Tag: saving more

Your Emergency Fund, is that the right name for it you may ask?

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I was listening to a podcast this morning asking this very question. Well, I guess it really doesn’t matter what you call it. I think whatever “You” name it is what it is. The term “emergency funds” is not a comfortable term for you? That is fine, whatever works for you right? After all it’s called “personal” finance.

Building an emergency fund is crucial, no matter what you call it. It is the FIRST thing any financially savvy person would advise you to do. Most of us might get into credit card debt because we charge things on a card. This happens because we do not have the cash. I don’t mean just the small items we buy. Coffee here and there or lunch can certainly add up! The big stuff that is not part of your typical expenses. This is your deductible for a car repair or medical bill.

The refrigerator stops working. The faucet on the kitchen sink falls off in your hands. It happens at 9 PM on a Saturday night! Ya that happened! This is what an emergency fund or whatever you want to call it, is for! Life happens, and sometimes it’s very stressful! NOT having some extra cash to pay for these unexpected things makes it VERY stressful. In the long run, it becomes more expensive.

When I think of an emergency fund, I think of 3-6 months of expenses in accessible cash. This is what most of us consider necessary in case you lose your job. If your expenses are $3,000 a month then you have $9,000-$18,000 in savings. This is NO easy task to get to this point, and maybe you never get to a full 3 months. But it’s a good idea to try and worse case you have something to lean on.

This is not to say that you only spend this money IF you find yourself out of work! Your emergency fund, or whatever you name it, only has $200 in the account. I like to think of it as the de-stress fund.

But let’s say you get a flat tire and need to get it fixed so you can get to work. That $200 in the emergency fund can help you do that. This fund saves you from putting more on that credit card you are trying to pay down. How much you have in this fund is really a preference and what you need to be comfortable with. Remember this “fund” takes several months to build. It can take a year to reach your personal goal for the fund. Think of this “account” as a revolving door. Money will come out and the balance goes down. Next month, you cut out a few extras. You put that money into the emergency fund instead. The goal is to have money set aside for the “unexpected”.

And NO this is NOT what the “credit limit” or CASH advance on your credit card is for! It is NOT something you should use for your unexpected stuff! Assuming you can help it…That is NOT an emergency fund! IF this is what you use as the emergency fund, the odds are good this will spiral out of control. Everything we do related to personal finance takes time.  When you make minor changes along the way, they start to stack up. Now you have created a new positive habit. Whatever you call this special account really does not matter… Just work on creating one! Get through the first few months of building this account and trust me you will feel empowered.  It’s a new year, so get on it! Next year at this time, you will look back and see the progress you have made. The sense of calm this will bring you is undeniable.  Good luck, you got this! 😊

Kickstart Your 2025 with New Habits

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New Year, New Habits…???

Here we are at the end of another year!  Why is it that the end of the year is when most of us fall off the deep end and any bad habit we might have is now X10! You start the new year thinking you are going to eat better and be more mindful of your spending so you can save more! BUT we get to December every year and ALL that goes out the window! It’s Christmas Day 2024, and the day is not even over, heck the year is not even over, and I am ready to re-set!

I think I have had my fill of sweets and “grazing” on fun food people have delivered and or sent as a holiday gift. Don’t get me wrong, I love it ALL! That’s the problem. 😊

I am also ready to stop spending my money on all those last- minute stressed out, how did I forget about that person, gifts too. Too much stress! So today. Ok  maybe tomorrow, I will start getting back on my schedule with both food and budgeting. I am approaching 2025 with small steps each week or month to move in the right direction. I am making my to-do list, and I think I will actually LOOK at this list every couple of weeks, so that I can feel guilty IF I do not start getting things checked off this list! The list is the only thing that will keep me accountable, and it will help me work on my mental toughness. 😊 In order to keep the to-Do List reasonable and reachable, I will make the “items” attainable and not be too hard on myself if it takes a few weeks to do them.

I will stay focused on how great I am going to feel if I have one action item a month to complete and let’s say 6 or 7 get done by the end of the year and it sticks as a new positive habit! That would be amazing!

Some of the smaller items will be things like, cancelling a fairly new gym membership that’s just not working for me. I have decided I would rather stay at my old gym.

Another item on the to-do list is to investigate my husband’s cell phone rate. I think they are OVER charging him, a customer, for 10 years vs the current plans they offer existing customers. Cell phone companies lower the plan rates, BUT I think I must reach out to them and ask for that lower rate? Not really sure, but I need to check it out.  These little things you need to watch because they are banking on you NOT paying attention. It’s not nice. ☹Same goes for the Car insurance. I need to re-look at that too!

All these little things that take time and money out of our pockets because the mental energy we need to expand to get these tasks done is painful. The goal in 2025 is to push past this.

I tried this same thing last year, although I did not keep an actual list, I did make some small positive moves in the right direction that I am proud of, like increasing my 401K contributions each month and automating it. It was quick & easy and only a few % points, but it was done! I really did not notice the difference in my take home pay. I also cancelled 2 subscriptions; I was NOT using them.  

I was determined to save money on my cable and wi-fi bill too! Ok that one was very challenging and after 3 hours in the store, I lowered the bill by about $20.00 a month. My goal was $50.00 a month, which did not happen. ☹ BUT if I switched to that provider for my cell phone, I could save $80.00 a month, so I did! Hey, I was not leaving there after 3 hours of my time without a WIN!

Looking back, I guess I did make some positive changes in 2024, and maybe me and everyone else just accepts the fact that December is the one month we go off the rails a little. (key word here) and spend more money than other months, but we spend that money on family/friends and memories….  Enjoy the last week of the year and when setting 2025 goals, keep them realistic so that you can hit those goals and build on that!

Happy Holidays!!!

Your Net Worth…

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When you hear someone say, “what’s your net worth”?  Do you know what the definition of that question really is? AS to not assume, let us break it down to some basics… To calculate your net worth, add up all your “assets” first… If you own a house, what is the estimated current value, how much do you have in savings, as well as in retirement accounts, the value of your car… Let’s stick with the big-ticket items vs things like a diamond ring… Again, we are keeping it simple. The total dollar amount you get is what we call our “assets” for this conversation.

Now the fun part… You need to add up all your debts and subtract that from the asset total dollar amount you got.

 If you own a home and it’s valued at $500,000 BUT you still owe $200,000 on the mortgage… in the asset column under your home, the asset is valued at $300,000, because the bank “owns” $200,000 worth of that home.

If you have student loans, subtract that total amount, same with credit cards and any other debt/loans. If you paid $20,000 for your car and you still owe $10,00 just use the $10,000 vs the blue book value of the car, remember simple. Once you take your total assets subtract your total debt amount and this equals your “net worth.” Sometimes this number is a negative number… Don’t be scared… Its fixable.

 This article from Motley Fools gives a nice snapshot of the “average” Net Worth in the US by age, so you can see where you stand compared to others. Check out the whole article, it’s a good read!

Here’s the Average American’s Net Worth by Age in 2024 | The Motley Fool

For most things in life, average is OK, right? But there are some things in life where “average” is just that “average”. That does not mean it’s a good thing. Unfortunately, Americans do not seem to be good at saving, sad but true, just look at the numbers above. I would bet we used to be! Maybe we were not good at investing/saving because most people worked for companies with a pension.

Pensions are still out there, but they are always moving the needle. I know, because two family members have pensions. Still a great deal! But not like the old days… Maybe those number above scare me because I live in the northeast and its very pricey to live here. How do we encourage the younger generation that just saving a little extra in their retirement accounts in their 20’s makes a HUGE difference 30 years down the road, vs waiting till they are well into their 30’s. if you start in your 20’s the amount each month can be much lower than if you wait ten years.

They say the average car payment these days is over $700 per month for a new car and over $500 for a used car. The average credit card debt in the US is over $6500. Most people want a NEW house, or at least one that looks like the ones on HG TV! I do! Which is why I do not watch those shows… to depressing… ☹ We as Americans want instant gratification and want everyone to see how “successful” we are. Based on the numbers above I think it’s all a smoke and mirror show.

We all need to just squeeze a little more into the long-term investments so that we can take care of ourselves later in life. I am not saying we can’t have nice things but paying ourselves first with money into long term retirement accounts, and not OVER buying on the house and car will go a long way. Unless you plan on living in that nice new car in your older years??? 😊 Small changes make a big difference ten-twenty years down the road. Slow and steady and be aware of big purchases and make good decisions that are well thought out. We have all hade the car issues, the house issues…

What’s the goal here? Be above “average” on the Net Worth chart by just making small changes and nailing new good habits with automation and good decisions on the big stuff.

You got this! 😊

Financial Coaching. And the roll it can play…

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What IS financial coaching, you may ask? These days our lives are much more complicated than decades ago. In the “good old days” there was maybe a list of  6-10 ESSENCIAL monthly bills most people probably had.

Mortgage or rent, utility bill, homeowners’ insurance & car insurance. Maybe a car payment, property tax bill if it was not part of the mortgage payment.

Not much else, for EVERY Month bills. It seemed much easier to keep track of your monthly spending. Even credit cards were just used for “emergencies.”

These days, EVERYTHING is on “credit” or is a must Have! We borrow for college, we HAVE a cable bill, wi-fi bill, streaming services, cell phone bills to cover EVERYONE in the family. Maybe you have water delivered to the house vs drinking it from the tap. We eat more takeout food; we go out to eat more than years ago. We pay to have food delivered. We pay random people to pick us up and drive us places, we MUST have a credit card for MOST if not all of these things! Hey, I just switched my cell carrier, and to get the “deal”. Which did save me $100.00 a month, 😊You need to allow automatic payments on your credit card. They do not tell you that till the very end of the transaction, and it took 2 hours to get it set up! Long story, but at that point I was like, I just want out of here!

The point here is as a society we seem to “need” all this stuff.  Can you really survive without a cell phone? You need an App. for everything! I digress…

So, what does a Financial Coach have to do with all this? The world is busier, and we can easily go down a rabbit hole and overspend, which can lead to more debt than in the old days. A “Coach” is the person that helps you get your arms around your personal finance lifer. The “Coach” helps you face your fears, vs putting your head in the sand, thinking this will pass. It does not pass; it usually gets worse.  The “Coach” is that person that’s right by your side helping you make better decisions one step at as time. Money can be stressful when there is not enough, or when you are having a hard time changing your habits. People have life coaches, why not a  coach that helps people make changes in their financial life? People pay a coach to “force” them to work out or get on track with better eating habits. It makes sense, right?

It’s a thing! And I think it would be a cool gig to be part of! Talking to people about how to help them de-stress over money and help them create a feeling of being in control. I think I may do this!

Habits

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We all have habits, some are good habits, some not so good. Habits are part of our behavior in all the areas of our life. Some people are very organized, Take Jess for instance, her work papers and planner… are so organized and color coded! It seems to come easy to her when it comes to important items like work. She started this habit very young as a student and has carried this habit into adulthood. I on the other hand, really must focus on keeping myself somewhat organized. I was never an organized student, well compared to my kid. But at the same time, I know it’s a “weak” spot for me so I do what I can to make small positive changes to be better organized.  This is an issue I could easily talk to a stranger about, and they would be happy to make suggestions and share their organizational skills or lack of them as well…

When it comes to our money habits. We NEVER want to talk about them. Nope, we don’t want to share that stuff! We all have money habits, again some good, some not so good. Let’s be realistic, we can’t fix all our bad money habits overnight, and maybe we don’t have to fix all of them? Maybe some are not that bad?  But I am guessing we secretly have some things we do repeatedly, that we say to ourselves, why do I do this to myself. 

In today’s world with so much online banking and automation that we can do, some of these bad habits might be easier than we think to break. To really start to make changes, you need to be honest with yourself as to what is a problem.  Write it down! Put it on paper and look at IT! Just ONE problem, not all or many of them if there is a list… Own it! Then write out the steps you need to take to make this a bad habit you no longer have.  Maybe you share your bad habit you are trying to break with someone you know will emotionally support you. That might be a spouse, a good friend, a co-worker.

Setting a goal is easy, executing it, not always as easy.  Maybe just saying the habit out load to someone and talking about it will be the biggest step. After that it might get easier to mentally tackle the habit. Good luck, stay focused and you got this!

Do we really need to make New Year Resolutions??

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Here we are Christmas Day already! Another year ALMOST behind us, with just a few days left. You know what that means… Those new year’s resolutions are right around the corner! I don’t know about you, but I hate those New Years resolutions. Don’t we have enough stress in our lives? I don’t need the pressure. Instead of creating a “promise to myself” That everyone will ask me about, I just say I’m pretty close to perfect so no need to make a resolution! 😊  Ok, I’m not but I still like to use that as my reason for NOT making a resolution. Maybe the easier thing to do is to look at each day or month and just do something a little better? Maybe it’s saving just a little more each month. Ex: upping our 401K contribution by 1%. Maybe its NOT purchasing that Latte EVERY day, how about just on the weekends. Maybe Its cancelling ONE subscription that we don’t really use anyway. Maybe it’s reading a financial book/s. Or listening to a financial podcast every day on the ride to work. What if every month we do one little thing that moves our financial life in the right direction.  They say little changes can add up to big accomplishments…. After all, what we are really trying to do is phase out the bad habits and create good habits. None of us are perfect, so let’s go easy on ourselves and see if we can go into 2024 with a goal of working on our financial literacy and creating better habits when it comes to our money. What if we just make a list of a few things we want to change this year in our financial life. Let’s use the NO Lattes during the week as an example. If you complete the task let’s, say for a month, check it off the list. Don’t get me wrong, there will be some slips here and there, but if we have pretty much changed that habit, it’s a WIN!

Once you have mastered your first new habit on the list, move onto another new habit on your list. Maybe it’s setting a limit on how much you spend on Amazon each month? Or NOT spending anything on Amazon, for a month! We all have things we do or spend money on that we know is wasteful, these are good places to start! It will be cool to look at the list NEXT December to see our accomplishments and how far we have come! Maybe we keep a journal about the habit and next to it each month we list how much money we DID NOT spend on it vs our old ways. 😊 EX: Lattes on only the weekends vs everyday = $100.00 a month x the number of months you do that, could become over $1000 in savings!    

So, we do not have to make New Years Resolutions, that’s too much pressure. We do have to create positive new habits for ourselves that we build on each day or month. 😊 Happy January!!!!

Are you ready for the Christmas shopping season!?

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Well, it’s that time of year again! Oh, sure it’s festive and it’s time off from work, and hopefully it’s time spent with family and friends! BUT it’s also a time of year when most of us go WAY over our typical monthly spending! What’s the answer here? For starters. We need to start with a total dollar amount that we think we can realistically handle. Really think about this….

According to a poll done by LendEDU, the average person will spend $997.00 on Christmas this year between gifts, food and decorations. And according to NERD Wallet 74% of people will use credit cards to pay for those gifts. Nerd Wallet also tells us 52% of people last year incurred credit card debt due to holiday shopping and 1/3 of them are STILL paying it off. Let’s not be one of those people this year!

This is so easy to do, right? We have all been there probably more than once. Maybe this year we REALLY do set a dollar amount on the spending. Hey maybe our challenge is to spend LESS than the Average person ($997) this year! Ya that does not mean we spend $996, 😊

So, what’s the game plan? Let’s really look at “THE LIST” Most of us can cut the list back, or spend less. It’s also OK to tell people early in the season, like now… That you are cutting back and paying off some bills or trying to save more.  You may be surprised at how other people might want to do the same thing and are grateful you said it first!

 One thing that may help these days are those office Christmas Secret Santa Gifts! That feels like something that did NOT come back after the pandemic, Thank God! It was not the money as much as the stress of WHAT to get that EVERYONE would like! Maybe we get thoughtful, yet personal gifts that do not need to cost much. After all it’s the thought… that’s what they say anyway.

The one thing I DON’T want is a huge credit card bill! This year I am going make most of the purchases with CASH.  I will decide on a dollar amount that I can handle with CASH, and then I MUST stay in that Budget. There will be some things I need a credit card for like online purchases. BUT I will also SET a limit on that amount as well.

Another “thing” I personally will also focus on… NOT buying things for myself while I am supposed to be buying for others! Come on you do it too! You see a great deal on boots, and it’s like, I NEED these, and they are on SALE! Merry Christmas to me! Ok none of that this year. 😊

They say “experiences” are remembered more than “Items”. Ex: Maybe you plan a day with your best friend or family member with something you found on Eventbrite vs buying a gift.

Maybe you take all the nieces and nephews out for a day trip together to the movies and make your own pizzas back at the house for a gift to your sibling and a day for the kids to remember the time together.

Look on Group On for your City, or Eventbrite or your town’s community calendar. Some museums are FREE on certain days, Some Zoos are FREE or Historical tours. There are many things to do that are low cost or FREE, like sledding or skating. GIVE people your time vs an expensive gift they may not even remember next year.

This year let’s challenge ourselves to be more mindful of what we buy vs buying it to get something/someone off the list.  Put some thought into how much we are spending and what we buy, is it really the “right” gift?  If we cut the spending down a little and set a limit on what we put on a credit card, say $200.00 IF you can get it paid off when the bill is due, and the rest CASH, AND get below the average person’s spend… Maybe we will be less stressed this year, knowing we do not have to pay for Christmas for the next 3 months+! 😊 Happy shopping/gift giving!

Week Three Money Challenge

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We spent the last 2 weeks looking back at our bank statements over the last three months or so to see how we can FREE up $100.00-$200.00 per month. That “Found” money we put 1/2 in a retirement account we already had, or we started one. The other half we put in the “emergency fund” which hopefully is in a high yield savings account. While you were scrolling those bank statements/activities online, did anything else jump out at you? Maybe there were things like your debit card at the grocery store! Maybe there were random trips here and there that you see a credit card or debit purchase? It’s not pretty sometimes, right? Sometimes it feels like money just passes through our hands like water…. ☹

Being more mindful of WHAT you spend money on might help us NOT spend as much???  Everything we do in life in general seems to be due to a “habit”. So what if we make a habit of really thinking about IF we really need to spend money on certain things or items, vs the impulse to spend. It’s hard! I get it! Maybe we say ok this week my budget for groceries is $100.00 that’s it! I will use cash only and really plan for the week as well as plan meals out. I am assuming this for a family of four.

Maybe it requires you to go to two or three different stores over the weekend to get everything you need. Assuming the stores are not far from each other, maybe it’s worth it! I started buying things at ALDi and another main grocery store than the one at the bottom of my street. I did some rough math and saved at least $30.00 this week! I even googled some coupons and saved on things like the special dog food at the pet store! Hey, it all adds up! Little by little more money ends up in our pocket vs out of our pockets. Your challenge for this week is MIND SET! Be aware of what you’re spending money on. Do I REALLY need this? Is this product sold some place else cheaper? EX. I buy my organic spinach at BJ’s, which is the same price at my grocery store, but at BJ’s it’s three times the size and I freeze it!  Let’s only buy what we need for a few weeks and see if we have some extra cash at the end of the month before the next check shows up. That’s how we start moving in the right direction, living on LESS THAN WE MAKE!! Not saying it’s easy, but it is possible…. We do this EVERY month. This is our NEW Habit.

Week One Money Challenge!

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This blog” Two Chicks Talking Money” is for other woman like us, just regular people with regular jobs. Getting financially “literate” is intimidating and may seem overwhelming.  That’s why we have each other! It’s not going to take much to get the ball rolling and start learning. We are not going to become day traders and must understand every technical term about the stock market. We are also not going to talk about investing in any ONE stock. We are going to INVEST in the market though!

Let’s do ONE Challenge each week, to up our financial position. Little steps in the right direction…

This week, Lets find an extra $50.00-$100.00 you can put into your retirement account AUTOMATICALLY, so that this happens EVERY month AUTOMATICLY.

IF you do not have a tax deferred retirement account at work, investigate opening a ROTH IRA or a traditional IRA. Get online or walk into a Fidelity office. They will take it from there.

We can do this! That’s this week’s challenge!

If you have never read the book The Millionaire Next Door, by Thomas J Stanley & William D Danko. You must pick it up and read this! It is motivating and makes you believe Yes; I too can do this!

Now don’t get me wrong this is NOT a get rich fast book or some fast-track way to get to the finish line. These days we only have ourselves to ensure we have money to survive when we are older and no longer able or willing to work. How quickly we get to that finish line, well that does depend on how much you save. The younger you start, even with a small amount, the faster it grows. So, when we think of the word INVESTING, we do this!! This can be in a company retirement plan, like a 401K. 403b…. Or even just a brokerage account. BUT we MUST set money aside for it to grow. Let’s also not get worked up on when the “Market” goes down, it will, we know this! It will also go up! Ya more for us!!! So what do we do when the market goes down??? I say BUY MORE! If the market is DOWN (And we are not pulling money out because we are already retired) Up your monthly contribution! Even if it’s only $50.00 more a month. Hey, it’s a SALE on STOCKS! Right!? What Chick does not like a sale!!! That’s what it is accentually. It’s all good! Clean your “Closet” aka, stop paying for things you do not need every month… Subscriptions for streaming, a latte EVERY day… Girl, that’s $100.00 a month if the Latte is Monday- Friday! Let’s not even get into the calories and the sugar! I LOVE Lattes, but not 5 days a week. Let’s fill the “closet” with more Index funds! 😊 Good Luck this week!

Retirement!

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Let’s talk about retirement. A new survey from Axios-Lpsos, says one in five people think they will never retire!   Gen. Xers said they have nothing saved for retirement at all and that’s from the National Institute of Retirement Securities. It’s said this is due to reduced pension plans and decreased access to 401K retirement plans as the major contributors for people working longer.

 I find it hard to believe that people really want to work into their 70s! Sure. you want to have things to do and stay active but do people really want to do the same job they’ve been doing for the last 35-40 years?

 I must think at one point those full-time big person jobs that are stressful and time-consuming, are no longer fun! It’s not a 40-hour week anymore, it’s a 60-hour week for the same money!

 So. what’s really going on? I think people want to stay busy in retirement, but I think they want to do something they feel is rewarding and gets them out. We all need a reason to get up and shower each day and keep our minds sharp. We want to be a part of the world but maybe not the full-time gig we have been doing for the 3-4 decades prior.

 I think more people work full time and stay working full time because they need to, not because they want to and is that good for us overall?

What if we start earlier with small changes in how we spend & save?  Little changes and starting earlier in life. We must educate the younger generations that it is important to start saving for retirement as soon as you start working just a little bit even if it’s only $100 a month, it’s a huge difference on the other end. You might love your job and you might think oh this is great I’m going to do this forever!

 Let me tell you things change overtime, companies change, they get acquired, they go out of business, management changes, you get a new boss and that could change everything! Then suddenly you went from having the greatest job in the world to being completely miserable.

  What’s the lesson here? Start taking care of yourself, the younger the better, but START! A little bit at a time and understand what compound interest does for you!  What’s the worst thing that happens? You get 40 years down the road and you’re still going to work, but you have a $2,000,000 in the bank! Ya, that’s a problem I want!!! Let’s get educated on the “money math”!

Check out this great on-line compound interest calculator from Bankrate! If this does not inspire you, you’re in the wrong place! 😊

Compound Interest Calculator – Savings Account Interest Calculator (bankrate.com)

Example: If you start with $1,000 in a retirement account that earns on AVERAGE 8% return, and you only put $100 per month in for 30 years… You get… wait for it! $146,002.51!!! You would have invested $37,000 and made $109,002.51 in INTEREST!!!

What if as you aged, you added more than a $100 a month or let it run for 33 years, or got a 10% average return??? The market will go up and down but set up a retirement account through work (401k) or a simple IRA, get online with Fidelity or Vanguard, or another major brokage company and start saving! That’s the first step!!!!! These companies have amazing software to guild you along the way as well as real people to call and talk to. Just START!!!

We cannot control everything during those “working” years, and we cannot control the market, but we must put the odds in our favor, so we have options down the road. We want to decide when we retire. We don’t want our “bills & expenses” to decide when we retire!!!