I'm just a local business and finance nerd looking to help people get educated about small business, marketing, and personal finance! I write about anything and everything that I can tie into those themes. I'm also Central Florida's only Kilted Realtor, so I write about Real Estate too! Check out my About Me page to see the origins of Cash Flow Celt.
Conquering Your Financial Empire
In my last article, I talked about how the Lady Celt and I interact when it comes to money. However, I didn’t really talk about how we view money. More importantly, I didn’t even mention how we came to view money the same way! I’d like to brighten up that dark space – Feng Shui this topic if you will.
How relationship’s view money is a critical topic because it ties into the relationship health. Is one of you a saver? Who is the big spender in the group? You need to understand these roles so you can have honest discussions. Surprisingly, Lady Celt and more similar than separate; We’re both SPENDERS!
Like most things in life, money is a spectrum. Some people enjoy saving their money and some people enjoy spending it. I am a spender. Lady Celt is a spender. However, on that spectrum Lady Celt is a bigger spender. I am just fortunate enough to be strong-willed enough to stick to my budget.
Spenders, unsurprisingly, gain enjoyment out of spending their money. They view money as a tool to get “stuff”. ‘Stuff’ doesn’t necessarily mean material items. It could be experiences or moments. Most people, in my experience, will fall somewhere on the spender spectrum. It’s not shocker either; it’s basic human psychology. Our brain releases little chemicals for things that make us happy. Whether that’s going to Disney, buying new shoes, or travelling, your brain encourages that happy feeling.
Savers however, enjoy finding the good deal. They seek to amass and conserve the wealth they have. For them NOT spending is as important as spending to cover their needs. Very few people fit this description. For them, spending creates a paranoia of sorts: ‘will I have money tomorrow?’ I would like to note that frugality and savers aren’t synonymous. Frugal people are like myself. Why would I pay $100 for jeans when I can buy the same quality for $45? Frugal people are willing to spend money. They just do so economically.
Like I said though, most people get happiness from spending money; not saving it. Where do you think you fall?
When Lady Celt and I first got together, we had some issues. We’re both spenders, but I’m diligent with the budget. She – was not. As we progressed, I had to convince her that frugality was a benefit to her. It sounds silly, but talk to your friends. You will find just how many of them don’t think in the long term when it comes to money. They “put money away”. That’s about it. They don’t know why, they don’t know where it goes, or why it does what it does. So, the million-dollar question. How did I get Lady Celt and I to see eye to eye?
I had to redefine money to her. I had to expand her horizons. We also talked – a lot. For her, $1,000 just meant $1,000 in consumable goods. I had to make her see that $1,000 as $500 in consumable goods and $500 in travel goods to Ireland. It sounds simple. Just snap your fingers and voila somebody can see how the same lump of money can be differentiated into separate accounts. However, psychology is a funny thing. When somebody has done something for a decade, it’s a difficult habit to overcome. I gave her my tips to create a budget and then define her goals. Now, she knows what her income ACTUALLY gets her. It’s not just a mish-mash of “stuff”. She knows that for every dollar she makes 25cents goes to this, 10cents to that, 15cents to this thing. Money means something now.
It sounds simple, but it’s not. But that’s why couples need to talk. Converging how you two view money, and being realistic with expectations, will save your relationship.
On top of sticking to your budget, you may also be derailing your budget by doing silly things. Be sure to read that article for more information. People who are spenders and people who are savers probably will not mesh well. However, two spenders can converge their ideas. Everything is a spectrum, so if both parties get and give a little, then you can view money the same. For Lady Celt, it was just defining her goals and then setting up a plan to get there. Now, when she splurges, it’s an issue of whether or not we go to Ireland; not simply “oh well.”
We still have differences. She thinks we should spend more on food or date nights. I think we should spend more on entertainment and increase our savings. However, now it’s an allocation issue – not a fundamental issue. We view money the same, relatively, now. It wasn’t an easy task, but most worthwhile things aren’t easy.
Consider this: you are walking through the green pastures of Ireland and you come across a leprechaun. Lore states that if you can catch a leprechaun, you get a pot of gold; visions of investing in an IRA float through your head! After a short sprint, you catch the trickster fairy! The leprechaun, feeling a little salty, asks if you want $100,000 right now or do you take a coin flip, a 50% chance, to score $1,000,000? Statistics might indicate you should take the risk. After all, the expected value of one choice is $100,000; the other choice has an expected value of $500,000. Being risk averse is a choice though. So which do you choose?
I found this question on a finance group I follow on Facebook. Surprisingly, it seemed most people would choose the $100,000. Reasons why ranged from standard risk averse tendencies to just having a sure bet. However, one of the most interesting reasons given was that people were poor. A for sure Band-Aid was better than a possible life change. I found this to be highly fascinating! Continue reading
Do you remember a time when your savings account could fetch 4-5% returns a year? Pepperidge Farm remembers. Alas, we live in a bottomed-out interest rate environment. Granny and Gramps are unsure of what to do with their retirement money, because the historical go-to for liquid funds isn’t providing a steady enough return to recoup some of their living expenses. Yikes! Hopefully it’s not too upsetting for the grandparents though; otherwise you may need to have the talk.
Personally, I was predicting a 1-1.25% increase in the Federal Funds Rate (FFR) this year and that might be good news for people looking to put more of their assets into a conservative savings account. Especially since December of last year we’ve seen an uptick of half a percent in the FFR. But don’t get too excited. An increase in the FFR isn’t necessarily a predictor of the market interest rate! Continue reading
I’ve got a lot of respect for the military. They endure things that the average person could not cope with. This is especially true during a wartime situation like the United States has been faced with since 2001. We send our men and women to serve all across the globe. Some make it back and some don’t – it’s a sad, but true, fact. However, to compensate our soldiers, we pay them in outstanding fringe benefits like education, pensions, and healthcare.
Sometimes during wartime, when ranks run thin, we even pay them with contract bonuses. The same type of contract bonuses you see athletes or corporate executives get to entice them into signing contracts. Generally, so long as the term of the contact was honored – and there was no malfeasance by either party – they are irrevocable and free to enjoy by the signing party. Last year, Peggy Johnson, then an executive with Qualcomm, received a $7.8Million bonus to sign with Microsoft. Could you imagine the outrage if, 10 years from now, Microsoft claws back that bonus saying she was ineligible for the bonus because the Board of Trustees didn’t vote on it?
Strangely enough though that’s exactly the case that’s happening to nearly 9,700 troops associated with the California Guard. The L.A. Times reports that the soldier’s bonuses are being clawed back – and I’m pretty peeved about it. Continue reading
One of the major reasons I started this blog was because my friends asked for it. Many of them asked for it because they were entering, or finishing, law school and were faced with enormous debt loads and were coming to an age where they were becoming classier consumers. Trading in their futons and beanbag chairs for sofas and dining tables. While they sought practical applications for money, what they were really asking for was how to become more financially literate. An important topic for upcoming professionals that need to fund retirement 40 years down the road.
Financial literacy has been an avid passion of mine for many years. Advocating the benefits and small research costs involved is something I do for pleasure. It’s why I got the title of the money guy in my sphere of influence. Much to my chagrin though, financial literacy rates are still garbage in America. I was reminded of this fact while listening to NPR when they had a segment on the topic. While listening, all I could think about was a paper out of Wharton School of Business on the topic (you can read the overview of it here). This paper described the dire state of financial literacy in America and abroad.
Consequently, I thought a paper on the value of financial literacy might be in order. Continue reading
Who knows more about the Brexit today than they did two weeks ago? Probably all of us. In the days that have followed, specifically trading days, we have seen so much volatility and price fluctuations it is reminiscent of the August 2015 crash. What it means for the average investor is that there are easy ways to help your financial situation just by using some common sense investing tactics. The gravy train on the Brexit has probably left the station; however, it doesn’t mean you can’t be ready to jump on the next opportunity.
It’s so rare when something of this magnitude comes along. In preparation for it, I exited most of my positions that I don’t intend to hold for a few years and had cash waiting on the sideline. In just two trading days, I was able to make 32%. Hooah! That’s some serious cash. Want to know the amazing thing though? I only traded two different stocks. Continue reading
In my article “Investing in the IRA Alphabet Soup” I fangirled about the Roth IRA and hinted I may do a dedicated post at some point. WELL HERE IT IS! An in-depth look at the Roth IRA and why, if you’re eligible to have one, you should totally have one. It’s probably one of my favorite retirement vehicles because it offers the Average Joe a better chance at a worry-free retirement.
If you’re like me, your college education was a fantastic experience, but you didn’t get a six figure job handed to you right off the stage. Instead, you’re working in the $30-45,000 a year and clawing and grinding towards the top. What this means, in the scope of the Roth IRA, is you have more income tax brackets above you rather than below you and for once that’s a good thing due to how the Roth treats contributions compared to a Traditional IRA. Continue reading
In my last post I talked about how to construct a budget. While that is by far the most effective way to get your finances in check, the second most effective tool is actually being able to curb your spending. Our budget should consist of things we need and hopefully your income can cover those expenses. If you can’t cover your essentials then it’s time to increase your education, get a side hustle, or consider your priorities on wants vs needs.
If all of your necessities are covered, then you start looking at your wants. We all work hard for our money and deserve to spend it on things that make us happy as well as things that we need to survive. As we all know though, what starts as a splurge can often time end in a gross overestimation of what’s in the bank. For that reason, I wanted to give my readers a little help to make it easier to stop spending so much. Continue reading
One of the essential tools in staying on track with your money is creating a budget. It’s incredibly simple to do, with many free and paid apps to help you along, and it is the single most effective way to get ahead financially. Sadly though, it’s one of the most neglected ways as well. A Gallop Poll from 2013 showed that only 1 in 3 families routinely use a budget – either through something they input manually or through an electronic app. The only consistent demographic that scored “better” were those making above $75,000 a year; political affiliation and education don’t make a large difference. A general principle in cash flow management is that the less money you have, the MORE often you need to track it. That’s simply because any unplanned outlay can mean catastrophe due to lower cash reserves.
So far I have only really mentioned the basics of constructing a budget. I mentioned it first when talking about the importance of saving and investing at a young age and then again when confronting the hard question about saving for retirement or paying off debt. However, to this point, I haven’t committed a great deal of time to it. I guess I figured with all the current software and technology we have that, with just a little encouragement, people would seek it out. That being said, I’ve received multiple questions about how to make a budget and when I would post on the blog about it. Continue reading
It’s all over the business news section – Apple missed their quarterly earnings mark. They made $1.90 in earnings per share compared to the estimated $2 per share that Wall Street predicted. The Street reacted and has so far have dropped the stock approximately 10% down to just under $95 per share. Thus far, the collective whole of Apple shareholders have lost about $50 billion in market capital. Market capitalization, for those of you who don’t know, is total outstanding shares multiplied by the current share price. It’s kind of like a “net worth” indicator, which they now have $50 billion less of.
The reason for this drop was inevitable. While Apple sold more phones than anticipated (although still a sizeable drop from this time last year) their average sales price was a cool $9 less than what was expected. Tim Cook painted a rosy picture about how a strong dollar led to weakened purchasing in America, plus smartphones as a whole had a rough quarter, but it’s a heck of a lot simpler than that. People don’t need to buy new phones anymore. Continue reading