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Financial Fluency Episode #20: Making Changes in Your Financial System

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Today I want to talk about how to make changes in your financial life and your financial systems. The two main levers for making change in a system are changing what goes in and what comes out of that system.

In the case of your finances – especially your personal finances – that is the income that flows in and the expenses that flow out. Part of that is also looking at efficiencies, but I’m going to group that under expenses because those systems are about how to get more out of the money that you are spending right now.

You can listen in here or read below and Tweet it out here

Income

A lot of people in the personal finance world like to look first at the expenses because that seems like an easy thing that we have control over on a daily basis, but I’m going to go for the income first, because let’s be honest, in terms of long term changes, that system can make a greater change than anything else can.

If You’re Employed

If you work in a job for somebody else, the main way to get a change in your income is to ask for a raise. I’m not an expert in negotiating raises, but I know that in Tim Ferriss’s book and Ramit Sethi’s book, ‘I will Teach you to be Rich’, they both talk about some great ways to lead up to asking for that raise. I think they both talk about maybe three or even six months of steps you can take to start setting the stage to establish the value you bring to the company to show and track your progress over time, and to show that you really are bringing a lot more to the company that what you’re paid for right now. It’s then easier to ask for the raise.

Other ways you can interact with your boss ahead of time are to ask for feedback on projects you’re doing, ask for feedback on what you can do to be more valuable, to be more of a long term player and asking for educational opportunities, for the business to send you to trainings in different things to make you more valuable.

Other options for when you work in a job already are asking to take on a new project, to seek more customers for commission, if applicable, to ask to be involved in things that are at a higher level than what you’ve been doing before or just start doing more things. If you see things that need to be done, start doing them, and make sure people notice that you’re doing them.

If you’ve been doing the newsletter or something else on top of your regular job that you aren’t being paid for, make sure everyone knows and recognizes what effect that has on the company. If you’re doing the social media on top of your regular job, make sure you’re tracking all the Google Analytics that show how social media brings more traffic to the website, and how that has increased conversions. Whatever it is, really track it and make sure you can show your bosses just now much you’re doing to bring value to the company.

Another option, even if you have a job, is to start moonlighting or start a side gig to offer your services in some way. Maybe make a list of all the things that you could do for money, go out there and start brainstorming. Ask people if they need your help with different things, and those things can change your income if you are employed in a job.

If You’re Self Employed

If you’re self-employed, there are a number of things you can do as well.

The first and most obvious one is to raise your prices for current services, and let your clients know that prices will be going up in so many months. This obviously depends on whether you are a time based service provider or a product based service provider or a project based service provider.

You could finish up current projects and let people know that prices will be going up on the next round of projects, or let them know that prices will be going up on a certain date or on the products at a certain time, or the next version of the products, or something like that.

You can also create some new offers you’ve never had before.

  • What is it your clients have been asking you about?
  • What are they interested in? Are there any burning pains they have that you haven’t addressed that you could now?
  • You can also bundle together old offers or even old content into a new product or service. I’ve seen a lot of people do this with blog content being bundled into an ebook that’s then sold, so that’s something to think about.
  • You can also have a limited time sale on products you already have. You can expand it to a new niche or market. If you are a website designer for tech companies, say, maybe you could start taking on smaller entrepreneurs or small businesses, people who’ve been on Etsy but have got too big and now need a new website. You could talk to people you know, people you like to work with, the kinds of people and kinds of projects you like to do, and see if that can be expanded into a new niche.
  • You can also reach out to people in similar niches for joint venture and collaboration type projects to reach clients that you don’t have access to right now, but you could by working with somebody else.
  • Another option is to be an affiliate for someone else’s products to your existing audience, so that’s where you find someone who has a product that you already like and use, and find out if they have some kind of affiliate program. You can then offer those products to your audience, and that is helping them reach a new audience, and it helps you by giving you some portion of those sales.
  • Or you could create an affiliate program for your own product, offer your own clients the opportunity to be affiliates for you, and they can share your products or services with their audience and network.

Expenses

Let’s switch over to the other lever for change which is the outflow, the expenses.

The first place it’s easiest to start is the low hanging fruit. Look at subscriptions, gym memberships, those sorts of things, how much are you using them and is it really worth what you’re paying per year?

A lot of us think we go to the gym enough, and if you’re taking a class or if your kids have swim lessons or whatever it is and you’re using it every single week, that’s totally legit. You can always try to negotiate for a different price, it’s worth asking, and you never know.

Think about things that are subscriptions where you can potentially pay for single uses instead, like a day pass for your gym if you’re only going now and then and not every single week. If you’re using cable, try downloading individual movies instead, or use one of the streaming services like Netflix or Amazon Prime. This serves the purpose that you’re using it for right now, but it costs less for the amount that you actually use it.

If You Don’t Want To Cut It, Reduce It

You can also negotiate the bills that you don’t want to cut, your cellphone bill, internet or cable, if you have it, and you can sometimes bundle those together and get savings for that, or you can call and ask them if there are any current promotions going on that they can apply to your account. A lot of the time they have promotions for new people who sign up, and if you call and say, I’ve been a customer for five years, I would like to take advantage of this promotion you’re offering to new people as I’m a loyal customer, a lot of times they’ll go ahead and apply it to your account.

Another option is to look at your car insurance, home insurance or rental insurance and if you can bundle those together for savings, and then you can call your credit cards and ask for lower interest rates, ask for promotions, ask if they have anything going, or if there’s any other card that would better suit your need.

Plan, Plan, Plan

Even for things like eating out, your variable spending, you can schedule when you’re going to eat out and you can even pick the restaurants to figure out how much you’re going to spend ahead of time, and then also schedule out those shopping trips. There are a lot of online meal plans with shopping list type services now that you can use, so you can really plan out how much you’re going to spend each week on your variable spending.

As long as you stick to it or close to it, you can really control some of that spending that gets out of control relatively frequently.

There are also some options for things that you use a lot like paper products, paper towels and toilet paper. You can set them on delivery order from Amazon using the Amazon subscription service which is a pretty great thing. We used to use it for things like diapers back in the day, and there was a while where I did put things like toilet paper, paper towels, wipes and diapers on there, because we could kind of predict how frequently we were going to run out, and I always had them arrive a little before we actually needed them, because with diapers you don’t want to run out!

That did save some time and money and trips to the store, and I was able to plan things out a little better when we had that going on. I haven’t done it for a while now because we no longer get diapers (phew!). That was a huge saving, that and having my kids both start full days of school have made such a massive difference in our personal finances.

That’s All, Folks!

So those are a few things that you can look at in terms of changing both the inflow and the outflow for your financial system. Setting up some of these things, especially the ones that you can put on autopay, or the ones that you can reduce the monthly amount, the effect of that really builds up month by month.

If you can save ten dollars per line on three family lines for your cellphone, that’s 30 dollars per month over the course of a year, and that really adds up. If you do that across a number of different categories in your spending, it can come to a significant amount of money that can really change how quickly you can pay off debt or build up savings.

So those are my tips for you for today, I hope that is helpful. If you like this podcast, please subscribe and listen every week, and I would love it if you would leave an awesome iTunes review too. Thank you so much. If you want to reach me, I’m jen@jenturrell.com, you can find me at the website, I read my own emails and answer them as much as I can. Talk to you soon.

Mastering Money Matters

What if managing your money and feeling wealthy was easy?

Imagine going from feeling sick to your stomach every time you have to pay a bill, to having a system that pays all of your bills on time, and shows you at a glance where all of your money is and where it is going.

Mastering Money Matters will show you a new way of looking at your finances so you can set up your systems, enjoy your money, and stop worrying about your next bill.

If you’ve been desperately avoiding looking at your finances and hoping it all just magically works out – money comes in, it doesn’t run out, and you have enough for a bit of extra spending – enroll in Mastering Money Matters today.

Financial Fluency Episode #19: Investing 101 with Sandy Chaikin

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After the success of my Investing for Beginners podcast (you can find it here), I decided to call in the big guns.

Sandy Chaikin is Co-founder for Chaikin Analytics, a ground-breaking stock research and analysis platform.

With no prior experience, Sandy started investing in 2012 with Chaikin Analytics and built a killer portfolio that continues to outperform the S&P 500 and many money managers.

Sandy is living proof that you don’t have to be a financial expert to pick winning stocks.

Sandy’s experience in the crash of 2008/2009 left her disillusioned with her fund manager and discouraged with Wall Street.

Lacking the skills and tools she needed, Sandy was the inspiration for the training that Chaikin has now given to many other people. You can find out their method by listening in to the podcast.

We discussed the unbalanced role of women in the financial sphere, Sandy told me that figures show that around 70% of women widowed or divorced will move their money from an existing advisor because they just don’t feel “part of the conversation”. And you know how I feel about women empowering themselves through taking control of their money!

Listen in below and Tweet it out here

Quotes

The only way you’re going to build confidence to invest, is to do it yourself. – Sandy

The important thing is just to get started – Sandy

The stock market is actually kind of fun…people want you to think it’s complex, but it’s not – Sandy

It’s really very similar to shopping. If you like that you’ll enjoy investing – Sandy

If you enjoyed this episode you can subscribe to Financial Fluency here on iTunes.

Sandy ChaikinSandy Chaikin is Co-founder for Chaikin Analytics, a ground-breaking stock research and analysis platform.

With no prior experience, Sandy started investing in 2012 with Chaikin Analytics and built a killer portfolio that continues to outperform the S&P 500 and most money managers. She bought the two best-performing stocks of 2014, SWKS and LUV – both stocks rose over 125% that year.

Sandy continues to find winners like AMWD and ATVI, both of which rose over 94% in 2015. Sandy is living proof that you don’t have to be a financial expert to pick winning stocks. She presents webinars and speaks at industry events on fearless investing by following the Chaikin Five-Step Method.

Sandy is a contributor to Nasdaq.com where she also hosts webinars on investing, using examples from her own portfolio. You can find out more here.

Mastering Money Matters

What if managing your money and feeling wealthy was easy?

Imagine going from feeling sick to your stomach every time you have to pay a bill, to having a system that pays all of your bills on time, and shows you at a glance where all of your money is and where it is going.

Mastering Money Matters will show you a new way of looking at your finances so you can set up your systems, enjoy your money, and stop worrying about your next bill.

If you’ve been desperately avoiding looking at your finances and hoping it all just magically works out – money comes in, it doesn’t run out, and you have enough for a bit of extra spending – enroll in Mastering Money Matters today.

Financial Fluency Episode #18: The Dark and Light Sides of the Compound Interest Force

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Today I want to talk to you about compound interest.

This is something a lot of us hear when we first start learning about money, and in a lot of personal finance books it’s kind of called things like the eighth wonder of the world or the magic of compound interest, and we’re all kind of told to believe that if we can just get enough time behind our money, it will really make a huge difference in our life.

You can listen in below and Tweet it out here

It is true that the earlier you start investing in saving, the better off you are. However, lately – well, I say lately, I mean for the last decade – the truth is it has not been a very kind world to save in, in terms of the interest that we can get.

Interest rates have been rock bottom and almost zero in many places in the world, including the United States. It’s been so low to encourage borrowing and to kind of lube up the gears of the mechanism of the economy, so that people who are relying on savings and income from savings have really not been doing well.

It’s pretty much got to the point that if you don’t want to be losing money to inflation, you have to put it into something that gets more than your regular savings interest rates

What this usually looks like is investing it into the stock market. However, as we saw back in 2008, the stock market can be extremely volatile depending on different cycles and bubbles and things that go on in the economy, so a lot of people, understandably, get scared by that.

In the past people have said that the best way to use compounding is really in a way when there is not the risk of principal loss, so here’s the issue. A savings account does not have the risk of principal loss, you won’t lose your principal, your principal’s safe as long as it’s in an FDIC insured account and is under 250 thousand dollars. However, if you want something more than the less than one per cent that most people are getting in interest on their savings accounts, you have to do something much more risky and put your money at risk by investing it in something where there could be principal loss.

There’s huge potential for the principal loss that you could have in the stock market, but if you leave it in a savings account you are losing money to inflation every day.

So What’s a Person to do?

The positive type of compound interest is where you have money that is making money for you, either in a savings account at a super teeny tiny amount that’s actually losing money to inflation every year or you have it invested in some kind of other investment vehicle like:

  • A fund
  • Some kind of stocks
  • EFTs
  • Bonds, or
  • Annuities

There are a lot of these different vehicles that you can put money into, from which it’s invested.

The wisest way to do these things is to also get tax benefits from them, because that also helps offset the amount that inflation’s affecting them, so either you can do one of two types of tax advantaged accounts, one where you are taxed now and you pay nothing on the gains over time, or where you save taxes now, have that pre-tax dollar earning money for you, and then you pay the taxes at the other end. You can get more information on what these differences mean to your dollar here.

The Dark Side of The Force

All of this is thought of as the good kind of interest, and it is good, it’s positive and at least you’re going in the right direction. The way that compound interest works against you, the dark side of the force, is when you’re the one who owes money and are paying interest out while you get very, very little interest for loaning the bank your money. When you put money into a savings account, you are loaning the bank money. They are the borrower and you are the lender, but you get almost nothing for it. Tweet That!

However, when you borrow the money, say from a credit card company, they could be charging you anywhere from eight to 24 per cent, depending on what kind of credit card you have, what the APR is, what your credit history is and if you have any dings on that history like late payments or not making the minimum payment and so on. Those things all make it harder for you to get lower interest rates.

Right now because there are so few venues for us to use the positive side of the force in terms of compound interest, I think one of the biggest ones we can have is to mitigate the damage done by this negative interest.

How do We do That?

Credit buyingBy getting out of debt and paying off those high interest credit cards, paying off the highest interest first and going down the line from there.

A lot of us have multiple kinds of debt, and I’m including myself in this. I am by no means someone speaking as a fully debt free person. I have a mortgage, I have a car payment, there are times when I have balances on my credit card, and I know that the best thing to do with credit cards is to pay off the balance in full every single month.

If you are not there yet, make that the first goal. Get one credit card completely paid off, then work through the others, and once they’re all completely paid off, get in a system of paying it off every month, of not putting more on there than you will be able to pay off.

I do think there are ways to use credit cards as tools, but it’s so tricky to get into that situation in case something goes wrong and you don’t have your savings account built up. I also like to have a curveball savings where I keep savings for things that happen irregularly, but aren’t totally unexpected, things like car repairs, needing to replace things in your home, and also bills that aren’t monthly, but come up regularly, like car or home insurance.

It’s good to look back over the last few years and figure out how much those not quite monthly things have been, and make sure you’re setting that aside so it doesn’t go on the credit card.

A Personal Example

We’re keeping my car payment because it’s at 0.9 per cent interest which is lower than our mortgage. If we had no car payments, in one way it would feel like a lot more money every month because there wouldn’t be that extra bill, but at the same time it’s so low interest that it would actually make sense for us to pay off some of our mortgage before paying off that car payment.

We’re carrying that on for now, unless we get to the point where all of our other revolving credit is completely paid off and all we have are these installment type credits. Revolving credits are things like your credit cards, things that are consumer debt, and installment credit is things like car loans and student loans. These are things where you paid for something big, it’s relatively secured, they’re pretty sure, and it’s hard to get out of it. If you don’t pay your car payments, they can come and repossess the car.

In terms of credit, the things that are weighted most heavily are the revolving credit, which is basically your credit cards, so paying those off first before anything else makes the most sense.

That’s really what you can do right now to make the most of the current financial situation. We can’t get a whole lot of positive compound interest out of savings accounts, we can get some out of investing, but with some risk if we do it in a tax advantaged way, but the biggest wins most of us can get are to pay off our debt and not get into that negative cycle of giving the banks the compound interest from that.

If you’re ready to tackle your debt in a constructive way, you can check out my Debt Reduction Lab here In this mini-course you’ll going to learn my three step process for reducing your debt starting now.

My Favorite Debt Management Tool

I have shouted this app out a lot since it came out and I started using it, because I think it’s really the best way to do it right now. If you are in Canada, the UK, Europe, Australia – which I’ve been surprised at, listening to the make-up of my listeners – I don’t think Ready for Zero works with banks outside of the United States, so if that is the case, you can go to bankrate.com where they have some great debt calculators that help you do the same sort of rolling out the plan, seeing how much you want to pay each month and how to pay off that highest interest debt first.

This takes a little more work from you, whereas if you have the app it sucks in all the transactions and interest rates and it also updates your credit relatively frequently so you can see how the actions you’re taking affect your credit every three to six months.

I really love how it shows you the daily interest you’re paying, because for me it made such a difference just to see how much that was every day and realize, wow, when I get all of this debt paid off, that’s money in my pocket every single day. It’s like giving yourself a raise, getting rid of all the interest we pay.

If you enjoyed this episode you can subscribe to Financial Fluency here on iTunes.

Mastering Money Matters

What if managing your money and feeling wealthy was easy?

Imagine going from feeling sick to your stomach every time you have to pay a bill, to having a system that pays all of your bills on time, and shows you at a glance where all of your money is and where it is going.

Mastering Money Matters will show you a new way of looking at your finances so you can set up your systems, enjoy your money, and stop worrying about your next bill.

If you’ve been desperately avoiding looking at your finances and hoping it all just magically works out – money comes in, it doesn’t run out, and you have enough for a bit of extra spending – enroll in Mastering Money Matters today.