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Starting a Business With a Friend: 4 Things to Consider

The ultimate question: Could you and your friend make the perfect business duo? The answer may be more complicated than you think. You love spending time with your friend and the idea of becoming entrepreneurs together. Why not fulfill your dreams with each other? Companies like Airbnb and Ben & Jerry’s had success in this area — they all started from friendships.

But much more goes into starting a business with a friend. You may make great business partners, or you could wish you had taken your venture solo. Before making any financial decisions, analyze the pros and cons and ask hard questions. For example, will you equally invest? Who will take on which tasks and responsibilities? Sift through the easy and hard questions to see where your business friendship lies.

To help you and your friend make a confident and informed decision, skip to our flowchart or keep reading.

karen-gordon-quote

Questions to Ask Before Going Into Business With a Friend

Before jumping into your business plan, ask the hard questions. These can be tough to ask and answer, but they could save your friendship from a business relationship gone sour.

Question 1: Do You Share the Same Values?

Depending on your life stage and goals, your values could differ greatly from those of your potential business partner. You may appreciate living a relaxed lifestyle that gives you the financial freedom to do what you love, while others may value a fast-paced lifestyle filled with activities and long workdays. Differences in values could spark tension in your business relationship.

Ask yourself: Do you and your potential business friend have the same values? If so, great! If not, note your differences and if they’re worth working through.

Question 2: Do You Share the Same Business Goal?

To make sure you’re on the same page, schedule a brainstorming session with your friend. Map out your one-month, six-month, one-year, and five-year goals for your startup. Is your goal to make a certain amount of revenue? To hire a certain number of full-time employees? Or to take your business idea global?

If you have the same intentions, move on to question three. If any of your goals contrast, there may be trouble in paradise. See if you can work through your differences before investing your time and money.

Question 3: Do Your Skills Complement Each Other?

You and your friend each have your own strengths For example, you may be good at time management while your friend is better at sales. For skills you’re both lacking, think about how you’ll fill in the gaps. If you and your friend’s startup plan has a budget for hiring freelancers, or one of you has the dedication to learn something new, this may not be a concern. No matter what, especially if you’re bootstrapping your business idea, it’s essential to talk through it.

If you don’t compliment each other’s needed skills, who will step up and learn them?

Question 4: Do Your Career and Lifestyle Habits Align?

Depending on your business goals, this could be a make or break question for a professional partnership. For instance, one friend may be a morning person while the other’s a night owl. One can take over morning meetings and emails while the other’s responsible for evening website development and customer service.

If one friend’s lifestyle habits don’t suit the other, it may be best to opt for other business opportunities. While starting a business could adjust your habits, it’s easy to fall back into old ones from time to time.

baylie-carlson-quote

The Pros and Cons of Doing Business With Friends

Before entering any business arrangement, it’s reassuring to weigh the pros and cons. Could your new business idea benefit or hinder your future relationship and career?

Pros: You Have a Friend Through the Ups and Downs

Starting a business with a friend is similar to marriage — you’re there for each other through the good and bad. Whenever you’re having trouble, you know who you can go to for help. And you’ll be able to do most tasks together. For example, approaching investors as a team vs. going solo could put your nerves at ease.

Cons: You Know the Same People

Instead of getting together for your weekly catch-ups, you could spend all day together! While this can be exciting, it can also be hard to leave work at work. When you both hang out with the same people, there may be little room to disconnect from each other and your business.

Pros: You Understand Each Other’s Strengths and Weaknesses

You likely already know how each other operates and your strengths and weaknesses. Instead of learning the way a new business partner functions, you already have the upper hand. On day one, you and your partner could delegate tasks that fit everyone’s strengths best.

Cons: Your Friendship Could Turn Strictly Business

Your current friendship can be hard to separate from your new work partnership. Taking your work too seriously could stiffen your current relationship. Even after your work’s done, “friend” time may slow down. To have the best of both worlds, over-communicate throughout your entrepreneurial adventures.

mike-falahee-quote

Pros: You Feel Comfortable Communicating

You may have been friends for months, years, or even decades. Having a strong friendship foundation helps bolster your communication in the workplace. Plus, you most likely know how your friend may react to a situation gone wrong. Take note of your friends’ communication habits and foster them throughout your business relationship.

Cons: It’s Easy to Let Emotions Get the Best of You

Be careful not to let your emotions dictate your business decisions. A situation could happen in your friend group that makes its way into the office. To avoid any personal matters in the workplace, come to an agreement — no drama. If situations arise, take some time off to clear your mind, rest, and come back more motivated and inspired.

Pros: You Get to Spend More Time With Each Other

You get to spend countless hours talking and doing business activities together. You could spend all day tackling business tasks and wrap up the workday chit-chatting about your lives. It’s an amazing opportunity to spend more time with your friend without letting other responsibilities slip through the cracks.

Cons: Friendship Failure Could End in Financial and Business Failure

When tension builds in the workplace, it could damage your business outcomes. Not wanting to attend a meeting with your partner could halt business productivity, or worse, end it. To avoid losing profits on your friendship and investments, you should both outline an exit plan if things go wrong.

Tips for Starting a Business With Your Friend

Before toasting to your other half and investing in your passions, properly prepare yourself. Show up to your new business like you would a new job. Have your plan documented before building your business empire.

1. Nit-Pick Your Business Plan

Small issues could grow months or years after starting your business. To avoid future problems, talk through small and large inconsistencies with your partner. Having different lifestyle habits may not be an issue now, but could be difficult after a year of working together.

2. Communicate Often

About one third of projects lack proper communication. Avoid project or business failure by finding a communication method that works for you and your partner. Daily catch-up meetings or weekly email updates are a few examples. Make it enjoyable by sipping your favorite coffee or eating your lunch while playing catch up.

3. Establish and Honor Boundaries

Eliminate tension in the workplace by setting a rubric for working hours. Avoid talking about personal matters until you step away from your work tasks. If you and your partner need to establish additional boundaries, clearly outline them as they come up.

4. Make it Official With Contracts

Once you’ve worked through any complications, put it all in writing. If things were to go wrong, documents and written statements can be referenced in court. To do this, contact a lawyer and draft up a business plan. Any business promises you make should be in writing for any miscommunications. Compensation rates, profit shares, investment contributions, and business accounts are a few things that should be listed on this document.

Before investing your time, energy, or money into your startup dreams, make sure you’re fully prepared. Could you and your friend be great business partners? Take our quiz below to find out. Don’t forget to keep track of your budget and investments throughout the startup process.

Starting a Business With a Friend: 4 Things to Consider appeared first on MintLife Blog.

Source: mint.intuit.com

The Best Student Loan Companies For Refinancing

Refinancing your student loans can make good financial sense, and that’s especially true if your current loans are stuck at a high-interest rate. With a new loan at a lower APR, you could save a bundle of money on interest each month and ultimately pay your student debt off faster. Consolidating several loans into one new one can also simplify your financial life and make keeping up with bills a lot easier.

College Ave and Earnest topped our list, but since student loan refinancing is an incredibly competitive space, you’ll also want to spend time comparing student loan companies to see who offers the best deal. Many lenders in this space offer incredibly low APRs, flexible payment options, borrower incentives, and more. This means it’s more important than ever to shop around so you wind up with the best student loan for your needs.

What You Should Know About Refinancing Federal Student Loans with a Private Lender

The lenders on this list can help you consolidate and refinance both federal student loans and private student loans. However, there are a few details to be aware of before you refinance federal loans with a private lender.

Switching federal loans to private means giving up federal protections like deferment and forbearance. You also give up your chance to qualify for income-driven repayment plans like Pay As You Earn (PAYE) or Income Based Repayment (IBR). Income-driven repayment plans let you pay a percentage of your discretionary income for 20 to 25 years before ultimately forgiving your remaining loan balances, so this perk isn’t one you should give up without careful thought and consideration.

Best Student Loan Refinancing Companies of 2021

As you start your search to find the best student loan for your lifestyle, take the time to compare lenders and all they offer their customers. While there are a ton of reputable companies offering high-quality student loan refinancing products on the market today, there are also companies you should probably steer clear of.

To make your search easier, we took the time to compare most of the top lenders in this space in terms of interest rates offered, fees, borrower benefits, and more. The following student loan companies are the cream of the crop, so you should start your search here.

Our Top Picks:

  1. Splash Financial
  2. College Ave
  3. Earnest
  4. SoFi
  5. CommonBond
  6. LendKey
  7. Wells Fargo
  8. PenFed Credit Union

Student Loan Refinancing Company Reviews

1. Splash Financial

Splash Financial may be a newer company in the student loan refinancing space, but their offerings are competitive. This company lets you check your rate online without a hard inquiry on your credit report, and their variable rates currently start at just 2.25% APR.

Not only are interest rates offered by Splash Financial industry-leading, but the company has a 95% customer satisfaction rate so far. Their cutting-edge technology also lets you apply for your loan and complete the loan process online, meaning less hassle and stress for you as the borrower.

Check Out Splash Financial’s Low Rates

2. College Ave

College Ave offers student loan refinancing products that can be tailored to your needs. They offer low fixed and variable interest rates, for example, and you’ll never pay an application fee or an origination fee. You can even qualify for a discount if you set your loan up on autopay, and a wide range of repayment schedules are available.

College Ave also offers a wide range of online calculators and tools that can help you figure out how much student loan refinancing could help you save and whether the move would be worth it in the end. Considering their low variable rates start at just 2.74% APR, there’s a good chance you could save money by refinancing if you have excellent credit or a cosigner with great credit.

Get Started with College Ave

3. Earnest

Earnest is another online lender that focuses most of its efforts on offering high-quality student loans. This company lets you consolidate debt at a lower interest rate than you might find elsewhere, and you get the option to pick a monthly payment and repayment period that works with your budget and your lifestyle.

While you’ll need excellent credit to qualify for the lowest interest rates, loans from Earnest come with variable APRs starting at 1.81% and low fixed rates starting at just 3.45%. To qualify for student loan refinancing with Earnest, you’ll need a minimum credit score of 650 and a strong employment and income history. You also need to be current on all your bills and cannot have a bankruptcy on your credit profile.

Refinance and Save with Earnest

4. SoFi

Also make sure to check out student loan refinancing company SoFi as you continue your search. This online lender offers some of the best student loan refinancing products available today, including loans with no application fee, origination fee, or hidden fees.

SoFi lets you apply for and complete the entire loan process online, and they offer live customer support 7 days a week. You can also check your rate online without a hard inquiry on your credit report, which makes it easier to see how much you could save before you commit.

Get Pre-Approved with SoFi in Less than 2 Minutes

5. Commonbond

Commonbond is another online student lender who lets you check your rate online without a hard inquiry on your credit report. With student loan refinancing from Commonbond, you could easily save thousands of dollars on interest with a new fixed interest rate as low as 3.21%. Repayment terms are offered for 5 to 20 years as well, letting you choose a new monthly payment and repayment timeline that works for your needs.

You can apply for your new loan online and note that these loans don’t come with an origination fee or any prepayment penalties. Your loan could also qualify for forbearance, which means having up to 24 months without payments during times of financial hardship.

Apply Online with Commonbond

6. LendKey

LendKey offers private student loans and flexible student loan refinancing options to serve a variety of needs. You can repay your loan between 5 and 20 years, and their refinance loans don’t charge an origination fee.

You can use this company’s online interface to check your rate without a hard inquiry on your credit report, and variable APRs start at just 2.01% for graduates with excellent credit. LendKey loans also receive 9.3 out of 10 possible stars in recent reviews, meaning their customers are mostly happy with their decision to go with this company.

Save Thousands by Refinancing with LendKey

7. Wells Fargo

While Wells Fargo is mostly popular for their banking products, home mortgage products, and personal loans, this bank also offers student loan refinancing products. These loans let you consolidate student debts into a new loan with a low variable or fixed interest rate, and you can even score a discount for setting your loan up on autopay.

Terms for Wells Fargo loans are available anywhere from 5 to 20 years, meaning you can choose a repayment schedule and monthly payment that suits your needs. Wells Fargo also lets you check your rate online without a hard inquiry on your credit report.

Get Started with Wells Fargo

8. PenFed Credit Union

PenFed Credit Union offers unique student loan products powered by Purefy. You might be able to qualify for a lower interest rate that could lead to enormous interest savings over time, and PenFed lets you choose a repayment term and monthly payment that fits with your budget and lifestyle.

You can apply for student loan refinancing on your own, but PenFed Credit Union also allows cosigners. Low fixed interest rates start at just 3.48% APR, and you can check your rate online without a hard inquiry on your credit report.

Learn More about PenFed Credit Union

What To Look For When Refinancing

If you decide you want to refinance your student loans, you’ll be happy to know the refinancing market is more robust than ever. A variety of lenders offer insanely attractive loan options for those who can qualify, although you should know that student loan companies tend to be very finicky about your credit score. Some also won’t let you refinance if you didn’t graduate from college, or even if you graduated from an “unapproved” school.

While you should be aware of any lender-specific eligibility requirements before you apply with any student loan company, there are plenty of other factors to look out for. Here’s everything you should look for in a student loan refinancing company before you decide to trust them with your loans.

Low Interest Rate

Obviously, the main reason you’re probably thinking of refinancing your loans is the potential to save money on interest. Lenders who offer the lowest rates available today can potentially help you save more, although it’s important to consider that you may not qualify for the lowest rates available if you don’t have excellent credit.

Cosigner Requirements

Also consider that most lenders will offer better rates and loan terms if you have a cosigner with better credit than you have. This is especially true if your credit isn’t great, so make sure to ask family members if they’re willing to cosign on your new student loan if you hope to get the best rate. Just remember that your cosigner will be jointly liable for repayment, meaning you could quickly damage your relationship if you default on your loan and leave them holding the bag.

Low Fees or No Fees

Student loans are like any other loan in the fact that some charge higher fees or more fees than others. Since many student loans come with an application fee or an origination fee, you’ll want to look for lenders that don’t charge these fees. Also check for hidden fees like prepayment penalties.

Discounts Available

Some student loan companies let you qualify for discounts, the most popular of which is a discount for using autopay. If you’re able and willing to set up automatic payments on your credit card, you could save .25% or .50% off your interest rate depending on the lender you go with.

Rate Check Option

Many of the top student loan refinancing companies on this list make it possible to check your interest rate online without a hard inquiry on your credit report. This is a huge benefit since knowing your rate can help you figure out if refinancing is even worth it before you take the time to fill out a full loan application.

Flexible Repayment Plan

Also make sure any lender you go with offers some flexibility in your repayment plan and your monthly payment. You’ll want to make sure refinancing aligns with your long-term financial goals and your monthly budget, and it’s crucial to choose a new loan with a monthly payment you can live with.

Most lenders in this space offer repayment timelines of up to 20 years, which means you could spread your payments over several decades to get a monthly payment that makes sense with your income. Keep in mind, however, that you’ll pay more interest over the life of your loan when you take a long time to pay it off, so you may want to consider prioritizing a faster payment plan.

The Bottom Line

Student loan refinancing may not sound like a lot of fun. However, taking the time to consider all your loan options could easily save you thousands of dollars. This is especially true if you have a lot of debt at a high interest rate. By consolidating all your student loans into a new one with a lower APR, you could make loan repayment easier with a single payment and save a ton of money that would otherwise go to straight to interest without helping you pay off your loans.

The first step of the loan process is the hardest, however, and that’s choosing a student loan refinancing company that you trust. The lenders on this list are highly rated, but they also offer some of the best loan products on the market today.

  • Work with College Ave, our top pick, to refinance your student loan.

Start your search here and you’re bound to wind up with a student loan you can live with. At the very least, you’ll have a better idea of the loans that are available and how much you might save if you decide to refinance later on.

The post The Best Student Loan Companies For Refinancing appeared first on Good Financial Cents®.

Source: goodfinancialcents.com

Repossession Credit Scores: What You Need to Know

One of the harsh truths of secured loans is that your asset can be repossessed if you fail to make the payments. In the words of the FTC, “your consumer rights may be limited” if you miss your monthly payments, and when that happens, both your financial situation and your bank balance will take a hit.

On this guide, we’ll look at what can happen when you fall behind on your car payments, and how much damage it can do to your credit score.

What is a Car Repossession?

An auto loan is a loan acquired for the sole purpose of purchasing a car. The lender covers the cost of the car, you get the vehicle you want, and in return you pay a fixed monthly sum until the loan balance is repaid.

If you fail to make to make a payment or you’re late, the lender may assume possession of your car and sell it to offset the losses. At the same time, they will report your missed and late payments to the main credit bureaus, and your credit score will take a hit. What’s more, if the sale is not enough to cover the remainder of the debt, you may be asked to pay the residual balance.

The same process applies to a title loan, whereby your car is used as collateral for a loan but isn’t actually the purpose of the loan.

To avoid repossession, you need to make your car payments on time every month. If you are late or make a partial payment, you may incur penalties and it’s possible that your credit score will suffer as well. If you continue to delay payment, the lender will seek to cover their costs as quickly and painlessly as possible.

How a Repossession Can Impact Your Credit Score

Car repossession can impact your credit history and credit score in several ways. Firstly, all missed and late car payments will be reported to the credit bureaus and will remain on your account for up to 7 years. They can also reduce your credit score. 

Secondly, if your car is repossessed on top of late payments, you could lose up to 100 points from your credit score, significantly reducing your chances of being accepted for a credit card, loan or mortgage in the future. 

And that’s not the end of it. If you have had your car for less than a couple of years, there’s a good chance the sale price will be much less than the loan balance. Car repossession doesn’t wipe the slate clean and could still leave you with a sizable issue. If you have a $10,000 balance and the car is sold for $5,000, you will owe $5,000 on the loan and the lender may also hit you with towing charges.

Don’t assume that the car is worth more than the value of the loan and that everything will be okay. The lender isn’t selling it direct; they won’t get the best price. Repossessed vehicles are sold cheaply, often for much less than their value, and in most cases, a balance remains. 

Lenders may be lenient with this balance as it’s not secured, so their options are limited. However, they can also file a judgment or sell it to a collection agency, at which point your problems increase and your credit score drops even further.

How Does a Repo Take Place?

If you have a substantial credit card debt and miss a payment, your creditor will typically take it easy on you. They can’t legally report the missed payment until at least 30-days have passed and most creditors won’t sell the account to a collection agency until it is at least 180-days overdue.

This leads many borrowers into a false sense of security, believing that an auto loan lender will be just as forgiving. But this is simply not true. Some lenders will repo your car just 90-days after your last payment, others will do it after 60 days. They don’t make as many allowances because they don’t need to—they can simply seize your asset, get most of the money back, and then chase the rest as needed.

Most repossessions happen quickly and with little warning. The lender will contact you beforehand and request that you pay what you owe, but the actual repo process doesn’t work quite like what you may have seen on TV. 

They’re not allowed to break down your door or threaten you; they’re not allowed to use force. And, most of the time, they don’t need to. If they see your car, they will load it onto their truck and disappear. They’re so used to this process that they can typically do it in less than 60-seconds.

It doesn’t matter whether you’re at home or at work—you just lost your ride.

What Can You Do Before a Repo Hits Your Credit Score?

Fortunately, there are ways to avoid the repo process and escape the damage. You just need to act quickly and don’t bury your head in the sand, as many borrowers do.

Request a Deferment

An auto loan lender won’t waste as much time as a creditor, simply because they don’t need to. However, they still understand that they won’t get top dollar for the car and are generally happy to make a few allowances if it means you have more chance of meeting your payments.

If you sense that your financial situation is on the decline, contact your lender and request a deferment. This should be done as soon as possible, preferably before you miss a payment.

A deferment buys you a little extra time, allowing you to take the next month or two off and adding these payments onto the end of the term. The FTC recommends that you get any agreement in writing, just in case they renege on their promise.

Refinance

One of the best ways to avoid car repossession, is to refinance your loan and secure more favorable terms. The balance may increase, and you’ll likely find yourself paying more interest over the long-term, but in the short-term, you’ll have smaller monthly payments to contend with and this makes the loan more manageable.

You will need a good credit score for this to work (although there are some bad credit lenders) but it will allow you to tweak the terms in your favor and potentially improve your credit situation.

Sell the Car Yourself

Desperate times call for desperate measures; if you’re on the brink of facing repossession, you should consider selling the car yourself. You’ll likely get more than your lender would and you can use this to clear the balance. 

Before you sell, calculate how much is left and make sure the sale will cover it. If not, you will need to find the additional funds yourself, preferably without acquiring additional debt. Ask friends or family members if they can help you out.

How Long a Repo Can Affect Your Credit Score

The damage caused by a repossession can remain on your credit score for 7 years, causing some financial difficulty. However, the damage will lessen over time and within three or four years it will be negligible at best.

Derogatory marks cease to have an impact on your credit score a long time before it disappears off your credit report, and it’s the same for late payments and repossessions.

Still, that doesn’t mean you should take things lightly. The lender can make life very difficult for you if you don’t meet your payments every month and don’t work with them to find a solution.

What About Voluntary Repossession?

If you’re missing payments because you’ve lost your job or suffered a major change in your financial circumstances, it may be time to consider voluntary repossession, in which case there are no missed payments and you don’t need to worry about repo men knocking on your door or coming to your workplace.

With voluntary repossession, the borrower contacts the lender, informs them they can no longer afford the payments, and arranges a time and a place to return the car. However, while this is a better option, it can do similar damage to the borrower’s credit score as a voluntary repossession, like a traditional repossession, is still a defaulted loan.

Missed payments aside, the only difference concerns how the repossession shows on the borrower’s credit report. Voluntary repossession will look better to a creditor who manually scans the report, but the majority of lenders run automatic checks and won’t notice a difference.

Summary: Act Quickly

If you have student loan, credit card, and other unsecured debt, a repo could reduce your chances of a successful debt payoff and potentially prevent you from getting a mortgage. But it’s not the end of the world. You can get a deferment, refinance or reinstate the loan, and even if the worst does happen, it may only take a year or so to get back on track after you fix your financial woes.

Repossession Credit Scores: What You Need to Know is a post from Pocket Your Dollars.

Source: pocketyourdollars.com

Dear Penny: My Sister Moved in With Dad, Says She Can’t Be Evicted

Dear Penny,

I am a 30-year-old who has built a stable and happy life after growing up in a family that was often unstable emotionally and financially. I love them, but as I become more successful, my family needs more and more of my support. 

My sister and her son moved into my father’s one-bedroom apartment in July, which is against the lease. I was very against this living situation because it’s way too small for two adults and a rambunctious child. My sister said she had no other options because she has terrible credit, little savings and an eviction. She was laid off for not having child care and is collecting unemployment. My father was struggling to pay for his apartment, as well. 

Their relationship has deteriorated. I don’t think they can continue living together. My aunt  co-signed for my father’s apartment and says my father can stay in her spare bedroom if he works with her to fix his finances. My aunt has been trying to help me, as she knows I am overwhelmed mediating their arguments and finances.

I told my sister we will need to find another place for her to live after April, and that I would co-sign if she sat down with me to go over her finances. She cried and said it would be impossible to find a place being unemployed, and that no one cares about her ending up homeless. 

She said she will refuse to leave the apartment if management doesn’t let her take over the lease. She believes that since she is a single mother with a child, they won’t be able to evict her. I’ve explained there could be negative consequences on her tenant record and for my aunt since she’s the co-signer,  but my sister says everything will be fine. 

I don’t want to hold my sister’s past mistakes against her, and COVID-19 has disproportionately impacted single mothers. She has been better with her money the last three months, but she has been very irresponsible in the past. (Example: paying for breast implants.) She can’t stay with me because I’m a head of house in my alma mater’s dorm, which grants me and my partner a free apartment. 

How should I proceed with my sister? Am I being too supportive, or not supportive enough? I feel guilty even having my own financial goals when my family is struggling. 

Sister Struggles

Dear Sister,

When someone tells you they’re about to behave terribly, listen. I don’t care if your sister has been more responsible for three months. She obviously doesn’t plan to be responsible moving forward. She’s also made it clear that she’s up for a fight. Please don’t co-sign for her and let her take down your credit in the process.

This is a problem between your sister, your dad and your aunt. I certainly feel for your aunt. I get that you’re both trying to help each other work through this mess. But you’re both ascribing magical thinking to your fix-it powers for your dad’s and sister’s financial messes. Nothing in your letter suggests that either one is interested in help.

If I were your aunt, I’d talk to an attorney who specializes in tenant law ASAP. You can suggest she do so. You also need to tell your sister you’re no longer in a position to co-sign. She’s going to cry and scream about how you’re ruining her life. Tell her by phone so you can hang up if things get out of hand.

The beauty here is that your living situation legitimately gives you a reason your sister and nephew can’t move in. I’d urge you to hang onto this arrangement as long as you can so you can develop firm boundaries. It’s OK to use dorm rules as an excuse while you get comfortable making it clear that you’re done bailing out your family.

Your signature probably isn’t the only thing standing between your sister and homelessness. Maybe she’s eligible for public housing, or she has friends who will let her couch surf. I’m not going to waste any energy exploring these options, though, because this is not your problem.

But here’s the trade-off: You don’t get to have an opinion even if you’re “very against” whatever living situation your sister comes up with. The second you weigh in, you’re throwing your sister a lasso. Don’t allow her to drag you back in.

This may seem like a money problem, but deep down it isn’t. Yes, life would be easier if you could buy your dad and your sister separate homes on opposite sides of town. But I suspect they’d still leave you emotionally drained. Emotional vampires always do.

Your financial goals are completely unrelated to your family’s struggles. The sooner you can separate the two, the better off you’ll be. Please don’t feel guilty for using your money to make good decisions for yourself instead of enabling your family’s bad ones.

Robin Hartill is a certified financial planner and a senior editor at The Penny Hoarder. Send your tricky money questions to AskPenny@thepennyhoarder.com.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

Source: thepennyhoarder.com

How a financial coach can help you get out of debt

If you can’t give up your daily latte, your twice-a-month false eyelashes or weekly fresh flowers, a financial coach won’t judge you.

But that coach or counselor will stress that you won’t reach your financial goals if you don’t give up most of your splurging.

“I had one client who was spending $200 a month to have people glue eyelashes on her lashes every two weeks,” said Christine Lane, an accredited financial counselor. “Until I met her, I didn’t even know that was a thing.”

“Everyone has different things that are important to them,” said Bridget Todd, head of trainer development at The Financial Gym, a credit coaching business. “A big one for people is often personal or mental wellness. Some people pay for an Equinox membership and they don’t want to go to a cheaper alternative. For others, an acupuncturist or a chiropractor is important to them to feel their best. We find the non-negotiables and ask them what expenses can come out.”

See related: How to match your spending with your values in 2021

What a financial coach does

A financial coach or counselor helps clients take a comprehensive look at all of their finances, bridging the gap between a debt counselor, who focuses on reducing your debt, and a financial advisor or planner, who focuses on helping you build wealth, Todd said.

“We focus on your entire financial life,” she said. “We take a deep dive into the day-to-day, how you’re spending your money. We give you different scenarios: if you do this, this will happen. We allow you to improve your finances and also help you feel comfortable and live your life.”

No matter how bad your debt or how frivolous your spending, financial coaching is a collaborative, judgment-free zone. A coach or counselor helps clients develop healthy spending habits, reduce debt, and build short-term and long-term savings. The goal is long-term financial wellness, said Rebecca Wiggins, executive director at the Association for Financial Counseling and Planning Education.

“A financial coach views the client as the expert in their own life, collaborating with them to define their goals, create solutions and an action plan that helps them achieve their goals,” Wiggins said.

Like many coaches, Lane uses a “spending, debt and savings” spreadsheet to open her clients’ eyes to their true financial picture. She shows clients how much they can spend every week or month on wants without going further into debt. Entering higher or lower spending or savings numbers in the spreadsheet immediately changes the long-term picture.

“The key is telling them what the number is,” Lane said. “I tell them, ‘Here are your fixed expenses and here’s what you have left. Focus on spending no more than $200 this week.”

Good budgeting is about categorizing expenses.

  • Amassing credit card rewards and points is more important than paying off the balance every month.
  • Investing in individual stocks is the best way, even for financially inexperienced people, to invest.
  • Supporting your adult child financially is a good idea, even if you haven’t saved for retirement.
  • Techniques to curb spending

    Like many coaches and counselors, Lane asks her clients to give up all credit card spending for a set period – in her case, three months.

    “I once had a woman who was $10,000 in credit card debt and was paying a ton of interest say she didn’t want to give up earning her points and that she’d already gotten two free hotel rooms,” Lane said. “I told her, ‘You’re going to pay in interest so much more than those free hotel rooms.’”

    Another technique Lane uses is asking clients to set just one so-called buy day a month: all other days are window shopping, or more likely now, screen shopping.

    “You can shop any day you want, go in person, take pictures, put things on Pinterest,” Lane said. “But there’s only one day a month where you’re actually allowed to make the purchase. If you have anything on the list that you haven’t thought of, then you don’t really want it.”

    See related: How to stop overspending during the pandemic

    Bottom line results

    Lane has worked with clients with credit card debt up to $60,000 and total debt, counting student loans, up to $200,000. Most are in their 30s to early 40s and have $20,000-$30,000 in debt.

    Many can get out of debt in about two years, she said. But these reforming spenders start feeling better about their financial life and life in general much earlier, Lane said.

    “Generally after six weeks, they say a weight was lifted from their shoulders,” she said. “They say, ‘I’m running more. I have a better relationship with my girlfriend.’”

    On average, their first year, clients at The Financial Gym see their credit scores go up more than 100 points, save $5,000 to $10,000, and pay off $5,000 to $10,000 in debt, Todd said.

    How much does financial coaching cost? 

    At The Financial Gym, coaching rates are about $99 a month for individuals, $150 a month for couples and $250 a month for business owners, Todd said.

    Fees for accredited coaches and counselors range from $50 to $150 an hour, Wiggins said. Some coaches offer packages or work on a sliding scale based on income, she added.

    See related: What is credit counseling, and how can it help you?

    How to become a financial coach

    To become a counselor accredited through AFCPE, students take one to three years to meet the education requirements and complete the exam, Wiggins said. The most common pathway is self-study with books and materials. This pathway’s cost is $1,455, including a $50 registration fee, $675 for books and materials, and a $730 exam.

    To become a certified financial coach through Sage Financial Solutions, applicants complete three modules, which can be done in as little as six months, at the cost of $1,200 and about 30 hours for the first module, $550 and 15 hours and for the second module and $750 and 22 hours plus 100 experience hours for the third module.

    The Financial Gym prepares its own coaches, which it calls trainers, with a two-week training session, then an interview with several team members, shadowing current trainers, creating mock financial plans and passing an exam with a score of 80 or higher, Todd said.

    Back to lattes and lashes

    Lane’s client still spends $200 every month on false eyelashes, which for her are nonnegotiable. But the client gave up her weekly fresh flowers, cut back on her dog walker and improved her financial picture from overspending her income by $200 a month to saving $1,000 a month, Lane said.

    “Different people have different blind spots,” Lane said. “That’s an advantage of counseling; you get a really personalized look at your needs. We try to work toward their goals, not ours. Accountability without judgment is our superpower.”

    “At the end of the day, it’s just math,” Todd said. “You have to be honest with me about what you’re willing to give up to get there.”

    Case study: From $15,000 in credit card debt to zero

    When Moira Sedgwick started working with a Financial Gym coach, her debt topped $250,000, with about $110,000 in student loans, $15,000 in credit card debt and a mortgage.

    “The bad surprise was how much debt was staring at me,” said Sedgwick, 39, who works as the director of The James Beard (Culinary) Awards and also consults in hospitality and event management. “I had always been messy at all of this. This was a way to stop being messy and own my finances.”

    Sedgwick already was paying extra on her student loans and was thinking about saving more for retirement, but her coach told her paying down debt, especially the high interest credit card debt, was the top priority.

    The next bad surprise was putting a cap on her spending. “I had only $100 a week for my fun money,” she said. “I had been spending everything that was coming in. I’m in the restaurant world, so a lot of it was dining out. I would justify it by saying, ‘This is my industry. This is my job.’

    “But no one on my job was reimbursing me. Cutting that out was a huge difference. I was getting real about how much eating out was really costing me and getting real about how much that was keeping me from my goals.”

    She still does takeout on Fridays and Saturdays – that was her nonnegotiable.

    Sedgwick, who didn’t have a lot of financial guidance growing up, said she feels like she has a partner to guide her decisions. “I finally have a support system,” she said.

    A few years in, Sedgwick has cut her credit card debt to zero and cut her student loan debt by nearly half, and paid her mortgage down to $68,000. Her credit score has improved from a respectable 740 to a nearly perfect 800. She saved up $30,000 in her emergency fund but recently used about half to buy a rental property, a longtime goal. She talked to her financial trainer first.

    “I talk to my trainer before I do anything,” she said. “That’s the only way I feel safe.”

    Source: creditcards.com

    Tips to Consolidate Credit Card Debt

    Tips to Consolidate Credit Card Debt

    Editorial Note: This content is not provided by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by the issuer.

    If left unchecked, extensive amounts of credit card debt can cripple your finances. The good news is there are many ways to handle debt, though each requires a dedicated effort on your part. But if you can manage to consolidate credit card debt, you will reduce your burden relatively quickly. In the process, you’ll avoid the exorbitant interest rates that accompany most credit cards. Below we take a look at some of the most effective techniques you can use to make this goal a reality.

    Find Out Your Credit Score

    Before you can work on improving your credit and minimizing your debt, you have to know where you currently stand.

    Many credit card issuers allow cardholders to see their FICO® credit score free of charge once a month, so check out if any of your cards include that free credit score. The three major credit bureaus – TransUnion, Experian and Equifax – also give out free annual credit reports. If that’s not enough, websites like Credit Karma™ and Credit Sesame provide a free look at your credit score and reports as well.

    It is vital to review your credit report with a fine-tooth comb to ensure the accuracy of the information. If you find errors be sure to let the credit bureau in question know so the issue can be eradicated as soon as possible.

    Zero Interest Balance Transfer Cards

    Although it might seem counterintuitive to apply for another credit card to lessen your debt, a zero interest balance transfer card could really help. These cards typically include an introductory 0% balance transfer Annual Percentage Rate (APR) for six months or more. This ultimately allows you to move debt from one account to another without incurring more interest. However, once the introductory offer concludes, any leftover balances will revert to your base APR.

    These offers aren’t totally free, though. Most cards also charge a balance transfer fee that’s usually between 3% and 5% of the transfer. Even with this initial payment, you will almost always still save money over leaving your debt where it stands currently.

    If you want to consolidate credit card debt, here are three different balance transfer credit cards you could apply for, with varying introductory interest rates and transfer fees:

    Balance Transfer Credit Cards Card Intro Balance Transfer APR Balance Transfer Fee Chase Slate 0% APR for first 15 months; then 16.49% to 25.24% Variable APR, depending on your creditworthiness No fee for first 60 days; then $5 or 5% of each transfer, whichever is greater Citi Double Cash Card 0% introductory APR for 18 months from date of first transfer when transfers are completed within 4 months from date of account opening; then 15.49% to 25.49% Variable APR, depending on your creditworthiness $5 or 3% of each transfer, whichever is greater BankAmericard® credit card 0% APR for first 15 billing cycles; then 14.49% to 24.49% Variable APR, depending on your creditworthiness No fee for first 60 days; then $10 or 3% of each transfer, whichever is greater Take Out a Personal Loan

    Tips to Consolidate Credit Card Debt

    The thought of taking out another loan probably doesn’t sound too appetizing to consolidate credit card debt. But a personal debt consolidation loan is one of the speediest ways to rid yourself of credit card debt. More specifically, you can use it to pay off most or all of your debt in one lump sum. That way, your payments are all merged into a single account with your lender.

    The APR and length of the offered loan and the minimum credit score needed for approval are the main factors that should go into your final decision on a lender. By concentrating on these three components of the loan, you can map out what your monthly payments will be. As a result, you can more easily implement them into your financial life.

    Applying for a personal consolidation loan can have a detrimental effect on your credit. Unfortunately, most institutions will run a hard credit check on you prior to approval. However, many online lenders don’t do this, which might ease your mind depending on the severity of your debt situation.

    These loans are available through a wide variety of financial institutions, including banks, online lenders and credit unions. Here are a few examples of some of the most common debt consolidation lenders:

    Common Debt Consolidation Lenders Banks Wells Fargo, U.S. Bank, Fifth Third Bank Online Lenders Lending Club, Prosper, Best Egg Credit Unions Navy Federal Credit Union, Unify Financial Credit Union, Affinity Federal Credit Union Auto or Home Equity Loan

    If you own assets like a home or car, you can take out a lump-sum loan based on the equity you hold in them to consolidate credit card debt. This is a great way to reuse money you paid toward an existing loan to take care of your debt. When paying back your auto or home equity loan, you’ll usually pay in fixed amounts at a relatively low interest rate. Even if this rate isn’t great, it’s likely much better than any offer you’d receive from a card issuer.

    Equity loans are technically a second mortgage or loan, meaning your house or car will become the loan’s collateral. That means you could lose your house or car if you cannot keep up with your equity loan payments.

    Create a Budget

    Tips to Consolidate Credit Card Debt

    To build a budget, you first need to figure out your approximate monthly net income. Don’t forget to take into account taxes when you’re doing this.

    You can then start subtracting your variable and fixed expenses that are expected for the upcoming month. This is where you will likely be able to identify where you’re overspending, whether it’s on food, entertainment or travel. Once you’ve completed this, you can begin cutting back where you need to. Then, use your surplus cash to pay off your debt one month at a time.

    It shouldn’t matter if you’re dealing with substantial credit card debt or not. A monthly spending budget should always be a part of how you manage your finances. While this is likely the slowest way to eliminate debt, it’s also the most financially sound. At its core, it attempts to fix the problem without taking funding from an outside source. This should leave very little financial strife in the aftermath of paying off your debt.

    Professional Debt Counseling

    Perhaps since you’ve found yourself in serious debt, you feel like you want professional help getting out of it. Well the National Foundation for Credit Counseling® (NFCC®) is available for just that reason. The NFCC® has member offices all around the U.S. that are certified in helping you consolidate credit card debt.

    These counselors won’t only address your current financial issues and debt. They’ll also work to create a plan that will help you avoid this situation again in the future.

    Agencies that are accredited by the NFCC® will have it clearly displayed on their website or at their offices. If you’re not sure where to look, the foundation created an agency locator that’ll help you find a counselor nearby.

    Borrow From Your Retirement

    Taking money early from your employer-sponsored retirement account obviously isn’t ideal. That’s means borrowing from your retirement is a last-ditch alternative. But if your credit card debt has become such a handicap that it’s affecting all other facets of your life, it is a viable option to consolidate credit card debt.

    Because you are technically loaning money to yourself, this will not show up on your credit report. Major tax and penalty charges await anyone who has trouble making payments on these loans though. To make matters worse, if you quit your job or are fired, you’re typically only given 60 days to finish paying it off to avoid incurring a penalty.

    Tips To Consolidate Credit Card Debt

    • If you take the time to come up with a budget, don’t let it go to waste. While you might find it tough to stick to, especially if you’re trying to cut back, it is the best way to manage your money correctly. Even if a budget becomes habit, stay vigilant with where your money is being spent.
    • Although a financial advisor will cost money, he or she might be able to help you keep your finances in check while ultimately helping you plan for the future as well. However, if this isn’t an option for you financially, stay on track with your NFCC® debt counselor’s plan.
    • There are so many ways to gain access to your credit score that there’s virtually no excuse for not knowing it. It doesn’t matter if you do it through one of the top three credit bureaus, FICO® or one of your card issuers. Just remember to pay attention to those ever-important three digits as often as possible.

    Editorial Note: This content is not provided by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by the issuer.

    Photo credit: ©iStock.com/Liderina, ©iStock.com/ferrantraite, Â©iStock.com/cnythzl

    The post Tips to Consolidate Credit Card Debt appeared first on SmartAsset Blog.

    Source: smartasset.com

    How to Run a Virtual Brainstorm that Actually Works

    Fun fact about pandemic life: Zoom fatigue is real. And not just real, but “widely prevalent, intense, and completely new,” according to Psychiatric Times.

    Although we might be avoiding Zoom these days when an email or even a phone call (is it 1986 again?) will suffice, there's one place where video conferencing still shines, and that's the good ol' brainstorm.

    Old school brainstorming was creative and connective and interactive—all things difficult, but not impossible, to recreate virtually.

    When I picture brainstorms of years past, I see images of big tables full of candy and fidget toys and pens and Post-Its galore. Old school brainstorming was creative and connective and interactive—all things difficult, but not impossible, to recreate virtually.

    Today we’ll talk about some virtual brainstorming strategies I’ve seen work really well. And then hopefully, you’ll give one a try. 

    Choose your occasion wisely

    brainstorms shouldn’t be a catch-all for any group conversation.

    Back when our biggest workplace woe was a vending machine out of Diet Coke, many of us took brainstorming sessions for granted. But in a virtual world, it's harder to organize, facilitate, and get people engaged.

    That's why brainstorms shouldn’t be a catch-all for any group conversation. (Often what you’re looking for is just a meeting.) Brainstorms are a very specific brand of discussion in which a collective of creative voices, ideas, and opinions are necessary inputs to achieve a valuable output.

    Because of challenges like Zoom fatigue and burnout, I urge you to be stingy with your brainstorming sessions. They're a fabulous enabler of ideas and solutions, so do use them. But do so strategically and with clear intention.

    Because of challenges like Zoom fatigue and burnout, I urge you to be stingy with your brainstorming sessions.

    What are some great occasions to host a brainstorming session? Use them when you need to:

    • Add or refine product features
    • Define a path in a sticky situation
    • Solve a complex problem

    These and many other scenarios call for a variety of perspectives in which there are no right or wrong answers, but only ideas.

    In contrast, many other occasions don’t call for a brainstorm. Like when you need…

    • Approval or alignment
    • Receipt of a message or direction
    • Feedback on a mostly baked idea

    These are not brainstorm moments—they're meetings with a much more defined outcome. See the difference?

    Figure out the specific problem you want to address

    Okay, so you've figured out that your situation calls for a brainstorming session. Now, it's time to make sure everybody who comes to the brainstorm is on the same page before you begin by creating a statement that lays out the specific problem and how you need to tackle it.

    Your problem statement might be something like:

    We’re losing market share on X product, and we need to define new features to attract Millennial customers.

    And here's another example:

    This client wasn’t happy with our last deliverable and we need to redefine how we’re engaging with them.

    One of your goals is to keep the session short (because fatigue) while maximizing what you take away from it. A clear problem statement allows you to invite your brainstorming participants to get the creative juices flowing ahead of the actual session.

    Assign some prework to get things rolling

    Now that you've stated the problem or opportunity, it's time to let participants know you’re looking forward to a collaborative discussion and invite them to jot down some early ideas and send them your way.

    You can then do some analysis ahead of the session. Did you spot any common themes? Any particular ideas you’re interested in having the group build upon?

    Share your findings at the beginning of the brainstorming session. This will give you a strong foundation from which to build.

    Get creative with tech 

    Love it or hate it, video conferencing technology is definitely your friend in a virtual brainstorm. It allows you to create a purposeful connection amongst participants. But you have to understand how to engage them.

    When I used to run in-person meetings with leadership teams, I was always intentional about switching up the activities every 30 minutes or so. I’d facilitate a breakout, and then we’d do a quick poll, and then I’d have people plot Post-It notes around the room, and more.

    Keeping things changing and moving is a great way to keep adults engaged. According to the Harvard Business Review: "If you don’t sustain a continual expectation of meaningful involvement, [people] will retreat into that alluring observer role."

    So take the time to learn the features of whatever platform you’re using, and make the session engaging. Some tactics you might try?

    • Use polls to test out early ideas
    • Use small group breakout sessions to create mini-competitions between your participants
    • Use a whiteboard to replicate a poster board people can plot virtual Post-It notes on
    • Use voting to prioritize or stack rank

    Of course, talking is part of any brainstorm. But using technology can keep participants from slipping into the shadows without contributing.

    Establish norms that serve your purpose

    A brainstorm isn’t successful because of how smart its participants are, but because of how much freedom and space their voices are given.

    A client once told me this story about a packaging company that was struggling with productivity. Their products had to be wrapped in newspaper before being shipped. But often, as employees were packaging product, they’d accidentally start reading the newspaper, losing precious packing minutes. These minutes added up to lost productivity.

    One day the leadership team was brainstorming solutions to this distraction problem and one executive said, “Well, what if we just poked their eyes out?”

    Of course, he wasn't serious—the question was absurd and meant to add a little humor. But it triggered a new line of thinking. Eventually, the company established a partnership with a non-profit organization that finds jobs for blind people.

    Is this story true? I’m honestly not sure. But it’s a great illustration of the importance of free-flowing ideas.

    A brainstorm isn’t successful because of how smart its participants are, but because of how much freedom and space their voices are given.

    As the facilitator, what norms can you put in place to ensure that all ideas get voiced without judgment and everyone has a chance to speak?

    Here are a few you might consider:

    • Use the improv rule of “yes, and.” It means that ideas are never knocked down, only built upon. (Don’t worry, they can get voted down later, just not during the brainstorm)
       
    • Use the two- (or one- or five)-minute rule. Ask people to limit themselves to two minutes at a time, even if they need to stop mid-thought (they can finish on their next turn). This challenges people to be concise and ensures that everyone gets a chance to speak.
       
    • Use a round-robin technique. Circle around the Zoom participants, calling on each person as you go. If someone isn’t ready, they can pass. But this is a great way to prevent introverts from getting overlooked.

    What other norms will keep you on track?

    Close out thoughtfully

    Save a few minutes at the end of your scheduled session to check in on the process. How did it feel for everyone? What worked well and what might you skip next time? Do they have other tactics to recommend?

    The best answer to “How do I host a great virtual brainstorm?” is the answer that your own participants give you.

    When scheduled for the right occasion and with the right people, brainstorms are a fabulous tool. Don’t be intimidated by them. Just be open to learning as you go.

    Source: quickanddirtytips.com

    Financial Considerations When Getting a Divorce

    In a recent episode, I shared that I would be doing a 4-part series on divorce.  I’ve been divorced for 5 years now and wanted to share what has worked for me, my ex-husband, and our 8 kids during this time. While divorce is not easy, time does help heal, and when your focus is putting your kids first, it is absolutely possible to maintain a healthy, happy family relationship.

    My first episode in this series was 5 Expert-Approved Ways to Talk to Your Kids About Divorce.  My second episode in this series was 5 Ways to Co-Parent with Your Ex-Spouse. 

    There really isn’t anything easy about divorce. Thankfully, as I discussed in the first two episodes, there are strategies and thoughtful ways to navigate through some of divorces issues, especially if the two parents are willing to put their personal differences aside and focus on their kids. In addition to the emotional turmoil that encompasses divorce, there is also another difficult component that couples must deal with and that is the financial aspect. 

    After 25 years of marriage and 8 kids, Mighty Mommy had to get her financial house in order and make some significant adjustments going from a two-income household to a single income.

    Here are four financial considerations, as backed by the experts, to keep in mind if you are thinking of or getting a divorce.

    1. Get Your Financial Documents in Order

    The entire divorce process is completely overwhelming, and when you begin to delve into the financial ramifications, the stress is taken to a whole new level. Once we began having our small tribe of kids, we decided I would leave my career to be home with our family. During the last 10 years of our marriage I went back to work part-time as a freelance writer but by no means was I contributing significantly to our income. My ex-husband managed the majority of our financial affairs so when the reality of our divorce settled in, I knew the first thing I had to do was get a handle on every aspect of our financial status. I honestly wasn’t sure where to begin, but my divorce attorney recommended I start by gathering all my financial documents.

    Maryalene LaPonsie, contributor to USNews.com writes in 7 Financial Steps to Take When Getting a Divorce that “as soon as you know you’re getting a divorce, collect all the financial documents you can.” She continues, by stating that these include:

    • “Bank statements”
    • “Credit card statements”
    • “Tax returns”
    • “Retirement account balances”
    • “Appraisals for valuable items, if available”

    In addition, other documents to consider are:

    • Mortgage Statement, including any Home Equity Loans and purchase information
    • Checkbook Registry for the last year
    • Any other long-term debt account statements you may have, including car loans

    2. Know Your Income and Expenses

    When we began our divorce proceedings, I admit I was far more focused on my emotional state than my finances. 

    When we began our divorce proceedings, I admit I was far more focused on my emotional state than my finances.  Because my ex was the one who paid all the bills and the sole provider for most of our marriage, I never worried much about the details of our 401(K) plan, life insurance policies or what our overall assets and debt totaled.

    One piece of advice I received many times over was that I needed to know what our budget was so I could begin to realistically know what my living expenses would be. 

    Jason Silverberg, CFP at Financial Advantage Associates, Inc. and author of The Financial Planning Puzzle, told me via email: “If there was one singular, most important piece of financial advice that I could offer someone going through a divorce, that would be to understand where everything is and what everything’s worth. Without knowledge of what you own and who you owe money to, you really are going to have a hard time moving forward. You’ll also want to understand all of your sources for income and all of your monthly expenses as well. This will help you have a good handle on your budget to provide you critical understanding, so you can make smart financial decisions.”

    He went on to say, “This exercise should be done both prior to as well as after the divorce. This way you can get a sense for how your household budget will operate on one income.” To help divorcing couples realize these figures, Silverberg has created the Personal Financial Inventory (1 page worksheet) inside the Picking up the Pieces eBook.

    This exercise was extremely enlightening as I realized exactly where every penny (and then some) was going on a monthly basis. I was also able to gauge how much income I would need to start making in order to support these bills in addition to the child support and alimony payments I was receiving. One important factor to consider with child support is that it will decrease as your children get older, so I had to continually modify my budget based on this decrease. At first, it was overwhelming to see how much money I would need to keep our household running, but when you are armed with the figures and you pay attention to your monthly cash flow, it becomes easier to make adjustments. The fact of the matter is that some of the extra splurges such as frequent trips to the hair salon or buying my kids their usual top-of-the line items like sneakers or sports equipment had to be adjusted to what I could now afford. My kids have had some disappointments in this department, but they appreciated how we were trying to work together as a family-unit so that their lifestyle wasn't affected as drastically as it could've been which balanced everything out.


    3.  Consider What Professionals Will Represent You

    There are important considerations to keep in mind when choosing which divorce professionals will represent you. Adrienne Rothstein Grace writes on the Huffington Post, 3 Steps to Prepare for Your Divorce, that you must align yourself with the right professionals.  She explains “First, think about the divorce process you and your spouse will want to undertake and ask yourself the following questions:

    • “Is this going to be an acrimonious divorce? Or will my spouse and I cooperate?”
    • “Do I already know about all of our household and personal finances? Or do I suspect that I may be out of the loop on some assets, debts or income sources?”
    • “Do I trust my spouse to be cooperative and forthright?”
    • “Do I have any reason to believe that I will feel intimidated by my spouse during these proceedings?”
    • “Are we both focused on the wellbeing of our children?”

    Grace says that “If you believe that you and your spouse will cooperate and will have joint best interests in mind while negotiating, then you might want to choose a divorce mediator or embrace a collaborative divorce. Those options are less costly, more private, and usually result in a more peaceful settlement process. However, if you’re not certain about finances, or cannot trust your spouse to be completely above-board and cooperative, then you might hire a traditional divorce attorney, who will only have your interests in focus while they help negotiate the complexities of your divorce.”

    My ex-spouse and I decided to retain individual divorce attorneys. In addition, we also hired a Certified Divorce Financial Analyst, (CDFA) at the recommendation of each of our lawyers, who met with us jointly to give us a complete overview of what our financial future was going to look like. It's a huge wake-up call when you see all the numbers in front of you on paper.  At our first meeting with the CDFA I learned quickly that I was going to have to go back to work, full-time to sustain the home we lived in as well as the upkeep, taxes, insurance, and basics like groceries for our large family. 

    It's a huge wake-up call when you see all the numbers in front of you on paper.

    If you surround yourself with competent, caring professionals who will guide you through this very delicate journey, you will have made an important investment in your family’s future, financial well-being.

    4.  Stay in the Financial Know Throughout Your Divorce

    Throughout your divorce, you’re bound to get all kinds of advice from friends, family, co-workers and other concerned individuals that will be looking out for you and have your best interest at heart.  This can be both helpful and draining depending on your relationship with these people.  When I began divorce proceedings, I too received lots of comments and suggestions from well-meaning folks, but I also decided I wanted to be armed with my own facts so I began reading lots of articles and books as well as listened to informative podcasts about divorce, particularly financially-related pieces.

    My QDT colleague, Laura Adams, Money Girl, recently did an wrote about divorce in Getting Divorced? Here's How to Protect Your Money. She interviewed Stan Corey, a divorce expert and author of a new book, The Divorce Dance. This podcast had some terrific insight and some of the topics she and Corey cover in this interview include:

    • Different types of divorce proceedings that you can choose
    • The biggest mistakes that can cost you financially in a divorce
    • Why relying on a single family law attorney can be a bad idea
    • Tips for dividing up financial assets the right way—especially when you’re not so financially savvy
    • How to get divorced when you don’t have much money to pay for it

    As you continue down the path of your divorce, surround yourself with as much information as you can, so that you will be able to make the best decisions possible for you and your children.

    Five years later, I am still watching my financial picture very carefully.  I work full-time and do freelance work on the side in order to maintain my home and other living expenses.  I am extremely grateful that my ex-husband is very supportive of many of our 8 children’s extracurricular expenses, but the reality is I’m responsible for my own financial future so I have learned to be extremely careful with purchases and expenses.

    The final topic in this divorce series will revolve around putting your kids first after the divorce.

    How have you managed your finances during a separation or divorce?  Please share your thoughts in the comments section at quickanddirtytips.com/mighty-mommy, post your ideas on the Mighty Mommy Facebook page. or email me at mommy@quickanddirtytips.com. Visit my family-friendly boards at Pinterest.com/MightyMommyQDT.

    Be sure to sign up for the upcoming Mighty Mommy newsletter chock full of practical advice to make your parenting life easier and more enjoyable. 

    Images courtesy of Shutterstock.

    Source: quickanddirtytips.com

    Financial Lessons Learned During the Pandemic

    2020 has shaped all of us in some way or another financially. Whether it is being reminded of the importance of living within our means or saving for a rainy day, these positive financial habits and lessons are timeless and ones we can take into the new year. 

    While everyone is on a very unique financial journey, we can still learn from each other. As we wrap up this year, it’s important to reflect on some of these positive financial habits and lessons and take the ones we need into 2021. Here are some of the top financial lessons:

    Living Within Your Means

    It’s been said for years, centuries even, that one should live within one’s means. Well, I think a lot of people were reminded of this financial principle given the year we’ve had. Living within your means is another way of saying don’t spend more than you earn. I would take it one step further to say, set up your financial budget so you pay yourself first. Then only spend what is leftover on all the fun or variable items.

    Setting up your budget in the Mint app or updating your budget in Mint to reflect the changes in your income or expenses is a great activity to do before the year ends. Follow the 50/20/30 rule of thumb and ask yourself these questions:

    • Are you spending more than you earn?
    • Are there fixed bills you can reduce so you can save more for your financial goals? 
    • Can you reduce your variable spending and save that money instead?

    The idea is to find a balance that allows you to pay for your fixed bills, save automatically every month and then only spend what is left over. If you don’t have the money, then you cannot use debt to buy something. This is a great way to get back in touch with reality and also appreciate your money more. 

    Have a Cash Cushion

    Having a cash cushion gives you peace of mind since you know that if anything unexpected comes up, which of course always happens in life, you have money that is easy to liquidate to pay for it versus paying it with debt or taking from long-term investments. Having an adequate cash cushion this year offered some people a huge sigh of relief when they lost their job or perhaps had reduced income for a few months. With a cash cushion or rainy day fund, they were still able to cover their bills with their savings.

    Many people are making it their 2021 goal to build, replenish, or maintain their cash cushion.  Typically, you want a cash cushion of about 3- 6 months of your core expenses. Your cash cushion is usually held in a high-yield saving account that you can access immediately if needed. However, you want to think of it almost as out of sight out of mind so it’s really there for bigger emergencies or opportunities that come up.

    Asset Allocation 

    Having the right asset allocation and understanding your risk tolerance and timeframe of your investments is always important. With a lot of uncertainty and volatility in the stock market this year, more and more people are paying attention to their portfolio allocation and learning what that really means when it comes to risk and returns. Learning more about which investments you actually hold within your 401(k) or IRA is always important. I think the lesson this year reminded everybody that it’s your money and it’s up to you to know.

    Even if you have an investment manager helping you, you still need to understand how your portfolio is allocated and what that means in terms of risk and what you can expect in portfolio volatility (ups and downs) versus the overall stock market. A lot of people watch the news and hear the stock market is going up or down, but fail to realize that may not be how your portfolio is actually performing. So get clear. Make sure that your portfolio matches your long term goal of retirement and risk tolerance and don’t make any irrational short term decisions with your long-term money based on the stock market volatility or what the news and media are showcasing.

    Right Insurance Coverage

    We have all been reminded of the importance of health this year. Our own health and the health of our loved ones should be a top priority. It’s also an extremely important part of financial success over time. It is said, insurance is the glue that can hold everything together in your financial life if something catastrophic happens. Insurances such as health, auto, home, disability, life, long-term care, business, etc. are really important but having the right insurance policy and coverage in place for each is the most important part.

    Take time and review all the insurance coverage you have and make sure it is up to date and still accurate given your life circumstances and wishes. Sometimes you may have a life insurance policy in place for years but fail to realize there is now a better product in the marketplace with more coverage or better terms. With any insurance, it is wise to never cancel a policy before you a full review and new policy to replace it already in place. The last thing you want is to be uninsured. Make sure you also have an adequate estate plan whether it’s a trust or will that showcases your wishes very clearly. This way, you can communicate that with your trust/will executor’s, beneficiaries, family members, etc. so they are clear on everything as well. 

    Financial lessons will always be there. Year after year, life throws us challenges and successes to remind us of what is most important. Take time, reflect, and get a game plan in place for 2021 that takes everything you have learned up until now into account. This will help you set the tone for an abundant and thriving new financial year. 

    The post Financial Lessons Learned During the Pandemic appeared first on MintLife Blog.

    Source: mint.intuit.com

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