Plan Well, Retire Well Saving and investing your money Sun, 15 May 2005 13:02:08 -0500 Family Finanical Feuds - Who Are We With Money? Fri, 18 Jan 2019 10:49:00 +0000 In November, Kathy Sweedler wrote a blog post titled "Money Avoider? Giver? What's your Money Personality?"

Kathy and I really enjoy discussing money personalities, scripts and even habitudes, so much so we recorded a podcast about it. Listen to "Who Are We With Money?" this month on Soundcloud!

I’m thinking of a Number between 300 to 850 Fri, 11 Jan 2019 09:15:00 +0000 I remember when I first started to learn about how to build and manage my credit in college. Many financial numbers were thrown around and were often confusing to a novice like me. People who do not work in finance or who have little motivation to pay attention to the importance of different numbers, or why lenders rely on them, may overlook them.

Some numbers have significant effects on our financial lives. If you are planning to take out any loan (e.g., car, mortgage, student, or smaller bank loans), it is a good idea to understand which numbers matter to creditors.

Credit Score. Your credit score is based on a mathematical formula that is used to measure your likelihood of repaying a loan. It is a 3-digit number that ranges from 300-850 (higher numbers are more favorable to lenders). The main components of a credit score are payment history, amount of debt owed, length of credit, amount and type of credit, and new credit. One question I get a lot about credit score is "why do I have multiple scores?" The short answer - different credit reporting agencies produce your scores, and those numbers reflect what the agency is reporting. You may also hear a lot about FICO (Fair Isaac Corporation) score. FICO is a company that produces the most widely used credit score.

* It is important to note that credit score doesn't consider your income

Debt-to-Income (DTI) Ratio. DTI measures the percentage of your debt compared to your income. To calculate your DTI, divide your total recurring monthly debt by your gross monthly income. Here is an example from the Consumer Financial Protection Bureau (CFPB):

If your monthly bills add up to $2,000 and your gross monthly income is $6,000, then your debt-to-income ratio is 33 percent. ($2,000 is 33% of $6,000).

When I was applying for my mortgage, I had conversations with my lender about my DTI. Creditors usually encourage a DTI below 43% to qualify for a mortgage that you can afford. DTI indicates to your lender that you are not taking on more debt than you can handle. It may vary depending on the creditor and other mitigating factors, so check with your lender to learn about their ideal DTI.

Credit Utilization Ratio. To calculate this ratio, divide the total balance of all your credit cards by the limits of all cards and then multiply by 100. For example, Sally has two credit cards. Credit Card Blue as a limit of $5,000 (total loan to you) and a balance of $2,000 (the amount you spend). While Credit Card Orange has a limit of $2,000 and the current balance of $500:

Total balance for both cards: $2,000 + $500 = $2,500

Total limit for both cards: $5,000 + $2,000 = $7,000

Utilization percentage: $2,500/$7,000 = .3571 or 35.71%

Financial experts encourage that we keep credit utilization as low as possible – preferably below 30%. Credit utilization plays an important role in determining credit scores and creditors rely on credit scores to decide whether to lend to us.

Emergency Savings. While this number is flexible and a little different from the ones mentioned above, it is equally important (in my opinion). Also known as a rainy day fund or contingency savings, an emergency fund acts as insurance for the unexpected (Collins & Gjertson, 2013). Financial experts offer varying recommendations about the exact amount you should have in an emergency savings account. Some suggest having three-six months' worth of income and others believe that might be too unrealistic for many people and encourage having at least $500 in savings.

In summary, if your credit score is low, your credit utilization percentage is high, or you don't have an emergency fund, there are techniques that you can use to stay in a great place financially:

  • Pay your bills on time
  • Pay more than the minimum monthly payment
  • Watch your credit utilization and make sure you are not close to your credit limit
  • Start small with your emergency savings and automate a monthly amount to a savings account

Follow on Twitter @savefearlessly

Visualize Your Financial Well Being Thu, 03 Jan 2019 12:45:00 +0000 Think about your financial well-being:
  • where you are now?
  • where you'd like to be in the future?
Take a look at the eight images at the top of this blog post; you can click through them.
  1. Pick the one photograph that best represents what you want your financial well-being to feel like in the future.
  2. Now, write down why you chose that image. There are no right or wrong answers here.

Research done at the Center for Advanced Hindsight at Duke University found that this activity helps people connect with their goals on a deeper, more emotional level.

In addition, their research found that many people saw financial well-being in similar ways. Specifically, seven themes emerged.

Often people talk about financial well-being around themes such as:

  • Stability: don't need to worry about finances and want to feel secure with finances
  • Family: provide for family, whether take family vacations or take care of children's future needs
  • Freedom: feel like nothing is weighing them down or holding them back
  • Journey: recognized positive financial well-being would be achieved through a series of steps
  • Travel: to have the financial capability for luxuries like travel
  • Concrete goals such as buying a car or pay off student debt
  • Limitless possibilities: excitement for endless opportunities
Does your vision of financial well-being align with any of these themes, or do you see it differently? I'd love to see your thoughts in the chat box below, if you'd like to share.

Once you have a vision of where you'd like to be in the future, then you can start taking steps towards it!
Family Financial Feuds - To Show or Not to Show? Thu, 20 Dec 2018 11:43:00 +0000 Listen to us on Soundcloud! ]]> 3 tips for shopping online this holiday season Fri, 14 Dec 2018 06:48:00 +0000 My shopping experiences have changed radically over the past few years. The older I get, the more I have a hard time going shopping. On the other hand, I have friends and family members who enjoy walking through the stores, finding the best bargains, and the right things that fit their needs.

Online shopping opened up a new avenue for consumers, including me, to have a different type of shopping experience. It is a quick and often convenient way shop. Many online shoppers enjoy the flexibility of selecting what they need with a few clicks and have it delivered to their homes. This method of shopping reduces travel and shoppers can sometimes find things online that are hard to get in [physical] stores. The online shopping trend has evolved over time and with the closing of department stores or shopping malls in many local areas, many people are moving online.

In a study on California residents, Lee and colleagues compared in-store and online shopping. They found that in-store shopping is typically more socially and emotionally satisfying while people may engage in online shopping because of the convenience, price, and selection. So, with these in mind, what should you consider as you shop online this holiday season?

Make a list and check it twice. It is also easy to overspend during the holiday season. Even those of us with the most disciplined spending plans may buy more than we planned for during this time of the year. If you haven't created a spending plan for the holidays, it is not too late! To guard against shopping behaviors that you might regret after the New Year, make sure you create a reasonable holiday list. For instance, if you have a large family or group of friends, consider doing gift swaps/exchanges instead of individual gifts for everyone.

Be aware of online deals. As you look for ways to save and spend less, pay careful attention to online sales or specials that may seem intriguing. Some products have misleading descriptions or features, so comparison shop. See what other retailers are charging for the same products. Make sure also to read recent reviews from other customers. Some online retailers take steps to make sure the reviewer is a verified purchaser of the product before they can submit a review.

Start making plans for the New Year. Planning for the New Year can help guide your spending behaviors during the holiday season. By creating or reviewing your savings/investing goals or goals for paying down debt, that becomes a reminder of your commitments for the New Year. It's a reminder that even though the holidays may be a time to give to others, it is also a time to think about how you want to build or maintain financial stability.

As you finish your holiday shopping, stick to your list and the amount you planned to use. Many Americans build up debt during the holiday season that may take months to repay. So, even though you may find seemingly great online deals, make sure to consider how your purchase fits into your spending plan or your debt repayment goals for the upcoming year.

Happy Holidays!


Follow on Twitter @savefearlessly


Lee, R. J., Sener, I. N., Mokhtarian, P. L., & Handy, S. L. (2017). Relationships between the online and in-store shopping frequency of Davis, California residents. Transportation Research Part A, 100, 40-52.

Strategies to Lower Health Insurance Costs Fri, 07 Dec 2018 14:51:00 +0000 When I was a young girl, I remember my grandmother saying she was thankful our family had good health. At the time, I thought that was a silly thing to be thankful for – now I have a better understanding of what she meant. When we're healthy, we tend to take health for granted; however, our lives change dramatically when poor health or an accident occurs.

Health insurance protects us from some of the impact of poor health or an accident. Without any health insurance, expensive medical expenses can quickly drain your savings and other assets. The challenge is that health insurance is expensive too. The Kaiser Family Foundation's 2018 report on employer-sponsored health benefits found that health insurance for a single person had a 3% increase in premium costs (the amount a person pays for the insurance) and a 5% increase for family coverage. Annual premiums for employer-sponsored family health coverage reached $19,616 this year, with workers on average paying $5,547 toward the cost of their coverage. This is an average; some people pay more and some pay less.

Overall, the Consumer Expenditure Survey shows that on average people in the U.S. pay about 8% of their annual expenditures towards health care costs. Using the Survey's categories, we only spend more on food, housing, personal insurance and pensions, and transportation.

Know When to Enroll

The 2019 Open Enrollment for Marketplace Health Insurance ends December 15, 2018. To compare policies and to enroll, go to Whether you obtain health insurance through the Marketplace, your employer or other sources, it makes sense to comparison shop. Find the health insurance plan that works best for you. You will want to compare services provided as well as other factors.

Comparison Shop

When comparing different health insurance policies, there are different costs to keep in mind. Monthly health insurance premiums (the amount you pay for the insurance) is the first cost people typically consider.

However, be sure to pay attention to the deductible level – the amount you pay before your insurance begins paying for covered services. While higher deductibles typically lead to a lower monthly premium, it also requires that you can afford to pay the deductible if needed.

Deductible costs have risen an amazing amount! The recent Kaiser Family Foundation report shows that since 2008, the cumulative increase in the average health insurance deductible is 212%. In contrast, workers' earnings have increased 26% since 2008.

What's your health insurance policy's deductible? In a worst-case scenario, how do you plan to pay this deductible if needed?

When choosing a health insurance policy you will need to balance the costs of the premium with the deductible cost. Also, keep in mind the maximum out-of-pocket cost of the insurance plan. This is the most you have to pay for covered services (not premiums) in a plan year. After this amount is spent, the health insurance plan pays 100% of covered benefits.

Consider Tax-Advantage Savings Accounts

More and more health insurance plans have high deductibles that can be hard to pay without savings. People can use tax-advantaged accounts for these savings. If your deductible is a high deductible health plan (as defined by the IRS) then you may be able to save for the deductible and other medical costs in a Health Savings Account (HSA). The main advantage of a HSA is that you avoid paying income tax on money you use for medical expenses. The tax isn't just deferred – you never pay tax on the money if you use it for qualified expenses. There may be other advantages for you too. Rules limit who can use a HSA. For more information go to

Your employer may offer you a healthcare flexible spending account (FSA). Typically, FSAs are funded with payroll deductions. Like HSAs, FSAs also allow you to pay for qualified medical expenses with pre-tax earnings. Check with your human resources office to see if this job benefit is available to you.

The next time you choose a health insurance plan, remember to compare different plans. Consider your immediate costs as well as the costs if your health situation changes. For personal help comparing plans, go to to locate someone nearby.

Is gardening garbage or great? Well, maybe it’s both… Thu, 29 Nov 2018 00:46:00 +0000 Well, obviously the summer has come and gone in Illinois and it's time to evaluate whether gardening was financially worth it. I had planned on keeping track of how much water we consumed and how many vegetables we were able to "save money on" because we had grown our own. Plus, the looking at the opportunity cost. An opportunity cost is a benefit of something that must be given up to achieve something else. In this example, I gave up purchasing vegetables (at a possibly lower cost) so I could grow them in my garden.

As it turns out, doing all those things over a summer, with a small toddler, and trying to balance enjoying our days in the sunshine was extremely difficult. Not to mention it was a rainy summer in my part of Illinois. Most of my tomato plants never did produce enough tomatoes to make the things I wanted to make like pasta sauces and salsa. We had so many bell peppers I started giving them to anyone who walked by our house, and since our lack of knowledge about brussels sprouts was limited, we didn't harvest it like we should have. Let's not even mention the broccoli we tried to grow…

Is gardening financially worth it? Probably not. I can tell you from the amount of time my husband and I took this year to take care of our budding produce it was not worth the outcome. From tilling the soil, mixing it in with our current dirt, putting up a fence so the dang bunnies wouldn't eat it, the effort and time didn't equal out in the amount of produce we got. Oh, let me also mention that medical bill I incurred from breaking my finger while preparing the garden area just as I was about to begin planting seeds!

Now gardening has a ton of other benefits. According to the research, the benefits of gardening include a way to encourage fruit and vegetable consumption. It also provides an opportunity for increased physical activity and exercise. Looking at specifically older adults, Theresa L. Scott et al. suggests that the most important reason for gardening was aesthetics aka "for its beauty". When talking about benefits of gardening activities it can be summed up into activity including rejuvenation, vitalization or mental stimulation. It seems that this research team hit the nail on the head when it comes to gardening. It's about enjoying nature, getting your hands dirty, plus that accomplishment that you're eating something you grew yourself. While gardening may not be financially worth it, it's not going to stop me from continuing to garden for many more years to come.

Research Resource:

Scott, T. L., Masser, B. M., & Pachana, N. A. (2014). Exploring the health and wellbeing benefits of gardening for older adults. Ageing and Society, 35(10), 2176-2200. doi:10.1017/s0144686x14000865