Monthly Archives: August 2016

MONEY SENSE FOR YOU

You know FOMO and YOLO and adulting. You’re probably familiar with regifting. But what about degifting and frugle and debth? It turns out, that as we sort through our money, millennials are creating new language right along side of it.

Why the need for the new vocabulary? Our generation is looking at money differently. Sometimes we’re confronting new issues. Other times, we’re confronting age-old issues in new ways. And when an entire generation is faced with unprecedented money obstacles, it’s going to take some new words to sort through the numbers and the emotions behind them. Because when it comes to millennial money, some of it is good, some of it’s bad, and some even gets a little ugly.

The Research

First things first. Let’s talk research. How do I know all this? Besides being really smartspending all my time on Twitter, Filene Research Institute sent me their Millennial Money Chatter findings, a summary of an online ethnography that looked at semiotics, syntax, and other things that I haven’t thought about since I was an English undergrad. See? Smart. But seriously. The report analyzes the way millennials talk about money online* with words, hashtags, and emojis. And it turns out, we’re talking about everything from being good grown-ups to drowning in debt.

*They’re reading our tweets, guys! We’re basically famous! Now when do we get to be rich?

The Good

Adulting – We’re adulting! We made it. And we’re totally owning it. We have jobs, we pay bills, we rent, we buy. We are officially grown-ups. Merriam-Webster says the use of adult as a verb showed a six-time increase in 2016 compared to 2015. Why shouldn’t we make a little noise? We’re figuring life out and doing awesome things.

Degifting – An example of our awesomeness? We’re not just big on DIY. We’re not just stretching our dollars with staycations. We do both of those things, and we also degift. Instead of just regifting, many millennials are pausing or stopping the gift exchange. Some of us are trying to stretch our dollars further. Some of us are looking to minimalism and meaningful experiences. And most millennials are taking a long, hard look at the consumerism that literally crushed my closet.

The Bad

Frugle – I love me some frugality. I crushed our grocery budget goal. I spend $7 on breakfast all month. Aldi is my BFF. That’s frugality by choice and for a purpose. Being purposeful with my money takes the latte factor out of my closet and helps me tackle goals like slaying the mortgage monster. So what’s with the weird spelling? It turns out that frugle is similar to frugality, but it is due to financial hardship. Forced frugality, if you will. When I stumbled across this word, it was another great reminder to check my privilege.

The Ugly

#debth – What do you get when your debt feels like a death sentence? Debth. Before anyone accuses our generation of being hyperbolic, let’s look at the numbers. This study quoted other research (like Inception but with data, not Leonardo DiCaprios) that shows 43% of millennials have delayed starting a family over debt, 55% worry that they won’t actually pay off their debt, and 75% have delayed saving for retirement because of debt.

Pause. No, full stop.

Almost half of the people surveyed aren’t having families on their own time because of money. Over half don’t feel like debt will ever end. And three-quarters of the people surveyed are going to be sad old people because of their currently-overwhelmed-selves.

While the numbers aren’t all pretty when it comes to millennial money, the fact that an entire generation is talking so loudly about a topic that was once considered incredibly taboo speaks volumes about what we can do. We can have smart conversations. We can share real stories. We can climb out of debt and make sense of our money in ways that should leave other generations inspired.

Financial Wake Up Call Moment

unduhan-20As I look around the world today, still convinced that America is in for a huge financial wake-up call, I see many, many people still wandering around in status-quo spending, telling themselves that they’re just fine. And I get it. Hubby and I did this for many, many years. We leveraged whatever credit we could gain to get the stuff we wanted to have. We thought that the amount of credit banks gave us was an indicator of our success in the world, and we wore those badges proudly with new cars, nice clothes, fancy homes, etc.

We told ourselves the old lie: “We can make the payments just fine, so it’s all good.”

That is, until the job layoff. But funny enough, that wasn’t our financial wake-up call moment. We still continued to tell ourselves we’d be just fine, and made the smart SO not smart move of using our plethora of available credit to make up for the difference in income between hubby’s salary and the unemployment check.

It was nice. We could continue to live as we’d always lived: financially cozy without much consciousness of our spending.

You would’ve thought that living on substantially less income and not knowing when hubby would work again would’ve been our rock-bottom wake-up call. But it wasn’t. Not yet.

Our Wake-Up Call Moment

Then we moved out of suburbia into the country, and something happened.

I think it could best be described as “taking the blinders off.”

In the country, we didn’t have nearby neighbors known as the Joneses to keep up with. And being further away from the neighbors we did have, we couldn’t see what they were spending their money on.

Suddenly, we didn’t have so many people around us to compare ourselves with. We’d spent years comforting ourselves with the “everyone’s doing it, mom” theology. Now “everyone” was far away, and we were left alone with our pile of debt and no one to compliment our cars, our home, our clothes or our status.

It was just us, staring face to face with tens of thousands in credit card debt. 

And that, my friends, was our rock bottom wake-up call. We started to wonder how we’d make these payments if hubby got laid off again. Yep, that would suck. We’d be in big, big trouble was the answer.

And since there was no one nearby to comfort us with the “it’ll be just fine” message, we had to face the fact that if a job layoff happened it really wouldn’t be just fine. Not in the least.

It was that stark realization – the one that foreclosure, bankruptcy and all those other not-so-fun things could become a reality – that induced our financial wake-up call.

Don’t Wait for a “Forced” Wake-Up Call Moment

My prayer for the millions dealing with oads of consumer debt and bloated mortgages today is that they don’t wait for that “forced” wake-up call of a job layoff or other disaster before they start making a plan to dump the debt and build a more secure financial situation for themselves.

Take a few moments today to honestly analyze your finances and see if your financial situation really lines up with your dreams and goals. Then make a plan to reduce debt and increase savings if needed.

No one is immune to a job layoff or decrease in business income. Or major league medical or other expense. Begin the work of preparing yourselves today so that your potential rock-bottom, wake-up call moment will end with a real-life “we’ll be just fine.”

How to Build a Financial Fortress

Here’s how you can begin those preparations.

1. Assess Your Situation

Sit down today and make a spreadsheet listing each of your debts (liabilities) in order from smallest to biggest. Then list your assets (savings, retirement, homes, cars, etc.) and their values in order. Subtract the liabilities from your assets in order to get your net worth.

2. Make or Assess Your Budget

If you have a budget, look it over to figure out if you can or should trim costs somewhere in order to improve your money situation.  If you don’t have a budget, make one. Make the first budget based on what you spend, and another one based on what you could be spending in order to make your money situation more secure.

3. Cut Costs That Aren’t Value-Based

Go through your budget line-by-line and analyze each non-necessity cost. If the expense is in line with your financial goals and dreams, keep it, but if it’s not, consider reducing or eliminating it. Example: If meeting your financial freedom goals is more important to you than watching cable TV, get rid of the cable, even if just for a time.

Ask yourself before making any expenditure: Is this expense worth me delaying my financial freedom date?

4. Put All Extra Cash Toward Consumer Debt Reduction

If you’re carrying consumer debt, commit to putting all extra monies toward paying it off. Use the Debt Snowball or Debt Avalanche to help accelerate the process.

Student Loan Analysis Tool

I’ve been working behind the scenes for months now to produce a simple, free spreadsheet to help with one of the greatest financial problems of our generation, that of student loans. I finally have a student loan analysis tool to share with you after many hours of work, and I’m very excited about it. Click below to download it while you read the rest of the article.

The Millennial Moola Free Student Loan Analysis Tool

Student Loans: My Accidental Side Hustle

I started learning about the maze of loan repayment programs while helping my girlfriend make a plan to repay her medical school debt. There’s IBR, PAYE, the Standard Plan, and now REPAYE. Each of them have unique rules and eligibility requirements. On top of that, if you work in a not for profit job you can even qualify for Public Service Loan Forgiveness.

I realized that choosing the right student loan repayment strategy could be boiled down to a financial analysis of your individual loan situation. In my prior corporate life, I traded bonds for a living, so using Excel to build cash flow models is something I’m familiar with. I started doing flat fee $100 consultations for people with six figure student debt burdens about six months ago. I’m still taking on new clients by the way if this spreadsheet doesn’t give you enough detail. If you wanted to email me at travis@millennialmoola.com I could give you more information.

In the short time I’ve been involved in the student loan space, I’ve discovered that it’s basically the Wild West of middle class personal finance. I read an excellent piece over at Millennial Money Man reporting that “debt relief” companies are charging hundreds or even thousands of dollars to tell you about information you can find out for free by searching the free Federal student loan website.

Student Loan Servicers and Financial Aid Officers Do Not Model Anything For You

People are turning to these scams because the companies that collect their payments are awful. Additionally, they cannot even report accurate information as to how long you have paid your loans and how many qualifying payments you make towards loan forgiveness, much less give you an estimate as to how much different repayment plans cost.

The majority of financial aid officers are similarly useless. One veterinarian I spoke with as part of my student loan consulting practice had almost $400,000 in debt a few years out of school. Her loan counselor told her not to worry, that it was “good debt” that she would figure out how to pay off at some point down the road. This individual had no clue what they were talking about. She had the opportunity to limit her interest accrual by switching to REPAYE, which slowed the accelerating growth of her massive student loans.

I was lucky enough to graduate school without any debt. Even so, that somehow doesn’t stop some extremely annoying robo caller hassling me weekly about an exclusive student loan relief offer I can get by dialing zero after the tone to speak to a representative. If this ever happens to you, try to get off their list. You will be speaking to someone who is better at sales than adding or subtracting with minimal knowledge as to what the heck they are talking about.

How My Student Loan Analysis Tool Works

I have a simulation tab that runs all the data you enter in the ‘Student Loan Inputs’ tab. The ‘Summary Statistics’ tab boils all this down for you in an easy to understand page. The red tab is the highest cost repayment plan you could use. The green tab is the lowest. If you work in the private sector, your Public Service Loan Forgiveness row should read N/A. Here’s a sample of what’s going on in the background.