.‘Is It a Bad Idea to Borrow $1K From My Friend?’

‘Is It a Bad Idea to Borrow $1K From My Friend?’

By Charlotte Cowles

I got laid off a few months ago and I’m still looking for a new job. I’ve been getting by with random work (babysitting mostly), but I’ve finally hit a point where I don’t think I’ll make rent this month.

I can’t ask my parents for help (they’re not in great financial shape either), and at this point, I think my best bet is to borrow money from a friend.

Her family seems well off, so I don’t think I’d be putting her in a tough spot. I also know she lent another friend money a little while ago. I just have no idea how to ask her, and I don’t want it to hurt our friendship.

 If she gave me a loan, ideally around $1,000, I could have some breathing room to search for a good job. How do I go about this? Or is there another, better option that I don’t know about?

If you borrow rent money from a friend — or anyone, really — it will be awkward. Just because your friend can afford to spare some cash doesn’t mean she’s comfortable being in that position. And what if she turns you down? She’ll feel guilty for saying no, you’ll regret asking, and you’ll still be broke.

When I polled some financial experts, they all agreed: It’s generally not a great idea to get into a borrower-lender relationship with friends or even family members. “I’ve seen it ruin friendships, or at least seriously damage them,” says Kristin O’Keeffe Merrick, a financial adviser.

“If one of my clients wants to lend money to a loved one, I always tell them to go into it with no expectation of being paid back.

If they’re comfortable with never seeing that money again, then it’s okay to extend the loan.” Think of this from your friend’s perspective. If, for whatever reason, you never repaid her, would it cause her serious hardship? If the answer is yes, you shouldn’t risk it.

Alternatively, what happens if you take years to repay her? It’s possible that she’ll hold the favor over your head or judge the way you spend money. I know a woman who loaned money to her brother to buy a house, and she says it was hard to watch him make “frivolous” purchases (new sheets, drinks with friends) while she waited two years for him to pay her back.

“I wish we’d been more formal about defining the terms,” she says. “Then I probably wouldn’t have been so anxious about being taken advantage of.” She never told him how she was feeling — just quietly stewed — and money remains a sore spot between them.

No one wants to feel like their personal relationships are transactional. Friendship math — the soft, intimate back-and-forth of giving and taking that happens between people who care about each other — is not numerical, and paying your friend back may not be as simple as cutting her a check.

 You might need to massage the friendship in other, more nuanced ways to make her feel appreciated and affirm that she’s more than a piggy bank to you.

For all of these reasons, your friend should be a last resort, not just a more convenient source of cash than another part-time gig. I’m not making light of your situation — it sounds like you really are scraping the bottom of the barrel here.

To continue reading, please go to the original article at

https://www.thecut.com/2019/07/is-it-a-bad-idea-to-borrow-usd1k-from-my-friend.html

.Why America’s Families Are Struggling Financially

Why America’s Families Are Struggling Financially

The finances of Americans may not be as good as they look from the outside.

Despite optimistic metrics like a nine-year-long bullish, if volatile, stock market, higher than expected job and wage growth, and consumer confidence levels nearing record highs, millions of Americans continue to struggle, a study released last week from financial consultancy nonprofit the Center for Financial Services Innovation (CFSI) found.

Only 28% of Americans are considered “financially healthy,” according to a CFSI survey of more than 5,000 Americans. “Financial health enables family stability, education, and upward mobility, not just for individuals today but across future generations,” the CFSI says. “Many are dealing with an unhealthy amount of debt, irregular income, and sporadic savings habits.”

Meanwhile, 17% of Americans are “financially vulnerable,” meaning they struggle with nearly all financial aspects of their lives, and 55% are “financially coping,” meaning they struggle with some but not all aspects of their financial lives.

The recent volatility in the Dow Jones Industrial DJIA, +0.17%  and S&P 500 SPX, -0.02%  has not helped Americans feel secure, experts say.

These findings are based on the CFSI Financial Health Score, a framework designed by CFSI to measure financial health more holistically by examining spending, saving, credit, and other indicators.

Some 44% of respondents said their expenses exceeded their income in the past year and they used credit to make ends meet. Another 42% said they have no retirement savings at all.

They come on the heels of a previous study from personal-finance site Bankrate.com that found only 29% of Americans had 6 months or more of emergency savings and a nearly equal percentage said they had none. Indeed, most Americans would not be able to pay for an emergency expense of $1,000, a separate 2015 study showed.

The median American household currently holds just $11,700 in savings, according to a recent analysis of Federal Reserve and Federal Deposit Insurance Corp. data by personal-finance site Magnify Money.

The top 1% of households in the U.S. by income have a median savings of $1.1 million across a variety of saving accounts. The bottom 20% by income have no savings accounts and the second lowest 20% income earners have just $26,450 saved.

To continue reading, please go to the original article at

https://pulsedailynews.com/2019/09/why-americas-families-are-struggling-financially/?listab_list=listab_list

."Financial Advisors and What They Do" Posted by MRiles at TNT

TNT:

MRiles:  Essential Questions for a Financial Advisor

By Wendy Connett  Updated Jun 25, 2019

Choosing the right financial advisor is, in essence, taking the time to invest in what should be a long-term professional relationship that keeps your financial health and future on the right track. The search should go well beyond referrals from colleagues, friends and family and an emphasis on investment performance.

In fact, investors should dedicate as much effort as they would to finding a medical professional with whom they trust their physical well-being. The right financial advisor will provide the professional help needed to reach long and short-term financial goals.

The following are questions that should be asked when choosing a qualified financial advisor. If they can’t or avoid answering them keep looking.

For advisors, being able to answer these questions may be the difference between whether or not a potential client decides to choose you over a competitor.

What are Your Professional Qualifications?

Anyone can hand out business cards maintaining they are a financial advisor so it is important to ask about qualifications and credentials.  

While there are myriad professional designations, top advisors typically have credentials such as certified financial planner (CFP), chartered financial analyst (CFA) and chartered financial consultant (ChFC).

Advisors with CFP designations, for example, are regulated, licensed and take mandatory courses related to financial planning, such as estate planning and retirement planning among others.

Some advisors are also certified public accountants (CPAs). For those who also need tax advice and preparation choosing a financial planner who also has a CPA designation may make sense.

Financial advisors who sell stocks, bonds, mutual funds or insurance have licenses including the Series 6, Series 7, or Series 63. To obtain these licenses they must take exams administered by the Financial Industry Regulatory Authority.

Are You an RIA?

Some financial advisors are registered investment advisors (RIAs), which means they are held to high fiduciary standards put in place to protect investors. The fiduciary standard requires that advisors unconditionally put their clients' best interest first at all times no matter what. 

Advisors who aren’t fiduciaries adhere to a less stringent standard called the suitability standard. This means that any investments they offer must be suitable for a client although it may not be in their best interest.

True to their name, RIAs are also required to register with the Securities and Exchange Commission or the states in which they conduct business. (For more, see: Becoming a Registered Investment Advisor.)

How Do You Charge for Your Services?

Most RIAs charge clients a percentage of assets under management or a flat fee or hourly rate. Advisors who are fee-only do not earn commissions on investment products they sell to clients. On average they charge no more than 2% of assets under management. That percentage often declines the more assets you have for them to manage.

Advisors who work for full-service firms, such as big broker-dealers like Merrill Lynch and Morgan Stanley, typically charge commissions on investment products such as stocks, bonds, mutual funds, exchange-traded funds and annuities that are bought and sold. In theory, advisors who charge commissions could be less objective when recommending investments. 

Who Are Your Typical Clients?

To continue reading, please go to the original article at

https://www.investopedia.com/articles/personal-finance/050815/what-do-financial-advisers-do.asp

.How to Use the Compounding Technique to Reach Success

How to Use the Compounding Technique to Reach Success

By Sim Campbell

Imagine this: a wealthy man gives you two choices. He will gifts you a million dollars in liquid cash right now…or a penny doubled every day for 30 days. Which one would you choose?

“I’d take the million…gimme, gimme, gimme!”

I can see you salivating right now. But…not so fast.

Wouldn’t you rather consider the penny?

“C’mon. It’s just a penny.”

Ah… that’s where you’re wrong.

It’s just a penny – but that’s all you usually start out with. If you took the choice of the penny doubled every 30 days, you’d be a multi-millionaire at day 30. To the tune of 10 million dollars to be exact. Do the math if you doubt it.

“But that’s not possible!”

But it is possible. It’s the only thing that’s possible. It’s the slight edge.

The Subtle Power of the Slight Edge

The book The Slight Edge by Jeff Olson describes how small, seemingly insignificant choices have a massive impact on us down the line. He uses the example of the penny to get his point across sharply.

Continuous actions over time lead to vast advantages…or disadvantages. This “edge” is the differentiating factor between those who blow life wide open and those who find themselves getting tossed about like a leaf in the wind.

You see, our actions don’t occur in a vacuum. They build upon past actions of a similar nature.

You start with one. One becomes two. Two becomes four. So on and so forth. It gets easier to build off of a foundation.

This is how habits such as discipline are created.

Because of this…the slight edge is great! But – it works in the opposite direction as well. If you indulge in bad habits and self-destructive behavior, you will find it easier to do those things over time.

Your successes and failures compound on each other.

But here’s the thing: this is so subtle. By the time you realize what has happened – your results are already evident.

This is why success is not an accident. Sadly, failure is not an accident either. In fact, they’re separated by a fine line. The line is what you do or fail to do consistently over a given period of time.

 The Importance of the Slight Edge

To continue reading, please go to the original article at

https://wealthygorilla.com/compounding-technique-reach-success/ 

.15 Personal Finance Rules to Live By

15 Personal Finance Rules to Live By

The following is a guest post from Marc at VitalDollar.com.

Have you ever wondered what separates those who are successful financially with those who are not? Have you felt like your income should allow you to live a much more comfortable life than what you are experiencing?

Personal finance doesn’t have to be complicated. There are a few basic rules that you should follow, and if you do that, everything else falls into place.

This article covers some of the most basic and most powerful financial rules that should impact your everyday life.

1. Spend Less Than You Earn

Arguably, the most important financial rule is to spend less than you earn. Regardless of how much money you make, it’s impossible to get ahead if you’re spending it all. Even worse, you could be going backward and accumulating debt if you’re spending more than you earn.

Lifestyle creep is when your spending increases at the same rate as your income. Ideally, as you progress through your career your income will rise. If you’re able to minimize lifestyle creep and keep your expenses at the same level, you’ll be able to save and invest the excess.

Ultimately, how much you keep is far more important than how much you earn. Someone with a $50,000 income can wind up in a better spot than someone with a $500,000 income based on how much is spent and how much is kept.

2. Know Where Your Money is Going

Establishing a budget is common financial advice. A budget gives you control over the way your money is spent, which helps you to make the most of the money that you have.

While budgeting is important, it’s equally important to track your expenses. If you’re not tracking your expenses, you won’t know if you are truly sticking to the budget.

Knowing where your money is going is a critical aspect of managing your money wisely. If you haven’t budgeted or tracked your expenses in the past, it can be an eye-opening experience.

When you see how you are really spending money, you’ll probably be able to quickly identify a few areas where you’re spending too much and could easily cut back (with a little bit of discipline).

3. Avoid Impulse Purchases

Most people spend their money based on emotions. Impulse buys can be small things (like picking up a few items when you’re checking out at grocery store, or it can be bigger things like a timeshare.

Large impulse purchases can obviously have a damaging impact on your finances, but even the small purchases add up.

To get control over the small impulse buys you can commit to grocery shopping with a list, and sticking to the things on your list.

For larger purchases, get in the habit of waiting at least 24 hours (or longer, if possible) before making a buying decision. When you take time to evaluate the purchase based on all of the factors involved, you’ll often find that you don’t really want or need that thing that you almost bought. You’ll reduce buyer’s remorse and keep more money in your pocket.

To continue reading, please go to the original article at

https://www.freemoneyfinance.com/2019/07/15-personal-finance-rules-to-live-by.html

.8 Common Causes of Debt — And How to Avoid them

8 Common Causes of Debt — And How to Avoid them

By Tim Lemke

Debt plagues millions of Americans every day. It is such a common problem that many of us don't even think twice about what we owe, or how we landed in such a predicament.

The simplest explanation is that debt happens when you spend more than you earn. But it's not actually that simple when real life steps in. Unexpected events, bad planning, and even a decision to pursue an education can leave you facing big debt that may take years to pay off.

By understanding some of the main causes of debt, we can make better financial decisions in avoiding it. Let's take a look at some of the worst offenders.

1. Medical expenses

Medical costs have long been one of the leading causes of bankruptcy in the United States. Even those with health insurance are not immune to medical debt. An illness, injury, or health condition can cause bills to quickly accumulate.

The Kaiser Family Foundation found that three in 10 Americans report that they or a household member have had trouble paying medical bills in the past year — 58 percent of which were affected in a way that had a major impact on their life. More than 60 percent of respondents claim their savings were wiped out. Another 37 percent turned to credit cards.

It's not easy to predict how your health could change in the future. Actually, it's almost impossible. But putting certain safeguards in place can help mitigate the risk of financial ruin.

Health insurance is the first step. And while premiums can be expensive, facing an illness or injury without that coverage would be infinitely more devastating. (See also: The One Question You Need to Answer to Choose the Best Health Care Plan)

It's also critical that you build an emergency fund. This savings cushion should ideally cover six months' to a year's worth of your living expenses. If the worst happens, you'll at least have something to fall back on. (See also: 7 Easy Ways to Build an Emergency Fund From $0)

2. Loss of income

Losing a primary source of income can severely hurt your bottom line. Maybe you were laid off or fired, or had a sudden decline in revenue for your business.

Maybe you needed to stop working to care for a child or older relative. Or perhaps your health took a turn, and you were forced to retire early or drop to part-time employment. When something like this happens, it's easy to find yourself overwhelmed by bills and expenses. Debt can quickly follow.

One of the biggest safeguards you can establish for yourself, again, is an emergency fund. Ideally, this fund can sustain you while you try to replace your lost income. Is your emergency fund as big as it should be?

It's also key that you try to live well below your means at all times, even when money is good. This means spending more on "needs" and less on "wants." This way, even if your income drops unexpectedly, you'll find it easier to get by at your current lifestyle without dipping into that emergency fund or creating new debt.

To continue reading, please go to the original article at

https://www.wisebread.com/8-common-causes-of-debt-and-how-to-avoid-them?ref=seealso

.9 Essential Personal Finance Skills to Teach Your Kid

9 Essential Personal Finance Skills to Teach Your Kid Before They Move Out

By Tim Lemke

Your child is on the verge of moving out and living on their own. Are they prepared?

Arming them with the right personal finance knowledge will give them a strong foundation to go and achieve many of their life goals. If their understanding of personal finance is lacking, they could begin their independent life on the wrong foot (and they may even come back home).

Consider these ways that you can help your child build a base of financial knowledge before they move out.

1. Show Them How To Budget

Perhaps the most important personal finance skill is consistently spending less than you earn. There are a million different ways to budget, and whatever works for you may not work for your child.

But encourage them to develop a system to track and categorize spending and then compare those expenses to their income.

Of course they'll need to account for housing, food, and utilities but also let them know it's OK to include "fun money" in their budget. It will help them stay motivated to stick to their budget. (See also: How to Help Your Kid Build Their First Budget)

2. Teach Them How Retirement Plans Work

If your child is moving out, they likely have some earned income. That means they can start contributing to a Roth individual retirement account.

They may scoff at the notion of saving for retirement so early, but if you help them open a Roth IRA and demonstrate how much money they can accrue over time, they'll get on board.

Urge them to save as much as they can each month, invest in simple things like index funds, and simply watch their account balance grow over time through compounding.

If they have a 401(k) plan through an employer, take time to review the plan document with them and encourage them to contribute as much as they can. Be sure to explain the advantages of getting a company match on contributions, if one is offered.

3. Explain Bank Interest Rates

Chances are, your child already has a savings account. But it's still helpful to explain that they don't necessarily need to put their money in the first bank they see.

Show them how interest rates can vary, and that it's OK to shop around for the best rates so they can earn a little extra money. Explain terms like APR and APY, and the factors that impact whether rates go up or down.

Also outline the pros and cons of placing money in certificates of deposit. These days, it's also helpful to explain that while interest rates are rising, they're still quite low, and that it might make sense to invest some funds in ways that generate a higher return than savings account interest.

To continue reading, please go to the original article at

https://www.wisebread.com/9-essential-personal-finance-skills-to-teach-your-kid-before-they-move-out

.The Flywheel Of Wealth

The Flywheel Of Wealth

(and the importance of patience)

By  Rob Berger September  3 2019

His name is Dave. A retired Naval officer, he’s written two novels and about to publish his third. His books (thrillers in the style of Dan Brown and John Grisham) have been well received and even won awards, yet he’s still a relative unknown in the competitive world of fiction.

Her name is Michal. She’s a residential and commercial painting contractor in central Ohio. She’s a natural artist, a trait she inherited from her father and passed on to her daughter. She’s truly gifted, yet has struggled to grow her young business.

His name is Rob. He wants to achieve financial freedom at a young age. Yet, fresh out of college, he has mountains of debt. He makes a good salary, but most of it goes to paying school loans and everyday expenses. He manages to save and invest $100 a month, but feels like he’s making little progress.

These are all true stories.

Dave is Dave Grogan, a friend of mine. You can find his books here.

Michal is Michal Cheney, my sister. She owns and operates No Drip Painting, a company that has enjoyed tremendous growth, but only after years of hard work that seemed to go nowhere.

Rob is, as you might have guessed, me — 25 years ago. What started as $100 a month turned into early retirement at the age of 49.

What do these stories have in common? The Flywheel.

 A flywheel is a mechanical device designed to efficiently store rotational energy. Well, that’s how an engineer would describe a flywheel. I majored in English. To me, a flywheel is a wheel that’s really hard to get started. Once it gets going, however, it’s really hard to stop.

Anybody who has taken a spin class and tried to stop the pedals with their feet has learned firsthand just how much a moving flywheel wants to keep moving!

Today, I want to tell you about the flywheel of wealth. Like any flywheel, it can be slow to get started. But once it's moving, it's almost unstoppable.

https://www.youtube.com/watch?time_continue=139&v=GeyDf4ooPdo

The Flywheel and Business

Most young entrepreneurs experience the flywheel. The new realtor struggles to get her first sale. The second sale is just as hard. So is the tenth. As she struggles, she watches long-time realtors get new clients with ease.

To continue reading, please go to the original article at

https://www.getrichslowly.org/flywheel-of-wealth/

.A Basic Skill We Should Have Learned as Kids

A Basic Skill We Should Have Learned as Kids

By David Cain of Raptitude

The phrase “Don’t get emotional” implies that we normally aren’t.

Most of our news headlines can be interpreted as emotional responses gone overboard, becoming crime, scandal, corruption, greed, and bad policy.

The fact that these reactions are newsworthy seems to reinforce the idea that emotions are sporadic and exceptional, little whirlwinds that appear around significant events, making the odd day or week wonderful or awful.

But if you pay attention to your emotions as you read these headlines, it becomes obvious that even in our most mundane moments — reading the paper on a Monday morning — we are always feeling some way or another. Even a casual glance at a newspaper will begin to stir up familiar feelings like fear, amazement, disgust, admiration or annoyance. We’re never really in “neutral.”

We’re living through emotional reactions all day long, even to events as tiny as hearing a text message arrive, or noticing a fly in the room. Our emotions aren’t always overwhelming us, but they are always affecting us, coloring our perceptions and opinions about ourselves and our world.

This is the “fish in water” effect at work — because we are immersed in our emotions’ effects every moment of our lives, we tend to talk about them only when they’re exceptionally strong.

.Seven Reasons Making 6 Figures Alone Won’t Make You Wealthy

Seven Reasons Making 6 Figures Alone Won’t Make You Wealthy
By  Michael Budget, Finance
 
Why Making 6 Figures Won’t Make You Wealthy
Earning a six-figure salary can make building wealth easier, but it’s not a magic solution for your financial woes. Earning a high income is only one part of the equation. If you want to be financially secure, you need to make your money work for you.
 
A big paycheck can make it easy to gloss over financial mistakes since you can still cover your bills. However, if you want to build wealth rather than an inflated lifestyle, you need to focus on reaching your full financial potential.

Most of the mistakes that six-figure earners make are easy to fix. Here’s how to use that high income to your advantage and build your net worth.
 
7 Six-Figure Money Mistakes

Mistake #1: Not Using a Budget
Just because you have a lot of money coming in every month doesn’t mean you shouldn’t keep track of where it’s going. This makes it easy to squander your paycheck without making any financial progress.
 
Creating a budget doesn’t have to be hard. Think of it as your spending plan. Make a list of all monthly expenses and use it to create your budget. Does your spending in each category align with your values? Can you cut back or cut out any costs?
 
Certain expenses such as eating out or groceries can get out of hand if not kept in check. Cut back on these areas by cooking more at home and shopping smart. You can still have fun with no regrets when you know you’re sticking to your budget.
 

Review your accounts for subscriptions you are not using and cancel them. Look at your other expenses and think about ways you can cut back with little sacrifice. It may surprise you how spending can escalate when left unchecked.
 
Make sure to track your spending, so you know where your money is going every month. Just because you can pay your bills every month doesn’t mean that it justifies your expense. Every dollar you invest instead of spending sets you up for a better financial future.
 
Mistake #2: No Long-Term Financial Plan
Having a long-term strategy is an essential part of setting yourself up for financial success. Making a six-figure income won’t mean much if you lose your job or if you don’t save enough for retirement.

To continue reading, please go to the original article at

https://yourmoneygeek.com/6-figures/

.Don’t Let Early Retirement Box You Into Stupid Corners

Don’t Let Early Retirement Box You Into Stupid Corners

By  Steve Adcock 

How many of you good people have [formally or informally] entered contests to see how little money you can spend during a period of time? Like those “No Spend” months?

If you read enough personal finance material, those money challenges are common. But, I haven’t entered a single one of them.

Not because they’re useless. Not because they are harmful.

It’s because I don’t need to enter a contest to see how much I can scrimp to get by in a certain area of my life.

That’s not the point of early retirement. Or financial independence.

These competitions have a way of “encouraging an assumption” that we need to do certain things or believe in specific philosophies in order to achieve our financial goals.

Things like:

Early retirees don’t spend money on clothes (they do)

Early retirees never spend money at restaurants (they do)

Early retirees never buy new cars (they do)

Early retirees always own instead of rent (they don’t)

In reality, financial independence and early retirement looks different to each and every one of us. We all spend money differently, and I’ve met early retirees who go out to eat regularly, or lease cars, or rent their homes instead of own. Homeownership is overrated.

The rhetoric that you hear isn’t necessarily wrong.

It just doesn’t speak for everyone. If you do things differently than the rest of us, that’s okay. Just because you love going out to eat or buying that Starbucks coffee doesn’t mean that you’ll never retire early.

Early retirement = Quality over Quantity

Here’s the biggest problem with these contests. They make it seem like simply spending less money is a major accomplishment. Like, “Yay, I didn’t spend a dime on such-‘n-such item for a whole month!“.

To continue reading, please go to the original article at

https://thinksaveretire.com/dont-let-early-retirement-box-you-into-stupid-corners/