I was having an email exchange with a blog reader here, and couldn’t pass up the opportunity to share this with you guys… Proof that even PROFESSIONALS have a hard time doing the “right” financial stuff! Even though they know it’s important!!
There’s a big difference between knowing and DOING, and this conversation is a perfect example of that. I already told y’all of one of my friends who trains employees on the benefits of 401k plans, yet doesn’t invest a drop himself (!!!), and our friend today is in a similar boat… and also kind enough to allow me to share this with everyone today, so for that she gets two gold stars :)
Here’s her dilemma:
I am embarrassed to say that I am a financial adviser/registered rep. that hasn’t put money in my 401k in the last 2 years, but tell my clients to save everyday!
Problem 1 – no budget. Where does the money go?? BTW, did I mention that my husband and I have 5 kids and 4 of them are 6 and under?? Anyways, my husband stays at home with the kids because when he did work most if not all went to daycare and the cost of gas/commuting.
So, pay down debt (not including mortgage, that will come later ) and contribute the 6% to my 401k so I can get the free 3% from my employer? When I sit here typing it, it all seems SO clear… but its not. Started downsizing, sold our 4K sq ft house last year and bought one 1/2 the size and 1/2 the price. Still don’t know where the $$ goes!
I just struggle with the TIME issue as far as investments go and KNOW that I need to invest, although the market is at record sky highs! At least putting my 6% would help with taxes and give me the free dough from my ER but mostly I wouldn’t feel like such a freakin’ hypocrite!!!!!!!
I cant stand paying the interest on my debts though. Is there a happy medium?
I want to get y’all’s opinion here after, but here’s what I shot back to her:
Awwww, well at least you’re ready to start working on it all now! And you’ve downsized your home – that’s good! Even though yes – it is pretty funny to hear from a financial adviser/rep ;)
But yes! Start contributing to your 401k!! At least what your company matches (that’s FREE money) and then anything on top of that is gravy. And you really only need to figure out “the game plan” there as far as what to invest in the beginning. Most 401k plans have advisers you can ask (talk with HR) and they’ll ask you questions to determine how comfortable you are with risk and what your end goals are. Then they’ll recommend which to invest in and at what %.
You set it up once and then let it ride!
(They’ll advise to check in every year or so to make sure it’s still aligned with your goals and what not, but you get the point. And plus, you already know all this stuff anyways ;)).
The beauty is that it’s all automated too so you don’t have to do a thing once you get it set up (not to mention the taxes you save and how BIG it adds up after every paycheck, as you also know already). It really is one of my favorite programs ever, and it sucks I can’t contribute myself now that I’m self-employed…
So yes – def. start there and just get the system going. That’ll be the easiest and fastest thing you can do right away.
As for debts, I’d literally call every single place you owe and just ask them to lower the interest rate by a few points. If they say no, ask to speak with a manager and 50% of the time they’ll say yes (for credit cards, at least). Just let them know you’re considering moving to other cards because it’s too high but you prefer to stay with them and pay it off over time, and usually that does the trick. This is the fastest way to save on that front, and again only takes 1-time actions.
As for getting money on the right track overall, try challenges #1 and #2 on this post of mine, and then for savings try #3 or #5 –> 5 Money Saving Challenges to Try
Either of those challenges would give you amazing results, especially the first two. It’s just a matter of getting into the habit and then you’ve got your structure built and can relax knowing you’re on the right track :)
Easier to say than do, of course, but give it a shot! What’s the worst that can happen? It’s really about taking action and moving the ball forward once and for all. You already know what you need to do, you just gotta pull the trigger. Your future self is depending on you! :)
Dear readers, what say you? What helps to give you a kick in the pants and/or stay motivated? What’s something you wish you could have gone back in time and done earlier if you had the brains you do now?
Spill it below and let’s help this chica out… She likes my blog, but I want her to LOVE it ;)
Picture expertly crafted by J. Money… He has no idea how he’ll be able to spend it now.
UPDATE: Our emailer, Michelle, chimed into the comments below. Posting it up here too so it’s not lost… Check out that 2nd sentence – wow!
I am very humbled by all of your responses. I have been in my profession for over 15 years and currently have 80 million in assets under management. My clients are very important to me and I strive to do my due diligence going above and beyond daily. I now realize, although if I dig deep I already knew all of this, that my time management skills coupled with my lack of a budget has resulted in this snowball effect.
Rather than answer each comment with a reply, I decided to try and sum it all up in one comment.
- We have 2 vans, one payment. ( both bought used )
- We do not qualify for anything low income but have when we were younger and think those programs are great!!
- We are not opposed to daycare, the issue is that the daycare cost more than what my husband brought home. Also, it makes it possible for me to travel when need be with one parent home.
- My husband is now an independent distributor from home and also has the kids involved :)
It is not a challenge to sell a service that I know is right, btw my retention rate for 2013 was 93%. I do have a 401(k) and started it 12 years ago as well as 529 plans for my children and other investments. I am able to speak with a clear conscience about these things.
Unfortunately, I do not have any emerging markets funds available in my fund line up for my 401(k) but could buy a retail fund.
Thanks for all of your feedback. I appreciate ALL of your responses and ideas/suggestions.
Have a Blessed week!
Jay loves talking about money, collecting coins, blasting hip-hop, and hanging out with his three beautiful boys. You can check out all of his online projects at jmoney.biz. Thanks for reading the blog!