Before you can build wealth, you need to want to learn & care.

It looks like you just arrived to the right place – it will be fun, I promise!

What I learned about money during COVID

This is a guest post written by Uziel, who has been working with me for the last few months.

Let’s cut to the chase…. Here is the short list.

I do not need to spend money on eating out every day.
There are activities that I can do that don’t involve spending any money.
It is okay to defer payments/ speak up.
Emergency fund is truly for an emergency.

Today we will be discussing some of the things we learned about money during this COVID era. By late May, my job had closed due to quarantine and I had no sources of income. I had to rely on my emergency fund.Read More

COVID & Money Introduction

Looking at things as an Opportunity; What do I Have to Lose?

These blog posts will focus on a few topics around money and happiness. The first one will be about where we live, the second will be about the lifestyle we want to have and the opportunity costs associated with that choice, and the last one will be about creating a calm and peaceful financial life. Hope you find something useful in them.

Note: This is a guest post written by Uziel, who started working with me recently, followed by my own comments and perspective on the topic.

Let me first introduce myself, my name is Uziel Gomez. I am Dr. Timmerman’s new intern. I attend California State University, Northridge. My major is finance with a focus in financial planning. My relationship with Inga started when she sent out an email to all financial planning students about a year ago. The email was about an opportunity to intern as a financial coach at the Vita Tax Clinic on campus. I was ready to apply for the position, but I was discouraged when I read “Priority will be given to graduating seniors”. A few days past and the email was sent out again, so I applied with the mentality of, what do I have to lose? I interviewed with Inga and got the position. The internship finished in April and Inga offered another internship, working with her at Attainable Wealth. The experience has been amazing, thus far.

I never saw myself as an opportunist, I’ve always thought that I somehow get lucky. Yet, I’ve learned a lot about myself the past few months. When the pandemic started and the quarantine in Los Angeles was announced, school transitioned to online. The first few weeks seemed like a vacation, I binge watched two different TV series within the first 2 weeks (yes, it was a lot of hours in front of the TV). I then realized that my job would soon end and that finals were right around the corner. I had to start applying to new jobs and study countless hours to finish the semester strong.

Fortunately (because there is always a fortunately when things do not go as planned), I never got a job since many places had already hired a wave of people. With no job and plenty of time on my hands, I didn’t know what to do. I knew I had to somehow invest in myself and to become just a little bit better. Another opportunity arose, an externship hosted by the Financial Planning Association (FPA). The sign-up fee to join the association was $50 (best investment I have ever made). Again, I felt skeptical about doing an externship online. I didn’t know what to expect. The externship was made up of weekly guest speakers from the industry, access to financial planning software, and a chance to practice on mock clients. The externship was about a month long, I committed about 15-20 hours per week. I certainly gained much more than the $50 I spent. I learned a lot about the industry in that one month; but more importantly I learned more about myself and what I intend to pursue in the future. Hearing from the diverse speakers, seeing that there are successful advisors with backgrounds similar to mine inspired me to set big goals. Prior to the externship, my mentality was to always work for someone else. I didn’t dream big… And now, I can’t get the idea out of my head that one day I will open my own financial planning firm.

On top of the externship, I began studying for the series 65 exam. The series 65 exam is a license that many advisors need to hold, depending on what their position is. Since this is my graduating semester, I’ve been trying to boost my resume with anything that makes me more attractive. I was committing about 10 hours per week to study for this license. This is still a work in progress, but this is something to aspire, something to work towards.

I realized that I don’t get lucky, I see an opportunity arise and I take it. I also don’t wait around for something to magically happen. My self-investments might not return in an immediate manner or even in a monetary figure. I know that this will help me out in the long run, I’m more knowledgeable than before. I can add the externship to my resume along with a certificate of completion for a finance software we used. I intend to take the series 65 exam soon and add that license as well. Investments aren’t always about investing in a security or property, the greatest investment is investing in yourself.

And here is Inga’s perspective

Uziel does not give himself enough credit. He is not coming from a wealthy family where financial planning was front and center. He is coming from a place where he had to fight and learn and try to do his best in life. He is no different than many of us, someone who did not grow up being comfortable around money or knowing what to do with it. But that does not mean that this is the end of it, that we cannot make it better for ourselves. From the five financial coaches we had last year at CSUN, Uziel was the one who went after helping people; trying to improve their lives just a little bit, even if they did not know where to start. He also told me that I need to get on Instagram, (something I am not sold on but let’s give it a try). I would like to welcome him and hope that he has a good experience working together.

This post is an introduction to a series I will be working on about money in times of COVID. This can also be used to look at life and money in times of change. Investing in yourself is something that we all need to and should strive for. For some of us, it is about getting a new license or a new professional certification. For other, it is about taking a few hours to start doing yoga or sleeping an extra hour per night.

COVID has not been fair. If you are a single 30-year-old who now works from home, you may have found yourself with more time on your hands than you know what to do with. A workout class? Sure… Learning Japanese? Absolutely. For others, the last six months have been a nightmare. I am in a mom group where all of us have soon to be 4-year olds…. Many of us have another kid or two as well. Most of these kids had to stay home and either be homeschooled or kept alive while mommy is still expected to hold a full-time job on Zoom. Let’s be serious. No one in that group was learning ay new languages or reading new books. But this does not mean that life stopped and there was no investment in yourself. There is always a way, it might just look a little different. That happy hour we had on Zoom and talked about the stresses of life while our kids were running wild around us ? That is an investment in ourselves. That new understanding that we can handle and do much more than we gave ourselves credit for? This is an investment in ourselves. New insights, new ideas and new perspectives on life is what COVID has introduced to many of us. Yes, working moms will never be as productive as childless males… and they may be even resentful of their friends who are doing yoga instead of scraping bananas off the walls. But no matter what our circumstances are, we can change, we can evolve an we can invest in ourselves.

What do you do with the stimulus check or any extra money that falls into your lap from the sky?

Today, many Americans woke up to money in their bank accounts courtesy of the US government’s effort to deal with the current economic and health disasters. A few of my clients asked me what to do with the money, a few friends texted me to ask me if they should pay off credit cards, save it or invest it…. And then I decided to post this in one of my Facebook mom groups and got all kinds of answers. With all the disclaimers that go with general financial advice- these are my opinions- but I hope that it can help you think through what to do with this money or any other money that falls into your hands in the future. Here is how I would organize my thoughts to come up with a decision.

This roadmap is purely selfish. You are keeping the money and doing something for yourself. I understand that you might want to gift it/donate it to someone who needs it more, you might want to support a local business, you might do something I can’t even imagine. That is all your choice. That is fine and no one can tell you it is wrong. We cannot quantify humanity and goodwill. My suggestions below come from a purely financial perspective.

The first order of business: is your credit score above 700 and if not, can you spend some of this money to get it there? If the answer is yes, I strongly believe that it might be the right thing to do as you will buy yourself options for the future. If your score is below 700-730 and you have outstanding credit card debt that is dragging your score down, pay off some of this debt and bring it above 690-700, which is the score where you can get 0% APRs. Use Credit Karma to model your score and see the optimal payoff to get there. Get it up. Get yourself to a place where you use the system to benefit yourself instead of paying interest and running in circles unable to pay off debt.

If your score is above 720-730, ask yourself: do you need to get your score to the 760-780 level? For example, do you need to refinance a mortgage or buy a new car? It might be worth to spend more money to get it to the top tier as the interest rates are going down and if you can take your mortgage from 4.25% to 3.3% by paying off $2-3k of credit card debt, you just saved yourself so much more.

If your score is already 760-780 and you have some credit card debt, move it to a 0% card for 1-2 years (like Citi Simplicity for 21 months) and do not pay it off unless there is a good reason to do so. Paying off 0% debt is not financially optimal.

Let’s say consumer debt, aka credit card debt, is not your problem, then what do you do? If there is any chance you will be losing some income or your job, keep the money. Hord it. Don’t spend it. Put it into a high yield savings account like Capital One or Marcus, get your 1.55% and do not touch it until you are in the clear. To me, that timeframe is 18-24 months and that is just a guess. The economic implications of what is going on now will last way longer than that and I am personally preparing for 2-3 years of pain. If you don’t know what three months from now will bring, save this money. Its intended purpose is to eventually pay your water bill, mortgage food, rent and other super exciting bills that you must pay every month.

If you know for a fact you will not lose your income (or for as close as it comes to a fact), then you could spend it. You can spend it on something you wanted to get but never found the money for. One side note here; please do not spend it on something that you can finance with a 0%. And to be frank, I am pretty sure over the next few months, you can finance a trip to the moon with a 0% APR. It does not make any sense to pay cash for a car when the manufacturers are offering 0% financing for 84 months. It does not make any sense to pay $900 for a stove when Home Depot will let you have it at 0% for 12 months. Keep your money, make 1.55% by letting it sit in the savings account and finance that stove for free.

And how about things that you just purely want? Are you allowed to spend the money on that? ….. like that Peloton you always wanted? You have my permission to buy it. It’s no one’s business but yours. Just don’t post it on Facebook if you do not want snarky judgemental remarks.

The option I would recommend you consider if you do not need the cash is to invest it. Be it in a 529 account for your kids, a Roth IRA or a work retirement plan, there is no way you cannot make money if you invest it now and wait for a few years. Even with the upcoming dip (and I am convinced we have not seen the bottom yet), the Wall Street Journal monkeys (if you are familiar with that experiment) will make money. If you want to time the market (something I never recommend), wait a little, wait for another dip and then buy a few funds or even a simple target date fund. Best part-you can forget about it afterwards, come back in 5 years and get your 10-20% return. I am making this super simple, but this is the gist of it. This is the time to invest your cash and unless the world falls apart and the US dissapears from the face of the Earth, you will see good returns.

Even better, go and increase your work retirement pretax contributions for the 401(k)/403(b)/457 by the amount of the stimulus and then use the money you got in your bank account to pay ongoing bills. You will (1) shield this money from taxes and (2) make a whole bunch more in 20 years. Let’s say mommy, daddy and 5-year-old Johnny got a total of $2,900 in stimulus money. Mommy goes and increases her 403(b) for 2020 by that amount. If you do it now, you can still catch the May deductions, so this means $362.50 per month. Let’s say you are in a 25% combined tax bracket; this means that your impact on the paycheck will only be about $272 and let’s assume you make a 6% return over the next 20 years. Do you know how much money you will have in 20 years? Right under 10k. Your 3k will become 10k… and you still can get that stove by financing it for 12 months and paying the difference between $362 and $272.

I could go on for hours on this topic but I already wrote a book on that so we can be done now. There are just two things I want to leave you with:

There is no right and wrong choice when it comes to what to do with this money. I can’t help but optimize the options in my head but that is because that’s what I do every day. You will not get judged by me if you decide to do something suboptimal with it because at the end of the day, even if I think that paying off your 3.5% mortgage is a horrible idea, it makes you sleep better at night and I cannot put a price tag on it (I will still try to dissuade you not to pay that mortgage off if you are ever my client).
This is the time to expand your idea about money and what you can do with it. This is money you did not expect. For some people, money is intimidating but I see it as a tool and the more you learn about it, the more you get to keep. Ask questions, don’t feel intimidated. No one is judging.

This morning, I woke up to $742.50 in my account from the stimulus pot. This was a complete surprise. I had no business getting it. I did not even look at my 2018 AGI because I was convinced we were above the complete phaseout. Turns out, we were a few thousand dollars under it. In a turn of events that just happened to benefit me without any intention, in a very unusual year when my husband took a huge temporary cut in pay to switch jobs, I ended up falling though the intended cracks and with this $742.50 in my pocket. I am now sitting on this money with a moral dilemma. I have no idea what to do with it. I feel that it is wrong to keep it but I am certainly not sending it back to the Treasury. It will probably end up with someone who needs it more than me; I just need to figure out how to align the intent of the bill with its best use.

I cannot afford a housekeeper

Today’s blog post is inspired by one of the conversations I saw on a mom group Facebook group. Someone has recently hired a cleaning lady and was expressing her happiness with the decision. Many people replied that they would like to do the same, but they cannot afford it.

Here is what I am going to tell you today: You CAN afford it. You just must figure out how. And I am not talking about the close your eyes and manifest money into the universe (although if you are into that, then I hope it happens too). I am referring to the sit down, get your notebook and calculate where the money will come from. If it is important to you, you can ALWAYS find the money. I will play the housekeeping help game now, but you can apply the same principle to whatever else you wish to get that you don’t think you can afford.

Here is the thought process I went through thinking about this:

What is the cost per month of whatever I want? You might really want to get the help every day but realistically, what would make your life better? Once. Just once. Let’s start with a one-time help. Btw, look around and ask for recommendations; you want someone who is as good at cleaning as you are, otherwise you will be angry you spent that money. The cost I came up with is $120.
Where can I find $120 in the month of September? List all your expenses from the month so far, see which ones you could have done without (you did not enjoy what they brought that much) and promise yourself not to spend your money that way until the end of the month.
Alternatively, you can play the I don’t buy anything for the next 5/7/10 days and see how much money you have afterwards. If you do this consistently, you will start seeing more money in your accounts.
Over the long term, you need to include the housekeepers into your budget and cut something else. What is that something else? What do you value less than a clean house? $12 spent on Taco Bell? That is 10% of your cleaner right there. $14 on an expensive cocktail with your friends? Go to happy hour, get a $5 drink and put the difference towards the cleaner’s fund.

When people tell me that they can’t afford something reasonable (and yes, I agree, you really cannot afford a Tesla perhaps), I always challenge them. Is it that you cannot afford it or that you do not value it enough to afford it? If you really wanted something, with few exceptions, you would find a way to make it happen. And if you do not believe that, send me your expense report and let’s see what we can cut out. Life is about spending your money in a way that will make you feel good. It is so hard to do that if you are not intentional about how you spend your money. So, let’s get to putting together a list of what you would like to have but can’t afford and then find the money for it.

What I learned in 2018

Every year, at the end of January, I sit down to think about the money related life lessons of the previous year. Here goes the 2018 edition. Here is what I have to tell you after 2018.

NOW RATHER THAN LATER

As I was talking recently to a potential client, the term ‘financial freedom” has been mentioned a few times. I heard the term plenty of times before; I know there are many online communities built around it. It has traction so it must be at least semi-legit and yet, I really, really don’t like what it represents. It’s not really the term, I guess. It is the concept behind it.

The whole thing assumes that we cannot live the life that we want to live now. Instead of waking up in the morning and doing the things that we want to do, we need to go to a job that we don’t really like, earn a paycheck, hoard all that cash for the future and live with a countdown to something that is supposed to exhilarate us at some future date. Read More

I THINK I AM GOING TO SAY “NO” TO THIS ONE

Our lives are becoming ridiculous. Not in a good way. Ridiculously busy, overscheduled and stressful. You don’t need me to tell you that. You know what you have to do every day just to “survive”. So today, I would like you to think about the list of Nos. When and how do you say no to demands, opportunities and random encounters? Do you have a process, an organized way to decide what to commit to, what to say maybe to, and what to say absolutely not to?

I am the worst at this. I say (or used to say as I am trying to stop that) yes to everything and everyone, in the process stressing out myself, my family and everyone around me by trying to squeeze one more things into the mix. But I am also a person who believes in processes, lists, and an organized way to analyze a problem. As a result, recently, I implemented the following system in order to make better decisions on this topic. I call it my “List of Nos” for work related demands.

My failed triathlon and your money

Six months ago I signed for my first sprint triathlon. I was excited. This has always been “a thing” I wanted to do. What better present could I give myself for my 36^th birthday? Side note: I can think of about 245 better ways right now. In November, I started training. In December, I became discouraged and two weeks ago, I changed it to a duathlon. Last Sunday, I finished the race in way better time than expected and yet, it feels like a failure. This is just like our money life. We all set expectations in life, we set goals and then we fail and give up. So today, I want to talk about the few things that I learned from my “failed” triathlon. I promise it has lots to do with your money.Read More

What do you want from life? Or what I learned about money in 2017.

Another year is over and as always, around the beginning of February, I sit down to think about what I learned about life and money over the last year. So here goes the 2017 edition.Read More

WHERE WILL MY KIDS GO TO COLLEGE?

My mother is a high school counselor at a really good high school in FL. If you didn’t know, October is the early admission scramble month. Most of the applications are due November 1^st so we had a few conversations over the last few day about why some kids choose to apply to specific schools even though it may not be worth to do so financially. And how do you even know if it is worth to apply and go to one school versus another when the price tags are so different? October is also the new FAFSA deadline month so in its honor, let’s talk about college today.Read More

12 3