Personal Finance

Awareness and control are key for success.

Insurance

Key Terms

Debt and Equity

Debt, the borrowing of money, has been a common part of most American households, but the key is knowing when it's workign for you and when it becomes a trap.

Keep in mind, any debt taken on without discipline or under emotions can quickly become traps....even debt that's typically "good." Use with caution and

Good Debt:

Mortgages - Homes often gain (appreciate) in value. While cash buying is best, homes are often too expensive so mortgages give you a chance to buy a home and get the increase in value.

Bad Debt:

Credit Cards - A quick trap. Ask yourself, if you didn't have the credit card, would you have still bought it? Probably not. The credit card points seem great but who's benefiting? The credit card companies.

Car Loans - Imagine, you purchase a $40,000 car, pay interest, and by the time you pay it off it's now worth $20,000 so now you've spent interest on on something that dropped in value. What happens to a lot of people is they pay interest, lose value on the car, and even more painful when they go to trade it in. Can you imagine taking that $20,000 car to trade in and you owe $30,000 on the car? One last, common, painpoint....the dealer won't give you full value for your car! Save up whatever you can, borrow if you MUST, and keep it at a minimum. Unlike a house, you'll never get that money back!

Student Loans - This one gets debated quickly. "It's for education!" Sure, sometimes, but ever hear of someone not finishing their degree or getting it because their parents told them they had to? It's not worth it if you wont use it. Second, the education isn't the problem...it's how the repayment is set up. Too many people finish college and start on a bare-minimum repayment and they pay, maybe, $75 per month. Issue is your interest due for the month was $100 and you didn't even touch the principal (original amount borrowed). Next month you'll owe $75 but you actually own $100 + $25 short from last month. And that's just the interest. This is why people get stuck in student loans.....for decades!

Budgeting

Budgeting can feel overwhelming, but it doesn't have to be.

What's important is that you, 1) figure out what's important to you (why are you doing this?), 2) get comfortable making new habits, 3) figure out what method works best for you, and 4) don't beat yourself up.

There are a TON of apps, methods, "cheat sheets" for budgets and it creates decision fatigue....exhaustion from trying to figure outwhat to use.

Here's what we recommend.

Go back to old fashion paper for your first budget. This isn't for every month. Just the first round. Why? Seeing it, saying it as you write it, and writing down your income and expenses puts a different level of realization that you wouldn't get from a mobile app because it's hitting multiple senses. You're seeing it, writing it, and hearing yourself say it. It'll be more impactful.
After your paper budget, find an option that works for you. You can ask friends for suggestions but give yourself space. You may like something else and you may even change your mind a few months in. Be flexible. Here are our suggestions:
1. Spreadsheets - We're finance people and excel nerds. What did you expect lol?!
2. Mobile apps that connect to banking - Just be careful and do your research to make sure they're legit. Try different methods and try the free trials. Just know that it's going to work off patterns. It won't recognize unusual transactions and won't see cash purchases.
3. AI - Some of these are really cool but, again, it'll only recognize patterns. It knows what it knows and has to be taught what it doesn't. Also, you have to tell it your transactions.....which means you have to be honest with yourself as much as you do telling AI.
4. The cash envelope system - This is also a lifestyle change you can touch (tangible). It's harder to stick with but also easier to keep youself in check. Once the cash is gone, it's gone, BUT......you have to stop yourself from pulling out the card or hitting the ATM.
Give yourself grace. They say new habits take 3 weeks to become the new norm. This can take longer because you need to review, adust, and continue month over month. Some days you'll struggle and some days you'll feel overwhelmed but remember that you may need to try a different method. Just make sure the method is the actual problem and not your discipline. If you mess up, it's OK. Don't waste time beating yourself up...just get back to it the next time you "need" (want) to buy something. Then ask yourself.....do I want to feel guilt later or would I rather feel proud? If you have kids.....what kind of example do you want to set for them?