Category Archives: Uncategorized

Save for the Unexpected

February 21, 2022 ECVtalks Leave a comment

You’ve probably heard it before a million times. You need an emergency fund of 3 to 6 months. Maybe you brushed it off as not urgent or maybe even unimportant. And then the world came to a screeching halt in 2020.

Now here we are in 2022 and maybe you’ve fully adapted to the world post-COVID-19. So what are you doing to be ready to bounce back from the next global event? Did you use that stimulus to start your emergency fund?

It really isn’t a question on whether or not you need an emergency fund.

(You do.) It’s the first line of defense when unexpected expenses show up (and they will—have kids?). Unforeseen emergencies threaten to undo your hard work and careful financial planning.

But what exactly is an emergency fund? What should it look like? And how do you start building one if you don’t have a sack of cash lying around?

What’s an emergency fund… and why do you need one?

An emergency fund is a dedicated amount of money to cover unplanned, unavoidable expenses. Establishing one is an important milestone on your journey to achieving financial independence! But why is it such a big deal?

Emergencies are a part of life. Nobody schedules a busted transmission or a broken arm, but you’ll need a way to pay for them when they happen. Who would have guessed that a global pandemic would force most of us to stay at home and cost millions of Americans their jobs? So it’s not a question of if you’ll need to cover something unexpected but how you’ll cover it. Without an emergency fund, you’ll be forced to either dip into your long-term savings (assuming you have them) or go into debt. For most people, either option can seriously throw off long-term financial plans. An emergency fund gives you the power to overcome sudden obstacles without sacrificing your retirement or piling up credit card bills.

Emergency fund ins and outs One critical thing to grasp is that an emergency fund isn’t the same as your savings. Establishing a solid emergency fund is not a long-term goal that’s built over years or decades. Once the emergency fund is full, then you move on to other money milestones like conquering debt and saving for the future.

So how do you know you have enough in your fund? That depends on how much you make. A good rule of thumb is that an emergency fund should cover 3 to 6 months of income. That provides a buffer if you have an unexpected car repair, medical emergency, or if you’re temporarily unemployed due to an unprecedented global pandemic!

But what if you don’t have that much cash just lying around? 3 to 6 months of income might seem like a lot of money to set aside, especially if you’re currently living paycheck to paycheck. Building an emergency fund will take time and budgeting. Start with a goal of saving 2 weeks of pay. Then shoot for 1 month, then 2 months, etc., until you reach your goal.

The 2 Rules of Emergency Funds

Rule 1: An emergency fund is only, ONLY to be used in case of actual emergencies. It’s not for last minute getaways, much needed spa days, or killer video game sales. If those kinds of things come along, you can use a “fun fund”, which of course is part of your regular budget! (We’ll talk more about your “fun fund” in a later post.)

Rule 2: The emergency fund needs to be easily accessible. Make sure it’s in an account where you won’t incur fees for withdrawals when your car breaks down or you suddenly need a new AC unit. That’s why it’s there. Just remember to refill it as soon as the emergency has passed.

Once you’ve built your emergency fund and know the rules, you’re ready to move on to the next stages of building wealth.🎉Congratulations! You’re officially not broke and in the perfect position to chase your financial future!

If you’re ready to start your savings journey but not sure where to begin, check out these 7 Steps to Start Your Savings Journey from AmericaSaves.org.

Or if you prefer some help, meet with a financial advisor for a free consultation to figure it out.

Uncategorized

Save Automatically

February 21, 2022 ECVtalks Leave a comment

Saving money on a consistent basis, regardless of the amount, is the true secret to financial victory. The strategy is simple. And thanks to technology, putting it into place can be simple also. So where do you start?

First you figure out what amount is workable FOR YOU, not anyone else. Then you take all the monthly cash flow that YOU can spare and start saving it into an account with the best interest rate, growth potential, tax advantages, and principal protection you can find AUTOMATICALLY, be it monthly, weekly or daily. Finding the best account is where a financial professional is key. Don’t go it alone.

These habits have created more millionaires than any other story, company buyout, or stock market windfall in the history of the world. The 8th wonder of the world—the power of compound interest—is the magic dust that will always work in your favor if you’ll put it to work.

Saving money is more about the decision than anything else. Just like breaking the cycle of foolish spending, you must DECIDE to save money on a consistent basis. When you do, over the years and decades, you will win because you’re employing the Time Value of Money and the Power of Compound Interest. This is the one-two combo that millionaires use to reach their status.

There are many culprits that can hamper your ability to build wealth.

Believe it or not, your checking account might be one of them.

A checking account is designed to give you quick, flexible access to your money—not grow it efficiently. That’s why the interest rate for an average checking account is negligible—less than .05%.¹ It might as well be zero if you’re considering it as a savings tool for the future.

But you may already be thinking, “no one would consider their checking account a savings vehicle.” Then why do Americans have so much of their money stashed in them—$2.2 trillion in 600 million checking accounts, to be precise. ²

The answer can only be that they don’t know how money works. Otherwise, they would have moved their cash to an account that leverages the power of compound interest with a higher interest rate long ago.

The sucker likes seeing a big balance in their checking account. The wealthy like seeing big deposits moved into their wealth building vehicles.

Do you have too much money sitting in your checking account?

As a rule of thumb, only keep enough cash in your checking account to cover everyday expenses like utility bills and groceries. Move what’s leftover into accounts and vehicles where it can accrue interest at a faster rate. And consider scheduling a conversation with a licensed and qualified financial professional to discuss which saving vehicles are best for you!

¹ “Average Bank Interest Rates in 2021: Checking, Savings, Money Market, and CD Rates,” Chris Moon, ValuePenguin, Dec 11, 2021, https://www.valuepenguin.com/banking/average-bank-interest-rates#

² “Checking Accounts Shrink by Nearly 100 Million Accounts Since 2011,” Tina Orem, Credit Union Times, May 8, 2018, https://www.cutimes.com/2018/05/08/checking-accounts-shrink-by-nearly-100-million-acc/#

Uncategorized

A lil’ Message from Ms. ME

December 17, 2020 ECVtalks Leave a comment

Not posting anything today but…

Financial, Health and Fitness, Physical, Uncategorized

The FULL COST of Smoking Cigarettes

July 9, 2020 ECVtalks Leave a comment

This is how smoking is usually pictured when the cigarette companies used to freely play mind games to convince you to smoke.

Nowadays, not many would argue the fact that smoking is bad for you. It’s linked to lung cancer and heart disease, and is associated with nearly 1 in 5 deaths in the United States.¹ Yet so many people, even some I know personally still smoke despite the health consequences. Besides ruining your physical health, smoking can also seriously ruin your financial health.

The upfront cost of smoking
Cigarettes aren’t cheap. Prices per pack vary from $5.25 in Missouri to $12.85 in New York, but the national average comes out to around $6.28.²’³ Smoking a pack per day will run you $44 per week, $188 per month, and $2,292 per year. Over 20 years you’ll have spent $91,671 on cigarettes. You’ve literally burned almost 6 figures!

If you got it like Granny, then ‘burn baby burn’, I guess.

Health care costs of smoking
Besides the up front cost, there are more subtle costs associated with what I’ve heard some say is their way to relieve stress. Extra doctor visits, prescriptions, hospital bills, and other treatments all cost money, and smoking increases your chances of needing those at some point in your future. In total, smoking-related illness costs the United States over $300 billion per year.⁴ Smokers also have to face higher insurance costs because of the health risks presented by their habit. All told, smoking one pack per day costs around $15,000 a year, or $40 per pack.⁵ Having $15,000 go up in smoke sounds pretty stressful to me.

The opportunity cost of smoking
Opportunity cost is a concept covered in economics and business courses. So unless you’ve taken both at the K-12 and collegiate level like I have you might be drawing a blank here. In a nutshell, it’s FOMO realized. In other words, (for my non Gen Z & Millennial readers) what are you missing out on because you decided to spend resources on a different option.

In our smoking scenario it means what could you have done with that $15,000? Did you want to start building a business but found yourself short on start-up funds? Maybe that could be the foundation of your child’s college fund or inheritance. Or is it that vacation you desperately want to take (of course while still keeping your physical distance; not trying to sort out catch dat ‘rona). Is your habit costing you the potential to live on your terms and start building your future?

Anyone who may be reading this and is struggling to quit smoking, I understand that it’s hard but keep trying. I want to see you reach your full potential and stop missing out one life-changing opportunities. Check out these resources from the CDC. And share your story in the comments.

(1) https://www.cdc.gov/tobacco/data_statistics/fact_sheets/health_effects/effects_cig_smoking/index.htm

(2) https://worldpopulationreview.com/states/cigarette-prices-by-state/

(3) https://smokefree.gov/quit-smoking/why-you-should-quit/how-much-will-you-save

(4) https://www.cdc.gov/tobacco/data_statistics/fact_sheets/economics/econ_facts/index.htm#:~:text=Smoking%2Drelated%20illness%20in%20the,%24300%20billion%20each%20year%2C%20including%3A&text=Nearly%20%24170%20billion%20for%20direct,due%20to%20secondhand%20smoke%20exposure

(5) https://www.washington.edu/admin/hr/benefits/events/flyers/tobacco-free/hidden-cost-of-smoking.pdf