NCVTV March Money Management Highlights!

This month’s blog includes highlights from the new NCVTV series, that I started this month.  Here are summaries from the March episodes.  To watch them all, and lots of other fun videos, check out my YouTube channel NCVTV.  You’ll be glad you did!

Episode 1 – Howdy!

In the inaugural episode, I talk about what my goals are for newcashview.com and the purpose of the video channel.  As a practicing bankruptcy attorney and a person who learned personal finance through a lifetime of learning and practicing money management, I’ve come to realize a few things about how we regular people handle our money.

The most important part:

There are really 2 parts to being good at managing your money, or day to day personal finance.  The first is the practical side of it, like maximizing your income, learning how to budget, planning for retirement, working on financial literacy.  The second, and most important, part of day to day personal finance and that is what I call the “you factor.”

Finally, in this episode I end by saying that the most important part of this project is you.  I already know how to manage money, I’ve created a financially successful life for myself.  I’ve spent my life learning how to do it through trial and error and from watching my clients.  What I want to do now is teach you what I know so you can do for yourself what I’ve done for myself just in a shorter period of time.  I want you to be able to take the shortcut to financial bliss rather than the long way around!

Sounds like a pretty good first episode, right?  To watch the episode, click here.

Episode 2 – Behavioral Finance Fun!

In this episode, I delved into the fun and exciting topic of behavioral finance based on a Ted talk about the subject that’s been going around on the internet.  Click here to check out the video. 

So what is behavioral finance?

The basic idea behind behavioral finance starts with the concept that you should be able to predict how the stock market moves because you assume that the people who are buying and selling stocks behave, or act, rationally and predictably with their own self interest in mind.  Well, it turns out that isn’t always the case.  In truth, people often make irrational financial decisions that are contrary to their own best interest.  The field of behavioral finance is important because it helps us understand why we make decisions the way we do and how to spot our behavioral patterns.

Why it’s important:

This field of study is proof of what I’ve seen over the years in my average bankruptcy client’s financial circumstances because the field of study itself serves 2 purposes at the personal finance level.  First, it highlights the effect of mindfulness in money management by showing us common behavioral patterns we unknowingly engage in when making financial decisions.  The second important purpose of behavioral finance is that it reveals the extrinsic nature of our money management decisions.  That means we are making financial decisions based on factors that are outside of us or against our best interest, like social pressures and comparing ourselves to others, or trying to live up to someone else’s standards, like a parent or spouse.

So now what?

Mr. Benartzi uses the information to suggest ways to get around our behavioral patterns and aversion to saving.  If you are aware of your patterns and tendencies, you can use his techniques to save and create wealth.  They include committing to saving in the future and being aware of self-imposed obstacles to enrolling in employer sponsored retirement plans.

My goal in this video is to make you aware of these ideas so you can learn how to make better decisions.  It’s really all about your awareness and mindfulness muscles!  Very useful information in every area of your life, not just when it comes to money management.  To watch the episode, click here.

Episode 3 – Ah, Credit!

Credit is an important thing.  It can help you buy things you otherwise couldn’t pay for out of pocket, bail you out of an emergency or help you take advantage of the deal of the century.  The problem is the “out of sight, out of mind” aspect of it.  It’s way too easy to pay for things on credit and then let the balance sit there accruing interest while we spend years making the minimum payments.  What a tragedy!

Being good at money management means also having a good relationship with your credit! 

You need to know how credit works and when and how to use it.  Because, don’t forget, credit and debt go hand in hand!  When you are managing your debt, and therefore your credit, you are well on your way to keeping your finances under control.

Of course, most of us have to use credit as part of our financial lives.  So how do you know when it’s a good idea to take on debt and what should you keep in mind when you decide you’re going to sign on the dotted line?  In this episode, I give you a whole list of things to consider and weigh in order to make good credit decisions.

The best part!

To better understand the true value of credit and debt, we compare 2 different items that are typically very expensive to purchase that we would need take out loans to buy.  A house and a college degree.  It’s important to understand that both things are investments, meaning you put money into them with the idea that you’ll get a return, or payout, on your investment.  Right?  That then begs the question what are those investments really worth?  To answer this question, we talk a little about how much it really costs to buy these things and what kind of return you’ll really get from your investment.  Good stuff!

Last but not least…

There is such a thing as good debt and bad debt and both types affect your credit positively and negatively.  We spend the last minute or two of this short, FUN video talking about the difference between good debt and bad debt.  Of course, the worst kind of debt is credit card debt.  I’m sure you already figured that out.  There’s more on that list, though!  To learn what else is on the list, check out the episode on YouTube.  To watch the episode, click here.

Episode 4 – Your interest rates have been hiked!

You may have heard that the fed raised interest rates for the 3rd time since the recession that hit in 2008.  Believe it or not, that tiny little quarter point hike in the federal funds interest rate will affect us 99%ers more than you think! 

What’s the big deal?

It’s important for you to understand a little about it because if you know what the deal is, you can plan a little better so you can take advantage of this increase in interest rates for your own benefit and make yourself a little extra cash. 

Just FYI, the federal reserve manipulates interest rates to control the economy.  When they raise that interest rate, it makes borrowing money more expensive.  When it’s more expensive to borrow money, fewer loans are taken out and so there’s less cash out there for people to spend.  This means you have to stretch your dollar further and that creates inflation.

Ready for the good news?

Remember, people should be paying you interest not the other way around!  Yes, the cost of borrowing money does go up when interest rates rise but that’s true for your money, too.  Banks can afford to pay you more interest on your checking and savings accounts, yay!!  That means your money is making money for you without you having to lift a finger.  Okay, so this probably won’t make a huge difference in the interest rate on your regular savings account but money market accounts and things like CDs will start paying higher interest rates, too.

Another great result is that stocks may also be cheaper to buy.  You can take advantage of this by finding a good financial planner and investing in the stock market through buying shares of a mutual fund.  You can do that by opening a Roth IRA, a relatively cheap and easy way to start investing.

So what can you do?

This episode winds up by talking about a few practical things you can do to take advantage of this interest rate situation by figuring out ways to optimize your money working for you.  This episode is chock full of useful information about the interest rate hike that you can use to help you manage your money and find your path to financial bliss!  To watch the episode, click here.

Episode 5 – Fun with financial literacy!

This episode is all about a super fun topic, financial literacy!  Yay!!  Now, I freely admit that learning about financial literacy can be very painful and super boring.  However, this episode takes this topic and makes it awesome, you know how?  By being short!  This is “snackable” financial literacy!

What in the world is it?

Investopedia defines Financial literacy as: the education and understanding of various financial areas. focusing on the ability to manage personal finance matters in an efficient manner, and it includes the knowledge of making appropriate decisions about personal finance such as investing, insurance, real estate, paying for college, budgeting, retirement and tax planning.  It also includes debt management which I’ve already talked about a fair amount in my blog and other materials.

An easy way to get your financial literacy feet wet!

You need to start by understanding compound interest.  What better way to do that than to learn how credit card companies charge interest?  Yay!!  How does that work?  Credit card companies calculate interest by using some math that we discuss briefly in this episode.

Understanding how credit card interest works serves 2 purposes.  First, it teaches the principle of compound interest in a powerful way.  Second, it drives home the point that paying off your credit card balance as quickly as possible is very important!  Why? Because credit card companies charge interest daily.

A final word about financial literacy!

This episode teaches two fundamental concepts of financial literacy, compound interest and debt management, to a certain extent.  If you understand those two principles, you are well on your way to being financially literate!  To watch the episode, click here. 

And that is that!  A highlight of all the NCVTV episodes for March 2017.  Make sure you check them out on my YouTube channel!  I’ll see you there!

Sincerely,

Joy Alford-Brand

Your Dollar Lama