Around 16 million people are self-employed in the US alone. That number will likely grow significantly over the next few years as millenials opt out of traditional employment.
While many people dream about running their own business or working for themselves, it’s not a simple or easy ride. You assume many risks and responsibilities that employers handle for their workers. Just as importantly, your family typically assumes the same risks you do by default.
In the US, about 66 percent of adults are covered by life insurance. However, 1 in 5 say they do not have enough life insurance. And, 44 percent of millennials say they overestimated the cost of life insurance.
Clearly, a lot of us could be doing a better job of choosing and understanding life insurance.
According to experts, 44% of Americans rely on auto loans to buy their cars. Are you one of them? Maybe you’re planning on doing some auto financing, but want to make an informed decision.
Besides your monthly payment and interest rate, you should also consider your car insurance policy. Learning the basics about the insurance requirements for a financed car will prepare you for when you make your purchase. Don’t know what we’re talking about?
Levels of anxiety and depression seemingly climb every day. This week, we are covering a different subject. It’s incredibly important, personal, and relevant.
I want to go over my personal struggle with mental illness, the things that I use/do to help, and how I figure out when I need help. Towards the end, I’ll tie in some instances of how your finances can impact your mental health.
I have anxiety and depression. I was diagnosed earlier this year. Once you can put a name to how you’re feeling, your eyes open.
When I was diagnosed, it forced me to look back on my life and I realized that I’ve had this for a long time. Mannerisms, behaviors, etc. all made sense.
With the diagnosis, however, came a new challenge. How do I treat this? How do I cope?
At the time of writing, not great. I call these, funks. A funk means I’m depressed. Reluctant to hang out with friends and family. Reluctant to talk to anyone. I just want to be alone.
That said, the funks don’t usually last long. My current one is going on for four days.
The question I often ask myself when I’m in these funks is, is this the depression or my current situation that’s causing this? The answer is both, but is one playing a bigger role than the other? That question will never have an answer because there is no way of knowing.
There are a few things that I’ve started to help cope with anxiety and depression.
I have a very obvious line in the sand for when I need to get more help.
When I’m depressed and in a funk, I know it’s only temporary and will get better, but if I ever think that it won’t get better, that’s the sign.
That’s when the thought of suicide can become more prevalent.
There are a few examples when your finances can hurt your mental state.
Related reading: The Psychology Of Money, The Questions You Need To Ask Yourself
Whether it’s finance-related or not, I’m here if any of you need to talk. Below you’ll find my email.
Mental illness is a big problem in this country and around the world. If you or anyone you know is struggling, utilize the resources below!
Remember, you are never alone. There is always, ALWAYS, someone that wants to help.
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
Buying a car is a substantial financial decision. For some people, it takes careful consideration and planning. Apart from choosing how to finance the purchase, you also need to account for running expenses. But, since a car is already considered a basic necessity in modern societies, the best way to buy a vehicle is to consider all financing options and select one that is right for you.
Did you realize nearly 20 percent of Americans have no money in savings? If you are one of these people, now is the time to take control of your finances. The longer you allow these financial mistakes to linger, the harder you will find it to live comfortably.
Most people don’t have the knowledge or the experience needed to make important financial decisions on their own. This is why working with a financial advisor is a good idea. These professionals will be able to offer you advice on everything from creating a budget to planning for retirement.
We finally have a little movement on Social Security reform! Sometime this fall, the House will introduce legislation and hold a vote in order to keep the Social Security Trust Fund solvent through this century.
Social Security is a benefit program introduced during FDR’s presidency. You pay into the program via payroll taxes, commonly referred to as FICA, and then receive a specified amount during retirement.
Social Security also provides disability payments for those who can’t work, as well as spousal benefits for widows/widowers.
The calculation that determines your monthly benefit takes into account your 30 highest-earning years, with at least 10 years, or 40 quarters, needed to qualify.
If you are short a quarter, a year, or more, SSA uses $0 for that period of time, which can drastically reduce your monthly benefit.
That’s enough about the nuts and bolts, let’s dive into the current program, followed by the new legislation.
It depends on how you define healthy. Currently, the Social Security Administration is paying out more than it’s taking in.
Social Security has a reserve fund that they go to in order to make good on payments. That reserve fund is set to run out in 2035. Now that does not mean that Social Security is doomed!
If nothing is done, the reserve will run out and then benefits will have to get cut. Most calculations are saying a 15%-25% reduction.
The current set up for Social Security is like this:
Full retirement age (FRA) is the age you must attain in order to receive your full benefit. If you apply early, your benefits are reduced, and if you put off receiving those benefits, you’ll get more.
With that said, let’s get into the new legislation.
There are four parts to this new law, which is called the Social Security 2100 Act.
This has been a long time coming. The Federal Government desperately needed to act in order to ensure Social Security would be here for the coming generations.
While I like the changes that have been proposed, I have two things I want to gripe about.
One, the 2% bump in benefits was not necessary. Though the Cost of Living Adjustment (COLA) has been minimal in the last few years, it still exists. Benefit recipients will continue to see an increase in benefits.
Two, they did not address the retirement age. As I mentioned, the current FRA is 67. With current life expectancy nearing 80 and improvements in medicine coming every day, this should have been increased, as well as the age cap for collecting benefits.
You have to take benefits when you turn 70, whether you want to or not. If we are living longer, FRA and the age cap should go up. Either way, I’m glad we’re starting to see movement on this front.
Here are some sources and some related reading:
Future Financial Status of the Social Security Benefit Program
When Should I Take Social Security?
Will Social Security Run Out Of Money?
Tips for Avoiding Social Security Disability Denial
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
When you are in a management position, you can’t guess and estimate the risks and dangers of your business. When the company needs you, you need certainty.
Learning business risk management is not as grueling as it may appear. It can boil down to a 3 step process.
How does this process work? Today we can show you a quick look at how you can master business risk management.
The first step requires you to identify the potential risks you may face. There can come in a lot of different forms, so we will go over the risk types.
The biggest thing to remember with this step is that risks come in all different sizes and you can’t ignore any of them. Tiny risks may be easy to fix, but if ignored, they can turn into major issues. Complacency does not help you.
Physical risks are the problems that can come up in the workplace itself. This can items like environmental hazards and employee issues.
Your workplace, whether it is a factory or office, needs to meet all the safety standards. Following safety regulations help to cover a lot of these risks.
Things like hazardous materials, the region’s risk of natural disasters, and fire safety are some of the more common ones.
Even a building’s remoteness can affect the emergency service’s ability to arrive on time.
Most risks associated with employees arise from negligence and illegal activities such as embezzlement, theft, and fraud. Many of these can be screened out through thorough interviews and routine performance inspections. However, it’s also essential to extend identity verification processes to customers. This approach ensures comprehensive risk management, safeguarding the business from potential threats, not only from internal staff but also from external entities or fraudulent customers.
Technology can be fickle. That much electricity can cause hazards and losing power can erase productivity.
The more computers and other devices you have operating in one location, the more you must protect and look them over.
Strategic and financial risks are the most uncertain of risks. The biggest reason why is that not all of these risks are bad and most of them are a natural part of the business.
By definition, all investments are a risk. Research and development is a strategic risk. Banks lending money count as a financial risk. The key here is that without these, these businesses lose out on a lot of potential business.
Once you have seen the risks that can come up to your company, you need to move to step 2 and assess these risks.
Even the slimmest of dangers needed assessment, to ensure that the danger is slim and not unmanaged.
Your assessment should lead right into the final step and showcase how much each risk needs your focus. This includes how much danger the risk poses to assets, how much money is on the line if the risk happens, and what you can do.
Step 3 is what you can do with each risk. This step requires you to find the most efficient and viable solution to each problem. As each risk can be different, you need to go off of the assessment from step 2 to evaluate each solution.
For most physical risks, safety procedures and localized management is the best overall solution. Most of the time there are enough warning signs to catch problems in these areas before they happen.
For strategic and financial risks, the strongest defense can be in risk mitigation. This can come in financial safety nets for when investments do not pan out.
Captive insurance is a great example of good risk mitigation.
Mastering business risk management comes easier with this 3 step process. To get the handle on the system, though, requires a lot of experience and trial and error.
For more financial guidance and information, we here at The Free Financial Advisor are eager to help! Check out our other articles today!
Did you know that in the first half of 2018, lenders mailed some 1.26 billion personal loan solicitations?
That’s a lot of solicitation letters!
This may help explain how Americans ended up owing $125.4 billion in personal loans in the second quarter of 2018.
Another possible reason is the increase in credit application rejection rates that year. After getting turned down for credit, many applicants turn to personal loans instead.
If you find yourself in the same boat, or you seriously need money now, you’re likely thinking of applying for a loan. But before you do, make sure that you first understand what a loan entails. This way, you can make an educated decision on which loan is right for you.
Ready to become a responsible and smart borrower? Then read on to learn more about loans and what to do before taking one out!
An applicant’s credit score is one of the key factors that lenders consider. This is especially true in the case of traditional lenders, like banks and credit unions.
One reason is that a person’s credit score is an indication of repayment ability. It also shows lenders that a consumer pays their debts and credit obligations on time. So, the higher a loan applicant’s credit score is, the lower the risks that lenders take on.
For borrowers, this means that their credit score affects their loan’s approval rate. The higher a person’s credit score, the greater their chances of getting a yes from a lender. Excellent scores also land borrowers more favorable terms, such as lower interest rates.
So, how’s the U.S. doing in terms of credit performance?
The latest reports show that only 21% of Americans have exceptional FICO scores. If these people apply for a loan, they will enjoy the lowest bank prime rates, which is currently at 5%.
Conversely, lower credit scores equate to higher interest rates. People with very poor credit scores may not qualify for any loan at all. In fact, back in 2017, poor credit scores were the reason why 32% of loan applications were denied.
If you’re unsure of where your credit stands, don’t hesitate to request a copy of your credit report. It’s free, and it’ll allow you to check for any discrepancies in your report. You’d want to dispute and get those possible errors fixed before applying for and taking out a loan.
Let’s say you already know your current credit score or you don’t have time to wait for the copy of your report. Even in cases like this, you should still take time to compute the total cost of each loan offer you get.
Even a 1% difference in interest rates can make a big difference. Getting a 1% lower interest rate can save you hundreds and even thousands if you take out a major loan.
For simplicity’s sake, let’s use a $1,500 loan with a six-month term as an example. Lender A charges a monthly 7% interest rate, while Lender B charges a monthly 8% interest rate.
With Lender A’s offer, your interest payments would be $105 a month, or a total of $630 for six months. Your monthly loan payments will be $355, which means that in total, you’ll pay back the lender $2,130.
If you miss out on Lender A’s offer and go with Lender B, your monthly interest payments will be $120, for a total of $720. Every month, for six months, you’ll make a payment of $370. At the end of your loan term, you would have paid the lender $2,220.
That’s a considerable difference of $90. That’s money that you could’ve otherwise saved if you compared even just two loan offers. Imagine how much more you can save if you compare three or more!
Now that you know how the basic loan payment structure works, let’s talk about your ability to pay back a loan.
For this, you’ll need to deduct your monthly expenses from your take-home pay. Let’s say you make $3,000 a month, and your expenses are $2,500. This means you have an “extra” $500 a month.
If you take out a loan with the exact terms we used in the above example, then you would be able to pay it back. Of course, it’s always a good idea to put away whatever you can into your savings account. But if you’re in dire need of cash now, then technically, you can afford to take out a loan similar to our example.
But what if your salary “left-over” is equal to your estimated monthly loan repayment?
In that case, you’d end up stretching your finances too thin, and you’d be at risk of coming up short once your loan due is up. This may force you to take out even more debt to avoid defaulting on your current one.
To avoid this, it’s best to take out a loan that has a smaller principal. A smaller loan amount will translate to smaller monthly payments. You’ll also pay less interest over the life of your loan.
If you can’t afford to get a smaller loan amount, then at least get a longer-term loan. This comes with lower monthly payments, so it’s easier to pay back every month. However, since you’ll stretch your payments over more months, you’ll also be in debt longer.
Speaking of salary, you’ll need to provide proof of income and employment to lenders. This goes for both traditional and online lenders.
Online lenders usually ask for fewer documents, which may either be a salary letter or pay stubs. Whereas banks require both, plus W-2 forms.
If you have a side job or also take on freelance jobs, be sure to provide proof for these, too. They add to your income, so they can help boost your chances of securing a loan.
If you’re self-employed, prepare at least two years’ worth of tax returns. Gather receipts, invoices, bank statements, and proof of assets. All these can help prove your ability to pay back a loan.
Lenders will also ask you for government-issued IDs, including drivers licenses and passports.
Just because one lender rejected you doesn’t mean the next one will. Banks and credit unions aren’t your only option, as there are now more than 200 digital lenders in the US.
That said, you may want to give these lenders a go if a bank denied your previous application and you need money ASAP. They have looser lending requirements, so their loans are easier to qualify for. It’s also due to their more relaxed policies that 38% of approved personal loans in 2018 came from them.
Before you apply for a loan online, confirm that a legitimate company is behind the website. Looking up a lender’s registration or license is one way to do this.
Note that each state has its own regulations, but they do require lenders to be a registered business.
For example, in Texas, the law requires lenders like tiempoloans.com to hold a license. They also need to register with the Office of Consumer Credit Commissioner of Texas. Before a lender can get licensed, it must satisfy everything in the state’s finance code.
Other states follow similar lending regulations, so it’s best you know your state laws. This way, you can avoid shady businesses or paying exorbitant interest rates.
If you have no or low credit score, but you have valuable assets, consider applying for a secured loan. In this case, your asset, say a vehicle in great condition, can serve as collateral. Collateral reduces the risks for lenders, so they’re more inclined to approve a loan.
Before you accept a secured loan, make sure that you can really make the repayments on time. Defaulting on this kind of loan can mean losing your property. The lender will liquidate the collateral so they can recover the money they lost.
This may seem obvious, but the fact is, loan delinquencies are still very common. Just take the 7 million Americans who have serious delinquencies on their car loans. Forbes reports that 11.4% of the 44.7 million student loan accounts are now also on serious delinquency status.
Loans are no doubt helpful, but they can lead to long-term debts. So, be careful when borrowing money. Even if you get approved for a high amount, make sure you can afford to pay it back. If in doubt, take out a lower amount.
There you have it, your in-depth guide on loans and how to ensure that you can pay them back. Even if you need money now, hold your horses for a bit longer so you have more time to explore your loan options. This way, you can compare interest rates and terms and determine which loan offer is best for your needs.
Need more help figuring out your expenses or how to pay back your debts? Then don’t forget to check out and bookmark our site’s Spending Plan and Debt Management pages!
The talk of impeachment is flooding the headlines, so we’re going to explore it, how impeachment proceedings took place in the past, what happened to the market with each instance, and what you should do with your money/investments while these events transpire.
The first step in any impeachment proceeding begins with a formal inquiry. This is done by the House of Representatives, and that’s where we are at this point in time.
During the inquiry, the evidence is gathered by the house to help make their case. Once they’ve gathered everything they needed, they take a vote.
If that vote passes, it goes to the Senate. They, like the House, review the evidence and take a vote. If the Senate’s vote doesn’t pass, then the President may be acquitted, and things end there.
There have been three impeachment inquiries, with only one actual impeachment.
The first was Andrew Johnson in 1868. The second was Richard Nixon in 1973. The third was Bill Clinton in 1998.
Which one was impeached? Bill Clinton. However, the Senate acquitted him and he was not removed from office.
When Andrew Johnson went through the impeachment process, the stock market (yes there was a stock market back then) really didn’t do anything, finishing that year up 1.5%.
During the impeachment proceedings with Nixon, the United States was in the middle of a recession. From the initial inquiry to the day he resigned from office, the S&P 500 fell about 30%.
With Clinton, however, the economy and the stock market were in the middle of an expansion. From beginning to end, the S&P 500 gained about 28% during his impeachment process.
What history tells us is that the period surrounding the impeachment will lead to greater volatility, but the long-term direction of the market is determined by fundamentals.
The current impeachment inquiry with President Trump is dramatically different from the other three.
That depends. If you have 15+ years until you need to access your investments, I would tell you to do nothing. If you’re in retirement or it’s right around the corner, however, I would think about being a little more conservative.
When you grow more reliant on your retirement savings, your primary objective must move from capital appreciation to capital preservation.
I’ll link to several resources that should give you more guidance about retirement planning by age, investing in volatility, and more information about what’s been discussed here.
Related Reading:
How To Invest In A Volatile Market
How Does Trade Policy Affect Me?
The Questions You Need To Ask Yourself
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