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Your Money: Survive (and Thrive) in the New Economy

Navigate financial challenges with expert advice from Liz Weston, the top internet finance columnist. Learn to manage debt, save for retirement, and take control of your finances. Visit www.asklizweston.com for more insights.

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Your Money: Survive (and Thrive) in the New Economy

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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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