JW’s Financial Coaching Podcast JW’s Financial Coaching Podcast-A show devoted to answering your personal financial questions and covering current events in personal finance. Giving people a new perspective on their money!

August 28, 2016  
00:0000:00
  • The average US household financial stats
  • What these stats say about your economy
  • What to do to be better than average
  • Motivation to not be financially average
  • Quote of the lesson

The JW’s Financial Coaching Podcast_118

My wife and I have had a lot of changes in our life this past year. We’ve added a new member to our family, spent some money updating our home, bought a new van, and got a raise in income.

Because of these life events we have been forced in the past year to look at some things in our finances and determine if we need to make any updates. This got me thinking on that others might have these same “problems” or “issues.”

So today we’re going to talk about things we need to review once a year to make sure our coverage or amount saved is enough. They include

  • Emergency Fund-We recommend you have 3-6 months’ worth of expense saved after you become debt free. But the problem is that we originally setup an emergency and as the years go by our life changes. We might have more or less expenses now, then we did originally. Life has happened so we might want to consider whether we would want a six month or a three month emergency fund. After determining what your expenses are today you might learn that you have too much or too little in your emergency fund at the moment
  • Life Insurance-Life insurance is not a fun topic to discuss, but make no mistake, it is an important one to discuss. Most advice says to have 8 to 12 times your income in life insurance. However what if your income has increased since you originally bought the term policy? Is your coverage still enough? If not you might have to buy an additional second policy or buy a whole new one to insure you have the right coverage.
  • Car Insurance-How often do we just buy car insurance and then never compare whether or not we are paying too much? More often then we think. Go ahead and look at quotes on online and see if they can beat your current rates. In addition look to see if you want to lower or raise your deductible or if you need to add or drop certain coverage.
  • Investing-Most of us invest in our 401(K)’s at work via a certain percentage each paycheck. However IRA’s are usually deposited by an amount each month. But if your income changes have you updated your IRA contributions to reflect that change?
  • Giving-The first four issue make sense to you probably. But why would I need to review my giving you might ask? Because let’s be honest when was the last time we looked at our giving and honestly looked at if we should be doing more in that area.

Now I don’t think we need to review these each month, but annualy or every few years make it a priority to see if you can save some money , cut back, or increase your contributions in a certain area.

If you are like me, you like to do something once, set it up on auto draft and be done with it. But sometimes putting our finances on autopilot can hurt us and actually cost us money. So it’s good to take a minute every once a while and ensure you are still setup properly.

Today's quote of the lesson is brought to you by Audible.com

"80% of what we worry about doesn’t happen.” ~ Unknown

Enjoyed this lesson? If so, please consider taking a few minutes to leave a review of the show either in Stitcher SmartRadio, or iTunes. For a step by step video of how that works, please watch this video on how to leave a review in iTunes.

You can subscribe to future podcasts through Stitcher SmartRadio or iTunes, or by downloading the iPhone app. Or you may listen to the podcast on the JW's Financial Coaching Facebook Fan page.

August 17, 2016  
00:0000:00
  • The average US household financial stats
  • What these stats say about your economy
  • What to do to be better than average
  • Motivation to not be financially average
  • Quote of the lesson from Steve Siebold

The JW’s Financial Coaching Podcast_117

When I first started the blog and the podcast, one of my most popular posts that gained some traction was the Don’t be Average blog post. In this post I shared some average financial statistics on income, debt, and savings which I tried to paint a picture that the average financial situation in America isn’t all the great. Since the original post back in 2010 I updated it for 2011 and did one of my original podcast lessons on the same topic.

But I realized I hadn’t had an updated version since 2011 so on today’s lesson we’re going to cover the average financial stats in America for 2016. Among some of the statistics discussed in the show:

  • The Median Household income is $53,657 [1]
  • 1% of households that have a credit card have a balance at the end of each month with an average debt of $16,000[2]
  • The average car payment is now $503(!) over 68 months[3]
  • The average car lease payment is now $400 [4]
  • 2016 college graduates had an average student loan balance of $37,000[5]
  • For all households that have a student loan, one in seven, the median balance is $13K[6]
  • The savings rate is currently 5.3%[7]
  • 50% of Americans would have to borrow or sell something to pay for a $400 emergency[8]
  • 1 in 7 Americans have a negative net worth [9]

We go into depth more on each stat and explain why these are troubling statistics.

But we also explain why it can be used as motivation to get out from under the rut of being at or below average and what you can do to having a good personal economy.

This is just a great reminder that we can’t go through life taking advice from “He said, I heard, and everybody does.”

Today's quote of the lesson is brought to you by Audible.com

"Average People live beyond their means. Rich people live below theirs. ” ~ Steve Siebold

Enjoyed this lesson? If so, please consider taking a few minutes to leave a review of the show either in Stitcher SmartRadio, or iTunes. For a step by step video of how that works, please watch this video on how to leave a review in iTunes.

You can subscribe to future podcasts through Stitcher SmartRadio or iTunes, or by downloading the iPhone app. Or you may listen to the podcast on the JW's Financial Coaching Facebook Fan page.

[optin-cat id="13626"]

[1] http://www.deptofnumbers.com/income/us/

[2] http://www.valuepenguin.com/average-credit-card-debt

[3] http://www.cnbc.com/2016/06/02/us-borrowers-are-paying-more-and-for-longer-on-their-auto-loans.html

[4] http://www.cnbc.com/2016/06/02/us-borrowers-are-paying-more-and-for-longer-on-their-auto-loans.html

[5] https://studentloanhero.com/student-loan-debt-statistics-2016/

[6] https://www.brookings.edu/research/the-typical-household-with-student-loan-debt/

[7] http://www.tradingeconomics.com/united-states/personal-savings

[8] http://www.federalreserve.gov/econresdata/2014-report-economic-well-being-us-households-201505.pdf

[9] http://www.whig.com/20160808/household-debt-concerns-economists-lenders#

August 7, 2016  
00:0000:00
  • How to balance enjoying money now vs. enjoying it later
  • The three questions Lisa and I ask when making a purchase
  • Why the amount in your bank account doesn't tell you what you SHOULD do, it tells you what you CAN do.
  • Should I be spending on luxuries when I'm in debt?
  • Quote of the lesson from Warren Buffett

The JW’s Financial Coaching Podcast_116

One of the most common issues that I encounter when I’m working with an individual or a couple is how to balance long term goals like saving, investing, or paying off debt vs. making a big purchase such as a car or a fancy vacation.

It’s a great question, because while we do our monthly budget and perhaps do set aside money for big purchases, the budget can’t tell us whether or not we *SHOULD* do it, it really can just tell us if we *CAN* do it.

On today's lesson of the podcast I'm going to share the process that Lisa and I use when making a big spending decision and whether or not we should do it now or later.

Now much like most thing in personal finance, the decision is a personal one that all depend on your situation and financial goals. But when it comes to making big purchases decisions below is the process that Lisa and I do when we look to make a big purchase.

We always like to ask ourselves the following three questions first

  • How much is it going to cost?
  • How are we going to pay for it?
  • If we have to budget for it, what will we need to change in our budget?

It’s important first to determine how much the purchase is going to cost. Doing so will help give you a clearer picture and will assist in determining whether or not it is something to do now or wait for another time.

After you know how much it costs, it’s then time to figure out how you will pay for it. Is it going to come out of savings? Will you have to adjust your budget for a few months to save enough cash? Is there something in your home that you can sell on EBay or Craigslist to get a cash infusion?

If you already budget for it, such as a car replacement fund, do you have enough time to save the correct amount between now and when you would like to make the purchase? If not, what will you need to change in your budget to have enough saved by then?

Some other things to consider as well is, if I make this purchase, what else is this going to prevent me from doing financially in the next few months? Save for my emergency fund? Not going out with my friends on the weekend? Postpone my debt repayment plan? You then have to weigh that loss against the gain of the purchase.

As for me, my #1 goal would be to have my $1,000 emergency fund funded first. Because if I don’t have my emergency fund fully funded and I make this purchase it’s like I’m spending my emergency fund on a luxury and a luxury is not an emergency. There’s nothing wrong with spending on luxury, but not at the expense of an emergency.

In addition, I personally wouldn’t be going on trips or spending big purchases on wants if I’m still in debt. I just think it is unwise. Often though I hear back from young adults in their 20’s and early 30’s who are looking at huge student loan balances, lower incomes, and don’t feel like they are ever going to get to spend their money on something nice so they want to go on a trip to be with friends.

While I might not agree with the purchase, I’m OK with it as long as it is paid for in cash and credit isn’t being used to fund a purchase. I’m never going recommend borrowing money to travel for luxury for example, but if someone can save up the money then going on the trip isn’t a “bad” or “un-wise” financial decision necessarily. It’s just different from what I do and teach.

However there needs to be a point where we focus and are more serious on paying off our debt then on travel. If the travel is a once in a few years type of deal that’s ok, but if it is a once a year thing I think I you might need to reevaluate how much getting out of debt is important to you.

To me this example it is a great opportunity to ponder on what your goals and priorities are. Yes you can go on vacations or buy a new car, but that is probably going to slow down the acceleration of getting out of debt, postpone your investing, or subtract money from your ability to do something else. Is that worth it to you? There isn’t a wrong or right answer but a question to ponder.

Hopefully that is enough information for you to make the best decision next time you are in this position. I think going through this exercise, whether you make the purchase or not, is a good real life example of how to handle money. You aren’t just acting on a whim and just making an impulse purchase, rather you are thinking critically whether or not to go and I’m sure you’ll make a wise decision.

Other resources mentioned in today's lesson

Today's quote of the lesson is brought to you by book on our experience of buying and selling a house titled "A Tale of Two Houses"

"Do not save what is left after spending, but spend what is left after saving” ~ Warren Buffett

Enjoyed this lesson? If so, please consider taking a few minutes to leave a review of the show either in Stitcher SmartRadio, or iTunes. For a step by step video of how that works, please watch this video on how to leave a review in iTunes.

You can subscribe to future podcasts through Stitcher SmartRadio or iTunes, or by downloading the iPhone app. Or you may listen to the podcast on the JW's Financial Coaching Facebook Fan page.