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IS YOUR MONEY MAKING YOU CRAZY?

IS YOUR MONEY MAKING YOU CRAZY?. HOW TO SURVIVE (AND THRIVE) IN THE NEW ECONOMY. “And you are…. ?”. Most-read personal finance columnist on the Internet Graduate of Certified Financial Planner training program

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IS YOUR MONEY MAKING YOU CRAZY?

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  1. IS YOUR MONEY MAKING YOU CRAZY? HOW TO SURVIVE (AND THRIVE) IN THE NEW ECONOMY

  2. “And you are….?” • Most-read personal finance columnist on the Internet • Graduate of Certified Financial Planner training program • Author of “The 10 Commandments of Money” and “There Are No Dumb Questions About Money” www.asklizweston.com

  3. It’s all your fault! Isn’t it? • The myth of the spendthrift American • Shrinking incomes, rising costs • The credit boom and bust • It’s not the lattes www.asklizweston.com

  4. Household income plunged Source: Sentier Research report, The Washington Post.

  5. Credit comes to the “rescue” www.asklizweston.com

  6. More credit = more BKs www.asklizweston.com

  7. Recession cuts net worth by 40% www.asklizweston.com

  8. Who’s hurting by age Source: Sentier Research report, The Washington Poston Post.

  9. Now what? • Acknowledge • Accept • Act www.asklizweston.com

  10. Where are you now? www.asklizweston.com

  11. Where are you now? • How much money has come into your life? • Earnings (www.ssa.gov/estimator/) • Gifts, winnings, inheritances • What have you done with it? • What do you own? • What do you owe? • What’s your net worth? www.asklizweston.com

  12. Danger signs • Credit card debt/medical bills equal half or more of income • Struggling to pay minimums on debt • Getting sued over debts Consult a bankruptcy attorney www.asklizweston.com

  13. Start with your spending Use the 50/30/20 budget: • 50% of your after-tax income for must-haves • 30% for wants • 20% for savings and debt repayment www.asklizweston.com

  14. Must Haves (50%) • Basic living expenses • Any expense you can’t put off for a month or more without consequences • Any payment you’re contractually obligated to make • Examples: Shelter costs, utilities, transportation, food, insurance, child care, tuition*, minimum loan payments www.asklizweston.com

  15. Wants (30%) • Expenses you can put off or live without (at least temporarily) if you need to • Examples: Clothes, eating out, vacations, gifts, pay television, Internet access • If Must Haves exceed 50%, you should trim back Wants www.asklizweston.com

  16. Savings/Debt (20%) Includes contributions for: • retirement • emergency and • college savings fund As well as: • credit card, loan and mortgage payments above required minimums www.asklizweston.com

  17. Why torture yourself? • The 50/30/20 plan gives you flexibility • It helps you know instantly what you can and can’t afford (no need to call Suze) • It gives you balance www.asklizweston.com

  18. Why aren’t you saving for retirement? • “I need to pay off my debt first.” • “There’s no money left over to save for retirement.” • “I don’t trust the stock market.” • “My company doesn’t have a match.” • “I’ll never retire.” www.asklizweston.com

  19. Work until you drop? Maybe not 41% of retirees left their jobs earlier than planned. Reasons included: • Health problems or disability (54%). • Changes at their company, such as layoffs or closure (26%). • Having to care for a spouse or another family member (19%). Source: Employee Benefit Research Institute, 2010 www.asklizweston.com

  20. The takeaway • Start saving for retirement early • Don’t cash out and • Don’t stop www.asklizweston.com

  21. Deal with your debt All debt is not created equal. There’s: • Good debt that helps you get ahead • Toxic debt that erodes your financial well-being • Neutral debt that’s somewhere in between www.asklizweston.com

  22. Good debt: Examples • Mortgage debt—in moderation • Federal student loan debt—in moderation • A loan to expand a successful business www.asklizweston.com

  23. Toxic debt: Examples • Credit card debt • Payday loans • Pawnshop or car-title loans • Bounce fees www.asklizweston.com

  24. Neutral debt: Examples • Auto loans* • Personal loans* • Medical debt* • Private student loans* *If you’re on an affordable payment plan. Otherwise, these can be toxic debts. www.asklizweston.com

  25. Your debt payoff plan • List and classify all your debts (good, neutral, toxic) • Refinance to lower rates where you can (check with your local credit union) • “Fix and forget” your good debts—for now • Target your highest-rate toxic debts first www.asklizweston.com

  26. Where to find help • Budget/credit counseling www.nfcc.org • Bankruptcy attorney www.nacba.org • Debtors Anonymous www.da.org • Fee-only hourly financial planning www.garrettplanningnetwork.com www.asklizweston.com

  27. Acknowledge, Accept, Act • Acknowledge you may not be entirely to blame, but you need to take charge now • Accept you are where you are • Act: Create a plan for financial sanity, and follow though www.asklizweston.com

  28. Visit me at AskLizWeston.com Available now in bookstores and online Order from: Amazon (www.amazon.com) Barnes and Noble (www.bn.com) Borders (www.borders.com) Indie Bound (www.indiebound.org) www.asklizweston.com

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