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!  

Money Mondays episode 4

https://www.spreaker.com/show/money-mondays

We talk about protecting yourself and your family. We talk about responsibility. And then Bunny Young shares her money story with you - a story from the heart with a lot of heart, and money lessons that can serve you well, on the way to your Financial Serenity.

Are you ready to RETIRE? If not NOW, when?

3 Reasons you should plan for retirement NOW

You may be familiar with the saying “The best time to plant a tree was 20 years ago, the next best time is NOW.” If you started your business thinking of it as your retirement ticket, make sure you have a contingency plan. Starting your business does not guarantee an automatic retirement plan for you. If your business is dependent upon your ability to perform, what happens if you are unable to perform for a period of time? Does your business continue to make money, depositing a percentage of that income into your retirement fund? Absolutely not.

Developing a contingency plan doesn’t mean your business fails, it simply means you have a plan for retirement – outside of selling your business.  If you have postponed thinking about your retirement planning, here are 3 reasons you should not postpone it any longer:

-         -- You may not be able to work forever, or may not be willing to: You started your business because you were passionate about it. There is no guarantee that you will find someone else that will duplicate that passion. You must be prepared for that. Perhaps you have hopes for your children to one take over your business, and they may very well be on board, but be prepared in case they are not. In any case, you will not continue actively working your business forever, so you do need to plan a proper exit strategy.

-         -- Your business may not sell for as much as you hope: It is common for business owners to choose to sell their business at retirement. Because you have an emotional connection to your business, chances are, you will always place a higher value on it than it really is worth on paper. Be prepared for this when you put your business on the market.

-        -- Social Security is not enough to live on, and medical expenses may increase: As you get older, it is naïve to think that government benefits alone with cover your life expenses. As time goes on, the social security budget continues to shrink while inflation continues to go up, raising the cost of living and medical expense. To enjoy a quality of life in retirement, you must have a plan that includes more than just social security.

No matter how much you LOVE what you do, you probably won’t to do it forever. Think of professions like a plumber, a baker, or a hair stylist; despite your passion for your work, your body will just not allow you to work this kind of professions into old age. As we age, the quality of service that we can offer will eventually start to deteriorate. That’s why we retire.

My goal is not to scare you, just to make you think. It’s your life, live it your way – just make sure that it is the BEST way for you (and your loved ones).

Are you working in your business or on your business?

HAVE YOU THOUGHT ABOUT THE "WHAT IF'S"?

As a solopreneur, you got into business to pursue your passion. If you’re a baker, you love to bake, if you’re a plumber or handyman, you love to fix things. However, what so many new business owners forget is that there is more to owning a business than just doing all of the things you love. There are things like insurance, taxes, payroll, marketing, all of the administrative tasks that are necessary to run your business but you don’t really want to do, right?

Here’s the challenge: if you spend 100% of your time inside your business, you don’t know what your business looks like from the outside. Don’t get me wrong. It is imperative that you continue to do the things that you are good at. But there is much more to business than your core product line. It has to be facilitated, managed and grown. Take a minute and think about your role in your business. 

If you are a solopreneur, the buck stops with you. So, what happens to the business if you cannot work tomorrow? What happens if you are absent from your business because of an accident, a stroke, cancer or death? Do you have a plan?

People rarely like to address these scenarios because they seem morbid. But you now have an asset to protect and if you don’t have a plan, that asset will lose value. If you want your business to continue to thrive and be transferable to your family, you need to protect yourself with adequate insurance, so your family can have the money they need to hire an expert – even if it is only temporary. Otherwise, your LEGACY will be bankrupt.

Consider protecting your business and your legacy. Otherwise, all of your hard work will be for nothing.