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Archive for January, 2010

Do You Need Financial Help?

January 27, 2010 1 comment

I’m not always sure what pops into people’s heads when they hear the term “financial planner.”  Before I decided to pursue financial planning as a profession, I generally believed that financial planners spent most of their time selling insurance or investment products.  And to be honest, this characterization is one of the reasons I did not pursue financial planning a long time ago.  I did not want to be a sales person and I wanted to focus on helping people rather than convincing them to purchase a particular product. 

But I gradually learned about different types of financial planners and I decided to open a practice where clients would not feel pressured to purchase products.  I wanted to provide no-strings attached financial advice to people who wanted to responsibly manage their money.   So I started a fee-only financial planning practice. 

So you may be wondering: is financial planning for me?  Some reasons to use a financial planner include the following:

  • You have no interest or time to manage my finances
  • You would like confirmation that you’re making the correct financial decisions given your goals  
  • You  have a special situation that requires more complicated financial analysis (e.g., chronic illness, special needs child, self-employed)
  • You can’t get your spending under control
  • You need help eliminating your debt

But if you’re still not sure or would like more information on what a financial planner can do for you, I recommend this New York Times article.  As the article mentions, wealthy families have relied on financial planners for years and ” paying for advice is as natural as paying the landscaper.”  But more and more non-wealthy Americans are finding that a financial planner can provide a financial checkup or financial guidance that can help them get on the right track.  Do you fall into any of the groups of people who could use professional financial help?

Categories: Uncategorized

How to Right the Wrongs

January 20, 2010 3 comments

Last week, I wrote about not letting credit run your life.  I stand by that, but that doesn’t mean that credit isn’t important for many aspects of your life.  Potential landlords and employers may check your report for judgments and delinquencies.  And most of us are aware of how important your credit score is in getting the best rates on a mortgage or a loan for a car or education. 

Because of this, it is important to regularly check your credit reports to make sure the information is correct and that you aren’t a victim of identity theft.  To do this you have to actually see your credit report.  Luckily, you have a right to a credit report from one of the three major credit bureaus (Experian, Equifax and TransUnion) once a year.  To get your reports, go to www.annualcreditreport.com, call 1-877-322-8228 or write to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.  

I’m sure you’ve seen the commercials for freecreditreport.com and freescore.com.  Ignore these sites.  www.annualcreditreport.com is the official website to get your free credit report.  The other sites often charge you for monitoring services and they aren’t always upfront about it (see a New York Times article discussing these issues here).

So, now that you know the right way to get your credit report, you are going to pull all three credit reports.  Look at each report carefully.  Is your name correct?  Birth date?  Accounts?  You’re looking for errors and you need to look carefully.  Does your report list accounts that you never opened?   So what do you do?  Who do you speak with?

  1. Write to each credit bureau (see the links above for addresses)
  2. Include your full name, date of birth, social security number, current mailing address, name and account number of the creditor and item in question, the specific reason for your disagreement and your signature
  3. Send the letters certified mail with return receipt

Click here for a sample dispute letter.  The information in italics should be personalized.

If the agency will not remove the erroneous information, you are entitled to include a 100 word statement explaining your side of the story.

So what do you do once you’ve seen the reports and confirmed that the information is accurate.  Make sure you regularly check your reports to make sure there isn’t any inaccurate activity listed.  You can pay to receive these reports throughout the year, but there is a more frugal way to watch your credit.   If you pull just one report at a time, you can check your report for free three times a year (e.g., pull one in January, pull another in May and pull the last in September). 

There are many steps in the process of becoming financially healthy and pulling and reviewing your credit report is a great place to start.  Keep in mind that your report is free, but your score is not.  You have a to pay separately for score.  But the first step is to review the report and make sure all the information is correct.

Categories: Uncategorized

Credit is Not King

January 14, 2010 Leave a comment

What I’m about to say is blasphemy, but please hear me out.  Your credit score is not everything.  That’s an insane statement, right?  We hear so much about the importance of  our credit scores and the need to improve them.   How can improving your credit score NOT be your most important financial goal?

I’m not trying to say you should ignore your credit score.  Yes, if you need a mortgage or a loan in the next year or so, make sure you’re working to increase your score.  But, you must understand the purpose of credit.  Credit is a way to judge how risky you are to financial institutions who may lend you money.  The number is not an overall judgment on your financial health.

I have found that many people focus on their credit score to the exclusion of other important financial issues.  I often meet homeowner’s who cannot pay their mortgage but who are more concerned about their credit score than modifying their mortgage to make their home affordable.  These homeowners don’t want to ask the bank to modify their mortgage because a modification will often have a negative impact on your credit.  But what’s more important?  Maintaining your home and the equity you’ve built up or a number?

I’ve also met people who assume that they are in good financial shape because they have a “good” credit score.  But focusing on your credit score to the exclusion of other issues is like using your weight to determine your overall health.  It may help indicate whether you’re healthy but it doesn’t give you the entire picture. It says nothing of your financial goals and whether you’re achieving them.  

Do you have an emergency fund?  Are you saving enough for retirement?  Do you have appropriate insurance?  Are you saving enough for your kids’ education?  These are the important questions.  We must start looking past the credit score into other issues that impact  our  financial lives.

Categories: Credit

Start Your Financial Revolution Today!

January 12, 2010 Leave a comment

A lot of people are happy to leave the last decade behind them.  We came out of that decade a lot less confident and a lot more shaken than when we went into it as a result of events such as 9/11 and the 2008 financial collapse.  But I have some fond memories of this time.  This is because the last decade was my first full decade as an adult.  I graduated from college and law school.  I got my first apartment.  I got my first full time job.  I paid bills and rent and socked away money in a 401(k).  I gained the freedom to live my life the way I saw fit and I loved that feeling.

But with new freedom comes new responsibilities and scary decisions.  I look at the baby boomers, my parent’s generation, and I see men and women with pensions and the ability to expect to get some social security.  Younger generations are very much on their own.  Our future dependence on our own financial and investment decisions is certainly a result of the changed times and it is a scary notion for most people, including me, a financial planner.

So what do we do?  How do we make sure that we have the money and the resources to maintain a decent lifestyle once we stop working?  We plan for the future.  We face our money issues head on and we don’t shy away because it’s complicated or scary or confusing.  Now is the time to make it a priority to create a healthy financial future for you and your family.  If the last decade taught us anything, it is that we must be vigilant and informed about issues that have a real impact on our lives.  We all need to be proactive.

There are a number of ways to get started:

  • Track your expenses for a month and creating a budget with your monthly expenses. 
  •  Review your assets and your debts to determine your net worth. 
  • Look at all your debts, list them from highest interest rate to lowest interest rate and start chipping away at the debt with the highest rate, moving down the list as you pay your debts off. 
  • Create a plan to build up six to eight months of emergency savings. 

I will be writing more about all of these things in the next couple of weeks to help you get started.  There are just initial steps to financial security but they are essential so that you know where you stand.

Does all of this seem overwhelming?  There’s help out there! 

  • Find a financial planning book that speaks to you. 
  • Seek out non-profits in your area that offer some financial counseling for free or at a low cost. 
  • Speak with a financial planner who can give you a more comprehensive financial evaluation and help guide you and motivate you get these things done.  

Remember – you don’t have to do it alone, but you have to do it.

Categories: Uncategorized

Five Steps to Your Financial Future

January 7, 2010 Leave a comment

So now that we’re about a week into the new year, I’m sure we’ve all had a chance to think about our goals and resolutions for the new year.  Maybe you’ve picked the same resolutions you had last year because you didn’t get around to making those things happen.  It takes a lot of energy to really stick with your resolutions.  If it didn’t we would have already made these improvements in our lives.  But, there are steps we can take to make ourselves more successful than not.

I’m a big fan of The Happiness Project Blog, written by Gretchen Rubin.  I have a special place in my heart for her because like me, she’s a former lawyer who gave up practicing to pursue her passion.  But I really like her because she doles out great pieces of information to help you improve your mood and your life.

One of her more recent posts gives five tips for planning effective resolutions.  I urge anyone who has a goal but who hasn’t been able to stick with it to take a look at the post.  The post takes you through the steps of not only selecting your resolutions but coming up with a concrete plan for how that will happen.

A lot of people come to me and say “I want to feel more financially stable” or “I wish I didn’t lose sleep over money.”  But the real question is:  What does that mean for you?  Does that mean starting a 529 plan for your child?  Saving more for retirement?  Saving up an emergency fund?  Eliminating credit card debt? What specific goal(s) do you need to reach to achieve that stability or to get that good night’s sleep?

Still need some help articulating what you need to do?  Here are some important steps that you can take to get closer to achieving your 2010 financial goals:

1) Track your spending through financial software, a spreadsheet or just simple pen and paper.

2) Write down your important financial goals so that you’re reminded of them throughout the year

3) Reduce debt by creating your own payment plan and/or reaching out to your creditors to ask for reduced interest rates and payments

4) Set up an automatic savings system to get you to that six to nine month of emergency savings

5) Make sure you’re setting money aside for retirement in a 401(k), 403(b) or an IRA

6) Make it a plan for the entire family to be money conscious.  If you are changing your money habits but your husband or your children or a parent you support is spending like it’s 2007, have a talk with them about establishing new money habits. 

And finally, the most important thing is to do something!  Anything!  It can be overwhelming to overhaul your entire financial life and financial philosophy.  If you feel you’re chest seizing up when you sit down to think about your finances, pick one achievable step  and get it done.  It really is about baby steps.  And don’t be afraid get help if you need it.  There is help available to assist you in getting your money in order.  You don’t have to do it alone – but you have to do it. 

Good luck!

Remembering the Important Things

January 5, 2010 Leave a comment

Me and my grandma

I’ve been absent from my blog for the past month or so.  This is mostly because I was working on a project that took up a great deal of my time.  But, I wasn’t just absent from my blog.  I was also absent from my friends and family.  I focused on my work and on my professional life.  I figured I could get back to my friends and family later, but I needed to take care of business at the time.   I was determined to finish this project before the end of 2009 and I was going to work my fingers to the bone each day to get it done.  

But life often interrupts our best laid plans.   My grandmother passed away on Christmas Eve.   She was 94 and she lived a long and beautiful life.  The death of my grandmother brought my work to a stand still and made it impossible for me to complete my project by the end of the year.  But something positive came out of this sad event.  It brought me in contact with family members I hadn’t seen in years.  We were brought together because of an unfortunate and heart breaking event but we were together and I realized how much I  missed spending time with my family.  

What does this have to do with financial planning, you ask?  I’m reminded of Suze Orman’s famous catchphrase: “People first, then money, then things.”  I’m starting off the new year thinking of those wise words.  I went into hiding for a bit because of business; because of money.  But, no matter how hectic things get with work or finances or life, don’t forget the people who are there for you.  This feels like a cliché.  It’s an obvious statement.  An obvious answer to how we’re supposed to spend our time and our lives.  But we often forget these things – I know I did.  Prior to my loss, I was busy setting goals for my business and making plans for my professional life.  But now I am reminded that while my business and my finances are important, these things don’t trump spending time with the people I love.

Categories: family