Minding Your Money 360 - Quick tips to manage your money for success

Today I want to talk about a big ticket item -- life insurance. I had someone trying to talk me into buying life insurance the other day and they kept saying that it was an investment. And, I don’t really agree with that definition or at least that’s not the idea behind it. Life insurance by definition is for the living. It’s to replace the income that those you leave behind depend on. Or, in the case of business life insurance, it may be used to buy out partners, etc.

Regardless of how you feel about it, most people need some form of life insurance – not for themselves but to protect those they will leave behind. If that’s no one or no one will suffer financially when you’re gone then you can skip this minute, otherwise here are 3 important considerations when it comes to life insurance.

Unless you want to use whole life insurance for estate planning, buy-sell arrangements, executive benefits, etc., then a less expensive solution is to buy term insurance. Usually when people talk about this they advise you to buy term instead of whole life and invest the difference. But here’s the kicker, most people don’t do the last part. So be the exception and actually save the difference and your future self will thank you because at some point you will want to stop getting term insurance because it will get too expensive (the premium increases as you age), but if you saved the difference, you will be able to self-insure.

Do your homework when selecting an insurance company. Here’s a hint: the stability of the company far outweighs the cost. After all, you want the company to be around to pay up.

Finally, some of the pitches to buy whole life or some variation thereof are so good that even I get tempted sometimes, but at the end of the day insurance serves one purpose that is to protect those you leave behind. When you start to think of insurance as an investment or some type of tax strategy, you may be crossing big line. If you decide to go that route, be sure you read the fine print and that you understand exactly what you’re getting yourself into.

Hey if you like the Minute, head on over to iTunes and subscribe to the show and leave us a review. Not only will it help our ranking on iTunes and keep us on, it will let us know you’re out there and you’re listening.

And, that’s the minute for today.

Thanks for listening and as always remember that minding your money really is the path to a richer life!

It's Monday and I have a question.

But first the Minding Your Money Minute is made possible in part by the How to Get Divorced Without Losing Your Blouse book where a portion of all book sales are being donated to further financial literacy programs.

I read the other day that cash is under siege by Visa. So much so that they are paying merchants not to accept cash. For right now, they are just offering to pay select restaurant owners up to $10,000 to stop taking cash. And, they are pledging up to $500,000 for this project. The money is basically payments to help owners update their systems to accept all the new forms of non-cash payments including cellphones. I don’t know about you, but I am still very leery of handing over my credit card and having it disappear and then come back to me later at a restaurant. That is the one place where I usually pay cash.

But here is my question to you, what do you think? Yes credit cards are more convenient BUT and it’s a big but for me because I see cash not only as a way to help control your spending but I see lots of ways that this can lead to even more opportunities for fraud and theft especially if you don’t closer monitor your credit cards. Also, remember, Visa stands to make a lot of money if they can get rid of cash.

Let me know what you think. Is this okay? Are you in favor of it or has Visa gone too far? Shoot me an email at [email protected] and let me know what you think.

That’s it for now.

Thanks for listening and as always remember that minding your money really is the path to a richer life!

It’s Friday and time for our word of the week –the word this week is Money Set Point.

So, what’s a money set point? A money set point is the point where you feel most comfortable about the amount of money or debt you have. And, when you veer too far out of your comfort zone, an internal sensor goes off that tells you it’s time to make adjustments for example to pull back on your spending when you have gone too far or to panic when things have gotten way out of control. It’s sort of like a temperature gauge on a thermostat. Some people have a really high money set point and as a result can stretch their comfort zones beyond their boundaries and keep expanding them. The good news is they can more easily get comfortable with making more money and building wealth. The bad news is they can more easily go in the opposite direction and spend until it becomes a real problem and affects their quality of life.

At the other extreme are others have very low set points and they tend to be very conservative with their spending, sometimes even skimping on necessities which can drive everyone around them nuts. But the bad news is it’s hard for them to build wealth beyond a certain point because they reach their set point.

So can you change your money set point? Of course! Money set points are changeable but it’s a bit like learning a new skill or learning a new language – it takes time, patience and lots of practice. So be good to yourself and turn the heat up gradually.

And that’s the minute for today. Regardless of your money set point having a good credit score is a real benefit and it can save you a ton of money. Download a free copy my How to Raise Your Credit Score Cheat Sheet at www.psworth.com.  And get the most bang for your bucks. 

Thanks for listening and as always remember that minding your money really is the path to a richer life!

I got an email from someone who wants to remain anonymous who is considering a divorce and she wants to know are there things that she can do to prepare before she actually tells her husband and files for divorce?

Good question. I think too many people just jump in without thinking all of this through. I cover this in my book (How to Get Divorced Without Losing Your Blouse: 129 Things Every Woman Needs to Know to Protect Her Future) and in my new class based on the book that launches August 1st. You can learn more about both at www.moneyanddivorce.com.

In the meantime, here are three things to definitely do before you file for divorce:

Open a checking account in your own name. This will allow you to pay attorneys’ fees and other expenses without you having to worry about your husband finding out or taking the money. Have your bank statements sent to a friend's house or a P.O. Box.

Build a cash cushion to cover emergency expenses, attorney fees, rent, deposits, utilities, etc.

If you don’t already have a credit card, apply for one in your name only. It’s much easier to establish credit before your divorce is finalized.

And, here’s a bonus tip: Change the passwords on your personal accounts including cloud accounts and get a secure email from gmail.com or a private domain that you can use to communicate privately with your attorney and other professionals. Not doing this has tripped a lot of people up.

And, that’s the minute for today. Get more tips to make your divorce smoother and get you new life off to a good start at www.moneyanddivorce.com.                                                      

Thanks for listening and as always remember that minding your money really is the path to a richer life!

If you’re not familiar with HSAs or health savings accounts, this might be a good time to learn more about them. I got a question from a listener when she found out that both the Senate and House healthcare bills have provisions in them to expand HSAs and she wanted to know what they are.

HSAs or health savings accounts are typically used by people with high insurance deductibles so you have money set aside to pay medical costs until you reach your deductible. They typically have two components -- a checking account, which savers use to deposit and spend money, and an investment account, where any money that is not spent immediately can be invested for future healthcare expenses.

While account holders get a triple benefit: They can contribute untaxed income, avoid capital gains and dividend taxes as contributions grow, and then spend money tax-free on qualified medical expenses there is a catch. HSAs typically charge hefty maintenance fees -- often hitting account holders twice -- with one fee for the checking account and a separate fee for the investment account. On top of those, there also comes a third layer of fees, which account holders pay to invest HSA balances in mutual funds. And, when you add up all the fees, they can be higher than you pay on a typical 401(k).

This market is growing by leaps and bounds but many of the big players Fidelity, Schwab and Vanguard are sitting on the sidelines. Why do you think that is? Drop me an email if you know the answer.

And, that’s the minute for today. Don’t forget, you can download a copy my How to Raise Your Credit Score Cheat Sheet at www.psworth.com.

Thanks for listening and as always remember that minding your money really is the path to a richer life!

Here’s a question for you -- who’s minding your money? If you’re minding it yourself and you’re thinking about getting help, here are some questions to answer before you take the next steps:

First decide how much and what type of help you want. This will greatly increase your chances of choosing the right financial advisor for you.

For example, do you want ongoing help? That is someone who will create a plan and manage your money and keep you updated on a regular basis. Pretty much a done for you service.

Or are you looking to basically do it yourself but you would like to be able to get a little guidance from time to time or a second opinion as needed?

Or are you for example, focused on a goal like retirement and want to have someone take you through the process so that you can achieve that goal without all of the common traps that you might otherwise fall into.

Once you know what you want in a financial advisor, it’s so much easier to choose the right one for you because you can simply ask them if that’s what they do, find out the costs, how they work with clients…choose investments, etc., check references (yes, I said check references) and then determine how comfortable you would be working with that person or group. Financial advisors in general are getting some bad reps today and some of it deserved but you have to take responsibility also if you don’t do your homework before you hire them. It’s a two-way street.

And, that’s the minute for today. Minding your money has never been more important and having a good credit score is essential. Download a copy my How to Raise Your Credit Score Cheat Sheet at www.psworth.com.

Thanks for listening and as always remember that minding your money really is the path to a richer life!

It's Monday and I have a question.

Are you using dollar cost averaging to your advantage? Dollar cost averaging is investing a fixed dollar amount on a regular schedule. You can invest in one or more investments. The idea is that you keep investing regardless of what the market is doing. So you have the opportunity to purchase more shares when prices are low and fewer shares when prices are high.

The benefit of doing this is that you can set this on autopilot by authorizing your bank, your broker or mutual fund company to automatically withdraw a set amount from your checking, savings or paycheck each month and using that money to purchase investments of your choice. Automating your investing makes it easy and almost effortless to grow you money. And, it may actually save you some money because you spend less on your investments over time because when the market is down, you will be able to buy more for less.

So, I repeat are you using dollar cost averaging to your advantage? It makes sense to use it to add money to your 401(k) but it also makes sense to use it to grow your emergency fund, your vacation fund and any other goals you want to fund because we all know that if you have to make a special effort to set aside savings each month it may or may not happen. So if your goal is really important to you, give it priority!

And, that’s the minute for today.

Want more of strategies? Join the minding your money movement. Visit www.psworth.com and download my How to Raise Your Credit Score Cheat Sheet.

Thanks for listening and as always remember that minding your money really is the path to a richer life!

It’s Friday and time for our word of the week –the word this week is Compounding Debt.

I chose compounding debt because mostly when we think of compounding we usually think of good stuff like growing our investments over time and using the power of compounding to grow them faster. But did you know that you can grow your debt in the same way. It can start out really small but over time when compounding kicks in, it can grow exponentially. So the bargain designer jeans you originally paid $100 for can cost you more than twice that over time if you carry a balance.

In fact, the only way to combat compounding debt is to watch what you charge and pay off your bill each month. And, if you must carry a balance, avoid charging things that depreciate or go away like food because if you don’t pay off the bill each month, you are just adding to their cost.

Our word of the week compounding debt – the opposite of compounding your investments but just as powerful. And that’s the minute for today. Want some easy ways to raise your credit score. Having a good credit score can save you $100k or more over your lifetime. And it’s not that difficult. Download a free copy my How to Raise Your Credit Score Cheat Sheet at www.psworth.com.

Thanks for listening and as always remember that minding your money really is the path to a richer life!

Minding your money has never been more important and having a good credit score is essential part of getting the biggest bang for your buck. Download a copy my How to Raise Your Credit Score Cheat Sheet at www.psworth.com.

Yesterday we talked about a way to find money to save money and that was to take it off the top. Here’s another piece of advice for all of the bargain hunters out there. And, it goes something like this…take the bargain and save the difference. In other words, add up all of your savings then save the difference between what you paid for something and what it would have cost to buy it full price.

Years ago, I used to sell insurance and I would often advise people who only needed life insurance for a limited period of time to buy term life insurance which only lasts for a set period of time and save the difference it would have cost them to purchase whole life insurance which as the name implies could be around for your whole life but it was so much more costly.

When I offered that advice, I literally meant save the difference and I arranged for them to put the savings directly in retirement savings or another program. But you don’t have to wait for large purchases like life insurance, you can do that with everyday purchases. The tv you saved $200 on, the groceries that practically paid for themselves because you are so great with sales and coupons.

Imagine how much you could add to your savings bucket if you took advantage of bargains and saved the difference. If you don’t make it a point to save the difference, we all know what happens, the money you saved on the purchase just disappears. It evaporates into the atmosphere never to be seen again and becomes a missed opportunity.

And, that’s the minute for today.                                                         

Thanks for listening and as always remember that minding your money really is the path to a richer life!

Minding your money has never been more important and having a good credit score is essential part of getting the biggest bang for your buck. Download a copy my How to Raise Your Credit Score Cheat Sheet at www.psworth.com.

You know the best way to predict the future is to create it! That’s a quote by Jason Kaufman. And, the thing I really like about it is the fact that you have control. So many times we just let things happen to us and we take on a reactive role when you have the power to be proactive and impact the future,

When it comes to your money, it all starts with spending less than you earn. I’m always amazed at how much money passes through our hands and how little we often keep. If your goal is to have a better – a more secure future – then you have to find a way to keep some of what you earn like some right off the top.

So, how much money are we talking about? A good place to start with is 10% or 10 cents out of every dollar. For example, if you earn $3,000 a month, 10% is $300 a month or $3,600 a year. Over the course of 10 years that could grow to over $50,000 and over 20 years to over $150,000 as the power of compounding kicks in. Obviously, the more you earn, the more you should try to say and as your income grows so should the amount you save. And, if you can save more – do it!

If you are wondering how you could possibly do this – don’t think about it too long, just put it into action. Most people have an amazing ability to live up to or down to the amount of money we have available – it’s a blessing and it’s a curse.

And, that’s the minute for today.

Thanks for listening and as always remember that minding your money really is the path to a richer life!