Kat, I’m wondering if you would consider a post about certain types of insurance such as life insurance, disability insurance, and umbrella policies? I’m wondering how people decide on buying additional insurance beyond what may be included in work benefits?
What money moves should you make in your 20s — and what should you avoid doing? Rhiannon Payne, editor in chief of Feminspire, reached out with a fabulous guest post on this very topic. I think her tips are solid however old you are, particularly if you’re just starting a new career with more money (like I was at 27, my first year in BigLaw). Thank you for guest posting, Rhiannon! (Pictured: Lodis Accessories Audrey Cassie Cell Case with Wristlet, available at 6pm for $36.99.)
So you’ve finally landed that amazing job, the one that pays you enough to not only cover your rent and other basic expenses, but also affords you the luxury of having money left over – money that you’re not sure what to do with. The options seem limitless. While you once had to count up the pennies in your change jar if you wanted to buy a new outfit, you’re suddenly thinking about all the exciting ways you can improve your life with your new funds. Things you would have never considered are suddenly options – a tablet for working on the go? A newer, shinier car to replace your old model? The fancier silverware sets from Bed Bath & Beyond?
This is a trap that a lot of young people fall into, especially when entering the workforce after college or going straight into the professional world in their early 20s (the latter was me – I set my sights on an industry where a degree was more of an option than a requirement, and I didn’t want to risk a negative ROI on my tuition). Unfortunately, the financial education provided to American students, in both high school and college, is generally pretty limited. When a young person starts earning a healthy income, they often have no idea what to do with their money. Thus, some unfortunate financial decisions usually occur. This is especially true for women, who not only make less (on average, $0.77 to the dollar) than men, but are traditionally given even less financial guidance than their male peers. [Read more...]
I absolutely love your Tales from the Wallet series, but I find a lot of the lingo is a little over my head. I do understand that most of your readers are lawyers and professionals with sizable incomes, but I was wondering if you had any book recommendations for readers like myself. I didn’t invest in a 401K through my employer because I didn’t understand it. The idea of having money deducted from my account for a stranger to manage and crossing my fingers for the best didn’t sound very appealing to me. After reading some of the comments, it looks like there’s more to it. I currently don’t have any investments and want to start to learn about vehicles to put my money in. Please share absolutely any resources for new investors! Thanks!
Everyone has to start somewhere, so I think this is a great question. We’ve talked about tax-savvy investments on here, of course (and may answer some of your 401K specific questions), but in general it can seem daunting to learn about personal finance. (Pictured: Kate Spade New York ‘Popsicle’ Coin Purse, $78 at Nordstrom — according to the reviews it’s surprisingly functional!) I’ve read a bunch of personal finance books over the years; these are the best ones that I would recommend for newbies: [Read more...]
How do you pay off big student loans? Can you manage your debt when you’re facing huge numbers, such as six figures? We’ve talked about when to save versus when to pay down debt before, but a number of readers have asked for a post on Really Big Debt, so let’s discuss (particularly since the interest rate just doubled on new Stafford loans!). I polled some friends to ask who had a plan or success story that didn’t involve inheritance/lottery, and thought I’d round up their stories, anonymously, below — but readers, please share your own! Have you paid off major debt (student loans or otherwise)? What is your plan to pay it off? (Pictured: one of Nordstrom’s top rated wallets: Hobo ‘Lauren’ Double Frame Clutch, with 95 positive reviews. Available in six colors for $110.)
M’s Story: Some repayment assistance / A whole lot of payment discipline
So, on my loans: the total between grad and law school was about $130k. I was fortunate to go to a law school with a repayment assistance program for graduates working in non-profit organizations… which requires the 10-year repayment plan. I bit the bullet and went for it, feeling like I’d rather suck it up for ten years and be FREE than have student loans following me into my 50s. Consolidated all the loans (with super-low interest rates, hooray), signed up for repayment assistance, and made sure to sign up for auto-pay on the loans to make non-payment/paying less not an option. [Read more...]
How do you bring yourself back when you’re consistently over budget — what changes do you make, on either a small or large scale, to control your spending? We’ve talked about how to set a budget, as well as how to live within your means, but we haven’t talked about that thing that everyone needs to do from time to time: rein yourself in when you’re spending more than you want to. There are two sides of this coin, I suppose. First, maybe you’re spending too much and sending yourself into the red — credit card debt is climbing, other bills are going unpaid, etc. Second, maybe you’re still spending within your means, but you just feel like you’re out of control — maybe you were raised with a more limited budget, or maybe you just know you can save a lot more than you are right now. Either way, the question is the same: how do you stop spending? (Pictured: Moyna Dollar Sign Pouch, available at ShopBop for $40.80 (on sale from $51).
I’ve done a number of things through the years, including: [Read more...]
What does it mean to have balanced investments, and how do you do it? What is a proper asset allocation? I first tried to answer these questions about six months ago (maybe longer) and finally think I’ve got it figured out… kind of. Still, do note: this is not intended as a tutorial, just a jumping off point for a discussion. (Pictured: Kate Spade New York Carmine Street – Lacey Wallet, available at Nordstrom for $158 in green, pink, and black.)
Why You Should Balance Your Investments
First — why should you balance your investments, or allocate your assets? I read Ramit Sethi’s I Will Teach You To Be Rich a while ago — a great introductory book if you’re new to financial stuff, and definitely a quick read. One of the only things that was new to me was his explanation of how and why to balance your investments, which I’d heard about through the years but never really focused on. (To be honest, I kind of thought all I needed to know was that bit about subtracting your age from 100 and putting that percentage in stocks, which roughly translated to me as “invest mostly in stock index funds.”) In Sethi’s book, he talks about how you should have a target asset allocation (also quoted on his website) of something like 15% TIPS, 15% Government bonds, 20% REITs, 5% emerging-market equities, 30% domestic equities, and 15% developed world international equities. Whoa! That’s a bit different than “mostly stocks.” But I suppose it’s easy enough to figure out, at least if you’re just setting up your investments for the first time. So, let’s say you invest accordingly, and in that first year, domestic equities do AMAZING and emerging-market equities have a lousy year — so at the end of the year you may end up with 60% of your holdings in domestic equities and only 2% in emerging-market equities. So, Sethi says, at the end of each year you should figure out what your target allocation is and then readjust so that you’re putting something like 20% into emerging-market equities and only 10% into domestic market equities. Uh huh. Ok. Simple! [Read more...]