Money Savers

Should I Pay My Kid’s Student Loans?

/ Micki

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Three boys. Three boys went to college.  Three boys with student debt.  What does a parent, like me, do?

The average student debt is $40,000 and 40 million young adults have student debt.  Student debt is a common reality.  My first piece of advice is to encourage our graduates to take the debt seriously.  The faster they pay it off, the sooner they will be unencumbered to go the next step, such as buying a home.  Any time they get a bonus at work, a tax refund, or a pay raise, we should suggest that they make an extra payment.  Extra payments can save them thousands of dollars of interest over the life of the loan and decreases the duration of the loan.  Also, I recommend helping our graduates create a monthly budget with an emphasis on paying the student loans on time.

As a parent, should we pay off their debt or make their monthly payments?  In my opinion as a financial advisor, the answer is – NO!  Especially no if making the payment would jeopardize our own retirement.  There is no greater gift a parent can give a child than to be financially secure in our own retirement.  The airline analogy of putting on our oxygen masks before we assist the children comes to mind.  It makes no sense to help with student debt if we only turn around and ask for their help down the road.

Additionally, student debt is a valuable learning tool.  Our young adult will learn what it means to have debt, how interest works, and how to budget.  Student debt can motivate good work habits and can actually build esteem.  Giving our children everything and eliminating serious responsibility can stifle their own progress to grow into strong and successful adults.

If you would like to help your graduate with the debt, I suggest a matching deal.  For example, if they pay $100 a month, you will match that amount, or a portion thereof, that fits your budget.  Using this technique, they still have the learning experience and motivation that paying debt brings.  Again, make sure you do not implode your own financial plan and that you can truly afford it.

In my case, I have to keep in mind that I will have three graduates.  I should not start a routine of helping the first graduate if I am not sure that I can help each one fairly.  This is another reason why I would put a pause on jumping in and paying your kid’s debt.  As parents, we can help down the road when the picture is clearer.  Our help does not have to start on day one.

Finally, if your graduate expresses disappointment that you are refraining from paying their debt, blame The Pearl Chaser!  I do not mind!  Tell them a very smart, sophisticated, funny, successful, pretty, and humble financial expert (no, not Suze Orman!) told you that it was not in their best interest to make their payments at this time.  Let’s put a pause on bailing our kids out of responsibility at every turn.  True love sometimes involves saying “not now.”

 

Photo by Colin Maynard on Unsplash

Movie Tuesday! – an Update

/ Micki / 7 Comments

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This is an update to my original post.

I very often catch myself in a rut.  I move through the days, especially in the winter, on what seems to be auto-pilot.  I don’t make plans to go outside, I don’t make plans to do a project – heck, Christmas just ended!  The dark mornings turn into the dark afternoons in a matter of hours.  The monotony starts to make me hate winter.

Cue Movie Tuesday!  I forget that movies are greatly discounted on Tuesdays – all day!  By me, they are $5.50!  In Woodside, they are only $4.25!  Nothing like seeing a movie on the big screen.  Ironically, when I saw “The Greatest Showman” last Tuesday, Hugh Jackman personally (well, on the screen) thanked the audience for coming to the movies – the old fashioned way.  Anything for you, Hugh!

This winter I saw these Tuesday movies:

  • The Greatest Showman
  • The Post
  • The Darkest Hour
  • Ladybird
  • I, Tanya
  • Peter Rabbit
  • Three Billboards outside Ebbing Missouri

I would say that Movie Tuesday was a huge pearl for me!  I had something very fun to look forward to on an otherwise boring day.  I even went by myself to two of the movies and it was more than fine!  I either liked or loved all the movies I saw.  Movie Tuesday is a keeper!

If you would ever care to join me, please, please, please contact me!!!

 

Photo by Conner Murphy on Unsplash

 

Money Pearl

/ Micki

Should I have done a financial planning blog?  Oh, God, no.  First, I would have to submit all my posts to my company’s compliance department to make sure the “disclosures” are in place.  They go like this:  Past performance does not guarantee future performance – not FDIC insured.  Yadda, yadda, yadda.  Nothing ruins a good post quicker than some fancy legalize!  Second reason – financial planning is just not funny!  It is BORING – yet necessary.  However, I do wish to express some of my thoughts in the hope that it may help someone.

The most important thing for you to know:  Your biggest risk when doing your financial planning is not the volatility of the market.  I acknowledge  that the ups and downs can be intimidating.  But the truth is, you must get over your fear now.  Not being in the market is your biggest risk!  Most people do not have their money working hard enough for them.  It is very probable that unless your money is earning you dividends and interest, you may not have enough of a nest egg to make it through retirement.  And plan on either you or your spouse living to at least 95.

Are you afraid that you will lose everything?  Do you have too much of your savings in the bank earning next to nothing?  If so, I strongly urge you to do some additional research.  Don’t take my word only – but you will find out that I am right.   You have worked hard for your money and it needs to work hard for you.

I like to share this: 

You put your money in the bank and the bank gives you 1%.  What do you think the bank is doing with your money?  They either lend it out and make 5%, or they invest it and make 5%.  How nice and convenient for the bank!  Why should the bank get what could be yours? 

How do you give yourself peace of mind and get over the fear?  It starts with having some of your money in the bank.  This is your emergency fund.  Then you begin to invest the rest in a well diversified portfolio appropriate for your age, risk tolerance, and life goals.  You need to go to an advisor that is a fiduciary or get a really great grasp on investing.  A good advisor probably will earn you more than what you can do yourself, which should cover their fee and then some.  Plus, advisors have access to research that the average person does not have the time or expertise to get on their own.

Jeez, I am starting to realize there may be some things I may want to share with you in a future post.  For example, what is an appropriate fee for an advisor to charge?  What is an appropriate expense for your portfolio to charge?  Do you need a trust?  Should you fund a Roth IRA?  Can you time the market?  And lots more.  Damn, I guess their is more to life than the best banana pudding!

If you found this helpful and you would like me to post more about financial planning, let me know.  If you have a specific question, feel free to ask me.  I love to help people because someone helped me.  There is no better pearl than having the peace of mind that you are doing all you can to have a nice retirement.

Happy planning!

Photo by Fabian Blank on Unsplash

The Thrill of the Hunt

/ Micki

Sometimes when I am planning to write about a pearl, I hesitate.  Do I want to share my treasure?  Will spilling the beans mean less in my bowl?  How generous am I really?  Well, if  you believe in the Peace Prayer of Saint Francis (see previous post), you must give to receive!  Plus, I am only kidding.  I gladly share this.

My favorite store is TJ Maxx.  When they went to online retail, https://tjmaxx.tjx.com,  my heart soared!  Here are a few of my tricks when you shop TJ Maxx online.

  1. You get free shipping at $89. However, if you sign up for e-mails, you will find that one day a month is free shipping with no minimum.
  2. You can return free at the store, OR ship back.  The receipt already has the return label. Use the same shipping box.  Voila!  Free of charge.
  3. Place things in your on-line shopping cart that you are considering.  When a free shipping day comes, you will not have to search again.

I hear skeptics say that they do not enjoy the hunt.  Who are you, and are you low in testosterone?  The hunt is the best part!  OK, do not go the night before a gala event and expect to find your gown.  Other than that, you will find amazing deals.  More than that, you will find some brands that top stores or boutiques carry for so much cheaper.

Here is an example of how TJ Maxx carries top brands.  I love NYDJ jeans.  They are quality.  They are made in the USA.  They tuck you in places that need tucking and somehow lift your rear end.  Ha!  Neiman Marcus has them on sale for $100.  TJ Maxx price is $39.99 – without waiting for a sale.

 

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Besides clothing, I love their Home Department.  I see products from Le Creuset, KitchenAid, All Clad, and other top brands.  I don’t need many things these days, but once in a while, I jump on a gadget, a decoration, or a pillow that I find unique and incredibly priced.  “It was a deal!”  Words my husband has come to loathe.

Oh Lord, I have not even brought you up to speed on purses, jewelry, shoes, sunglasses, men’s clothes, or beauty products!  But, I think you are getting the picture.  Let’s just say, I find going to the TJ Maxx store, either in person or online – FUN!  Maybe even therapeutic.  No expectation, just surprises.

Did I put you in the mood for a pearl hunt?