2016 - Page 5 of 7 - Best Money Moves

How Financial Stress Rises with Your Rent and Home Expenses

by Ilyce Glink | Sep 7, 2016 | For Employers

There are certain expenses everyone deals with no matter how extravagant or restrained their lifestyle. Housing is at the top of the list, both because you need a place to hang your hat and because it’s usually the single largest bite out of your monthly take-home pay.

Unfortunately, this is the most basic and important of expenses. Whether it’s a house, apartment or condo, everyone needs a place to live and this basic expense can quickly become your biggest source of financial stress.

According to a September National Rent Report by Zumper, eight of the 10 most expensive rental markets in the country have either maintained their spot or moved higher on the list, even as prices for one and two-bedroom units dropped slightly for the first time all year. This might sound like business as usual but for employees looking to decrease their financial stress, it’s bad news for their budgets.

Employees can downsize their budgets in many ways, from cutting meals out to limiting their entertainment spending, but housing is a relatively fixed cost and it’s hard to find wiggle room until your lease comes up for renewal. And then, where do you go if rents are rising everywhere you want to be? one staple that has lost most of its wiggle room. If you want to know what your employees are stressed about, housing is one area you can’t ignore.

What’s the fix?

The recommended rule for figuring out how much to budget for housing is to cap it at 30 percent of your income, leaving at least 60 percent of your budget for other expenses like food, healthcare, debt payments and savings. The problem for an increasing number of employees is that these figures have made maintaining this ratio difficult. If employees want to spend under $1,000 each month on rent, for example, they’ll need to look to the 30th most expensive city on this list, downsize the space they live in, move to another neighborhood or find an alternate way to manage rising rent or housing expenses. And until they can make this change, they’ve got less room in their budgets for other necessities.

Changing a housing situation isn’t impossible, but it is a recurring cost people are locked into for months or years at a time, that will affect them every day. If that cost climbs too high, or there is an unexpected jump, it creates a cycle where that cost eats into the rest of their finances, increasing their financial stress and keeping them from making progress with their budgets, debts and retirement savings.

As an employer, you want to help defray this expense but may be at a loss for where to start. There are small steps you can take, like offering transit assistance for your workers’ commutes or opportunities to work remotely, but the root of the problem is much deeper.

Employees have to get control over their budgets and learn how they can change their housing situation for the better. For some cities, moving to a new neighborhood may be the only viable option, but it’s one your employees have to discover in order to take action.

If you want to reduce financial stress in your workplace, talk to your employees and see what assistance they need. With the right knowledge and tools, they can decide on a solution that gets them to a stronger financial position. They can’t count on a major drop in their rent (it’s an expense that tends to rise over time), so it’s time to find a new way around this cost and get it back down to the recommended 30 percent threshold.

Whether it’s small changes or a big move, there’s no better time to get started than right now. You’ll be amazed at what a small savings on housing can do for the rest of the monthly bills and, consequently, your employees’ financial stress level.

Dustin Pellegrini is a senior web producer and writer at Think Glink Media, where he specializes in reporting credit and personal finance topics. He studied writing and visual media at Columbia College Chicago.

Making Labor Day Meaningful For Employees

by Ilyce Glink | Aug 31, 2016 | Blog

We’re a few days out from Labor Day – the celebration of all the work employees do – so let’s talk about making Labor Day meaningful for employees and their bosses.

One of the top biggest reasons workers leave their jobs is because they don’t feel their work is appreciated. Whether they feel they’re underpaid or that their work goes unnoticed, it leads to the same chain reaction: anger, stress and eventually giving their two weeks’ notice.

But that isn’t what employees want – and it isn’t what employers want either. The uncertainty of the job market causes a huge amount of financial and emotional stress for employees. Meanwhile, employees don’t want to feel forced back into the uncertainty of the job market, and employers have don’t want to scramble to find new hires and they’ll have an agitated workforce filled with unsatisfied workers.

So, what’s the fix?

First, put yourself in your employees’ shoes. You have to understand what your employees feel they deserve and then identify what you can do to make them feel more valued. This isn’t as easy as giving everyone a raise, as the budget may not allow it, but you may find that not everyone is solely interested in making more money.

According to a recent report by the Society for Human Resource Management, the biggest drivers of employee satisfaction are, in order, respectful treatment of the employees in the workplace, compensation, benefits and job security.

If you want to increase employee satisfaction and you’ve heard concerns about job security or the treatment of employees around the office, that’s where you should start. Or, if your employee reviews reveal that your workers are interested in new perks – like working remotely or a more flexible time-off policy – think about how you can implement these ideas without affecting productivity.

While you’re putting your new plans into action, remember that an employee’s age and experience may affect what perks they appreciate at work. According to the study, millennials reported the lowest levels of job satisfaction, while Boomers and those close to retirement were the happiest with their jobs. Think about what this means for the benefits you offer and the environment you’re creating. Everyone appreciates a day off, but some workers will value consistent raises while others want more vacation time.

If you’re unsure where to start, just ask your employees. No one knows what your employees want more than they do. It’s important to know your limits on what you can and cannot offer, but don’t let these barriers keep you from making any changes or improvements. Your workers will notice your efforts to address their concerns, whether it’s through new perks, raises or a combination of benefits.

So, on this Labor Day, understand that your show of appreciation doesn’t have to be an enormous change-of-management demonstration or once-in-a-lifetime bonus as long as it’s consistent, authentic and relevant to what your employees want. But putting in the effort to make your employees feel valued and appreciated will juice workplace profits over time.

Why There Isn’t Enough Money To Pay Bills and Save?

by Ilyce Glink | Aug 24, 2016 | Blog

Ever wonder why there often isn’t enough money at the end of the month to get all of your bills paid and save money?

You’re not alone. According to a new survey published this week by the Certified Financial Planner Board of Standards (CFP Board), nearly half (48 percent) of all Americans “don’t always have enough money left over to save after paying their bills.”

“Our economy has come a long way since the depths of the recession, but most Americans up and down the socioeconomic scale are still facing significant pressures in saving for today and tomorrow,” said CFP Board Consumer Advocate Eleanor Blayney, CFP®, in a press release. “An inability to start saving early, debt and stagnant incomes are just a few of the factors driving Americans’ financial anxiety.”

The survey found:

More than a third (35 percent) of Americans surveyed have seen a significant decrease in household income;
A little over a third (34 percent) say that the amount of debt they have prevents them from saving;
Only half (51 percent) save money regularly on a monthly basis;
Roughly 1-in-3 Americans (30 percent) has experienced a job change in the past three years;
About 1-in-5 (20 percent) of those polled has experienced a major medical expenditure in the past three years;
Half of Americans (51 percent) believe credit card debt is the most important debt to pay off, followed by mortgages (36 percent) and student loan debt (19 percent);
More than one-third (36 percent) of Americans anticipate working in retirement.

(While the survey found that some Americans are feeling more positive about the economy as a whole, it’s typically those with a higher net worth who have the most positive economic views. Which isn’t that surprising.)

If you look at the list, it’s clear that a third of Americans have seen a significant decrease in household income, are trying to pay down a mountain of debt, and have experienced a job change in the past three years. Debt, including medical debts or expenses, can eat a huge hold in anyone’s budget.

What can you do? At Best Money Moves, we believe in getting your debt paid down as quickly a possible, and we have tools that help you do that (without trying to trick you into buying something or reselling your information to a credit card company). But here’s the big secret: Throw as much cash as you have at your debt that carries the highest interest rate. And, keep doing that as often as possible, while always being sure to make your minimum payment.

That’s it. There’s nothing more magical about debt repayment than that. Once you pay down a debt, use all the extra cash you’re “saving” each month to pay down the next debt, and so on. What you’ll see is that paying down debts is possible and can be done fairly quickly. You just have to make the commitment to put it first in your financial life.

I will add this: Every time you pay down a debt, you’re saving the interest you would have paid. That interest equals the net interest rate you’re paying. So if your credit card has an interest rate of 15.9 percent, every dollar you prepay will effectively “earn” 15.9 percent. And these days, it’s hard to get that much of a return anywhere, let alone in a savings account.

So, get your debts paid off and start saving for your goals and dreams, whatever they may be.

Ilyce Glink is the Founder/CEO of Best Money Moves, and a nationally-syndicated, award-winning personal finance columnist, best-selling author and radio talk show host. Contact her today to get a free trial and start lowering your employees’ financial stress levels.

Employees’ Financial Stress Mounts as Millions Are Priced Out of the Housing Market

by Ilyce Glink | Aug 19, 2016 | Blog

Economists and industry experts have been trumpeting the recovery of the housing market, which is good news for anyone who already owns one.

But that recovery isn’t necessarily good news for people looking to buy a new home. In fact, it’s pushing the dream of homeownership farther out of reach for millions of Americans.

The Wall Street Journal reports that while home prices rose in 83 percent of the nation’s major real estate markets last quarter to just 2 percent below their July 2006 peak, those gains are due mostly to a lack of new supply, not an increase in buyers.

Unfortunately, there aren’t a lot of new homes being built yet and those that already exist are getting more expensive, making it more difficult for people to achieve a major part of the American Dream.

On top of that, potential buyers (including many of your employees) may still be struggling with damaged credit, huge student loans and tougher post-recession credit standards.

This helps explain why 200,000 to 300,000 fewer households are buying a new home each year than we would see under “normal” market conditions and overall homeownership has hit a 51-year low of 62.9 percent. (And, this in a time where mortgage interest rates are just about at all-time lows.) The situation forces folks to continue renting a place to live, which causes rents to rise due to this increased demand, further stretching their finances and reducing their ability to save more money for a downpayment on a home.

See how the cycle feeds itself?

While you can’t control the real estate market, you can control your finances (to some extent). That’s where Best Money Moves comes in. We help employees dial down their financial stress, strengthen their financial foundation and put their version of the American Dream – whether it’s buying that house with a white picket fence or retiring early – within reach.

We do so by helping you dial into your biggest financial stressors and providing the education, resources and personalized advice from accredited money coaches you need to help you take back control.

Sound like something your company (or its employees) could use? Email us at ilyce@bestmoneymoves.com to learn how you can get a free trial.

Making Americans’ Financial Lives Great Again

by Ilyce Glink | Jul 22, 2016 | Blog

In the wake of the Republican National Convention, it seems appropriate to lay out some steps ordinary Americans can take to make their financial lives great again – or, if yours has never been particularly strong, then at least make it better.

Stop spending. In my books on personal finance, I’ve often recommended a Go To Zero strategy for managing your money. Here’s how it works: Imagine all of your expenses on a table. Now, take your arm and wipe them all off. You’ve now got a clean slate, and you can put expenses back on the table in the order of importance: Shelter, utilities, food, transportation, etc. When you run out of cash in your budget, you simply stop spending.
Start saving. Another strategy is to stop spending well before you run out of take home pay and use that extra cash to start saving. Or, if you are carrying debt, simply use the extra cash each month to pay down your debt faster. Remember, every dollar of debt you prepay effectively earns you that interest rate. So, if you prepay $1 of debt at an interest rate of 14%, you’ve effectively earned 14% interest on that dollar.
Make paying off non-deductible debt your top priority. If you’re paying to service your debt, you’re not going to get rich. You’re not going to have a great financial life. And, you’re not going to get rid of the anxiety that comes along with having crushing debt. So, start prepaying your non-deductible debt as fast as possible. In addition to feeling more in control of your financial life, you might just notice that you’re sleeping betterl.
Practice “deferred gratification.” One thing about today’s world, everything happens instantaneously, almost miraculously. But when it comes to money, nothing good happens instantly. That why practicing deferred gratification can have such a positive effect. By simply pushing off a purchase (even one you think you must have), you’ll quickly see you can live without it. And if not, then at least you know you’re making a truly “can’t live without” purchase decision.

I’ve noticed that if I just say “no, for now” I generally don’t miss whatever it is I’ve done without. And, 9 times out of 10, I never get around to purchasing the item. Even if it’s on sale. I just figure out a workaround or do without. If you make all of your purchases thoughtfully, instead of gratuitously, that’s how you’ll make your financial life great again.

And, as Americans, living the financially great life should be an inalienable right.

Ilyce Glink is the Founder and CEO of Best Money Moves. She is also the author of 13 books on personal finance and real estate and the CEO of Think Glink Media, a digital content agency.