Launch Financial- Teaching Financial Education In The Public School System with Dr. Genevieve Floyd and Maria Tarasuk

Join us on this week’s episode of Launch Financial as we wrap up financial literacy month with Dr. Genevieve Floyd and Maria Tarasuk, both MCPS professionals.

On this week’s episode, Dr. Genevieve Floyd and Maria Tarasuk discuss how Montgomery County Public Schools are instituting financial education in their curriculum and how to better financial literacy across the country as a whole. Financial education is a crucial aspect of child development which is why we wanted to help provide useful resources for you and your family. For access to financial education resources discussed in the episode, click the link here. https://www.montgomeryschoolsmd.org/curriculum/finance-park.aspx.

More about our special guests, Dr. Genevieve Floyd has been an educator for 31 years. She holds degrees in math, in education, and an MBA. She has served as a teacher and college adjunct professor, department and career academy leader, school-based administrator, central office coordinator, special assistant to the deputy superintendent, and currently supervisor of Career and Postsecondary Partnerships for Montgomery County Public Schools. In her current capacity she oversees all the dual enrollment options for the school district as well as 22 Career and Technical Education (CTE) programs. Her work is designed to smooth the transition from high school to college and careers for all students, and to enable them to thrive in their postsecondary pursuits. Furthermore, Maria Tarasuk has been an educator in Montgomery County Public Schools for twenty-nine years as a social studies teacher, curriculum writer, and currently, as the Pre-K through 12 Supervisor of Social Studies.  She oversees the Finance Park Junior Achievement program at all the county middle schools as well as financial literacy instruction as part of the high school government course that is required for graduation.

For more resources and inquiries regarding the episode, please contact us at info@shermanwealth.com .

Check out this episode!

How To Determine Your Debt Tolerance

Debt can be a helpful tool in achieving your dreams and even building wealth, but it’s important to know how much you can comfortably handle. Debt can be complicated. Sometimes, it seems like taking on debt is a good idea, because you want to help grow your net worth and start building up your credit. However, building up debt can be a slippery slope and quickly turn negative, especially when you get stuck with high interest rates or borrow money to pay for things you truly cannot afford. 

Unfortunately, it can be tough to know the difference between good and bad debt at times, since anyone with a good credit score, stable income, and positive payment history usually gets approved to take on more debt with no money down. With so many opportunities to take on debt and finance items, it’s important to be savvy and have a system in place to know when and when not to take on more debt. Today we want to point out a few key factors to consider if you are trying to figure out if you can afford more debt 

  1. Calculate your debt-to-income ratio
  2. Watch your credit utilization 
  3. Add up the total cost of debt
  4. Assess your personal comfort level

Calculate your debt-to-income ratio

It’s almost impossible to guess whether someone can afford a new loan or an increased credit limit based on how much they make in income alone because different people will have different living expenses. Lenders use a standardized calculation called debt-to-income ratio (DTI)  to gauge whether a loan applicant has room in their budget to borrow more money. DTI is calculated by comparing your monthly debt payments to your total monthly income. The equation includes housing costs (whether you rent or own) and any other minimum payments on outstanding debts of any kind.

If you’re looking to take out a loan, make sure that your monthly bill won’t exceed 36% of your take-home pay. If you want to be more conservative, don’t go above 30%. That way you’ll have at least 70% of your paycheck leftover to cover the rest of your bills as well as any discretionary spending plus some cash free to save for future expenses.

Watch out for your credit utilization 

If you’re thinking about putting a big purchase on a credit card, like a 0% APR card, with a plan to pay it off over several months, don’t forget about your credit-utilization rate (CUR).

It’s not always a bad idea to charge big items to a credit card, especially if you can take advantage of 0% financing and/or meet the minimum spending requirement to earn a generous welcome bonus. But charging a big-ticket item is going to temporarily raise your CUR and cause your credit score to drop. Once you pay the balance off, your score will improve. But since credit cards generally charge a higher interest rate compared to a personal loan or home equity line of credit, it’s not always the best financial decision to spend above 30% of your credit limits just because it’s available.

Add up at the total cost of the debt

The more money you borrow, the more you’ll pay in interest charges and fees. Always review the interest rates on any kind of credit or loan product before you apply. Break it down into monthly, or even daily, fees, to get perspective as to just how much your debt truly costs. Also look for hidden costs like origination fees, early payoff penalties and more. When taking out a larger loan, consider using an interest calculator to see how much you’ll pay in interest over the lifetime of the loan. Also, Try to improve your credit score before applying to borrow any type of product so that you can qualify for the best rate and save.

Assess your personal comfort level

Putting aside the financials, you also want to take time to consider your personal feelings about money, borrowing and debt. Some people know that they are naturally savers, meaning they may be less inclined to take on debt, where others will not sweat it if they have some outstanding debt to pay back. Make sure you are comfortable with your debt tolerance and know what you are doing before taking out more and more debt. If you have any questions about your personal situation or about debt, please email us at info@shermanwealth.com or schedule a 30-minute consultation here

Launch Financial- Financial Traditions for Young Families with David Pearl

On this week’s episode of Launch Financial, we are joined by a recurring guest, David Pearl. This week, David helps us discuss financial literacy and the importance of establishing or passing down financial traditions to your family. Throughout the episode, Brad, Ashley and David discuss their own personal experiences with these family traditions and ways to communicate about money.

A little about David, he aims to provide a safe and supportive environment to strengthen self-esteem and facilitate more meaningful connections with family, friends, professional colleagues, or teammates.

David obtained his Master’s degree from The Silver School of Social Work at NYU and his Bachelor’s degree in Human Development and Family Studies from the University of Wisconsin-Madison. He is formally trained in Acceptance & Commitment Therapy (ACT), and has certifications in Imago Relationship Therapy and Prepare/Enrich Premarital and Marital Counseling. David is dual licensed in New York and Tennessee, and works with clients on an ongoing basis in both locations.

Prior to founding Music City Psych in Nashville, TN, David provided psychotherapy and performance coaching at Union Square Practice in NYC, counseling to individuals, couples, and families struggling with hematologic cancers at Mount Sinai Hospital, as well as psychodynamically oriented individual and couples counseling at The National Institute for the Psychotherapies (NIP).

Check out this episode!

10 Financial Milestones & Goals To Pursue In Yours 20s and 30s 

Establishing goals in your early years is a great way to reach financial milestones and better your financial future. As part of financial literacy month, we have been discussing different techniques to establish smart and achievable goals along with ways to achieve those goals. We know that managing your finances, especially for the first time, can be overwhelming, but the sooner you start making financial goals and plans for yourself, the brighter your future will. Building these habits, especially in your twenties and thirties, is so important for long-term and future success. Here are ten financial milestones to consider pursuing in your twenties and thirties. 

  1. Automate Everything 
  2. Create a Monthly/Quarterly/Yearly Budget Plan
  3. Pay off All of your debt 
  4. Pay your bills on time and establish a good credit score
  5. Start and regularly fund an emergency account 
  6. Contribute to your company 401(K) and take advantage of your match 
  7. Open a Roth or Traditional IRA 
  8. Save for a big purchase such as a car or first home 
  9. Invest outside of a retirement plan 
  10. Protect your life with insurance and a will 

While it is not mandatory to achieve these goals to succeed, hitting these goals in your early years is a great way to set yourself up for success. Savings, budgeting, investing, and protecting your life are essential steps in building a solid foundation and growing your money. Also, starting to education yourself about personal finance will take you much farther than you think. The sooner you start and realize these goals are important and achievable, the better position you will be in in your forties and fifties. If you have any questions about achieving your financial goals or establishing SMART goals personalized to your financial situation, send us an email at info@shermanwealth.com or schedule a complimentary 30-minute consultation here. 

What You Need To Know About NFTs

With NFTs and baseball mania taking over the news, some of you may be wondering: What actually are NFTs? 

Blockchain technology has opened up new markets for investment and consumption. And one of the hottest recent trends in this space has been the production and sale of non-fungible tokens (NFTs). NFTs are one-of-a-kind, authenticated digital files, such as artwork or collectibles. The reason gain and retain such high value is due to the fact that they cannot be easily copied. 

The hype around NFTs has been so strong that some have sold for millions of dollars. So, is this an emerging asset class that you should be jumping into? Let’s dive a bit deeper into NFTs to see if this is something you are interested in. At a very high level, most NFTs are part of the Ethereum blockchain. Ethereum is a cryptocurrency, like bitcoin or dogecoin, but its blockchain also supports these NFTs. It is worth noting that other blockchains can implement their own versions of NFTs. 

So what types of companies are selling NFTs? The NBA has NBA Top Shot – a way of selling digital collectibles in the form of trading cards embedded with iconic moments from the game. With a plan to add virtual jewelry, accessories and clothing that can be used across social media, the NBA is seeking to find ways to expand this revenue stream as far as it can go. And Topps now wants to do for Major League Baseball (MLB) what Dapper Labs did with NBA Top Shot. And now, even tweets hold value, with Twitter co-founder Jack Dorsey selling off the first-ever tweet for a massive $2,915,835.47. Musicians are also selling the rights and originals of their work, as well as short videos to clips of their music, and you can even buy digital real estate and 3D assets like furniture. 

NFT’s are definitely the craze right now, and may only just be getting started. If you have any questions on what NFTs are or how it may impact your financial planning or tax situation, please email us at info@shermanwealth.com or schedule a complimentary 30-minute consultation here. 

4 Commonly Made Financial Mistakes Young Families Make

As we are halfway through financial literacy month, we want to continue to discuss simple ways to better your financial life. At Sherman Wealth, we focus on helping young couples and families get their finances on the right track, which is why we want to talk about common financial mistakes young couples and families often make in their 20’s and 30’s that come back to haunt them in the future.

One of the first commonly made mistakes we see with our clients is purchasing the wrong insurance products. We see tons of people in their 20’s purchasing whole life and non-level term policies from large insurance companies that are truly not right for them and that they truly do not understand. Oftentimes, it is not until these individuals are starting their families and progressing their careers that they realize they have been losing money with the wrong policy for them. It is very important to discuss with a professional or research what policies are best for you and your family before blindly purchasing the wrong insurance. 

Another commonly made mistake we see among this demographic is not signing up for your company 401(k) and taking advantage of the match. We have seen tons of cases where individuals are not signing up for their company’s retirement plan and matches until five to ten years later, which is giving away a large chunk of your salary benefits and essentially, “free money”. It is always the right move to sign up for your company 401(k) and contribute the full match if your situation allows you too in order to build a strong retirement account.

Budgeting and saving is always a priority when it comes to building your financial portfolio and especially starting a family. In previous blogs, we have talked about the importance of starting and saving from an early age and the power that compounding interest and  “time” in the market has on your money. Whether you are starting your first job or graduating college, it is never too early to start saving, even if it’s only a few dollars per month.

Lastly, another mistake we see individuals making is not contributing to their health savings accounts (HSAs). A health savings account (HSA) can help you lower your taxes as they are triple tax free. Our advice is to always take advantage of these types of accounts if you are eligible, that can help you make the most of your current situation and future. 

By avoiding these four commonly made financial mistakes in your early years, you and your family will be in a much better situation as you embark on the next chapter in your life. As always, speak with your financial professional to ensure you are making the right decision for your particular situation. If you have any questions, please email us at info@shermanwealth.com or schedule a complimentary 30-minute consultation here