Episode 16  In this episode of Getting Money Right, we’re continuing to answer some of the most common money questions from our listeners.  Knowing the answers to some of these questions can help you tackle some of the challenging financial decisions you might face in the future with greater a chance of success.  Show Notes:    1. Unique Terms on my credit report - what do they all mean?    Default  - A failure to make a loan or debt payment when due. Usually, an account is considered to be “in default” after being delinquent for several consecutive 30-day billing cycles.   Charge-off  - The balance on a credit obligation that a lender no longer expects to be repaid and writes off as a bad debt.   Collection  - An attempt to recover a past-due amount by a credit agency or collections department.   Settled in Full vs Paid in Full -  Paid in full means you paid the entire loan amount in full while settled in full means you negotiated the amount and paid a portion of the loan.   Delinquent  - A failure to deliver even the minimum payment on a loan or debt payment on or before the time agreed. Accounts are often referred to as 30, 60, 90 or 120 days delinquent because most lenders have monthly payment cycles.   Installment debt  - Debt to be paid at regular times over a specified period. Examples of installment debt include most mortgage and auto loans.   Bankruptcy  - A proceeding in U.S. Bankruptcy Court that may legally release a person from repaying debts owed. Credit reports normally include bankruptcies for up to 10 years.   Discharge  - Granted by the court to release a debtor from most of his debts that were included in a bankruptcy. Any debts not included in the bankruptcy – alimony, child support, liability for willful and malicious conduct and certain student loans – cannot be discharged.   Foreclosure -  A property has been foreclosed (house).  Check with each credit bureau for a glossary of terms and how to read your credit report.      2. What should I do if my auto loan is upside down?   Vehicles depreciate very fast in the first year or two - $2,000 or more immediately.  A $30,000 vehicle will $7,400 in the first year.  $600 a month lost, while the payment is about $550.  $100 of the payment is going to interest if you have a 5% interest rate.  That means that you’re actually not paying off the car as fast as it goes down in value.  That’s how you get upside down on a car loan.  After 1yr, you owe about $24,500, but it’s only worth $22,500 - upside down $2,000. You’d have to pay the dealer at least $2,000 to take back the car you just bought from them a year ago.  The problem gets bigger if you buy a more expensive vehicle, or something that is rare and unique so not many buyers are looking to buy it, so it’s harder to sell and the depreciation is even higher.  Imagine you buy a $45,000 truck, it could easily depreciate by at least $10,000 the first year, leaving you with big payments and no easy way to sell the vehicle and get out from under it.    General rule of thumb is to not have more than 35-45% of your household income wrapped up in vehicles (depreciating assets). So, if the family earns:  $40K * 35% = $14,000 vehicle  $50K * 35% = $17,500 vehicle  $60K * 35% = $21,000 vehicle  $70K * 35% = $24,500 vehicle  $80K * 35% = $28,000 vehicle         3. Should I use my 401(k) or other retirement funds to pay off debts?    4 reasons to never borrow from a 401(k)   You’ll miss out on the earning your investments would have generated.   No, you paying yourself back with 4% interest is not a good idea because it’s nowhere near what you would gain if you left it in.  Fail to pay and A $10,000 loan taken 20 years before retirement if not paid back could cost you as much as $57,000.  That 10K at a 10% interest compounded over 20 years would grow to $67,000.     You’ll pay tax twice on the money you borrow and the interest you pay   First, when you pay it back (after-tax money)  Second, when you take it out at retirement.    IRS cannot distinguish between pre-tax (your normal contribution) and after-tax (your loan repayment) money, so you’ll pay taxes on that money twice.     If you default on the loan you’ll get a large tax bill.   It will be considered income so you’ll get taxed at your income tax rate and if you’re under the 59 ½ the withdrawal will be considered an early distribution, which will add another 10% penalty.   Leave your employer and you’ll need to pay the loan back in full within 60 days.   Doesn’t matter if you left voluntarily, were fired, or the company failed.     Exception : you can’t pay your bills and have to file bankruptcy or default on a loan.  You should do whatever you can, get a second job, sell stuff, and spend less before you cash out your retirement account.  Assets should be minimized and not be a lifestyle.        RESOURCES   Budget Forms and Tutorials   Spending Guidelines   Envelope System Video         

Episode 16
In this episode of Getting Money Right we’re continuing to answer some of the most common money questions from our listeners.  Knowing the answers to some of these questions can help you tackle some of the challenging financial decisions you might face in the future with greater chance of success.

     

 
 
               Episode 15  In this episode of Getting Money Right, we’re answering some of the most common money questions from our listeners.  Knowing the answers to some of these questions can help you tackle some of the challenging financial decisions you might face in the future with a greater chance of success.  Show Notes:  1. How does the overall economy affect your personal finances?    Global economy  - what happens anywhere in the world can impact our economy.   National Debt impact on the economy.   If the U.S. is unable to pay its debts.  A rise in interest rates.  Drop in the value of the dollar.     Student loan debt impact on the economy.   Slows down their contribution to the economy.  Live with parents.  Put off having kids, buying a house, cars, etc.  All these factors will affect the health of our economy since a large part of our economy is based on people spending money.     Inflation   Hurts your buying power.  It means you have to pay more for goods and services.     Consumer confidence affects how much people spend   If they feel the economy is strong they’ll spend.  If they feel the economy is weak they’ll save.     Oil Prices   Affect everything not just gas at the pump.  High oil prices drive job creation but also increases the cost of manufacturing and travel cost.  Low oil prices benefit manufacturing through lower costs but can also affect jobs in the oil and gas sector.     The health of the economy affects your personal finances because it directly impacts how much things cost, from interest rates to the price of gas, and jobs.   Supply & Demand  Housing  Jobs  Unemployment rate      2. Should I have joint or separate bank accounts with my spouse?    If you’re married, definitely yes! If you’re dating, definitely no!    The benefits of combining accounts:   No temptation to hide money from your spouse.  Open communication catches financial issues early.  Two heads are better than one, having your spouse see the balance will help catch any errors.  You can easily pay bills from one location, making it easier to plan and budget the automatic expenses in your life.  Both spouses have access to the accounts in case something happens to one person, the other person can still access the money.  I tragically had a woman in her 50’s whose husband passed away and she couldn’t access any of their money for funeral expenses and common house needs for quite some time  The most important thing about this is the unity, this is “our” money, that “we” spend “together,” based on a plan that “we” created, and “together” we’re going to manage these finances.     Reasons not to combine bank accounts:   It’s harder to separate the rest of your lives if you combine finances in case of a breakup.  Dealing with an addict or someone who clinically can’t control their behavior.  This means it’s time for professional help.  Gambling addicts should not have full access to the accounts whenever they want, they should be portioned just enough cash for meals and gas etc.   Their online access should be shut down. This goes for pornography addicts, alcohol or substance abuse addicts, and for manic-depressive or bipolar disorders.     3. I’ve heard about Good Debt, what is that?   Debt is considered good when you’re able to borrow (leverage) money from a lender such as a bank, to purchase an asset that has potential to produce a profit, either through regular income or growth in equity (value).  Ex. business, real estate.  Difference between assets and liabilities  Assets put money in your pocket  Liabilities take money out of your pocket.  Borrowing to buy assets is better than borrowing to buy liabilities.  However, using too much leverage and owing a lot of debt is unwise.  Debt, even when used for assets should be minimized and not be a lifestyle.      Resources   Budget Forms and Tutorials   Spending Guidelines   Envelope System Video         

Episode 15
In this episode of Getting Money Right we’re answering some of the most common money questions from our listeners.  Knowing the answers to some of these questions can help you tackle some of the challenging financial decisions you might face in the future with greater chance of success.

     

 
 
               EPISODE 14  In this episode of Getting Money Right we’re talking about investing in real estate. We’re going to go over the types of real estate investing available and drill down on two or three that are most common for the average investor.    Show Notes:   Why Invest in Real Estate?   Diversification - multiple streams on income  More control than stocks or bonds  Multiple tax benefits not available with other types of investments     Types of Real Estate Investing Options:   Single-Family Home  Duplex/Multifamily - 2 to 4 units  Fix and Flip  Many, many, other types of real estate investing -  Commercial (offices, retail)  Wholesaling - deal making (find a buyer and connect to a seller)  Large apartments multi-family - 5 or more units (8, 16, 32, 64, 100+)  Mobile home parks  Owner finance owned properties       Multiple benefits of Real Estate Investing   Equity - Value of property increase  Write off for depreciation - less taxes/more income (explain this)  Cashflow - make money each month to reinvest or pay down principal  Returns are usually higher than investing in the market and you have more control (12-15% or more)  ROI (Return on Investment) = Gain (Gross) - Cost / Purchase Cost  Leo's results:  $113,000 purchase price  25% down - $32,500 (down payment and closing costs)  Average gain $16,700 (Gross) - $11,111 (Cost) = $5589 (Net Gain)  $5589 / $32,500 = 17.2% average (11.4% - 29.6%)          Real estate associated costs and requirements   20-25% down  Loan Payment - Principal and Interest (online mortgage calculator)  Insurance - Agent quote  Taxes - County Tax Assessor  Maintenance - 1% of property value per year for maintenance. Ex. $200,000 value = $2,000 in maintenance cost.    Single-Family Home  You can buy or build the property, or pick it up on a short sale or foreclosure. You may want to buy a fixer upper and flip it, or rent it out for income. Investments can be rather modest compared to those for larger properties and are generally 15%-25% of the total value of the home with a personal guaranty on the loan.    Pros:   Longer tenant leases can yield a higher annual ROI.  Value increase through upgrades and repairs - value may greatly exceed purchase price.  Holds its resale value if the community is thriving and the home is well-maintained.  Property taxes are often lower than those for multi-family units and commercial real estate.   Cons:   Less diversified rental income cash flow compared to multi-family properties. If the one tenant moves out, you have no cash flow from the property until you find another tenant.  Property costs may be higher due to homeowner association fees.  Fix-up costs may be high and you may have to renovate the property before renting it out or selling it.  Turnover cost could be high - More square feet to clean and repair between tenants.    Duplex/Multifamily  Usually two to four units, this is a popular investment for those just starting out. Owner occupancy is possible and is generally 15%-25% of the total value of the home with a personal guaranty on the loan.  Pros:   Less risk of zero income.  Always in demand.  Spreads costs of improvements and repairs over multiple units.  If four units or less, doesn't require special financing.  Convenient to manage rather than having multiple single-family homes geographically dispersed.  Can choose to passively invest in a professionally managed property.   Cons:   Higher turnover rate in multifamily - turnover is costly because property must be cleaned and repaired, plus the legal fees and other associated costs could eat into your profit.  Higher taxes due to higher value.     Real Estate Investment Trusts (ReiTs)   Passive investment in real estate.  Mutual Funds that hold real estate assets.  Similar returns as the general market.     Other things to consider   When looking to buy, take a general contractor with you to inspect the property - motivated to find issues because you’ll probably hire him to do the repairs  If you don’t have adequate knowledge of property condition, hire an inspector ($500) - well worth the cost.  Include a termite inspection when necessary ($100) - do this either way!  Learn your state laws regarding renters and landlord obligations.    Knowing what’s expected of you and what the renter’s obligations are will prepare you to navigate through issue that may come up and keep you legal.      Fears of real estate investing:   Nightmare renters: not typical and can easily be avoided by knowing how to screen your tenants.  Avoids 95% of bad renters.  Maintenance issues (inspection and basic knowledge, which can be learned will keep this number low and manageable).      How to succeed?   Save the first year’s income and build a cash cushion for unexpected expenses - the property should support itself through rents not through ongoing cash infusion from you.  Run it like a business - separate budget with all expenses allocated for (taxes, insurance, repairs and replacement costs, etc.).  Take the profit and reinvest or pay down the mortgage.  Don’t think of this money as a way to increase your lifestyle. Think of the long-term benefit!     Resources    The Intelligent Investor  by Benjamin Graham   The ABC’s of Real Estate Investing  by Ken McElroy   The Book on Investing in Real Estate with No (and Low) Money Down  by Brandon Turner   What Every Real Estate Investor Needs to Know About Cash Flow  by Frank Gallinelli   The Millionaire Real Estate Investor  by Gary Keller    

EPISODE 14
In this episode of Getting Money Right we’re talking about investing in real estate. We’re going to go over the types of real estate investing available and drill down on two or three that are most common for the average investor.

     

 
 
               EPISODE 13  In this episode of Getting Money Right we’re continuing our conversation on investing for retirement.   We want to equip you with modern philosophies for investing and show you where to start. This series will give you the confidence to go out and make some retirement investing decisions and teach you what it takes to become a millionaire.    SHOW NOTES:    INDEX FUNDS  A majority of actively managed mutual funds fail to beat broad indexes, like the S&P 500. We know that some hedge fund and mutual managers will beat the overall market, we just don’t know which ones it will be. We don’t know who the next Warren Buffet or Philip Fischer will be.    INVESTMENT ADVICE FROM WARREN BUFFETT      “My advice to my trustee couldn't be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S & P 500 index fund. (I suggest Vanguard's.) I believe the trust's long-term results from this policy will be superior to those attained by most investors — whether pension funds, institutions or individuals — who employ high-fee managers.”     4% RULE   The four percent rule is a  rule of thumb  used to determine the amount of funds to withdraw from a retirement account each year.  This rule is used to calculate a steady stream of income to the retiree from their investment, while also keeping an  account balance  that allows funds to be withdrawn for a number of years.  The 4% rate is considered a "safe" rate, with the  withdrawals  consisting primarily of interest and  dividends  meaning, you won’t lose the balance of your investment, because you’re only taking out the amount it’s growing each year.   The four percent rule  was created using  historical data on stock and bond returns  over the 50-year period from 1926 to 1976.  Prior to the early 1990s, 5% was generally considered a safe amount for retirees to withdraw each year.  William Bengen (financial advisor) - skeptical of whether this amount was sufficient, in 1994, conducted an exhaustive study of historical returns, focusing heavily on the severe market downturns of the 1930s and early 1970s.  He concluded that even during weak markets, no historical case existed in which a 4% annual withdrawal exhausted a retirement portfolio in less than 33 years.  What does that look like in actual income?  To have at $75,000 yearly income you’ll need to have saved $1.875 million.     BROKERAGES  Now that you’ve learned about Mutual Funds & Index Funds, would you like to know where to buy them?   First go to your company 401(k) or 403(b) if you work for a non-profit, or TSP (Thrift Savings Plan) for government employees.  If they do a match, start there.  Review mutual funds - Google “where can I buy mutual funds?”    Or go to these brokerages  Vanguard  Charles Schwab  Fidelity  TD Ameritrade  Search Mutual Fund Lists.       WHAT TO LOOK FOR?   10-year track record or more  Average 9%-11% or more  Minimal fees / expense ratio  0.25% = low  0.75% = medium  1.25% = high     Don’t get sold, get educated.    IS IT TOO LATE TO START INVESTING?   Life expectancies as of 2011  Men 76  Women 81    People are starting business later in life.  Great potential for significant income.    Lowering lifestyle  60’s-70’s usually means less expenses.  Feeding less people.  Less car insurance.    House is paid off.  Less water & electricity when kids move out.  Downsize (apartment or townhouse).  Lower taxes.  Lower energy consumption.  Less maintenance.    Move to a cheaper state - low or no income tax states.  Lower property tax states.  Property taxes frozen.    40’s-50’s are highest income years.  Save more aggressively.  Try to add a catch-up amount when buying mutual funds.      Next week: Additional types of investing (more hands-on vs passive investing)      RESOURCES    Vanguard Mutual Funds    ETrade Mutual Funds    0 Likes        

EPISODE 13
In this episode of Getting Money Right we’re continuing our conversation on investing for retirement.   We want to equip you with modern philosophies for investing and show you where to start. This series will give you the confidence to go out and make some retirement investing decisions and teach you what it takes to become a millionaire.

     

 
 
                 EPISODE 12  In this episode of Getting Money Right we’re continuing our conversation on investing for retirement.   We want to equip you with modern philosophies for investing and show you where to start. This series will give you the confidence to go out and make some retirement investing decisions and teach you what it takes to become a millionaire.    Show Notes:  Foundational Principles   Never invest in something you don’t understand.  Diversify your investments - don’t buy one stock or invest into one specific investment (don't put all your eggs in one basket).      Investing Long Term   Mutual Funds well diversified across a number of stocks is a great place for investing long-term.          
   
     “ “Stock market returned an average of 11.31% from 1928 through 2010”   ” 
   
   — Investopedia 
      
   
     “ Over the long term, stocks do better than bonds. Since 1926, large stocks have returned an average of 9.8% per year; long-term government bonds have returned between 5% and 6%  ” 
   
   — Ibbotson Associates 
       Although past performance isn’t a guarantee of future performance in stocks or bonds, 100+ years of data should give investors the confidence to invest in the stock market.  If the stock market has averaged 9%-11% then it is possible for the average American to retire with $1,000,000 or more.      Example of Long-Term Investment Potential Gain   Average Median Household Income – 2012 Census Bureau = $51,000   15% of income toward retirement = about $600/month  If invested from age 30-70…   Based on the percentages below you’d have:   8% = $2,109,168.73  9% = $2,830,458.10  10% = $3,826,668.15   How can you accumulate so much, so quickly?  Compound Interest - Interest earning interest   $10,000 investment at 10% interest earns $1,000 in one year.  $11,000 investment at 10% interest earns $1,100 in the second year.  $12,100 investment at 10% interest earns $1,210 in the third year.  Each year your investment compounds (grows) and grows exponentially.  In 40 years $10,000 investment grows to $452,592.56.      

  

  	
       
      
         
          
             
                  
             
          

          

         
      
       
    

  


     Rule of 72    
  
  
   
   
   
   
   
   
   
   
   
   
   
   
  
  
  
  
  
    Rule of 72 is a shortcut to estimate the number of years required to double your money at a given annual rate of return.   Anyone can do 72 ÷ 8 (interest rate) = 9 (years)    If it takes 9 years to double a $1,000 investment, then the investment will grow to $2,000 in Year 9  $4,000 in Year 18  $8,000 in Year 27, and so on.  Example: 72/10% = 7 years  $100,000 invested at 10% for 30 years (35-65 years) is:  $100,000 - at start.  $200,000 - at 7 years.  $400,000 - at 14 years.  $800,000 - at 21 years.  $1,600,000 - at 28 years.    This is without any additional investment added outside of interest growth.      Index Funds   Index Funds are Mutual Funds  They attempt to match a “market index”  Index basically means list…. So there are a list of stocks and the index fund uses a computer to buy that list of stocks and only buys or sells when the list changes.  S&P 500 is an index of 500 of the largest companies in the United States/  These are companies you’ve heard of, here are the top 5 currently:  Apple  Microsoft  Exxon  Johnson & Johnson  GE      Buying an S&P 500 index fund, you’re invested in 500 of the top companies in the U.S.  Dow Jones Industrial Average (“The Dow”) is an index of the top 30 companies in the U.S. and it’s been around since 1896.  Index funds are managed by computers mostly so the expenses are very low compared to other mutual funds.  Investing in an index fund is a form of  passive investing . Because a person isn’t actively managing and trying to find the best stocks, it’s just a computer picking off of the list.   A majority of actively managed mutual funds fail to beat broad indexes, like the S&P 500. We know that some hedge fund and mutual managers will beat the overall market, we just don’t know which ones it will be. We don’t know who the next Warren Buffet or Philip Fischer will be.       Investment advice from Warren Buffett       
   
     “ “My advice to my trustee couldn’t be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.) I believe the trust’s long-term results from this policy will be superior to those attained by most investors — whether pension funds, institutions or individuals — who employ high-fee managers.” ” 
   
   — Warren Buffett 
      Resources   Vanguard Mutual Funds         

EPISODE 12
In this episode of Getting Money Right we’re continuing our conversation on investing for retirement. We want to equip you with modern philosophies for investing and show you where to start.  This series will give you the confidence to go out and make some retirement investing decisions and teach you what it takes to become a millionaire.

     

 
 
               EPISODE 11  In this episode of Getting Money Right we’re talking about investing for retirement and we’re going to take all the complex investment terms you hear and make them super simple. We’re going to give you the confidence to go out and make some retirement investing decisions and teach you what it takes to become a millionaire.    Show Notes:  Foundational Principles   Never invest in something you don’t understand.  Diversify your investments - don’t buy one stock or invest into one specific investment (don't put all your eggs in one basket).   From the Book of Ecclesiastes -  “Send your bread across the waters, for you will find it after many days. Invest in seven ventures, yes, in eight; for you do not know what disaster may come upon the land.”     Stocks   Shares of an existing company.  Ownership of stock in a company is part ownership of the company.  As company increases in value the stock goes up in value.  Shares can go up or down in value.    High risk of having all your investment in a single company stock.  Company and stock could be negatively impacted by:    Financial mismanagement.  Rise in operating costs.  Illegal activity could lead to company failure or bankruptcy.  New competition.  Natural disasters.     Dividends   Profit divided between owners who own company stock.  Two ways to profit  Dividends paid from profit.  Profit reinvested causing the stock to increase in value.       Bonds   A promise to pay a debt.  A certificate issued by a government, a city, or other entities, that promise to pay you your investment plus an additional amount in the form of interest.     Mutual Funds   An account mutually funded by many investors.  Fund is used to purchase large amounts of different company stocks.  Provides a level of diversification by spreading risk across many companies.    Types of Mutual Funds    Growth - Fast growing companies,  Income - provide a dividend.  International - non-US company stocks.  Large Cap - Companies worth $10+ Billion.  Mid Cap - companies worth $2-$10 Billion.  Small Cap - companies worth $300 Million - $2 Billion.     IRA   Individual Retirement Arrangement/Account.  Purchased with pre-tax dollars and growth is tax deferred.  2018 maximum allowed contribution:  Single under 50 years old $5,500  Single over 50 years old $6,500  Married couple under 50 years old $11,000  Married couple over 50 years old $13,000    Can contribute up to 70 ½ when mandatory withdrawal begins.     Roth IRA   Contribute after-tax dollars.  Tax-free withdrawals.  Same contribution limits as a traditional IRA.  Can start withdrawals at 59 ½ without penalty or taxes.     401(K) OR 403(B)   A retirement account sponsored by an employer and owned by the employee.  401(k) and 403(b) get their name from a section of the US tax code.  Title 26 – Internal Revenue Code.  Subtitle A – Income Taxes.  Chapter 1 – Normal Taxes.  Subchapter D – Deferred Comp.  Part 1 – Pensions, Profit Sharing, Etc.  Subpart A – General Rule.  Section – 401.  Subsection – (k).                Pre-tax or tax-deferred contributions.  Maximum Contribution  Individual under 50 years old $18,500.  Individual over 50 years old $24,500.           

EPISODE 11
In this episode of Getting Money Right we’re talking about investing for retirement and we’re going to take all the complex investment terms you hear and make them super simple. We’re going to give you the confidence to go out and make some retirement investing decisions and teach you what it takes to become a millionaire.  

     

 
 
               EPISODE 10  In this episode, we discuss everything about credit scores!  How the FICO score came into being and how the score effects some of the biggest financial decisions you make.  We’ll examine credit reports and how the information on them can positively or negatively impact your FICO score.  Most importantly, we'll tell you how to best improve your credit score.   Show Notes:    History of FICO Score:   Bill Fair & Earl Isaac started the Fair & Isaac Company (FICO) in the 1960’s.  It is a measure of consumer credit risk and has become a fixture of consumer lending in the United States.  In 2013, lenders purchased more than 10 billion FICO scores.   30 million American consumers access their scores.   FICO scores are now widely used by:   Insurance and utility companies.  Cable/satellite/mobile phone providers.  Landlords or rental management companies, and many others.     Consumers with Lower FICO scores:   Pay more for the services they seek.  Have to put a large deposit down to be approved.  Have a greater chance of being turned down.  Pay more in interest and require more money down.   How to Obtain Your Score   Most Credit Card companies and banks offer free credit scores now, so don't pay for it.    You can also use  Credit Karma , an app for iPhone and Android that will keep you aware of your score and even help you understand how you can improve your score.    Building and improving your credit takes time. Unfortunately, there is no quick fix if you find yourself with a bad score.   Educating Yourself Leads To:   Confidence when making a decision.  Potentially savings hundreds of dollars a month, and 10’s of thousands of dollars over your lifetime.  Basic steps to protect your identity.  Free ways to manage your own credit.  You don’t need to hire anyone.  Ability to fix credit errors without paying anyone.   Credit Reporting Bureaus   Experian, Equifax, and Transunion.  See your actual reports from each credit bureau once a year at  www.annualcreditreport.com .  Free credit score: www.creditkarma.com .  Also available on Apple Store and Google Play.  Understanding Credit: Visit -  www.myfico.com/credit-education/improve-your-credit-score/ .     
  
  
   
   
   
   
   
   
   
   
   
   
   
   
  
  
  
  
  
    Credit score rankings:   Credit Score ranges between 300-850    300-620 - Bad  620-660 - Fair  660-720 - Good  720-850 - Excellen   How credit score is weighted:   35% - Payment History  30% - Amount Owed  15% - Length of Credit History  10% - New Credit  10% - Credit Mix - Types of credit   Ways to improve your credit score.    On time payments  - largest portion of your score - 35%.  Paying more than the minimum payment.     Credit Used  - 30% or more of available credit used will significantly impact your score.   Keep credit use under 30% of available credit.     Length of credit   Less than 2 years will not give you a good score  5-6 years midrange - improves you score  7+ years - good to excellent     Credit Inquiries   Hard inquiries  Credit applications (car, home mortgage, credit card)  Multiple hard inquiries in a short time is negative  Can stay on your report up to 2 yrs    Soft inquiries  Insurance, Phone, Utilities.  Background checks.  Checking your credit without your permission. Doesn’t damage your score.       Credit Mix   Auto, Furniture, Mortgage, Credit Cards, Multiple Cards  The more they see you handle debt, the more comfortable they are lending you money.       Credit Repair Links  Transunion -  https://www.transunion.com/credit-disputes/dispute-your-credit   Experian -  https://www.experian.com/disputes/main.html   Equifax -  https://www.equifax.com/personal/disputes/    Conclusion   The FICO score is not your identity - It’s a measure of creditworthiness    It’s not a badge of honor to wear nor is it an accurate measure of who you are if your score happens to be low right now.    The FICO score is just a tool that’s part of a system which our country’s financial institutions use.    Be wise.  Learn all you can about it so you can make it work for you instead of it working against you but stop shy of letting it dictate who you are.               

EPISODE 10
In this episode, we discuss everything about credit scores!  How the FICO score came into being and how the score effects some of the biggest financial decisions you make.  We’ll examine credit reports and how the information on them can positively or negatively impact your FICO score.  Most importantly, we'll tell you how to best improve your credit score.

     

 
 
               EPISODE 9  In this last episode of this series, we break down the main budget categories, Child Expenses, Personal, Saving, and Giving, and identify what expenses you should include in these four areas of your budget.  We'll also share simple yet powerful tips on how to save money and manage each of these expenses so you can budget more successfully.   Show Notes:    Main Category  - Personal   Health Insurance / HSA / Life / Disability etc.  Out-of-pocket health expenses / Medical Savings Envelope.  Cell Phone.  Consider using a tier 2 phone carrier to save on phone plans.  Save for upgrades.  Avoid phone leases.    Hair Care.  Clothing.     Main Category - Child Exp - Average of 0-9% of Net Income.   Daycare.  Tutoring/Lessons/Training.  Private school tuition.     Main Category - Saving - Average of 5-15% of Net Income.   Emergency Fund - first, then...  IRA.  401(k).  Non-traditional investing.  Real Estate.  Business (franchise) - no personal involvement.       Main Category - Giving - Average of 5-15% of Net Income   Non-profit organization  Passion projects  Relief Help  Etc.     Resources  You can access these and other resources on my  Resource  page.   Budget Forms and Tutorials   Spending Guidelines   Envelope System Video         

EPISODE 9
In this last episode of this series, we break down the main budget categories, Child Expenses, Personal, Saving, and Giving, and identify what expenses you should include in these four areas of your budget.  We'll also share simple yet powerful tips on how to save money and manage each of these expenses so you can budget more successfully.

     

 
 
               EPISODE 8  In this episode, we break down the main budget categories Debt, Miscellaneous, and Recreation, and identify what expenses you should include in these three areas of your budget.  We'll also share simple yet powerful tips on how to save money and manage each of these expenses so you can budget more successfully.    Show Notes:    The 60% Rule  Food, Housing, and Transportation can take up to 60% of a budget, but no more.   10 categories in a normal budget.   If,  3 categories take up 60% of the budget,   Then,  40% is available for the other 7, which average 5% - 6% each.     Main Category – Debt - 0% of Net Income   Revolving Credit Card Debt     Not recommended as an ongoing budget expense.   Use debt snowball plan to eliminate -  Debt Payoff Plan @leosabo.com.   One credit card + debit card(s) for checking account is sufficient -  easier to manage.     Credit card use is fine if:    You pay for budgeted items.  You pay them off in full every month.   Caution:   Multiple studies prove more is spent when multiple credit cards and higher credit availability exists.  Instant gratification more likely with access to multiple credit cards.  12-18% more spent when using credit cards vs cash.   Make an agreement to cut up credit cards if you can’t pay them off every month.        Credit cards with rewards/points    Consider cost vs rewards - if there’s a hefty yearly fee it may not be worth it.  Will having a reward card encourage you to spend more to gain the points or rewards?  Will you need to spend extra money to get and use the rewards?      Main Category - Miscellaneous - Average of 5-7% of Net Income   Subscriptions.  Dry cleaning.  Kid’s allowances.  Other miscellaneous items – “ keep this low” – under $100/mo.  Gifts (birthdays, anniversaries, etc.).  Christmas gifts.  Should be separate from other gifts.  Consider opening a Christmas fund in January and add to it every month.    Make each expense that occurs 4 or more times per year its own subcategory and fund it monthly.     Main Category - Recreation - Average of 5-7% of Net Income   Cash  Spending money for:  Buying a friend lunch.  Coffee with your spouse or significant other.  Fund a hobby.      Entertainment  Date night  Movies  Shows – plays  Activities    Vacation  Must allocate an amount to avoid overspending.  Plan for it and set money aside each month.  Doesn’t need to be expensive.  Spend according to ability.      Caution: Having categories without some money allocated to them is a good way to wreck your budget!      Resources  You can access these and other resources on my  Resource  page.   Budget Forms and Tutorials   Spending Guidelines   Debt Payoff Plan   Gift Planning Tool         

EPISODE 8
In this episode, we break down the main budget categories, Debt, Miscellaneous, and Recreation, and identify what expenses you should include in these three areas of your budget.  We'll also share simple yet powerful tips on how to save money and manage each of these expenses so you can budget more successfully.

     

 
 
               EPISODE 7  In this episode, we break down the main budget categories, Food and Transportation, and identify what expenses you should include in these two areas of your budget.  We'll also share simple yet powerful tips on how to save money and manage each of these expenses so you can budget more successfully.     Show Notes:     Main Category - Food - Average of 10-13% of Net Income   Two Subcategories    Groceries - foods you prepare.  Eating Out - restaurants or take out.    Groceries    High variation in cost - organic or specialty foods.  Cost per person per month - $200 to 225 per person.  Shop with a list (meal planning).  Keep a mental tally or add up cost on a phone calculator.  Don’t shop when  hungry  or  in a hurry  (kids in tow).  Cost vs value - get generic when possible.    Eating Out    Set a reasonable amount.  Take out or fast food for 2 - $15-25.  Sit down basic - $30-$35.  Sit down fancy - $50-$100.  Use cash.  Share an appetizer and split a meal.  Use promotions or coupons.    Main Category - Transportation - Average of 10-13% of Net Income   Tags & Inspection    $100-$120 per vehicle in Texas - check your own state required inspection and license/tags/taxes renewal fees.  Total cost for all vehicles /12    Maintenance & Repair Cost    Varies depending on make and model of vehicle.  Use a reputable mechanic vs dealer to save on maintenance and repairs.  $150 or more per month is a good starting budget - depends on condition.    Maintenance    Oil change every 3-5K miles.  Air filter, fuel filter, cabin filter - every year.  Coolant flush and change every 1 to 2 years.  Transmission fluid change and service every year.  Tire replaced every 40-50K miles (3 to 4 years).  Battery replaced every 4 to 5 years.  Brakes - 2 to 4 years (varies depending on driving and vehicle type).    Repairs    A/C repair  Alternator/Starter  Timing belt    Car Payments   Difficult to fit into an average income budget.   Ex. $65,000 net income  Transportation (12%) $7,800/yr or $650/month.  Gas $120  Insurance $125  Maintenance & repairs $150  Tags $16  Total = $411 leaving  $239 available for a car payment.       Gas    Calculate your mpg on each car.  Calculate how much driving you do per month per car.  Ex. 1000 miles/mo, 20/mpg, 50 gallons @ $2.25/gallon = $112.50/mo (do this for all ca rs).      Insurance    Get adequate insurance from a reputable insurance company.  Newer or financed cars require full coverage (avg. $70/mo.).  Older vehicles - liability insurance (good drivers).  Consider having a higher deductible (make sure you have an emergency fund).  Carefully shop for add on’s like towing, gap insurance, vanishing deductible, which are not free!   Resources  You can access these and other resources on my  Resource  page.   Budget Forms and Tutorials   Spending Guidelines   Debt Payoff Plan         

EPISODE 7
In this episode, we break down the main budget categories, Food and Transportation, and identify what expenses you should include in these two areas of your budget.  We'll also share simple yet powerful tips on how to save money and manage each of these expenses so you can budget more successfully.

     

 
 
               EPISODE 6  A budget doesn't have to be complicated. In this episode, we break down the main budget category, Housing, and all other expenses associated with it. We'll also share some tips on how to save money and manage each of these expenses so you can budget more successfully.  ShowNotes:    Housing - Average of 30% of Net Income   Renting   Pro’s   Fixed payment.  Rent could be increase, but only yearly and no more than $25-$50.  Have the opportunity to move to keep payments lower.  Lower energy costs (smaller size = less heating and cooling).  No maintenance cost.    Con’s   Not yours - no equity.  Smaller size - challenging for larger family size.  Can’t personalize it by painting and remodeling (making it your own).  Small or no back yard.   Other things to consider   Renter's Insurance.  Best to rent and save than to own and not be able to save.    Own - Buy a Home   Pro’s   Equity growth.  Yours - personalize as you want.  Larger size - more room.  You own backyard (pool, swing set, play area).   Con’s   More expensive (P&I, Insurance and Taxes)  $250K home with 20% down = $1,600/mo. (P&I $950, Ins. $150, tax $500).  $250K home w/o 20 % down = $1,925 (P&I $1075, Ins. $150, tax $500, PMI $200).    Higher utility costs - larger space, electricity, gas, water.  Internet, TV Service, Cable.  Overall, 196.3 million U.S. adults will have traditional pay TV.  Less expensive Alternatives  Antenna - free HD channels.  Amazon Prime.  Hulu.  Netflix.    Maintenance & Repairs= your property means it's your cost to maintain and repair.  HVAC Systems.  Appliances - hot water heater, refrigerator, dish washer, etc.  Landscaping.    Updating and Replacing.  Replace (hot water heater, fence, roof, etc.).  Buying New Decorations.  Remodeling (kitchen cabinets, painting, bathrooms, hard wood floors, etc.).     Resources    Budget Spending Guidelines    Budgeting Tools          

EPISODE 6
A budget doesn't have to be complicated. In this episode, we break down the main budget category, Housing, and all other expenses associated with it. We'll also share some tips on how to save money and manage each of these expenses so you can budget more successfully.

     

 
 
               Episode 5  Too many Americans are struggling with having excessive debt.  For many, debt is the only way they can get through a financial emergency.  Unfortunately, this only adds to an already difficult financial situation.  Understanding debt and borrowing will help you make better borrowing decisions and eliminating unnecessary debt.   Debt: something, typically money, that is owed or due.   Two things you can do with debt   Pay it  Forgive it, if you’re the lender    The responsibility to repay is always on the borrower (attitude)   After borrowing some may feel like they got a bad deal - interest too high, late fees, over the limit fees.  Some use it as an excuse to not repay, pay late, or try to negotiate a lower payoff.  Understand the risk and try to avoid using credit in the future when you're unsure if you can pay it back.     Secured vs Unsecured Debt   Secured by an asset    House.  Car.  Furniture.  Pet.    Unsecured Debt    Credit Cards.  Medical Bills.  Utility Bills.  Cell Phone Service, Cable, Internet Bills.  These typically have higher interest rates because the lender has less leverage.    Surety Principle    Always have a sure way to pay.  Asset stands for the value of the debt.  A savings account that has enough to cover the debt.  A detailed budget that has margin in it to cover payments.  Consider the potential of a job loss.  A 3-6 month emergency fund is super helpful.     Borrowing   Can be a benefit if used wisely.  Allows you to purchase something you may otherwise not be able to.  Home.  Start a business.  Limit risk by always putting a 20% or more down payment.    Only borrow for appreciating not depreciating assets    House  Rental Property     3 Way to Get Out of Debt   1. Debt consolidation    Lower interest rates.  One payment instead of many.  3 to 5-year max time to pay off debts.  Must fit into your budget - a financial interview is required.    2. Debt negotiation    Negotiate your balance down to 50% or less than originally borrowed.  The company gets between you and the creditors (cease and decease letter).  Can’t protect you from being sued by your creditors.  A creditor may seek a judgment to avoid the statute of limitation.  Able to go after the debt anytime in the future - freeze accounts and garnish wages.    3. Best and cheapest option - do it yourself!    Don’t give your problem to someone else to fix or you’re destined to repeat it.  Debt snowball repayment strategy.  Use form and how-to video @  leosabo.com/resources       Conclusion   Not all borrowing is bad.  Avoid borrowing for depreciating assets.  Use wisdom whenever borrowing.         

EPISODE 5
Too many Americans are struggling with having excessive debt.  For many, debt is the only way they can get through a financial emergency.  Unfortunately, this only adds to an already difficult financial situation.  Understanding debt and borrowing will help you make better borrowing decisions and eliminating unnecessary debt.

     

 
 
               EPISODE 4  There are different seasons in life and each has different financial challenges.  It's important that you know how to prepare for and navigate through each of these seasons.  We'll discuss each season and answer some of the common questions relevant to each.   Show Notes   Financial Seasons of Life     From single to married.  Having children.  Empty nesters - grandchildren.  Retirement.  Legacy building.      Common questions:   1. When should I focus on removing debt?    Always aggressively remove consumer debt.  Teach kids to avoid debt.  Find unique ways to remove debt quickly.  Don’t borrow for anything that isn’t appreciating in value.  Pay off student loans as soon as possible.     2. How much do I need to have saved at different times in my life?    Save $1000 then increase to 1 month of income ASAP.  3 to 6 months of a bare-bones budget.  6 to 12 months of a bare-bones budget for the self-employed and business owner.  15% to long-term saving - may need to do less when you have kids and one income.  More aggressive as you get older and kids move out - higher income potential is usually in 50's and 60's.      3. Retirement planning, when and how much to invest?    Starting early to take advantage of compounding.  15% through your working life will typically lead to millions (30-70).  Especially important if you get a match at work.  Use tax advantaged savings accounts - ROTH / Traditional IRA / 401(k).     4. How much should I set aside for my kids college expenses?    Should your kid go to college? Or is a trade school more suited?  Tuition - consider inflation (doubles every 9 years).  In state - lower cost.  Out of state - higher cost.  kids can contribute through scholarships and work.      5. When should I buy a house?    A house isn’t for everyone.  How long will you live there? Repairs, interest, selling costs…  If you hold for 5yrs or more, it will often be a benefit, but not always  Typically need to wait till after the 3-6 month emergency fund is set aside.  Consider the potential costs to home ownership.  HVAC repairs.  Fence repairs.  Appliance replacement.  Foundation.  Hail damage.       6. What About Insurance?    Without adequate insurance your financial plan is in jeopardy.  Health and disability will protect you in case of major medical or long-term disability.  Term life insurance - lower cost higher coverage.  10X your salary - provide for family needs or spouse retirement needs.       Summary   Your financial plan should include:    Savings to prepare you for future seasons.  Proper insurance for protection (life, health, disability).  Emergency Fund to protect your budget.  Cashflow planning - monthly budget to meet needs.         

EPISODE 4
There are different seasons in life and each has different financial challenges.  It's important that you know how to prepare for and navigate through each of these seasons.  We'll discuss each season and answer some of the common questions relevant to each.

     

 
 
               EPISODE 3  Finances play a crucial role in you life.  If you're going to live the kind of life you want, you need to create a financial plan to help you achieve it.  In this Part 2 we're going to discuss the specifics of creating a financial plan.    Show Notes     Where do you start?   The foundational plan for managing your money is called a budget.  A budget is the foundation of your financial house upon which you will build your financial life.   Objections to budgeting   People are opposed to budgeting for two main reasons   1. They believe it will limit their ability to live their lives and enjoy it. 2. Someone’s used a budget to control them.   A budget provides freedom.  Equips you to make good financial decisions that keep you out of bondage and help you reach your goals.   Budget as a Fence - Schoolyard Example   It’s the vehicle to help you stick to and accomplish your goals.  Tells you how much you can spend and where you spend.  Takes the emotions out of financial decisions.  Helps you to avoid buying on impulse.  Give you the freedom to spend guilt free.   3 Parts Of Your Plan   1. Monthly Budget    Zero based, meaning that every dollar you earn is assigned to a category  Having the written plan in place before the month begins and assigning all the money to various categories so that no money is left floating around….because money is currency… it rides the current and will flow away if you leave it floating around.  No matter how you get paid, we are encouraging you to make an annual plan that you manage monthly.    2. Main Categories     Housing  Food  Transportation  Debt  Savings  Childcare  Recreation  Personal  Miscellaneous  Giving    3. Sub-Categories -   Housing     Rent/Mortgage  Internet  Insurance  Yard  Maintenance  Electric  Water   Spending Guidelines for your categories    Developed a guideline based on successful people  It’s just a suggestion, but will help you start strong  100% of your money  60% rule (Housing, Food, Transportation     Yearly vs. Monthly Budget    We manage monthly because it’s easier, but we need to have an annual plan.  Gives us the view of non-monthly items.  Each month is connected to the next.  If you have extra money in a category at the end of the month, it rolls into the next month and grows.  Good month's cover for bad months    Visit    https://leosabo.com/resources  to gain access to the budgeting forms discussed in this episode.         

EPISODE 3
Finances play a crucial role in you life.  If you're going to live the kind of life you want, you need to create a financial plan to help you achieve it.  In this Part 2 we're going to discuss the specifics of creating a financial plan.

     

 
 
               EPISODE 2  Finances play a crucial role in you life.  If you're going to live the kind of life you want, you need to create a financial plan to help you achieve it.  Start by getting clear about where you want to go and then set some clear goals to get there.    SHOW NOTES    What does it mean to have a financial plan for your life?   You can’t go on a journey without a plan in place  Where am I now?  Where do I want to go?  What do I have with me?  What will I need?  How do I get there?      Ask Yourself: How do I need to manage my money, to live the life that I want to live?     Money is going to influence how you get to where you want to go.   Do you want more time with family?  Do you want to retire earlier?  Do you want to change career fields?  Do you want to be able to give your kids or grandkids a financial inheritance?  How much would you like to leave them?  How about philanthropy?  Do you want to be more generous toward worthy causes?  To be able to give when Hurricane Harvey comes through, or Irma, or you name it….church, friends, family….?  Do you want to finally be able to afford that dream vacation?  Whatever you want and however you want to live your life, it won’t happen by accident - you need a plan, and  finances has to be part of that plan!       How do you move toward the kind of live you really want to live?   Start with where are you right now…    Self-Awareness.  Are you living paycheck to paycheck?  Do you feel like you’re managing money or does it feel like it’s money managing you?  What is your earning potential now and in the future?  Does your career have long-term sustainability?  Setbacks can have a significant impact on your life and financial plans.      Things you need to know   How much debt do you have?  How much do you earn?  How much are you spending?  Do you really know or just think you know?  Without a written plan is impossible to know - without tracking expenses, you'll never stick to a plan and succeed.  7 out of 10 Americans do not have a financial plan - a budget.  Budget in a drawer untouched does you know good - must be active.     Start by asking and answering the questions that reveal where you are right now.     Next step   Creating a financial plan for your life      Determine Your Destination    When you travel somewhere the GPS can locate your current location - it’s up to you to enter the destination.  Where are you going? What is it that you want?  Do you want a certain lifestyle?  To live in a specific state, city, town, neighborhood?  Rent or own?  Do you have or do you need to save for a down payment on a house?  Retirement needs? $$$ Amount?  You have to know where you’re going and then…  You have to take action.     It all starts with setting some specific goals     Goal setting: The journey is never easy, so you must remind yourself constantly of the reward at the end of the journey, you have to have that reward strongly built in your mind….visually….aroma…..all five senses….what’s it really going to feel like being debt free or reaching that milestone.   A goal must be:    Written down.  Looked at, spoken, rewritten everyday so you can get it deep down inside of you.  You have to believe it so much that no one and no thing can persuade you to give it up.       Set a specific goal - then list 20 things you can do to reach your goal.    Focus on one or more things on the list you can do every day to move toward your goal.  Education  Extra sources of income - side hustle  Can you ask for a raise?  You can negotiate your credit card interest to a lower rate to help you pay off debt faster.  Pick one thing of the 20 things on your list every day  and do it to reach your goal.  A financial is a crucial part of the journey    Extra    Married couples/significant other  - Set goals together  You’re in the same boat - It’s better to row together in the wrong direction then to try to row separately, which will only make you go in circles and frustrate you both.  Setting Your Family Plan -  download .      SET SMART GOALS     S – Specific (or Significant).    M – Measurable (or Meaningful).    A – Attainable (or Action-Oriented).    R – Relevant (or Rewarding).    T – Time-bound (or Trackable).          

EPISODE 2
Finances play a crucial role in you life.  If you're going to live the kind of life you want, you need to create a financial plan to help you achieve it.  Start by getting clear about where you want to go and then set some clear goals to get there.

     

 
 
               EPISODE 1  In our first episode we'll discuss how money impacts three specific areas of our life: our relationships, our work, and our lifestyle. We'll also introduce you to who we are, why we started this podcast, and tell you why getting your money right is important to your happiness and your life's purpose.    Show Notes:    The WHY – our reasons for starting this podcast  o   Recognized a lack of education on money o   Knowledge about money – makes all the difference in every area of life o   Our personal journey and the gained experience (10,000 hours) o   We are passionate because it changed and helped us o   We want to make a difference, add value, and help you the listener get money right because it        will change your life.    What you can expect from listening  o   Receive practical advice o   Access to useful tools to help you manage your money successfully o   Education o   Your questions answered – Q & A    How money impacts our life – positive and negative  o    Relationships    Couples  marriage communication (geek and the free spirit = good) complement each other.  Singles – money central to social life  Money impacts our relationships most every day   o    Work    80% unsatisfied and would quit if money wasn't an issue  Love your job but don’t make enough money = unsatisfied and unhappy  Hate your job but make good money = unsatisfied and unhappy  Money is a major chunk of our work life   o    Lifestyle    People want more than just the basics (food, clothing, and a roof over your head).  Lifestyle Represents = our dreams, our security and safety (women/kids), our hopes and desires for happiness and fulfillment.    Summary    Money impacts our life in these 3 main areas: our relationships, our work, and our lifestyle – it’s important!  That’s why Getting Money Right is so crucial – doing it right will have a significant positive impact on your life.  The opposite is also true if you don’t get money right.         

EPISODE 1
In our first episode we'll discuss how money impacts three specific areas of our life: our relationships, our work, and our lifestyle. We'll also introduce you to who we are, why we started this podcast, and tell you why getting your money right is important to your happiness and your life's purpose.