Category Archives: Decision Making

Car Costs

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OK, you need to get around. You need some wheels. But you don’t have a lot of Simoleons…er, Bucks…

A car is in order right? Well ask yourself – What is the real cost of owning an automobile?

I’m Frank Money, and I want to help you investigate everything about money – This Talkin’ Money video tells the story of one car owner who realized after the fact how much a car really costs.

April is National Financial Literacy Month, Detective Frank Money’s favorite month! To celebrate the importance of being financially literate, Detective Money is going to post financial literacy tips every day.

What To Do About
Excessive Debt

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Frank Money here – your very effective money detective….

If you have excessive debt, you should take a deep breath and realize you do have options.

Millennials in general have the lowest credit score and most problems managing their debt, compared to prior generations. But the good news is you have the lowest number of credit cards and lowest debt total compared to other generations.

However, the bad news is that you use credit cards a lot, and make a lot of late payments. Late payments mean lower credit scores.

Additionally, millennials tend to use costly alternative financial services, such as auto title loans, payday loans, pawnshops, rent-to-own loans and tax-refund advances.

Here are some steps you can do to help you get control of excessive debt:


1 – For credit cards, get a lower credit card interest rate as soon as you can – Call up your credit card company and ask for a lower rate.

2 – If you can’t make the minimum payments on time, call your credit card company and work out a payment plan.

3 – Allocate a larger portion of your income to reduce debt. This will be painful, but over time it will work.

4 – Limit your spending. If you don;t have a budget plan in place, now is the time. Limit your spending to only the essentials, and make paying off your debt the number one priority.

5 – Motivate yourself. Reach out to friends or relatives who have been through similar problems. This is a process, and it helps to have support during those low times.

Need more help? Then why not reach out to the NFCC (National  Foundation for Credit Counseling – the nations largest and longest-serving non-profit financial counseling organization.

http://www.nfcc.org/

So don’t fret the debt – instead take some steps to help yourself and sleep easier.

Good Consumer Skills

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You really should apply good consumer skills to your purchase decisions. How so you say?

Just like my bloodhound ‘Shamus’ would do, it really just takes an analytical, systematic approach to decision making. In fact, you can apply this to lots of things in life.

Well think about it, do you really want to go through life spending more than you have to for things you buy? Or what about paying higher fees for things people get for a lot less, or even for free?

Here’s a step-by-step approach that really helps:

1 – Consider the item, thing or service you want.

2 – Look at several options for each – Let’s say three different ones.

3 – Consider to alternatives and consequences of each option.

4 – Make your decision…go ahead, pick one!

5 – Analyze the results of your choice. Did it turn out the way you wanted? What could your of done differently for a better result?

Congratulations! Now that’s applying good consumer skills. It applies to buying a car, renting a house, purchasing a smart phone, even buying an ice cream cone! In the end, if you think carefully about each purchase, you could save yourself big bucks!

Mind Blown

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We’ve all heard and read a thousand times how we should save on a regular basis and the younger you start the more we’ll have when getting closer to retirement. But as sure as the sun rises there will always be something that happens in your life that will make it difficult for you to part with your money to put into savings. That’s why every paycheck you should have a set portion of your salary automatically deposited into your savings account.

I’ve done the detective work on this and the later you wait to start saving, even a year or two, could mean the difference of up to $200,000 or more! Remember compounding interest? Over time your money will make more money for you. Mind blown!

In fact, if you want to have what we financial literacy fans call ‘fun’ here’s a link to the government’s Securities and Exchange Commission’s handy, dandy Compounded Interest Calculator. GO ahead, plug some numbers in, step back, and get ready to be surprised!

https://www.investor.gov/tools/calculators/compound-interest-calculator

Good old Benjamin Franklin once said: “An investment in knowledge pays the best interest.” So it’s up to you to be a wise investor with your savings.

Fiduciary

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Today’s secret word – Fiduciary!

Now as words go, this detective finds that word to be a long…and maybe a little intimidating.

But when it comes to your finances, fiduciary is your friend! The definition of the word is “involving TRUST, especially to the relationship of a trustee and a beneficiary.”

In my line of work, trust is a big deal! In the world of money and financing, it establishes how the relationship between you and a financial advisor or institution works.

Here’s a case – Mark wanted to put the money he is saving in his IRA for retirement in a mutual fund. He asked a financial advisor for advice on which fund to purchase. The advisor gave him a couple of choices, but when Mark investigated the funds closer, he discovered that the funds carried high fees. Which would mean, he might make less on his investment over time.

Now there was nothing wrong with the funds the financial advisor recommended, but most likely the reason he recommended them was because the advisor would profit from the sale of the mutual fund to Mark – probably in the form of a commission. Which means that the advisor has some ‘skin in the game’ when it comes to selling something to Mark. The advisor is working in both his own and Mark’s interests – and just so everyone understands, there is nothing illegal about this, in fact, it’s quite common.

But if Mark had an advisor with a FIDUCIARY DUTY on his behalf, that advisor would be required to ONLY act in Mark’s best interests.

A fiduciary is expected to manage the assets FULLY for the benefit of the other person rather than for his or her own profit.

TRUST me, take this detective’s advice – when you are asking for financial advise, also ask whether the advise comes with a FIDUCIARY DUTY,

April is National Financial Literacy Month, Detective Frank Money’s favorite month! Let’s all celebrate by becoming more financially aware!

Education ROI

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OK Frank Money here, your very effective money detective – Listen up! We need to know the R-O-I of that higher education your pursuing?

What’s ROI you ask? That’s RETURN ON INVESTMENT.

Whether it be college, trade or vocational schools you INVEST your time as well as money to get an education. The end result is a career you hopefully will love with yearly earnings being the RETURN.

It’s important to ask yourself – what is the payoff for all your blood, sweat and tears…and cost. It’s time to do the math.

QUESTION 1 – What is the cost of your higher education.

QUESTION 2 – What is the average starting salary of a job in your area of study?

The blog fivethirtyeight.com has a great chart of understanding what the average median earning is for your degree and future job.

http://fivethirtyeight.com/features/the-economic-guide-to-picking-a-college-major/

QUESTION 3 – Now look the first two questions – how many years will you have to work to equal the cost of higher education. In other words, how many years of working will it take you to break even in paying back that cost of education.

That’s your ROI.

Life is about pursuing interests that you love, but it’s equally important to consider the path you take and whether the return will be worth it.

Savings Is Good For You!

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I’m Frank Money, and I wanna help you investigate everything about money! For example, let’s investigate savings. It doesn’t take much detective work to understand that savings is good for you!

And here’s the good news for millennials – you are saving at a rate greater than any generation before you. Fidelity Investments found that 20 somethings are saving on average 7.5% of their income compared to 5.8% in 2013.

We’ve talked about retirement savings, and how important it is to start as soon as you can, along with the benefits of deferring taxes and saving on how much income tax you pay when you invest in a 401k, IRA, etc.

But what about non-retirement savings?

One strategy to employ is to set a goal of savings out of each pay check, and to make that ‘payment’ to you savings account, just like you pay your rent, phone and electric bill. Over time, you grow your savings account and let your money work for you.

What’s the amount you should save? well, it varies from person to person, but a good rule of thumb is to save 10-15% of your gross income (the amount you make BEFORE taxes are deducted) and use that for both your retirement accounts as well as non-retirement accounts.

It takes discipline, but getting used to a regular savings plan is something all millennials need to consider. It doesn’t take much detective work to understand  – SAVINGS IS GOOD FOR YOU!

The Good Old A&Q

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How many times have you passed by an electronics store and saw that X-Box you always wanted was finally on sale or the newest smart phone has hit the market? Temptations are thrown at us everyday in many different forms of ads. They know how to get your attention.

But where do you stand financially? Are you strong enough to stick to your budget or are you ready to throw caution to the wind? If so, then let’s at least recognize that there are alternatives & consequences to most financial decisions. Frank Money likes to call the ‘The Good Old A&Q’

Think of setting financial goals so you can purchase these items by saving for it on a monthly basis. But remember, the more you save, the more you have to sacrifice other things like movies or eating out. So there’s your alternative, but if you spend and don’t have it, the consequences means going into more debt. So check out your A&Q!

Bad Credit Will Cost You

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Frank Money here, your financial detective trying to save you money. Ok, listen up all you financial hotdogs out there who don’t pay attention to their credit scores. I’m about to give a lesson in world of hard knocks. Let’s cut right to the chase, bad credit will cost you money. If you’re planning to purchase large ticket items like a mortgage, car loan or even another credit card, you’re going to pay a lot more.

Your credit score under FICO ranges from 300 to 850, with the highest being the best score. I’m guessing anything under 620, you’re going to have trouble even being considered with some purchases without paying extra for insurance of payment.

So pay off your credit cards and get rid of the ones you don’t need. Don’t be late with any of your loan payments, and don’t be afraid to check your credit report, it does not affect your score. It will take a couple of years to build your credit back up to a decent score but it’ll be worth it and that’s coming straight from Frank Money.

Play Budget Mania!

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Frank Money here – I find that Money is never around when you need it…and you never need it when it’s around. Understanding your spending and savings with a budget is the best way to get control of your money!

It’s time for Budget-Mania! Where everyone can learn about keeping a budget for their spending and saving. After all, if you don’t have a plan then good-bye budget and hello chaos!

Click here and download this PDF form to be on your way to your first budget!

As you can see by this form it’s really quite simple, but like everything else in life, you got to stick with it in order to succeed. It’s a game of pluses and minuses. Income, such as your take home pay from your job, is a plus. Your parents give you money for your birthday, plus. As for the minuses, that’s all of your expenses from car repairs to your monthly rent, from paying your health insurance to shopping for groceries.

Add up all of your expenses and subtract it from your income and you are well on your way to winning at Budget-Mania! That’s because you have a plan and that information will help keep you out of spiraling debt.

As my old friend Ben Franklin always said, “An investment in knowledge pays the best interest”.