Monday, June 18, 2018

Goal Achievement Month - Chapter 3

STEP 3: Make a flexible plan on how you will get it done

Armed with the knowledge on what we needed to get us to live together in the US, my husband and I got married and applied for my spousal visa, all in one day. And less than 3 months later, I was landing in Richmond, VA - my new home across the Atlantic. 

After I landed in the United States, I had a steep learning curve to adapt to a new country, new rules and new people. Many things that I had been used to for my entire life were done differently here. I adapted to most changes in a short period of time, the easiest thing to adapt to being the American version of the English language that I had studied throughout school. In my quest to build a life in my new country, I left behind everything and everyone who had been important to me. So I made a decision to make that sacrifice worth it by building a life of financial serenity. My definition for it at the time was to be able to do what I wanted when I wanted.

Coming from a country where everyone had a job working for a state-owned company, and then seeing a few "adventurous souls" be brave enough to become entrepreneurs - the foreign word was adopted into the Romanian language, since we did not have a term for it - I thought that finding a corporate ladder to climb on will take me to the ultimate goal of financial serenity. I was also naive enough at the time to believe that I was now in a country where my own achievements would be recognized and I would get rewarded for them with the jobs of my choice and the salary that I wanted. Coming form a country where it is more important who child, nephew or friend you are, that your competence in the field, I thought I was in a place where the fact that I didn't know people was not going to be an obstacle.

Wow, was I wrong?! I had to learn very quick that the corporate ladder was not the spot where I wanted to hang out, and that people promote you or not based on them liking you (or not) just as much as back home. And I also learned that I could not stand incompetence anymore than with my former employers back in Romania. So, after biting my tongue one too many times, I started looking for a better way. I had learned even before coming to the US that this is the land of opportunity, and I was convinced that mine was out there - I just hadn't found it yet. So I crossed off corporate career from my plan and moved on to the next idea. 

Monday, June 11, 2018

Goal Achievement Month - Chapter 2

  STEP 2Acquire the knowledge of what you need to accomplish the goal

I had a goal and I had a vision on why I wanted to achieve my goal. I could see myself living in another country and - most importantly to me at that time - not living in Romania. I was speaking this into being, I was acting as though it was a given. Even though initially I had no idea how I was going to accomplish my goal, I was convinced I would do it. At the time I had conversations with a friend and we both said we would leave the country, but we had different visions of what that would look like: I said I would live in another country for the rest of my life and only come back to visit; she said she would go work and return with the money to live in Romania. And we both got our wishes.

After coming home from the college experience in England, I started sharing first with my parents, then with my friends, my intention to leave the country after college, at some point. The strange thing about sharing my goal was that as I was repeating it, I kept getting more certain of the outcome – still without knowing when, where or how. And the interesting thing is that once they saw me so determined and sure of my idea, my parents started believing it would come true; and they also started acting like it was going to happen. Because of my college experience, the first logical choice was England, or somewhere else in Western Europe. After all, there were a lot of Romanians living abroad in that area, including a few of my friends. My ultimate goal became moving to the United States later in life, alter some years in another country or two.

And then my plans got changed when I met my now husband, and we wanted to be together. The goal now became moving to the US, without spending time in other countries, so we could be together. This also started as an idea and was soon developed into a plan. In a time where the information was not as easily accessible on the internet, I managed to find out details on immigration and the INS (now USCIS) rules. Following the online directions on their official website, my husband and I got married in Romania and applied for my spousal visa. Thus, 2 months later I joined him in Richmond, Virginia; and have been here ever since.

It was a stressful 3-4 month period once we decided to get married because we had to figure out the legal requirements for my transition from Romania to the US. I found lots of horror stories online about how hard it was and how long it took to be able to get there. All we knew at the time was that we wanted to be together and him living in Romania was not an option - language barrier, work challenge and lack of a personal place to live. 

I relentlessly scoured the internet and connected to people within Yahoo groups (Facebook was not even a dream at the time) and learn from their experiences what not to do. I also read anything and everything there was to know about immigrating in the US as a dependent of a US citizen. And then, armed with that information, I coached my husband on the documents he needed and on the steps we had to take. 

Monday, June 4, 2018

Goal Achievement Month - Chapter 1

STEP 1Figure out what you want – beyond doubt (a.k.a. your WHY)
    When sharing my recipe for achieving goals, I want to start with the biggest goal that I set for myself and describe the way I managed to reach the goal. Of course, as they say “hindsight is 20/20”… so after reading many books on how to get things done, I realize that I had followed the steps without even being aware of them at the time.

When asked what my greatest achievement is, I always say that moving across the Atlantic and building a life for myself in a country where I only knew my husband. It may sound crazy, or scary, or too hard. Well, 15 years later, I am here to tell the story. I have achieved numerous goals since then but still feel this to be the greatest one, since it brought about the most radical change.

I was born in a small country in South-East Europe, Romania, in one of its largest cities. After finishing college and working for a couple of years, I moved to the United States to follow my husband. I was always an overachiever, I guess people would call me. Through my school years I was always at the top of the class and passed all my exams with flying colors. These seemed like reasonable things to do at the time, so I never really considered these major goals to be achieved. After a scholarship earned in college that sent me to England for 3 months, I realized there were things I wanted to achieve and a life style I wanted to live that were outside Romania.

The first step toward achieving my goal was setting it. And the very first thing to do in this case, was to get the idea – I found the one major thing I wanted to accomplish: moving to another country to build a career or a business. At the time this idea first came to mind I had no clue where, when or how I was going to do this. Looking back I understand that when you are young everything seems in a far distant future. And that was my first thought.

Once I came home from the college experience in England, I started sharing first with my parents, then with my friends, my intention to leave the country after college, at some point. The strange thing about sharing my goal was that once I started repeating it, I kept getting more certain of the outcome – still without knowing when, where or how. Because of my college experience, the first logical choice was England, or somewhere else in Western Europe. After all, there were a lot of Romanians living abroad in that area, including a few of my friends. My ultimate goal became moving to the United States later in life, alter some years in another country or two.

Monday, April 23, 2018

Money Friendship Month - Chapter 4

As we are building better relationships with our money and we are becoming friends, we want more of it to hang out in our own bank account instead of the credit card company. Most people know that interest can work in your favor or against you. That may be a cliche but it is also a truth. Every dollar bill you have wants to hang out with its friends - other dollar bills - so either it brings you more of said friends and they hand out in big groups in your wallet or your bank account, or it goes to a bigger company - credit card company, store - to find friends to hang out with.

If you want to build a friendship with your money, you need to make sure you give as little as possible to the creditors. Now, I'm not suggesting to lower your payments, just to shorten the time you pay - this in turn will reduce your paid interest. This same method applies to credit cards, as well as car payments or even mortgage. The faster you eliminate a debt, the less interest you are paying on that debt.

There are 2 ways to tackle debt, each with its pros and cons. One is based on paying the highest interest first, and the other one is based on paying the lowest balance first (known as the snowball effect).

They are both efficient and can be followed by anyone. The challenge is that we are humans, and we naturally procrastinate, and we also naturally get side-tracked even when we are working on the project. Therefore, when making the decision on which way works best for you, the most important to keep in mind is your personality and your motivation.

If you know you can stay focused, and if you want to pay as little as possible in interest, the “highest interest first” method may be your best choice. For the rest of us however, the most likely way to succeed may be the “lowest balance first” method. The reason is the increased motivation once a debt is paid off.

Either way you decide to tackle your debt, it is important to keep working on it and never give up. The best approach is to pay the minimum required on all credit cards and other loans, except for the one you are working on at the time – whether that is the lowest balance or the highest interest. On that one, you want to put as much money as you can, in order to pay it off as soon as possible.

The total monthly payments should stay fixed (or increase if possible – if you want to pay everything off faster). Once a card is paid off all the money that was going on it should be redirected to the next debt, thus keeping the monthly at the same amount but increasing always the payment on one debt until it is paid off. 

Remember we talked last week about building an emergency fund that would take care of unexpected bills. When you have that in place, you don't have to worry about higher credit card balances due to things you could not budget for. And after you obliterate credit card debt, make sure to tackle all your other debts, such as car loan, mortgage and student loans. None of them are your friends, even though your tax preparer may suggest you keep a mortgage in order to deduct the interest on your taxes. Chances are slim to none that you would be able to use that, especially if you have been paying for 5 years or more. Not worth making your mortgage company rich.

If you want your money to be your friend, don't pass it on to creditors! Encourage it to hang out with you more.

Monday, April 16, 2018

Money Friendship Month - Chapter 3

During the month of building friendship with your money, we have talked about saving money, so you can keep more of the money that already flows into your life; and we have talked about protecting your assets. By keeping your wealth and protecting it, you are building a positive relationship with your money. And after talking about the protection that would take care of your family were you taken away by an unexpected event, such as accident or fatal illness, we will now talk about protecting your wealth from other, non-fatal, events that can threaten it.

We will dedicate en entire post to getting out of debt (check out next week's post for that). Today, we will focus on having money set aside as a safety net, a.k.a. emergency fund. The number one reason why it is important to have an emergency fund in place, and to grow the amount in it to the level that brings you comfort, is that without it, you risk getting either deeper in debt or back in it if you just managed to get rid of it. 

I know there are some financial experts who would tell you to not use your credit cards, to put them in a place where you don't have easy access, or where you don't go on a regular basis... but I would like to argue that using a credit card for emergency situations is not the best idea. First, it defeats your hard work with getting out of debt - after car repairs for a couple of thousand dollars you find yourself back to square one with paying that credit card off. Secondly, now you also have to pay interest on the amount you borrowed from your credit card. And last but not least, sometime using a credit card may not be an option, depending on the type of emergency you are dealing with.

An example of an emergency that may come up in anyone's life is being laid off. Many people can attest to that who had great jobs before the 2007-2009 recession. Also many of those people had purchased homes during the real estate boom right before the recession. And the mortgage companies don't accept credit card payments for the mortgage. No need to even mention here the statistics related to the foreclosures from those years, right?!

When I talk to my clients about building up their savings in different accounts, such as for big goals, or vacations or even an emergency fund, I suggest that they call those accounts by a name that resonates with them - i.e. vacation account, BMW fund, or Fun Fund etc. For your emergency fund, I understand the connotation of the word, and I know that it is not wise to use words that have a bad vibe... so I suggest it should be call your Justin Fund. Why Justin? Because this money is for "just in case" something happens. 

If you are working on paying off credit card debt, or any other debt - long-term or short term - please consider setting aside some money for a rainy day, and don't send your last penny to the debt company. It may take you a little longer to pay the debt off, but the upside is that you will have the peace of mind if something goes wrong, and you will also be able to stay on track with paying it off because you won't have to "charge" any emergency bills.

Now that you are setting up an account to house Justin, please make sure the money is somewhere close enough and easy enough to access, though not that close that it starts to look tempting. Because no, a sale at Macy's on the best looking shoes still does not qualify as an emergency!  

Monday, April 9, 2018

Money Friendship Month - Chapter 2

We are talking about a better relationship with our money this month. And we cannot express good feelings towards our money without protecting it from the unexpected. Illness and accidents can put a dent in our finances, therefore we need protection in place to take care of our loved ones and to provide for the family, so the life style can be maintained. And that protection is covered through life insurance. 

Even though life insurance is an uncomfortable topic for many people, and it may scare some visitors away from today's post, I will ask that you power through the next lines, as you learn some information that will help you build your relationship with money on a friendly level. I will cover some basic points regarding life insurance, with a promise not to bore you by the use of jargon.

There are multiple types of life insurance available, and mainly they fit in 2 categories: term and whole life. The term lasts for a number of years (usually 10, 20 or 30 years), while the whole life lasts until age 100 or 120 – depending of the company and the product selected.

Most people believe they lose the protection at the end of the term; in fact, most of the term life insurance is guaranteed renewable and convertible. It sounds more complicated than it is. It means that you can re-new the coverage at the end of the term without answering medical questions again. It can also be converted into a whole life policy anytime during the term, or just before expiration – also without answering medical questions a second time.

There are 2 ways to figure out the amount of protection necessary: the expenses the family needs to cover when someone dies, and the value of the in-come the person would have earned had they lived. 

The first method is more popular, and the one most frequently used by financial professionals with their clients. The best known way of calculating the need for coverage is the DIME method. It stands for Debt (how much debt the family has to pay off), Income (how much money would have been earned until the youngest child turns 18), Mortgage (balance on the mortgage for the family home) and Education (cost for college for all children).

The second way is by multiplying the annual income by the years left to earn it. One other popular way is to use the children's ages and the number of years until they can provide for themselves. In this case, please keep in mind that your children will probably not be able to provide for 100% of their financial needs at age 18, or even at 21-22 immediately out of college.

My intention in writing this post was not to frighten you or to make dire predictions. I simply wish for you to put the protection in place that will provide peace of mind for yourself and your family, so the unexpected doesn't hurt you, your family or your life style. And if this post raises more questions for you, please don't hesitate to reach out; I'm always willing to answer questions and provide the guidance you need.

Monday, April 2, 2018

Money Friendship Month - Chapter 1

April is the month to make friends with your money. Why? you ask... Well, because it is my deepest desire to see people prospering and making their dreams come true. And if you are buying into the myth "money doesn't buy happiness", you are missing out on a lot of things that money will buy that can bring you happiness: great vacations with loved ones, comfort for yourself and your family, being able to make a difference in someone's life through the charity of your choice, etc.

I chose April to share some tips on how to build better relationships with your money because of the famous "April showers" - in Romania rain is a sign of prosperity because it brings life to the land. So this seemed the perfect time to share some money lessons that I learned throughout my life, by living in 2 different countries, through communism, then democracy and then a different kind of democracy.

While you read my tips and tricks, please take into account that they were developed based on my personal experiences, and the reason why they worked for me comes down to my feelings and ideas about money. You may not share those same feelings, and that is OK. Take it all in, and then adapt it to your own money story, to based on your own feelings about money.

Saving...? Yes, please! 

The reason why most people don’t save is because they decide to save the money they have left after paying the bills and spending on both needs and wants. Most months, they don’t have anything left after spending on things they want – even though sometimes they mask wants as needs. The cliche about "running out of money before one runs out of month" rings true for a lot of people, unfortunately. In this case, even the best intentions are not powerful enough to turn into action.

Most financial gurus will advise to “pay yourself first” and put 10% of the money you get paid into savings before directing money towards anything else; and then live on the rest, to cover both needs and wants. They are correct in explaining that everyone saving by this method will figure out ways for the money to be enough. One hurdle in applying this method is the fact that sometimes people are intimidated by the 10% amount - it sounds scary and then leads to analysis paralysis while people try to talk themselves into it. So, for most people, it may be a better idea to start with a lower amount than 10%, and then increase it every couple of month while getting used to less money available every month.

Depending on how you get the income, you can have an automatic deposit straight from the paycheck, or an automatic transfer from the checking account on preset days. If you get commissions you may consider a percentage of income; whereas, if you get a fixed salary, you may want to designate a set amount. If you are an entrepreneur or an independent contractor and rely solely on commission, it is easier to set up the transfer the day after the commission gets deposited into your account - or better yet, see if your company can direct deposit a certain percentage to another bank account.

The number one thing to remember is that saving takes discipline and you need to build up your discipline muscle if you depend on yourself, and not an employer that forces your saving into a retirement plan, for example.

The strategies that always worked for me were to have a savings account at a bank a little out of the way, where I don’t go very often, or to use an online bank – again one that I don’t use on a regular basis. The one trick that has always helped me to keep the money in savings, is to not look at the money too often. Out of sight, out of mind concept at its best!