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!

February 27, 2017  
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  • Continuing our series on lessons learned from coaching
  • Learning the impact of what debt does to our life
  • The normalization of debt in our culture
  • Actions to take the realize the impact of debt on our life
  • Quote of the lesson from Publilius Syrus

Part of the job of a coach or mentor is the ability to shed light on an area or issue that needs to be improved upon.

The Impact of Debt on our Lives

One of the common areas I get to shed light on when I’m coaching with clients is the impact of debt on that individual or families life.

It’s very rare that I work with someone who has no debt what so ever. Often the client knows how debt is impacting their lives but that isn’t always the case 100% of the time. Sometimes I work with clients who don’t realize how much stress, negativity, and financial loss their debt is costing them.

On today’s lesson I’m going to continue with a series I started last lesson on lessons learned in coaching and today’s topic is about the impact debt has on our lives.

Part of the reason why we don’t realize how much our debt is impacting us is because debt itself has become so normalized that often we can’t imagine life without it.

The problem with that line of thinking is that if we think debt is normal, we’ll never look for ways to get out of it and instead use debt as a way of life.

How it Impacts Us

But debt does have an impact on our lives. Some more so then others and most of the time debt is negative. Debt impacts mostly through the following five ways

  1. Pre commits future income
  2. Increases the amount we have to cover for our “needs”
  3. Reduces our options
  4. We’re paying interest, not earning it
  5. Opportunity cost

Recommendations to Better Understand and Quantify the Impact

With that being said what do I recommend people do to realize the impact of debt in their life?

First I recommend you take the time and sit down and write down your down. Every single one. If you have 13 different student loans, break each one out. Then list them smallest to largest as you’ll use the debt snowball method to eventually pay them off. Often when you write down your debt you get that “ouchie” moment of realization instead of having a general idea of your debt floating around in your head.

Second, then take all your debts and add up the monthly payment amounts. Separate the mortgage debt, if you have any, from your non-mortgage debt.

Next determine how much interest you are paying a year. A good quick and dirty way it to take your latest statement from Dec of the previous year and it should list the total interest paid. If you want to be more advance, take that total and divide by 365 to determine your daily interest charge.

Finally doing the three steps above should give you a better idea of how much your debt is impacting you. You can then ask yourself the question what you could be doing instead with that money each month. It is every eye opening to see how much money is going out each month and how much interest you are paying a year and it can be a good motivational tool to pay off the debt.

Other resources mentioned on the show:

Today's quote of the lesson is brought to you by the JW's Financial Coaching Newsletter

“Debt is the slavery of the free".“ ~ Publilius Syrus

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, Google Play or by downloading the iPhone app. Or you may listen to the podcast on the JW's Financial Coaching Facebook Fan page.

February 19, 2017  
00:0000:00
  • Kicking off a new series
  • Getting on the same page with your spouse on your finances
  • Why this is important to do
  • Why it is initially hard, but worth it in the end
  • Quote of the lesson from Dave Ramsey

Back when I first started the show, I would group a lot of shows together and do a series on them. I love doing series because the shows have a similar theme and they build upon each other. If you look through the archives of the show you will see a variety of series I’ve done in the past.

But it hasn’t been something I’ve done recently, until now. Today I’m starting a series on lessons learned in financial coaching.

As someone who has been doing financial coaching for seven years now, I’ve noticed several reoccurring topics or themes that pop up when working with clients or talking with potential clients.

What I’ve realized is that if there are constant themes with clients, then odds are the other people are experiencing the same issues and have the same questions.

Today we start off with working together with your spouse on being on the same page financially. I choose this one first, because if you are currently married or are thinking about marriage one day, and you can’t solve this issue it doesn’t really matter about what you do for the other issues. The thing is that our money issues are probably due to a result of not being on the same page financially

What typically happens is one spouse contacts me about possibly working together. This spouse is usually the one who is “in charge” of the finances, and things aren’t going 100% well for any variety of reasons.

There is no communication with their spouse on money. It’s not necessarily that they disagree and fight all the time, although often that can be the case, but rather that there isn’t any communication to begin with and each partner is doing their own thing.

This is an issue because it is very difficult to do anything in marriage if one person is doing their own thing, doesn’t know what is going on, or is up to one spouse to do it. This not only is with our money but also in other areas of our marriage such as faith, family, housework, etc.

The thing is that I think a lot of couples get into this predicament because initially in a marriage you can “get by” without being on the same page. However once you start to earn more money, your lifestyle increases, you have children, buy a bigger home, and your children get to college the more your lack of togetherness is exposes.
Now it’s going to be hard to do something different, especially if you have never done it before. Also as a warning, if you try to talk to your spouse about money and you never have had serious conversations about it before, your situation will probably get worse before it gets better.

However, IT IS WORTH THE EFFORT!

I always tell people that these changes are good for your marriage, not just your money. By working together and beginning the conversation you will see great changes in your marriage. Now you might have some apologizing of confessions to make, but if you share why you want to change and work together, not just the what, you will start to experience a breakthrough in that area of your marriage.

Granted, this won’t be easy at first, but if you sit down, be open and honest, and see where your money is going it will be eye opening to both of you and allow you to dream again

If you want change to occur this must happen. Doing the same thing you’ve always done and expecting a different result isn’t going likely to happen.

More resources I have done on this topic:

Today's quote of the lesson is brought to you by the JW's Financial Coaching Newsletter

“One thing that is always more expensive than a good system is not having a system at all." ~ Dave Ramsey

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, Google Play or by downloading the iPhone app. Or you may listen to the podcast on the JW's Financial Coaching Facebook Fan page.

February 13, 2017  
00:0000:00
  • Answering listeners questions
  • How to ask for a balance transfer
  • What the biggest issue is with your debt
  • Should you take vacations while in debt?
  • Quote of the lesson from Rory Vaden

When I first started the show back in 2010 one of the things I set out to do was to answer listener’s questions on personal finance issues.

It’s part of why I got into coaching in the first place, to teach and help people in their situation. Well on today’s lesson I get back to that a little as I’ve been looking around on Facebook and on other money forms and have found a few questions from real life people I’d like to answer. I want to answer them today because they are questions I receive often when coaching or talking with people about their money.

First Question-Balance Transfers

The other day I decided to do a balance transfer to a 0% card. My card I am transferring from has a balance of $2048 the new card only approved me for $1000 @ 0% for 15 months. Any suggestions on how to proceed with the payoff since I will still have a balance on the old card? Is it possible to contact the new card and request a balance transfer increase? What are the odds that would work?

Balance transfers are quite popular when trying to get out of credit card debt. For those who don’t know, balance transfers are when you transfer part or all of a balance on an already existing credit card to another card via another company.
This is done because credit card companies typically offer low introductory interest rates which allows you to pay off the credit card faster, in theory. Credit card companies offer these to 1.) Get your future business 2.) Get your money by you hopefully not paying off the balance.

You can always call the credit card companies and ask to increase your limit on a balance transfer as it never hurts to ask. You might need to make multiple phone calls until they bend however. Another option is to do another balance transfer with another credit card company.

As to how to pay these off, assuming these are your lowest debt on your debt snowball, you have gone from one credit card with a $2,000 balance to two credit cards with a $1,000 balance each. I would pay off the credit card with the interest rate first, before going ahead and attacking the other one.

I say attack, because the problem I see often with balance transfers is that by moving your credit card debt to a zero percent interest credit card, people often feel a sense of accomplishment. They shouldn’t!

The debt still exists though! You really didn’t do anything, and that is the problem with debt. Interest rate is *NOT* the problem. The actual debt is the problem! As I’ve mentioned before I’m not against balance transfers in general, but I’m against them as a way to get out of debt. Because simply moving your debt to a lower interest rate is not removing the debt.

Other resources I’ve done about balance transfers

Second Question-Taking a vacation while in debt

When paying off debt what's recommended for taking vacations?

This question comes up a lot in different varieties when I work with clients. The premises of this question is do I have to wait to be debt free before I can have fun? Or can I have some fun now?

Let’s be clear hear, there is no clear cut *right* answer to this question. It all comes down to what are your real priorities? What do you value more, a vacation or anniversary gift? Or getting out of debt?

From my point of view, vacations aren’t a right, they are a luxury. For some of you, you might not agree, but because I have this view point I’m can’t recommend taking a trip while in debt. I believe this because I’ve been debt free myself for many years and have seen and talked with others who have been the same and I see what being debt free means to your life, not just your finances.

The sacrifice is worth it, I know the feeling of being debt free is better than the feeling of going on a vacation, and the short term pain is worth it for the long term gain.

Another way to answer this question is to ask yourself the following question-would I borrow money to go on this vacation? If the answer is no, then what are you essential doing by going on vacation while in debt? You are borrowing to travel.

Ultimately the choice is up to you, and it depends on a variety of things including debt level, income, and what you are prioritizing. But I would only consider doing this if I could save the money to do so. No way would I recommend traveling on a credit card, home equity loan, stop contributing to retirement, or depletion of emergency savings.

Other Resources mentioned in the show on this topic:

If you would like your questions answered on air, please send them to me at Jon@JWFinancialCoaching.com

Today's quote of the lesson is brought to you by the JW's Financial Coaching Newsletter

“One thing that is always more expensive than a good system is not having a system at all." ~ Rory Vaden

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, Google Play or by downloading the iPhone app. Or you may listen to the podcast on the JW's Financial Coaching Facebook Fan page.

February 6, 2017  
00:0000:00
  • What financial risk is . . . and isn't
  • How we took a risk with our health insurance
  • Why we were able to take that risk
  • Reasons to get your financial house in order
  • Quote of the lesson from Tony Robbins

When I use the word "risk" associated with your finances what comes to mind?

Do you think of putting all your money into one investment that could go boom . . . or bust?

Do you think of quitting your day job on a whim to start a business with no money in savings?

Those are indeed risk, but risk in our finances doesn't mean all or nothing. We face risk each day when we invest in the stock market. The stock market could lose value tomorrow.

When we buy a home, their is risk in the house dropping in value or becoming a money pit. (For more info on how to buy a home the right way please check out the book I wrote A Tale of Two Houses.)

The thing is that it is almost impossible to avoid any kind of risk with our finances. Yes there is the possibility of losing money when it comes to taking risk, but there should also be a chance at reward as well.

On today's lesson I share why our family took a "risk" with our health insurance this year and share how we are able to do it in the first place.

Health Insurance enrollment

Like most of you, our open enrollment for our health insurance benefits at my company occurred in late October/early November. Typically when it comes to that time, I usually just go in, select the same coverage we had last year and see how much the coverage increased.

Instead though I looked through all of our health care plans options and an interesting situation arouse. Typically we have gone with a high deductible plan which has a Health Savings Account (HSA) attached to it. The deductible is $3,000 with a 80/20 co-pay after that up to a maximum out of pocket amount of $6,000. The monthly premium was $274.96 or $3,299.52 a year.

However I noticed that there was another high deductible option with a $5,000 deductible with a 80/20 co-pay after that with a $10,000 maximum out of pocket. But the monthly premiums for this plan was only $63.55 a month or $762.60 for a whole year. The difference in monthly premiums was over $211.41 a month, which translated to a savings of $2,500 on an annual basis!

But of course that also involved more risk. So what did I do? I ran the number of course. In addition to the premium difference, my employer also contributes an amount into our HSA each January. The amount was $800 for the $3,000 deductible plan and $300 for the $5,000 plan. I counted that as a deduction to annual premium because that money covers the first medical expenses you have for the year.

 

 

 

That was the upside, but what about the downside? Well taking the numbers above, I then ran some scenarios on our medical expenses for the year. Below is what I came up with:

 

 

 

 

 

 

 

Basically as long as we didn't have $20,185 in medical expenses for the year we would come out ahead and our total exposure to loss was only $1,963 and that is if we had the medical expense year from hell. But on the plus side if he had our normal medical expenses per year (non counting labor and delivery years) we could come out ahead $2,000 a year.

Ultimately we decided to take the risk and go with the $5,000 plan and take the difference in premium and put it away in our HSA that way we were paying ourselves the difference instead of the insurance company.

Why we took the risk

But the point on today's show isn't about changing your health insurance coverage. It's about why we were able to take the risk. We were able to take the calculated risk because we're debt free, we have an emergency fund, we have money already in our HSA in case we had a medical emergency, and we know what our money is doing.

Ultimately we're taking a slight risk. Yes we could have multiple emergency rooms visits or one of us might need surgery this year. But odds are we won't and the reward is worth the risk.

The bottom line is that winning with money allows you to take more calculated risks in health care, investing, and in our career. It's just simply another reason to get our financial houses in order.

Other Resources mentioned in the show

Today's quote of the lesson is brought to you by the JW's Financial Coaching Newsletter

“Don't think in terms of taking huge risks to get rewards. Think about the least amount of risk for the greatest reward, and be extremely disciplined in that." ~ Tony Robbins

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, Google Play or by downloading the iPhone app. Or you may listen to the podcast on the JW's Financial Coaching Facebook Fan page.