• Insurance,  Retirement Planning

    The Bills and The Fees: How to Talk to Your Parents About Money (Without Making It Awkward)

    February 7, 2019 /

    If the thought of talking to your parents about money makes you cringe, you’re not alone. In fact, the majority of Americans would rather talk about “the birds and the bees” than “the bills and the fees” of finances with their own family. When given the choice, we would prefer to talk about our own DEATH than asking our parents about their will or estate. (Now, that is just ridiculous). There’s no question that money is a taboo topic that makes you want to run 100 mph in the other direction anytime you hear the words “budget” or “debt.”

    But, why is it so uncomfortable to talk about cash money with our family? And does it even really matter? After all, you’ve made it this far without diving into the depths of financial awkwardness with your parents. What’s the worst that could happen?

    Well, here’s a few stats for ya:

    • 52% of people turning 65 will need some form of Long-Term Care
    • 64% of people with Long-Term Care needs rely exclusively on friends and family for care
    • 25% of all caregivers are Millennials
    • Average annual cost of caregiving ranges from $18,000 (Adult Day Care) to $91,00 (Private Room in Nursing Home)
    • 55% of Americans have no will or plan to transfer assets at death
    • Only 35% of Baby Boomers are confident that they are financially prepared for retirement

    To summarize these lovely statistics: the odds that your parents may eventually require some form of Long-Term Care (assisted living, nursing home, etc.) during their lifetime is 1 in 2 (a coin flip). The chances that you will need to help pay for some of these costs are also quite high, especially if your parents don’t have any kind of long-term care insurance coverage or other savings in place. AND, if your parents are in the minority of those who have already established a will, congratulations! But, even if they do have a will, are you sure it’s up-to-date? You’d hate for your mother’s ex-husband’s cousin’s half-brother to end up inheriting money that was meant for you, right? Yikes! Talk about awkward.

    With that said, yes. Having a conversation about finances with your parents is obviously very important. So, what are you waiting for?? Go ahead and throw those taboos to the wind and dive right in! OK, easier said than done, right? Let’s look at three simple conversation starters that will make the money talk a little less awko-taco.

    1. You’ve taken good care of me, so I want to take good care of you.

    When I was visiting my parents over the holidays, I asked them if we could set aside some time to talk about money. Specifically, I wanted my parents to know that, if anything should ever happen to them, I would be adequately prepared take care of them and their finances. Just as my parents have spent years caring for me and preparing me for my future, I want to be able to return the love by taking care of them when the need arises. We discussed what kinds of insurance policies, investments, and savings they have in place, where they keep financial records, and who they use as a trusted financial advisor. I didn’t ask to see any financial statements or specific policy information (because that’s usually where the awko-meter starts to rise) — only where this information is kept, so I know where to look if I need to access it at some point in the future. By emphasizing that my purpose behind the conversation was love and care for my parent’s wellbeing, we were able to talk open and honestly — without any hurt feelings or awkward outcomes.  

    YESSSSSSSS

    2. I’m interested in visiting a financial advisor, but I’m not sure where to start. Would you mind introducing me to yours?

    This is a win-win conversation starter. Not only does it provide you an opportunity to visit a financial advisor for the first time (without spending lots of money), but it also provides an ideal environment to discuss difficult financial topics with your parents. Their advisor can guide the conversation and act as a third-party mediator if needed. While meeting with the advisor, you may want to discuss your parent’s current retirement plan, including protection against long-term care events, and to review any beneficiaries on your parent’s insurance policies to ensure they are up-to-date. (You’d be shocked how often an ex-wife, ex-husband, or estranged family member ends up receiving a death benefit, simply because policy information was not current). AND, while you’re in the office, you might as well glean some insight from the advisor on your own financial plan. Most likely, the advisor will be more than willing to assist you, as they see you as a potential future client. (If the advisor doesn’t see your value, you may want to look for another advisor).

    Even if your parents don’t already have a trusted financial advisor, this is the perfect time to find a reputable professional together. It will be an opportunity to bond as a family, while also tackling your finances in an efficient and holistic manner.

    3. Do you have a legacy plan? AKA: If you die tomorrow, what kind of legacy to do you want to leave and how do you want it accomplished?

    Most people don’t like to think about dying until a death actually occurs. Can’t blame you. Death isn’t the first topic that comes to my mind when I think of “fun conversation starters.” BUT, the problem we create when we avoid talking about death is that we miss out on the opportunity to plan for a legacy — until it’s already too late. While your parents may want to leave their house behind to the family, donate their art collection to a local museum, and divide the rest of their assets equally among you and your siblings– if they don’t have these wishes expressly written in a will, they’re not likely to happen. When someone dies without a will (called intestate in legalese), your state will then determine how your assets should be dispersed. This could be okay, except that your state has no idea that you don’t even really like your spouse, you’re estranged from your son, and your daughter is a compulsive shopper who blows every penny she has on lottery tickets. But, the state doesn’t really care about your family issues. It will still divide up your assets among each of these individuals anyway. (Sorry ‘bout your luck).

    Contrary to popular belief, establishing a will (and keeping it current) is not as much of a headache as many people think. For a simple estate (think: relatively small and not paying estate taxes), it may only cost around $100-$150 for an attorney to draft a will. (If you’re looking for a lawyer, start here). Or, you can also write your own will by using a reputable online software program or following a template. HOWEVER, if you complete your will on your own, you are doing so at your own risk, as each state has different regulations surrounding what is required to validate a will and, if done incorrectly, it may not hold up in court.

    I’ve only scratched the surface on the importance of writing a will (both you and your parents). And I haven’t even started to explain all of the incredible information that can be contained in a will, such as designating power of attorney or establishing a living trust. But, I realize I’ve already bored you to tears, so I’ll save these enthralling topics for a different time. (Psst: stay tuned for an upcoming Face The Fear Podcast episode on Estate Planning 101, coming soon!)

    In summary, you know you should probably strike up a conversation with your parents about money. It’s on your to-do list, right below “Clip grandma’s toenails” and “Watch paint dry.” At least now you’ve got a few conversation starters in your back pocket to break the ice. I promise, it won’t be as bad as you think. (Or, maybe it will be. In that case, I don’t know you). Either way, challenge yourself to start a conversation with your family about finances this week. Even simply cracking the door open today could provide fruitful opportunities for future discussions and prevent a flood of heartache, confusion, and financial strain later in life. Friend, it’s time to #FaceTheFear!

    Written By: Kaitlyn Duchien

    Contact Us: facethefearfw@gmail.com

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  • Budgeting

    Budgeting: How to Crunch Those Numbers Like a Boss

    January 8, 2019 /

    Like most folks who hear the term ‘budget’, I cringe, close my eyes and begin groaning inwardly like Tina Belcher from Bob’s Burgers (No? Just me? Oh geez…).

    In the past, I would search for budget templates online, attempt to follow them, realize they didn’t fit my tastes or my lifestyle and I would walk away defeated. I would wonder what was so wrong with my finances that I couldn’t match exactly what some of these articles were telling me.

    But that’s the uniquely wonderful (and yes, incredibly frustrating) thing about budgets: they aren’t black & white or one-size-fits-all; they can be tailor-made to fit your specific lifestyle, needs, and wants. I say ‘incredibly frustrating’ because it does take time and a fair amount of effort to find a budget that works for you—your wants and needs are going to change and with that, so will your budget.

    At the end of each paycheck, for me, there’s a sense of strength that comes from knowing where each of my dollars are going and knowing what I’m left with to play with however I choose. Full disclosure: that’s my favorite part about budgeting because I love seeing what money I have left over and let’s admit it, we all want to have fun with our money—after all, we work hard for it!

    I’ve been creating a budget for the past 6 years or so and I have found a few things to be invaluable in my attempt to understand and control where each of my hard-earned dollars are going:

    1. Know your debt intimately. When I started creating a budget, I couldn’t tell you which of my debts had the highest interest rate or what their balances/minimum payments were; it honestly gave me a headache every time I tried to write it all out. Knowing this info gives me the opportunity to see where I am and where I can send extra cash. Small amounts add up over time & it feels so good to see $0 next to a debt I owe.

    2. Figure out some financial goals. These can be as little or broad as you would like them to be but I normally create small goals to feel encouraged in continuing to hit some of my larger goals. I ask myself where I’d like to be in 3 months, 6 months, and a year! And, as a side note: I treat myself when I accomplish a financial goal—it keeps me inspired and reminds me that even though ‘adulting’ and ‘budgeting’ aren’t exactly the most thrilling parts of life, they are necessary and we can make it as easy or hard as we want it to be.

    3. Be flexible. Always be open to changing whatever you feel isn’t quite working for you and your budget. Your goals are going to adjust over time and with that, your budget will too and that’s okay! I’ve tried several different budgeting techniques (the 80/20, the 50/15/5, etc) so be willing to try out different techniques until you find one that works for you. Your wants/needs change regularly, so why wouldn’t your budget?

    One last, small tip I’ll give to those preparing to create or change their budget is this : give yourself lots of grace. You’ll fall short, not reach certain goals, or get that call on a Friday night from your BFF who’s had a rough week and she wants to go out to eat and grab a few drinks—in those moments, it’s challenging. All you can do is adjust, pick yourself back up, and attempt to stick to it better next time.

    There are also tons (and I mean literal tons) of information and resources out on the world-wide web that can get you started on creating a budget or finding example budgets to follow and use as a rough outline for your own.

    Article Contributed By: Bethany Trosper

    Contact Us: facethefearfw@gmail.com

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  • Budgeting

    New Year, New You: 5 (MORE) Ways You Can Take Control of Your Finances in 2019 

    January 4, 2019 /

    Earlier this week, we talked about 5 simple ways to get your financial sh*t together in 2019. If you’re looking for that article, here it is! If you have been sitting on the edge of your seat waiting eagerly for the 5 MORE ideas to tackle your finances in the new year…well, my friend, you need to get a life. (Just kidding! You’re my favorite). Wait no longer. Here are 5 MORE ideas to show your finances who’s boss in 2019:

    1. Start that Side Hustle

    Everybody’s got a knack for something. Whether it’s photography, writing, event planning, car-fixing, baking, nannying, or playing music, your “knack” can be turned into a side-hustle money maker. The New Year is an excellent time to begin monetizing your skill set.

    Think you don’t have any valuable skills that can translate into a profitable business? Think again. Can you drive a car? (Think: Uber and Lyft). Can you put together a piece of IKEA furniture faster than your mom can say, “Honey, make sure you read the instructions”? (Think: TaskRabbit) Can you speak English? (I hope so if you’re reading this article. Think: Teaching English online through VIPKID). Can you take a BuzzFeed survey to find out what your spirit animal is? (Think: SwagBucks). Can you walk someone else’s dog? (Woof! Think: Rover).

    I prove my point. It’s easier than you may think to pick up a few extra dollars here and there. You just need to dedicate a little time and energy to get it started. Ultimately, those extra bucks could jumpstart your emergency fund or pay down a credit card faster. Score!

    2. Find a Financial Mentor

    If you’re interested in seeing a financial advisor, but aren’t sure where to start looking or don’t feel like it’s the right time yet, finding a financial mentor may be the perfect first step.

    Like most mentors, a financial mentor is someone who has walked the path before you, achieved success with managing their own finances, and can help illuminate your way. This person could be a parent, coworker, friend, teacher, pastor — really anyone who you admire for their practical, disciplined, and knowledgeable approach to money. The purpose of this mentorship is simply to establish a relationship with someone who can provide constructive advice, hold you accountable to your financial goals, and even recommend a financial advisor who’s a good fit for you. Ideally, your financial mentor will be someone who you know, trust, and feel comfortable discussing finances with — and who isn’t afraid to call you out on your BS and give you some tough love when needed.

    BUT, remember: a financial mentor is not a replacement for a financial advisor. While it may be tempting to imitate every financial decision your mentor has ever made in hopes of achieving the same success, your mentor’s approach may not be suitable for your unique circumstances. Take all advice given as a mere suggestion and make sure to run it past a financial professional first. Your mentor cannot be held liable for a poor investment suggestion or financial strategy that went sideways. (Sorry ’bout your luck).

    3. Face the Fear of Money Talk

    Asking a coworker how much money they make? GASP! I would never. Pestering my parents to purchase life insurance, long-term care, or write a will? No way. Too uncomfortable. Touching the topic of student loan debt on a first date? WOAH. Now that is just too far!

    (OK, maybe not on the first date).

    As a society, we have become afraid of talking about money, and all of this secrecy is ultimately hurting our finances. Why?

    Consider this. You just received a job offer in a brand new city. YASSSS! After your initial excitement settles, you realize that #1, you have no idea what a reasonable job offer may be for this position and #2, you have no idea what a reasonable apartment costs in this new city. Thankfully, you have tools like Glass Door and Apartments.com to assist with these decisions. However, can you imagine how much more straightforward it would be to simply ask someone in that position what they are being paid or ask someone in the city how much they are paying for their apartment? For whatever reason, money has become a taboo topic that most Americans feel uncomfortable discussing. It’s time to change that — for everyone’s benefit.

    Here’s a New Year’s challenge to spark up these conversations at least once in 2019. (But remember, these are still sensitive conversation topics for some, so please use tact. And if you’re going to ask the question, be willing to answer it yourself):

    • Ask a coworker how much they’re making. (Just in case you asked yourself, “But, is that even legal??” Yes, it is.)
    • Ask your boss if there are opportunities for promotion and set up a plan to get you there.
    • Ask a friend how much they are paying for their apartment.
    • Ask your parents if they have life insurance, long-term care, and have written a will. (P.S. These are hugely important topics that no one ever talks about until it’s too late. Don’t be that person).
    • Ask your significant other how much personal debt they have (credit cards, student loans, car loan, etc).
    • Ask your kids if they have any questions about money, (such as how much you make, how much it costs to buy a car or a house, how much a college education costs, etc). Talking openly and honestly with your kids about money could be the single most influential way to improve the financial habits of the next generation.
    • For the ULTIMATE challenge-seekers: Ask a stranger if they feel financially stable. Their response could be eye-opening, and it may spark a life-changing conversation unlike any you’ve experienced before. (Or they may just say, “Nope!” and walk away. Who knows).

    4. Make Your Money Do The Work For You

    Investing. You’ve heard about it. You know you should probably do it. And you’ve watched The Wolf of Wall Street and The Big Short, so you’re basically an expert.

    OK, pump the breaks. You may not be an expert, but you definitely don’t need to be one to start putting your money to work for you.

    If you have a retirement account such as a 401(k), 403(b), or IRA, you’re probably participating in the stock market already through the mutual funds inside these accounts. In other words, you’re halfway to being the next Warren Buffett. (Just kidding. But dream big, kids).

    So, how do you start investing when you’ve only got a few dollars to spare and your current investment knowledge is limited to binge-watching Shark Tank?

    The most old-school, yet time-tested method is to begin working with a financial advisor who is a Registered Representative with FINRA. (How do you know if an individual is registered with FINRA? Check here). This professional can evaluate your current financial situation, assess your risk tolerance, and pair you with suitable investments that both align with your goals and your personal values. Fortunately, we will be speaking with one of these fantastic professionals on our February Face the Fear Podcast episode! Make sure you’re subscribed so you don’t miss it.

    An alternative is investing through robo-advisors and investment apps. While you’re missing out on the face-to-face interaction and personal relationship built with a financial advisor, these online tools can be a beneficial and inexpensive option for beginners who don’t have billions of dollars to invest (yet).

    As per usual, here’s a quick disclaimer. Investing is one method of wealth accumulation that should be accessible to everyone, regardless of net worth or investment experience. However, investing does involve risks along with it’s rewards. So, make sure you are fully aware of these risks and have received all required informational materials (such as a prospectus) PRIOR to chucking all of your pretty pennies into an investment. Also, here is a Beginner’s Guide to Investing published by the SEC (Securities and Exchange Commission — an independent federal agency established to protect investors). You’re welcome.

    5. Subscribe to Face the Fear (Shameless Self-Promo)

    You know you want to.

    Written By: Kaitlyn Duchien (@ktaylor1395)

    Contact Us: facethefearfw@gmail.com

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  • The Market: 101

    Drop It Dow Low: What is the Dow Jones?

    December 13, 2018 /

    You may (or may not) have heard that the Dow Jones has been dropping it like it’s hot lately, dipping 1,150 points just last week. World events and uncertain economic conditions can result in market volatility — when the stock market changes moods faster than your teenage sister. But, what exactly is the Dow Jones? And why has it been making major money moves recently?

    The Dow Jones Industrial Average (DJIA) is a stock market index that includes 30 large, U.S. publicly-traded companies and acts as a thermometer, testing the overall health of the U.S. marketplace. Sounds a lot like the S&P 500 index, right? 

    Here are several key differences between the S&P 500 and the DJIA:

    S&P 500Dow Jones (DJIA)
    Founded in 1957Founded in 1896
    500 of the largest U.S.-based publicly-traded companies across all industries 30 of the largest U.S.-based publicly-traded companies across all industries (originated with just 12 companies solely in the industrial sector)
    Companies selected by S&P Committee (owned by McGraw Hill Financial)Companies selected by Dow Jones & Co. Averages Committee
    Companies selected based upon specific qualification criteria No defined criteria for how a company is selected — generally, must be a large leader in their industry
    Stocks within the index are weighted by market capitalization (market cap = # of outstanding shares x market price)Stocks within the index are price-weighted (the higher the stock’s market price, the more influence it will have on the index’s performance)
    Often considered the “single best indicator” of stock market performance, because of its broad and diverse collection of companies across all industriesMost well-known stock market index. But, because if its exclusivity (only represents 30 of over 3,000 US public companies), it is more an indicator of blue-chip stocks than the market overall

    OK, now that we’ve got a grasp on what the Dow Jones Index is, let’s talk about why it’s been dropping faster than your bank account after a trip to Target.

    The stock market can be affected by many factors, such as political changes, natural disasters, inflation, interest and exchange rates, and unexpected world events — just to name a few. Most recently, when the Dow Jones stumbled and fell by 4 percent in early October, it was likely due to sipping a cocktail of rising Treasury yields, the increased Federal Funds rate, and the China-U.S. trade war. Just like how you get a little wobbly after drinking one too many cocktails, the stock market also gets shaky (see: volatile) when too many uncertain events are mixed together at the same time. The stock market: it’s just like us.

    But, not to fear. Similarly to how you will drink lots of water, take an Advil, and eat greasy food to bounce back after a night out, the stock market bounces back, too. Usually, the severity of the market fall will determine how long it will take to rebound. Small corrections can be overcome in just a few days, whereas a full-blown financial crisis may take years to recover from (think: the 2008 Great Recession).

    To recap: the Dow Jones is the most well-known market index, comprised of only 30 companies across various industries, and is used to evaluate general trends in the stock market. Recently, the Dow Jones took a big tumble due to a woozy cocktail of world events and interest rate changes. But, don’t worry. Analysts remind us that the market often panics over everything and can sometimes be a bit overdramatic…#Relatable. So, for now, be prepared to ride the roller coaster of market volatility, because over the long-term, the market always trends upward. Ask Warren Buffett.

    Congratulations! You now know what the Dow Jones is and why it’s been in the headlines lately. But, this article was not meant to be an in-depth analysis of the Dow Jones (because ain’t nobody got time for dat). If you’d like to dig in a little deeper to the topics covered above, feel free to click on any of the hyperlinks (including that one) to become a Dow Jones expert. You’re welcome.

    Written By: Kaitlyn Duchien (@ktaylor1395)

    Contact Us: facethefearfw@gmail.com

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  • Insurance

    Why Buy Life Insurance?

    December 6, 2018 /

    As a millennial, life insurance is likely not high on a list of financial priorities. With rent, student loan payments, and other essentials, life insurance premiums can seem like an unnecessary expense. When you’re young and healthy (read: invincible), what’s the benefit of life insurance?

    I had these same objections just a few months ago. But then I learned more about the benefits, and I bought my first personal life insurance policy.

    Here are a few reasons why:

    • The cheapest time to buy life insurance was yesterday

    Life insurance gets more expensive every year, so why not buy it as cheap as possible? For a 25 year old male in good health, the premium could be as low as $18 a month! This policy would provide a tax-free $100,000 death benefit to your designated beneficiary if you die any time in the 20 year policy period.[1]

    • Buying now secures your insurability for life

    Let’s say you buy that 20 year term policy. If in 10 years you develop a significant health problem that could prevent you from buying more life insurance in the future, you are still protected. Even if you couldn’t buy life insurance because of your health impairment, if you currently hold a term policy, you can convert it into a permanent one, albeit for a higher premium, and keep it for life.

    • It’s not for you – it’s for your loved ones

    The main reason most people buy life insurance is to provide their family with tax-free money in the event of an untimely death. But what if you’re single and have no kids? Well, there are still plenty of people affected by your death! Your funeral expenses need covered, which can be $10,000 or more. Also, any co-signers on a loan you have may still have to pay that loan if you die. That $100,000 policy protects your family members. And remember, if you get married and have kids, but become uninsurable, you can convert the term policy into a permanent one.

    Life insurance when you’re young is inexpensive and has long-lasting benefits. It protects your insurability in the event of future health problems, and protects your family in the event of a premature death.

    Still not convinced? Or do you have other personal finance questions? Let’s talk! Face The Fear is here to help millennials make smart financial decisions that fit their lifestyle. Contact us at: facethefearfw@gmail.com

    [1] Protective Classic Choice Term, Male, Indiana, Age 25, $100,000, 20 year term

    Article Contributed By: Xavier Serrani

    Contact Us: facethefearfw@gmail.com

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  • Face The Fear

    Welcome!

    December 5, 2018 /

    Welcome to Face the Fear!

    We are Nicole Ellsworth and Kaitlyn Duchien, two motivated millennials on a journey to face the fear of our financial future.

    We created this safe space where we will dive into topics like retirement, budgeting, student loans, investing, insurance, financial terms, etc. We are passionate about educating ourselves and others in the process. Join us as we change the conversation around finances and approach our future with confidence.

    If you like us, follow us here, Facebook, Twitter, Instagram and subscribe to our podcast: Face the Fear. (Social media links are on the top right of this page.)

    *Disclaimer: We are not here to give legal financial advice. We highly encourage you to bring the topics we discuss to a financial professional, who is qualified to address your specific financial goals.*

    It’s time for some real talk, and we are so excited that you are here to join us!

    Until next time – Face the Fear!

    –Nicole and Kaitlyn

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