or Roth IRA offers tax free withdrawals in the future, but requires contributions with money you have already paid taxes on. HSAs have tax benefits as well. All of these options...

_{This post may contain affiliate links. If you make a purchase, I may be compensated at no additional cost to you. For my full disclosure, click here.} 

People talk a lot about "financial freedom" or "financial independence". But what does it really mean? There are so many different variations of this out there and different people use different terms. We will keep things simple. 

Financial independence means you can live entirely off of your investments. 

Some people utilize stages to describe financial independence. One example is the following:


1. FINANCIAL SECURITY
- This means your investment returns could cover your bare minimum expenses, with no thrills or extras. Few people will quit their job at this stage (unless they have some source of additional income), but it allows you the security of knowing your investments could cover your major bills should you need them to. Some people call this "lean financial independence". 

2. FINANCIAL INDEPENDENCE
-...

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The key to wealth is your overall savings rate. I say this ALL THE TIME. Recommended savings rates vary from 10% (see books like The Richest Man in Babylon), 15-20% (Dave Ramsey), and upwards of 50% (see the entire FI/RE movement). Regardless of if you are saving nothing at all, or just a small amount, increasing your savings rate even slightly will make a HUGE difference in your future.

But how do you increase your overall savings rate when you're already feeling strapped for cash?

Here are a few suggestions:

1. GET ORGANIZED
- If you're not tracking your expenses routinely, it is nearly impossible to know where you can cut expenses to increase your savings rate. A monthly budget is a fundamental requirement. 

2. PAY OFF HIGH INTEREST DEBTS
- Carrying high interest debts is the equivalent of running a race with...