Every four years, a magical event takes place in the mysterious realms of Bitcoin Mining. The event is known as ‘Bitcoin Halving’ and reduces the pay out to miners by half, every four years. This year 2012, the halving was supposed to reduce the Bitcoin rewards from 12.5 BTC t0 6.25 BTC. [Read more…]
Job Loss: What to do
Losing your job is like a big punch to the gut. At first, it’s hard to process, but then your head starts spinning. What will I do for work? How will I pay my bills and put food on the table? What will my family do?
Taking a deep breath is a good first step. After that, it’s time to put a plan into action. Many of you could be experiencing this right now, given what the world looks like today.
In this article, I’m going to lay out how to financially prepare before and in the midst of a job loss.
First thing
As I said, this will be a big shock to absorb. Give yourself some time to realize what has happened. More than likely, you’ll go through the 5 stages of grief.
Unemployment
One of the first things you should do is apply for unemployment. There might be some hoops that you have to jump through, but one imperative item you need to confirm with your old employer is that you were let go and without cause. Resigning or being fired for cause disqualifies you from collecting unemployment.
Set money aside for taxes. Unemployment does not withhold FICA taxes or state income tax (if applicable). If you normally receive a refund, you might get a reduced refund or none at all. Plan accordingly.
Severance
The next step has to do with severance. If you were let go or fired without cause, your company will, most likely, offer it to you. It isn’t required by law, but most companies do it. Take severance home and review it closely. Don’t sign right away. Once you’ve reviewed it, take it back and negotiate.
Job Search
Starting looking for a new job right away. It does not pay to wait. All jobs are first come first served, set get searching as soon as possible.
Be picky, but pick up a job of some sort that will provide you with some cash flow.
Is now the time for a career change? Have you been dissatisfied with your industry or line of work? Do you have the skills and/or qualifications to make such a change? These could be questions to consider.
Finances
With regard to any debts that you have outstanding, call your creditors and see if they will let you defer payments, or at least make reduced payments, for a while. Also, make the minimum on your debt payments. Having cash available for other necessary items is more important.
Relentlessly cut expenses and review your budget with fine-toothed comb. Again, cash flow is your friend in your new situation so the more liquidity you have the better.
Pad your emergency fund. Obviously, this is something that needs to be done before you lose your job, so it’s imperative that you listen. Common advice is to save 3-6 months’ worth of expenses. If you’re self-employed and are responsible for payroll and other business expenses, it’s prudent to have 6-12 months worth saved.
HELOC? That stands for Home Equity Line of Credit. Is that something you are able to do? Is that something that you want to do? A HELOC turns the equity you’ve accumulated on your home into a loan.
Insurance
Life and disability insurance are very important coverages to have, but a just loss and loss of income could derail those coverages. There is a rider that can be added (waiver of premium) at the time of application so your policy stays in force while you are unable to make payments. *Be advised: this has to be done when you sign up, not after the fact.*
Healthcare is another important item to take care of. First off, if you have any appointments you were waiting to schedule, do it now before your coverage changes. The next step is to find a suitable replacement for your current coverage. This could be taking your spouse’s insurance, finding new coverage on the marketplace, or signing up for COBRA.
Retirement
Avoid dipping into retirement savings – this should be your last resort. Retirement savings accrues most effectively when you leave it alone. That’s when compounding works the best. Not only that, withdrawing funds prematurely will subject you to income taxes and an early withdrawal penalty.
Do you have 401(k) loans? If the answer is yes, you’ll be required to pay that loan back in its entirety in the next 60 days, otherwise, it’ll be considered a withdrawal. Again, taxes and a penalty.
Make a decision on what to do with the old retirement plan – Do you roll it to your new employer, roll it to an IRA, or leave it with the current institution. If you have a lower account balance, your HR department could require you to transfer it or cash out. Each company is different.
Related reading:
Employer/Employee Negotiations
Why Financial Literacy is Important
My name is Jacob Sensiba and I am a Financial Advisor. My areas of expertise include, but are not limited to, retirement planning, budgets, and wealth management. Please feel free to contact me at: jacob@crgfinancialservices.com
Reduce your debt by using a balance transfer card
Believe it or not, one of the most efficient manners to pay down the credit card debt is simply by making use of a balance transfer. While it might look as an unorthodox method to make this happen, the truth is that it works perfectly well to the point it can get you out of this uncomfortable problem. [Read more…]
Dealing with Market Fluctuations
Over the past couple of months, we’ve seen increased volatility. Put simply, volatility is periodic market fluctuations.
In a month, from the end of February to the end of March, we saw the S&P 500 drop nearly 35%. Obviously, it wasn’t a straight drop. There were several up days and a few relief rallies.
Since then, we have seen the S&P come back to the tune of 22%.
In this article, I want to give a little information about how I deal with market fluctuations, where I look for opportunities, and how retirement savers navigate these difficult times.
What I Learned
At the beginning of my career, I always dreaded experiencing a bear market. What do I do? Do I sell out of everything to avoid the decline? What do I tell my clients? How will they react?
As I gained more experience and read more, I learned what to do.
Keep in mind that I started my career in 2014, still in the middle of a long bull market, and since then I’ve read everything I could get my hands on about finances, markets, and economics. I’ve listened to podcasts and watched YouTube videos.
A lot of the people that I learned from attributed their success to when they got started. Two gentlemen really stick out.
One began his career in 1987 and lost his shirt on Black Monday (20% decline in one day, October 1987). This taught him about diversification and the importance of a long-term strategy.
The other got started in the early 80s but had a much different experience. He did some research and analysis and found a lot of risk in the credit market. He stuck his neck out on this trade and what he predicted came to fruition.
However, the markets didn’t react how he thought. What he learned was that fundamentals are important, yes, but what [almost] matters more is investor behavior.
Market Fluctuations
In periods of heightened market volatility, I pretty much hold my ground. I help my clients plan accordingly and coach them about what to do when stocks fall.
We put together the parachute before we jump out of the plane, not on the way down. That’s where people get into trouble. That’s why asset allocation is so important.
When building a portfolio, it’s vital to take your age (time horizon) and risk tolerance into account.
What may even be more important is the investor’s behavior. They might have a long time horizon and be fairly tolerant of risk, but if they’re going to lose sleep over a 10% correction, you need to position their portfolio accordingly.
Because my clients and I plan ahead, generally, I don’t do anything and I advise them to sit tight. What you don’t want to do is sell out of fear. At that point, you have probably experienced enough of the decline that it doesn’t make sense.
Exceptions
That said, I did some broad selling during the month of March. There were two positions that I used specifically to serve as a shock absorber during declines, and those did not perform as I’d hoped. So I sold them.
I realized they weren’t doing what I wanted them to and I cut my losses. Good traders and investors have an incredibly short leash when it comes to limiting their losses.
Opportunities
Generally speaking, I’m not a stock picker. I’m an asset allocator. Stock picking is not an efficient use of my time. However, sometimes it’s necessary and market fluctuations often create opportunities.
There are two positions, in particular, that I’ve been buying over the last month or two. I found enough of a disconnect between the price and what I thought the value would be over the long term, that I slowly invested into these two positions.
By the way, this slow investing is called averaging in, or dollar-cost averaging. Ideally, you invest at lower and lower prices, reducing your overall cost basis. My method is to take advantage of that disconnect I mentioned, but also leave enough on the side in case it goes lower so I can buy more.
How to Plan
Planning for market fluctuations isn’t something you do when you think it’s coming, it should be part of your plan all along.
Age is a big factor when determining the time horizon. The other items to consider, as I mentioned, are goals, risk tolerance, and investor behavior.
As an advisor, you have to be acutely aware and familiar with your clients, their risk appetite, and their personality. Only then are you able to plan with them, then guide them during trying times.
That’s probably one of the biggest things I’ve taken away from these market fluctuations. I’ve received two phone calls. That tells me that I’ve trained them well. That I’ve done a good job planning with them and that they are comfortable with how their portfolios are positioned.
Related Reading:
My name is Jacob Sensiba and I am a Financial Advisor. My areas of expertise include, but are not limited to, retirement planning, budgets, and wealth management. Please feel free to contact me at: jacob@crgfinancialservices.com
Did You Know That Even Gig Workers Can Have Financial Security-Here’s How
As the coronavirus pandemic fundamentally altered the daily lives of the masses, it quickly became clear that gig workers were especially vulnerable. Traditionally, they aren’t eligible for a variety of protections, including employer-sponsored health insurance or unemployment. While some rules were changed due to the unprecedented nature of the outbreak situation, it showcased that financial security could be challenging for gig workers. However, that doesn’t mean it’s impossible. Here’s a look at how even gig workers can have financial security.
Tamila McDonald is a U.S. Army veteran with 20 years of service, including five years as a military financial advisor. After retiring from the Army, she spent eight years as an AFCPE-certified personal financial advisor for wounded warriors and their families. Now she writes about personal finance and benefits programs for numerous financial websites.
Employer/Employee Negotiation
Negotiation between an employee and employer (or possible employer) come up, salary is often, if not always, the first thing that comes to mind.
Did you know that you can negotiate more than just your salary?
Obviously, if you believe you are worth more, then you should negotiate your salary, but if you feel you are adequately paid or your employer won’t budge on salary, there are a number of other things you can turn to.
What can be negotiated?
As I said, there are a plethora of items that could be up for negotiation. Some of these may depend on the size of your employer and/or the structure of the company, but here’s a solid list that’ll get you started.
- More time off – Vacation, paid time off, etc. It really does pay to take a break from the grind every once and awhile. Studies show that employees that take vacations are more productive than employees that don’t. Not only that, but there are several other benefits as well! (Source)
- Job title – A change in your job title could lead to more respect received by you, as well as feeling more respected by your superiors.
- Allowances/reimbursements – The list for allowances given by an employer is endless, but the common ones are transportation, health insurance (choices), flexible spending account, wellness programs, dental insurance, life insurance, and disability insurance.
- Flexible schedule – Working from home is an in-demand perk nowadays. Especially for people with families. Being able to spend time at home like that is invaluable. Plus, it gives you an excuse to work in your pajamas.
- Equipment upgrades – Whether you work at a desk or operate machinery, having new equipment is always helpful. It makes you more efficient and it can eliminate the headache of working with old equipment.
- Training and education – Going back to school, tuition reimbursement, and/or job training to help you with your current employer.
- Bonuses – A signing bonus if you’re accepting a job or an end of the year bonus based on some metric.
- Relocation/moving expenses – If you’re accepting a new position and have to relocate, this can be part of your offer. If you get moved to another location with your current firm, if they don’t offer it, it’s something worth negotiating.
- Stock options – Potential ownership of your organization, to be exercised at your discretion. Most big company CEOs offer this as part of their compensation.
- Severance – If you’re let go or fired from your employer, it’s the compensation they provide while you look for a new job. Not required by federal law and only a few states make it a requirement, but most companies offer it.
How to negotiate
Now that we’ve covered what you can negotiate, let’s discuss how you negotiate.
- Know your alternative – that could be a different job or a different position within your current organization.
- Minimum willing to accept – this could be related to your salary or some of the items from above.
- What’s the ideal – know what you exactly want out of the negotiation.
- What gives you leverage – how do you add value, or maybe you have a better offer at another company.
- Consider these same concepts from the manager’s perspective.
Severance
We mentioned severance above, so I wanted to give a little insight as to how to negotiate that if those circumstances arise.
- Take the other side’s perspective – What are they set to gain or lose with the severance you agree on.
- There’s a financial range for severance – Dismissal because of something you did should result in a lower severance. Dismissal because of something out of the company’s control should result in a more severance.
- Review work history, closely – Job performance, punctuality, rapport with colleagues and management, etc.
- Employer flexibility – Not flexible with what the law says, can’t help you with insurance but might be able to give more severance to “reduce” cost of COBRA, timing payment of benefits (request to get it later as not to affect your unemployment benefits), and a lump sum for outplacement services.
- Negotiation, with the future in mind – Next job.
Negotiation is a part of being an employee, and it’s also a part of life. Knowing what to negotiate and how to negotiate are two very powerful tools.
Related Reading:
Just Entering the Workforce: Let’s Talk About Retirement
How to Create a Fair and Protective Company Car Policy
My name is Jacob Sensiba and I am a Financial Advisor. My areas of expertise include, but are not limited to, retirement planning, budgets, and wealth management. Please feel free to contact me at: jacob@crgfinancialservices.com
7 Common Mistakes to Avoid for a Better Credit Score
One-third of Americans have a credit score of lower than 601. That’s in the fair to bad group. And you know that’s not good.
Having bad credit can really affect your ability to build the life you want. This score helps determine if you are eligible for loans to buy a house, car, or even an extra big toy like a boat.
Audit Your Digital and Financial Life
There’s no better time to audit your financial and digital life than tax time.
Having these two things orderly and up to date not only helps you stay organized but also gives you an opportunity to review your progress.
Review your budget
First things first. Review your budget.
Have any line items changed? Have there been additions? Maybe you paid off a debt and that line item can be dropped off?
If that’s the case, you can adjust your debt repayment plan. Whatever money was going to that paid off debt, funnel it a different one. You can do that by using one of two strategies.
One, the debt avalanche, where your dollars go to the debt with the next highest interest rate. Two, the debt snowball, where you focus that money on the debt with the next lowest balance.
Related: Your Go-To Budget Guide, How to Pay Off Credit Card Debt
Increase savings rate
If it’s been a while since you adjusted your savings rate, now is the time to see if you can tolerate an increase. Bump up your salary reduction plan an additional 1%. If you’re saving $50 per month for emergencies or your kid’s college fund, can you do another $10?
Review investment portfolio allocation
Is your current portfolio allocation still suitable? Whether or not you rebalance can hinge on two things. One, did your risk tolerance or time horizon change enough to warrant an adjustment? Or two, did your investments perform so that you’re no longer where you started?
Asset allocation tends to get out of whack when stocks perform well. 2018 is a good example, where the S&P 500 index finished up over 20%. More than likely, some rebalancing took place at the beginning of 2019.
Related: Why Asset Allocation Matters
Tighten up your expenses
Sell items you no longer have use for. You get rid of some clutter and can make a little money in the process.
Review your subscription list and get rid of things you don’t need. With so many subscription-based offerings, it’s easy to keep saying yes until you’re shelling out too much money each month. Audit these subscriptions and get rid of the ones you don’t need.
Call your internet provider. It’s more costly to acquire a customer than it is to retain a new one so they should work with you a little.
Do the same thing with your credit card company. They want to collect on the debt you owe them, so if that means lowering your APR by a percentage point or two, they’re more willing to help you out.
Related Reading: Quick and Easy Ways To Save Money
Digital
As our devices become more and more embedded in our way of life, we accumulate various types of accounts. Email, social media, and the like; this leads to endless different amounts of information that can be used against you. Time to purge (not like the movie).
- Destroy or recycle old devices – This will clear up space that can be better used by something else. Make sure you wipe the device before recycling it.
- Change passwords – Complex passwords are vital in our data-driven society. Long passwords with numbers and special characters must be used to protect your data.
- Remove old accounts. Social media, email, and apps that you no longer use can be deleted and removed. Make sure that you delete the data from those accounts before you remove them, however. Just in case the owners of the site/app/program use the data from those apps for their personal gain.
- Make sure your devices are up to date – This is elementary data protection. Up to date devices have patches for bugs and possible holes in their system. Your operating system is your first line of defense.
Keeping your life organized and performing a regular review/audit is imperative, whether we’re talking about your digital or financial life.
Related Reading:
Top Technology Trends That Will Dominate The Banking Industry
Three Ways To Cut Business Expenses
My name is Jacob Sensiba and I am a Financial Advisor. My areas of expertise include, but are not limited to, retirement planning, budgets, and wealth management. Please feel free to contact me at: jacob@crgfinancialservices.com
A Quick Guide on How to File for Bankruptcy
Thanks to COVID-19, over 16 million Americans have filed for unemployment within a three-week period. While some of these layoffs are temporary, many of them are permanent as companies struggle to keep their doors open.
If you recently lost your income, staying on top of your essential bills may seem impossible. The situation becomes even more difficult if you have have a lot of debt.
Stay on Track with an Accountability Partner
With most things in life, it often helps to have someone with you. Experiences, whether good or bad, are almost always better when you have someone to share it with.
Finance is no exception. In a world that’s connected more than ever before, it’s time to find an accountability partner.
This accountability partner could be anyone. A spouse or significant other, a friend, or someone you met at a local coffee shop.
In this article, we’re going to explore what makes a good accountability buddy and how you can encourage/help each other.
Choosing a financial accountability partner
Ideally, your financial accountability buddy will have similar goals as you and hopefully will hold the same financial philosophies, as well. If you’re saver, they’re a saver. If you like to cook at home, they like to cook at home.
Honestly, the most important thing to find in an accountability partner is someone that will keep you honest. Someone you can and should be totally honest with.
Tell this individual your goals. What you want to accomplish and what purpose your money serves. Then ask them the same thing.
You just need someone that can be honest with you and someone you can be honest with.
Mentor
An accountability partner can also come in the form of a mentor. Someone that’s been where you are before and/or someone that’s had similar goals as you before.
They can guide you along your journey, correct you if you’re making mistakes, or just be someone you can turn to if you have questions or start to feel discouraged.
Example
While doing research for this post, I came across an article about a couple. This couple had a goal of paying off tens of thousands of dollars worth of student loans.
After they came up with this goal and developed a plan on how to achieve it, they told some close friends. Friends that could keep them honest.
Because of that, this couple was more able to be honest when turning down invitations to hang out. These social outings often involved going to bars and restaurants, which costs money. Money that they didn’t want to spend so they could achieve their goal.
Create challenges
To make things fun, or competitive depending on your personality, you can create challenges. For example, who can save the most money (as a percentage of salary) in a month, or who can go the longest without spending any money.
Be advised, a no-spend challenge typically excludes necessary expenses like bills, rent, and debt payments.
Another thing you can do is create a list of inexpensive dates/activities you can do together, or with your significant other (SO) if your financial accountability partner isn’t your SO.
Scheduling
Schedule regular check-ins with each other. How frequently you check-in can be up to you, but it should be no less than monthly.
You should also establish a rule for impulse purchases or expensive items. If you want to buy something that’s over a certain dollar amount, you have to check in with your accountability partner first.
Related Reading:
A Systematic Approach to Goals
Different Ways to Think About Money
My name is Jacob Sensiba and I am a Financial Advisor. My areas of expertise include, but are not limited to, retirement planning, budgets, and wealth management. Please feel free to contact me at: jacob@crgfinancialservices.com
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